As Myanmar becomes Asia’s next frontier market, risks abound for the investor who makes the first move, says William Chan, Chairman and CEO of Singapore-based family office Stamford Management Group.

 For investors with a high risk tolerance, Myanmar may be a suitable gamble, says Chan, who noted the most impatient investors are typically entrepreneurs. “Since the bet is on the obvious structural and political change, getting involved in the very early days will certainly be opportunistic and may prove to be a smart move.”

However, Vietnam and Cambodia “held almost the same promise some 10 to 15 years ago and never saw winners out of first movers” and that is “assuming that you do not fall into the traps of unscrupulous, illegal and unreliable local partners for your investments.”

The risk factors in investing in Myanmar include the country’s political instability and its volatile international positioning. Its poor infrastructure may present investment opportunities but is also seen as a risk factor, according to Chan.

Ethnic minorities make up about a third of Myanmar’s population. The country, also known as Burma, has always seen sporadic ethnic and political rebellions since its independence in 1948. While decades of military rule has somewhat quelled the conflicts, recent reforms have sparked fresh protests amid new found freedom to organise and demonstrate.

Since June, as many as 100,000 people from the Muslim Rohingya minority were reported to have been displaced by fighting in the country’s western state of Rakhine. The allege rape and murder of a Buddhist woman by three Muslim men in May 2012 had triggered long-simmering tensions between the Buddhist majority and the Muslim Rohingya minority. Elsewhere, the Kachin ethnic group in the north and the Karin people in the south have been struggling against the central government for regional autonomies.

Myanmar’s human rights issue is also a concern, says Chan. “While more forgiveness in recent times has resulted in a loosening of sanctions, it takes very little for the barriers to be up again,” he says. “This will contribute to uncertainties for long term businesses and investments, especially for the foreign investor.”

While the lack of roads, ports and phone lines may be a hindrance for businesses, the absence of infrastructure such as a sound legal system, foreign exchange, banks and financial institutions will add risks to any foreign venture, says Chan. “As such if one can find any business model that is ‘off the infrastructure grid’ it may be less risky from one perspective, and very dangerous from another.”

With regards to opportunities, Chan says small investors should stay away from the so-called “big boys” territory of resources, minerals and agriculture. “They tend to be more protectionists and will crowd out smaller foreign competition.”

The sectors to watch will include financial services, urban development, hospitality and tourism and telecommunications, says Chan. “The Myanmar Stock Exchange currently has only two stocks traded on it that are not connected to international markets. Where regulations permit and grow, it will be an interesting segment.”