Not so with companies from Vietnam, which had few qualms about doing business with Myanmar’s military dictatorship before political and economic reforms of the last year. Many are moving ahead with investment plans.

At a bilateral investor meeting in Hanoi on Wednesday, held to coincide with a visit by Thein Sein, Myanmar’s president (pictured right with Truong Tan Sang of Vietnam), the chairman of the association of Vietnamese investors in Myanmar announced a $100m agricultural investment and said he hoped for progress on a number of other fronts, including the untapped mobile telecoms sector.

Tran Bac Ha, whose day job is to be chairman of the Bank for Investment and Development of Vietnam, one of the country’s biggest state-owned banks, called on Vietnamese investors to pay more attention to Myanmar, calling it “the last golden destination in Southeast Asia”.

Ha said An Giang Plant Protection, a Vietnamese agricultural group, and VinaCapital, a fund manager with several London-listed funds, had signed an agreement with Eden Group, a Myanmar conglomerate run by tycoon and rice association chief U Chit Khiang, to develop a $100m agricultural processing factory.

The chairman of BIDV, which opened a representative office on a piece of prime real estate on Yangon’s Pyay Road last year, said the two big Vietnamese state-owned telecoms groups VNPT and Viettel were hoping to get a licence to build mobile phone networks in Myanmar, which still suffers from woeful telecoms connections.

And Hoang Anh Gia Lai, a large Vietnamese property group, has already announced plans to build a $300m shopping, office and residential complex in Yangon.

Overall, Vietnam wants to increase direct investment in Myanmar from $500m to $2bn and to lift bilateral trade from $167m last year to $500m by 2015.

Having lobbied Western governments for some years to engage more closely with Myanmar, Vietnamese officials feel rather pleased with themselves about the tentative opening up of the country and the fact that the US and the EU have begun easing sanctions.

Vietnamese officials feel they have many useful lessons for Myanmar about developing a transition economy and dealing with the emergence from isolation and US sanctions.

But as Myanmar moves ahead with reforms to its legal framework and currency system, some in Vietnam are already concerned that Hanoi’s little friend may become a strong competitor for much-needed foreign direct investment.

On the political front, Myanmar, which conducted its first ever naval visit to Vietnam last week, could be a useful ally as both nations have been courting the US, Japan and others to balance against the rising power of China, the giant on their doorstep.

At the same time, political reforms in Myanmar – including the release of many political prisoners and the relaxation of some censorship – may increase the pressure on Vietnam over its lack of progress on human rights and democracy.

Phil Robertson, deputy Asia director for Human Rights Watch, a campaign group, said that although Vietnam is used to advising Myanmar, the Vietnamese government “should seriously consider following the lead of their visitor, president Thein Sein” when it comes to human rights.

While the economic opportunities in Myanmar look set to grow, Vietnam’s Communist leaders may find it more tricky to deal with a tentatively democratising, nominally civilian government than a pure military dictatorship.

By Ben Bland - The Financial Times - March 21, 2012