Economic Update

Published 16 May 2016

Growing brand awareness, combined with investments in infrastructure, will drive development in Myanmar’s tourism industry this year and beyond, with record high inbound traffic forecast for 2016.

In late March the Ministry of Hotels and Tourism predicted 6m inbound tourists for 2016, up 25% on the 4.68m arrivals last year and far above the 2010 total of 800,000.

Though arrivals for last year fell short of the ministry’s forecast of 5m, officials and industry stakeholders have cited stronger growth for 2016 based on improved political and economic stability.

Tourism as an economic driver

In its latest profile on Myanmar, the Asian Development Bank (ADB) reported that tourism had become a major driving force in the economy. According to the bank’s report, tourism revenues grew by 19% last year as inbound traffic increased, totalling $2.1bn, or more than 4% of GDP.

The bank expects tourism, resource exports and construction to be the leading sources of growth in Myanmar’s economy this year. Expansion in these sectors will help fuel projected GDP growth of 8.4% in 2016 and 8.3% in 2017.

The World Travel and Tourism Council (WTTC) is even more upbeat on prospects for the sector in the short-to-medium term. Over the coming 10 years, the WTTC projects that Myanmar’s tourism industry will rank second out of 184 countries for long-term growth and 15th globally in 2016.

In its 2016 outlook for the industry, the WTTC forecast the sector’s total contribution to Myanmar’s GDP – including indirect inputs – would increase by 5.9% this year and by a further 7.8% per annum through to 2026.

This should take the sector’s contribution to GDP to 6.5%, while employment from tourism will rise by 66% between 2015 and 2026 to 2.1m.

Infrastructure pressure

While the opening up of Myanmar to international markets and the country’s many travel offerings have boosted arrivals, rapid growth could outpace the development of auxiliary infrastructure, according to U Aung Myo Min Din, chairman of tourism service provider Adventure Myanmar Group.

“Tourist numbers have risen considerably in recent years due to the fact that Myanmar has so many hidden paradises,” he told OBG. “However, the rapid influx has put a strain on supporting infrastructure such as airport capacity.”

Growing demand has lead to a sharp increase in carriers seeking to serve international routes, with 24 foreign airlines now flying to destinations inside the country, compared to 13 carriers in 2012.
Further capacity will be added through to the end of this year, as more routes are scheduled and carriers like HK Express and Thai Lion Air prepare to launch services to Myanmar in the coming months.

Room to move

However, this influx is also expected to put greater pressure on existing airport infrastructure.

Authorities are already moving to improve airport facilities to accommodate rising demand, with ongoing work to expand the capacity of Yangon International Airport from 2.7m to 8m passengers by 2019. The first stage of this programme was the opening of a new $660m arrivals and departures terminal in mid-March, which raised capacity to 6m passengers.
It is not just Yangon International Airport that is working to find space to expand. Tourism has to compete with the residential, commercial and industrial sectors for land resources, which has pushed prices up, while zoning laws have also limited access to blocks for development in some areas.
With the expansion of the airport broadly seen as a medium-term solution to accommodating Myanmar’s rising tourist numbers, the government is actively pursuing additional developments.
In late January a framework agreement was signed between the Department of Civil Aviation and a consortium comprising Japan’s JGC Corporation, Yongnam Holdings and Changi Airports International to develop the Hanthawaddy International Airport, which will be located 80 km to the north-east of Yangon.
When completed in 2022, the new $1.5bn airport will have a passenger-handling capacity of 12m per year, twice that of the upgraded Yangon International Airport today.

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