Considered to be the last frontier market in Southeast Asia, Myanmar remains focused on creating the right set of conditions to attract and facilitate foreign investment to spur economic development. Following decades of military rule that maintained a socialist and centrally planned economic model, cutting off access to the world’s financial markets and main trading routes, the country’s ongoing transition towards market economy and electoral democracy has caught the attention of investors worldwide.
The gradual removal of economic sanctions, initially by European governments and later by the US, contributed to putting Myanmar on the map, gaining a reputation as an increasingly attractive investment destination in the early 2010s. Investors have been drawn in by the potential size of its internal market, abundant natural resources, land fertility and strategic geographical location between the world’s most populous countries, China and India.
The pivotal event in this transition was the first openly contested national elections, held in November 2015, which resulted in the victory of the National League for Democracy (NLD). The landslide victory of Daw Aung San Suu Kyi’s party expressed the peoples’ collective aspiration for change and generated widespread excitement among the local and international business community. After two years in power initial enthusiasm has gradually been met with some scepticism, as the NLD grapples with the challenges posed by economic and institutional reform, as well as internal conflicts.
With a total land area of 676,552 sq km, Myanmar – known as Burma until 1989 when the name was changed – is the largest country in mainland by area in South-east Asia, around 20% larger than Thailand and twice the size of Malaysia. Its heartland lies along and around the Ayeyarwady River, which flows from north to south, starting at the confluence of two other rivers, the N’mai and Mali, which themselves carry Himalayan melt waters from the glaciers of Upper Myanmar and flow through the northern state of Kachin.
The Ayeyarwady then stretches for a total of 2170 km, eventually emptying into the Andaman Sea via a major delta system. On its path the river passes through the country’s Central Basin, an area of plains and dry forests, which is also watered by the Chindwin River. To this day, the Ayeyarwady remains one of the country’s most important commercial waterways, while it also constitutes a unique ecosystem and is home to animals such as the Ayeyarwady dolphin and some 43 different species of fish.
Surrounding the river basin and its tributaries, increasingly high mountain ranges lie in an arc from west to east, forming natural frontiers and historic barriers to trade. In the north, the Hengduan mountain range forms a border with western China, while also holding Myanmar’s highest peak – Hkakabo Razi, at approximately 5881 metres.
To the west lie the Arakan Mountains, which constitute a boundary with India and include the Chin and Naga Hills. At the southern tip of this range, a coastal area abuts the Myanmar state of Rakhine to the Bangladeshi division of Chittagong.
Further to the east the Shan Hills rise, reaching a peak of some 2563 metres, and along with the Karen Hills, forming a natural frontier with Thailand. These remote and difficult-to-access ranges also contain a border with neighbouring Laos. A further coastal strip of territory runs along the shores of the Andaman Sea. This is also a mountainous area, consisting of the western slopes of the Bilauktaung range, a feature running down into the Malay Peninsula.
The largest city in the country is Yangon (also known as Rangoon), which had a population of 5.2m, according to the 2014 census, although more recent official data estimates that there were 6.2m city inhabitants in 2017. Located in the Ayeyarwady Delta, Yangon is the economic centre of the country and one of its most ethnically diverse cities. While Indians made up the majority of the population in Myanmar in the period leading up to the Second World War, in 2018 most of the population is of indigenous Bamar descent. Yangon was also the capital of the country until 2006, when that function was transferred to Naypyidaw. The new capital, located 320 km north of Yangon, had a population of 1.16m in 2014 and was the country’s third-largest city after Mandalay. The latter had a population of 1.22m that year and lies in the heart of the country, on the Ayeyarwady, in the Central Basin.
Founded in 1857, Mandalay is still the chief centre of economic and commercial activity in Upper Myanmar, with a large concentration of businesses with links to China, mainly due to the geographical proximity and ethnic ties. Mostly fuelled by the presence of all the country’s governmental institutions, Naypyidaw is also poised to grow rapidly. Other important urban centres include Mawlamyine in Mon State, with a population of 451,000, and Taunggyi, the capital of Shan State, which had a population of around 381,000 in 2014.
The same national survey determined the country’s total population to be 51.4m. As of 2018 UN estimates say that Myanmar has around 53.6m habitants. Despite the growing number of people migrating to the main urban centres, particularly Yangon, Myanmar is still predominantly a rural country with agriculture playing a fundamental role as one of the main income sources for local families.
Myanmar has a tropical, monsoon climate, although there is considerable variation within the country itself, stretching as it does from the Andaman Sea to the foothills of the Himalayas.
There are two major monsoons that affect the whole country, however. The first is the north-east monsoon, which lasts from November to April, while the second is the south-west monsoon, which runs from May to September or October. The first of these brings cooler, drier weather, while the latter brings a hotter, wetter season. Indeed, during the south-west monsoon, which comes in off the Indian Ocean, some three-quarters of the country’s entire annual rainfall descends. Coastal hills and the north and east get the heaviest deluges, with these running from 2000 mm to 2500 mm per year. Other, more sheltered areas, get around half of this.
The periods before the south-west monsoon and immediately after it begins are also the hottest of the year. Between March and June, and in the lowland areas in particular, daytime temperatures can reach as high as 40°C. In the months following this and into the period of the north-east monsoon, there is a cold, dry season, which is the most-popular time for tourism. Average monthly temperatures between November and February are usually between 20°C and 24°C. In the north, upper-central and eastern regions, however, temperatures are generally lower all year round, given their higher average altitude. Night-time temperatures in these areas may drop to the single digits.
In addition to its range of landscapes, Myanmar is blessed with a wide variety of minerals and ores, while its climate and geography continue to provide it with a large bank of arable land, forestry and fisheries. These natural resources form the staples of the country’s economic wealth – underpinning many industries – and also constitute the target of much of its foreign investment.
Myanmar’s Department of Geological Survey and Mineral Exploration lists 62 commodities as present in the country, which can be found at more than 2000 locations. The minerals portfolio includes precious stones, such as the largest deposit of jade in the world located in Kachin State. The region of Mogok, in Upper Myanmar, has also been known as the Land of Rubies since the 13th century. In addition, substantial deposits of lucrative metals exist, such as tin, copper, gold and zinc, along with industrial minerals, such as fire clay, bentonite, feldspar and asbestos (see Mining chapter).
When it comes to hydrocarbons, the extractive sector has a relatively extensive history, with the first crude oil exports leaving Myanmar during the British colonial era in the mid-19th century. Recoverable crude oil reserves are estimated at approximately 3.2bn barrels, and the government is looking to bring in foreign investment to increase oil production from the country’s 53 onshore blocks.
Myanmar also has a reputation as a natural gas producer, with four offshore gas projects – Yadana, Yetagon, Shwe and Zawtika – that total an estimated 18.3trn cu feet of gas reserves. In 2017 the French oil major Total started up production from the Badamyar project, an extension of the Yadana gas field (see Energy chapter). The opening of the Badamyar low-compression platform shows that despite falling oil and gas prices in 2016, international oil and gas firms have continued to invest in the sector. While there is optimism about Myanmar’s potential gas reserves, there is also a large degree of uncertainty, particularly at a time when production from the existing gas fields is starting to decline.
Into the Woods
Back on land, there are large forestry resources, particularly of tropical hardwood varieties, such as teak, ironwood and padauk (cherry wood). However, rapid deforestation has taken place, with the country registering the third-highest annual rate of forest reduction in the world in 2010. According to the UN’s Food and Agriculture Organisation, between 1990 and 2015 Myanmar lost around 15m ha of forests and other wooded land (see Agriculture chapter). Nevertheless, the total land area covered by forests and wooded land is still significant, at about 43% and 22%, respectively.
As forestry remains a major resource for the country, sustainable management of this reserve is vital for the nation’s future, with nearly 70% of the rural population depending on it for their livelihood. Meanwhile, with 2228 km of coastline, several large estuaries, many offshore islands and major rivers such as the Ayeyarwady, fisheries are also a major natural resource and is an industry receiving increasing levels of government support.
The large bank of arable land makes Myanmar the seventh-largest rice producer in the world. In addition, the country’s farmers produce corn, peas, onions, sugar cane and groundnuts, among other crops. Cultivated land currently accounts for approximately 15% of Myanmar’s entire surface area, with around 18,700 sq km of this irrigated. Furthermore, the country has some 1045.6 cu km of renewable water resources, giving its farmers plenty of water for irrigation and other uses.
The national census conducted in 2014 was the first in more than 30 years. The survey, which was undertaken with the financial support of the UN Population Fund, took place under difficult circumstances, with some ethnic groups boycotting the process, and conflict and displacement affecting others. The results of the survey were well below previous estimates, which often varied between 60m and 70m habitants. Despite concerns over the accuracy of the results, the 2014 census provided a reliable demographic snapshot of a country where access to consolidated data remains difficult to find.
Out of the 51.4m total inhabitants, the 2014 census showed that there are more females than males (51.8% to 48.2%), while 29.6% of the population lived in urban areas. As a growing number of rural citizens look for new opportunities in main cities, this percentage has naturally increased. Yangon is Myanmar’s most urbanised region, with some 70.1% of its population living in urban wards. Yangon is also the most densely populated region in the country, containing 14.3% of the entire population. This was approximately 11% higher than the population of Yangon at the time of the previous census in 1973, which illustrates the economic attraction of the country’s main urban centre.
However, due to decades of political seclusion and economic isolation, the previous regime did not invest in the development of Yangon’s infrastructure and housing sectors. Transport networks remain dysfunctional and there are increasing numbers of slum dwellers. To address this demographic pressure the regional authorities promised to take measures to provide affordable housing solutions by commissioning the construction of low-cost apartments. A response to this challenge is critical, taking into account UN-Habitat projections that Yangon’s population will grow at 4% per annum to reach more than 11m habitants by 2040.
Alongside internal migration movements, migration to other countries is also a relevant issue for governments. In the case of Myanmar, some 2m citizens live and work abroad – approximately 70% of them in Thailand. Around 61% of these migrants are male. Outward migration has long been a factor in the country’s demographics, with internal ethnic conflict prompting displacement into neighbouring countries. Poverty and relatively higher wages overseas have also driven many abroad.
Another interesting conclusion of the 2014 census is that Myanmar has a youthful and literate population. The median age at the time of the census was 27, and more recent figures show that 55% of the population is under the age of 30. The percentage of literate people is higher than in some neighbouring countries, with a literacy rate of 89.5%, compared to 80% in Cambodia and 73% in Laos.
This combination of factors creates a picture of an educated, youthful population with fewer dependants. This is a profile that implies a positive outlook for the country’s short- to medium-term economic development. However, as experts widely point out, sustainable growth will only be possible with increasing investment in education. Despite being one of the electoral flags of the NLD, the sector remains poorly funded, memorisation prevails over the stimulation of critical thinking and syllabi are generally outdated (see Education chapter).
Myanmar has a wide variety of religious groups, with the population seeing religious affiliation as an important part of their lives. Buddhists make up the largest group, with the 2014 census showing that 87.9% of the population identified with this affiliation. The majority of these are Therevada Buddhists, which are followers of the orthodox “school of the elder monks” that uses the Pali canon – the standard collection of scriptures in the Therevada Buddhist tradition – as its doctrinal core. This is the school of Buddhism most common in South and South-east Asia.
Myanmar is widely thought to have the highest proportion of Buddhist monks per capita in the world, with the Sangha – the Buddhist monastic order, including monks, nuns and novices – playing a key role in the country’s recent history and politics. There are two primary orders of monks: the Thudhamma Nikaya (88% of all monks) and more traditional Shwegyin Nikaya. Seven other orders are also officially recognised.
Among Myanmar’s other religious groups, the Christian community is the next largest, accounting for some 6.2% of the population in the 2014 census. Largely introduced by Western missionaries from the 18th century onwards, around four-fifths of Christians are Protestant, and the remainder are mostly Catholic. There is also a relatively small Armenian Orthodox community centred in Yangon. Most Christians also belong to minority ethnic groups, such as the Karen, Chin, Lisu and Lahu.
The third-largest religious group is made up of Muslims, at 4.3%, although conflict and political controversies have cast some doubt on the true size of this community. For example, the Rohingya, one of the largest components of the Muslim population, was not counted in the 2014 census is not officially recognised as an ethnic designation.
Islam’s history in Myanmar stretches back to the seventh century, followed much later by a major wave of Muslim immigration from India to the country in the 19th century. The majority of Muslims follow the Sunni sect of Islam, with the main concentrations being the Rohingya and Kamein in Rakhine State; Indian-descent Muslims in Yangon; the Panthay, or Chinese Burmese Muslims, in the Shan States and Central Basin area; ethnic Malay Muslims in Kawthaung; and Zerbadi Muslims, descended from intermarriages between South Asian and Middle Eastern people and local Myanmar.
In addition, there are populations of Hindus (0.5%), and of people following traditional, tribal animistic beliefs (0.8%). The latter still have some influence over the day-to-day lives of many who follow different religious affiliations. Although religious beliefs are generally practised in peace in Myanmar, unrest continues in certain regions, particularly in northern Rakhine State. Recent events have drawn the attention of international media and have had some negative effects on the economy. The US imposed targeted sanctions against Maung Maung Soe in December 2017 after gaining bipartisan support in Washington, and conflict footage has caused concern among trade partners and foreign investors.
Languages & Ethnic Groups
Myanmar contains 135 officially recognised ethnic groups. The largest of these is the Bamar, accounting for approximately 68% of the population. The Bamar speak the Myanmar language (formerly known as Burmese) – a member of the Sino-Tibetan group – and live largely around the Ayeyarwady basin. The dominant religion in this group is Buddhism, and historically the Bamar have tended to dominate the political, military and economic life of the country.
The second-largest official ethnic group in Myanmar is the Shan, with around 9% of the population belonging to this group. These are related to the Thai people and are mainly Therevada Buddhist, mainly living in the Shan State, a large area bordering Thailand, Laos and China in the country’s north-east.
The Shan speak a variety of languages, some Tibeto-Burman and others Mon-Khmer. They have a long history of independence, with recent times also seeing armed conflict in Shan state and its neighbours. A nationwide ceasefire agreement, which was signed in 2015, ended most hostilities, but rival Shan groups have since been in conflict with each other over this agreement.
The third-largest ethnic group is the Karen, making up around 7% of the population. This community primarily resides in Karen State, in the south-east, with large numbers having crossed over into Thailand due to conflicts between Karen separatists and the Myanmar military. Karen people speak a Sino-Tibetan language, and while the majority are Therevada Buddhist, approximately 35% are Christian.
The next-largest official ethnic group is the Rakhine. These constitute approximately 3.5% of the total population and live in Rakhine State, alongside the unofficial Rohingya Muslim group. Formerly known as the Arakanese, they have relatives in neighbouring Bangladesh and India. They are predominantly Therevada Buddhists and speak the Arakanese language, which is close to Myanmar.
There is a significant ethnic Chinese group – around 2.5% – in Myanmar, while around 2% of the population belong to the Mon ethnicity. This latter group have a great historical significance in the country, being credited with bringing Therevada Buddhism to this region, while also being inter-related with many Thais, including the Thai royal family. They mainly live in Lower Burma. The ethnic Kachin, meanwhile, constitute around 1.5% of the population, ethnic Indians some 1.3% and Chin around 1%.
The Challenge Ahead
Myanmar’s mosaic of diverse religions and ethnic groups is perhaps the most challenging task facing the NLD-run government. Ethnic divisions are the historical legacy of a region that makes a bridge between the Indian Ocean, China, Indochina and the Pacific.
Over the centuries successive waves of various demographic groups have moved across the mountains and plains that constitute modern Myanmar, with the ethnic majority Bamar founding a powerful empire in Bagan during the 11th century.
Throughout the ensuing centuries, the Mon, Mongols, Chinese and Shan also exercised their influence over the country. When European colonial expansion started gaining ground, the Portuguese were the first to arrive, bringing with them the Catholic faith. In 1785 and 1817-19 the Burmese conquered the periphery regions of Arakan (today Rakhine State) and Assam, respectively. These wars brought first contact with the British Empire, with whom Burma would engage in three different wars. During the last of these in 1885, the country was invaded and conquered. The period of British rule was turbulent and, similar to many other territories under colonial rule, nationalism began to define the character of the resistance against colonial rule. Under the leadership of General Aung San, the Burmese Independence Army (BIA) took shape and was quickly dragged to battle following the outbreak of the Second World War in the Pacific. After the war the country moved rapidly to establish its independence, which was achieved in 1948.
Exhausted from the war effort and with a relatively weak state unable to create inclusive political and economic institutions, the new nation was poised to go through a very turbulent period. General Aung San’s initial efforts for national reconciliation following the Panglong Agreement of February 12, 1947 were ruined after his assassination just before independence. A period of infighting between communist and non-communist groups followed and ethnic conflicts between Shan, Burmese, Chin and Kachin also broke out.
This period of political uncertainty paved the way for General Ne Win’s military coup in 1962, which declared the creation of a socialist state run by the Union Revolutionary Council. Unable to develop inclusive political and economic institutions, Ne Win’s government and the others that have since followed have not been able to put a term on the conflict between the Myanmar State and the ethnic minorities organised under the Kachin Independence Organisation and the Shan State Army.
The development of extractive economic and political institutions dominated by a military minority transformed Myanmar from the richest country in South-east Asia to the poorest. Decades of political and economic seclusion made the nation a mystery to the outside world and cut it off from global technological innovation and the necessary tools for social mobility and sustainable growth.
Under military rule there were regular crackdowns on political protests until the weakness of the regime started becoming increasingly evident. A major anti-government uprising led by university students broke out in 1988, shaking the foundations of the regime. Consequently, General Saw Maung took over and dismantled the campus of the University of Yangon to control academic political resistance. In 1989 he changed the country’s name to Myanmar, and held an election the following year. This was won by the National League for Democracy (NLD), led by Daw Aung San Suu Kyi, General Aung San’s daughter. However, the military refused to accept the result, putting the leaders of the NLD under house arrest. Daw Aung San Suu Kyi’s imprisonment and democratic activism turned her into a globally recognised icon, eventually leading to her nomination for the Nobel Peace Prize.
In 1992 General Than Shwe took power over the country, but the pressure on the regime was becoming increasingly difficult to resist. Internal ethnic conflict continued, and new cases of social unrest and protests against the government erupted. The Saffron revolution was the most emblematic of these uprisings. It was sparked by a steep jump in fuel prices that quickly turned into a popular protest led by Buddhist monks – mostly Sangha – against the military-led government. The Buddhist monks’ support of the protests was a sign that no one could ignore in Naypyidaw. In May 2008 the devastating effects of Cyclone Nargis exposed even more of the military regime’s shortcomings.
In the same year the government announced a referendum on a new constitution and elections for 2010. Before the elections, Daw Aung San Suu Kyi was released from house arrest, and two years later by-elections gave her and the NLD seats in the military-dominated parliament installed in 2010. In 2011 former General Thein Sein became president, unleashing an unexpected set of economic and political reforms that started to produce tangible results and generate economic growth.
In 2015 nationwide elections delivered a landslide majority for the NLD. Although constitutionally barred from becoming president, Daw Aung San Suu Kyi became the state counsellor and the country’s de facto leader. As many of her public interventions made clear, she came to power with a clear objective in mind: to revive the legacy of her father, General Aung San, and to build national unity. That has been her priority since she became State Counsellor and even economic reforms in dire need took a back seat.
In 2015 eight out of 14 armed groups in the country signed a ceasefire agreement, and in 2016 the 21st Century Panglong Conference – a forum to negotiate a roadmap to national reconciliation – was also spearheaded by Daw Aung San Suu Kyi.
Head of State
Under the 2008 constitution, which remains in effect, the president is the head of state and of the government. As of early 2018 this post is held by the NLD’s President U Htin Kyaw. The president is elected by the bicameral legislature, the Assembly of the Union (Pyidaungsu Hluttaw in Myanmar), which chooses from three candidates, one put forward by each of the three committees comprising the electoral college.
These committees are constituted by deputies from the House of Nationalities, the House of Representatives and the military. The president appoints the Cabinet, made up of the various department ministers. However, the 2008 constitution stipulates that the military, the Tatamdaw, rather than the president, appoints the defence, interior and border security positions. Other Cabinet ministers appointed from the Assembly of the Union must resign their seats, paving the way for by-elections.
The House of Representatives, or Pyithu Hluttaw, is composed of 440 members – 330 of whom are elected – with the remainder appointed by the military. Elected seats are allocated on a township basis, with each choosing one representative for a five-year term, according to a first-past-the-post system. Members of the Sangha Buddhist clergy are not allowed to vote.
As of late 2016 the NLD held 255 of the 330 elected seats, with the Union Solidarity and Development Party (USDP) – the military’s preference – holding 30 seats. The Arakan National Party (ANP) had 12 seats, as did the Shan Nationalities Democratic Party. Other parties (mainly ethnically based outfits) hold 13 seats, with one independent and seven seats suspended due to conflict.
The upper legislative body, the House of Nationalities (Amyotha Hluttaw) has 224 members, with 168 directly elected and 56 appointed by the military. In 2018 the NLD has 135 of the elected seats, while the USDP holds 11, the ANP 10, and the rest are held by smaller, largely ethnic-based parties.
The Supreme Court of the Union is the highest judicial body, with the legal hierarchy then descending to the High Courts of the Regions and States. The latter hear and determine civil cases, while also acting as appellate courts in criminal cases determined at lower courts. District Courts then come under the High Courts, along with Courts of the self-administered division or zone, where such administrative entities exist. These lower courts hear original criminal and civil cases, provided the damages of the subject matter do not exceed MMK500m ($406,000). Beneath this level are the township courts, which can hear criminal cases where a punishment of not more than seven years in prison is possible and civil cases in which up to MMK100m ($81,200) in damages could be awarded.
Myanmar has seven states and seven regions, along with the six self-administered zones and one self-administered division. Each of these has its own local government, headed by a chief minister, with a state or regional Hluttaw as the local legislative body. These are elected in the same fashion as the national Hluttaw, with seats either elected or military-appointed. States and regions are constitutionally equivalent, with the main difference being that states are primarily for non-Bamar ethnicities, while regions form subdivisions within the majority Bamar ethnic areas.
The self-administered zones and one division are run by Leading Bodies. These are led by a chairperson, and constitute both the legislative and executive branches. They are composed of the deputies elected to the House of Nations for the zone or division, plus military appointees.
The capital, Naypyidaw, has its own local authority, coming directly under the jurisdiction of the national president. Day-to-day business in this region is conducted by a council, led by a chairperson.
Meanwhile, the smallest administrative unit in rural areas is the village, with a village tract being a group of several of these. Urban wards are at a similar level as that of villages, with these village tracts and towns then grouped together to form townships. Collections of these in turn form districts, with groups of districts forming states or regions. At these lower administrative levels, there is a mix of elected officials and those positions that are appointed by the General Administration Department of the Ministry of Home Affairs.
As the euphoria of the 2015 general election results has subsided, the challenges facing the NLD are becoming increasingly evident. Two years of administration has not been without criticism, and the government has identified three main goals. The first is national reconciliation, which is Daw Aung San Suu Kyi’s greatest priority.
However, as history shows the task will prove difficult and will require the development of inclusive political and economic institutions capable of launching the foundations of a federal state. The second priority – a necessary pre-condition for more inclusive institutions – is to root out corruption from public and government institutions. The third is to promote national and economic development.
While there have been visible steps towards eradicating corruption, with a number of contractual and tendering processes becoming more transparent, the business community has become increasingly concerned with the pace of economic reform. Myanmar’s potential has been lauded, but investors have voiced concerns regarding the lack of regulatory clarity and legislative predictability that affirms their confidence to make long-term investment decisions.
As the government prioritises national reconciliation, both economic development and achieving peace will parallel one another. The first steps have already been taken with regulatory reform and emergence in the global economy. In the years ahead Myanmar will be in position to leverage its international support to strengthen reform, improve local infrastructure and generate sustainable growth.
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