The Report: Myanmar 2014
The “Golden Land”, officially known as the Republic of the Union of Myanmar and formerly as Burma, has undergone dramatic reforms in recent years under the administration of President U Thein Sein. The rapid transition from a military junta to an open economy has surprised the global community and will see Myanmar assume the ASEAN chair for the first time in 2014. Myanmar is rich in natural resources and has an established extractive industries sector, with one of the world’s oldest continuously producing oil fields. The country is also rich in mineral resources, but it remains greatly unexplored by international mining firms, something the government is proactively trying to change. The easing of economic sanctions has accelerated the nation’s economic growth, but Myanmar still faces political challenges, including ongoing ethnic conflict and religious tensions. However, with greater access to international markets and a growing number of business opportunities, there are many reasons to be optimistic about the country’s future.
Country Profile
Wedged between the world’s two most populous countries, India and China, Myanmar has a young and growing population of more than 60m people and a total of 135 ethnicities. Burmese is Myanmar’s official language, but studies suggest there are as many as 100 different languages spoken within the country. The end of the military junta and the rule of Senior General Thn Shwe brought about the easing of sanctions by the EU and the US, as well as the release of Myanmar’s most prominent human rights activist, Daw Aung Saan Suu Kyi, chairperson of the National League for Democracy, along with many other political prisoners. As a result, the country is gaining increasing international credibility but still has obstacles to overcome. With Myanmar taking its place as chair of ASEAN in 2014, a remarkable period of progress in its foreign relations is being acknowledged. A raft of new economic developments and agreements, such as tourism and transport projects, should help bolster Myanmar’s international standing. This chapter contains an interview with President U Thein Sein and viewpoints from Barack Obama, US President; Daw Aung San Suu Kyi, Chairperson, National League for Democracy; and Xi Jinping, President of China.
Explore chapterEconomy
A new foreign investment law, an open telecommunications license tender and the exchange rate float, all in the past two years, have shown the government’s focused interest on developing the necessary legal, financial, and policy measures for attracting foreign investment and boosting the economy. A budding young labour force, abundant natural resources and a strategic geographic position at the heart of high-growth Asia give the country the potential to be a key global player in the coming decades. Official figures report that economic growth for FY2012/13 was 7.6%. In 2012, agriculture made the greatest contribution to GDP at 33% of the total. Thanks in part to the large informal economy, SOEs account for over two-thirds of government revenues, with tax receipts at a modest 3.3% of GDP. Recent years have seen large investment projects developed by Asian investors, but the new Foreign Investment Law of August 2012 has caught the attention of larger Western firms looking for exposure to the next frontier high-growth market. Myanmar has just begun its development process and, although growth will be strong, there are still many legal and regulatory measures that need to be taken before Western firms consider it to be largely risk free. This chapter contains interviews with U Soe Thane, Minister of the President’s Office and Former Chairman, Myanmar Investment Commission (MIC); Dr Kan Zaw, Minister of National Planning and Economic Development; Serge Pun, Chairman, Serge Pun and Associates (Myanmar); and Le Luong Minh, Secretary-General, ASEAN.
Explore chapterFinancial Services
After being nationalised in 1963, Myanmar’s financial system was liberalised in 1988, allowing for the emergence of several private banks. The government’s strategy for developing the sector includes a three-phase plan that emphasises an independent central bank and adequate regulation. Foreign banks are lining up at the country’s doorstep to tap into this potentially major market in the heart of South-east Asia, but significant challenges lie ahead, and risks to the banks, depositors and borrowers are evident. Competition for Myanmar’s banking sector is fierce, and a wide arsenal of tools must be carefully selected over the coming years if institutions hope to succeed. The country is also on its way to opening a local, modern Yangon Stock Exchange (YSE) by 2015 after Myanmar’s first stock exchange was closed in 1960. Rounding off Myanmar’s financial services sector, the insurance industry is also moving forward as, for the first time in 60 years, Myanmar has permitted private insurance companies to compete with the state monopoly. This chapter contains interviews with U Win Shein, Minister of Finance, and Chairman, Myanmar Investment Commission; U Kyaw Kyaw Maung, Governor, Central Bank of Myanmar; and a banking roundtable with U Than Lwin, Deputy Chairman, KBZ Bank; U Kyaw Lynn, CEO, Cooperative Bank; and U Win Min Khine, Managing director, Apex Bank.
Explore chapterEnergy
The energy sector is the great, untapped potential on which much of Myanmar’s hopes are pinned. One of the world’s first oil producers, Myanmar is emerging in the 21st century as a key producer of natural gas. The country’s vast rivers are also well suited to hydroelectric dams. The lion’s share of sector investment has been aimed at the export market as low electric tariffs and an inefficient centrally planned gas distribution system limit expansion of the public energy grid. Already the main source of the country’s electric power production, hydropower output has the potential to be boosted 40 times. Myanmar faces challenges, however, with an underpowered and overloaded energy grid. Furthermore, the pace of new supply additions is unlikely to keep pace with rapidly growing domestic and international demand. Over the longer term, offshore gas exploration is set to bear substantial fruit and large hydropower projects are expected to be revived, which will ultimately accelerate industrial development. This chapter contains interviews with U Khin Maung Soe, Union Minister, Ministry of Electric Power; U Zay Yar Aung, Minister of Energy; U Moe Myint, Chairman and CEO, MPRL E&P, and CEO, Myint & Associates; Jean-Marie Guillermou, Senior Vice-President Asia Pacific, Total Exploration & Production; and Ken Tun, CEO, Parami Energy Group of Companies.
Explore chapterTelecoms & IT
Until September 2013 there was only one telecoms provider, which has run the mobile network and backbone gateway for Myanmar since their construction. In 2013, two new international telecoms players entered Myanmar, providing the modern and affordable services necessary to bring the country into the 21st century. With 55m unconnected citizens, these firms have the opportunity to tackle one of the final frontiers for mobile penetration. However, Myanmar’s telecoms sector remains one of the most underdeveloped in the world, and immense challenges lie ahead for the international giants as well as the local government and domestic providers. Meanwhile, the doors have been opened for local and foreign firms to begin expanding the IT space and some 700 companies are now registered with the Myanmar Computer Federation. In 2014 Myanmar’s IT industry will see an explosion of activity that promises to transform almost every other sector of the economy over the coming years. Yet experience and training are severely lacking at present, and education will need to catch up quickly with the rush of technology if the country is to take full advantage of the trend. This chapter contains interviews with U Myat Hein, Minister of Communications and Information Technology; Ross Cormack, CEO, Ooredoo Myanmar; Ren Geng, Managing Director, Huawei; and U Shane Thu Aung, Vice-Chairman, RedLink Communications; and a viewpoint from Eric Schmidt, CEO, Google.
Explore chapterConstruction & Real Estate
Myanmar is being hailed as the next Vietnam, which kicked off a multi-decade construction boom when it opened up to the world in the 1990s. With much of Myanmar’s housing stock in poor shape and cities expected to grow rapidly, demand for middle-class urban apartments will be a powerful driver of growth. And with the country’s limited domestic capacity and wide range of construction needs, there are plentiful opportunities for foreign investors, international construction firms, and sellers of construction equipment materials. The biggest recent legal change for the industry was a reform to the Foreign Investment Law in 2012 that allows foreign investors in real estate to operate without domestic joint venture partners through build-operate-transfer lease agreements with the government. But developers have a long way to go to catch up with demand, and the pace of development is still restrained by the limited availability of prime land and domestic financing. This chapter contains interviews with U Kyaw Lwin, Minister of Construction; and U Aung Zaw Naing, Group CEO, Shwe Taung Development Co.
Explore chapterAgriculture
While estimates may vary, the sector contributes 43% to GDP and employs 70% of the working population, according to the World Bank. Almost everything can be grown in Myanmar, from tropical fruits and vegetables to rice and pulses. It is sometimes said to have the most fertile soil in Asia. The country is known for its rice, teak and mangoes, but it also produces rubber, oil seeds, cotton, corn, chillies and pulses, with a total of 60 crops grown. If the country manages to avoid the pitfalls of agriculture that have challenged other countries in the region and works to best practices, success will build on success and a healthy agricultural market will be restored. This chapter contains an interview with U Ye Min Aung, Secretary General, Myanmar Rice Federation (MRF) and Managing Director, Myanmar Agribusiness Public Corporation (MAPCO).
Explore chapterMining
The presence of rubies, jade and other precious gems has been noted for centuries by locals, early Western explorers and colonial powers. Myanmar has an abundance of gold, silver, platinum, tin, tungsten, zinc, copper and gemstones. Yet very little of this has been exploited. One challenge to exploration and production is information. Only about half of the country has been mapped, pre-independence surveys are incomplete, and much was lost during the Cold War. Bureaucracy remains a hurdle for foreign investors. After years of working mostly with other governments directly, the Ministry of Mines lacks certain administrative capabilities and expertise. In 2014 Myanmar hopes to build trust internationally by joining the Extractive Industries Transparency Initiative, a process that shows accountability and transparency in the mining and hydrocarbons sectors. Given the huge demand for Myanmar minerals and the positive bearing of the government, it is expected that sizeable new exploration and production projects will get underway in the next few years. This chapter contains an interview with Dr Myint Aung, Minister of Mines.
Explore chapterIndustry
Myanmar is seeking to build upon the growing and steady contribution of industry to GDP. This figure rose from 12% to 15.3% between 1970 and 1995 even as international sanctions affected the garment industry, with clothing exports falling by 60% and a loss of 80,000 jobs. However, with reform has come optimism of a turnaround in the making. As of 2012 the country had around 200 garment factories, having peaked at 300 in 1999. In addition, there are five steel plants, as well as hundreds of smaller steel workshops and four cement factories. In many ways, Myanmar has very suitable conditions already in place to develop and sustain an industrial base. In order to maintain its position as an attractive, low-cost market for international investment, Myanmar will need to overcome rising property and electricity prices, not to mention gaps in transport infrastructure. Progress will also depend on how laws are finally settled and whether the domestic financial system can be reformed to the extent that local corporations are able to finance their own facilities. This chapter contains interviews with U Maung Myint, Minister of Industry; U Khin Maung Win, Chairman, Myan Shwe Pyi Tractors; Dr Sai Sam Htun, Chairman, Loi Hein Company; and Daw Win Win Tint, Managing Director, City Mart Holdings.
Explore chapterTransport
Despite years of isolation and being a relatively poor country, Myanmar has a surprisingly developed transportation network. It has 66 airports, eight airlines, more than 5500 km of rail and about 150,000 km of roads. However, those years of isolation left the country’s transportation infrastructure in poor condition, so Myanmar is making efforts to improve the system, and it is likely that these efforts will pay off in the medium and long term. The construction of less expensive and safer transportation options is vital to achieving Myanmar’s long-term development goals. If priority areas are dealt with quickly and if major setbacks are avoided, the sector will improve steadily until the more complex investments, such as urban rail, can be completed. This chapter contains an interview with U Nyan Htun Aung, Minister for Transport.
Explore chapterTourism
While many sectors of Myanmar’s economy have great potential, the tourism sector is already highly profitable and growing rapidly. Flights to Myanmar have dramatically increased in number since 2010 as business visitors and leisure travellers flock to the frontier that until recently was isolated by international sanctions. In just four years, visitor numbers surged from 20,000 per year in 1992 to 200,000 per year in 1996, and they reached 2.04m in 2013. Given the dearth in hotel accommodations and other facilities to meet the surging demand, many operators have doubled or even tripled prices and investors are scrambling to build. Growing at a sustainable pace is key for the sector’s long-term success, and the government has made a decision not to overdevelop too quickly and to respect the landscape and cultures that attract tourists in the first place. This chapter contains interviews with U Htay Aung, Union Minister, Ministry of Hotels & Tourism; and Frank Janmaat, Group General Manager, Amata Hotels and Resorts.
Explore chapterTax
This chapter contains an overview of the Myanmar tax system, geared toward those interested in doing business in Myanmar. It also contains a viewpoint with OBG tax partner, Chris Woo, Managing Director, Tax Services, PwC Myanmar.
Explore chapterLegal Framework
This chapter contains an overview of Myanmar’s legal framework, with a focus on the rules governing foreign investment, new legislation, special economic zones, and the combination of colonial, traditional, and modern laws. It also contains a viewpoint with OBG’s legal partner, Cheah Swee Gim, Director, Kelvin Chia Yangon.
Explore chapterThe Guide
This section contains hotel listings for business and leisure travellers, useful numbers for embassies and other important contacts, and facts for first-time visitors to Myanmar. It also contains a feature introducing readers to the country’s pristine getaways and more information on what the “Golden Land” has to offer travellers.
Explore chapterTable of Contents
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