The Report: Myanmar 2017

Myanmar today is a country undergoing rapid change, and there is a solid determination among its people and leaders alike to help their country establish an important place at the global political and economic table.

Country Profile

Undergoing profound and rapid change, Myanmar is today emerging as one of Asia’s most sought-after investment destinations. Its opening to the global economy has come after decades of military rule, during which a long period of isolation and internal conflict was followed by an era of gradual disengagement from politics by the army. This retreat took a decisive step forward in November 2015, when the country held the first openly contested elections in its modern history. The new administration now faces the daunting task of meeting the expectations of a diverse and dynamic people, conscious of their long and distinguished histories as well as their current opportunities.

This chapter contains viewpoints from Daw Aung San Suu Kyi, State Counsellor; President U Htin Kyaw; and Former US President Barak Obama, as well as interviews with Lim Hng Kiang, Singapore Minister for Trade and Industry; and Mark Garnier, Parliamentary Undersecretary, UK Department for International Trade.

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Trade & Investment

Although Myanmar remains in trade deficit, its trade balance has been improving in recent months. The trade deficit stood at $1.11bn in the first quarter of 2015 and fell to $945.7m in the same period of 2016, highlighting the impact rising exports are having on trade growth, and painting a brighter picture for long-term trade trends.

This chapter contains interviews with Le Luong Minh, ASEAN Secretary- General; Cecilia Malmström, European Commissioner for Trade; Vivek Pathak, Director for East Asia and the Pacific, International Finance Corporation; U Thura Ko Ko, Managing Director, YGA Capital and Local Representative, Texas Pacific Group; and Peter Beynon, Chairman, British Chamber of Commerce Myanmar.

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After its historic transition to civilian rule following years of incremental reforms, Myanmar is enjoying a period of exceptional growth. Once an outlier in the region, Myanmar now has the fastest-growing economy in ASEAN, and is seen as a source of regional strength and a destination of opportunity. Further liberalisation is planned, international investment is expected to remain strong and the domestic economy is becoming increasingly efficient. Optimism reigns as the experiment in reform has proven durable. While many emerging economies struggle to maintain a high rate of expansion in the face of global uncertainty, Myanmar is set to remain on course.

This chapter contains interviews with U Kyaw Win, Minister of Planning and Finance; Sean Turnell, Economic Advisor, National League for Democracy and Associate Professor, Department of Economics, Macquarie University; U Thurance Aung, Vice-President, Myanmar Japan Thilwa Development; and Keiichiro Nakazawa, Chief Representative, Japan International Cooperation Agency, Myanmar Office.

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Financial Services

In the wake of sweeping reforms undertaken since 2011, Myanmar’s banking sector has been advancing at a rapid pace to become safer, sounder and better regulated. The majority of banking institutions are rising to the challenge by adopting international best practices, especially in terms of accountancy, and investing in systems that promise to transform the way they operate. Until recently banking in Myanmar was a highly controlled, state-centric, ledger-entry affair. However, after undergoing a process of modernisation, it has become an industry of great opportunity. Indeed, thanks to significant expansion into underbanked corners of the economy, growing international interest and a series of large-scale reforms, the sector may also be one of the world’s most promising.

This chapter contains interviews with U Kyaw Kyaw Maung, Governor, Central Bank of Myanmar; U Yin Zaw Myo, Managing Director, Yangon Stock Exchange; Quach Hung Hiep, Senior Executive Vice-President, Bank for Investment and Development of Vietnam; and Simeon Preston, Group COO, AIA Group; as well as a roundtable with Azeem Azimuddin, CFO and Advisor to Chairman, Aya Bank; Antony Picon, Managing Director, Colliers International; Kim Chawsu, Managing Partner, Katalysts Investment Group; and Hal Bosher, CEO, Yoma Bank.

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With massive infrastructure upgrades in the works and industrial demand rapidly expanding, the energy market in Myanmar is currently one of the more promising ones in the world. The country is in great need of electricity generation capacity and must completely overhaul its transmission and distribution systems. Investment opportunities are available throughout the energy value chain, and will be for decades to come. Globally, it is an outlier: as other countries slow or cut back on energy investment due to low oil prices and weak economic growth, Myanmar is ramping up its commitment and inviting the world to participate.

This chapter contains interviews with Ken Tun, CEO Parami Energy Group; U Kyaw Kyaw Hlaing, Chairman, SMART Group of Companies; and Billy Harkin, Chairman, Energize Myanmar.

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Telecoms & IT

The expansion of Myanmar’s telecoms market continues to live up to its early promise, with the reform of the industry viewed as the biggest economic success since the military ceded power in 2011. The dramatic surge in network coverage has empowered local businesses and provided remote villages with the opportunity to connect to the outside world. The country’s IT segment continues to attract investors from around the globe. Driven by the rapid success achieved by international operators in the telecoms sector, foreign sponsors are eager to take part in the country’s evolving tech industry. In a matter of only a few years, the majority of Myanmar’s young population has gone from little or no access to internet services to a breeding ground for tech start-ups.

This chapter contains a roundtable with Takashi Nagashima, CEO, MPT-KSGM Joint Operations; Rene Meza, CEO, Ooredoo Myanmar; and Lars Erik Tellmann, CEO, Telenor Myanmar; and interviews with Michelle Simmons, General Manager of South-east Asia New Markets, Microsoft Asia Pacific; and David Madden, Founder & CEO, Phandeeyar.

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Construction & Real Estate

The construction industry is set to become a major growth driver of Myanmar’s economy, as investors look to capitalise on economic liberalisation and a major public infrastructure programme. Residential real estate, particularly affordable housing, will remain the chief engine of growth over the medium term, though a large infrastructure deficit and rising congestion in Yangon should see public works comprise a growing portion of activity. Although the outlook for the office and residential segments remains subdued as a result of rising new supply, the real estate sector is expected to maintain steady momentum in the coming years, on the back of further economic liberalisation and new opportunities in the retail, non-serviced apartment and affordable housing segments.

This chapter contains a viewpoint from U Win Khaing, Minister of Construction; and interviews with Wong Heang Fine, Group CEO, Surbana Jurong; and Omar Shahzad, Group CEO, Meinhardt Group.

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Agriculture & Forestry

The agriculture sector is already gaining ground from relaxed trade policies. Future potential, however, will depend on the ease of its transition from a supply-led industry to one determined by demand. For the short term, Myanmar will rely on consumption trends in India and China. It is unclear how long it will take the country to successfully penetrate international markets outside of Asia, although the process to get there is more than apparent. In line with this objective, local and international investors, with the support of the government and development agencies, are accelerating efforts to promote farming inputs, improve productivity and strengthen supply chains.

This chapter contains an interview with Sunil Seth, President, Overseas Agro Traders Association of Myanmar.

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The immense wealth that lies beneath Myanmar’s soil continues to entice prospectors from around the globe, and recent structural reforms are expected to bolster the sector and attract much needed capital. The nation’s first democratic government has shown determination to remedy past wrongs and clean up a sector that has immense potential to fuel growth. However, the new administration has inherited a wealth of intricate challenges that will require a vast amount of resources to resolve. Given the country’s geology and the passing of long-awaited legal amendments, most of which are geared towards promoting foreign participation, mineral exploration is expected to accelerate.

This chapter contains interviews with U Ohn Winn, Minister of Natural Resources and Environmental Conservation; and U Nay Win Tun, Chairman, Ruby Dragon Group of Companies.

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Industry & Retail

Recording steady growth in recent years, Myanmar’s industrial and retail sectors have been buoyed by solid macroeconomic fundamentals, economic liberalisation and regulatory reforms encouraging investment and expansion. The new administration has set a bold industrialisation target, with manufacturing expected to become one of the most significant economic growth drivers in the coming years. Job creation and infrastructure investment are priorities, with ongoing development at three special economic zones also expected to attract new industrial and manufacturing investment. Low labour costs provide an additional incentive, despite a shortage of skilled labour, which has driven the government to target significant new investment in vocational training.

This chapter contains an interview with U Ko Ko Gyi, Group Managing Director, Capital Diamond Star Group.

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Health & Education

The state of health in Myanmar is gradually improving, with significantly higher levels of funding being allocated by the state, and foreign donors and private investors looking to participate. To ensure its 56m people have access to better care, and mindful of the challenges, the administration is increasingly open to assistance from foreign governments, NGOs and private firms. The newly installed government has also put education at the heart of its reform agenda, recognising its potential for lifting the country out of poverty. More money is being channelled into the sector as officials seek to build a 21st-century education system to help push Myanmar into the ranks of the upper-middle-income nations by 2030.

This chapter contains a viewpoint from Dr Myint Htwe, Union Minister, Ministry of Health and Sports; and an interview with Myo Thein Gyi, Minister of Education.

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Spanning a vital geographic area and sharing borders with India, China, Thailand, Bangladesh and Laos, Myanmar is poised to see its transport sector post double-digit growth in the coming years. The sector is bolstered by surging air passenger and trade volumes, and rising urbanisation. Additionally, ageing road and rail networks, urban and port congestion, and a lack of multi-modal connectivity have made rising transport costs a major impediment to new foreign investment. The government is moving to address these challenges through delivery of its National Transport Master Plan, which should see huge public investment in new transport infrastructure in the coming years.

This chapter contains an interview with U Than Tun, CEO, Myanmar National Airlines.

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When Myanmar recently began opening its doors to the outside world, tourists rushed at the chance to see a country that had not only been closed to them for decades, but that also boasted a rich culture and heritage. The next phase of growth will demand better marketing, improved data collection and facilities capable of offering visitors not only sights, but compelling experiences. Change has already begun, and improvements to ageing infrastructure continue, but with hotel rates dropping to historic lows, the coming years could provide the sector with a difficult but necessary reckoning.

This chapter contains an interview with U Nay Aung, Founder, Oway Group.

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This chapter examines Myanmar’s tax regime, focusing on the newly passed Special Goods Tax Law, rules and penalties for concealment of income, regulations for industrial and special zones, the Myanmar Investment Law set to reshape the market and a summary of accounting standards and practices. It also contains a viewpoint from U Win Thin, Chairman, Win Consulting.

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Legal Framework

This chapter examines Myanmar’s legal system, focusing on the new investment law that is set to enhance the business climate, the extension of investment protections and benefits, a mobile financial services bill, and updates to several key labour laws.

It also contains a viewpoint from Cheah Swee Gim, Director, Kelvin Chia Yangon.

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The Guide

This chapter contains accommodation listings for business and leisure stays, contact numbers for a variety of local services, useful tips for first-time visitors to the country, as well as a feature on the city of Pyin Oo Lwin.

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