The construction industry is set to become a major growth driver of Myanmar’s economy, as investors flock to capitalise on economic liberalisation and a major public infrastructure programme. The sector has expanded rapidly since 2012, although growth moderated in 2016 as a result of election uncertainty and regulatory reforms. Residential real estate, particularly the affordable housing segment, 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 larger portion of construction activity.

Drivers & Brakes

The country’s National Transport Master Plan (NTMP) calls for a surge in infrastructure investment, including building highways, upgrading the dilapidated railway system, and carrying out new port and airport projects. At the same time, the national grid is slated for a major mid-term refurbishment and expansion under the recently launched National Electrification Programme (NEP).

The most significant challenge for potential investors lies in the country’s unclear regulatory environment, and the new administration will need to address urgent concerns around land acquisition, credit access and zoning laws to help the sector regain its footing. Emblematic of such concerns is the government’s mid-2016 move to halt construction on hundreds of high-rise building projects; many contractors have recorded significant losses while awaiting a government review. Other reforms have lent a more optimistic outlook to 2017, including a move to loosen trade restrictions and permit foreign firms to buy and sell building materials, which should help phase out use of low-quality, counterfeit materials and bodes well for future industry liberalisation.

Regulatory Bodies

Myanmar’s construction industry is overseen by a host of related ministries and departments, most notably the Ministry of Construction (MoC) and its Department of Human Settlement and Housing Development (DHSHD), which is responsible for overseeing affordable housing projects and under the previous administration was known as the Department of Urban and Housing Development. The Ministry of Transportation and Communications is tasked with rolling out various projects under the NTMP, while the Ministry of Planning and Finance plays a role in policymaking, public finance and project planning. The Ministry of Commerce sets import and export regulations for the sector, most recently moving to liberalise foreign trade in construction materials, while the Ministry of Electric Power and Energy oversees grid upgrades and power plant projects under the NEP.

Industry bodies, including the Myanmar Construction Entrepreneurs Association, collaborate with the government to help develop new construction policy.

Backed by the Yangon City Development Committee (YCDC), a further industry body now looks to be in the offing. In August 2016 more than 500 Yangon-based contractors met to discuss the creation of a new representative board, the YCDC Licensed Contractors Association. According to its acting spokesperson, U Lar Sal, the new group will create a single bloc that can negotiate with the government over issues such as the recent high-rise review process, which has affected more than 200 projects at various stages of completion.

Government Vision

Myanmar’s overarching NTMP envisions MMK28trn ($22.7bn) of public investment in road, rail, water and air transport projects in the years leading to 2030.

Originally unveiled in 2014 with the assistance of the Japan International Cooperation Agency (JICA), the plan sets targets and aims to develop efficient, modern and environmentally friendly systems across multiple modes of transport, allocating $11.7bn to road projects, $6.6bn to railway development, and $8.5bn for inland water, sea and airport projects.

Myanmar’s national grid is also slated for an overhaul under an ambitious new electrification programme launched in September 2015. According to the World Bank, 84% of rural households in the country lack an electricity connection, exacerbating poverty and hindering development.

The NEP, which was launched by the government in partnership with the World Bank, targets universal electricity access by 2030, which will require 7.2m new connections. The plan will begin with $400m in funding from the bank’s International Development Association, connecting over 6m people by 2021, as well as providing grid connections for 23,000 schools, clinics and community centres.

Exports Add Value

The National Export Strategy, also launched in September 2015, aims to expand and diversify the local export base with an emphasis on the value-added production of beans, pulses and oilseeds; fisheries; forestry products; textiles and garments; rice; rubber; and tourism. The new administration’s industrial development plan, unveiled in July 2016, similarly targets export growth, focusing on economic corridors with transport links to new manufacturing centres in central and southern areas, as well as new agri-processing zones and deep sea ports (see Industry chapter). Development of new value-added factories will entail significant investment in surrounding infrastructure, offering further opportunities to the construction industry.

Recent Growth

Myanmar’s construction industry has recorded robust growth in recent years, expanding at an annual average rate of 7.2% between 2011 and 2015, according to market intelligence firm Ken Research. Growth is expected to accelerate in the coming years: in a June 2016 report, Timetric’s Construction Intelligence Centre valued the sector at MMK9trn ($7.31bn) in 2015, projecting it to grow by 10.37% a year until 2020 to MMK15trn ($12.2bn).

Of the 2015 figure, infrastructure construction comprised the second-largest segment, at 19.4%, having risen from some MMK2trn ($1.6bn) in 2011 to MMK3trn ($2.4bn) that year. Infrastructure is expected to maintain its second-place position through to 2020, reaching a value of MMK6trn ($4.9bn) as a result of investment under the NTMP.

In an earlier report, global consultancy McKinsey had projected similar growth patterns, putting the GDP contribution from infrastructure and construction operations at around $10.5bn in 2010, and forecasting this would rise to $48.8bn by 2030, driven by real estate construction. The firm estimated Myanmar’s infrastructure investment requirements at $320bn between 2010 and 2030, with real estate comprising some 60% of the total.

Sector Investment

The Myanmar Investment Commission permits a foreign investor to own up to 50% of a joint-venture construction company, and the sector has witnessed an influx of new investment in recent years, driven by opportunities in real estate and transport. According to U Ye Phone Hlaing, managing director, Suntac Technologies, which provides IT and infrastructure-related services, the capacity of the government has not been fully tested. “Some investors are concerned that they lack skilled personnel to implement policy,” he told OBG.

While many potential investors remain wary of the new administration’s plan for the sector, the business climate for contractors has been improving. Indeed, in the World Bank’s “Doing Business 2016” survey Myanmar rose 10 spots in the “dealing with construction permits” category, to 74th place out of 189 economies. The survey found that new contractors must complete 14 procedures to register in Myanmar, compared to an average of 14.7 in the East Asia and Pacific region, and that the process takes an average of 95 days compared to 134.6 regionally.

“The process of obtaining a building permit is getting better and better,” Mark Petrovic, managing director of construction consultancy Archetype Group, told OBG. “Before there was no clear list of required documents. The big challenge now is land documentation, surveys and history. Often we are still working with hand-drawn maps that are not matching with technical surveys.”

The Central Statistical Organisation (CSO) reports that domestic investment in construction enterprises jumped by 230% between FY 2013/14 and FY 2014/15, from $13.75m to $45.39m, though this eased down to $6.15m during the first nine months of FY 2015/16. While it does not track foreign investment in construction, the CSO reports that foreign investment in real estate rose from $440.6m in FY 2013/14 to $780.8m in FY 2014/15, while in transportation and communications foreign investment grew from $1.19bn to $1.68bn, and reached $1.59bn in the first nine months of FY 2015/16.

Affordable Housing

Improvements in Myanmar’s economic conditions will depend on new public investment in residential developments, energy and utilities, according to Timetric, with affordable housing projects expected to drive growth over the medium term. Indeed, residential has been the sector’s largest segment over the past five years, accounting for 49.9% of its total value, having risen from $3.6bn in 2011 to $5bn in 2015 – much of this driven by public investment in affordable housing under the second National Development Programme. In the coming years, Timetric expects the residential segment to reach MMK11trn ($8.9bn) in value.

The government has been active in pursuing affordable housing projects in recent years, the largest of them located in Yangon. The MMK20bn ($16.2m) Mahabandoola project, for instance, will provide an estimated 1200 new units to residents. The DHSHD, meanwhile, announced in September 2016 that more than 2000 low-cost apartments in Yangon would be available under a hire-purchase system. This enables low-income, first-time buyers to purchase the MMK10m ($8120) units on an eightyear instalment plan, using accounts opened at the Construction and Housing Development Bank. That same month, the department said it had already handed the units, located in Hlaingthaya and Dagon Myothit, to Yangon’s regional government.

Private Investment

With the city’s affordable housing shortfall expected to hit 40,000 units annually in the years to 2030, public funding will be unable to close the gap (see Real Estate chapter), leaving space for new private investors. Local companies are already moving to deliver new units. In April 2016, the MoC announced that a consortium led by Myanmar’s Capital Diamond Star Group had won a tender, first launched a year earlier, to build part of a 15,000-unit affordable housing project on a 183-ha plot of state land at the corner of Yangon’s Mya Nandar and Shwe Li roads. The consortium, one of 12 bidders for the project, will provide the government with MMK3bn ($2.4m) and 3000 units under the award. Capital Diamond Star’s subsidiary, Capital Development, will lead construction efforts, and says it plans to negotiate with its two bidding partners Sae Paing Development and Bagan Business Group, as well as with any other interested developers, to carry out the project. Work will commence after stakeholders have obtained a secure water supply, with construction taking six years to complete.

Promisingly for foreign contractors, in July 2016 the new administration announced it was considering opening low-cost housing projects to foreign firms, provided they are able to complete them within two years. As local contractors tend to prefer high-end condominium and office developments, which offer a better return than low-cost units, the MoC said it hopes to attract foreign contractors by streamlining registration and licensing, thus offering an easier and more efficient entry into the industry.


Transport upgrades are also an increasingly critical priority, particularly given the rapid growth and urbanisation recorded in Yangon, the country’s largest city and economic centre (see Transport chapter). “Infrastructure shortages remain a huge barrier,” U Khin Maung Aye, chairman of Lat War Group of Companies, which works in real estate, told OBG. “Economic growth is causing congestion, particularly at ports, which creates exporting price hikes in the form of increased shipping charges.”

Transport priorities are outlined in the Strategic Urban Development Plan of Greater Yangon (SUDPGY), which was originally published in March 2013 by a partnership between the Yangon Regional Government, the YCDC and the JICA.

The SUDPGY envisions a host of major new transport upgrades, ranging from the widening roads and construction of new flyovers, to the construction of new railway lines linked up to feeder systems, including monorail and light railway transit (LRT). The strategy also recommends expanding existing facilities at the Port of Yangon and developing the city’s water supply and sewerage systems, which reach just 42% and 10% of its population, respectively.

National Trunk Transpor

The NTMP targets the development of corridor-based transport infrastructure, outlining total investment requirements of MMK1.39trn ($1.1bn) in 2015, rising to MMK2.16trn ($1.8bn) in 2020 and MMK5.25trn ($4.3bn) by 2030. New highways and upgrades to the rail network dominate planned works: JICA estimated the country would need MMK10.17trn ($8.3bn) to build the trunk transport system over 2014-20, comprising 87% of total capital formation in the transport sector, followed by MMK1.53trn ($1.2bn) for urban and rural systems. Trunk-system investment needs, the JICA calculated, will rise to MMK16.52trn ($13.41) between 2020 and 2030, at which time they would comprise 45% of all capital formation requirements.

Major planned projects under the NTMP include rehabilitation and modernisation of the 620-km Yangon-Mandalay rail line, construction of port facilities in Mandalay, and dozens of east-west and northsouth highway projects. The government is also actively pursuing airport upgrades: Yangon International Airport’s new international terminal opened to passenger traffic in March 2016, and there are plans to build a further aviation facility, the Hanthawaddy International Airport in Bago, which is scheduled for completion in 2022 (see Transport chapter).


These projects will keep the sector on a long-term growth path, but amid these opportunities, foreign and domestic contractors face challenges. These are largely related to an unclear and relatively undeveloped regulatory environment, as well as difficulties in accessing finance. Changes in regulations have been a cause for concern, with the YCDC implementing a host of new reforms in 2015, including raising the deposit for a contractor licence from MMK5m ($4061) to MMK20m ($16,200) for small contractors, and from MMK20m ($16,200) to MMK50m ($41,000) for larger firms.

High-Rise Review

Perhaps the most significant near-term challenge for contractors has been the YCDC’s decision to halt construction of some 200 high-rise buildings in the city, which it announced in May 2016, saying the projects would be reviewed to ensure they meet environmental and urban planning standards. In September 2016 it reported that, out of 185 projects that had received in-principle approval under the previous administration, nearly one-third would need to make retrospective design modifications to receive a formal building permit, while 64 were allowed to continue as planned. According to the Myanmar Times, some developers at resumed projects accrued significant losses as a result of the review, a process that battered investor confidence and is expected to negatively affect the sector’s growth in 2016 (see Real Estate chapter).

“The reason for the suspension of high-rise buildings is to review the quality of ongoing projects,” U Htun Lynn, managing director of Htun Nay Wun Thitsar, told OBG. “There is no political motive: it is primarily aimed at improving the quality of buildings.”

According to U Han Thein Lwin, managing director of High Tech Concrete, the adoption of the high-rise review shows good intent from the new government to employ policies that meet international standards and benefit the economy in the long run.

In early November 2016 the YCDC announced it had completed the high-rise review process and would begin accepting applications for new construction projects imminently.

Labour Issues

Daw Mie Mie Soe Nyunt, director of Kyauk Sein Nwe Construction, told OBG the cost and quality of labour continues to be an issue in Myanmar. “The best talent leaves for better-paying markets, leaving us with eager, but inexperienced new graduates or the higher cost of importing talent,” she said. According to U Aye Han, managing director of United Paints Group, the cost of labour has increased by 20% over the last few years. “Fortunately, the demand for decorative paint has also increased around 20% due to the growth in construction projects,” he said.

Land & Finance

Access to finance is another concern for construction contractors, few of which are able to secure financing, particularly loans with the longer tenors necessary for large-scale projects. Lacking a credit registry and credit bureau, Myanmar ranked 174th of 185 countries in the “Getting Credit” category of the World Bank’s “Doing Business 2016” survey. Interest rates on loans are high, at around 13%. Often the only collateral a bank will accept is land – a challenge exacerbated by inflated real estate prices, difficulties in the acquisition process and a prohibition on foreign ownership.

Given the importance of land access for the industry, such issues are worrying for foreign investors. Estimates from sector stakeholders suggest that just 3% of land in Yangon is considered freehold, with the majority still state owned and prices high. This problem could be exacerbated further by new reforms at the Yangon Internal Revenue (YIR). In September 2016 the YIR announced it had changed its property valuation process, telling media that the standard prices it has been using to declare the value of land are less than one-third of what is actually paid on the market. New valuations are expected to be higher, although details have not yet been released.

Zoning Plan

Near-term growing pains notwithstanding, other regulatory reforms are expected to have a positive long-term effect on industry growth. One such sign was the August 2016 announcement by the YCDC to publish its long-awaited zoning code before the end of the year. This should prevent a repeat of the high-rise review undertaken in 2016. The committee said that a new zoning and land use law would be submitted to parliament following the conclusion of the city’s high-rise review.

The draft zoning law was originally created in 2012 by the MoC, YCDC, and the UN-backed Urban Research and Development Institute, as well as professional societies including the Myanmar Construction Entrepreneurs Association. The law divides Yangon into a total of 10 zones, and allocates between 30% and 35% of Yangon’s entire land area to high-rise buildings and apartments, with an additional 20% to be set aside for use as recreational and public spaces, under urban planning initiatives.

Trade Relaxation

Foreign contractors received welcome news in July 2016, when the Ministry of Commerce announced it would further relax restrictions on their activities by opening trade in onshore construction materials to foreign-local joint ventures. The new rules were announced as part of an agreement between Myanmar and the World Trade Organisation (WTO), after the country began implementing WTO policies in 2015. That same month, Luther Law Firm reported that the ministry is in the process of drafting another, similar piece of legislation enabling foreign-local joint ventures to establish showrooms for the import and sale of heavy machinery. Though not yet finalised, it said, the draft provides for the establishment of heavy machinery showrooms outside of Yangon’s downtown area. These facilities must include full servicing capabilities, and could be permitted to import and sell more than one brand, provided all equipment is of international quality and manufactured in a developed country by a firm with at least 20 years of experience.

The impact of this legislation on industry growth could be profound. Until November 2015, foreign firms had been barred from the country’s import-export industry, despite government assurances that month that it would permit trading activities in agricultural and hospital products. When announcing the new regulations, the ministry told media it hopes foreign firms will import high-quality building materials, in light of complaints by local contractors about low-quality and counterfeit materials.

Materials Investment

Companies are already moving to invest in materials trading. In April 2016 a group of companies from Macau announced plans to invest $2.5m to establish new distribution channels for building materials in Myanmar, in addition to a new industrial zone in Mon State. News portal Deal Street Awsia reported that a delegation of businessmen from Macau arrived in Myanmar in late March to investigate upcoming investment opportunities. The new materials distribution facilities are expected to offer cement, hammers, iron and household paint for import and sales, though further details of the deal have not yet been released.

An influx of new materials investment will have an impact on the existing market, however. Some stakeholders argue that rising competition from new entrants is unfair, given local companies’ limited access to credit to finance expansions and upgrades, as well as the ongoing industry slowdown. Cement prices, for example, fell from $110 per 50-kg bag in 2014 to between $70 and $80 as of mid-2016. An influx of new suppliers – SCG launched its Masonry Cement brand in August 2016, and Heidelberg Cement announced plans to enter the market in April 2016 – as well as the persistent smuggling of counterfeit materials, is likely to continue to challenge both domestic producers and importers.


Although the construction sector faced a challenging 2016 in the wake of political uncertainty, the costly high-rise review and softening demand in the real estate sector, mid-term growth forecasts remain positive. A surge of new infrastructure projects upgrading urban and national transport networks will buttress the country’s robust residential property sector, while ongoing liberalisation in the materials sector and broader economy are expected to further support long-term expansion in the sector. Although land prices remain inflated and access to finance limited, government steps to encourage new private investment bode well for the industry, and should keep momentum strong in the coming years.