The Report: Myanmar 2020
Foreign companies are showing interest in Myanmar’s geostrategic location, abundant natural resources and youthful population. A focus on following international best business practices and reducing the informal economy, paired with an annual GDP growth forecast at around 6% in the coming years, is setting Myanmar on a path to catch up with some regional peers.
Country Profile
In what is considered to be the last frontier market in South-east Asia, the pace of business-friendly reforms is quickening, with a view to becoming a preferred investment destination in a region that is experiencing the effects of a global repositioning in trade and manufacturing. Following decades of military rule that maintained a socialist and centrally planned economic model that cut off access to the world’s financial markets and main trading routes, the country’s ongoing transition towards a market economy and electoral democracy has caught the attention of investors worldwide. Investors have been drawn by the size of its internal market, competitive wages, abundant natural resources, fertile land and strategic geographic location between the world’s most populous countries, China and India. This chapter contains an interview with Nick O’Donohoe, CEO, CDC Group.
Explore chapterEconomy
Myanmar is now one of the fastest-growing economies in Asia Pacific, with a key geostrategic location, abundant natural resources and a youthful population underpinning its progress. It is also a country that has achieved much in a relatively short period of time, after only setting out on the path of liberalisation and democratisation in 2011-12. Since then GDP, personal incomes, international trade and standards of living have improved significantly. Cities such as Yangon and Mandalay have experienced booms in real estate and construction, while the national grid has expanded, and transport and logistics networks have widened and deepened. The wholesale and retail sector is becoming a major driving force of the economy, and the financial and manufacturing sectors are undergoing liberalisation and diversification. This chapter contains interviews with U Soe Win, Minister of Planning, Finance and Industry; Daw Cherry Trivedi, CEO, Myanmar Institute of Directors; and Melvyn Pun, CEO, Yoma Strategic Holdings.
Explore chapterTrade & Investment
Since initiating the process of liberalising its economy and encouraging greater foreign participation, Myanmar’s international investment inflows and trade have expanded significantly. This has gone hand in hand with strong domestic economic growth, even at a time of global trade slowdowns and protectionist headwinds. Capitalising on its strategic location as a crossroads between China, India and South-east Asia, as well as leveraging its abundant natural resources and youthful population, Myanmar has indeed made remarkable progress in just a few short years. Yet the horizon is not without storm clouds, both in the form of economic responses to the country’s internal conflicts from the international community and continuing challenges to the ease of doing business. Nevertheless, investment from Asia’s economic powers remains strong, even if Western commitments are limited. This chapter contains interviews with U Thaung Tun, Chairman, Myanmar Investment Commission; and Minister of Investment and Foreign Economic Relations; and U Than Myint, Minister of Commerce.
Explore chapterBanking
The pace of reform in Myanmar’s banking sector has been increasing in recent years, with liberalisation taking a major step forwards in November 2019 when the Central Bank of Myanmar announced that foreign banks would be able to secure a licence to engage in onshore retail business through a subsidiary or joint venture from 2021. Naturally, challenges remain for an industry that only recently emerged from decades of exclusion from the global financial system. Many citizens remain outside the formal network of banks and microfinance institutions, relying instead on informal sources for their financial needs. Skilled human resources also remain a barrier, as new banking methods increasingly challenge traditional practices, while local professionals trained to global banking standards remain scarce. Furthermore, as reform continues, the regulatory regime remains restrictive in terms of products, interest rates, loan books and deposits. This chapter contains a viewpoint from U Kyaw Kyaw Maung, Governor, Central Bank of Myanmar; as well as interviews with Linus Goh, Head of Global Commercial Banking and Executive Vice-President, Oversea-Chinese Banking Corporation; and Christopher Loh, CEO, uab Bank.
Explore chapterInsurance
Recent years have seen Myanmar’s insurance sector take significant steps forwards, with liberalisation giving rise to a number of foreign insurance companies entering the market. At the same time, the country’s financial sector governance has been strengthened, while the economy has continued to grow. These developments bode well for the industry, with rising per-capita incomes expected to lift premium volumes and improved regulations set to stimulate investment. Indeed, with penetration rates for both life and non-life coverage comparatively very low, and a population of 53.6m as of FY 2018/19, the sector presents significant potential for expansion. Furthermore, the ongoing opening up of the country’s economy and adoption of international best practices is expected to support increased activity and competition. This chapter contains a roundtable with Nhon Luc Ly, CEO, AIA Myanmar; Son Nguyen, Country President, Chubb Life Insurance Myanmar; Zarchi Tin, CEO, Dai-ichi Life Insurance Myanmar; and Asit Rath, CEO, Prudential Myanmar Life Insurance.
Explore chapterICT
The ICT sector is perhaps Myanmar’s most advanced area of the steadily growing economy. Nevertheless, the era of easy growth and customer acquisition for telecommunications players has come to an end, and a new phase of intense competition has ensued. Myanmar has wide-ranging plans to grow its digital economy and is actively engaging in efforts to improve the foundations of its digital ecosystem and convert its smartphone-wielding population into online consumers. However, it will require significant development of a policy framework, as well as investment in digital literacy and ICT skills, to realise the country’s potential. As the ICT sector matures, there is room for companies to grab market share in the country’s nascent but fast-growing digital economy. This chapter contains interviews with U Thant Sin Maung, Minister of Transport and Communications; and Alok Kumar, Group CEO, Oway.
Explore chapterEnergy
In addition to being crucial to economic activity, Myanmar’s energy and power sector continues to be one of the main drivers of foreign investment as the country looks to develop its national electricity grid. As of October 2019 the value of foreign direct investment approved by the government in the energy sector for that year stood at $43.6bn, representing just over half of total FDI. As demand for electricity continues to rise, the authorities are pursuing new avenues to boost supply. Average household energy consumption is around 435 KWh per month in urban areas, compared to roughly 300 KWh per month in rural areas. Yangon alone accounted for some 42% of electricity consumed in Myanmar in October 2018, down from 50% in 2013. The Ministry of Electricity and Energy announced that 50% of the population was covered by the electricity network in December 2019, up from 43% in 2018. This chapter contains interviews with Ken Tun, CEO, Parami Energy Group of Companies; and Rorce Au-Yeung, Co-CEO, VPower Group.
Explore chapterConstruction & Real Estate
Construction activity has increased significantly in Myanmar as the country works to address gaps in transport and power infrastructure, as well as an affordable housing shortage. The creation of several economic zones aimed at attracting investment over the coming years is expected to further the expansion. Cooperation with international organisations and partners such as China, Thailand and Japan will help the country acquire the knowledge and technology necessary to move forward. In recent years Myanmar’s real estate market has been hampered by oversupply, regulatory uncertainty, and an absence of consumer financing or avenues for international investment. However, as market conditions improve, new laws and regulations governing the development and sale of condominiums to foreigners, along with greater flexibility in mortgage financing, have set the stage for sector recovery. This chapter contains an interview with Stephen Suen, Chairman, Marga Group.
Explore chapterTransport & Infrastructure
Myanmar’s success in improving its transport infrastructure is clearly illustrated by developments in Yangon, the country’s commercial capital. Yangon International Airport, for instance, has undergone significant upgrades and now has an annual capacity of 20m passengers. Upgrades are also being made to the Yangon Circular Railway. Older buses that once contributed heavily to air pollution have mostly been replaced, and a modern bus service is in operation. The city is also served by 50,000 taxis and a catamaran water bus service. Ports are being modernised as well, with work on a 400-metre wharf near the Thilawa Special Economic Zone completed in December 2018. A new $290m container terminal on the Yangon River has received in-principle approval, and a deepwater port at Kyaukphyu in Rakhine State is in the pipeline as part of China’s Belt and Road Initiative. Nevertheless, transport infrastructure in the countryside remains below standard. This chapter contains an interview with Shinichi Kitaoka, President, Japan International Cooperation Agency.
Explore chapterIndustry
Industry in Myanmar has benefitted from a period of strong economic growth, an increasingly welcoming environment for foreign investment and more open regulatory reforms. The outlook for Myanmar’s industrial sector is bullish in light of ongoing reform, the successful blueprint provided by the Thilawa Special Economic Zone, infrastructure development and the growing consumption power of a nascent middle class. However, as Myanmar heads into an election year, it is hoped that the reform agenda does not stall as politics ramps up. Looking ahead, there is significant potential for further growth as efforts to source materials locally pick up and infrastructure improves, particularly transport routes that will reduce logistics costs and open up less developed parts of the country to further investment. This chapter contains an interview with U Zaw Min Win, President, Union of Myanmar Federation of Chambers of Commerce and Industry.
Explore chapterRetail
As recently as 2011, before economic liberalisation began to gain speed, Myanmar had no access to international brands. In strong contrast, in 2019 Yangon’s Junction City Mall had a 100% occupancy rate, hosting a number of popular restaurants, shopping and entertainment venues. The growth of such complexes is striking. Considering the government’s current reform-minded trajectory and the lack of tough international sanctions, Myanmar’s retail industry is unlikely to be diverted from its current path of strong and steady growth. More foreign companies are expected to enter the market as infrastructure continues to improve, with e-commerce exhibiting breakout growth if the government can strike the right legislative balance. This chapter contains an interview with Jens Michel, CEO, METRO Wholesale Myanmar.
Agriculture
Myanmar boasts diverse ecological conditions, fertile soil, and promising fisheries and aquaculture. The current administration has centred its vision for future economic prosperity and its drive to alleviate poverty around agriculture. Demonstrating the sector’s significance, agriculture accounted for 38% of GDP and 70% of the workforce in 2018. While Myanmar was once the world’s largest exporter of rice, the post-independence era saw state support for agriculture decline and productivity levels drop. Today, however, efforts to enhance crop diversity and increase output are being introduced, bolstered by the June 2019 opening of the Myanmar Productivity Centre. Even so, major upgrades to storage and processing facilities, rural electrification and transport infrastructure are needed to strengthen the position of producers in the farm-to-market value chain and help them gain additional revenue. This chapter contains an interview with U Ye Min Aung, Secretary-General, Myanmar Rice Federation; and Managing Director, Myanmar Agribusiness Public Corporation.
Explore chapterMining
Endowed with rich deposits of jade, ruby, copper, lead, zinc, tin, tungsten, silver, gold, antimony, nickel and barite, as well as a long history of mining that dates back to the 15th century, Myanmar’s mining sector has significant potential. While these rich and varied reserves indicate a bright future for the industry, there are numerous regulatory, infrastructural and societal challenges that need to be addressed before the mining sector can reach its full potential. The long-term outlook for the industry remains generally optimistic: at least seven international mining companies are looking to exploration activities and, given its potential, Myanmar is likely to continue to attract investment. This chapter contains an interview with U Ding Ying, Chairman, DELCO.
Explore chapterTourism
Sharing borders with India, Bangladesh, Thailand, Laos and China, Myanmar is one of the last frontiers of Asian tourism. Offering pristine beaches, abundant cultural and natural attractions, and a warm, hospitable population, the country has significant potential – especially considering the thriving travel markets in neighbouring states. Following its opening as a travel destination, the sector experienced impressive growth in both arrival numbers and foreign direct investment. However, unrest in Rakhine State in 2017 and the international media coverage that followed have negatively impacted the sector, diminishing the flow of visitors from Western countries. Visitor demographics have since changed and the sector is undergoing a gradual recovery, with sizeable growth stemming from Asian source markets. Tourism has been supported by a number of government reforms and initiatives, including relaxed visa regulations, and efforts are under way to establish new flight routes to the country. This chapter contains an interview with Daw Su Su Tin, Managing Director, EXO Travel.
Explore chapterEducation & Health
Myanmar’s education sector has undergone a significant transformation following the transition to democracy. Budget allocation for the sector has risen steadily and liberalisation has resulted in the emergence of a rapidly expanding private school segment. Nevertheless, further work is required to reform the curriculum, raise teaching standards and adopt education technology if the country’s young population is to be prepared for an international labour market characterised by innovation and rapid technological change. Health care expenditure has been rising and the government is implementing three national health plans to lead the country towards universal health care by 2030. Furthermore, private investment has become increasingly welcome and significant growth potential exists in the insurance market. Nonetheless, more systematic data collection is required to prioritise the areas where resources are most needed. Widening access to primary health care and improving the quality of services will be key to fostering sustainable economic growth. This chapter contains an interview with U Aung Chit Khin, Founder, Strategy First University.
Explore chapterAccountancy & Tax
This chapter offers an overview of Myanmar’s tax regime, including the provisions of Myanmar Income Tax Law and the conditions for Commercial Tax and Specific Goods Tax, alongside individuals’ tax obligations – and the penalties for failure to comply. It also outlines the differences in tax requirements for foreign bodies and Myanmar nationals, and summarises Myanmar’s tax assessment systems. The chapter details tax incentives for companies operating in Myanmar’s special economic zones. This chapter contains a viewpoint from U Tin Win, Country Managing Partner, EY Myanmar.
Explore chapterLegal Framework
This chapter examines the legal system of Myanmar, focusing on changes arising from the Myanmar Company Law and efforts to open up to foreign investment. Crucially, the banking sector has reduced restrictions on foreign participation and introduced the Mobile Financial Services Regulations in an effort to increase banking penetration. The chapter also outlines the measures introduced to enhance transparency and improve consumer protection, and details the terms of the Anti-Money Laundering Order introduced in November 2019, as well as anti-terrorism and trade liberalisation measures. Key points in this chapter refer to the opening of the insurance sector and the Yangon Stock Exchange to foreign participation. This chapter contains a viewpoint from Cheah Swee Gim, Director, Kelvin Chia Yangon.
Explore chapterThe Guide
This chapter contains a list of some of the country’s top hotels; contact details for embassies, ministries and organisations; and helpful tips for business and leisure travellers ahead of a trip to Myanmar. This chapter contains an interview with Peter Crowhurst, CEO, British Chamber of Commerce Myanmar.
Explore chapterTable of Contents
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State Counsellor Daw Aung San Suu Kyi: Viewpoint
U Thaung Tun, Chairman, Myanmar Investment Commission; and Minister of Investment and Foreign Economic Relations
Shinichi Kitaoka, President, Japan International Cooperation Agency (JICA)
U Soe Win, Minister of Planning, Finance and Industry
Melvyn Pun, CEO, Yoma Strategic Holdings
Stephen Suen, Chairman, Marga Group
Myanmar Times: Myanmar tourism pins hopes on local travellers
Kumudra: For a growth of Myanmar's Health Care Sector
Myanmar Times: Good prospects in Myanmar for long-term investors Oxford Business Group report
América Economía: El nuevo impulso de Myanmar - Asia
