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 and new cities 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 strategically important country acquire the knowledge and technology necessary to move forward.

Structure & Oversight

The task of coordinating investment in national infrastructure falls to the Ministry of Construction (MoC), while its Department of Urban and Housing Development (DUHD) leads housing development. The DUHD constructs and markets properties, and is spearheading plans to build more than 1m apartments nationwide by 2030. A National Housing Development Law is being developed by the government and is expected to call for a greater role for the private sector in the housing market. The Housing Welfare Committee oversees the DUHD’s provision of low-cost housing, while a parliamentary committee administers the Condominium Law.

The MoC coordinates policy with ministries including the Ministry of Transport and Communication, the Ministry of Municipal Affairs, and the Ministry of Electricity and Energy (MoEE). The Myanmar Construction Entrepreneurs Association (MCEA) is a private organisation that promotes industry development on behalf of its 10,000 member companies. It established the Myanmar Construction Development Public Company (MCDP) as its trading arm. Meanwhile, the MCEA lobbies the government, sits on housing oversight committees, and facilitates any related work and training programmes.


Construction is set to benefit from the projected growth in the overall economy, which both the Asian Development Bank (ADB) and the World Bank expect will see rapid expansion despite external headwinds. In September 2019 the ADB downgraded its regional economic forecast by 0.4 percentage points for 2018 and 0.3 points for 2019 due to weakening global performance and the ongoing trade dispute between the US and China. However, the bank’s outlook for Myanmar’s GDP growth remains unchanged, at 6.6% in 2019 and 6.8% in 2020. The World Bank is similarly optimistic, noting in a mid-2019 bulletin that reforms have raised productivity while investment in mega-projects has supported the construction sector. The construction sector is expanding, with growth estimated to have increased from 7.9% in FY 2017/18 to 8.2% in FY 2018/19, underpinned by the development of energy, transport and power infrastructure, as well as industrial zones and affordable housing. The positive trajectory was reflected in an increase in local building material production and the import of fixtures.

Around 500,000 people were employed in construction in 2018, a four-fold increase from 2010 levels In recent years there have been a number of projects in the pre-development and feasibility study stages. According to a 2018 assessment from global consultancy McKinsey, construction employs around 500,000 people in Myanmar, a figure four times higher than in 2010. In addition, the study found the sector accounted for 6% of GDP in 2017, up from 2% in 2000.

While sector expansion has sparked competition, cost and schedule overruns remain common. McKinsey suggests that projects in Myanmar typically take 20% longer than planned, and the sector could benefit from the digitalisation of processes, information modelling and industrialised building systems. However, according to the MCEA, only three or four of all its members have such systems, as most are small and family-owned.


Overall foreign direct investment (FDI) in Myanmar has weakened over recent years, with a number of Western investors deterred by conflict in areas such as Rakhine State.

Net FDI in Myanmar declined to 1.8% of GDP in 2018, down from 6% of GDP in 2017. Figures from the Directorate of Investment and Company Administration (DICA) show that there was $37.8m in approved foreign investment in the construction sector, accounting for 0.1% of total approved investment. DICA found that real estate was the leading sector for domestic investment in FY 2018/19, attracting $1.3bn, or 22.5% of the domestic total, to permitted enterprises. The next-largest recipients of domestic investment were manufacturing, with 18.1% of the total; transport and communications, with 15.1%; and hotels and tourism, with 10.4%. Construction came in fifth, with $506.8m, accounting for 5.6% of domestic investment.

Foreign Players

The construction market continues to be dominated by foreign contractors, which have more than an 80% share in key infrastructure projects, according to a June 2019 report from Fitch Solutions. While the majority of the contractors are from Asia, no one particular country dominates.

Thailand’s Vintage Engineering, LNG Plus International and Rojana Industrial Park Public are working on the 220-MW Minbu Solar Plant in Magwe and the Dawei Maritime Hub, which includes a deepwater port. South Korean heavyweight Hyundai Engineering and smaller Chinese players such as Yunnan Construction Engineering Group are also active in the market. Given the small pool of available local expertise and the complexity of the projects, foreign players are likely to continue leading in the years to come.


Myanmar is working to develop vital transport, energy and telecoms infrastructure. The ADB estimates that the country will need to invest $120bn through to 2030 to close the gaps in these sectors; that figure is higher if urban infrastructure is taken into account. Addressing these shortages will require a mix of private investment, developmental finance and private sector participation.

Financing possibilities for construction projects improved in late 2018 when banking reforms from the Central Bank of Myanmar opened the door for foreign lenders to extend credit to local companies, overseas entities and joint ventures. However, loans are largely denominated in US dollars, leaving the sector vulnerable to currency fluctuations.

“Due to the scale of the capital and long tenors required, local banks often face challenges when financing large infrastructure projects. Bankable public-private partnerships (PPPs) to attract international financing therefore remain critical in bringing these projects to life,” U Han Thein Lwin, CEO of Shwe Taung Engineering and Construction, the construction arm of Shwe Taung Group, told OBG.

In November 2018 the then-Ministry of Planning and Finance announced the formation of a Project Bank to centralise infrastructure initiatives that have been screened by the government in a publicly accessible database. The portal will include details such as the projects’ technical specifications, the type of contracts on offer and other necessary information. The database will also allow the government to coordinate with different agencies and ministries to ensure projects align with the goals of the Myanmar Sustainable Development Plan 2018-30. Some 30 projects were listed on the database, including five river ports, the Hanthawaddy airport project, the Muse-Mandalay railway, and six new expressways and ring roads, among others.

“Myanmar has some of the least developed infrastructure in the world,” U Htun Lynn, managing director of Yangon-based construction machinery company Htun Nay Wun Thitsar, told OBG. “This presents an opportunity for companies looking to tap into the market. The tendering process, however, can be frustrating, as the contract sizes are often small, which means it can be tough to achieve the scale needed to make an endeavour profitable. We are hopeful that the Project Bank will help address these issues.”


In addition to the national Project Bank, the Yangon Project Bank (YPB) hosts some 80 projects in housing, commerce, industry and transport. The projects listed on the YPB – a joint venture between the Yangon Metropolitan Development Public Company and the MCDP – are seeking private or PPP funding. Challenges remain, however, including the fact that Myanmar lacks a specific PPP legal and regulatory framework. The private sector will likely require incentives to participate considering the exchange rate risk and possibility of loan default.

There have been some successful PPPs carried out under existing tender and investment rules. In March 2019, for example, Singapore-listed Sembcorp began operations at a $310m, 225-MW combined-cycle gas turbine plant in Mandalay. Financial institutions and international lenders such as Clifford Capital, DBS Bank, DZ Bank and Oversea-Chinese Banking Corporation are financing the project. Investors and sector analysts will be closely watching how the 22-year, build-operate-transfer arrangement with the MoEE is executed.

Building Materials

Myanmar is self-sufficient in cement production and can meet 90% of its annual demand of 11m to 12m tonnes through domestic production, importing only in areas close to China where it is easier to bring supplies from across the border. However, competition is intensifying as Chinese players, led by Alpha Cement, continue to step up activities.

Despite continuing electricity shortages in the country, domestic building materials producers are starting to add additional product lines, and growing competition in the market is serving to drive down overall materials costs. Importantly, these lower prices have filtered into official tenders, which has helped the government reduce its budget. Infrastructure projects are driving demand for steel products including rebar, galvanised and colour-coated steel sheet, hot-rolled coil and plate. National steel consumption reached 2.4m tonnes in 2018, up from 2.1m tonnes in 2017. This figure is expected to grow at an average annual rate of 8% to reach 5m tonnes by 2025, according to date from the South East Asia Iron and Steel Institute.

Government and industry leaders are working to foster the growth of the local steel industry using Chinese technology to reduce reliance on imports, which account for 90% of the market, U Tin Myint, chief advisor of the Myanmar Steel Association, told local media in September 2019. Under this plan, some 2m to 4m tonnes per year of domestic demand will be met by locally produced steel.

Foreign steel companies are already accelerating production, most notably those based in Yangon’s Thilawa Special Economic Zone (SEZ), such as Japan’s JFE MERANTI Myanmar and Vietnam’s PEB Steel. “Construction is growing at a pace of around 10% per annum, but there remains a three-month delivery time for imported building materials. Reducing this through local production will free up working capital and increase overall growth in the sector,” Sebastian Langendorf, CEO of JFE MERANTI Myanmar, told OBG.

A lack of enforcement of construction standards has hampered the growth of legitimate materials producers, with brick factories hit particularly hard by the thriving market for sub-standard products. Many contractors have been struggling with the rising costs associated with weakness in the kyat.

“Construction costs have risen throughout the supply chain,” Daw Mie Mie Soe Nyunt, director of Kyauk Sein Nwe Construction, told OBG. “Despite this, there are still great opportunities on the horizon, particularly related to latent demand in the tourism sector.”

Doing Business

The government has enacted several reforms to strengthen construction quality, including tightening qualification standards for architects and engineers, making building permit requirements available online, publishing performance measurement reports to make enforcing contracts easier, and introducing service quality standards to streamline the process of obtaining building permits. These efforts helped Myanmar rise six places in the World Bank’s “Doing Business 2020” report, to rank 165th.

Also working to improve the business environment, Yangon authorities, in cooperation with the International Finance Corporation, launched the Yangon Building Permit System in July 2019. The automated system aims to nearly halve processing time – from an average of 95 days to 49 days – for around 90% of the 4000 permits submitted each year.

“Myanmar’s construction sector has the highest earning potential [of any sector],” Vikram Kuman, country manager for the International Finance Corporation, told local press in August 2019. “An efficient, transparent and affordable permit system will help enable a conducive business environment,” he added.

The Neighbor

With access to the Indian Ocean and home to abundant natural resources, Myanmar is an attractive geostrategic destination for investment. China, in particular, has taken notice, investing $634m in 140 projects during FY 2018/19, second in value only to capital coming from Singapore, with $2.4bn. Additionally, the two countries signed an agreement to create the China-Myanmar Economic Corridor (CMEC) in September 2018. As part of China’s Belt and Road Initiative (BRI), the CMEC will link China’s Yunnan province with Mandalay, Yangon and Kyaukphyu.

Some observers have questioned the growing Chinese involvement in the economy, highlighting the country’s practice of restricting participation in projects to its own contractors, which limits economic benefits for Myanmar. Chinese loans also open the door to mounting debt dependency.

At present, China is responsible for more than 40% of Myanmar’s foreign debt of $10bn, with more set to be incurred as a result of involvement in the BRI. Meanwhile, some investors, including those from China, are cautious about entering Myanmar as a result of the unrest in Rhakine State and a general lack of security in some of the more remote regions.

Growth Drivers

“Industrial projects represent a real growth segment for the construction sector, with warehousing in particular proving resilient in a slow market,” U Ye Phone Hlaing, managing director at Suntac Technologies, told OBG. Overall construction activity has been supported by the ongoing development of industrial and economic zones.

One such project is the $8bn Dawei SEZ, which is positioned to boost overland trade with Thailand as well as regional sea commerce. In October 2019 Myanmar signed an agreement with Thailand to speed up development of the 196-sq-km SEZ by providing it with electricity and connecting it by road to the Thai border. However, electricity in the area is currently only available from private providers at high prices that disincentivise investment. A loan from the ADB is expected to establish a connection to the national grid that will provide the area with a maximum 300 MW of capacity by 2021 or 2022.

Housing is also a consistent source of demand for construction services, but the market has stagnated in recent years (see Real Estate overview). Looking ahead, expansion will depend on the government’s ability to draft a National Housing Development Law that would incentivise the private sector to get more involved in affordable housing, the need for which the ADB suggests is in excess of 100,000 units a year.

New Cities

Myanmar is working with China on its New Yangon City project, which has strategic importance for the CMEC. Planners aim to develop a new city on the western outskirts of the commercial capital. In April 2018 – following a Swiss Challenge tendering phase – the New Yangon City Development Company (NYDC) signed a $1.5bn framework agreement with the China Communications Construction Company (CCCC) to begin building the first phase, which includes preliminary infrastructure such as bridges, roads, waste and water treatment facilities, and a power plant.

Dutch consultancy Royal HaskoningDHV released an assessment in August 2019 that advised the authorities to construct a $100m primary ring-dyke system around the waterfall areas near the new city to mitigate the risk of flooding from three sources: tidal and storm surges, river discharge and rainfall. Without the dyke, flooding could cost the new city $1.2bn in economic losses a year at current sea levels and $2.1bn a year should sea levels rise by 90 cm. Even so, the project is moving forward. In August 2019 the NYDC chose Thailand’s PTT Group to supply power to the city and India’s Indraprastha Gas and Gail Consortium for gas supply. “We have completed by-laws and zone laws, and the land is 90% appropriated,” Serge Pun, CEO of the NYDC, told OBG. “We are even more optimistic because there is no shortage of firms wishing to relocate here due to the fallout from the US-China trade dispute.” According to Pun, the city will serve as a development template for other parts of the commercial capital. Meanwhile, the 4050-ha New Mandalay Resort City project, part of the CMEC, is attracting significant investment as a priority infrastructure project for the state (see analysis). Elsewhere, in January 2019 the MoC announced it would begin construction on a 588-ha, $2bn Eco-Green City in Hlegu Township on the outskirts of Yangon.

Transport & Utilities

Future growth in construction will also be fuelled by transport and power generation as Myanmar works to improve vital infrastructure. The MoC plans to upgrade around 42,000 km of existing roads and bridges to meet ASEAN Class III standards by 2030. In addition, the $42.5bn Master Plan for Arterial Road Networks Development, published in 2015, seeks to widen, upgrade and maintain motorway networks.

International partners are helping to develop infrastructure. In November 2019 the ADB announced that it would provide around $51.2m in loans and grants through to 2025 to upgrade rural roads to be allweather and climate resilient. About 6% of the country’s 95,000 km of rural roads are paved, and 28% are gravel or stone, highlighting the need for improvement. In February 2019 work began on the Yangon-Thanlyin Bridge, funded by a $278.4m low-interest loan from the Japan International Cooperation Agency (JICA).

Rail has similarly been targeted for improvement. Work on a $3bn overhaul of the 620-km Yangon-Mandalay rail line began in November 2018 and is scheduled to be completed by the end of 2023. Japan’s Sumitomo Corporation is the main contractor for the first phase of the project, which will run between Yangon and Taungoo. JICA also extended a $250m loan to finance an upgrade to Yangon’s 56-km Circular Railway. Works are expected to be finished in 2022.

The development of power and other utilities will drive construction growth, with a June 2019 report from the World Bank suggesting that the country needs to invest twice as much and implement projects three times as quickly to keep pace with electricity demand. In June 2019 the government issued emergency tenders for five gas-fired power stations for a combined capacity of 1040 MW (see Energy chapter). In October 2019 four of the tenders were awarded to Hong Kong firm VP ower, while the last was awarded to the China Energy Engineering Group. In May 2019 the Parliament approved a $1bn, 30-year loan from JICA for urban development projects in Yangon and Mandalay focused on sewage treatment, water drainage and electricity.


Infrastructure development across several sectors and affordable housing should help the construction sector maintain its growth trajectory in the coming years, fuelled in part by mega-projects. While some investors may be cautious about entering the market due to ongoing conflicts and a shortage of incentives to offset financial risk, government efforts to open the economy to foreign investors and improve the business environment have been positive steps.