Myanmar

In-depth country-focused analysis on Myanmar's economic, political and operational risk environment, complemented by detailed sector insight

Myanmar

Our comprehensive assessment of Myanmar's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Myanmar, as well as the latest industry developments that could impact Myanmar's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Myanmar before your competitors.

Country Risk

Myanmar Country Risk

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November's ASEAN summit in Myanmar shone the spotlight on the country's political reform drive, which we believe has lost considerable momentum over recent months. In particular, the government has not shown the willingness to make substantive amendments to the constitution, suggesting that opposition leader Aung San Suu Kyi will not be allowed to run for president in 2015's general elections. Furthermore, it looks increasingly likely that the military (Tatmadaw) will retain its automatic 25% share of seats in parliament. Combined with efforts from the ruling USDP to adopt a proportional voting system rather than the first-past-the-post system that has been used in the past, it is likely that the USDP and Tatmadaw will maintain a considerable preference beyond the upcoming elections. At the same time, we also note rising risks that general elections may be postponed, as the government has tied the elections to a nationwide ceasefire which is looking more tenuous by...

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Myanmar Operational Risk Coverage (9)

Myanmar Operational Risk

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BMI View: Myanmar presents some of the highest operational risks by regional standards as, in spite of the recently lifted trading ban, severe risks still await incoming businesses and investors in the form of an underdeveloped transport network, poor contract enforceability and a poorly educated workforce. However, few security risks in terms of crime, and generous tax breaks partially mitigate the overall operational risks of investing in Myanmar.

Myanmar is afforded a 'least developed nation status' by the UN, alongside Cambodia and Laos, which has major implications for its operational risk profile. Geographically, Myanmar is well placed to evolve into a regional hub for freighted goods in Asia...

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Myanmar Crime & Security

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BMI View: Myanmar poses sizeable security risks to foreign business travellers, expatriates and tourists. The greatest risk is that of terrorism particularly in the northern and eastern regions. There is a moderate risk of crime; however, the extensive organised crime (facilitated by a weak and ineffectual police force) is not focused on foreigners. Finally, Myanmar's cordial relations with its regional neighbours, pose limited likelihood of it becoming embroiled in conflict though it is becoming a bone of contention between the US and China. Overall we award the country a score of 27.9 out of 100 which leaves it in 24th place out of 30...

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Myanmar Labour Market

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BMI View: Myanmar poses high risks to incoming businesses with regard to the low levels of education, high mortality rates due to HIV/Aids and limited urbanisation. However, businesses stand to benefit from competitive labour costs and high female labour market participation. BMI has given Myanmar an overall score of 49.8 out of 100, which places it 18th in the region for Labour Market Risks.

Years of military rule saw education squeezed as a budget priority, with resulting low levels of enrolment into secondary school, a high drop-out rate between grades and poor-quality education. The proportion of the workforce educated past primary school...

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Myanmar Logistics

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BMI View: Geographically, Myanmar is well placed to evolve into a regional hub for freighted goods in Asia. However, the poor ports infrastructure, paucity of railways, limited good quality roads and declining air traffic pose significant risks to incoming businesses and significantly expand import and export lead times. Further risks stem from the lack of internet and telecommunications capacity in many areas. However, there are a number of advantages to operating in Myanmar if a business is involved in logistics or supply chains. In addition to vast natural resources (both mineral and agricultural), Myanmar has one of the world's largest garment exporting industries, a growing economy and increasingly welcoming trade agreements. Moreover, the cost of importing and exporting in...

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Myanmar Trade & Investment

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BMI View: A weak banking sector, poorly enforced legislation and high levels of corruption are the key contributors to Myanmar's poor performance on Trade and Investment. Years of military rule, lack of democracy and human rights abuses led to the imposition of strict economic sanctions by foreign governments. The result is that despite the lifting of sanctions in 2012, the country is the poorest performer globally on Trade and Investment, ranked alongside some of the least developed countries in the world, including Venezuela, Zimbabwe and Chad. BMI has given Myanmar a score of 22.8 out of 100 for Trade and Investment Risks, which puts it firmly at the bottom of the Asia region.

Myanmar presents an...

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Myanmar Industry Coverage (8)

Autos

Myanmar Autos

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The common theme in Cambodia, Myanmar and Laos is that used vehicles make up the overwhelming majority of their auto markets. The low GDP per capita of these economies makes it difficult for consumers to afford new cars. However, as long as carmakers maintain their expectations, we do see an advantage for firms to develop a toehold in these frontier markets.

Over our 2015-2020 period, we forecast GDP per capita to exceed 6.0% annual growth in all these economies, aided by their young demographics. As incomes rise, new vehicle sales will inevitably increase when motorisation finally takes off - which we believe will take place when these countries achieve GDP per capita of USD3,000. Based on our forecasts, Myanmar and Laos will reach this stage in 2049 and 2021 respectively, while Cambodia will be yet to attain this by 2024. Firms which have built up their brand awareness and loyalty will then be able to reap the benefits of the motorisation...

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Food & Drink

Myanmar Food & Drink

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BMI View: We believe that Cambodia, Laos and Myanmar (CLM) will offer substantial opportunities for investors as their economies grow rapidly and become more integrated with the world economy. Growing populations, growing GDP, increased urbanisation and a demographic profile favouring a young target base all offer opportunities for food and drink operators looking to establish a foothold in the region. Additionally, a forecast increase in tourist numbers over the next few years will also fuel growing interest in more sophisticated food and drink products among the domestic consumer base.

Headline Industry Data (local currency)

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Infrastructure

Myanmar Infrastructure

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BMI View: We believe near-term growth in Myanmar's construction sector, while impressive, will remain below the country's full potential, owing to a host of ongoing risks. The sector remains unable to achieve its full potential due to limited upside to foreign investment - the main driver of construction activity - and the looming threats to the country's political environment posed by general elections scheduled for 2015. In addition, operational risks in Myanmar are among the most significant in the region, making business in the country particularly difficult.

Key Trends And Developments

  • Myanmar's...

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Mining

Myanmar Mining

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BMI View: The cooling of the Chinese economy will remove the shine off mining investment in South East Asia. Frontier regions will be the first places where miners pull back their investment as brownfield projects take precedence. Nonetheless, it is certainly not all gloomy in the mining sector. Resilient demand from the power sector will continue to support growth in coal production, while Indonesia's export ban on unprocessed ores will help support bauxite prices.

Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to uncover its potential over the coming years. The cooling of Chinese economic growth will remove a crucial pillar of support for mineral prices, particularly industrial metals such as iron ore and copper. For...

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Oil & Gas

Myanmar Oil & Gas

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BMI View: The outlook for Myanmar's upstream sector has been slightly weakened this quarter, as the lower oil prices will hurt exploration in the short term. This will have a longer-term impact on the country's gas production potential. However, we still note Myanmar is benefiting from growing private sector involvement. In light of the country's highly prospective acreage, the increasing diversity of the competitive landscape and an improving business environment, its long-term exploration and production potential remains strong.

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Headline Forecasts (Myanmar 2013-2019)
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Pharmaceuticals & Healthcare

Myanmar Pharmaceuticals & Healthcare

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BMI View: While the country's plan to expand health provision is positive over the longer term, the current underdeveloped healthcare sector meant limited access for its people. Extensive bureaucracy, political risks from the upcoming election are key risks to Myanmar's healthcare developments.

New investment reforms lifting restrictions on the foreign funding of medicine production will make Myanmar an attractive market to international generic drugmakers. This is due to the opportunity of securing a first-mover advantage in this frontier market, as well as being a result of rising medicine consumption. Nonetheless, we highlight that there is significant political uncertainty in Myanmar with the upcoming 2015 elections which poses as a risk to investment.

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Power

Myanmar Power

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BMI View : The Myanmar power sector is set to grow impressively over the coming decade, and will be one of the fastest growing markets in the region. We also expect the country's energy mix to change over the decade and this change will create numerous opportunities across the sector.

We are forecasting electricity generation in Myanmar to grow by 16.1% in 2015, a slight slowdown from what we estimate to have been a 17.5% expansion in 2014. We believe growth in 2015 will continue to be primarily driven by hydropower and gas-fired generation, similar to 2014. We believe Myanmar's power sector will be one of the fastest growing in Asia over the coming decade. We have maintained our forecasts for the sector this quarter, and are forecasting electricity generation to grow by an average of 10.0% per annum between 2015 and 2024. This is significantly higher than...

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Shipping

Myanmar Shipping

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BMI View: Although port infrastructure being limited in Myanmar and Cambodia, and Laos is landlocked, we feel that their booming economies and increasingly liberalised port sectors will provide significant opportunities for the wider shipping sector. Stronger bilateral trade agreements, developing manufacturing sectors and a wealth of natural resources are driving growth in outbound maritime freight, while consumer demand is supporting an uptick in container imports. As investment improves the port infrastructure, we anticipate Myanmar and Cambodia will augment their connectivity, which will in turn benefit Laos.

Myanmar has strong fundamentals, in our view, with good trade connections across the region, and occupying the ideal position to become a regional transport hub. The...

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