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

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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While political reforms in Myanmar have not been particularly impressive over recent months, economic reforms have maintained a steady pace. Specifically, the Central Bank of Myanmar (CBM) announced in July that it would allow as many as ten foreign banks to begin operations in the country before the end of September, marking the first time in decades that foreign financial institutions would be allowed to operate in the former pariah state. This is a major step forward, not only in terms of the government's economic reform credentials, but also in terms of the economy's near-to-medium term growth prospects. Foreign banks will increase the local availability of capital considerably, and will for this reason be a boon to foreign firms looking to do business in the frontier market. Additionally, foreign banks will bring a new level of expertise to the market, acting as a positive market force for local banks in terms of competition. While we remain cautious on...

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Myanmar Operational Risk Coverage (9)

Myanmar Operational Risk

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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, due to its proximity to the outperforming frontier markets Vietnam and Thailand, and India and China, which offer opportunities to feed major consumer demand. However, its authoritarian government and risky logistics network, decrease the security of...

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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 2 7 .9 out of 100 which leaves it in 2 3rd place out of 29...

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Myanmar Labour Market

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Myanmar poses high risks to incoming businesses with regards 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 is the lowest in the region, with a significant dearth in the numbers of skilled workers. Minimal spending on education of just 1.2% of GDP is partially to blame, although the government is making amends by embarking on a reform programme involving grants and stipends to stimulate access...

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Myanmar Logistics

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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. In addition, the cost of importing and exporting in Myanmar is well below regional average. Moreover, with regards to utilities, the country offers cheap and plentiful fuel, good water availability and cheap electricity (albeit erratic during...

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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 sanctions having been lifted 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 Chad, the Central African Republic and Haiti. BMI has given Myanmar a score of 12.3 out of 100 for Trade and Investment risks, which puts it fir mly at the bottom of the region .

Myanmar sees the highest risk to investors from...

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Myanmar Industry Coverage (6)

Autos

Myanmar Autos

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The common theme in among 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 2014-2020 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. Firms which have built up their brand awareness and loyalty will then be able to reap the benefits of the motorisation boom.

We also see tremendous opportunities for parts makers and after-sales service providers in these markets due to their large used vehicle fleets. In order to keep their vehicles in a roadworthy...

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Infrastructure

Myanmar Infrastructure

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BMI View:   We believe near-term growth in Myanmar's construction sector will remain at levels that are modest relative to its massive growth potential. The sector remains unable to achieve its full potential due to limited upside to foreign investment - the main driver of construction activity - and the numerous threats to the country's political environment before and during the 2015 general elections. In addition, issues with some of Myanmar's largest infrastructure projects have highlighted the lack of maturity in the country's business environment.

Key Trends And Developments

  • In May 2014, Hanergy Group and Asia World secured approval for the 1,400MW Upper Thanlwin (Kwonlon) hydropower plant project on the...

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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 the positive development of the nuclear sector in South Korea fuels uranium mining production.

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 instance, we...

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Oil & Gas

Myanmar Oil & Gas

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BMI View:  The outlook for Myanmar's upstream sector has strengthened this quarter, as major international oil companies gained acreage in the latest offshore licensing round. We see Myanmar benefit from growing private sector involvement, and forecast a strong hike in exploration over our ten-year forecast period. Gas output will continue to drive the country's production growth, and we expect output to exceed 20bn cubic metres as early as 2016. However, in light of the country's highly prospective - if unproved - acreage, the increasing diversity of the competitive landscape and an improving business environment, we believe that the risks to this view lie firmly to the upside.

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Headline Forecasts (Myanmar 2012-2018)
  2012e

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Pharmaceuticals & Healthcare

Myanmar Pharmaceuticals & Healthcare

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BMI View:   While the current medical gap will attract some foreign investors into Myanmar, we highlight that the lack of basic infrastructure and political instability will potentially affect the growth of the econo my.

Headline Expenditure Projections

  • Pharmaceutical sales: MMK324.8bn (USD350mn) in 2013 to MMK387.5bn (USD390mn) in 2014; +19.3% in local currency terms and +11.3% in US dollar terms.  Forecast unchanged from previous quarter.

  • Healthcare Expenditure: MMK1,047.3bn (USD1.1bn) in 2013 to MMK1,217.9bn (USD1.2bn) in 2014; +16.3% in local currency terms and +8.4% in US dollar terms.Â...

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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 note that the country's energy mix is set to change over the decade and we see numerous opportunities across the sector.

There is tremendous growth potential in the Myanmar power sector and we are forecasting electricity generation in the country to grow by a considerable 17.5% in 2014. This growth will be driven by a number of hydropower and gas-fired projects coming online in 2014.

We believe that Myanmar's power sector will be one of the fastest growing in Asia over the coming decade. At present, we are forecasting electricity generation to grow by an average of 11.3% per annum between 2014 and 2023, which is significantly higher than the regional average of around 5.2%.

Key...

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