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.
Myanmar Country Risk
Myanmar's opposition National League for Democracy (NLD) dominated the incumbent, military-backed Union Solidarity and Development Party (USDP) in November's general elections, setting the stage for an entirely new government in 2016. The results were tantamount to a social and political catharsis for Myanmar, which has been dominated by the military for decades and bore witness to the decimation of the NLD in the 1990s despite the fact that the party had emerged victorious in democratic elections. Nevertheless, we note that the political situation in Myanmar is still fraught with potential stumbling blocks as the NLD, USDP, and Tatmadaw will need to find a way to work together. The formation of a new, NLD-led government will also entail a veritable trial by fire for the largely untested political party, and uncertainties regarding the appointment of a president remain. That said, we believe that the election results, as well as the statements of...
Myanmar Operational Risk Coverage (9)
Myanmar Operational Risk
Myanmar Operational Risk
BMI View: Despite much excitement regarding its economic potential, Myanmar remains a very high risk location for investment. Foreign businesses must be aware that, in order to reap the rewards of the country's largely untapped market, they must navigate a series of severe operational risks, largely stemming from an underdeveloped logistics network, a weak rule of law and unclear environment for foreign direct investment (FDI), and numerous layers of red tape. Myanmar remains one of the world's least developed states, and essential investment in infrastructure and education, as well as an improvement in political stability and security, will take many years to achieve. Investors must therefore be prepared to hedge against substantial risks when considering Myanmar as a base for operations, a situation which is reflected in the country's low score 34.2 out of 100 in the BMI...
Myanmar Crime & Security
Myanmar Crime & Security
BMI View: Myanmar's unstable political situation and the limited capacity of the government to maintain the rule of law in all regions has allowed a range of criminal activities to flourish and pose a risk to legitimate businesses. Primarily, organised crime is prevalent and undermines business activity by facilitating the proliferation of counterfeit goods and forging connections between the political elite and the criminal underworld, which exacerbate corruption. Firms in Myanmar are also highly exposed to cyber attacks and financial crime, against which the government offers little or no protection. The country suffers from a number of long-running ethnic conflicts, as well as religious strife and political unrest, which contribute to a climate of instability. Terrorism and militant activity is not targeted at foreigners, however, and the risk of violent crimes affecting expatriates and business property is low...
Myanmar Labour Market
Myanmar Labour Market
BMI View: Owing to its large and youthful population which is comparatively cheap to employ, Myanmar offers an appealing location for businesses in labour-intensive industries, such as manufacturing. Nevertheless, we caution that the country's labour market retains many flaws, primarily stemming from poor education provision, underinvestment in healthcare, and low urbanisation, all of which will increase the recruitment difficulties faced by businesses. In addition, over the longer term employment costs are likely to rise as labour regulation improves and trade unions develop greater power. Due to these considerations, Myanmar scores 50.1 out of 100 in the BMI Labour Market Risk Index, placing it in the middle of the pack in the Asia region, in 18th place...
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 raise 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), the country offers cheap utilities and good water availability, although the supply remains erratic. Moreover...
Myanmar Trade & Investment
Myanmar Trade & Investment
BMI View: A weak banking sector, an absence of legal protection for foreign investors, and high levels of corruption, are the key contributors to Myanmar's poor trade and investment profile. 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 among the poorest performers globally, ranked alongside some of the least developed countries in the world, including Venezuela, Zimbabwe and Chad. BMI has given Myanmar a...
Myanmar Industry Coverage (7)
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 area for firms to develop a toehold in these frontier markets.
Between 2015 and 2020, 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 2019 and 2021 respectively, while Cambodia will not yet have attained this by 2024. Firms which have built up their brand awareness and loyalty will then be able to reap the benefits of the motorisation boom...
Food & Drink
Myanmar Food & Drink
BMI View: We believe that Cambodia, Laos and Myanmar 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 fuel growing interest in more sophisticated food and drink products among the domestic consumer base.
Cambodia's economic growth rate does...
BMI View: We believe near-term growth in Myanmar's construction sector, while impressive, will remain below the country's full potential, owing to political risks as well as a challenging business environment. We remain more positive for the sector over the medium term and expect a more positive legal environment, improving banking system and greater support from multilateral institutions to provide a more positive investment outlook.
Forecast And Latest Updates
We maintain our conservative near-term outlook for Myanmar and expect the sector to grow 8.5% in 2015, while averaging 11.8% between 2016 and 2019 in real terms. This is a slight improvement from the 10.0% historical average growth rate registered between 2008-2013.
Growth will remain below potential owing to a still challenging business...
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...
Oil & Gas
Myanmar Oil & Gas
BMI View: Myanmar's crude oil and natural gas production will remain on a downtrend over 2015-2025, as low oil prices stunt greater realisation of the country's sizeable below-ground potential. Rising domestic demand for fuels will see the country remain a net importer of oil through our forecast period, while longstanding export obligations amid diminishing supplies could see Myanmar struggle to sustain high levels of pipeline gas exports over the long-term.
Pharmaceuticals & Healthcare
Myanmar Pharmaceuticals & Healthcare
BMI View: High out-of-pocket payments will continue to account for the majority of health expenditure in Myanmar as we believe that coverage would be limited even if the country were to introduce universal health coverage due to lack of resources. Nevertheless, strong demand for health facilities makes Myanmar a potential market for private hospital chains.
Headline Expenditure Projections
Pharmaceutical sales: MMK387.5bn (USD394mn) in 2014 to MMK458.3bn (USD385mn) in 2015; +18.3% in local currency terms and +8.0% in US dollar terms. Forecast remained broadly unchanged from Q415.
Healthcare Expenditure: MMK1,063.5bn (USD1.08bn) in 2014 to MMK1...
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.