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
The National League for Democracy continues to consolidate its position as Myanmar's new government, having installed leader Aung San Suu Kyi in the powerful new role of 'State Counsellor' in order to circumvent constitutional restrictions regarding the presidency. Nevertheless, the government faces an increasingly difficult uphill battle in accomplishing its wide-ranging goals around economic and political reforms in the country. Its first major test will be the upcoming 21 st Century Panglong Conference, targeted for July. The conference represents an attempt to move forward with the country's decades-long national reconciliation process, the heart of which is a national ceasefire agreement which has only been signed by 8 out of 15 major ethnic rebel groups. Should the government find a way to accomplish even a limited peace (its lack of control over the military,...
Myanmar Operational Risk Coverage (9)
Myanmar Operational Risk
Myanmar Operational Risk
BMI View: Myanmar remains a very high risk location for investment despite generating much investor interest due to its economic potential. 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, an unclear environment for foreign direct investment 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...
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 textiles 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 52.0 out of 100 in the...
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...
Myanmar Trade & Investment
Myanmar Trade & Investment
BMI View: Myanmar offers tremendous potential for investment as it continues its path of emergence from decades of international isolation. A large population, favourable location between major Asian markets, and wealth of natural resources offer enticing prospects for foreign investors. Nevertheless, Myanmar's underdeveloped economy has suffered from many years of international sanctions and heavy state intervention, meaning new investors must have a high risk appetite. Particular challenges include a weak banking sector, stifling bureaucracy, an absence of legal protection for foreign investors, and high levels of corruption in the public sector. Consequently, despite the lifting of sanctions in 2012, Myanmar is among the poorest performers globally in BMI's Trade and Investment Risk Index, ranked alongside those countries with the most hostile investment...
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: Cambodia, Laos and Myanmar will experience strong growth in their food and drink sectors on the back of rising incomes, favourable demographics and urbanisation. Opportunities in these markets largely lie in mass market offerings as a majority of consumers fall within the low income band. Operational challenges will act as a deterrent to investment in the food, drink and mass grocery retail sectors of these markets, however.
Key Trends & Industry Developments
Food sales per capita in Cambodia, Laos and Myanmar (CLM) are still low by regional and global standards, and food continues to account for a great share of total household spending. Therefore, any increase in disposable...
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: Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to fulfil its potential over the next few years. China's economic slowdown will remove a crucial outlet for raw material exports in the region and, more importantly, will impact the profitability of mining ventures, with high start up costs likely to deter new investment. While states such as Myanmar have made strides to relax the regulatory environment to encourage increased private sector investment, substantial obstacles remain across many parts of the region, including high levels of corruption and limited infrastructure. As such, many parts of the region continue to be perceived as frontier markets as far as mining activity is concerned.
Oil & Gas
Myanmar Oil & Gas
BMI View: The Myanmar upstream segment remains a potential high-risk, high-reward play, with a host of IOCs engaged in various exploration and production plays in the country's oil and gas blocks. The country's attractive economic growth outlook and fuels demand growth forecasts have already attracted significant interest from international firms - such as Indian Oil and Pertamina, which have announced intention to establish a foothold in the country's downstream sector. Rising demand and export obligations will pressure domestic gas supplies, rendering the country to turn to LNG imports in the latter half of the decade....
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.