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: 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...

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Myanmar Crime & Security

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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...

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Myanmar Labour Market

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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...

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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 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...

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Myanmar Trade & Investment

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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...

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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.

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 have 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 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.

Cambodia's economic growth rate...

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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 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.

Key Trends And Developments

  • Myanmar's construction sector will remain at levels that are modest relative to its massive growth potential over the near-term. We forecast real growth for the sector to come in at 8.5% for 2015 and expect the sector to grow by an annual average of 11.8% between 2016 and 2019.

  • Growth will continue to be hindered by...

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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: Myanmar's natural gas production will see a boost over the 2015-2017 period on the back of an expansion in the Yadana field. While the country 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 short-term exploration and production potential will take a hit from weak oil prices.

Headline Forecasts (Myanmar 2013-2019)
2013 2014e...

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Pharmaceuticals & Healthcare

Myanmar Pharmaceuticals & Healthcare

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BMI View: Out-of-pocket payments will remain a key source of healthcare financing in Myanmar over the medium term. Central to this view will be the slow uptake of private health insurance as the sub-sector remains new to the country and has a premium structure that is largely unaffordable to the majority of the population. Furthermore, coverage is limited, which will see out-of-pocket payments accounting for the majority of hospitalisation fees.

Headline Expenditure Projections

  • Pharmaceutical sales: MMK387.5bn (USD390mn) in 2014 to MMK457.9bn (USD430mn) in 2015; +18.1% in local currency terms and +8.0% in US dollar terms. Forecast remained unchanged from Q315.

  • ...

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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.

We forecast electricity generation in Myanmar to grow by 8.4% in 2015, a moderate pick-up from what we estimate to have been a 7.3% 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 forecast electricity generation to grow by an average of 7.6% per annum between 2015-2024. This is significantly higher than the regional average of about 5.2%....

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Shipping

Myanmar Shipping

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BMI View: Despite ongoing challenges regarding the capacity and development of the ports sector in Myanmar and Cambodia, and Laos' landlocked geographical position, we expect that robust economic growth in all three Southeast Asian countries will lead to rising demand for shipping services in both the near and short term. This will be driven by both imports and exports, as infrastructure projects and increasingly wealthy populations will see incoming goods, while investment in the manufacturing and agricultural sectors will drive up exports.

Looking first at Myanmar, we believe that the country has strong fundamentals with regards to demand for shipping services, and the country is seeking to establish itself as a regional shipping hub, serving not only its domestic demand, but also providing transhipment and transit services. The improving economic openness is encouraging investment...

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