Myanmar Business Outlook an Overview

overview Myanmar’s economy has been on the rise for past few years. The fundamental economic and political reforms, launched in 2011, have reached increased levels of inclusion, openness, and empowerment. And, along with the increased civil liberties came the business opportunities in Myanmar. Myanmar (Burma)has one of the lowest population density stats in the Southeast Asia region. Along with this come the fertilelands and the incredible untapped agricultural potential. The geographical location of Myanmar is right between India and China – two adamant world economies. The country has the real opportunity to become a big regional trading hub. Along with being a mediator, Myanmar can provide a high yield of minerals, agricultural produce, and natural gas.

The economic growth in Myanmar fell to 7% during the last year, because of the 2015 floods. The disaster caused some issues, including household damage, reduced employment, and others." According to Asian Development Bank the medium-term growth projection for Myanmar closes to an average of 8.2% per year.

image1 Myanmar currently offers business opportunities in a large number of areas. The minimum foreign capital required is quite small, compared to other countries. If your company is registered under the Foreign Investment Law, your minimum investment would be $500,000 for a manufacturing enterprise and $300,000 for a service company. However, if your firm has a registration under the Myanmar Companies Act, the minimum falls to $150,000 for manufacturing and $50,000 for services. Let’s talk about some of the areas, which are welcoming to foreign investments. If you want to invest right NOW and own your business 100%, you have a few choices. All of them require a minimum of $25,000 USD to start. Five key sectors that are forecasted to have exponential growth in the coming years are:

  • Infrastructure & Construction
  • Energy & Power Generation
  • Banking & Finance
  • Telecommunication
  • Information Technology

Why Singapore businesses need to look to expand into Myanmar?

Economic growth in Singapore has been increasing at a decreasing rate within the last few years; the most possible reason for this slow growth may be attributed to the country's stage in economic development and stability. There are also some reasonable pointers to low birthrate as one of the home-market decline factors in Singapore. At the current birthrate of 1.2 percent, Singapore may not have enough young hands to take new jobs for the economy to grow. This demographic situation may tend to rise significantly in the coming years and may cause further economic stagnation. Expansion into emerging ASEAN economies with high growth potential like Myanmar seem to be the best way out for Singapore's business corporations.

Opportunities

Some of the attractive opportunities for which Singaporean companies could bring their businesses to Myanmar include:

  • Large potential consumer market: With a population of 54 million in 2016, half of which are younger than 30 years, Myanmar has enough prospective consumer market to support business growth of foreign companies.

  • Low wage rate: With a US$2.8 average daily wage rate in the year 2015, labour is cheaper than most ASEAN countries.
  • Favorable geographical location: Myanmar is known as the Hub of South East Asia due to its location at the heart of ever-growing economies of South East Asia. Myanmar shares its boundaries with growing economies of India, Thailand, Bangladesh and China.e
  • Rapid development in key infrastructural sectors: There may be significant gap in Myanmar infrastructural development as compared to that of its neighboring state. However, in order to prepare an enabling environment for businesses considering to enter the Myanmar market, the government is making huge effort in improving direct investment into key infrastructural sectors like power, transportation and telecommunications.
  • Favorable socio-economic policies: The policies enacted during Myanmar's economic transition to market economy have been one of the leading factors to the increase in FDI it is getting in recent times. Some of the major areas covered include consideration policies, competitive policies, policies on regional and international co-operations, company mergers and acquisitions, developmental actions on national and regional level, etc.

Risks associated with investing in Myanmar

risk

  • General approval and licensing for emerging companies may be associated with some degree of red tape.
  • There is still a large degree of infrastructural barriers to FDI in Myanmar, especially on transportation networks into rural areas in the country.
  • Institutional and human resource challenges may pose a threat to investment. This can be seen from the large number of unskilled workers and the large of adequate educational institutions to help train the population.
  • Political and economic instability may not be very promising. Though it seems to be stable for now, however the risk of investing in Myanmar economy is still very high.
  • Regulatory and legal frameworks in Myanmar may not be as competent as the ones seen in developed countries like Singapore. Infringement of human rights may still exist to a large degree, and this is a big challenge to foreign direct investment.
  • Lack of standardized banking, accounting and financial systems are still factors that need to be address in order to improve investment in Myanmar.
  • Exchange rate fluctuations may still pose a big challenge to foreign direct investment

Myanmar people and government are ready for an open market economy. However, Singaporean corporations need to do enough due diligence on a number of areass before seizing this opportunity to expand their market and businesses into Myanmar for better growth.

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