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mA r k E t in t E l l i gE n C E
Market Potential
Much like Vietnam, Laos and Cambodia, Myanmar is filled with
opportunity and promise in its lush forestry and rich port areas.
At this point in time, even if several market sectors have already
been developed – to a reasonable degree at least – the fact
still remains that plenty of key areas within the country require
added focus and concern.
“Myanmar looks very tempting at first glance but we have to
remember that there are wealthy Burmese who can compete
with foreign investors, unlike Vietnam in the early days where
both the State owned companies and family companies were
not rich,” said Mr Rick Mayo-Smith, president of investment
management firm Indochina Fund Management Pte Ltd.
Indeed, the business environment is still challenging to say
the least, and is expected to remain so for the near future. By
way of background, Myanmar is ranked close to last on the list
of Transparency International’s Corruption Perceptions Index
(180th of 182) and is not even mentioned in the World Bank’s
Doing Business report.
In the same vein as other resource-rich emerging markets like
Mongolia, Myanmar is projected to veer towards the area of
commodity extraction and the infrastructure required in getting
all produce to market. Therefore, investors will be focused
on the infrastructure, mining and oil & gas industries for the
foreseeable future.
“Myanmar is a frontier market, it is not like Vietnam in the 1990s
or Cambodia in early 2000s; there are similarities but not the
same,” according to Mr Thura Soe-Paing, Managing Director of
investment and advisory firm All Myanmar Investment Partners
(AMIP), “So people considering doing business in Myanmar
should do their homework and not just merely cut-and-paste
of what has happened before.”
Market Sectors
Infrastructure is one of the biggest gaps in the market containing
the most potential for development. In Myanmar currently,
only 12% of all roads are paved and 50% of all goods are
still transported via river barges, allowing immense business
potential in road infrastructure, with projects linking Myanmar
to the border nations being most financially sustainable.
Nevertheless, perhaps the biggest problem plaguing business
in Myanmar is the lack of a reliable power supply, with only 20%
of the total population connected to the national power grid.
Currently, the power industry is the dominant market segment
in the Burmese business landscape, commanding 40% of
total market share. All things considered, the power industry
itself can be a viable market, with off-grid generation sources
like thermal power plants being the most feasible, along with
renewable power plants even if hydropower facilities have fallen
out of favour.
Although Myanmar has broadband internet capability, the
service is not freely available to the masses, with only around
Ju l | Au g 2012
En t r E p r E n E u r s’ Di g E s t
100,000 of the 60 million-population connected to the internet.
More mobile phone towers are needed in addition to the
phasing out of dated SIM cards that cost US$400 apiece and
can only be used within Burmese boundaries.
Agriculture is the mainstay of the Burmese economy, existing
throughout the history of the nation and with more than half of
the population practice farming to varying degrees. However,
land reforms and upgraded machinery are sorely needed
to bring this market sector to the next level. Similarly for the
construction industry, existing infrastructure must be upgraded,
or even rebuilt if necessary.
Manufacturing is another area worthy of consideration. With
wages less than a third of those in Thailand and even China,
textiles and other lower-end manufacturing businesses can
stand to benefit. For the textile industry, wages can be as low
as US$20 a month and the relaxation of US sanctions will give
the industry an added boost, since 75% of all Burmese textile
exports are bound for the USA.
On tourism, Myanmar can be considered an idyllic location,
even if it pales in comparison to its other ASEAN neighbours.
Visitor arrivals have been on the rise since 2008, and 500,000
tourists are expected to visit Myanmar in 2012. Its numerous
pagodas, temples, mountainous regions as well as beach
resorts certainly create a scenic tourist destination, only
hampered by a lack of capacity and potential supply issues in
both the high and low-end hotels.
Myanmar has the 4th largest copper mine in Asia, delivers
60% of the world’s teak, and is also responsible for 90% of