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Seizing OPPORTUNITIES in MYANMAR

Event:  ASEAN ECONOMIC COMMUNITY (AEC) OPEN DAY

Date:  10 August 2015

Venue:  MATRADE Exhibition & Conference Centre Kuala Lumpur

Organizer: MATRADE & Ministry Of International Trade And Industry (MITI) Malaysia

Subject: Seizing Opportunities in Myanmar

Presented by: Mr. Jonathan Rao

 

Downtown Yangon, Myanmar by Tedd
Downtown Yangon, Myanmar by Tedd

1.Recent developments

  • relaxation of export and import licence requirements;
  • introduction of the Myanmar Investment Law and Competition Law;
  • setting-up of a national trade portal;
  • enrolling for the Extractive Industries Transparency Initiative (EITI);
  • joining the Open Government Partnership (OGP);
  • implementation of Health insurance;
  • imminent establishment of the Yangon Stock Exchange;
  • launching of the National Export Strategy (NES);
  • deployment of mobile inspection teams at various check-points and border crossings; and
  • awarding of licences for foreign banks to operate in Myanmar.

2.Why Myanmar

  • Myanmar’s strategic potential:
Photo: Myanmar Strategic Potential
Photo: Myanmar Strategic Potential
  • Myanmar’s Economic Potential:

               i. GDP Growth

> Potential to achieve USD200 billion+ GDP in 2030, over four times as high as today.

> Average economic growth of 8.25 per cent over the next few years (IMF forecast)

                ii. Expansion of the Consumer Class

> Consumer spending potentially tripling from USD35 billion to USD100 billion in 2030

> Consuming class of 19 million in 2030 from 2.5 million in 2010

               iii. Foreign companies coming in

                             > Influx of foreigners and factories, (Coca-Cola, GE, KFC, Colgate)

                             > Myanmar has garnered the interest as the last frontier market

                iv. Country is in dire need for infrastructure and human resources development

                            > Telecommunications, infrastructure, logistics, air networks, training and vocational skills needed

                            > Opportunities for Malaysian companies to share expertise and international experience

                 v. Reforms going in the right direction

> Government is making strides in improving transparency (Open Government Partnership)

> Going towards the ASEAN Economic Community and improving compliance with WTO

> Shifting from central state-owned economy to market oriented economy

 

3.  Malaysia’s Major Exports to Myanmar 2014

Total Exports 2014: USD 805.4 million

  • Petroleum Products: USD285mil  (35.4%)
  • Palm Oil: USD164mil  (20.4%)
  • Chemicals & Chemical Products: USD103mil  (12.7%)
  • Processed Food: USD36mil  (4.4%)
  • Machinery, Appliances & Parts: USD36mil  (4.4%)

 

4. Malaysia’s Major Imports from Myanmar 2014

Total Imports 2014: USD 166.8 million

  • Agricultural Products: USD47mil (28.3%)
  • Crude Natural Rubber: USD30mil (18.1%)
  • Seafood, Fresh, Chilled/Frozen: USD22mil (13.2%)
  • Sawn Timber: USD17mil (10.0%)
  • Processed Food: USD15mil (8.9%)

 

5.  TOTAL INVESTMENTS INTO MYANMAR BY COUNTRY (AS OF 30 JUNE 2015):

Source: Directorate of Investment and Company Administration (DICA), Myanmar
Source: Directorate of Investment and Company Administration (DICA), Myanmar

 

6. Investing in Myanmar

  • Focal point is the Directorate of Investment and Company Administration (DICA)
  • Promoted sectorsAgricultureMiningOil and gasHotel and tourismPower / electricity generation
  • Introduced Foreign Investment Law in 2012 to promote FDI

 

7. Business Opportunities in Myanmar (Potential Sectors)

Photo: Architecture, Myanmar by Tedd
Photo: Architecture, Myanmar by Tedd

i. Construction & Building Materials

  • The construction sector is expected to expand at an annual rate of at least 8% over the next five years. The industry is valued at $3bn, with the residential segment accounting for half the sum.

ii. Power

  • Myanmar’s annual electricity consumption rate is expected to increase 13% per year, currently totalling 4,362 MW. Currently, only 30% of Myanmar’s population have access to electricity with frequent power cuts.

iii. Human resources development

  • Myanmar is facing a shortage of trained and capable labour in a range of industrial sectors that could undermine the nation’s development prospects. The country’s demand for skilled workers is expected to reach a level equal to almost half the population by 2015.

iv. Oil & Gas

  • Myanmar has 7.8 trillion cubic feet of proven natural gas resources worth about USD75 billion waiting to be discovered.
  • 20 offshore and 25 onshore blocks awarded

v. Pharmaceuticals and Medical Devices

  • The pharmaceutical and medical equipment market in Myanmar is expected to grow to USD800 million by 2020

vi. Hotel & Tourism

  • The tourism boom, which brought in a record number of 1 million tourists into Myanmar in 2012 has drawn interest from hotel owners to invest in the country.
Pagoda Temple at Mandalay By JPeter2
Pagoda Temple at Mandalay By JPeter2

vii. Other potential sectors

  • Information & Communication Technology (ICT)
    Photo: Fire Rescue, Myanmar by Dassel
    Photo: Fire Rescue, Myanmar by Dassel
  • Electrical & Electronic Products
  • Medical tourism
  • Fast Moving Consumer Goods (FMCG)
  • Auto parts and accessories
  • Processed food
  • Franchise

 

8.Challenges of Doing Business in Myanmar

  • Weak legal framework
  • Limited pool of skilled and talented workforce
  • High land prices
  • Foreigners not allowed to own land
  • Foreigners not allowed to do trading
  • Competition from border trade
  • Funding and technical assistance is expected
  • Inadequate infrastructure
  • Small quantity orders

 

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9. Strategies of Doing Business in Myanmar

  • Work with consolidators in Thailand and Singapore that has direct border access / shipping lines to increase market access.
  • Work with local partners, distributors and agents
  • B2B initiative between chambers and business associations of Malaysia and Myanmar (UMFCCI) for joint promotion activities
  • Joint-venture to set-up manufacturing base in Myanmar as gateway into neighbouring markets and the EU (under GSP scheme)
  • Leverage on Maybank’s presence in Myanmar

 

10. AEC – Is Myanmar prepared?

Photo: ASEAN Countries
Photo: ASEAN Countries
  • Lack of awareness
  • Trading restricted to local companies
  • Economy just opened past 3 years
  • Local industry is not ready

 

11. Business Customs & Practices

  • Cash based transactions still the norm
  • Focus on personal relationship
  • Provide technical training and assistance, credit facility and promotion incentives
  • Culture and traditions are strongly upheld

 

Photo By Matrade
Photo By Matrade

12. Do’s and Don’ts of Doing Business in Myanmar

  • Don’t take yes to mean agreement or action
  • Be realistic about your local partner(s)
  • Get to know the local culture
  • Get it down in writing
  • The key to success – preparation

 

13. How MATRADE Yangon Can Assist

  • Identify potential distributors, partners for joint ventures
  • Arrange business meetings and conduct basic due diligence
  • Advisory services as well as the dissemination of market information, market intelligence and industry reports
  • Trade promotion activities (Specialised Marketing Missions, Showcase Malaysia / Malaysia Services Exhibition (MSE), Incoming Buying Missions)

 

Photo by Matrade
Photo by Matrade

14. Contact MATRADE Yangon

Embassy of Malaysia (Trade Section)

82, Pyidaungsu Yeikhta Road

11191, Dagon Township

Yangon, Myanmar

Tel  : +95-1-230 1951 / 52

Fax  : +95-1-230 1954

Matrade Website

Email: yangon@matrade.gov.my

 

Message from the Trade Commissioner of MATRADE:

Mr. Jonathan Rao (3rd from right)
Mr. Jonathan Rao (3rd from right)

I am Jonathan Rao, the Trade Commissioner of MATRADE Office in Yangon.  I have been attached to MATRADE, the national trade promotion agency of the Government of Malaysia for about 19 years.

Over my one and a half years of working in Myanmar, I notice of the country’s rapid economic developments and keen interests from the international business community to do business in this ‘Golden land’.  Opportunities are abound for Malaysian businesses to expand trading and investment activities in view of the burgeoning growing consumer class, robust economic growth, booming foreign direct investments and vibrant business environment.

I welcome Malaysian companies to establish their presence in this last frontier of Asia!

 

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