Myanmar: Asias Next

Tiger?

A Wave of Change and The Way Forward

Snapshot
After 50 years of military rule, the nominally civilian government of 2010 has lent a
positive outlook to the political and economic scenario in Myanmar. A rapid series
of reforms and forecasts for further economic and social development have made it
an attractive destination for investment.
Wave of Change: Held its first general elections in 20 years in November 2010 ending
an oppressive military regime bringing an end to 50 yrs of economic & political isolation
Reforms: A process of reform has been under way since November 2010
Financial Sector reforms: Floating of the currency exchange rate and plans to set up
a stock exchange have been at the forefront
Investment climate: Changing FDI and taxation laws have displayed pronounced
results by creating a flurry of investments into the country
Social reforms: release of political prisoners, deregulation of media, focus on citizen
rights, have generated a favorable response from the international community
New Investment Hotspot: As one of the most exciting liberalizations in recent times,
Myanmar, coupled with its vast reserve of natural resources is expected to see huge
foreign investment in the coming few years. With an expected Economic Growth of 8%,
effects of this are already visible. Myanmar has been appointed to chair ASEAN in
2014. Multilateral financial institutions and foreign governments are increasing aid and
loosening sanctions against Myanmar

1
Myanmar: Asias Next Tiger?

Content

Brief History

Economic Development

Reforms and impact on the industry

Key challenges

Appendix

2
Myanmar: Asias Next Tiger?

Content

Brief History
Economic Development
Reforms and impact on industry
Key challenges
Appendix

3
Through the difficult period of internal conflicts and isolation, towards
peace, harmony and prosperity
Now
Then

SOURCE: Images courtesy British Broadcasting Corporation (BBC) and Deutsche Welle
After years of martial law, periods of political unrest and attempts at
democracy the new government promises a head start towards liberalization
1962 -1988
Oppressive Martial Law
Myanmar ruled under martial law
till 2010
Continued human rights violations Military refused to hand
United States and European
Union imposed and intensified
sanctions against Myanmar
Business climate opaque and
highly inefficient
SOURCE: Web, Press Search
2010-Present
1988-2010
Establishment of Democracy
Attempts at democracy and rise
of Aung San Suu Kyi
National elections held for
In the 1990, general multi- the first time in 2010
party elections were held
but results were nullified
Though, elections were
condemned as fraudulent, a
wave of reformation is seen
over power, resulting in an
international outcry
Release of Aung San Suu
Kyi and hundreds of
Aung San Suu Kyi placed political prisoners
under house arrest for 15
years; won Nobel Peace
Reforms like deregulation of
the media etc
Prize for non-violent
struggle for democracy By elections in 2012 won by
opposition party National
Anti-government protests
League for Democracy
in 2007; constant
discontent building up Countries recognized this
development by lifting or
Through 2009,
loosening sanctions
international pressure for
release of Suu Kyi
 Focus
Next rising star of Asia? areas

Geographic advantage of being located between

India & China with good harbors and developing
road networks

Emerging from 5 decades of isolation, both

economically & politically

Young and large labor force

Rich natural resources in form of Oil, Gas &

Minerals

SOURCE: Myanmar in Transition 6

Myanmar is one of the largest countries in Southeast Asia strategically
placed between two economic powerhouses

GDP: $7,318bn
GDP/capita: $5,445
Pop: 1.3 bn

China

India

Myanmar
GDP: $1,847bn
GDP/capita: $1,489
Pop: 1.2 bn

GDP: $52 bn
GDP/capita: $857
Pop: 49-55 mn

1 GDP numbers at current USD, 2011

SOURCE: World bank, UNPD 7
It presents economic opportunities with large population, significant
natural resources and a geo-strategic location
Key facts
GDP/capita (2010, PPP)
7,846
Uzbekistan
Kyrgyzstan
3,836 2,846
1,967 1,311
Turkmenistan
Tajikistan
Japan
China TL RI VN CAM MYR
Afghanistan
Nepal Bhutan
Pakistan South Korea
Myanmar North Korea
Population, million people
240
Taiwan
India Vietnam 89
Hong Kong 70 60
Bangladesh
Thailand Lao 14
Philippines

TL RI VN CAM MYR
Sri Lanka Cambodia Brunei

Malaysia
Singapore Size, million ha
Indonesia 1.9
0.7
0.5

Strategic location between China, India. The worlds 40th largest country and 0.3
0.2
second largest in SEA after Indonesia (RI)

With 60 million people it is the 24th most populous country
TL RI VN CAM MYR

Largest exported item: Natural Gas

SOURCE: International Monetary Fund; Asian Development Bank; Burma Economic Review 2005-06 by Sein Htay, Burma
Fund; The Conference Board Total Economy Database
Leaving behind times of isolation, fragility and conflict

1824 - 1886
1940-1959
Anglo-Burmese
Wars; British control Independence from
British rule; Economic
turmoil
1960-90s
Uprising of socialism;
civil unrest; Burma 1990 onwards
changed to Myanmar Fight for democracy
continues; Joins ASEAN;
NLD wins elections

Source: Press search 9

Making steady progress towards brighter future

1st general elections

conducted in 20 years;
however 25% of MPs
appointed by Military
In 2011 Hillary Clinton
became the most senior US politician to visit
Myanmar in 50 years

80%-100%
Foreign investment law passed -

ownership in restricted sectors, 5 year

First SEZ tax break, easy land lease
was approved. The total project
value is estimated to be more than
policy
100% of the current GDP

Source: Press search 10

Share of working population aged between 30-59 has increased over the
last ten years and projected to grow further
Population by age, in %. Total in millions

100% = 45 48 50 52 54
60 + 8 9 10 12 14
45-59 11
15 17 18 19
30-44 21
23
24
24
24
15-29 29
27 26 24 22

0-14 30 25 23 22 21

2000 2010 2015F 2020F 2025F

SOURCE: United Nations Population Division 11

Myanmar: Asias Next Tiger?

Content

Economic Development
Reforms and impact on industry
Key challenges
Appendix

12
Its economy has grown at fastest pace among ASEAN nations, however its
per capita income is still the lowest

GDP growth rate (CAGR) between 2000-12; Per Capita; 2012

(at Current Prices)

14.7
14.2 Singapore 51,162
13.7
Brunei 41,703
12.1
11 Malaysia 10,304

9.5
9.1
Thailand 5,678
8.8 8.6
8.2
Indonesia 3,592

Philippines 2,614

Vietnam 1,528

Laos 1,446

Cambodia 934

Myanmar 835
Myanmar Laos Indonesia Vietnam Cambodia Malaysia Philippines Thailand Singapore Brunei

Source: International Monetary Fund 13

This growth has been primarily driven by Industry and Services
Growth in percentage

4.4% 4.4%

4.7%

Agriculture,
livestock, 6.3% 6.5%
3.4%
fishery and 5.0%
forestry

Industry 3.0%

5.8% 6.1% 6.3%

Services 4.2%

2008 2009 2010 2011

SOURCE: Myanmar in Transition 14

In the short-to-medium term the fundamentals are expected to go through
corrections and stabilize which will make growth sustainable

Inflation - stabilizing Currency - stabilizing

Percentage YoY Kyat per USD
60
Unstable period
35
-3% p.a. +3% p.a.
30
Expected stable period +26% p.a.
1,110
25 with open market and 1,027 1,004 965
998
floating currency 861 904
857 874
810 819
20 772

5
319
0

-5
2000 02 04 06 08 10 12E 14E 16E 18E 2020E 2000 02 04 06 08 10 12E 14E 16E 18E 20E

SOURCE: Global Insight (WMM) 15

The fast urbanization in Myanmar continues to fuel the demand for more
products and better services

The Mass affluent segment has the fastest growth

By 2017, the proportion

Number of Households
CAGR 12-17 of upper mass and
Thousands
mass affluent
+2% p.a. 3,620 household segments
3,236 ~80% the total number
of household in urban
2,729 1,609 areas in Myanmar
1,068 9%
Mass affluent 452

Affluent people typically
have more needs and
Upper mass 837
require more
1,133
1,243 2% sophisticated products,
Lower mass 678
647 -5%
512
Unbankable 762 -8%
388 256
2005 2012 2017

Urbanization 29% 33% 36%

SOURCE: MGI Citiscope 16

Myanmar: Asias Next Tiger?

Content

Reforms and impact on industry

Key challenges
Appendix

17
Since 2011, policy reforms in various sectors have been recognized and
supported by foreign countries and institutions alike
Reforms
Major reforms in the financial sector
Private banks allowed to engage in the
foreign exchange market
Currency exchange rate floated by the
Central Bank of Myanmar
New Taxation Laws led to a 389% y-o-y
rise in revenue1
Changing Foreign Investment Laws
New FDI Law enacted in November 2012
to allow foreign-owned investment up to
100%
Foreign investors to get five-year tax
holiday and 50-year land leases
Relaxed import restrictions and abolished
export taxes.
Social reforms, too, been a key focus
Establishment of the National Human
Rights Commission and amnesties of
political prisoners
New labor laws allowing unions and
strikes
Relaxation of press and media censorship
SOURCE: ADB Report
Recognition
Recognition of reforms at a global level
ASEAN approved Myanmar's bid for the
chairmanship in 2014
Foreign Investment increased from
US$300 million in 2009-10 to a US$20
billion in 2010-11, (about 667%)1
Multilateral Financial institutions and foreign
governments to increase aid
World Bank to resume aid of US$85 mn
Asian Development Bank (ADB) to resume
financial aid after a 24 years
United States, European Union, etc.
suspend sanctions
Multinational firms expressing increasing
interest in the country
Japanese companies, financial firms and
US energy giants interested
Coca- Cola Co. and MasterCard Inc. etc
increasing their presence
OAO Gazprom in discussions with the
government to participate in energy
projects
18
1 Independent Media Source
Several sectors of the economy show promise

Sectors Description
Fisheries Substantial opportunities to develop both riverine and marine fisheries
resources, one million metrics tons of fishery resources could be exploited
annually on a sustainable basis
Agri/fishery/ Forestry Has 33 million hectares of forest reserves and forestry exports were USD 644
forestry million in 2011/12
Agriculture
Lot of potential due to availability of arable land (~19.39 million hectares) and
labour. Key crops include Rice, beans, sesame seeds

Energy Has proven reserves of 7.8 trillion cubic ft of natural gas. Natural gas is the
countrys most important source of export revenue
Has proven oil reserves of 2.1 billion barrels, more than Thailand and Brunei
Darussalam
Industry Hydro-power potential by harnessing 4 river basins is pegged at 100,000 MW
Apparel Like its neighbors (Vietnam & Thailand) , Myanmar could build on apparel exports
(it already does some), particularly with abundant labor available at low cost
Mining Is rich in mineral resources & minerals of potential importance are copper, gold,
lead, zinc, silver, tin and tungsten, antimony, chromium and nickel

Tourism Natural attractions (forests, beaches) and rich heritage provide a good
potential of growth
Services Telecom Has potential, however very underdeveloped as of now
Retail Good growth with a CAGR of 15% over 2000-2011 and expected to increase
upto CAGR 17% over 2011-2017

SOURCE: ADB, Interconsulting

Did you know?

Tourist arrivals to Myanmar in

the whole of 2011 were equivalent
to arrivals to Thailand
in a single week

20
Tourism and increased trade ties look to further strengthen Myanmars
global position

Flow of tourists into the country is

anticipated to rise

Tourism declared as national priority

sector
25 million visitors forecasted in 2013-
2015

Increased trade ties and bilateral relations

with international countries

Indian and Chinese ministers visiting

Myanmar for talks
Leader Aung San Suu Kyi visited several
nations to strengthen ties

Myanmar President, Thein Sein, seeks

flexibility for foreign investors in their joint
ventures in Myanmar

SOURCE: Factiva, WebSearch, WMM 21

Myanmar: Asias Next Tiger?

Content

Key Challenges
Appendix

22
Many risk and challenges lie ahead of a young and promising nation

Economic challenges:
Weak macroeconomic management and lack of experience with
market mechanisms
Business is restricted by poor infrastructure and logistics , particularly
in transport, electricity access, and telecom
Limited economic diversification; production structure dependent on
natural resources (gas & wood and farm & fish)

Political challenges:
Ongoing influence of Military rule; 25% of MPs appointed by Military
Low score on government effectiveness & regulatory quality
Scores very low on human development reflective of the low
government investment on key necessities

External/Internal Risks:
Social tension within Myanmar remains a potentially destabilizing
factor; over 130 recognized ethnic group
Abolition of sanctions still languishing

SOURCE: Facts sourced from reports published by World Bank; Asian Development Bank 23
Myanmar: Asias Next Tiger?

Content

Appendix

24
Myanmar scores very low on human development reflective of
the low government investment on key necessities Global best country
Global worst country

Human development index, 2011 Public health expenditure, 2011 Public education expenditure, 2011

High to low; (x)=global rank % of GDP % of GDP

Norway 0.9 (1) Denmark 9.7 Denmark 8.2
Australia 0.9 (2) USA 9.5 Sweden 7.0
Japan 0.9 (12) Netherlands 9.4 Finland 6.2
Hong Kong 0.9 (13) Japan 7.8 Malaysia 6.0
Korea 0.9 (15) Costa Rica 7.4 France 5.7
Singapore 0.9 (26) Finland 6.7 United States 5.5
China 0.7 (101) Czech R 6.6 Bhutan 5.4
Thailand 0.7 (103) Bhutan 4.5 Brazil 4.6
Philippines 0.6 (112) S. Korea 4.1 Korea, Rep. 4.4
Indonesia 0.6 (124) Thailand 2.9 Thailand 4.3
Viet Nam 0.6 (128) China 2.7 Japan 3.6
India 0.5 (134) Vietnam 2.6 India 3.4
Bhutan 0.5 (141) Cambodia 2.1 Singapore 3.2
Bangladesh 0.5 (146) Indonesia 1.3 Philippines 2.8
Myanmar 0.5 (149) India 1.2 Bangladesh 2.4
Nepal 0.5 (157) Bangladesh 1.2 Sri Lanka 2.1
Zimbabwe 0.4 (173) Pakistan 0.8 Myanmar 0.9
Congo 0.3 (187) Myanmar 0.2 Guinea 0.6

SOURCE: Human Development Report 2011; World Bank

Business is restricted by poor infrastructure and logistics

Quality of infrastructure Logistics performance index

(0 = bad, 5 = good) 2011 (0 = bad, 5 = good) 2011

Score Rank Score Rank

Singapore 4.2 3 Singapore 4.1 1

Hong Kong 4.1 8 Hong Kong 4.1 2
South Korea 3.7 22 South Korea 3.7 21
China 3.6 25 China 3.5 26
Malaysia 3.4 26 Malaysia 3.5 29
Thailand 3.1 43 Thailand 3.2 38
Brazil 3.1 44 Brazil 3.1 45
India 2.9 54 India 3.1 46
Philippines 2.8 61 Philippines 3.0 52
Pakistan 2.7 69 Vietnam 3.0 53
Vietnam 2.7 72 Indonesia 2.9 59
Indonesia 2.5 83 Pakistan 2.8 71
Sri Lanka 2.5 88 Sri Lanka 2.8 81
Russia 2.5 96 Russia 2.6 95
Bhutan 2.3 116 Cambodia 2.6 101
Cambodia 2.2 125 Bhutan 2.5 107
Myanmar 2.1 132 Myanmar 2.4 129
Nepal 1.9 147 Nepal 2.0 151

SOURCE: World Bank 2012

Myanmar scores low on government effectiveness and regulatory quality
Government effectiveness score Regulatory quality score
(100 = best, 0 = worst) 2011 (100 = best, 0 = worst) 2011

Score Rank Score Rank

Singapore 99.05 3 Hong Kong 99.05 3

Hong Kong 94.31 13 Singapore 97.16 7
S. Korea 86.26 30 Brunei 84.83 33
Malaysia 81.04 41 S. Korea 79.15 45
Brunei 77.25 49 Malaysia 74.41 55
Bhutan 70.62 63 Thailand 56.40 93
China 60.66 84 Brazil 55.92 94
Thailand 59.72 86 Sri Lanka 50.71 105
Philippines 55.92 94 China 45.50 116
Brazil 55.45 95 Philippines 43.60 120
India 54.50 97 Indonesia 41.71 124
Sri Lanka 52.61 101 India 40.28 127
Indonesia 46.92 113 Russia 38.86 130
Vietnam 45.02 117 Cambodia 35.07 138
Russia 42.18 123 Pakistan 29.86 149
Cambodia 25.59 158 Vietnam 29.38 150
Nepal 22.75 164 Nepal 25.59 158
Pakistan 22.27 165 Bangladesh 22.27 165
Bangladesh 19.91 170 Bhutan 10.90 189
Myanmar 2.37 207 Myanmar 1.42 209

SOURCE: World Bank, World Governance Indicators 2012