Successfully investing in Myanmar

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published on May 16, 2018


How do you assess the current economic situation in Myanmar?

The local economy shows impressive growth, at first sight. In the financial year 2016-2017, which ended on 31 March 2017, the economic growth rate was 5.9 per cent. For the financial year 2017-2018 (ending on 31 March 2018) forecasts are between 6.4 and 7.7 per cent. Nonetheless, Myanmar is still falling short of expectations and its potential.
 

How would you describe the investment climate in Myanmar? Which sectors offer the largest potential?

While investments from neighbouring and other Asian countries increased in the last year, investments from Western countries decreased. This is due to the slow implementation of the reform process and the political tensions in Rakhine State, amongst others.

 

Because of its geostrategic location, the abundance of raw materials, a population of about 53 million and enormous pent-up demand for investments in infrastructure, Myanmar offers great potential for growth in many industries. In particular, tourism, agriculture, energy and infrastructure can be mentioned in this context. 
  

What challenges do German companies face during their business ventures into Myanmar?

The present transitional period caused by the reforms is currently leading to legal uncertainty in some areas. The outdated administrative structures are overwhelmed by the fast growth and often operate very inefficiently. Other issues include outdated infrastructure and a shortage of skilled workers.
 

Have the infrastructural situation and the nationwide supply of electricity and internet access improved in the meantime?

The opening of the telecommunications sector in 2014 has dramatically changed the situation related to access to the Internet in Myanmar. While the share of the population having access to the Internet was about 1 per cent before 2014, it is now about 60%. Likewise, the mobile penetration rate has jumped to more than 85%. About 40,000 kilometres of fibre-optic cables were laid and 4G services offered by mobile providers are accessible nearly across the whole country.
 
The current government also places a special focus on electricity supply. So, for example, this year, contracts for further 4 power plants were signed, which should increase the capacity of national networks by 3,100 megawatt by 2020. Since the current capacity is about 3,000 megawatt, this would mean that it would more than double. Further hydro and gas-fired power plants are being planned. An expansion of the national network is absolutely necessary since, currently, only about one third of the population is connected to the grid.
 

In your opinion, how will Myanmar develop?

In December 2017, the parliament adopted the new Myanmar Companies Law which will probably become effective in August 2018 and will enable foreign investors to hold up to 35% of shares in local companies. The urgently needed new Companies Law is an important basis for the implementation of the Investment Law which came into effect in 2017. Crucial for the further development of the country will be how and how fast the government and the authorities will expedite the reforms and what investment opportunities will be offered to foreign investors. The opening of the telecommunications sector has shown what potential can be unlocked when a sector of industry is opened. The reforms already implemented and the permit for export financing by foreign banks granted by the Central Bank in December give grounds for assuming that the economy will continue its solid growth. Current estimates for the financial year 2018-2019 indicate economic growth of 8 per cent.
 
 
   

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