Myanmar intro by frost Oct-12

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  • 1. Country Overview: MyanmarPresenter:Monsinee Keeratikrainon, Ph.D.Frost& SullivanCountry Manager, ThailandChief Representative Officer, Myanmar/ Lao/ CambodiaHead of AEC Strategy Practice, APAC
  • 2. Country Overview 2
  • 3. Country SnapshotRepublic of the Union of Myanmar (also known as Burma)• One of the least developed countries in the world• Abundant natural resources and cheap pool of labor• Undergoing political and economic transformation after the fall of the long ruling military regimeArea Size Administrative Division• 676,578 km2 – 40th in the world • 7 regions (divisions)• Bordered with India, Bangladesh, • 7 states China, Laos, and Thailand • Capital city: Nay Pyi Taw • Commercial hub: YangonNatural Resource Key IndustriesPetroleum, timber, tin, antimony, Agriculture processing, wood andzinc, copper, tungsten lead, coal, wood products, copper, tin, tungsten,marble, limestone, precious stones, iron, cement, construction materials,natural gas, hydropower pharmaceuticals, fertilizers, oil and natural gas, garments, jade, and gems 3
  • 4. Key Macroeconomic Indicators Key Macroeconomic Indicators, Myanmar, 2011 ECONOMIC POPULATIONGDP (US$ Billion) 83 Population Number 54,584,650GDP per Capita (US$) 1,325 Population Annual Growth 1.23%GDP Growth 5.5% Gender/Sex Ratio 99(M) : 100(F)Inflation Rate 5.2% Number of Households 11,826,000Export/Import (US$ Million) 45.2/42.9 Average Household Size 4.62Benchmark Interest Rate 12% SOCIAL - EDUCATIONLending Interest Rate 15% Working population 41.6%Exchange Rate (= US$ 1) MMK825 Unemployment rate 5%Consumer Confidence N.A. Poverty rate 32.7 %Consumer Price Index 163.32 Human Development Index 0.48 (rank 149/187) FINANCIAL Gender Inequality Index 0.492Country Income Profile Low incomePoverty Line MMK754 per day MOTORIZATIONIncome share of Highest/Lowest 10% 32.4%/2.8% No. of Vehicles/1000 persons 7 FUEL COST Drive LHD/RHDType Gasoline Diesel CNG Emission Requirement N.A.Ratio 1 1.1 - Paved Road 21%Price US$4.30/gallon US$4.73/gallon US$0.33/Kg Source: CSO, CIA World Factbook, UNDP, Frost & Sullivan. 4
  • 5. Political Risk Among the top countries exposed to rapid and sudden changes of government policies Political System, Myanmar, 2011 • The new government, which took power in Myanmar Mar 2011, ended a 23-year military regime. Government 2008 Constitution • Several efforts have been made towards democracy, most notably the release of opposition party leader, Aung San Suu Kyi, and more recently, the reshuffle of the Executive Legislative Judiciary cabinet to include more reformists. Union Assembly Main Issues to Address President (Pyidaungsu Supreme Court Hluttaw) • Deficient democracy • Infrastructure development House of Nationalities • Special economic zones (Amyotha Hluttaw) • Education and health • Human rights abuses House of Representatives • Weak regulatory and legal system (Pyithu Hluttaw) • Corruption • Child labour and forced labour • Environmental issuesRanked 2 out of top 20 countries in the world with highestpolitical risks in 2012 according to Maplecroft’s Political Risk • Release of political prisoners(Dynamic) Index. • Ethnic violence Source: Frost & Sullivan analysis. 5
  • 6. Economic Analysis Economy is gradually picking up and expected to attain 6% growth in 2012 GDP (PPP), Myanmar, 2007-2011 GDP by Sector, Myanmar, 2011 GDP GDP Growth 90 83 14 12.0 77 80 72 12GDP (PPP) (USD bil) 68 70 64 GDP Growth (%) Services 10 60 37% Agriculture 50 8 43% 40 5.1 5.3 5.5 6 30 3.6 Industry 4 20 20% 10 2 0 0 2007 2008 2009 2010 2011 Source: International Monetary Fund. GDP per Capita, Myanmar, 2007-2011 1,400 1,325 GDP (PPP) per • Myanmar’s GDP grew the highest in past 5 years, Capita (USD) 1,300 1,255 crossing US$ 80 billion in 2011. 1,201 1,200 1,153 • Biggest contribution came from Agriculture and 1,111 Services sectors. 1,100 • GDP per capita in 2011 was US$ 1,325 (almost 20% 1,000 growth from 2007 figure). 2007 2008 2009 2010 2011 6
  • 7. Economic Analysis Rapid developments to set banking sector ready for AEC in 2015 Banking Sector Structure, Myanmar, 2011 • Myanmar’s antiquated banking sector has gradually opened up since the new civilian government took control in 2011, allowing the establishment of more domestic private banks and Central Bank of representative offices of international banks and financial Myanmar institutions. • However, foreign banks are still not allowed to offer banking services. They will only be able to form joint ventures in 2014. Government Overseas • Interest rates have been made in line with other ASEAN countries Private Banks to raise national competitiveness. Banks Banks (19) (4) (23) • FEC, which has been used as a substitute for US dollar in the country, is expected to be terminated by end of 2012 when the new Foreign Exchange Law is enforced. Interest Rates, Myanmar, 2008-2011 Recent Developments in Banking Sector 18% Nov 2011 Introduction of ATM cards 16%Lending Rates (%) Jan 2012 Launch of international money transfer service 14% Feb 2012 Increase limit of foreign exchange amount 12% Introduction of cross-bank foreign currency transactions 10% 8% Apr 2012 Official float of the Kyat 6% Jul 2012 Opening of foreign currency account for local and foreign 4% individuals and companies 2% Aug 2012 Introduction of Letter of Credit 0% Launch of Giro Billing Payment System and debit cards 2008 2009 2010 2011 2012 Sep 2012 Launch of Myanmar Payment Union card Fixed Deposit Lending Rate Savings Bond (3-year) Source: Frost & Sullivan. 7
  • 8. Social Analysis Household Monthly Income Distribution, Myanmar, 2011 Labor Force, Myanmar, 2011 9 Number of Households (million) 8 7.69 7 Services 6 23% 5 4 Industry 3 2.37 7% Agriculture 2 1.18 70% 1 0.35 0.24 -• Active work force constitutes 42% of the population, mainly serving the agriculture sector.• Majority of households (65%) earned between US$200-300.• Around 70% of income was spent on food items, leaving small amounts for education and healthcare. Source: Central Statistics Organization, Myanmar Survey Research. 8
  • 9. Legal Risk Underdeveloped regulatory and legal system makes Myanmar the worst country for doing business Legal System Characteristics Legal System, Myanmar, 2011• Combination of English common law and customary Judiciary law.• Lack of transparency – no advance or written notice on changes of laws/regulations by the government Supreme Constitutional• No guarantee of a fair trial Courts Martial Court Tribunal Status of Business Laws • Amended version to the 1988 Law under approval High CourtsForeign Direct • Redrafting Special Economic Zone Law in Investment process • Banking Law – in drafting process Finance/ Courts of Self- • Foreign Exchange Management Law – in drafting Banking District Courts process Administered Areas • Employment and Skills Development Law underEmployment/ discussion Labor • Minimum Wage Law under approval Township Consumer • No existing law Courts Protection • New law in drafting process • No existing law Law enforcement bodies: Intellectual • New IPR to be submitted to Parliament for State Peace and Development Council Property approval Attorney General • New Impact Assessment Law in drafting process Supreme CourtEnvironment • No pollution standards Police 9
  • 10. Market Entry Approach 10
  • 11. Suggested Approach for Market Entry StudyProduct Market Overview Partnership model Regulatory Analysis•Market size by segment/application •Joint Venture opportunities •Import regulations•Market size by brand •Distribution partner(s) identification •Foreign investment regulations•Market drivers and restraints •Partner profiling and justification •Company act How to enter Market Partner Regulatory Market Entry Myanmar Overview Selection Analysis Options market How to compete Market Competitive Customer Product in Myanmar Overview Analysis Analysis Portfolio market Competitor Analysis Customer Analysis • Product • Attitude and preference • Price • Lifestyle and behaviour • Distribution and service • Purchasing criteria • Partner • Market segmentation 11
  • 12. Contacts Suwitchaya Lerswisut Business Development Manager, Thailand Tel: +66 2 637 7414 ext. 105 Email: suwitchaya.lerswisut@frost.com 12