Investing in Myanmar


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In this updated PP we walk through the investment opportunity in Myanmar and reflect on the immense amount of opportunity that exists for both Australian and New Zealand business of all shapes and sizes. The previous presentation was given as a part of the Myanmar Business Investment Roundtable back in June of 2013 with the content being updated on the 29th of November 2013.

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Investing in Myanmar

  1. 1. Myanmar Business Round table: Investing in Myanmar: Myanmar 101 / Opportunities for NZ and Australian Business Matthew Tukaki, CEO and Chief Social Investor The Sustain Group I
  2. 2. Key points from this presentation to take away:  Overview of:  The state of the economy  Population make-up  Key industries and economic dynamics  Sanction impacts  Key laws to be aware of for foreign investors  The investment opportunity for New Zealand and Australian companies I
  3. 3. History of this presentation  This presentation was first given as part of the AusAid Asialink Myanmar Business Roundtable “Investing in Myanmar” that was held in Sydney, Australia on the 19th of June 2013.  Matthew Tukaki attended in his role as Australian Representative to the United Nations Global Compact.  This presentation has been updated and accompanies an article written by Mr Tukaki on the subject of New Zealand & Australian investment into Myanmar. To savour confusion the views, opinions, data and research noted in this presentation are of Matthew Tukaki, CEO and Chief Social Investor of the Sustain Group and not in relation to his previous role as Australian Representative of the UNGC.  This presentation was updated for publication on the 29th of November 2013. I
  4. 4. About Matthew Tukaki Matthew Tukaki is the CEO and Chief Social Investor of the Sustain Group. In 2013 Matthew was appointed by Secretary General of the United Nations Ban Ki Moon, to occupy the ex-Officio Director of the Board Role of the United Nations Global Compact. His role is to represent the views and aspirations of the United Nations Global Compact's more than 100 outposts around the planet. Matthew is also active in leading Sustain teams into the field, working directly with clients on mapping social investment returns and sustainability initiatives. Matthew is considered to be an expert and trusted advisor when it comes to the identification and development of social investment opportunities across Asia, the Middle East and Africa. Matthew is a Director of the Board of Australia's Peak Mental Health Body, Suicide Prevention Australia, former Director of the Board of Australia's Indigenous Chamber of Commerce and a Member of Deakin Universities Centre for Sustainable and Responsible Organisations Advisory Board. Matthew also Chairs the Advisory Board of the International Symposium for the Post 2015 Agenda and the Sustainable Development Goals as well as holding roles on a number of other private and public sector boards and taskforces. I
  5. 5. About Sustain We are a uniquely strategic organisation based in Asia Pacific with partnerships and clients spanning the globe. Our primary areas of focus see us working with business and industry as they develop, manage and review activities when it comes to social investment, sustainability and corporate social responsibility. We work to ensure an organisation is realising a return on the investments being made and that they are having the intended impact. I
  6. 6. Economy snapshot  GDP in 2010 was USD 45.4B compared to 2012 when it rose to USD 54B  Inflation has been sitting at around 9% - inflation between 2005-7 sat at 30% +  Unemployment relatively high at 35% although this could be larger given the inadequate census data collected over the years or an assessment of the “black market economy  As of 2011 GDP growth was sitting at around 5.5%  The Central Bank of Myanmar is currently embarking on a plan to unify the country's multiple exchange rate system. From April 2012 to April 2013, the official exchange rate of 6.4 kyats to $1 USD (a rate that has not changed since 1977, when it was pegged to the IMF's special drawing rights) will be floated up, to foster an interbank money market. From 2013 to 2014, the most widely used informal black market rate will be completely eliminated I
  7. 7. Economy snapshot I
  8. 8. Economy snapshot I
  9. 9. Impact of US economic sanctions  The Government of Burma is under economic sanctions by the U.S. Treasury Department (31 CFR Part 537, 16 August 2005) and by Executive orders 13047 (1997),13310 (2003),13448 (2007),13464 (2008),and the most recent, 13619 (2012).Debate as to the extent to which the American-led sanctions have had adverse effects on the civilian population or on the military rulers.  From May 2012 to February 2013, the United States began to lift its economic sanctions on Burma "in response to the historic reforms that have been taking place in that country. "Sanctions remain in place for blocked banks and for any business entities that are more than 50% owned by persons on "OFAC’s Specially Designated Nationals and Blocked Persons list (SDN list)“  In March 2012, a draft foreign investment law emerged, the first in more than 2 decades. Foreigners will no longer require a local partner to start a business in the country, and will be able to legally lease but not own property. The draft law also stipulates that Burmese citizens must constitute at least 25% of the firm's skilled workforce, and with subsequent training, up to 50-75%. I
  10. 10. Understanding the population Town ships Cities/ Towns Village groups  68% Bamar  9% Shan  7% Karen  4% Rakhine 1255  3% Chinese 1424 6498  2% Indian 160 1543 4774  2% Mon 29 259 1611 5472  5% other 10 11 69 381 1199 Rakhine State 4 17 17 120 1041 3871 12 Yangon Region 4 45 20 685 634 2119 13 Shan State 11 54 54 336 1626 15513 14 Ayeyarwady Region 6 26 29 219 1912 11651 Total 63 324 312 2548 13742 65148 No. State/Region Districts Wards Villages 1 Kachin State 3 18 20 116 606 2630 2 Kayah State 2 7 7 29 79 624 3 Kayin State 3 7 10 46 376 2092 4 Chin State 2 9 9 29 475 1355 5 Sagaing Region 8 37 37 171 1769 6095 6 Tanintharyi Region 3 10 10 63 265 7 Bago Region 4 28 33 246 8 Magway Region 5 25 26 9 Mandalay Region 7 31 10 Mon State 2 11 I
  11. 11. Understanding the population “70% of the population is agriculturally based” I
  12. 12. Important laws to remember for investors  The Labour Organization Law, (The Pyidaungsu Hluttaw Law No. 7/2011), The 14th Waxing day of Thadinkyut 1373. ME. (11th October, 2011)  The Republic of the Union of Myanmar, Pyidaungsu Hluttaw, The Settlement of Labour Dispute Law (The Pyidaungsu Hluttaw Law No. 5/2012) The 6th Waxing day of Tagu 1373, M.E. ( 28th March, 2012)  The Foreign Investment Law (2nd of November 2012)  The draft law also stipulates that Burmese citizens must constitute at least 25% of the firm's skilled workforce, and with training, increased in increments of 25% up to 75% in subsequent years. I
  13. 13. Business investment opportunities  Agriculture and Horticulture – development, management, technology and skills transfer, skills development and marketing  Fisheries and blue economy - development, management, technology and skills transfer, skills development and marketing  Education and technical / vocational skills development  Professional services and legal  Government and Public Services skills and knowledge transfer  Reserve Bank – skills and knowledge transfer I
  14. 14. If I was an Australian or NZ business I would be looking to the developing world as a source of immense commercial opportunity I
  15. 15. Challenges and opportunitie  Not overwhelming Government  Aligning with Government priorities  Aligning with investment and development finance reform / keeping investment pace with reform  Understanding the current economic structures such as domination of natural resources and commodities / informed decisions and market intelligence leads to better market entry investment decisions  Targeted industry development – exporting what we do well  Agriculture (supply chain, primary production and technology) / extractives / banking and finance / prudential / infrastructure development I
  16. 16. Questions?   I