At a Glance of Myanmar Current Situation (Part-II) for Infrastructures Business

As introduced in Part (I) from Nov 1st 2013, Myanmar has been going with its reformation since 2011. Currently, it has been in their progress of FESR (Framework for Economic and Social Reform) which outlines priorities up to 2015 which is a part of National Comprehensive Development Plan (NCDP), 20-year plan for reformation.

0112-Myanmar-Peace-Talks_full_600Myanmar is currently struggling with all three dimensional reformation: Political Reformation, Economic Reformation and Peace Building (ceasing fire, negotiation, and implementation of Peace with 16 major armed forces in the country), in which most of the other countries in the world has passed through their reformation process with only one or two dimensions, (MPC, Oct 2013).

As for economic reformation, selected sectors in five-year plans (FESR) has made its industry zoneannual plan and some of those are in actions during these years including new foreign exchange management law, new central bank law to improve operational autonomy of the Central Bank of Myanmar, opening up the telecommunication sector by choosing foreign investors through bidding, permitting 100% ownership for foreign companies with exceptions, and above of all, there is much better, more attractive tax incentives for investments in infrastructure development and the creation of special economic zones to attract foreign investment for the selected sectors. An Example of this incentive is the allowance of 5-year tax holiday.

There are significant necessities for development in Myanmar’s infrastructure sector which could be one of the divers for future job creation in Myanmar just like the other important sectors including manufacturing and tourism. Myanmar overall LPI ranking shows 133 out of 155 (see in table) with 134 in infrastructure (see in table) which is showing the opportunities for foreign investment as private sector in development of basis infrastructures such as urban transportation, airports, utilities, power plants, etc.,.

Myanmar’s agriculture sector has been a dominant sector in creating country’s GDP (0.8, agri$ thousand, 2010) which is taking about 44% of overall GDP. (McKinsey Institute, June 2013) This has led the country to opposite directions with the structure of GDP contribution of other Asia countries like Thailand (4.8, $ thousand, 2010) which has below 15 percent contribution from agriculture and shifting their contribution to infrastructures, manufacturing and services.(McKinsey Institute, June 2013)

Therefore there are six other sectors in national plan to create improvements which can potentially contribute the country’s economy. Infrastructure sector is one of these six with the estimation of 8% growth rate by 2030. According to McKinsey Institute, June 2013, this sector contributes $10.5 billion to GDP in 2010 which is estimated to be $ 48.8 billion in 2030 with the job opportunities of 2.3 million which is currently having the figure of 500,000 only.

Telecommunication infrastructure has made its movement in 2013 as Norway’s telecommunication company, TELENOR and Qatar’s telecom OOREDOO has become Myanmar’s first private telecommunication operators. teleApart from telecommunication, there are other important infrastructures to develop which include transportation infrastructures (roads, sea ports, railways, airports), utilities infrastructures (energy, power, water), industrial infrastructures and real estates. Among these real estates have greatest potential growth from $ 5.4 billion to $ 25.2 billion by 2030. (McKinsey Institute, June 2013)

According to the estimation of McKinsey Institute, June 2013, the urban floor space of large cities will take around 60% of the country in total and the real estate construction costs can be or may be similar to those in Vietnam.

Table: Logistics Performance Index by World Bank 2012

Logistics Performance Index, 2012, WB Myanmar
Overall LPI score 2.33
rank 133
Customs score 1.94
rank 146
Infrastructure score 1.92
rank 134
International shipments score 2.37
rank 131
Logistics competence score 2.01
rank 148
Tracking & tracing score 2.36
rank 129
Timeliness score 3.29
rank 82