2017 CLMV Outlook€¦ · 21/03/2017 · Amid global economic recovery, CLMV countries show high...

2017 CLMV Outlook

EIC Forum

March 21, 2017

Thanapol Srithanpong, Ph.D.

Agenda

1) Business opportunities in CLMV

2) Border trade opportunities in CLMV

3) Opportunities in CLMV and Thailand

3) Cambodia’s economy and outlook

4) Laos’ economy and outlook

5) Myanmar’s economy and outlook

6) Vietnam’s economy and outlook

2

1

2

3

4

5

6

7

Emerging markets will become more influential in global trade, especially in CLMV countries as the last frontier market.

3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

876543-1 20 1 14

Average forecasted import volume growth, 2016-2020 (%YOY)

Euro area

Russia

United Kingdom

United States

Japan

Korea

Average import volume growth 2011-2015 (%YOY)

MENA

ASEAN-5

Germany

Sub-Sahara Africa

China

India CLMV

World import volume

growth = 3.7

Forecasted

import volume

growth = 5.2

Potential markets driving world demand

Lower growth than world demand

Size of bubble = % shares to world import

Source: EIC analysis based on data from IMF

Opportunities in CLMV 1

Amid global economic recovery, CLMV countries show high growth potential, mainly driven by foreign direct investment.

4

8.0

5.7

3.2

3.3

4.9

5.7

6.1

6.5

7.2

7.5

Myanmar

Singapore

Thailand

Malaysia

Indonesia

Brunei

Vietnam

Philippines

Cambodia

Laos

Source: EIC analysis based on data from IMF, World Bank and UNCTAD

CLMV’s economic forecast 2015-2020

Unit: %YOY

CLMV’s FDI net inflows

Unit: USD billion

0

2

4

6

8

10

12

14

16

18

20102006 2015

Vietnam

Myanmar

Lao

Cambodia

20142002

CAGR = 20%


CLMV countries are attracting large inflows of investment both within the region and big economies abroad.

5

Source: EIC analysis based on data from ASEAN Foreign Direct Investment Statistic

-

2

4

6

8

10

12

14

2013 2014 2015

Intra-ASEAN

Extra-ASEAN

CLMV’s approved FDI by Intra & Extra ASEAN

Unit: USD Billion

CLMV’s Net FDI by Source Country 2014

Unit: %

ASEAN21.4%

Republic of Korea26.4%China

11.3%

Japan8.5%

EU6%USA

1.4%

Canada1%

Australia0.9%

Others23.1%


CLMV large inflows of FDI are due to cost competitiveness, abundant resources, growing markets, and pro-business policies.

6

CLMV’s approved FDI by sector

Unit: %

20%

11%

59%

67%

45%

38%

29%

10%

37%14%

51%

10%

100%

Vietnam1%

1%

Myanmar 0% 0%

Lao 3% 0%

Cambodia 3%

Others

Oil & Gas

Agriculture

Mining

Infrastructure/Construction

Manufacturing

Note: Latest CLMV data (Cambodia 2015, Laos 2015, Myanmar 2015 and Vietnam 2016)Source: EIC analysis based on data from Investment Board of each country


7

CLMV population structure is still in early and middle stage, compared to Thailand that has rapidly become an aging society.

52%

2015

29%

7%

42%

53%

18%

2050F

CLMV population by age

Unit: % of population

Cambodia MyanmarLaos Vietnam

46%

2050F

15%

56%

29%

2015

6%

48%

19%

2050F

56%

26%

2015

9%

54%

37%

2015

31%23%

10%

59%

49%

28%

2050F

60%

16%

17%24%

37%

46%

Thailand

0-19 60 and above20-59

68 M 62.5 M 15.6 M 22.5 M 6.8 M 10.2 M 53.9 M 63.6 M 91.7 M 110 M

CLMV

23%

2050F

9%

34%25%

2015

56%

52%

168 M 206 M

Source: EIC analysis based on data from the World Bank


2015 2050F

CLMV’s fast-growing economy will increase purchasing power of their sizable young population.

8

69

97

54

8

17

0

1

2

3

4

5

6

7

8

9

10

11

0.60.40.20.0-0.2 2.01.81.61.41.21.00.8

Population growth (CAGR 2015-2020)

Thailand

GD

P p

er

capita g

row

th (

CAG

R 2

015-2

020)

Vietnam

Myanmar

Lao

Cambodia

Population in 2020 (million people)

Source: EIC analysis based on data from IMF and UN World Population Prospects

CLMV’s population pyramids in 2015

Unit: % of total population

CLMV’s income and population growth

Unit: %YOY

VietnamMyanmar

LaoCambodia

Male Female


CLMV are having high demand for imports of consumer products, raw materials, machinery and intermediate goods.

9

-40

-20

0

20

40

60

80

100

120

140

160

180

-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55 60

Imp

ort

gro

wth

(2

01

4/1

3)

Building mat.

Import growth (2012/11)

Knitwear

Prepared fruit & veg.

Cosmetics

Ceramic

Fruits

Dairy products

Wool

Prepared meats

SugarsCrustaceans

Optical parts

Chemicals

Cotton

Beverages

Vehicles

Plastic

Leather

Steel

Oils

Machinery

Fiber

E&E

Wood

Rubber

Pharmaceutical

High growth products

Overall growth = 10%

Overall growth = 16%

Size of bubble = import value in 2014

Source: EIC analysis based on data from Trademap


Agenda








10

1

2

3

4

5

6

7

251

101

133

105

23 25 27

258

109

136

101

27 2336

0

50

100

150

200

250

300

Malaysia Myanmar Laos Cambodia Singapore Southern China Vietnam

2015 2016

11

Thailand’s border trade – Opportunities beyond the Frontier Amidst Thailand’s sluggish exports, border markets closed to CLM still register positive figures and cross-border exports even show better performance.

Thailand’s border and cross-border exports in 2015-2016

Unit: Billion THB

Source: EIC analysis based on data from Department of Foreign Trade

Border exports Cross-border exports

• border exports to Malaysia remained the lead

• exports to CLM is still healthy

• Value was far less than border exports but the number is increasing for Singapore and Vietnam

CLMV Border Trade2

Thailand benefits from its strategic location surrounded by booming CLMV, and border exports enjoy moderate growth.

12

2015

63%

2010

+18%

37%

74

167

31%

69%

Cambodia Lao Myanmar Vietnam

5%68

+16%

2015

143

93%

7%

2010

95%

141

66

2015

+17%

72%

28%

2010

78%

22%

185

+10%

97%

301

2015

9%3%

2010

91%

Thailand’s exports to CLMV (2010 vs. 2015)

Unit: THB Billion

Border ExportOthers

Source: EIC analysis based on data from Ministry of Commerce

CLMV Border Trade2

13


2015

22

92%

8%

2010

7

62%38%

+26%

Cambodia Lao Myanmar Vietnam

+16%

2015

50

87%

13%

2010

24

63%

37%

+6%

2015

121

94%

6%

2010

90

97%

3%

+25%

2015

138

17%

83%

2010

45

0%

100%

Thailand’s border imports from CLMV have also increased significantly in recent years.

Thailand’s imports from CLMV (2010 vs. 2015)

Unit: THB Billion

Border ImportOthers

CLMV Border Trade2

14

Thai trade with CLMV (2016)

Source: EIC analysis based on data from Bank of Thailand

Thai exports to CLMV are shifted towards consumer products while imports are shifted towards manufactured goods.

Trading

partner

Thailand’s exports

International TradeShare

(%)

Cambodia

Jewelry

Refined petroleum

Sugar

Beverages

Machineries

32.2

14.4

4.7

4.7

3.3

Laos

Refined petroleum

Vehicles & parts

Metals

Machineries

Cosmetics

14.3

13.1

4.4

3.6

3.3

Myanmar

Beverages

Sugar

Machineries

Refined petroleum

Chemicals

8.2

7.9

7.2

6.1

4.2

Vietnam

Refined petroleum

Vehicles & parts

Fruits

Plastic

Chemicals

12.0

9.8

7.3

5.7

5.4

Thailand’s imports

International TradeShare

(%)

Wire & cable

Remnant of metal

Fruits & vegetables

Clothes

23.5

18.7

15.7

12.8

5.2

Electricity

Electric Machineries

Copper

Electrical appliances

Fruits & vegetables

56.7

14.2

14.1

5.1

2.5

Natural gas

Meat

Ores

Livestock

Wood products

80.3

4.0

2.8

2.7

1.6

Phone and parts

Crude oil

Motor

Marine products

Coffee

24.6

9.8

7.1

4.7

4.1

CLMV Border Trade2

15

2012 Share (%) 2016 Share (%) 2012 Share (%) 2016 Share (%)

Sugar 5% Non-alcoholic beverage 8% Vegetables 49% Vegetables 55%

Combustion engine 5% Motorcycle & parts 5% Iron 13% Wire & cable 16%

Non-alcoholic beverage 4% Combustion engine 5% Aluminium products 6% Aluminium products 7%

Cosmetics & soaps 4% Auto & parts 5% Copper products 5% Clothes 4%

Diesel 16% Auto & parts 11% Copper products 72% Electric energy 51%

Auto & parts 11% Iron & Steel 9% Lumber 7% Coppers 14%

Computer & parts 7% Diesel 9% Cereal 4% Transceivers 12%

Benzine 5% Other animal products 5% Vegetables 2% Vegetables 5%

Diesel 11% Non-alcoholic beverage 6% Natural gas 97% Natural gas 94%

Benzine 7% Alcoholic beverage 6% Marine animal 1% Marine animal 2%

Non-alcoholic beverage 7% Sugar 5% Other wood products 1% Other animal products 1%

Alcoholic beverage 6% Telephone, teletype, fax 5% Live stocks 0% Live stocks 1%

Rubber 47% Rubber 29% Telecom machine 16% Computer & parts 11%

Other rubber products 8% Computer & parts 12% Computer & parts 14% Recording parts 10%

Computer & parts 7% Lumber 9% Recording parts 7% Computer components 10%

Lumber 4% Other agricultural products 5% Magnetic disk 5% Magnetic disk 8%

Cambodia

Laos

Myanmar

Malaysia

Trading

Partner

EXPORT IMPORT

Leading goods traded across Thailand’s four borders in 2012 and 2016

Thailand’s border trade – Demand and Supply transitionGoods traded along borders have changed over the time, they are more sophisticated, more modern, and more industrialized, represented market opportunities for both exporters and manufacturers.

CLMV Border Trade2


16

SMEs’ share of border exports in 2015

Unit: %, Billion THB

SMEs’ border exports

Unit: %, Billion THB

Thailand’s border trade – SMEs performanceBorder markets are close at hand so Thai SMEs are keen on border exports rather than the international trade. SMEs enjoy high growth of border exports, especially in CLM markets.

Source: EIC analysis based on data from Bank of Thailand and Office of SMEs Promotion

27%

41%

30%

65%

36%

27%

73%

59%

70%

35%

64%

73%

100%

SMEs Others

World 7,228

133

Cambodia 105

Myanmar 79

Malaysia 415

CLMM 731

Laos

Laos

Cambodia

Myanmar

Malaysia

27%

15%

17%

40%

2011

243

14%

14%

55%

21%

15%

16%

48%

2010

158

17%

11%

2014

227

32%

16%

19%

34%

2013

226

29%

17%

20%

34%

2012

256

33%

12%

2015

262

12%

42%

CAGR2010-2015

(5.2%)

(7.9%)

(7.5%)

(26.2%)

CLMV Border Trade2

17

Leading goods traded by Thailand’s SMEs across borders in 2014

Thailand’s border trade – SMEs performanceThai SMEs have great opportunities in exports of modern lifestyle products and imports of intermediate industrial goods.

Source: EIC analysis based on data from Office of SME Promotion

CLMV Border Trade2

Trading partner

SMEs’ exports SMEs’ imports

Goods Share Growth

(2014/2013) Goods Share Growth

(2014/2013)

Cambodia

Beverages Plastic products Sugar & snacks Auto parts

10.9% 7.6% 6.8% 6.7%

-21.3% 14.7% -26.8% 17.1%

Vegetables Aluminum & products Food industrial waste Copper & products

39.3% 19.4% 11.3% 6.6%

31.0% 109.9%

28.0% -1.5%

Laos

Machinery & parts Fruits & nuts Meats Electronic parts

13.3% 13.0% 6.9% 6.5%

-22.2% 65.5%

8.8% 59.1%

Electronic parts Copper & products Machinery & parts Metal products

36.3% 17.1% 9.4% 9.1%

16.8% 2.4%

66.3% 362.3%

Myanmar

Beverages Sauces & seasonings Machinery & parts Auto parts

14.4% 8.2% 5.8% 5.6%

18.2% -6.1% 8.5%

-26.7%

Metals Wood & products Ores Cereals

46.3% 10.9% 6.6% 6.1%

-54.5% 72.8% -13.5% -44.1%

Malaysia

Latex & rubber Wood & products Electronic parts Machinery & parts

47.8% 16.9% 10.7% 4.7%

-26.4% -4.4%

155.4% -11.0%

Machinery & parts Electronic parts Plastic & products Auto parts

31.3% 22.8% 10.0% 4.6%

-9.7% 23.0% 15.7% -10.3%

Agenda








18

1

2

3

4

5

6

7

HQ

19

Source: EIC analysis based on data from Bank of Thailand, Ministry of Commerce, UNCTAD , the World Bank

FDI receipt

+12%

Exports to the

world

+19%

B

Annual growth (2010-2015)

CLMV GDP

growth

6-8%

Thailand is surrounded by fast-growing neighbors, CLMV, that giving new growth opportunity for trade and investment.

Thai outward

FDI to CLMV

+44%

CLMV Tourists

to Thailand

Border

trade

+17% +15%

B

Activities with Thailand (2010-2015)

Thai exports

to CLMV

+13%

Population

growth

+2%

CLMV and Thailand3

20

Thailand has its strengths that could support businesses going into CLMV, especially expertise in finance.

Note: Data of Myanmar are as of 2015-2016Source: EIC analysis based on data from World Economic Forum

Countries Overall InfrastructureMacroeconomic

EnvironmentFinancial market

development

Thailand

Vietnam

Lao

Cambodia

Myanmar

34

89

93

60

131

79

49

134

108

106

63

50

87

77

106

63

81

78

39

138

The Global Competitiveness 2016-2017 RankingsUnit: Rank

Availability of financial services, soundness of banks, and regulation of securities exchanges are

CLMV common weaknesses.

CLMV and Thailand3

21

Thailand’s key strengths underpin growing economic success in the region.

Source: EIC analysis based on data from Havas Riverorchid, Ministry of Finance

Strategic location

Recognizable products

Strong Thai companies

Being geographically connected with five ASEAN economies, Thailand can be a regional hub in transportation as well as other services.

Products from Thailand obtained high scores among CLMV consumers for trust in product origin, quality and image.

Medium to large Thai companies have already had their presences in CLMV. Prominent examples are…

CLMV and Thailand3

Agenda








22

1

2

3

4

5

6

7

Cambodia’s GDP Growth

Unit: %YOY

Share of GDP by economic sector

Unit: %

Source: EIC analysis based on data from CEIC

Cambodia’s growth has been consistently over 6% since the turn of the century as the economy diversifies away from agriculture.

10.810.2

6.7

0.1

6.0

7.1 7.3 7.57.1 7.0 7.0 6.9 6.9

0

2

4

6

8

10

12

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

2017

F

2018

F

US Subprime crisis

Tourism revenue

16.7% 16.5%

23

14.7%

37 34 27

40 4144

24 26 30

2011 2013 2016

Agriculture Services Industry

Cambodia’s Outlook4

Import and Export

Unit: % GDP

Export production has become increasingly important in lieu of import

substitution, while tourism revenue has helped finance the trade deficit.

Source: EIC analysis based on data from CEIC and the Government of Cambodia

65.3

72.9

67.6

74.1

Export Import

2007 2015

-2,000-1,00001,0002,0003,0004,0005,0006,0007,0008,000

10

510

1,010

1,510

2,010

2,510

3,010

3,510

2007 2008 2009 2010 2011 2012 2013 2014 2015

Tourism revenue Trade deficit

Trade Deficit and Tourism Revenue

Unit: USD mn

24


Visitor arrivals and tourism receiptsUnit: thousands

Top foreign tourists by country of residence 2016


The number of foreign tourists has increased tenfold since 2000.

Unit: % total export

466

5,012

24%

41%

15

20

25

30

35

40

45

0

1,000

2,000

3,000

4,000

5,000

6,000

2000

2002

2004

2006

2008

2010

2012

2014

2016

Th

ou

sa

nd

s Visitor arrivals Receipts (% of total export) Rank Country Number % total %YOY1 Vietnam 959,663 22% -3%2 China 830,003 19% 19%3 Thailand 398,081 9% 14%4 Laos 369,335 8% -9%5 South Korea 357,194 8% -10%6 USA 238,658 5% 10%7 Japan 191,577 4% -1%8 UK 159,489 4% 3%9 Malaysia 152,843 3% 2%10 France 150,294 3% 3%11 Australia 146,806 3% 9%12 Germany 108,784 2% 16%13 Philippines 108,032 2% 28%13 Taiwan 104,765 2% -5%

25


Cambodia export by destination (2015)

Unit: % share to total export

Cambodia is the place to target for exports to the EU.


Cambodia’s top exports to major markets and tax benefits (2013)

ProductShare to

total export

Key markets (share)

EU GSP Privileges

Appareland textiles

72% US (40%)EU (36%)

Yes (EBA)*

Footwear 5%EU (52%)

Japan (14%)US (11%)

Yes (EBA)*

Bicycles 4%EU (52%)US (5%)

Canada (5%)Yes (EBA)*

Rice 4%EU (60%)

Malaysia (17%)China (10%)

Yes (EBA)*

Rubber 3%China (45%)

Vietnam (26%)Malaysia (20%)

Yes

35%

Others

13%

5%

ThailandVietnam

5%

China5%

Canada7%

Japan

7%

US

23%

EU

*Cambodia exports mainly to EU and US where it receives a special duty-free and quota-free access for export goods under GSP.

26


What are attractive sectors in Cambodia?

• Construction materials

• Construction engineering

• Power

Infrastructure-related

• Rice milling

• Machines and equipment for farming and agricultural processing

Agriculture and Agricultural Processing

• Electrical appliances

• FMCGs i.e. packaged foods, condiments, home care and personal care products

• Home furnishings

Consumer Goods-related

• Labor-intensive i.e. clothing, sport equipment, auto parts, electronic parts

Light Manufacturing

• Cambodia has surplus supply of paddy rice and government is pushing for higher milled rice production and export.

• Government also encourages diversification of crops and agricultural products.

• Structurally, Cambodia will have a long period of high growth in infrastructure spending.

• Due to lack of local capability, there are opportunities for foreign firms to bring in technology and expertise.

• Rapid growth in disposable incomes and urbanization will strongly push consumer demand for household products.

• Consumers can afford more sophisticated and premium products.

Attractive Business Key Drivers

• Rising labor cost of other countries in the region

• Cambodia can produce small parts in FGs to assemble in Thailand or elsewhere

27


Agenda








28

1

2

3

4

5

6

7

Laos’ macro conditions look favorable given impressive growth, moderate inflation, and relatively fixed FX environment.

Source: EIC analysis based on CEIC data

90

92

94

96

98

100

102

104

106

Jan-1

5

Feb-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct

-15

Nov-1

5

Dec-

15

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-16

Aug-1

6

Sep-1

6

CPI: Food and Nonfood

Consumer Price Index (CPI) CPI: Foods CPI: Non Foods

200

210

220

230

240

250

260

270

280

7200

7400

7600

7800

8000

8200

8400

8600

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

Sep-1

3

Jan-1

4

May-1

4

Sep-1

4

Jan-1

5

May-1

5

Sep-1

5

Jan-1

6

May-1

6

Sep-1

6

Exchange rate

USDLAK THBLAK

0

2

4

6

8

10

2012 2013 2014 2015 2016

Economic Growth

Resource sectors Nonresource sectors Real GDP growth

Laos’ Outlook5

29

0.0

0.5

1.0

1.5

2.0

2.5

3.0

96

97

98

99

100

101

102

103

Jan-1

5

Mar-

15

May-1

5

Jul-15

Sep-1

5

Nov-1

5

Jan-1

6

Mar-

16

May-1

6

Jul-16

Sep-1

6

Nov-1

6

Jan-1

7

Inflation

Consumer Price Index (CPI) Consumer Price Index: YoY

Laos’s public finance looks similar to that of Thailand before 1997. However, high external public debt and low reserves are concerns.

Source: the World Bank and IMF

Variable Unit Laos Thailand

Real GDP Growth % 7.0 2.8

Government Revenue % of GDP 23.3 22.6

Government Expenditure % of GDP 26.2 22.3

Interest Payment (FY14/15) % of GDP 1.3 1.0

Public Debt (gross debt) % of GDP 64.3 43

External Debt % of GDP 92 32.7

External Public Debt % of GDP 48.7 20.6

Gross Official Reserves Million USD 987 168,200

Reserves (months of imports) % of GDP 2.2 11.7

Current Account Balance % of GDP -11.6 8

Comparison of Selected Economic Indicator in 2015

Laos’ Outlook5

30

Laos’ fiscal deficit is estimated to have declined slightly to 3.7% of GDP in FY14/15, supported by controls on expenditure growth and strong efforts to increase non-resource revenues.

Source: Lao Economic Monitor (May 2016) by the World Bank

25.2

29.128

26.6

23.9 2324.1

23

-1.3 -6 -3.8 -3.7

-4.6

-8.8

-5.8 -5.3

-15

-10

-5

0

5

10

15

20

25

30

35

2011/12 2012/13 2013/14 2014/15

Government Budget

Expenditure Revenue and grants

Overall balance (incl grants) Overall balance (without mining revenue)

Laos’ Outlook5

31

36.5

42.338.7

46.1 45.6

4.8 4.6

75.3

67.6 69.1

5.49 5.88

5.438.3 7.38

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015

EXTERNAL DEBT

External Debt: % of Nominal GDP

Short-term debt: % of total reserves

Debt Service Ratio: % of GDP

0

500

1000

1500

2000

2500

3000

2011 2012 2013 2014 2015

CAPITAL AND FINANCIAL ACCOUNT BALANCE

Other Investment

Portfolio Investment

FDI

Capital and Financial Account

Foreign Direct Investment and Portfolio Investment continue to increase.

Source: EIC analysis based on data from World Bank, CEIC and Bank of Lao Annual Economic Report (2015)

Relatively high external debts cause vulnerability to external

shocks, while capital and financial account balances are rising.

High level of external debt may have negative effect on confidence and growth.

Laos’ Outlook5

32

Electricity Generation

45%

Others4%

Agriculture37%

Mining14%

FDI DDI 2015 BY INDUSTRY

0% 20% 40% 60% 80% 100%

2011

2012

2013

2014

2015

FDI by country

Thailand Vietnam China Malaysia Netherlands

• Lao has completed many hydropower projects with co-investors from worldwide, several are still on going, as the country aims to be the “Battery of Asia”.

• During 2011-2015, China was the top foreign investor on Lao, followed by Vietnam and Thailand.

Source: EIC analysis based on Ministry of Planning and Investment and CEIC

Foreign Direct Investment in 2015 was mostly directed

to electricity generation, followed by agriculture and mining.

33

Laos’ Outlook5

Agenda








34

1

2

3

4

5

6

7

35

Myanmar is expected to continue to grow at high rate.

Source: EIC analysis based on data from World Bank Global Economic Prospect Jan, 2017

Myanmar’s Real GDP growth 2014-2019f

Unit: %YOYMyanmar: Country facts

Population (2016) 53.9 million

Labor force (2015)36.18 million

GDP (2016e) USD 68.28 billion

GDP per capita(2016e)

USD 1,307 billion

Fiscal Year 1st April – 31st March

0

1

2

3

4

5

6

7

8

9

2014 2015 2016 2017F 2018F 2019F

Myanmar’s Outlook6

Myanmar’s economy has been shifting from agricultural sector to industry and service sectors with high expected growth.

36

64%

25%

11%

GDP composition in year 1996

Agriculture

Industry

Services

26%

28%

46%

GDP composition in year 2016

Source: Asian Development Bank from 1996-2014 and WB Global Economic Prospect, Jan 2017

3.6

5.5

11.4

910.59.9

0

2

4

6

8

10

12

2013 2014 2015 2016E 2017F 2018F

Agriculture Industry Services

GDP Composition by Sector 1996 & 2016

Unit: % of GDP

GDP Composition by Sector Growth 2013-2018F

Unit: % of YOY


Myanmar offers vast untapped natural resources and favorable labor market conditions such as cheap, abundant, and young workforce.

37

Resource

Source: EIC analysis based on data from Ministry of Mines, ADB, JETRO, CIA, and World Bank

Coal basinOil & gas field

Type Proved reserve Location

Coal 540 million tons (estimated)

Sagaing , Magway, and Tanintharyi regions and Shan state

Oil 160 million barrels Ayeyarwady, Magway regions and Rakhine State

Gas 12 trillion cubic feet Coastal region (Bay of Bengal and Gulf of Martaban)

Key Cities

City State/Region Population (as of July 2016)

Yangon Yangon Region 4,477,638

Mandalay Mandalay Region 1,208,099

Naypyidaw Naypyidaw Union Territory 925,000

Mawlamyine Mon State 438,861

Bago Bago Region 244,376Jade

Resource (oil & gas, coal)


Special Economic Zone

38

Kyaukphyu

Thilawa

Dawei

• 20,500 hectares

• Heavy industries

• Thai-Myanmar consortium (ITD* & ROJANA**), and Japan

• Deep sea port plans , availability of minerals and forestry

• First phrase construction started from August, 2015.

Dawei

• 520 hectares

• Construction materials, textiles, food industries

• China-Myanmar consortium

• Deep sea port plans, oil & gas pipeline

• Six foreign companies leading China’s CITIC won the developer biding announced on January, 2016.

Kyaukphyu

• 2,400 hectares

• Light manufacturing industries

• Japan-Myanmar consortium

• Easily accessible by public transportations such as bus and train

• First phrase (400 hectres zone A) launched on September, 23rd

2015 for over 40 companies.

Thilawa

* ITD : Italian-Thai Development Public Company Limited** ROJANA : Rojana Industrial Park Public Company Limited

Source: EIC analysis based on data from PWC, Myanmar Legal Services, Myanmar Thilawa SEZ, JICA, Dawei Development Company, Kyauk Phyu SEZ, and press search


39

Given the growth opportunities within the challenges of under-developed conditions, there are quite a few attractive sectors to invest now.

• Hydropower

• Oil & Gas

• Construction & Materials

Infrastructure-related

• Garment

• Fisheries

• Agriculture Processing

Manufacturing (of selected

goods)

• IT and Telecom-related

• Restaurants

• Wholesale & Retail

Service (especially for consumers)

Attractive Segments

Large Corporates

SMEs

SMEs

Target Thai corporates Remarks

Criteria to select attractive sector

• Labor intensive

• Availability of local raw materials

• Import replacement

Reasons to support investment

• Myanmar will have a long period of high growth in infrastructure spending

• Due to lack of local player's capability, foreign firms can bring in technology and expertise

Reason to focus on consumers

• Local consumers will continue to have more purchasing power as the economy develops

Source: EIC analysis


Agenda








40

1

2

3

4

5

6

7

41

Vietnam GDP growth over past 10 years

Unit: billion VND, % YOY

Fast-growing Vietnamese economy has been mainly driven by manufacturing exports, FDI, and infrastructure investment.


10%

5%

0%

3

2

1

0

+6%

201520062005 20082007 20102009 20122011 20142013

6.7%

GDP GDP growth

Vietnam’s Outlook7

3.262.98

2.8

2.07

2.46

0

0.5

1

1.5

2

2.5

3

3.5

Thailand Vietnam Cambodia Laos Myanmar

Logistics Performance Index 2016 (overall score)

* The score is out of 5, the higher the better

3.12

2.72.36

1.76

2.33

0

0.5

1

1.5

2

2.5

3

3.5

Thailand Vietnam Cambodia Laos Myanmar

Quality of trade and transport related infrastructure

Vietnam’s economy has been industrialized over the past two decades owing to strong growth from industry and trade (exports) sectors.

Unit: % Share of GDP

89.7

88.1

50

55

60

65

70

75

80

85

90

95

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Exports

Imports


Unit: % Share of GDP

Vietnam’s GDP Composition – Production Side Vietnam’s Exports and Imports Share of GDP


42

38%

18%

29%

36%

33%

45%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Agriculture Industry Service

2%

2%

3%

4%

5%

5%

7%

9%

17%

30%

0% 10% 20% 30% 40%

Indonesia

Germany

Malaysia

Singapore

USA

Thailand

Taiwan

Japan

South Korea

China

2%

3%

3%

4%

4%

4%

6%

9%

10%

21%

0% 10% 20% 30%

Malaysia

UK

Netherlands

UAE

Germany

Hongkong

South Korea

Japan

China

United States

43

48.2

60.6

89.8

102.5

142.7

144.2

149.5

169.5

350.9

0 100 200 300 400

Myanmar

Indonesia

Philippines

Lao PDR

Brunei

Thailand

Cambodia

Malaysia

Vietnam

Singapore

Source: EIC analysis based on data from The World Bank, Asian Development Bank (ADB), UN Comtrade, and Charting Economy

Trade Openness (2014) Exports and Key Partners (2015) Imports and Key Partners (2015)

Unit: % Trade/GDP

Unit: % Unit: %

Top 5 Export Items

1) Electrical machinery &equipment

2) Articles of apparel & accessories

3) Footwear

4) Nuclear reactors, boilers, machinery

5)Furniture

Top 5 Import Items

1) Electrical machinery &equipment

2) Nuclear reactors, boilers, machinery

3) Plastics and articles

4) Iron & steel

5) Mineral fuels

Vietnam’s economy depends heavily on international trade.


43

328.000

1,012.000

236.000

719.000

170.000

464.000

0 200 400 600 800 1,000 1,200

Financial, Banking, Insurance

Arts, Entertainment,…

Mining & Quarrying

Water Supply, Sewerage,…

Electricity, Gas, Air Con…

Human Health, Social Work

Other Activities

Agriculture, Forestry &…

Administration, Support…

Real Estate Activities

Education, Training

Transportation, Storage

Accommodation, Food…

Construction

Information, Communication

Professional, Scientific, Tech

Wholesale, Retail Trade,…

Manufacturing

2011

2013

2015

Unit: USD mn

6,983

2,479

2,082

1,8031,468

8,760

South Korea

Malaysia

Singapore

Japan

Taiwan

Other

Manufacturing, real estate and construction industries currently receive most of FDI.


South Korea, Malaysia, Singapore are the top three countries investing in Vietnam in 2015

FDI by country (USD mn): Registered Capital in 2015


44


Unit: VND/USD

4.74

0.0

5.0

10.0

15.0

20.0

25.0

Nov-0

9

Apr-

10

Sep-1

0

Feb-1

1

Jul-11

Dec-

11

May-1

2

Oct

-12

Mar-

13

Aug-1

3

Jan-1

4

Jun-1

4

Nov-1

4

Apr-

15

Sep-1

5

Feb-1

6

Jul-16

Dec-

16

CPI: YOY

Despite extremely high inflation during 2011-2012, Vietnam’s inflation in recent years has been contained and lower.

Unit: % YOY

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Mar-

11

Jul-11

Nov-1

1

Mar-

12

Jul-12

Nov-1

2

Mar-

13

Jul-13

Nov-1

3

Mar-

14

Jul-14

Nov-1

4

Mar-

15

Jul-15

Nov-1

5

Mar-

16

Jul-16

Nov-1

6

Export Price: YOY

Import Price: YOY

Unit: % YOY

Vietnamese Dong (VND) Exchange Rate Consumer Price Index, Export and Import Prices

High Inflation

20,600

20,800

21,000

21,200

21,400

21,600

21,800

22,000

May-1

2

Sep-1

2

Jan-1

3

May-1

3

Sep-1

3

Jan-1

4

May-1

4

Sep-1

4

Jan-1

5

May-1

5

Sep-1

5

Jan-1

6

VND/USD

Vietnamese Dong Depreciation

Vietnamese Dong Appreciation


45

Target sectors include process manufacturing, electronics and new energy industries.

46

Doi Moi reforms launched in 1986• Per capita GDP has risen from 100USD to 2,233USD (2015F, IMF)

Socio-Economic Development Plan (SEDP) 2011-2015• Increasing share of value added economic activities• Improving living standards of ethnic minorities• Strengthening environmental protection• Reducing contribution of state sector and increasing contribution of private sector/FDI

Socio-Economic Development Strategy (SEDS) 2011-2020• Improving human resources/skills (esp. modern industry/innovation)• Improving market institutions• Infrastructure development

Industrial Development Strategy through 2025, vision toward 2035(Priority industries)• Processing and manufacturing industries

• Mechanical engineering and metallurgy• Chemicals• Agricultural, forestry and fishery product processing• Garments, textile, leather and footwear

• Electronic and telecommunication industries• New energy and renewable energy industries


DisclaimerDisclaimerDisclaimerDisclaimer

The information contained in this report

has been obtained from sources believed

to be reliable. However, neither we nor any

of our respective affiliates, employees or

representatives make any representation

or warranty, express or implied, as to the

accuracy or completeness of any of the

information contained in this report, and

we and our respective affiliates, employees

or representatives expressly disclaim any

and all liability relating to or resulting from

the use of this report or such information

by the recipient or other persons in

whatever manner.

Any opinions presented herein represent

our subjective views and our current

estimates and judgments based on various

assumptions that may be subject to

change without notice, and may not prove

to be correct.

This report is for the recipient’s

information only. It does not represent or

constitute any advice, offer,

recommendation, or solicitation by us and

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interest in the companies mentioned

herein.

47

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