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Myanmar in Brief
Restaurant Association of Singapore
March 21, 2017
2
Foreign investment and growing domestic consumption increasingly drive growth from a low base
52 Million people
676,578 km2, roughly 2x the size of
Vietnam or Malaysia
9.4 billion foreign investment in FY 2015-16
~5X Economy size increase in a decade
11 billion US$ exports in 2016
3
Myanmar’s relatively small economy has experienced high GDP growth and high inflation . . .
Source: IMF
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2011 2012 2013 2014 2015 2016*
ASEAN GDP growth rate
Vietnam Malaysia Indonesia
Thailand Myanmar Singapore
-2.0%
3.0%
8.0%
13.0%
18.0%
2011 2012 2013 2014 2015 2016*
Inflation rate
Vietnam Malaysia Indonesia
Thailand Myanmar Singapore
* 2016 is an estimate
4
…and still remains one of the most difficult countries for conducting business
Source: Trading Economic, World Bank
Myanmar
Lao
Cambodia
PhilippinesIndonesia
Vietnam
China
Thailand
Malaysia
1
51
101
151
201
0 20 40 60 80 100
Ea
se
of
Do
ing
Bu
sin
es
s (
20
16
)
Political Stability & Absence of Violence/Terrorism (max 100) in 2015
Bubble size reflects GDP per capita (PPP)
Singapore
5
Myanmar boasts a relatively young and productive population
5.47
6.69
15.33
29.90
51.49
67.73
90.73
99.14
254.45
Singapore
Lao PDR
Cambodia
Malaysia
Myanmar
Thailand
Vietnam
Philippines
Indonesia
Million people
Source: World Bank, Myanmar Census 2014 0123
0 - 4
10 - 14
20 - 24
30 - 34
40 - 44
50 - 54
60 - 64
70 - 74
80 - 84
90 +Male
0 1 2 3
0 - 4
5 - 9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
70 - 74
75 - 79
80 - 84
85 - 89
90 + Female
Population (in millions) Population (in millions)Age Group
POPULATION FACTS
Myanmar has 51.49 million people, ranking 5th in
the Southeast Asia region behind Indonesia, the
Philippines, Vietnam and Thailand.
Annual population growth rate is 0.89%. Average population density is 76.1
persons/sq.km. The most populous cities are
Yangon and Mandalay.
Unemployment rate is approximately 4%.
DEMOGRAPHIC OVERVIEW The size of the young working age population has steadily increased and
the country’s literacy rate for individuals above the age of 15 is 89.5%. The
labor force participation rate is 67% for the age group between 15 and 64.
Approximately 100 languages are spoken in Myanmar, with Burmese
serving as the primary language and English being the secondary
language used by educated urbanites and the national government.
The main religion in Myanmar is Theravada Buddhism which is practiced
by 87.9% of the population, followed by Christianity (6.2%), Islam (4.3%),
Animist (0.8%), Hinduism (0.5%), Other Religion (0.2%) and No Religion
(0.1%).
COUNTRY POPULATION 2014 MYANMAR POPULATION 2014
6
While the political situation has improved, a significant gap remains
Source: Fund for Peace 2016
32.9
66.1
70.7
74.9
74.9
78.8
84.4
84.7
87.4
96.3
Singapore
Malaysia
Vietnam
Indonesia
China
Thailand
Lao PDR
Philippines
Cambodia
Myanmar
GOVERNMENT IMPACT ON ECONOMY
NLD government presented 12-point policy summary in 2016 with national
reconciliation at its forefront. Others include supporting competition and a
vibrant private sector, infrastructure development, job creation, welcoming
FDI, monetary and fiscal stability, reforming state-owned enterprises and
helping small and medium enterprises, among others.
Due to wide-ranging reform and expansionary fiscal and monetary policy,
ADB forecasted Myanmar to record solid growth overall although floods
have damaged agriculture again in 2016.
POLITICAL SYSTEM
Myanmar has a young democratic
system led by the National League
for Democracy after decades of
military rule.
Ruling power lies in the hands of
the President but the Commander-
in Chief holds a considerable
amount of power as well. Military
controls 25% of the parliament.
Upper and Lower Parliament of
Myanmar holds legislative power.Source: The World Banks Group 2015
10.48
15.71
20.95
24.76
27.14
43.81
48.57
54.29
60.48
93.33
Myanmar
Thailand
Philippines
Indonesia
China
Cambodia
Vietnam
Malaysia
Lao PDR
Singapore
Note: Higher Score= More Stable
Note: Higher Score= More Fragile
Political stability and state failure risk in
Myanmar are worse than in other Asian
countries.
The main contributing factor is the internal
conflict between ethnic groups and the
military, which has been described as one
of the world’s “longest running civil wars.”
With a national cease fire agreement and
on-going discussions, there is continued
hope for the end of the conflict.
FRAGILE STATE INDEX SCORE 2016 POLITICAL STABILITY AND ABSENCE
OF VIOLENCE / TERRORISM 2015
7
Myanmar’s economy remains highly agrarian, but this trend is slowly changing
Source: World Bank
GROWING MIDDLE CLASS
• In July 2015, World Bank reclassified Myanmar as a lower-middle
income country, whereas previously it was a low-income nation.
• It is projected that Myanmar’s middle and affluent class will grow
to about 15 percent of the population by 2020 if economic
reforms can sustain momentum.
• Land and labor productivity are much lower than in other Asian
countries despite low unemployment
• Myanmar has a shortage of skilled workers. Despite its high
literacy rate of over 90%, Myanmar’s education system failed to
provide a workforce with the appropriate skillset required by
companies.
CountryGDP per capita
US $
Thailand 5,815
China 8,028
Indonesia 3,347
Vietnam 2,111
Myanmar 1,162
Cambodia 1,159
GDP Per Capita (2015)
Source: World Bank
27%
63%
35%
12%
39%25%Service
Industry
Agriculture
Employment by SectorGDP by Sector
78.35
79.87
93.09
95.44
94.51
94.64
96.62
96.36
96.66
93.98
96.77
Cambodia
Lao PDR
Myanmar
Indonesia
Vietnam
Malaysia
Philippines
China
Brunei
Thailand
Singapore
LITERACY RATES (2015)
Trade & Investment
9
The country maintains a trade deficit gap that’s projected to close as economic output increases
MYANMAR TRADE 2016
Total Imports
US$17
Billion
Total Exports
US$11
Billion
Major export products:
Crude oil and natural gas
Minerals
Garments
Agricultural products
Major import products:
Machinery and transport equipment
Manufacturing goods
Vehicles
MYANMAR’S TOP TRADING PARTNERS (IMPORT & EXPORT) 2016
Source: Myanmar Central Statistical Yearbook
HIGHLIGHTSUS$ Billion
US$ Billion
Exports FY’16 - US$ 11.3 billion,
US$ 2.6 billion from agriculture,
US$ 9 million from livestock,
US$ 510 million from fisheries,
US$ 843 million from mining,
US$ 215 million from forestry
goods,
US$4.8 billion from industrial
products and US$ 1.4 billion from
other sources.
Source: Ministry of Commerce
0
5
10
15
20
2012 2013 2014 2015 2016
Import
Export
MYANMAR IMPORT-EXPORT VALUE
Source: Ministry of Commerce
1.7
1.8
3.7
4.8
11
India
Japan
Singapore
Thailand
China
10
Note: Other sectors include Agriculture, Livestock &
Fisheries, Mining, Oil and Gas, Construction, Hotel and
Tourism, Industrial Estate and other services.
FDI has dropped in 2016 and is projected to be lower in 2017
Source: DICA
49%
Transport &Communication
Manufacturing
Power
Real Estate
Others
TOTAL INVESTMENT IN APPROVED FDI PROJECTSFDI BY SECTOR 2016-2017 (End of November)
Source: DICA
0
500
1,000
1,500
2,000
2,500
3,000
3,500
MAIN ASIAN INVESTORS BY
INVESTMENT CAPITAL FY’ 2016
(End of January 2017)
TOP 5 MANUFACTURING
PRODUCTS
Agricultural processing
Wood and wood
products
Garments
Electronics
Footwear
US$
Million
0
1
2
3
4
5
6
7
8
9
10
2011 2012 2013 2014 2015 2016
US$
in b
illio
n
• Investment amount in 2016 is lower than in 2015 due
to various government changes and investment
policies.
• Manufacturing and Transport & Communication
received highest levels of FDI, while there was
virtually no FDI investment in agriculture, mining,
construction and industrial estate.
Source: DICA
1111
The nascent market is poised for growth & holds a high potential, but not without its challenges
• Payments can still be
somewhat archaic despite
influx of ATMs and overall
improvements
• The Ministry of
Electricity is not immune
to power outages
• Telecoms have changed
Myanmar over night
12
Logistics and infrastructure remain a critical challenge . . .
A recent study by Asian Development Bank (ADB) showed that improving national and
international transport systems and services could increase Myanmar’s GDP by 21% by
2030.
The Global
Competitiveness Index
2015-2016
Myanmar
Score (1-7)
Rank
(out of 144)
Quality of overall
infrastructure2.4 135
Quality of roads 2.3 136
Quality of railroad
infrastructure1.8 96
Quality of port infrastructure 2.6 123
Quality of air transport
infrastructure2.6 132
Note: World Bank’s Logistics Performance Index is based on opinions of freight forwarders on key
logistic topics such as customs clearance efficiency, ability to track cargo, etc.
13
. . . with lots of room for improvement
1414
• Agriculture sector employs majority of working population, yet still faces shortages
• Skilled labor is scarce
• Lack of vocational schools forces factories and companies to invest in specific training programs
• Companies have provided incentives for management overseas to come to Myanmar and train employees to overcome the lack of skilled labor gap
In addition to infrastructure challenges, lack of skilled labor in Myanmar requires investment in training
15
Trading opportunities cross cut B2C and B2B industries driven by market fundamentals…
B2
C
Country background Increasing disposable
income
Increasing GDP
Large and young population
Opportunities FMCG
F & B
High-tech/ Consumer Electronic
Medical/ Pharmaceutical
Education ServicesB
2B
Country background
Weakness of supporting industries
Increasing trading within TPP countries
Developing manufacturing industry
Growing local market
Opportunities Electronic and machinery component
Raw Material
Healthcare equipment
High value services (Financial, IT Consulting….)
1616
Myanmar’s SWOT
Strengths
• Lowest wages in ASEAN
• Abundant workforce with
fast-learning skills
• Young population with high
consumption demand
• Rich in natural and agricultural
resources
Opportunities
• Attracting manufacturing
investment from China
• Increasing income generates
demand for higher-value
products & services
• Positive impacts of Free
Trade Agreements
Weaknesses
• Under-developed infrastructure
• Legal uncertainty
• Weak supporting industries
• High corruption and low
transparency country
• Insufficient education, specifically
in vocational training
• Poor utility availability and
reliability
Threats
• Competition from regional
peers
• Trade restrictions in key
markets
• Regional political uncertainty
• Re-imposition of sanctions or
other restrictions
S W
O T
Singapore-Myanmar Relationship
18
Singapore has played an integral role in engaging and supporting Myanmar as it develops
1966
Diplomatic
Relations
established
2015 2016
Announced 30 days
visa exemption for
Myanmar nationalities
Held 5th Singapore -
Myanmar Joint
Ministerial Working
Committee
20101984
Yangon
Embassy
opened
2016
50th anniversary of
diplomatic relations
• The Singapore Prime Minister Lee Hsien Loong visited Myanmar in 2016 as a first visit in the new civilian government term. In the visit, the Prime Minister and Myanmar’s newly elected president, U Htin Kyaw, discussed strengthening economic ties between the two countries by renewing and updating the MoU of the avoidance of Double Taxation agreement and signing bilateral investment treaty.
• State Counsellor Daw Aung San Suu Kyi travelled to Singapore on an official visit at the end of 2016 where she provided an overview of the Myanmar government’s domestic preoccupations, particularly in the areas of job creation, infrastructure, education, electricity generation, and public health.
• Under discussion is also Singaporean support for vocational training in Burma, and further bilateral trade agreements on tourism and trade.
Signed Singapore-
Myanmar Technical
Cooperation Program
(SMTCP)
2012
Agreed double-
taxation agreement
with Singapore and
Myanmar
Appendix
Operating Conditions
21
LABOR REGULATIONS
STANDARD WORKING TIME
Standard workday: 8 hours / day and not
exceeding 48 hours / week
Maximum working days per week: 6 days
Typically, manufacturing companies work 48 hours/
week. Office employees’ working hours range from
40-44 hours/week (depending on the policy)
Standard annual leave: 10 days after an employee
has worked for 12 consecutive months
OVERTIME
MANDATORY SOCIAL CONTRIBUTION
Employers can ask employees to work
overtime, but must be voluntary and cannot
exceed 16 hours/week
Overtime wages are 200% of hourly pay
Mandatory contribution in Myanmar includes
Health Insurance, Social Care Insurance and
Employment Injury Benefit Insurance
Employer’s contribution is 3% on top of the base
salary of workers
Workers’ contribution is 2% of the base salary
22
ELECTRICITY
Source: Tractus Research 2017
REGIONAL COST COMPARISION
Yangon City Electricity Supply Board supplies electricity in Yangon
City and Electric Supply Enterprise covers the supply of power to the
rest of the country
The Residential segment remains the largest consumer, with 74% of
the total, 3.6% by the industrial, and 1.6% by the residential sector.
Installed capacity of Myanmar reached 4,805 MW in 2015, with more
than two-thirds coming from hydropower.
About 70% of the population has limited or no access to electricity.
Even major cities like Yangon still experience power outages, limiting
economic activity.
Foreign investment is not allowed in the trading of electricity or
inspection services in the sector.
Source: World bank
Electricity Availability & Quality
Population % without electricity 47.6%
Electrification rate 52%
Quality of electric supply index 2.8
Ranking 117
70%
22%
8% Hydro
Natural gas
Coal
POWER SOURCE
Source: Power Sector Development in
Myanmar, ADB 2015
19
16
16
12.48
11.5
11
8
6.97
Cambodia
China
Phillippines
Indonesia
Myanmar
Thailand
Malaysia
VietnamCent/Minute
23
WATER
Source: WHO/UNICEF JMP 2015
WATER COST COMPARISION Myanmar Water Availability & Quality in 2015
Urban water supply coverage 93%
Rural water supply coverage 74%
Total water supply coverage 81%
Total sanitation coverage 88%
Water Quality Index 77/100
Source: Tractus Research 2017
SANITATION COVERAGE
WATER SUPPLY IN MAIN CITIES
Water services do not reach a large proportion of the
urban population. Most people in urban areas rely on
untreated private water supplies.
Total water withdrawal is less than 5% of the
renewable available; around 89% of it is for
agriculture, 10% is for municipalities, and 1% is for
industries.
Approximately 91% of the total water withdrawal
comes from surface water and 9% from groundwater.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%Sanitation Coverage in Myanmar
Source: Myanmar Census Data 2015
94.2
82.3
77
59.2
51
45
36
35
Indonesia
Vietnam
Myanmar
Phillippines
Malaysia
Thailand
Cambodia
China Cent/M3
24
TELECOMMUNICATION
FIXED LANDLINE COST
29 million Mobile subscribers
0.14 million Broadband Internet
Users
17.2 million 3G subscribers
0.53 million Landline subscribers
TELECOMUNICATION AVAILABILITY 2014
Note: The fee is calculated based on the cost of calling from a fixed landline to
a local mobile within country.
Source: Tractus Research 2017
Source: UTC, DICA, MMRD research
Telecommunications in Myanmar have experienced significant
developments in recent years with the installation of three new
operators; Norway’s Telenor and Qatar’s Ooredoo in 2014, and
Vietnam’s Viettel recently.
In 2012, Myanmar’s international bandwidth was below
15Gbps representing 0.3 Kbps, which is below Laos’ 0.4,
Cambodia’s 0.8 and Vietnam’s 5.2. In 2015, the bandwidth
increased to about 70Gbps (1.3 kbps per capita).
Myanmar’s mobile phone penetration rose
to about 60% in 2015 from just 4% at the
beginning of 2012.
US$1.93 billion of FDI flows into the
transport & communication sector in 2015.
96% of internet users in Myanmar use
social media. Facebook is the most popular
with 93% using it, followed by Viber (80%)
and Twitter (6%).
16
10
10
9
8.8
6
5
4
Thailand
China
Phillippines
Indonesia
Malaysia
Cambodia
Vietnam
Myanmar Cent/M3
Legal & Tax
26
LEGAL SYSTEM AND REGULATION REGIME
Myanmar doesn’t have standardized IP laws though one is being
drafted currently
With a lack of IP laws, the following laws exist:
Penal Code (1860)
Merchandise Marks Act (1889)
Specific Relief Act (1877)
Sea Customs Act (1878)
Registration Act (1908)
Science and Technology Department Law (1994)
ENVIRONMENTAL REGULATIONS
IP PROTECTION LAW
In Dec 2015, the new Environmental Impact Assessment (EIA) Procedure
in collaboration with ADB and IFC was released
To identify possible consequences of projects on socioeconomic
development, and to minimize their impact on the environment
IN PRACTICE Publication of Cautionary Notice in
a local newspaper is the only
process to notify public of any
infringement on the right of the
patent ownership
IN PRACTICE The legal framework of Myanmar is outdated, and is frequently changed. Foreign investors might encounter regulation changes
related to laws, regulations, and notifications.
The legal system is undergoing major changes to better align commercial statues.
HIERARCHY OF MYANMAR GOVERNMENT
Government
Executive
President & Cabinet
Legislative
Assembly of the Union
House of Nationalities
House of Representatives
Judiciary
Supreme Court
27
STRUCTURING AN INVESTMENT
In Myanmar, the types of companies fall
into several categories:
Private company by Myanmar citizens
Public company by Myanmar citizens
Foreign service company
Foreign manufacturing company
(under Foreign Investment Law)
Branch or representative office of a
foreign company
Joint venture company with the
government of Myanmar
Association/nonprofit organization
Manufacturing and related services of arms and ammunition
Conservation and management of natural forests
Prospecting, exploration and production of jade/gemstones
Production of minerals on a small-medium scale
Supervisory control of electric power system
Inspection of electrical works
Air navigation services
Exploration of minerals including gold in the river and waterway
Pilotage
Cross ownership between print media and broadcasting media
service without approval of the Union Government
Periodicals in languages of national races including Myanmar
FORMS OF BUSINESS ORGANIZATION
PROHIBITED INVESTMENTS
INVESTMENT APPROVAL PROCESS
IN PRACTICE
Licensing procedures are mostly centralized
and handled by the union government
It’s not uncommon to find discrepancies
between laws and practices by government
agencies
Document Submission
Proposal Assessment
Team Meeting
Comments from
Relevant Government
Agencies
Myanmar Investment
Commission Meeting
Receive Investment
Permit
28
TAXATION
Resident companies (Companies
incorporated under the Myanmar
Companies Act (MCA) or Myanmar
Foreign Investment Law (MFIL): 25%
Non-resident companies (Branch
offices of foreign companies which are
not registered under MCA or FIL) : 25%
CORPORATE INCOME TAX (CIT)
Nationals / Resident Foreigners:
1-25% taxed on base of a
progressive rate
Non-resident Foreigners
(residing less than 183 days per
year in Myanmar): 1-25% taxed
on base of a progressive rate
PERSONAL INCOME TAX (PIT)
Companies operating in Myanmar are
typically subjected to the following
common taxes:
Direct Tax
Corporate Income Tax
Personal Income Tax
Capital Gains Tax
Withholding Tax
Indirect Tax
Commercial Tax
Special Goods Tax
TYPICAL TAX
Resident Citizens/ Resident
Foreigners: 10%
Non-resident Foreigners: 10%
Oil & Gas Industry – 40% to 50%
CAPITAL GAINS TAX
SPECIAL GOODS TAX (SGT)
SGT is introduced to replace
commercial tax on a list of 16 special
goods that are imported and/or
purchased from local
producers/manufacturers
SGT rates are ranging from 5% to
120%
On top of SGT, a commercial tax of 5%
will also be imposed on special goods
(on the selling price inclusive of SGT)
at the point of importation/sale of
special goods
COMMERCIAL TAX (CT)
There is no value-added tax
in Myanmar
A commercial tax is imposed
on a wide range of goods,
imported into or produced in
Myanmar, trading sales, and
services
Registration for commercial
tax is required when the
amount of income from sales
and services for an income
year is MMK 10 million or
more
There is no commercial tax
on the export of goods with
very few exceptions
29
TAXATION
Companies incorporated under Myanmar Foreign
Investment Law (MFIL) or SEZ Law can enjoy CIT
exemption
CIT exemption of up to 5 consecutive years (Companies
under MFIL)
CIT exemption of 7 years (Investment businesses operated
in an exempted zone or exempted zone businesses)
Exemptions from payment of import duty on equipment,
materials, means of transportation and other goods for
implementation of investment are also available from
Myanmar Investment Commission (MIC) or SEZ
Management Committee
INCENTIVES
TRANSFER PRICING
Myanmar has no formal transfer pricing
regulations
Under Chapter VII of the Income Tax Law,
taxpayers who have filed their annual tax return
may also be required to “produce supporting
evidence, accounts and a list of properties”
There is no explicit penalty for transfer pricing
assessments, nor is there an explicit penalty for
not having transfer pricing documentation.
However, for tax shortfalls in general, a penalty
not exceeding 10% of the tax may be imposed.
Payments subjected to withholding tax are interests;
royalties for the use of licenses, trademarks, patent rights
etc; payments made under contracts or agreements for
procurements and services made within the country
Applicable to both domestic and cross border payments
WITHHOLDING TAX
30
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