National University of Management

MBA ProgramPromotion 11, Group 14

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International BusinessManagement

INVESTMENTOPPORTUNITYIN MYANMAR

Lecturer: Soun Hong, DBA

Prepared by Group 8:1. Meas Sakun 3. Tiv Polin 5. Heng Piseth2. Sok Kompheak 4. Saray Chanrithya 6. Sum Vanchandarong

July, 2010

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Content

Introduction 1

I. Market intelligence 2

II. Business environment analysis 5

A. Foreign investment environment 5

B. Macroeconomic business climate 7

C. Business environment analysis 7

III. Opportunities for market entry 10

IV. Market entry strategy 12

Conclusion 14

INVESTMENT OPPORTUNITY IN MYANMAR

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The analyzing of the Investment Opportunity inMyanmar, this assignment is study on the primarycomponents:

- Market Intelligence

- Business Environment Analysis

- Macroeconomic Business Climate

- Opportunities for Market Entry and

- Market Entry Strategy

Introduction

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1. Location

Myanmar is situated in South-East Asia and bordered on thenorth and northeast by China;on the east and southeast byLaos and Thailand; on the southby the Andaman Sea and theBay of Bengal; and on the westby Bangladesh and India.

I. Market Intelligence

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2. Geography

- Official Name: Union of Burma

- The total area: 678,500 sq km

- Land: 657,740 sq km

- Water 20,760 sq km

- Cities: Administrative capital--Nay Pyi Taw

- Other cities: Rangoon

- Terrain: Central lowlands ringed by steep,

rugged highlands.

- Climate: Three main seasons, hot season, rainyseason and cold season

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3. Natural resources

Myanmar is rich in natural resources such aspetroleum, timber, tin, antimony, zinc, copper,tungsten, lead, coal, some marble, limestone,precious stones, natural gas, and hydropower.

4. People

Total population 59.98 million (2009)

Urban population as % of total population

31% (2006)

Population median age 27.0 years (2006)

Population growth rate 0.90% (2006)

ReligionsBuddhist 89%, Christian 4%, Muslim4%, animist 1%, other 3%

Languages Burmese, minority ethnic languages

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5. Government- Type: Military junta.- Constitution: January 3, 1974; suspended sinceSeptember 18, 1988, when the current militarygovernment (currently called the State Peace andDevelopment Council, or SPDC) took power.- New draft constitution was overwhelminglyapproved in a May 2008 and scheduled to take effectwhen a new parliament convenes following electionsplanned in 2010.- Governors: Executive-Chairman of the SPDC SeniorGeneral Than Shwe is the head of state. PrimeMinister Gen. Thein Sein is the head of government.- Suffrage: Universal suffrage at 18 years of age.

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6. Economy

- Bangladesh, India, Myanmar, Sri Lanka, ThailandEconomic Cooperation (BIMST-EC).

- Myanmar’s ASEAN membership providesnumerous trade benefits with the ASEAN Free TradeArea (AFTA)

- Myanmar currency is kyat (K).

- Exchange Rate: 1USD = K1040

- The biggest bank note is 5000K

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6. Economy...

- GDP: $27.5 billion (2009)

- Annual growth rate: 1.8% (2009)

- GDP per capita: $431 (2009)

- Inflation rate: 6.5% (2010)

- Agriculture: Products-rice, pulses, beans, sesame,peanuts, sugarcane, hardwood.

- Industries: Types-natural gas, agriculturalprocessing, knit and woven apparel, wood and woodproducts, cement, paper, cotton, cotton yarn, sugar,copper, tin, tungsten, iron, construction materials,pharmaceuticals, and fertilizer.

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- Myanmar adopted the market oriented economicsystem in the year 1988 after adopting thecentralized planning economic system for more thantwo decades.

-The initial step taken towards a more liberalizedeconomy is to allow foreign direct investment and toencourage the private sector development.

II. Business environment analysis

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A. FOREIGN INVESTMENT ENVIRONMENT

Foreign Direct Investment Policy

The main components of the policy are:

(a) adoption of market oriented system for theallocation of resources.

(b) encouragement of private investment andentrepreneurial activity.

(c) opening of the economy for foreign trade andinvestment.

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Forms of Investment

- Wholly foreign-owned or

- Joint venture with any partner (an individual, aprivate company, a cooperative society or a state-owned enterprise). The minimum share of the foreignparty is 35 percent of the total equity capital.

Minimum Capital Requirement

- Industry US $500,000

- Services organization US $300,000

B. MACROECONOMIC BUSINESS CLIMATE

Real GDP growth rate: 2001-2009

Graphic of Real GDP growth rate: 2001-2009

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2001 2002 2003 2004 2005 2006 2007 2008 2009

11.3% 12% 13.8% 13.6% 13.6% 13.1% 11.9% 3.6% 1.8%

C. Business Environment Analysis1. Domestic Business Environment Analysis (2002)

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2. Foreign Investment Analysis (2002-2009)

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No Sector Permitted Enterprises

(US$ in million)2002 2009

No Approved Amount

No Approved Amount

1 Oil and Gas 51 2355.923 89 3,398.4782 Manufacturing 143 1575.136 155 1,634.8963 Hotel and Tourism 43 1059.661 45 1,064.8114 Real Estate 18 1025.140 19 1,056.4535 Mining 51 523.358 60 1,395.8866 Livestock and Fisheries 20 283.372 25 324.3587 Transport and

Communication14 283.272 16 313.272

8 Power 2 6,311.22

Foreign Investment of Permitted Enterprises (By Sector)

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Foreign Investment of Permitted Enterprises (By Country and Region, 2002-2009)

2002 2009

No. of Country

No. of Projects

Approved Amount

No. of Country

No. of Projects

Approved Amount

24 355 7,394.779 32 426 15,788.290

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1. Current Cement Market in Myanmar

III. Opportunities for Market Entry

Cement Market Overview (2007)

Demand of Cement Product:- 2006: 3.5 (million tons)- 2007: 4.0 (million tons)

=> the demand of cementproduct is increasing eachyear.

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2. The Opportunity for Entry

Why Cement Market in Myanmar shortage?

• The new capital, “Naypyitaw” caused large demand of construction materials• The biggest “Salawin” Dam requires cement approx. 300,000 million tons during 2008 – 2012• Great demand in infrastructure development.• Other Social economics sectors are growing up.

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2. The Opportunity for Entry...

Cement industry is needed more to produce and to fulfillthe increasing of cement product in Myanmar.

This is a good opportunity for investing in this area.

Golden Cement Company is ready to invest and toplanned to build a factory in Limestone source area ofMyanmar, located in Mon State, south of Myanmar, nextto the Andaman Sea.

The Golden Cement Company (GCC) is a joint ventureinvestment company under the Foreign Investment Lawof Myanmar.

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2. The Opportunity for Entry...

Map of Mon State

Limestone Mountains in Mon State

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1. SWOT ANALYSIS

IV. Market Entry Strategies

SWOT analysis is a simple frame work for generating strategic alternatives from a situation analysis. SWOT stand for Strengths, Weaknesses, Opportunities and Threats.

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1. SWOT ANALYSIS...

Strengths

- Technology: Japan technology, standard (ISO)

- Leading Brand: People’s favorite (Golden Land, Golden Cement)

- Distribution channel: Whole country

- Customer Royalty/Relationship: Brand name and promotion

- Product quality: Standard quality

- Scale: 600 tons/day

-Management: Co-management

Weaknesses

- Absence of important skills: None

- Weak brand: None

- Poor access distribution: None

- Low customers retention: None

- Unreliable Products/Service

- Sub-scale: None

- Management: None

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1. SWOT ANALYSIS...

Opportunities

- Change customer taste: Surplus Demand

- Technology Advance: Japan technology, standard (ISO)

- Change in government politics: Oriented Market Economic,

Good relation with business partner and top local authorities

- Lower personal taxes: Local product, lower rate

- Change in population age: Average 27 years old

-New distribution Channel: Whole country

Threats

- Change customer taste: Local cement

- Technology Advance: China technology

- Change in government politics: Politic crisis

- Lower personal taxes: Change policy

- Change in population age: Low population growth

- New distribution Channel: Increasing products of local company

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2. 4P’s Strategy

Product

Type: Construction product (Cement)

Brand: Golden Cement

Quality: High quality from Japan

Packaging: Standard package (Auto machine)

Service: Closely relationship

Support: On time supply, technical

Warranty: Broken or bad quality product

Price

Price: Approximately (Local price)

Discounts: Based on power of purchase

Financing: Accountable (based on customers)

Leasing Option: Dealers and government

Allowance: Commission to dealers

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2. 4P’s Strategy...

Place

Locations: Factory near natural resource of product (Mon state)

Logistics: Factory, Mawlamyine, Yangon, Mandalay

Channel members: Dealers, Construction companies

Market Coverage: ½ of shortage supply

Internet: Available

Mobile: 24hours per day

Promotion

Advertising: TV, Radio, Newspapers

Public Relationship: Banner, name card, Calendar

Message : E-mail & mobile

Direct Sales: Dealers

Sales: Reward, commission

Budget: 2 years for promotion

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CONCLUSION

Cement product is the good opportunity to invest and produce inthis country, because:- Myanmar’s economy has adopted the market orientedeconomic system in the year 1988.- Economy policy is to allow foreign direct investment and toencourage the private sector development- Increasing of investment companies of any sectors and manygovernment project, such infrastructures (roads, bridges &dams), business buildings, hotels, factories etc.- Demand of cement product is growing

Thus, the Golden Cement Company (GCC) is ready to investand build its plant to produce and supply Golden Cement to thebig target market in this country by joint-venture with localbusiness partner by its successful expected plan and efficiencymarketing strategy to lead market share.

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References

1. www.myanmars.net/facts-about-myanmar

2. http://www.state.gov/r/pa/ei/bgn/35910.htm#profile

3. www.myanmars.net/facts-about-myanmar

4. Global Finance: http://www.gfmag.com/gdp-data-country-reports/214-myanmar-gdp-country-report.html

5. www.yadanabon.com/investment.htm

6. www.yadanabon.com/domestic_investment

7. http://www.state.gov/e/eeb/rls/othr/ics/2010/138043.htm#

8. Markets Updates, Siam City Cement PLC, Chantana Sukumanont,Mkt & Sales

9. www.tradingmarket.com

10. http://www.netmba.com/strategy/SWOT Analysis.mht

11. www.valuebasedmanagement.net/methods_marketing_mix.html

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Thank you for your attention !