Who dare ? Why invest in Myanmar?

Why invest in Myanmar?

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Growing in a growing economy....

DICA warmly invites responsible investors to pursue business opportunities that help grow and shape the “New Myanmar” and accelerate the realization of national development goals through sustainable economic development on a countrywide scale.

• Myanmar’s economy has continuously grown at approximately 8% since 2012. Over FY 2014-15, a GDP increase of 8.7% has been mainly driven by developments and investments in the telecommunication sector (57.5%*), extractive industries (50.5%*), oil and gas (36.1%*), construction (15.9%*), manufacturing (9.7%*) as well as growth in key service industries (e.g. tourism). (*=percentage increase of the absolute GDP contribution of the sector)
   
• Myanmar’s overall growth strategy is built on a complementary mix of policies to simultaneously enable modernization in industry, agriculture and infrastructure, a diversification of the export basis and the expansion of value-added production for domestic and international markets.
   
• Three costal Special Economic Zones in Thilawa, Kyaukphyu and Dawei with particular investment incentives, simplified processes for investors and industrial facilities at international standards will become “growth engines” of the New Myanmar.
  In addition, growth along economic corridors with old (Yangon and Mandalay) and new development nodes (e.g. Bago, Hpa An, Sittwe, Myitkyina and border towns) is fostered.
   
• Economic growth has led to the emergence of an increasing middle class and a significant increase in per-capita consumption of 10.9% (during FY 2013-14). Increasing opportunities open up for the FMCG industry and service industries (e.g. private education institutions, entertainment).

Location & Connectivity: Shaping Asia’s new crossroads

Myanmar is in an excellent position to access to regional and global factor markets as well as product markets. Improvements in Myanmar’s infrastructure (in terms of particularly power infrastructure, road, rail, air and ports) have highest priority by the Government in order to establish efficient national and international supply chains for future economic growth.

• Myanmar is the largest country of mainland Southeast Asia and has – beyond its domestic market of more than 50 million citizens – direct access to China, India, ASEAN markets and other international markets through ports along the Bay of Bengal and Andaman Sea.
   
• After decades of international isolation prevented the modernization and expansion of infrastructural networks, the Government of Myanmar is now in the preparation for building the physical “roads” to becoming Asia’s “crossroads” through investments into
  • major domestic highways and transnational road links to Thailand (i.e. from Hpa An and Dawei SEZ), China (i.e. from Mandalay) and India (i.e. from Mandalay and the Kaladan Multi-Modal Transit Transport Project),
  • a more modern rail network and dry port facilities in Ywarthargyi (near Yangon) and Myitnge (near Mandalay) and
  • power infrastructure to expand installed capacity (4,422 MW in 2014) and annual production  (12,247 GWh) as well as the transmission system according to the National Electrification Plan foreseeing an full electrification even of remote areas by 2030.
     
• Myanmar will be increasingly integrated into regional production networks through its membership in the ASEAN Economic Community as well as the ASEAN-China Free Trade Area (ACFTA), while internationally enjoying preferential tariff schemes as a least developed country (LDC).

Supporting the reforms course of the “New Myanmar”

Myanmar is undergoing a fundamental political and economic transformation to a democratic, federal and peaceful national state. Responsible investments are key requirements for and direct drivers of sustainable and inclusive economic development.

• A National Comprehensive Development Plan (NCDP) has been formulated to identify policy directions for countrywide sustainable economic development in based on international best practices to alleviate poverty in the country.
   
• A sector-specific National Export Strategy (NES) is under implementation to strengthen trade and investment in high-potential industries with strong global demand (e.g. rice, textiles and garments, tourism). Myanmar as a least developed country (LDC) is enjoying preferential tariff arrangements to facilitate the access of the country to major international markets.
   
• The Government of Myanmar is highly committed to encouraging investments with a positive impact on society and environment. Investment activities in certain sectors are therefore prohibited or restricted or may require specific approvals, processes, joint venturing or Environmental and Social Impact Assessments (EIA/SIA) to avoid adverse impacts on communities and their livelihoods, the environment as well as the progress in peace and national reconciliation.
   
• DICA is warmly inviting foreign companies to invest in less developed parts of Myanmar and to consider business opportunities facilitating the economic inclusion of Myanmar citizens in remote parts of the country (e.g. Chin State).

Investing in(to) the Myanmar society

Myanmar has the right “ingredients” and potentials for sustainable growth: The country offers natural resources and arable land in abundance – most importantly, however, Myanmar possesses a skilled, motivated and young population to realize the potentials and positive change.

• In the previous years of political and economic reform, the Myanmar society has shown to be willing and capable to drive the fundamental change. Myanmar’s citizens have demonstrated to be flexible in adapting to the availability of new opportunities and in dealing with new technology (the so called “digital leapfrogging of Myanmar”) and requirements, while acquiring new skills and competencies in a learning society – as employees and entrepreneurs.
   
• Particularly in Yangon and increasingly in urban centres in all of Myanmar, traditional life and modernity mix harmoniously – the society is open, warm and welcoming to foreign cultures and influence.
   
• According to the Myanmar Population and Housing Census (2014), Myanmar is home to 51.4 million people – a young population with a share of 65.6% within working age (15-64 years).
   
• The population is generally well educated with a high literacy rate of 93% and widely spread basic competences in English. Vocational training programs through the private sector may therefore easily close skill gaps.
   
• Valuable efforts are being made to strengthen the education sector in Myanmar: Compared to 2012, public spending in education in 2014 has increased by 49%. In addition, the Government is leading a Comprehensive Education Sector Review (CESR) to better understand the current status of education and is developing a National Education Sector Plan (NESP), which will guide the implementation of policies and programmes.

Profiting from a liberal, transparent and business-enabling environment

The creation of a business-enabling environment, investment promotion and protection are key priorities of the Government of Myanmar to attract responsible investment.

• Several Bilateral Investment Treaties (BITs) and other International Investment Agreements (IIAs) have been concluded to date. Please find an updated list here.
   
• Agreements on the avoidance of double taxation are in place with eight countries such as India, Laos, Malaysia, Korea, Singapore, Thailand, United Kingdom and Vietnam.
   
• Various laws have been revised to facilitate investment and to ease the operation of businesses in Myanmar, such as the e.g. Foreign Investment Law (granting taxation benefits, land use rights etc.), the Myanmar Citizen Investment Law and the Arbitration Law. Further legal changes to a better business-enabling environment are currently in the making (e.g.  Banks and Financial Institutions Law of Myanmar and a combined Myanmar Investment Law).
   
• A “National Framework for Public-Private Partnerships” (PPP) is being prepared to accelerate growth and faster improvements through the effective engagement of the private sector e.g. in infrastructure development. Transparent procedures in public tenders will be put in place to allow cost-efficient public service provision and modernization.
   
• The transformation of the telecommunications industry in Myanmar from a monopoly into an open market and first competitive tender processes (such as for a gas-fired power plant in Myingyan, Mandalay Region) show the efforts of the Government to create an open and transparent business environment.

State/Region	Total Population	Average Population (%)	State/Region urban population
Yangon Region	7,360,703	14.6	70.1
Ayeyarwady Region	6,184,829	123	14.1
Mandalay Region	6,165,723	12.3	34.8
Shan State	5,824,432	11.6	24.0
Sagaing Region	5,325,347	10.6	17.1
Bago Region	4,867,373	9.7	22.0
Magway Region	3,917,055	7.8	15.0
Rakhine State	2,098,807	4.2	16.9
Mon State	2,054,393	4.1	27.9
Kachin State	1,642,841	3.3	36.1
Kayin State	1,504,326	3.0	21.9
Tanintharyi Region	1,408,401	2.8	24.0
Nay Pyi Taw	1,160,242	2.3	32.3
Chin State	478,801	1.0	20.8
Kayar State	286,627	0.6	25.3
Total	50,279,900	100.0%	29.6%

Investment Opportunities

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The Government of the Republic of the Union of Myanmar warmly invites responsible investors to seek and seize business opportunities in Myanmar to accelerate sustainable economic growth.

Seize Investment Opportunities in Myanmar …
… in AGRICULTURE

Myanmar is a agro-based country with a vast potential of fertile land and abundant water resources. In 2014-15 a total area of 11.379 million hectares had been used for agriculture (net area sown). Given the landscape profile, topographic dimensions of Myanmar and different climatic areas in Myanmar, not only perennial plants, but also crops such as rice, pulses and beans, fruits and vegetables can be easily grown.

DICA is aiming at attracting responsible local and foreign investors, transforming the mostly traditional agricultural economy of today into a productive and sustainable agro-economy. To achieve this goal, increases in agricultural productivity (e.g. better irrigation, better seeds and techniques) and quality (e.g. seed quality, immediate post-harvest processing) are required.

Key opportunities:

• Agricultural input industries:
  • Distribution of low-cost irrigation systems to rural communities (e.g. solar-powered, with instruction)
    [Media: DICA_Investment_Opportunities_Irrigation]
  • Leasing of agricultural tools and machinery
  • Distribution of high-quality seeds for higher yields (e.g. rice unification in cooperation with the Myanmar Agricultural Bank to incentive conversion of communities to agriculture with higher productivity levels)
  • Establishment of the production of fertilizers, crop protection chemicals etc.
• Product and market development:
  • Contract farming (i.e. direct sourcing from rural communities (based on partnership agreements)
  • Introducing value-added production / processing based on local agricultural produce (e.g. groundnut, sesame). Please find a list of selected crops and annual production below:
    [Media: DICA_Investment_Opportunities_Agricultural_Crops]
  • Establish packaging / canning industry for agricultural produce
• Agriculture-related services:
  • Establishment of research and training institutions or demonstration farms on integrated agriculture, crop sequencing, fertilizer use, organic agriculture and agriculture-related business skill development
  • Construction of warehouses and cold storages
  • Microfinance, microinsurance and trade finance services for farmers

Seize Investment Opportunities in Myanmar …
… in AQUACULTURE & FISHERIES

Given Myanmar’s 2,832 kilometers of coastline along the Bay of Bengal and in the Andaman Sea, fisheries represent – as a natural matter of fact – an important opportunity for communities and businesses in the coastal areas of Myanmar (particularly in Rakhine State). Fishing grounds in Myanmar water are relatively less exploited than elsewhere. The aquaculture sector is operating almost 50,000 hectares of freshwater ponds.

According to statistics of the Department of Fisheries of the Ministry of Livestock, Fisheries and Rural Development, the production of fish and seafood has nearly increased to an eightfold between 1994 and 2014 demonstrating the importance of the sector to the economy as well as its strong potentials. Opportunities in the sector exist inshore (e.g. fish ponds, inland river systems and aquaculture), offshore as well as at deepsea locations.

Foreign investment in the fisheries sector is permitted to foreign investors in a joint venture with a local company. Recently, fishery products from Myanmar received approval to be exported to the European Union by certified producers. Myanmar enjoys preferential tariff arrangements with the European Union as a least developed country (LDC).

Key opportunities:

• Capture and aquaculture of different types of fish
• Capture and aquaculture of shrimp and prawn
• Fish food production
• Fish and seafood processing facilities
• Cooling, canning and packaging facilities
• Establishment of education and research institutions to broaden knowledge as well as the base of human resources available to the fisheries sector

Seize Investment Opportunities in Myanmar …
… through URBANIZATION

Likewise to other economies, Myanmar is experiencing a gradual migration process of population from rural to urban areas of Myanmar driven by a more diverse set of educational, professional and income opportunities. Hand-in-hand with urbanization come challenges as well as opportunities for local and foreign businesses addressing these needs and finding durable solutions for better and smarter cities in a more livable and a sustainable environment.

Changed demand patterns of the rapidly growing middle and consumer class open up new opportunities for the distribution of a larger spectrum of consumer goods (e.g. FMCG) as well as an emergence of new service industries (e.g. restaurants, entertainment, education).

Key opportunities:

• Real Estate& Construction:
  • Realization of projects for affordable housing in Yangon, Mandalay and second-tier cities in all states and regions
    • Nearly 20,000 low-cost and affordable apartments are planned only in Yangon, Pathein and Mawlamyine in FY 2015-16. Demand is to increase rapidly.
  • Restauration of colonial heritage buildings in Downtown Yangon
• Urban solutions:
  • Investments into systems for the improvement of public transport in urban agglomerations
  • Establishment of parks, facilities for recreation and entertainment
  • Provision of private healthcare facilities
  • Establishment of private education institutions (e.g. private universities, business schools, certified vocational training)
  • Smart traffic management and road safety solutions
  • Urban waste management
  • Water treatment facilities
• Production and distribution of consumer goods and lifestyle articles

Seize Investment Opportunities in Myanmar …
… in TOURISMAND HOSPITALITY

The tourism and hospitality sector in Myanmar is evolving rapidly since the political and economic opening of the country – the number of visitors to the country has been growing nearly exponentially since 2011:

TABLE: International tourist arrivals (including air, sea and road)

Year	Total
1995-1996	208,228
2000-2001	438,480
2005-2006	653,549
2010-2011	792,738
2011-2012	866,989
2012-2013	1,339,442
2013-2014	2,247,117
2014-2015	3,443,009

Source: Ministry of Hotels and Tourism, Ministry of Immigration and Population

At the moment, foreign tourists (on their first short-term visit to Myanmar) mostly visit Yangon, Bagan, Inle Lake / Nyaung Shwe as well as Mandalay. However, Myanmar offers to date unexplored treasures of natural beautyin the whole of the country from Kawthaung in the tropical South-East to Putao in the Himalaya.

The table displays the current distribution of hotels, motels and inns/guesthouses in Myanmar and reflects the considerable under capacity of available accommodation in numerous locations outside of the urban centers Yangon and Mandalay. There is a need for both, affordable as well as high-class accommodation depending on the current demand.

TABLE: Distribution of available capacity of hotels, motels, inns/guesthouses (in FY 2014-15; including private owned, state-owned and cooperative-owned establishments)

State / Region	No. of hotels, motels and inns	No. of rooms	No. of beds
Kachin State	26	732	1445
Kayah State	8	175	350
Kayin State	11	346	692
Chin State	4	40	69
Sagaing Region	23	724	1426
Tanintharyi Region	27	1226	2385
Bago Region	50	1212	2325
Magway Region	28	598	1185
Mandalay Region	356	15053	30045
Mon State	39	1392	2784
Rakhine State	43	1303	2616
Yangon Region	301	14053	28072
Shan State	232	7015	13914
Ayeyarwaddy Region	64	2387	4703
Nay Pyi Taw	2	70	102
TOTAL	1214	46326	92113

Source: Ministry of Hotels and Tourism and Ministry of Cooperatives

Foreign investors may engage independently in hotel developments of 3-stars or higher standard, whereby local investors are encouraged also to consider opportunities in offering budget accommodation through guesthouses at international standards. For foreign companies, investments in tour companies, travel agencies, budget hotels, amusement parks and tourism-related public infrastructure projects are permitted on a joint-venture basis.

Key opportunities:

• Exploring new high-potential investment locations in hospitality and tourism
• Developing eco-tourism (e.g. development of eco-tourism oriented hotels and lodges along with respective activities such as trekking routes or tours)
• Building cultural and community-based tourism (e.g. development of shops for the sale of locally produced cultural artifacts)

Seize Investment Opportunities in Myanmar …
… in the POWER SECTOR

The power sector of Myanmar opens up abundant and immediate opportunities to foreign and local investors. The installation of considerable additional capacity to the current 4,422 MW as well as the rapid construction of transmission lines are national priorities. In order to reach the objective of full national electrification until 2030, the power sector of Myanmar is to grow to a multiple of its current size.

The abundance of locations suitable for hydropower generation, the available rich natural gas deposits and nearly unexplored potentials in solar power and wind power along with the expansion of the transmission system open miscellaneous investment potentials. In the medium run, Myanmar may even develop to a net exporter of electricity to neighboring countries.

Beyond 92 identified larger-scale hydropower development (for the future development of potentially additional 46.1 GW) along the Ayeyarwaddy, Sittaung, Salween and Chindwin River systems, also smaller-scale hydro power plants as well as other sources of energy (i.e. solar, wind, gas) have high potential to play a significant role for national power supply.

Key opportunities:

• Construction of medium to large-scale hydro and gas-fired power plants in Public-Private-Partnerships
• Investments into the transmission system (e.g. high-voltage transmission lines between the North of Myanmar and Yangon)
• Realization of small-scale hydro-power projects e.g. to supply a village tract
• Establishment of solar energy farms and wind power farms
• Provision of efficient and practical solar-power kits to communities currently off-grid as well as of solar-power based solutions (e.g. solar-powered pumps, solar lighting)
• Upgrading of the current power infrastructure in urban centers and industrial zones

Seize Investment Opportunities in Myanmar …
… in MANUFACTURING

The manufacturing sector opens up opportunities due to the significant domestic market of Myanmar, direct access to strategic markets of Southeast Asia (ASEAN Economic Community) as well as to China and India. Preferential tariff arrangements for exports of the least developed country Myanmar to various geographies (e.g. European Union, Japan) create distinct economic incentives for investments in Myanmar.

With comparatively low labor costs, rich natural resource endowments, a diverse agricultural base for further value-added production and the strong support of industrial investment as a priority of the Government of Myanmar, investors enjoy favorable conditions.

To facilitate investments in manufacturing, three Special Economic Zones (SEZ) in Thilawa (near Yangon), Dawei in Myanmar’s Southeastern Tanintharyi Region as well as Kyaukphyu in Rakhine State are currently under development along with a separate legal framework granting investment incentives to companies in these SEZ. Thilawa started its operation in 2015 as the first SEZ of Myanmar.

In addition to the SEZ, numerous industrial zones have been established throughout the country, i.e. 14 industrial zones in Yangon Region (e.g. Mingaladon Industrial Park), Mandalay, Monywa, Hpa An, Kalay, Shwebo, Myingyan, Meikhtila, Magway, Pakhokku, Yenanchaung, Taunggyi, Pyay, Mawlamyine, Pathein, Myaungmya, Hinthada and Myeik.

Key opportunities:

• Value chain integration (e.g. joint ventures) of companies of supportive industries from Myanmar with international companies to combine operational experience in Myanmar with international markets, technology and investment capital.
   
• Investment are in particular encouraged in the following industries:
  • labor-intensive industries in second-tier cities (e.g. Pathein, Bago, Hpa An) in areas such as production of garments and shoes or assembling of toys and stationary articles
  • agro-processing industries at the locations of agricultural produce in rural areas (see section on agriculture)
  • production of building materials strongly demanded by the national construction industry (e.g. cement, bricks, steel, glass, paints, doors, windows etc.)
  • gemstone processing industries (e.g. jade, sapphires, rubies) to establish value-adding production such as design, cutting and polishing inside Myanmar
  • capital-intensive industries (e.g. automotive, land machinery) particularly at locations with good access to international and national markets (e.g. SEZs)
  • wood-processing industry particularly based on hardwood and bamboo (e.g. furniture production)
  • paper and cardboard industry
  • high-tech industries (e.g. in Yangon, Nay Pyi Taw, Bago and Mandalay) based on local, regional and global demand and the opportunities through the proximity of international airports
  • chemical industries (e.g. pharmaceutical and plastic articles) based on local and regional demand
  • industrial services, e.g. waste water management, recycling, training

Seize Investment Opportunities in Myanmar …
… in INFRASTRUCTURE DEVELOPMENT

The development of sufficient and better infrastructure is an important requirement to be able to physically carry the industrial and agricultural growth in Myanmar’s dynamic future. As stipulated in the National Comprehensive Development Plan, the Government prioritizes infrastructural and economic development along certain major trade paths through the country in order to facilitate the integration of Myanmar into production networks of the Greater Mekong Subregion (GMS) and Myanmar’s Western neighbors.

The Government of Myanmar has experience in conducting infrastructural projects under Build-Operate-Transfer (BOT) or other Public Private Partnerships (PPP)agreements with the private sector (e.g. in the railway and highway sector) and is welcoming investors for infrastructural improvement projects.

Key opportunities:

• Road, bridge and railway construction
• Construction and operation of airports
• Construction of ports
• Establishment and retrofitting of industrial parks and supportive infrastructure
• Logistics infrastructure

Seize Investment Opportunities in Myanmar …
…in EXTRACTIVE INDUSTRIES (Minerals / Oil and Gas)

Myanmar possesses natural resources in abundance, such as predominantly the following minerals:

Alum Amber Antimony Barite Bauxite Beryl Bismuth Cadmium Chromite Cinnebar Coal Cobalt

Columbite Copper Corundum Gemstones Gold Graphite Gypsum Iridium Iron ores Jadeite Kaolin Lead

Manganese Mica Molybdenum Natural gas Nickel Ochre Oil Oil shale Phosphates Platinum Salt Saltpetre

Silver Soda Steatite Sulphates Sulphides Sulphur Tin Titanium Tungsten Zinc

The Government of Myanmar is encouraging responsible investments in the field of the extractive industries. Investors may support the exploration and extraction of the natural resources according to international best practices. Responsible investments in extractive industries are necessarily to consider the implications on livelihoods of the local population, the environment, societal factors as well as the political economy in specific areas. Myanmar is a candidate of the Extractive Industries Transparency Initiative.

Key opportunities:

• Exploration and feasibility studies for projects in mining as well as oil and gas
• Medium to Large-scale operation of mines and wells
• Offshore and onshore opportunities for the exploration and extraction of oil and gas
• Establishment of petroleum-based industrial, processing and supportive facilities (e.g. refineries, fertilizers, LPG, LNG)
• Value-added production based on natural resources
• Supporting industries, such as machinery, maintenance, consulting services
• Establishment of education and research institutions to broaden knowledge as well as the base of human resources available to this sector

Seize Investment Opportunities in Myanmar …
… in FORESTRY-BASED INDUSTRIES

Myanmar’s strong forestry sector offers numerous opportunities for involvement of local and international investors. The country is one of the leading producers of teak and hardwood (particularly Pyinkadoe and Padauk).

In order to prevent the continuation of unsustainable forestry practices and large scale log-harvesting particularly of teak, the Government of Myanmar strictly and effectively abandoned the export of unprocessed teak and hardwood in April 2014. According to the Department of Forestry, between 2000 and 2014, the total forest cover of Myanmar decreased from 348,680 sq-km to 304,725 sq-km equaling anaverage deforestation rate of approximately 1%.The ban on logging has proven to be effective in incentivizing more value-added production in wood-processing in Myanmar and increasing the GDP contribution of this sector.

The structural change offers opportunities to foreign and local investors to support this emergence of value-added and sustainable forestry e.g. by establishing new wood-processing industries in Myanmar. Furthermore, the stronger engagement of the private sector in the plantation business to restore forests in an environmentally and economically sustainable way is desired.

Key opportunities:

• Establishment of wood-processing industry (e.g. furniture production)
• Expansion of bamboo forests and bamboo-based production (i.e. handicrafts)
• Rubber-based industries (e.g. tire production in Mon and Karen State)
• Teak and hardwood plantations
• Sandalwood-processing industries
• Community-based forestry

Table: Tree species in Myanmar in 2000 and 2005

Source: European Union