Country Overview: MyanmarCountry Overview: Myanmar

Presenter:

Monsinee Keeratikrainon, Ph.D.

Frost& Sullivan

Country Manager, Thailand

Chief Representative Officer, Myanmar/ Lao/ Cambodia

Head of AEC Strategy Practice, APAC

Country Overview

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• One of the least developed countries in the world

• Abundant natural resources and cheap pool of labor

• Undergoing political and economic transformation after the fall of the longruling military regime

Country Snapshot

Area Size Administrative Division

Republic of the Union of Myanmar (also known as Burma)

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• 676,578 km2 – 40th in the world• Bordered with India, Bangladesh,

China, Laos, and Thailand

Key Industries

Agriculture processing, wood and wood products, copper, tin, tungsten, iron, cement, construction materials, pharmaceuticals, fertilizers, oil and natural gas, garments, jade, and gems

Petroleum, timber, tin, antimony, zinc, copper, tungsten lead, coal, marble, limestone, precious stones, natural gas, hydropower

Natural Resource

• 7 regions (divisions)• 7 states• Capital city: Nay Pyi Taw• Commercial hub: Yangon

POPULATION

Population Number 54,584,650

Population Annual Growth 1.23%

Gender/Sex Ratio 99(M) : 100(F)

Number of Households 11,826,000

Average Household Size 4.62

SOCIAL - EDUCATION

Working population 41.6%

Key Macroeconomic Indicators

ECONOMIC

GDP (US$ Billion) 83

GDP per Capita (US$) 1,325

GDP Growth 5.5%

Inflation Rate 5.2%

Export/Import (US$ Million) 45.2/42.9

Benchmark Interest Rate 12%

Lending Interest Rate 15%

Key Macroeconomic Indicators, Myanmar, 2011

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Working population 41.6%

Unemployment rate 5%

Poverty rate 32.7 %

Human Development Index 0.48 (rank 149/187)

Gender Inequality Index 0.492

Exchange Rate (= US$ 1) MMK825

Consumer Confidence N.A.

Consumer Price Index 163.32

FINANCIAL

Country Income Profile Low income

Poverty Line MMK754 per day

Income share of Highest/Lowest 10% 32.4%/2.8%

FUEL COST

Type Gasoline Diesel CNG

Ratio 1 1.1 -

Price US$4.30/gallon US$4.73/gallon US$0.33/Kg Source: CSO, CIA World Factbook, UNDP, Frost & Sullivan.

MOTORIZATION

No. of Vehicles/1000 persons 7

Drive LHD/RHD

Emission Requirement N.A.

Paved Road 21%

Political RiskAmong the top countries exposed to rapid and sudden changes of government policies

President Supreme Court

2008 Constitution

Main Issues to Address

• Deficient democracy

• The new government, which took power inMar 2011, ended a 23-year military regime.

• Several efforts have been made towardsdemocracy, most notably the release ofopposition party leader, Aung San Suu Kyi,and more recently, the reshuffle of thecabinet to include more reformists.

Political System, Myanmar, 2011

Union Assembly (Pyidaungsu

Myanmar Government

LegislativeExecutive Judiciary

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President Supreme Court• Deficient democracy

• Infrastructure development

• Special economic zones

• Education and health

• Human rights abuses

• Weak regulatory and legal system

• Corruption

• Child labour and forced labour

• Environmental issues

• Release of political prisoners

• Ethnic violence

(PyidaungsuHluttaw)

House of Nationalities (Amyotha Hluttaw)

House of Representatives(Pyithu Hluttaw)

Source: Frost & Sullivan analysis.

Ranked 2 out of top 20 countries in the world with highestpolitical risks in 2012 according to Maplecroft’s Political Risk(Dynamic) Index.

Economic AnalysisEconomy is gradually picking up and expected to attain 6% growth in 2012

Agriculture43%

Industry20%

Services37%

6468

7277

8312.0

3.6

5.1 5.3 5.5

4

6

8

10

12

14

20

30

40

50

60

70

80

90

GD

P G

row

th (

%)

GD

P (

PP

P)

(US

D b

il)

GDP GDP Growth

GDP (PPP), Myanmar, 2007-2011GDP by Sector, Myanmar, 2011

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• Myanmar’s GDP grew the highest in past 5 years, crossing US$ 80 billion in 2011.

• Biggest contribution came from Agriculture and Services sectors.

• GDP per capita in 2011 was US$ 1,325 (almost 20% growth from 2007 figure).

Source: International Monetary Fund.

20%

0

2

4

0

10

20

2007 2008 2009 2010 2011

GD

P G

row

th (

%)

GD

P (

PP

P)

(US

D b

il)

1,111 1,153

1,201 1,255

1,325

1,000

1,100

1,200

1,300

1,400

2007 2008 2009 2010 2011

GD

P (

PP

P)

pe

r C

ap

ita

(U

SD

)

GDP per Capita, Myanmar, 2007-2011

Economic AnalysisRapid developments to set banking sector ready for AEC in 2015

Banking Sector Structure, Myanmar, 2011

Central Bank of Myanmar

Private Banks(19)

Government Banks

(4)

Overseas Banks(23)

• Myanmar’s antiquated banking sector has gradually opened upsince the new civilian government took control in 2011, allowingthe establishment of more domestic private banks andrepresentative offices of international banks and financialinstitutions.

• However, foreign banks are still not allowed to offer bankingservices. They will only be able to form joint ventures in 2014.

• Interest rates have been made in line with other ASEAN countriesto raise national competitiveness.

• FEC, which has been used as a substitute for US dollar in thecountry, is expected to be terminated by end of 2012 when thenew Foreign Exchange Law is enforced.

7

0%2%4%6%8%

10%12%14%16%18%

2008 2009 2010 2011 2012

Le

nd

ing

Ra

tes

(%

)

Fixed Deposit Lending Rate Savings Bond (3-year)

Interest Rates, Myanmar, 2008-2011

new Foreign Exchange Law is enforced.

Source: Frost & Sullivan.

Recent Developments in Banking Sector

Nov 2011 Introduction of ATM cards

Jan 2012 Launch of international money transfer service

Feb 2012 Increase limit of foreign exchange amountIntroduction of cross-bank foreign currency transactions

Apr 2012 Official float of the Kyat

Jul 2012 Opening of foreign currency account for local and foreign individuals and companies

Aug 2012 Introduction of Letter of CreditLaunch of Giro Billing Payment System and debit cards

Sep 2012 Launch of Myanmar Payment Union card

Social Analysis

Household Monthly Income Distribution, Myanmar, 2011

7.69

2.37 3

4

5

6

7

8

9

Nu

mb

er

of

Ho

us

eh

old

s (

mil

lio

n)

Industry7%

Services23%

Labor Force, Myanmar, 2011

8

0.24 0.35

1.18

-

1

2

Nu

mb

er

of

Ho

us

eh

old

s (

mil

lio

n)

Source: Central Statistics Organization, Myanmar Survey Research.

Agriculture70%

7%

• Active work force constitutes 42% of the population, mainly serving the agriculture sector.

• Majority of households (65%) earned between US$200-300.

• Around 70% of income was spent on food items, leaving small amounts for education and healthcare.

Judiciary

Supreme Court

Courts MartialConstitutional

Tribunal

High Courts

Legal System, Myanmar, 2011Legal System Characteristics

• Combination of English common law and customarylaw.

• Lack of transparency – no advance or written noticeon changes of laws/regulations by the government

• No guarantee of a fair trial

• Amended version to the 1988 Law under approvalForeign Direct

Status of Business Laws

Legal RiskUnderdeveloped regulatory and legal system makes Myanmar the worst country for doing business

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High Courts

District CourtsCourts of Self-

Administered Areas

Township Courts

• Amended version to the 1988 Law under approval• Redrafting Special Economic Zone Law in

process

Foreign Direct Investment

• Banking Law – in drafting process• Foreign Exchange Management Law – in drafting

process

Finance/ Banking

• Employment and Skills Development Law under discussion

• Minimum Wage Law under approval

Employment/Labor

• No existing law• New law in drafting process

Consumer Protection

• No existing law• New IPR to be submitted to Parliament for

approval

Intellectual Property

• New Impact Assessment Law in drafting process• No pollution standards

Environment

Law enforcement bodies:

� State Peace and Development Council� Attorney General� Supreme Court� Police

Market Entry Approach

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Suggested Approach for Market Entry Study

How to enter Myanmar

Market OverviewMarket

OverviewPartner

SelectionPartner

SelectionRegulatory Analysis

Regulatory Analysis

Market Entry Options

Market Entry Options

Product Market Overview

•Market size by segment/application•Market size by brand•Market drivers and restraints

Partnership model

•Joint Venture opportunities•Distribution partner(s) identification•Partner profiling and justification

Regulatory Analysis

•Import regulations•Foreign investment regulations•Company act

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Myanmar market

OverviewOverview SelectionSelection AnalysisAnalysis OptionsOptions

How to compete in Myanmar

market

Market OverviewMarket

OverviewCompetitive

AnalysisCompetitive

AnalysisCustomer Analysis

Customer Analysis

Product PortfolioProduct Portfolio

Competitor Analysis

• Product• Price• Distribution and service• Partner

Customer Analysis

• Attitude and preference• Lifestyle and behaviour• Purchasing criteria• Market segmentation

Contacts

Suwitchaya LerswisutBusiness Development Manager, ThailandTel: +66 2 637 7414 ext. 105

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Tel: +66 2 637 7414 ext. 105Email: suwitchaya.lerswisut@frost.com