From the Wires
Frost & Sullivan: Future is Bright for Myanmar
By: PR Newswire
Dec. 4, 2012 02:05 AM
BANGKOK, Dec. 4, 2012 /PRNewswire/ -- Frost & Sullivan is optimistic on the future growth for Myanmar as the country is an untapped new frontier at the crossroads of India, China and South East Asia offering abundant opportunities.
Mr. Vivek Vaidya, Vice President at Frost & Sullivan said that Myanmar was among first few countries US President Barack Obama chose to visit in his second term indicates Myanmar's improving status and image among the global community.
"Myanmar, the only neighbor for both China and India is likely to assume great geo-political-business importance in years to come," he added.
He added that Myanmar has a large untapped potential and is truly going through transition with a population of more than 60 million.
He also that Myanmar's GDP at purchasing power parity (PPP) has been growing at a very solid rate and is expected to continue to do so over the next few years in the range of 5-6 per cent. He noted that Myanmar's GDP (PPP) has increased by 20 per cent since 2007.
Mr. Vaidya said Myanmar has a very young population spread that will help to drive it economically. He added that the low unemployment rate of about 5 per cent was due to the growth of the agriculture sector, which remains the key driving force of the Myanmar's economy both in terms of GDP and employment.
"There is a large labor force to be tapped into in Myanmar but two-third of this is involved in agriculture, representing about 43 per cent of GDP," he added.
Mr. Vaidya said that most imports into Myanmar are basic commodities not yet manufactured in wide scale in the country and thus show growth potential. He added that the top ten import industries/items for Myanmar in 2011 are petroleum and related products, machinery/spares, steel construction materials, plastic raw materials, palm oil, vehicles and spare parts, pharmaceutical products, ships & boats, cement and fertilizers.
He also said that China has been the leading investor in Myanmar in the last few years, but this is likely to change. "With the market opening up, South East Asian companies are rushing to invest in the country. US/International companies are also doing so, but on a more selective and wait and see nature to get clarity on director and laws of the country," he added.
Mr. Vaidya said that all industry sectors and sub-sectors are of interest, but for the economy to take off and to benefit from Myanmar's location, large infrastructure project covering power, water, ports and roads are needed.
"Oil, gas, power, infrastructure, telecommunications and consumer businesses could top the list in terms of being the most attractive and easier to do investments in the country. Property prices are already very high," he said.
He also said that special economic zones will be required to continue to stimulate both imports and exports, along with ports and roads. He noted that around 300,000 TEUs and 16.7 million tonnes, accounting for close to 100 per cent of Myanmar's cargo, pass through the ports of Yangon and Thilawa. He added that Myanmar will act as a Southern Economic Corridor and Gateway to India, and the three special economic zones being developed are Kyaukphyu, Thilawa and Dawei.
Mr. Vaidya said that Myanmar needs to address its chronic shortage of electricity to ensure continued economic growth. He added that Myanmar's power generation is currently made up of 70 per cent hydro, 24 per cent gas, 4 per cent coal and 2 per cent diesel. He added that current production levels are at 1,350 MW which can drop in summer due to less hydro production against a demand of 1,850 MW. He forecasts demand of about 3,000 MW in 2016.
Mr. Vaidya said that the oil and gas sector offers major opportunities but most likely under Production Sharing Contracts (PSC). He added that state-run MOGE is active in the oil & gas sector, and Myanmar has large reserves of oil and gas both onshore and offshore.
"Other than companies coming into to work with current block licence holders, Myanmar is looking at offering up as many as 10 off-shore and 10 on-shore blocks," he said, adding that altogether 62 of the country's 101 exploration blocks remain open for bidding, including 34 onshore, eight in shallow water, and 20 in deep water.
Mr. Vaidya said that Myanmar's telecommunications sector shows huge potential with only 3 million mobile subscribers out of 60 million people. He added that wireless penetration stands at 4 per cent and fixed at 3 percent, so massive upside for growth but hurdles exist.
"50 per cent of wireless penetration is targeted by 2015 but handset prices are high and registering SIM cards is expensive at about US$150-200," he added.
Mr. Vaidya said that there are abundant opportunities within a wide range of industries in Myanmar but one will need to be patient and get timing and model of entry right in order to be successful in the country.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.
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