Myanmar is increasingly developing a favourite trading environment for businesses, especially for the small to medium-sized enterprises (SMEs) which dominate its economy. Despite some concerns, Myanmar-based firms have expressed optimism over the nation’s growth prospects in a new survey.
To compile this research, German consulting firm Roland Berger questioned nearly 200 executives at 179 local and global businesses operating in Myanmar. Local news portal Mizzima reports that according to Roland Berger, these executives expressed optimism over their companies’ expansion prospects. However, they also highlighted governmental policy and regulation as key concerns.
Commenting, Roland Berger’s Manager Partner for South-East Asia, Thomas Klotz, said that “seeing from our conversations in the market, there’s a bit of nervousness” among those polled. In their research, Roland Berger cited several government-related issues that need to be addressed, to facilitate future economic growth. This included the government’s vague economic policy, selective enforcement of regulation and restrictions on both access to markets and investments.
Continuing, Klotz said that “there are still some questions about what the rules of the game are.” He added, however, that the government is making some progress in clarifying these rules, using the recently-approved Myanmar Investment Law as an example. This is designed to boost Myanmar’s foreign direct investment (FDI), which is critical to its economy, by equalising the playing field for investors. Roland Berger added that the government also needs to reform the finance sector and improve Myanmar’s broadband, transport and electricity infrastructure, to help businesses operate.
However, Roland Berger found that optimism remains high among businesses operating in Myanmar. Almost three quarter (73%) of those polled think that Myanmar’s economy will improve in the next year. Expanding, Klotz commented that Myanmar’s environment is “a green space, an open field,” possessing a range of “frontier market” benefits which make the nation attractive to global investors.
These benefits include its nascent economy, abundant natural resources and large, young population. The vast majority (80%) of those questioned said that a major reason why they started operating in Myanmar was these “frontier market” benefits. Klotz cited Myanmar’s telecommunications sector, which has expanded exponentially over the past few years, as a prime example of the nation’s economic potential. Explaining, he labelled this industry “the perfect choice for a sector to liberalise,” as its local successes have boosted investor confidence in Myanmar’s economy.
It is important to note that Roland Burger’s research represented a broad-cross section of Myanmar’s economy. The industries represented included tourism, banking, retail, utilities, real estate and telecommunications, suggesting that it is a fairly accurate assessment of business sentiment in Myanmar. This is actually the first ever business confidence survey of its kind carried out in the South-East Asian nation, so it provides us with unique insight on Myanmar’s business operating environment.
Myanmar has serious economic potential. In a recent report, the International Monetary Fund argued that Myanmar’s economy is making progress, estimating growth for the 2016/2017 financial year at 6.5% of gross domestic product (GDP), just down from 7.3% for the year before. Meanwhile, Myanmar State Councillor Aung San Suu Kyi recently argued that in 20 years’ time, Myanmar’s economy could surpass Singapore’s, one of the biggest in South-East Asia, with the help of foreign investors.
For a nascent economy like Myanmar, foreign investment is critical, supplying crucial business resources, technology and education to SMEs. But along with the government-issues highlighted by Roland Berger, foreign investors face an uncertain international geopolitical climate, especially with the recent election of anti-globalist Donald Trump as President of the US, the largest economy on earth. In this environment, investors may be reluctant to take a chance in an emerging economy like Myanmar, so its government needs to further liberalise invest laws, to raise FDI rates and aid growth.
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