Myanmar is currently one of the world’s fastest developing economies, as it increasingly provides new opportunities for both local and global firms. As its economy further opens up, new research has found, Myanmar could register rapid economic development going forward. Htet Tayza reports.
This research, compiled by strategy consulting firm Roland Berger, was titled, Myanmar: A wave of optimism – will it last? Roland Berger polled over 200 business executives, from local and global firms, from across many of Myanmar’s sectors, to assess its growth prospects. They found that Myanmar’s economic growth will hit 8.4% in 2017, a huge increase from the 5.9% rate registered in 2011.
This rate is significantly higher than that for other emerging South East-Asian economies like Cambodia (6.9%), but it comes from a low base. Myanmar currently boasts a nominal gross domestic product (GDP) of just US$1,500, one of the lowest in Asia. Yet, Roland Berger suggested, a large amount of relatively free-flowing capital, coupled with advancing technology, could allow Myanmar’s nominal GDP to leapfrog to US$5,000 in the next 20 years, outpacing historic trends in both the UK and the US.
Wave of optimism
Most of the executives surveyed by Roland Berger expressed positive sentiments concerning Myanmar’s economic growth prospects. Almost two thirds (65%) of those questioned said that conditions in Myanmar will improve, with this number rising to 86% for the hotel and tourism sector. Executives in Myanmar’s finance, utilities and oil & gas industries also expressed positive attitudes.
The fact that Myanmar is a frontier market was cited by 80% of respondents, as the strongest reason that they believe that the nation’s economy will improve in 2017. Meanwhile, two thirds of executives said that the government’s economic reforms, such as the recently-enacted Myanmar Investment Law, should help the country’s economy succeed across the coming 12 months and beyond.
Roland Berger further noted that both local and global firms operating in Myanmar are positive about their growth prospects. Over half (57%) of local enterprises polled said that they are expecting to expand their operations in Myanmar organically, with 67% of global companies saying the same. Also, 27% and 16% of local and international businesses respectively admitted that they plan to enter partnerships with global companies going forward, in order to expand their operations in Myanmar.
However, Roland Berger found that businesses operating in Myanmar face a number of challenges. The areas cited as requiring either improvement or significant improvement by respondents included a lack of skilled employees, unclear government economic policy and the nation’s unpredictable legislative environment. Roland Berger also discovered that if Myanmar’s infrastructure undergoes significant development, according to those polled, Myanmar’s economy could benefit. For example, a staggering 97% of those questioned cited a stable electricity supply as a critical factor to success.
Commenting on the report’s findings, Roland Berger was quoted by Consultancy UK, a consulting industry news source, saying: “Companies that want to invest in Myanmar need to be prepared for volatility. The country is rapidly developing and changing, but still has a long way to go to catch up. The prospects for Myanmar are bright and those who are prepared to ride out the volatility are likely to be rewarded with new opportunities.”
Going on, Roland Berger explained: “Our conversations with Government officials indicate that there is awareness of the need and urgency to clarify and detail economic policies, and determination to move from planning and deliberation to action and quick wins. If this indeed happens, we will continue to see one of the fastest and most impactful transformations of a nation ever.”