After decades of lying dormant, Myanmar is quickly awakening to global business. The pace of change from an isolated, closed off economy to one that is open for business on a global scale has been staggering. As one of Asia’s least developed countries, Myanmar is experiencing a transformation unlike any other today and provides a rare opportunity for international firms to be a part of one of the last frontier markets.
In August and September 2016, German consulting firm Roland Berger surveyed nearly 200 senior executives from companies of all sizes to get input on the opportunities and challenges ahead.
Executives were enthusiastic about Myanmar’s outlook and believed that conditions are ripe for firms to grow and expand. Nearly 80 percent of survey respondents cited the country’s status as a frontier market with a large and growing population as a prime reason for investing in Myanmar. And 66 percent of respondents think that the government’s commitment to reform is a key reason to enter the market.
Businesses also expect the situation to improve and are planning accordingly. Nearly two-thirds of those surveyed preferred organic growth, while more than half of local firms prefer international partnerships, providing a platform of opportunity for international firms.
Success in Myanmar is a matter of commitment and patience.
The road won’t be smooth
Like many emerging markets, Myanmar also presents challenges to firms looking to grow. Firms surveyed believe that labour issues and lack of legislative certainty are the main risks to doing business in the country. Some 41 percent of firms say that lack of skilled staff is a very significant issue and for 85 percent it is the most significant one. As a result, much of the investment in the coming year will be on employee development and training. Higher skilled workers present the added challenge of rising labuor costs, which could be an issue for growth.
The biggest concern, of course, is the government policy in Myanmar. While there is broad acknowledgement that important actions such as the new investment law have been taken, the business community is missing a programme that is broad enough to cover the major parts of the economy. There is no programme that is specific enough to build business and investment plans on, and quick enough to take advantage of the goodwill created by the change in government and lifting of sanctions, before it evaporates.
The lack of a clear economic policy, an unpredictable legislative environment, selective enforcement of regulations and lack of intellectual property rights protection all present major obstacles to business growth and investment in the country.
“These obstacles indicate the need for comprehensive public sector reform. Despite ongoing initiatives, meaningful improvements to public services will be inevitably challenging, reflecting the urgent need for swift implementation and quick wins”, said Thomas Klotz, managing partner of Roland Berger South-East Asia.
Government reforms are crucial for achieving economic growth. The magnitude of the transformation challenge is illustrated by how many firms are suggesting urgent government action across a wide range of issues. For example, more than 90 percent are calling for transparent government policy, stable electricity supply, better transport infrastructure, financial sector reform and promotion of fair competition.
Time for Action
Myanmar’s potential is real, but so are the roadblocks. For firms seeking to take advantage of the country’s window of opportunity, as well as policymakers who want to boost employment and investment, both have roles to play in helping the country develop rapidly such as regulatory and legislative assurances as well as transparency.
But Myanmar presents tremendous opportunities for international firms that want to expand into new and emerging markets.
“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”, Klotz said.