1. Could you provide an overview of Myanmar’s reliance on trade and its overall domestic market structure?

Myanmar is one of the fastest growing economies in Asia. The country has been steadily opening to international trade and investment since Government-led economic and political reforms started around 2011.

Agriculture still employs the most people in Myanmar, but we see significant growth in manufacturing, tourism and the financial services sectors. Trade in Myanmar has expanded quickly during the past few years as a result of eased border restrictions. Out of Myanmar’s many current trading partners, China is the largest – with trade doubling to US$11.3 billion in the eight years between 2013 and 2019. Myanmar’s main exports include oil and gas, agriculture products, minerals and forest products, and finished industrial goods such as garment, while it imports a wide variety of manufactured consumer and capital goods as well as CMP (cut-make-package) raw materials. The countries trade deficit stands at $1.14 billion for the fiscal year 2018-2019.

Myanmar surprised many in 2013 when it opened up its telecommunications sector to international operators, paving the way for an extensive rollout of infrastructure that heralded a rapid digitisation of the economy. For example, adoption of mobile financial services has created huge opportunities in a country where as much as 75% of the population are unserved by banks. With these broader economic changes comes a noticeable growth in consumer discretionary spending. We expect the consumer market to rise steadily during the next few years as the middle class expands.

2. What do you see as the most exciting trends for Hong Kong and Myanmar in terms of trade?

Since the re-opening of the Myanmar economy in 2011, the country has enjoyed strong GDP growth and benefited from an increase in FDI. Several major infrastructure projects are currently underway, which will reduce the costs of production for manufacturers operating in the country. Before the global COVID-19 outbreak, the World Bank projected Myanmar’s GDP would expand by 6.6 per cent in 2020, with growth driven by investments in the manufacturing and construction sectors.

With recent trade wars and rising labour costs across the region, Myanmar is becoming an increasingly attractive destination for manufacturing investments. Labour is young and abundant, whilst industrial land cost is significantly cheaper than neighbouring countries. Whereas low connectivity and infrastructure had dampened such investments in the past, this is set to change quickly as the country embarks on its infrastructure plans. On top of that, a surge in Chinese investment with the Belt and Road Initiative will give Hong Kong a front-row seat to provide necessary international services to enable these investments. 

3. What are some of the recent developments in terms of projects, cooperation or infrastructure that you can highlight?

During Chinese President Xi Jinping’s visit to Myanmar in January, he signed off on 33 bilateral agreements including railway, port and SEZ projects, which are expected to bring billions in FDI and create substantial jobs. Notable developments include the Kyaukpyu port, and the New Yangon Development Company (“NYDC”). 

A consortium of six companies led by the China International Trust and Investment Corporation (“CITIC”) won the tender for building the Kyaukpyu Special Economic Zone, one of three such zones. The project will include a deep-sea port and an accompanying industrial park. Infrastructure Asia (“IA”), an infrastructure project facilitation office led by two Singapore government agencies, Enterprise Singapore and Monetary Authority of Singapore, have been working with NYDC to share institutional, technical knowledge and international best practices in project evaluation. 

Such infrastructural developments will also benefit many service sectors. Tourism, for example, will be given a boost with the conversion of some domestic airports to international airports. Improved connectivity will open some of Myanmar’s new and exciting destinations to rest of Asia and the world, such as the spectacular and largely unchartered Mergui Archipelago in the southern region of Myanmar. 

4. How has COVID-19 changed things in the short run for business and trade? What do you think are the long-term implications?

COVID-19 has impacted trade globally, Myanmar is no different. Myanmar recorded its first COVID-19 case relatively late on, giving the Government some time to prepare its response. All international flights are currently suspended, and the country is in a state of temporary lockdown during Thingyan, the Myanmar New Year holiday.

Myanmar’s GDP has been projected to slow anywhere between 2 and 3 per cent in the current fiscal year as manufacturing activity and exports are expected to slow down due to the virus. The Myanmar government was quick to announce stimulus packages to support businesses and protect employment. Although the quantum of these packages are comparatively small, they are first-of-its-kind in Myanmar and demonstrate a will and cooperation across the government that is much welcomed by the business community. Indeed, there are some bright spots as we expect to see faster digitisation, growth in e-commerce and fin-tech businesses. Companies, like Wave Money, are currently leading the industry as the digital money platform in Myanmar with quick uptake and a growing user base. 

5. Could you share one recent success story of a Hong Kong company making waves in Myanmar and vice versa?

Hong Kong frequently leads the list of top FDI source for Myanmar. In recent years, several Hong Kong companies have taken leading positions in their respective fields and made headlines. 

The Hongkong Shanghai Hotels Limited, in partnership with local conglomerate Yoma Group, is undertaking a major heritage conservation project to develop the Peninsula Hotel Yangon. This development is capturing the imagination of heritage enthusiasts and architects alike and will set the scene for luxury travel in Myanmar. Along with the newly opened Rosewood Hotel and the Hong Kong-owned Strand Hotel – both set in historical colonial buildings, Hong Kong companies are truly leading the way in luxury hospitality in Yangon.

Hong Kong-listed VPower Group has announced three power projects in Myanmar with an aggregate capacity of 900MW, making it one of the most significant private sector power producers in the country to provide the much-needed electricity to fuel the rapid economic expansion in the country. Hong Kong-owned developer Marga Group has recently completed and delivered The Central, a stylish lakeside residential and retail development, and one of the most prominent real estate project that is elevating the standard of living in Yangon. In the financial sector, AIA is one of the few foreign companies awarded a license to sell insurance.