Myanmar – Embraces Positive Change
Following a successful democratic political election in November 2015, Myanmar is busy preparing itself to make the political, economic, social and legal changes that will continue to ensure the sustainable development of its economy.
Foreign participation has grown to unprecedented levels as international companies compete for investment opportunities in one of the newest and most promising economies of Asia.
Myanmar, also popularly known as Burma, has historical roots that stretch back into antiquity. Situated in South East Asia, at an intersection between India and China, it is a largely rural, thickly forested country. Famous for its Buddhist pagodas, it has become a place of pilgrimage for worshippers and tourists alike.
On 8 November 2015, Myanmar held landmark elections to replace the civilian Government formed by the Military in 2011. The National League for Democracy (NLD), led by Aung San Suu Kyi, enjoyed a landslide success winning just under 80% of the seats in the upper and lower houses of parliament. As a consequence of its large majority, the NLD will be in a position to lead political and social reforms and also dominate the process for the election of a new President.
An NLD Government demonstrates the progress that democracy has made in Myanmar since it opened its doors to the international community in 2011. The success of the national vote, which has seen the people of Myanmar choose their first democratically elected Government since the early 1960s, serves to further strengthen improving international political relations.
Future political and legal reform is expected to continue its support for the growing influx of foreign investment into the country, which has seen a huge increase from US$329.6 million in 2009/2010 to US$8.1 billion in 2014/2015.
But what really makes Myanmar such an attractive place to invest in?
With a population estimated at 53.7 million in 2014, Myanmar has significant untapped agricultural potential and a rich endowment of natural resources in the form of oil, gas, minerals and a variety of precious gemstones.
Myanmar is ideally situated to take advantage of the large export markets of India and China. It is also a member and was the chair country in 2014 of the Association of South East Asian Nations (ASEAN) trading bloc. ASEAN includes some of the fastest growing economies in the World.
The cornerstone of the Myanmar economy is agriculture. It contributes between 30 to 40% of the gross domestic product. Up to 70% of the 32.5 million national workforce is engaged in agricultural activity or depends upon agriculture for their income. Furthermore, agricultural products generate roughly 25 to 30% of export earnings.
Myanmar’s diverse topography, climates, water resources and ecosystems offer farmers and investors the opportunity to produce a wide range of crops, livestock, poultry and fish.
Rice is currently the most important agricultural commodity and the majority of production is centred upon the Irrawaddy river delta. Paddy rice feeds the country and also represents the main export crop. Sugar cane, cotton and pulses are other important contributors to the success of the agricultural sector. The production and processing of these commodities was until recently controlled by state owned organisations. However, in an effort to develop foreign participation and increase local production, these industries have been liberalised.
The government now has high hopes that foreign investment will increase in the agriculture sector.
Although the Government provides valuable capital for agricultural production, foreign investment is also crucial to make up for capital shortfalls and to help farmers avoid alternative capital funding that can carry extremely high interest rates.
Despite the importance of the agricultural sector to Myanmar, it has not historically attracted high levels of foreign investment. This situation is slowly changing, but the need for international investors to upgrade infrastructure and research and development is high.