BMI View: We continue to believe that near-term construction growth in Myanmar will remain close to the modest levels seen in 2012. This lack of acceleration in growth is due to the limited upside to foreign investment - the main driver of construction activity - and the numerous threats to the country's political environment before and during the 2015 general elections. That said, our base scenario is for broad political stability to persist in Myanmar and reforms in the country's business environment to continue. Should that be the case, we believe that the growth prospects for Myanmar's construction sector beyond 2015 are bright, due primarily to the country starting from a low economic base.
Key developments in Myanmar's infrastructure sector:
In November 2013, the governments of Thailand and Myanmar signed three memoranda of understandings, formally approving a new business framework for the Dawei port and special economic zone (SEZ) project. With this new framework, the existing 75-year concession between Italian Thai Development (ITD) and the Myanmar government for the development of the Dawei project will be terminated and transferred to a new special purpose vehicle, known as Dawei SEZ Development (DSEZ). New investors will, however, be legally obliged to compensate ITD for its existing investment into the Dawei project, which amounts to around THB6bn (US$187mn) according to ITD's president, Premchai Kanasutra (cited from the Bangkok Post). DSEZ is expected to award concessions for three projects - a dual-lane highway linking Thailand with Dawei, a small port and an industrial estate - by Q214.
In December 2013, the concessionaire for the Nay Pyi Taw International Airport, Myanmar-based conglomerate Asia World Company, advocated that the Myanmar government scrap the project due concerns about profitability. According to Asia World (cited from Eleven Media), the primary reason for the lack of profitability is due to the lack of flights to...
"Myanmar's latest political and economic awakening appears to be the 'real deal' and - as with any 'new' investment story - foreign interest is likely to reach fever pitch in the coming years. As seen in other resource-rich frontier markets, we expect a number of key sectors to dominate investor attention in the short to long term."
Business Monitor International (BMI) has just published 'Myanmar Awakens: Unearthing Asia's Hidden Gem', a brand new special report that examines the economic growth prospects for Myanmar as a resource-rich frontier market in the medium to long term.
Use BMI's core views on Myanmar's country and industry development to enhance your investment decision-making and strategic planning activities, assessing key questions such as:
- Will a fair and transparent electoral process in Myanmar pave the way for relaxation of the US and EU economic sanctions?
- With soaring economic prospects forecast for Myanmar as a result of its ongoing reform drive, how will China's interests be affected?
- Will foreign investment prevail in the short or long-term given the history of poor market accessibility?
- Will heavy investment in Myanmar's real estate market offer sufficient liquidity to entice an international audience and what will be the key barriers to overcome?
- Which key sectors will be the main outperformers for Myanmar in the short term?
- Which key sectors will be most promising in the long term?
The special report draws on BMI's 27 years of experience to critically assess the greatest economic and political risks for Myanmar in the years to come, helping you assess the opportunities and challenges for your business in 2012 and beyond.