Security, trading and investment update for Myanmar

04 September 2019

Security trading and investment update for MyanmarMyanmar will face a number of security, investment and trading challenges in the coming months. In this article we provide a detailed forward-looking assessment of developments in the country.

Myanmar will open up its wholesale sector to become a regionally competitive exporter in the coming years. Real GDP growth is forecast at 6.3% in 2019, and 6.4% in 2020.

Security Environment

Large-scale protests occurred in Yangon on July 17, 2019, following proposed amendments to the 2008 military-drafted national constitution.

Several thousand protesters demonstrated peacefully to demand a reduction in the military’s involvement in national politics.

The proposed constitutional amendments are unlikely to become law in 2019, but recurring attempts by Aung San Suu Kyi’s government to pursue the debate in Parliament may trigger larger protests in the next six months.

Protests will focus on Yangon and Nay Pyi Taw cities, with collateral damage to foreign nationals, and business interruption, likely.

Strikes and riots against hydropower, infrastructure, mining, and special economic zones projects will remain elevated in the next six months.

Security, trading and investment update for MyanmarProtests are likely to target and disrupt operations where construction threatens environmental damage and the removal of indigenous groups.

On average five to ten disruptive protests occur across Myanmar each month, often resulting in police using live fire to disperse crowds.

On August 16, 2019, the Northern Alliance insurgent movement carried out attacks against government assets across the Shan state and Mandalay region, killing at least 15 Burmese security forces.

Attacks on bridges, toll gates, and a police station near Nawnghiko and Gokhteik caused significant road and rail closures.

Further attacks and violent clashes between armed groups and security forces in Mandalay are likely in the short term.

Trading Environment

Ongoing trade friction between China and the US may create manufacturing opportunities for Myanmar.

Following the planned implementation of 30% tariffs on US$250 billion of Chinese imports from October 1, alternative textile suppliers may become more competitive.

With a strong source of labor and average minimum wage of 4,800 Kyat per day (equating to US$80 a month), Myanmar is well positioned to expand its share of low-end segment production in the garment sector.

Despite starting from a low base, garment exports have increased significantly, recording double-digit growth in the past four years to reach an estimated US$2.5 billion in 2018.

On the back of increasing garment exports, the trade deficit declined from 5.5% of GDP (US$3.5 billion) in 2017 to 2.6% of GDP in 2018.

More than 1.1 million workers are employed in garment, textile, footwear, and accessories factories in Myanmar.

With the country’s working age population set to increase to 68.9% of the total population by 2026, adding more than three million people to the workforce, there is significant scope for foreign investment in the sector.

Real GDP growth is projected to average 6.9% over the next four years, with support from private and public investment in infrastructure services and the light manufacturing sector.

Investment Environment

Pricing outlook MyanmarForeign direct investment (FDI) inflows into Myanmar accounted for US$3.5 billion in 2018, down from US$4.3 billion in 2017.

FDI stock also grew to US$31.3 billion in 2018, estimated at 45.7% of GDP.

There has been a substantial shift in the composition of FDI towards the manufacturing and garment sector.

Preferential access to the EU common market under the “Everything but Arms” initiative gives Myanmar tariff- and quotafree market access.

As such, in the fiscal year 2017-18, FDI in manufacturing grew by 65% year on year, suggesting continued favorable prospects for the sector.

In order to attract foreign investment in Myanmar, the government has established three special economic zones at Thaliwa, Dawei, and Kyaukpya.

These zones will incorporate income tax exemptions seven years from the commencement of commercial operation, and 50% relief on the income tax rate for a second five-year period.

Contract reviews and cancelations will remain likely, particularly for projects that risk environmental damage.

The suspension of the US$3.6 billion Myitsone dam, due to environmental concerns, highlights the risk foreign investors face when developing large-scale infrastructure projects.

Firms operating in the non-hydropower renewable power sector are likely to face reduced risks, particularly if firms can provide employment opportunities for the local population.

5 Key Takeaways

  • Large-scale protests occurred in Yangon on 17 July 2019, following proposed amendments to the 2008 military-drafted national constitution.
  • On 16 August 2019, the Northern Alliance insurgent movement carried out attacks against government assets across the Shan state and Mandalay region.
  • Garment exports have significantly increased, recording double-digit growth in the past four years to reach an estimated US$2.5 billion in 2018.
  • FDI in manufacturing grew by 65% y-o-y in fiscal year 2017/18 suggesting continued favourable prospects for the sector.
  • Real GDP growth is projected to average 6.9% over the next four years.

The monthly Risk Outlook is supported by our proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.

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In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for DRC, India, Mozambique and Tunisia all of which have been the subject of recent enquiries from our client base.

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  • Eleanor SmithEleanor Smith

    Eleanor Smith is a Senior Political Risk Analyst within Marsh JLT Specialty’s Credit Specialties team. At Marsh JLT Specialty, Eleanor analyses developments in political risks, and advises clients on their effect in a range of sectors. Eleanor is also responsible for delivery of World Risk Review, JLT’s country risk ratings platform, to clients and prospects.


    Eleanor has a first-class degree in History with Spanish from UCL, and a Masters in International Public Policy from the same institution. With experience in a range of sectors, including diplomatic missions and not-for-profit, Eleanor can help clients understand their risk exposure.

    If you would like to talk about any of the issues raised in this article, please contact Eleanor Smith, Senior Political Risk Analyst on +44 (0)20 8108 9544.

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