Why Thai business investors should invest in Myanmar now

Posted byHappio Team Posted onJuly 4, 2018 Comments0
Myanmar

Myanmar have made a historic transformation towards democracy, a market economy, and peace and stability. Myanmar moved from military rule to democracy, and from a centrally directed economy to market-oriented, now it is on a path to a more prosperous future. For the sustainable growth of the country, the new democratic government is inviting more foreign investment and at the same time builds on a harmonized mix of policies which enhance modernization in the agriculture, and infrastructure, a diversification of the export basis and the expansion of value-added production for domestic and international markets.

The positive changes of the country and the efforts stimulate the constant economic growth for Myanmar and put Myanmar in the position to become one of the worlds’ fastest growing economies country, with an average growth rate of 7.1% over the next three years. According to the data, Myanmar’s GDP has been raised up to 6.8% when Thailand grows 3.7% in 2017.  Economic growth has led to the emergence of an increasing middle class and a significant increase in per-capita consumption. Increasing opportunities open up for the FMCG (Fast Moving Consumer Goods) industry and service industries (e.g. private education institutions, entertainment).

The growing of per-capita consumption stimulates the trade partners countries to get more excited for expanding market. Thai FMCG products such as beverages, confectionery, packaged foods and personal hygiene products are extensively popular for its fair/cheaper prices with high quality and more visibility or availability in the market. After Thailand, Japan is the second largest export country to Myanmar and most of it exported consumer products are household and famous for high quality. Korean brand becomes very popular in the middle age group consumers because of the influences by Korean TV dramas and pop culture. Especially the Korean brand cosmetic and household products are well-known among the youth consumers. Western brands dominate the Alcoholic Beverages and Tobacco market because in Myanmar consumers’ perception, those brands have premium quality. Chinese brands target mostly for the consumer who are extremely price-sensitive who have limited options. On the other hands, it is infamous for low quality, safety and quality even Chinese brand are available in all the products categories.

Myanmar   

   

The investment from Thailand has raised remarkably since 2012. Statistics show that the direct invest of Thailand has raise from THB10.38 billion in 2012 to THB 19.2 billion in 2017. According to the official, Thai businesses are mostly interested in manufacturing and food processing industries. Along with the investment, Thailand’s trade with Myanmar has increased significantly. The data from IMF, World Bank, in 2016, showed Thailand is one of the top 3 countries which trade export and import with Myanmar. According to WITS, World bank, in 2016, Thailand exported to  US$ 1.9 billion worth products and food products alone worth US$ 482 million. The 3 top import products from Thailand are food, transportation and machine and electronic.  The trade between these 2 countries grow constantly over time. In 2018, the border trade between Myanmar and Thailand reached totaled US$ 1.33 billion the exported value of Myanmar was US$ 393 million and the imported value was US$ 941.7million according to Global New Light of Myanmar reported. Myawady border gate topped the trade with 816 million U.S. dollars, followed by Myeik with 241 million U.S. dollars and Kawthoung with 179 million U.S. dollars. The country trades with neighboring Thailand via seven border gates: Tachilek, Myawady, Kawthaung, Myeik, Hteekhee, Mawtaung and Kyaing Tong gates. Myanmar primarily exports fishery products such as crab, fish and shrimp, as well as onions, sesame, dry tea leaves, coconut and turmeric, while consumer goods, cosmetic machinery, food products, while agricultural equipment and track cars are imported into the country from Thailand.

With the enormous amount of investment, Myanmar is generating more sustainable economic development growth. At the same time the new Myanmar Investment Law(MIL) has streamlined the investment and trade procedures for foreign and domestic investors. The 3 key elements of MIL which give more favors to create a business-friendly environment are as followed,

  • Most investment proposals no longer need to be screened or approved by the

Myanmar Investment Commission,

  • Tax ‘holidays’ of up to seven years are available for promoted sectors

in certain geographic areas

  • Funds can be transferred overseas by foreign and domestic investors.

Another favorable point for Thai investors and trade businesses is the levies tariffs which is lower than other countries in the region. In 2017, Myanmar has charged the general rate of 5% for commercial tax on sale for most goods and services while Thailand has charged as 7%. However, Thailand charger 20% on corporate tax while charges 25%. Moreover, Myanmar is a member of the ASEAN Free Trade Area (AFTA) and has committed the Common Effective Preferential Tariff Scheme (CEPT) to reduce intra-ASEAN import tariffs for 100% of the total tariff lines by 2018.

Thai businesses are interested in investing beyond the major cities of Yangon, Mandalay and Nay Pyi Taw, including seeking opportunities in the less-developed Tanintharyi Region that borders Kanchanaburi Province. They have closely cooperated with local businesses in Dawei, Myeik and Kawthaung which are sea ports of Myanmar and close to Thailand geographically and has high potential for tourism, logistics services, fisheries and rubber production. Tun Tun Win, vice president of Myeik District Chamber of Commerce and Industry (and chairman of Pho La Min Trading Co), said the Chamber had received more than 50 business trips from different Thai delegations since 2012 which included big corporate representatives from Siam Thai Steel Co, Siam Thai Metal and Machinery Co, Z-Pun Thailand, NIM Express, Thanapat Serene Place Co, CI Group Public Co, Please Square Co, Sheet Lookphorkhoon Co, Studio 17 Co, Merck Auto Co, Prakob Beef Products Co, Chokthavorn Plastic Ltd, Chocolate Activation Co and Me-I.

Furthermore, Myanmar’s simplified processes for investors and industrial facilities at international standards in the 3 new opening special economic zones in Thilawa(Open), Kyaukphyu and Dawei (Under construction) become a big opportunity for Thai business to invest.  The opened Thilawa special economic zone already has approved investment US$ 1195.85 million with 85 investors from 16 countries. 10 investors from Thailand have invest US$ 125.31 which is 10.55% of the whole project. Manufacturing sector is the biggest chunk of the investment and it is 74.50% of the whole investment which is US$ 896.80 million.

Here is the summary of main incentives available for trade zone and SEZ.

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Incentives available under the Myanmar Foreign Investment Law– Income tax exemption for five years, extendable depending on the success of the enterprise

– Deduction of depreciation on capital goods

– Income tax relief of 50% on the sale of exported goods

– Inclusion of foreign employees under domestic income tax law

– Deduction of business expenses, such as research and development

– Exemption from customs duties on imported capital goods, construction materials and raw materials

– Exemption from sales tax on goods produced for export

SEZs located at Thilawa (open), Dawei and Kyaukpyu (under construction)– Income tax exemption for seven years in exempted zones

– Income tax exemption for five years in business-promoted zone

– Income tax relief of 50% for a further five years for businesses in exempted zones or business promoted zones

– Income tax relief of 50% for a third period of five years if profits are held in a reserve fund and re-invested within one year of the reserve being made

– Ability to lease land for up to 75 years

Retrieved from http://emerging-markets-research.hktdc.com/business-news/article/Asia/Myanmar-Market-Profile/mp/en/1/1X4W6LCX/1X09SI4E.htm

Myanmar’s constant economic grow, investment and equally fast grow in the consumption have already took the attention from many consumer products and retail companies. With the economic and consumption growth, the new investment law which give more favor for creating business friendly procedures and policies, it is a very fruitful opportunity for Thai investors, business owners and entrepreneurs to invest or expand market in Myanmar.

About Happio.Co.,ltd

Happio Myanmar Co., Ltd provides creative and digital solution to help organizations and individuals create the value they’re looking for. Happio believes in Open Communication, Co-creation and Continuous Improvement.  Happio is family of Index creative village and core DNA is “creative” While Specializing in “online & Digital” Our Team Consist of Marketer, Designer and Developer. Tell us what matters to you and find out more by visiting us at http://www.happioteam.com/.

 

References

 

Facebook Comments
Category