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Consumer business in Myanmar

A land of gold

Myanmar is a nation that is rich in resources. Yet it remains one of the poorest nations amongst the Association of Southeast Asian Nations (ASEAN) countries due to its political turmoil and economic isolation. The country suffers from an acute shortage of electricity, ageing transportation networks and inadequate telecommunications infrastructure, which makes trade difficult in the country. Nevertheless, with the new foreign investment law introduced in November 2012, Myanmar has shown a commitment to opening up the market and creating an environment that is more attractive for foreign firms.

In recent times, some consumer business companies have begun their foray into the Myanmar market and a number of international retailers are entering the country using the convenience store format. However, in the short term, these companies have to focus on developing their capabilities in a market where traditional trade dominates and the distribution of goods and services can be costly.

Furthermore, rising costs in traditional manufacturing bases like China and Indonesia have made Myanmar a more attractive market for foreign investments. With its relatively lower labour cost and strategic access to China and India, Myanmar is appealing to labour-intensive manufacturers who are looking to set up businesses in the region. In addition, Myanmar, with its large population and increasing purchasing power, presents a potentially large consumer market that can be served at the mass market point. Companies can also export to neighbouring countries to take advantage of the exemptions or lower tariff agreements that Myanmar is entitled to as a member of ASEAN.

On the other hand, the skyrocketing land prices and retail property rentals, especially in Yangon and Mandalay, are stumbling blocks for consumer products and retail companies who are looking to enter the market. The social, economic and political reforms in Myanmar have also resulted in rapidly changing policies and regulations that businesses have to grapple with. The lack of credit and a cash dominated market with underdeveloped automated teller machine (ATM) networks, banking security and electronic payment systems, are also challenges that will need to be dealt with.

From an investment perspective, Myanmar is in a strong position with its rich natural resources, a large youthful population, excellent geographical location and a determined government that is willing to embrace economic and political change. However, it may take some time before the full effects of the move towards liberalisation can be felt, and even more time before its opportunities can be translated into substantial gains for businesses.

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