Master Class #20-Doing Business & Opportunity to Enter into Myanmar Market

Myanmar is surrounded by China, India, Bangladesh, Thailand, Laos. And all these countries contribute towards trading in Myanmar, making it like a hub itself. It’s a matter of time that this market will be a very interesting destination to do business. Those who gets in early will have a prime mover advantage. But at the same time, there are risks involved. And that’s why I had invited Dr John Vong, Former Adviser to World Bank toe sharing on this topic in my webinar not long ago. Here is a summary of the sharing from his webinar

Doing Business in Myan

Doing Business in Myan

Looking at the business intelligence chart, they are 24 East Asia pacific countries. And by comparing Myanmar with Vietnam, Cambodia, Laos and Thailand. The higher the number the more difficult it is to start a business. Starting a business in Cambodia ranks number 24, the highest among all countries listed in the chart. In terms of building & construction, Cambodia is also the toughest. Whereas the easiest could be Thailand. Getting electricity is an interesting part, because not every country has constant supply of electricity. There are black outs and there are brown outs. Vietnam are the highest in terms of brownouts. This means a shortage of electricity. To register a property in their company’s name or personal name, Cambodia is also quite difficult. Whereas Thailand is the easiest. Getting credit when you enter a country to do business you may want to get bank credit from the country. Laos happens to be the most difficult because there’s too few banks there.  And Vietnam is the easiest among all of them. Protecting investors.. the protection of investors in Thailand of course is the best, and then you have Vietnam is at 21 and Laos is at 24 in the protecting investors. Paying taxes, it is difficult to pay taxes in Vietnam and Laos. Cross border training that means trading with countries  that surround a particular country. Cambodia is difficult but Laos is even more difficult. Why, because Laos is land locked country. There are no ports, no seaports no airports. Enforcement of contracts, you find in Cambodia and Laos it is pretty difficult to enforce contracts even given the contract. What about resolving insolvency? Incase somebody don’t pay you and you want to take action. You find in some of these countries it is difficult to be insolvent. The key question is where does Myanmar stand in terms of ranking among all this? Right in this moment there is no official rank. So therefore it is anybody’s guess.

But if you ask people who have experience in those countries in this whole region you will find that Myanmar may be closer to Cambodia and Laos rather than to Vietnam. And as you know in Myanmar is being controlled by military, a lot of enterprises and businesses are controlled by the military. Before when it was under the military government and now it is beginning to open up. So there is a phase of transition and this transition is not going to be easy.

Doing Business in Myanmar

Doing Business in Myanmar

Lets look at this because it is a very interesting chart and by closely analysing this chart, one will sort of find out the potential for Myanmar in comparison to its neighbors. Population wise , Myanmar has 60.6million, that’s twice the population size of Malaysia but similar to Thailand (67.6million). In any country you must have the size of the population that will determine the growth. That is one of the factors. The labor force is 32.5%, that is a good number of people who are able to work which usually are the ages between 15-64. So the labor force is 32.5million people in Myanmar. Malaysia has 11.9 million and we see how Malaysia has grown. Thailand is very similar to Myanmar, 39.6 million. So you can see that Myanmar has the potential to grow in the same way economically similar to Thailand.

 

The next area is that we look at is the critical mass of the urban population because you have a large population but it is all over the place as its distributed across big land mass. Then it is not it does not have critical focal points. But urban population tells you to a large extent how an urban population can grow and what is the level of migration from rural country side into the cities. Myanmar urban population is 34%, which is exactly that of Thailand. Malaysian have many cities therefore we have large population that is urban, 72%. And I want to look at the potential over the next 10 years. You looked at this 0- 14 year old population of Myanmar. And in Myanmar you have 27.1% of this population, this means that almost ⅓ of the population is 0- 14 years old. That means this people within the next 10 years will definitely join the workforce, and compare that with Thailand which is a 19.5%. This show that the workforce in Thailand over the next 5-10 years will likely be shrinking. If you have a business that is ongoing in Thailand, you need to look at this issues. Whether there is potential workforce for you from 10-20 years onwards. And lets look at a median age. The median age, that means the most common age of the population. In Myanmar is 27, in Thailand the median age is 34. What does that mean? That means the population is aging in Thailand compared to Myanmar. Myanmar is USD 83.7billion in terms of GPD, but you look at Thailand which is USD 609 billion, this is many times more than Myanmar given the same size population and similar size labor force. This points immediately to the potential of Myanmar that is able to grow maybe 5 times of what it is today. That means if you invest $1 today in Myanmar, over the next five years, you have a chance to make 500% return. That is higher than any term deposit in Malaysia or many other countries. And you look at the GDP per capita. Per capita means it is per person  of the population. And Myanmar is $1300 per person, compared to Thailand a very similar country, it is $9500. Which means, potentially the purchasing power of the Burmese people can increase 9 times. What does this mean? This means that for FMCG market, there is a chance that this will grow very fast. In most countries, any per capita income that’s above $1000, means that means  people have the means to purchase things at supermarkets, that is the benchmark figure, above the $1000 GDP per capita.

Now Myanmar is right for that for people in the FMCG markets. What about below poverty lines, the level of poverty in the nation. Myanmar is a very poor country. 25% of the people are below the poverty line which usually means having less that $1.25 to live on per day.. Now nevertheless what it show is now a quarter of the population is below poverty line, the rest of the 75% that is above the poverty line has spending power. So business can still take off there.

to get the rest of Dr John Vong’s sharing, please see below …

For FounderMethod Members you can watch the full session here:

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