Transcript Myanmar Business Opportunities

The Benefit of AEC Integration to
ASEAN Supporting Industry
Presented by
Dr. AUNG THEIN
Vice-Chairman
Myanmar Industries Association
14h May 2015
Bangkok – BITEC,
Thailand
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Contents
 Current Economy Outlook of Myanmar
 Strength & Opportunity of Myanmar’s Supporting
Industry
 Current Status of Myanmar’s Supporting Industry
 Possible Area of Cooperation among ASEAN countries
and between ASEAN countries & Japan particularly in
Supporting Industry Development
Brief about Myanmar
Area
676 577 sq km
Total Land
Borders
5876 km
Population
51 .4 million ( 2014 Population Census)
GDP (PPP)
$ 56.8 billion(2013-2014)
GDP Growth Rate
8.7% (2013-2014)
GDP per capita
(PPP)
$ 1 105
Inflation rate
6.5% (2013-2014)
INDIA
BANGLADAHS
89.9%
Age Structure
0-14 years (26.7%), 15-24 Years(18.6%)
25-54 years(42.8%), 55-64 Years(6.7%)
65 Years and above (5.2%)
Source : DICA
Eastern Hill Region, Central Valley
Region, and Western Hill Region
CHINA
SAGAING
DIV
ISION
Literacy rate
Geography
KACHIN STATE
B
A
Y
O
F
B
A
N
G
L
AY
ALN
D
O
ANVISI
M
I
D
MAGWAY
DIVISION
CHIN
STATE
SHAN STATE
LAOS
KAYA STATE
BAGO
DIVISION
THAILAND
MK
A
YANGON
O YIN
AYEYARWADY DIVISION
N S
N
O
S
DIVISI
TA TAT
T E
ANDAMAN
SEA
T
A
N
D
IVIN
IS TH
IOA
NR
Y
I
Current economy outlook
 After decades of economic isolation, Myanmar has undergoing
significant transformation since 2011, on the path of political, social and
economic reforms agenda.
 Moving towards inclusiveness, transparency and improved institutions.
 Fertile land, abundant natural resources, rich cultural heritage, a young
labor force and a prime geographic location represents enormous
development opportunities and contribution to growth.
 High potential to become a major player in international & regional
trade which constitute sizeable consumer market.
 International sanctions are being released and lifted
 Reinstatement of trade preferences to Myanmar under EU’s GSP
 Re-engaging with the global economy, Myanmar to participate in
production and distribution networks of East Asia
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Trade Patterns and Trends
 Trade mainly with Asian Countries
 70% of export to Asian region
 90% of import comes from the region
 China , Singapore and Thailand are the biggest trade
partners
 Export primary products
 Import manufactured goods
Import & Export Structure of Myanmar
Major Export Items
Major Import Items
Natural Gas
Petroleum Products
Jade
Machinery and spare parts
Timber
Iron and steel construction materials
Pulses and Beans
Plastic raw materials
Marine Products
Palm oil
Raw Rubber
Vehicles and spare parts
Garment
Pharmaceuticals
Rice
Cements
Fertilizers
Strength & Opportunity of
Myanmar’ Supporting Industry
 Comparatively Low Labor Wages compared to other
developing countries
 Existence of fairly trained & literate labor force
 Over 60% of population are at Working Age
 If you establish your Supporting Industry under CMP
basic, you don’t need to pay Import Duty when you
import your Raw Materials & no need to pay Export
Tax when you export back your finished products.
Only has to pay 25% corporate tax/profit tax after
enjoying 5 years tax holidays.
Current Status of Myanmar’s
Supporting Industry
 Currently there are 9 Electrical & Electronics Parts
production companies are operating in Myanmar
under CMP basic. Mainly from Japan, Korea, Malaysia,
Singapore & China.
 2 Optical Lens companies from Taiwan & Hong Kong
 1 Medical Equipment Company from Japan
 1 Car Radiator Company from Japan is going to start
their production at newly established Thilawa SEZ very
soon.
Types of Investment allowed
1
2
A Citizen
or
Concerned
Government
Organization
100%
Foreign
Owned
Joint
Venture
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Any System
Included in
the Mutually
Agreed
Contract
Highlights of New Foreign
Investment Law
Income Tax
Exemption
For First Five Years
Deductions
Relief from
customs and
internal taxes
Right to deduct
depreciation from
profit
Machinery and
Equipment
imported during
construction period
R&D Expenditure
deductible from
assessable income
Raw Material used
in production over
the first 3 year in
case of increase
investment
For reinvestment of
profit within 1 year
50% exemption on
profit from exports
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Industries of Myanmar by
categories
Competitive Industries
Potential Industries
Basic Industries
Food and Beverages
Automobile Parts
Agricultural Machinery
Garment & Textile
Industrial Materials
Agricultural Fertilizer
Household Woodwork
Minerals & Crude Oil
Machinery & spare parts
Gems & Jewellery
Pharmaceutical
Electrical & Electronics
Supporting Industry
Paper & Publishing
Renewable Energy
Construction Materials
Household products
Kyauk Phyu
Thilawa
Dawei
Incentives under SEZ Law
 Imported raw material
 Machineries
Export Processing Zone
 Equipment
 Machineries
 Vehicles
 Tax holiday -
5 years
5 years
 Second 5 years
- 50% relief on
income tax – overseas sale products
 Third 5 years
- 50% relief on
income tax – reinvestment obtained
from export sale
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Few Tips for Myanmar Business Environment
 Local currency is Myanmar Kyat and it is around K 1100 per USD.
 Corporate Tax is





of total profit annually.
5% Commercial Tax for imported items and locally produced
products. Items such as alcohol, cigarette etc. subject to much
higher tax rate.
Average worker’s monthly wages is around 80~100 USD per
month . But going to increase to 100~120 USD per month very
soon due to government adjusted the salary for public sector just
recently.
Current commercial and industrial land depends on the location
Bank deposit rate is
and lending rate is
SME
Electricity rate is K50 for resident & K75 for businesses.
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Possible Area of Cooperation with ASEAN & Japan
 Supporting industries in Electrical & Electronic sector,
Automobile Industries etc.
 Establishing Technical Training School & Vocation
Training Center to educate local labor force to become
skillful
 In order to enhance technological know-how of Myanmar
industries, high technological industries should be
welcomed, experts should be introduced and organizing
industrial technological fairs.
 To Establish institution, Technology Incubator &
Productivity center to increase the productivity of
Myanmar businesses
Conclusion
 Myanmar is now regarded as place of incredible prospects and
is the last frontier for business opportunities in the region.
 Myanmar possesses various resources, including human
capital resource.
 The country is going through changes at an extraordinary
pace. The public and private sectors are all working to full
capacity in order to catch up to the modern world.
 When AEC start to implement around end of this year, ASEAN
countries can work more closely among themselves and
between ASEAN countries & Japanese SMEs & MNCs to
enhance our supporting industries participation in regional &
global supply networks. Myanmar can also be a very fruitful
and productive home for both ASEAN countries & Japanese
businesses in the future.
 The mutually beneficial and synergistic relationship that can
be build between Myanmar and ASEAN countries & Japan is
invaluable and can extend into future for many years to come.
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