After several decades of military occupancy and closed economic policy, Myanmar has finally started to open up their economy for foreign industry players in 2011. Even though it has been 8 years since the opening of Myanmar's economy, this burgeoning market still offers many untapped opportunities for both regional and global investors to put their interest and invest in. Investors around the globe are agreeing to the fact that Myanmar would be a golden opportunity for investments as this country is the last uncharted frontier economy in the Southeast Asia region.
Myanmar has a staggering number of direct investments towards the country since the opening of its economy in 2011. In 2016, a new government under National League for Democracy (NLD) was formed to reinforce global market's faith in Myanmar's economy outlook. Foreign direct investment in Myanmar is forecasted to reach USD 5.8 billion in 2018-2019 fiscal year.
Numerous investment has boosted many foreign businesses to expand their market to Myanmar, but this doesn't mean that local conglomerates are not able to compete. Local conglomerates have taken the advantage of accelerating economic growth and landscape. The increasing number of foreign and local business has led to an increasing employment rate and higher power purchase of Burmese.
Our paper, The Next Growth Wave: Rising Consumerism in Myanmar, reported that today's Myanmar population has not earned much, as 76% of the population makes below USD 120 a month and seeks their income from non-industrialized and agriculture sectors. However, our paper analyzed that there will be a 48% increase of income by 2022. The nation's rising of consumerism behaviour will help boost services and manufacturing sectors. Foreign direct investments helps higher productivity sectors to grow and increase the overall earning.
As Myanmar's population are now facing the rise of consumerism, retail industry in the country is expected to grow significantly in the coming years. Retail industry positive prospects are also supported by the fact the government of Myanmar has authorised a full foreign investment last year. Global retailers, as well as wholesalers from South Korea, Thailand, and Japan are currently seeking opportunities in this country.
Retail industry is projected to contribute a positive growth in Myanmar's service sector in 2018-2019 fiscal year, with 8.3% growth in the current fiscal year compared to 8.2% in the previous year. The industry's growth is not only limited to urban cities such as Yangon and Naypyitaw. Nowadays, smaller cities such as Pathein, Taunggyi, and Mawlamyine could also enjoy the presence of modern retailers. Many 24-hour convenience stores, supermarkets, and hypermarkets have arrived in these areas, replacing traditional wet markets and street vendors.
Key barrier in the modern retail adoption is mainly focused on the behaviour of Myanmar population. According to our report, a typical Burmese spends only 45% of their monthly income for consumption and the rest of it for saving. This number is very different with many of its neighboring countries such as Thailand, who would generally spend about 70% of their monthly income for consumption. Retailers eager to expand their business to the country must shift these consumer behaviour to increase their profitability. Modern retailers should also compete with local wet market or street vendors, as many Burmese still prefer to shop at these places compared to the modern ones.Download the white paper Download White Paper