Role of INDUSTRY in

Myanmar
6. Industrial (Formal Manufacturing) (SEZ, SDZ, SME etc)

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 Content
▫ Introduction
▫ GDP & Industry Sector
Roll No Name
▫ Formal Manufacturing 10 Ei Ei Htun
▫ SME 12 Hnin Nwe Soe
▫ SEZ 14 Hnin Yee Hpwe
15 Htet Htet Aung
16 Kyaw Zin Latt
18 Lwin Lwin Khaing
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 Introduction 3

• Government making
national Development
plan with three pillars.
• This group will
highlight about
Industrial

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 4
Introduction

▫ Mining (G1)
▫ Energy and Electric power
(G4)
▫ Construction (G6)
▫ Manufacturing including
SEZ, SME

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Introduction 5

MM-Economy in Brief
Industry wise
Period Era Economy Contribution to Policies Result
GDP
Relax taxes on Industry
Parliament
1948 – 1962 14.7% Sector. Financial support to Packaging Industries.
Democracy
SME.

Burmese way to Packaging Industries. SME

Socialist
Socialism Nationalize all industries. owners had to work under
Period Under 1962 – 1988 10%
(အတြင္းၾကည့္ကို ယ္ဘာသာသီး Re-open FDI. strict control of Supervisory
Military Rule ျခားရပ္တည္ျခင္း) Committee.
1988 – 1989 8.7% From 24,117 SME in 1992 to
Regulation and privatization.
43,633 in 2011. 176 FDI.
1990 – 2009 24 years under Encourage agri support
State Peace and (Technology gap, instable
Military Rule Market Oriented industry, Export. Establish
Development Council foreign exchange rate, lower
Economy with 9.4% MIDC on 1995 to control
ppp customer, no after sales
2010 – 2014 Economic product quality. Build 18
service, no network to sell
Democratic Government lead liberalization (Indu Industrial Zone.
by U Thein Sein products)
stry based state
2015 – 2017 owned enterprise)
Democracy
Democratic Government lead 31.67% Current MOI Policies
Government by Daw Aung San Su Kyi

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Introduction 6

MM-Industry Sector
▫ Data is collected by the Ministry of Planning and
Finance’s Central Statistical Organization

▫ Industrial and Services sectors - continual GROWTH

since 2011
- Processing and manufacturing - 10%per year
- Electric power - between 5 & 10 % per year
- Construction - between 8 & 16.5% each year
- Within services, both transportation and
communications have grown steadily

▫ Agriculture is more volatile and has taken a hit during

heavy monsoons and droughts, but within this sector,
livestock and fisheries have performed consistently well.

Sensitivity: Internal Source https://investmyanmar2019.com

 GDP and Industry Sector 7

Sensitivity: Internal Source – http://mmsis.gov.mm

GDP and Industry Sector Policies
8

GDP AT CONSTANT PRICES BY SECTOR OF ACTIVITY (Units in Mil Kyats)

Sector 2010 (FY) 2011 (FY) 2012 (FY) 2013 (FY) 2014 (FY) 2015 (FY) 2016 (FY) 2017 (FY)
INDUSTRY 10,528,139.70 11,604,661.20 12,533,395.10 13,963,076.00 15,659,182.30 16,962,757.10 18,476,752.00 20,216,364.30

1. Energy 66,994.90 64,243.60 63,390.10 65,283.00 88,821.00 88,366.90 82,077.10 92,637.70

2.Mining 299,433.40 336,973.00 310,684.90 407,170.50 610,518.70 512,226.70 572,049.10 643,874.40

3.Processing and Manufacturing 7,900,494.00 8,754,616.40 9,483,383.40 10,387,879.60 11,370,547.10 12,496,231.20 13,659,251.30 15,060,282.00

4.Electric Power 421,882.70 443,980.90 484,041.20 551,844.00 633,345.90 716,282.50 773,459.20 822,014.30

5.Construction 1,839,334.70 2,004,847.30 2,191,895.50 2,550,898.90 2,955,949.60 3,149,649.80 3,389,915.30 3,597,555.90

45,000,000.00

40,000,000.00

35,000,000.00

30,000,000.00
15,060,282.00
13,659,251.30
25,000,000.00
12,496,231.20
11,370,547.10
20,000,000.00 10,387,879.60
9,483,383.40
8,754,616.40
15,000,000.00 7,900,494.00

10,000,000.00

5,000,000.00

-
2010 (FY) 2011 (FY) 2012 (FY) 2013 (FY) 2014 (FY) 2015 (FY) 2016 (FY) 2017 (FY)

INDUSTRY 1. Energy 2.Mining 3.Processing and Manufacturing 4.Electric Power 5.Construction

Sensitivity: Internal Source – http://mmsis.gov.mm
GDP and Industry Sector Policies
9

Sector
2010 (FY) 2011 (FY) 2012 (FY) 2013 (FY) 2014 (FY) 2015 (FY) 2016 (FY) 2017 (FY)

% in GDP
26.47% 27.63% 27.80% 28.57% 29.67% 30.04% 30.90% 31.67%

% of P&M in Industry
75.04% 75.44% 75.66% 74.40% 72.61% 73.67% 73.93% 74.50%

P&M contribution in GDP at Constant Price

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2010 (FY) 2011 (FY) 2012 (FY) 2013 (FY) 2014 (FY) 2015 (FY) 2016 (FY) 2017 (FY)
Sensitivity: Internal Source – http://mmsis.gov.mm
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•
•
•

Relax industry sector to private. Open FDI

Old machines

Open border trade. Reduce price control.

Not enough raw material
Only packaging industries

Rent low performance factory to private.

•
•
•

Issue FEC. Allow private banks.

Issue citizen investment law

Give gov owned business to private.

No technology
Owned by government
Lack of foreign currency

YGN,MDY, MLM, Industrial Zone for FDI

around 400 garment

factories entered Bank crises
into Myanmar

U.S. sanctions imposed

Establish

U.S. sanctions Revoked

working committee

Dwei Deep Sea project

1) Central Industrial Dev
Processing & Manufacturing and Policies

Gove reduce export duty,

restrictions on the financial sector,
committee 3) Myn Industrial dev
committee. 2) Myn Industrial dev

revised the FDI law, and executed

currency reforms

Approve FDI. Kyaukphyu Industrial Zone

Open FDI for (2) Operator

Thilawa Industrial Zone

Ministry of Commerce authorized full foreign investments in retail

GDP & Industry
10
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Current MOI - Policies MM-Economy in Brief

Sensitivity: Internal Source - http://www.moin.gov.mm/information/policy

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Current MOI - Policies MM-Economy in Brief

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Law of Industry Sector
1990 _ To consolidate and promote large, medium and small – scale private industries, the State Law and
Order
Restoration Council enacted the Private Industrial Enterprise Law in November,

1994 _ To promote inducement of domestic investment to bring about increase in commodity production and
exports by the private sector, the State Law and Order Restoration Council enacted the Myanmar Citizens
Investment Law.

The provisions of these new laws and regulations provided favorable and sound business environment to the
newly established SMEs in their operations.

In general, laws apply to individuals, companies and joint ventures are;

1) Myanmar Private Industrial Enterprise Law (MPIE)
2) Myanmar Citizen Investment Law (MCIL) 4-7
3) The Union of Myanmar Foreign Investment Law (MFIL)
4) The income tax law, and
5) The commercial tax law

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Formal
Manufacturing
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Formal Manufacturing

▫ 1988-2011
▫ 24 years under market-oriented economic system
▫ Industries based on state-owned enterprises
▫ Registered private industrial establishment 43,633
▫ FDI manufacturing – 176 only

Source - New Government’s Initiatives

for Industrial Development in Myanmar
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 16

Formal Manufacturing

▫ 2019 Update
▫ Industrial activities are recovering after volatility in the Transition Period, supported
by manufacturing and construction
▫ Industrial output growth is expected to recover slightly from 9.4% in the Transition
Period to 9.6% in 2018/19 due to a pick-up in manufacturing and construction
activities, although growth remains below the 9.7% in 2017/18
▫ Manufacturing output is expected to recover in 2018/19 after a slowdown in the
Transition Period, supported by production of garments for exports and new higher
value-added products

Source - Myanmar Economic Monitor

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 17

Formal Manufacturing

▫ 2019 Update
▫ Strong performance in the garments sector and new manufacturing activities are projected to
support a pick-up in overall manufacturing output
▫ Growth in manufacturing output is projected to pick up to 10.2% in 2018/19 from 10% in
2017/18, due to increased external demand and diversified activities
▫ Manufacturing, which constituted 75% of the industrial sector in 2017/18, was weak in the
Transition Period with slow growth in investment flows and rising cost pressures from kyat
depreciation also passing through inflation
▫ Meanwhile, the manufacturing sector continued to diversify, with investment growing in higher
value-added manufacturing including agricultural machinery (mainly assembly), building
structures and components, and auto parts

Source - Myanmar Economic Monitor

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Formal Manufacturing 18

Currently, manufacturing is dominated by smaller-

sized firms, though naturally this varies significantly
based on the industry.

Garments manufacturing is a major export driver.

Growth in garment exports has averaged about 25%
yearly since 2012

Sensitivity: Internal Source – Manufacturing Guide 2019 by Eurocham

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Formal Manufacturing
▫ GARMENT industry is a major job creator in the Yangon area
▫ mid-2015, around 200,000 workers in garment production
▫ exported $1.6 billion worth of garment and textiles in 2016
▫ Garment - significant influx of FDI
▫ Textile & Garment manufacturers – total 1827

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FOREIGN INVESTMENT OF EXISTING ENTERPRISES 20

BY SECTOR (as of 30 Sep 2019)

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Special Economic Zones

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SEZ
▫ A Special Economic Zone
(SEZ) is an area within or
across national boundaries that
is administered under special
rules. They come in different
forms, which in Myanmar
include free zones (Export oriented
good production) and promotion
zones (Good production for domestic) , as
well as the potential for the
creation of other types of zones
as need be.
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History
▫ The concept of SEZs in Myanmar began with the Thilawa and Dawei SEZs.
▫ Studies to determine whether developing these SEZs in Myanmar would be
possible began in the mid-1990s.
▫ However, the Thilawa SEZ was not completed until 2015, and the Dawei SEZ
continues to be under development.
▫ A third SEZ, the Kyauk Phyu SEZ, was announced in 2013 and is also currently
being developed.
▫ An agreement with China for a fourth SEZ, Myitkyina Economic Development
Zone (also known as the Namjim Industrial Zone), is expected to be signed at the
end of 2019.

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Law and Policy

▫ The rules governing SEZs are intended to be investor and business friendly, and often differ
significantly from the national laws.
▫ In Myanmar, some of these differences include breaks on tax and duties and the ability for
foreigners to be 100% owners or investors; however, the existing labour standards and
environmental requirements set out in laws still apply.
▫ The SEZs in Myanmar are governed by a structure that is both centralized and
decentralized, which means that the Myanmar government shares responsibilities with
management committees specific to each SEZ.
▫ The legislative framework that sets out this and other legal aspects of SEZs is the Myanmar
Special Economic Zone Law, 2014. For more on the law as it relates to SEZs, see our page
on the legislative framework for SEZs in Myanmar.
Source: Amit Khandelwal, Rocco Macchiavello,
Matthieu Teachout, Sanghyun Park, and Paing
Sensitivity: Internal Thu Htet, Policy brief
 26

Benefits
▫ SEZs are considered by multilateral
development banks, such as the ADB, to
be tools of development that, if designed
and regulated properly, could continue to
bring in foreign investment, encourage
better policy reforms, and improve
domestic industries.
▫ In Myanmar, these benefits remain to be
seen, since of the four expected SEZs,
only Thilawa SEZ is operational.

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Benefits
▫ Although recommended as a method of sustainable development, the potential benefits are
not seen by all. Many SEZs in Southeast Asia are poorly planned, and became enclaves with
few links to the economy of the country it is in.
- For example, road connectivity to Dawei SEZ has been poor, and planned roads to this
SEZ have impacted and continue to impact local communities, due to insufficient
access to information, impacts on livelihoods, and expropriation of land.
▫ Further, despite the SEZ Law indicating that environmental and labour laws are to be
followed, NGOs such as Earth rights International have reported violations at the Dawei
SEZ.
▫ Potential for other human rights violations has also been identified by critics.

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 Lack of accountability and clarity in SEZ Law 28

highlighted in Dawei
▫ An inadequate legal framework, poor implementation process, absence of
accountabilities and the lack of transparency lead to violations of human rights
and environmental disruption in Myanmar’s Special Economic Zones, speakers at
the Myanmar Special Economic Zones Forum highlighted.
▫ Similar to many pieces of legislation in the country, the legal provisions do not
provide sufficient clarity, particularly with the responsibilities, oversight and
obligations which different governing institutions and organizations are subject to.

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Weaknesses for SEZ Law

With the Myanmar SEZ Law, there are two key weaknesses.
 One is related to the role of the SEZ management committees governing each zone.
- The management committee plays an important and powerful role in the implementation of the zone. The
issue is that their roles and responsibilities are not clearly defined, according to Sean Bain, legal
consultant from the International Commission of Jurists (ICJ).
- When things go wrong, there is a lack of accountability because community members do not have a clear
place to go to convey their complaints or to try to access some kind of remedy, he added.
 “The other key issue with the SEZ law is regarding the sequencing of critical legal procedures
which affect human rights and the environment,” he said. There is not clear responsibility for
coordinating the application of legal procedures in the correct sequence.

Sensitivity: Internal Lack of accountability and clarity in SEZ Law highlighted in Dawei
 30

Weaknesses for SEZ Law

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Way forward
▫ Based on the IGC’s research in Thilawa SEZ, the following actions
are recommended to stimulate more knowledge spillovers to the
domestic economy and maximize Thilawa SEZ’s contribution to job
creation and economic growth in Myanmar.
1. Understanding managers and spillovers of managerial skills
2. Policies to attract skilled labour
3. Development of job-matching platform
4. Fostering local content

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 32

SME
Over 90 per cent of all business in Myanmar is classified as Small and Medium Sized Enterprises, and the
government has recognized that SMEs are main driver for the country’s future national economic
development.

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 51,297 Registered Business in Industry Sectors 33
Sector Distribution of SMEs in Myanmar

43,298 SMEs by Size:

Larg
7999 Businesses e,
15.5
9%

11,425 SMEs
Medium, 22.27%

31,873 SMEs
Small, 62.13%

Sensitivity: Internal Source – CSO 2017

 Development of SME From 24,117 SME in 1992 to 51,297 in 2018. 34

Industrial Development Committee is going to give the policy

guidelines for SME development and issued the task force of
the IDC.
 After selecting and defining the state –owned sector and
private-owned sector, development program of State –
owned sector is submitted to the Union Government and
implement the projects by the permission, and also
encourage the development private sector.
 To provide, adjust, instruct and safeguard necessary
energy, raw material, technical know- how, capital for fully
production as per machine capacities of SME.
 To push, uplift and look after SME and make the instruction
to produce more value added products utilizing the basic
raw material in the country.
 To build the modern industrialized nation by establishing
community peace, tranquility, uplifting social progress,
economic development and promoting green industries.

Sensitivity: Internal Source https://investmyanmar2019.com

 Myanmar Retailer Association (MMRA) 35

Retail Industry
Development

Communication Retail
Retail Industry
Industry
Communication & & Education
Education
Public Affair Development
Development
Public Affair Committee
Committee
Committee Committee
Committee
• Networking events • Training Courses • Advice & Guidance
• Mixers • Industry Publications • Retail Consulting
• Cooperation with Overseas Retail Associations • Grants & Awards to Scholars who • To improve the business standards, professionalism and
• Media Relations contribute publications to Retail productivity of Retailers
• Member Relations Industry • To develop Retail Industry Standard (e.g, Itemized Receipts,
• Emergency Incidents Communication • Affiliation with MBA programs Overpricing, Customer Service)
• To be a listening post for news that is of • To develop Retail Industry Indexes (e.g, Retail Sale Monitor, Price
& Educational Institutions to
interest to retailers Index)
•
exchange various industry • To develop Consumer Trend Analysis
To improve perception of retailing in Myanmar
• Broadcasting of E-Resources & social media information • To develop Great Myanmar Sale Week (To promote both Retail
present • Conference & Seminars Industry and Tourism Industry)
• Monthly Newsletter • Trips to Oversea to learn Modern • To develop Mystery Shopping Program for member Retailers
• Scholarly Publications Retail Industry (Annually or • To monitor Employment in Retail Industry
• Job Opportunities & Business Opportunities Semi-Annually) • To monitor Supply Chain & Logistics information
• Online Directory • To Initiate Tax Refund programs for Tourists
• Up to Date Government Policy • To monitor improvements in Technology in Retail Industry
• Industry News
• Online Suggestion Box

Sensitivity: Internal Source http://www.mmramyanmar.com/

 Challenges of SME 36

1) Increasingly demanding of products and services; Management:

2) Customer expecting flawless products and services; 1) Insufficient entrepreneurs, venture spirit and weak in
3) Enterprises will increasing face a global competition; adopting modern management principles
4) Emergence of new technologies and its impact on the 2) Inadequate capacity of SMEs for subcontracting to large
integrated supply chain in production system among ASEAN enterprises
countries
5) Increasing costs which impact on export competitiveness It was Marketing:
recognized that SMEs and SMIs sectors in Myanmar consisted. 2) Weak in local, regional and international marketing and
Finance: access to markets.
1) Limited access to financing and financial facilities 2) Difficulties in finding distribution channel in overseas
2) Governments tight money policy, capital intensity and high market
interest rates
Others
Human Resource: 3) Lack of qualified human resources programs and skill
3) Lack of skilled labors upgrading for manufacturing and services
4) Inadequate level of technologies and managerial skill 2) Weak in infrastructure and utilities (electrical power
energy, transport etc.)
R &D – Technology: 3) Lack of environmental awareness and knowledge
5) Lack or inadequacy of R& D
6) Insufficient preparation to take advantage of ICT and
Ecommerce opportunities
7) Weak in appropriate technological information for
manufacturing, quality certification laboratories for
standardization of products and process

Sensitivity: Internal Source Aung Min & Toshihiro, New Government imitative for Industrial Development in Myanmar
 Development of SME From 24,117 SME in 1992 to 51,297 in 2018. 37

Myanmar still needs to address some critical issues if manufacturing is to reach its full potential. The lack of
a stable electricity supply and skilled labourers, for example, continues to hinder the expansion of the sector.
Other problems for small- and medium-sized enterprises include their lack of access to bank credit, which
hampers their ability to expand and upgrade to meet the demands of the local market, let alone foreign
markets. All of these conditions can inhibit growth.

Sensitivity: Internal Source https://investmyanmar2019.com

 Thank You

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