After nearly half a century of isolation, followed by five years of reform-driven growth, Myanmar’s economy is currently expanding at a record rate. As of late 2015 rising investment, growing exports and steadily increasing foreign involvement were expected to push GDP growth to 9.3% during FY 2015/16, which ends in March 2016, according to government estimates. This follows on five years of average annual GDP growth of around 7.5% since the current thaw began in 2011, which has had a positive impact on the daily lives of a large segment of the population.

The current period of economic expansion is a result of two main causes: a raft of new government liberalisation policies, which have made it much easier to do business in the country, and the fact that Myanmar started from a low development base in 2011, which has meant wide scope for growth as its economy plays catch-up.

Regardless, the nation’s rapid growth is widely seen as a positive indicator of future performance and potential. “The economy has changed and expanded at an incredible pace in recent years,” Daw Khin Thida Maw, the International Finance Corporation’s country officer in Myanmar, told OBG. “This has created many challenges, of course, but it also has positive implications for Myanmar’s future, which is clearly bright.”

Overcoming Obstacles

That said, the challenges facing the country are manifold and some are pressing. Since the Central Bank of Myanmar (CBM) allowed the kyat to trade at its real value in 2012, the currency has depreciated rapidly, losing some 30% of its value in the first 11 months of 2015 alone. On a related note, rising inflation and a widening current account deficit (CAD) led the IMF to call for increased central bank controls and a tighter monetary policy in mid-2015. More fundamentally, after years of underinvestment on the part of the government, Myanmar’s power, transport and communications infrastructure is outdated and of a relatively low quality, which is a major disincentive for foreign investors that are looking to set up manufacturing operations in the country. Finally, while the nation’s regulatory framework has improved dramatically in recent years, it still lags behind global best practice in a number of key areas, including investment protection, land and labour issues, and intellectual property rights, all of which have negative implications for local and foreign businesses.

Getting Busy

The government has worked to address these and a slew of additional issues in recent years. “There is so much to be done at the moment, it is hard to keep track of it all,” Alexander Jaggard, country representative for the Vietnam-based research consultancy Mekong Economics, told OBG. “Since 2011, more than 30 laws have been enacted in total. Legislation currently under review will address a host of pertinent issues and sectors, including small and medium-sized enterprises, arbitration, trade, consumer protection, the financial sector and competition, among many others.”

Much of the work of implementing these and other upcoming changes, not to mention managing the country’s continued growth, will fall to the National League for Democracy (NLD), which won more than 80% of contested seats in the historic November 2015 election, and is scheduled to take charge of the government in early 2016. While the party had not yet released a detailed economic platform or official policies as of January 2016, given its strong mandate and the extent and pace of Myanmar’s reforms thus far, it is widely expected to continue to push for increased economic liberalisation, international integration, political normalisation and, consequently, growth.

Long History

Endowed with vast mineral, hydrocarbons and agricultural resources, Myanmar has historically been a major source of production and exports, as well as a key stopping-off point on the trade route between India and China. Even prior to British rule, which began in the mid-19th century, Burma, as the country was known at the time, was a regional trade centre, although agriculture and exports still played a primary role, with its key exports being gems, teak, rice and other agricultural products. In the 1880s and 1890s the British invested heavily in mining, energy and other types of extractive industries, turning Myanmar into one of the wealthiest nations in Asia.

During the Second World War, however, fierce fighting between Japanese and British troops decimated the country’s economy and set Myanmar on the fast track to independence, which was achieved in 1948, three years after the end of the war. A 15-year period of intense disputes, regional infighting and political tensions followed, which further damaged the economy, wiping out nearly all of Myanmar’s agricultural and mineral exports.

A 1962 coup d’état resulted in the replacement of a civilian government with an authoritarian military regime, which instituted far-reaching economic overhauls under an economic policy known as the “Burmese Way to Socialism”. Reforms enacted during this period included the nationalisation of all private enterprises and the closing off of the economy to foreign influence, kicking off a long period of political, economic and physical isolation from the rest of the region and the world at large. In an effort to improve the lives of everyday citizens, the Tatmadaw, or the Myanmar Armed Forces, focused its efforts on developing the agriculture sector in what amounted to an anti-industrialisation policy, which proved to have devastating long-term economic effects.

Cracking The Door

This situation improved slightly in the late 1980s, when a series of protests led the military government to open up some industries, primarily energy, mining and related concerns, to foreign involvement and private investment. After an initial burst of economic activity, however, the US, EU and Canada instituted trade sanctions on Myanmar in the 1990s and early 2000s, which put a damper on inward investment from Western firms. Nonetheless, in the late 1990s and 2000s investment and trade between Myanmar and its fellow ASEAN member states, as well as the East Asian giants China, Japan and South Korea, contributed to steady growth in the country. By 2000 Myanmar’s exports were valued at $1.96bn, up from just $498m a decade earlier, according to the UN Comtrade statistics database. The country’s largest trade partners are still China, Thailand, Hong Kong and India.

Over the ensuing decade economic ties between Myanmar and the West weakened as a result of sanctions, while links with ASEAN, which Myanmar joined in 1997, and other East Asian countries continued to deepen, albeit at a relatively slow pace due to a continuation of relatively isolationist policies in the country. The government oversaw a complex and changing set of regulations during this period, some aimed at liberalising the economy and opening up further to foreign investment, while others were strongly protectionist. The exchange rate for the kyat, for example, was officially set at around MMK6.4:$1 from 2003 through 2012, while the black market rate fluctuated between MMK700:$1 and MMK1200:$1, a discrepancy that made it difficult to legally convert kyat to foreign currency.

From 1988 through 2002 foreign direct investment (FDI) into the country went primarily to oil and gas projects, followed by manufacturing, hotels and tourism, and real estate development, according to data from Myanmar’s Central Statistical Organisation. Agriculture, which was the country’s largest employer at the time, as it is today, also received a considerable amount of investment, both from foreign entities and domestic players alike. From 2000 through 2010 the bulk of Myanmar’s trade and investment activity was with Asia, a trend that continued until quite recently. Indeed, between 2009 and 2012 some 95% of the country’s foreign trade was with Asian partners, according to the Asian Development Bank’s (ADB) 2014 report “Myanmar: Unlocking the Potential – Country Diagnostic Study.”

A New Era

Following a series of political reforms enacted by a post-junta government led by outgoing president U Thein Sein in March 2011, the country embarked on a period of economic liberalisation, privatisation and regional integration. Under the Myanmar Investment Commission (MIC) and the Directorate of Investment and Company Administration, which fall under the Ministry of National Planning and Economic Development, the country opened its doors to foreign investment and ramped up efforts to boost trade. To stabilise the kyat, the CBM instigated a managed float of the currency in 2012.

The nation’s legal environment has undergone extensive changes since 2011, with new policies put in place in areas as wide ranging as taxation, anti-corruption, monetary policy, Customs duties, foreign exchange, banking, and domestic and foreign investment. The reform effort had an immediate and far-reaching impact on Myanmar’s economy. From FY 2009/10 through FY 2010/11, FDI jumped more than 600% from $329.6m to allowed investments of $20bn. Trade has grown considerably, though pent-up demand has resulted in Myanmar running a trade deficit in recent years. The country’s economy has grown substantially, with GDP growth averaging around 7-8% per year since the thaw began, and inflation has dropped considerably from the early and mid-2000s, when it regularly topped 20%. This steadily improving economic environment has let to the emergence of a middle class population, centred in Yangon, Mandalay and other urban areas (see analysis).

Year To Date

2015 was a particularly challenging and momentous year in Myanmar. The country struggled with various macroeconomic imbalances, including widening CAD and fiscal deficits, continued kyat depreciation and rising inflation. From July through September of 2015, severe monsoon floods affected 12 of the nation’s 14 states, which resulted in over 100 deaths and negatively impacted more than 1.15m people in total, according to data from the UN Office for the Coordination of Humanitarian Affairs.

A total of 526,091 ha of Myanmar’s prime agricultural land were inundated and another 278,019 ha were damaged, which is expected to have far-reaching negative effects on food security, not to mention agricultural exports for the 2015/16 period and further on in the future. Agriculture makes up almost one-third of Myanmar’s GDP and one-quarter of exports, according to the World Bank. As such, the longer-term impact of the flooding includes added pressure on inflation and the CAD, plus the fact that the agriculture sector is not expected to recover for over a decade.

Political Change

Landmark general elections, which were held on November 8, 2015, also had a major impact on Myanmar’s economy, though the long-term repercussions had yet to play out as of early 2016. The NLD, led by chairperson Daw Aung San Suu Kyi, won a majority of contested seats, largely on the basis of its status as the opposition party. That being said, the military is likely to continue playing a major role in running the country for the foreseeable future, given that 25% of the seats in the House of Representatives are reserved for Tatmadaw-affiliated politicians under the nation’s 2008 constitution. Nonetheless, when the NLD takes charge of the nation in early 2016 it is expected to continue to push for additional economic reforms and market liberalisation.

Furthermore, an NLD-led Myanmar is widely expected to be better positioned to attract, and welcome, investment from Western countries, many of which have watched the nation’s development thus far with cautious optimism. “Most current and potential investors are holding back right now,” U Soe Win, the managing partner of Myanmar Vigour, which has partnered with Deloitte, told OBG. “Assuming that the three-to-six-month transition period for the new NLD government progresses smoothly, I think investors will then move into the country very quickly.”

Growth In Figures

While Myanmar’s economy has clearly grown substantially since 2011, conflicting numbers, a lack of reliable data collection and poor reporting standards in many sectors mean that much of the nation’s economic data is of a relatively poor standard and should be read only as a guideline to current trends. With that caveat in mind, in the 2014/15 FY Myanmar’s economy grew at an estimated real rate of 8.7%, according to data provided by the government, while staff at both the World Bank estimated real GDP growth for the year at 6.5%, due to the flood in August 2015. The World Bank reported growth of 8.5%, for real GDP growth the previous year (FY 2013/14) as well, and both of these recent growth figures were similar to or above the rates of 7.3% in FY 2012/13 and 5.6% in FY 2011/12, when the economic thaw began. According to World Bank estimates, the economy has grown at an average annual rate of 7% since 2010/11, which is in line with real GDP growth of 6-10% in neighbouring countries in the five years following liberalisation.

GDP per capita growth, meanwhile, has lagged slightly behind overall economic expansion. On a per capita basis GDP fell slightly from $1118 in 2011/12, according to IMF data, to $1100 in 2012/13, before rising again to $1112 in 2013/14 and to a provisional level of $1228 in 2014/15. The IMF foresees continued per capita GDP growth in the coming years, with the fund forecasting a rate of $1269 in 2015/16, $1364 in 2016/17 and $1502 in 2017/18. These figures put Myanmar at the lower end of per capita GDP in South-east and South Asia as a whole, according to the IMF. Nonetheless, a small, but growing, middle class population and changing consumer habits have become more visible in Myanmar (see analysis).

Sector Breakdown

Myanmar’s growth drivers on the demand side have shifted in recent years, as government spending on public services such as health care and education has increased. Private consumption, meanwhile, has been consistently strong since 2011 and is expected to continue growing in the coming years, driven by private sector-led construction activity in Yangon and other urban areas, as well as rapidly expanding domestic and foreign investment in the services, industrial and agriculture sectors. In FY 2014/15, for example, services accounted for 4.2 percentage points of overall GDP growth, and the services sector as a whole grew by more than 10% in total, according to World Bank data. Of this growth, the telecommunications sector, which was liberalised in 2013, contributed 4.3 percentage points, while trade accounted for 2.9% and transportation made up 1.8%. Transport services, which include freight handling, logistics and related activities, made up one-third of total service sector growth over the past four years, due in large part to Myanmar’s rapidly expanding domestic and external trade.

Branching Out

Manufacturing and industrial output grew by more than 8% in 2014/15, due in large part to continued investment in Myanmar’s booming natural resources sector. From March 2014 through February 2015 the manufacturing sector attracted $1.7bn in FDI for a total of around 150 new projects. While both the oil and gas sector and transport services brought in more FDI overall – around $3.2bn and $1.9bn, respectively, according to the World Bank – far more FDI-financed projects were launched in manufacturing than any other sector. A majority of this investment went towards setting up new garment factories. The garment production industry is one of the country’s largest in terms of employees and number of companies involved. The segment has nearly doubled its revenues base in recent years, from around $900m in 2012 to $1.56bn in 2014, according to data from the Myanmar Garment Manufacturers Association. Other key contributors to manufacturing growth include building materials, which also grew at around 8% in 2014/15, food and beverage production and, increasingly, the fast-moving consumer goods industry (see Industry and Retail chapter).

Myanmar has only recently begun to industrialise at a large scale and agriculture remains a key economic driver, not to mention a major employer, particularly in rural areas where a majority of the nation’s population resides. Prior to 2011 the sector suffered years of underinvestment and, consequently, declining output. Since then, however, agricultural output has increased annually, from a slight decline of 0.7% in 2011/12 to growth of 1.7% in 2012/13, 3.6% in 2013/14 and 5.6% in 2014/15. This expansion has taken place as a result of investments targeting a wide variety of technological upgrades on farmland and improved transport networks, which have increased access to markets across the country. Rice paddies account for over 54% of Myanmar’s planted farmland. Beans and pulses are also major export earners.

Key Components

Myanmar’s energy industry was first liberalised in the late 1980s, when a handful of foreign oil majors were invited to begin exploration in the country. Since then oil and gas has become a major export earner. As of 2014, the Ministry of Energy estimated that Myanmar had the potential to extract $4.6bn in oil from both onshore and offshore deposits and 15.48trn standard cu feet of natural gas.

Since 2011 the country’s energy exploration-and development-focused state-owned energy firm, the Myanma Oil and Gas Enterprise, has carried out three international rounds of bidding for a variety of exploration blocks, both on and offshore, which have resulted in a number of oil majors moving into the country.

Given this ongoing recent activity, annual 2014 production of around 180,000 barrels of oil equivalent (90% of which is gas) is expected to jump considerably in the 2016-18 period as exploration ramps up. From FY 2011/12 through August 2015, the oil and gas sector attracted the single largest share of FDI, with around 28% of the total, according to data from the MIC. The energy sector has been a key component of Myanmar’s economy for decades, though until recently only Asian companies were involved. The participation of Western oil majors points to considerable growth in this area for the future (see Energy chapter).

Historically the mining sector has been one of Myanmar’s least regulated industries, to the point that, even today, there is very little reliable data about mining output. At the same time, the country is home to vast mineral wealth in the form of gems, like jade and rubies, as well as metals, ores and other industrial materials, such as marble. Jade is the country’s largest mining output by far, with one 2011 study estimating output at $7.9bn. The jade segment, like the mining industry as a whole, is managed by a handful of state-owned firms, plus a handful of foreign players. In 2013 the government drew up a new mining law with the aim of increasing the sector’s attractiveness to investors. After many rounds of parliamentary debate, it passed a set of amendments in December 2015, with specific regulations for these to be drafted over the next 90 days (see Mining chapter).

Powering Up

According to the ADB, as of the end of 2015 per capita electricity consumption in Myanmar was the lowest in the region, due in large part to the fact that 70% of the nation’s population had limited or no access to power. However, the government has made a concerted effort over the past decade and a half to boost electricity supply and transmission, with an eye towards improving both quality of life and the business environment for the manufacturing industry.

Beginning in the late 1990s and through the early 2000s, regional companies, particularly from China, carried out hydropower projects in Myanmar, although much of the power these generated was transmitted and consumed outside of Myanmar. According to MIC data, from FY 2011/12 through August 2015, the power segment attracted the second-largest amount of FDI after the oil and gas industry, with 23% of the total.

Improving Myanmar’s power supply is expected to have a knock-on effect on manufacturing, which has been a target growth area for the government in recent years. In 2013 the OECD estimated that Myanmar was home to some 60,000 individual manufacturing firms, the majority of which had only a handful of employees. In addition to garments, which are widely regarded as a key area of expansion, local and foreign manufacturers are involved in producing bottled water, energy drinks, beer, automobiles, pharmaceuticals and construction materials. The government has worked hard to encourage these activities since 2011, enacting a series of manufacturing-friendly laws and regulations, as well as moving forward with a plan to build a handful of special economic zones (SEZs) in the country.

In September 2015 the first of these zones, Thilawa SEZ, which is 25 km south-east of Yangon, was officially opened, though foreign players had been setting up shop there for more than a year prior. Thilawa SEZ, which is strongly supported by both the Myanmar and Japanese governments, as well as a raft of industrial firms from both countries, offers a variety of incentives to foreign players looking to set up shop in Myanmar, including tax exemptions, and favourable land ownership and capital repatriation frameworks. Bangkok-based daily The Nation, which reported on the September 2015 launch, said some 48 companies were in the process of establishing factories at Thilawa SEZ, including four domestic players. The government is also currently developing other SEZs throughout Myanmar (see Industry & Retail chapter).

Additional Contributors

The liberalisation of the telecoms sector in 2013 resulted in two foreign operators setting up shop in Myanmar, namely Qatar’s Ooredoo and Norway’s Telenor, which were awarded licences in January 2014. Since then, both firms have invested heavily in towers, fibre optic and other communications infrastructure. This new activity has contributed to mobile penetration jumping from around 33% to nearly 55% from mid-2014 through mid-2015, according to figures from the Ministry of Communication and Information Technology. The mobile penetration figure, and the telecoms sectors economic output, are widely expected to continue to grow for the foreseeable future (see Telecoms & IT chapter).

Finally, Myanmar’s agriculture and financial services sectors are both expected to play an important economic role in the country’s future. The former, which is historically one of the nation’s largest industries in terms of output and workforce, has waned slightly since 2011 due to the government’s focus on industrial activities and, most recently, the mid-2015 floods. Nonetheless, given Myanmar’s size and large labour force, the production of rice, beans and vegetables will continue to be an important economic activity.

The banking sector, meanwhile, was only recently liberalised, with nine foreign banks, all from the Asia-Pacific region, being awarded limited licenses in October 2014, on condition that they provide investment services solely to foreign players. The entrance of foreign banks is expected to have positive long-term effects on the domestic banking industry, which has been operational since 1993 and still carries out most business without the use of computers. “The development of the banking sector is starting from a very low base,” Daw Khin Thida Maw told OBG. “ATM cards are not new, but credit cards are still novel. Furthermore, even the CBM requires all local institutions to keep paper records.” In mid-2015 Reuters reported overall domestic banking penetration was at just 5%, though this figure is widely expected to grow over the course of the coming decade, particularly as the financial demands of the country’s nascent middle class expand (see Banking chapter).


Myanmar’s economy has shown signs of overheating in 2014/15, with rising inflation and a widening CAD, according to IMF data. This, along with various other short- and medium-term challenges, including limited infrastructure and the rapidly changing legal environment, has been a topic of discussion among the local business community and foreign investors alike in recent years. While Myanmar jumped 10 spots in the World Bank’s 2016 doing business index as compared to the previous year, the country still ranked relatively low overall, at 167th out of 189 economies. Continued kyat depreciation against the dollar is a serious hurdle for export-oriented firms operating in Myanmar, both domestic and foreign.

Nonetheless, interest in Myanmar as a potential destination for economic activity of all sorts has growth exponentially over the past five years. Since 2011, FDI has poured into the country, trade has grown rapidly and domestic output has increased apace on the back of continued government-led reforms and rising levels of foreign integration. “There are huge opportunities here right now,” U Maung Aung, an advisor at the Ministry of Commerce, told OBG. “We have a vast amount of land, a large population and great potential for growth across a range of economic activities. We need to work to capitalise on these advantages.”