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Frost & Sullivan: How to make smart entry to Myanmar?

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Frost & Sullivan: How to make smart entry to Myanmar? PR Newswire BANGKOK, July 19, 2012 BANGKOK, July 19, 2012 /PRNewswire/ -- Today many businesses representing almost all industry sectors are eagerly seeking opportunities to either invest or expand to Myanmar. With a population of 60 million, the country has recently opened up and attracted many foreign investors due to its becoming pro- investment climate. Gaining further attention, Myanmar is hosting key upcoming events like the SEA Game in 2013 and the ASEAN Summit in 2014. According to Dr. Monsinee Keeratikrainon, Thailand Country Manager, Frost & Sullivan, currently, the majority of foreign investment in Myanmar comes from China and Hong Kong, followed by Thailand and South Korea. "Around 80% of foreign investment goes to Power, Energy, Oil and Gas; where as 11% goes to mining and manufacturing. Although the GDP composite in the industrial sector is as low as 20%, with service at 37% and the rest is agricultural, there are highly increasing demand for industrial goods due to many major infrastructure buildups. The key growing segments would be the power & energy, oil & gas, mining & minerals, and construction," she said. Recently, the Myanmar government promoted property investment in Myanmar, especially hotels, residential, as well as commercial buildings, in order to accommodate the dramatically growing number of business investors.
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Frost & Sullivan: How to make smart entry to Myanmar?
PR Newswire BANGKOK, July 19, 2012
BANGKOK,July 19, 2012/PRNewswire/ -- Today many businesses representing almost all industry sectors are eagerly seeking opportunities to either invest or expand toMyanmar. With a population of 60 million, the country has recently opened up and attracted many foreign investors due to its becoming pro-investment climate. Gaining further attention,Myanmaris hosting key upcoming events like the SEA Game in 2013 and the ASEAN Summit in 2014. According to Dr. Monsinee Keeratikrainon, Thailand Country Manager, Frost & Sullivan, currently, the majority of foreign investment inMyanmarcomes from ChinaandHong Kong, followed byThailandandSouth Korea. "Around 80% of foreign investment goes to Power, Energy, Oil and Gas; where as 11% goes to mining and manufacturing. Although the GDP composite in the industrial sector is as low as 20%, with service at 37% and the rest is agricultural, there are highly increasing demand for industrial goods due to many major infrastructure buildups. The key growing segments would be the power & energy, oil & gas, mining & minerals, and construction," she said. Recently, theMyanmargovernment promoted property investment in Myanmar, especially hotels, residential, as well as commercial buildings, in order to accommodate the dramatically growing number of business investors. The new property law allows foreigners to lease land directly fromMyanmar residents, not necessarily through government like before, whilst the leasing term has also extended from 30 years to 50 years. According to Monsinee, there are still four key major issues needed to be addressed in making the decision to invest inMyanmar; 1. Landavailability - Currently there is only 50 80,000-SqM leasing space available in Yangonwhich does not match the demand, causing the price to hike above$80per SqM whereas the average price in nearby city likeBangkokis not more than$30per SqM. Visitors may have to pay as high as$250per night for a 4-star hotel which is always fully booked. 2. Basicinfrastructure – Transportation and logistics as well as utilities like electricity/water and telecom infrastructure are still mostly operated by the government.There are problems in basic infrastructure as witnessed in the quality of roads in suburban areas and regular electric lights-out even in the 5-star buildings inYangonaccess tocity. Also broadband is very limited and unreliable while data roaming is not available at all. The government has promised to upgrade its ICT infrastructure before the 2013 SEA Game. 3. Manpower– Although theMyanmarpopulation have high literacy rate (more than 90%), more than a third have lower than primary school education. Therefore, businesses will face problems in skill shortages and lack of manpower, especially for industrial goods where technical skill is a must. 4. Regulationuncertainties – Whilst the new foreign investment law is expected to be passed within the next month, many investors are speculating dramatic improvement in flexibility and tax benefits. However, there are still many economic-related legislations not yet passed or drafted, leaving uncertainties underway. Therefore the legislative processes are moving slower than the market. Although the government is promising commitment, at the same time, a cautious approach has been taken in changing regulations.