Myanmar Country profile
Myanmar’s journey to democracy following 49 years of military rule is proceeding well. Openly contested elections in November 2015 ushered in the transfer of power to the National League for Democracy (NDL) Led by Aung San Suu Kyi. The new government is focused on greater trade and foreign investment and sustaining the strong growth of the last decade. But the army maintains a heavy presence in both government and business. And Myanmar lags most of Asia on incomes per capita, creditworthiness and ease of doing business.
Myanmar was ruled by a military dictatorship for much of the last 50 years, resulting in decades of isolation. This weighed heavily on investment and incomes. But positive steps toward democracy has warmed relations with the international community, which have welcomed Myanmar back into the fold with high level visits from the EU and US over the last few years.
Public infrastructure spending is supporting construction and ancillary industries. The manufacturing and gas sectors are benefitting from greater trade and foreign investment flows, while services have received a boost from higher tourism receipts. The IMF expects growth will average close to 8% p.a. over the next five years.
But there are still considerable risks. The rapid expansion is likely to cause capacity constraints as policymakers push reforms on all fronts—elevated public spending could put pressure on the government’s debt position, while inadequate financial regulation could be exposed if rapid credit growth persists over coming years.
ASEAN integration will give Myanmar greater access to some 600m consumers. But the economy remains in transition and will struggle to compete with its more developed neighbours. Like Cambodia and Laos, Myanmar has been given until 2018 to better equip itself for integration into ASEAN.
Per capita income has more than doubled since 2007 and the economy is now classed lower-middle-income. But poverty remains rife with around one quarter of the population estimated to be living in poverty. The United Nations Development Index, a broad measure of living standards, ranks Myanmar in the bottom 20% of countries.
Myanmar has an OECD country credit grade of 7, underlining its vulnerability to business, financial and economic setbacks. Myanmar is not rated by any of the major ratings agencies.
Doing business in Myanmar is very difficult. The economy is ranked 170 out of 190 on the World Bank’s ease of doing business gauge— which measures regulation and red tape relevant to a domestic small to mid-sized firm. Lack of transparency, weak infrastructure and an inadequate judicial system are often cited as barriers.
The country also scores poorly across all facets of governance due largely to turbulent politics.
Australian sanctions on Myanmar between 1991 and 2011 weighed heavily on bilateral trade. But the arrival of democracy has ended targeted financial sanctions and travel bans, although Australia continues to maintain an arms embargo. Myanmar is currently Australia’s 73rd largest trading partner. Australia sent US$226m of merchandise and service exports to the country in 2015-2016, mostly wheat. Import payments were worth US$76m, mainly petroleum and seafood.
Service exports to Myanmar are negligible. Student enrolments abroad and in Australia are minuscule, given the low levels of income. Australian aid to Myanmar is worth A$60m (1.6% of the aid budget) in 2016/2017, targeted at education, infrastructure, trade and agriculture.
Australian investment in Myanmar is also very low, though the country’s large oil and gas reserves present opportunities for Australian mining companies–Woodside and Bluescope Steel already have a sizable presence. Outside of commodities, ANZ is quite active in banking.
Department of Foreign Affairs