Myanmar, the Manufacturing Hub – with focus on Special Economic Zones

Infrastructure remains a key challenge in Myanmar and the government is now depending on the development of industrial and special economic zones (SEZ). Road is the key mode of transportation for local trade, but ~79% of it are still unpaved.

The majority of railroad is nearly 100 years old, and low investment for this segment has led to low speed, quality, and decline of competitiveness of freight and passenger services. Airline cargo and transport, on the other hand, are not popular due to high cost. Meanwhile for sea trade, Yangon has a major port handling nearly 90% of imports and exports in the country.

Three SEZ are expected to further boost economic growth in Myanmar: Kyaukphyu, Dawei, and Thilawa SEZ. These zones offer more generous benefits than industrial zones, such as follow :

1. Tax exemption for first 5~7 years
2. 50% relief on subsequent 5 years of exemption + 5 more years on reinvested profit
3. Investors can lease land up to 75 years
4. Etc

Thilawa SEZ

Thilawa SEZ is heralded to strengthen Myanmar’s position as a manufacturing hub, offering access to an estimated 2.3 billion consumers across the region. Myanmar’s total manufacturing FDI in 2014-2015 was USD 1.5 billion, a third of which comes from investment in Thilawa.

49% of the investment in Thilawa SEZ is held by a Japanese consortium comprising Mitsubishi, Marubeni, Sumitomo and the Japanese government while the rest is held by a Myanmar consortium.

Low labour costs in Myanmar have attracted low-cost manufacturing and there is a gradual shift toward medium-value manufacturing. Investing in Thilawa SEZ and Myanmar as a whole would offer the investors the following :

• Domestic demand:
  Opportunities in automotive, construction materials, industrial machineries, and electronic products sectors.
• Regional demand:
  Offers access to a 2.3 bn consumer base through trade with neighboring countries. Natural gas and agricultural products have dominated exports due to limited manufacturing.***

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The complete version of the white paper further outlines the opportunities in Myanmar’s manufacturing sector and its special economic zones for the investors, along with the key success factors for accessing these untapped opportunities.

Download it for free here.