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Myanmar: Continued to Promote Structural Reforms

 

Key Information
CapitalNaypyidaw
Population55.1 million
CurrencyMyanmar Kyat
Official languageBurmese
Form of governmentMultiparty democratic

 

Major Merchandise Exports (% of total, 2016*)Major Merchandise Imports (% of total, 2016*)
Agricultural products (40.8%)Manufactured goods (68.3%)
Manufactured goods (29.9%)Agricultural products (19.6%)
Fuels and mining products (29.2%)Fuels and mining products (12.1%)
Top Three Export Countries (% of total, 2017)Top Three Import Countries (% of total, 2017)
China (38.9%)China (31.8%)
Thailand (19.4%)Singapore (15.2%)
Japan (6.5%)Thailand (11.3%)

*Most recent data available
Sources: Economist Intelligence Unit, World Trade Organisation

Political Highlights

Myanmar has a multiparty democratic system, but substantial political power still rests with the military. The country is transitioning into a more open country following decades of military rule and isolation. The National League for Democracy (NLD) led by Aung San Suu Kyi, the figurehead of the country’s pro-democracy movement, came into power in 2016. While Aung San Suu Kyi remains constitutionally barred from the presidency, she acts as a de facto leader by taking on a newly created role of state counselor as well as some key government positions. The parliament elected U Win Myint as president in March 2018, replacing U Htin Kyaw who has resigned due to illness.

When Myanmar was under full military rule, the US and other Western governments placed sanctions on the army regime. But as the top brass began sharing power with a civilian government, most of those broad sanctions were lifted gradually in the past decade. However, relations with the West have become strained in recent time due to the government’s mistreatment of the Muslim ethnic minority Rohingya. In December 2017, the US imposed sanctions on Myanmar. Also, the EU and Canada have placed sanctions on Myanmar military officials including asset freezes and ban from travelling in June 2018.

Economic Trend

Economic Indicators2015201620172018^2019^
Nominal GDP (USD bn)59.563.367.371.574.0
Real GDP growth (%)7.05.96.86.46.8
GDP per capita (USD)1,1471,210*1,278*1,3541,395
Inflation (%)10.06.84.06.05.8
Gross  government debt (% of GDP)34.535.733.633.234.2
Current account balance (% of GDP)-5.1-3.94.3-5.3-5.7

*Estimate ^Forecast
Source: International Monetary Fund (IMF)
Fiscal year begins on 1 April of year shown

Myanmar has enjoyed one of the fastest growth rates in the region after the military, which ruled for nearly 50 years, ceded power in 2011 to a civilian government that ushered in rapid reforms, including the relaxation of foreign investment rules in 2013-2014. Economic reforms include establishing a managed float of the Kyat, granting the Central Bank operational independence, liberalising the telecommunications sector, and grating licenses to foreign banks. The reforms have paid off with the economy growing strongly in recent years. The country recorded 6.7% GDP growth in 2017 from 5.9% in 2016, driven by recovery in agriculture and especially crop production, improved manufacturing performance and services growth.

With continued structural reforms and the strengthening of foreign direct investment in a number of industries, such as telecommunications, oil and gas, and manufacturing (primarily garments), the growth prospect of the Myanmar economy remains favourable. Thanks to its membership in the ASEAN and its strategic location between China and India, the country benefits from relocation of manufacturing plants around the region in search of lower labour cost. Furthermore, the country has enforced a new Companies Law on 1 August 2018, aiming at attracting more foreign investment.

However, the country’s GDP per capita remains low. Decades of isolationist policies resulted in macroeconomic imbalances and deficient infrastructure. As merchandise import growth will remain strong as foreign-invested infrastructure projects caused huge demand for imported capital goods and raw materials, the growing trade shortfall will further widen the current-account gap in the years ahead.

Chart: Hong Kong total exports to Myanmar
Chart: Hong Kong total exports to Myanmar

Hong Kong-Myanmar Trade

Total exports from Hong Kong to Myanmar increased by 47.4% from HK$1,532 million in 2016 to HK$2,259 million in 2017. The top three export categories to Myanmar were: (1) textile yarn, fabrics, made-up articles, and related products (+37.3%), (2) plastics in non-primary forms (+386.4%), and (3) telecommunications and sound recording and reproducing apparatus and equipment (-14.4%), which represented 54.1% of total exports to Myanmar.

HKECIC Underwriting Experience

HKECIC imposes no restrictions on covering buyers in Myanmar with the exception of those under sanctions. There was no insured business on Myanmar from November 2017 to October 2018.

 

 

 

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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