World Grain - August 2013 - 28

FEATURE: EmErging opportunity in myanmar

GDP structure change
100
Change driven by new investments

% of GDP output

80
Services

Agriculture

60
40
20

10.5% per anuum
between 2005 & 2010

0
Source: Stanton Emms Strategy Consultants
1995

2000

2000
2000

growth rates could easily accelerate,
particularly if fast-expanding parts of
the black economy are factored in.
Myanmar’s small middle class is already devouring ever growing numbers
of food imports, while the cost of labor
is very cheap, making Myanmar a prospective base for manufacturing, particularly for textiles and other industries,
which could rapidly boost economic
growth and consumer demand.
It is also located at a strategic
crossroads between India, China and
Southeast Asia and offers easy access
to the Bay of Bengal, further increasing
its attractiveness to investors. In short,
the world’s politicians and business
community see Myanmar as a major
untapped, strategically located market
boasting abundant natural resources
including oil, gas and minerals, and a
large, cheap labor market.
All of which makes Myanmar one of
the most promising markets in Asia for
grain and processed food imports over
the next decade and more. One delegate
at the 7th Asia Grain Transportation
Conference, hosted in Bali, Indonesia
in May by a range of grain organizations including the U.S. Department of
Agriculture and U.S. Grains Council,
compared Asia’s newest tiger economy
to one of its Southeast Asian peers.
“Vietnam’s commercial feed production was 500,000 tonnes in 1996. Now
it’s about 13 million tonnes. Myanmar
could go the same way,” he said.
28

Industry

2005
2000

2010

GrowinG middle class
Speaking at the same conference,
Singapore-based Tony Emms, managing partner at Stanton Emms Strategy
Consultants, said the number of middle
income consumers in Myanmar had
grown rapidly since around 2006 as the
economy has partially industrialized

“Myanmar will be the first
Asian country to develop in a
free trade environment. The
rush to invest has now started.”
— Tony Emms, Stanton
Emms Strategy Consultants
and people have migrated from the agricultural sector to services and industry.
Although still at a very early stage,
this trend is changing diets and consumer trends, driving up food imports, not
least for consumer-ready branded foods
and drinks, both soft and alcoholic.
At the moment, the number of middle
income consumers in Myanmar totals
only around half a million, with a fringe
group of around another million now
occasionally consuming beer and other
premium products. But Emms said food
imports have increased at over 40% per
annum since 2005 to total $1.6 billion
in 2011, and growth has continued with
major shortages of branded foods and
drinks apparent across the country. Import

growth for feed materials grew 117% over
2005-11, while drinks imports were up
60%, edible oils 34% and cereals 22%, in
part to satisfy growth in local production
of dairy products, fish and meat.
Total imports have increased 16.9%
per annum since 2000, while exports
have risen almost 30% per annum, according to figures from Emms calculated using external customs figures.
The huge opportunities available
help explain the June decision by the
Australian Trade Commission (Austrade)
to open an office in Yangon to help support Australian companies looking to
invest or supply products to Myanmar.
Agriculture, food and beverages were
some of the sectors newly appointed trade
commissioner Mark Wood said would be
targeted in a series of trade exhibitions
and product promotions through 2014.
“Companies looking to do business in
Myanmar need to be fully informed about
the operating environment,” he explained.
The removal of more sanctions by the
E.U. and U.S. will see more growth in
an already dynamic market, said Emms,
with the E.U. already clearing Myanmar
to export textiles into its huge market,
potentially creating a new production
base for those seeking lower costs than
now available in China.
“The economy has been in the process of change for some years,” he said.
“We’re seeing strong growth in industrial output and better paying job indicators. Things are changing.”
Much more investment will come
from Europe, Japan, India, Thailand,
Singapore and the U.S. as Myanmar
seeks to reduce its dependence on
Chinese investment, which has mainly
focused on established export routes for
raw materials back to China. However,
Emms warned investors that there were
still many negatives clouding the picture. These include a “tainted legal system,” a major brain drain, overvaluation
of the Kyat currency, corruption, doubts
about whether the ruling elite are really
ready to hand over power, and if the opposition has the ability to govern.
On the positive side, liberalization of
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