Asian companies look to expand into Myanmar

For the fiscal year ending March 31, Myanmar’s trade deficit increased by 88%. The country imported $16bn of goods for the time period and exported $11bn of goods. According to Reuters, capital goods such as construction materials for infrastructure projects accounted for 40% of imports, fuel 30% and consumer goods 20%.

As such, the country has launched a national export strategy, which, according to the government will strengthen smaller businesses. “Exports have become concentrated on a handful of products, mostly unprocessed natural resources, and export destinations remain limited,” the government said in a statement.

Indeed, there is a good bit of interest in this country as it continues to emerge as a manufacturing location. According to United Overseas Bank’s Asian Enterprise Survey, one in four Asian businesses plan to expand into Myanmar this year. The survey is based on 1,024 businesses from China, Hong Kong, Indonesia, Malaysia, Singapore and Thailand and further finds that of the respondents, 31% of Hong Kong respondents noted plans to expand to Myanmar this year followed by Thailand (28%), mainland China (26%) and Malaysia (25%).

Additionally, 44% of Asian businesses planning to expand into Myanmar are in the automotive industry and 39% are in the food and beverage industry. Logistics and shipping companies are following suit as well at 30% and 33% respectively.

Vehicle import regulations have been relaxed in Myanmar since 2011 and as such imports have been on the rise. A recent example of the growing interest from the automotive industry is the announcement from NYK Line which established a joint venture for car transportation in Myanmar with its partners Silverbird Auto Logistics and Phee Group.

Also, leading automobile manufacturers such as Ford and GM have partnered with local dealers to open showrooms. Also, these manufacturers also provide service and spare parts. In 2013, Japan’s Suzuki Motor Corp, resumed production of vehicles in Myanmar for the first time in three years, manufacturing about 100 small trucks a month and Nissan has partnered with Tan Chong Motors to build what is described as the largest automobile assembly plant in Myanmar with anticipated capacity of 10,000 vehicles a year. The plant is scheduled to open this year. According to a Nissan spokesperson, parts will be sourced from Thailand, India, China and Japan as well as by local suppliers.

As Myanmar continues to open up intra-Asian supply chains will connect with it, extending an already intricate logistics network to create additional opportunities for logistics providers.