Myanmar

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- Economic factors

The economics states in response to the political changes. After changing to the democratic governance, the other parties ease the sanctions and helps Myanmar to booms its economics.

- The annual growth of Gross Domestic Product (GDP)

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Myanmar’s GDP keep increasing from 2011, it increased more than 5% each year and it increased 8.2% in 2013 and 8.5% in 2014 (The World Bank, 2015). By comparing with other emerging country like Brazil, it shows the big different. It seems that Myanmar has high potentials for foreign companies to invest in the future.

- Current Income level

One of the reasons of why the foreign investors are seeking for switching their production line in Myanmar is because of the low cost labors. The World Bank ranked the income level in Myanmar is lower middle income (The World Bank, 2015), which means the average income level is quite low. For the production industry, the most concerned factors are the cost of rent and the labors. In order to achieve economies of scale, taking advantages in low renting cost and low labor cost is necessary. Because of the cost of production theory of value, lower the cost can gain competitive advantages, especially for the low cost providers.

The current minimum daily wage is about 900 to 1300 Kyats (about 1 USD) in the industrials zones (Xinhua, 2015).

- Investment policy

In order to attract foreign investors, the Myanmar government provides different benefits for them.

- New foreign investment law

The Myanmar government released the new foreign investment law, which aims to provide an investment-friendly environment for the foreign companies (HKTDC, 2014). The foreign investors are able to choose 100% ownership or joint venture. It offers the manufacturing, services, infrastructure construction, retail and wholesale businesses for the foreign investors (HKTDC, 2014). The foreign investors can enjoy the tax holiday for the first five years and 50 –year land leases from the government (The Economist, 2012). Those policies help to attract different kinds of foreign investors.

The foreign direct investment was more than 49.4 billion USD in August 2014. Those capitals are mainly from China, Thai Land, Hong Kong and Singapore (HKTDC, 2014). The foreign companies are spending a lot of money to improve its infrastructure, in order to increase the efficiency of transportation and telecommunication. Myanmar will become a high competitive market after those infrastructures are well developed.

- Trading policy

Myanmar current exporting and importing partners are Thailand, China, India, Singapore and Japan. It mainly exports the natural gas, wood products, pulses, fish, rice, clothing, jade and gems, and it imports the machinery, transport equipment, cement and construction materials (The World Factbook, 2015). Myanmar mainly exports the raw materials and clothing to other countries. The clothing industry is successful due to the low cost renting and labors. It also shows that Myanmar is starting to improve its infrastructure by importing the machinery, transport equipment and construction materials from other countries. It shows that the government and the other foreign investors aim to improve the local infrastructure for future development.

- The Commercial Tax for special goods

The Myanmar’s commercial tax rate for import and production of 16 kinds of special goods will be change. The cigarettes products will increase 20% and other tobacco and beer product will increase 10% (Rödl & Partner, 2015). It shows that those industries will not be favorable and facing the higher tax problems. On the other hand, the jewelry product will decrease 10 to 15% under the new commercial tax (Rödl & Partner, 2015). The jewelry industry will be favorable under the new commercial tax.

- Ideological factors

Myanmar is a high power distance, feminism, collectivism and long-term oriented country (Rarick, 2006).

Consumers are more likely to listen to the elders’ opinion (Rarick, 2006). It means that the foreign companies must respect the elders, in order to do businesses in Myanmar. Moreover, the people are tends to be caring rather than aggressive. Using the suitable way to manage the labors may provide better outcomes. It means the team oriented may provide better outcomes than individual competiveness. The country are ranked collectivism, it means the consumers may focus on the whole group rather than personal usages, according to the Rarick, it mentioned that word of mouth is a useful tools in the collectivism country, because the people tends to be asking advise from its friends or family members (Rarick, 2006). Therefore, it may be a useful tool to convince the customers. Moreover, the country are ranked in long-term oriented, it means the people focuses on long-term rather than short-term, so the customers may focus on high quality in order to use it in long-term.

- Migration situation

The migrations are popular in in Myanmar. Most of the labors migrated to Thailand, because of the high demand in low skill labors (McGann, 2013). Moreover, Thailand provides higher wages than Myanmar, about 10 times higher than the local wages (McGann, 2013). Therefore, most of the labors moved to Thailand and seeks for the jobs.

- Conclusion

After analyze the current situation of Myanmar, it shows that Myanmar has great potentials for some foreign companies to enter the Myanmar’s market, because of its potentials and current foreign investment law, provides an investment-friendly environment for the foreign investors. And also the low cost renting and labors are extremely attractive.

- Recommendations

Two industries are highly recommended to enter the Myanmar’s market, likely the manufacturing industry and mobile telecommunication industry. The manufacturing industry required low cost renting and labors, and it does not required high level of skills. The clothing manufacturing industry is the best choice for the foreign companies to enter the markets, because Myanmar current exports the clothing in high volume. It means that the labors are well trained in producing the clothing.