According to countryaah, Myanmar’s economy and business are characterized by being one of the poorest countries in Southeast Asia and suffering from decades of stagnation, mismanagement and isolation. The lack of infrastructure and the lack of skilled labor in modern technology are a hindrance to Myanmar’s economy.
With the establishment of the State Council for the Restoration of Law and Order (SLORC) in 1988, the former economic policy, the “Burma Road to Socialism “, was formally demolished. After violent demonstrations in 1988, partly as a result of deep economic crisis, the policy was changed to a more open policy. Foreign investment was welcomed. The socialist system, and thus the state directing of the entire economy, was gradually abolished. Like in China, capitalist instruments were opened.
However, the growth of the economy is hampered by widespread corruption, lack of professional competence in the governing military junta, political instability and large military spending. The military service is deeply involved in business operations in a number of areas. The Democratic Alliance that won the 1990 election has asked foreign companies not to invest in the country until political and human rights have improved.
The isolation was somewhat softened from 1992, with some degree of domestic political liberalization and increasing foreign investment. The countries of the Southeast Asian ASEAN Alliance led what they called a “constructive engagement”, which broke with the West’s boycott line. In July 1997, Myanmar became the ninth ASEAN member. Myanmar, however, resigned from the chairmanship following international pressure; The United States threatened to boycott all ASEAN meetings in which Myanmar presided.
In October 2004, Myanmar was seated for the first time at the table when EU countries and thirteen Asian countries met in the cooperation organization ASEM. The EU announced new sanctions here, and following Khin Nyunt’s fall, these were implemented. General financial sanctions were tightened, along with a ban on further investment. The economic isolation led to China strengthening its influence in the country.
The US and the EU eased their trade sanctions in 2012, and with the free elections in 2015, trade relations between Myanmar and most other countries were normalized. Large foreign investments were predicted, but expectations were higher than actual investments. Stagnation in the peace process, new fighting, and not least the massive assaults on the Rohingya population in the Rakhine state, put a damper on investment. Nevertheless, gross domestic product growth was 6.8 percent in 2017.
Almost all foreign investment has come from natural resource extraction (oil, gas, minerals, timber and fishing) as well as in hotels. The largest single projects come from the UK, the US (Texaco) and France (Total), but the vast majority of investments come from other Asian countries such as South Korea, Singapore, Thailand, Malaysia and China. Following the accession of Myanmar as a full member of the regional cooperation organization ASEAN in 1997, economic cooperation with neighboring countries in Southeast Asia has expanded considerably.
Agriculture is the country’s most important business sector. It comprises (including fishing) over half of the gross domestic product, employs about 70 percent of the working population and contributes around three quarters of export revenue. Around 30 percent of the land area has the potential to be used as agricultural land. However, insufficient infrastructure means that only half of this is cultivated. About a fifth of the cultivated area has artificial irrigation. To increase agricultural production, the development of artificial irrigation plants is a priority target for the authorities.
Half of the agricultural land is used for rice production, which is mostly in very small units. Rice is both the most important calorie and protein source in the population and an important export product. For a time under British colonial rule, Myanmar was the world’s largest rice exporter. Under central socialist policy, rice production stagnated, and the country struggled to supply its own growing population. The restructuring of agriculture from the 1970s again led to an increase in rice production.
The most important rice cultivation areas are found in the Ayeyarwadys and Thanlwin delta areas, along the Sittung, in the plains along the Ayeyarwady’s middle course and in the coastal districts to the west and in the Taninthayi area. In these areas wet rice is grown, largely based on artificial irrigation. Highland rice is cultivated on the Shan Plateau and in the northern and western mountain ranges, in several places in Sweden. However, production is still characterized by both lower productivity and lower quality compared to neighboring countries in Southeast Asia.
Wheat, maize and millet are grown from other cereals. Wheat is mostly grown on the Shan Plateau and along Ayeyarwady’s middle course. Corn is grown south of Mandalay as well as in parts of Ayeyarwady’s delta. Millet is most prevalent in the northern and western mountainous areas. In the “dry zone” oil crops and cotton are grown. The tea bush is wild in several places, including on the Shan Plateau, and in the Tanintharyi division fruits and rubber are produced on plantations. Other products include cane, peanuts, legumes and tobacco.
On the Shan Plateau and partly in the mountainous regions along the border with India, there is extensive cultivation of opium poppy (” the golden triangle “). Several reports point to a military participation in opium exports. Myanmar is the world’s second largest opium producer after Afghanistan.
Since the country is very poor, livestock farming plays a relatively modest role. Domestic animals are primarily used as draft animals. The authorities are investing in increasing the number of migratory animals to achieve the goals of increased agricultural production. Only poultry (chicken and duck) are used to some extent for meat production, and meat is still considered “luxury food”. In higher and dry areas, smaller goats are kept with goats.
Teak and other hardwoods comprise a significant portion of the country’s forests. It is estimated that Myanmar has over three-quarters of the teak exploitable reserves in the world. To increase export revenues, the authorities issued licenses to Thai logging companies in the late 1980s. Illegal logging and smuggling across the border into Thailand is a general problem and teak reserves are seriously threatened. Although there has been some replanting of teak, the authorities are criticized internationally for little ability and willingness to control the harvest, which takes place in part in outbreak regions. Deforestation is believed to have contributed to the country more often being hit by floods.
Fish represents the most important animal source of protein for the population, and is therefore an important part of the diet. About three quarters of the catches are in salt water and one quarter in fresh water. A large proportion of the saltwater fishing takes place in the Myeik archipelago. The authorities have invested in expanding the fishing fleet to increase export revenues. Licenses granted to foreign (Asian) trawlers have led to reports of overfishing.
The country’s expanded capacity for electric energy production in 2013 was 3,735 MW, of which hydropower amounted to 2,780 MW and gas power 835 MW. Annual production is around 18 TWh. Of electrical energy produced in 2015, 68 percent came from hydropower and 32 percent from fossil energy. Many villages are not connected to the national electricity grid, and in 2014 it was estimated that only 30 percent of the population had access to a reliable power supply. The final consumption per capita is thus very low and in 2016 calculated at 293 kWh.
A number of major hydropower projects are planned to be developed along the Thanlwin River in the eastern mountainous areas. The deposits of mineral oil have been known since the 13th century and have been used for lighting. The authorities have invited foreign companies to the country to invest in oil and gasrecovery. A number of problems related to corruption, inefficiency and strong pressure from international human rights organizations, including charges of forced labor, have severely limited the activities of foreign companies. The government’s ambition for the country to be self-sufficient with crude oil has in reality never been fulfilled, and the country suffers from continuous energy shortages. The most important deposits of crude oil are found in the Ayeyarwady basin and along the Rakhine coast. Since the 1980s, gas has been produced from offshore deposits in the Gulf of Martaban and in the Tanintharyi Division. From the Yadana field in the Gulf of Mottama (Martaban Bay), gas is exported to Thailand via a pipeline.
Less good quality coal is mined in the upper part of the Chindwinn Valley. Tin and tungsten are mined in the Tanintharyi Division. Lead, zinc and silver are mined on the Shan Plateau, copper in Monywa and gold at Bawdwin northeast of Mandalay. From ancient times, the country is known for its production of jade and gemstones (sapphires and rubies).
Natural gas and other riches
About one-third of foreign trade takes place with neighboring Thailand, which imports natural gas for close to USD 2 billion annually. In the Bay of Bengal off Myanmar’s west coast, large deposits of natural gas have been detected in recent years. China, India and other neighboring countries are competing for new gas deals. In 2008, new exploration agreements were signed with Russian, Thai and Vietnamese companies. By the way, the country is rich in tropical timber and minerals, jade and other gemstones. Myanmar is believed to extract about 90 percent of the world’s rubies (measured by value) and 80 percent of the world’s teak timber. In addition, they have one of Asia’s largest proven deposits of natural gas.
Work is underway on massive projects for further development of gas exports. China secured an agreement to build a pipeline for oil freight (from the Middle East) from the deep-water port of Rakhine State to Yunnan Province in southwest China. Another natural gas pipeline has been built from the Shwe field to the same Chinese province. The two pipelines are the largest investment in Myanmar ever. Myanmar also has a central place in China’s Belt and Road initiative.
The industry is small and mainly based on the processing of agricultural and forestry products and minerals. Oil refineries are found in Chauk, Thanlyin (Syriam) and Mann. The cotton industry is concentrated to Yangon, Mandalay and Myingyan. Yangon also has facilities for the production of steel products and pharmaceuticals; furthermore there are cement plants in Thayet, a paper mill in Rakhine and factories for the production of fertilizers based on natural gas at Sale and Kynchaung. The industry is hampered by inadequate energy supply and high prices for machinery and spare parts. The textile industry has been hit by international sanctions.
Myanmar has, with its exceptionally rich and genuine cultural traditions, basically a great potential as a tourist destination. A number of magnificent palaces and Buddhist temples are scattered around the country. The most attractive tourist destinations are Yangon, Mandalay, Maymyo and Pagan. After the fight against the democracy movement in 1988, the tourist flow stopped almost completely. Later, the authorities have sought to expand tourism in order to attract foreign currency. A combination of Western sanctions, restrictive visa rules and inadequate infrastructure has kept visitor numbers down.
In the western countries, a debate has been held on whether to visit Myanmar as long as the military regime is in power. Tourist visits automatically lead to increased military dictatorship. Suu Kyi and her democracy movement have advised tourists not to travel to the country as long as human rights are not respected.
Myanmar has long had a current account deficit with foreign countries. However, the launch of natural gas exports to Thailand has led the country to have a surplus on the trade balance since 2002. Other important export products are rice, legumes (to India), hardwood and marine products. Other exports are hampered by US sanctions, European restrictions and general boycott campaigns launched by international interest groups. Together with Afghanistan, Myanmar is unofficially regarded as the world’s leading exporter of opium. Imports consist of consumer goods, semi-finished goods, capital goods and military equipment.
The main trading partners are neighboring countries Thailand, India, China and Singapore. Border trade with China has expanded since 1987. It exports jade, gemstones and teak, and cheap consumer goods and capital goods are imported. China is also the main exporter of military weapons to Myanmar.
Transport and Communications
The transport network is poorly developed and is characterized by old and poorly maintained equipment. In essence, the connections are built north-south. The railway network is approximately 3955 kilometers long with the main train from Yangon to Mandalay and Myitkyina. The road network is extensive, but only a small part has a fixed tire. The rivers are traditionally important in transport. In total, there are 12,800 kilometers of navigable waterways, of which Ayeyarwady and Chindwinn are the most important. During the dry season, boats can navigate all the way up to Bhamo (1450 km), during the rainy season to Myitkyina. International airport can be found at Yangon (Mingaladon) and Mandalay.