1. Myanmar prESENTATION ON
The Benefit of AEC Integration to ASEAN Supporting Industry
Presented by
Dr. AUNG THEIN
Vice-Chairman
Myanmar Industries Association
14h May 2015
Bangkok – BITEC, Thailand

2. Contents Current Economy Outlook of Myanmar
Strength & Opportunity of Myanmar’s Supporting Industry
Current Status of Myanmar’s Supporting Industry
Possible Area of Cooperation among ASEAN countries and between ASEAN countries & Japan particularly in Supporting Industry Development

3. Brief about Myanmar Area 676 577 sq km Total Land Borders 5876 km
Population
51 .4 million ( 2014 Population Census)
GDP (PPP)
$ 56.8 billion( )
GDP Growth Rate
8.7% ( )
GDP per capita (PPP)
$ 1 105
Inflation rate
6.5% ( )
Literacy rate
89.9%
Age Structure
0-14 years (26.7%), Years(18.6%)
25-54 years(42.8%), Years(6.7%)
65 Years and above (5.2%)
Geography
Eastern Hill Region, Central Valley Region, and Western Hill Region A N D M S E B Y O F G L
KACHIN STATE
CHIN
STATE
SHAN STATE
KAYA STATE K I T
SAGAING
DIV
ISION
MAGWAY
DIVISION
BAGO
YANGON V R W H
CHINA
LAOS
THAILAND
INDIA
BANGLADAHS
Source : DICA

4. Current economy outlook
After decades of economic isolation, Myanmar has undergoing significant transformation since 2011, on the path of political, social and economic reforms agenda.
Moving towards inclusiveness, transparency and improved institutions.
Fertile land, abundant natural resources, rich cultural heritage, a young labor force and a prime geographic location represents enormous development opportunities and contribution to growth.
High potential to become a major player in international & regional trade which constitute sizeable consumer market.
International sanctions are being released and lifted
Reinstatement of trade preferences to Myanmar under EU’s GSP
Re-engaging with the global economy, Myanmar to participate in production and distribution networks of East Asia

5. Trade Patterns and Trends
Trade mainly with Asian Countries
70% of export to Asian region
90% of import comes from the region
China , Singapore and Thailand are the biggest trade partners
Export primary products
Import manufactured goods
Myanmar’s foreign trade is mainly with Asian countries. More than 70% of total export goes to the Asian region and about 90%of total import comes from this region. Myanmar foreign trade is mainly with China, Singapore, Japan, Thailand, Malaysia and India. Myanmar is still exporting agricultural and other primary products. Imports are manufactured goods, particularly capital goods.

6. Import & Export Structure of Myanmar
Major Export Items
Major Import Items
Natural Gas
Petroleum Products
Jade
Machinery and spare parts
Timber
Iron and steel construction materials
Pulses and Beans
Plastic raw materials
Marine Products
Palm oil
Raw Rubber
Vehicles and spare parts
Garment
Pharmaceuticals
Rice
Cements
Fertilizers

7. Strength & Opportunity of Myanmar’ Supporting Industry
Comparatively Low Labor Wages compared to other developing countries
Existence of fairly trained & literate labor force
Over 60% of population are at Working Age
If you establish your Supporting Industry under CMP basic, you don’t need to pay Import Duty when you import your Raw Materials & no need to pay Export Tax when you export back your finished products. Only has to pay 25% corporate tax/profit tax after enjoying 5 years tax holidays.

8. Current Status of Myanmar’s Supporting Industry
Currently there are 9 Electrical & Electronics Parts production companies are operating in Myanmar under CMP basic. Mainly from Japan, Korea, Malaysia, Singapore & China.
2 Optical Lens companies from Taiwan & Hong Kong
1 Medical Equipment Company from Japan
1 Car Radiator Company from Japan is going to start their production at newly established Thilawa SEZ very soon.

9. Types of Investment allowed1
A Citizen or
Concerned Government Organization
100% Foreign Owned 2
Joint
Venture 3
Foreign investors can set up their business either in the form of 100% wholly foreign owned or Joint venture or any system included in the mutually agreed contract.
Any System Included in the Mutually
Agreed
Contract

10. Highlights of New Foreign Investment Law
Income Tax Exemption
For First Five Years
For reinvestment of profit within 1 year
50% exemption on profit from exports
Deductions
Right to deduct depreciation from profit
R&D Expenditure deductible from assessable income
Relief from customs and internal taxes
Machinery and Equipment imported during construction period
Raw Material used in production over the first 3 year in case of increase investment

11. Industries of Myanmar by categories
Competitive Industries
Potential Industries
Basic Industries
Food and Beverages
Automobile Parts
Agricultural Machinery
Garment & Textile
Industrial Materials
Agricultural Fertilizer
Household Woodwork
Minerals & Crude Oil
Machinery & spare parts
Gems & Jewellery
Pharmaceutical
Electrical & Electronics
Supporting Industry
Paper & Publishing
Renewable Energy
Construction Materials
Household products
Currently, Myanmar’s industries can be grouped into three categories as competitive industries, Potential Industries and Basic Industries.

12. Special Economic Zones in Myanmar
Kyauk Phyu
Thilawa
Dawei
Incentives under SEZ Law
Imported raw material
Machineries
Equipment
Vehicles
Tax holiday years
Second 5 years % relief on income tax – overseas sale products
Third 5 years % relief on income tax – reinvestment obtained from export sale
Export Processing Zone
5 years

13. Few Tips for Myanmar Business Environment
Local currency is Myanmar Kyat and it is around K 1100 per USD.
Corporate Tax is 25% of total profit annually.
5% Commercial Tax for imported items and locally produced products. Items such as alcohol, cigarette etc. subject to much higher tax rate.
Average worker’s monthly wages is around 80~100 USD per month . But going to increase to 100~120 USD per month very soon due to government adjusted the salary for public sector just recently.
Current commercial and industrial land depends on the location
Bank deposit rate is 8% and lending rate is 13%, SME 8.5%
Electricity rate is K50 for resident & K75 for businesses.

14. Possible Area of Cooperation with ASEAN & Japan
Supporting industries in Electrical & Electronic sector, Automobile Industries etc.
Establishing Technical Training School & Vocation Training Center to educate local labor force to become skillful
In order to enhance technological know-how of Myanmar industries, high technological industries should be welcomed, experts should be introduced and organizing industrial technological fairs.
To Establish institution, Technology Incubator & Productivity center to increase the productivity of Myanmar businesses

15. Conclusion
Myanmar is now regarded as place of incredible prospects and is the last frontier for business opportunities in the region.
Myanmar possesses various resources, including human capital resource.
The country is going through changes at an extraordinary pace. The public and private sectors are all working to full capacity in order to catch up to the modern world.
When AEC start to implement around end of this year, ASEAN countries can work more closely among themselves and between ASEAN countries & Japanese SMEs & MNCs to enhance our supporting industries participation in regional & global supply networks. Myanmar can also be a very fruitful and productive home for both ASEAN countries & Japanese businesses in the future.
The mutually beneficial and synergistic relationship that can be build between Myanmar and ASEAN countries & Japan is invaluable and can extend into future for many years to come.

16. Thank you for your kind attention Dr. Aung Thein (Vice Chairman)