Investing in Myanmar – not when but how

NEWS

Decades of stunted development under military rule gave way to Asia’s newest democracy after victory by Aung San Suu Kyi’s National League for Democracy (NLD) in 2015. This, along with the lifting of country-based sanctions by the US government, was supposed to be the turning point for Myanmar, thought to be the “last economic frontier” in ASEAN. Four years later, however, the economy has been underperforming and confidence in the government is low. Sluggish growth can be seen in various sectors. Construction and real estate have been adversely affected by office rental declines and low take-up rates for newly constructed condominiums in Yangon. Hotel occupancies are also trending downwards, and premium hotels have had to drop their room rates as business travelers declined.

(Source: The Business Times, January 7, 2019)

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

On a larger scope, the government needs to take a more holistic approach to private sector development and provide a range of systemic support measures, including improving the regulatory environment, investing in physical and social infrastructure, building human capital with a focus on strengthening the skills of the young, strengthening and deepening the banking sector and financial markets, and improving labor relations. Investment is an important gauge of successful private sector development. Significant government support aimed at removing barriers to business at the policy level and providing quality infrastructure will be essential to attract foreign investment and to promote domestic investment in industry. The first step for promoting rapid development of the private sector is to build effective regulations and strong market institutions that make the rules of the game clear to all participants—firms, households, and the government alike—and help alleviate risk in their economic decisions. 

Yoma Land to launch City Loft in Star City in January 2019

NEWS

Yoma Land has revealed details of City Loft, a new real estate offering targeting the underserved middle-income market in Yangon. City Loft combines a competitive price point with mortgage repayment terms of up to 25-years, making homeownership accessible to many who would traditionally be priced out of the real estate market. The company says the new residential offering will make homeownership accessible to a wider population.

(Source: Mizzima, January 3, 2019)

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

The introduction of City Loft represents a breakthrough, not only for Yoma Land but also for Myanmar’s real estate sector as a whole. Until recently, local banks provided limited lending with mortgage repayment terms typically just five years. With this lack of financing and the relatively high cost of housing, new home ownership has traditionally been out of reach for most people. Yoma Land’s favourable mortgage and deposit arrangements will change this, allowing the middle-income earners, especially the young working professionals, to get on the property ladder. Going forward, Colliers continually advises developers to address issues around affordability by introducing competitively priced products, starting with looking at reasonably priced land. In particular, site selection can be geared towards alternative and accessible development sites in the immediate outskirts of Yangon. Overall, the market is seen to favorably improve in the coming years, on the back of the government's exertions in providing clearer sectorial reforms.

Myanmar plans to draw more tourists from Hong Kong, Macau

NEWS

Myanmar is planning more promotional activities to attract visitors from Macau and Hong Kong, while implementing digital marketing to develop the country’s hotels and tourism sector, reported the Myanmar News Agency. The intention was discussed at a recent meeting in Nay Pyi Taw between Myanmar Minister of Hotels and Tourism U Ohn Maung and Chairman of the Hong Kong Macau Myanmar Chamber of Commerce and Industry Lin Khin Wan.

(Source: Vietnam Plus, January 8, 2019)

CLICK HERE TO VIEW THE ARTICLE

RESEARCH VIEW

Succeeding to the withdrawal of cash requirement, the Ministry of Hotels and Tourism commenced the granting of visa-on-arrival for tourists from mainland China, Hong Kong and Macau. Still owing to the declining visitation records from the Western market, the government opted to further bank on the strong influx of Asian tourists in the country. Recent figures from the ministry will show that visitors  from Europe, Middle East, and Africa (EMEA) dropped on an annual basis, for example: Eastern Europe, -14%; Western Europe, -26%; Middle East, -20%; and Africa, -11%. Even with the revealed falloffs, major compensations came from Asian tourists arrivals, specifically Thai and Chinese guests. This has allowed the overall tourist numbers to meagerly increase by 0.65%, recording a total of roughly 960,720 tourist visits as of Q3 2018. Overall, Colliers remains optimistic that tourist  arrivals will continue to rise given the sustained interest from Thai and Chinese tourists as well as the rising arrivals from Myanmar's emerging tourist markets such as Malaysia and India. However, in order to sustain this momentum, the next phase of growth will demand bigger investment in infrastructure and better marketing, branding and identity of the country.