Economic Overview
MYANMAR’S POLITICAL AND ECONOMIC REFORMS TO BOLSTER THE CONSTRUCTION MARKET
Recent political and economic reforms in Myanmar have led to a considerable transformation in the business environment. Market liberalization has opened wider doors for foreign companies eager to set foot in this potentially emerging country with increased foreign direct investment and relaxation of EU & US sanctions in 2013 continuing to drive the economy.
Myanmar’s economic growth reached up to ~8.6% in 2016 and is expected to stabilize in the coming years. However, unexpected landslides and widespread flooding in 2015, decreasing the growth rate to 7.0%. Before the political and economic reforms started in 2011, Myanmar’s average GDP growth was 5.5% and quickly escalated to 7.3% in FY2012 (ended 31 March 2013).
Myanmar’s Nominal GDP (USD Billion) and GDP Growth Rates (2012 – 2020)

Source: IMF, World Bank, Solidiance Analysis
Along with the overall economic growth, Myanmar’s construction market presents tremendous opportunities in real estate, building construction materials & building finishing materials. The market grew from USD 2.4 billion in 2011 to USD 3.95 billion in 2013, with 87% of spending coming from the private sector, particularly from local companies. In the coming years, Solidiance forecasts Myanmar’s construction market to reach at least USD 6.6 billion by 2018, making this frontier market the fastest growing construction industry in the region.
Foreign investment in Myanmar’s construction comes mostly from Asian companies like HK & Shanghai group, Capitaland and Lotte. As foreign companies can not buy land in Myanmar, they tend to partner with large local conglomerates like Yoma, Max, Naing & Shwe Taung Group.

FDI
FDI focus in Myanmar continues to transition away from resource-based industries, and into agriculture and industrial sectors
GDP Output by Sector
(2015)

FDI in Myanmar (USD billion)
(FY2010-FY2017)

Source: IMF, DICA Myanmar, Solidiance Research and Analysis
Myanmar’s economy is heavily based on agriculture-related industries. Meanwhile, there has been a shift towards industrialization in economic and infrastructure development. Although the newly-elected government in 2016 now focuses on accelerating agricultural productivity and land reforms, total foreign investment in these sectors remain negligible with ~USD 200 million in the last five years.
On the manufacturing front, FDI is expected to grow increasingly due to the government’s promotion of export-oriented manufacturing by giving attractive incentives and development of the upcoming special economic zones (SEZs).
Oil & Gas and power sectors, on another hand, have been main source of FDI flow. With the high demand and needs in infrastructure development, foreign investment in the power and infrastructure sector will play an effective role in upcoming years.
Furthermore, FDI for construction sector was humble in 2012 but these numbers will increase sharply in the short to mid term. The majority of FDI in Myanmar’s construction segment mainly comes from Japan, Singapore and Thailand.

Construction Sector
Infrastructure and residential construction have led to robust growth, with new policies expected to boost residential sector development
Construction industry in Myanmar was valued at ~USD 4.9 billion in 2015 and is expected to grow at a CAGR of ~11% until 2020, despite uncertainty regarding construction sector policies, reflecting an underpenetrated market.
Industry growth was robust after 2010 because of increase in investment opportunities in energy and public infrastructure projects with FDI inflows from Thailand, Vietnam, China, Singapore & Malaysia.
The growth from 2015-18 will be driven by investments across all segments – rising interest in residential construction, government’s focus on infrastructure development, low-cost construction as well as construction of industrial zones and SEZs to support industrial development.
Myanmar Construction Industry Output (USD billion)

Source: Solidiance Interviews and Analysis
- Change in government and uncertainty regarding regulations on high rise buildings have slowed down construction market growth in 2016
- However, introduction of government’s low-cost housing programs in major cities and rebound in foreign investments are expected to help the construction segment regain its momentum
Yangon is the key hub for construction activities; both from a population demographics and economic importance, accounting for 90% of total trade
With a population of over 7 million inhabitants, Yangon has ~700 people per square kilometer, ahead of Mandalay (~200 people/sq. km) & Ayeyarwady (~170 people/sq. km), while national average lies on 76 people per sq. km
Population Density on each state
(people per sq. km)

Myanmar Population in States and Divisions
(2014)

Source: The 2014 Myanmar Population and Housing census, Sollidiance Interviews and Analysis
Total CAPEX on Myanmar’s construction market saw a big forward jump in 2013 mainly due to heavy investments in residential, retail and office space. Yangon remains to be the center of construction activity and it is unlikely to change in the near future. A new town, close to new international airport, is being built in Yangon. Moreover, the increasing number of expats and locals moving to Yangon for job opportunities are carrying significant demand for housing.
Large global and regional companies have set up offices in Yangon, and the current supply is far below the demand for office space. There are 7 large projects in the pipeline to meet some of this demand.
The tourism industry is also found to have positively impacted the construction sector. Myanmar saw 1.5 million tourists in 2013, a 50% increase from 2012. While there may be a serious shortage of hotels in the country, heavy investments are being made to cater to this growing need of hotels, with some notable large projects such as Lotte, Shangri-La and Novotel in the pipeline.
315

is the number of registered construction projects that started in 2013
with the number of projects expected to grow at 5% y-o-y till 2018
Residential and Infrastructure accounts for ~80% of the overall construction market in Myanmar
Myanmar's Construction Industry Value by Segment

Source: Solidiance Research & Analysis
- Residential and Infrastructure accounts for ~80% of the overall construction market in Myanmar
- Government infrastructure projects account for the next large chunk of construction activity. It has been a key focus for the new government since 2010 to invest in infrastructure projects such as roads / transportation, power, telecom, etc. to support the country’s development goals
- Industrial construction market constitutes roughly 15% of the construction market. Manufacturing activity is expected to boom with government easing the FDI regulations and offering incentives to foreign investors

Construction Projects
Construction projects in the infrastructure and industrial sectors will play an important role in the demand of Myanmar’s construction industry
Identified Mega Projects

Source: Solidiance Research and Analysis

About
About Solidiance
Solidiance is a corporate strategy advisory firm advising CEOs on make-or-break deals and defining market-specific business models for Fortune 500 companies and Asian conglomerates looking to leverage Myanmar's unprecedented growth. Our Myanmar experience includes market entry and growth strategy projects across various sectors with a particular focus on the burgeoning construction market in Myanmar.
Our full-time in house team of local Myanmar consultants has extensive experience and expertise in advising clients across the residential, commercial, industrial, infrastructure construction segments as well as building materials from ground breaking excavation to roofing systems and coatings, equipped with the most up to date market insights and an extensive network of relevant Myanmar construction sector contacts on the ground. Recent projects include Myanmar cement plan investment thesis development, market entry and growth strategy for galvanized steel products and developing a comprehensive Myanmar business strategy for a leading global automation player. From understanding the Myanmar construction market landscape, volume and value of residential, commercial and industrial units, upcoming projects, regional share, key developers, supply chain decision making factors involving developers, architects, EPCS and building material suppliers to current building materials usage practices and substitutes, Myanmar construction laws and regulations, trends and drivers, Solidiance offers flexible customized solutions to cater to the specific needs of our construction sector clients.
Solidiance has been working on construction projects since we established our presence in Myanmar in 2011. Our Yangon office is part of a network that extends across Asia with offices in China, India, Singapore, Thailand, Vietnam, Indonesia, Malaysia, Philippines, UAE and Lebanon.
For more information, contact us at info@solidiance.com
About
Myanmar Construction Consulting Team

Damien Duhamel
Managing Partner Asia Pacific
Damien Duhamel is the co-Founder & Managing Partner of Solidiance and has worked on hundreds of growth strategy engagements with Fortune 500 clients. Based in ASEAN for the last 22 years, Damien is a recognized Innovation and Asia Competitive Strategy expert. His thought leadership has been featured on various media: AFP, Business Insider, BBC, Bloomberg, CNN, CNBC, New York Times, Wall Street Journal, and several Asian publications. Damien speaks English, French, and Vietnamese. He holds a Bachelors Degree in Business from the Victoria University, an MBA from the Chicago Booth School of Business and is completing a Master of Sustainability and Environmental Management at Harvard University.

MICKAEL FEIGE
Partner
Mickael Feige is a Partner based in Thailand and responsible for Bangkok and Yangon offices. He manages large projects for Fortune 500 in various sectors such as chemicals, construction, energy, heavy industries. His expertise lies mostly in market entry, growth strategy, industry and competitive benchmarking, and commercial problems diagnostics. In the construction industry, Mickael advised several global companies in building material such as cement, lighting, insulation, roofing, adhesives, coatings, construction chemicals in go to market strategy and for M&A projects. Mickael speaks French and conversational Japanese. He holds a Masters Degree from a joint program between Lyon Political Science Institute and Senshu University. He holds an MBA from INSEAD.

Naithy Cyriac
MANAGER
Naithy is a Manager based in Solidiance's Yangon office. She has over 6 years of advisory experience across a range of sectors, including construction, building materials, chemicals and infrastructure. She has worked extensively with MNCs exploring investment opportunities in Myanmar from pre engineered steel buildings applications across residential, commercial and industrial sectors to developing market entry strategies for building automation services. Prior to joining Solidiance, Naithy was a Senior Associate at a Moody’s group company, leading various due diligence projects for financial institutions. Naithy graduated with an MBA specialization in Strategy & Organisation from the National University of Singapore and Cornell University and holds a Bachelors of Science degree from St. Stephen’s College, Delhi University.

JACK FOWLER
CONSULTANT
Jack is a consultant based in our Myanmar office. He specializes in corporate strategy and has experience in guiding market entries across a range of sectors with a focus on real estate and construction sectors. Before joining Solidiance, Jack worked with an international real estate and energy research firm in Yangon providing services to both public-sector and corporate clients including developers, EPCs, building material firms amongst others. Jack holds degrees from the University of Manchester and the London School of Economics and Political Science.

Shin Thant
CONSULTANT
Shin Thant is a Consultant based in our Myanmar office in Yangon and has served clients in doing market analysis and commercial due diligence covering extensively the galvanized steel market, building automation applications in Myanmar amongst others. Prior to joining Solidiance, he worked as an audit and advisory associate for KPMG responsible for auditing MNCs and INGOs. With an in-depth knowledge in accounting and engineering, Shin Thant has obtained his advanced diploma in engineering and accounting. He is also member of Association of Chartered Certified Accountants UK (ACCA).

Rajan
ANALYST
Rajan is an Analyst based in Solidiance's Myanmar office, supporting clients with market entry and growth strategy analysis across the construction, energy and building materials sectors from HVAC to fiber cement. Before joining Solidiance, Rajan worked as a Business Development Manager for one of the largest local firms in which he focused on identifying market opportunities and building relationship with B2B partners to support market share expansion in Myanmar . He earned his MBA from the University of Sunderland, UK and holds a Bachelors in Law degree from University of Mandalay.

Khine Yi
ANALYST
Khine Yi is an Analyst based in Solidiance’s Myanmar office working extensively with clients looking at tapping into the burgeoning construction market in Myanmar. Prior to joining Solidiance, Khine Yi worked as a Senior Project Manager at a French architecture firm in Myanmar serving various residential and commercial clients. Khine holds an MBA from the university of Cardiff Metropolitan, UK and a Master in English from University of Pathein. Khine has a pre-intermediate understanding of Chinese Language.
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