The Myanmar economy ended 2020 with a relatively low drop in GDP and very low inflation compared to previous years, thanks to which, for example, GDP converted to purchasing power parity even increased slightly. Under the given conditions, the country had all the prerequisites for a very dynamic recovery in the post-pandemic era.
However, the promising prospects of the country, which in the past decade was among the fastest growing in the world, were violently interrupted by the military coup that took place on February 1, 2021 and the subsequent instability in the political, security and socio-economic fields. According to preliminary estimates, the economic consequences of the coup already two months after the coup are more serious than the effects of the covid-19 pandemic for the entire previous year. The amount of damage will depend on how quickly the economy and state administration stabilize. They are not yet reflected in the statistics and predictions available at the time of this publication.
Between April 2020 and January 2021, the government supported the economy affected by the pandemic with measures totaling 2.6% of GDP. The government summarized the overall national strategy for combating the economic consequences of the pandemic in the Economic Support Plan, which contained specific steps in the area of tax relief, preferential loans to particularly affected businesses and support for households. In 2021, the Plan for the recovery and reform of the economy was to follow, which was supposed to support economic growth after the end of the pandemic.
The military regime that emerged from the February coup declares that it considers the aforementioned strategies still valid, but will subject them to an update with the aim of achieving a faster opening of the economy and “more realistic results” in the area of economic growth. The fact is that the public reacts to a military coup with unusually persistent protests and conditions of a virtually permanent general strike, even at the cost of significant losses in the form of lost profits and wages.
Under these conditions, it is difficult to imagine that an unrecognized military government would achieve any positive economic results, nota bene in the conditions of increasing sanctions from the international community. The regime is not succeeding in opening the economy, which has now closed by its own decision in protest against the seizure of power, even with the application of rigid repression.
Under the conditions of the de facto closure of the economy, the departure of foreign investors and the return of part of the population from the cities to the countryside, the new regime lists as one of its economic priorities the support of agriculture, which was already the most important sector of the economy before the coup. It can be expected that the mining of minerals and rare woods, which has not been significantly interrupted, will also gain importance in the post-revolutionary economy.
Post-COVID-19 opportunities for foreign exporters
An unrecognized military regime is trying to rule the country, and most available estimates (including, for example, the EIU) assume that this state of affairs may last for most of 2021. Any participation in public contracts tendered by the authorities of this regime therefore entails the risk of sanctions, reputational damage, but also problems with financing and insurance of such exports. In the overview of prospective industries, we therefore list those sectors for which we can expect buyers from the ranks of companies and end customers.
In a situation where companies have limited turnover for many months and people participating in strikes receive reduced or no wages, a significant change in purchasing power and consumer behavior can also be expected. The “consumer class” will most likely narrow down to the segment of the population with the highest incomes, or savings. At the same time, demand from companies that will have their operations limited or interrupted (from sectors relevant to the Czech Republic, e.g. construction, healthcare) will decrease. These factors were also taken into account when looking for potential export opportunities.
With the gradual departure of foreign industrial firms, the sectors processing natural resources, with which Myanmar abounds, are gaining prominence. In addition to mineral extraction, which has been controlled by the army for a long time and brings a number of risks for the exporter, they also include the woodworking industry and related production, including furniture.
The new regime, as well as the remnants of the private sector that are still running, will be looking for ways to increase the competitiveness of their wood, rattan, bamboo and other wood products. In this context, interest in new woodworking technologies will grow, but also in services in the field of design and marketing of furniture and other wooden products on world markets. To a limited extent, interest in premium European furniture can also be expected.
Glass and ceramic industry
Today, Czech glass is mainly represented in Myanmar by hand-made decorative products, crystal chandeliers and, more recently, also by high-quality table glass. The demand for these products has been high for a long time, which in the long term creates room for new players to enter the market.
The reason for the high demand is generally the growing interest in luxury goods in times of crisis and instability, when people prefer products that can retain value more than at other times. From the reports from distributors, it can be concluded that after the current instability and restrictions have passed, the demand for table and bar glass will also increase, due to the partial reopening of hotels and restaurants, but also due to the organization of a number of social events that have been postponed until now (for example, weddings).
Of course, the above-mentioned trend does not only apply to glass, there is currently room for entering the market with other products of a similar category, such as watches, porcelain or luxury furniture.
Agricultural and food industry
According to allcountrylist, agriculture and the related food industry account for 37.5% of the country’s GDP and employ approximately 70% of the economically active population, making it by far the most important sector of the economy. The regime that emerged from the February military coup lists the support of agriculture as one of the three key priorities of its economic policy. Among the sub-goals of supporting agriculture and the food industry should be strengthening the country’s self-sufficiency and increasing the production of products that are still mainly imported.
If the new regime is able to provide the announced support, this development may be reflected in increased demand for machinery and equipment for the processing of agricultural products (oil presses, crop dryers, etc.), as well as equipment for food plants (canneries, meat processing plants). Myanmar is still introducing modern forms of animal husbandry, which brings with it a growing demand for breeding animals and genetic material (especially chickens and cattle), large-scale breeding and slaughtering facilities, but also for veterinary drugs, preparations and equipment. Demand for fertilizers and food preparations is likely to continue to grow.
Any support to agriculture and food industry from the new regime or another future government will help the growth of both sectors. The actual business exchange with the above-mentioned items takes place purely on the B2B level. Therefore, exporters do not have to participate in tenders organized by an unrecognized government. In contrast, agricultural machinery (tractors, combine harvesters, etc.) is often purchased from a large Ministry of Agriculture and then distributed to individual farmers. Another advantage of agriculture and the food industry is the fact that these sectors do not interrupt their operations even during general strikes, so the demand for materials and equipment used in these sectors is less volatile.