Manufacturing in Myanmar Look Before You Leap... Dennis J. Meseroll Executive Director Tractus Asia Limited US-Myanmar Business Summit Yangon, Myanmar.

Manufacturing in Myanmar Look Before You Leap... Dennis J. Meseroll Executive Director Tractus Asia Limited US-Myanmar Business Summit Yangon, Myanmar 14 November 2012

5 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. FDI Location Factors 1.Market access 2.Political and social stability 3.Reliability and quality of utilities 4.Ease of doing business 5.Ability to hire technical staff 6.Ability to hire management professionals 7.Level of corruption 8.Cost of labor 9.Ability to hire skilled labor 10.Crime and safety Source: MIGA, World Bank

6 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Critical Manufacturing Location Factors 1.Political and social stability 2.Ease of doing business 3.Supply of operators 4.Electricity availability 5.Availability of industrial land 6.Labor costs 7.Proximity to a container port 8.Supply of skilled/ technical labor 9.Supply of managerial talent 10. Availability of suppliers and vendors Source: Tractus Research

8 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Political and Social Stability Note: Political stability is indexed from -2.5 to 2.5, with 2.5 being the most politically stable Source: World Bank World Governance Indicators Project Source: Economist Intelligence Unit Note: Political stability is indexed from 0 to 10, with 0 being the most politically stable

10 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Supply of Labor Myanmar’s working age population 29+ million 56.5% employed in the agriculture sector Underemployed Sources: US Department of State World Bank, Official government estimates

13 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Labor Costs Country Minimum Wage 1 (local currency) Minimum Wage 1 (US$) ThailandTHB 7,800US$260 China (Yunnan)RMB 759US$115 CambodiaKHR 264,990US$66 IndonesiaIDR 720,000–1,529,150 2 US$79 – 168 LaosLAK 569,000US$71 VietnamVND 1,400,000–2,000,000 2 US$66 – 95 MyanmarMMK 50,000-110,000 3 US$59 - 129 BangladeshBTK 3,525US$43 - 107 Sources: US Department of State, World Bank, Official government estimates Notes:1 - All wages are unloaded and do not including deduction of taxes, social security contributions, etc. 2 – Minimum wages vary based on geographic location 3 – Myanmar has no statutory minimum wage; wages noted here represent range of market wages

14 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Supply of Operator Labor A sign advertising job opening at a garment factory outside a factory in Shwe Linban Industrial Zone Sino-Myanmar garment factory in Shwe Linban Industrial Zone Source: Tractus

17 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Industrial Zones and Sub-Zones and Parks Sub-Zones (Industrial Zone) Year Established Area (Ha) Operational Factories Private Partner Comments North Yangon Mingaladon Industrial Park (MIP) (Hlaing Thaya) 1998 88.3 8MitsuiHighly Developed West Yangon Sinmardex Industrial Sub-Zone (Thilawa Thalin Khyattan) 1996 1164.3 1Sinmardex International Undeveloped North Yangon Yangon Industrial Park (YIP) (Hlaing Thaya) 2000 395.8 25ZaykabarHighly Developed North Yangon Shwe Thein Lwin Sub-Zone (Hlaing Thaya) 2001 165.2 0Shwe Thein Lwin Undeveloped North Yangon Mya Sein Yang Sub-Zone (Hlaing Thaya) 2002 126.4 3Mya Sein YangDeveloped North Yangon Anawyathar Sub-Zone (Hlaing Thaya) 2002 311.2 N/AWah Wah WinDeveloped North Yangon Thardukan Sub-Zone (Shwe Pyi Tha) 2001 192.0 9High-riseDeveloped East Yangon December Sub-Zone (South Dagon) 2002 140.1 0DecemberUndeveloped Source: Tractus research

20 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Myanmar‘s Value Proposition PoorAcceptableGood Excellent Labor Availability Labor Cost Physical Infrastructure Investment Zones Supply Chain Time Political Stability Currency Stability Cambodia Indonesia Laos Vietnam Myanmar

21 Copyright © 2009 Tractus Asia Ltd. All Rights Reserved. Look Before You Leap StrengthsWeaknesses Abundant underemployed labor supply Favorable demographics Strategic geographic location between 2 largest markets - China and India Political, social and economic instability Investment incentives High logistics lead-time Unreliable electricity supply High electricity, Internet and telecom costs High construction costs Minimal international banking services No central industrial zoning authority OpportunitiesThreats Potential for GSP privileges in the future First mover advantages Ability to have influence on development of industry sector Labor competition from neighboring countries such as Vietnam and Cambodia Workers migrate to work in neighboring countries for higher wages Currency inflation Reinstatement of sanctions Political and social instability Skyrocketing real estate prices

Manufacturing in Myanmar Look Before You Leap... Dennis J. Meseroll Executive Director Tractus Asia Limited US-Myanmar Business Summit Yangon, Myanmar.

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Manufacturing in Myanmar Look Before You Leap... Dennis J. Meseroll Executive Director Tractus Asia Limited US-Myanmar Business Summit Yangon, Myanmar.

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Presentation on theme: "Manufacturing in Myanmar Look Before You Leap... Dennis J. Meseroll Executive Director Tractus Asia Limited US-Myanmar Business Summit Yangon, Myanmar."— Presentation transcript:

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