Foreign investment, export and freight forwarding partners help formerly isolated Myanmar boost the economic expansion accompanying its new democratic system.
The blossoming democracy that replaced Myanmar’s military regime has also sparked surging foreign trade and rapid economic expansion. Reinforcing those are global companies and freight forwarding partners that were previously restrained by embargoes in dealing with the nation, but which are now boosting activity amid Myanmar’s economic effervescence.
Myanmar has enjoyed recent annual economic growth of over 8%, worth $69.1 billion in 2015. Projections of current expansion rates forecast Myanmar’s GDP rising to nearly $2 trillion by 2050.
But the country’s industrial sector accounts for 26% of economic activity – considerably less than agriculture. Both it and Myanmar’s infrastructure require significant investment and development. Myanmar’s dated rail, road and maritime transport networks also need reinforcement, as do certain utilities like electricity generation.
Fortunately, surging export activity in gas, oil, mining, timber and textiles is helping Myanmar address those areas, and build industrial strength. Speeding that is rising foreign investment increased five-fold in the years following Myanmar’s first free elections in 2010. Those totaled $8 billion in 2014 alone.
According to Elizabeth Shwe, director of the Bolloré Logistics affiliate operating in Myanmar since 2014, infrastructure improvement has been considerable, but varies across sectors. Access to and operation of telecom service has grown rapidly, she says. Yet limitations and disruptions in areas as essential as electricity supply and reliable transport services are aspects foreign businesses partners would like to see improved in.
“Before the elections, companies wanted to see political improvement before committing to major investment in Myanmar,” says Julien Loiret, general manager at Bolloré Logistics Myanmar. “Now companies want to see infrastructure and administrative improvement as well.”
Some investors are taking development initiatives themselves, however. Several foreign freight forwarding and transport companies have built modern, state-of-the-art facilities for shipments in and out of Myanmar. Others have begun offering enhanced services in the country.
One example, Mr. Loiret explains that Bolloré Logistics opened a new warehouse in a new 6,000 square-meter complex with international standards (secured by 24/7 guards, CCTV equipped, reinforced fire protection, and boasts an in-house generator to ensure electrical supply). Bolloré Logistics offers in this new warehouse added-value services such as kitting, packing, labeling, price tagging and seven loading bays to speed freight turn-around.
Customer demand for improved freight forwarding operations in Myanmar is soaring as previously robust activity in sectors like telecoms are over-taken by booming textile exports – an area in which the country has long excelled.
Despite its previously limited exchanges with foreign investors and markets, Myanmar’s quality garment production has remained high, while its labor costs have stayed low. Since the advent of democracy, meantime, Myanmar exports to the European Union and the United States have been exempted from import taxes to help nurture the country’s re-emergence and growth.
The result has been a rush by international garment and sporting goods groups to establish and expand operations in Myanmar, and reinforce production and exports around similarly thriving Southeast Asian markets.
Despite advances that new investment has produced, problem areas remain. Myanmar’s strict administrative and customs procedures can extend clearance time from three or four days to weeks should questions arise. That risk requires logistics partners to assist clients by pre-vetting documents to avoid costly delays.
Growing but still limited air traffic into Myanmar, meantime, means freight forwarders must innovate around restricted volume and frequency of flights.
“For customers short on time, we offer sea/air service that ships goods by cargo to Singapore, and air freight service to final destinations,” Mr. Loiret says of Bolloré Logistics’ response. “It limits total transport time to around 10 days. That’s much faster than sea-only options, and represents a 30% to 35% savings on what total air cargo would cost.”