Companies Resize Ambitions in Myanmar After Census

Census Shows Population Is Significantly Smaller Than Earlier Estimates

Buddhist devotees visit Myanmar’s Shwedagon Pagoda. An official census released Saturday found the population of the country was significantly smaller than previously thought. Associated Press
YANGON, Myanmar—A lower-than-expected population count is taking some of the shine off Myanmar, compelling current and hopeful investors to reassess what profits they can expect out of the frontier market.

An official census released Saturday found the population of the country was 51.4 million—significantly lower than the 60 million estimates that the Myanmar government has touted in recent years, as it started emerging from decades of economic isolation. The larger figures have been cited by companies hoping to tap the country’s domestic consumer market.

“For players already in the market, it affects their profitability and margins,” said Vikram Kumar, the Myanmar representative for the International Finance Corporation, the private sector-focused arm of the World Bank that helps with financing and acts as an asset manager for companies looking to enter developing countries.

Telecommunications companies Ooredoo and Telenor, for example, used a 60 million estimated population in assessing Myanmar’s potential as an untapped market for their telecommunication services. Now they will have to rework profit margins, Mr. Kumar says. The companies didn’t respond to a request for comment.

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For new investors—whom the Myanmar government is actively trying to court—the smaller population might make them rethink the size and scale of their investments.

“The [smaller population] is a bit of a metaphor for the country more broadly,” said Sean Turnell, an expert on Myanmar’s economy at Sydney’s Macquarie University. “With a bit of research and somber reflection, the hype proves to have inflated the reality.”

Population-wise, Myanmar is much smaller than its regional neighbors. Vietnam, another emerging market, has around 90 million people, while the Philippines has about 100 million.

“This 51 million population shows that Myanmar is not such a big market—it is smaller than just one state in India and China,” said Takashi Yanai, chief executive officer of Myanmar Japan Thilawa Ltd., the joint venture heading the development of the Thilawa special economic zone south of Yangon.

Skeptics had previously questioned the 60 million figure for Myanmar, tempering some investor expectations. The last census took place more than three decades ago, and even then was considered incomplete because some areas were completely off-limits due to ethnic tensions. A fuller result of the statistics, including religious and ethnic breakdown, will be released next year according to the Myanmar government.

One upside for the country, experts say, is that the new data are also likely to boost per capita gross domestic product figures, with a smaller base for the country’s GDP, estimated at $51.8 million in 2013, according to the World Bank.

Some companies see another silver lining in the smaller population estimate. Mr. Yanai said companies leasing land in the special economic zone—almost all of whom are first-time investors in Myanmar—are starting with small operations, with potential plans to expand later, undeterred by the country’s relatively small consumer base.

“I ask the customers sometimes, why are you coming to us? The Myanmar market is small and still not so developed,” he said. “But the companies say once you set up a factory, other competition cannot come, because you have dominated the market.”

Source: WSJ

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