Myanmar's Moment: Unique opportunities, major challenges

McKinsey Global Institute Report June 2013

Between June 5 and 7, the World Economic Forum on East Asia meets in Nay Pyi Taw, Myanmar’s new capital city. The fact that Myanmar is hosting such a high-profile international gathering of luminaries from industry, government, and academia is a firm signal of the world’s interest in this country’s economic prospects. Myanmar’s economy is relatively small—only 0.2 percent of the Asian economy overall. Yet the potential of Myanmar’s economy is currently subject to intense curiosity. Myanmar is a very unusual case: a large country with a rich history that remains an underdeveloped agrarian economy in the heart of the world’s fastest-growing regional economy—perhaps one of the few remaining, largely untapped markets in the world.

It is in this context that the McKinsey Global Institute (MGI) decided to launch a research project on Myanmar’s economy. Very little is known about it, and data are generally lacking or of questionable accuracy. We nevertheless have tried to build as strong a fact base for our analysis as possible under the circumstances. A MGI team based in Myanmar for four months collected data from a range of government agencies with the help of local researchers, and conducted field research and more than 200 interviews with experts, political leaders, and business people. We used data from international organisations including the International Monetary Fund (IMF), World Bank, UN Development Programme (UNDP), and Economist Intelligence Unit (EIU). We also used comparison data from many other countries that have undergone transitions similar to that which could be in prospect in Myanmar today. While the unreliability of data is undeniably an issue, our hope is that this assessment will be a starting point for those looking to better understand Myanmar’s economic prospects.

In this report, we discuss Myanmar’s new beginning after a long period of economic stagnation and look at how the economy might develop. We have used MGI’s experience of bottom-up sector analysis to size the potential economic opportunity of Myanmar’s key sectors in the period to 2030—both in terms of their contribution to GDP and the creation of jobs. We highlight the importance of raising labour productivity across the economy. We have also looked at four areas that arguably deserve a greater focus: (1) the fact that Myanmar’s transformation is beginning in the digital age, giving the country the opportunity to leapfrog in its development; (2) the importance of a structural shift towards manufacturing; (3) the impending urbanisation of Myanmar and the imperative to prepare for it; and (4) how to quickly reconnect to the global economy through investment, trade, and people. The task Myanmar faces is monumental—virtually every aspect of economic and social development is on the agenda—and we close the report with a discussion of some of the implications for government as well as businesses from Myanmar and overseas.

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