Myanmar opens up for investment

A country undergoing profound and rapid change, Myanmar is today emerging as one of Asia’s most sought-after investment destinations. Its opening to the global economy has come after decades of military rule, during which a long period of isolation and internal conflict was followed by an era of gradual disengagement from politics by the army.

This retreat took a decisive step forward in November 2015, when the country held the first openly contested elections in its modern history. These resulted in the victory of the National League for Democracy (NLD), which has since taken the reins in leading a successful coalition of democratic interests. Led by Nobel-laureate Daw Aung San Suu Kyi, the NLD now faces the daunting task of meeting the expectations of a diverse and dynamic people, conscious of their long and distinguished histories as well as their current opportunities.

Geography

With a total land area of 676,552 sq km, Myanmar – known as Burma until 1989 when the name was changed – is the largest country in mainland South-east Asia, around 20% larger than Thailand and twice the size of Malaysia. Its heartland lies along and around the Ayeyarwady River, which flows from north to south, starting at the confluence of two other rivers – the N’mai and Mali, which themselves carry Himalayan melt waters from the glaciers of Upper Burma and flow through the northern state of Kachin.

The Ayeyarwady then stretches for a total of 2170 km, eventually emptying into the Andaman Sea via a major delta system. On its way, the river passes through the country’s Central Basin, an area of plains and dry forests, which is also watered by the Chindwin River. To this day, the Ayeyarwady remains one of the country’s most important commercial waterways, while it also constitutes a unique ecosystem and is home to animals such as the Ayeyarwady dolphin and some 43 different species of fish.

Surrounding the river basin and its tributaries, increasingly high mountain ranges lie in an arc from west to east, forming natural frontiers and historic barriers to trade. In the north, the Hengduan mountain range forms a border with western China, while also holding Myanmar’s highest peak – Hkakabo Razi, at some 5881 metres.

To the west lie the Arakan Mountains, which constitute a boundary with India and include the Chin and Naga Hills. At the southern tip of this range, a coastal area abuts the Myanmar state of Rakhine to the Bangladeshi division of Chittagong.

Further to the east, the Shan Hills rise, reaching some 2563 metres at their highest, and along with the Karen Hills, forming a natural frontier with Thailand. These remote and difficult-to-access ranges also contain within them a border with neighbouring Laos. A further coastal strip of territory runs along the shores of the Andaman Sea. This is also a mountainous area, consisting of the western slopes of the Bilauktaung range, a feature running down into the Malay Peninsula.

Main Cities

The largest city in the country is Yangon (formerly Rangoon), which had a population of 7.4m according to the latest census, in 2014. Located in the Ayeyarwady Delta, the city’s history stretches back to the 11th century. It was also the capital of the country until 2006, when that function was transferred to Naypyidaw. The new capital, located 320 km north of Yangon, had a population of 1.16m in 2014 and was the country’s third-largest city after Mandalay. The latter had a population of 1.22m that year and lies in the heart of the country, on the Ayeyarwady, in the Central Basin.

Founded in 1857, Mandalay is still the chief centre of economic and commercial activity in Upper Burma, although Naypyidaw continues to grow rapidly. Other important urban centres include Mawlamyine in Mon State, with a population of 451,011, and Taunggyi, the capital of Shan State, which had a population of 380,665 in 2014. With provisional results of the 2014 census showing the country’s total population standing at 51.4m, these urban population numbers reveal the largely rural nature of the country, with the vast majority of Myanmar’s citizens living in small villages and towns dotted around the countryside.

Myanmar thus shares borders with five countries, while possessing a wide variety of environments, from coastal plains to wide river valleys and imposing, jungle-covered mountains. These geographical and geopolitical realties have long shaped the country’s socio-economic and political history.

Climate

Myanmar has a tropical, monsoon climate, although there is considerable variation within the country itself, stretching as it does from the Andaman Sea to the foothills of the Himalayas.

There are two major monsoons that impact the whole country, however. The first is the north-east monsoon, which lasts from November to April, while the second is the south-west monsoon, which runs from May to September or October. The first of these brings cooler, drier weather, while the latter brings a hotter, wetter season. Indeed, during the south-west monsoon, which comes in off the Indian Ocean, some three-quarters of the country’s entire annual rainfall descends. Coastal hills and the north and east get the heaviest deluges, with these running from 2000 mm to 2500 mm per year. Other, more sheltered areas, get around half of this.

The period before the south-west monsoon and immediately after its beginning are also the hottest. Between March and June, in the lowland areas in particular, daytime temperatures can reach as high as 40°C. In the months following this and into the north-east monsoon, there is a cold, dry period which is the most popular tourist season. Average monthly temperatures between November and February are usually between 20°C and 24°C. In the north, upper central and eastern regions, however, temperatures are generally lower all year round, given their generally higher altitude. Night time temperatures in these areas may drop to single digits.

Natural Resources

In addition to its range of landscapes, the country is also blessed with a wide variety of minerals and ores, while its climate and geography continue to provide it with a large bank of arable land, forestry and fisheries. These natural resources continue to form the staples of the country’s economic wealth – and also constitute the target of much of its foreign investment.

Myanmar’s Department of Geological Survey and Mineral Exploration lists some 62 different commodities as present in the country, to be found at more than 2000 locations. The country’s minerals portfolio includes precious stones, including the largest deposit of jade in the world, located in Kachin State. The region of Mogok, in Upper Myanmar, has also been known as the Land of Rubies since the 13th century. The country also possesses significant deposits of lucrative metals, such as tin, copper, gold and zinc, along with deposits of industrial minerals, such as fire clay, bentonite, feldspar and asbestos (see Mining chapter).

When it comes to hydrocarbons, the extractive sector has one of the oldest histories on earth, with the first crude oil exports dating back to the British colonial era in the mid-19th century. The country also has a deepwater shelf that has been underexplored by oil and gas majors using the latest techniques. Despite recent falling oil and gas prices, these international giants have continued to survey these offshore blocks, demonstrating a clear confidence that major new discoveries are likely to be made. In the meantime, natural gas continues to be a major export product, with offshore gas fields such as Yadana, the country’s largest, already in production. Recent estimates put the quantity of offshore gas at approximately 10trn cu feet.

Back on land, the country has large forestry resources, particularly of tropical hardwoods, such as teak, iron wood and padauk (cherry wood). Deforestation has, however, taken place, with the country’s forest cover falling from around 70% at independence in 1948 to 47% in 2014 (see Agriculture chapter). The rate of loss has, however, been declining, with forest cover declining at a slower rate than in regional peers, such as Vietnam and Indonesia. As forestry remains a major resource for the country, sustainable management of this reserve is vital for the nation’s future. Meanwhile, with 2228 km of coastline, several large estuaries, many offshore islands and major rivers such as the Ayeyarwady, fisheries are also a major natural resource. The main landing sites are around Yangon, while others may be found along the coast at Thandwe, Mawlamyine, Myeik and Kawthaung.

On land, the large bank of arable land makes Myanmar the seventh-largest rice producer in the world. In addition, the country’s farmers produce corn, peas, onions, sugar cane and groundnuts, among other crops.

Cultivated land currently accounts for approximately 15% of Myanmar’s entire surface area, with around 18,700 sq km of this irrigated. The country has some 1045.6 cu km of renewable water resources, too, giving its farmers plenty of water for irrigation and other uses.

Demographics

The most recent census, held in March and April 2014, took place under difficult circumstances. Certain ethnic groups boycotted the process, while conflict and displacement affected others. The provisional results were therefore well below previous estimates, which had varied between 60m and 70m in 2012. The 2014 census also showed more females than males (51.8% to 48.2%), while 29.6% lived in urban areas. The gender discrepancy is thought likely the result of overseas citizens not being counted. Some 2m Burmese live and work abroad – around 70% of them in Thailand – and 61% of these are male. Outward migration has long been a factor in the country’s demographics, with conflict prompting much displacement into neighbouring countries. Relatively higher wages in Thailand in particular have also driven many abroad.

The most urbanised region in the 2014 census was Yangon, with some 70.1% of its population living in urban wards. Yangon was also the most densely populated region overall, containing 14.3% of the entire population. This was some 11% higher than the population of Yangon at the time of the previous full census, in 1973, and illustrates the draw of the country’s main urban centre. Indeed, several surrounding states saw population declines during the period, as urbanisation drew in people from the city’s widening hinterland.

The least populated state, according to the 2014 census, was Kayah on the Thai border, with 0.6% of the total. The overall population density of the country was 76 persons per sq km.

Earlier demographic surveys also revealed that Myanmar has a relatively low fertility rate among South-east Asian nations – 2.23 in 2011, compared to 3.18 in Cambodia and 4.41 in Laos. This is thought to be largely due to cultural and economic factors. Celibacy has a higher level of social acceptability among the country’s majority-Buddhist community, in particular, while economic hardship often means the postponement of marriage. Around 33.1% of men and women between the ages of 25 and 34 were single, according to 2012 surveys.

At the same time, 2013 surveys showed that the country’s infant mortality rate has declined considerably over the past few decades. There were 49 deaths per 1000 live births in 2013, whereas in 1970 the figure had stood at 116.

Youthful Population

Myanmar’s population is very youthful. The median age at the 2014 census was 27, and around 55% of the population is under the age of 30. Those aged 15-29 accounted for approximately 25% of the total, and the number of dependents per family is also falling.

At the same time, the percentage of literate people is higher than in some neighbouring countries. The 2014 census revealed a literacy rate of 89.5%, compared to 80% in Cambodia and 73% in Laos. This combination of factors creates a picture of an educated, youthful population with fewer dependants – a profile which bodes well for the country’s short to medium-term economic development.

The country’s current youth bulge is likely the result of previous state policies promoting children – policies which have since lapsed, helping create the now-declining birth rate. Demographically, this too should stand the country in good stead in the longer term, and ease pressure on employment, as well as on future education and health budgets.

Religion

Myanmar has a variety of religious groups, with the population overall seeing religious affiliation as an important part of their lives. The largest religious group is composed of Buddhists, with the 2014 census showing that 87.9% of the population identified with this affiliation. The majority of these are Therevada Buddhists – followers of the orthodox “school of the elder monks” that uses the Pali canon, the standard collection of scriptures in the Therevada Buddhist tradition, as its doctrinal core. This is the school of Buddhism most common in South and South-east Asia.

Myanmar is widely thought to have the highest proportion of Buddhist monks per head of population in the world, with the sangha – the Buddhist monastic order, including monks, nuns and novices – playing a key role in the country’s recent history and politics. There are two primary orders of monks in the country – the Thudhamma Nikaya (88% of all monks) and more traditional Shwegyin Nikaya. Seven other orders are also officially recognised.

The sangha were leading movers advocating for reform under the military regime, and the so-called Saffron Revolution of 2007 included a major role for monks, who led a campaign of non-violent resistance to the dictatorship. Today, Buddhism remains a key part of everyday life in Myanmar, with the religion’s festivals, holidays and rituals built into the country’s very calendar and the seasons themselves.

Among Myanmar’s other religious groups, the Christian community is the next largest, accounting for some 6.2% of the population in the 2014 census. Largely introduced by Western missionaries from the 18th century onwards, around four-fifths of Christians are Protestant and the remainder mostly Catholic. There is also a small Armenian Orthodox community present, centred on Yangon. Most Christians also belong to minority ethnic groups, such as the Karen, Chin, Lisu and Lahu.

The third-largest religious group are Muslims, at 4.3%, although conflict and political controversies have cast some doubt on the true size of this minority. One of the largest components of the Muslim population, the Rohingya, was not counted in the 2014 census, for example, while this group is also not recognised officially as an ethnic designation.

Islam’s history in Myanmar stretches back to the 7th century, followed much later by a major wave of Muslim immigration from British India to the country in the 19th century. The majority of Muslims in Myanmar follow the Sunni sect of Islam, the main concentrations being the Rohingya and Kamein in Rakhine State; Indian-descended Muslims in Yangon; the Panthay, or Chinese Burmese Muslims, in the Shan States and Central Basin area; ethnic Malay Muslims in Kawthaung; and Zerbadi Muslims, descended from intermarriages between South Asian and Middle Eastern people and local Burmese.

In addition, there are populations of Hindus (0.5%), and those following traditional, tribal animistic beliefs (0.8%). The latter still have some influence, too, in the day-to-day practices of many of those who otherwise follow different religious affiliations.

Although religious beliefs are generally practiced in peace in Myanmar, communal violence continues in certain parts of the country, particularly in Rakhine State, where at least 150,000 Rohingya have been displaced since 2012 due to conflicts between Buddhist and Muslim communities.

Languages & Ethnic Groups

Myanmar’s population contains a total of 135 officially recognised ethnic groups. The largest of these is the Bamar, accounting for approximately 68% of the population. The Bamar speak the Myanmar language ( formerly known as Burmese), which is itself a member of the Sino-Tibetan group, and live largely around the Ayeyarwady basin. The dominant religion in this group is Buddhism, and historically the Bamar have tended to dominate the political, military and economic life of the country.

The second-largest official ethnic group in Myanmar is the Shan, with approximately 9% of the population belonging to this group. These are related to the Thai, are mainly Therevada Buddhist and mainly live in the Shan State, a large area bordering Thailand, Laos and China in the country’s north-east.

The Shan speak a variety of languages, some Tibeto-Burman and others Mon-Khmer. They have a long history of independence, with recent times also seeing armed conflict in Shan state and its neighbours. A nationwide ceasefire agreement, which was signed in 2015, ended most hostilities, but recently rival Shan groups have also been in conflict with each other over this agreement.

Third-largest ethnic group is the Karen, at around 7% of the population. The Karen largely reside in Karen State, in the south-east, with large numbers of them having crossed over into Thailand over the years due to conflict between Karen separatists and the Myanmar military.

The Karen speak a Sino-Tibetan language, while the majority are also Therevada Buddhist, although approximately 35% are Christian.

The next largest ethnic group officially is the Rakhine. These constitute around 3.5% of the total population and live in Rakhine State, alongside the unofficial Rohingya Muslim group. Formerly known as the Arakanese, they have relatives in neighbouring Bangladesh and India. They are predominantly Therevada Buddhists and speak the Arakanese language, which is close to Burmese.

There is a significant ethnic Chinese group – around 2.5% – in Myanmar, while around 2% of the population belong to the Mon ethnicity. This latter group have a great historical significance in the country, being credited with bringing Therevada Buddhism to this region, while also being inter-related with many Thais, including the Thai royal family. They mainly live in Lower Burma. The ethnic Kachin, meanwhile, constitute around 1.5% of the population, ethnic Indians some 1.3% and Chin around 1%.

Harmony

Bringing harmony to this multi-layered mosaic of religions and ethnic groups is the task now facing the new government. After years of military rule, establishing a sense of pluralism and inclusion is no easy task, particularly when many of the country’s diverse groups have a history of conflict with the central, largely Burmese authorities. Yet there is a great deal of goodwill, both globally and domestically, behind the new government, while the opportunities the country presents remain immense. For many years, Myanmar’s isolation left it as the missing piece of the puzzle for international investors looking at South-east Asia; its opening up to the wider world thus represents a remarkable moment in the history of this most remarkable country.