Singapore businesses to benefit from Myanmar’s manufacturing potential

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Singapore businesses to benefit from Myanmar’s manufacturing potential

Singapore’s Prime Minister Lee Hsien Loong has enforced a new visa rule for Singaporeans traveling to Myanmar, announcing that citizens from both sides will not need visas to enter each other’s country for visits of up to 30 days. Currently, Singaporeans applying for a visa to Myanmar costs SGD 35, depending on the purpose of the visit.

The new rule had been created in an effort to lure more Singaporean companies in tapping on emerging opportunities in Myanmar, particularly the rise of the middle-class. Singapore businesses will be able to gain access to the country’s new consumer space, expand operations, as well as provide urban solutions in Asia’s last frontier market.

With economic reforms in Myanmar boosting business optimism, the visa-free initiative will further open up foreign investments into the country. “Trade and investment liberalization, access to a large domestic market, as well as abundant low cost labor make Myanmar attractive from a manufacturing perspective”, according to Naithy Cyriac, Manager at Solidiance Myanmar, an Asia-focused management consulting firm.

Since the new government took over, foreign investments into the manufacturing sector have soared. The sector made up 53.1 per cent of all investment as of September 2016, with market value of USD 686.9 million. This figure was higher than the 14.1 per cent of all investment in FY2015/2016 under the previous government.

Moreover, Myanmar’s new investment law, which is expected to unfold in April next year, could help provide policy clarity for investors. This includes changes in investment permits, updates to the distribution and length of various tax incentives, as well as further easing of foreign access to land leases. This new law, and the policy clarity that may come with it, would help more Singaporean businesses to gain better understanding over investment policies.

Despite the opportunities for growth, the challenges are there in equal measure. Issues such as an infrastructure deficit, as well as the lack of policy clarity in Myanmar, will continue to be obstacles for Singaporean investors. Solidiance’s white paper “Myanmar as the next manufacturing hub” notes that transportation lines are mostly underdeveloped and will need significant upgrades. For instance, although road transport is a key mode of transport for local trade in Myanmar, ~79% of roads are still unpaved.

Recently, the Singapore Chinese Chamber of Commerce and Industry’s (SCCCI) led a 36-member delegation to visit Yangon and Mandalay to engage and strengthen the network with the business community there. The delegates met with the Chief Minister of Yangon Phyoe Min Thein and visited the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry, Thilawa Special Economic Zone and Mandalay Myotha Industrial Park, hoping to tap on Myanmar’s potential.

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