Prior to the COVID-19 pandemic, industry in Myanmar had been profiting from a cycle of robust economic growth, a more attractive environment for foreign investors and the further liberalization of regulatory reforms. Growth in the industrial sector has largely been fueled by low cost labour, an increase in domestic demand and enticing incentives within economic zones. As a result, the World Banks “Myanmar Economic Monitor December 2019” report stated that “the industrial sector grew by an estimated 6.4% in 2018/19, driven by rising investment in manufacturing. Manufacturing growth reached 8% in 2018/19,” which the Bank projected to be the fastest growing economy in ASEAN. Such growth has been supported by programs such as the Everything But Arms (EBA) scheme which has been implemented by the EU.
Furthermore, the World Bank report also suggested that the “industry sector is expected to grow at a faster pace in 2019/20 than 2018/19, with growth in manufacturing activities driven by foreign firms’ entry.” As such GDP growth in the industrial sector was anticipated to increase to 6.5% in 2019/20.
With that being said, Myanmar is scheduled to hold a general election in November 2020. With this event on the horizon, most businesses expected that 2020 would see relatively flat, if not a drop, in foreign direct investment. However, the early months of 2020 indicated that those assumptions may have been wrong.
Inquiries on industrial land, applications for Myanmar Investment Commission Permits and assessments of local distribution partners all increased during the December to March period between 2018/19 and 2019/20. COVID-19 however quickly quelled that renewed interest in Myanmar with many of those inquiries deferred until the economic fallout of COVID-19 lifts.