Heavy analysis! In addition to Vietnam, Cambodia, China buil

When it comes to setting up factories in Southeast Asia, the hot destinations are nothing more than Vietnam and Cambodia. In the first quarter, Vietnam’s exports to the United States soared 40.2%. If this rate is maintained, Vietnam may surpass the United Kingdom and become a larger supplier to the United States.
However, with the influx of Chinese manufacturing companies, the cost of building factories in Vietnam and Cambodia has risen. Is it feasible to go to Myanmar?
Market overview
On January 4, 1948, Myanmar declared its independence from the Commonwealth and established the Union of Burma. Since then, domestic disputes have continued and it has experienced more than 40 years of military government.
In 2011, international sanctions were relaxed, Myanmar began to open to the outside world, the government opened its market and invested in infrastructure construction. The inflow of foreign capital, technology, talents and passengers drove the growth of telecommunications, construction, manufacturing and service industries, and the economy continued to grow rapidly. increase.
Geographically, the northern and northeastern parts of Myanmar are adjacent to China, the east and southeast are connected to Laos and Thailand, the southwest is bordered by the Bay of Bengal and the Andaman Sea in the Indian Ocean, and the west and northwest are bordered by Bangladesh and India.
Yangon is its largest economic center, but the administrative capital of Myanmar is Nay Pyi Taw.
Although there are many foreign companies in the Myanmar market, their business environment still has high risks, such as communication and grid instability, and lack of transparency in many business processes.
Of the 190 economies published by the World Bank's 2018 Business Environment Report, Myanmar ranks 171th.
Some of the individual rankings in Myanmar are:
The power supply ranks 151,
163 cross-border trades,
134 business enterprises,
Execution contract 188,
Apply for credit 177,
Taxation is 125.
Although the overall business environment is slightly behind, Myanmar's foreign trade has unique advantages:
Myanmar became a member of the ASEAN in 1997, joining the ASEAN Free Trade Area, the China-ASEAN Free Trade Area, the Korea-ASEAN Free Trade Area, the Japan-ASEAN Free Trade Area, and the India-ASEAN Free Trade Area.
In addition, after the lifting of sanctions in Europe and the United States, Myanmar enjoys GSP treatment from the United States, the European Union, and Japan: Myanmar has more than 5,000 products that can enter the US market duty-free;
Since the European Union resumed the GSP preferential offer in Myanmar in 2013, Myanmar’s exports to the EU have soared sevenfold. In 2017, it reached 1.56 billion euros, with a contract of 1.77 billion US dollars, of which clothing accounted for more than 70% of exports.
Myanmar's main trading partners are Asian countries and regions, and trade with neighboring countries accounts for 90% of Myanmar's total foreign trade. According to the latest data from the Central Bureau of Statistics of Myanmar, China is Myanmar's largest trading partner. The top 5 trading partners are China, Thailand, Singapore, Japan and India.
Myanmar's main export commodities are: natural gas, rice, corn, various beans, rubber, mineral products, wood, pearls, precious stones and aquatic products. The main imported goods are: consumer goods, electronic equipment, production materials, automobiles and automobiles. Accessories, and intermediate products.
Another notable risk is the depreciation of the currency. Since April 2018, the Burmese currency has depreciated by 18% against the US dollar, and it is expected that there will be further depreciation in the future. On January 30, 2019, the Central Bank of Myanmar approved the RMB and JPY as its international payment and settlement currency.
 
2. Advantage industries
Myanmar is one of the emerging places in the textile industry in Southeast Asia. According to statistics from the Myanmar Garment Processing Association, garment exports have become the second largest export item after Myanmar’s natural gas exports.
The Myanmar government has listed the processing and export of garments as one of the seven key industries in the national export strategy, and has tried to change the country's foreign trade deficit by increasing exports of a range of industries including garment exports.
Myanmar's garment industry exported only 320 million U.S. dollars in 2004, and has grown exponentially since 2013. In 2018, Myanmar's garment industry exports reached 3.2 billion U.S. dollars, and now it is expected to increase to 3.5 billion U.S. dollars in 2019.
The Myanmar garment industry is able to meet the needs of the high-end, mid-range and low-end markets, and the advantages in the mid- to high-end segment are more obvious. Myanmar manufacturers are more inclined to produce medium- and high-quality products to attract EU customers' attention.
Garments are mainly exported to Japan, the European Union, South Korea, the United States and China. In 2017, the EU surpassed Japan with 47% of purchases to become the country with the largest number of garment exports in Myanmar.
The production of European brands such as H&M and Adidas has begun to stand in Myanmar, and H&M has produced more than 30 garment factories in Myanmar.
According to the preliminary statistics of the Economic and Commercial Office of the Chinese Embassy in Myanmar, 60% of Burmese garment enterprises belong to foreign capital, while Chinese-funded enterprises account for 60% of foreign-funded enterprises. At present, there are more than 300 Chinese-funded enterprises investing in the textile and garment industry in Myanmar, employing more than 300,000 local laborers.
Like the problems faced by the textile industry in Vietnam, Cambodia and Bangladesh, due to the incomplete industrial chain, fabrics in the textile and garment industry in Myanmar are not self-sufficient, and the demand for Chinese yarns and fabrics is huge. 98% of the domestic textile industry is CMP. Material processing), after processing and 100% export, most of the exports rely on Western countries, and are completely passive in economic and trade.
One of the main reasons for the rapid increase in garment processing plants is the GSP treatment and preferential treatment (EBA) granted by the EU to Myanmar. Therefore, in 2018, after the EU considered cancelling the GSP treatment in Myanmar, the Myanmar garment industry is facing a decline in new investment.
Wu Minsuo, president of the Myanmar Garment Association, said: "Since the end of 2018, the number of projects that have come to China to invest and build factories has decreased significantly. In the first half of 2018, there were an average of 4-6 garment factories in Yangon Industrial Zone. Investment in the project. However, at the end of 2018, there were only 3-5 garment factory projects invested in each month."
The Myanmar government is trying to improve the status of the garment industry in Myanmar in the international garment industry chain. By creating a “Myanmar brand” and changing the low-end model of “processing materials” for foreign manufacturers in the past, the income of the garment industry will be improved. And further expand employment.
In addition, similar situations to the garment industry have also occurred in the footwear industry. Due to the rising salary of employees in shoe-making enterprises in Vietnam and Thailand, companies including China, Taiwan, and South Korea are beginning to increase investment in Myanmar.
 
3. Construction cost
1. In terms of tax policy
The Myanmar Investment Law provides for tax exemption policies based on investment geography, which are divided into three categories:
The first category is the least developed region.
The second category is generally developed regions.
The third category is developed regions.
Investing in a type of area can enjoy up to 7 years of income tax exemption, including more than 160 townships in 13 provinces;
Investment in the second category can enjoy up to 5 years of income tax exemption, including 122 townships in 11 provinces;
Investing in three types of areas can enjoy up to three years of income tax exemption, including 14 townships in Mandalay and 32 townships in Yangon.
In addition, the Investment Committee will approve the following tax relief situations as appropriate:
(1) Exempt and/or reduce tariffs or other domestic taxes on machinery, equipment, equipment, spare parts and materials required for construction materials and business that cannot be obtained locally during the construction or preparation period of the investment project;
(2) Export-oriented investment projects are the production of export products, while importing raw materials and semi-finished products, exempting and/or reducing import tariffs or other domestic taxes;
(3) Returning import duties and/or other domestic taxes on raw materials and semi-finished products imported for the production of export products;
(4) If the investment is increased by the approval of the committee, the scale of the original investment project will be expanded during the investment period. During the construction period or preparation period of the investment project, the machinery, equipment, equipment, parts and components that are required to be imported, and the building materials and business offices that cannot be obtained locally will be The exemptions and/or mitigations of tariffs or other domestic taxes on materials are also adjusted accordingly.
 
2. In terms of transportation
Domestic transportation in Myanmar is mainly based on truck transportation, and the cost is low; railway transportation covers the whole country and is expected to access China's railway network.
About 80% of Myanmar's foreign trade uses sea transportation, but Myanmar lacks a large port. Yangon Port handles about 90% of Myanmar's maritime trade. The terminals are inland river ports and cannot accommodate large ships. They are often very crowded.
 
3. In terms of power supply
According to the World Bank's 2019 Doing Business, the country has an average of 21 power outages per year, with one hour of power outages.
Hydropower accounts for more than two-thirds of Myanmar's electricity supply. In the dry season from November to April each year, the supply of water and electricity is reduced, often resulting in power outages. In Yangon, most manufacturers have installed their own generators to ensure a stable power supply and reduce the impact of power outages on production activities.
The Myanmar government has set a goal of nationwide electrification in 2030. Through the comprehensive use of hydropower, natural gas, photovoltaics, wind power and other means, on the one hand to solve the rising demand for electricity in major cities such as Yangon, Mandalay, on the other hand, the vast rural areas of Myanmar to use electricity.
 
4. In terms of labor
Myanmar's labor resources are very rich. According to Myanmar's official statistics, the labor force between the ages of 15 and 59 is 33.407 million, accounting for 59.1% of the national population.
But the problem is that its per capita education level is low and there is a lack of high-quality talent. According to the statistics of the World Bank, the enrollment rate of secondary education in Myanmar is 49%, and the enrollment rate of higher education is 12%, both of which are at a low level in the world.
However, some insiders said that Myanmar workers can reach 70 to 80% of the productivity of Chinese workers after receiving appropriate technical training. The preparation of detailed operational guidelines in the local Burmese language also helps workers to understand the production process and achieve better results.
From May 2018, the minimum wage in Myanmar has been raised from a daily salary of 3,600 kyats to a daily salary of 4,800 kyats (about 3 US dollars), assuming 25 working days per month, equivalent to 75 US dollars per month. Comparing Vietnam (the minimum wage is about 126 to 180 US dollars per month) and Cambodia (182 US dollars), Myanmar is much lower.
According to a survey conducted by the Japan External Trade Organization (JETRO), the average monthly wage of manufacturing workers in Myanmar is about US$162, Cambodia’s US$201, and Vietnam’s US$227.
It is worth noting that Myanmar requires factory workers to work up to 44 hours a week and no more than 4 hours per week. Employers should set a work schedule in advance because they must obtain prior approval from the factory and the Labor Law Office to work overtime.
More than 85% of Burmese people believe in Buddhism and are very religious. Therefore, the law and order situation in Myanmar is relatively good, but the "workers" of the laborers are far worse than the Chinese workers.
The person in charge of a clothing company in Shanghai said: "If you have a game today, you will never work overtime. If you give him 10 times, he will not come to work overtime."
In addition, the frequent disputes between employers and employees are also issues that business owners must consider.
 

When it comes to setting up factories in Southeast Asia, the hot destinations are nothing more than Vietnam and Cambodia. In the first quarter, Vietnam’s exports to the United States soared 40.2%. If this rate is maintained, Vietnam may surpass the United Kingdom and become a larger supplier to the United States.
However, with the influx of Chinese manufacturing companies, the cost of building factories in Vietnam and Cambodia has risen. Is it feasible to go to Myanmar?
Market overview
On January 4, 1948, Myanmar declared its independence from the Commonwealth and established the Union of Burma. Since then, domestic disputes have continued and it has experienced more than 40 years of military government.
In 2011, international sanctions were relaxed, Myanmar began to open to the outside world, the government opened its market and invested in infrastructure construction. The inflow of foreign capital, technology, talents and passengers drove the growth of telecommunications, construction, manufacturing and service industries, and the economy continued to grow rapidly. increase.
Geographically, the northern and northeastern parts of Myanmar are adjacent to China, the east and southeast are connected to Laos and Thailand, the southwest is bordered by the Bay of Bengal and the Andaman Sea in the Indian Ocean, and the west and northwest are bordered by Bangladesh and India.
Yangon is its largest economic center, but the administrative capital of Myanmar is Nay Pyi Taw.
Although there are many foreign companies in the Myanmar market, their business environment still has high risks, such as communication and grid instability, and lack of transparency in many business processes.
Of the 190 economies published by the World Bank's 2018 Business Environment Report, Myanmar ranks 171th.
Some of the individual rankings in Myanmar are:
The power supply ranks 151,
163 cross-border trades,
134 business enterprises,
Execution contract 188,
Apply for credit 177,
Taxation is 125.
Although the overall business environment is slightly behind, Myanmar's foreign trade has unique advantages:
Myanmar became a member of the ASEAN in 1997, joining the ASEAN Free Trade Area, the China-ASEAN Free Trade Area, the Korea-ASEAN Free Trade Area, the Japan-ASEAN Free Trade Area, and the India-ASEAN Free Trade Area.
In addition, after the lifting of sanctions in Europe and the United States, Myanmar enjoys GSP treatment from the United States, the European Union, and Japan: Myanmar has more than 5,000 products that can enter the US market duty-free;
Since the European Union resumed the GSP preferential offer in Myanmar in 2013, Myanmar’s exports to the EU have soared sevenfold. In 2017, it reached 1.56 billion euros, with a contract of 1.77 billion US dollars, of which clothing accounted for more than 70% of exports.
Myanmar's main trading partners are Asian countries and regions, and trade with neighboring countries accounts for 90% of Myanmar's total foreign trade. According to the latest data from the Central Bureau of Statistics of Myanmar, China is Myanmar's largest trading partner. The top 5 trading partners are China, Thailand, Singapore, Japan and India.
Myanmar's main export commodities are: natural gas, rice, corn, various beans, rubber, mineral products, wood, pearls, precious stones and aquatic products. The main imported goods are: consumer goods, electronic equipment, production materials, automobiles and automobiles. Accessories, and intermediate products.
Another notable risk is the depreciation of the currency. Since April 2018, the Burmese currency has depreciated by 18% against the US dollar, and it is expected that there will be further depreciation in the future. On January 30, 2019, the Central Bank of Myanmar approved the RMB and JPY as its international payment and settlement currency.
 
2. Advantage industries
Myanmar is one of the emerging places in the textile industry in Southeast Asia. According to statistics from the Myanmar Garment Processing Association, garment exports have become the second largest export item after Myanmar’s natural gas exports.
The Myanmar government has listed the processing and export of garments as one of the seven key industries in the national export strategy, and has tried to change the country's foreign trade deficit by increasing exports of a range of industries including garment exports.
Myanmar's garment industry exported only 320 million U.S. dollars in 2004, and has grown exponentially since 2013. In 2018, Myanmar's garment industry exports reached 3.2 billion U.S. dollars, and now it is expected to increase to 3.5 billion U.S. dollars in 2019.
The Myanmar garment industry is able to meet the needs of the high-end, mid-range and low-end markets, and the advantages in the mid- to high-end segment are more obvious. Myanmar manufacturers are more inclined to produce medium- and high-quality products to attract EU customers' attention.
Garments are mainly exported to Japan, the European Union, South Korea, the United States and China. In 2017, the EU surpassed Japan with 47% of purchases to become the country with the largest number of garment exports in Myanmar.
The production of European brands such as H&M and Adidas has begun to stand in Myanmar, and H&M has produced more than 30 garment factories in Myanmar.
According to the preliminary statistics of the Economic and Commercial Office of the Chinese Embassy in Myanmar, 60% of Burmese garment enterprises belong to foreign capital, while Chinese-funded enterprises account for 60% of foreign-funded enterprises. At present, there are more than 300 Chinese-funded enterprises investing in the textile and garment industry in Myanmar, employing more than 300,000 local laborers.
Like the problems faced by the textile industry in Vietnam, Cambodia and Bangladesh, due to the incomplete industrial chain, fabrics in the textile and garment industry in Myanmar are not self-sufficient, and the demand for Chinese yarns and fabrics is huge. 98% of the domestic textile industry is CMP. Material processing), after processing and 100% export, most of the exports rely on Western countries, and are completely passive in economic and trade.
One of the main reasons for the rapid increase in garment processing plants is the GSP treatment and preferential treatment (EBA) granted by the EU to Myanmar. Therefore, in 2018, after the EU considered cancelling the GSP treatment in Myanmar, the Myanmar garment industry is facing a decline in new investment.
Wu Minsuo, president of the Myanmar Garment Association, said: "Since the end of 2018, the number of projects that have come to China to invest and build factories has decreased significantly. In the first half of 2018, there were an average of 4-6 garment factories in Yangon Industrial Zone. Investment in the project. However, at the end of 2018, there were only 3-5 garment factory projects invested in each month."
The Myanmar government is trying to improve the status of the garment industry in Myanmar in the international garment industry chain. By creating a “Myanmar brand” and changing the low-end model of “processing materials” for foreign manufacturers in the past, the income of the garment industry will be improved. And further expand employment.
In addition, similar situations to the garment industry have also occurred in the footwear industry. Due to the rising salary of employees in shoe-making enterprises in Vietnam and Thailand, companies including China, Taiwan, and South Korea are beginning to increase investment in Myanmar.
 
3. Construction cost
1. In terms of tax policy
The Myanmar Investment Law provides for tax exemption policies based on investment geography, which are divided into three categories:
The first category is the least developed region.
The second category is generally developed regions.
The third category is developed regions.
Investing in a type of area can enjoy up to 7 years of income tax exemption, including more than 160 townships in 13 provinces;
Investment in the second category can enjoy up to 5 years of income tax exemption, including 122 townships in 11 provinces;
Investing in three types of areas can enjoy up to three years of income tax exemption, including 14 townships in Mandalay and 32 townships in Yangon.
In addition, the Investment Committee will approve the following tax relief situations as appropriate:
(1) Exempt and/or reduce tariffs or other domestic taxes on machinery, equipment, equipment, spare parts and materials required for construction materials and business that cannot be obtained locally during the construction or preparation period of the investment project;
(2) Export-oriented investment projects are the production of export products, while importing raw materials and semi-finished products, exempting and/or reducing import tariffs or other domestic taxes;
(3) Returning import duties and/or other domestic taxes on raw materials and semi-finished products imported for the production of export products;
(4) If the investment is increased by the approval of the committee, the scale of the original investment project will be expanded during the investment period. During the construction period or preparation period of the investment project, the machinery, equipment, equipment, parts and components that are required to be imported, and the building materials and business offices that cannot be obtained locally will be The exemptions and/or mitigations of tariffs or other domestic taxes on materials are also adjusted accordingly.
 
2. In terms of transportation
Domestic transportation in Myanmar is mainly based on truck transportation, and the cost is low; railway transportation covers the whole country and is expected to access China's railway network.
About 80% of Myanmar's foreign trade uses sea transportation, but Myanmar lacks a large port. Yangon Port handles about 90% of Myanmar's maritime trade. The terminals are inland river ports and cannot accommodate large ships. They are often very crowded.
 
3. In terms of power supply
According to the World Bank's 2019 Doing Business, the country has an average of 21 power outages per year, with one hour of power outages.
Hydropower accounts for more than two-thirds of Myanmar's electricity supply. In the dry season from November to April each year, the supply of water and electricity is reduced, often resulting in power outages. In Yangon, most manufacturers have installed their own generators to ensure a stable power supply and reduce the impact of power outages on production activities.
The Myanmar government has set a goal of nationwide electrification in 2030. Through the comprehensive use of hydropower, natural gas, photovoltaics, wind power and other means, on the one hand to solve the rising demand for electricity in major cities such as Yangon, Mandalay, on the other hand, the vast rural areas of Myanmar to use electricity.
 
4. In terms of labor
Myanmar's labor resources are very rich. According to Myanmar's official statistics, the labor force between the ages of 15 and 59 is 33.407 million, accounting for 59.1% of the national population.
But the problem is that its per capita education level is low and there is a lack of high-quality talent. According to the statistics of the World Bank, the enrollment rate of secondary education in Myanmar is 49%, and the enrollment rate of higher education is 12%, both of which are at a low level in the world.
However, some insiders said that Myanmar workers can reach 70 to 80% of the productivity of Chinese workers after receiving appropriate technical training. The preparation of detailed operational guidelines in the local Burmese language also helps workers to understand the production process and achieve better results.
From May 2018, the minimum wage in Myanmar has been raised from a daily salary of 3,600 kyats to a daily salary of 4,800 kyats (about 3 US dollars), assuming 25 working days per month, equivalent to 75 US dollars per month. Comparing Vietnam (the minimum wage is about 126 to 180 US dollars per month) and Cambodia (182 US dollars), Myanmar is much lower.
According to a survey conducted by the Japan External Trade Organization (JETRO), the average monthly wage of manufacturing workers in Myanmar is about US$162, Cambodia’s US$201, and Vietnam’s US$227.
It is worth noting that Myanmar requires factory workers to work up to 44 hours a week and no more than 4 hours per week. Employers should set a work schedule in advance because they must obtain prior approval from the factory and the Labor Law Office to work overtime.
More than 85% of Burmese people believe in Buddhism and are very religious. Therefore, the law and order situation in Myanmar is relatively good, but the "workers" of the laborers are far worse than the Chinese workers.
The person in charge of a clothing company in Shanghai said: "If you have a game today, you will never work overtime. If you give him 10 times, he will not come to work overtime."
In addition, the frequent disputes between employers and employees are also issues that business owners must consider.