On the back of strong GDP growth and an expanding population, Myanmar's construction industry has performed well in recent years. Buoyed up by this thriving construction market, the country has enjoyed highest growth rates in cement demand with cement producers bringing new capacity to keep pace with surging consumption. On average, Myanmar's gross domestic product expanded by 7.7% from 2001-10. An IMF study projected Myanmar's real GDP growth for 2011-12 as 5% and for 2012-13 as 6%.
Myanmar is now becoming one of the world's most sought-after countries, ready to open up and woo foreign investors in its construction industry. The Myanmar construction industry increased in value at a compound annual growth rate (CAGR) of 11.48% during the review period (2007-2011). This growth was supported by the country's improving political stability, increasing number of investment opportunities in energy and public infrastructure projects, and rapid inflow of foreign direct investment (FDI) from Vietnam, Thailand, China, Singapore and Malaysia. The infrastructure and residential construction markets together generated 77.3% of the total Myanmar construction industry value in 2011.
The Government has also accorded high priority to infrastructure development projects - such as roads, railways, bridges, ports facilities, airports, electric power, irrigation networks, communication systems, private schools construction, private hospitals, etc. There is an increasing trend of private sector participation in these projects which is expected to escalate as Private Public Partnership (PPP) is gaining momentum.
Further, large-scale hydro-electric development and deep-sea port projects, road works, airports, hotels and other construction activities translate to high cement demand in Myanmar. Cement export to Myanmar is expected to increase as several cement giants such as Siam Cement Group (SCG) has plans to build a $180 million cement factory, while the Saha Group aims to construct an industrial estate near Rangoon to cater for dozens of small-to-medium-sized manufacturing businesses. On the other hand, companies like PT Semen Gresik have announced plans to set up new plants in Myanmar.
The construction industry growth is expected to remain strong driven by the government's increasing expenditure on improving Myanmar's public infrastructure, and the rising interest of domestic and foreign real estate developers on constructing residential units to meet the population's huge housing demand. The future of construction industry looks very promising and the government is also encouraging investment in the construction of cement plants in the country by facilitating tax allowances. With these developments and initiatives the industry is expected to grow at a magnificent rate.
(Source: Insight Alpha)