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23 Sep 2016

International Economy

Opportunities for Thai Contractors in Myanmar’s Residential Development (Current Issue No. 2776)

คะแนนเฉลี่ย
As economic momentum in Myanmar has been continuously on the upswing, the country is now witnessing rapid urbanization. That has spurred record demand for residences there, particularly within metropolises. Today, their urban population is 14.9 million and is expected to jump to 23.4 million in 10 years, reflecting good growth potential for residential construction projects in the foreseeable future. KResearch projects that from 2016 to 2020, residential housing development in Myanmar will likely achieve 16.0-19.0 percent, CAGR, expansion per annum, grossing at USD3.7-4.2 billion in 2020.

Looking at Thailand's construction industry, competition has intensified as more and more companies enter the market, whereas demand has been sluggish. As a result, Myanmar, with more exciting opportunities, seems an attractive alternate venue for Thai construction companies. Apart from large companies that have already ventured into Myanmar's market some time ago, medium-sized contractors with proven competency to operate internationally will likely consider delving into this promising market, too. Branching out into foreign markets can help strengthen regional companies and is considered a good diversification strategy, reducing business risk.

Investing in Myanmar may largely be accomplished in two ways – as a joint venture or by being a subcontractor for larger contractors. Also, opportunities seem especially inviting for prefabricated and precast concrete homes, as well as for other relevant businesses, e.g., retailers and wholesalers of construction materials. In addition, professions such as engineers and architects stand to gain from the uptrend in construction there.

Despite all the reasons mentioned above, investors seeking to try Myanmar should be extra careful over many concerns, including matters of labor resources, communication with state agencies, material costs and inadequate infrastructure. Investing in Myanmar's construction industry thus offers both opportunities and challenges for Thai companies.

International Economy