Mixed response from Thai firms
Some Thai firms have already planted themselves in Myanmar after reforms led to stronger growth, while some are still reluctant to make a move until the rules and regulations become clearer.
Paradon Kunkongkaphan, managing director of MK Group Companies, which is a joint venture with the Thai instant noodle brand “Mama”, said sales of the company have spurted in the past year by 30-50 per cent due to the better economic environment.
Since the company was founded in 1991, it has experienced growth of 10-15 per cent a year until 2008. However, with the change in Myanmar’s political make-up and strong economic growth averaging 4-5 per cent a year since 2008, the firm’s sales have revved up.
Although personal income has not risen much, consumers have more confidence to spend because of the investment pouring in from overseas.
Logistics costs have also become more reasonable in the past decade as infrastructure has been improved. The firm has put together an expansion plan to serve the rapid growth of the country in the near future.
Mama is the second largest instant noodle brand in the Myanmar market, with a share of about 30 per cent. The largest brand is also Thai. “Yumyum” controls about half of the market running at about Bt2 billion a year.
Myanmar offers many advantages for investors such as cheap labour and strong consumption.
However, logistics costs remain high, accounting for 20 per cent of total costs. But logistics has developed tremendously compared with a decade ago.
For instance, shipping products from Yangon to other states in Myanmar used to take about a week, but nowadays takes only two or three days.
At present, the cost per worker is Bt2,400 per month or Bt80 a day, a substantial increase from Bt1,000 per month five years ago, he added.
Surapon Vongvadhanaroj, CEO of Surapon Foods, sees a big opportunity to launch a business in Myanmar.
“The company has not yet started up any business overseas. Myanmar could be the first overseas base for the company in the near future after the firm conducts a more in-depth study of market demand and consumer behaviour,” he said.
To set up a plant here, the firm needs a partner to help promote strong ties with the local people, he said.
