Increased vehicle demand in Myanmar boosts imports
Since liberalisation, Myanmar has seen its demand for vehicle ownership increase rapidly, research by Asian-focused corporate consultancy Solidiance shows. Particularly imports of motorcycles have increased markedly, up by almost 2 million units in two years. Car imports have increased 100,000 in the past two years, with Myanmar citizens preferring second hand Japanese imports over vehicles from other markets due to their price, robustness and easily accessible spare parts market.
Myanmar has sought to liberalise its economy and political climate after more than a decade of military rule. In 2011, the newly ‘democratically’ elected government set out to bring in a number of new policies and reforms aimed at liberalising and opening up the country’s economy. These laws included anti-corruption laws, currency exchange rates, foreign investment laws and taxation. The effect of the laws has seen a significant increase in foreign capital investment and the Myanmar government participated in the opening of an economic hub to boost investment further.
Liberalisation came to Myanmar’s vehicle market in 2012, which had since 1983 placed restrictions on ownership – only a limited number of ‘qualified people’ were allowed to import and own cars. From 2012, all citizens that open a foreign currency exchange account at a state bank* can import a car – although only cars from 2007 and younger are permitted to be imported.
As a result of the changes, vehicle ownership jumped significantly, up from 2,363,747 in 2011 to 3,739,947 in 2012. In 2013, the number of vehicles grew another almost 700,000 to 4,407,741. According to the Solidiance report, the two-wheeler segment is by far the largest segment in the country, accounting for 85% of all vehicles in May 2014, at 3,747,785 registered to citizens. Passenger Cars is the second biggest group, standing at 389,551, and significantly higher than in 2011 when there were 267,600. The rise in cars still remains slow compared to that of motorcycles, in large part because of the expense of cars. When a citizen can afford a car, for the most part that car will be second-hand according to the report.
The second-hand car of choice is Japanese, like for many countries relatively close to the Japanese market. A total of 87% of all imported cars are Japanese made, 10% come from Korea, and the EU/US/China make up the final 3%. In terms of preferred model, Toyota is king. The durability of the vehicles, as well as a large market for spare parts makes this the ideal choice for many car owners. The second most sought after type is Honda, at 11% of imports. Interestingly, none of the big names, BMW, VW, Ford, GM models make the top 10 list of imported cars into the country.
* Myanmar Foreign Trade Bank (MFTB), Myanmar Economic Bank (MEB), and Myanmar Investment Commercial Bank (MICB).
