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Myanmar’s construction boom spurs rapid growth in paint and coatings

Published in Asia Pacific Coatings Journal in March 2014

A UPG Premier showroom in Yangon
A UPG Premier showroom in Yangon

Myanmar’s booming construction industry is spurring rapid growth in the paints and coatings sector, as a steadily increasing number of foreign firms attempt to stake out a share in a market that was until relatively recently, decidedly lackluster.

Myanmar’s construction industry is currently valued at US$3bn and is forecasted to grow to US$4.2 billion by 2016, according to a February 2014 report by the financial advisory firm New Crossroads Asia.

According to Paris-based global market research firm IPSOS, 49 percent of construction projects in 2013 were residential. The domestic market is currently worth US$1.5 billion, according to New Crossroads Asia.

Next comes infrastructure, which comprises 28 percent of all projects, while industrial construction makes up 14 percent, commercial 6 percent, and “other” 3 percent.

While many investors remain hesitant to invest until the 2015 general election has passed, analysts predict stronger growth in the long-term: “Growth will average 10.8 percent per annum between 2016 and 2023, making [Myanmar] one of the fastest growing construction markets in Asia,” according to London based research firm Business Monitor International (BMI).

However unlike many of its ASEAN neighbours, a paints and coatings industry association is yet to exist in Myanmar. The closest equivalent is the Chemical Industry Group (CIG), which falls under the Myanmar Industries Association.

A spokesperson from the Myanmar Industries Association told Asia Pacific Coatings Journal, “We don’t know the value of the paint and coatings market in Myanmar because we can only obtain figures from our association’s member companies.”

“Having a specific body set up would definitely help develop Myanmar’s paint and coatings sector,” said Kansai Paint’s Managing Director Aung Nyunt Thaung.

He said that whilst the Myanmar Investment Commission now requires the submission of environmental impact assessments, there remains no ban on paints and coatings which are harmful to the environment or human health.

“Some of the smaller companies lack knowledge about the contents of raw materials and potential risks,” Aung Nyunt Thaung said.

Local company dominates

Aung Kyaw Myint, Business Coordinator at United Paint Group Co., Ltd (UPG) told Asia Pacific Coatings Journal that UPG has a staggering 85 percent market share in Myanmar.

“UPG’s products are all over the country, even in the smallest of shops – we’re sending out trucks every day.”

Kansai’s Managing Director is well aware of UPG’s dominance in local market share, but suggests that the data may be a little overblown.

“We accept that UPG is the market leader, but I think its market share is lower; perhaps around 65 or 70 percent. After all, there are so many competitors, including many local ones. Businesspeople in Myanmar don’t seem to see the need for robust data – ‘statistics’ are often based on rough calculations,” said Aung Nyunt Thaung.

He partly attributes UPG’s dominance to retailers being given shares in the company: “That’s why they are all over the country.”

Recent additions to Yangon's skyline
Recent additions to Yangon’s skyline

UPG was established in 1995 and is wholly Myanmar owned. It imports raw materials from Germany and locally manufactures decorative paints, wood coatings, automotive primers, thinners and tinting systems. It has several seals of approval from regulatory bodies (including the International Standards Organisation) for environmental management and occupational health and safety.

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