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Stellar performance

In 2005, Myanmar’s generals perplexed the world by relocating their country’s capital from bustling Yangon to a remote, mosquito-infested swamp. Accountable to no one, the regime felt no need to explain itself, but rumor suggested the decision had been made at the urging of an astrologer. Apparently, the moon and stars revealed an invasion, and the junta, already jittery under international sanctions, felt safer inland than it did in coastal Yangon.

The dreaded attack never materialized. Instead, Myanmar embarked on democratic and economic reforms, culminating in elections in 2015 and a relaxation of sanctions. The government remains holed up in distant Naypyitaw, however, complicating official business and inconveniencing many ordinary Burmese.

But give the generals’ soothsayer a break. While no foreign soldiers stormed Myanmar’s beaches, the country did, as predicted, witness an invasion—of businessmen and consultants. Encouraged by market liberalization and Myanmar’s newfound respectability, investors from around the world descended on the nation, eager to cater to millions of previously underserved consumers in areas ranging from packaged goods to information technology.

The tobacco industry, too, returned, albeit with less fanfare than other sectors. Having pulled out of the country during military rule, cigarette manufacturers were eager to resume operations in the new Myanmar.

Their enthusiasm is hardly surprising. In a world characterized by stagnating cigarette sales, Myanmar is one of the few true growth markets. With many young adult smokers, rising disposable incomes and a deep-rooted tobacco culture, the country offers conditions that have evaporated even in many markets that, until recently, were labeled as “emerging.”

Euromonitor International expects Myanmar’s gross domestic product to increase by at least 7.5 percent annually until 2022—an impressive pace for the region and an astronomical one compared with the anemic rates common in the West.

The growing wealth will enable the country’s many tobacco users to migrate from traditional products, such as cheroots, to factory-made cigarettes. Cigarettes currently account for only a small share of Myanmar’s tobacco consumption, and many are filterless, suggesting considerable room for uptrading.

The fear that the country’s illicit market may be larger than its duty-paid one should be interpreted as an opportunity as well: Imagine the payoff to industry and tax collectors if those sales could be brought into the formal economy.

Plenty of challenges, including persisting corruption and outdated infrastructure, remain. The big picture, however, is one of potential. It doesn’t take a clairvoyant to see that.

The March 2017 digital edition will be uploaded shortly

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