YANGON/TOKYO -- Japanese retail group Aeon said Tuesday it would build a large commercial facility in Yangon, the biggest city in Myanmar, with an investment of $180 million, marking its first market entry into the Southeast Asian nation.
The Aeon Mall shopping complex would be built on a 72,000 sq. meter site within 30 minutes' drive of central Yangon, Aeon said. Construction of the facility will begin in the first half of 2021 with the aim of opening in 2023.
The investment, which was approved by the Myanmar government in late July, will be made through a joint venture between Aeon and Shwe Taung Group, a local conglomerate. The venture will be 70% owned by Aeon Mall, part of the Aeon group, and 30% by Shwe Taung.
Aeon leads other big retailers around the world in investing in Southeast Asia. In Cambodia, which is comparable with Myanmar in terms of per capita gross domestic product of about $1,500, the company already operates two outlets and has decided to open another.
Encouraged by the strong performance of its outlets in Cambodia, Aeon will begin operating in Myanmar to "capture a dominant market position in the absence of rivals," a company executive said.
Shwe Taung Real Estate also released a statement by its CEO Sandar Htun on Tuesday. "We are excited to enter into this strategic joint venture with Aeon Mall to bring fresher and more innovative retail and lifestyle concepts to Myanmar," she said.
Shwe Taung is a major conglomerate in Myanmar, primarily engaged in real estate and construction and with a workforce of 6,800 as of 2018. It has operated six shopping centers in Myanmar since 1999, including the Junction City shopping complex that opened in central Yangon in 2017.
The group has also formed alliances with foreign businesses including Japan's Tokio Marine and Nichido Fire Insurance and Nippon Life Insurance.
The location for the new mall is in Dagon Seikkan, where Shwe Taung has been promoting new urban development since 2014. It is also near to the Thilawa Special Economic Zone.
In 2018, the Myanmar's government implemented a regulatory reforms allowing foreign companies to enter the retail and wholesale sectors in return for investment beyond set levels, paving the way for Aeon Mall's entry into the market. Siam Makro of Charoen Pokphand Group, a leading Thai conglomerate, opened Makro Myanmar, a warehouse-type supermarket, in Yangon in April.
Southeast Asia is a big contributor to Aeon's group earnings. With five facilities in Vietnam and two each in Cambodia and Indonesia, Aeon Mall logged an operating profit of 34.7 billion yen ($372.11 million) from them in the year ended in February, contributing to 15% of the group's profit. The figure was much larger than the 9 billion yen chalked up from its China operations.
In Japan's mature retail market, Aeon is shifting its strategic priority to refurbishing existing stores instead of opening of new outlets.
But the company is accelerating the establishment of new stores overseas. It plans to increase the number of outlets to 70 in China and other countries in the year through February 2026, from 30 at present.
Though an end to the novel coronavirus pandemic is not yet in sight, Yasutsugu Iwamura, president of Aeon Mall, said, "We will not change the plan."
The number of citizens infected with the new coronavirus in Myanmar -- about 350 -- is lower than in neighboring countries.
Modern retailers, such as supermarkets and shopping centers, are estimated to account for 10% to 20% of the retail industry in Myanmar currently. Research group Myanmar Survey Research said commercial facilities were in strong demand among young people and families seeking places of entertainment and relaxation.
The World Bank forecast that Myanmar's economic growth will slow to 0.5% in fiscal 2019 through September 2020, but will pick up to 7.2% in fiscal 2020.