Primarily an agricultural country, Burma has always lagged behind in industrial production. The colonial authorities discouraged industrialization and encouraged only the production of raw materials, although there were some industrial developments towards the end of the colonial period.
World War II caused serious damage to the country's infant industries. It took a long time for production to catch up to pre-war levels, and in 1952, the government established the Industrial Development Corporation to stimulate industrial production. The country's effort to industrialize without foreign assistance was successful to a certain extent in areas such as petroleum and natural gas production. In the 1960s, under military rule, many industries were nationalized. Since the 1970s, there has been a steady growth in industrial production. In 1988, the government liberalized the economy, abandoned state socialism, and encouraged foreign investment.
Much of the industrial sector, especially heavy industries, is controlled by the government, although the share of private enterprise in this area is steadily growing. Industry accounts for only about 11 percent of the GDP and employs only 10 percent of the total labor force. Most of the industries center around agricultural processing, textiles, footwear, wood and wood products, copper, tin, tungsten, iron, construction materials, petroleum and natural gas, pharmaceuticals, and fertilizers. Cars and television sets are also assembled in the country. In 1999, the annual rate of growth of industries was estimated at 4 percent. The heavy losses of the public sector factories and industries are in part responsible for slow industrial growth.
Pegu is the seat of most industrial activity. In addition, the government has opened 17 special industrial zones all over the country, 5 of which are in the Rangoon area. Foreign investment is encouraged in 2 of the zones. While these zones are not fully developed, several factories and plants manufacturing clothing, consumer goods , and iron and steel materials are already operating there.