Vol 2, Issue 25

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Myanmar Business Today is Myanmar’s first and the only bilingual (English-Myanmar) business newspaper, distributed in both Myanmar and Thailand. MBT covers a range of news encompassing local business stories, special reports and in-depth analysis focusing on Myanmar’s nascent economy, investment and finance, business opportunities, foreign trade, property and real estate, automobile, among others. MBT also provides detailed coverage of regional (ASEAN) and international business stories. For more information please visit www.mmbiztoday.com.
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Vol 2, Issue 25

  1. 1. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com mmbiztoday.com June 26-July 2, 2014| Vol 2, Issue 25MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL Myanmar Summary Myanmar Summary Contd. P 9... Contd. P 9... Inside MBT Prescribesbroad-basedpolicyreformsandbettereconomicmanagement Tom Stayner T he International Monetary Fund (IMF) has revised its forecast for Myanmar’s economic outlook for this country’s rapid economic expansion to continue sures. The Paris-based lender said Myanmar’s economic expansion will reach 8.5 percent this year, after gross domestic produc- tion (GDP) rose to 8.25 percent over the 2013-14 March. In January, the IMF predicted Myanmar’s eco- nomic growth rate would steady at 7.7 percent by March 2015. IMF Resident Repre- Ching Wong said increas- es in gas and agricultural production have helped Myanmar build on the country’s economic mo- mentum. growth average of 7-8 percent is sustainable for a developing country if they can maintain their economic stability and manage macroeconomic ing Wong told Myanmar Business Today. pected to remain at 6.5 from foreign investments and local production con- tinues to increase. Myanmar mission chief, Matt Davies, warned that without proper economic management Myanmar’s favorable economic out- look could be undercut. demand-side pressures the still-infant macro- economic management tjynfjynfqdkif&maiGaMu; &efykHaiGtzGJUtpnf; (IMF) rS May Soe San Ia K750 million ($767,000) renova- tion to its embankment and shores this year thanks to a grant from the Shan State government. The regional govern- ment received K1.5 billion ($1.5 million) from fees collected over the past year from the visitors to the lake. U Win Myint, Inntha Ethnic Minister of Shan will be granted to a tender winner [who will carry out the project]. The State Finance Ministry will dis- burse the fund in four- In the past the military collected the foreign en- try fee charged to visit the lake but locals were unaware of how much money was being used tives elected in 2011 have established controls over the proceeds. To increase revenue from the lake the price per foreign entry visit, for the almost 150,000 peo- ple who visit the lake each year, was doubled from $5 (K5,000) to $10 in last October. from recent deforestation with silt deposits and un- forming deposits in the lake. rnfjzpfaMumif;&Srf;jynfe,ftpdk;& A man pushes a cart past shipping containers stacked at a shipping terminal in Yangon. Myanmar’s GDP will grow 8.5 percent this year, the IMF said. DarioPignatelli/Bloomberg Government to Impose ‘Property Tax’ to P-6 Export Strategy Draft Complete, Awaits Parliamentary Approval P-7
  2. 2. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com 2LOCAL BIZ MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL Board of Editors Editor-in-Chief - Sherpa Hossainy Email - sherpa.hossainy@gmail.com Ph - 09 42 110 8150 Deputy Editor - Aundrea Montaño Email - aundrea.montano@gmail.com Editor-in-Charge - Wai Linn Kyaw Email - linnkhant18@gmail.com Ph - 09 40 157 9090 Regional Editor - Tom Stayner International Editor - David Ross Reporters & Contributors Htun Htun Minn, May Soe San, Kyaw Min, Wai Linn Kyaw, Aye Myat, Aung Phyo, Zwe Wai, Phyo Thu, David Mayes, Sherpa Hossainy, Aundrea Montaño, Tom Stayner, David Ross Art & Design Zarni Min Naing (Circle) Email - zarni.circle@gmail.com Ph - 09 7310 5793 Ko Naing Email - nzlinn.13@gmail.com Ph - 09 730 38114 DTP May Su Hlaing Translators Wai Linn Kyaw, Phyu Maung, Bone Pyae Sone, Aye Chan Wynn Advertising Seint Seint Aye, Moe Hsann Pann, Htet Wai Yan, Zin Wai Oo, Nay Lin Htike Advertising Hotline - 09 420 237 625, 09 4211 567 05, 09 31 450 345, 09 250 411 911, 09 2500 18646 Email - sales.mbtweekly@gmail.com Managing Director Prasert Lekavanichkajorn pkajorn@hotmail.com 09421149720 Publisher U Myo Oo (04622) No. 1A-3, Myintha 11th Street, South Okkalapa Township, Yangon. Tel: 951-850 0763, Fax: 951-8603288 ext: 007 Shwe Naing Ngan Printing (04193) Printing Subscription & Circulation Aung Khin Sint - aksint2008@gmail.com 09 20 435 59 Nilar Myint - manilarmyint76@gmail.com 09 4210 855 11 Khaing Zaw Hnin - snowkz34@gmail.com 09 4211 30133 Govt invites consultants to help design new postal services The Ministry of Communications and Information Technology has invited Expressions of Interest (EoI) designing a new postal service policy and drafting a new postal law, the ministry said in an announcement. The EoI should be sent to the ministry by June 30. CIMB bullish about Myanmar banking licence to get a licence in Myanmar, Nazir Razak, group chief executive of CIMB Group, told Thai media. Myanmar is expected to grant as many as 10 licences to foreign banks to operate their branches in the country. CIMB 17 years. Razak said the bank is also eyeing presence in every market in the ASEAN region by 2015 and looks to expand beyond the region into Australia and China. August and hopes to get a licence to operate in Vietnam this year. Yangon stops issuing taxi licences due to heavy the commercial city, local media reported the Regional Transport Minister as saying. There are about 80,000 registered with the local authority. Myanmar to adopt new monetary policy to The government will introduce a new monetary policy Bank Deputy Governor Khin Saw Oo said while speak- risen to 5.76 percent in April 2014, from 5.53 percent and 1.48 percent respectively in the same month in 2013 and 2012. The monetary policy will include allo- cating the government budget with World Bank’s as- banks, she explained. Myanmar invites tenders to build Thilawa ports The Myanmar Ports Authority has announced eight construction tenders to construct a general cargo port and a container loading dock using Japanese develop- ment aid. The port will be part of the Thilawa Special gon, and building is due to start this year. The Ministry of Transport has received $205 million loan from Ja- pan to enlarge the Thilawa port. Canadian mining company to be sued in My- anmar Mine in northwestern Myanmar, local media reported. The company broke the law and it did not meet interna- tional standards when it was running the project, Thein Than Oo of Network was quoted as saying. Ivanhoe has been under intense scrutiny by Canadian civil society groups for more than 15 years, following widespread allegations that it has been complicit in human rights violations and environmental degradation in several of the world’s most impoverished nations. Mining Watch Canada detailed allegations of Ivanhoe’s misconduct published in 2000. Govt banks to pay foreign exchange licence fee State-owned banks will have to pay foreign exchange local media reported, referring to central bank sources. The central bank has imposed this requirement to cre- operations later this year. Myanmar Summary CIMB CIMB Taxi City Taxi
  3. 3. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com 3
  4. 4. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 4 Myanmar Summary T he Myanmar Gov- ernment – along with the regions and states – is set to im- pose a new ‘property tax’ to curb skyrocketing land prices, a minister said. The current property taxation system works through a levy collected on all residents living on land or in a building ac- cording to a resident’s location and income. Re- gional and State govern- ments currently levy the tax for use in regional de- velopments. When a property chang- es hands in Myanmar, ownership must be reg- istered with the Urban Department and tax paid to the City Development some real-estate agencies do not make legal con- tracts, instead they buy lands with ‘general power’ or ‘special power’ –which allow for sale without contract – the resulting failure to collect tax fur- bought lots of lands. So, we will study the inter- national taxation system and techniques to control those who trade lands and manipulate the land - ion Minister for the Presi- system in discussion with regional and state par- liament members, busi- nessmen and authorities from relevant regions and Htun Htun Min & Phyo Thu Reforms to the 2012 address this problem, - ing, renting, pawning, ex- changing and transferring of farmland. But did not include the collection of tax on property sales. To control land prices, government set the land price per foot in 2013. Prices for downtown reached K150,000 ($150) to K300,000 ($300), but actual prices are much higher, more than dou- ble in some rural areas of The Department of In- ternal Revenues plans to revise land price per foot with current prices and halt speculative buying. Thin, former professor of law and parliament mem- ber, cautioned against government intervention saying price hikes could not be avoided through simple law enforcement. - able laws and also watch by forming the relevant - mediate control over the land price. To control the land prices, the govern- ment must explore more - of Economics, said. real estate. This is due to - The rise in the price of land has caused increases (Property Tax)}} tcGefaumufpepfudk azmfaqmif (Property Tax) in the price of goods due to high investment costs for local and foreign manu- foreign investment owing to the high prices of land, owning or possessing land, member of the Parliament Phyo Min Thein said. To control the land prices, government set the land price per foot in 2013. Prices for downtown townships in Yangon reached K150,000 ($150) to K300,000 ($300), but actual prices are much higher, more than double in some rural areas of Yangon. WaiLinnKyaw
  5. 5. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 5 Myanmar Summary A s rapid infrastruc- ture development continues to in- crease the demand for cement, builders are pri- marily utilising imported cement due to the low quality of domestically produced cement, indus- try insiders say. When compared to im- ported cement, locally manufactured cement is lower in terms of quality but pricier because of the low volume of production, making it less desirable. This phenomenon is the result of sanctions that have caused Chinese ma- chines and spare parts to replace German machines in cement manufacturing factories, said U Ko Ko Thwe, owner of Taw Win with a plethora of un- skilled workers, who have little or no knowledge of ity of cement is unsafe Htun Htun Minn and there needs to be improvement in the man- agement and technical Myanmar Business To- day. cement is used in making bricks and building roads. In 2012, Myanmar used about 4 million tonnes of cement. It’s predicted that cement will increase by 10 percent, Kan Trakul- hoon, CEO of Thailand’s largest cement producer Siam Cement Group, said earlier. Currently, there are three state-owned and 12 private cement factories, which have the capac- ity to produce 4.02 mil- lion tonnes of cement per year. Myanmar Invest- ment Commission has given the go ahead to nine new cement factories to be constructed by 2015. velopment, cement pro- duction rate [is expected to] be up to 10.53 mil- Minister for Industry U Maung Myint. construction sector, for- eign investors will play a major role in supply- ing the materials to ac- complish infrastructure projects such as building roads, harbours, hotels he added. The minister said the in- vestors have to take into account the hazardous ef- fects on health and social welfare of the chemical smoke released from us- ing raw materials related to cement manufacturing. There also needs to be innovation so that the energy consumption rate carbon production are re- duced, he added. SCG said it is going to establish a $388-million cement factory near Maw- lamyine, Mon state, while Indonesia’s state-run Se- men Indonesia said it will build a $200-million ce- ment factory this year. building cement factories in Mandalay region, and Mon, Kayin and Shan states. Myanmar imports ce- ment mainly from Thai- land and partly from In- donesia, Malaysia and Bangladesh. Myanmar Summary A total of 30,436 foreigners visited Shwedagon pa- goda in May this year, according to the pagoda’s Board of Trustees. During the period, visitors from Thailand topped the table with 6,700 visitors, followed by the Chinese with about 3,000 and South Koreans with 2,200. On an average, 980 foreigners visited per day and the entrance fee for foreign visitors is $8 – meaning a $240,000 in tourism receipts for Myanmar. In April, over 31,000 tourists visited the pagoda, with 5,865 Thais visiting the top tourist attraction in the Southeast Asian country. Shwedagon Pagoda is a repository of the best in My- anmar heritage – architecture, sculpture and arts. It consists of hundreds of colourful temples, stupas and most 2,500 years. Aung Phyo terms of cement quality in the local industry. Thailand’s SCG said it is going to establish a $388-million cement factory near Mawlamyine, Mon state, while Indonesia’s state-run Semen Indonesia said it will build a $200-million cement factory this year. KerekWongsa/Reuters
  6. 6. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 6 T he increase in My- anmar’s imports has presented the need to deploy mobile teams to inspect cargo ar- riving through the coun- try’s air and waterways for illegal goods. Union Minister U Win Myint said authorities will organise mobile teams to inspect cargo being car- ried into Myanmar via the country’s air and water ways, to verify whether it’s legal or not. Usually, the Mobile Team examines goods being couriered across Myanmar’s borders in ve- hicles using the country’s motorways. Union Minister U Win six-month test period has been arranged to sur- vey foreign goods, being imported across Myan- mar’s national boarders, through alternative trans- portation routes. Commerce and Trade said over 80 percent of Htun Htun Minn Myanmar’s overseas shipping carrier services. - cal cargo will have to be measured simultaneously According to interna- tional rules, the transpor- tation checking process starts when cargo con- tainers are loaded from ships to ports in Myanmar – vessels carrying foreign Union of Myanmar Fed- eration of Chambers of Commerce and Industry (UMFCCI) Joint Secre- changes to Myanmar’s cargo management are needed to develop the countries industrial sec- tor. laws for our business- men, there is no way to hide and protect illegal Finance Union Minster more border gates would help Myanmar better deal with illegal imports com- ing into the country. - erates seven international cargo ports checking the arrival of goods being transported into Myan- mar – tax income has increased by 20 percent from these border gates. Commerce and Trade said adding water and air transportation routes to the country’s import checklists will increase state income, giving the revenue to spend in other sectors. through water route arranged to purchase mo- bile X-ray machines hop- ing to get more believable said. State trade reached $24.97 billion in the 2013- from $18.4 billion in the Illegal border trade has also dropped by over 20 percent in Myanmar over Myanmar Summary Containers at Asia World Port in Yangon. SherpaHossainy MobileTeam oversea oversea and air cargo the past year, according to A t the Myanmar Business Forum hosted by KPMG recently, Shinsuke Goto, director of Daiwa Securi- ties Group Inc – the com- pany providing technical assistance to the Myan- mar government to es- tablish the country’s stock exchange – revealed the draft listing requirements for companies seeking to list their IPO when the exchange becomes opera- tional next year. Companies seeking to required to demonstrate two years or show K10 billion ($10 million) in market capitalisation, have a minimum capital amount of K500 million ($511,000), and have a minimum of 100 share- holders where the minor- ity must account for at least 10 percent of the to- Aundrea Montaño tal equity. The corporate listing requirements are low in order to accommo- date smaller businesses, Shinsuke said. be operational by October 2015; however, many an- alysts have doubts about the government’s ability to establish policy and a - vironment in such a short time frame. In an attempt to increase assure the au- dience, Shinsuke Goto in the process and noted that the Securities and Exchange Commission (SEC) is expected to be formed by mid-July and SEC rules are expected to be revealed in the next couple months. In addition to the for- mal listing requirements, much attention is being paid to the challenges companies face in prepar- ing to establish an IPO. who are considering a listing on the exchange is the right choice and at the right time given their stage of development and Fujii, managing partner of KPMG in Myanmar. Companies preparing assess and institute in- ternationally recognised standards for accounting, - nancial reporting, trans- parency and strategic planning. Instituting strong cor- porate governance re- - cult for many businesses deemed desirable for listing on the exchange. These companies face immense challenges in terms of human resource capacity, information technology, low govern- ment capacity, and lack of knowledge on behalf of the general public. Additionally, the estab- lishment of the ASEAN Economic Community (AEC) and regional capi- tal integration will chal- competition for the nas- cent exchange. Companies with the greatest potential for list- from banking, agricul- ture, consumer products, infrastructure, construc- tion, manufacturing, and real estate sectors, said Fujii. Myanmar currently has an over the counter market (OTC) called the Myanmar Securities Ex- change Centre, which has two companies with tradable shares, and is ex- pected to be replaced by While no announce- ment has been made if foreign companies will be much emphasis is being placed on readying local companies. Five companies are ex- pected to be listed when - ber of 2015. Myanmar Summary Shinsuke Goto, director of Daiwa Securities Group Inc. KPMG KPMG
  7. 7. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com 7LOCAL BIZ Myanmar Summary M yanmar’s long- awaited Na- tional Export Strategy (NES) has been drafted and is awaiting parliamentary approv- al, said Daw Thida Win the Department of Export Development. The drafting of the plan, which started in 2012, is a response to the need to in- crease exports by expand- ing market access for local producers and products, and will help Myanmar’s rapid growth continue to gain momentum, said strategy have been fully drafted. Once we get con- - ment we can implement Advisor to the Myanmar Beans, Pulses and Sesame Entrepreneurs Associa- tion, U Soe Win Myint, said the NES includes strategies targeting the country’s ag- riculture, rubber, textiles, tourism and marine prod- uct industries. and pulse exports were the main export sector. Once one NES is ap- proved, it’s going to be a challenge to break into the market and access the technology needed to re- Win Myint said. The German Federal Enterprise for Interna- tional Cooperation (GIZ) Phyo Thu provided technical assis- tance to authorities and local entrepreneurs draft- ing the NES. GIZ policy advisor, Dr - ing international organi- sations other than GIZ in the future will help the NES manage export strat- egies more closely in each sector. GIZ transfers its opera- tion to the International The International Trade Centre has already be- gun implementing NES schemes targeting the travel and tourism indus- try in Kayah state. Secretary of Myanmar Rubber Plantation and Production Association, U Khaing Myint, said the quality, quantity and op- eration times of exports must be supervised for the national strategy to succeed. approves the NES, there are many processes which said. udef; (NES) NES NES tpnf; (GIZ) rS enf;ynmydkif; ]]GIZ NES Sector GIZ ITC GIZ T he local Fish Food Producers Asso- ciation announced that it has decided to prawn rather than man- ufacturing locally, re- sponding to a hike in local prices. Increasing demand for from China has driven up the past year. In June 2013, the price of one viss (1.6 kg) of sesame, which is used around K1,200-1,400 ($1.2-$1.4) but this year has increased to K1,450- 1,500 ($1.4-$1.5). - eries import sesame and bean from India, Argen- tina, Brazil and America food will support Myan- association. With weak government assistance, the number of entrepreneurs in the livestock industry has de- creased, directly impact- he added. for the price hike. Trans- portation costs and the de- mand from China are part - stock businessman. Since the new govern- ment came to power, the May Soe San - terial exports to China - ly, which has caused the price hikes, the entrepre- neur criticised. Myanmar Summary SoeZeyaTun/Reuters
  8. 8. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 8 Myanmar Summary A $1 per gallon dif- ference in the price of jet fuel between Myanmar and its neigh- bours is causing domestic and international airlines to increasingly look out- side for cheaper prices. The issue of fuel costs is considered to be a major issue in the competitive- ness of Myanmar domes- tic airlines. even to Thailand, one plane uses over 10,000 gallons of fuel. Domestic airplane fuel is a dollar more expensive than for- eign prices, which causes refuelling in Myanmar to Mandalay Airlines Chair- said. Phyu Thit Lwin this. Therefore, we refuel he said. Many airlines have pe- titioned the government to remedy this disparity in prices, with the govern- ment agreeing to address the income imbalance. In May, the Myanma Petroleum Products En- terprise (MPPE) invited foreign companies to form a joint venture to improve its jet fuel distri- bution system. The MPPE, which is re- sponsible for carrying out the retail and wholesale distribution of petroleum products under the Min- istry of Energy (MOE), currently distributes about 127 million litres of jet fuel a year at 11 air- ports around Myanmar, - dalay and Nay Pyi Taw. - ternational Airport. Myanmar Summary B ordertradebetween Myanmar and most of its neighbours has slowed, according to the Department of Com- merce and Consumer Af- fairs (DCCA). Director of DCCA U Tay Za Aung Win said, remains normal but due to instabilities in other countries the trade has from Thailand have de- creased and trade has dwindled especially in During April-May, ex- ports through border crossings with Bangla- desh, China, India and Thailand increased by $116.97 million, while imports increased only $7.66 million compared with the same period last year, according to the is attributed to only the growth in Myanmar-Chi- na border trade. The coup in Thailand recently caused trade to be restricted to daylight hours at border crossings between Myanmar and Htun Htun Min Thailand, causing a fall in exchange of $12.9 million compared to the same time last year. of Department of Trade Thailand has now de- creased. We gained yearly increases in trade because of our easing of regula- tions, but have not in- creased the value of those commodities. our exports we will be in A border row with In- dia and also its recently- concluded general election have also caused a fall in trade between the two na- tions. Frequent road and bridge blockages have re- duced trade value by $8.02 million, DCCA data shows. Trade with Bangladesh, worth only $1.96 million over the April-May pe- riod, has also fallen from its high in 2012 due to se- curity and border issues between the two nations. In April and May, bor- der trade between China and Thailand was worth $571.557 million and $69.109 million respec- tively. Myanmar Summary T he government up to K5 million ($5,000) to breeders in- terested in entering the aquaculture industry in a bid to counteract the industry and collapse in catch-sizes due to over The loan can now be - tive costs of brick or soil upwards of K10 million, May Soe San & Phyu Thit Lwin and is widely seen as an attempt to boost domes- - bers. The fall in salt and combined with issues in transportation and pro- export revenues fall from a high of $650 million to $536 million in 2013-14. This falls short of the exports from the Myan- mar Fishery Federation (MFF). but since then tonnage has fallen every year. This is because the amount we can catch at sea has of the MFF, Daw Toe Nandar Tin, said. - time waters possess we require high quality products for export and we currently don’t have Breeders can obtain the loan through an applica- tion to the ministry with the interest and charges totaling K1.3 million ($1,300). by the Myanmar gov- ernment are expected to boost the country’s trou- shifting it towards man- aged catch farms. The government also moved to protect the do- this year, banning all for- - sels from its waters, in a bid to stop rampant ille- This move may see do- - crease; however, there re- main further issues in the delivery of fresh or frozen - gon’s industrial zones due to power outages. WaiLinnKyaw A Myanmar Airways International (MAI) aircraft refuels at Yangon International Airport. SherpaHossainy
  9. 9. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 9 Myanmar Summary Aung Hla Tun M yanmar’s earnings from natural gas ex- - cal year as more of the resource was consumed domestically but shipments of greater vol- umes to China as a new pipeline comes up to speed are expected to boost earnings this year. Myanmar earned $3.299 bil- lion from the export of gas during the 2013-14 (April/ $3.666 billion in 2012-13 and compared to $3.502 billion in 2011-2012 and $580 million in 2003-2004, according to data released by the state-run Cen- tral Statistical Organisation (CSO). Gas exports are a crucial rev- enue source for the Southeast Asian nation, accounting for nearly 30 percent of its total exports of $11.204 billion in the Win Maw, a senior ener- - cal year was due to the alloca- tion of more gas for domestic consumption after redrawing the agreement with Thailand’s PTT, previously the sole buyer the Mottama Sea in southern Myanmar. the gas was exported during 2013-2014 to energy-hungry neighbour China but more will be exported this year as a new to capacity. China through the 793 km-long cross-country pipeline around the end of last year, but the amount was rather small since it was not technically feasible to send much through a new pipe- a new pipeline with gas gradu- ally and it takes about a year to this year, we’ll be able to trans- port to China through the pipe- Domestic power consump- tion in Myanmar has been ris- ing steeply as the country has undertaken economic reforms since a quasi-military govern- rule. According to CSO data, total generation of electric power 13.048 billion kwh, up from 10.964 billion kwh in the 2012- kwh in 2011-2012. Generation by gas was 2.794 - cal, up from 2.377 billion kwh in 2012-13 and 1.763 billion kwh in 2011-2012. - mestic demand for electricity is growing speedily, but we have prepared to increase generation Close supervision needs to be paid to infrastruc- ture to ensure the coun- try’s modernisation is properly regulated, he added. well placed to build on its recent economic re- forms and embark on an extended period of rapid growth, emulating its re- gional peers. is sustainable and in- clusive requires deci- sive implementation of a broad range of policies Davies said. After decades of mis- management under the repressive junta, the new regime headed by Presi- dent U Thein Sein has introduced nationwide economic and political reforms since coming to power in 2011. According to the IMF, - pected to remain consist- ent with the government’s target – in large part due telecommunications licences. expects the country’s strong economic outlook to increase international investment interest in the developing nation. communications, agricul- ture and mining sector can increase investment country’s trade opportuni- Withmoreforeignbanks set to enter the country’s economic framework, the rapid economic growth sector is expected to con- to meet the demand without af- - - tric Power told Reuters. Reuters tinue. Davies said the IMF will work closely with authori- ties to ensure expansion demands on Myanmar’s macroeconomic policy don’t outweigh the coun- try’s supervision capacity. - ernised prudential regu- lations for all banks as soon as possible will lay the foundation for the development of a sound IMF IMF Matt Davis Central Statistical Organization The Chinese gas pipeline in Rakhine state. KyawMin
  10. 10. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 10 Myanmar Summary T he Myanmar Rub- ber Planters and Manufacturers As- sociation (MRPMA) says Japan is the next logical step in the export of My- anmar’s rubber and latex products. Amidst the falling price of rubber, gross national rubber exports are esti- mated to reach 100,000 tonnes by the end of this - pean and global economic crisis, as well as ample Chinese stockpiles are Phyo Thu on rubber prices. - duction has increased, exports have not reached Khing Myint, secretary of the MRPMA. must increase the quanti- ty and quality of our rub- ber. At the moment we have a low quality prod- uct going for $400-500 less per tonne compared he said. The current rubber har- vest of 500,000 acres – planted mainly in Mon and Kayin state and Than- intharyi region – have yielded latex harvests ris- ing to 160,000 tonnes this year. Current plans for a new export strategy have been it will boost rubber ex- ports, which last year fell 12,000 tonnes short of the 95,000-tonne target. Myanmar Summary D elays are expected in construction of as import permits from the Myanmar Investment Commission (MIC) for the required machinery have not been forthcoming. - Chosun Korea Co and signed a deal to produce electricity from waste at Dawei Chaung and Thein- - ary. - ered import permits, so we are unable to start. As soon as we get the permits we will be able to begin - partment of Pollution Phyu Thit Lwin Control and Cleansing at A total of $200 million will be spent on the con- struction and operation of the generator facility, construction is expected to take two years and test- ing an additional three months. When fully operational it is expected the gen- erators will produce 45.4 megawatts (MW), with electricity to be sold to ($0.15) per unit, largely for industrial use. Further discussion as from the 25-year deal will the companies involved. with foreign experts to ensure smoke and waste water from the generators is least harmful to the en- Mon, executive director of said. Myanmar Summary T he joint secretary of Union of Myan- mar Federation of Chambers of Commerce and Industry (UMFCCI) U Myo Thant says there is growing interest from Vi- etnamese entrepreneurs in the Myanmar gem in- dustry. Vietnamese business- men came to the Myan- mar Gems Emporium held from May 26 to June 7 to seek investment op- portunities in the sector. jewellery after purchas- ing Myanmar jade lots and manufacturing value- Thant said. Kyaw Min The increased invest- ment interest in the gem industry comes as more Vietnamese entrepre- neurs try to penetrate Myanmar’s consumer market. Joint Secretary U Than Aung Kyaw said the food industry is another key sector being eyed by Eu- ropean and Asian coun- tries as a promising in- vestment opportunity. The 2014 Vietnam-My- anmar Trade and Tour- ism Fair will be held from June 26-30 at Tatmadaw The fair will feature over 80 Vietnamese busi- nesses in the foods, plas- tic and electronic items sector in nearly 100 stalls. UMFCCI d Zeya & Associates Co.,Ltd BOT MIC &aMumif; YCDC DimasArdian/Bloomberg WMC SoeZeyaTun/Reuters
  11. 11. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 11 Myanmar Summary M y a n m a r ’ s e m e r g e n c e in the last 24 months as Southeast Asia’s most exciting business opportunity has rarely been out of the press. It has a large, youthful population, a strategically advantageous geographical location within the ASEAN community and, most importantly following decades of authoritarian rule, a renewed desire to undertake the political and economic reforms necessary to position itself as a key economy in the region. economy, one of the most important building blocks for Myanmar’s economic development will be access to electricity. Without power, Myanmar’s industry will not reach its full potential. In this article we outline some of the reasons why Myanmar’s power sector has attracted the interest of the international and provide an overview of the key challenges that the power sector is facing. Opportunities Strong demand and potential growth Presently, only 30 percent of Myanmar’s population have access to electricity (with that percentage decreasing to around 6 percent in rural areas) and there were demonstrations last year power cuts. Power cuts and brown-outs are an unfortunate feature of daily life, as anyone who has visited the city this year will be aware. The power sector is therefore a top priority for the government, and the latest announced goal is to increase capacity to 20,000MW by the year 2030 – a monumental plan given the current installed capacity of only 4,000MW. The government also plans to revise the existing electricity law (dating from 1984, it Nathan Dodd & Ben Thompson was enacted during the years of isolation), and is working with the Asian Development Bank to understand the scope of this challenging task. The government is also in the process of drafting a new energy policy, through the National Energy Management Committee. In terms of fuel sources, have seen the most initial activity. The 120MW Ahlone power project, being developed by Toyo Thai, is one of the most progressedpowerprojects involving international sponsors, with 80MW already being dispatched. under development include a 500MW gas- Thakayta province, being developed by a South Korean consortium, and three locally developed power projects of 50MW each. Myanmar also has potential of about 100,000MW, with around 40,000MW of hydropower having so possible development. have their own challenges, however, due to seasonality of power resettlement issues. The distance of the hydropower resource from the main demand also an issue, with of the transmission network required to avoid substantial transmission losses. As such, there is a recognition by the government that hydropower (which currently accounts for the bulk of the country’s base- load) may be better suited to peak load supply, with thermal power capacity being stepped up to provide base-load. Other renewables could role, particularly micro power projects for smaller areas. Suitable sites for solar and biomass power projects have been a successful renewables sector typically requires a solid underlying regulatory framework, which Myanmar does not for example. Government funds limited markets, and indeed some more developed markets, government funds are currently over- stretched. There is simply not the cash available in the public purse to make the substantial investments required to upgrade Myanmar’s power infrastructure in order to keep pace with its economic development. While government-to- government lending term gap, the private sector is going to have a injecting the necessary capital, and that will be by means of both private company investment as well as international bank funding. The most likely form of funding for the power sector is by multilaterals or export credit agencies. The question remains however, how great is the commercial lender appetite to provide project Keen interest from international banking sector In spite of the challenges, there is relatively strong interest from the international lending community in Myanmar; the challenge is to convert this interest into debt funding for suitable projects. Myanmar presents a new frontier market in the Southeast Asia region for the international banks, especially as markets such as Thailand and the Philippines are increasingly dominated by strong local banks. The international banks know that the lender that takes a leading role in the when the sector expands. Many of the key regional and international project establishedrepresentative number of them now have a clear mandate to lend – provided it is to the right project. movers The same early mover advantage is being pursued even more aggressively by international sponsors seeking to gain recognition with the various governmental and local players in the market, which is going to be key in getting deals done in Myanmar. Some companies are more cautious than others. Some will wait for opportunities to invest by acquiring shares in projects that the more bullish early movers have developed. Chinese, Japanese, South Korean, Thai and Singaporean companies are looking at this market. China has dominated investment in Myanmar in recent years, particularly for cross-border hydropower schemes. Although Myanmar appears to want to loosen its reliance on its powerful neighbour, Chinese investment Through institutions such as Japan International Cooperation Agency (JICA), the world’s largest bilateral aid agency, Japan has been a key provider of development building assistance to Myanmar over the last 12 months, leaving the Japanese well-positioned with the government. The South Koreans have also been key investors in the ASEAN region in recent years and are similarlyintentongaining a foothold in Myanmar. The Korean Development Bank is showing early interest, as have a number of South Korean power at a government-to- government level, we are not seeing the same level of investment as that Thailand has a long history with Myanmar and, although geographically close, the relationship between the countries is also tinged with a healthy rivalry. Thailand’s power sector is, however, one of the success stories of South-East Asia over the last 20 years. With Thai investment-starved power sector. WaiLinnKyaw “ The power sector is a top priority for the government, and the latest announced goal is to increase capacity to 20,000MW by the year 2030 – a monumental plan given the current installed capacity of only 4,000MW.”
  12. 12. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com LOCAL BIZ 12 eager to follow Thailand’s increasinglyinternationally focused sponsors into the Myanmar market, the opportunities are there and learn from the Thai experience. Singapore, as centre, is home to some ambitious developers and is also likely to play a key role, not least due to its favourable tax treaty with Myanmar. Multilateral/ Development funding assistance Given the risks involved and Myanmar’s early stage of development, multilateral and ECA development funding assistance is key. If there was ever a market that should attract development funding, Myanmar is that market. Institutions such as the World Bank, the IFC, and the Asian Development opportunities to provide development assistance to the country. Various high-ranking delegations from these institutions have visited the country over the last 12 months to pledge support, which will be essential in ensuring the transition of the power sector to a model that is bankable. Nathan Dodd and Ben Thompson are partners Myanmar Summary Myanmar Summary T he small and Me- dium Enterprise Development Bank (SMIDB) will contribute K1 billion ($1 million) in loans in each of Myan- mar’s seven states in a bid to support the countries’ local business sector, an The loans will be distrib- uted regionally through- out Myanmar at an in- terest rate of 8.5 percent over three years. SMIDB has already granted K20 billion ($20 million) with an 8.5 per- cent interest rate to SMEs throughout Myanmar this managing director of SMIDB, said the state loans will provide mone- tary support for the small and medium enterprises (SME) in the country. bursed this month, fol- lowing recommendations from representatives from the state and region- State-run SMIDB was established in 1996 and currently has 13 branches May Soe San in Myanmar. Daw Khin Thein, man- Kaung Manufacturing, said the comparatively by SMIDB will draw local businesses in Myanmar to the loans. She said SMIDB will provide bank loans of up to K150 million for a col- lateral worth K600 mil- lion, and when compared with other private banks the interest rate is cheap. The K1 billion state con- tributions from SMIDB will see small and me- dium enterprises become more competitive in My- anmar’s growing econo- my, she added. port provided through the regional loans can help increase the production capacity of local business- es in Myanmar, then the T he authorities will spend more than K1 billion ($1 million) to repair seven domestic airports in Myanmar in cal year, a Department of cial said. Since the process for improving 30 domestic airports began, 48 local and foreign companies have bid to handle the op- erations, she said on con- dition of anonymity. The repairs will include and installing security de- vices, she added. pair the runways. As rainy season has arrived we will prepare everything neces- sary to prevent airplane cial said. The airports to be re- paired are Thandwe Air- port in Rakhine state, Tachileik and Mae Sot Htun Htun Minn Airport in Shan state, Naung Mon Airport in port in Kayah state, Kalay Airport in Sagaing region and Koe Koe Island Air- Four foreign companies have also made proposals waddy International Air- port – set to become the largest airport in South- east Asia once complete. One of those four com- lected for the project in June. Thandwe Airport in Ngapali, Rakhine State. The small and Medium Enterprise Development Bank (SMIDB) will contribute K1 billion ($1 million) in loans in a bid to support small local businesses. the legal system. This Reuters. SMIDB SMEs UAung/Xinhua SherpaHossainy “ There is simply not the cash available in the public purse to make the substantial in- vestments required to up- grade Myanmar’s power infrastruc- ture in order to keep pace with its economic development.”
  13. 13. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com REGIONAL BIZ 13 Myanmar Summary Myanmar Summary CBritain last Monday focused on moving the relationship beyond the the past and signing more than $30 billion of deals. Britain’s relations withChinatookanosedive in 2012 after Prime Minister David Cameron Tibetan spiritual leader whom Beijing says is a separatist. Ties have recovered somewhat since, and Cameron visited China last year. Tensions remain, however. Beijing warned visit not to lecture it on the subject if it wanted good economic ties, after Britain angered China in April when it criticized its human rights record in a report. Britain is expected to take the opportunity to announce it is easing some visa restrictions on Chinese citizens, a ANDREW OSBORN AND BEN BLANCHARD long-standing request from Beijing which has complained current arrangements are overly lengthy, bureaucratic and opaque. Cameron and will also meet the Queen. China’s ambassador to Britain on Friday robustly rejected local media reports that Beijing had threatened to not granted an audience. In speeches to Chinese and British business people, as well as think to make reassuring comments about slowing growth in China to try in the world’s second biggest economy. A Reuters poll in April forecast China’s economic growth could slow to 7.3 percent in the second quarter from a 18-month low of 7.4 percent in the previous quarter, with full-year growth of 7.3 percent in 2014, the weakest in 24 years. year’s 7.5 percent growth target, but analysts say the government needs to prevent growth from falling towards 7 percent, something that could fuel job losses and threaten social stability. DEALS Boosting business between Britain and China is one of the visit’s main aims. China views Britain as Europe’s most open economy and is in nuclear and high-speed rail projects. It also wants the government to ensure airport is expanded. Two large Chinese investment funds are expected to announce plans to plough’s new money into Britain during the trip. yuan trading hub and there may also be deals related to that. China has said the visit should yield business deals worth a total value of over $30 billion. Ahead of the trip, Vice Commerce Minister investment in Britain had jumped from $840 million in 2008 to $12.4 billion in 2013. import even more high- tech goods, services and Gao said. She said she hoped Britain would push Europe to lift curbs on exports of high-tech goods to China and said Beijing wanted British help to explore an EU- China free trade deal. Reuters T he Philippines said last Monday that China’s the disputed South China Sea threatened security and stability in the region, calling on all claimant states to halt construction activities that may raise tensions. Albert del Rosario, said he supported U.S. Assistant Secretary of State for East Asia Daniel Russel’s proposal for China and Southeast Asian states to get together for dialogue. moratorium in terms of activities that escalate told ANC Television let’s do that while we work on an expeditious conclusion of the code Del Rosario said China and other claimant states have been rushing construction activities in their respective claimed territories to expand, citing works in Fiery Cross Reef, Johnson South Reef, Gaven Reef, and Cuarteron Reef. their expansion agenda for the following reasons ... one is they want to do this before the conclusion of the code of conduct. They’re also trying to do this very quickly in anticipation of the handing down of the Southeast Asian states have been pressing China to conclude a Code of Conduct - a set of rules governing naval actions - for the South China Sea. Arbitral Court in The to explore and exploit resources under the U.N. the Sea. China has refused to participate in the case. Chinese Foreign Ministry spokeswoman had a right to do what it wanted on its islands in the South China Sea as they were Chinese territory, and criticised the Philippines for what it called Manila’s illegal occupation of some of the islands and construction work there. Philippines keep making further provocative moves, and one the other hand make thoughtless remarks about China’s appropriate moves within the scope of our China claims 90 percent of the South China Sea, believed to have huge oil-and-gas deposits and Brunei, Malaysia, the Philippines, Vietnam and Taiwan also have claims over the sea where about $5 trillion of ship-borne trade passes every year. DelRosariosaidChinese construction in the Spratlys was an attempt to alter the character of the features, converting reefs into islands to be able to increase maritime entitlements. China and Vietnam are also involved in an increasingly bitter spat over the operations of a Chinese oil rig in another part of the South China Sea, around the Paracel Islands. China has made Woody Island, which Beijing calls Sansha city, the hub of its operations on the Paracels, including building a port and airport facilities there. Reuters Manuel Mogato & Lara Murallos British Prime Minister David Cameron (L) and Chinese Premier Li Keqiang. NgHanGuan/Bloomberg A China Coast Guard ship, top, and a Philippine supply boat engage in a stand off as the Philippine boat attempts to reach Ayungin Shoal. JayDirecto/GettyImages Li Keqiang Li
  14. 14. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com REGIONAL BIZ 14 A worker rakes the pulped outer layers of arabica coffee berries as the waste pours. Bloomberg Cin India, the third- largest grower in Asia, will probably decline in six years after plentiful rains spurred bean development, an exporters’ group said. Shares of exporters gained in Mumbai. The harvest in the 12 months starting Oct. 1 is set to expand from 300,000 metric tons this year, Ramesh Rajah, Exporters Association, said without providing an estimate. While he expects an increase, the crop still faces the risk of pest attacks and reduced rainfall from a possible El Nino later this year, he said by phone on June 13. Swansy Afonso may boost shipments, expanding global supplies andpotentiallypressuring prices. Arabica futures abear market this month and have tumbled 20 percent from a two-year high in April after rains eased drought damage for plants in Brazil. Robusta percent from the highest level in 17 months in March. much better next year, specially for robusta, because rains have been Gurjer, a member and past chairman of the Karnataka Planters Association, said by phone June 12 from Bengaluru, formerly known as Bangalore. The group represents 650 growers from the state, which supplies about 70 percent of the nation’s crop. Total production may increase by 7 percent from the 280,000 tons that the planters’ association estimates for this year, Gurjer said. The robusta crop, which makes up 70 percent of the total, may expand by 15 percent, he said. El Nino Concern Karnataka received 9 to 75 percent more rain than the 50-year average from March to May, according to the India Meteorological Department. The monsoon from June to September, which supplies more than 70 percent of annual rainfall, will be below normal at 93 percent of the 50-year average because of the emergence of El Nino, the bureau said. While Rajah from the exporters’ association said a weak monsoon may hurt the crop, Gurjer of the planters’ group said the absence of heavy rain later in the year may be happen and the monsoon isn’t as vigorous as last year, the risk associated with a heavy monsoon explaining fewer cherries would be lost. Board cut its output forecast for this year to 311,500 tons in January from 347,000 tons at the start of the season, citing heavy rain in Karnataka in September and October. The board hasn’t updated its estimate. The crop was a record 318,200 tons last year, board data show. A weak monsoon might increase the incidence of the white stem borer pest in arabica plantations, according to Rajah. Brazilian Supplies much as 2.8 percent to 994 rupees in Mumbai trading, the biggest gain in more than a week, before trading at 986.35 exporter, climbed as much as 1.5 percent to 63.70 rupees. Arabica prices may drop by 10 percent to 15 percent in the next couple of months, while robusta may decline 5 percent to 10 percent, Rajah said. coming in better than expected and we are heading into the lean demand season as the summer months begin in Brazilian growers are facing less severe crop losses than estimated after showers reduced the impact of the worst dry spell in 50 years, Agriculture Minister Neri Geller said on June 2. Output this year may be 50.5 million bags, according to Mercon Group. That’s higher than the 49.5 million estimated by the U.S. government in May. S h i p m e n t s from India may fall in the second half because of the smaller crop and weaker prices, Rajah said. Exports in 2014 will drop by 5 percent to 10 percent from 312,756 tons a year earlier, he said, reiterating estimates made in April. Exports declined to 167,714 tons between Jan. 1 and June 10 from 168,089 tons a year earlier, board data show. Buyers from Italy, Russia and Germany accounted for about 40 percent of exports last year, the data showed. Robusta rose 0.1 percent to settle at $1,999 a ton while arabica fell 0.4 percent to $1.758 a pound on ICE Futures U.S. Myanmar Summary Myanmar Summary Premier Li Cwill hit its growth target of 7.5 percent this year, Chinese last Monday, adding the government was ready to adjust policy to make sure it does. Writing in Britain’s The Times newspaper on the the world’s second-largest economy was normal and not a problem. to grow at a proper rate, expected to be around downward pressure, China’s economy is moving on a steady course. We will continue to make anticipatory and moderate adjustments when necessary. We are well prepared to defuse various risks. We are growth target will be A Reuters poll in April forecast China’s economic growth could slow to 7.3 percent in the second quarter from a 18-month low of 7.4 percent in the previous quarter, with full-year growth of 7.3 percent in 2014, the weakest in 24 years. in achieving this year’s growth target although analysts say the government wants to prevent growth from falling towards 7 percent, as that could fuel job losses and threaten social stability. Reuters Andrew Osborn Bloomberg Ramesh Rajah rS ajym Arabica Li Keqiang Times Li
  15. 15. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com REGIONAL BIZ 15 Myanmar Summary Myanmar Summary nd A sia’s diesel demand is expected to grow this year at the second lowest rate since as slowing economies and subsidy cuts squeeze consumption and help build a surplus for which there are few markets. Demand in top regional consumers China, India and Indonesia is expected to remain stagnant or capacity is added in Asia and the Middle East, excess diesel is seen hitting an annual average of more than a million barrels per day (bpd) in 2014, according to one oil and gas consultancy. That means regional returns or cracks from processing crude into the fuel - already near 3-1/2- year lows - will remain slim, analysts said. Since diesel or gasoil accounts for nearly 40 percent of the typical Asian oil plant’s output, overall also be pressured and already slowing run rates. Asia’s surplus diesel would normally be shipped west but Europe is facing a glut as well, with diesel margins there holding at multi-year lows. this year is expected but growth will probably still fall short of the levels seen FGE. JANE CHUNG AND ALICE WOODHOUSE Asia’s diesel demand will grow slightly faster this year than in 2013, when it rose less than 1 percent - the lowest in 15 years, FGE said. Oil consultancy Wood Mackenzie (Woodmac) has lower numbers, forecasting diesel use in Asia to grow at 0.45 percent compared to average annual growth 3.9 percent. For the second quarter this year, Woodmac estimated Asian diesel demand 0.7 percent higher than last year, while forecasting growth in 2015 at 1.7 percent. This slow growth amid increasing capacity will result in a diesel surplus of around 1.2 million bpd this year, said Suresh Sivanandam, an analyst at Woodmac, with China’s diesel exports averaging around 90,000 bpd, nearly double from 2013. China is bringing on demand growth there drops to its slowest in decades, forcing Asia’s top consumer to turn region with supplies far in excess of demand. New plants in India and the Middle East are also contributing to diesel’s overhang, analysts said. Diesel is Asia’s most widely consumed fuel, used in everything from power generators and factories to trains and trucks. Given its broad applications, the product is often seen as an indicator of a country’s economic health. LITTLE ROOM There is some room but not a lot for Asian products to be soaked up elsewhere, said Amrita Sen, chief oil market analyst at Energy Aspects. move out of Asia ... but competition from other players such as the Middle East, Russia and the U.S. Given the excess supply, in South Korea and Japan which account for about a third of Asian middle distillates exports - have lowered crude runs slightly. may consider cutting run rates if the supply glut continues, but actually they have already trimmed by 30,000 bpd a source at a North Asian average operating rate from January to April this year was 80.7 percent, down from 83.1 percent during the same period last year, data from state- run Korea National Oil Corp (KNOC) showed. this year, South Korean processed less crude than last year amid a regional supply glut. PARING SUBSIDIES A gradual reduction of subsidies in India and Indonesia to bring domestic gasoil prices in line with global markets is also hurting consumption, analysts and industry sources said. Indonesia’s diesel demand is expected to drop 4.6 percent this year, further than last year’s fall of 3.7 percent, Woodmac’s Sivanandam said. India’s diesel use fell year that ended March in more than a decade in the world’s fourth-largest oil consumer, according to data from the oil ministry’s Petroleum Planning and Analysis Cell. New Delhi last year hike diesel prices by small amounts every month with the aim to end subsidies eventually. That should keep pressing down the country’s demand for diesel, said a trading source based in India. Western oil advisors and economists have for years been saying that fuel subsidies have distorted Asian oil markets, encouraged overconsumption and capacity surpluses in some countries such as China. reduced subsidies in India and Indonesia may not be long-lasting as economic growth in the two countries will likely bolster demand for diesel in coming years. played a role in lower demand but we anticipate that the impact of price hikes on Indonesian diesel demand will be temporary, as road- freight demand for diesel will grow in tandem with Sivanandam said. shutdowns in Australia is also likely to support demand for the fuel, helping soak up some of the regional surplus. Reuters B rent crude jumped to a nine-month high on June 13 on concern violence in Iraq will disrupt sup- plies, threatening to in- crease costs for Asia’s third-largest economy that imports almost 80 percent of its oil. India’s accelerated to 6.01 per- cent in May, the fastest data showed yesterday. a 10-month high of $11.24 billion in May, a report showed last week. The rupee slid 1.9 per- cent in the past three days to 60.38 per dollar the biggest loss since the period ended Jan. 27, ac- cording to prices from local banks compiled by Bloomberg. It fell 0.4 per- cent today and dropped as low as 60.5250, the weak- est level since April 29. is mainly due to dollar buying by importers on expectation oil prices may surge because of Iraq ten- - veri, co-head of currency and rates in Mumbai at brokerage Edelweiss Fi- currency may fall as low as 60.80 today, he said. India’s currency and in- terest rates will withstand the surge in oil prices as the nation’s political stability draws capital, Ashima Goyal, a member of the Reserve Bank of India’s technical advisory committee, which advises Governor Raghuram Ra- jan on monetary policy, said in a phone interview yesterday. The rupee is and may trade mostly between 58 and 60 this year, she said. Foreigners have pumped more than $10 billion into Indian bonds and stocks this quarter, exchange data show, as the nation’s most deci- sive election in 30 years Kartik Goyal Brent crude tjrefqkH;jzpfaMumif; tpdk;&
  16. 16. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INTERNATIONAL BIZ 16 A sian shares struck a cautious tone last Tuesday as the double-whammy of a and a gas dispute between Ukraine and Russia sapped investors’ appetite for risk. MSCI’s broadest index outside Japan fell 0.3 percent. Japan’s Nikkei bucked the trend with rise of a 0.5 percent, though it was still down on the week so far. Oil prices remained near nine-month highs after militants from the Islamic State of Iraq and swathe of northern Iraq and threatened to capture The insurgent advance forced Washington to not only consider options for military action but also hold brief talks with Iran, its long-time foe, to support the besieged government in Baghdad. U.S. crude futures edged down to $106.76 per barrel after having climbed as high as $107.68, but investors remain wary of potential disruptions to oil exports. Hideyuki Sano extremists to Baghdad or bombing by U.S forces will be a trigger to justify rise in U.S. oil prices above $110. That would be a burden for the world economy in the Uno, chief strategist at Sumitomo Mitsui Banking Corp. likely to curb growth in oil-importing economies, with the Indian rupee already falling victim to worries over rising month low. Tension in Ukraine showed no sign of abating Ukraine in a dispute over unpaid bills that could disrupt supplies to the rest of Europe and set back hopes for peace between the former Soviet neighbours. As investor risk sentiment was hit, underpinned U.S. Treasuries prices despite solid U.S. industrial output data. The 10-year yield stood week’s peak of 2.662 percent. Immediate focus is on the Federal Reserve’s monetary policy statement on Wednesday, when the U.S. central bank is expected to announce it will continue paring its bond purchase programme and cut its growth projections. In the currency market, the Australian dollar slipped after minutes of the Australian central bank’s June 3 meeting were more dovish than expected. The Aussie dipped 0.4 percent to $0.9361 as the minutes showed the Reserve Bank of Australia was not sure the current stimulus would be enough falling mining investment and government belt- tightening. The British pound held maintaining momentum after Bank of England chief Mark Carney surprised markets last Thursday by suggesting the Bank of England may tighten its policy before year-end. The pound stood at $1.6975, near Monday’s high of $1.7011, with close attention falling on due later in the day given the focus on the BoE’s policy. Elsewhere, Argentina’s Merval index fell 10.1 percent after the U.S. Supreme Court declined to hear the country’s appeal over its battle with hedge funds that refused to take part in its debt Myanmar Summary F or more than eight Kim Oanh bought cases of thread from China for her garment month, rattled by an anti- China riot in her country, from South Korea. percent of my thread 52, who employs about Garments & Embroidery. cost us more, but we need to think of it now, or it know how things may Oanh fears a further disruption in trade after last month’s violent Nguyen Dieu Tu Uyen protests following China’s placement of an oil rig in disputed waters. The unrest halted production at foreign-owned factories and caused Chinese China is the nation’s largest trading partner, Vietnam must reduce its dependence and develop a contingency plan to Chamber of Commerce and Industry Chairman month. More Vietnamese businesses may have to consider alternatives as the country prepares challenging China’s claims to the disputed waters. Prime Minister Nguyen Tan Dung said in an interview last month that his administration had prepared evidence and was ready for legal action against the world’s second-largest economy. businesses to look into other markets where the political risk is absent, Singapore-based regional economist at Bank of good to diversify, anyway. much on another country, especially where political The Vietnam Textile and Apparel Association has asked its more than 1,000 members including Oanh to consider alternative supply sources to China, according to Deputy General Secretary Nguyen Van Tuan, even as bilateral trade between the two countries rose 84 percent to $50.2 billion last year from $27.3 billion in 2010, according to government data. About 31 percent of Vietnam’s exports to China last year comprised agricultural products, while apparel and footwear made up 13 percent, trade ministry data showed. Forty-two percent of imports from China were telephone components, electronic spare parts, and fabric and leather for garments and footwear, with tools and machinery making up 18 percent. Vietnam’s policy makers Bloomberg MISCI Nikkei restructurings. The move risks sending Argentina into a fresh sovereign default, although Argentine shares have risen 34 percent so far this year.
  17. 17. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INTERNATIONAL BIZ 17 Myanmar Summary Myanmar Summary T he number of companies on Cambodia’s stock exchange doubled on Monday - to two. The debut by a Taiwan garment maker is an important baby step for long road to listing and a lack of clarity on the number of companies to follow underscore just how far Cambodia has to go before it becomes a hot frontier market. While neighbouring Vietnam has seen around 660 companies go public since the opening of its which has three listed up to early expectations that came when their exchanges opened for business in 2011. That the newly listed company - Grand Twins International (Cambodia) Plc, a major clothing manufacturer in the country - is not Cambodian but Taiwanese only serves to highlight local corporate reluctance. As does the two-year gap since Companies planning to list must provide statements, have made a Prak Chan Thul and Lawrence White requirements to have a variety of shareholders. TheCambodiaSecurities Exchange, a joint venture with Korea’s bourse, initially announced plans to list three state-owned companies by the end of 2012 but so far only the Phnom Penh Water Supply Authority has made it to market. And there is not a whole lot of turnover, with no shares changing hands in one in three trading days last month. The trading computers sat switched reporter visited in June. While some 100 people, mostly media, were in attendance for the ringing of the bell for Grand Twins, it was a subdued debut with the stock falling 5 percent in extremely thin trade. of the exchange, has said around 10 companies are exploring a listing and there would likely be one more before the end of the year, but statements continued to be a challenge. news conference earlier this month. Frontier markets, a subset of emerging markets but which are more illiquid, less stable and carry more risk, have increasingly found favour with investors and without change, Cambodia has much to lose in potential capital. they risk being eclipsed by Myanmar, says Asia Myanmar, which has enacted sweeping political and economic reforms since 2011, is drawing huge foreign investor interest with some of that beginning to bear fruit. Gap Inc, for example, just announced plans to open Myanmar, which currently has two listed brand new exchange in October next year with Japanese help. It says half a dozen companies will list in the early stages including Myanmar Agribusiness Public Corporation and Asia Green Development Bank. While experts say that both Cambodia and companies that would be attractive investment targets, there needs to a change in mindset as business tycoons have yet to be convinced about the Pervasive corruption hasalsofosteredasenseof distrust that is hindering the development of a local institutional base, despite most of the necessary regulatory framework being in place. to my surprise, even quite anumberoflocalinvestors are still questioning the trustworthiness of local companies’ head of Southeast Asia investment banking at Tongyang Securities (Cambodia) Plc, who Cambodian IPO. The Cambodian government could out of the books of other frontier markets such as Bangladesh, said Douglas Clayton, CEO of frontier Capital. Public companies in Bangladesh pay 27.5 percent tax, while most private companies must pay 37.5 percent. Cambodia could, for example, cut corporate taxes in half for three companies, he said. transparency this would bring might actually increase tax collections added. Reuters are trying to bolster an economy that the World Bank estimates will grow 5.4 percent this year, target of 5.8 percent. The government is studying the impact of the tensions, and will closely monitor sectors that may trade, infrastructure development and tourism, and take Prime Minister Nguyen Xuan Phuc said June 12. Vietnam’s Transport said he has not seen any indication of Chinese companies pulling back on investment in the Southeast Asian nation, even as the South China Morning Post reported June 9 that state-owned temporarily halt bidding for Vietnam contracts. economic growth will be economist and former question is how much, 0.5 or 1 percentage point. It’ll depend on how we cope The benchmark VN Index (VNINDEX) has slipped almost 5 percent in the past three months. The dong has weakened 0.6 percent against the dollar this year. Vietnam isn’t the only country in the region that China has clashed with. China, which controls the bulk of global rare-earth supply, in 2010 turned imposed a de facto ban on exports to the nation after the captain of a a collision with Japanese Coast Guard boats was detained. Anti-Japan protests sparked by a territorial dispute in 2012 hurt carmakers including Toyota Motor Corp. China’s growing assertiveness has spurred Japan to turn its attention to Southeast Asia and pledge billions of dollars of investment. Vietnam Partnership that would cover an area with about $28 trillion in annual economic output and excludes China. Vietnam would also gain from an Asean Economic Community planned for 2015. It has already seen overseas makers of apparel, footwear and electronics set up factories, spurring a six- fold increase in foreign direct investment to $8.4 billion in 2012 from $1.4 billion in 2002, according to World Bank data. The tensions between Vietnam and China in the South China Sea are Vietnamese leaders to of the country’s supply chains and development of domestic industries that can feed critical raw materials to the country’s factories, said Trinh Minh City-based chief economist at VinaCapital Group, Vietnam’s biggest fund manager that oversees about $1.6 an urgent message that Vietnam should take measures to lessen its economic dependence on China. It’s never good to put all your chips on one Reuters Luong THi Kim Oanh Vu Tien Loc rS
  18. 18. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INVESTMENT & FINANCE 18 T he Japan Interna- tional Cooperation Agency (JICA) will fund ¥2.5 billion ($24.51 million) to help improve Myanmar’s education sector, the agency said. The project aims to im- prove quality of teacher education in the educa- tional college, JICA said. Education colleges in Myanmar are institutes to train teachers in basic education. The said grant amount will cover for administra- tion building including assembly hall and gymna- sium, classrooms build- ing, hostels and dining hall with kitchen. Neces- sary equipment will be set up as necessary. The Japanese agency said the quality of the ed- Aye Myat ucation, especially teach- ers’ education, is one of the reasons that deter motivation of students to continue learning. JICA said the project will improve education colleges which will pro- duce teachers of higher quality and greater com- petence who will in turn upgrade the quality of the students as well as the quality of basic education of the country. The grant agreement - provement of Education - tween the Department of Educational Planning and Training under the Min- istry of Education and JICA, a statement said. Myanmar Summary Students attend a local school on the outskirts of Yangon. UAung/Xinhua (JICA) JICA
  19. 19. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INVESTMENT & FINANCE 19 Myanmar Summary David Mayes P - selves suddenly coming into a chunk of unex- pected money and they need to decide the best way to invest it. As we are in a situation where the broad markets continue to be highly overvalued, the downside risks of just throwing the money into the market are very high. One way to avoid get- ting caught at the peak before a crash is to put the money into a discount brokerage account - lio that you would want if the individual stocks were trading at the right valuation. The key to this strategy is that you pa- tiently wait with the money in cash until each company hits your desired price before pur- chasing it. Many of the top investors of the world follow a simi- lar strategy. Rather than wait for the markets to be crash- out when you are close to the - ing out which companies you want, it is much better to have a wish list put together ahead of time. Then you do not need to try and pick the bottom of the just need to know which prices you have determined are fair to buy the companies you want to hold long term. When the stock trades down to that price, you have a pre-set alert inform you that it is time to make the pur- chase. A good rule of thumb is to try and buy companies trading at price to earnings ratios of 10 or below. If you want a portfolio of say 20 companies, you may in fact need to make a wish list of about 40 (some may unfor- tunately not dip down to your valuation target even in a se- vere crisis). When the market begins a serious retracement, desired targets dip into buy range without the broad mar- kets even crashing. In the event that within the space of a few days they all tend to end up as value buys at about the same time. Thus it also makes sense to make a priority list in the event this happens. The great thing about this strategy is that if you pick solid companies and they survive, you will almost certainly double your money at the peak of the following bull market, even if that may be some time away. If the broad markets peak at over a price to earnings ratio of at least 20, which they always do at the end of a cyclical bull mar- ket, most likely your stock hold- ings will all be valued similarly. This assumes earnings can even - as in reality they could grow if you have picked stocks where the companies are still in the growth phase of the business life cycle. A few may see declin- ing revenues if you have not picked good companies, hence be the better your odds of hav- ing the majority continuing to grow. bottom of a crashing market in the same way you can never pick the exact top of a bull market. It’s a fool’s game to even try, but by following the long time hori- zon cycles and using valuation as a decision making criteria you can assure that you get a safe chunk out of the middle of - uals stock holdings will almost always immediately drop after your purchase when you follow this strategy, and your account value could stay negative for a few years even. This is because of the very nature of buying in the midst of a falling market, but don’t worry as it won’t last. Bear markets are usually fast and furious, and the following bull market will always bring the markets back to their previ- ous highs if not higher. - es to expatriates throughout - - pensions. Reuters P eople should not pin their hopes on Myanmar’s new stock exchange even as the government announced plans to launch a share market by October 2015, experts say. Companies who originally expressed interest in forming a stock exchange are now hesitant, citing further capital needs should the government follow through with its plan. expect much in the initial stages of a stock market. There will be some trades May Soe San at start-up, but there won’t be many companies to trade. It’ll be just a Thura, CEO of Thura Swiss, a local market research and business advisory company. Japan planned to help Myanmar establish its stock exchange but pro- gress has proven slow with delays arising due to - - ing suitable premises. Training of government Japanese company, has been underway since 2011 with Japan also sending members of its Financial Services Agency to oversee development. and also sent people overseas. The Minister of Finance expects the stock exchange to be in place by 2015, but for now we are still seeking companies to Myanmar Stock Exchange program said. Daiwa Securities Group Inc.signedamemorandum of understanding with the Myanmar government in 1994. In 1996, Daiwa Institute of Research Group and the Myanmar Economic Bank formed the Myanmar Securities objective of launching a Myanmar stock exchange. Myanmar Summary Thura Swiss CEO Bloomberg
  20. 20. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INVESTMENT & FINANCE 20 Aung Phyo T he World Bank has approved a $107 million credit for the Mizoram State Roads II – Regional Transport Connectivity Project to improve transport con- nectivity for India’s land- locked state of Mizoram and to help open up the potential for regional trade among neighbour- ing countries. The Washington-based lender said the project will enhance India’s Mi- zoram and other north- eastern states’ road links with Bangladesh, as well as with Myanmar, Nepal and Bhutan. - cated between Myanmar and Bangladesh, a bet- ter connected Mizoram can open up huge trade potential for the entire northeastern region of In- dia with South and East Asian countries. able to export and import goods cheaper and faster. Consumers will also bene- World Bank Country Di- rector in India. Connectivity is crucial for a distant hill state such asMizoramwhich,likethe other northeastern states, is geographically isolated - tion routes over predomi- nantly mountainous ter- rain have long hampered trade and development. Stage I of the project re- habilitated over 400 kilo- metres of the state’s core road network, reducing travel time by half, and - the project area. The link to Bangladesh will facilitate greater bi- lateral trade and access to the Port of Chittagong – the nearest shipping port for the northeastern region of India, while the link to the border with Myanmar will facilitate connectivity to Myanmar and the rest of East Asia and beyond, the World Bank said. Mizoram’s road net- work is of poor quality and under developed, and has among the lowest density in all of India. It faces severe constraints in its connectivity with larger markets. Travel from Aizawl to the nearest Indian port of Kolkata via the congested, 11 km-wide Siliguri corridor, also journey. Prices for basic staples like rice, sugar, tea and tomatoes can cost as much as three times more in Mizoram and other northeastern states when compared with most In- dian cities or neighbour- ing countries like Bangla- desh. According to estimates, annual intra-regional trade in the region can more than double from $16 billion to $38 billion annually, if barriers to trading with neighbours were removed. Accord- ing to another estimate, investments in transport infrastructure could re- duce trade costs by more than 20 percent in India, and 12.5 percent in Bang- ladesh. The project will fund 91 km of roads that are design-ready. Roads that will be widened or - glei – Tlabung – Kawr- puichhuah road on the border with Bangladesh; the 27.5km Champhai- Zokhawthar road on the border with Myanmar; and the 41.7km Chhum- khum-Chawngte North- South alignment connect- ing to the border roads with Bangladesh to the west and Myanmar to the south. Another 330km of road works may be considered for a follow-on project - ing when the designs are ready. The current project will fund detailed stud- ies and designs for these roads (330km) mostly in the North-South corri- dor. Many of these roads, to be taken up in the next projects and will increase the connectivity both within the state – improv- ing access to transport in- frastructure and services for isolated communities – as well as to key inter- national trunk roads and transport corridors that connect to other north- east Indian states, Bang- ladesh, Chittagong Port and the rest of South Asia, and to Myanmar. The bank said the pro- ject will strengthen road safety management sys- tems and initiate pilot projects to demonstrate good practices in road safety engineering meas- - dress road safety hazards. connectivity can play a vital role in enhancing growth in Mizoram, a re- mote, hilly, and moun- tainous region where road transport is the only mode of transport senior transport special- ist and the World Bank’s project. can help reduce freight and passenger transport costs, and provide quick- er and safer access to all parts of the state and to neighbouring states and Myanmar Summary Myanmar Summary Aye Myat M yanmar and the United States talks on trade and invest- ment framework agree- ment (TIFA) in Nay Pyi Taw last week. The dialogue covered update on Myanmar trade initiatives and policy reform, import licens- ing regime, intellectual property rights and op- portunities for bilateral cooperation as well as ex- panded economic engage- ment between ASEAN and the United States. The opening of the dia- logue was respectively addressed by Myanmar Deputy Minister of Na- tional Planning and Eco- nomic Development Daw Deputy Assistant of US Trade Representative for Southeast Asia and the Aimed at promoting an attractive investment climate and expanding and diversifying trade in products and services between the two coun- tries, the governments of Myanmar and the United States signed the trade and investment frame- work agreement on May 21 last year, creating a platform for ongoing dia- logue and cooperation on trade and investment issues between the two sides. Under the agreement, a Trade and Investment Council was established to monitor trade and in- vestment relations be- tween the two countries, identify opportunities for expanding trade and in- vestment and identifying issues such as strengthen- ing of rule of law and pro- moting transparent and corruption-free public in- stitutions and the protec- tion of intellectual prop- erty rights, workers’ right and the environment. Following the easing of sanctions in 2012, the United States claimed that Myanmar-US bilat- eral trade has been in- creasing but still remains small. According to Myanmar - mar-US bilateral trade reached $104.44 million which ended in March, of which Myanmar’s export to the United States stood at $24.78 million. US Department of Com- merce has also disclosed that as of the end of April, US companies had in- vested $243.6 million in Myanmar and US exports have increased from $9.8 million in 2010 to $145.7 million in 2013. A worker drives a road roller during the construction of a road link between India and Myanmar at Wang- zing village, south of the northeastern Indian city of Imphal. RupakDeChowdhuri/Reuters
  21. 21. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INVESTMENT & FINANCE 21 Myanmar Summary A uthorities in Myanmar are determined to foster economic progress inclusion on their list of priorities. In an attempt to tackle demand for services, Myanmar has taken numerous steps in the last 24 months, such currency, liberalisation of theinsuranceindustryand the independence of the Central Bank of Myanmar (CBM). Following these adjustments, 2014 is set to see the CBM grant operating licences to foreign banks, while 2015 has been set as the target date for the establishment Exchange. The unbanked population According to a recent joint study by the UN Capital Development Fund (UNCDF) and the UN Development Programme called Making Access Possible (MAP), only 4 percent of families surveyed have bank accounts in their own names, 39 percent have no access to any while 31 percent opt for assistance such as money lenders or borrowing money from family or friends. Sponsored by the UNCDF and the multi- Food Security Trust Fund survey covered 5,100 households and suggested that while there is strong potential demand for regulated services, do not match the needs of the unbanked population. are being undertaken to address the issue, and Dr Maung Maung Thein, the deputy minister for the Financial Inclusion Roadmap Conference in Nay Pyi Taw in May that the ministry aims to increase the banked Michael Nesbitt population from 30 percent to 40 percent by 2020. Branchless banking In an attempt to increase services, many local banks are opening branches in critical momentum for expected to be gained once infrastructure improvements are made within the telecoms sector. Similar to other emerging economies, localbanksarepositioning mobile banking services. U Pe Myint, managing director of CB Bank, of people have limited access to the internet. Mobile banking gives our people the chance to do their banking activities With two international telecoms providers set to launch their services in 2014, Myanmar is well positioned for a rapid rise in both mobile penetration and mobile banking activity. payments in this country is SMS banking, similar to success stories in Africa, such as Kenya where mobile banking plays a Bennett, a consultant for Tun Foundation Bank, told OBG. Foreign participation According to the Myanmar Investment Commission, approved foreign investment nearly tripled to $4.1 year from $1.4 billion in the previous year. With an expanding economy and underdeveloped banking system, many international banks are vying for an operating licence in the once feelings are mixed, as Daw Kim Chawsu, head of transformations at Kanbawza Bank (KBZ), two trains of thought. First the entrance of foreign banks will assist in the development of the sector, and second that they will squash local competitors out of from this development. Infrastructure, funding, technology and expertise are all things that international banks bring Foreign banks can only enter the market in the form of representative the CBM plans to grant media reports suggest that the newcomers will be faced with certain restrictions, such as not being allowed to engage in retail banking or dealing uniquely in foreign currency. Although local banks may be concerned by the possible role of foreign-owned banks in the future, there is some recognition that their presence may also encourage international companies to invest in the deputy chairman of banks should be allowed in on a step-by-step basis. This will assist with the development, as well as the protection, of the sector in Myanmar is still decadesbehinditsASEAN neighbours, progressive steps within insurance, accounting and telecoms place the country in good stead to leapfrog years of technology and establish a modern banking this depends greatly on the CBM’s decisions regarding the entrance of foreign banks and the restrictions they will face. in Myanmar. Based in Yangon he works OBG’s Flagship annual opportunities in key The Visa Inc and Mastercard Inc logos are displayed on the side of an automated teller machine (ATM) as a customer withdraws money at a shopping mall in downtown Yangon. DarioPignatelli/Bloomberg UN Capital DevelopmentFund(UNCDF) Making Access Possible (MAP) UNCDF Livelihoods and Food Security Trust Fund (LIFT) MAP
  22. 22. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com INVESTMENT & FINANCE 22 Myanmar Summary TM 2 colx x 26 cm Giti Notice Ministries join hands to support responsible tourism in Indawgyi Lake A new ecotourism initiative will be developed to en- sure visitors to Indawgyi in Kachin state contribute positively to its ongoing conservation manage- ment, a nature conserva- tion group said. - tives from the Ministry of Environmental Conser- vation and Forestry and hands to agree on the im- portance of engaging local stakeholders in develop- ing a tourism strategy for the lake and its globally important wildlife. Dr Sai Kyaw Ohne, said that creating a responsi- ble, sustainable tourism strategy that involved and engaged local com- munities could prevent mistakes that have been made during the devel- opment of other regions, can lead to serious envi- ronmental degradation. help to support everyone who lives here and is a good example for other communities in the coun- try, other countries in the region, and in fact other Kyaw Ohne said. A workshop to discuss the new strategy was held, involving local commu- nity representatives, the Myanmar Tourism Feder- ation and Myanmar Tour- ism Association repre- senting the private sector, and relevant government agencies. Wai Linn Kyaw Attendees agreed on a vision for responsible tourism development at help to conserve the natu- ral and cultural heritage of the area, while provid- to local people. The workshop builds on the momentum created by Fauna & Flora Inter- national’s (FFI) launch of a community-based eco- tourism initiative at In- FFI helped commu- - ton Village at Indawgyi - gyi’, a community group dedicated to support local livelihoods through the development of ecotour- ism. FFI has provided train- ing to the young villag- ers, as well as kayaks and mountain bikes that can be rented to tourists to explore the beautiful na- ture of the lake and its surrounding forests. sustainable ecotourism which creates revenues says Frank Momberg, FFI Myanmar Director. - - ence in complete lake se- renity, instead of joining the tourist hordes in noisy which is Myanmar’s most Before FFI’s Inn Chit Thu initiative, Indawgyi tourists could only expe- rience the lake through an expensive motorboat ride – now tourists can choose kayaks, bicycles and walks instead, having an opportunity to feel closer to nature, and without us- ing noisy, unsustainable and expensive methods. Despite quadrupling visitors since the launch of Inn Chit Thu, inter- national tourists to In- small, an area the group hope to build in coming seasons. a pristine state with thou- sands of migratory birds arriving each winter from their long journey start- ing in Siberia for resting and wintering in Indaw- gyi, turning the lake into a heaven for bird watch- ers and nature tourists. It is hoped that by following a strategy for responsible tourism in a protected area, tourism can help to balance the needs for nature conservation and economic development. Indawgyi Lake. Flickr/Morgenstund Brown-headed gulls at Shwemyintzu Pagoda at Indawgyi Lake. BjornOlesen/FFI
  23. 23. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com PROPERTY & REAL ESTATE 23 Myanmar Summary F oreign companies are to be allowed to bid for road and bridge construction con- tracts thanks to changes in rules from the Ministry of Construction. In the past, only local companies were allowed to invest through Build- Operate-Transfer (BOT) agreements with the gov- ernment, while it was mandatory for foreign partner. Foreign investment in the construction sector currently stands at $37 million, with South Ko- rea, Japan, Singapore and Thailand being the high- est investing countries. Domestic investment stands at K733 billion ($751 million), according - construction was limited to foreign companies col- Phyu Thit Lwin laborating with local companies. Now, with foreign companies bid- ding for road and bridge construction local compa- - businessperson U Paing The lack of skilled work- ers and access to technol- ogy deters local business- es from infrastructure development programs, industry insiders say. The Myanmar Construc- tion Business Association said it intends to tackle skills shortages through training programs. Myanmar Summary Mahabandoola bridge in Yangon. The Department of Human Settlement and Housing Development (DHSHD) is formulating urban man- agement strategies to cope with Myanmar’s growing municipalities. WaiLinnKyaw DavidRoss in any town plan. If we implement this project, we require properly im- plemented technology - ing expert and the advisor to the Myanmar City Plan - gon City Master Plan. After drafting the new projects, the department intends to implement projects in Mandalay, Mawlamyine, Meikhtila, Taunggyi, Moe Gok, Pyin priority. Remaining cities will be dealt with in the long- term (30 year), with these projects requiring addi- tional technical support from overseas. T he Department - has released a draft plan detailing urban manage- ment strategies to cope with populations exceed- ing 100,000 people in growing municipalities. The department, which is under the Ministry of Htun Htun Minn Construction, says the plan for new towns aims to direct and manage pop- ulation growth in both the short- and long-term. draft we will submit it to the president. We will then implement the pro- the drafting of the plan of the department said. The current draft in- cludes the expansion of existing town and city footprints, land man- agement, new roads and housing zones in conjunc- tion with economic devel- opment for 32 townships, which have populations exceeding 100,000. - pand a city. We need to manage according to its area. Transportation plays an important role
  24. 24. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com 24PROPERTY & REAL ESTATE Myanmar Summary J apan is going to pro- vide ¥4.22 billion ($41.25 million) to build a new bridge in Tha- - ternational Cooperation Agency (JICA) said. Under the grant, a new four-lane extradosed type bridge and access roads will be constructed. its kind in Myanmar, is to have 253 metre length with construction starting April 2015. The Public Works de- partment, Ministry of Construction, will con- Zwe Wai struct expansion of ap- proach roads to the new bridge, JICA said. The project aims to en- sure better mobility and accessibility in greater to smooth transportation to cope with increases in economic activity and - rounding area. The agreement was managing director of Public Works, Ministry of Construction, and Masa- hiko Tanaka, chief repre- sentative of JICA Myan- mar. Pansodan bridge in Yangon which connects downtown to Thaketa. WaiLinnKyaw JICA JICA Myanmar T - nese home prices in two years has crystallised worries of a messy end to a housing boom, but some analysts say fears of an imminent collapse similar to that in the United States after the sub-prime crisis are over- blown. The property market - ing this year, and is cited as one of the main risks to the health of the world’s second-largest economy. But high down pay- ments, low household debt, some government support – and expecta- tions of more to come – have some experts fore- casting the downturn will be short lived, with prices expected to recover as economic growth steadies in the second half of the year. Average new home pric- es across 70 cities fell 0.2 percent in May from April, and the annual rise of 5.6 percent was the slowest in 13 months. Prices fell on a monthly basis in 35 cities, from the balance sheet point of view, the only balance sheet that has not been destroyed is the said Bo Zhuang, an econ- omist at Trusted Sources, a UK-based investment consultant. Xiaoyi Shao and Koh Gui Qing balance sheet at the mo- The International Mon- etary Fund agrees. In a paper published in April, it ranked China as having the fourth-lowest level of household debt among 11 Asian countries, at around 12 percent of its gross domestic product (GDP). In New Zealand and Australia, where house- holds are the most indebt- ed, debt levels exceed 90 percent of GDP, IMF data shows. Downpayments of 30 purchases and between 60-70 percent for second homes, and laws which make borrowers liable for debts even if they de- fault on repayments have banks viewing mortgages as among their safest as- sets. It also means those who fear that a sharp decline in home prices would rock inundating banks with bad debt may be overstat- ing the case. Further, a reduction in the amount of reserves that banks must hold to boost lending to small has inadvertently freed up some cash for the proper- ty sector. said Fan Xiongchong, vice-president of Sun- shine 100 China, a mid- sized developer based in the property market via Not without risks This is not to say the housing market, which accounts for about 15 per- cent of GDP, is without risks. For one, despite the moderation this year, prices are still near record rates near an all-time low. Construction has also fallen sharply this year, - ployment and spending. The statistics show that Wenzhou, a wealthy city with a thriving private sector, has been hardest hit in the current slow- down with prices down 4 percent in May from a year ago. Experts disagree about the extent of housing oversupply in China, but agree that slower prop- erty investment would be a drag on the economy. A sharp drop in home prices would destroy household wealth, undermining con- the fact that we see the Chinese government tak- ing action - they are not oblivious to what is hap- an emerging markets debt fund manager at Pioneer Investments. go’ policy... on one hand market, and on the other they don’t want it to hurt referring to earlier and prolonged government attempts to rein in red- hot home prices. No big crash The biggest problem is a misallocation of resourc- - omist at Bank of America- With only about one- third of the 1.3 billion population living in ur- ban centres, too many homes that will never be small cities. That would likely see a sharp spike in bankruptcies among Wages in China are still growing faster than house prices, with average in- comes in cities and rural areas climbing 10-12 per- cent last year, on par or faster than a 10 percent rise in property prices. - an economist at Gavekal no signs of imminent col- Reuters Myanmar Summary Bloomberg
  25. 25. June 26-July 2, 2014 Myanmar Business Today mmbiztoday.com AUTOMOBILE 25 Myanmar Summary Myanmar Summary Ipolice groups stepped up problems, according to Second The police groups will take action against cars that violate and reckless driving, he said. K10,000 and K500,000 ($10 to $500) depending on the violation. Drivers issued citations must City Development Committee will cooperate with police units from township administrations illegally parked cars. will vary and can range from a warning to suspension of their a designated no parking zone will be towed, he added. Kyaw Min From the end of 2013 through May of this year, nearly 1,900 illegally parked cars were police unit. During the third week of violations. From end-2013 to April 15, 2014, 8,154 cars were towed from no parking zones, the Vehicle Control Committee announced. ay;aqmif&rnfjzpfaMumif; ,if;u quf Myanmar Summary S akura Car Sales Cen- tre will give buyers who purchase cars from the centre free vehi- cle services for one year, a The centre opened on Kabar Aye Pagoda road last month with new auto- mobiles and used cars for sale. Over 90 percent of the automobiles at the centre are Japanese, 80 percent of those vehicles manu- factured by Toyota, the company’s director Ko Kyaw Min Zaw Aung said. with maintenance and sup- port services, we hope to increase consumer interest Sakura will provide in- surance to customers who purchase cars from its dealership with cost de- pending on the type and age of the vehicle sold. The company will co- operate with the World Treasure Bank to organ- ise the long-term install- ments of these agree- ments. But another car dealer Brand New Service Free Service Plan Train Free Service Ko Aung Thein said de- spite the improvements in Myanmar’s car industry it will take time for consum- er demand to increase. - rybody in Myanmar can purchase a car. People earning low in- the cost of purchasing said. T he Japanese gov- ernment is plan- support to popularise fuel cell vehicle technology as Toyota Motor Corp and to launch hydrogen-pow- ered cars in 2015. The government drafted a timeline that spelled out targets and actions over the next 25 years to com- mercialise fuel cell vehi- cles and boost use of hy- drogen energy in general. The move comes as Democratic Party consid- ers supporting the tech- nology through subsidies and tax breaks, so that by 2025 fuel cell vehicles can sell for around $20,000 or a little more, the same price as popular gas-elec- tric hybrids. A fuel cell vehicle, which runs on electric- ity generated from cells that combine hydrogen with oxygen, emits only water vapour and heat. Yoko Kubota times longer than battery- operated electric cars, and their hydrogen tanks can - utes. Reuters SherpaHossainy A car service centre in Yangon. SherpaHossainy

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