Politics
Transition to new civilian government—Aung San Suu Kyi appointed “State Counsellor”
The transition to Myanmar’s first civilian elected government for 50 years continues to progress smoothly.
On taking the oath of office, President Htin Kyaw gave a short speech in which he gave as the government’s priorities “national reconciliation, internal peace, pursuing a constitution toward a federal union and improving the living standards of the majority of the people”. He also referred to the need for constitutional reform:
“His excellency the Speaker, members of parliament, our guests of honour and our citizens; I have something important to say on this occasion. It is that I have a responsibility to always keep my solemn oath that I have made earlier, and to pursue a constitution in accordance with democratic norms that will be suitable for our country. I believe that I will have to be patient in implementing this political aim, which the people have wished to see for years.”
Having initially assumed responsibility for 4 ministries in the government—foreign affairs, education, energy and electric power, and the President’s Office—Aung San Suu Kyi has been granted the role of “State Counsellor” by parliament, a move that is seen as giving her something akin to Prime Minister status and which certainly puts her at the heart of the new government. The education and energy and power portfolios have since been re-allocated to others.http://www.mmtimes.com/index.php/national-news/19844-military-protests-but-parliament-passes-state-counsellor-bill.html
New government reduces the number of ministries
The NLD government has stated that one of its initial priorities is to reduce the number of government ministries in order to increase efficiency and reduce costs.
Inter alia, planning and finance are to be combined into one ministry, as are transport and communications. A new ministry of Ethnic Affairs is being created, as expected following the passage of the Ethnic Nationalities Protection Law. A full overview of the NLD’s plans which, it says, will not involve reductions in civil servants but, rather, a re-assignment of roles, follows in this article from the Myanmar Times:
http://www.mmtimes.com/index.php/national-news/nay-pyi-taw/19532-nld-reduces-government-ministries.html
Release of political prisoners
In a move that is certain to be well received internationally, the new government has acted almost immediately on its promise to release Myanmar’s remaining political prisoners.
Please click onto the following link, to view a report by the BBC’s Jonah Fisher:
http://www.bbc.co.uk/news/world-asia-35994773
ECONOMICS
ADB publishes latest forecasts for the economy
In the latest edition of its “Asian Development Outlook”, the ADB has published its most recent projections for the Myanmar economy.
Following the effects of the 2015 cyclone and heavy monsoonal rains, which are estimated to have cost $1.5bn, or a full 3% of GDP, the ADB forecasts real GDP growth of 8.4% in 2016 and 8.3% in 2017, as agriculture recovers and FDI increases post the elections.
It highlights strong growth in garment exports (+28% to $2bn in 2015) and tourism spending (+18% to $2.1bn) as drivers behind recent performance and notes that gas exports have also seen an increase. Looking forward, closer relations with its other neighbours, Thailand and India, are expected to compensate for weaker growth in China.
The key shorter term challenges are inflation (11% on average in FY 2015), the twin deficits (fiscal deficit 4.8% GDP, current account 8.9% GDP) and the need to diversify the base of the economy away from its dependence on natural resources, construction and tourism. Inflation is expected to ease in FY 2016 and FY 2015, as food prices drop back, but is forecast to remain elevated.
Longer term structural weaknesses that need to be addressed include deficits in infrastructure and human resources, the need to improve governance and public sector management and the need to increase regional cooperation and integration.
The ADB welcomes the reforms in the financial sector and plans to increase the independence of the central bank and to develop stronger monetary tools. It urges greater flexibility in the management of the exchange rate, noting that measures adopted to resist depreciation in the Kyat last year were counterproductive and resulted in a diminution in FX reserves.
http://www.adb.org/news/features/whats-fastest-growing-country-asia-surprise-its-myanmar
FDI approvals reach $9bn in 2015-16
A rush of last minute approvals in March led to a surge in YTD FDI from $5.6bn at the end of February to $9.4bn at the end of the 2015–16 financial year. The increase partly reflected approval for a $2bn oil refining project at Dawei.
In reporting the increase in FDI, DICA has also indicated that it plans to start tracking actual FDI spending from FY 2017. (The IMF’s most recent projections for FDI spend in FY 2014 and FY 2015 were $3.2bn and $3.6bn.)
http://www.mmtimes.com/index.php/business/19855-dica-to-track-actual-levels-of-foreign-investment-from-2017.html
Finance Minister outlines his priorities
The Finance Minister in the new government, U Kyaw Win, has indicated that his priorities are growth in manufacturing to provide job opportunities for the rural population and to support exports, and strengthening of the financial sector.
He has also indicated a plan to reduce tax exemptions as a way of raising government revenues.
http://www.mmtimes.com/index.php/business/19689-economic-growth-is-priority-u-kyaw-win.html
First trading on YSE
The new Yangon Stock Exchange opened for trade on 25th March. Shares in the first (and only) trading counter, FMI—a company linked to local tycoon Serge Pun, who is also the promoter behind Singapore-listed Yoma Strategic holdings – opened with a Ks 26,000/sh base price. It closed the first day at Ks 31,000 and reached a peak of Ks 41,000 share before settling back (in somewhat volatile fashion) at the month end.
As the following article from the Myanmar Times suggests, Myanmar is not yet properly familiar with the nature and behaviour of stock markets, but these are—as they say—very early days …..
http://www.mmtimes.com/index.php/business/19802-serge-pun-calls-meeting-with-brokers-over-fmi-volatility.html
BUSINESS
Chinese oil refining project at Dawei
China’s Guangdong Zhenrong Energy Co (GZEC). has secured approval for a $3bn refinery, to be built in partnership with local parties including the energy ministry. The 100,000 bpd project, which includes an oil terminal, storage and distribution facilities, is to be sited at Dawei on the southern coast and has been planned since 2011. GZEC is to take a 70% stake alongside UMEHL, Myanmar Petrochemical and the privately-owned HTOO Group. It will be GZEC’s first foray into refining, although the company has indicated it may work with other Chinese energy groups on the project.
Please use the following Reuters link to read more on the project:
http://uk.reuters.com/article/china-myanmar-refinery-idUKL3N1782MS
UMEHL to become a public company
The military-backed conglomerate UMEHL has taken another step in its restructuring process by applying to the national planning ministry to become a public company. It is currently designated a “special company” under the 1950 Special Company Act. Its change in status would put it on a more equal footing with other companies, competing on a more level playing field.
UMEHL, which controls Myanmar’s leading brewery in a JV with Japan’s Kirin and its dominant tobacco firm, is also to change its shareholding structure, with the Ministry of Defence transferring its shares to military personnel and ex-military personnel organisations—in effect turning the group into an investment / welfare fund.
http://www.mmtimes.com/index.php/business/19799-military-owned-mehl-applies-to-become-public-company.html
Viettel invests in fourth telecom licence
Vietnam’s Viettel has been granted the right to negotiate with a local consortium, including a subsidiary of military-run conglomerate MEC, for a 49% interest in Myanmar’s fourth telecom licence. It was one of seven foreign companies that were reported as having an interest in the licence.MEC’s subsidiary, Star High Public Company, already has in place access to 1,000 towers and 13,000km of fibre infrastructure.
According to the Myanmar Times, the licence fee is $300mn. This is reportedly less than the fees paid by the holders of the other three licences, and is said to reflect the new consortium’s relatively late arrival in the market.
According to reports in Vietnam, Viettel has committed to an investment of $1.5bn alongside the consortium. It previously planned to work with Yatanarporn Teleport in the Myanmar market, but that proposal was rejected by the Myanmar government in 2014.
http://www.mmtimes.com/index.php/business/technology/19679-viettel-picked-for-fourth-telco-tie-up-with-military-partner.html
Foreign interest in mining—Balasore Alloys, First Light Mandalay Mining, Euemeralla Mining, Titelina Valentis
Two companies, India’s Balasore Alloys (part of the Mittals’ Ispat Group) and Australian First Light Mandalay Mining have applied for exploration licences in Chin state. Balasore Alloys has a plan to explore for chromite, First Light Mandalay for copper.
Australian-listed Eumeralla Resources has announced a capital raising, with a portion of the proceeds to be invested in the exploration of tin and tungsten in Kayah state, in anticipation of the receipt of the necessary permits in Q2 or Q3.
Finally, DealStreetAsia has reported that a partnership between Australia’s Titeline Drilling and Myanmar’s Valentis Resources has received approval to invest $26.7mn to provide exploration drilling services in Myanmar.
http://www.dealstreetasia.com/stories/titeline-valentis-from-australia-invests-26-7-m-for-a-period-of-10-years-36656/
KMA Group to build new wharf on Yangon riverfront
The New Global Light of Myanmar newspaper has reported that Kaung Myanmar Aung Shipping has won a tender from the Myanmar Port Authority to build a modern wharf on the Yangon River front between Botahtaung Pagoda and the Bo Aung Kyaw Jetty on Strand Road. KMA Shippping is part of the KMA Group, a diversified conglomerate with interests in tourism, real estate and mining, and which has Golden Myanmar Airways, CB Bank and Parami General Hospital as associates.
Ajinomoto returns to Myanmar with MSG plant. CJ Foods and Yakult also setting up
The Nikkei Asian Review has reported Ajinomoto has injected $10.6mn into a new Myanmar company and is establishing a plant at the Thilawa SEZ for packing MSG to be imported from its Thai subsidiary. Myanmar, apparently, is SE Asia’s 4th largest MSG market, consuming 52,000 tonnes of the product a year.
Ajinomoto set up its first Myanmar operation in 1996, but withdrew from the market when the government put restrictions on the import of its raw materials in 2000.
http://asia.nikkei.com/Business/Companies/Ajinomoto-to-return-to-Myanmar
CJ Foods is also reportedly setting up an edible oil plant at Thilawa, having invested $8.3mn in a Myanmar subsidiary, and DealStreetAsia has indicated Yakult is investing $11mn in a new fermented milk drinks site at the SEZ.
Konoike customs clearance services investing in Thilawa
DealStreetAsia has reported that Japanese logistics firm Konoike is investing $5mn in a subsidiary that will offer custom clearance, warehousing and trucking services from a base in Thilawa.
