Myanmar - Business and Investment Digest, April and May 2017

A domestic perspective of news from the past month with implications for business and investment in Myanmar.

Politics: 2nd round of 21st Panglong conference concludes with some evidence of progress.

Economics: World Bank’s $200mn programme to support financial stability; China and Myanmar plan to establish border economic co-operation zone; MIC mandated to exclude irresponsible investors.

Business: Unilever forms HPC J/V with EAC; Puma Energy commissions oil storage facility at Thilawa, plans ventures in jet fuel distribution and fuel retailing; Foreign firms to be permitted to import agricultural, medical & construction materials; Plans for new offshore supply base at Nga Yoke Kaung; Microfinance—two ventures supported by Dragon Capital and OPIC; Myanmar Investments planning ventures in tourism and pharmacies; Korea’s LS Cable to invest at Thilawa; $35mn hydroelectric dam plan from Great Hor Kham; China’s Great New Hope to invest $10mn in poultry hatchery.

… A WINDOW ON THE GOLDEN LAND …

A new final resting place in Myanmar for King Thibaw ?

In recent months, momentum has been building for the repatriation of the remains of Myanmar’s last king, Thibaw, from their current resting place in India, to a new mausoleum in Mandalay. The effort has been spearheaded by Thibaw’s great grandson, U Soe Win, who has been campaigning for permission to build a royal tomb next to that of Thibaw’s father, King Mindon. View more

The Burmese government’s attitude to the King’s descendants has been softening since President U Thein Sein made a visit to King Thibaw’s Indian grave in 2012. In December 2016, one hundred years after Thibaw’s death, U Soe Win led a delegation of family members to the same place to commemorate the event. This followed, in November, a public commemoration by the family, at the royal palace in Mandalay, of the moment the King and Queen had been driven out of the city in a bullock cart. View more

A window on the Golden Land

King Thibaw ruled for just seven years before he and his pregnant queen, Supayalat were forced to abdicate by the British at the time of the conquest of Upper Burma in 1885. Denied a home in their native country they and their two daughters, Myatpayagyi and Myatpayalat (a third and fourth daughter followed later), were packed off to India where eventually, a new residence, known as Thibaw’s Palace, was built for them at Ratnagiri, about 350km (220 miles) south of Mumbai.

A window on the Golden Land

Initially, King Thibaw received a monthly pension of Rs.100,000, but this was progressively reduced and, by the time of his death, it had fallen to just Rs.25,000. The family had been permitted to take some of their jewellery with them, and this they progressively sold in order to supplement their income. Thibaw lived the life of a recluse and, although he was provided with a car (a Model T), and his daughters and other members of the household travelled about, he rarely left the property before he died, a brokenhearted man, in 1916, aged 57.

A window on the Golden Land

Thibaw was buried at Ratnagiri next to his junior queen, Supayagale. Supayalat returned to Rangoon in 1919, but was not allowed revisit the former capital, Mandalay. She begged the British to be permitted to bring the remains of husband with her, but her requests were denied, for fear of the consequences.

A window on the Golden Land

When the elder of Thibaw’s daughters reached marriageable age in the early years of the new century, various Burmese suitors were proposed but did not find the King’s favour. The British Viceroy suggested the crown prince of Sikkim who—like the Burmese—was Buddhist, but he made his excuses, saying the princesses’ English was not good enough. Eventually, Myatpayagyi became pregnant with the child of the family’s Indian gatekeeper, and Myatpayalat fell in love with a Burmese, Khin Maung Gyi, who had been a minor official in Mandalay, and of whom Thibaw disapproved. He and the princess had a row, and she moved out of Thibaw’s Palace to the house of Mrs Head, the wife of the British district collector.

Princess Myatpayagyi, travelled back to Burma with her mother in 1919 but later returned to Ratnagiri to be with her daughter Tu-Tu, and Tu-Tu’s father. When she died in 1947, she was cremated and her ashes stored in a box in the Ratnagiri Treasury, but it seems that, owing to bureaucratic dithering, they were never deposited in the tomb built for her next to her father’s.

A window on the Golden Land

In 1995, the Hindustan Times caught up with the descendants of Princess Myatpayagyi who remained in India:

The collector’s records say that when Phaya died, she was such a destitute that the locals of the village around collected money under the leadership of the collectorate for her funeral. Phaya left behind the daughter she had borne to Gopal, who had died earlier. This daughter, named Tu Tu, was brought up in poverty and not being educated, forgot all about her royal heritage except having one sorry looking poster painting of her mother in her home for veneration among the many household gods…Without money or education, Tu Tu married a local mechanic and had at least six or seven children, all of whom became more and more Indian in religion and culture as well as appearance. Tu Tu, for whom Burmese is a forgotten language, still lives in Ratnagiri as an old woman and speaks fluent Marathi with a rural Maharashtrian accent. She used to sell paper flowers to make a little money for her family in the days gone by.

According to Thant Myint-U, the author of The River of Lost Footsteps, the fate of the second princess is a bit of mystery, although he suggests she and Khin Maung Gyi lived the rest of their lives apart from the family at a hill station near Darjeeling, tending a dairy farm. They were childless.

In 2013, the Myanmar Times caught up with one of King Thibaw’s two surviving grandchildren. She seemed to have a different opinion to many of her other relatives on the matter of her grandfather’s repatriation: View more

In December of 2016, the BBC’s Alex Bescoby reported on the visit to Thibaw’s grave in India by U Soe Win and other members of the his family, the descendants of Myatpayagyi. View more

On her return to Rangoon, with her two youngest daughters, Supayalat took a house on Churchill Road, named after Lord Randolph Churchill, architect of the third Anglo-Burmese War and the man who, more than any other, had been responsible for the dethroning of her husband. She received a pension but, with good reason, never reconciled herself to British dominion. She died in 1925, at the age of 65. Although the colonial government declared a national holiday on the day of her funeral, her family’s request that she be buried in Mandalay was refused. Instead, her body lies at the Kandawin Garden Mausoluem near the Shwedagon pagoda, alongside the tombs of Aung San Suu Kyi’s mother and UN Secretary General U Thant.

A window on the Golden Land

“The King in Exile”, a full account of King and Queen’s exile and last days, by Sudha Shah, was published by Harper Collins in 2012. A brief article by her, from that time, follows: View more

POLITICS

2nd round of 21st Panglong conference concludes with some evidence of progress

The much-anticipated 2nd round of the Panglong peace conference was concluded on 29th May. Some progress seems to have been made, with a number of agreements signed between the government and the armed ethnic groups.

In the political arena, it was agreed that all ethnic nationalities should have equal status and that there should be protection for differing languages and cultures. It was also agreed that legislative, executive and judiciary power should be shared between the states, regions and self-administrative units, with a constitutional tribunal being established to resolve disputes between them.

In the economic arena, it was agreed that tax and financial resources and decision-making power should also be shared equitably between the centre and the regions, according to terms to be defined in the constitution. The centre should also ensure all regions have equal economic opportunity for development.

Other points of agreement centred on decentralisation, transparency and rights over drafting land policy and guaranteeing property rights, the fair management of farmland, and the proper protection of sites of cultural and historical significance.

It was agreed that priority should be given to the proper protection of civilians caught up by conflict and natural disasters, of the more vulnerable members of society, and to the eradication of narcotics.

Agreement was not achieved in certain areas, notably the areas of “self-determination” and “non-secession”, and it was decided to carry discussion of these forward to the next round of talks, which are planned to take place in six months, or so.

One other feature of the conference was a meeting between representatives of previously excluded armed ethnic groups led by the United Wa State Army, and State Counsellor Daw Aung San Suu Kyi. At dispute is the form of the National Ceasefire Agreement, which these groups have not signed and wish changed, and which the army says should not be altered. Beyond the fact of the meeting, which was described by the ethnic groups as “social” rather than “political”, it seems not a great deal more progress was made at this time.

The following article contains a summary of the conference from Mizzima: Click here to view

ECONOMICS

World Bank’s $200mn programme to support financial stability

The World Bank has approved $200mn in credit to support Myanmar’s efforts to establish macro-economic stability and fiscal resilience and, in particular, to increase budget resources for greater access to quality public services.

Inter alia, the World Bank plans to support efforts to promote prudent public debt management, to reduce Central Bank deficit financing, and to improve SOE discipline and policy-based budgeting. It also hopes to improve revenue mobilization, the management of gas revenues, and the viability of the power sector. The long-term objective of the programme is to help contain possible inflationary pressures.

The credit is being made available over a period of 38 years, with a grace period of six years and a zero interest rate. Read more

China and Myanmar to establish border economic co-operation zone

The Myanmar Times has reported on plans for a joint committee to be formed between Myanmar and China to boost border trade between the two countries. In particular, it has reported that an MOU was signed for the establishment of a China-Myanmar Border Economic Co-operation Zone during Daw Aung Sang Suu Kyi’s visit to the Belt and Road Forum in China in May. Read more

MIC mandated to exclude irresponsible investors

The Myanmar Times has noted that, under the terms of April’s new Investment Law, the MIC has been given power to take into account investors’ record for responsible investing when considering investment proposals. In particular, it is expected to withhold its approval to investors who have been found guilty of breaking the law in Myanmar (or any other jurisdiction), with respect to environmental protection, labour, tax, corruption and human rights. Read more

BUSINESS

Unilever forms HPC J/V with EAC

Unilever has announced it is to combine its personal care and home care businesses in Myanmar with those of Europe & Asia Commercial Company (EAC) in a new JV which will have annual sales of a little more than €100mn.

The JV will combine manufacturing and distribution and it is expected it will benefit from the two companies’ complementary portfolios, as well as from greater rural penetration and economies of scale. Unilever anticipates the venture will create opportunities for local employment through R&D, manufacturing investment, market development and the nurturing of local talent.

EAC manufactures and distributes detergents and, through a sister company E-LAN, home care products (such as soap, shampoo and dish wash), as well as some personal care products.

The text of Unilever’s press release follows: Click here to read

Puma Energy JV commissions oil storage facility at Thilawa; plans ventures in jet fuel distribution and fuel retailing.

A JV between Puma Energy and Asia Sun, a Myanmar firm with experience in logistics and fuel trading, has commissioned a new fuel storage terminal at Thilawa.

The JV claims the facility, which took $92mn to build, is Myanmar’s largest and most modern import terminal for refined products, and the first to meet international standards for construction, safety and environmental protection.

A report from Frontier Myanmar, posted to the Puma Energy website, reports that the company has also become the first foreign entity that has received approval to distribute and sell petrol and diesel at its own branded outlets in Myanmar. Until recently, foreign companies were required to partner with the government in such a venture, but this obligation was waived by MIC in early April.

The Myanmar Times has also reported that Puma Energy (49%) has formed a JV with the government’s Myanmar Petroleum Products Enterprise (MPPE, 51%) for the import of jet fuel.

https://www.pumaenergy.com/press-releases/2017/05/08/puma-energy-asia-sun-opens-myanmars-largest-and-most-modern-petroleum-products-terminal/

http://www.frontiermyanmar.net/en/fuel-market-set-for-shake-up-as-puma-gets-mic-green-light

http://www.mmtimes.com/index.php/business/25923-fuel-storage-terminal-with-us-92m-fdi-to-be-built-at-thilawa-port.html

Foreign firms to be permitted to import agricultural, medical & construction materials

The Myanmar Times has reported that foreign firms are shortly to be permitted to import agricultural, medical and construction materials for the first time. The relaxation in the import regime has the support of the agriculture ministry and is designed to improve product quality, much of which is smuggled over Myanmar’s land borders. Read more

Plans for new offshore supply base at Nga Yoke Kaung

Deal Street Asia has reported that Myanmar’s SIM Co. Ltd is planning to raise $60mn in equity and debt to finance the development of an offshore supply base at Nga Yoke Kaung in the Ayerawaddy region. According to the report, the company has received permission from MIC to develop 184 acres of land, 49 acres of which it will do by itself and the remainder through a JV, for which SIM will be seeking a partner.

The new supply base will be competing with an existing facility at Thaketa, and with international operations in Singapore and Thailand, which – it is claimed – are up to three extra days’ sailing away from platforms in the Gulf of Mottama. Read more

Microfinance—two ventures supported by Dragon Capital and OPIC

Two new developments have recently been announced in the micro-finance space in Myanmar.

In the first, Ruby Hill Finance, a subsidiary of Myanmar’s Loi Hein Group (51%) and Vietnam-based Dragon Capital (49%) are to form a new microfinance JV, supported by $5mn in initial capital commitments. The venture is Dragon Capital’s first in Myanmar. Loi Hein, a producer of Alpine drinking water and carbonated soft drinks and has an existing securities JV with KT Zimco of Thailand. Ruby Hill’s CEO is to be Loi Hein’s Chief Strategy Officer, who previously worked at Standard Chartered Bank. Read more

In the second venture, OPIC, an US government agency that supports businesses investing in emerging markets, has signed a commitment letter for a loan of $5mn to Early Dawn Microfinance Company. Dawn’s largest shareholder is Accion, a non-profit organization based in Massachusetts. Dawn is to focus its efforts on low-income female entrepreneurs. It currently has about 80% of its customers in urban and semi-urban centres in Myanmar. Originally sponsored by Save The Children in 2002, Dawn has since received funding from FMO, the Dutch development bank, as well as from Triodos Investment Management. It has around 88,000 clients in 5 regions, but targets 150,000 customers by 2019. Read more

Myanmar Investments planning ventures in tourism and pharmacies

In an April trading update, AIM-listed Myanmar Investments has indicated that it has signed a MOU to set up a pharmacy, healthcare and personal care product JV in Myanmar, with two international partners. In addition, it has signed a MOU with a local tour operator and travel agency to establish a JV to expand the business and to invest in tourism-related assets. Myanmar Investments has since flagged a possible equity raising. Read more

Korea’s LS Cable to invest at Thilawa

LS Cable and System of Korea has announced plans for a JV, to be based at Thilawa, manufacturing aerial cables for power infrastructure and low-voltage cables for buildings and residences. The $18mn JV, is to be split 50:50 between LSC&S and Myanmar’s Gaon Cable. Read more

$35mn hydroelectric dam plan from Great Hor Kham

Deal Street Asia has reported that Great Hor Kham, an engineering company with operations centered around Muse on the border between China and the Shan state, has received approval to invest $35mn in a hydroelectric dam in the area. It is planned that part of the funding for the dam will be raised from an IPO on the Yangon Stock Exchange some time in 2017. Read more

China’s New Hope Group to invest $10mn in poultry hatchery

Deal Street Asia has also reported that China’s New Hope Group, a large supplier of agricultural products and feeds, is to invest $10mn in a poultry breeding farm in the Bago region. The group already has operations in Myanmar producing animal feeds and is now extending its reach to Mandalay and the north.

Its investment follows a similar project announced by Dutch group De Heus, supported by the IFC, last year. Other companies such as Thailand’s CP Group and Indonesia’s Japfa Group already have a presence in the market. Read more