POLITICS
Update on 21st Century Panglong Peace Conference
The next round of the peace conference, which was scheduled to start at the end of February, has been delayed to some time in March.
At the celebrations celebrating Myanmar’s 70th Union Day, which were held at Panglong in the Shan State, State Counsellor Daw Aung San Suu Kyi called on the dozen armed ethnic groups that have not signed the national ceasefire to do so, and join the conference. Several of the armed groups responded with the technical answer that they have not in fact refused to sign, but that an invitation needs to be extended to all before they accept.
In his Union Day speech, President U Htin Kyaw, said the solution to national reconciliation, after an end is brought to the fighting, is building a democratic federal union. Calling for “Union spirit”, he said “Union spirit refers to the strong determination of all our nation’s people to build our Union with unity and mutual consultation. Without a strong and active Union spirit, a democratic Federal Union cannot be built.”
No specific date has yet been set for the next round of the peace conference. One of the reasons given in the Myanmar Times for the delay was to allow time for a scheduled conference of the Karen National Union, as well as Armed Forces day. There were also other meetings planned by the Restoration Council of Shan State and the Chin National Front at the end of February.
It is hoped that a delay in the conference would also allow time for a meeting between signatory and non-signatory groups to the national ceasefire.
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ECONOMICS
IMF issues new report on the Myanmar economy
Taking into account a slower than expected start to the year—resulting from weaker than expected agricultural production and the temporary halt to construction for compliance purposes—the IMF is projecting real GDP growth of 6.3% in 2016/17. It projects inflation of about 7% on average, and a widening in the current account deficit to about 6.5% of GDP.
It adds that the risks to growth are “tilted to the downside” and relate to (i) concerns over policy clarity (ii) financial sector vulnerability (iii) weak commodity prices and slow export demand (iv) global financial market volatility and (v) potential natural disasters.
In their report, the Executive Directors welcomed Myanmar’s continued progress on economic and political transition, but commented on the need for a strengthening of macroeconomic and financial stability, a deepening of reforms and improved communication of policies and plans to support confidence. In particular, the Directors commented that the following are needed:
- exchange rate flexibility to strengthen the external position and protect reserves
- reforms to strengthen the business environment
- tighter monetary conditions to contain inflation and reduce exchange rate pressure
- fiscal restraint and improved spending efficiency to maintain debt sustainability
- further reforms to reduce financial sector risks
Turning to specifics, the Directors welcomed:
- the authorities’ interest in a mechanism for making the setting of the exchange rate more transparent
- their commitment to phasing out central bank financing of the fiscal deficit
- improvements in tax administration (whilst also encouraging efforts to increase fiscal revenues further)
- progress on financial sector reform (whilst suggesting that more is needed)
On the last, the Directors have urged the government to issue the regulations to implement the Financial Institutions Law expeditiously, to accelerate the reform of the state-owned banks, and to further increase sector supervision capacity. They also saw scope for a measured loosening of controls on interest rates, in order to improve access to credit for the agricultural sector and SMEs.
Readers may use the following link to read the full IMF report.
Central Bank may liberalise trade financing by the branches of foreign banks
The Myanmar Times has reported that the Central Bank may allow the Myanmar branches of foreign banks to offer trade finance directly to importers and exporters, rather than just through JVs with local banks.
The paper writes that business associations have been lobbying the finance and commerce ministries for a relaxation in the regulations, as the local private sector banks’ capacity for providing lending of this sort is too small.
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Tax break on interest income
A statement issued by the Ministry of Planning and Finance that it will not levy tax on interest from bank deposits in the 2017/18 year has met with a mixed reaction, with some experts suggesting that the tax that would be foregone can be ill-afforded.
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BUSINESS
Work on Dawei SEZ to restart ?
In what it described as “plodding progress” on the long-delayed Dawei SEZ project, the Myanmar Times has reported that officials from the Tanintharyi Region have returned from a visit to Japan encouraged by its increasing interest.
However, the same report quoted the vice president of the Dawei SEZ Management Committee as saying that the ItalThai Development, one of the companies in the development consortium, is seeking to make some changes to its contracts, whilst another spokesman said that Japan is only likely to get involved in the latter stages of the project, which involve higher value-added industries such as electronics, fertilisers and pharmaceuticals. It is anticipated that the initial industrial units in the zone will be focused on labour-intensive sectors such as garments.
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ADB issues first guarantee for Burma
The Asia development Bank’s Trade Finance Programme has issued its first guarantee for Myanmar, supporting the import of fertilisers from Italy. The guarantee was issued to Banco Popolare di Sondrio, and covers the obligations United Amara Bank, one of the programme’s partner banks in Myanmar.
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Kirin seeks JV with Mandalay Brewery
After initial reports that suggested that Kirin Brewery, the majority shareholder in Myanmar Brewery, would be buying Myanmar’s oldest brewer from the UMEHL conglomerate, Kirin management has indicated to the Myanmar Times that it has, in fact, submitted a proposal for a JV with UMEHL to the MIC. He also added that, assuming approval is granted, the two companies would be run separately, to start with.
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Yoma Strategic ties up with Metro in a wholesale distribution
Singapore-listed Yoma Strategic has announced it is to take a 15% interest in a partnership with Germany’s Metro to establish a wholesale food and non-food distribution platform in Myanmar.
The JV expects to be able to offer 3,300 food and non-food products to professional customers such as hoteliers, caterers and independent retailers. It plans to leverage on Metro’s procurement capabilities and Yoma’s existing logistics infrastructure to fast-track its growth. It also intends to supply an e-commerce offering.
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SMI to distribute Shiseido cosmetics
SMI has announced it has reached a 3-year exclusive distribution agreement with Shiseido covering Myanmar. The contract may be extended for a further two years by mutual agreement.
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Thai TSP partners City Mart
A Thai fintech start-up, T2P, is reported to have entered into a partnership with City Mart, a leading retail chain, to integrate its payment platform, loyalty and e-gift platform.
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Diebold Nixdorf opens permanent office in Myanmar
In a similar vein, the Myanmar Times has reported that Diebold Nixdorf, a financial services and technology company is opening a permanent presence in Myanmar, with a view to expanding payment services to the retail sector. Hitherto, it has been working with a number of banks in Myanmar in the areas of retail banking technology, ATMs and software support.
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