POLITICS
2nd round of 21st Panglong conference concludes with some evidence of progress
Snippets on the peace process
Following the conclusion of the second round of the 21st Century Panglong Conference, June has been a quieter month for the peace process. Two Shan groupings, the SNLD and the RCSS, have called on those leading the process to involve other stakeholders more, suggesting more needs to be done to collect inputs from the regions, particularly through the preparatory sub-national dialogue process. They have also argued more of those attending the conference should have had a say in the decisions taken at it. Read more | Read more
Following the Conference, members of the Peace Commission have met, in Chiang Mai, with members of the DPN, a body representing five groups that have not yet signed the ceasefire agreement. It seems they have agreed that the international community, under a UN platform, should be involved in the monitoring of breaches in any ceasefire, although the army is thought to be nervous about what it sees as concessions in national sovereignty. Read more
The following article by Richard Horsey, of the International Crisis Group, provides a helpful overview of some of the issues, such as the right to secession, that remain unresolved post the most recent stage of the Panglong Conference process. Read more
UNHRC fact-finding mission to be refused entry to Rakhine
Reuters has reported that Myanmar will conduct its own investigations into alleged human rights violations, and will issue its own report.
State Counsellor Daw Aung Sang Suu Kyi has argued that an international mission would likely create greater hostility between the different communities in the state. The findings of a commission of enquiry led by Vice President U Myint Swe are awaited. Read more
ECONOMICS
EuroCham 2017 “White Book” recommendations
The European Chamber has recently published its 2017 “White Book” on Myanmar. In it, it has highlighted the following as primary areas for policy action:
- education on the importance of tax, simplifying tax procedures, and improving tax and accounting enforcement
- doing more to encourage better corporate governance, adherence to regulations, improved operational procedures
- introducing and enforcing intellectual property laws
- reducing unnecessary bureaucracy
- establishing a more level playing field between domestic and foreign companies, by reducing restrictive trading rights
- addressing infrastructure needs through longer term master plans
EuroCham has also made some recommendations in respect of certain specific sectors, thus:
- infrastructure: improvements in safety and environmental protection; developing a master plan for Yangon
- CSR: raising awareness, enhancing collaboration between the public and private sectors
- energy: improving coordination between ministries and optimizing their procedures; introducing a risk allocation framework and clear electricity pricing policies; enhancing investment in renewable energy
- health: controlling generics with no bioequivalence; increasing awareness of patient safety; tightening controls over medical equipment at hospitals; streamlining the pharmaceutical registration process
- logistics & transport: developing a deep sea port/SEZ in the delta region; adhering to WTO standards in the Customs valuation process; increasing port efficiency and Customs operating hours; reducing congestion at the ports by ensuring only custom-cleared containers are admitted
The following link to the EuroCham website can be used to read the full report: Read more
Myanmar Investment Forum – Government promises more economic reforms, support for SMEs to aid import substitution
At the annual Investment Forum, government minsters have promised further reforms, focusing particularly on reducing protectionism (as implied by the new investment law), helping SMEs secure land, finance and technology for expansion, supporting infrastructure investment (especially in power), and improving tax collection.
They have also indicated they wish to simplify trade procedures, to encourage a shift in informal trade to formal trade, and to take advantage of Myanmar’s recent admission into the Generalised Scheme of Preferences (GSP.)
Support for SMEs, particularly in manufacturing, is seen as important for import substitution and reducing the trade deficit. However, access by the SMEs to competitive finance is a continuing challenge. Read more
Ministry of Commerce statistics suggest that, in the first two months of the fiscal year, the trade deficit has expanded from $0.7bn to $1.2bn and that the growth in imports of raw materials and consumer goods has been outstripping the growth in capital goods imports. Read more
MIC announces ten prioritized sectors
According to the Myanmar Times, MIC has highlighted 10 sectors in which it is seeking to attract extra foreign inward investment. Thus:
- agriculture, especially in value added segments, livestock production, and fisheries
- export promotion industries
- import substitution industries
- power
- logistics
- education services
- health care
- construction of affordable housing
- industrial estates
It notes that, since 2011/12, only 3% of FDI into Myanmar has gone into agriculture and livestock breeding. Read more
June manufacturing PMI falls to 49.4
The Nikkei Myanmar PMI index has dropped back to just below 50 for the first time since December 2016. The survey reports a weakening in output and new orders, and manufacturing optimism that is unchanged from May’s muted level.
Anecdotal evidence from the survey points to higher input prices having impacted demand, although inflation pressures have been easing from their peak. Increased competition is also said to have had an impact on output. Read more
$1.8bn in FDI approved; business volume with ASEAN declines in 2016/17; trade with India rises by 6% in 2016
According to the Myanmar Times, MIC has approved $1.85bn of FDI so far in FY 2017-18. An additional $127mn of investments into Thilawa SEZ has also been approved.
Citing the Ministry of Commerce, The Irrawaddy has reported that trade between Myanmar and India grew by 6% in 2016. Imports rose 3.8% to $1.11bn, whilst exports rose by 8.4% to 1.06bn.
Meanwhile, it reports that trade with ASEAN slipped from $10.4bn to $9.6bn in 2016/17. Exports were $3.1bn, whilst imports were $6.5bn. Myanmar’s main exports to ASEAN were of agricultural products; its main imports were consumer goods, electronic products, capital goods and autos.
World Bank urges accounting/audit sector liberalization
In its Report on Observance and Codes in accounting and audit, the World Bank has urged Myanmar to finalise its new statutory framework (Company Law, Securities Exchange Law, Financial Institutions Law) as soon as possible, whilst ensuring that requirements for financial reporting are made consistent.
Given the increase in demand for accountants and auditors, it suggests an easing in the restrictions on foreign practitioners should be considered, and that greater resource be applied to training and education, with the quality of programmes and courses being upgraded.
The World Bank notes that Myanmar accounting and auditing standards have not been updated since 2009, and so have fallen behind international practice, whilst compliance is often poor and inconsistent. Read more
World Bank support for disaster resilience
The World Bank has announced it is to allocate $116mn from its Myanmar SE Asia Disaster Relief Management Project to finance initiatives to reduce the impact of flooding, to improve resilience to earthquakes, and to help the government to improve its disaster response capability.
The World Bank estimates that disasters cost the Myanmar economy $184mn annually, and has noted that Yangon in particular is exposed to risks from flooding and earthquakes. Read more
BUSINESS
TTCL JV mulls $6bn investment into coal-fired power
Citing a report from The Nation newspaper that it has posted to its corporate website, TTCL, a JV between Ital-Thai Development and Japan’s Toyo Engineering Corp., has announced a plan to invest up to $6bn in the period to 2020 in two 1280 MW, coal-fired power stations in Myanmar. The first plant, planned for Mon state, is meant to get under way this year. The second, planned for Kayin state, is still “under study.” Funding for the projects is to be supported via the listing of a TTCL subsidiary on either of the Thai or Singapore stock exchanges.
In addition, TTCL has indicated it intends to propose a plan to the government to raise the capacity of its existing 121 MW combined-cycle plant in Yangon to 200 MW. Read more
Plans for Korean industrial zone in N. Yangon
According to the Myanmar Times, an agreement has been reached between Myanmar’s Department of Housing and Urban Development (DHUD) and the Korea’s Land & Housing Corporation (LHC) to develop a 570 acre township and industrial complex in the Nyaung Na Pin area, to the north of Yangon.
Korea’s LHC is expected to take a 60% stake in the c.$100mn project. It is hoped that construction will begin early in 2018. Read more
JICA master plan for Tanintharyi, incl. Dawei
Meanwhile, the Japan International Cooperation Agency has indicated that, at the Myanmar government’s request, it is to draw up a master plan for the Tanantharyi region, and a development plan for the Dawei SEZ (based on its existing master plan.)
An initial survey period is expected to take about a year, with work starting in June. Read more
Nippon Concrete JV to invest in Mawlamyine
DealStreetAsia reports that a JV involving Nippon Concrete of Japan has opened its 9.6 acre concrete pole and pile manufacturing plant near Mawlamyine. The JV has invested about $5mn in the plant so far, and aims to invest a further $10mn in future. The plant’s core products are concrete poles used in electricity distribution.
DHL to invest $114mn in Myanmar
In the same report, DealsStreetAsia says that DHL Supply Chain Myanmar has received MIC approval to invest $114mn in supply chain and warehouse services, to be based in Mingalardon. Read more
Daiwa Securities invests in ISP Frontiir
Daiwa PI, a subsidiary of Daiwa Securities, has announced it has invested $6.06mn to acquire a stake in Frontirr, an internet service provider to both businesses and consumers. Frontiir obtained an ISP licence in 2016 and offers a broadband communication services through an optical fibre and wireless network in the Yangon area.
The funds raised from this investment will be deployed by Frontiir in capital expenditure to expand the network, including in Mandalay. Read more
IFC promises $13.5mn funding for microfinance
In a press release, the IFC has announced is has committed a finance package of $13.5mn to Myanmar microfinance institutions. It plans to take a $1.5mn stake in Maha Agriculture Public Co (a subsidiary of Myanmar AWBA) and to extend $6mn in loans to each of Fullerton Finance (Myanmar) and Early Dawn Microfinance.
IFC already has a 15% equity interest in Fullerton Finance (Myanmar). Dawn Microfinance has recently received a commitment for a $5mn loan from the United States agency OPIC. Read more
Myanmar Investments closes $7.3mn equity fund raising
AIM-listed MIL has recently announced it has raised $7.3mn in new equity, more than its original $3mn to $5mn target. It has indicated it has a pipeline of new investment opportunities in place and that it expects to invest a significant proportion of the capital so raised in 2017. In April, MIL reported it had signed non-binding MOUs for investments in the healthcare and tourism sectors. Read more | Read more
Delta Capital Myanmar raising capital for second PE fund
Meanwhile, Delta Capital Myanmar, a private equity firm sponsored by Serge Pun Associates and Simon Murray & Co., has indicated on its website that it is seeking to raise $100mn, or more, in fresh capital. It launched its first fund, with over $50mn in committed capital, in 2013. Read more
