POLITICS
Advisory Commission on Rakhine State publishes its final report
After a year of consultations, the Kofi Annan-led commission published its report “Towards a Peaceful, Fair and Prosperous Future for the People of Rakhine” on 23rd August.
Recommendations focus specifically on “citizenship verification, rights and equality before the law, documentation, the situation of the internally displaced and freedom of movement, which affect the Muslim population disproportionately.”
For socio-economic development, the report calls for more investment, increased participation for local communities in decision-making, and steps to ensure they benefit more from natural resource extraction in the state.
On security, the Commission calls for “a calibrated response that combines political, developmental, security and human rights approaches” as well as a unified agency for policing, with a single chain of command reporting directly to the chief of Myanmar’s police force.
Steps taken over the past year to improve cooperation with Bangladesh to secure the border and address shared challenges including drug trafficking are welcomed and further encouraged.
In terms of the implementation of its recommendations, the Commission calls for a ministerial appointment to be made with the sole function of coordinating policy on Rakhine, and for the appointee to be supported by a permanent and well-staffed secretariat.
On the day following the publication of the report a number of personnel were killed in attacks on the security forces in the state. These were condemned by Kofi Annan as well as by State Counsellor Daw Aung San Suu Kyi.
A summary of the key points and recommendations raised by the Commission follows:http://www.rakhinecommission.org/app/uploads/2017/08/final_report-20170822-Overview-of-key-points-and-recommendations_For-Web.pdf
State Counsellor’s September statement on Rakhine
On 21st September, Daw Aung San Suu Kyi made a televised statement on Rakhine in which she pledged to implement the Advisory Commission’s recommendations.
She said that the military offensive ended on 5th September, but admitted the exodus of refugees has continued since. She condemned all violence and rights violations and said that the security forces have been instructed to exercise restraint. She urged all Muslim communities in the state to participate in the verification process on citizenship and the repatriation of refugees, saying that everyone who passes the twin tests will be allowed to return.
Some comment from the Myanmar Times on her statement follows:https://www.mmtimes.com/news/rakhine-situation-fact-versus-fiction.html
Indian Prime Minister Narendra Modi visits Myanmar
Prime Minster Modi visited Myanmar on 5th to 7th September.
During his visit, an agreement was reached to regulate and harmonise travel across the border. In the first instance, a regular bus service is to be launched between Imphal and Mandalay. There are also plans to improve air connectivity between the two countries, whilst a feasibility study is to be launched for a rail link between Tamu and Mandalay.
The two sides agreed to appoint an operator for the Sittwe port and the Paletwa Inland Water Transport Terminal, construction of which has been supported by India. India is also to assist with road construction on the trilateral highway linking India, Myanmar and Thailand.
Discussion included the need for greater integration of energy infrastructure and for more co-operation in the energy sector, including oil and gas, and renewables.
Following the visit, India has formed a chamber of commerce in Yangon. Trade between the two countries is currently about $2bn per annum, which the chamber is hoping will rise to around $4bn to $5bn over the next two to three years.
https://www.mmtimes.com/news/expanding-trade-india.html
A copy of the India-Myanmar joint statement on the visit follows:http://tinyurl.com/y79xaj4m
Update on the Peace Process
The government’s Peace Commission held informal talks in Chiang Mai with UNFC representatives of the non-signatory armed ethnic groups in a bid to get them to sign the ceasefire agreement. In the event, they unsuccessful, but the UNFC has proposed another round of formal talks for early October.
https://www.mmtimes.com/news/government-unfc-set-more-talks-nca-deal.html
ECONOMICS
Government sets 7% GDP growth target for 2017-18
The 7% target is included in the 2017-18 National Plan. The Ministry of Planning and Finance indicated that, in its first year, the government has been focused “on the continuity of the previous government” but that “the middle three years” of its term will be a period in which “the government, the public and the private sectors (will) put all efforts to make the economy grow.”
For the current year, growth in agriculture has been projected at 4.6%. The industrial sector is expected to grow by 11.3% and services to grow by 7.4%.
In agriculture, the government has indicated it is prioritizing loan extension, contract farming, and the development agricultural value-added as a means of fostering growth in agricultural SMEs.
Otherwise, it has indicated its priorities extend to support for inward investment into labour-intensive industries and infrastructure. It proposes promulgating rules and regulations to protect intellectual property rights, in order to encourage investment in innovation and advanced technology.
https://www.mmtimes.com/business/26715-government-sets-7-percent-as-gdp-growth-target.html
Limits on domestic banks’ exposure to single individuals / entities
The Central Bank has announced a limit has been set at 20% of core capital and is effective immediately.
The move is seen as a precursor of a shift from Basel I to Basel II standards.
At the same time, the CBM has stipulated that a limit on unsecured transactions between banks has been set at 100% of core capital and that the aggregate of all large exposures of a bank are not to exceed 8 times its core capital. A minimum liquidity ratio for the banks of 20% became effective on July 7th.
https://www.mmtimes.com/business/26813-banks-must-limit-financial-exposure-to-20-of-core-capital-says-cbm.html
Increase in tax revenue in H2 FY 2016-17. Budget deficit in 2016-17 lower than expected.
Revenues were MMK 4.6tr, higher than the MMK 4.3trn expected. Income from oil and gas and income tax was lower than expected, but receipts from a wide range of sectors including, most notably, telecoms, excise on cigarettes and alcohol, commercial tax, and vehicle taxes of various sorts were higher than predicted. SoEs contributed taxes for services bought in both 2015-15 and 2015-16. Revenues in the telecoms sector included taxes collected from companies who were allocated 2500 MHz spectrum, as well as the fourth telecom operator. The shortfall in income taxes was partly due to an increase in exemptions.
In the budget, the government has budgeted a fiscal deficit of 4.5% of GDP. 28 Preliminary data for the budget deficit in FY 2016-17 suggested that, at MMK 2.6trn, it was substantially below the official target of MMK 4trn. Revenues were a little below target (MMK 16.5trn vs MMK 17.1trn), but expenditures fell well short of plan (MMK 18.6trn vs MMK 21.1trn.).
FDI in Q1 FY 2017-18 running ahead of target
DICA has indicated that FDI between the start of the financial year and mid-July has reached $2.7bn, compared with its $6bn target for the year.
Foreign investments in 13 projects were approved by MIC in August, taking the total for the financial year to that point to $3.1bn.
FDI in 2016-17 was $6.6bn.
https://www.mmtimes.com/business/26883-fdi-could-exceed-mic-s-target-in-2017-18-but-still-lower-than-previous-years.html
Plans to permit foreign investment on YSX
The Myanmar Securities Exchange announced its plans at a conference in mid-July in which it acknowledged that more investors are needed to support trade volumes.
Under the old Myanmar Companies Act, any company in which a foreigner had any share was defined as a foreign company. Under the new Companies Act, the foreign ownership limit for domestic companies has been raised to 30%.
Average daily volume on the exchange has declined from MMK 313mn in June 2016 to MMK 70mn in June 2017. From its opening level of 1,000 on 25th March 2016, the index had fallen to 524 at the end of June 2017.
https://www.mmtimes.com/business/26884-mechanism-for-foreigners-to-trade-in-ysx-under-way.html
World Bank approves $200mn credit for Macroeconomic Stability and Resilience
According to the World Bank the plan supports two mutually-reinforcing pillars: a stability pillar to promote prudent public debt management, improved SOE discipline and more effective budgeting and a resilience pillar to increase tax collection, enhance management of gas revenues and strengthen public finance management
http://www.nationmultimedia.com/detail/aec/30324227
Plans for the economic development of Rakhine State
In its final report, released on 23rd August, the Annan Commission tasked with finding solutions for the conflict in Rakhine has called on the government to conduct a strategic environment and labour market assessment for the proposed Kyaukphyu SEZ. It has suggested that, in the past, the preparation and implementation of large-scale projects in the state have helped to breed resentment, and that local communities should be more involved.
Meanwhile, a regional minister has suggested a Maungdawn economic zone, not to be designated an SEZ, but focusing on trade with Bangladesh as well as manufacturing, finance and services, is planned for development once the situation in the area has calmed down. The project was first mooted under the previous government. No timeline for the hoped-for MOU between the government and the private sector has yet been determined.
https://www.mmtimes.com/news/rakhine-construct-maungdaw-economic-zone.html
BUSINESS
Department of Civil Aviation to sign final Hantharwaddy airport agreement in early 2018.
The Singapore-based Yongnam-Cape-JGC consortium that won the tender in October 2014 has committed $1.44bn to the project. Negotiations about responsibilities have been continuing. DCA hopes these will be finalized in January and that, once an agreement has been made, it will be able to approach the Japan International Co-operation Agency for financial support.
The new airport has a planned capacity of 12mn passengers a year, which compares to an optimal capacity for the existing international airport in Yangon of 2.7mn a year.
https://www.mmtimes.com/news/hantharwaddy-airport-priority-government.html
Japanese businesses in Myanmar have not indicated interest in Dawei SEZ or Kyaukphyu SEZ
However, in an interview with the Myanmar Times, the chair of the Japanese Chamber of Commerce in Myanmar (JCCM) has indicated that, that Japanese companies – especially those engaged in heavy industry – have encountered no public pressure on human rights issues in Myanmar, and are concerned more about the availability of power than a lack of clarity in the regulations.
In February, the Tanintharyi region’s finance minister and vice president of the Dawei SEZ management committee had suggested that Japanese interest in the project was increasing and that the project would likely restart soon. Since then, there has been no announcement about Japanese investment in the zone.
The JCCM chair did suggest that there might be interest in the project from Japanese companies based in Thailand.
Meanwhile, at its fourth AGM in early September, the chairman of the Myanmar Thilawa SEZ, U Win Aung, indicated that his company would consider making an investment in the Kyaukphyu SEZ “if it is a profitable enterprise.”
A recent Thai perspective on the Dawei project from the Bangkok Post follows:https://www.bangkokpost.com/business/news/1334979/myanmar-renews-sez-push
Ford launches Yangon assembly plant in July
The new plant in East Dagon will assemble a range of Everest and Ranger 4WD vehicles, to be distributed by Capital Automotive, a partnership between RMA Group of Thailand and Myanmar’s Capital Diamond Star Group.
The plant has a capacity to assemble between 2,000 to 3,000 cars annually, but this can be increased as demand increases.
https://www.rmagroup.net/all-news-update/rma-opens-ford-assembly-plant-myanmar/
MIC approves offshore oil and gas supply base on Made Island
The supply base is to be developed on a 147-acre site in the Kyaukphyu district by Myanmar Chemical & Machinery Company.
Approval has recently been granted to Myint & Associates and SIM Co., for two other supply bases in the Ayeryarwaddy Region, as well as to Singapore-based Myanmar Offshore Supply Base to build a facility in Mon State.
https://www.mmtimes.com/news/made-island-offshore-supply-base-receives-green-light.html-0
The announcement follows news that, in July, another appraisal well struck gas in Block A-6 in Southern Rakhine.. The block is operated by Woodside Petroleum and Total.
http://tinyurl.com/yddlfr6w
Japan consortium to build mixed development near Shwedagon Pagoda and Central Railway Station
The $332mn, 92,000sqm development will comprise high-grade offices, commercial facilities and a 390-room luxury hotel to be managed by Hotel Okura. The development is being led by Fujita Corp., Tokyo Tatemono and Japan Overseas investment Corporation for Transport & Urban Development. It is due to be completed in 2020.
In July 2015, former president U Thein Sein responded to protests by cancelling five projects that had been approved for construction near the Shwedagon Pagoda. The $300mn Dagon City 1 project, a JV between Marga Landmark Development and Thu Kha Yadanar Company is to proceed on a new site at the corner of Kaba Aye Pagoda Road and Kan Be Road.
Meanwhile, domestic conglomerate, the Eden Group, has announced it is to invest $100mn in two Hilton hotels in Bagan and Inle lake, which it plans should open in 2019 and 2020.
https://www.tatemono.com/english/news/pdf/20170728.pdf
Mandalay Brewery’s JV with Kirin receives approval.
Mandalay Brewery is a subsidiary of Myanma Economic Holding (MEHL). Under the JV, $9mn is to be invested in upgrading the brewery, with Kirin taking a 51% stake.
In August 2015, Kirin acquired a 55% stake in MEHL’s Myanmar Brewery from Singapore’s Fraser & Neave. Since then, MEHL has acquired a 4% interest from Kirin, raising its stake to 49%.
https://www.mmtimes.com/news/mandalay-brewerys-jv-kirin-approved-market-heats.html
DealStreet Asia has reported on two investments in the farming sector. Singapore-based Japfa Comfeed is to invest $7.1mn in a poultry breeder farm and hatchery business and Korea’s CJ Feed is to invest $16.7mn in an animal feed business in Hmawbi township near Yangon.
https://www.dealstreetasia.com/stories/myanmar-digest-japfa-invest-7-07-breeder-farm-hatchery-mandalay-cj-feed-myanmar-put-16-7m-animal-feed-business-80362/
DealStreet Asia also reports that Myanmar Strategic Holdings, proprietor of the Ostello Bello hospitality chain and franchiser of the Wall Street English educational business in Myanmar is to list London’s main stock market.
https://www.dealstreetasia.com/stories/myanmar-strategic-holdings-lse-listing-80638/
Lastly, Alliance for Microfinance in Myanmar, which is based in Mandalay, has received $5mn in fresh equity from its existing shareholders and from the Asia Impact Investment Fund. The new funding is expected to help the company to expand its loan book from $10mn today to a target of $36mn by 2019.
https://www.dealstreetasia.com/stories/microfinance-firm-alliance-gets-5m-equity-work-financial-inclusion-myanmar-82516/
