POLITICS
UN Security Council calls for “end to excessive military force, intercommunal violence in Rakhine state”
The UNSC’s statement was released on 6th November. It also urged “the implementation of agreed-upon mechanisms to assist the return of those who have fled and to ensure access to humanitarian aid.” This refers to an MOU agreed between Myanmar and Bangladesh on 24th October.
The full text of the UNSC’s statement follows:
https://www.un.org/press/en/2017/sc13055.doc.htm
In early December, UN’s Human Rights Council passed a resolution deprecating “the very likely commission of crimes against humanity” against the Rohingya by the security forces and others.
Subsequently, Yanghee Lee, the UN’s special rapporteur on human rights has been informed by the Myanmar government that she will not permitted to visit the country during the remainder of her term.
https://www.reuters.com/article/us-myanmar-rohingya-un/myanmar-forces-may-be-guilty-of-genocide-against-rohingya-u-n-says-idUSKBN1DZ14J
https://www.reuters.com/article/us-myanmar-rohingya-investigator/myanmar-bars-u-n-rights-investigator-before-visit-idUSKBN1EE0UL
US Secretary of State refers to “ethnic cleansing”, but cautions against broad sanctions for now
In a hardening of its stance, the US has followed the UN human rights chief in describing Myanmar’s treatment of the Rohingya as ethnic cleansing. The US Secretary of State, Rex Tillerson, has blamed “some among the Burmese military, security forces and local vigilantes”, and has indicated the US wants an independent investigation into what has been happening. He added that targeted sanctions could follow, saying that those responsible for the atrocities must be held accountable. Broader sanctions against Myanmar as a whole, however, are being discounted as being counterproductive.
http://www.bbc.co.uk/news/world-asia-42084895
Myanmar signs refugee repatriation agreement with Bangladesh.
Myanmar and Bangladesh signed an agreement to facilitate the repatriation into Myanmar of refugees from Rankhine state at the end of November.
https://www.mmtimes.com/news/refugee-deal-inked-repatriation-begin.html
Pope visits Myanmar
The Pope visited Myanmar at the end of November. In his keynote speak in Naypyitaw he issued a call for the rights of all those who live in Myanmar to be properly respected.
http://www.bbc.co.uk/news/world-asia-42158405 https://www.reuters.com/article/us-pope-asia/pope-says-his-defense-of-rohingya-got-through-in-myanmar-idUSKBN1DW0R2
Two Reuters journalists arrested under 1923 Official Secrets Act
The war of words between members of the international community and Myanmar continued when it was announced that two Reuters journalists had been arrested for illegally acquiring information that they intended to share with the foreign media. UN Secretary General, Antonio Guterres, amongst others, has argued that the move is symptomatic of a decline in press freedom and has called for their release. The journalists are expected to make an appearance in a Yangon court on 10th January.
https://www.reuters.com/article/myanmar-journalists-explainer/explainer-two-reuters-journalists-due-to-make-second-myanmar-court-appearance-idUSL4N1P029W
ECONOMICS
DICA/GIZ publish Socio-Economic Atlas of Myanmar
The atlas collates a wide variety of data on Myanmar aggregated under the following headings:
- Administrative and Spatial Organisation
- Environment and Natural Resources
- Population, Settlement and Urbanisation
- Infrastructure
- Economic development
- Social development
At the policy level, the focus of the report is on social-economic developments and their uneven manifestation in the states and regions. The objective is to increase the state of knowledge about Myanmar and to support decision-making on spatial development policy.
The reports suggests the greatest obstacles to FDI include problems of macro-economic stability, extensive bureaucracy, infrastructural deficits, economic diversification, the ensuring of long-term guarantees, a lack of openness of the financial sector to foreign competition, and restrictions on the transfer of foreign capital and profits. Although it welcomes the emergence of new companies in textile, garment and food production, as well as in services (especially tourism), the report suggests foreign investment is over-concentrated in the metropolitan areas of Yangon and Mandalay.
Use the following link the access the full report:
https://elibrary.steiner-verlag.de/book/99.105010/9783515116251
World Bank reduces growth forecasts
In its latest update on the Asia Pacific economies, the World Bank has lowered its forecast for economic growth in Myanmar to 6.4% in 2017-18 and to 6.9% over the longer term. (It had forecast growth of 7.1% over the next three years in its April report on the economy.)
Slower investment demand, lower gas prices and a drop in exports of beans and pulses are some of the reasons given for the cut in growth expectations.
Inflation is expected to decline as agricultural output picks up, and to reach 5.2% by the end of FY 2017-18. The current account deficit is expected to widen to 6.8% of GDP because of continued subdued gas prices and a forecast acceleration in investment.
According to the Ministry of Commerce, the trade deficit in the first six months of FY 2017/18 rose from $1.8bn to $2.2bn.
For details, please see the summary of the World Bank’s report posted to this website on 9th November.
https://www.inwa-advisers.com/2017/Myanmar-Economy-World-Bank-Update-October-2017.html
IMF completes 2017 Article IV visit to Myanmar – sees economy rebounding and imbalances stabilizing
In its preliminary findings, the IMF suggests that “the outlook remains favourable, albeit moderately weaker than previously anticipated and with greater downside risks” and that a second wave of reforms is needed to accelerate the growth momentum and foster inclusion.
The IMF is projecting real economic growth of 6.7% in 2017/18. This is a little less than earlier forecast and reflects a subdued pick-up in investment and as well as uncertainties connected to recent events in the Rakhine state. Over the long term, growth is expected to gradually rise to its potential of 7% to 7.5%, with continuing FDI flows and improving efficiency in public investment and spending. The current account is expected to remain in deficit, given buoyant imports associated with FDI and government expenditure.
In respect of the risks, inter alia the IMF highlights the need of the banking sector to adjust to new prudential regulations and the possible impact on the economy of the humanitarian crisis in Rakhine state.
In respect of the next phase of reforms, it suggests a focus on agriculture, the banking sector and gradual interest rate liberalization, infrastructure, trade, natural resource management and the legal framework, including further opening up the economy to joint foreign ventures.
Fiscal policy, it says, should be geared towards the Sustainable Development Goals whilst being anchored on debt sustainability and lowering central bank financing of the deficit. It sees scope for efficiency gains through expenditure rebalancing, improved public financial management and further revenue mobilization, as well as through SoE reform, especially in the financial and electricity sectors.
The IMF also continues to advocate greater exchange rate flexibility and the development of deeper financial markets.
http://www.imf.org/en/News/Articles/2017/11/17/pr17447-myanmar-imf-staff-completes-2017-article-iv-visit
Business confidence drops sharply in second Roland Berger survey
In its 2017 survey of 500 businesses in Myanmar (61% of them domestic, 39% foreign), Roland Berger reported that confidence fell to 49 per cent from 73 per cent in 2016. Commenting on the drop, which reflects expectations for the coming year, Berger said that companies are concerned by “the lack of a clear economic policy and plan”, and added the survey was conducted before the recent problems in Rakhine state which is “likely to have further reduced investor confidence in Myanmar.”
Other challenges most commonly referred to by companies in the survey include a lack of trained staff, an unpredictable legislative environment and selective law enforcement. In respect of Myanmar’s medium to long term potential, however, Berger says that 88% of businesses (82% of foreign businesses) remain optimistic.
For access to the full survey, use the following link:
https://www.rolandberger.com/en/Publications/pub_myanmar_business_survey.html
EuroCham Myanmar’s second Business Confidence Survey
In its 2017 survey of 70 European businesses active in Mynamar, Eurocham reported an increase to 76% of companies reporting the business environment as “poor” or “needing improvement”. Regulatory issues, a lack qualified workers, and legal uncertainty are cited as the main challenges.
That said, a majority of firms surveyed said they are optimistic about operational change during the next three years, with 84% expecting to provide more services and 73% expecting profitability to improve over that period.
There is a decrease in companies intending to reinvest in the Yangon Region and Rakhine State, and an increase in the share of companies planning to invest in Mandalay, Naypyidaw and the Taninthariyi Region.
http://www.ealink.eu/resources/eurocham-myanmar-business-confidence-survey-2017
Implementation of new Company Law delayed to August 2018
Although it has now been approved in Parliament, Reuters has reported the head of DICA as saying it will take time for the necessary by-laws, registry and procedures to be put into place.
The new Company Law permits foreign investors to hold stakes of up to 35% in domestic companies and promises an improvement in the standards of corporate governance. The relaxation in the restrictions in foreign ownership is designed to facilitate the infusion of fresh capital into Myanmar companies and to assist in corporate restructuring, mergers and acquisitions.
https://www.reuters.com/article/us-myanmar-investment-exclusive/exclusive-myanmar-to-delay-law-that-would-have-allowed-more-foreign-investment-idUSKBN1E50FK
Government submits supplementary budget to Parliament
The government has submitted a supplementary budget of MMK2.5trn to parliament for the current year. This follows submissions for extra spending from the central bank, the telecommunications ministry, the transport and communications ministry and the Yangon Electricity Supply Corp.
The government has indicated its target of keeping the fiscal deficit below 5% of GDP remains in place and that, of the MMK2.5bn, it anticipates MMK1.4trn only will be spent in the current fiscal year.
Additional investments are planned for rural development, Rakhine state, food security, as well as electricity production.
The government is proposing to borrow MMK1trn from the central bank to go towards funding the deficit. According to Sean Turnell, senior economic adviser to the government, its plan is to reduce the portion of the deficit funded by the CBM from 40% in 2016/17, to 30% in 2017/18 and 20% in 2018/19. From 2019/20, the plan is that no recurrent government spending will be funded using the CBM.
https://www.mmtimes.com/news/k25-trillion-supplementary-budget-submitted-hluttaw.html
Central Bank to permit uncollateralized loans – grants banks longer to covert O/D loans to term loans
According to a report in the Myanmar Times, permission to extend such loans is dependent on the banks having suitable risk management policies in place.
At the same time, the CBM is granting private banks more time to clear open-ended “overdraft” loans and restructure them into term loans. The banks are now being allowed until January 2019 to convert a minimum of half of their overdraft loans, and to reduce the remaining balance to 20 per cent of such loans by mid-2020.
https://www.mmtimes.com/news/central-bank-myanmar-approves-loans-without-collateral.html
https://www.mmtimes.com/news/financiers-cheer-central-banks-compromise-loan-deadline.html
CBM to permit foreign banks to offer export financing facilities
The move is designed to help domestic exporters obtain access to working capital loans and seems to have been broadly welcomed by business.
https://www.mmtimes.com/news/central-bank-allows-foreign-banks-provide-export-financing.html
MOGE to disclose details of Other Account income for 2014/15 and 2015/16 in Second EITI Report
Myanmar’s second Extractive Industries Transparency Initiative (EITI) report is due for publication by March 2018. According to the Myanmar Times, it will include information on Myanma Oil and Gas Enterprise’s other account income for these two years.
In 2013/14, other account income was MMK1.3trn, of which MMK880mn was paid to the government. How much has been accumulated in the account over time, and how it is managed and invested is unclear, although the National Resource Governance Institute (NRGI) has suggested that, for the period since 2012-13, the amount accumulated could be as much as MMK4.6trn (around $3.4bn at the current exchange rate.)
https://www.mmtimes.com/news/moge-reveal-other-account-details-second-eiti-report.html
