Weekly Business News from Myanmar

Myanmar CEO survey remains broadly confident about the investment climate in Southeast Asia’s last great frontier market despite Myanmar's domestic and international challenges
Despite fierce domestic and international headwinds that have threatened to blow Myanmar’s fast-growing economy off course, executives who participated in Oxford Business Group’s latest Business Barometer: Myanmar CEO Survey remain broadly confident about the investment climate in Southeast Asia’s last great frontier market. Of the 100 respondents, 77pc indicate their firm intends to make a significant capital investment in the year ahead, while 64pc have positive or very positive expectations of local business conditions. The survey was conducted face-to-face in Yangon at a time when Myanmar was facing international scrutiny into the unrest in Rakhine State, as well as severe pressure on its currency stemming from the tightening of US monetary policy, moderating foreign direct investment (FDI) inflows and underperforming exports.
The value of bilateral trade between Myanmar and Thailand reached USD$ 2.39 billion from April to August of the past mini-budget period
The value of trade between Myanmar and neighboring country Thailand has reached 2.39 billion USD from April to August of the past mini-budget period, comprising export worth $1.23 billion and import valued $1.15 billion, according to data released by the Ministry of Commerce. Thailand tops on regional trade line-up with the largest trade value. Myanmar’s main export items are fishery products such as crab, fish and shrimp, as well as onions, sesame, dry tea leaves, coconut and turmeric, while consumer goods, cosmetic machinery, food products, and agricultural equipment and trucks are imported into the country from Thailand.
The government of Myanmar and China will sign a framework agreement for the construction of the Kyaukphyu deep sea port project in Rakhine State next week
The Myanmar government and China-based CITIC Group will sign a framework agreement for the construction of the Kyaukphyu Deep Sea Port project in Rakhine State next week, said U Aung Htoo, deputy minister of commerce. “It was agreed that for the first phase, the deep sea port will be implemented with US$1.3 billion (K2.4 trillion) in funds. The framework agreement will be signed between CITIC and Kyaukphyu Special Economic Zone (SEZ) Management Committee on November 8,” he told journalists in Nay Pyi Taw yesterday. CITIC Group initially won the tender to construct the Kyaukphyu (SEZ) with an estimate investment of $7 billion in December 2015. The development comes after months of difficult negotiations between China state investment vehicle CITIC Group and the NLD-government to reduce the Chinese consortium’s stake in the port from 85 percent to 70pc. Under the previous government, CITIC had won the original tender to build the port based on an 85:15 ratio.
Negative impact on investments in Myanmar from the loss of EU “GSP” is debatable (U Than Aung Kyaw, Deputy Director of DICA)
The Directorate of Investment and Companies Administration (DICA) believes that revoking Myanmar’s EU GSP will probably not have a severe impact on investments in Myanmar, according to U Than Aung Kyaw, Deputy Director of DICA. “It’s only been around five years since the EU granted us Everything But Arms (EBA) in June 2013. We already have CMP garment investments in our country. Moreover, when you look at the investments in Myanmar, most of the investments in the country are not from the West,’’ he added. He was referring to the Cut-Make-Pack (CMP) garment exports. As of 2017 the sector stood third on the list of export items as earnings reached nearly $700 million USD during four months of 2018FY. The EU placed more orders in the CMP market after the reinstatement of GSP rights to Myanmar. In the past many companies from South Korea and Japan invested in the sector; now the sector sees an inflow of investments from China as well.
Government will take action on the shadowy trade in gold and dollars in order to protect the country's economy
Panic over a falling currency and surging gold prices has put the spotlight on a network of brokers and speculators profiting from – and possibly fuelling – volatility. “THE GOVERNMENT will take action against the brokers who are manipulating the market and find out why they are doing it.” When government spokesman U Zaw Htay addressed reporters on September 21, Myanmar’s currency, the kyat, had been enduring a rough few days. Over the last three days it had fallen from K1,565 to the dollar to K1,630, but had also seen wild swings in which it gained or lost as much as K15 – nearly 1 percent of its value – in just an hour, according to websites that track the market rate. During this three-day period, the US dollar was generally losing value against other currencies; the kyat would normally have been strengthening. It seems that there were indeed other forces at work.
More support is needed for progress of Small and Medium Enterprise (SME), as financing SMEs can help to boost Myanmar’s economy
As some 99 percent of businesses in Myanmar are categorised as small- and medium-sized enterprises (SMEs), anything that can be done to help these businesses can only boost Myanmar’s economy. Among the most immediate issues SMEs in Myanmar face is access to funding. According to the Myanmar Micro, Small and Medium Enterprise Survey 2017 distributed by the Ministry of Planning and Finance, businesses in Myanmar rely on self financing for nearly 80pc of starting capital while financial support from banks is just 8pc. In addition, banks in Myanmar offer commercial loans with interest rates of up to 13 percent a year. Moreover, fixed assets are required as collateral for the loans. This makes gaining access to loans difficult or expensive for SMEs. However, the banks are at the moment unable to offer cheaper loans given that the local inflation rate, although much lower than before, is still not stable enough to support a dip in interest rates.
In a joint venture with a Hong Kong investor, Mottama Holdings completed the structure of Myanmar’s first high-rise steel building in Yangon, which is expected to be finished by 2020
Mottama Holdings said on Tuesday it has completed the structure of Myanmar’s first high-rise steel building, a US$80 million office tower in Yangon called M Tower that the company is building through a joint venture with a Hong Kong investor. The 26-storey project on Yangon’s Pyay Road is being built by Mottama subsidiary Min Dhama Steel Structure using locally manufactured steel and is expected to be finished by 2020, after which the 265 units will be leased as office space. The 0.97 acre site is owned by Mottama chairman U Yang Ho, company director U Tin Maung Htun told Frontier on Tuesday. He said the investor, M Tower Company, is a joint venture between Mottama, which holds a 51 percent share and a Hong Kong-based company, which holds 49 percent, and that the project is funded through company revenues and shareholder loans. M Tower was originally known as AMC Tower before Mottama changed its name from Asia Metal Company in 2013 after it was sanctioned by the United States Treasury Department for building work at a Tatmadaw factory at which US officials said about 30 North Koreans were working.
Toyo Thai Power Myanmar Co., Ltd (TPMC) plans to invest around USD $ 500 million in a liquefied natural gas (LNG) power plant in Ahlone, Yangon Township
Toyo Thai Power Myanmar Co Ltd (TPMC) plans to invest between US$350 million (K471 billion) to US$500 million to set up a liquefied natural gas (LNG) power plant, U Htet Aung Mon, general manager of TTCL Power Myanmar said. TPMC is the subsidiary of Thailand-based TTCL Public Co Ltd. The LNG power plant expected to generate 388Mw of electricity will be located in Alone Township, Yangon. U Htet Aung Mon said that the LNG to power the plant will be imported. In July last year, TPMC proposed the project to the Ministry of Electricity and Energy. The ministry issued a Notice to Proceed to TPMC this January. At present, the company is preparing an environmental impact and socio-economic impact reports for the project. The company is meeting with residents and explaining the project in the townships of Alone, Dagon, Lanmataw, Dala, Sategyi Khanaungto, Sekikan and Thanhlyan in Yangon.
Myanmar’s trade union and labor organizations disagreed with Brussels’ consideration to withdraw trade preferences during the meeting with visiting EU officials
Myanmar’s trade union and labor organizations voiced strong disagreement with Brussels’ move to consider withdrawing trade preferences at a meeting with EU officials on Monday. Representatives of the Myanmar Confederation of Trade Unions and the Myanmar Infrastructure, Craft and Service (MICS) organization met with members of an EU delegation looking into the human rights situation in the country at the bloc’s Myanmar office in Yangon. “We told them we don’t agree with the EU’s [possible] withdrawal of trade preferences,” U Maung Maung, president of the Myanmar Confederation of Trade Unions, said after the meeting. During the meeting, U Maung Maung stressed that Myanmar’s reforms are making progress, saying, “Myanmar needs the EU’s support for further reforms in the country.”
European Union (EU)’s probable withdrawal of its Generalized Scheme of Preference (GSP) may have limited impact on foreign investment since EU countries are not leading investors
The European Union (EU)'s probable withdrawal of its Generalized Scheme of Preference (GSP) will not impact the foreign investment flow in Myanmar, Xinhua reported. This will be due to the fact that EU countries have never been leading investors in Myanmar's investment sector, said U Than Aung Kyaw, deputy director general of the Directorate of Investment and Company Administration (DICA).