Weekly Business News from Myanmar

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  Internal Revenue Department will reward those who provide the information on establishments that fail to pay commercial taxes

  The government is raising its efforts to collect taxes from commercial enterprises. Last week, the Internal Revenue Department said it will reward those who provide information on establishments that fail to collect commercial taxes, according to state media. Under the law, consumers who buy goods and services in Myanmar are liable to pay commercial taxes. This will be included in the total bill presented by the goods or service provider. The customer will be given a receipt affixed with official tax stamps, signifying that commercial taxes have been paid on the transaction. The commercial taxes will be collected by or remitted to the government. The goods and service providers include restaurants, hotels and jewelry shops, among others. Should a customer not be presented with a receipt or if the receipt is not affixed with the appropriate tax stamps, he or she can lodge a complaint with the IRD in exchange fore rewards ranging between K20,000 and K100,000. Informants’ identities will not be revealed.
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  State-owned Myanma Petrochemical Enterprise (MPE) plans to build a new oil refinery near an existing state- run facility in Magwe Region, which will have a capacity of two million tones per year (Daw Yin Yin Aung, Deputy Director of MPE)

  State-owned Myanma Petrochemical Enterprise (MPE) is planning to build a new oil refinery near an existing state-run facility in Magwe Region, Daw Yin Yin Aung, deputy director of MPE, told The Myanmar Times. The government intends for the project to be implemented in cooperation with the private sector under a Public Private Partnership, in line with Myanmar’s economic policy. The capacity of the new refinery will be 2 million tonnes per year. It will use crude oil feedstock from the South East Asia crude oil pipe line, which runs across Myanmar from a terminal on the coast of Rakhine State to Yunnan province in China. The pipeline, which began operations in 2015, was first developed by China National Petroleum Corporation in 2008. The Chinese own a controlling stake in the pipeline, while the government holds the remaining stake. Crude oil is transported via the $2.5 billion pipeline and exported to China. The Ministry of Electricity and Energy (MOEE) has granted approval for the new refinery to buy 2 million tonnes of oil from the South East Asia Crude Oil Pipeline Company, which controls the pipeline.
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  Yangon Regional Government plans to implement an inland port project in Hlaing Tharyar Township to streamline transportation of goods using waterways

  Yangon Regional Government is planning to implement an inland port in Hlaingtharyar Township to streamline transportation of goods using waterways. The project is being planned near the Nge Pin Le industrial zone and A Le village in Hlaingtharyar Township, but the regional government has not mentioned a proposed completion date. The project is called the ‘Ngwe Pin Le Integrated Logistics Zone & IWT Jetty Link Dry Port Project.’ Its market sounding was held on April 4, and was attended by businessmen in the transportation sector. ‘‘Waterway transport is the cheapest mode of transportation. However in Yangon land transportation is mainly used. Therefore, we are planning to implement water transportation as soon as we can,’’ Daw Ni Lar Kyaw, a regional minister for electricity, industry and transport, said.
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  Greater Mekong sub-region countries have adopted a framework worth $66 million that will be implemented in five years: the framework will expand the economic corridor among the countries and connect urban and rural areas

  Greater Mekong sub-region countries have adopted a framework worth $66 million that will be implemented in five years. “Myanmar agrees with the framework and will actively take part in the framework.” U Henry Vanthio, Myanmar’s Vice President No.2, said at the Greater Mekong Sub-region Economic Cooperation summit held on March 31 in Vietnam. The summit of Greater Mekong sub-region countries, Thailand, Myanmar, Laos, China, Cambodia and Vietnam defied Hanoi Action Plan and the Regional Investment Framework. Myanmar's Vice President said that Myanmar believes it will be able to collect funds which will help implement the action plans of the 2022 framework. This includes 226 projects of investment and technical assistance in Myanmar which supports the new GMS Transportation Strategy of 2018-2030 among Greater Mekong sub-region countries.
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  Dr. Maung Maung Thein, former minister for Finance and Planning, pointed out five constraints that make banks hesitant to grant loans to SMEs: lack of statistics, more than one business statistics record, inability to provide complete statistics, weakness

  Dr. Maung Maung Thein, former minister for Finance and Planning, pointed out five constraints that make banks hesitant to grant loans to SMEs during the event of SME Financing Landscape in Myanmar: A Multifaceted Approach. He pointed out that most SMEs lack statistics, have more than one business statistic record, are unable to provide complete statistics, are weak in laying out a business plan and do not own immovable properties. “They are weak in having complete statistics. Banks always look at the statistics. They also keep more than one record. For instance, one for his wife and one for himself,” he said. The first four facts can be addressed, he said, by raising financial knowledge and the last fact can be overcome by making credit insurance business develop.
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  Additional loans to be disbursed to profit-making small and medium enterprise (SMEs) after a review on their investments and progresses (U Khin Maung Cho, Union Minister of Industry)

  Additional loans will be disbursed to profit-making small and medium-sized enterprises after a review of their investments and progresses, said Union Minister for Industry Khin Maung Cho. For the business expansion of SMEs, the government is carrying out the issuance of recommendations for the availability of loans from respective banks and the submission of loan applications under the Credit Guarantee Insurance (CGI) system. Till February 15, the Co-operative bank disbursed Ks 2,283 million loan to 225 SMEs, the Small and Medium Industrial Development Bank, Ks 200 million to 10 SMEs and Kanbawza Bank, Ks 295 million to four SMEs.
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  Although some reform has been implemented at Yangon port, the process for import and export there remains complicated, slow and costly

  The latest World Bank ease of doing business report ranked Myanmar near the bottom of 190 global economies and this story will help you to understand why. IT’S FAIRLY easy to register a trading business in Myanmar. But getting permission to import or export products through Yangon’s port is another matter entirely – let alone physically getting goods into and out of the country. Despite some reform steps, the process remains complicated, slow and costly. The latest World Bank Doing Business report for Myanmar ranked the country 163rd of 190 surveyed for trading across borders. The numbers in the report are staggering: the World Bank says it takes 230 hours to complete border compliance when importing goods, including obtaining, preparing and submitting documents during port or border handling, customs clearance and inspection procedures, compared to an average of 70.5 hours for East Asia and the Pacific, and 8.7 hours for high-income countries. The cost is also higher, at US$457 compared to $431 for the region and just $111.6 for high-income countries.
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  Myanmar has economic potential but needs to restructure its system, implement discussions with the business community, and deliver concrete policy reforms to improve the investment climate

  Last year, U Kyaw Win, the planning and finance minister, proclaimed that Myanmar’s economy is like a plane at full throttle down the runway, ready to take off. “Myanmar is like a plane running on the runway in 2016, but it is ready to take off in 2017.We will prevent [tackle] the monopoly which has persisted in Myanmar due to years of protectionism,” U Kyaw Win said. Two years into this government’s term though, and it is clear that neither has happened. The system needs to be restructured for it to take flight. The current economy is akin to the collapsed venture between All Nippon Airways (ANA) and Golden Sky World. Last year, ANA was forced to back out of a JV with Shwe Than Lwin’s subsidiary in which the Japanese airline originally was to pay US$25 million for a 49pc stake. The deal failed to go through because Nay Pyi Taw rejected the JV’s application for an air operator’s certificate without reason. ANA had been waiting for 1.5 years.
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  The Yangon Region Government's promotion of public-private joint ventures has been controversial, with critics saying that the government should stay away from the joint venture with the private sector and focus instead on transparently contracting some

  Senior Yangon City Development Committee officials and chief executives of some of the country’s most prominent companies met on March 5 to discuss a proposal for a joint venture enterprise to be called Yangon Infrastructure Development Co Ltd (YIDC). YCDC is under the Yangon Region Government and Chief Minister U Phyo Min Thein has proposed that YIDC take over its municipal responsibilities, such as garbage collection, road building and digging drains. At the meeting, one local company said that its study had found that US$7 billion was needed to upgrade the city’s infrastructure. YIDC is just the latest proposal for a public-private joint venture backed by the Yangon Region government since it took office in 2016. But are these joint ventures likely to be successful? Under junta rule, union-level ministries and the states and divisions (now known as regions) were allocated budgets and were given significant autonomy on how it was spent. Basically, they spent it was they saw fit. A consequence was widespread corruption and substandard government services and infrastructure that did not reflect the amount of money that was being allocated. Meanwhile, many state-owned enterprises were running at huge losses.
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  Proper accounts, financial statements, and a solid business plan are challenges for small and medium enterprise (SMEs) that wish to obtain a loan from the bank

  The lack of proper accounts, financial statements and a solid business plan is one of the biggest obstacles to small and medium enterprises (SMEs) qualifying for loans, banking officials said at a recent discussion on access to capital organised by MFITRIX, a financial training school. “When obtaining loans, the banks need to review each applicant’s income and expenditure to calculate the repayment terms,” said Dr Hla Nyunt, deputy managing director of Global Treasure Bank. “Local firms are weak in basic accounting processes such as keeping track revenue, expenditure and tax. In addition, their business plans and strategies are not recorded or well-prepared. Without these documents, it is quite impossible for the banks to extend loans to them,” Ayeyarwady Bank managing director U Myint Zaw said. The government has taken efforts to help local SMEs sidestep high local interest rates and collateral requirements with options such as foreign loans and insurance.