Weekly Business News from Myanmar

Government urgently needs to promote infrastructure development to attract investors (Myanmar Infrastructure Forum)
SINCE MYANMAR’S lack of adequate infrastructure may deter potential investors, the government must urgently bring infrastructure development into focus, according to the recent Myanmar Infrastructure Forum. The government’s clear decisions would drive the future of Myanmar, said Teo Eng Cheong, CEO International of Singapore, North Asia and Southeast Asia at Surbana Jurong Private Limited (SJ), which organised the event. “The government needs to decide what kind of infrastructure is in need in the short term. Is it ports, roads and highways, railways or power generation? It is the big question the government needs to look at and carefully assess in the next two years,” he said. Cheong urged the government to choose the right projects and to work with the right partners. “It is important to allow the right companies to get involved in infrastructure projects. Approaches in financing, developing and operating the projects are critical to ensure benefits for all the citizens,” he said.
To support livestock farmers with working capital, Yoma Bank signed its first innovative loan agreement with De Heus
Yoma Bank signed its first innovative loan agreement that is set to revolutionize SME financing in the poultry sector. The purpose of the loan is to facilitate livestock farmers with working capital to buy animal feed from De Heus, a Dutch Feed Miller with factories in Yangon and Mandalay. The finance structure is a win-win situation for all parties involved. Individual farmers and dealers get access to the formal financial system in order to grow their poultry business, whereas De Heus is positioned to grow feed sales on the back of their client’s increased purchasing power. Borrowers are not required to put up hard collateral typically requested by banks in Myanmar, but rather earn unsecured bank credit based on their positive track record. "Yoma Bank is proud to support Myanmar’s poultry farmers through this innovative partnership with De Heus. This program will make a great impact on the ability of livestock farmers to grow their businesses. Yoma Bank’s Agribusiness Finance Program, together with LIFT, continues to deliver new and innovative financing solutions to support Myanmar’s agriculture sector.” said the Advisor to the Chairman and CEO of Yoma Bank, Mr. Hal Bosher.
Directorate of Investment and Company Administration (DICA) expects US$3 billion FDI in 2018 transitional fiscal year
Directorate of Investment and Company Administration (DICA) forecasted that $3 billion in foreign direct investments will flow into Myanmar in first six months of this fiscal year, from April 1 to September 30. DICA is referring to the 2018 transitional fiscal year which is only six months long. To clarify, 2018 will see the start date for the normal fiscal year period change from April 1 to October 1. The current 2018 fiscal year started on April 1, 2017 and will end on March 31, 2018, and we normally call this 12 month period the FY 2018. However, there will be a six month transitional fiscal year period, which will start on April 1, 2018 and end on September 30, 2018. So in order to avoid confusion between the two fiscal year periods which both end in 2018, we will refer to this six month period as the 2018 transitional fiscal year.
Myanmar has signed investment promotion and protection deals with twelve countries since 2014, including Thailand
From 1998 to 2014 Myanmar has signed investment promotion and protection deals with twelve countries, since then there have not been any other signed deals, according to the press conference of Directorate of Investment and Company Administration (DICA) held on January 19. “Myanmar is planning to sign deals with Hong Kong, Singapore, USA, and European Union countries,” according to U Kyaw Win Tun from DICA. ‘‘We have signed Trade and Investment Framework Agreements with USA. We have more steps to reach a bilateral agreement and we are negotiating by forming working groups on the subject,’’ he said. The countries that have signed a deal with Myanmar are Philippines, Vietnam, China, Laos, Thailand, India, Kuwait, Indonesia, Japan, Korea and Israel and the agreement with USA is the one on attracting investment.
Government approved export of 22 types of value added products for foreign joint venture businesses
The government has approved export for 22 types of value added products by joint venture businesses, according to the notice by the Ministry of Commerce on January 22. With the aim of boosting productivity and expending foreign market, the ministry has allowed the export of 22 items. ‘‘The is the first step for joint venture businesses for exporting their products which will pave the way for more foreign investment,’’ U Khin Maung Lwin, Deputy Director of the Ministry of Commerce, said. Before the notice, foreign venture businesses were not allowed to be involved in exporting, they were only allowed to import hospital equipment, construction materials, fertilizers and other related items. The allowed items, according to the notice, are meat, crops, plastics and pulp, ceramic materials, ceramic materials, pots, cups, plates and other household materials; chemicals, compressed gases, agricultural products, cosmetics, animal food, wood based furniture and purified metals.
To monitor and control of credit risk, the Central Bank of Myanmar will improve financing of business establishments, especially SMEs, and shift from a collateral-based to risk-based lending system
Reading through the 7/2017 directive by the Central Bank of Myanmar (CBM) on the implementation of the Asset Classification and Provisioning Regulation, the words and phrases that captured my attention were: “cash flow pattern of the borrower”, “credit risk analysis” and “term loans with up to a maximum maturity of three years.” These technical terms are essential ingredients for effective financing of business establishments, especially small and medium enterprises (SMEs). By issuing the directive, the monetary authority is allowing local banks to make medium-term loans based on the business cycle and cash flow patterns of the SME. This represents a shift from a collateral-based to risk-based lending system, which is a significant development in the banking sector.
Mandalay Myotha Industrial Park project attracted US$500 million local and foreign investments as of mid January 2018, which includes investments from Thailand
The Mandalay Myotha Industrial Park project in Myanmar's central Mandalay region has attracted 500 million U.S. dollars of local and foreign investment as of mid this month, Xinhua reported quoting state media. The project is jointly implemented by the Mandalay government and Mandalay Myotha Industrial Development (MMID) Public Company, aiming to construct more than 100 plants on a 1000-plus-acre compound within three years. At present, five factories including animal feed plants, a saw-mill, a concrete plant and a snow cookie plant with investments from Indonesia, Denmark, Thailand, China and China's Hong Kong are operational, the report said.
In order to meet Myanmar’s growing electricity demand, Myanmar government gave the green light to private investors in four gas-fired projects
YANGON — The government has finally revealed how it plans to meet Myanmar’s growing electricity needs, giving the green light to private investors in four gas-fired projects. Minister for Electricity and Energy U Win Khaing yesterday oversaw the issuing of a “notice to proceed” to investors in the four projects at a ceremony in Nay Pyi Taw, the ministry announced on its Facebook page this morning. The projects – comprising several billion dollars of investment – would collectively add more than 3,000 megawatts of capacity to the national network and essentially double existing output. Three of the projects, at Kanbauk in Tanintharyi Region, Mee Laung Gyaing in Ayeyarwady Region and Ahlone in Yangon Region, are for imported liquefied natural gas. A fourth, at Kyaukphyu in Rakhine State, is for natural gas.
Central Bank of Myanmar has no plan to change existing interest rates until 2020 (U Soe Thein, Vice-Governor of CBM)
The Central Bank of Myanmar (CBM) will not revise the interest rates on bank deposits, borrowings and government treasury bonds, CBM Vice-Governor U Soe Thein told the media on Tuesday. As it must keep inflation stable and maintain the rate at which the government borrows money to fund the fiscal deficit, the CBM has no plans to change existing interest rates until 2020, U Soe Thein said. “The CBM has a mandate to keep inflation stable and support the government in narrowing the fiscal deficit. So, we will not change or reduce interest rates up until 2020 at least. Beyond that, if conditions are suitable, and these two factors are under control, there may be some relaxation in the rates,” he said. Currently, the Central Bank Rate is 10 percent per annum (pa). The Minimum Bank Deposit Rate is 8pc pa, while the Maximum Bank Lending Rate is 13pc pa, according to the CBM’s website.
Fencing along 8,200 foot Hanthawaddy international airport project in Bago region is expected to finalized by the end of this financial year
Fencing along the 8,200-foot Hanthawaddy International Airport project in the Bago Region is now 65 per cent complete, and it is expected to be finalised by the end of this financial year, according to a project engineer from the Department of Civil Aviation. The fencing project is being implemented with a budget of Ks400 million. The department faced some difficulties while fencing the target area because of the presence of local restaurants and farmlands within the project area. The Bago Region government and the department held several negotiations with restaurant and farmland owners, following which the task was completed. The total area to be fenced is 84,480 feet (16 miles). In the initial stage, the organising body allocated Ks400 million to fence 8,200 feet of the area within this fiscal year (FY); however, the executive body is trying to complete the project before 31 March.