MMM -International Marketing Project - Engineering Service Prospect in Myanmar

7/29/2019 MMM -International Marketing Project - Engineering Service Prospect in Myanmar

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Engineering Service Prospect in Myanmar

Submitted byName of the student: Vijay Dadhwal

MMMSem V

Roll No. 017

Under the guidance of

Name of the Guide: Prof R VenkateshIn partial fulfillment of

MMM course

University of Mumbai

(2011-2014)

Prin.L.N.Welingkar Institute of Management

Development & Research Matunga,

Mumbai400019.


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CERTIFICATE FROM GUIDE

This is to certify that the project entitled______________________________

_______________________________________________________________

is successfully done by Mr./Ms./ ____________________________________

during the third year of his/her course ________________________________

in partial fulfillment of the master Degree in __________________________

Management under the University of Mumbai through the Prin.L.N.Welingkar

Institute of Management Development & Research Matunga, Mumbai400019.

This project represents the work done by Mr./Ms./ ______________________

under my guidance & the record of interactive sessions with me during the

preparation of the Project are as under:

Interactive session No. Date Signature of Guide

(Minimum Three)1.

2.

3.

Date: ________ Signature of the Project Guide

Name of the Project Guide:Address:TelNo./Mobile No.

Email ID


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ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me for

this project.

My deepest thanks to professor, R. Venkatesh the Guide of the project for guiding and

correcting various documents of mine with attention and care. He has taken pain to go

through the project and make necessary correction as and when needed.

I express my thanks to the Principal of, Prin.L.N.Welingkar Institute of Management

Development & Research- Mumbai, for extending his support.

My deep sense of gratitude to Mr. R V Gaikwad (Chief, Project & Business

Development), Mukand Engineers Limited - Mumbai, for support and guidance.

Thanks and appreciation to the helpful people at Mukand Engineers Limited, for their

support.

I would also thank my Institution and my faculty members without whom this project

would have been a distant reality. I also extend my heartfelt thanks to my family and

well wishers.


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INDEX

SN Description Page No. Remark

1 Executive Summary 02

2 Introduction 03

3 Economy Statistics 10

4 Business Prospect 23

5 Taxation 41

6 Human Resources & Employment Law 46

7 Commercial registration & licensing requirements 49

8 Banking & Financial Structure 54

9 Myanmar: Challenges - Strength - Opportunity 58

10 Conclusion 66

11 Bibliography 69


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EXECUTIVE SUMMARY

Myanmar is at a pivotal movement. The government has ushered in a series of

political and economic reforms after decades of authoritarianism, a revived peace

process is under way to address on-going ethnic conflicts and communal violence,

and the foundations of an open market economy are being laid after years ofisolation.

There is everything to play for- but also a major risk of disappointment. Today,

Myanmar is enjoying a groundswell of goodwill from an international community

that is keen to support the country in its process of change and opening. Investors

are understandably interested in this highly unusual and potentially promising

market prospect. Myanmar is at the heart of the worlds fastest-growing region

and beings its transformation in the digital age. Severe underdevelopment, after

nearly a century of economy stagnation, poses fundamental channelizes for an

economy that know only contributes 0.2% of Asias GDP. But it also gives

Myanmar an opportunity to use its Greenfield situation to leapfrog over

intermediate stages of economic development and to create sufficient jobs to meet

the high expectations of its people.

Much uncertainty remains. Investors are actively considering Myanmar, but many

want reassurance that the government can resolve ethic and communal violence,

maintain its momentum towards political and economic reform, and ease

constraints on doing business. Those political and economic choices will

determine the sustainability of change and the level of interest from investors and

supportersand therefore the success of Myanmars economic transformation.

By developing a diversified set of sectors, Myanmar has the potential to more than

quadruple the size of its economy to over $200 billion by 2030. But if it fails to

build a compelling growth plan and implement it effectively, todays goodwill and

cautious optimism could evaporate all too rapidly.

In this report, we assess the economic potential that Myanmar offers and explores

how the nation can seize todays window of opportunity to vault itself into a newera of growth and development.


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INTRODUCTION

BASIC DATA

TIMELINE OF KEY EVENTS

POLITICAL SYSTEM & GOVERNANCE STRUCTURE

KEY MINISTERS


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REPUBLIC OF THE UNION OF MYANMAR

Flag State Seal

CAPITAL: NAY PYI DAW

Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bm.html

Figure: 1
http://en.wikipedia.org/wiki/Naypyidawhttp://en.wikipedia.org/wiki/Naypyidaw


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THE GOLDEN LANDMYANMAR

BASIC DATA

Area 676,578 sq km (second largest country in Southeast Asia)

Land: 653,508 sq km

Water: 23,070 sq km

Total land borders 5,676 km

Border countries Bangladesh: 193 km

China: 2,185 km

India: 1,463 km

Laos: 235 km

Thailand: 1,800 km

Population 54.5 million (July 2012 estimate)

Main cities population Rangoon: 4,259,000

Mandalay: 1,009,000

Nay Pyi Taw (capital): 992,000

Ethnic groups Burman 70%, Shan 9%, Karen 7%, Rakhine 4%,

Mon 3%, Ka Chin 2.5%, Kayah 0.5%, Chin 0.3%,

Other 3.7%

Religions Buddhist 89%, Christian 3%, Muslim 4%, Animist 1%,

Other 2%

Age structure 0-14 years: 27.5%15-64 years: 67.5%

65+ years: 5%

Urbanisation 34% of the total population lives in cities

Road density 2 km per 1,000 people4 (relative to 11 km in other

Southeast Asian countries)

Motor vehicles 18 per 1,000 people5 (relative to 250 in Indonesia

and 370 in Thailand)

Climate Tropical monsoon

Summer (June to September): cloudy, rainy, hot, humid

Winter (December to April): scant rainfall,

mild temperatures, lower humidity

Languages Burmese; numerous minority ethnic group languages
http://www.myanmar.cm/http://www.myanmar.cm/http://www.myanmar.cm/http://www.myanmar.cm/


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Currency 1 Kyat (MMK); MMK 1 = 100 pyas.

Average official exchange rate in April 2012:

MMK18:US$1 (managed float currency regime

introduced by Myanmars Central Bank in April 2012)

Average free-market exchange rate in 2012:

MMK 800-820: US$1 (Reuters)Time GMT + 6.5 hours

Fiscal year 1 April to 31 March

Natural resources Petroleum, timber, tin, antimony, zinc, copper,

tungsten, lead, coal, marble, limestone, precious

stones, natural gas, hydropower

Environmental issues Deforestation, industrial pollution of air, soil and

water, inadequate sanitation and water treatment

contributing to diseaseTable: 1

STATES AND DIVISIONS

1. Thaninthayi

2. Mon

3. Yangon

4. Ayeyarwaddy

5. Kayin

6. Bago7. Rakhine

8. Magwe

9. Mandalay

10.Kayah

11.Shan

12.Sagaing

13.Chin

14.Kachin

Rivers

A = Ayeyarwaddy : C = Chindwin : M = Mekong : S = Sittoung : T = Thanlwin

these rivers generally flow north to south

Source: http://www.asterism.info/states/

Figure: 2
http://www.asterism.info/states/1/http://www.asterism.info/states/2/http://www.asterism.info/states/3/http://www.asterism.info/states/4/http://www.asterism.info/states/5/http://www.asterism.info/states/6/http://www.asterism.info/states/7/http://www.asterism.info/states/8/http://www.asterism.info/states/9/http://www.asterism.info/states/10/http://www.asterism.info/states/10/http://www.asterism.info/states/11/http://www.asterism.info/states/11/http://www.asterism.info/states/12/http://www.asterism.info/states/12/http://www.asterism.info/states/13/http://www.asterism.info/states/13/http://www.asterism.info/states/14/http://www.asterism.info/states/14/http://www.asterism.info/states/14/http://www.asterism.info/states/13/http://www.asterism.info/states/12/http://www.asterism.info/states/11/http://www.asterism.info/states/10/http://www.asterism.info/states/9/http://www.asterism.info/states/8/http://www.asterism.info/states/7/http://www.asterism.info/states/6/http://www.asterism.info/states/5/http://www.asterism.info/states/4/http://www.asterism.info/states/3/http://www.asterism.info/states/2/http://www.asterism.info/states/1/


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TIMELINE OF KEY EVENTS

1885-1948British colony with the second largest economy in South-East

Asia (after Indonesia), the largest exporter of rice and teak

1941Aung San announced the formation of the Burma IndependenceArmy (BIA) in anticipation of the Japanese invasion of Burma

in 1942

1947 General Aung San and several cabinet ministers are assassinated

1962The military led by General Ne Win took control of Burma

through a coup dtat

1948-1988 Nationalisation of industry and socialism

1988Democratic unrest as the economy was opened to foreign

Investors

1990Aung San Suu Kyis National League for Democracy (NLD)

wins elections but results annulled

1992The military replaced General Saw Maung with General Than

Shwe

1997 US sanctions on Burma

2000 EU sanctions on Burma; Burma joins ASEAN

2001Reversal of investor-friendly policy, many sectors closed to

foreign investment

2007Crackdown on saffron revolution sanctions intensified,

more investors pull out; Burma turns to China

2010 Limited democratic elections held

2011 New civilian administration, rapprochements with the West2013 SEA Games host

2013 22nd World Economic Forum held in Nay Pyi Taw (Capital)

2014 ASEAN Chair 2014

Table: 2


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POLITICAL SYSTEM AND GOVERNANCE STRUCTURE

Official name Republic of the Union of Myanmar (previously Union of

Myanmar; Union of Burma)

Local name Pyidaungzu Myanma Naingngandaw

Independence 4 January 1948 (from the UK)Constitution Approved by referendum on 29 May 2008 and reformed

by a series of acts in 2011

Government type Nominally civilian parliamentary government

(took office in March 2011)

The Executive Chief of state: President Thein Sein (since 4 February 2011,

5 year term); Vice President Tin Aung Myint Oo (since 4

February 2011resigned 3 May 2012 but his resignation was

not accepted by the President); Vice President Sai Mouk Kham

(since 3 February 2011)Head of government: President Thein Sein

Cabinet: Appointed by the President and confirmed by

Parliament

Elections: President elected by the Parliament from three Vice

Presidents. Each Vice President is nominated by the upper

house, lower house and military members of Parliament

The Legislative Structure: bicameral, consisting of the House of ationalities,

Amyotha Hluttaw (224 seats, 168 elected and 56 appointed by

military) and the House of Representatives, Pythu Hluttaw(440 seats, 330 elected and 110 appointed by the military)

Elections: 7 November 2010 and by-elections on 1 April 2012

to fill 46 vacant seats (next elections to be held in December

2015)

The Judiciary Mixed legal system of common law and customary law is in

place. However the judiciary is not independent from the

executive and a fair public trial is not guaranteed

Key political

parties

USDP (Union Solidarity and Development Party, led by Shwe

Mann and Htay Oo), NLD (National League for Democracy,

led by Aung San Suu Kyi), NUP (National Unity Party, led by

Tun Ye), NDF (National Democratic Force, led by Khin

Maung Swe and Than Nyein), Shan Nationalities Democratic

Party (led by Sai Aike Paung), Rakhine Nationalities

Development Party (led by Dr. Aye Mg), other ethnically

based partiesTable:3


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ECONOMY STATISTICS

ECONOMIC INDICATORS

CURRENCY

GDP (GROSS DOMESTIC PRODUCT)

POPULATION

UNEMPLOYMENT RATE

INFLATION RATE

INTEREST RATE

TRADE FIGURE

GOVERNMENT STATISTIC
http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Gross_domestic_product


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THE ECONOMY - BRIEF

Major exports: Petroleum gases (42%), Dried legumes (12%), Wood

in the rough (8%), Natural rubber (3%), Precious

stones (3%)

Major imports: Self-propelled bulldozers, excavators and road rollers

(5%), Motorcycles (5%), Motor vehicles for

transporting goods (3%), Palm oil, crude (2%),

Structures and parts thereof (bridges, lock gates,

towers, etc) (2%)

Major trade partners

(exports):

Thailand (46%), China (16%), India (13%), Japan

(7%), Malaysia (4%)

Major trade partners

(imports):

China (65%), Korea, Rep. (9%), Thailand (6%),

Indonesia (5%), Japan (5%)

Source: http://atlas.media.mit.edu/

Table: 5


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MYANMAR | ECONOMIC INDICATORS

MARKETS LAST PREVIOUS AVERAGE UNIT REFERENCE

CURRENCY 974 970 893.43 9/13/2013 Month

GDP LAST PREVIOUS AVERAGE UNIT REFERENCE

GDP 53.14 51.44 21.43 USD Billion 12/31/2012 Year

GDP ANNUAL GROWTH RATE 6.3 5.5 9.71 Percent 12/31/2012 Year

GDP PER CAPITA 824.19 741.67 331.76 USD 12/31/2011 Year

GDP PER CAPITA PPP 1324.61 1254.53 828.24 USD 12/31/2011 Year

LABOUR LAST PREVIOUS AVERAGE UNIT REFERENCE

POPULATION 52.8 52.4 38.31 Million 12/31/2012 YearUNEMPLOYMENT RATE 4.01 4 4.04 Percent 12/31/2011 Year

PRICES LAST PREVIOUS AVERAGE UNIT REFERENCE

INFLATION RATE 2.85 2.37 4.33 Percent 3/31/2013 Month

MONEY LAST PREVIOUS AVERAGE UNIT REFERENCE

INTEREST RATE 10 10 10.19 Percent 7/31/2013 Month

TRADE LAST PREVIOUS AVERAGE UNIT REFERENCE

BALANCE OF TRADE 181.7 29.9 32.6 USD Million 3/31/2013 Month

CURRENT ACCOUNT -1684.9 1828.7 154.53 USD Million 12/31/2011 Year

CURRENT ACCOUNT TO GDP -2.7 0.03 -0.21 Percent 12/31/2011 Year

EXPORTS 860.1 637.8 763.32 USD Million 3/31/2013 Month

IMPORTS 678.4 607.9 729.82 USD Million 3/31/2013 Month

GOVERNMENT LAST PREVIOUS AVERAGE UNIT REFERENCE

GOVERNMENT DEBT TO GDP 53.53 52.99 83.48 Percent 12/31/2011 Year

GOVERNMENT BUDGET -5.4 -3.9 -2.66 Percent of GDP 12/31/2012 Year

CREDIT RATING 15 Month

Source: http://www.tradingeconomics.com/myanmar/indicators Table


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MYANMAR KYAT

The USDMMK spot exchange rate depreciated 1.0000 or 0.10 percent during the

last 30 days. From 2012 until 2013, the USDMMK averaged 893.6900 reaching an

all time high of 988.0000 in July of 2013 and a record low of 847.9500 in October

of 2012. The USDMMK spot exchange rate specifies how much one currency iscurrently worth in terms of the other. While the USDMMK spot exchange rate is

quoted and exchanged in the same day, the USDMMK forward rate is quoted

today but for delivery and payment on a specific future date.

MYANMAR GDP

The Gross Domestic Product (GDP) in Myanmar was worth 53.14 billion US

dollars in 2012. The GDP value of Myanmar represents 0.09 percent of the world

economy. GDP in Myanmar is reported by the World Bank. Myanmar GDPaveraged 21.43 USD Billion from 1998 until 2012, reaching an all time high of

53.14 USD Billion in December of 2012 and a record low of 6.46 USD Billion in

December of 1998.

Graph: 1

Graph: 2


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MYANMAR GDP ANNUAL GROWTH RATE

The Gross Domestic Product (GDP) in Myanmar is expected to reach 6.30 percent

in 2012 from the previous year. GDP Annual Growth Rate in Myanmar is reported

by the Central Statistics Organization, Myanmar. Myanmar GDP Annual Growth

Rate averaged 9.71 Percent from 1994 until 2012, reaching an all time high of

13.84 Percent in December of 2003 and a record low of 5.30 Percent in December

of 2010. Myanmar, formerly known as Burma, is the poorest country in Southeast

Asia. Myanmar was under a military regime for decades, yet since 2011, a

transition to democracy has been taking place. The new, civilian led, reformist

government has taken charge and the country has begun to open up to foreign

direct investment. Myanmars economy is pretty diversified. The most important

sector of the economy is services, which has been growing steadily in the last fewyears, and now account for over 38 percent of GDP. The share of agriculture has

been declining, and now represents 36 percent of GDP. Finally, industry

contributes the remaining 26 percent of GDP.

Graph: 3


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MYANMAR GDP PER CAPITA

The Gross Domestic Product per capita in Myanmar was last recorded at 824.19

US dollars in 2011. The GDP per Capita in Myanmar is equivalent to 7 percent of

the world's average. GDP per capita in Myanmar is reported by the World Bank.

Myanmar GDP per capita averaged 331.76 USD from 1998 until 2011, reachingan all time high of 824.19 USD in December of 2011 and a record low of 129.19

USD in December of 2001.

MYANMAR GDP PER CAPITA PPP

The Gross Domestic Product per capita in Myanmar was last recorded at 1324.61

US dollars in 2011, when adjusted by purchasing power parity (PPP). The GDP

per Capita, in Myanmar, when adjusted by Purchasing Power Parity is equivalent

to 6 percent of the world's average. GDP per capita PPP in Myanmar is reported

by the World Bank. Myanmar GDP per capita PPP averaged 828.24 USD from1998 until 2011, reaching an all time high of 1324.61 USD in December of 2011

and a record low of 365.08 USD in December of 1998.

Graph: 4

Graph: 5


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MYANMAR POPULATION

The total population in Myanmar was last recorded at 52.8 million people in 2012

from 21.5 million in 1960, changing 146 percent during the last 50 years.

Population in Myanmar is reported by the World Bank. Myanmar Population

averaged 38.31 Million from 1960 until 2012, reaching an all time high of 52.80Million in December of 2012 and a record low of 21.50 Million in December of

1960. The population of Myanmar represents 0.70 percent of the worlds total

population which arguably means that one person in every 144 people on the

planet is a resident of Myanmar.

MYANMAR UNEMPLOYMENT RATE

Unemployment Rate in Myanmar increased to 4.01 percent in 2011 from 4 percent

in 2010. Unemployment Rate in Myanmar is reported by the Central StatisticsOrganization, Myanmar. Myanmar Unemployment Rate averaged 4.04 Percent

from 1994 until 2011, reaching an all time high of 4.15 Percent in December of

1995 and a record low of 4.00 Percent in December of 2009. In Myanmar, the

unemployment rate measures the number of people actively looking for a job as a

percentage of the labour force.

Graph: 6

Graph: 7


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MYANMAR INFLATION RATE

The inflation rate in Myanmar was recorded at 2.85 percent in March of 2013.

Inflation Rate in Myanmar is reported by the Central Statistics Organization,

Myanmar. Myanmar Inflation Rate averaged 4.33 Percent from 2010 until 2013,

reaching an all time high of 8.27 Percent in April of 2011 and a record low of 0.28Percent in August of 2012. In Myanmar, the inflation rate measures a broad rise or

fall in prices that consumers pay for a standard basket of goods.

MYANMAR INTEREST RATE

The benchmark interest rate in Myanmar was last recorded at 10 percent. Interest

Rate in Myanmar is reported by the Central Bank of Myanmar. Myanmar Interest

Rate averaged 10.19 Percent from 2011 until 2013, reaching an all time high of 12Percent in November of 2011 and a record low of 10 Percent in October of 2012.

In Myanmar, the benchmark interest rate is set by the Central Bank of Myanmar.

The benchmark interest is the Central Bank Rate.

Graph: 8

Graph: 9


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MYANMAR BALANCE OF TRADE

Myanmar recorded a trade surplus of 181.70 USD Million in March of 2013.

Balance of Trade in Myanmar is reported by the Central Statistics Organization,

Myanmar. Myanmar Balance of Trade averaged a surplus equivalent to 32.60

USD Million from 2010 until 2013, reaching the best surplus at 593.30 USDMillion in August of 2011 and the worst deficit at 639.80 USD Million in June of

2011. Myanmar had been trading mostly with neighboring countries due to

political circumstances and poor infrastructure, but the change to democracy is

likely to allow access to new markets. Oil and natural gas dominate Myanmar's

exports. Other exports include vegetables, wood, fish, clothing, rubber and fruits.

Myanmar mainly imports fuel, vegetable oil, vehicles, pharmaceutical products,

construction equipment, polymers, tires and machinery. Myanmar's main trading

partners are China, India, Japan, Indonesia, Germany and Hong-Kong

Graph: 10


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MYANMAR CURRENT ACCOUNT

Myanmar recorded a Current Account deficit of 1684.90 USD Million in 2011.

Current Account in Myanmar is reported by the Ministry of National Planning and

Economic Development, Myanmar. Myanmar Current Account averaged a surplus

equivalent to 154.53 USD Million from 1994 until 2011, reaching the best surplusat 1828.70 USD Million in December of 2010 and the worst deficit at 1684.90

USD Million in December of 2011. Current Account is the sum of the balance of

trade (exports minus imports of goods and services), net factor income (such as

interest and dividends) and net transfer payments (such as foreign aid).

MYANMAR CURRENT ACCOUNT TO GDP

Myanmar recorded a Current Account deficit of 2.70 percent of the country's

Gross Domestic Product in 2011. Current Account to GDP in Myanmar is reported

by the Ministry of National Planning and Economic Development, Myanmar.

Myanmar Current Account to GDP averaged -0.21 Percent from 1994 until 2011,

reaching an all time high of 0.03 Percent in December of 2010 and a record low of

-2.70 Percent in December of 2011. The Current account balance as a percent of

GDP provides an indication on the level of international competitiveness of a

country. Usually, countries recording a strong current account surplus have an

economy heavily dependent on exports revenues, with high savings ratings but

weak domestic demand. On the other hand, countries recording a current account

deficit have strong imports, a low saving rates and high personal consumption

rates as a percentage of disposable incomes.

Graph: 11


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MYANMAR EXPORTS

Exports in Myanmar increased to 860.10 USD Million in March of 2013 from

637.80 USD Million in February of 2013. Exports in Myanmar is reported by the

Central Statistics Organization, Myanmar. Myanmar Exports averaged 763.32

USD Million from 2010 until 2013, reaching an all time high of 1256.60 USD

Million in August of 2011 and a record low of 502.60 USD Million in April of

2011. Oil and natural gas dominate Myanmar's exports. Other exports include

vegetables, wood, fish, clothing, rubber and fruits. Myanmar's main exports

partners are China, India, Japan, South Korea, Germany, Indonesia and Hong

Kong.

Graph: 12

Graph: 13


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MYANMAR IMPORTS

Imports in Myanmar increased to 678.40 USD Million in March of 2013 from

607.90 USD Million in February of 2013. Imports in Myanmar are reported by the

Central Statistics Organization, Myanmar. Myanmar Imports averaged 729.82

USD Million from 2010 until 2013, reaching an all time high of 1248.00 USDMillion in June of 2011 and a record low of 334.20 USD Million in October of

2010. Myanmar mainly imports fuel, vegetable oil, vehicles, pharmaceutical

products, construction equipment, polymers, tires and machinery. Myanmar's main

imports partners are China, Japan, India, Indonesia, Germany, France and Hong

Kong.

MYANMAR GOVERNMENT DEBT TO GDP

Myanmar recorded a Government Debt to GDP of 53.53 percent of the country's

Gross Domestic Product in 2011. Government Debt to GDP in Myanmar is

reported by the Central Statistics Organization, Myanmar. Myanmar Government

Debt To GDP averaged 83.48 Percent from 1998 until 2011, reaching an all timehigh of 140.95 Percent in December of 2001 and a record low of 52.99 Percent in

December of 2010. Generally, Government debt as a percent of GDP is used by

investors to measure a country ability to make future payments on its debt, thus

affecting the country borrowing costs and government bond yields.

Graph: 14


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MYANMAR GOVERNMENT BUDGET

Myanmar recorded a Government Budget deficit equal to 5.40 percent of the

country's Gross Domestic Product in 2012. Government Budget in Myanmar is

reported by the Central Statistics Organization, Myanmar. Myanmar Government

Budget averaged -2.66 Percent of GDP from 1994 until 2012, reaching an all time

high of 0.79 Percent of GDP in December of 1998 and a record low of -5.40

Percent of GDP in December of 2010. Government Budget is an itemized

accounting of the payments received by government (taxes and other fees) and the

payments made by government (purchases and transfer payments). A budget

deficit occurs when an government spends more money than it takes in. The

opposite of a budget deficit is a budget surplus.

Graph: 15

Graph: 16


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THE ECONOMYBRIEF

Myanmar is rich in natural resources such as arable land, forestry, minerals, and

natural gas, as well as freshwater and marine resources, gems and jade. The

country has recently emerged as a natural gas exporter, with exports to

neighboring countries providing an increasingly important revenue stream.

The most productive segments of the economy are currently the extractive

industries, in particular oil and gas, mining and timber. Other areas such as

manufacturing and tourism, which represent a small share of economic activity,

are largely accounted for by state industries. While the Myanmar government has

good economic relations with neighbors such as China and Thailand, significant

improvements in the business and political climate and economic governance will

be required to attract serious, long term investment, particularly from western

economies. Initial steps towards reform and opening the economy were taken in

2011 through the lowering of export taxes and an easing of restrictions on the

financial sector.

Its Exports of gas increased by nearly 15% to an estimated US $3 billion.

Gemstones and jade exports, however, declined after doubling in FY10. Higher

levels of imports, particularly construction materials and machinery, widened the

current account deficit to an estimated 2.7% of GDP in FY11 from 0.9% in FY10.

Increased foreign investment in energy and hydropower, estimated at US $2.8billion in FY11, helped lift international reserves to approximately US $8 billion

by March 2012, equivalent to 9.4 months of imports. Foreign investment in other

industries is insignificant owing to barriers to entry and the poor business

environment.

The monetary authorities lowered administered bank interest rates by 4 percentage

points from 17% to 13% for lending and from 12% to 8% for deposits in FY11,

though banks were also given some flexibility in setting deposit rates. Yields on

treasury bonds made them attractive investments for banks, which reduced centralbank monetisation of the fiscal deficit in FY11.


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ECONOMIC PROSPECTS

Going forward, GDP is expected to grow 6.3% in FY13, driven by improved

business confidence following recent political and economic reforms. However,

short term risks to growth include the rapid appreciation of the Kyat and potential

slowdown in neighbouring countries due to the European sovereign debt crisis, aswell as operational challenges that may be faced by the authorities.

While important steps have been taken to reform and diversify the economy, many

structural barriers will need to be overcome to realise its full potential.

The government that took office in March 2011 has an opportunity to rejuvenate

the economy after more than 50 years of stagnation. In a promising start, the

authorities took steps to unify the multiple exchange rates and are preparing other

reforms, including a new national development plan.

New currency arrangements from 1 April 2012 involve a managed float of the

Kyat with a reference exchange rate of MMK818/US$1. The government plans to

establish a formal interbank market and relax exchange restrictions on current

international payments and transfers. Fiscal policy in FY12 targets a modest fiscal

deficit equivalent to 4.6% of GDP.

Among the planned reforms is a land law giving farmers the right to own, sell, and

mortgage their land. Credit to the farm sector remains inadequate, even though the

Myanmar Agriculture Development Bank has doubled its funding for farmers ineach of the past two years. A microfinance law was approved in November 2011

to expand microcredit to farmers.

The government is preparing a new foreign investment law that is expected to

offer tax breaks to investors and allow them to lease private land and repatriate

investment proceeds using market exchange rates. Special economic zones in

Dawei in southern Myanmar, Thilawa near Yangon, and Kyaukphyu on the west

coast will be established to attract investments.

Gas production and exports are scheduled to increase sharply in FY13 when the

Shwe and Zawtika gas fields and pipelines to the Peoples Republic of China

(PRC) and Thailand, now under construction, are completed. Inflation has been

quickening to just over 6%. The authorities raised administered electricity prices

in late 2011 and fuel prices in early 2012. A government plan to help farmers by

supporting rice prices is likely to lead to higher retail prices of rice.

Relaxing foreign exchange controls is expected to propel imports upward and

contribute to a widening of the current account deficit. Easing of economic


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sanctions imposed on Myanmar by industrial countries would lead to higher levels

of trade and investment, as well as the resumption of assistance and concessionary

financing both from these countries and from international financial institutions.

ECONOMIC STRUCTURE

Myanmars economy is dominated by natural resources and commodities. Its

largest exports are natural gas.

Myanmar Key Industries

No Industry No USD in mil %

1 Power 5 18,874 46.40%

2 Oil and Gas 109 14,063 34.60%

3 Mining 66 2,814 6.90%

4 Manufacturing 164 1,761 4.30%5 Hotel and Tourism 45 1,056 2.60%

6 Real Estate 19 1,056 2.60%

7 Livestock and Fisheries 25 324 0.80%

8 Transport and communication 16 314 0.80%

9 Industrial Estate 3 193 0.50%

10 Agriculture 7 173 0.40%

11 Construction 2 38 0.10%

12 Other Services 6 24 0.10%

Total 467 40,699 100%

Source: Ministry of National Planning and Economic Development Table: 7


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MAJOR INVESTORS IN MYANMAR

China surpassed Thailand to become the largest foreign investor in Myanmar in

FY10-FY11, when approximately US$20 billion of energy and infrastructure

development projects were announced.

Thailand is the second largest foreign investor in Myanmar, with approximately

US$9 billion invested in manufacturing and mining projects. Investment has been

particularly strong in oil and gas through PTT Exploration and Production, the

overseas arm of state owned PTT, which operates the Zawtika gas project in the

gulf of Mottama, while also being a partner in the Yetagun and Yadana offshore

gas projects. According to the commercial counsellor at Thailands embassy in

Myanmar, Mr Prajuab Supinee, new Thai investors are showing an interest in

consumer goods manufacturing and agriculture ventures.

South Korea is the fourth largest Foreign Direct Investment (FDI) contributor,

with 48 projects amounting to US$2.9 billion being undertaken since 1988. South

Korean companies (including large conglomerates like Daewoo and Samsung) are

looking to further increase their investments in construction, mining, agriculture,

electricity, energy, logistic and freight-forwarding, vehicles and auto parts,

communication and multimedia, iron and steel, agro-fishery, timber and wood,

financing, real estate, garment, transport, hotel and tourism and civil engineering

industries, according to the Korea Trade-Investment Promotion Agency.


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Major Investors

No Country No USD in Mil %

1 China 5 13,949 34.27%

2 Thailand 61 9,568 23.51%

3 Hong Kong 38 6,308 15.50%

4 Republic of Korea 49 2,941 7.23%

5 UK 52 2,760 6.78%

6 Singapore 72 1,804 4.43%

7 Malaysia 41 1,027 2.52%

8 France 2 469 1.15%

9 United States 15 244 0.60%

10 Indonesia 12 241 0.59%

11 Netherland 5 239 0.59%

12 Japan 24 216 0.53%13 India 6 262 0.64%

14 Philippiness 2 147 0.36%

15 Russian Federation 2 94 0.23%

16 Australia 14 82 0.20%

17 Austria 2 73 0.18%

18 Panama 2 55 0.14%

19 Vietnam 3 42 0.10%

20 United Arab Emirates 1 41 0.10%

21 Canada 14 40 0.10%22 Mauritius 2 31 0.08%

23 Germany 2 18 0.04%

24 Republic of Liberia 2 15 0.04%

25 Denmark 1 13 0.03%

26 Cyprus 1 5 0.01%

27 Macau 2 4 0.01%

28 Switzerland 1 3 0.01%

29 Bangladesh 2 3 0.01%

30 Israel 1 2 0.00%

31 Brunei Darussalam 1 2 0.00%

32 Sri Lanka 1 1 0.00%

Total 438 40,699 100%Source: Ministry of National Planning and Economic Development Table: 8


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Australia Travel bans for members of

the Government.

Sanctions directed at

financial transactions.

Easing of sanctions and move to

normalise trade ties announced in April

2012.

Lifting of all remaining economic,

financial and travel sanctions announced

on 7 June 2012 and expected to come into

effect in the coming weeks.

Exceptions: arms embargo will remain

in place.

Timeline: no timeline, sanctions lifted

permanently

Canada Perceived as having some of

the toughest sanctions.

Economic sanctions

imposed in 2007 through the

Special Economic Measures

(Burma) Regulations.

Ban on all goods exportedfrom Canada to Myanmar

except humanitarian goods.

Ban on all goods imported

to Canada.

Freeze on assets in Canada

of any designated Burmese

nationals connected with the

Burmese State.

Prohibition on the provision

of Canadian financial services

to and from Burma.

Lifting of most sanctions announced on

24 April 2012.

Exceptions: ban on arms deals

maintained.

Timeline: not specified.

Japan The Japanese Government

did not impose sanctions and

Debt write-off of US$3.7 billion and

resumption of development aid


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maintained trade ties with

Myanmar, however official

development assistance was

suspended except

humanitarian aid.

Japanese companies have

held back from investing in

Myanmar in recent years so

as not to jeopardise relations

with the US and the EU.

announced in April 2012.

SUSTAINABILITY OF POLITICAL REFORMS AND LONG TERM

PROSPECTS

While the international community has responded to recent democratic reforms

undertaken by the Myanmar Government with immediate actions to ease

economic and financial sanctions, the preferred approach has been to temporarily

suspend sanctions rather than lift them completely.

Given that the sustainability of political reforms requires the commitment of the

government, the above should be seen as an incentive mechanism to encourage

further progress rather than a risk that sanctions will be re-imposed.

President Thein Sein has recently announced a second wave of reforms which aim

to triple the size of the economy in five years and further accelerate the pace of

change.

The government gave permission, for the first time, to the publication of the

International Monetary Fund (IMF) annual assessment of the country,

demonstrating its willingness to re-engage with the international community,

according to IMF mission chief for Myanmar, Meral Karasulu. The IMF has also

noted that the authorities have been actively seeking its advice, and that the Fund

is scaling up technical assistance in line with the authoritiespriorities.

The Myanmars new draft foreign investment law is being put forward for

approval by Parliament this year.


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It sets out land-use terms, legal structures and incentives for foreign companies

such as a five-year tax holiday from the start of commercial operations,

demonstrating the governments commitment to attract long term foreign

investors.

CONDUCTING BUSINESS IN MYANMAR

FORM OF BUSINESS

Under the Foreign Investment Law, a foreign entity may establish its presence in

Myanmar as a limited liability company (private or public), a registered branch

and a representative office of a company incorporated outside Myanmar, a sole

proprietorship, a partnership or a joint venture with a citizen, private company,

cooperative society or State-Owned Economic enterprise (SEE). A foreign entity

may also enter into a production sharing contract with an SEE for exploration,

extraction and sale of petroleum and natural gas and mining operations.

LIMITED LIABILITY COMPANY

A limited liability company may be 100% owned by foreign investors except

certain industries that are closed to private investment and can only be carried out

by the government. The government, on a case-to-case basis, may permit these

activities to be carried out by any person or economic organisation, with orwithout a joint venture with the government and subject to unspecified conditions.

There are two types of limited liability Company in Myanmar, namely a private

limited liability company and a public limited liability company.

Currently, there is no public foreign company in Myanmar. A private limited

liability company is required to have at least two shareholders and the number of

members is limited to 50. The transfer of shares to a foreigner is restricted. A

public limited liability company is required to have at least seven shareholders.

REGISTRATION OF COMPANIES

Foreign investors may register their companies under the Myanmar Companies

Act (CA) or in conjunction with the Union of Myanmar Foreign Investment Law

(MFIL). The differences between companies registered under the CA and the

MFIL are:


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Companies registered under the CA- Manufacturing company- Service company

US$150,000US$50,000

Registration fees on the incorporation of a company are US$2,500.

Branch of a company incorporated outside Myanmar

A foreign company can also set up its branch office in Myanmar. A foreign branch

formed under the CA does not need to obtain an MIC permit, and is only required

to apply for a permit to trade and then for registration. The branch is allowed to be

formed as a manufacturing or a service company (for instance oil companies are

set up mostly in the form of branches).

In contrast, a foreign branch formed under the MFIL is required to obtain an MIC

permit in addition to a permit to trade and a registration certificate. Registrationfees payable on the registration of a branch are US$2,500.

Representative office of a company incorporated outside Myanmar

Foreign companies with business relations or investment projects in Myanmar

may apply to set up representative offices in Myanmar (this being a common

practice for banks). In contrast with a branch, a representative office of a company

incorporated outside Myanmar is not allowed to perform direct commercial or

revenue generating activities in Myanmar. However, it is permitted to liaise with

its head office and collect data useful for the head office.

Joint venture

Foreign investors can set up their business in the form of a joint venture, either as

partnerships or limited companies, with any Myanmar partner (an individual, a

private company, a cooperative society or a state owned enterprise).

In all joint ventures, the minimum shareholding of the foreign party is 35% of the

total equity capital.

Foreign Investment Restrictions

Foreign investment in Myanmar is governed under the Foreign Investment Law

(FIL) 1988.


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Economic activities prohibited under the SEE Law

The SEE Law specifies 12 economic activities that are closed to private

investment and can only be carried out by the government:

1. Extraction and sale of teak in Myanmar and abroad

2. Cultivation and conservation of forest plantations, with the exception of

village- owned firewood plantations cultivated by the villagers for their

personal use

3. Exploration, extraction and sale of petroleum and natural gas and

production of products of the same

4. Exploration, extraction and export of pearls, jade and precious stones

5. Breeding and production of fish and prawns in fisheries that have been

reserved for research by the government

6. Postal and telecommunications Services

7. Air and railway transport services

8. Banking and insurance services

9. Broadcasting and television services

10. Exploration, extraction and export of metals

11. Electricity generating services, other than those permitted by law to private

and cooperative electricity generating services

12. Manufacture of products relating to security and defense which the

government has, from time to time, prescribed by notification.

The government, on a case-to-case basis, may permit these activities to be carriedout by any person or economic organisation, with or without a joint venture with

the government and subject to unspecified conditions.

Sectors allowed for foreign investment

Based on the MIC Notification No. 1/89 of 30 May 1989, foreign investments may

be made into the economic activities (other than 12 economic activities restricted

under the SEE Law above) which are classified into nine sectors as follows:

1. Agriculture and irrigation2. Livestock and fishery3. Forestry4. Mining5. Power6. Oil and gas7. industry involving food stuffs, textile, personal goods, household goods,

leather products and similar products, transport equipment, buildingmaterials, pulp and paper, chemicals, chemical products andpharmaceuticals, iron and steel and machinery and plant


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8. Construction9. Transportation and communications

Investment proposals in sectors other than those listed above are considered on a

case-by-case basis by the MIC.

INVESTMENT INCENTIVES

Incentives under the MFIL

Companies registered under the MFIL which have obtained MIC permits are

entitled to the following special benefits and tax incentives. The benefits and

incentives are granted by the MIC at its discretion.

Exemption from income tax for up to three consecutive years for an

enterprise engaged in the production of goods or services. The exemption

may be extended by the MIC for a further reasonable period, depending on

the success of the enterprise.

Exemption or relief from income tax on profits of the business that are

maintained in a reserve fund and subsequently re-invested within one year

after the reserve fund is made.

Accelerated depreciation of machinery, equipment, building or other capital

assets used in the business at the rate fixed by the MIC.

Relief from income tax of up to50% of the profits accrued on exported

goods.

The right to pay income tax payable to the state on behalf of foreign

employees and the right to deduct such payments from assessable income.

The right to pay income tax on the income of the foreign employees at the

rates applicable to citizens residing within the country.

The right to deduct expenses incurred in Myanmar on research anddevelopment relating to the business of the enterprise from assessable

income.

The right to carry forward and set off losses for up to three consecutive

years from the year the loss is sustained.

Exemption or relief from customs duty or other internal taxes on machinery

equipment, instruments, machinery components, spare parts and materials


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used in the business, and items which are imported and required to be used

during the construction period of the business.

Exemption or relief from customs duty or other internal taxes on imported

raw materials for the first three years of commercial production following

the completion of construction.

SPECIAL ECONOMIC ZONES

In addition to foreign investment under the MFIL, foreign investors may invest

under the Myanmar Special Economic Zone Law of 2011(Myanmar SEZ Law)

and the Dawei Special Economic Zone Law of 2011 (Dawei SEZ Law). The

Myanmar SEZ Law is a basic law for any Special Economic Zone (SEZ) within

Myanmar whereas the Dawei SEZ applies only to a specified designated area, i.e.

the Dawei SEZ, which is located in the Tanintharyi Region in the south, and is the

first SEZ in Myanmar.

The main regulatory body handling foreign investment under the Myanmar SEZ

Law and the Dawei SEZ Law is the Central Body for theMyanmar Special

Economic Zone which was formed by the Presidents Office in April 2011.

Subordinate regulatory bodies are the Central Working Body and the Dawei SEZ

Temporary Supporting Working Body, as formed by the Presidents Office in

April 2011. The Myanmar SEZ Law and Dawei SEZ Law contain, inter alia,

provisions relating to developers and investors, exemptions and reliefs,

restrictions, duties of developers or investors, land use, banks and financemanagement and insurance business, management and inspection of commodities

by the customs department, quarantine, labour and guarantee of non-

nationalisation.

In general, the investment projects in the Dawei SEZ must be approved by the

Central Body. Tax exemptions or relief may be granted under the Dawei SEZ Law

upon application by the investor.


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INVESTMENT GUARANTEE AND PROTECTION

Investment Guarantee and Protection

The MFIL provides an explicit guarantee that an economic enterprise with an MIC

permit cannot be nationalised during the term of the contract or during any

extended term. The MFIL also includes a provision which expressly provides that

upon the expiry of the contract term; the government guarantees that an investor

may remit his investment and profits in the foreign currency in which such

investment was made, as specified. Investment businesses in the Dawei SEZ are

guaranteed against nationalisation under the Dawei SEZ Law. Under the Dawei

SEZ Law, foreign investors may be allowed to exchange and remit their own

foreign currency within the Dawei SEZ and abroad.

Investment protection agreements

Myanmar has investment protection agreements with China, India, Kuwait, Laos,

the Philippines, Thailand and Vietnam.


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TAXATION

CORPORATE INCOME TAX

PERSONAL INCOME TAX

COMMERCIAL TAX

OTHER TAXES

PROPERTY TAX

STAMP DUTY

CUSTOM DUTY

EXCISE DUTY


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CORPORATE INCOME TAX

Scope

Resident companies are taxed on a worldwide basis, and as such, income from

sources outside of Myanmar is taxable. A resident company is a company as

defined and formed under the Myanmar CA 1913 or any other existing law of

Myanmar. MFIL companies are treated as resident companies. However, MFIL

companies are not taxed on their foreign income. Non-resident companies are

taxed only on income derived from sources within Myanmar. A non-resident

company is a company that is not formed under the Myanmar CA 1913 or any

other existing law of Myanmar. Generally, foreign branches are deemed to be

nonresident companies. Income received from any capital assets within Myanmar

and from any source of income within Myanmar is deemed to be income received

within Myanmar. The income is generally subject to tax under the normal rules for

residents, except that different tax rates apply. Newly established economic

enterprises and MFIL companies are entitled to enjoy exemptions and relief from

taxes.

A partnership is taxed as an entity and not on the individual profit share of the

partners. Partnership income is not taxed in the hands of the partners.

Tax rates

Corporate tax rates vary depending on the type of taxpayer and broadly, nature of

income.

Type of Taxpayer or Income Tax Rates

Companies incorporated in Myanmar under Myanmar Companies Act

Trade/business income

Rental income from movable or immovable property

25%

25%

Enterprises operating under MFIL 25%

Foreign organisations engaged under special permission in State-

sponsored projects, enterprise or any undertaking

25%

Non-resident foreign organisations such as a branch of a foreign

company

35%

Capital gains tax (except transfer of shares in an oil and gas company

where the rates ranging from 40% to 50% will apply on gains)

Resident companies

Non-resident companies

10%

40%


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HUMAN RESOURCES

&

EMPLOYMENT LAW

EMPLOYMENT OF FOREIGNERS

LABOUR LAWS IN MYANMAR


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HUMAN RESOURCES AND EMPLOYMENT LAW

Employment of Foreigners

There is no restriction on the number of expatriate employees. However,foreigners cannot be appointed as directors in companies formed under the CA and

owned by Myanmar citizens. In addition, the employment of foreigners as experts,

technicians, managers, general managers or managing agents in companies owned

by Myanmar citizens must be approved by the MIC. In the appointment of

personnel in an organisation formed under the Permit issued by MIC, preference

shall be given to citizens. However, MIC can consider the request for appointment

of experts and technicians from abroad on a case-by case basis.

An economic organisation formed under a Permit shall make arrangements forlocal and foreign training so as to ensure its local personnel are proficient in their

work and are able to be promoted to higher ranks of services.

Work Permit Processing and Requirements (Managerial, Supervisor,

Expertise)

Employment of foreign experts and technicians by the enterprises formed under

the Permit issued by MIC is allowed. The following procedures would have to be

completed to employ foreign experts and technicians:

The investor has to mention the number of foreign experts/ technicians to

be employed in the investment application form submitted to the MIC.

After obtaining MIC permit, the company has to apply for an appointment

and stay-permit.

With the endorsement of MIC, the company has to apply for a work permit

from the Directorate of Labour under the Ministry of Labour, and for a stay

permit and visa from the Immigration and National RegistrationDepartment under the Ministry of Immigration and Population.


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Labour Laws in Myanmar

Existing labour laws in Myanmar include:

Employment and Training Act (1950),

Employment Restriction Act (1959),

Employment Statistics Act (1948),

Factories Act (1951),

Labour Union Law (2011),

Leave and Holidays Act (1951),

Minimum Wages Act (1949),

Oilfields Labour and Welfare Act (1951),

Payment of Wages Act (1936),

Social Security Act (1954),

Shops and Establishments Act (1951),

Trade Disputes Act (1929)Workmens Compensation Act (1923).

These laws govern labour relations problems and deal with subjects such as work

hours, holidays, leaves of absence, woman and child labour, wages and overtime,

severance pay, workmens compensation, social welfare, work rules and other

matters.

A Social Security Act established a fund with contributions by employers,

employees and the government.

The Myanmar Special Economic Zone Law (2011) and Dawei Special Economic

Zone Law (2011) prescribe special rules applicable to foreign employees, work

permits, and minimum percentages of employees which must be citizens.

Myanmar has been a member of the International Labour Organisation (ILO) since

1948.


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if approved by the MIC. The lease can be extended if the project is mutually

beneficial to the investor and the state. A foreigner or foreign company is required

to apply to MIC with the land lease agreement or other documents that evidence

the agreement to lease from the person who has the right to lease. The land lease

agreement is concluded upon receiving the approval from MIC and shall be sent

back to MIC.

Arbitration law

There are two main laws in Myanmar relating to arbitration, namely the

Arbitration Act 1944 which relates to local arbitration within Myanmar and the

Arbitration (Protocol and Convention) Act which relates to foreign arbitral

awards. According to the Myanmar Export/Import Rules and Regulations issued

by the Ministry of Commerce, entrepreneurs having trade disputes with foreign

companies can only resolve the disputes in accordance with the Arbitration Act

1944, thus requiring contracts to be under Myanmar arbitration.

Economic and Trade Agreements

Myanmar has agreements with the following countries:

Economic agreements with China, Cuba, Kuwait, Malaysia and Singapore

Trade agreements with Bangladesh, China, India, Israel, Korea (Rep.), Laos,

Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand and Vietnam - an

economic and trade agreement with Turkey. Myanmar is a member of the

ASEAN Free Trade Area (AFTA) which was initiated in 1992. AFTA seeks

to eliminate tariff barriers among ASEAN countries, and the key to this is the

Common Effective Preferential Tariff (CEPT) Scheme, under which tariffs are

gradually reduced to 0%-5% by 2010 or 2015.

Myanmar is also a signatory to the ASEAN Framework Agreement on Services

(AFAS) which is aimed at strengthening the cooperation among service suppliers

in the ASEAN region, reducing restrictions to trade in services, and progressively

liberalising trade in services among ASEAN counties. In addition, Myanmar is

also a party to the Framework Agreement on the ASEAN Investment Area (AIA)

which is aimed at establishing the ASEAN region as a competitive investment area

by 1 January 2010, as well as facilitating a liberal and transparent investment

environment and free flow of investments in the region by 2020.

As a member of ASEAN, Myanmar is a party to the following:


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The ASEAN-China Free Trade Agreement, under which a zero tariff markettook effect for the ASEAN-6 on 1 January 2010, which is expected to beachieved by 2015 for the rest of the participating countries

The ASEAN-Korea Framework Agreement on Comprehensive EconomicCooperation, under which tariffs on 90% of products were eliminated as from

1 January 2009. A Free Trade Area for Trade in Goods is intended to berealised by 2012 for the ASEAN-6 and by 2018 for the rest of theparticipating members - the ASEAN-Japan Agreement on ComprehensiveEconomic Partnership, under which tariffs on 90% of imports from Japan areexpected to be eliminated by the ASEAN-6 within 10 years of the agreementtaking effect. A more gradual tariff elimination table has been set for theremaining four ASEAN members

ASEAN-India Framework Agreement on Comprehensive EconomicAgreement, which aims to establish an ASEAN-India Free Trade Area with

five ASEAN members by 31 December 2012 and with the remainingmembers by 31 December 2017 - a free trade agreement between ASEAN andAustralia and New Zealand. Negotiations for an EUASEAN Free TradeAgreement commenced in May 2007.


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BANKING

&

FINANCIAL STRUCTURE

FINANCIAL STRUCTURE OF MYANMAR

FOREIGN EXCHANGE RATES

INTEREST RATES


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BANKING IN MYANMAR

Financial structure of Myanmar

The financial sector of Myanmar is made up of state owned banks, private banks,

finance companies and representative offices of foreign banks.

A new banking law license allows 19 domestic private banks to operate and

permits 32 foreign banks to open representative offices in Myanmar.

The Central Bank of Myanmar has also allowed 11 out of a total of 19 local

private banks to operate foreign currency accounts. However, only four banks

have started operating Foreign Currency accounts up to date.

State owned banks

The following table presents the state owned banks operating in Myanmar at the

time of publishing.

SN Name of Bank

1 Myanmar Foreign Trade Bank (MFTB)

The bank specialises in conducting foreign exchange operations concerning

external and non-trade foreign exchange operations.

The functions of the bank are to accept deposits in Kyats as well as foreign

currencies, provision of loans and advances bolt seemed and unseemed, issuing,

accepting, discount buying, selling and collecting all securities, including Bills

of Exchange, sale and purchase of travellers cheques and foreign currencies,

fund transfer issues and handing of Bank Guarantees.

2 Myanmar Economic Bank

Myanmar Economic Bank (MEB) originated from the State Commercial Bank

(SCB), established in 1954, which provided a wide range of commercial bankingservices across the country.

The functions of the bank are accepting current accounts, savings and deposit

accounts, issuing of saving certificates, advancing loans to economic enterprises

and personal loans, and financing private business undertakings such as

production, trade and services.

3 Myanmar Investment and Commercial Bank


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The functions of the bank are providing investment development and

commercial banking facilities to local and foreign investors, partnership firms,

joint ventures, limited companies, organisations, sole proprietorships and

exporters.

4 Myanmar Agriculture and Development Bank

The bank was established with the intention to promote agricultural, livestock

and rural society economic enterprises including processing and production.

The bank has a country wide network of 14 regional offices, 164 branches and

48 agency offices providing short and long term credit for crop production, salt

production, livestock, fish and dairy farming etc. Clients receive 10% interest on

their deposits and are allowed to borrow four times their savings at 15% interest

where the funds are used in relation to farm development.Table: 9

Private Banks

The following table presents the private banks operating in Myanmar at the time

of publishing.

S.N Bank Name

1 Myanmar Citizens Bank Ltd

2 First Private Bank Ltd

3 Yadanabon Bank Ltd

4 Myawaddy Bank Ltd

5 Yangon City Bank Ltd

6 Yoma Bank Ltd

7 Myanmar Oriental Bank Ltd

8 Asia-Yangon Bank Ltd

9 Tun Foundation Bank Ltd

10 Kanbawza Bank Ltd *

11 Myanma Industrial Development Bank

12 Myanma Livestock and Fisheries Development Ltd

13 Sibin Tharyar Yay Bank Ltd

14 Innwa Bank Ltd

15 Co-operative Bank Ltd*

16 Asia Green Development Bank Ltd*

17 Ayeyarwaddy Bank Ltd*

18 United Amara Bank Ltd

19 Myanma Apex Bank Ltd


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Table: 10

* With effect from 9 July 2012, these banks have started operating Foreign

Exchange Accounts.

REPRESENTATIVE OFFICE OF FOREIGN BANKS

The following table outlines representative offices of foreign banks in Myanmar

SN Name of Bank

1 United Overseas Bank Ltd.

2 Overseas-Chinese Banking Corporation Ltd.

3 Malayan Banking Berhad (MAYBANK), Malaysia

4 Bangkok Bank Public Company Ltd.

5 National Bank Ltd.

6 Brunei Investment Bank (BIB)

7 First Overseas Bank Ltd.8 First Commercial Bank, Singapore Branch

9 CIMB Bank Berhad

10 Sumitomo Mitsui Banking Corporation

11 DBS Bank Ltd.

12 The Bank of Tokyo-Mitsubishi UFJ,Ltd

13 Bank for Investment and Development of Vietnam

14 AB Bank limited

15 Industrial and Commercial Bank of China Ltd.

16 Mizuho Corporate Bank Ltd.

17 Siam Commercial Bank Public Company Ltd.

18 Krun Thai Bank Public Company Ltd.Table: 11

Interest rates

The following table presents approximate interest rates in effect at March 2013

Rate per annum

Central Bank Rate 10%Minimum Bank Deposit Rate 8%

Maximum Bank Lending Rate 13%Table 12


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MYANMAR

CHALLENGES

STRENGTH

OPPORTUNITY


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MYANMAR OPPORTUNITY

Sustain rapid growth

Myanmar witnesses sustain rapid growth in diversified economic base/ sector.

Manufacturing, agriculture, infrastructure, energy/mining, tourism, financialservices and telecom are the major seven sectors which provide most contribution

to GDP and these sectors has sizeable potential to contribute in Myanmar GDP.

Sectors in particular agriculture, energy/mining, manufacturing, and

infrastructure could be important for driving growth because together they

account for almost 85% of the total growth opportunity in the seven sectors.

In terms of employment potential, manufacturing, infrastructure, and tourism are

likely to be the most important sectors and could account for 92% of the

employment potential in the seven sectors.

Overall, the seven sectors could together potentially contribute more than $200

billion to GDP by 2030 and create over ten million additional non-agricultural

jobs. This would be a remarkable leap forward for Myanmar and a very large

opportunity in Myanmar itself and overseas.

AGRICULTURE:

Agriculture contributed 44% of GDP in 2010 and 52% of workers were employed.By 2030, agriculture sector GDP could more than double to approx $49 billion by

catering six main sources of value and are (refer graph: 21)

Increase crop yields

Shift to high-value crops

Increase land under cultivation

Increase livestock production

Increase fishery production

Reduce losses by implementing advance supply chain and cold storage.


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INFRASTRUCTURE (TRANSPORT, WATER AND UTILITIES AND

REAL ESTATE)

Infrastructure construction and operations contributed an estimated $10.5 billion to

GDP in 2010 and provided employment for 500,000 people. By 2030, its

estimated that the GDP contribution could be $48.8 billion and employment 2.3

million.

Myanmar will need total infrastructure investment of $320 billion between 2010

and 2030. The most significant investment needs to be in residential and

commercial residential estate, which could potentially comprise around 60% of the

total requirement. Other areas like power plants, water treatment plants, and roads

and rail networks, airport and Sea port.

The demand for new infrastructure is likely to rise, if Myanmar begins to undergo

a structural economic shift to manufacturing and urbanize.

TELECOMMUNICATIONS

The telecommunications contributed $100 million to GDP and accounted

approximately 2,600 Jobs. In 2030, its estimated that the sector could contribute

$6.4 billion to GDP and employ around 240,000 people.

Myanmar has the lowest penetration of telecommunications infrastructure of any

ASEAN country. (Source: Ibid).

Less than 3% of citizens had access to a mobile phone in 2011.

FINANCIAL SERIVIES

The financial services sector contributed $200 million to GDP and around 7,000

jobs. In 2030, it is estimated that the sector could contribute $11.1 billion to GDP

and about 400,000 jobs.

Myanmar has four large state-owned banks (refer table 9) , 19 local private

banks(refer table 10) and 18 representative office of foreign banks(refer table 11).

the penetration of banking products is currently very low and well below that of

other ASEAN countries.

TOURISM

Myanmars rich cultural heritage and natural attractions are significant strengths

and suggest considerable potential in tourism, especially considering the growth of

the consuming class in Asia. In 2010, Myanmar had the lowest number of tourism

of any ASEAN country.


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It is estimated that Asian tourisms could make 525 million trips within the region

by 2030.

In 2010, the tourism contributed $600 million to GDP and employed close to

2700,000 people. By 2030, the tourism services could contribute $14.1 billion to

GDP and employ around 2.3 million people.

The growth in tourism sector is dependent on supporting infrastructure such as an

air, water, rail, and road infrastructure is in place to support the expansion of

hotels and airports.

A $200 BILLION OPPORTUNITY: IMPLICATIONS FOR THE PRIVATE

SECTOR

MYANMARS COMPANIES

Myanmars companies are likely to experience both significant growth potentialand intense competitive pressure over the next few years. The environment will be

one of enormous change. Market pressures, prices, the regulatory environment,

and ways of doing business will all shift as Myanmar integrates into the global

economy and the ASEAN economic community is realized. Myanmars

companies, which are generally currently small by international standards, are

likely to increase their chances of success if they keep three interlinked

imperatives in mind:

Prepare to compete in Myanmar and abroad.Quickly reach international standards.

Seize the opportunities of foreign partnerships.

INTERNATIONAL COMPANIES

International companies need to weight up the advantages of fast growth in

Myanmar, at potentially high margins, with access to cheap labour and natural

resources and compare these to the risks inherent in the peace and transformation

process and potentially the small-scale of opportunity relative to other Asianmarkets. For those companies overseas that decide to invest, there are four

potentially useful ways of looking at how to approach Myanmar.

Move fast to assume a leadership position.

Be prepared for a longterm commitment.

Develop a deeper approach than elsewhere.

Form partnerships with local companies.


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CONCLUSION

By 2030, Myanmars economy could be more than four times as big as it is today,

with GDP of over $200 billion (refer table 23). The seven sectors which will

contribute maximum share in GDP, will contribute more than $200 billion by2030. It has been estimated that, overall service industry will contribute about

$100 billion of $200 billion (estimated) by 2030 and engineering services will

share the pie by $45 billion. The engineering services in Manufacturing, Energy &

mining, Telecom and Infrastructure sector includes: Basic Design Engineering,

Detail Design Engineering, Research & Development, Inspection, Quality Check,

Product Improvement and Commissioning.

Myanmar, a nation eager to take its place in the world and join Asian neighbours

in todays wave of rising prosperity, has an exceedingly demanding agenda ahead:boosting productivity, building the infrastructure needed to support growth,

developing skills, and creating employment-and all with limited funds and

governmental capacity. After a series of political and economic reforms, Myanmar

has the goodwill of the international community as it embarks on this monumental

task. But it needs to maintain a steady course of change and progress, in order to

maintain the trust of the businesses and investors-necessary for reaching its

potential.

Only 4% of Myanmars citizen comes under consuming class and it has been

estimated that Myanmars consuming class could grow more than seven-fold

around 19 million by 2030. The fact that this underdeveloped economy is

embarking on its transformation in the digital age should reinforce that potential.

So, too, should the fact that Myanmar is still largely an agrarian nation, but one

that is on the cusp is a wave of urbanization sweeping across Asia and the rest of

the development world.

This is Myanmars moment: seize it and the nation has a chance to b ecoming one

of the most exciting economic transformations the world has seen.


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Figure 3


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BIBLIOGRAPHY

Mckinsey Global Institue - Report

Pricewaterhouse coopers - ReportBain & Company INDUSTRY_BRIEF_PE_in_Southeast_AsiaReport

Deloitte APAC_March2013Report

KPMG Investing in MyanmarReport

World Economic Forum: New Energy Architecture MyanmarReport

Myanmar Information Management Unit (MIMU)

Directorate of Investment and Company Administration- (DICA)

World Data Bank

Wikipedia

Tradingeconomic.com

http://www.president-office.gov.mm/en/

http://www.dica.gov.mm/index.htm

http://atlas.media.mit.edu/

REFERENCE DATA

FIGURE

Figure 1 Map

Figure 2 State and RiversFigure 3 Myanmar Overview Map

TABLE

Table 1 Myanmar Basic DataTable 2 Timeline of Key EventTable 3 Political System and Governance StructureTable 4 Key ministersTable 5 The Economy Statics

Table 6 Economic IndicatorsTable 7 Myanmar Key IndustriesTable 8 Major Investors in MyanmarTable 9 State owned banksTable 10 Private Banks listTable 11 Representative offices of foreign banksTable 12 Interest rates


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GRAPH

Graph 1 Myanmar KyatGraph 2 Myanmar GDPGraph 3 Myanmar GDP Annual Growth RateGraph 4 Myanmar GDP Per CapitaGraph 5 Myanmar GDP Per Capita PPPGraph 6 Myanmar PopulationGraph 7 Myanmar Unemployment RateGraph 8 Myanmar Inflation RateGraph 9 Myanmar Interest RateGraph 10 Myanmar Balance Of TradeGraph 11 Myanmar Current AccountGraph 12 Myanmar Current Account To GDPGraph 13 Myanmar ExportsGraph 14 Myanmar ImportsGraph 15 Myanmar Government Debts to GDP

Graph 16 Myanmar Government BudgetGraph 17 Per capita GDP, Purchase Power Parity (PPP)Graph 18 Sector Share of GDP (%)Graph 19 Labour Productivity and share of employmentGraph 20 Labour productivityGraph 21 Agriculture Sector contribution to GDPGraph 22 Sector vs EmploymentGraph 22 Sector vs EmploymentGraph 23 Sector contributing to GDP and potential

Documents

MMM -International Marketing Project - Engineering Service Prospect in Myanmar