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PwC MyanmarWeekly Business Intelligence
Issue 15108 March 2019
www.pwc.com/mm
PwC | March 2019
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PwC | March 2019
1. Weekly Key Financial & Business News
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PwC | March 2019
Weekly Key Financial & Business NewsHeadlines
Aussie survey finds private firms face hurdles in doing business
KBZ Bank Working to Spur Home Ownership Among Locals
A touch of micro financing for renting homes in Yangon
Uncertainty clouds bank equity move
4
As banking opens up, Yoma Bank finds niche in SME loans and mortgages
PwC | March 2019
Weekly Key Financial & Business NewsHeadlines
Bus Company Owned by Ex-Dictator Ne Win’s Grandsons at Risk of Lawsuit Over Unpaid Loan
Yangon’s ‘new city’ plan raises a billion-dollar question
New Yangon City Chief Grilled Over Chinese Contractor’s Reputation
Local and foreign companies compete in smart car parking tender in Yangon
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Commercially proven gas reserves found in offshore Zawtika field
PwC | March 2019 6
KBZ Bank Working to Spur Home Ownership Among Locals
KBZ Bank is launching a set of new Home Loanproducts aimed at increasing home ownershipaiming locals. The five Home Loan options offerpreferential rates and are structured simply tooffer different benefits according tocustomers’circumstances. The variety of HomeLoan products will allow customers, be itindividuals or couples, to choose a Home Loanthat suits them best for purchase of apartments,condos or landed properties.According to the 2014 Myanmar Population andHousing Census Report on Housing Conditionsand Household Amenities, published by theGovernment of Myanmar and United NationsPopulation Fund, home ownership is high inMyanmar at 85.5 percent but it is lower in urbanareas at 66 percent. People living in urban Yangonand Mandalay typically do not own the housesthey live in because of the higher land andproperty prices. Additionally, home ownership islow among younger people, with only 14.6 percentof household heads aged 25-34 owning the homethey live in.U Htay Aung Kyaw, Head of Department, Secured
Consumer Mortgage, KBZ Bank, says, “At KBZBank, we wish to improve the quality of life for allthrough banking. With our new set of Home Loanproducts, we are striving to make homeownership accessible by being flexible on ourrates and rewarding our best customers. Webelieve our Home Loan offerings will be a majorstep forward for Myanmar’s society as we aim tomake home ownership a reality for millions andsupport them to build brighter futures for theirfamilies.” Home loans are structured as long-termfinancial plans and require customers to makemonthly payments, which are inclusive of interestbased on the loan obtained, over a predeterminednumber of years. KBZ Bank has receivedpermission from the Central Bank of Myanmar tooffer its portfolio of Home Loan products andeligibility is dependent on the customer’s lifestage, monthly income, available capital andpreferred property value.Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/kbz-bank-working-spur-home-ownership-among-locals
NewspapersMyanmar Business Today
04 March 2019
PwC | March 2019 7
Aussie survey finds private firms face hurdles in doing business
Red tape and access to skilled labour aresignificant constraints for businesses inMyanmar, according to a survey by the Australia– Asean Chamber of Commerce.Three-quarters of the respondents to the surveyon Myanmar identified government bureaucracyas a significant hurdle while two-thirds identifiedaccess to skilled labour as a constraint.Respondents to the survey - the fourth AustralianBusiness in Asean Survey – also noted weak lawenforcement as a continuing challenge to doingbusiness in the country.These three high-impact business challengesincreased in 2019 compared to 2017. However,the survey showed that the political and currencyconditions have become more stable.Office rentals, personal security and labour costswere also seen by respondents as less of achallenge.Australia-Myanmar Chamber of Commerce CEOJodi Weedon told the Myanmar Times thatcompared to the rest of the region, Aussie firmsdo not see corruption in Myanmar as being moreof a challenge.
“More than 90pc of the Australian businesscommunity here in Myanmar (who responded tothe survey) has been operating in the Myanmarmarket for less than 10 years with 50pc enteringthe market in the past five years demonstratingthe scale of opportunity which may exist,” shenoted.Weedon said the survey “is intended to providefactual guidance as to how Australia, as a closeneighbour in the Asean region, is well placed tobecome a partner of choice for countries inSoutheast Asia”.She said the survey identifies new trade andinvestment opportunities across the region. “Withregard to Myanmar, the survey indicated thatthere does continue to be great diversity amongAustralia's business presence here.
Source: Myanmar Timeshttps://www.mmtimes.com/news/aussie-survey-finds-private-firms-face-hurdles-doing-business.html
NewspapersMyanmar Times
05 March 2019
PwC | March 2019 8
A touch of micro financing for renting homes in Yangon
As more and more people move to Yangon to seekwork every year, the housing shortage in the citybecomes increasingly acute.One form of housing that has emerged to servethe needs of middle-class workers seekingaccommodations is hostels and rented rooms.Even as the rest of Yangon’s property marketremains flat, demand for hostel housing has risen.In tandem with the country’s growing economy,workers who have seen their pay rise areincreasingly seeking to move from crowdedhostels to rented low-cost apartments that theycan share with perhaps two or three other peopleto lighten the financial load.However, rooms in Yangon are being rented outon six-month or one-year leases, with severalmonths of rent, sometimes up to a year, paidupfront upon the agreement of a deal.Additionally, renters have to pay the equivalent ofa month’s rent to property agents who act asmiddlemen for property owners.Those who struggle to make lump sum paymentsare still unable to move from hostels.Over the last year or so, real estate services
websites started to emerge to cater to the needs ofpeople seeking property to buy or rent. Thisallows property seekers to cover more ground, soto speak, online.Property services company Nay Yar recentlylaunched an innovative service where it pays sixmonths of rent upfront for people who are not arenot in a position to pay in one lump sum. Nay Yarthen charges the renters a small fee of threepercent a month on the rent.During its ongoing trial run, Nay Yar will makelump-sum payments on behalf of tenants forapartments being rented for up to K200,000month, and if the service proves viable it will beexpanded, said Nay Yar CEO Ko Andrew Kyaw.In the example of an apartment being rented forK200,000 a month, the company will pay the six–month upfront lump sum of K1.2 million in rentfor the client and receive 18 percent as a fee forthe service.
Source: Myanmar Timeshttps://www.mmtimes.com/news/touch-micro-financing-renting-homes-yangon.html
NewspapersMyanmar Times
05 March 2019
PwC | March 2019 9
Uncertainty clouds bank equity move
Domestic banks have been slow to act on a reformallowing equity injections of up to 35 percent byforeign banks, with some citing continuedconfusion over the rules.DOMESTIC BANKS have been slow to act on aCentral Bank of Myanmar decision that allowsforeign banks to invest in their operations, withindustry sources attributing their hesitation to afailure of the Central Bank to provide clarity overthe change.A Central Bank regulation issued on January 29that formally allows foreign banks to have up to35 percent equity in Myanmar bankinginstitutions was broadly welcomed by a businesscommunity eager for greater access to finance.A senior Central Bank official who asked not to benamed told Frontier that up to the third week ofFebruary, they had yet to receive a proposal froma local bank for foreign equity participation. Somebankers said they were still unsure whether theregulation applied equally to public, private andstate-run banks.U Than Lwin, senior adviser at privately ownedKBZ Bank, said the regulation, which implements
provisions of the Myanmar Companies Law thattook effect on August 1 last year, lacks clarity.“They need to publicly define it,” he said,referring to the Central Bank.Central Bank deputy governor U Soe Theinconfirmed to Frontier that the regulation appliesto all banks in Myanmar but declined to commentfurther.Members of the business community say thatenabling foreign banks to invest in local bankinginstitutions will make more capital available forinvestment and benefit the economy.“Up until now, I’ve not heard about any foreignbanks preparing to acquire equity in local banks,”said Dr Soe Tun, president of the MyanmarAutomobile Manufacturers and DistributorsAssociation.“However, if such equity participation could reallyhappen, the local banks would get not only capitalbut also the technology and the global experience[of foreign banks],” he said.Source: Frontier Myanmarhttps://frontiermyanmar.net/en/uncertainty-clouds-bank-equity-move
NewspapersFrontier Myanmar
05 March 2019
PwC | March 2019 10
As banking opens up, Yoma Bank finds niche in SME loans and mortgages
With the Central Bank of Myanmar (CBM) havingissues a slew of directives liberalising theMyanmar banking and financial sector over thepast 24 months, chief executive Hal G Bosher isbeginning to see positive opportunities for YomaBank in the years ahead.“The CBM has been implementing reforms tobolster confidence in the industry since 2017. Thisis a good thing as it will help strengthen thebanking system in the country with better qualityof services,” he told the Myanmar Times duringan exclusive interview.To align the country with the Basel III set ofinternational banking regulations developed bythe Bank for International Settlements, the CBMin July 2017 introduced rules requiring banks tosubmit reports on large debts and amend the waybank liquidity ratios are calculated. It alsotightened regulations on the types of assets bankscan hold.Less than six months later, it directed banks toconvert all overdraft loans to term loans with thevolume of overdraft as a percentage of a bank’sloan book to be reduced to 20 percent by July
2020. On November 8, 2018, the CBM thenannounced that it would allow branches of foreignbanks in Myanmar to offer financing for localbusinesses and operate other banking services.This year so far, the CBM has permitted Myanmarbanks to extend loans without the need forcollateral at a maximum lending rate of 16pc. Italso relaxed the requirement that banks allocate5pc of their loans for home loans and allowedlocal banks to accept up to 35pc in equityinvestments from foreign banks or financialinstitutions.On February 11, the CBM also issued a directivefor banks to not have net open positions over20pc of core capital.To leverage on the more competitive bankinglandscape, Yoma Bank, which was awarded a fullbanking license by the CBM in 2013, is pushingdigital services in an economy still largely relianton cash transactions.Source: Myanmar Timeshttps://www.mmtimes.com/news/banking-opens-yoma-bank-finds-niche-sme-loans-and-mortgages.html
NewspapersMyanmar Times
06 March 2019
PwC | March 2019 11
Yangon’s ‘new city’ plan raises a billion-dollar question
ON JANUARY 12, the Chinese embassy in Yangonissued a statement that mentioned the US$.3.6billion Myitsone dam project, suspended by thegovernment since 2011, in a manner that arousedindignation in political circles and among thepublic. The statement, issued after a visit toMyitkyina by Chinese ambassador Mr HongLiang, attributed Hong as having told Kachinleaders, “If this issue fails to be resolved after along delay, it will seriously hurt the confidence ofChinese entrepreneurs in investing in Myanmar.”However, at an event in mid February to discussthe building of a “New City” across the river fromdowntown Yangon, it was revealed that China’sstate-owned China Communications ConstructionCo Ltd had proposed spending $1.68 billion oninfrastructure for the project. This seems tocontradict the ambassador’s statement aboutChinese investors holding back. It’s time to take acloser look at the New Yangon City project led bythe Yangon Region government and discuss itspartnership with CCCC.The New Yangon City is intended to cover an areatwice the size of Singapore. The first phase, which
has been approved by the Yangon Regionparliament, would be implemented on an areacovering 20,000 acres (about 8,000 hectares)west of the Yangon River, opposite KyimyindaingTownship. The vehicle established in March lastyear by the regional government to implement theambitious plan is the New Yangon DevelopmentCo, with prominent businessman Mr Serge Pun,also known as U Theim Wai, as CEO.Amid criticism over a lack of transparency, NYDCsigned an agreement with CCCC last May toprepare a detailed infrastructure proposal.However, a final decision will be based on what’sknown as a “Swiss challenge”, rebranded as“NYDC challenge”, under which other companiesare able to submit counter proposals for theinfrastructure work, and would be required torefund CCCC’s costs if its counter proposalsucceeds.
Source: Frontier Myanmarhttps://frontiermyanmar.net/en/yangons-new-city-plan-raises-a-billion-dollar-question
NewspapersFrontier Myanmar
08 March 2019
PwC | March 2019 12
Bus Company Owned by Ex-Dictator Ne Win’s Grandsons at Risk of Lawsuit Over Unpaid Loan
YANGON—Two grandsons of Myanmar’s ex-dictator Ne Win may be at risk of being sued by alocal bank for failing to repay hire-purchase loansobtained to acquire buses for a transportcompany they own.The bus company, Omni Focus, and two of itsaffiliates—Central Yangon Network Company andKeen Support Company—took out a loan of 56billion kyats (US$36.8 million) from AYA Bank in2017 to buy 500 new buses to be operated byYangon Bus Service (YBS). The loan was sought atthe recommendation of Yangon Chief Minister UPhyo Min Thein.In a statement released on Friday, the bank said itis planning to sue the companies for failing torepay the loans. The bank said it had attempted tocommunicate with the companies for severalmonths, including sending bank notices and legalnotices requesting repayment, as per the bank’sprocedures.U Myint Zaw, managing director of AYA Bank,told The Irrawaddy on Friday that the threecompanies failed to make at least 50 billion kyatsin repayments, including interest and late
penalties, over the past 17 months.“As a bank, we gave them loan within the bankcompliance and procedures. And now they havemissed the deadline to make the repayment. Wewould like to urge them to repay the loan,” hesaid.U Kyaw Ne Win of the Omni Focus Company andofficials from AYA Bank met separately with theYangon Regional Parliament’s Finance, Planningand Economy Committee on Thursday to discussthe dispute.Regional lawmaker U Kyaw Zeya, who is amember of the committee, told The Irrawaddythat the loans were provided because the regionalgovernment told the bank to do so. He said thebank officials said that while other companiesrepay their loans regularly, the three companies,which are all under Omni Focus, failed to pay. Headded that U Kyaw Ne Win acknowledgedreceiving notices from the bank.Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/bus-company-owned-ex-dictator-ne-wins-grandsons-risk-lawsuit-unpaid-loan.html
NewspapersThe Irrawaddy
08 March 2019
PwC | March 2019 13
New Yangon City Chief Grilled Over Chinese Contractor’s Reputation
YANGON—The CEO of the company developingthe controversial New City project on the westbank of the Yangon River has defended theinvolvement of a Chinese firm with aninternational reputation for engaging in briberyand corruption.The Yangon government-backed New YangonDevelopment Company (NYDC) last year signed aUS$1.5-billion (about 2.3 trillion kyats)framework agreement with Beijing-based ChinaCommunications Construction Company, Ltd.(CCCC) under which the latter will buildinfrastructure for the new city. The project, slatedto be developed on 20,000 acres of land, is part ofChina’s ambitious Belt and Road Initiative inMyanmar.However, the project has been a source ofcontroversy due to its flood-prone location as wellas CCCC’s involvement. The Hong Kong-listed,Chinese state-owned company has been accusedof engaging in corruption and bribery relating todevelopment deals in at least 10 countries inAfrica and Asia, from the Philippines toBangladesh to Tanzania, according to
international media reports.At a public consultation meeting about the projectin Yangon on Wednesday, NYDC’s CEO Serge Punwas bombarded with questions on topicsincluding the project’s location, financial model,environmental feasibility, job creation and thecontroversial Chinese firm’s involvement, amongothers. Audience members wondered aloudwhether the New City project would have anegative impact on Yangon and expressedconcerns over Chinese influence over the NewCity once it is completed.When asked if NYDC had done a backgroundcheck on CCCC before signing the frameworkagreement, the CEO said it had. He acknowledgedthat the Chinese company had once beenblacklisted by the World Bank along withinternationally known U.S. and Canadiancompanies, but insisted that “the situation haschanged”.Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/new-yangon-city-chief-grilled-chinese-contractors-reputation.html
NewspapersThe Irrawaddy
08 March 2019
PwC | March 2019 14
Local and foreign companies compete in smart car parking tender in Yangon
A total of 18 local and foreign companies aresubmitted tender to build smart car parking inYangon Region, said MP Than Naing Oo of No.1Pabedan Constituency on March 6.“A total of 60 applicants bought the tenderproposal form and 18 of them are selected for theexpression of interest. Some proposals areincomplete and some are not registered in officeof the regional government. Sumitomo Companyfrom Japan submitted the EOI. I don’t know howthe authorities specify the requirements,” said theMP.A total of four companies from China, Israel andSingapore made joint-ventured with localcompanies and applied for the tender. Engineers,IT experts and MPs are included in the smart carparking tender selection committee.The first phase of the smart car parking will becarried out in six downtown townships and it willlater be implemented in townships where trafficjam is heavy. The tender selection committee willscrutinize based on the documents, companyregistration and organization structure,investment, three-year telecommunication license
term, five year experiences and no criminalrecord.
Source: Consult Myanmarhttps://consult-myanmar.com/2019/03/08/local-and-foreign-companies-compete-in-smart-car-parking-tender-in-yangon/
NewspapersConsult Myanmar
08 March 2019
PwC | March 2019 15
Commercially proven gas reserves found in offshore Zawtika field
PTTEP Myanmar Asset, a subsidiary of Bangkok-based PTT Exploration and Production, has foundcommercially proven gas reserves at the M9 blockof the Zawtika project located 300km southwestof Yangon in the Gulf of Mottama.The company’s General Manager PiyaSukhumpanumet said in a press release that oneof the successful wells, Zawtika-24, hascommercially proven hydrocarbon reserves.Results showed that the well has shown positivelyproven reserves of 152 metres of net gas sands,more than the expected 41 metres with the latestdiscovery to prolong Zawtika’s gas production.“With these significant appraisal outcomes,PTTEP Myanmar Asset is continuously lookingfor additional resources and reserves toconstantly meet energy demands for Myanmar.This discovery increases our confidence about thehydrocarbon potential of undrilled areas in theZawtika project,” Piya said.PTTEP Myanmar Asset is 80pc owned by PTTExploration and Production, with the remainderstake held by Myanma Oil and Gas Enterprise.
Source: Myanmar Timeshttps://www.mmtimes.com/news/commercially-proven-gas-reserves-found-offshore-zawtika-field.html-0
NewspapersMyanmar Times
08 March 2019
PwC | March 2019
2. Weekly Key Policy News
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PwC | March 2019
Weekly Key Policy NewsHeadlines
Myanmar's historic municipal poll to take place in Yangon
Four loss-making YCDC businesses suspended
Myanmar launches first ever municipal citizen’s budget
17
Nine sectors to have priority under the China-Myanmar Economic Corridor
Unity Needed for Effective Constitutional Reform
PwC | March 2019 18
Myanmar's historic municipal poll to take place in Yangon
Myanmar’s first directly-elected municipalelection will be held this month. There are hugecapacity challenges to organise the poll but thiswill set precedents for the rest of the country.The coming election for Yangon City DevelopmentCommittee (YCDC) will take place on March 31,after a delay of two years.The last YCDC election, held in December 2014,was based on the household suffrage system. Only401,000 people out of 5.2 million were able tovote in that election.Hence, the March 31 election is the first pollwhich is mostly directly elected.On February 25, the YCDC committee released alist of the 272 candidates for the municipalelection who will be contesting for a total 105seats, 99 at the township level — three seats eachin 33 townships — and six for the YCDC’sexecutive board. The board, which includes themayor, has a total of eleven committee members,and through secret voting, they will then pick thedeputy mayor among the six elected committeemembers.The Myanmar Times sat down with Greg Kehailia,
country director of the Carter Center, a US-basedNGO founded by former US president JimmyCarter that will support the civil societyorganisation, New Myanmar Foundation, toobserve the polling and will also support somevoter education activities, to talk about what toexpect for the municipal election.The Yangon regional government has allocatedK2 billion (US$1.3 million) to organise the poll.The Union Election Commission (UEC) has nojurisdiction over this, according to the 2008Constitution. Instead, the YCDC electoralcommission is in charge.“Women and youth were disproportionallydisenfranchised by the voting system applied inprevious Yangon municipal elections, whichprovided one vote per household. Under thatsystem, voters were typically male heads offamily.
Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmars-historic-municipal-poll-take-place-yangon.html
NewspapersMyanmar Times
05 March 2019
PwC | March 2019 19
Four loss-making YCDC businesses suspended
Four loss-making companies under theproduction department of the Yangon CityDevelopment Committee (YCDC), a body set upfor city planning, tax administration anddevelopment, have been suspended.According to Yangon Mayor U Maung Maung Soe,who also chairs the YCDC, these four companieswere suspended from a group of five that haveexperienced five consecutive years of losses.He noted that inspections carried out by theAuditor General over fiscal 2015-16 and 2016-17showed that five out of the 14 livestock andagriculture businesses under the YCDC have notbeen properly run.“These businesses have been falling because theywere not properly conducted to meet commercialsuccess. We have been making our efforts torecover these businesses since our administrationtook office,” U Maung Maung Soe said.He was responding to Daw Kyi Pyar, a Hluttawrepresentative from No.1 KyauktadaConstituency, who asked about how the YCDC’splans for the production department, at theRegional Hluttaw session held on February 27.
The businesses found to be loss making by theAuditor General were Ma Soe Livestock,Agriculture and Recreation Site; Aung Chan TharMarine Lobster Farming; Htauk Kyant PoultryFarming; U Toe Livestock, Agriculture andRecreation Site and; plantation businesses oflong-living trees.From fiscal 2012-13 to 2016-17, the AuditorGeneral’s report showed that Ma Soe lost K88.04million, Aung Chan Thar lost K38.408 million,Htauk Kyant lost K340.862 million, U Toe lostK175.651 million while the plantation businesslost K81.578 million.The Mayor added that the plantation business’slosses came from investing costs incurred for teakplanting from its original castor oil planting. Theother businesses incurred losses due to yearlydepreciations and not having any private firms totrade with.
Source: Myanmar Timeshttps://www.mmtimes.com/news/four-loss-making-ycdc-businesses-suspended.html
NewspapersMyanmar Times
04 March 2019
PwC | March 2019 20
Myanmar launches first ever municipal citizen’s budget
The Taunggyi Township Development AffairsOrganisation (DAO) has become the country’sfirst-ever local-government authority to publishits citizen’s budget.DAOs, municipal-type authorities outside ofYangon and Mandalay, have powers to raise theirown revenues through taxes, fees and licenses anddeliver services such as garbage collection, roadsand bridges, street lighting, sewers and drainageto the citizens.Taunggyi Township DAO Executive Officer U AyeKo said following the recent launch of the budgetthat this first DAO budget report would definitelyhelp to build trust between the DAO officers andpublic that could generate more revenue for citydevelopment projects.The DAO’s first published budget was supportedby the San Francisco-based The Asia Foundation,a non-profit international developmentorganization.“People will not be afraid or reluctant to pay taxesif they realized where public finances are used for.And this can be one of the initiatives for otherstate and regions to adapt such kind of budget
transparency,” U Aye Ko, also the Acting Directorof Shan State Development Affairs, said.Taunggyi’s DAO citizen’s budget’s publicationbuilds on the momentum surrounding increasedbudget transparency and accountability amonggovernment that began in 2017 when states andregions across Myanmar first started developingsub-national citizen’s budgets.The Asia Foundation’s country representative forMyanmar Matthew Arnold said in a press releasethat the publication was critical at the municipallevel where government decisions have the mostimpact. “Citizen’s budgets are a vital form ofcommunication between governments and theirpeople, contributing to more informed publics,higher trust between governments and the peoplethey represent and, ultimately, a strongerdemocracy,” he added.
Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-launches-first-ever-municipal-citizens-budget.html
NewspapersMyanmar Times
06 March 2019
PwC | March 2019 21
Nine sectors to have priority under the China-Myanmar Economic Corridor
Myanmar is prioritising nine sectors coveringinfrastructure projects under the China-MyanmarEconomic Corridor although more specific detailsas to which of the projects have been chosenremain under wraps.These sectors, part of the Myanmar SustainableDevelopment Plan, include electricity, road,bridge, telecommunication, basic construction,agriculture, transportation, research andtechnology.Union of Myanmar Federation of Chamber ofCommerce and Industry (UMFCCI) deputy chairU Thein Han said that the nine prioritized sectorsinvolve partnerships between Myanmar andChinese firms.He was among a group of Myanmar private sectorrepresentatives who had followed governmentofficials led by Minister for Planning and FinanceU Soe Win to the second joint committee forum ofthe China-Myanmar Economic Corridor held inKunming, China in late February.It has been learnt that a number of agreements “islikely” to be inked in April when the StateCounselor attends a state-level conference in
Beijing related to the Belt and Road Initiative.“Many companies want to enter the market andwe will connect them with the capable companieshere depending on the company size. We haveplans to connect companies of various sizes," UThein Han told The Myanmar Times.Myanmar Times, which attempted to getcomments from the Ministry of Planning andFinance, understands that Chinese and Myanmargovernment officials met four times in closed-door meetings in Kunming where private sectorofficials were not present.Among other details from the February meeting,Chinese officials were said to have pushed for anumber of projects mooted under the umbrella ofthe China-Myanmar Economic Corridor, whichcomes under China’s larger Belt and RoadInitiative.
Source: Myanmar Timeshttps://www.mmtimes.com/news/nine-sectors-have-priority-under-china-myanmar-economic-corridor.html
NewspapersMyanmar Times
07 March 2019
PwC | March 2019 22
Unity Needed for Effective Constitutional Reform
Ko Ye Ni: Welcome to Dateline Irrawaddy. Wewill discuss efforts in constitutional amendmentsthis week. A constitutional amendmentcommittee has been formed at the UnionParliament. However, we still don’t know how farthe amendment will go or if it will be a waste oftime and end up with the same status quo. LawyerU Kyi Myint and political commentator U YanMyo Thein will join me in the discussion. I am YeNi, editor of The Irrawaddy (Burmese Edition).Saya U Kyi Myint and Ko Yan Myo Thein, therewere disagreements at the Union Parliament thismorning as the Tatmadaw (Myanmar Army)opposed a proposal submitted by theConstitutional Amendment Committee. We sawthat (sound of) the live broadcast of criticismsmade by the Tatmadaw representatives had to beomitted. The Tatmadaw has always opposed theNLD’s aim to reduce the leading role of theTatmadaw in politics. During the Tatmadaw’spress conference, they made it clear that they willnot relinquish their political role as long as ethnicarmed organizations exist. As the Tatmadaw andthe NLD hold no negotiations and have different
views on constitutional amendments, is it possibleto amend the Constitution? If it is possible, underwhat circumstances can the Constitution beamended? I would like to ask Saya U Kyi Myint todiscuss this.U Kyi Myint: The Constitution, which is alsoknown as “mother law” or “basic law,” is vital for acountry. It is the “mother law” that affects thedevelopment of a country. What we see now isanarchy in which everyone is perusing their owncause amid criticisms and protests instead ofmaking the Constitution more democratic. We,[activists] are very sad because we are notaffiliated with any political party. As we foughtagainst the military dictatorship at all stages, wewere imprisoned repeatedly but we are still full ofhope for our country.
Source: The Irrawaddyhttps://www.irrawaddy.com/dateline/unity-needed-effective-constitutional-reform.html
NewspapersThe Irrawaddy
09 March 2019
PwC | March 2019
3. Weekly Investment News
23
PwC | March 2019
Weekly Key Investment NewsHeadlines
Myanmar launches trade, investment project with UK support
US$96 million for first phase upgrades of three airports
Govt seeks more private sector, foreign help with education
24
Domestic airlines need mergers, partnerships to sustain
Metro’s Myanmar subsidiary secures US$20m IFC loan
PwC | March 2019 25
Myanmar launches trade, investment project with UK support
The Ministry of Commerce together with theDirectorate of Investment Administration (DICA)and the International Trade Center (ITC)launched the Trade and Investment Project (TIP)on Monday with the aim of boosting Myanmar’sbusiness ecosystem by improving trade andinvestments.The TIP, which would run from 2019-21, isfunded by a US$5.28 million grant from the UK'sDepartment for International Development(DFID) with technical assistance from the ITC, amultilateral agency based in Geneva.The project’s strategic focus include improvingtrade competitiveness and business environmentthrough updating National Export Strategy(NES), supporting investments in buildingproductive capacities as well as expanding publicand private trade and investment support servicesto micro, small and medium enterprises.The TIP will also improve the investmentpromotion through the Myanmar InvestmentPromotion Plan (MIPP), and enable prioritysectors growth through specialized support forthe private sector.
The current NES, which runs from 2015-19, has alist of 11 prioritized sectors, which includes rice;beans pulses and oilseeds; fisheries; forestryproducts; textiles and garment; rubber; tourism;information and promotion; trade facilitation andlogistics; access to finance; and qualitymanagement as supporting services to improveexport.The Ministry of Commerce will be adding fruitsand vegetables, gems and jewelry, handicrafts,processed food products and digital business asthe potential export sectors for the updated NES(2020-25).The Ministry of Commerce’s permanent secretaryU Aung Soe said the states and divisions of thecountry will then develop the prioritized sectorsassigned to them following the NES’s updating ofthese sectors.
Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-launches-trade-investment-project-uk-support.html
NewspapersMyanmar Times
04 March 2019
PwC | March 2019 26
US$96 million for first phase upgrades of three airports
A raft of agreements between the government andprivate firms are expected to be signed this monthfor the upgrading of three regional airports tointernational standards.The three airports concerned – Heho airport inShan State, Mawlamyine airport in Mon State andKawthaung in Tanintharyi Division – will beupgraded to boost regional development as wellas improve accessibility.According to Department of Civil Aviation DeputyDirector-General U Ye Htut Aung, the first phaseof the upgrading works that includes theconstruction of customs, immigration andquarantine facilities will total US$96 million.Upgrades for Heho airport will cost US$40million, with US$20 million and US$36 millionrespectively for Mawlamyine and Kawthaungairports.The airport upgrading project will be done in twophases. In the first stage, they will be upgraded tobecome Custom Immigration Quarantine airportsand in the second stage, the airports are expectedto achieve international status.U Ye Htut Aung pointed out that the upgrades
will be completed faster with the participation ofthe private sector through public-privatepartnerships. “The future is looking up for airtransportation,” he added.He said among the three airports, the one at Hehohas the “highest potential”, followed byKawthaung. Mawlamyine airport was notoriginally chosen as one of the airports to beupgraded but the Mon State government lobbiedfor the upgrade to improve accessibility asmillions of its residents who work in Thailand,Malaysia and Singapore have to use a circuitousand more expensive route through Yangon.The KBZ group, which owns Air KBZ as well asMyanmar Airways, has a 65pc stake in apartnership while Toyota Tsusho, a member ofthe Toyota group, has 35pc stake, for the Hehoairport upgrade.
Source: Myanmar Timeshttps://www.mmtimes.com/news/us96-million-first-phase-upgrades-three-airports.html
NewspapersMyanmar Times
05 March 2019
PwC | March 2019 27
Govt seeks more private sector, foreign help with education
The government needs greater participation bythe private sector and foreign institutions totransform the country’s education system, whichwas neglected during more than half a century ofmilitary rule, a British-based business researchcompany said.The Oxford Business Group said in its recentcountry report that the ongoing “transformationof Myanmar’s education system needs substantialinvestment” that the cash-strapped governmentcannot provide on its own.It said that while the ruling National League forDemocracy (NLD) has begun implementing thefive-year National Education Strategic Plan sinceit took over the government in 2016, much morework needs to be done.“As the market is anticipated to expand, morecreative measures will be needed to catalyseinvestment for education infrastructuredevelopment and teacher training. This will likelylead to further partnerships with both the privatesector and foreign institutions,” it said.The country report said education expertsestimated the government needs US$2.1 billion
(K3.19 trillion) annually to complete 80 percent ofthe plan by 2021, which exceeds the $1.24 billionit budgeted for education in fiscal 2018-2019.The five-year plan was supposed to revive thecountry’s moribund education system byexpanding basic education from 11 to 13 years,focusing on reducing dropout rates, creating amore engaging and interactive curriculum thatpromotes critical thinking, and equippingstudents with the necessary skills to meet thedemand of the changing global labour market.Myanmar’s education system was highly regardedin Asia until the 1960s, when a succession ofmilitary governments sharply reduced theeducation budget.“In April 2018 a joint venture was formedbetween London-listed Myanmar StrategicHoldings (MHS) and Singapore-based AustonInstitute of Management to open a private schoolin Yangon.
Source: Myanmar Timeshttps://www.mmtimes.com/news/govt-seeks-more-private-sector-foreign-help-education.html
NewspapersMyanmar Times
06 March 2019
PwC | March 2019 28
Domestic airlines need mergers, partnerships to sustain
There is a need for domestic airlines to merge orform partnerships with foreign airlines in order tosustain themselves in the longer-term.Stakeholders believe that the way forward fordomestic airlines, which continue to be loss-making due to lower number of passengers andhigher costs, would be to either merge theiroperations or form partnerships with foreignairlines.There has been a proliferation of domestic airlinesever since the country granted more licenses in2011, with competition becoming more intense. Atthe same time, forming partnerships with foreignairlines have not been easy.Ticket prices remain high despite the largernumber of domestic airlines and the more intensecompetition, putting off air travelers. Touroperators noted that domestic air tickets were farhigher when compared to other countries, makingit an obstacle for tourism.Minister for Hotels and Tourism U Ohn Maungtold the media recently that domestic airlinesmust be able to operate in a level playing fieldwith foreign airlines.
He had previously suggested that domesticairlines should look for partnerships amongthemselves if they wanted to sustain theirbusiness and cut costs.Meanwhile, Myanmar Tourism Federation chairU Thet Lwin Toe observed that joint venturescould be the way to survive with cost-sharing onfuel and being able to fill the seats.According to a May 2018 report by the Centre forAsia Pacific Aviation, many domestic airlines inMyanmar were running on volume of less thanthree million passengers.The report noted that the intense competitionhave affected the finances of a number of airlines,leading to a several of them deciding to suspendservices or leave the market.Asian Wings suspended operations on January 1while over the past year, FMI Air, Air Mandalay,Air Bagan and Apex Airlines have all groundedoperations.
Source: Myanmar Timeshttps://www.mmtimes.com/news/domestic-airlines-need-mergers-partnerships-sustain.html
NewspapersMyanmar Times
07 March 2019
PwC | March 2019 29
Metro’s Myanmar subsidiary secures US$20m IFC loan
The Myanmar subsidiary of German retail groupMetro AG has raised a US$20m loan from theInternational Finance Corporation, the private-sector arm of the World Bank.The subsidiary Metro Wholesale Myanmar is a85pc-15pc joint venture between Frankfurt-listedMetro AG and Singapore-listed Yoma StrategicHoldings, offering one-stop wholesale foodservice distribution for hotels, restaurants,retailers, and offices.The IFC said the financing aims to drive upagricultural incomes as well as improve thequality and availability of local produce,benefiting buyers and end consumers. The termsof the loan were not disclosed.It also said the investment will help Metro sourcethe majority of its produce from local farmers andcompanies, raising food safety standards andcreating employment opportunities in foodprocessing and logistic services.Since 2013, the Washington-based lender hasinvested over $1.3 billion in the country.Vikram Kumar, IFC’s country manager forMyanmar and Thailand, said the move is to
“ensure the availability of safe, high-quality foodsfrom the farm to fork, increasing the agribusinesssector’s export potential.”He added the loan will eventually benefit smallbusinesses and service providers along the valuechain.According to Jens Michel, CEO of the JV, thecompany operates a warehouse and distributioncentre in Thilawa Special Economic Zone for fast-moving consumer goods and food products andprovides “doorstep deliveries” for customers.Logistics players see rising market demand fromretailers and wholesalers just as the infrastructurehas gradually developed.“With the expansion of the retail/ wholesalesector thanks to partial liberalisation, we aredefinitely seeing more market interest in thelogistics,” commented Tomoaki Yabe, managingdirector of Thilawa-based logistics companyDaizen Myanmar.Source: Consult Myanmarhttps://consult-myanmar.com/2019/03/08/metros-myanmar-subsidiary-secures-us20m-ifc-loan/
NewspapersConsult Myanmar
08 March 2019
PwC | March 2019
3. Weekly New Tenders
30
PwC | March 2019
Tenders (Myanmar)List
Note: tenders information are collected from http://www.mmtimes.com/, https://tender.yangon.gove.mm, http://consult-myanmar.com/, and http://www.myanmar-opportunities.org/mm/tenders http://www.buildersguide.com.mm/en/ .
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No applicable Tenders announced for the week ending 08 March 2019.
PwC | March 2019
Tenders (Multilateral organizations) List
Note: tenders information are collected from https://wbgeconsult2.worldbank.org, www.devex.com, www.adb.org, https://www.ungm.org
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ADB: TA-9647 REG: Strengthening Safeguards Management in Southeast Asia (52059-001), Closing Date: 12 Mar 2019 (Individual)
ADB: TA-9416 REG: Sustaining the Gains of Regional Cooperation in the Greater Mekong Subregion- 2 Section-Specific Planning for North-South Economic Corridor: Electric Power Dev't (Myanmar) (51178-001), Closing Date: 15 Mar 2019 (Individual)
ADB: TA-9416 REG: Sustaining the Gains of Regional Cooperation in the Greater Mekong Subregion- 1 Section-Specific Planning for the North-South Economic Corridor: Agriculture (Myanmar) (51178-001), Closing Date: 15 Mar 2019 (Individual)
ADB: TA-9292 REG: Strengthening Project Preparation Capacity in Asia and the Pacific - Supporting Preparation of Infrastructure Projects with Private Sector Participation in Asia Pacific (Subproject 4) - #3 MYA: Legal Firm (49407-005), Closing Date: 23 Mar 2019 (Firm)
PwC | March 2019
4. MIC Permitted Projects
33
PwC | March 2019
MIC Permitted Projects (Meeting 3, 2019)
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No. Name of Company Type of Investment Form of Investment
1Bel Ga Myanmar Limited BDH Azie B.V. 99.9998% (Netherlands) and De Heus(Myanmar) Limited 0.0002% (Myanmar)
Parent Stock Farm Wholly Foreign Owned
2 MAYLP Agriculture Co., LtdCultivation, production and sales of hybrid variety rice seeds by contract farming
Joint Venture Investment
3Top Galaxy (Myanmar) Apparel Limited Hong Kong 100%
Manufacturing of knitted wear on CMP basis
Wholly Foreign Owned
4 KMIC Development Co., LtdDevelopment and operation of Industrial complex (phase 1)
Joint Venture
5 VPower Myanmar Limited (permit)Generation of 90 MW electricity from gas engine, supply and sales of electricity
Wholly Foreign Owned
6 ARO Commercial-AL Co., Ltd (permit) Wholesale and retail servicesWholly Foreign Owned (Thailand)
Source: DICA
PwC | March 2019
5. Upcoming Events
36
PwC | March 2019
Upcoming Events (April 2019) List
Date Location Name of Event Sector Price Focus Points
03-04 April2019
Yangon LPG Myanmar Summit Power & EnergyUSD300
“LPG Myanmar Summit will advocate theappointment of sole women as LPGdistributors to act as a catalyst in helpingexceed the Governments’ objectives withrespect to energy, health, and theenvironment. Ultimately the empowermentof women in Myanmar will be a criticalsuccess factor”
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Note: Events information are collected from https://www.go-myanmar.com/events-and-conferences and https://10times.com/myanmar .
© 2019 PricewaterhouseCoopers Myanmar Co Ltd. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Myanmar Co Ltd, which is part of the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
www.pwc.com/mm
PwC Myanmar Weekly Business Intelligence Publication
For further information please contact:
Jovi SeetSenior Executive [email protected]
Brandon [email protected]
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