Myanmar Considering Property Taxes To Stabilize Skyrocketing Real Estate Market, Despite Experts Suggestion Not To Meddle

Boats seen on a jetty in Dala township other side of Yangon on February 8, 2011. The proposed Yangon-Dala bridge would make the township, which is currently only reachable by ferry, more accessible. REUTERS/ Soe Zeya Tun

By Sophie Song
International Business Times

Fearful its skyrocketing real estate prices could prevent foreign firms from entering and investing in Myanmar, the government is considering new property taxes to stabilize the market, deter land speculation and increase state income, despite experts urging the government not to meddle.

Land prices in Myanmar’s commercial center Yangon, have risen to higher than prices in Manhanttan – the price of one square foot of real estate along Yangon’s main road ranges from $1,000 to $1,500. Knowing it will be profitable, anyone with the funds to do so is investing in real estate.

“Whenever people make money — if they have extra money in hand — instead of putting money in a bank they just buy land,” said Moe Zaw, the founder of Myanmar Deals Leasing, a real estate leasing agency in Yangon that serves corporate and diplomatic clients. “Everyone knows you’re not going to lose money buying land.”

Even in regions outside of Yangon, prices have hiked. Following announcement of a bridge crossing the Yangon-Dala River, which was to be built with investment from South Korea, investors rushed to buy up land on both banks of the river, despite the already high prices in Yangon, as well as the fact that Dala is reachable only by ferry currently, according to Mizzima, a Myanmar news outlet.

The government, worried that such rapid real estate booms in both regions could make it difficult for foreign investors to do business in the country, have suspended the bridge building project until the end of the current government’s administration, said U Soe Thein, the Minister of the President’s Office, at a press conference in Nay Pyi Taw on Friday.

Myanmar’s next election is slated for 2015, according to the Bangkok Post, and polls are already being prepared in anticipation.

In addition, government officials are looking at ways to collect taxes based on square footage, according to Maung Maung Thein, the Deputy Minister of Finance, also at an event on Friday, in order to rein in land prices, and also generate revenue for the state, according to the Myanmar Times.

“We have [internally] proposed tax prices for land in the Yangon region, and are looking at rates for the entire country. We will make an announcement soon,” Maung Thein said.

Last year, the government axed a five-year property tax holiday, when the real estate market was already on the rise, which brought into effect a 30 percent transaction tax and a 7 percent stamp tax, both to be paid by the buyer. The real estate industry has been pressuring the government to slash that rate, but an announcement last week said the 37 percent tax rate will not be lowered, the Myanmar Times reported.

Economists, while acknowledging current prices are too high to be sustainable, have previously urged the government not to meddle, but allow the market to fluctuate according to demand.

“The rising cost of land is indeed a hindrance to the economic development of the city and the country at large. But it is not due to sellers’ greed -- it is simply the trend of demand-pull market economics,” said Professor Aung Tun Thet, a member of the State Socio-Economic Development Advisory Council and advisor to the United Nations Development Program. “We must accept this. I worry that the government will try to meddle with the market. Rather than controlling the market, infrastructure development should be undertaken and wasteland should be provided to real and potential investors.”

Posted by Unknown 8:38 PM

Parliament approves plan to accept US$260 million loan from World Bank

Japan's Prime Minister Yoshihiko Noda (L) shakes hands with Burma's President Thein Sein during a joint news conference following their bilateral meeting at the Japan-Mekong summit in Tokyo on 21 April 2012. Japan has since forgiven Burma's debt and is now preparing fresh loans to kick-start development projects in the country.(Reuters)

By DVB

Burma’s Union Parliament has approved a plan, recommended by President Thein Sein, to agree a US$261.5 million loan from the World Bank to support various development projects.

The 40-year loan – at a fixed 0.75 percent interest rate – would be used to develop the communications sector and to improve schools, as well as pay for the construction of a compressed natural gas and biogas power plant in Mon state’s Thaton township.

In January, the World Bank announced that it would clear Burma’s outstanding debt of some $900 million, allowing the country to reapply for grants and loans from international institutions.

Meanwhile, The Asian Development Bank (ADB) announced on Monday that it will administer a Japanese loan of $1.2 million to help Burma improve statistics collection.

The technical assistance grant from the Japan Fund for Poverty Reduction aims “to strengthen institutional, strategic, and technical capacity for collecting better statistics to chart the country’s development and progress” the bank said in a statement.

“Timely, relevant, and accurate data is essential to understanding where the country [Burma] is today, and for future evidence-based decision making both within and outside government,” said Kaushal Joshi, the senior statistician with the Economics and Research Department at ADB. “Statistics help policymakers understand the economic, social, and environmental conditions, make decisions on economic growth, and design efforts to promote poverty reduction.”

Posted by Unknown 7:34 AM

Japan's ANA to buy 49% in Myanmar's Asian Wings Airways: Source

All Nippon Airways' (ANA) aeroplanes at Haneda airport in Tokyo on Aug 8, 2013. Japan's ANA Holdings Inc will buy a 49 per cent stake in Myanmar carrier Asian Wings Airways as part of a strategy to expand overseas by investing in airline related businesses, an industry source familiar with the agreement said. -- FILE PHOTO: REUTERS

by Straits Times

TOKYO (REUTERS) - Japan's ANA Holdings Inc will buy a 49 percent stake in Myanmar carrier Asian Wings Airways as part of a strategy to expand overseas by investing in airline related businesses, an industry source familiar with the agreement said.

ANA, will pay 3 billion yen (S$38.81 million) for the stake, the Nikkei business daily reported earlier. The two carriers may announce the deal later on Tuesday, the source said on condition he was not identified.

Yangon-based Asian Wings, which began flying in 2011, operates three turboprop ATR 72 regional aircraft and one Airbus A321 on domestic flights in Myanmar. The airline plans to begin international service in October with a flight between Yangon and Chiang Mai, Thailand, the Nikkei said.

A spokesman for the Japanese carrier declined to comment on the reports, saying it had not announced the acquisition. ANA resumed flights between Tokyo and Yangon last October after a 12-year hiatus.

Posted by Unknown 7:23 AM

Rice exports down but annual forecast positive

Farmers plant rice seedlings in a paddy field on the outskirts of Rangoon in 2012. (Reuters)

By THIKE ZIN (DVB)

Burma exported some 200,000 tonnes of rice between April and July, but that’s 100,000 tonnes short of last year’s figures.

According to the chairman of the Myanmar Rice and Paddy Traders Association, the 50 percent decrease in shipments is due to an increase in the Burmese rice price, a decrease in Indian prices, and adverse weather conditions.

The price per tonne for low-quality Emata rice (25 percent broken) in Rangoon today stands at US$360- $370, compared with $330 on the international market.

In addition, Burma has been hit with adverse weather conditions recently, with floods in the Irrawaddy delta and a drought in Upper Burma.

However, exports at the Sino-Burmese border are up significantly according to a local trader from Muse.

“Last week only 600 tonnes of rice passed through the border, but this week it’s up to 1,000 tonnes,” he said.

The chairman of Myanmar Rice and Paddy Traders Association, Aung Than Oo, remained upbeat, saying that while Burma exported some 1.4 million tonnes of rice in 2012, this year he expects the total to hit 2 million tonnes.

Posted by Unknown 7:47 PM

Myanmar Minister of Tourism disagrees on foreign visitors staying in private homes

Despite the lack of accommodation in many tourist areas, Myanmar Minister of Tourism does not look favourably at tourists staying in private homes.

Luc Citrinot - 07 August 2013
TravelDailyNews Asia


YANGON- The daily English-speaking newspaper Myanmar Times reported a few days ago that Minister for Hotels and Tourism U Htay Aung was not in favour of foreign visitors staying in private homes in Myanmar “as their manners are not appropriate for local residents” as quoted from the Minister.

The Minister indicated that foreigners would probably have difficulties to follow the customs of locals and if they do not, it might create a cultural shock for their guests. He was referring at customs such as sleeping facing the east or the fact to share only a single spoon when eating soup in a family.

All these comments came during a meeting of Mandalay’s tourism players – including hoteliers and tour guides. The Minister then indicated that “homestays” would only be considered as suitable when foreigners visit remote areas and where they are no other choices. Where hotels are available, he added, particularly in larger urban centres such as Yangon or Mandalay, such arrangements should not be permitted.

“The manners of some foreigners are not appropriate for Myanmar people. But we have to choose homestay where there are no hotels or guest houses. In the meantime, we also need to [stay] strictly alert to possible risks,” he said at the meeting, which was held at Mandalay’s Swan Hotel.

While technically banned, homestays can however be arranged by guides when tourists go on multidays treks. They would generally stay at monasteries.

The Myanmar Times quoted Ko Thaung Naing Oo, from the Myanmar Tourist Guide Association’s Mandalay branch, who explained that homestays would certainly help to alleviate the country’s hotel shortage. However, it would then request from tour operators to make an effort of explaining properly to visitors what are the customs and the way to behave as a private guest of a Myanmar host family.

The current lack of adequate accommodation for visitors to Myanmar is a concern as tourism continues to grow rapidly. After topping a million foreign travellers last year, The Minister for Hotels and Tourism indicated earlier in July that tourist arrivals are growing by 30% this year and that visitors could reach 1.8 million travellers by year end.

Talking to Myanmar Upper House, Minister U Htay Aung declared that the country is still “in need to develop infrastructure, supporting and providing services in line with the tourist increase. We have about 30,000 hotel rooms ready for the tourists. About 10,000 more rooms will be ready in the end of this year”.

Posted by Unknown 5:31 PM

Build it and they might come

A planned Thai mega-project in Myanmar runs into difficulty

The Economist
Aug 3rd 2013 | BANGKOK AND DAWEI

THE Burmese city of Dawei lies 350 kilometres (220 miles) west of the Thai capital, Bangkok. The two are separated by a stretch of mountainous jungle and have never been connected. But over the past five years, Thailand’s biggest construction company, ItalianThai, has cut a swathe through the jungle which, once paved, will cost roughly $1m per kilometre of road. The plan is that it will connect Bangkok with a $50 billion industrial hub and deep-sea port at Dawei on the Andaman Sea.

The project was set in motion by Thaksin Shinawatra, a former Thai prime minister, who was overthrown in a military coup in 2006. When he proposed it he was still in power and it was seen by many as a vanity project that would never get off the ground. After the Burmese government started to open up two years ago, some concluded that Mr Thaksin was in fact a visionary. But although Yingluck Shinawatra, Mr Thaksin’s sister and Thailand’s current prime minister, is soon due to inaugurate the border checkpoint on the road, financial difficulties are once more calling the project into question.

The plan is epic in scale. At 205 square kilometres (80 square miles), the project area is the size of the Vietnamese capital, Hanoi, and nearly ten times as big as Thailand’s largest industrial area at Map Ta Phut. Thailand has a coastline on the Andaman Sea, but it is in the south of the country. Dawei’s proximity to Bangkok and the cheapness of Myanmar’s labour and land are attractive. And, crucially, the port would be a long way north and west of the potential chokepoint for shipping at the Strait of Malacca. Boosters of the project in Thailand suggest, somewhat implausibly, that it will increase annual Thai GDP by 2%. The hope is that the Thai middle class could soon be driving their Japanese cars over the mountains and through the jungle into Myanmar. In anticipation of a new gateway for international trade and tourism into South-East Asia, land prices in some parts of Thailand’s Kanchanaburi province have already begun to rise.

But dogs still outnumber cars on the road to Dawei. The jungle is mostly untouched, and there are concerns about security, despite a ceasefire between Myanmar’s army and the armed wing of the Karen National Union (KNU), which has long sought more autonomy for its people in the region. Some landmines have been cleared, but local people remain resentful towards the army, whose remit now includes guarding Thai equipment along the still-unpaved road.

Htin Aung, director of special projects at ItalianThai and a former brigadier general of Myanmar military intelligence, says he and his Thai billionaire boss, Premchai Karnasuta, a pal of Mr Thaksin, negotiated security for the road with the KNU leadership in 2008-10. Even so, it is unclear whether Burmese reforms and Thai generosity will be enough to extinguish one of the world’s longest-running insurgencies. And if they don’t, will investors still come?

Every 30km, ItalianThai has a camp with fuel, construction materials and huts for engineers. A company fleet of 50 pickup trucks are in radio contact. A fibre-optic cable, provisionally held up by bamboo sticks, runs the entire 150km from the Thai-Myanmar border to a clump of office cubicles near the beach at Dawei.

In Mu Tu, a village on the edge of the planned port, Thein Aye, a 48-year-old mother of six, runs a small tea and noodle shop. Local politicians told her to pack up by June, but no one has yet come to move her family to the neat new house built for them on the edge of what is planned as a golf course.

We’re not China, you know

The project’s biggest problems, however, are financial. Japanese investors have been flying in by corporate jet for some time (no Chinese money is involved), but it appears that they cannot quite bring themselves to believe that Dawei will really happen. And besides, the Japanese have been focusing on developing a port and industrial zone at Thilawa, closer to Yangon, Myanmar’s largest city. A consortium of Thai banks, many of them state-run, has been roped into providing $4 billion to move things along at Dawei. But ultimately, vast sums of private money will be needed.

Anan Amarapala, a vice-president of ItalianThai, does not conceal his chagrin that his employer was downgraded to the status of mere contractor a few months ago when the project was taken over by the Thai and Burmese governments. Mr Anan stresses that they are in the pre-construction phase. The swampy ground has to be raised by 2 metres to protect against the rising sea. He has to make sure there is energy, water and roads (the project currently runs on imported diesel from Malaysia). Tankers carrying crude oil from the Middle East could berth offshore, he says, their cargo pumped ashore to feed petrochemical plants and steel mills.

Mr Aung admits that getting that far will be hard because the “logistics are simply not there”. He believes, however, that it will happen eventually, in perhaps 20 years. He tells of a large oil company that looked at the level of investment and decided to postpone its own involvement. “Tell us when you are ready,” they said.

Posted by Unknown 2:46 PM

Myanmar: A Blueprint for International Development?

By Gib Bulloch (Businessweek)

I was never a good footballer. Besides an innate lack of ability, there was another reason for my ineptitude: The best footballers don’t chase madly after the ball as I did. They anticipate where the ball is going and move there. So it should be with international development.

Much is being made of the reopening of Myanmar to the global economy. Barely a week goes by without another multinational announcing a commitment to invest in the country. At the World Economic Forum (WEF) meeting last month, Coca-Cola (KO) Chief Executive Officer Muhtar Kent compared the opening of the company’s first Myanmar bottling facility to the fall of the Berlin Wall. That’s a grand vision. But really, what does all this economic development mean for a country with a population of 60 million mostly rural people, 76 percent of whom lack access to electricity and more than 90 percent of whom lack access to a mobile phone?

From a development perspective, Myanmar may be a blank canvas, but the brushes are digital. Myanmar has the potential to go beyond all the traditional emerging-market development models. Where once public-private partnerships (PPPs) were cutting edge, we now need to consider other, newer models, too. What, for example, are the appropriate roles of PPPs? As its economy reopens to large multinationals, now could be the perfect time to find out, and the country could become a blueprint for a new kind of international development.

Development efforts in Myanmar and other emerging-market economies have typically focused on leapfrogging, a term that conjures up an image of accelerated progress. Taken literally, though, leapfrog is just another playground game characterized by repetitive activity that leads to incremental change. To realize its promise as a development hub for global companies, however, Myanmar must strive for transformational change.

Myanmar and those investing in the country need to think big. Why focus on building an ATM network in Myanmar—an idea raised at one WEF summit discussion—rather than advancing directly to creating the ability to dispense mobile money?  What long-term value can be gained by investing in old technology?

A much better idea for Myanmar is the development of a mobile network. In June the government awarded two major contracts for developing such a network. As the project takes shape, the successful bidders should give serious thought to rural off-grid electrification, which creates both business and development challenges and opportunities. Successful rural electrification can help transform agriculture by providing mobile-enabled services such as microfinance, crop insurance, or weather information. Additionally, electrification and mobile connectivity can significantly improve the prospects for developing a next-generation health system.

Addressing the health-care challenge need not be confined solely to health-care companies. Since Coca-Cola and PepsiCo (PEP) have ambitions in Myanmar, what role might they play in transforming health distribution systems for essential medicines by bringing their supply-chain expertise to bear? And in education, how might the growing financial-services community turn the economic potential of Myanmar’s talent into an “asset class” for investment today?

To be clear, this is not about ignoring the critical role of government; it’s about changing it from acting as a “service deliverer” to a “choreographer” across a diverse set of partners and stakeholders.

Myanmar is a rich country filled with poor people who have high hopes. Meeting their expectations will require a new approach to economic development: namely a strategy for footballers—not leapfroggers—that can successfully marry the best of the old with the best of the new.

Posted by Unknown 2:38 PM

Myanmar Copper Mine Will Receive $997 Million From Chinese Investor Following Local Protests

By Sophie Song ( International Business Times)

Wanbao Mining, a Chinese company engaged in exploration and production of mineral resources, has agreed to up its investment in Myanmar's controversial Latpadaung copper mine project to just under $1 billion, a report said Wednesday. The investment follows a contract renegotiation, which resulted from villagers in farming areas surrounding the mine protesting against the loss of their land.

Wanboa's move comes despite the fact that a recent contract renegotiation will trim its stake in the mine's profits, according to Mizzima, an India-based Myanmar news outlet.

“We have invested $600 million to date,” said Geng Yi, Wanbao’s general manager in Myanmar. “We will up that to $997 million.” Geng said that expenses incurred due to specifications in the revised contract forced it to increase its investment.

Prior to the contract renegotiation, Wanbao was entitled to 49 percent of the profits. However, following protests in November and a subsequent crackdown, the Myanmar government appointed an implementation committee, which recommended that the project be allowed to continue with a revision of the contract terms.

The new contract, signed on July 24, will give Wanbao only 30 percent of the profits, while the Myanmar government will receive 51 percent. The rest will go to the military-owned Myanmar Economic Holding, Wanbao’s original collaborator.

Chinese firms have faced pressure in Myanmar from protests against allegedly unfair contracts, environmental damages, and China’s close ties with the country's former military regime.

Wanbao will also be required to pay $2 million a year in compensation and funding for those local villagers and farmers who've been displaced from their land due to the project, according to Mizzima.

The project began in 1998 as an agreement between the Myanmar Ministry of Mining and the Canadian firm Ivanhoe, which in 2010 sold its shares to Wanbao.

Posted by Unknown 2:19 PM

With Myanmar Economy On The Rise, Indian Companies Want To Wrest Business Away From Dominant Chinese Rivals

Myanmar's opposition leader Aung San Suu Kyi (L) walks with Executive Chairman of Infosys Kris Gopalakrishnan in the Electronic City area of Bangalore, November 17, 2012. Suu Kyi urged India on Wednesday to stand by Myanmar on its journey to democracy, on her first trip to Myanmar's neighbour since it dropped its support for her democracy movement two decades ago in favour of the ruling junta. REUTERS/Stringer

By Sophie Song (International Business Times)

Myanmar, formerly one of the poorest nations in Southeast Asia but now termed the region’s “next economic frontier” by the International Monetary Fund, is also the newest battleground for Indian companies seeking to wrest business away from Chinese firms, which remain the biggest investor in Myanmar, even as western companies rush to the country.

Export-Import Bank of India (Exim), the state-controlled trade financing institution, has agreed to invest $800 million in Myanmar, part of which will be used to upgrade the Yangon-Mandalay railway and a plant for Tata Motors Limited (NYSE:TTM) to assemble vehicles in the country, said David Rasquinha, the executive director of the bank, according to Bloomberg.

Chinese companies have previously invested more than $14.19 billion in its neighboring country.

The competition is somewhat uneven for Exim, as China Development Bank Corp., which has a loan book more than three times the size of the World Bank, and the Export-Import Bank of China, offer cheap loans to snare business. The Indian bank is planning to sign credit agreements of as much as $500 million by the next month, to participate in an economy that the IMF predicts will expand 7 percent over the next five years.

“We shouldn’t get pessimistic because competition is there,” Rasquinha said in an interview in Mumbai. “We should be seeing the size of the pie and fighting smart.”

Thus far, India has made a single $2.5 billion investment by Oil & Natural Gas Corporation Limited (NSE:ONGC).

China Development Bank signed a $2.4 billion loan agreement with Myanmar’s Foreign Investment Bank in 2010, according to the Myanmar Times, to help fund a natural gas pipeline between the two countries. In May 2011, the bank agreed to provide Myanmar’s Ministry of Taxation and Finance with a 540 million euro ($718 million) line of credit during a meeting between Myanmar President Thein Sein and former Chinese President Hu Jintao.

Exim, which has been active in lending to Africa and helped boost India’s trade with African countries, is hoping to replicate some of its success in Myanmar. The bank if trying to “excite” Indian companies to conduct business in Myanmar, Rasquinha said.

Myanmar needs $650 billion in investment by 2030 to support the 8 percent GDP growth potential forecasted by McKinsey Global Institute, the research unit of McKinsey & Co. Companies wanting to do business in Myanmar, which has been ruled by a military regime until 2011, will have to adjust to the pace of the country’s opening, corruption, and the lack of infrastructure.

The Southeast Asian country, which borders both India and China, is ranked No. 172 of 176 in Transparency International’s 2012 corruption perception index.

Myanmar’s liberalization may reduce its dependence on China, according to Olivia Boyd, a Beijing-based energy analyst at IHS Global Insight. China has been a long-time supporter of the country’s junta government, and was the only major foreign investor, benefitting from its close ties with Myanmar’s leaders. Now, however, the local population is protesting against certain Chinese companies for unfair contracts, environmental damages and their relationship with the junta.

“Myanmar’s dependence on China is lessening,” Boyd said. “Chinese companies wield less bargaining power, meaning that Chinese companies may face further contract revision of this sort in the future.”

A contract with Chinese Wanbao Mining Co.’s Latpadaung copper mine was revised recently, giving Myanmar’s current government a large share of the mine’s revenue.

Indian companies may be able to tap part of the business if they take a long-term view, said Rasquinha, according to Bloomberg.

“The pie is so big that there’s room for all of us,” he said. “China has large large amounts of money available and can lend at very low rates, but they can’t finance every single project.”

Posted by Unknown 2:31 PM

Myanmar is new battleground for business

BUSINESS CALLS
Myanmar is one of the world's last remaining untapped telecom markets. - PHOTO: AFP

Indian companies seek to wrest business from Chinese firms in the world's 'next economic frontier'

Mumbai (Business Times (subscription)

MYANMAR, called Asia's "next economic frontier" by the International Monetary Fund, is the new battleground for Indian companies seeking to wrest business from Chinese firms.

Export-Import Bank of India, the state-controlled trade financing institution, has pledged US$800 million in Myanmar, which includes funds to upgrade the Yangon-Mandalay railway and a plant for Tata Motors to assemble vehicles in the South-east Asian nation, Executive director david Rasquinha said. China, which has beaten Indian companies in the race to invest in energy assets from Kazakhstan to Venezuela, has agreed to lend more than US$2.4 billion in Myanmar.

Exim Bank of India faces an uneven contest as China Development Bank, which has a loan book more than three times the size of the World Bank, and the Export-Import Bank of China offer cheap loans to snare business. The Indian lender plans to sign credit agreements of as much as US$500 million by next month to participate in an economy that the IMF forecasts will expand 7 per cent over the next five years.

"We shouldn't get pessimistic because competition is there," Mr Rasquinha said. "We should be seeing the size of the pie and fighting smart."

State-run Chinese companies have spent US$19.5 billion this year acquiring energy and resources assets overseas versus India's single US$2.5 billion investment by Oil & Natural Gas Corp.

Exim Bank of India has been focusing on Africa. About 60 per cent of the Indian lender's lines of credit are for countries in the continent, Mr Rasquinha said. It has so far signed 172 lines of credit with commitments of about US$10.5 billion, covering 75 nations, he said. That compares with a US$219 billion loan book at Exim Bank of China.The Indian lender expects to mirror some of its African success in Myanmar. Exim Bank is trying to "excite" Indian companies to conduct business in Myanmar, Mr Rasquinha said.

The lender charges a floating 50 basis point over the London interbank offered rate to a fixed 2 per cent on overseas lines of credit, Mr Rasquinha said.

Bharti Airtel, India's biggest mobile carrier, was among companies that had bid for a telecom licence in Myanmar, the nation's selection committee said on its website in April.

Norway's Telenor ASA and Ooredoo QSC of Qatar won licences to expand telecommunications in Myanmar, one of the world's last remaining untapped markets where only about one in 10 people has a mobile phone.Myanmar needs US$650 billion of investments by 2030 to support an 8 per cent gross domestic product growth potential, according to McKinsey Global Institute, the research unit of McKinsey & Co.

Myanmar's liberalisation may reduce the nation's traditional dependence on China, according to Olivia Boyd, a Beijing-based energy analyst at IHS Global Insight.

"Myanmar's dependence on China is lessening," Ms Boyd said. "Chinese companies now wield less bargaining power, meaning they may face further contract revision of this sort in the future." Bloomberg

Posted by Unknown 2:27 PM

Myanmar's Weakening Kyat (MMK) And Worsening Trade Deficit Are Necessary For The Country's Growth

Workers count Myanmar's kyat banknotes at the office of a local bank in Yangon. REUTERS/Soe Zeya Tun

By Sophie Song - International Business Times

The opening of Myanmar’s economy along with its floating currency and growing demand for imports has led to a worsening trade deficit and significant weakening of the Myanmar kyat (MMK) against the dollar. Investors have no reason to worry, however, as these are necessary growing pains for the rapidly emerging economy, according to the analysts at Standard Chartered Bank.

On April 2, 2012, Myanmar’s reform government implemented a managed float for the MMK, in place of the “overvalued” peg. The new system is similar to China’s, according to a research note published by Standard Chartered on Monday.

This is a momentous policy shift, considering before the float, the MMK fluctuated very little, usually around 6.40 to 6.45 against the U.S. dollar. In addition, Myanmar had several unofficial exchange rates in the informal market, where the exchange rate could be as high as 830 against the dollar. The MMK was highly overvalued -- 19 percent in the year ending March 2011, according to a study by the IMF, and 40 percent in the year ending March 2012.

The overvalued currency was not supportive of the country’s export competitiveness, or of foreign direct investment (FDI). The decision to switch to a unified, managed float system came against this backdrop, which will also serve to lay the groundwork for establishing a monetary policy framework for the newly opened country, according to Standard Chartered.

Since the float, as international investors look to Myanmar with interest, the depreciation of the MMK against the dollar has received some attention. At the end of 2012, dollar to MMK exchange rate was at 87. By July, the MMK has depreciated by about 14 percent.

The depreciation should not cause concern, according to Standard Chartered, and is merely part of the growing pains Myanmar must endure as its financial markets mature.

In addition to the MMK depreciation, Myanmar’s imports are growing faster than its exports of gas, gems and agricultural products. The IMF said that the country’s trade deficit is likely to widen to 4 percent of its GDP this year.

This too is just a sign of Myanmar’s economic growth, according to Standard Chartered, as the country builds its production capacity.

Imports of machinery and transport equipment recorded a 67 percent year-on-year increase in the first quarter, according to Myanmar customs department, and Standard Chartered expects to see continued strong demand for imports of heavy machinery, construction equipment, infrastructure materials and refined fuel for investment purposes.

Exports-wise, the country will continue to rely on its traditional industries of natural gas, minerals, agricultural/aquacultural products and textiles for a few more years, but the lifting of Western sanctions and increasing FDI should lead to a widening variety of exports soon. Tourism is another flourishing industry that should bring in foreign currencies.

While the widening current account deficit weakens the MMK in the short term, foreign investment, development aid and remittances should more than support the balance of payments and the MMK. In the long-term, however, exports receipts are expected to rise, supported by new gas fields and rising global trade. These receipts will help offset growing demand for imports and balance the MMK, according to Standard Chartered.

Posted by Unknown 11:18 AM

Myanmar Stock Exchange To Launch After Security Exchange Law Passed

A woman counts Myanmar kyats at a money changer in Yangon, May 23, 2013. REUTERS/Soe Zeya Tun

International Business Times
By Sophie Song

Myanmar will have its own stock exchange soon, according to the country’s deputy minister for finance and revenue, Maung Maung Thein. Preparations and implementations for the market are already underway.

“Earlier we planned to begin in 2015, but it would be too late. So, we are beginning this year,” said Thein, according to Mizzima, a Myanmar news portal based in India.

To establish the stock exchange, the Central Bank of Myanmar is cooperating with the Daiwa Institute of Research Group, a leading Japanese think tank with expertise in economics and financial capital markets, and Japan’s Tokyo Stock Exchange. Later this month, there will be a demonstration of the operation of the stock exchange with the help of a Myanmar information technology company, Thein said.

A “Security Exchange Law” has been introduced to the lower house of parliament, Thein added. Shortly after the bill is approved, the stock exchange will be established.

A relevant committee has also been formed in order to ensure a smooth launch for the exchange.

“Myanmar needs a huge market to attract financial investments,” said Thein. “Myanmar did not have that market. To establish that market [stock exchange], we have prepared for many years.”

The legal establishment of a stock market is only the first step in creating an authentically liquid equity market in the nation.

“It’ll be surprising if the stock exchange can be established in late this year,” said Hla Maung, an economist. “The sooner the better. But it is a financial market, so we need to have public companies and corporations that can sell shares. If not, the market will be weak and unsuccessful.”

Public companies that wish to be listed in Myanmar’s stock exchange will need to submit applications to the supervising committee. However, experts said this may prove a big challenge for existing Myanmar companies, as they struggle to deal with problems related to taxes.

The stock exchange will be located near Bandoola Garden, where Myawaddy Bank currently stands. The building formerly owned by the Finance and Revenue Ministry is due to be returned to them later this year, according to Mizzima.

It was announced earlier that Toshiba Corp. (TYO:6502) has won an order from Daiwa to supply the data center for the Myanmar stock exchange. The company has had a long and successful history in Myanmar, Mizzima reported.

Hidejiro Shimomitsu, corporate senior vice president of Toshiba, said the company's home appliance business in Myanmar started in the 1980s. Its washing machines are still the most popular brand in Myanmar.

Toshiba launched a branch office in Yangon on July 3, according to Mizzima.

Myanmar’s neighbors, Cambodia and Laos, two of the poorest countries in the region, launched their stock exchanges two years ago, but neither market is seeing much activity. The Lao Securities Exchanges has only two listed companies, while the Cambodia Securities Exchange has only one.

Posted by Unknown 8:41 PM

Burma to give central bank more autonomy

By AFP & DVB

Burma is set to enact a new law in the coming days giving greater independence to its central bank, officials said Wednesday, in the latest economic reform aimed at enticing foreign investors.

The new legislation was approved by lawmakers on Monday and is expected to be signed into law by President Thein Sein by this weekend, although the details have not yet been made public.

“The significant thing is that the central bank will be an independent body and will not be under the finance and revenue ministry anymore,” a central bank official who did not want to be named told AFP.

“The central bank’s mandate will be in line with international standards,” the official said, adding that the president would appoint a governor and three deputy governors with the approval of parliament.

An official in Thein Sein’s office said the former general would sign the bill before he leaves on a visit to Europe on Sunday.

Burma’s quasi-civilian government has announced a series of political and economic reforms since coming to power more than two years ago following the end of nearly half a century of military rule.

In April of last year it began to overhaul the country’s complex foreign exchange system in a bid to facilitate trade and investment.

An independent monetary policy is seen as a hallmark of a modern free-market economy, but it is unclear how much freedom the Central Bank of Myanmar (CMB) will enjoy.

Its main role up to now, experts say, has been to print money to fund the government’s budget deficit.

Unlike independent central banks such as the US Federal Reserve or the European Central Bank, the CBM does not increase or reduce official borrowing costs as a way of preventing the economy overheating or cooling too rapidly.

“It would be very hard for the CBM to conduct an effective anti-inflation monetary policy if it simultaneously had to lend to the government through bond purchases to finance the budget deficit,” said Sean Turnell, a Burmese economic expert at Australia’s Macquarie University.

“In other words, government spending and taxation matter too,” he added.

A lack of technical expertise is seen as another hurdle for the central bank.

Posted by Unknown 7:06 AM

New partnership for MasterCard ATM in Myanmar

Theodore Koumelis - TravelDailyNews Asia

SINGAPORE – One of the largest banks in Myanmar, Kanbawza Bank Limited (KBZ Bank), will now be accepting MasterCard  payments cards at ATMs throughout the country, following a succession of similar achievements which MasterCard has announced over the past 8 months, less than a year since entering the Myanmar market.

KBZ Bank has the largest branch network in Myanmar and operates 55 ATMs across the country in states such as Yangon, Mandalay and Shan at convenient locations such as supermarkets, airports, restaurants, hotels and shopping centers. With KBZ Bank ATM acceptance, this brings to 140 the number of active ATM's in Myanmar that accept MasterCard and Maestro/Cirrus cards.

Mr. Antonio Corro, country manager, Thailand and Myanmar, MasterCard, said apart from being extremely convenient for the huge number of visitors expected this year—including at next month’s historic World Economic Forum— increasing ATM acceptance would help facilitate the process of financial inclusion for a nation that mostly relies on cash transactions.

“Our intention in Myanmar since becoming operational has been to steadily build up its payments infrastructure, its capability, and facilitate financial inclusion. That means expanding the number of points where safe and easy transactions can be made, and supporting businesses that are part of this growing economy,” Corro said.

MasterCard was the first international payments network to issue a license to a Myanmar bank in September last year, paving the way international payment cards to be accepted in the country for the first time. In November, MasterCard and Co-operative Bank Ltd (CB Bank) teamed up to launch the first ATM transaction at one of the bank’s Yangon ATMs.

It is expected that more than 500 restaurants, retail outlets and hotels in Myanmar will be accepting credit cards by the end of the year, following the rollout of Point-of-Sale (POS) terminals in April with CB Bank, which included the national budget airline Golden Myanmar Airlines.

There are now currently five MasterCard member banks in Myanmar: Co-Operative Bank Ltd; Kanbawza Bank Ltd; United Amara Bank Ltd; Myanma Apex Bank Ltd; and, Myanmar Citizens Bank Ltd. MasterCard is expecting to announce new bank license agreements in the near future.

POS acceptance will give merchants in Myanmar access to electronic commerce and the ability to participate in the open, global payments system that MasterCard enables. These merchants will also benefit from being part of a network of thousands of issuing and acquiring financial institutions and their partners. There are already 72 POS acceptance terminals in Yangon & Nay Pyi Taw which accept MasterCard cards.


CAPTION: Mr. Antonio Corro country manager, Thailand and Myanmar, MasterCard, withdraws kyat from a KBZ Bank ATM in Yangon

Posted by Unknown 3:49 PM

Telenor Will Roll Out 3G Network In Myanmar Next Year And Install 4G Base Stations

A man talks on his mobile phone by the street side of Yangon June 21, 2013. REUTERS/Soe Zeya Tun 

By Sophie Song

Myanmar will have commercial third-generation (3G) mobile service next year, when Telenor, one of the two winners of the country’s lucrative telecom licenses, rolls out its network. The Norwegian firm plans to complete the nationwide roll-out of 2G and 3G network within five years.

Telenor will also install 4G-ready base stations for Myanmar, to match the sophistication of leading networks worldwide, said Glenn Mandelid, communications director of Telenor Asia, according to Bangkok Post, a Thai newspaper.

“A full range of mobile services, both 2G and 3G mobile data service, will be commercially launched next year,” he said, adding that telecom service would drive social development and economic growth in the country.

Last Thursday, the Myanmar government awarded the licenses to open its telecom market to Telenor and Qatari firm Ooredoo. The two companies beat out nearly 90 competitors in the bid for the 15-year mobile licenses.

by International Business Times

Posted by Unknown 2:32 PM

Telenor, Qatar Telecom win Myanmar telecom licences

A screenshot of the web page Telenor. The Norwegian firm Telenor and Qatar Telecommunications on Thursday won telecom licences in Myanmar.

by The Hindu

Myanmar, one of the last remaining untapped mobile phone markets, on Thursday awarded telecom licences to Norway's Telenor and Qatari firm Ooredoo.

India's Bharti Airtel along with nine other players were also in the fray for the licences.

"Telenor Mobile Communications and Ooredoo have been selected as the two successful applicants in the Nationwide Telecommunications Licence Award Process", the Myanmar government said in a statement.

It added that a consortium consisting of France Telecom-Orange and Marubeni Corporation was named the backup applicant in case one of the two successful applicants does not fulfil the post-selection requirements contained in the Invitation to Tender.

The Myanmar Government had in late 2012 established an independent committee to conduct an objective and transparent process for selection of two telecom operators. The Committee’s invitation to submit Expressions of Interest (EOIs) saw application from 91 entities, and 12 from those, including Bharti Airtel, Vodafone, SingTel, Telecom-Orange and Marubeni Corporation were shortlisted.

This was the first time Myanmar opened up the sector for private investments with the aim to increase the overall teledensity of the country to 75-80 per cent by 2015-2016.

In a separate statement, Telenor said in accordance with the described process, Telenor Group will now enter into final discussions with the Myanmar authorities, with the aim of acquiring a telecommunications licence over the coming months.

Additionally, the company will build a state-of-the-art mobile network using HSPA and LTE-ready technologies for Myanmar and plans to achieve nationwide coverage within five years.

"A full range of mobile services, both voice and data, will be commercially launched as the initial offering, anticipated to happen in 2014. The introduction of telecommunication services in Myanmar will drive social development and economic growth for the country", it said.

Posted by Unknown 3:10 PM

Foreign companies wait to hear if Myanmar will delay licenses for mobile phone network

In this June 24, 2013 photo, a man uses a mobile phone while standing on a balcony of an apartment as telephone and electricity cables dangle in the foreground in Yangon, Myanmar. Foreign companies will tap into one of the world's final telecom frontiers Thursday, June 27, 2013, when Myanmar hands out licenses to operate two new mobile phone networks — part of efforts by the long-isolated nation to use technology to spur economic development. (AP Photo/Gemunu Amarasinghe)

Edmonton Journal
By Robin McDowell, The Associated Press

YANGON, Myanmar - Foreign companies hoping to tap into one of the world's final telecom frontiers grappled with lingering political uncertainties Wednesday after Myanmar's lower house of parliament ruled that licenses for two new cellphone networks should be delayed until a law governing the sector is passed.

The winners of the hotly contested bid were supposed to be announced Thursday, and officials were unable to say if that would change.

Currently fewer than 6 million of country's 60 million people have cellphones, putting it on par with North Korea when it comes to connectivity. The government hopes it will be able to push cellphone usage rates to 80 per cent within three years by releasing its grip on the industry.

Those are the kinds of numbers that have left international telecom consortiums salivating.

Of the 90 that initially submitted bids, 11 have been shortlisted including Singapore Telecommunications, Bharti Airtel of India, KDDI Corp. of Japan, Telenor of Norway and Digicel of the Caribbean — some opening offices and even recruiting staff in gleeful anticipation of the announcement.

"It's a great first start," said Richard Dobbs, director of the McKinsey Global Institute. "My only hope is that the winners will move quickly to get broadband — either 2G, 3G or 4G — rolled out countrywide."

He said the government views the opening of telecommunications to foreign investment as an opportunity to spur the type of rapid economic growth that has raised living standards in other developing countries.

"This should not just be about profit maximizing," he said. "It should be about enabling other services."

By using mobile banking and e-commerce the country may be able to spread banking and other consumer services more widely and at a reduced cost. Mobile telecommunications could also extend health and education services to even the remotest villages.

Myanmar, located in the heart of one of the fastest growing regions in the world, became one of the most isolated and poorest nations during its half-century of iron-clad military rule.

After taking control of a quasi-civilian government in 2011, former general Thein Sein started implementing promised political and economic reforms.

But the country faces monumental development challenges. Some roads are almost unnavigable, with pot holes several meters (yards) wide. Electricity blackouts are routine. Real estate prices in the commercial capital, Yangon, rival New York City due to limited supply and a surge in demand brought on by the country's emergence from isolation.

The communications industry, long-neglected by the country's military rulers, is in need of a complete overhaul. That's in part because the original network was intended for only a tiny number of subscribers — mostly the rich. Up until a few years ago, the cost of SIM cards could reach $2,000.

Eric Schmidt, executive chairman of Google, says there are tremendous advantages to starting from scratch.

"You all will have an opportunity to skip all the previous ... generations of technology," he told a group of young business leaders during a visit to Yangon earlier this year.

"You'll have fiberoptic cable in your cities. You'll have 3G and 4G networks that will connect to smartphones. You will literally leapfrog 20 years of difficult to maintain infrastructure."

Experts are quick to point out, however, that while the potential returns for the winners of the bidding are staggering, so are the risks.

Investors preparing to invest billions of dollars are rightly nervous about how political reform will evolve, whether the government can maintain the fragile peace between ethnic groups, and how regulation and ownership rights will develop.

That was hammered home to the bidders late Wednesday night when the lower house of parliament unanimously agreed that — with the telecom bill to set the legal framework for the industry not yet approved — the decision about the two new mobile licenses should be delayed.

Lawmaker Thein Nyunt, the chairman of the New National Democratic Party, said the proposal will bypass the upper house and go directly to the president for review. It remained unclear if any decision would be made ahead of Thursday's planned announcement.

The government also insists a new industry regulator will take over within the next few years, but the job is still effectively in the hands of the Ministry of Communications and Information Technology.

Foreign companies are "entering the market while the process is still taking place and major reforms are yet to happen," said Peter Evans, a senior analyst at the telecom research group, BuddComm.

It's also unclear what role the state-owned incumbent telecom operator, Myanmar Posts and Telecommunications, will be playing. The idea is that it will eventually be divorced from state control but what its structure, funding and role will be at this time remains unclear.

Yatanarpon, which is majority government-owned and primarily an Internet service provider until now, has a much smaller network. And also newly on the scene is the army-owned Myanmar Economic Corp.

Posted by Unknown 7:08 PM

Getting Access to Myanmar, via Singapore

A man uses a mobile phone as he stands on a footbridge next to an advertisement for the JAS Myanmar Android mobile phone in downtown Yangon, Myanmar, on Tuesday, June 4, 2013.    Bloomberg News

By John Phillips - Wall Street Journal (blog)

With high-profile investors like Jim Rogers and George Soros showing a keen interest in Myanmar, it may be time for risk seekers to gain exposure.

While Myanmar continues to face headwinds on multiple fronts, the World Bank said in a report in January that the resource-rich country “is already seeing increased trade and investment from the wider international community,” after decades of international isolation. This is reflected in the World Bank’s 2012-2013 Myanmar GDP growth forecast of 6.3%, which compares with 5.5% growth for the 2011-2012 period.

Among changes expected to support growth in Myanmar, brokerage DBS Vickers highlights revised foreign investment laws aimed at enticing foreign investors, employment provisions within the foreign investment laws to ensure that Myanmar workers are not left behind, and developments in the country’s infrastructure.

With Myanmar set to reintegrate into the world the question remains: how can smaller investors invest in Myanmar given that direct access is limited?

The best way, DBS Vickers says in a note, is to “invest through foreign companies already in or expanding into Myanmar.”

Opportunities are abundant, it says, but pure plays are scarce. It tips Singapore-listed Yoma Strategic Holdings is the closest thing to a pure play. “With close to 100% of its land bank in Yangon, Yoma is a direct proxy to Myanmar’s booming real estate sector and is well positioned to benefit from Yangon’s severe demand/supply mismatch for quality residential, office, hotel/serviced apartment properties.”

DBS Vickers notes Singapore-listed Interra Resources 5GI.SG +1.08% is the largest onshore oil producer in Myanmar with a 40% market share. It tips a “significant production ramp up to drive near-term growth,” and expects “potential further upside from exploration assets and bids for new licenses.”

Competition in the energy space will be tough amid keen foreign interest. Myanmar’s Ministry of Energy recently short listed more than fifty foreign companies as potential bidders for thirty oil and gas blocks. Asia-based bidders include Indian Oil Corp 530965.BY +0.46%and GAIL (India) Ltd. 532155.BY -0.97%

DBS Vickers notes that Singapore-based construction company Yongnam Holdings Y02.SG 0.00% is currently bidding for two airport projects in Myanmar – the expansion of Yangon International Airport and the development of new Hanthawaddy International Airport. “(A) tender win could net S$10.4 million to FY14F earnings and S$0.12/share to valuation,” it says.

However, not everyone is overly optimistic about opportunities in Myanmar. While Deutsche Bank acknowledges the country’s investment potential, the house is “agnostic” on SingTel's Z74.SG +0.55% bid for a telco license in Myanmar. Deutsche Bank expects the telcos to face significant challenges seeding devices in Myanmar, where GDP per capita ranks 205th in the world, and where an estimated 30% of the population lives below the poverty line. Additionally, “there still appears to be significant regulatory uncertainties and major reforms are required to remove barriers to take-up,” it says.

With only two telecom licenses up for grabs competition looks tough. Other companies in the running include Norway’s Telenor, India’s Bharti Airtel 532454.BY +2.26% and Japan’s KDDI 9433.TO +1.97%.

Posted by Unknown 2:54 PM

Burma readmitted to EU trade scheme

The flag of the European Union (R) stands beside the flag of the Association of the Southeast Asian Nations and the flags of the 10-member countries. (Reuters)

By AFP & DVB

The European Union on Wednesday readmitted Burma to its trade preference scheme, saying it wanted to support reform in the once pariah state through economic development.

Burma’s membership of the scheme was withdrawn in 1997 due to concerns over the use of forced labour under the then-military junta.

But the EU said the International Labour Organisation had last year reported “necessary improvements” to labour practices in Burma, which was formerly known as Burma.

The Irish presidency of the EU and the president of the European parliament signed legislation on Wednesday confirming Burma’s readmission.

“Given the positive developments in Myanmar/Burma in the recent past, it is important that the EU supports this by facilitating economic growth and development opportunities,” said Irish jobs and enterprise minister Richard Bruton.

The EU scheme grants developing nations preferential access to the 27-nation bloc for several products in the form of lower tariffs.

In London, Justine Greening, the International Development Secretary, welcomed the news.

“We have been calling for the EU to recognise that Burma’s standards are improving and this is great news,” she said.

“Boosting trade and exports is vital if Burma is to develop its economy and escape years of poverty.”

The EU in April agreed to lift the last of the bloc’s trade, economic and individual sanctions against Burma in response to the military’s progressive ceding of power to civilians.

Posted by Unknown 6:59 PM

Myanmar says will set up independent telecom watchdog

Move should reassure foreign investors on the quality of regulation in the country

Anil Padmanabhan |  Shauvik Ghosh  (Livemint)

Nay Pyi Taw: Myanmar on Friday promised the creation of an independent watchdog for telecom in a move that should reassure foreign investors worried about the quality of regulation in the country that’s opening up its airwaves, among other areas, to investment.

The announcement was made at the ongoing World Economic Forum (WEF) on East Asia in Nay Pyi Taw by U Thaung Tin, deputy minister of communications.

The move comes a few days after a consortium led by India’s largest telecom services provider, Bharti Airtel Ltd, submitted bids for two telecom licences, on 3 June, along with 10 other consortia. The winners of the tender will be the second and third telecom services providers in the country after the government-run ministry of communications, posts and telegraph that is also handling the tender. The new licences are being awarded for 20 years with the possibility of another round for bids for two licences once this is done.

Thaung Tin added that the winner of the competitive bids for the privatization of the nation’s telecom network will be announced on 27 June.

Myanmar is one of the last countries to open up its telecom sector, and less than 10%—5.4 million of its 60 million population—have access to a phone. The government has set a target of connecting 75-80% by 2015-2016. The average level of telecom penetration in India was 73.32% at the end of March.

The other bidders include Axiata Group Bhd, Digicel, France Telecom SA, KDDI Corp., Millicom International Cellular SA, Qatar Telecom QSC, Singapore Telecommunications Ltd, Telenor and the Viettel Group. A Vodafone Group Plc and China Mobile Ltd combine chose not to bid in the final round.

Interestingly, the winners will not be decided solely on financial aspects, but mainly on the ability of the telco to fulfil the task at hand—starting operations in nine months and reaching the set telecom penetration targets.

The creation of a telecom watchdog is being seen as a positive move, given the lack of regulation and policy in Myanmar. The procedure being followed by the Myanmar government to open the sector is being seen as very similar to the India model, where, soon after private telecom companies started services in 1995, the government formed the Telecom Regulatory Authority of India (Trai) in 1997.

“The Indian telecom regulatory story has been an eventful one and one hopes that the Myanmar government learns as much from the successes and the failures,” said Mahesh Uppal, a telecom regulatory expert and director at Com First (India) Pvt. Ltd.
“Trai has done well on things like interconnection, ensuring that rates stayed low, and growth was not bogged down, as is the case with many other countries. However, in contrast, the issues around spectrum and licensing, one hopes they avoid,” he said.
“There are two things that a telecom regulator must keep in mind when managing the sector—ensuring sufficient competition for quality of service and tariffing purposes, and ensuring the sector remains an attractive destination for investors,” Uppal added.

Posted by Unknown 3:56 PM