Myanmar Business Today - Vol 2, Issue 17

May 1-7, 2014
Myanmar Business Today
mmbiztoday.com
mmbiztoday.com May 1-7, 2014| Vol 2, Issue 17MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL
Myanmar Summary
Myanmar Summary
Contd. P 6... Contd. P 6...
Inside MBT
National Export Strategy to Be Ready
by 2014 .. p-4
Myanmar’s Palm Oil Industry: Chal-
lenges and Way Forward .. P-9
Myanmar’s Economic Prospects And
Its Real Potential .. P-21
Securing Myanmar
Hydrocarbon Investments
M
yanmar’s hydro-
carbon sector
is an attractive
target for foreign inves-
tors. Three major issues,
however, present a signif-
icant challenge to foreign
companies planning to
invest in Myanmar: oner-
ous government policies,
community resistance to
infrastructure projects,
and security concerns.
Companies are rela-
tively powerless to af-
fect government policy,
but by employing com-
munity engagement pro-
grams, they can mitigate
community resistance
As shown by the experi-
ence of the Sino-Burmese
pipeline project, energy
sector investors should
engage with local com-
munities when carrying
out such programs, and
they should not rely sole-
ly upon interfacing with
government entities.
Hydrocarbon pros-
pects
As Myanmar continues
Nicholas Borroz its dramatic opening to
international markets, oil
and gas projects will be an
attractive investment tar-
get. There are numerous
media articles speculating
that Myanmar contains
vast oil reserves, with a
recent estimate that My-
anmar has potential re-
serves on par with Brazil.
There are also reports of
small-scale homegrown
oil extraction projects
that have transformed
local communities. The
country has yet to un-
dergo rigorous testing to
determine the exact size
of its reserves, but such
speculation and anecdo-
tal evidence is a tantalis-
ing prospect for foreign
businesses.
China’s development
panying Sino-Burmese
pipelines are the most
bon projects currently
underway in Myanmar.
After China, Thailand is
the most active player in
Myanmar’s hydrocarbon
sector. It is engaged in the
licence that covers much
Gulf of Martaban. Opera-
tions in Zawtika are due
to start shortly, with two
thirds of gas production
destined for the Thai mar-
ket. In March 2014, sever-
al Western majors joined
game; Shell, Chevron,
and Statoil all acquired
acreage in a highly publi-
Investment chal-
lenges
Despite the appeal of
Myanmar’s hydrocarbon
sector, government poli-
cies could decrease oil
and gas companies’ de-
sire to invest. There are
reports, for instance, that
Nay Pyi Taw will impose
onerous revenue-sharing
requirements well above
the international average,
channelling up to 85 per-
cent of earnings to gov-
more vocal about the
need to reserve some gas
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FDI Almost Triples to
$4.1b in FY2013-14
M
yanmar bagged
$4.1 billion in
foreign direct in-
vestments in the 2013-14
in March, almost tripling
from $1.4 billion it re-
ceived in FY2012-13, the
Directorate of Investment
and Companies Admin-
istration’s (DICA) recent
data shows.
Injected by 34 countries,
the foreign investment
Pann Nu
into manufacturing, en-
ergy, oil and gas, mining,
hotels and tourism, real
and agriculture.
Total FDI from 34 coun-
tries in Myanmar now
stands at $46 billion, ac-
cording to DICA statistics.
China still stands as the
largest investor with $14
billion in investments in
the Southeast Asian coun-
try, followed by Thailand
($10 billion) and Hong
Kong ($6 billion).
The 71 foreign-invested
projects in 2013-14 up to
December last year has
created over 50,000 jobs
for local people, accord-
ing to DICA.
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pm&if;rsm;t& od&onf/

May 1-7, 2014
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2LOCAL BIZ
MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL
Board of Editors
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Email - sherpa.hossainy@gmail.com
Ph - 09 42 110 8150
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Email - linnkhant18@gmail.com
Ph - 09 40 157 9090
Reporters &Writers
Sherpa Hossainy, Kyaw Min,
Wai Linn Kyaw, Phyu Thit Lwin, Aye Myat,
Pann Nu, Htun Htun Min, May Soe San
Art & Design
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Email - zarni.circle@gmail.com
Ph - 09 7310 5793
Ko Naing
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Ph - 09 730 38114
DTP
May Su Hlaing
Translators
Wai Linn Kyaw, Phyu Maung,
Bone Pyae Sone
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Business News in Brief
Myanmar Investment Commission to become
independent
Arrangements are underway to make Myanmar In-
vestment Commission (MIC) an independent body,
local media reported, citing Aung Naing Oo, director
general of the Directorate of Investment and Company
Administration. Set up by former military government
in 1989 with intent to encourage local and foreign pri-
vate investment, the MIC is currently chaired by Win
Shein, minister for Finance and National Planning, and
based in capital Nay Pyi Taw. Another senior MIC of-
based in Yangon.
Five new tax laws enacted
cluding Revenue Law 2014, Income Tax Law, Commer-
cial Tax Law, Stamp Duty Law and Court Fee Act. For
personal taxes, top rate was increased from 20 percent
to 25 percent, while the income band was set higher
from K500,000 ($520) to K2 million ($2,080). Corpo-
rate income tax rate was unchanged at 25 percent.
Health ministry plans labs at border gates to
check imports
The Food and Drugs Administration department un-
der the Ministry of Health will open laboratories at all
15 border-trade gates to inspect food and goods legally
and illegally imported into the country, local media re-
ported, quoting Khin Chit, a director from the ministry.
Khin Chit said the general public would be informed
about unhealthy food and goods imported into the
country. In 2013, consumer rights activists demanded
a close and thorough inspection of ready-made snacks
illegally imported through the Chinese border.
Taw
na’s Yunnan Province, and Myanmar’s capital Nay Pyi
Taw twice a week, on Tuesdays and Thursdays, from
Pyi Taw airport. Currently, there are four local airlines
the only foreign airline. Air Asia suspended its sched-
due to low seat occupancy.
Consumer prices have risen by 25 to 100 percent af-
ter a hike in power supply fees and salary increases for
nancial year, making it harder for those who live from
hand to mouth, local media reported, citing data from
wholesale and retail outlets. Consumer prices normally
climb around the Myanmar New Year, which falls in the
middle of April, and then decline a few days later. But
prices of some consumer items remain high while oth-
ers are still rising.
Deforestation far higher than reforestation
Over 900,000 acres of forests are destroyed in Myan-
mar every year while only over 150,000 acres of forests
have been grown by private companies since private
forests grown by private companies include 107,543
acres of teak and 46,180 acres of hardwood, data re-
leased by the Ministry of Forest said.
EU extends arms embargo
EU’s sanctions against Myanmar by one year, until 30
April 2015. The sanctions comprise an arms embargo
and an embargo on equipment that may be used for in-
ternal repression, said the Council in a statement after
the end of its meeting in Luxembourg last month.
Myanmar’s 2014 nationwide census covered 10.719
million households except some restive areas in north-
ernmost Kachin state and western Rakhine state, said
a statement of the Ministry of Immigration and Popu-
lation. Myanmar’s national census from March 30 to
economic and social data, aimed at working out a na-
tional development plan.
Myanmar Summary
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wGif pwifrnfjzpfonf/

May 1-7, 2014
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3LOCAL BIZ
Myanmar Summary
Myanmar Summary
EnergyContractsSigningThisMonth
Gov’t says it will sign production sharing contracts for onshore energy exploration in mid-May
P
roduction sharing con-
tracts for energy compa-
nies tasked with exploring
Myanmar’s onshore reserves is
expected to be signed in May, a
last week.
This is later than an earlier
timeline planned for January.
The Ministry of Energy award-
ed 16 of the 18 onshore blocks
tober. Italy’s Eni, India’s ONGC
Videsh Ltd., Malaysia’s Petro-
Energy Hunt Corp., Pakistan’s
Petroleum Exploration (PVT)
Ltd and British Virgin Islands-
registered MRPL E&P Pte Ltd.
were each awarded 2 blocks.
The government also awarded
one block each to Thailand’s
PTTEP, Brunei National Petro-
leum Co, Luxembourg’s CAOG
and Russia’s JSOC Bashneft.
A total of 26 foreign compa-
nies bid for the onshore blocks,
the production sharing con-
tracts.
Khin Khin Aye, director of en-
ergy planning at the Ministry
Kyaw Min of Energy, said the government
was working according to nor-
mal procedures.
“We will sign the production
sharing contracts in the mid-
dle of May,” he told the energy
news website Rigzone.
International investors have
moved into the wake created
when Myanmar earned relief
from economic sanctions when
in 2010 it ended a long period
of military rule through general
elections.
Last month, the government
awarded some of the biggest
energy companies in the world
with exploration contracts for
mar coast.
ported from Myanmar in 1853,
though the country’s energy
sector was largely idled during
the long period of military rule.
French energy company Total, a
pioneer developer in Myanmar,
estimates the country produces
about 180,000 barrels of oil
equivalent per day and nearly
all of that is in the form of natu-
ral gas.
Investors Invited to Develop Yangon
Railway Station Complex
M
yanmar’s rail trans-
port authorities are
working on a massive
plan to transform the Yangon
Central Railway Station into
one of the city’s most sparkling
new projects, and are inviting
ideas and expression of interest
from local and international in-
vestors for the move.
The state-run Myanmar
Railways said it intends the
investors to undertake de-
sign-and-build work for the
comprehensive development of
the largest railway station in the
country, according to state-run
media.
The department called for de-
velopment of the colonial-era-
left station on 25.3 hectares of
land plot as a rail concerned
business including high-rise
buildings and hotels up to in-
ternational standards.
The authorities have set May
6 as the deadline for submission
of the expression of interest.
The rail transport authorities
have also planned to privatise
Yangon city circular trains as
run the rail transport busi-
Phyu THit Lwin ness under a build, operate and
transfer (BOT) system.
About 130,000 passengers
depend on rail transport in
Yangon daily, according to gov-
ernment estimates.
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May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 4
Myanmar Summary
Myanmar Summary
NationalExportStrategytoBeReadyby2014
T
he National Export Strat-
egy (NES) will be drafted
by this year in a bid to im-
prove trade and attract foreign
investments, according to U
Aung Min, in-charge of coordi-
nation of the NES.
Previously, the government
strategy by December last year,
but the Ministry of Commerce
later asked to include the trade
and commerce sectors along-
side export in the strategy.
-
ised by 2014. There are a total of
11 sectors in the draft and most
of them have been completed,”
he said.
“Both foreign investment and
trade will become more conven-
ient after we develop this plan.
drafting by this year.”
The UN’s World Food Pro-
gram (WFP) is assisting in the
drafting process with regards to
-
ery products. Operations such
as data sourcing, collecting
Htun Htun Min and processing are carried out
by separate teams and the in-
charge of trade information of
the NES, U Aung Min said.
He said the comprehensive
sectors will help foreign in-
vestors during their research.
-
ties in terms of gathering illegal
border trade data, he added. In
March, London-based Environ-
mental Investigation Agency
(EIA) said that Myanmar had
lost over $6 billion because of
illegal logging during 2000 to
2013.
President U Thein Sein initi-
ated the NES in 2012. At that
time, the plan focussed on rice,
rubber and tourism sectors on
the sidelines.
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MAPCO, Mitsui to Form Irrigated
Rice Complex Product JV
M
yanmar Agribusiness
Public Corp (MAPCO)
and Japanese con-
glomerate Mitsui Co will form
a joint venture in a bid to de-
velop Myanmar’s rice industry,
according to the Myanmar Rice
Federation (MRF).
According to the deal, MAP-
CO and Mitsui will establish
Myanmar-Japan Rice Industry
Co Ltd and start the initial im-
plementation of the Irrigated
Rice Complex Product (IRCP)
project in Twante township in
Yangon region.
The project, which will con-
tain value-added facilities for
crops including rice, will cost
-
ised by December 2015, MRF
said.
The project will play an im-
portant role in Myanmar’s
agriculture sector and will ac-
celerate the agricultural de-
velopment of Yangon and Ay-
eyarwaddy regions, MRF said.
The project will also facilitate
between Myanmar and Japan,
Phyu Thit Lwin the foundation added.
The joint venture company
will produce value-added prod-
ucts based on rice, generate
-
ment the production of paddy
seeds and distribute fertilisers,
in collaboration with farmers,
MRF said.
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jzpfonf/
Reuters
Reuters

May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 5
Myanmar Summary
G
erman power solutions
provider Heliocentris
Energy Solutions AG has
to deliver hybrid power solu-
tions for the ongoing mobile
network rollout in Myanmar,
This is the largest single pur-
chase order since the compa-
ny’s foundation in 1995, it said.
The order comprises the de-
livery and installation of hybrid
power solutions for the build-
out of 150 mobile base stations
in Myanmar and has a value of
$4-6 million depending on the
delivered, said the Berlin-based
company, which deals in solu-
tions and services for energy ef-
systems.
The orders will be shipped
and installed within the next 3-4
months, Heliocentris said.
The power solutions comprise
Heliocentris’ proprietary “En-
ergy Management System” and
Wai Linn Kyaw
also include diesel generators,
batteries, power electronics,
cabinets and peripheral mate-
rial from other power compo-
nents suppliers.
The two foreign mobile opera-
tors, Telenor from Norway and
Ooredoo from Qatar, who were
awarded 15-year-licences to op-
erate mobile phone networks in
Myanmar in June last year have
now started their initial rollout
phases which entail construc-
tion of more than 2,000 mobile
base stations within the next 12
months.
The towers for these mobile
base stations will be installed
and operated by tower compa-
nies such as Apollo Towers and
Irrawaddy Green Towers and
require power solutions for a
-
ing from on-grid to bad-grid
“Participating in
the roll-out from its
initial phase creates
an outstanding op-
portunity for Helio-
centris to gain a sig-
coming build-out of the mobile
networks in Myanmar,” Ayad
Abul-Ella, CEO of Heliocentris,
said.
Myanmar is one of the few
remaining telecommunications
frontiers, with only 10 percent
of its 60 million people holding
a mobile-phone subscription,
according to industry estimates.
That compares to penetration
rates of 70 percent in Cambo-
dia, 90 percent in Laos and over
100 percent in Thailand.
-
ments, the Myanmar govern-
ment plans to increase the per-
centage of phone owners to 80
percent by 2016.
In order to achieve this ambi-
tious goal, new mobile licences
were awarded to Telenor from
Norway and Qatar Telecom in
June of last year. Both opera-
tors will have to meet popula-
tion and geographical coverage
targets to ensure that the coun-
try’s large rural population is
covered.
This is expected to require
more than 18,000 mobile base
stations being erected green-
three years, with most of them
-
tions.
Ayad said: “We have designed
-
ments of our customers in an
optimal manner: best energy
ownership with maximum up-
time, the security of multiple
sourcing for the key power com-
ponents and seamless upgrad-
ing options to higher capacities
for multi tenant usage.
He said with this order the
-
cant business in Myanmar” has
forward to winning “additional
multi-million purchase orders
in the coming months.”
-
uct “Energy Manager” enables
components in hybrid energy
supply clusters, such as batter-
ies, solar panels, conventional
diesel generators or fuel cells. It
targets primarily base stations
GermanFirmReceivesMajor
MyanmarPowerSystemsOrder
*smreDvQyfppfxkwfvkyfjzefYjzL;a&;ukrÜPD
wpfckjzpfonfh Heliocentris Energy
Solutions AG taejzifh jrefrmEdkifiH
qufoG,fa&;uGef&ufwGif tokH;jyK&ef
twGuf vQyfppfESifhpGrf;tifqdkif&m0,f,lrI
trSmpmvufcH&&Sdxm;aMumif; tqdkyg
ukrÜPDrS ajymMum;xm;onf/
tqdkyg0,f,lrIrSm ukrÜPDpwifwnf
axmifonfh 1995 ckESpfrS ,cktwGif;
yrmPtBuD;qkH;aom0,f,lrIjzpfaMumif;
vnf; od&onf/tqdkygtrSmpmt&
ukrÜPDtaejzifh jrefrmEdkifiH&Sd qufoG,f
a&;½Hk 150 wGif vQyfppfESifh pGrf;tif
xkwfvkyfjcif;tm; o,f,lwyfqifay;
&rnfjzpfNyD; tar&duef a':vm 4 oef;
rS 6oef;wefzdk;&SdaMumif; od&onf/
tqdkyg vQyfppfESifhpGrf;tifxkwfvkyfrI
wGif Heliocentris ukrÜPD pGrf;tif
pDrHxdef;odrf;rIpepftygt0if 'DZ,fjzifh
vQyfppfxkwfvkyfa&;? bufx&Drsm;? "mwf
tm; tDvufxa&mepfrsm;ESifh tjcm;
"mwftm;ay;ud&d,mrsm;vnf; yg0ifonf/
jrefrmEdkifiHonf qufoG,fa&;zGHUNzdK;
rIaemufusonfh EdkifiHtenf;i,fwGif
wpfck tygt0ifjzpfNyD;vlOD;a& oef; 60
10 &mcdkifEIef;om zkef;udkifEdkifaMumif;
cefYrSef;csufrsm;t& od&onf/
of mobile telecom operators in
world regions with poor and
unreliable grid-coverage such
as the Middle East and South-
east Asia.
Myanmar Summary
NEXI to Insure JFI’s
Myanmar venture
N
ippon Export and
Investment In-
surance will pro-
vide up to about ¥700
million ($6.83 million)
in trade insurance for an
infrastructure construc-
tion joint venture set up
in Myanmar by JFE En-
said last week.
support project of the
-
ter known as NEXI, since
it sharply expanded the
scope of insurance for My-
anmar in January 2012 as
part of Japan’s economic
assistance to the country.
The trade insurance will
cover J&M Steel Solu-
tions Co, the joint venture
JFE Engineering estab-
Aye Myat lished with Myanmar’s
Construction Ministry in
December 2013 to con-
struct bridges, Jiji Press
reported.
-
tal of ¥1.2 billion, NEXI
will insure up to about
¥700 million, or 95 per-
cent of JFE Engineering’s
interest of 60 percent.
Myanmar Summary
Nippon Export and Invest-
ment Insurance vkyfief;tae
jzifh,Grfoef;700 (tar&duefa':
vm6'or83oef;) tm; jrefrm
EdkifiH tajccHwnf aqmufa&;
qdkif&myl;aygif;aqmif&GufrItwGuf
ukefoG,fa&;tmrcHtjzpf JFE
Engineering Corp odkYaxmuf
yHhrnfjzpfaMumif; od&onf/
Reuters

May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 6
Myanmar Summary
production for domestic
consumption; the country
-
tricity access, a dilemma
it wishes to address with
gas-fuelled power plants.
Corporate social respon-
sibility requirements re-
main unclear, but they
will likely be implement-
ed, thereby siphoning fur-
community development
initiatives.
Another issue that
dampens Myanmar’s at-
tractiveness to energy
investors is local com-
munity resistance to in-
frastructure projects.
Communities fear los-
ing land, jobs, and liveli-
hoods, and this popular
discontent could pressure
the government to enact
measures against the in-
terests of investors. Chi-
na’s turbulent experience
with the Sino-Burmese
pipeline project best illus-
trates vocal community
resistance. There are sev-
eral local interest groups
in Myanmar, most nota-
bly the Shwe Gas Move-
ment, which regularly
demonstrates against the
project. Their discontent
is augmented by reports
that the Burmese govern-
ment has not distributed
funds intended to com-
communities.
A third factor that chal-
lenges investment pros-
pects in Myanmar is secu-
rity concerns, once again
illustrated by the Sino-
Burmese pipeline project
experience. In May 2013,
ethnic minority guerril-
las attacked a compound
owned by the Burmese
company involved in that
project, killing two peo-
ple. The compound was
located in Shan State near
the Chinese border, close
to the pipeline’s route. In
January 2014, clashes be-
tween Burmese and Chi-
nese workers at a work-
site along the pipelines’
route reportedly led to the
destruction of an oil stor-
age facility. Such security
concerns are likely at least
partially responsible for
delays in the project’s de-
velopment, which was to
become fully operational
in late 2013.
-
ment
Although energy com-
panies are relatively
-
erous government poli-
cies, they could employ
community engagement
programs in Myanmar to
overcome the challenges
of community resistance
Community engagement
programs are driven by
comprehensive consul-
tations with community
leaders that identify their
concerns and grievances.
Those concerns and griev-
ances are then addressed
through negotiations and
local partnerships. Com-
munity engagement pro-
grams are directly driven
by business concerns;
by including local com-
munities as stakeholders
in an infrastructure pro-
ject, those communities
become invested in the
project’s success, thereby
eliminating community
resistance.
Equally important,
community engagement
provides an intangible
layer of security around
large infrastructure pro-
jects. In the chance that
an infrastructure project
is targeted by an impend-
ing attack, community
members will either ac-
tively protect the project,
or at the very least notify
authorities of the danger.
In some ways, commu-
nity engagement is simi-
lar to the strategies used
by development workers
to ensure their own safe-
ty; instead of protecting
themselves with weap-
onry or armed guards,
development workers in-
tegrate themselves into
local communities to en-
sure that other commu-
nity members will assist
them in a dangerous situ-
ation.
Although similar, com-
munity engagement is dis-
tinct from corporate so-
cial responsibility (CSR).
CSR is primarily driven
by a desire to do good, as
well as by an intention to
improve a company’s im-
age through community
development work, which
is vaguely expected to
improve the company’s
business prospects. The
problem is that, from a
business perspective, CSR
is unsustainable because
it doesn’t explicitly align
private company.
“There are reports, for instance, that Nay
Pyi Taw will impose onerous
revenue-sharing requirements well
above the international average, channel-
ling up to 85 percent of earnings to
government coffers.”
Lessons from the
pipelines
As previously men-
tioned, the Sino-Burmese
pipeline project has faced
communityresistanceand
security concerns. There
are indications, however,
that the consortium in
charge of the project has
attempted some form of
community engagement;
it has reportedly allotted
$20 million in “liveli-
hood security” for local
the project. The money
has been channelled into
numerous projects, in-
cluding schools, kinder-
gartens, hospitals, health
care centres, a reservoir,
and electricity transmis-
sion lines.
The consortium’s at-
tempts did not have the
for two reasons. First, the
consortium directed the
money through the Bur-
mese government, and it
wasn’t clear to local com-
munities that the con-
sortium was intending
communities. Second,
the Burmese government
reportedly withheld some
of the money and local
communities were there-
fore unaware that they
were intended to receive
any funding at all. This
experience highlights the
need for energy sector in-
vestors to directly engage
with local communities
in Myanmar, rather than
solely rely upon interfac-
ing with government enti-
ties. Investors should ac-
tively engage community
stakeholders and align
infrastructure projects to
meet their needs.
-
tributor an independent
analyst of energy geo-
politics with an emphasis
on oil and gas transpor-
tation infrastructure. He
works for a DC-based
risk consultancy and has
three years’ experiencing
working for the US gov-
ernment in international
on development, energy,
and macroeconomics.
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ThePhilippinesSetsAirTalks
withMyanmarEyeingDirectLink
T
he Philippines will hold
air talks with Myanmar
and Canada next month,
followed by talks with Macau,
which could result in increased
those destinations and help
bolster the Philippines’ tourism
goals, according to a Filipino
The Philippines’ Civil Aero-
nautics Board executive direc-
tor Carmelo Arcilla said in an
interview recently that talks
from May 19 to 20, according to
Filipino media reports.
The move is set to result in the
-
ippines and Myanmar, often
frontier, and follows strength-
ened bilateral ties between both
countries late last year.
Kyaw Min There is strong potential for
tourism links with Myanmar
has expressed interest in serv-
Talks with Canada will be held
later in May aimed at expand-
Arcilla noted that the time
was right for talks with Myan-
mar given the potential for in-
creased tourism and business.
Among local carriers, he said
interest to operate in Myanmar.
“It’s a very young emerging
market and there are political
reforms being implemented,”
Arcilla was quoted as saying.
“For a while, Myanmar was at
the receiving end of economic
sanctions but now, there is rec-
ognition and support coming
from other ASEAN members.”
At present Philippines Air-
-
looking at doubling the maxi-
week, in the aviation agreement
to give more scope for growth in
the long-term.
Talks with Macau are set for
17 to 18 June, also to cater to
-
mand.
There is speculation that the
Philippines will seek talks with
Russia and African countries
like Ethiopia, South Africa and
Kenya to create more air links.
So far this year, the Philip-
pines has completed successful
air talks with New Zealand, Sin-
gapore and France.
Talks with France resulted in
-
vious four, which can be used
by Philippine Airlines, and also
the slots following its removal
from a European Union black-
list. However, both airlines
have not indicated if they are
prepared to increase services
to Europe until there are clear
signs of economic recovery to
to Southeast Asia.
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jrefrmEdkifiHESifhawGYqkHaqG;aEG;rnfjzpfaMumif;
zdvpfydkifEdkifiH owif;rD'D,mrsm;u azmfjy
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EdkifiHESifhzdvpfydkifEdkifiHtMum; wdkuf½ddkufav
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Philippine Airlines Airbus A320.
MRadziDesa/WMC

May 1-7, 2014
mmbiztoday.com
7LOCAL BIZ
Myanmar Summary
Myanmar Summary
S
ingapore-based Wil-
mar International
Ltd announced last
into Myanmar’s sugar
market, forming a joint
venture with a local pro-
ducer.
The company said it
WilmarSeeksMyanmarSugarMarketEntryThroughJV
Phyu Thit Lwin has signed a joint ven-
ture agreement with My-
anmar’s Great Wall Food
and sell sugar and its by-
products in the emerging
Southeast Asian market.
Wilmar will hold a 55
percent stake in the joint
venture company, Great
Wall-Wilmar Holdings.
The deal will see the new
joint venture company
buying all of the existing
sugar-related business,
mills and plants Great
Wall and its associates.
That includes two sugar
mills with a total milling
capacity of 4,000 metric
tonnes of sugarcane per
day and a total production
capacity of 65,000 metric
tonnes of sugar per year, a
bio-ethanol plant and one
organic compound ferti-
liser plant.
Wilmar is the world’s
top palm oil processor,
but it has been steadily
growing its sugar busi-
ness through a series of
deals over the past four
years. In February it an-
nounced it was buying
a major stake in India’s
Shree Renuka Sugars for
up to $145 million.
Financial terms of the
deal were not announced
and Wilmar says it does
not expect the investment
to have a material impact
on its earnings for the
The joint venture is still
subject to regulatory ap-
proval.
Bags of sugar. Singapore’s Wilmar said it has signed a joint venture
agreement with Myanmar’s Great Wall Food Stuff Industry to pro-
duce and sell sugar and its by-products in the emerging Southeast
Asian market.
JeanPierrePingoud/Bloomberg
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International Ltd taejzifh
jynfwGif;xkwfvkyfolwpfOD;ESifh
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taejzifh jrefrmEdkifiHrS Great
Wall Food Stuff Industry
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Holdings tm; zGJUpnf;rnfjzpfNyD;
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xnfh0ifrnf[k od&onf/
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½kH?BuHyifESifh Great Wall quf
pyfvkyfief;rsm;wGif0ifa&mufvkyf
udkifrnfjzpfonf/
Investors Eye Fish
Feed Production
Jchairman of Myanmar Eel Farming Entrepreneur
Association.
showed similar interest.
According to the Myanmar Fisheries Federation
(MFF), those countries want to invest in the sector as
that can guarantee international standards.
in Phyapon district of Ayeyarwaddy region and some
farming is done in Rakhine state.
its growth, exporters said.
sector, according to MFF.
coming months, and also arrange technical training,
the federation said.
Recently, MFF also invited experts from the United
States to provide technical assistant for the improve-
Kyaw Min
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tmrcHaMumif; jrefrmEdkifiHig;vkyfief;tzGJUcsKyfrS od&onf/
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vnf; awGU&aMumif; od&onf/
Foreign investors are getting increasingly interested in investing in
Reuters

May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 8
Myanmar Summary
ADB, Japan to Give $2m to Upgrade Youth Skills to Lift Economy
Grant to develop three month-long courses in construction, welding, and use and repair of rural machinery
T
he Asian Development
Bank (ADB) and Japan
are to help Myanmar
upgrade and modernise tech-
nical and vocational training
programs to meet the country’s
pressing need for skilled young
workers.
A $2 million Japan Fund for
Poverty Reduction grant, ad-
ministered by ADB, will be
used to develop and pilot three
month-long competency-based
courses in skills such as con-
struction, welding, and use and
repair of rural machinery, the
Manila-based lender said.
“Overhauling technical and
vocational training to make
them more relevant, modern
and accessible is critical for de-
veloping the foundational skills
needed to support Myanmar’s
economic transformation and
help cut poverty,” said Chris-
topher Spohr, senior education
economist based in Myanmar.
ADB said the target is to train
at least 1,000 young people,
and steps will be taken to en-
sure that places are reserved for
women and young adults from
Pann Nu poor and disadvantaged fami-
lies.
Courses will be launched in
Yangon, Mandalay, and Pakok-
ku starting this November, and
will be free of charge.
-
ings from Myanmar’s forth-
coming costed education sector
plan, which is helping pinpoint
gaps and “quick win” opportu-
nities in the country’s education
sector, ADB said.
Myanmar’s workforce lacks
well-trained workers to im-
mediately step into positions
opening up as a result of re-
cent reforms. Existing technical
training is focused on long-term
programs in urban niche skills,
such as operating computers,
with less than 2 percent of 16-
19 year olds engaged in skills
training courses.
In rural areas the situation is
even worse, ADB said, with less
than 0.5 percent of rural males
and females enrolled in technical
or vocational training programs.
The lender said as well as set-
ting up short courses, the tech-
nical assistance project will
help relevant government agen-
cies gain the necessary capacity
to develop and oversee youth
skills training programs.
ADB said the course outcomes
will also be assessed to provide
a potential model for replica-
tion in future.
Along with the grant sup-
port from Japan, Myanmar will
provide counterpart assistance
equivalent to $500,000 for a to-
tal project cost of $2.5 million.
DefTechTargetsMyanmarProjects
M
alaysia’s leading ar-
moured vehicle maker
DRB-Hicom Defence
Technologies Sdn Bhd (DefT-
ech) is in talks about new pro-
jects with the relevant authori-
ties in Myanmar, a top company
-
ing a deal with the Cambodian
government for a new main-
tenance, repair and overhaul
(MRO) contract for T-55 tanks,
Samsudin told Malaysia’s na-
tional news agency Bernama.
The project, which has an es-
timated worth of $50-$60 mil-
set to commence by October,
he said on the sidelines of the
Defence Services Asia Exhibi-
tion and Conference 2014 (DSA
2014).
DefTech was also in talks with
the authorities in Myanmar for
similar MRO contracts, he add-
ed.
Another Malaysia defence
-
gies Sdn Bhd is also reportedly
planning to make an overseas
foray this year.
Corporation Sdn Bhd has set its
sights closer to Malaysia, eye-
Kyaw Min ing ASEAN countries such as
Indonesia, Thailand and Brunei
for a further growth, Bernama
reported.
The four-day biennial DSA
2014 ushered in a total of
33,544 trade visitors from 77
countries and regions, up from
26,980 two years ago. A total of
1,000 companies from 60 coun-
-
ings at the exposition this year.
Myanmar Summary
Myanmar Summary
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YongmaoBags$2.4-mMyanmarCranesOrder
C
hinese tower crane man-
ufacturer Yongmao has
sold ten cranes to Sin-
gapore crane sales and rental
house Erect Group, for an end
user in Myanmar.
The $2.39-million deal will
see Yongmao deliver 10 of its
STT cranes through 2014-2015.
It follows the manufacturer’s
start of this year.
As Myanmar democratises
and its economy opens up from
years of sanctions and restric-
tion, companies like Yongmao
are seeing new opportunities.
Yongmao executive director
and group general manager Sun
Tian said deals like this are an
important part of his company’s
export strategy.
the Myanmar market, we are
expanding our foothold in this
region. We foresee that urbani-
sation and economic develop-
ment will drive higher con-
struction activities to support
this progression.
“Eyeing the potential demand
for infrastructure across Asia,
we hope to continue to pro-
mote the Yongmao brand, qual-
ity and service in order to cater
to the need for quality tower
Aye Myat cranes. We believe our competi-
tive edge lies in our product and
service: our tower cranes have
obtained the relevant product
safety and design approval of
various countries and we pro-
vide premium after-sales ser-
vice.
“Moving ahead, we hope to
continue our push into Myan-
mar by securing more contract
wins with well-established tow-
Revenue from Asia, besides
China, contributes 25.1 percent
of Yongmao’s turnover for its
nine months ended 31 Decem-
ber 2013. Revenue from this
geographical segment has in-
creased 11.6 percent during this
time.
Yongmao is on the lookout
for collaborations with existing
customers who have plans to
enter the Southeast Asian mar-
ket. Such partnerships include
working with Singapore rental
companies and contractors to
provide towercranes in Myan-
mar, Vietnam and Indonesia.
The company also aims to par-
ticipate actively in various trade
fair and exhibition in Southeast
Asia.
Tower cranes from Yongmao are seen. Yongmao foresees that urbanisation and
economic development will drive higher construction activities in Myanmar, hence
the demand for its cranes.
A $2 million Japan Fund for Poverty Reduction grant, administered by ADB, will be used to develop and pilot three month-long
competency-based courses in skills such as construction, welding, and use and repair of rural machiner.
SoeZeyaTun/Reuters
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May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 9
Myanmar Summary
Myanmar’s Palm Oil Industry: Challenges and Way Forward
P
alm oil as edible oil is the
second biggest important
food item after rice in an
average Myanmar household.
However, Myanmar’s domes-
tic edible oil production is not
enough to meet the demand, so
it imports palm oil from some
of the world’s largest palm oil
producing nations like Indone-
sia and Malaysia.
During the military rule palm
oil import was controlled by
state enterprises. But the recent
economic and democratic tran-
sition has resulted in a market-
based economy, which resulted
in the Ministry of Commerce
opening up the previously-re-
stricted palm oil import market
to local private players in April
palm olein, which is the liquid
form of palm kernel oil after a
process called fractionation,
Vijay Dhayal
and is used for cooking and fry-
ing.
In Year 2012 Myanmar im-
ported 400,000 tonnes of palm
Oil and which has grown to
485,000 tonnes in 2013. Market
is expected to expand further to
700,000 tonnes by 2017-18 due
to growing demand, rising in-
come of Myanmar households
and shifting from costlier pea-
nut oil.
One of the biggest challenges
for palm oil trade is the cargo
storage facility at Yangon port,
which results into long waiting
period for vessels at the port
to discharge the cargo, leading
majority of importers to face
demurrage claims from their
suppliers.
Due to shortage of storage
space, importers are pushed to
liquidate the cargo as soon as
possible. Another concern is
usage of delivery order mecha-
nism in the local market where
speculators and distributors
play with forward contracts,
creating speculation and de-
faults. Road infrastructure is
also underdeveloped in My-
anmar, so transportation cost
also becomes very high, hurting
margins and causing delays in
delivery of cargoes to northern
Myanmar.
Another major area of chal-
lenge is illegal border trade of
palm oil from Thailand to Mon
state and Tanintharyi region
which impacts importers who
are brining cargoes to Yangon
legally after paying customs
duty, commercial tax and in-
come tax.
Private players have invested
in palm plantation in southern
Myanmar to increase domes-
tic production but it will take
at least two to three years to
on the palm oil trade. Various
stake holders from government
and industry can pursue the
idea of promoting manufac-
turing industry for converting
oil which could create technical
know-how and employment.
Currently in the local mar-
ket palm oil is traded in loose
which results into quantity loss
and quality deterioration. How-
ever, that also provides great
opportunity for investors to set
up blowing units for jerry can
production and packaging and
distribution with right quantity
and quality.
modities market for more than
two years. He is an agri com-
modity trader by profession.
He can be contacted at vijay-
dhayal.eca@gmail.com. This
the author in his own person-
al capacity. The opinions and
views expressed here are his
own.
A worker unloads palm fruit at a local palm oil factory in Langkat of Indonesia’s north Sumatra province.
RoniBintang/Reuters
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vkyfief;rsm;odkY csxm;ay;cJhonf/

May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 10
Myanmar Summary
Economic Opportunities Continue to Grow in Myanmar
This bulletin by Canadian law firm Davis LLP provides an update on the significant changes Myanmar is experiencing in government, legislation, trade and tourism
and outlines the opportunities in this growing country.
W
ith a population of
more than 60 million
people, opportunities
in Myanmar are not limited to
extractive industries, but also
exist in manufacturing and the
domestic market for consumer
goods. Even so, Myanmar’s
natural resources should not
be underestimated: natural gas,
petroleum, timber, zinc, cop-
per, lead, coal, precious stones,
and agricultural land exist in
abundance.
foreign investors
A general election is set to be
held in Myanmar in November
2015. These elections could see
Aung San Suu Kyi, Nobel lau-
reate and leader of Myanmar’s
main opposition party, the Na-
tional League for Democracy
(NLD), brought to power. Her
release in 2010 after almost
eleven years of house arrest
imposed by the previous mili-
tary regime, was instrumental
in opening up trade relations
with the West. Regardless of
whether the current ruling
Union Solidarity and Develop-
ment Party (USDP) or the NLD
forms a government next year,
it is expected that political and
begun in 2010 by current Presi-
dent, Thein Sein, will continue.
However, it is important to
note that at this time, Aung San
Suu Kyi is barred from becom-
ing President of Myanmar by
virtue of the country’s Consti-
tution, which prohibits anyone
with family members who are
citizens of another country from
holding the country’s highest
prevent her from being elected
to Parliament in 2012, when
vacancies in 8 percent of the
following by-elections, with
the NLD capturing all 43 seats
in which they ran candidates.
Another round of by-elections
is anticipated late in 2014, to
-
cancies. It remains to be seen
whether the Constitution will
be amended to enable Suu Kyi’s
candidacy for President prior to
the general election expected in
late 2015.
Other legal reform is ongo-
ing, making it more practical
for multi-national companies
to invest in Myanmar. It is an-
ticipated that a new Companies
Law will be introduced in 2014,
to replace the current law that
dates back 100 years. A draft
Trademark Law is before Par-
liament and a proposed Con-
dominium Law, that will allow
foreign citizens to own a form of
also placed before Parliament
in November 2013.
New incentives draw foreign
investment despite trade re-
strictions
The government of Myanmar
places restrictions on foreign
investment within the country.
The State-Owned Economic En-
terprises Law (1989), Foreign
Investment Law (2012) and
the Foreign Investment Rules
(January 2013) restrict certain
types of business activities from
occurring without government
approval. Foreign investment is
monitored and approved by the
Myanmar Investment Commis-
sion (MIC) which has published
a list of activities in which for-
eign investors are prohibited
from participating or which re-
quire a joint venture with a local
business.
At the same time, the country
is also providing incentives to
foreign investors. In January,
2014 a new Myanmar Special
Economic Zone Law (MSEZL)
was enacted, repealing earlier
legislation regarding special
economic zones. The MSEZL of-
fers up to seven years of income
tax exemptions for foreign in-
vestors, with further 50 percent
discounts on income tax for an-
law applies in Myanmar’s three
Special Economic Zones: Kyauk
Phyu, Dawei and Thilawa. The
MSELZ provides for the estab-
lishment of additional zones
and contains dispute resolution
procedures.
Economic sanctions
Domestic strife and ongoing
corruption issues have certainly
not disappeared. While Cana-
da’s Special Economic Measure
Regulations (sanctions) have
been relaxed in recent years,
Canadians are still prohibited
from dealing with certain busi-
nesses and individuals, includ-
ing the state banks of Myanmar.
Military shipments are also
prohibited. These sanctions are
enforced by the Export Controls
International Trade Canada,
of Foreign Assets Control. It is
worth noting, however, that the
Canadian list of restricted per-
sons is more limited than com-
parable US prohibitions.
While Japan did not impose
economic sanctions against My-
anmar, there was a pronounced
slowdown in government aid
and private sector investment
during the years that Aung San
Suu Kyi was under house arrest.
China expanded its economic
this period, but faces greater
competition now that other
countries, including Japan, are
investing heavily. The Japanese
government has pledged almost
$2 billion in loans and grants
since Prime Minister Shinzo
Abe was elected in December
2012.
Japan and Myanmar are
jointly developing the ambi-
tious Thilawa special economic
zone just outside of Yangon,
the country’s largest city. Plans
call for a deep sea port, a power
plant and waste water treat-
ment facility, all in support of a
2,400 hectare industrial park.
Construction began in Novem-
ber, 2013 and commercial op-
erations are expected to start in
mid-2015.
Financial growth: foreign
banks increase presence
in Myanmar
Despite some remaining trade
restrictions imposed by vari-
ous countries, growth of for-
eign investment in Myanmar
has been substantial. At least
14 banks in Myanmar now per-
mit foreign currency accounts.
Even though foreign banks are
currently permitted to only
conduct research in Myanmar,
35 foreign banks have opened
expected that some licences for
foreign branches may be ten-
dered within the year. Daiwa
Securities from Japan is one of
In late 2012, automated tell-
er machines (ATMs) linked to
the international payment sys-
tem were introduced in Myan-
mar. There are now hundreds
of ATMs around the country,
and while not as reliable as
similar-looking ATMs in North
America, they are providing
much needed convenience and
liquidity. On a visit this year,
one of the authors of this bul-
letin found it’s possible to ac-
cess funds held in Canadian ac-
counts using some ATMs.
Further bank reform is needed
and is on the way, with the IMF
assisting in changes to the cen-
tral bank and the launch of the
Yangon stock exchange planned
for 2015. Myanmar has also ac-
ceded to the New York Conven-
tion on the Recognition and
Enforcement of Foreign Arbi-
tral Awards, as of July 15, 2013.
This will allow multi-national
companies to settle commercial
disputes outside the domestic
legal system. Myanmar has also
drafted a new arbitration law,
expected to be enacted in 2014,
which is required to allow for
the enforcement of foreign ar-
bitration awards by the courts
of Myanmar.
At the end of 2013, Myanmar
became the 180th member of
the Multilateral Investment
Guarantee Agency (MIGA),
meaning MIGA guarantees are
now available for foreign direct
investments. The US Ex-Im
Bank also opened in Myanmar
support for short and medium-
term US export sales to Myan-
mar.
“The electricity grid is inadequate by western
standards. Companies offering a distributed
power generation model are taking up the chal-
lenge, particularly outside Yangon. Large scale
thermal and clean energy projects are also ex-
pected over in next few years.”
Reforms initiated by Myanmar’s quasi-civilian government have sparked growth in the poor Southeast Asian nation’s economy.
SoeZeyaTun/Reuters
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May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 11
Myanmar Summary
LiuRui/GT
China’sBackyardPlatformforCooperation
W
hile Chinese enter-
prises are entering
the US “backyard,”
Latin America and the Carib-
bean, one after another and set-
tling down, the US also acceler-
ates its entrance into China’s
“backyard.”
Right before US President Ba-
rack Obama’s Asia trip, the US
Department of State announced
-
It has been widely noticed
that the US is back. However,
it isn’t back just for a new mar-
from China’s seeking develop-
ment drives across the world
or transferring competitive in-
dustries to other countries and
regions.
In January, the US embassy
in Myanmar provided techno-
logical training for 150 civil so-
ciety activists in Myanmar. And
in February, the US funded the
social activities of BarCamp, an
international network of open
online workshops, which has
attracted more than 5,000 par-
ticipants.
These moves have naturally
triggered China’s worries, and
some media outlets exclaimed
that Washington is nosing
around China’s backyard.
Ding Gang This is reminiscent of simi-
lar arguments from some US
media outlets during Chinese
President Xi Jinping’s Latin
America visit last year that Chi-
na was entering the backyard of
the US.
Certainly, compared with the
US, China is still a latecomer
and is way behind in terms of
soft power. Even with close
neighbours like Myanmar, Chi-
na still faces the challenge of
winning more trust from them.
In a recent interview with the
Beijing-based Caijing magazine,
Elizabeth Economy, director for
Asia studies at the Council on
Foreign Relations, said that ul-
timately who would lead Asia
would depend on the country’s
development route and its dip-
lomatic attitude in wider areas.
According to the historic logic
of a great power’s rise and espe-
cially when a new order is still
leadership may provide more
room for speculation about Si-
-
ly? Just as a Chinese poem once
quoted by Hillary Clinton goes,
“After endless mountains and
rivers that leave doubt whether
there is a path out, suddenly
one encounters the shade of
lovely village.”
If we see each other’s “back-
yard” as a platform to know
more about each other and con-
tribute more to that region, we
new order in the future.
Take Myanmar. Currently
what’s most urgently needed in
this country is to boost ethnic
reconciliation, without which
further realization of democrat-
ic politics and stable develop-
ment will be unlikely.
The stability of northern My-
anmar is very important for
China, and it is not meaningless
for Washington’s promotion of
its own human rights values in
Myanmar.
This is where the two sides’ in-
terests converge, and coopera-
tion on this point will enhance
mutual trust.
So far the US has started to
promote some activities facili-
tating the fostering of civil soci-
ety, which is helpful for Myan-
mar’s good governance in the
future. However, the arrange-
ment of similar projects should
ethnic reconciliation.
in this regard, such as collabo-
rating and arranging nego-
tiations between the Myanmar
government and ethnic minor-
ity independent armed forces
in northern Myanmar. It needs
to consider how to also bring
Washington in to promote such
negotiations.
If China and the US can
strengthen collaboration, com-
municate on these issues and
accumulate experience of co-
operation, this will be more im-
portant than increasing invest-
ment in Myanmar in the short
term.
There are more than a few
similarly thorny issues in the
China’s neighbourhood. If the
two powers can cooperate over
third parties in this region and
the construction of the future re-
gional order, and will provide a
future leadership.
China and the US have already
established diplomatic mecha-
and the situation in Myanmar
has been on the agenda. None-
theless, the two should not just
exchange information, but also
issues.
The author is a senior editor
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US President Barack Obama (L) shakes hands with Japanese Prime Minister Shinzo
Abe (R) at the Akasaka guesthouse in Tokyo. Obama’s “Asia Pivot” is widely seen
Xinhua

May 1-7, 2014
mmbiztoday.com
LOCAL BIZ 12
-
tential
The country is endowed with
of oil was exported in 1853 but
little production or explora-
tion took place during the past
50 years of military rule. How-
ever, Myanmar has 50 million
barrels of proven oil reserves
and 280 billion cubic meters of
natural gas. This is expected to
increase with the recent arrival
of foreign oil and gas compa-
nies. After a tender process for
16 on-shore blocks, Canadian
won two oil concessions in My-
anmar last year.
Even more recently, in March
the government announced
and gas blocks. Majors such as
Shell (in partnership with Mit-
sui) British Gas (with partner
Woodside Petroleum), Total,
Chevron and Statoil (in part-
nership with ConocoPhillips)
were among the successful bid-
ders.
In the manufacturing sector,
GM and Ford have both entered
Myanmar. Coca-Cola re-en-
tered the country in September
2013 after an absence of more
than 60 years. GE, VISA, and
MasterCard are all increasing
their presence in Myanmar.
Telenor (Norway) and Oore-
doo (Qatar) both received in-
vestment permits after winning
a tender in June 2013 for pro-
vision of telecom services. Sig-
growth is expected in the wire-
less sector.
In the garment industry,
H&M has started placing test
orders to explore possibilities,
and a group of 12 Hong Kong
garment manufacturers look to
-
awa special economic zone.
Tosustainongoinginvestment
in Myanmar, parallel growth
in infrastructure is required.
In addition to the ambitious
Thilawa special economic zone
project already mentioned, two
other major port development
projects are planned: a deep
sea port at Dawei, 300km west
of Bangkok, supported by Thai-
land and a smaller port on the
Bay of Bengal, a joint project
between India and Myanmar.
Completion of these projects
may not be imminent, but the
need for related bridges, roads,
highways and water systems
are major opportunities.
The electricity grid is inad-
equate by western standards.
-
ed power generation model are
taking up the challenge, par-
ticularly outside Yangon. Large
scale thermal and clean energy
projects are also expected over
in next few years. In March,
2014 the Japanese government
pledged approximately $450
-
nance additions to Myanmar’s
electrical system. Mitsubishi,
Marubeni, Fuji Electric, Toshi-
ba and Hitachi are among the
or actively pursuing involve-
ment in this sector.
The Environmental Conser-
vation Law was passed in 2012,
but implementing rules to gov-
ern environmental impact as-
sessments are still being draft-
the government are eagerly
awaited.
travellers bring economic
The tourism industry is grow-
ing at a rapid pace. Myanmar is
welcoming almost two million
tourists each year. While this is
less than 10 percent of the num-
ber of visits to neighbouring
Thailand, this gap is starting to
narrow. Those plane loads of
tourists are looking for a place
to stay, and hotel chains such as
Accor and Best Western are
responding to the opportunity
presented by nightly rates that
have tripled in recent years.
This also creates strong op-
into Myanmar. Expansion of
the country’s largest airport,
Yangon International, has
been announced, with a goal to
handle 3.3 million passengers
per year. A new international
airport is expected to open in
Bago in 2018, and expansion
projects at other airports are
expected. The private sector has
been encouraged to participate
but delays have hit some pro-
jects, particularly the planned
new $1.1 billion Hanthawaddy
International Airport, 100km
from Yangon International Air-
port.
There are eight domestic air
carriers operating in Myanmar,
with at least four more prepar-
ing to launch. However, these
carriers only operate a com-
bined total of 40 aircraft and
only two, Myanma Airways and
aircraft. Consolidation of do-
mestic airlines seems probable,
even as growth in domestic air
travel continues.
Myanmar is also looking out-
wards and is playing a more
active role in the international
economy. The country hosted
the East Asia World Economic
Forum in its new capital city,
Nay Pyi Taw, in June 2013. My-
anmar also hosted the Foreign
Ministers Meeting of the Asso-
ciation of Southeast Asian Na-
tions (ASEAN) in January 2014,
-
anmar is now chair of ASEAN.
The biggest newsmaker, how-
ever, was when the 27th South-
east Asian Games were held in
Myanmar just before Christmas
2013.
Other information to con-
sider
For those considering doing
business in Myanmar, the cost
reasonable accommodation in
Yangon can be daunting. Rents
currently surpass $100/square
foot, which is higher than the
average rental rate in Manhat-
tan. Relief may be on the way,
however, as construction cranes
are sprouting across the city.
Although the tight real estate
market seems to have delayed
the promised opening of Cana-
(it was intended to open in mid-
2013), Mark McDowell was
named last year as Canada’s
He and a small contingent of
of the British Embassy, but for
now Canadian citizens requir-
ing consular services are still
required to seek assistance at
the Australian Embassy. Cana-
da’s Embassy is now expected
to open in mid-2014.
Myanmar’s rich resources and
untapped market and labour
potential have made it a hot bed
of new international economic
development. Still, there re-
-
cial and legal systems. Caution
and careful planning is recom-
mended.
-
“Legal reform is ongoing, making it more
practical for multinational companies to invest in
Myanmar. It is anticipated that a new Companies
Law will be introduced in 2014, to replace the
current law that dates back 100 years.”
SoeZeyaTun/Reuters
Myanmar opposition leader Aung San Suu Kyi smiles after signing on the guest-
-
most eleven years of house arrest imposed by the previous military regime, was
instrumental in opening up trade relations with the West.
ZhangFan/Xinhua
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May 1-7, 2014
mmbiztoday.com
REGIONAL BIZ 13
Myanmar Summary
Myanmar Summary
With an Eye on TPP, Garment Companies Flock to Vietnam
Lien Hoang
A
s China and its work-
ers get wealthier, glob-
al manufacturers are
looking south for less expen-
sive places to do business. But
Cambodia faces labour strikes.
endless protests and Myanmar
needs infrastructure updates.
As a result, many companies
are setting their sights on Viet-
nam.
Hundreds of them, in fact, de-
scended on Ho Chi Minh City
last month for Saigon Tex, a gar-
ment and textile expo. Sharing
a border with China, Vietnam
boasts geographic convenience,
as well as political stability and
low costs. Those attract compa-
nies like Spain-based Jeanolo-
on-denim technology at the
expo.
“It is becoming such an im-
portant hub for American and
European brands,” Jeanolo-
gia area manager Borja Trenor
Casanova said of Vietnam.
(TPP) helps, too. As one of 12
countries negotiating the trade
most from a clause that would
-
parel, which are among the na-
tion’s top exports.
To take advantage of the tax
reduction, foreign companies
are shifting their factories to
Vietnam. Nguyen Thi Cam Tu
is general manager at Thach
Anh Vang, which represents
manufacturers from Germany,
Turkey, the United States, and
others. She said the TPP is part
of the reason her company saw
a 50 percent increase in annual
turnover in 2013,
“I see a lot of investment go-
ing on, because we see quite a
lot of inquiries recently,” Cam
Tu said, as a giant yarn spinner
roared at the vendor slot next to
hers at the expo.
the country. Textile exports in-
quarter of 2014, compared with
the same period last year, ac-
cording to the General Statistics
While production and rev-
enues have risen steadily, Viet-
recognise a gaping weakness in
the garment industry: It buys
most of its materials from other
countries. The Vice Minister of
Industry and Trade Ho Thi Kim
Thoa told an audience at the
expo that Vietnam must set tar-
gets to produce more fabrics on
its own.
“These targets demonstrate
an urgent need for technologi-
cal innovation, improvement of
quality control, labour manage-
ment, environmental manage-
ment, as well as improvement
in the textile and garment sup-
ply chain in accordance with
international standards,” Kim
Thoa said.
If it doesn’t develop more lo-
cal suppliers, Vietnam won’t
be able to tap the full potential
-
ship. The agreement is likely
to include a yarn-forward rule,
which requires Vietnam to
make clothes with materials
from TPP member countries in
order to receive tax-free import
But people are looking to im-
prove the garment sector in
other ways, too. Casanova said
Jeanologia’s laser-printing is
one of the technologies that
could help Vietnam become a
value-adding step in the pro-
duction chain. The country,
which achieved lower middle
income status in2010, is still
very dependent on cheap la-
bour. But to avoid the middle-
ways to add value to its exports.
Casanova said it seems to want
technology for that purpose, as
well as to promote environmen-
tal sustainability in business.
“Vietnam is showing interest
in a change in the industry,” he
said.
Airasia to Launch Long-Haul Services to Thailand
John Ruwitch
T
hai AirAsia X, Thailand’s
airline, will take to the
skies in June despite the tour-
ism market being dragged
down by the country’s political
turmoil.
The new long-haul low-cost
an event in Bangkok last week,
with CEO Nadda Buranasiri
Operating from its home base
at Bangkok Don Mueang Inter-
national Airport, Thai AirAsia X
daily services to Seoul. It will
then expand its operations with
Tokyo and Osaka commencing
later in the year.
“We are absolutely thrilled
long-haul carrier,” said Nadda.
“While Thai AirAsia’s Airbus
the best connectivity for short-
haul destinations, Thai AirA-
sia X will be operating Airbus
A330-300 wide-body aircraft
to destinations that are further
from Bangkok.”
Nadda revealed that future
destinations could include Aus-
tralia and China, as long as the
airline’s strategy.
“We know that Thailand is a
preferred destination for Aus-
tralians,” Nadda told Travel
would [also] consider Chinese
destinations over four hours in
length.”
Thai AirA-
sia has already
established a
strong presence
in China, with
mainland cities.
And while Tas-
sapon Bijleveld,
CEO of Thai
AirAsia X will not take over any
routes from Thai AirAsia”, the
new airline’s four-to-nine-hour
destinations as Beijing.
Thai AirAsia X will also be
looking to use Thai AirAsia’s
network of short-haul routes to
-
tions for its passengers. For ex-
ample, passengers on inbound
Osaka will be able to connect to
a range of Thai domestic desti-
nations such as Phuket, Krabi
and Chiang Mai, or regional
hubs like Siem Reap and Yan-
gon, via Bangkok.
Thai AirAsia X will initially
operate two Airbus A330-300
– 12 in business class and 365
in economy.
Thai AirAsia X received its
last year, but delayed its launch
– initially planned for Febru-
ary 2014 – due to the impact of
Bangkok’s political protests on
the country’s travel industry.
But Nadda said he remained
-
cord load factors of up to 80
percent on both its new routes.
The CEO also predicted that
Japanese services would be a
50-50 mix between Thai and
international. The destinations
were selected in part due to the
fact that South Korea and Japan
Thai nationals.
Thai AirAsia X becomes the
seventh branch of the AirAsia
group, following AirAsia Malay-
sia, Indonesia, Thailand, Phil-
ippines and India, and AirAsia
X in Malaysia.
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Reuters

May 1-7, 2014
mmbiztoday.com
REGIONAL BIZ 14
Myanmar Summary
Myanmar Summary
Myanmar Summary
IFCProbesHAGLInvestmentLinkedtoLand-Grabbing
Aye Myat
T
he International Finance
Corporation (IFC), the
World Bank’s private sec-
tor lending arm, has launched
an internal investigation into a
complaint lodged against the in-
stitution for investing in a Viet-
illegal logging and land grabbing
in Ratanakkiri, an NGO and a vil-
lager said last week, according to
Cambodian media reports.
Earlier in April, representa-
tives of the IFC’s Compliance
Advisor Ombudsman (CAO)
met with leaders from 17 indig-
enous communities in Andong
Meas and O’Chum districts,
along with representatives of
Vietnam-based Hoang Anh Gia
Lai (HAGL), which operates
rubber plantations on econom-
ic land concessions in the King-
dom’s northeast, according to
Eang Vuthy, executive director
at NGO Equitable Cambodia.
The IFC is accused of support-
ing HAGL’s actions by investing
millions through an intermedi-
ary fund called Dragon Capital
Group since 2002.
Last year, HAGL came under
Witness published a report ac-
cusing the rubber giant of ille-
gally logging outside concession
areas and being in possession of
at least 47,000 hectares of eco-
nomic land concessions – al-
ChinaActivistMissingAfterTryingtoHelpStrikingWorkers
John Ruwitch
A
prominent Chinese la-
bour activist has been
missing and his wife
suspects he was detained by
state security agents after try-
ing to help workers involved in
China’s biggest strike in years
organise their case.
Zhang Zhiru was last heard
from when he spoke to his wife,
Xiao Hongxia, by telephone
at around noon on April 22.
He told her he had been sum-
moned to a meeting with state
security agents from the indus-
trial southern city of Dongguan.
Workers at a Yue Yuen Indus-
trial Holdings Ltd shoe factory
complex with about 40,000
employees have been on strike
since April 14 over social insur-
ance payments.
Labour activists say the strike,
in the Dongguan town of Ga-
obu, is one of China’s biggest
since market reforms started in
the late 1970s.
“When he went out in the
morning he said he was meet-
ing Dongguan state security,”
Xiao said by telephone from
Shenzhen, where Zhang lives.
“Yesterday afternoon, and at
night when it was very late and
he had not come home, a lot of
us tried to call him, but couldn’t
get through.”
Zhang’s mobile telephone ap-
tried to call him.
The Ministry of State Security
(MSS) is the Chinese equivalent
of the KGB in the former Soviet
Union, an intelligence-gather-
ing agency that also suppresses
dissent and other activities it
deems threats to Communist
Party rule.
A man surnamed Wang who
answered the telephone at the
Dongguan branch of the MSS
said he had not heard of Zhang’s
possible detention.
“Nothing wrong”
Zhang had been closely fol-
lowing the Yue Yuen strike and
was working with other activ-
ists and lawyers to try to help
the workers organise to press
their demands.
Lin Dong, a colleague of
Zhang’s at the Shenzhen Chun-
feng Labour Dispute Service
Center, may also have been de-
tained, Xiao said. Calls to the
centre went unanswered.
On April 21, however, Zhang
and a lawyer involved in la-
bour issues went to Gaobu and
met several workers to discuss
their options, said Wang Jiang-
song, a Beijing-based labour re-
searcher.
“That’s why this has hap-
pened,” said Wang, referring to
Zhang’s possible detention.
“But there was nothing wrong
with what they did, trying to
help the workers.”
May Have Beat
BOJ: Kuroda
Deputy governor says Japan
can withstand tax hike pain
Leika Kihara
B
ank of Japan Governor
Haruhiko Kuroda said
exceed the central bank’s pro-
-
dence the world’s third-largest
economy continues to make
headway in meeting its price
target.
Deputy Governor Hiroshi Na-
kaso added to the optimism,
stressing that Japan can with-
stand the pain from a sales tax
as companies are increasing
hiring and wages due to bright-
er prospects for the economy.
was actually slightly higher
-
rent projection of 0.7 percent,”
Kuroda told a parliamentary
session last week.
“For now, we can say Japan is
making steady progress toward
His remarks suggest the BOJ
year’s price forecast and main-
tain its bullish projections for
subsequent years in its twice-
yearly outlook report due this
week.
But both Kuroda and Nakaso
reiterated the BOJ’s readiness
to “adjust policy” with addition-
al monetary stimulus should
risks threaten achievement of
the price target.
“There are various ways to
adjust policy. We will decide
what among these measures is
appropriate depending on eco-
nomic and price developments
at the time,” Kuroda said.
Reuters
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Stringer/Reuters
SamrangPring/Reuters
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&ifqdkifae&jcif;jzpfonf/

May 1-7, 2014
mmbiztoday.com
REGIONAL BIZ 15
Myanmar Summary
IndonesiatoMakeItEvenHarderforForeignMiners
Clyde Russell
I
ndonesia’s decision to start
cancelling investment trea-
ties with 62 countries has
passed with little comment, but
the move may have a greater
impact than the recent banning
of mineral ore exports.
Indonesia in March kick-
started the process of terminat-
ing all of its bilateral treaties by
notifying the Netherlands that
its agreement to protect and
promote investment would end
in 2015, and signalling that the
others would end as soon as
possible.
The agreements, which are
common between states, pro-
tect the rights of investors in
each other’s country, and typi-
cally include clauses about fair
treatment, no expropriation
be repatriated.
Most importantly for many
investors in countries like In-
donesia, with its patchy record
on legal certainty, is the right
of appeal to the Washington-
based International Centre for
Settlement of Investment Dis-
putes (ICSID).
Among the countries that
have treaties with Indonesia
are major foreign investors in-
cluding China, India, Australia,
Britain, Singapore and Russia.
However, the United States and
Japan are among nations that
don’t have agreements.
Why would the Indonesian
government seek to end agree-
ments that were designed to
foster foreign investment and
economic development, as well
as protect Indonesian invest-
ments abroad?
The main argument seems to
be that their time has passed
and they belong to an earlier
era when foreigners feared as-
sets would be nationalised.
The treaties are seen favour-
ing foreigners over domestic
investors, something at odds
with the government’s drive to
ensure greater control of Indo-
nesia’s mineral resources.
This can be seen against the
backdrop of a raft of changes to
Indonesian law and regulations,
which among others enforced a
ban on exporting unprocessed
ores, mandated the building of
smelters and introduced laws to
force the sale of stakes to locals
of foreign-owned mines.
Indonesia is the world’s big-
gest exporter of nickel ore and
supplies about two-thirds of top
buyer China’s imported baux-
ite, the raw ingredient for mak-
ing aluminium.
London-traded nickel has
gained almost 32 percent so
far this year after the export
ban came into force in January,
with China’s imports of nickel
ore from Indonesia plunging 79
percent in March from a year
earlier and bauxite slumping 86
percent.
Indonesia is also the world’s
biggest exporter of thermal coal
used in power-stations, but the
impact on coal has been mut-
ed so far as it isn’t subject to a
ban, but foreign owners will be
caught by the need to divest.
The problem for many foreign
investors is that they will doubt
whether the need for invest-
ment protection has passed.
I doubt that any investor in
the Southeast Asian nation
would privately agree that his
company would get a fair hear-
ing in the legislative and court
processes, especially if the op-
ponent was the government or
a well-connected local.
It seems that the decision to
end investment treaties is part
of the ongoing process to ensure
that Indonesia’s resources are
controlled by the government,
and/or domestic investors.
The dispute between the gov-
ernment and London-listed
Churchill Mining provides a
short-term impetus for the end
of investment treaties.
of its dispute over coal assets
with the Indonesian govern-
ment in February at an ICSID
tribunal.
The Jakarta Globe reported
on February 28 that the govern-
ment will appeal the decision
and it doesn’t want to face the
risk of paying compensation to
Churchill, which the newspaper
said could be as much as $1.05
billion.
The risk for the Indonesian
government is that it could be
hit with dozens of cases in the
ICSID from disgruntled foreign
investors.
It’s not hard to imagine In-
dian or Australian coal miners
challenging the rule that they
have to sell half of their stake in
a mine once it has been produc-
ing for 10 years.
Ending the investment agree-
ments will mean foreign com-
panies having to take their
chances in Indonesian courts, a
far better prospect for the gov-
ernment.
However, cancelling the trea-
ties will take time, as some run
for extended periods and have
additional protection clauses
once notice of termination is
served.
This means the Indonesian
government may well have to
deal with foreigners in an inter-
national tribunal, but it’s a safe
bet they will play for time if this
is the case.
The trend still appears clear,
Indonesia is doing all it can to
get control of its natural re-
sources from foreign investors.
Clyde Russell is a Reuters col-
umnist. The views expressed
are his own.
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A miner carries baskets of sulphur stones out of the crater at the Kawan Ijen volcano, Indonesia.
AngelNavarrete/Bloomberg

May 1-7, 2014
mmbiztoday.com
INTERNATIONAL BIZ 16
Myanmar Summary
Myanmar Summary
Underlying inflation surprisingly restrained in Q1 at 2.6pc
Awas surprisingly
tame last quar-
ter showing a modera-
tion that greatly lessened
the pressure for a hike in
interest rates this year
and sent the local dollar
sharply lower.
A key measure of un-
by only 0.5 percent in
percent for the year, well
below forecasts of 0.7 per-
cent and 2.9 percent re-
spectively.
That was a big relief fol-
lowing a high reading the
previous quarter and sup-
ported the Reserve Bank
-
stay consistent with its
long-term target of 2 to 3
percent.
“The coast is relatively
for the RBA to keep rates
low,” said Ben Jarman,
and economist at JPMor-
Wayne Cole
front itself, things look
relatively benign still.”
Investors reacted by
paring back the risk of a
hike in the 2.5 percent
cash rate at least until
very late in the year. That
in turn knocked the Aus-
tralian dollar down over
half a US cent to $0.9303,
though local yields still
remain high by rich-world
standards.
The anxiously awaited
report from the Austral-
ian Bureau of Statistics
showed the headline con-
sumer price index (CPI)
rose 0.6 percent in the
previous quarter when it
climbed 0.8 percent.
The annual pace did
edge up to 2.9 percent, the
highest since late 2011,
but that was well below
forecasts of 3.2 percent.
The quarterly increase
was driven in part by sea-
sonal increases in some
sectors such as health-
care, transport and school
fees, and by a large hike in
tobacco duties.
Education costs have
been one of the main driv-
by 5.1 percent in the year
to March.
That was balanced by
falls in the cost of cloth-
ing, furniture, holiday
travel and car mainte-
nance.
The RBA had argued the
last year was temporary
and that sluggish wage
growth would keep it
consistent with the target
band over time.
“That high Q4 reading
wage growth and rising
unemployment,” said Mi-
chael Turner, a strategist
at RBC Capital Markets.
“Today’s data show the
underlying pulse of in-
Market prices ex-volatiles
services moderated.”
Reuters
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Reserve Bank of Australia’s
(RBA) taejzifh aiGaMu;azmif;yG
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tm;vyf&uftyef;ajzp&dwfESifh
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Mark Felsenthal and
Linda Sieg
U
S President Ba-
rack Obama as-
sured ally Japan
last week that Washing-
ton was committed to its
defence, including of tiny
isles at the heart of a row
with China, but denied he
had drawn any new “red
line” and urged peaceful
dialogue over the islands.
Obama also urged Ja-
pan to take “bold steps”
to clinch a two-way trade
pact seen as crucial to a
broad regional agreement
that is a central part of the
US leader’s “pivot” of mil-
itary, diplomatic and eco-
nomic resources towards
US and Japanese trade
negotiators failed to re-
for Obama and Prime
Minister Shinzo Abe to
shake hands on a deal at
the summit, but the two
leaders reported progress
and ordered their teams
to keep working.
Obama, on the start of
a four-nation tour, is be-
ing treated to a display
of pomp and ceremony
meant to show that the
US-Japan alliance, the
main pillar of America’s
security strategy in Asia,
is solid at a time of ris-
ing tensions over growing
Chinese assertiveness and
North Korean nuclear
threats.
“We don’t take a posi-
determinations with re-
spect to Senkaku, but his-
torically they have been
administered by Japan
and we do not believe that
they should be subject to
change unilaterally and
what is a consistent part
of the alliance is that the
treaty covers all territo-
ries administered by Ja-
pan,” Obama said.
“This is not a new posi-
tion, this is a consistent
one,” he told a joint news
conference after his sum-
mit with Abe, using the
Japanese name for the
islands that China, which
also claims sovereignty
over them, calls the Di-
aoyu.
“In our discussions, I em-
phasized with Prime Min-
ister Abe the importance of
resolving this issue peace-
fully,” Obama added.
Obama also said there
were opportunities to
work with China – which
complains that his real
aim is to contain its rise
– but called on the Asian
power to stick to interna-
tional rules.
“Whatwe’vealsoempha-
sised, and I will continue
to emphasise throughout
this trip, is that all of us
have responsibilities to
help maintain basic rules
of the world and interna-
tional order, so that large
countries, small countries,
all have to abide by what is
considered just and fair,”
he said.
Some of China’s neigh-
bours with territorial dis-
putes with Beijing worry
that Obama’s apparent
inability to rein in Russia,
which annexed Crimea
last month, could send a
message of weakness to
China.
Obama told the news
conference that additional
sanctions were “teed up”
against Russia if it does
not deliver on promises in
an agreement reached in
Geneva last week to ease
tensions in Ukraine.
The two leaders also
agreed that their top
trade aides, US Trade
Representative Michael
Froman and Japanese
Economy Minister Akira
Amari would keep trying
to narrow gaps in their
trade talks.
Abe has touted the TPP
as key to “Third Arrow”
reforms needed to gener-
ate growth in the world’s
third-biggest economy,
along with hyper-easy
-
cal spending.
Both sides have also
stressed that the TPP
would have strategic im-
plications by creating a
framework for business
that could entice China to
play by global rules.
But the talks have been
to protect politically pow-
erful agriculture sectors
such as beef, and disputes
over both countries’ auto
markets.
Pointing to restrictions
on access to Japan’s farm
and auto sectors, Obama
said: “Those are all issues
that people are all famil-
iar with and at some point
have to be resolved. I be-
lieve that point is now.”
Reuters
Pedestrians walk through a laneway lined with boutiques and street cafes in central Melbourne, Aus-
tralia.
CarlaGottgens/Bloomberg
A man with a mask of US President Barack Obama attends a protest against Obama’s visit to Japan, in
Tokyo. Obama assured ally Japan last week that Washington was committed to its defence, including of
YanLiang/Xinhua
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Myanmar Business Today - Vol 2, Issue 17

Myanmar Business Today - Vol 2, Issue 17

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