PwC Myanmar Weekly Business Intelligence Issue April 2017

Transcription

1 PwC Myanmar Weekly Business Intelligence Issue April 2017

2 1. Weekly Key Financial & Business News 2

3 Weekly Key Financial & Business News Headlines YBS inks deal with Yutong to purchase 1,000 city buses 28 leaders to attend B&R forum Clothing industry looks for favoured status Avoid loss of foreign investments: report President s reserve fund to ensure Yangon power supply 3

4 Weekly Key Financial & Business News Headlines Electrification project for villages in Mandalay Region Time to fix the economy with action, not words Non-transparent contracts in Yangon Region to be reviewed Grab eyes Myanmar growth 4

5 Newspapers Mizzima YBS inks deal with Yutong to purchase 1,000 city buses 16 April 2017 China Yutong Company and Yangon Bus Service (YBS) signed agreement on April 11 at Yangon Region Government, Mingalar Hall to buy 1,000 city buses for the roads of Yangon. Yangon Region Transport Authority (YRTA) Secretary Dr. Maung Aung said that YBS needed buses for their commuter service and then the Yangon Region Government and Chinese Government negotiated to supply these city buses on G-to-G basis and finally they entered agreement and these buses would arrive in Yangon starting at the end of May. A motor vehicles expert group and a motor vehicles technician group took part in these negotiations and inspected and verified all the specifications in making a deal for buying these city buses. We delayed in buying these city buses as we had to negotiate the price and quality of these commercial vehicles especially on air conditioning performance which must be compatible with the tropical climate here and the quality and specifications of these vehicles. Delivery of these vehicles will be at the end of this coming May, he said. Source : Mizzima 5

6 Newspapers Mizzima 28 leaders to attend B&R forum 19 April 2017 Leaders of 28 countries will attend the Belt and Road (B&R) Forum for International Cooperation next month, another major "home diplomacy" event for China after the Hangzhou G20 Summit in The B&R Forum for International Cooperation will be held on May 14 and 15 in Beijing, and Chinese President Xi Jinping is set to attend the opening ceremony and host a round table summit of the leaders, Wang said Tuesday morning, the Xinhua News Agency reported. "Since the start of the B&R initiative in 2013, the initiative has undergone three years' development, so we are at the key stage to comprehensively promote it, and this is the main reason why China is holding the forum" said Lin Minwang, a professor at the Institute of International Studies of Fudan University. At the invitation of Xi, 28 heads of state and government leaders will attend the forum, including Russian President Vladimir Putin, Indonesian President Joko Widodo, Turkish President RecepTayyip Erdogan, Philippine President Rodrigo Duterte, Myanmar State Counselor Aung San Suu Kyi, Pakistani Prime Minister Nawaz Sharif, Cambodian Prime Minister Hun Sen, and Italian Prime Minister Paolo Gentiloni. In attendance will be academics, entrepreneurs and finance and media industry experts from 110 countries, and other guests include nine vice prime ministers, seven foreign ministers and 190 ministerial-level officials, and 89 heads and representatives from 61 international organizations. The total number of attendees will surpass 1,200. Source : Mizzima 6

7 Newspapers Eleven Myanmar Clothing industry looks for favoured status 20 April 2017 The Myanmar Garment Entrepreneurs Association says it is working for MFN (mostfavoured nation) status so that the CMP (cutting, making and packaging) clothing industry can receive tax reliefs. Myint Soe, chair of the association, said: I have submitted a plan to ensure the country gets MFN status when CMP products are exported to the US. It is a state-level matter. The tax levied on the CMP products exported to the US ranges from nothing to 5 per cent. Under the MFN system, the taxation rate is higher than 5 per cent. The US restored the generalised system of preference rights to Myanmar after lifting economic sanctions last year. But clothing is not included on the list of products which can enjoy the rights reinstated by the US. The US will collect a per cent tax on exports of cotton clothing and a 37-per-cent tax on nylon garments. High taxation rates serve as a deterrent to garment exports. Khaing Khaing Nwe, secretary of the association, said: CMP export earnings are expected to reach up to US$2.2 billion this year as it receives more orders from the EU and Japan. According to the commerce ministry, the export earnings from the CMP exceeded US$1.64 billion between April 2016 and the end of February, up nearly US$1 billion from the same period the previous year. Source : Eleven Myanmar 7

8 Newspapers Myanmar Times Avoid loss of foreign investments: report 21 April 2017 The Yangon Region Finance, Planning and Economic Committee has sent its yearly report to the regional parliament, urging for action to be taken in order to avoid the loss of foreign investments. Committee chair Daw Sandar Min said the regional government must put emphasis on issues that could affect investments and the economy. Among the issues highlighted were high-rise buildings, the Yangon new city project, Dagon 1 city project, Mingalar market and squatter issues that affected factory owners. She said solutions would hopefully be implemented under the current fiscal year, in accordance with the new investment law s economic policies and regulations. Daw Sandar Min said the committee had informed the regional parliament of the issues during the fiscal year, but the government had yet to reply on how it planned to address these concerns. She also said evidence of how factory owners were threatened and how foreign investment would be affected had been sent to the government. We may lose foreign investments if the regional government doesn t solve the issues, regardless of whether or not the State Counsellor is inviting investors from overseas to come. Everyone already knows the lack of laws in the industrial zone, and the government still has not addressed this problem. Over the high-rise building issue, developers already lost billions of kyat, she said on April 6. Source : Myanmar Times 8

9 Newspapers Myanmar Times President s reserve fund to ensure Yangon power supply 21 April 2017 The President s Reserve Fund will be used to ensure there is sufficient electricity supply in Yangon in the coming summer, Chief Minister U Phyo Min Thein said. He announced this after a meeting among some Union ministers and entrepreneurs at the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) office on April 10. The chief minister said the money would come from the fund as Yangon made arrangements to upgrade its electricity sector to ensure development and businesses would not be disrupted. He said the state had been losing money generating and distributing electricity, stressing the need for Myanmar to look into cheaper methods of generating power. He said power from gas could be costly while coal was the cheaper option, but he also noted the environmental concerns related to generating power using coal. High-tech coal power generation has been conducted in other countries including Japan, and Myanmar has been left behind. Therefore, Myanmar also needs to consider cheap electricity generation, said U Phyo Min Thein. Regional ministers from Yangon have been preparing tender documents to buy 25 MW diesel/gasoline power generators which can channel power to townships, following their consultation with the Ministry of Electricity and Energy. The government has also been talking to the private sector since last year to find a way to generate power at a fair price while causing minimal impact to the environment. Source : Myanmar Times 9

10 Newspapers Myanmar Times Electrification project for villages in Mandalay Region 21 April 2017 According to the Mandalay Region Ministry of Electrical Power, Energy and Construction, a total of 26,032 villages in the region do not yet have access to electricity. Under the National Electrification Program (NEP), a total of 54 villages have already been successfully supplied with electricity, said U Zarni Aung, Mandalay Region Minister for Electrical Power, Energy and Construction. There are 26,032 villages without electricity in the whole region. That means 376 villages per district have no power supply. Among them, Meiktila district has 764 villages with no electricity, Myingyan district has the second highest number of villages without power supply, with 443 villages still in the dark, he said. We intend to provide electricity to all the districts equally. During the second Mandalay Region Hluttaw session, the Ministry of Electrical Power, Energy and Construction said that the region s poverty reduction and rural development fund allocated for the budget year will be used to illuminate the villages which are not covered by the regional government s budget. The Union government will receive US$300 million as the World Bank loan to support the NEP Project. The tender process has started, which is the first step of the loan procedure. The procurement of the necessary components for 11 KVA line project has started via the tender system. 175 villages out of 393 villages are already illuminated with local donations and the regional government s budget. Source : Myanmar Times news/mandalay-upper-myanmar/ electrification-project-for-villages-in-mandalayregion.html 10

11 Newspapers Myanmar Times Time to fix the economy with action, not words 21 April 2017 Economists and business owners, while acknowledging and applauding the measures put into achieving peace and stability, say the National League for Democracy-led government has largely ignored the economy during its first year in power. Some experts and entrepreneurs told The Myanmar Times that the government needs to focus on ways and means of stimulating economic growth and getting the budget, monetary and fiscal policies fixed so that real benefits can be drilled down to the ground. Economists say that the fluctuating exchange rates and inflation have brought the economy to a standstill and brought hardship to the people as well as uncertainty to the economy. Economist Dr Soe Tun said: It is time to focus on the economy and people at the grassroots level as it is the ordinary folk who will feel the pinch and ultimately bear the brunt of this failure if the country goes on this way. It could be very dangerous for the country in the long-term. The people can tolerate this situation for one or two years, at most. Making a living will become more and more difficult if the economic ills are not addressed, he said. He added that despite the high expectations that there would be an influx of local and foreign investments after the new government took office, this has yet to happen. Some experts The Myanmar Times spoke to said that the new Investment Law enacted to encourage local and foreign investments to create new jobs, has yet to kick in. Source : Myanmar Times time-to-fix-the-economy-with-action-notwords.html 11

12 Newspapers Mizzima Non-transparent contracts in Yangon Region to be reviewed 21 April 2017 Yangon Region Legislative Assembly legislator Kyaw Zeya from Dagon constituency told Mizzima that the assembly would review and point out the non-transparency of contracts given through nepotism by citing an Auditor-General s Report for Yangon Region. These agreements and contracts were made with companies. But these contracts and agreements are non-transparent and were signed without any tendering process,only through nepotism. These were done by the then government. We will review all these contracts and agreements. The contracts and agreements that need to be reviewed aren t many but we must point the mout, he said. The assembly will focus primarily on agreements and contracts made by the then government in financial year based on Yangon Region Auditor General s report submitted on March 24. It is believed that the then government transferred these businesses due to nepotism during the transition period to the newly elected government. Legislator Kyaw Zeya responded to reporters that he would discuss and urge the assembly to review a contract in which a one-acre plot was rented at the paltry rate of one million per month. The assembly would point out the lesser rate in comparison to the market rate of ground rent to the executive branch, he added. Source : Mizzima 12

13 Newspapers Eleven Myanmar Grab eyes Myanmar growth 21 April 2017 THOUGH THE TAXI-HAILING service is still a relatively new concept in Myanmar, Grab, the leading ride-hailing firm in Southeast Asia, has revealed its ambitious target of attracting everyday taxi users in Yangon to book taxis through their app. Cheryl Goh, group vice president of marketing at Grab, said in an exclusive interview that there is a huge opportunity to introduce technology that can solve the problem of unreliable public transport. Public transport infrastructure is still developing, and there can be more safe and reliable public transport options. At the same time, Myanmar is young and we believe open to sharing economy services, she said. The firm launched its beta trial of taxi-hailing service in Myanmar on March 21. Goh said that they are now focusing on their trial to ensure that its taxi service is running smoothly, once they are ready to launch fully to the public. We are currently working with a small group of taxi drivers. The beta trial will scale up gradually to allow Grab to test and improve the GrabTaxi service in Yangon, based on driver and passenger feedback, she said. At this time, we are gathering feedback from our drivers and passengers. We will focus on improving the quality of the vehicles, driver service and safety standards for taxis in Yangon. According to the statistics, the number of taxis in Yangon has surpassed 90,000, including the ones that operate illegally. The Japan International Cooperation Agency noted in one of its reports that 20 per cent of over two million commuters in Yangon use taxis while the rest rely on public transport. Source : Eleven Myanmar 13

14 2. Weekly Investment News 14

15 Weekly Key Investment News Headlines Over $830 million invested in Myanmar by UOB clients Investors shun oil and gas: DICA 15

16 Newspapers Mizzima Over $830 million invested in Myanmar by UOB clients 17 April 2017 Over $830 million has been invested in Myanmar via United Overseas Bank's clients since it opened a branch in Yangon in 2015, the Straits Times reported on 17 April. Most of the capital has come from multinational and regional companies based in Asian economies such as China, Malaysia, Singapore and Thailand. A UOB survey of 2,500 enterprises last year found 20 per cent of companies from Singapore, Malaysia, Indonesia, Thailand, China and Hong Kong said they planned to expand into Myanmar in the next three to five years, according to the report. Source : Mizzima 16

17 Newspapers Eleven Myanmar Investors shun oil and gas: DICA 20 April 2017 There was no foreign investment in agriculture, mining, oil and gas and construction in the previous fiscal year, according to the Directorate of Investment and Company Administration. The financial year saw an inflow of foreign direct investment (FDI) into livestock and fisheries, manufacturing, energy, transport, communications, hotels and tourism, real estate and other service sectors totalling US$6.6 billion. US$97 million was invested in livestock and fisheries, US$1.1 billion in manufacturing, US$910 million in energy, US$3 billion in transport and communications, US$404 million in the hotels and tourism sector, US$748 million in real estate and US$231 million in other services. Under the second five-year National Development Plan, until 2021, the government will promote exports by attracting foreign investment, promote the private sector, turn regional projects into commercial cooperation and ensure that private sector investment can benefit the people. In addition, the government will work to review provisions that may hamper the in-flow of FDI, reduce skyrocketing land prices, provide market research data, release the accurate statistics about the government, draft industrial policies for the development of advanced industries and ensure easy access to electricity and infrastructure development of the transport sector. The government is preparing to develop the fiscal sector, ensure better monetary policies and create investment opportunities. Source : Eleven Myanmar 17

18 3. Weekly New Tenders 18

19 Tenders (Myanmar Government) List No applicable Tenders announced for the week ending 21 April 2017 Note: tenders information are collected from and

20 Tenders (Multilateral organizations) List Mandalay Urban Services Improvement Project - Climate Change Resilience Urban Planning Capacity Building, Closing Date: 20 th May 2017 Research, Design, And Development of GPEs Knowledge and Innovation Exchange (KIX) and Advocacy and Social Accountability (ASA)initiatives, Closing Date: 30 th April 2017 Development and implementation of an evaluation study on the effectiveness and efficiency of the Global and Regional Activities (GRA) portfolio, Closing Date: 21 th April 2017 Learning Partnership on the Dedicated Grant Mechanism (DGM) for IPLCS in the Climate Investment Funds Forest Investment Program, Closing Date: 27 th April 2017 CGAP Blockchain Applications to Agriculture and Rural Finance, Closing Date: 22 th April 2017 Note: tenders information are collected from

21 4. MIC Permitted Projects 21

22 MIC Permitted Projects (Meeting 6, 2017) No. Name of Company Type of Investment Form of Investment 1 Lucky Tokyo Noodle Company Limited Manufacturing and Marketing of Instant Noodles Joint Venture Investment 2 Bel Ga Myanmar Limited Production, Distribution and Sale of Day Old Chicks(DOC) Wholly Foreign Owned Investment 3 U & G (Myanmar) Fashion Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 4 GTIG Huasheng (Myanmar) Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 5 Guohua Glory Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 6 GTIG Eastar Garment (Myanmar) Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 7 GTIG Hubo Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 22

23 MIC Permitted Projects (Meeting 6, 2017) No. Name of Company Type of Investment Form of Investment 8 Maisha (Myanmar) Garment Company Limited (Hong Kong) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 9 Fu Son Garment Factory (Myanmar) Limited (Macao) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 10 China Palette Garment Myanmar Company Limited (China) Manufacturing of Garment on CMP Basis Wholly Foreign Owned 11 Myanmar Li Bao Handbag Company Limited (China) Manufacturing of All Kinds of Bags on CMP Basis Wholly Foreign Owned 12 Commercial Plastics Company Limited (Marshall Islands) Manufacturing and Sales of Plastics Recycling Products Joint Venture 13 Ming Da Polyester Wadding (Myanmar) Company Limited (China) Manufacturing and Sales of Spraying Collodion Polyester, Imitation Silk Polyester, Eiderdown Polyester, Needle-punched Polyester, Vertical Polyester, Non-Woven Fabric, Lining Colth and Quilting for Various Kinds of Garment Wholly Foreign Owned 14 Chindwin Banner Company Limited Manufacturing of Jacket, Happi and Pants on CMP Basis Myanmar Citizens Investment 23

24 MIC Permitted Projects (Meeting 6, 2017) No. Name of Company Type of Investment Form of Investment 15 Four Rivers Inya Office Co Ltd Construction of Office Tower, Leasing and Management of Office Space Foreign Investment 16 Paradiso Cinemas Co., Ltd. Construction of Cinemas and Operation of Movies Show Joint- Venture 17 Thanlwin Education Services Company Limited Thanlwin Private School Myanmar Citizen Investment 24

25 5. Upcoming Events 25

26 Upcoming Events (May 2017 to June 2017) List Date Location Name of Event Sector Price Focus Points 15 May 2017 Yangon Hospitality & Tourism Conference Hospitality & Tourism TBC Discuss hospitality & tourism sector in Myanmar, and meet with investors and understand the investment and development opportunities in Myanmar May 2017 Yangon BuiltTech Yangon 4 th Edition Construction equipment Free Showcase equipment used in construction industry May 2017 Yangon Emerging Asia FinTech & Agent Banking Summit Finance TBC Discuss on the financial landscape transformation of Myanmar Jun 2017 Naypyitta w Aid & Development Asia Summit Aid & Development TBC Gathering humanitarian and development professionals, This event will bring together regional and global expertise to discuss innovations and partnerships for aid and development programmes in Asia, with a particular focus on Myanmar Jun 2017 Mandalay BuiltTech Mandalay Construction equipment Free Showcase equipment used in construction industry. 26

27 Upcoming Events (June 2017 to October 2017) List Date Location Name of Event Sector Price Focus Points June 2017 Yangon Myanmar Real Estate Expo Expo Free This event showcases products like One- Stop Consulting Services to Foreign Investors for Entry etc. in the HR Consultants industry. 6-7 July 2017 Yangon ASEAN Ports & Shipping Ports & Shipping 1268 Will covers areas of logistics & transportation Aug 2017 Yangon Renewable Energy Expo Myanmar Power TBC Renewable Energy technology and equipment event that brings together an international congregation of Government and private renewable energy companies, suppliers and also its supporting industries gathered in Yangon, Myanmar to showcase the latest developments in the renewable energy industry in Myanmar Oct 2017 Yangon Oil & Gas Myanmar Oil & Gas Free Opportunities and difficulties facing in Myanmar Oil & Gas Industry as it embarks on its exciting new phase of growth. 27

28 PwC Myanmar Business Intelligence Publication For further information please contact: Jovi Seet Senior Executive Director Brandon Lye Director 2017 PricewaterhouseCoopers Myanmar Co Ltd. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Myanmar Co Ltd, which is part of the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. 28