Thura NewsViews. Myanmar Economics and Politics. Weekly Newsletter. Issue 260, March 16, Politics

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1 Issue 260, March 16, 2017 Thura NewsViews Politics Pakistan president pushes for improved Myanmar economic relations Pakistan s President Mamnoon Hussain has called for closer bilateral economic ties between his country and Myanmar. The remarks were made when Hussain met with U Win Naing, the outgoing Myanmar ambassador to Pakistan, according to media reports. Hussain called for improved contacts at the parliamentary level and said the two countries should improve relations in order to increase bilateral investment. Hussain said Myanmar s transition from a military government to one that is democratically elected was a welcome development and said that Pakistan supports the efforts of Myanmar to strengthen democracy in the country. He urged the outgoing ambassador to promote a positive image of Pakistan when he returns to Myanmar. Thousands flee to China as Kokang fighting continues More than 20,000 Myanmar refugees have entered China after a recent outbreak of fighting in and around Laukkai, the capital of the Kokang Self- Administered Zone in northern Shan State. The fighting first broke out on the morning of March 6, but is still continuing, according to reports. On March 12, the Myanmar National Democratic Alliance Army (MNDAA), which launched the offensives on Tatmadaw outposts, said the Kokang area is now in a state of war, with the fighting worsening. Reports quoted officials as saying that Laukkai had almost entirely emptied since the fighting started. According to reports, thousands mostly Myanmar people fled south to the Shan State town of Lashio, while others mostly Han Chinese living in Kokang travelled across the border into China where they are living in make-shift camps. Reuters reported that a number of Chinese army trucks were seen traveling close to the countries border, mostly for disaster relief, an official was quoted as saying. The Chinese will be very angry if it escalates to the level of 2015, said China expert Yun Sun, referencing the most recent outbreak of fighting in which about 200 were killed and about 50,000 displaced. The outbreak of violence is yet another setback to Myanmar s beleaguered peace process and comes just weeks ahead of the second 21 st Century Panglong Union Peace Conference, which is due to take place in Nay Pyi Taw in late March or early April. Thura Swiss Ltd. Economic Research Shwe Hinthar B /2 Miles Pyay Road 11 Qtr. Hlaing Tsp. Yangon, Myanmar Phone +95 (0) Fax +95 (0) info@thuraswiss.com March Highlights Myanmar and Thailand are in discussions to extend the visafree period for travellers from both countries from 14 days to 90 days. Malaysia based Iflix has officially launched its video on-demand subscriptions in the Myanmar market. A 5.1 magnitude earthquake hit the outskirts of Yangon on March 13, causing a handful of injuries and damage to some pagodas.

2 Economy Blackouts expected in Yangon throughout hot season As Myanmar s hot season gets underway, it is expected that electricity shortages will continue because the government has not completed contracts for an emergency supply of electricity, despite holding a tender last year. The government had planned to have two separate 300-megawatt emergency power sources in place in time for the hot season, which begins around the middle of March. In hot season, demand for electricity spikes and production at the country s hydropower dams drops dramatically. A local article quoted government officials as saying that the power purchasing agreements with private power suppliers have yet to be signed. We ve submitted the draft [PPA] to the higher level but we haven t got permission [to sign] it from the respective department, an official was quoted as saying. U Maung Maung Latt, chairman of the Yangon Electricity Supply Corporation, was quoted as saying that the energy will be ready in It won t be ready for this summer, he said. Parliament calls for dozens of state-owned projects to be cancelled Lawmakers from the National League for Democracy (NLD) have proposed cutting projects at state-owned factories, as part of discussions related to economic plans and priorities for the financial year. The MPs proposed stopping funding to 44 out of 52 of the projects, with the money instead invested in community development projects. Dr Myat Nyana Soe, secretary of the joint bill committee, was quoted in the local report as saying, The recommendation to suspend the 44 is to prevent wasting public funds, and to make sure the investments are viable. He added that the factories, many which fall under the Ministry of Industry, are currently not economically viable and may not be in the future. However, some MPs from the military-linked Union Solidarity and Development Party (USDP), said the projects should continue. Former Minister for Industry, and now Lower House MP for Mingun, Sagaing Region, U Maung Myint was quoted as saying that wrong decisions should not be made related to state enterprises because of phobia. A decision that considers the interests of citizens without neglecting staff is needed, he said, referring to the fact that if the projects were cancelled, then many people would lose their livelihoods. Regional/State governments to have say on investments Under a new proposal to move some power away from Nay Pyi Taw, state and regional parliaments will now have permission to approve some investments of up to US$ 5 million (MMK 6 billion), within their state. However, so-called restricted businesses, such as capital intensive investments and those with largescale environmental impacts, will still need to seek approval from the Myanmar Investment Commission (MIC), according to its chairman U Aung Naing Oo. Under the changes, state and regional parliaments will still have to report their decisions and figures to the MIC. To report to the MIC on facts and figures about permitted businesses is meant for more accurate and comprehensive statistics. Afterwards data on investment will be managed in a better way, Aung Naing Oo said. Myanmar in Figures GDP (PPP): $283.5bn (2015) GDP (official ex.rate): $66.98bn (2015) GDP growth rate: 8.3% (FY proj.) Population: 51.4mn people (2014) Inflation: 11.5% (2015) Foreign trade: $22bn (2015) FDI: $64bn (31/07/2016) International reserves: $9.4bn (Dec 2015) CBM rate Kyat/$ = 1362K/1$ (16/03/17) For advertising with Thura Swiss please contact us by info@thuraswiss.com or by phone +95 (0) Please note that our advertisement contracts are based on a subscription of a minimum of 4 weeks. 2

3 Legal Box by Duane Morris & Selvam LLP Powering Myanmar Forward Myanmar s increase in demand for electricity has far exceeded its supply. The Ministry of Electricity and Energy commented that for the next four years, a significant amount of electricity is estimated to be consumed, thereby further increasing the gap between consumer demand and supply. As of now, not all regions have access to the national electricity grid. Future plans to meet this demand include the use of liquefied natural gas and coal power. Reviewing the tariff charges for wind energy and other alternate power-generating services is also being considered. Overwhelmingly, more power stations and grids must be constructed to meet this shortfall. Shortfalls in public infrastructure have resulted in operational overloading and system breakdowns. Yangon already experiences regular brownouts and blackouts. Foreign investor participation in the energy sector will help fill this void through private public partnerships ( PPP(s) ). A PPP is a contract between a public entity and a private partner, whereby the private partner pays for the development of the asset. After operating the asset for a period, the private partner will then transfer the asset back to the government for the state s use. Presently, Myanmar does not have a PPP law, however, it is foreseeable that there may be future liberalization in this sector. There is strong political support for PPPs in Myanmar. The Government has already issued draft guidelines for PPPs to promote increased private sector investment in Myanmar s infrastructure. We are optimistic of increased foreign investor participation in Myanmar s energy sector. Through our office in Yangon, Duane Morris & Selvam advises corporations on investment, business and regulatory processes in Myanmar. For further information, please contact Mr Krishna Ramachandra (kramachandra@duanemorrisselvam.com), Ms Babita Ambekar (bambekar@duanemorrisselvam.com) or Mr Rory Lang (rjlang@duanemorrisselvam.com) or visit Duane Morris & Selvam is recognised as a leading law firm for Myanmar related Corporate and M&A work The Legal 500 (2017). 3

4 Companies and Investments KBZ open to foreign investment KBZ Bank, Myanmar s largest bank by assets, has said it is willing to sell part of its business to a foreign lender, subject to expected changes to the Companies Law. In an interview with Bloomberg, Daw Nang Kham Noung, executive director of KBZ Bank, said: In any emerging market capital is important. For us, we are open to foreign partnership. However that s subject to the central bank and the regulation. The government is considering changes to the Companies Law that would allow foreign investors to acquire up to 35 percent of a local company. Under current laws, foreign investors cannot invest in Myanmar banks. In the interview, Nang Kham Noung also said the bank plans to double its number of branches to 1,000 by 2020 and also grow its mobile financial services so that its services can reach Myanmar s rural population, many of which still do not have access to bank accounts. Ooredoo planning to launch mobile money services Ooredoo is set to become the latest company to enter Myanmar s growing mobile money market, according to reports. A local article quoted Ooredoo Myanmar s CEO Mr Rene Meza as saying that the company sees huge potential in mobile money and will launch its service very soon, having applied for the license. Ooredoo s rival Telenor launched its mobile money service Wave Money last year and state-owned Myanma Posts and Telecommunications (MPT) has announced plans to launch its own service later this year. Thai health company invests in laboratory in local JV Thai firm National Healthcare Systems has opened an independent clinical laboratory in Myanmar, as part of a jointventure with two Myanmar companies, Sea Lion Group and Bahosi Hospital, according to Thai media reports. The company said it is the first government-licensed private medical laboratory in the country. We are here because we believe in the future of Myanmar. This market recognises the value of services. It is willing to pay for quality services. It has a unique quality, Mr Narongrid Galaputh, chief executive of Non-Hospital Group, part of the group, was quoted as saying by The Nation. Narongrid said N Health Myanmar aims to support large hospitals for high-end genetic tests, allergy tests, as well as evaluations of diseases including tuberculosis, malaria and dengue fever. The deal has seen an initial investment of US$ 2.5 million with N Health holding a 60 percent stake, with each local partner holding 20 percent. 4

5 Events Name Details Organizer/Ministries Contact Information Myanmar Supply Chain Summit Venue: Melia Hotel, Yangon Date: 29 March 2017 Global Supply Chain Council Myanmar Infrastructure Summit Venue: Sule Shangri-La Hotel, Yangon Date: March 2017 Confexhub Sdn.Bhd Exclusive Packaging Expo for Myanmar Venue: Tatmadaw Hall, Yangon Date: March 2017 Myanmar Industries Association, Enterprising Fairs (India) Myanmar Hospitality and Tourism Conference Venue: Park Royal Hotel, Yangon Date: 15 May 2017 Sphere Conferences Emerging Asia FinTech & Agent Banking Summit Venue: tbc, Yangon Date: May 2017 Magenta Global ASEAN Ports and Shipping Venue: Sule Shangri-La Hotel, Yangon Date: July 2017 Myanmar Banking & Finance Conference Venue: Yangon, Myanmar Date: July 2017 Transport Events, Myanmar Port Authority Sphere Conferences Myanmar Green Energy Summit 2017 Venue: Yangon, Myanmar Date: August 2017 Confexhub Compack Myanmar 2017 Venue: Tatmadaw Hall, Yangon Date: September 2017 Enterprising Fairs (India), Myanmar Industries Association Builders Myanmar 2017 Venue: Tatmadaw Hall, Yangon Date: August 2017 Fireworks Trade Media Ptd Ltd +95 (0)

6 Tenders Ministry of Agriculture, Livestock and Irrigation: Invitation for Price Quotation The Department of Rural Development (DRD) under the Ministry of Agriculture, Livestock and Irrigation has invited a price quotation for the supply of the following items in both USD and Myanmar Kyats: Reference No. No. Description Quantity 1) Project Cycle Poster 9,600 2) Grievance Poster 9,600 G 53 3) ECoPs Environmental Code Poster 9,600 4) Positive and Negative List Poster 9,600 5) Finance Poster 9,600 6) Procurement Poster 9,600 7) Social Accountability Poster 9,600 The quotations must be submitted in a written form to the address unioncddprocurement@gmail.com and clearly indicate the reference number above. Deadline is Friday 31 March Further information can be obtained by phone at +95 (0) , U Kyaw Swa Aung, Director, Procurement and Logistic Section. Myanma Timber Enterprise: Open Tender Myanma Timber Enterprise will sell Teak & Hardwood Round Logs and Sawn Timber in open tenders in USD. Particulars of the open tenders are as follows: No. Description Quantity 1) Teak Logs 654 tons 2) Teak Conversion 475 tons 3) Hard Wood Logs 8000 tons Date and Time : , 12:00 PM : , 01:00 PM Place : Taw Win Hall, Gyogone, Insein township, Yangon Further information can be obtained by phone at +95 (0) and on the Myanma Timber Enterprise Website ( 6