May 2 nd 2015 ECONOMY Lack of Finance Stunts Private Businesses: World Bank Source: Myanmar Business Today (4 th April 2015) Access to finance is the top constraint for private enterprises as Myanmar s economy undergoes market-oriented reforms after emerging from decades of isolation, the World Bank said. Addressing this and other challenges will help create a strong private sector to drive the country s future growth and create much-needed jobs, the bank's first Investment Climate Assessment report in Myanmar revealed. Among more than 1,000 foreign and domestic non-agricultural businesses interviewed in the report, only 1 percent of fixedasset investment costs are financed by bank borrowing, while 92 percent of firms rely on their own funds a percentage higher than that of any other comparable country, the DC-based lender said. Difficulties in getting land-use rights, power outages, and inadequate workforce skills are other main barriers to business operation and growth in Myanmar. Focusing Myanmar s economic reforms on removing these obstacles will create a better business environment and enhance the productivity and efficiency of private enterprises allowing them to grow and flourish, the report finds. State Gives SMEs US$6.9 Million in Loan Source: Eleven Myanmar (3rd April 2015) The government has given loan worth Ks 6.9 billion (US$6.9 million) to small and medium enterprises (SMEs) as of March 24, according to the Ministry of Industry. The state has prepared to lend Ks 20 billion (US$20 million) to SME owners. So far, 237 SME owners have borrowed Ks 6.9 billion, said Yi Yi Khine, director of the Department for Small- and Medium-sized Enterprises Development. In the FY 2014-15, the loans were given to business owners in Kachin, Kayah, Mon, Rakhine, Shan, Sagaing, Taninthayi, Bago, Mandalay, Magway, Yangon, Ayeyawady states and regions and Nay Pyi Taw Council.The 25 entrepreneurs borrowed Ks 5 billion (US$5 million) from the state for the first time in October 2012. Then 37 more SME owners were given Ks 5 billion in loan in 2013.In 2014, the state has prepared Ks 20 billion and lent Ks 6.9 billion to the business owners residing in Nay Pyi Taw council and other states and regions. The interest rate is 8.5 per cent a year and the borrowers have to return the money within three years. The SME owners have to present the progress of their businesses, their licences and the mortgage to receive state loans.
Audit Firms vie for Myanmar Contract Source: Eleven Myanmar (5th April 2015) One of three international audit teams that will check the transparency of resources will be chosen after their financial reports are inspected, according to Myanmar EITI (Extractive Industries Transparency Initiative) Coordination Office. The three shortlisted audit firms are UK-based Moore Stephens, Australia s ENY and EU-based Fair Link. Six representatives from the private sector and the government, coordination office and World Bank will select the audit team. It will be finalised at the end of April. As an EITI candidate country, Myanmar will have to submit the inflow of tax revenues generated by extractive industries to the EITI Secretariat Office and make the data public. The audit team will release its findings on the revenues of extractive industries and taxes. Myanmar has chosen oil and natural gas as priority sectors for the EITI report. And it needs to finalise its application within 18 months of July. The EITI is an international organisation which maintains a standard, assessing the levels of transparency around countries oil, gas and mineral resources. This standard is developed and overseen by a board, consisting of representatives from governments, extractives companies, civil society organisations, institutional investors and international organisations. Union Tax Law 2015 Lowers Rates for Expats, Foreign Industry Source: Myanmar Business Today (9th April 2015) The Union Tax Law, which went into effect this fiscal year starting in April, will lower several significant taxes on foreigners and foreign companies residing in Myanmar. The non-resident income tax rate will be lowered from 35 to 25 percent, which will affect branch offices operating out of Myanmar, foreigners working in the country, as well as outside companies deriving income from Myanmar, according to Edwin Vanderbruggen, a partner at law firm VDB Loi, who was commenting on a draft version of the law. This means that, in theory, foreign companies will be taxed at the same rate as local companies, which is important in order to uphold several international treaties. While income derived from Myanmar will be taxed at 25 percent, this new law also states that the salaries of nonresidents - those who spend fewer than 183 days per year in the country - will be taxed progressively, from 0 to 25 percent. Branch offices are currently rare, but as foreign banks move into the country, this is expected to change. The capital gains tax will also lowered from 40 percent to 10 percent, except for those in the oil and gas sector. This represents a huge lost opportunity for the government, said Edwin. Singapore-based companies already enjoy a capital gains tax rate of 0 to 10 percent due to a bilateral tax treaty, so this lowering of the rate gives investors less incentive to set up shell companies in Singapore to operate in Myanmar. However, capital gains can be had tax free for Singaporean companies if the seller only sells a fraction of their shares. Insurance Firms Told to Brace for Foreign Competition Source: Eleven (April 2015) Private insurance companies need to be ready for international competition as the domestic market prepares to open up to foreign firms, according to the Myanmar Insurance Business Supervisory Board. The government has allowed 15 foreign insurance companies, including firms from Japan, the US and Europe, to open branch offices. Simeon Preston from AIA Insurance said: We expect to offer long-term life and health insurance services. Life insurance will be a big market when international insurance companies enter the country. We are ready to share our technology, courses, experience, management and information. The supervisory board is planning to grant permits for foreign insurance companies to insure the special economic zones. The board has yet to release the names of the permit winners. The licence fee for foreign insurance companies is US$30,000. Myanmar s untapped insurance market is enormous with international companies claiming they can offer great benefits. Established in 1952, Myanmar Insurance has granted permits to 12 Myanmar insurance companies since May 2013.
Thilawa to be Operational this Year Source: Myanmar Business Today (6th April 2015) The first phase of the Japanese-backed Thilawa Special Economic Zone (SEZ) project will be completed and put into commercial operation by June, an official report said. The entire facility, which is expected to complete by 2016-17, will create some 40,000 job opportunities, the report said. INVESTMENT Japanese Banks to Open in Yangon Source: Mizzima (4th April 2015) The Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp said Thursday they will set up branches in Myanmar later this month as the country's central bank has issued permission for foreign banks to begin operations, according to the Bangkok Post April 2.BTMU and SMBC will open the branches April 22 and 23 respectively in Yangon to begin offering loan, settlement and deposit services to Japanese companies operating there. The two banks as well as Mizuho Bank are among nine foreign banks that Myanmar approved last October for opening branches in the country, opening up its banking sector to overseas banks for the first time in more than five decades. Mizuho Bank is also preparing to open a branch in the country. Japan's investment in the country accounts for less than 1 percent of the total foreign investment, leaving much room for the three banks to help Japanese firms launch projects through their financial services. Foreign Stock Investors to be Tightly Controlled Source: Myanmar Business Today (6 th April 2015) Tight restrictions will be imposed to prevent foreign investors from controlling the stock bourse before the Yangon Stock Exchange (YSX) opens in October, said chairperson of the Securities and Exchange Commission of Myanmar (SECM). Currently, the SECM doesn t give permission to foreign funds and institutional investors to invest instantly in the YSX. Dr Maung Maung Thein told local media that the commission will use the Company Act to control foreign investment, and that allowing foreign investors to invest freely will drive the smaller local players out of business. JICA, MPA Sign Port Modernization Grant Deal Source: Myanmar Business Today (7 th April 2015) Myanmar Port Authority (MPA), Ministry of Transport and Japan International Cooperation Agency (JICA) have signed a grant agreement for a port modernization project, JICA said. The amount of the grant aid for the Project for Port EDI for Port Modernization is 1.72 billion ($14.38 million), the Japanese development agency said.jica said the project will improve the port-related procedures, berth allocation, invoice issuance, statistics management and logistics monitoring systems of Yangon Port. The project aims to accelerate Myanmar s economic growth by modernizing cargo handling system and operation of Yangon Port, a major cargo port of Myanmar, it added. The total duration of the project is expected to be two years.
Bibby Clinches Myanmar Offshore Vessel Contract Source: Myanma Business Today (4 th April 2015) Bibby Offshore, a Scottish provider of subsea installation and services to the offshore oil and gas industry, announced that its Asian Division, Bibby Offshore Singapore (BOS), has secured a contract with the Moattama Gas Transportation Company (MGTC). MGTC, a joint venture between Total, Unocal, PTTEP and Myanmar Oil and Gas Enterprise, has appointed BOS to provide ROV pipeline inspection, remedial work and associated project management on its Southeast Asia asset offshore Myanmar, the Aberdeen-based. Bibby Offshore will supply its DP2 ROV support vessel, Bibby Spring. The vessel is equipped with dual ROVs, including the latest 150HP, 3000m-rated SMD Quasar, and complemented by a Lynx lightweight ROV suitable for dive support, inspection and repair. The 60-day project on the Yadana field in the Andaman Sea commenced in February, and will be carried out in water depths of up to 146 meters. Earlier this year, BOS secured a contract with Singapore based subsea service provider Seascape to provide ROV services for its DP2 dive support vessel the Windermere, further highlighting the company s continued success in Asia.Bibby Offshore has enjoyed steady growth since 2003 and now employs more than 1,450 people onshore and offshore worldwide, with offices in Aberdeen, Liverpool, Newcastle, Singapore, Trinidad, Houston, and Norway. The company has an international fleet of seven subsea support vessels and 17 ROVs, and said will continue to add to its fleet to meet demand. Singapore Tops List of Investors in Myanmar Source: Eleven Myanmar (1st April 2015) Singapore tops the list of 27 foreign countries with investments in Myanmar for the 2014-15 fiscal year, according to Directorate of Investment and Companies Administration. Between April and February, foreign investment amounted to US$7.8 billion and went into the oil and gas sector, energy, commodity production, transportation and communication, mineral extraction, tourism, real estate, agribusiness and fishing. From the start of Myanmar s economic reforms until February 2015, Singapore's accumulated investment reached $8.47 billion. In the 2014-15 fiscal year, Singapore was followed by the UK ($850 million), Hong Kong ($619 million), and China ($516 million). YCDC Promises 45-day Wait for Licences Source: Myanmar Times (6th April 2015) Yangon City Development Committee has pledged to lower the wait time for applying for contractor licences from months to weeks, partly as the number of applicants decreases. We were receiving between 80 to 100 contractor applications for licences every month, but the number is now decreasing, YCDC deputy head of building department U Nay Win said. Now we receive about 20 licence applications a month, and arrange an interview before we give permission to them. Previously the department had been too busy to regularly hold interviews, meaning as few as four a month were held.would-be contractors must sit through an interview with YCDC officials to discuss their education, experience, ownership and citizenship in order to receive a licence. Each licensed contractor is allowed to build 15 buildings in total over the length of the licence, he said. If a contractor applies for a licence, we will try to get it to them in 45 days. The number of applicants for contractor licences shot up in 2011, as the construction industry started to boom. Recently, interest in the licences has waned, which U Nay Win said is caused by a few factors. YCDC has changed the amount contractors must deposit for licences from K10 million (US$9670), to K50 million which has priced some would-be entrants out of the market. Existing contractors were required to add in the additional K40 million with the rule change, though some contractors avoided paying.
OCBC Receives Final Approval to Open Yangon Branch Source: Mizzima (3rd April 2015) OCBC Bank is one of the first three foreign banks to have received final regulatory approval from the Central Bank of Myanmar to open a branch in Myanmar, reports Channel News Asia on April 2. The approval follows the award of provisional banking licenses on October 1, 2014 to nine foreign banks, including Singapore's UOB. OCBC's Yangon branch will start operations on April 23. It will offer banking services such as cash management, project financing, and trade finance. It will also offer treasury and capital markets advisory and services to foreign companies and joint ventures, as well as domestic banks in Myanmar. Customers will be able to open current and savings accounts denominated in Myanmar Kyat, US Dollar and Singapore Dollar, take up loans and apply for trade and foreign exchange facilities. The Oversea-Chinese Banking Corporation Limited, abbreviated as OCBC Bank, is a publicly listed financial services organisation with its head office in Singapore. The OCBC Bank group comprises a family of companies owned by island s state s longest established local bank. MIC Accepts Investments from 77 Companies in First Quarter of 2015 Source: Eleven Myanmar (28th March 2015) Myanmar has invited 77 local and foreign companies to make investment in all sectors of the economy, including oil and gas exploration, commodity goods production and hospitality, in first quarter of 2015, according to the Myanmar Investment Commission (MIC). The MIC met five times between January and March, 2015. The permissions were granted at the request of regional governments, Union ministries and other organisations. The investments are expected to boost local employment opportunities. Foreign investment in Myanmar has increased over the last four years as foreign investors were permitted to lease state-owned land in addition to private property, to transfer ownership of businesses to foreigners under the guidance of the MIC and to transfer money with fewer restrictions. DICA Extends Consultations for Investment Law Source: Myanmar Times (2nd April 2015) A government body has extended the period of public consultations on the draft investment law until the end of April following complaints that the time allocated to consultation was too limited. The Directorate of Investment and Company Administration (DICA) previously allowed 16 days for public consultation after launching the process on March 10. The Directorate has now extended the deadline to the end of the current month. The plans is to combine into one document the Myanmar Citizens Investment Law, which governs investment by locals, and the Foreign Investment Law, which governs investment by foreign entities. The drafters hope the combination will help remove incongruities between the two laws, while also bringing them up to date on ASEAN investment agreements.the Foreign Investment Law was passed in 2012 and the Myanmar Citizens Investment Law in 2013. The new draft also received significant support from the International Finance Corporation, including with the actual drafting. Human Rights Watch previously criticised the consultation process, saying Myanmar s government has failed to engage in meaningful public consultation on the law, which could have a profound impact on human rights in the country. It added consultations should be extended. The organisation s senior international financial institutions advocate Jessica Evans said in the release that the government s consultations had come up short. The updated draft version of the law has several parts, covering the Myanmar Investment Commission, admission of investment, treatment of investors, investment incentives, dispute prevention and resolution. Foreign investment in Myanmar Sees Sharp Rise Source: Mizzima (23th April 2015) Myanmar received record foreign direct investment of more than US$8 billion in the 2014-15 financial year, according to Deal Street Asia on April 22. According to the Directorate of Investment and Company Administration, foreign direct investment in Myanmar has grown sharply since 2012 and in 2014-15 nearly doubled from the year before. The 2013-14 financial year saw $4.1 billion in foreign
direct investment. Among the sectors attracting foreign investment during the fiscal year ended on March 31, the oil and gas sector led with $3.2 billion, followed by transport and communication with approved capital of $1.7 billion, manufacturing with $1.5 billion, real estate with $780 million and hotel and tourism with $360 million, according to the report. Myanmar has a target of $6 billion in FDI in the current 2015-16 budget year, according to an official. Myanmar received $54.2 billion in foreign direct investment from 895 permitted companies from 38 countries from 1988-2015. China remains the top investor in Myanmar, with 74 Chinese enterprises having invested $14.8 billion, followed by Thailand with $10.3 billion and Singapore with $8.8 billion. Mitusbishi Acquires 30pc of CDSG to Foray Into Food Manufacturing and Distribution Source: Myanmar Business Today (6th April 2015) Local conglomerate Capital Diamond Star Group Ltd (CDSG) and Mitsubishi Corp have formed a joint venture to engage in food manufacturing and distribution businesses throughout Myanmar and regionally, the firms announced.mitsubishi will acquire up to 30 percent equity stake in existing CDSG businesses to form the joint venture, Lluvia Limited. The joint venture company will leverage the expertise and experience of CDSG and Mitsubishi Corp, the companies said in a joint statement. Lluvia aims to invest over $200 million over the next three years in various businesses across the food value chain in Myanmar, they said.cdsg is a leading food and FMCG (Fast Moving Consumer Goods) player in Myanmar with brands like Premier coffee, Premier milk powder, Tea Master tea-mix, Blue Rocket wheat flour, and Diamond Star wheat flour. In addition to being a top supplier of wheat flour and instant beverages, CDSG is also involved in agricultural commodity trading, fertiliser and agro chemicals distribution, and retail businesses. It said Lluvia aims to work with farmers to facilitate access to capital and enhance farming techniques through knowledge transfer from Mitsubishi Corp and its network of partners. Trade Deficit Swells to $4.9b in FY2014-15 Source: Myanmar Business Today (6th April 2015) Myanmar registered a trade deficit of $4.9 billion in the fiscal year 2014-15 that ended on March 31, figures from the Ministry of Commerce showed. With total foreign trade amounting to $27.79 billion during the period, exports racked up $11.45 billion while imports cost $16.34 billion. Myanmar s trade has seen unprecedented growth recently, following the end of dictatorship in 2011. The semi-civilian government s reform efforts encouraged major world powers to drop sanctions and engage deeper with the former pariah state, fuelling growth in trade and investments. According to the Central Statistical Organization, Myanmar suffered a trade deficit of $2.65 billion in the fiscal year 2013-14, when it registered a total trade volume of $24.86 billion - meaning deficit has ballooned more than 87 percent in the recently-ended fiscal year. In 2013-14 exports stood at $11.1 billion and imports were worth $13.76 billion, in 2014-15, Border trade accounted for $4.22 billion of the total export and $2.35 billion of the total import, the ministry data showed. Myanmar mostly exports agricultural produce, animal by-products, fishery products, mine and forest products while imports consumer products, raw materials and investment goods. To tackle the trade deficit, the government is planning to implement the National Export Strategy, which focuses on seven sectors rice, beans and pulses, fisheries, textiles, timber and forestry products, rubber and tourism. OCBC Receives Yangon Branch Approval Source: Myanmar Business Today (7th April 2015) Singapore s OCBC Bank became one of the first three foreign banks to have received final regulatory approval from the Central Bank of Myanmar (CBM) to open a branch in Myanmar. The final licence was awarded on April 2, and the OCBC Yangon Branch will start operations on April 23. The approval follows the awarding of provisional banking licences by the CBM in October to nine foreign banks from Singapore, Malaysia, Thailand, China, Japan and Australia. OCBC said its Yangon branch will offer banking services including cash management, project financing, working capital financing and trade finance, as well as treasury and capital markets advisory and services to foreign companies and joint ventures, domestic banks in Myanmar.The bank said it can also provide banking services to local corporates in partnership with local financial institutions. Customers will be able to open current and savings accounts
denominated in Kyat, US Dollar and Singapore Dollar, take up loans and apply for trade and foreign exchange facilities, it added. OCBC said it will be among the first foreign banks to offer internet banking facilities to corporate customers in Myanmar. With its business internet banking platform, Velocity@ocbc, customers will have access to their bank accounts and may initiate payments from anywhere. The new branch has a registered capital of $ 75 million and is staffed with over 20 employees, more than half of whom are Myanmar nationals. Daniel Tan, currently the general manager designate, will assume the role of general manager of the branch, OCBC said in a statement. The new branch will be located on the second floor of the Union Financial Centre (UFC), at the corner of Mahabandoola road and Thein Phyu road. OCBC has had a presence in Myanmar for 60 years, having first operated as a branch for 40 years from 1923 to 1963, and subsequently as a representative office in Yangon over the past 20 years. Westerners Still Shy to Put in Investment: Official Source: Myanmar Business Today (24th April 2015) As a low number of Western investors have come forward to submit tenders for public works projects, the government has been left with only a few countries to choose from, a government official said. Even though there are tender invitations open to both local and foreign investors for some projects, only a few Western countries have shown interest, Dr Wah Wah Maung, deputy director at the Foreign Relations Department under Ministry of National Planning and Economic Development, said. Most of the tender biddings come from ASEAN countries, she added. The deputy director said Myanmar needs to diversify its foreign investor base to prop up economic growth, adding that investors would only come if the country has stability and skilled workers, as they need to invest huge amount of money. Only few economically developed countries have submitted tenders for government projects, and most of them are investing in natural resources exploitation, he added.u Zeyar Aung, chairman of Myanmar Investment Commission (MIC), in his recent report to the parliament stated that there are 522 companies investing in Myanmar, with investments valued at $39 billion. Currently, EU member countries including Britain, France, Netherland and Sweden are investing in Myanmar. Singapore, Vietnam, Malaysia, Thailand, Hong Kong and India are the major regional investors. RESIDENTIAL Affordable Housing Sold in Instalments Source: Myanmar Times (7 th April 2015) Affordable housing being built in Mandalay by the Ministry of Construction will be sold using an installment system, according to U Kyaw Kyaw Lwin, head of the Department of Human Settlement and Housing Development. Installments will be due over a four-year period, and the system is being used to make the housing more affordable, he said. The price has not yet been revealed, but U Kyaw Kyaw Lwin said he has proposed a price to the Department s head office.the development is located in Mya Yi Nandar Ward of Chanmyathazi Township in Mandalay. The large-scale project is being built by the ministry s Special Construction Group (6) and seven private companies. The project began in July, and is set to include 27 buildings of four storeys. Each storey will have four units measuring 650 square feet. We have ordered construction to be completed in April, said U Kyaw Kyaw Lwin. They shall transfer the buildings to the department in May. After that, we will sell them to those who have real difficult in owning a residence. The department has a number of other construction projects planned, including a 22-building development in the same ward as the current project, with a total of 880 units planned. The head office s planning department has nominated some tender applicants, he said. The buildings will be built in May after the tender winner has been confirmed. Low-Cost Housing Now Much Cheaper Source: Myanmar Times (3rd April 2015) A planned low-cost housing plan will sell units for between K7.5 million (US$7200) and K9 million, a departure from other recent government low-cost housing options which had been several times more expensive. Construction at the new project will begin in April
on 15 acres in Hlaing Tharyar township s Shwe Lin Ban industrial zone, said zone management committee secretary general U Nay Lin Zin. The contract is being run by the Department of Human Settlement and Housing Development, with work slated to be finished by the end of the year. Presidential advice to promote the low-cost project was put in place by deputy construction minister U Soe Tint to rent the 15 acres on the Shwe Lin Ban industrial zone to put up 28 buildings, each of five storeys, according to industrial zone officials.each building includes apartments measuring 18 by 18 square feet, for a total of 324 square feet. The costs will be between K7.5 million and K9 million.the units are intended only for people working at the industrial zone. Human Settlement and Housing Development director general Colonel Min Htein said the Shwe Lin Ban project began in 2012, with the first phase already finished and work on the second phase starting soon. Among the 28 buildings, four will be built by the Department of Human Settlement and Housing Development, and another eight will be built by the industrial zone for its workers. The others will be built by the construction company which wins a later tender. U Nay Lin Zin said 1200 people have applied for the 240 units in the eight buildings. New Affordable Flats to be Sold Under Instalment Plan Source: Eleven (April 2015) Residential flats of the Ayawon and Yadana housing projects will be sold under an instalment plan through the Construction and Housing Development Bank (CHDB), according to the bank. The 18-storey affordable housing projects, which is being implemented on 220 acres of land in Dagon Myothit Seikkan Township, includes 20 apartment buildings in the first phase, 13 in the second phase and 16 in the third phase. The project will house about 100,000 people. The first phase of the projects comprises 7,200 flats and will be sold according to an instalment plan in October, according to Kyaw Soe, the Yangon Region Minister for Construction, Forestry and Energy.Buyers will have to put down a 30 per cent down payment and pay off the rest within four years. Some buildings of Ayawon and Yadana housing projects will be completed by September, according to the Department of Human Settlement and Housing Development. These low-cost and affordable housing projects are being constructed in Hlaingthaya, Dagon Myothit Seikkan and north Dagon Myothit townships. New Housing in Dagon Seikkan Township to Go on Sale in October Source: Eleven Myanmar (6th April 2015) Newly built apartments under the Yadanar and Ayerwut affordable housing projects located in Dagon Seikkan Township, Yangon, will go on sale in installments beginning in October, according to Kyaw Soe, the Regional Minister of Construction, Forestry and Energy. The first phase of the housing projects, carried out by the Department of Human Settlement and Housing Development, consists of 7,200 units and will be sold according to the instructions from the Ministry of Construction and the Yangon regional government. Many such housing projects are underway in places such as Hlaingtharyar, Dagon Seikkan and North Dagon, but most are too expensive for low-income people. Those who can afford them must win the purchasing rights in a lottery. The apartments that have already been sold in North Dagon township costs between Ks 200,000 and Ks 300,000. New affordable apartments in the Hlaingtharyar area, located on the outskirts of Yangon, cost between least Ks 110,000 and Ks 125,000. There have been several cases in which lottery winners have been unable to afford deposits for the apartments. INDUSTRIAL Foreign Insurance Firms Get Green Light Source: Eleven Myanmar (5th April 2015) Myanmar Insurance, the state-owned insurance company, has announced the completion of rules and regulations for foreign firms to operate in special economic zones, adding that foreign companies will be required to pay a US$30,000 licence fee. They would be allowed to operate in special economic zones (SEZ) such as Thilawa, Kyaukpyu and Dawei which were under construction, it said.
The process to create rules and standards for foreign insurance companies entering Myanmar is finished. A foreign company will need to pay US$30,000 for a licence fee to enter the SEZs. Myanmar companies which have already paid their fees will not need to do so again," said Dr Maung Maung Thein, chairman of the Insurance Business Supervisory Board. Currently, 15 companies from Europe and Asia are allowed to open offices. REFORMS New Property Tax Rates can Spur Demand for Real Estate Market Source: Myanmar Times (24th April 2015) Real estate agents are extending a cautious welcome to a change in the tax laws that could stimulate the torpid property market. A combination of anxiety over the coming election and backlash against huge price surges over the past few years has had a significant cooling effect on the property market since at least the start of the year. The tax cuts are expected in particular to revive interest in the low-to-middling K100 million to K1.5 billion range, where sales taxes have been cut by multiple percentage points. For instance, a K500 million property whose sale would have been taxed at 30 percent under the old law will now be taxed at only 5pc.The Union Tax Law 2015 was printed in state-owned media on April 5 following final approval by Pyidaungsu Hluttaw. It came into effect on April 1. The lowest tax rate of 3pc applies on deals up to K100 million (about US$100,000). Up to the K500 million level the new tax will be 5pc, rising to 10pc for properties up to K1 billion, 20pc for up to K1.5 billion, and a ceiling of 30pc for properties valued at above K1.5 billion. These taxes are payable by the buyer if they cannot show the source of their income. Sellers pay a flat 10pc rate. In addition, property sales are subject to stamp duty for buyers, set at 5pc of value in Yangon, Mandalay and Nay Pyi Taw, and 3pc in other cities. Previously, all property transactions incurred a 30pc tax payable by the buyer if they could not show the source of the income. Last year, however, the government introduced once-in-a-lifetime tax relief for transactions below K300 million, which set the tax at 3pc for purchases up to K50 million, 5pc on transactions worth up to K100 million, 10pc for deals worth up to K150 million and 20pc for up to K300 million.but tax officials are not convinced that the lower rates will encourage more buyers to pay the tax. Real estate prices boomed in Yangon after the government of President U Thein Sein took office in 2011 after decades of military rule and economic stagnation, and introduced a raft of political and economic reforms. Since 2012, real estate values have skyrocketed all over the country, particularly in Yangon and Mandalay. At one point, prime office space in Yangon was priced comparably with Singapore and Manhattan. Median prices for properties situated along Yangon s main roads reached unprecedented highs of K700,000 to K1 million (US$680-970) per square foot, with Pyay Road and Kabar Aye Pagoda Road the most lucrative areas in the city. India to Build IT Institute in Mandalay Source: Myanmar Business Today (6th April 2015) The International Institute of Information Technology, Bangalore (IIIT-B) is collaborating with its counterpart in Mandalay to build information technology institute in Myanmar s second largest city, the Indian Embassy in Yangon said. The Mandalay Institute of Information Technology, which is the center of excellence for IT modeled on IIIT-B is being implemented. For next step, the entrepreneurship development institute in Yangon is also in the process of tying up with Indian Institute of Management, Lucknow (IIM- Lucknow). India has also provided support to English language department in Yangon University and a language laboratory for Ministry of Foreign Affairs to enable its officials to learn foreign languages.
Govt Targets 10% for Tax to GDP Ratio Source: Myanmar Times (6th April 2015) Finance Minister U Win Shein said the country has aimed to increase the tax to GDP ratio to 10 percent this year. Myanmar has the lowest tax-to-gdp ratio in ASEAN, at 8pc in 2014-15, though it has improved markedly since 3.7pc three years ago. The minister said he hopes foreign investment will grow and the tax base will widen with more businesses entering, which will increase revenue, he said. As previously reported, Kanbawza Bank was the largest taxpayer last year, paying K17 billion, while Myawaddy Trading was the largest commercial taxpayer with K10 billion, for the 2013-14 fiscal year. The ministry also plans to open offices for mid-sized taxpayers soon, after achieving strong results from opening the Internal Revenue Department s Large Taxpayer Office in April 2014, which coincided with a switch to self-assessments. The state generated K4.3 trillion (US$4.18 billion) in tax income in 2014-15, about K300 billion over its target. It hopes to reach tax revenues of just less than K5 trillion for the current 2015-16 fiscal year.increased tax collection is important for the government to boost spending in areas like electricity distribution, supporting education rural development and providing drinking water, according to government officials. Myanmar is also tackling a widening government budget deficit, which could be helped by increased tax revenue. Tax could also decrease in certain areas, such as on imported petroleum, since the world price has declined, an official said. Thura U Thaung Lwin, chair of the Tax Advisory Board, said there are nearly 320,000 taxpayers paying through township offices, and about 16,500 paying tax through the Company Circle Tax Office. He added most companies do not register with the Internal Revenue Department and still fail to pay taxes. Region Prepares to Scrap Customs Tax Source: Eleven Myanmar (4th April 2015) As part of the plan to establish the Asean Free Trade Area (AFTA), Cambodia, Laos, Myanmar and Vietnam (CLMV) will be removing customs taxes in 2018. CLMV have exempted up to 60 per cent of trade lines which is over 4,200 lines in 2008, up to 80 per cent by 2012 and until January 1, 2015, 93 per cent. The remaining 7 per cent will be included in the exemption by 2018, said Kyaw Win, director of the Customs Department.The exemption of custom tax began in 1991. Kyaw Win said: The items in the inclusion list will benefit from tax exemption or lower tax rates. Those in the general exemption list normally consist of security equipment and antiques. For items included in the sensitive list, there will be a 5 per cent tax. There are 9,558 trade lines covered currently.
Colliers International Accelerating success. www.colliers.com Unit 7/C (6 th Floor), White Cloud Building (Right Entrance), No. (138/142) Thein Phyu Road, Botahtaung Township Yangon Myanmar. Yee Mon Cho Senior Analyst Mobile +95 (0) 95047334 Yeemon.Cho @colliers.com Karlo Pobre Manager Research & Advisory Mobile +95 (0) 9795733378 Karlo.Pobre @colliers.com Antony Picon Managing Director Main +95 (0) 9421034026 Antony.Picon@colliers.com Likes us on Facebook: Colliers International Myanmar Follow us on Twitter: @ColliersMyanmar This weekly news document has been prepared by Colliers International for general information only. Colliers International does not guarantee warrant or represent that the information contained in this document is correct. Any interested party should undertake their own enquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damage arising directly or indirectly there-from.