April 2016 ~ MYANMAR TRADE OFFICE (TAIPEI)

Thursday, April 28, 2016

「昂山素姬—希望的燈塔」

奧巴馬在文章中說，「當我在（美國白宮）橢圓辦公室迎接她的到來時，我即刻被她特有的沉靜與尊嚴所打動。她語調溫和卻充滿堅定與力量，這些來自她為開創緬甸的民主而被軟禁15年的囚徒生涯。兩個月後，當我在昂山素姬位於仰光的家中再次見到她時，我看到她的博愛與慈悲精神來自她對佛法的學習。也正是這些信念和精神支持她一路走過來。」
「如今，昂山素姬不再是昔日的囚徒，她已經成為緬甸國會議員和政黨領袖。她所領導的黨派在去年的選舉中大獲全勝，並正在她的帶領下、50年來首次為緬甸開創了民選政府。緬甸在未來的發展中，還會面臨巨大的挑戰，只有各方在結束長期的矛盾、維護不同族裔和宗教團體的人權下，緬甸的發展才能取得成功，但在民主的體制下，國家的未來一定更加繁榮和強大。」
「昂山素姬曾說：『作為人類，我們依舊缺陷百出。然而，儘管我們在很多方面還不完美，民主卻是每個人希望的燈塔。』同時，昂山素姬女士也是5000多萬緬甸人、乃至世界成千上萬名民眾的燈塔
。」

Markets	Last	Reference	Previous	Range
Currency	1165	Apr/16	1165	848 : 1316
GDP	Last	Reference	Previous	Range
GDP Annual Growth Rate	8.7 %	Dec/14	6.5	3.6 : 13.84
GDP	64.33 USD Billion	Dec/14	53.14	6.46 : 64.33
GDP per capita	824 USD	Dec/11	742	129 : 824
GDP per capita PPP	1325 USD	Dec/11	1255	365 : 1325
Labour	Last	Reference	Previous	Range
Unemployment Rate	4.02 %	Dec/13	4	4 : 4.15
Minimum Wages	3600 MMK/ 8-hour	Aug/15	3600	3600 : 3600
Population	53.72 Million	Dec/14	53.26	21.5 : 53.72
Prices	Last	Reference	Previous	Range
Inflation Rate	15.19 %	Sep/15	10.19	0.28 : 14.18
Consumer Price Index Cpi	212 Index Points	Aug/15	204	183 : 212
Inflation Rate Mom	0.93 %	Sep/15	1.61	0.02 : 3.9
Money	Last	Reference	Previous	Range
Interest Rate	10 %	Mar/16	10	10 : 12
Deposit Interest Rate	8 %	Dec/14	8	1.5 : 12.5
Trade	Last	Reference	Previous	Range
Balance of Trade	-72.2 USD Million	Sep/15	-943	-943 : 593
Exports	1018 USD Million	Sep/15	1024	503 : 1747
Imports	1091 USD Million	Sep/15	1967	334 : 1967
Current Account	-1128 USD Million	Dec/12	924	-1128 : 1961
Current Account to GDP	-7.1 %	Dec/14	-4.8	-14.77 : 6.77
Foreign Direct Investment	381 USD Million	Sep/15	150	21.82 : 2443
Tourist Arrivals	376862	Sep/15	323335	125085 : 323335
Crude Oil Production	16 BBL/D/1K	Oct/15	15	8.01 : 23
Gold Reserves	7.27 Tonnes	Jan/16	7.3	7.18 : 7.3
Terrorism Index	4.08	Dec/15	4.36	3.45 : 4.9
Government	Last	Reference	Previous	Range
Government Debt to GDP	31.6 %	Dec/14	34.8	31.6 : 141
Government Budget	-4.31 % of GDP	Dec/14	-2.03	-7.16 : -0.1
Credit Rating	15			:
Business	Last	Reference	Previous	Range
Competitiveness Index	3.32 Points	Dec/16	3.23	3.22 : 3.32
Competitiveness Rank	131	Dec/16	134	131 : 139
Corruption Index	22 Points	Dec/15	21	13 : 22
Corruption Rank	147	Dec/15	156	129 : 180
Ease Of Doing Business	167	Dec/15	177	167 : 177
Taxes	Last	Reference	Previous	Range
Personal Income Tax Rate	20 %	Dec/15	20	20 : 20
Sales Tax Rate	30 %	Dec/15	30	30 : 30
Corporate Tax Rate	25 %	Dec/15	25	25 : 25

Photo Credit:Yusen Logistics Co., Ltd

Yusen Logistics Co., Ltd. will establish Yusen Logistics (Thilawa) Co., Ltd. in Thilawa, Myanmar's Special Economic Zone (SEZ), and construct a 5,000-square-meter logistics facility. This is the company's first in-house facility in Myanmar.

The Thilawa SEZ, a major industrial complex, is Myanmar's first special economic zone. It is strategically located adjacent to Port Thilawa, which is 20 kilometers southeast of Yangon, a main gateway to international markets. More than 50 companies have opened sites in the complex, which is expected to become a production and sales hub for a variety of industries, including retail, automotive, electronics and food.

With the new facility, Yusen Logistics Thilawa will increase its presence in the region and meet the growing logistics demand, including inventory management, distribution processing and inspection. The company is also planning to provide high value-added services to meet the needs of customers in various industries, such as temperature-controlled storage and bonded warehouse services.

The Group's Medium-Term Business Plan, 'GO FORWARD, Yusen Logistics-Next Challenges,' positions the ASEAN region as a critical region. The Myanmar subsidiary, which began operations in 2014, has offered diverse logistics services, including ocean and air freight forwarding, customs clearance, domestic delivery, factory equipment transportation, and cross border transportation. By combining its diverse range of services with the functions provided by this new facility, the Group will meet the logistics needs of customers in Myanmar.

General information＞

Name	Yusen Logistics (Thilawa) Co., Ltd.
Address	Lot No.C-14 Zone Thilawa Special Economic Zone, Yangon, Republic of the Union of Myanmar
Total site area	About 30,000m2 * Warehouse area (About 5,000m2) * Warehouse expansion will be considered based on demand
Operation start	2017

Credit: Yusen Logistics

Commerce minister to boost trade and target smuggling

The Union Minister for Commerce aims to triple the value of trade within his five-year term and will focus on promoting exports to help reduce the country’s widening trade deficit, as well as tackling smuggling networks to formalise illegal trade.

U Than Myint made the comments during a meeting with traders in Yangon, in which he asked for feedback and suggestions for new economic policies.

“Our country’s exports as a percentage of gross domestic product is very low. To improve this, we must do two things,” he said. The first is to support local industries and improve their quality for export and the second is to find markets for these products. To increase exports threefold, he will focus on agricultural development, encourage small and medium-sized industry and continue to promote the export of natural resources.

“For example, to develop the farming sector, we must improve access to rural finance, and finance for small and mid-sized enterprises,” he said.

Demand for products in the international market will be high, so long as the ministry cooperates with private enterprises and regional associations, he added. Myanmar’s largest trading partners are its neighbouring countries, he added, though trade links with Europe and the US improved during the former government term.

Now the ministry must actively promote new markets in ASEAN, the EU and the US. The new government will continue to follow the national export strategy drawn up by the previous administration, and will try hard to combat illegal trade.

“Some say the value of illegal trade is as high as the value of legal trade. It is difficult to study this systematically. It is a very difficult problem and can only be solved by cooperation between many associations,” the minister said.

He did not directly answer questions about how the new government planned to eradicate smuggling. In December, the former government abolished a mobile taskforce charged with preventing illegal goods from entering the country.

Government officials said at the time that immediate action to control illicit trade following the mobile taskforce’s abolition, such as opening more border gates, punishing illegal traders and developing an electronic system for border checkpoints, would not be taken.

U Than Myint said that the teams had been effective. “It is better to stop illegal trade through respective regional authorities than through the central government. We will [tackle smuggling] using this system,” he said.

Everyone must cooperate for the project to be successful, he said, adding that it depends on the rule of law. “There are many sectors where we need to take action against smugglers. We must do this as a national duty and authority must be given to regional associations,” he said.

Credit: MMTIMES
Translation by Khine Thazin Han

2016 Trade Shows In Myanmar

仰光（图片 - 沉积物/伊洛瓦底江)

由於去年的洪水災害緬甸約有5分之一的農業用地被破壞了，但緬甸的經濟在2016年-2017年初預估成長率大約8.4％，在亞洲和太平洋區域是最高的，根據亞洲開發銀行(ADB)亞洲發展展望2016 年的報導。

2011年緬甸經濟和政治改革開始,自2012年國內生產總值逐年成長率超過6％，然而在2015年緬甸受到天然災害及社會問題，經濟損失約1.5億美金相當於國內生產總值3％，農業受災害的損失率 30％，影響就業率60％。

雖然受天然災害的影響但製造業產品出口成長率為28％約2億美金及天然氣出口略有增加。政治開放和旅遊業的開發已成為經濟成長的動力。2015年旅遊人數為470萬成長率70％，消費成長率19％消費金額為2.1億美金。

緬甸必須保持改革與不確定性對政府的表現及氣候效應的挑戰，2017年緬甸的良好前景仍然是「成為亞洲開發最快速的國家」經濟成長率可保持8.3％。(亞洲發展展望報導估計)

Image Credit: Myanmar flag via Shutterstock.com

U.S. energy giant Chevron is offering up for sale its entire gas block stake in Myanmar, valued at an estimated $1.3 billion, Reuters reported in an exclusive earlier this week. Chevron has purportedly already started working with an American investment bank with regards to a potential sale.
If the deal goes through, it would mark the biggest sale involving Myanmar’s assets, eclipsing the previous record of Singapore’s Sea View Hotel Ltd’s $1 billion purchase of a hotel property in 2005. Analysts have argued that it could set the tone for future deals in Myanmar, boosting claims that the country is now more open for business under the new democratic government led by the National League for Democracy (NLD). In that vein, the deal is likely to be watched closely by state, institutional and corporate investors alike.
The Chevron assets that are up for grabs include a 28.3 percent ownership in the Yadana and Sein gas fields and a 99 percent stake in exploration Block A5 in the Rakhine Basin. These are designated as non-core assets by Chevron. Sources say that buyers would be keen to acquire all three assets bundled together.
Chevron’s move to pull out of Myanmar is not at all an indication of the latter’s dampened economic prospects. Rather, it is better understood as a bid to boost cash reserves and retreat from non-core assets in the wake of sliding oil prices. Prices of brent crude have declined by over 60 percent since June 2014. Depressed prices are also not likely to rise anytime soon since the OPEC producer cartel recently failed to reach an agreement to halt the glut in oil supply by freezing production at January levels.
More broadly, Chevron’s asset sell-off in Myanmar should be seen in light of the company’s strategy to sell off assets for hard cash and focus on high-risk high-return exploration projects. Chevron put up its geothermal energy blocks in Indonesia and Philippines, valued at about $3 billion, for sale in early April 2016. The sale, managed by Citigroup, saw the usual suspects – Japan’s Marubeni, a Chinese sovereign wealth fund China Investment Corp, as well as Malaysian (Malakoff), Filipino, and French companies (Engie) – expressing interest in bidding. In recent years, Chevron has also sought to sell its 50 percent stake in Caltex Australia as well as its assets in Hawaii.
Despite the doom and gloom in the oil market, Myanmar’s assets remain attractive not just because of export markets like China and Thailand, but also a growing internal domestic market, according to Singapore-based analyst Adrian Pooh at energy consultancy Wood Mackenzie. Australia’s Woodside Petroleum, Thailand’s PTT Exploration and Production, Japanese trading houses, and Chinese companies, among others, may feature in the potential buyer list.
Woodside, which already has 20 percent of its exploration acreage in Myanmar, has recently discovered gas in block A-6 of the Rakhine Basin near Chevron’s A-5 block and thus would reasonably be interested in enlarging its holdings. Power plants in Thailand primarily get their energy from the Yadana and Sein gas fields currently operated by French company Total SA, hence the Thai interest in vertical consolidation. The Japanese, flush with cheap capital, will be looking for more ways of securing energy. As for Chinese companies, some say they may hesitate to invest for various reasons including weak demand and corruption investigations which have slowed business decision-making. More generally, Chinese firms have also become more selective in recent years, preferring core assets.
Either way, the Chevron-generated buzz over energy-related M&A in the region has already been read as a positive signal of economic sentiment in general and a boost to Myanmar’s investment climate in particular. Some also hope that it might further encourage the new NLD government to move toward more investment-friendly reform, though that remains to be seen.

Credit: The Diplomat

Trade Shows in Taiwan(April-May)

Apr 22-25,2016	Taipei Int'l Gift & Stationery Show	Gift & Stationery, Promotional Items, Holiday Decorations, Stationery & Art Supplies, School & Office Supplies, Art & Crafts, Houseware & Home Living, Toys & Children's Articles, Bags, Jewelry & Accessories and Brand Licensing.
Apr 22-25,2016	Taiwan SOUVENIR & HANDICRAFT Show	This is the show that has it all when it comes to Taiwan souvenir & handicraft products. Souvenir products range from fine food and wine, local specialties, handicraft items, Festival gifts, wedding gifts...and so much more!
Apr 22-25,2016	Taiwan Houseware & Home Décor Show	Houseware, Kitchen ware, Table ware, Clean and House Cleanning Supplies, Home Décor
May 05-08,2016	Taipei Manufacturing Technology Show	CAD-CAM / Software, Quality Control / Inspection & Measurement Equipment Automation & Control, Machine Tool Components / Attachments / Accessories’ Cutting Tools / Toolholding & Workholding Devices, Tube & Wire Processing Equipment, Laser Processing & Punching Machines, Welding Equipment, Industrial Robot, Cutting Machine Tools, Forming Machinery, Presses , Foundry, Forging Equipment,
May 13-16,2016	The 35th Int'l Young Designers' Exhibition	The largest student design show in Asia. The dynamic young design power from various design disciplines such as fashion design, industrial design, communication design, interior design and so on, for design students and Young Designers, YODEX offers an unparalleled opportunity to interact with each other and provides a valuable experience for pursuing their future careers or business opportunities.
May 31-Jun 04,2016	COMPUTEX TAIPEI	IoT (Internet of Things) applications, PCs, NBs, handhelds, wearables, components & parts, displays, storage products, communication products, peripherals & accessories, embedded products, industrial personal computers, automotive electronics, POS system products, systems, system integration, Cloud technology & services, innovative startups.

မြန်မာကုန်သွယ်ရေးကိုယ်စားလှယ် တိုင်(သ်)၊ လီဆူး၊ ဂျိန်ဖောတိုင်းရင်းသားတို့၏ နှစ်သစ်ကူးပွဲတော်သို့တက်ရောက်ခြင်း

တရုတ်နိုင်ငံ၊ ယူနမ်ပြည်နယ်၊ သိုင်၊ လီဆူး၊ ဂျိန်ဖောတိုင်းရင်းသားတို့၏ နှစ်သစ်ကူး ရေသဘင်ပွဲနှင့် ဆန်ခေါက်ဆွဲပွဲတော်ကို ဧပြီလ ၁၆ရက်နေ့မှ ၂၄ရက်နေ့အထိ Taoyuan City၊ Taiwan၌ စည်းကားသိုက်မြိုက်စွာကျင်းပ ပြုလုပ်ခဲ့ပါတယ်။ အဆိုပါပွဲကို ထိုင်ဝမ်နိုင်ငံ၊ Taoyuan City မြို့တော်ဝန်နှင့်ဇနီး၊ မြန်မာကုန်သွယ်ရေးကိုယ်စားလှယ်ရုံး (တိုင်ပေ)မှ ကုန်သွယ်ရေးကိုယ်စားလှယ် ဒေါက်တာသတ်လွင်ဦးနှင့်တစ်ကွ ထိုင်ဝမ်နိုင်ငံဆိုင်ရာ နိုင်ငံတကာသံအမတ်များ၊ စီးပွားရေးကိုယ်စား လှယ်များ၊ ယဉ်ကျေးမှု ဖလှယ်ရေးကိုယ်စားလှယ်များနှင့် ဖိတ်ကြားထားသောဧည့်သည်တော်များ တက်ရောက်ခဲ့ကြပါတယ်။ ပထမဦးစွာ ကြွရောက်လာသော အထူးဧည့်သည်တော်များအား ပွဲတော်ကျင်းပရေးကော်မတီမှ ရိုးရာအစားအစာများဖြင့်တည်ခင်းဧည့်ခံခြင်း၊ မြို့တော်ဝန်မှ နှုတ်ခွန်းဆက်စကားပြောကြားခြင်း၊ ရိုးရာတေးသီးချင်း တူရိယာများဖြင့်တီမှုတ်ဖျော်ဖြေခြင်းများဖြင့် ကြိုဆိုနှုတ်ဆက်ခဲ့ပါတယ်။

ဆက်လက်ပြီး ညပိုင်း ရိုးရာယဉ်းကျေးမှုအကများဖြင့်ဖျော်ဖြေခဲ့ရာ မြန်မာကုန်သွယ်ရေးကိုယ်စားလှယ် ဒေါက်တာသတ်လွင်ဦးမှ အဖွင့်အမှာစကားပြောကြားပြီး ဖျော်ဖြေပွဲကို စတင်ခဲ့ပါတယ်။ ပွဲကို ည၉နာရီအချိန်မှာ အောင်မြင်စွာ ကျင်းပြီးစီးခဲ့ပါတယ်။

Photo Gallery-2

Photo Gallery-1

Taiwan-ASEAN investment Strategic Partnership Forumကျင်းပခြင်း

Taiwan-ASEAN investment Strategic Partnership Forumပွဲသည် ထိုင်ဝမ်-အာဆီယံကြား ပထမဆုံးအကြိမ် ကျင်းပပြုလုပ်သည့် ရင်းနှီးမြှပ်နှံမှုဆိုင်ရာ ဖိုရမ်တစ်ခုဖြစ်ပါတယ်။ ဖိုရမ်တွင် အာဆီယံနိုင်ငံများမှ ရင်းနှီးမြှပ်နှံမှုဆိုင်ရာ အစိုးရ/ပုဂ္ဂလိက အဖွဲ့အစည်းများ ပါဝင်တက်ရောက် နိုင်မှာဖြစ်ပါတယ်။

ထိုင်ဝမ်အစိုးရမှ လက်ရှိပြည်မဘက်တွင်ရှိသော ရင်းနှီးမြှပ်နှံမှုများကို အာဆီယံနိုင်ငံ များသို့ ပြောင်းရွှေ့လိုသည့် ရည်ရွယ်ချက်ဖြင့် ယခုဖိုရမ်ကိုကျင်းပရခြင်းဖြစ်ကြောင်း အဆိုပါဖိုရမ်သို့ တရုတ်၊ အာဆီယံနှင့် အာရှနိုင်ငံများတွင် ရင်းနှီးမြှပ်နှံမှုပြုလုပ်နေကြသော ထိုင်ဝမ်ကုမ္ပဏီများ၊ အဖွဲ့အစည်းများ တက်ရောက်ကြမှာဖြစ်ပါတယ်။

ဖိုရမ်ကို ၂၀၁၆ခုနှစ်၊ ဂျူလိုင်လ၁၃ရက်နေ့ နံနက်(၀၉းဝဝ)နာရီမှ ညနေ(၀၅းဝဝ)နာရီထိ Taipei International Conference Center ၊ အခန်း(၂၀၁)တွင်ကျင်းပပြုလုပ်မည်ဖြစ်ပြီး မြန်မာနိုင်ငံမှ ပါဝင်တက်ရောက်လိုသည့် ကုမ္ပဏီများ၊ အဖွဲ့အစည်းများလည်း ပါဝင်တက်ရောက်နိုင်ကြောင်း သတင်းရရှိပါတယ်။

Tentative Agenda

Trade Show in Myanamr(April-May)

Trade Show In Myanmar (April-May)

April 1-3,2016	PLASTICS MYANMAR(Tatmadaw Exhibition Hall)	International Plastics Exhibition
Apr 12-15,2016	MYANLIGHTING(Myanmar Convention Centre )	International Lighting Exhibition in Myanmar
May 12-15,2016	MYANMAR INTERNATIONAL BUILDING MATERIAL, HARDWARE & TOOL EXHIBITION(Myanmar Convention Centre)	International Trade Show for Building Materials & Hardware Tools
May 12-15,2016	MYANMARWOOD(Myanmar Convention Centre)	International Wood Processing Machines, Cutting Tools & Hand Tools Fair
May 19-20,2016	GLOBAL OIL & GAS MYANMAR(Sule Shangri-La Hotel)	Oil & Gas Exhibition and Conference
May 19-21,2016	BUILDTECH YANGON(Myanmar Convention Centre)	Building Technology and Supply Expo for the Construction Industry. BuildTech Yangon will feature the latest in construction machines, construction vehicles and equipment, materials for building and construction, electrical and mechanical

Doubts Raised Over Chinese Oil Refinery Plan

A Chinese-led US$3 billion plan to build Myanmar’s largest oil refinery near the southern city of Dawei has raised questions about China’s strategic intentions in launching apparently commercially unviable projects, while local groups have already signalled their opposition.

A sign offers directions to a planned deep sea project in Dawei in 2012. Photo: EPA

Guangdong Zhenrong Energy Co, a Chinese state-controlled commodity trader, said the Myanmar Investment Commission (MIC) had signed its approval at a ceremony in Nay Pyi Taw on March 29 – the last full day in office for U Thein Sein’s government.

That day Guangdong Zhenrong also signed an agreement to take a 70 percent stake in the project consortium with military-linked Myanmar Economic Holdings Limited, state-owned Myanma Petrochemical Enterprise (MPE) and Yangon Engineering Group which is controlled by Htoo Group. The MIC confirmed it had signed its approval.

The headline figure of $3 billion would put the project among the biggest single foreign investments for Myanmar and mark another step in China’s “One Belt One Road” strategy of developing overseas markets through mega-infrastructure projects.

It would also pit China against other Asian interests on the narrow strip of land between Thailand and the Andaman Sea. Thailand has long been in discussions to build a deep-sea port in Dawei as part of a special economic zone and Japan has also said it would invest.

An official of what was the ministry of energy – now merged by the new government with the ministry of electric power – said the Chinese company had been aiming for this project for seven years. He said MPE, which runs Myanmar’s three small ageing refineries, had joined the project because of an MIC ruling in 2015 that foreign investments in petro-chemicals had to be joint ventures.

Industry rivals who had considered but rejected a similar project told The Myanmar Times that the Chinese-led venture, which includes an oil terminal, did not make sense.

“Dawei does not make sense for a deep water port,” said one industrialist who asked not to be named, having estimated it would cost some $1 billion to build because of problems of sandbars and dredging. “The refinery is too small to be viable,” his business partner added.

The planned refinery would have an output of 100,000 barrels per day (bpd) – more than the combined output of Myanmar’s existing refineries, but still not big enough to compete with refineries in Asia operating on slim margins but with an output of at least 600,000bpd.

The industrialists and analysts also noted that China had meanwhile cancelled, or indefinitely postponed, plans to build a refinery in Kunming, the provincial capital of Yunnan, that would have used oil coming through the pipeline that crosses Myanmar to the Indian Ocean off Rakhine State.

As a result that pipeline is now little used, raising further questions about the sense of some of China’s flagship projects in Myanmar.

A Yangon-based lawyer, who asked not to be named, said the Myanmar government had been trying “desperately” to get a refinery “despite most investors warning that, due to low prices and existing surplus in China and India, it might not be easy to make it profitable”. He also noted that the deal had not been the result of a competitive tender.

“A project such as this requires a lot more permits and approvals such as environmental, land use, zoning [and] operating permits. So if a new government wanted to, it can stop the project from going further without too much difficulty. I am not saying they will, just that they could,” he added.

Analysts said China’s main priority appeared to be its plans to build a special economic zone in Rakhine’s Kyaukphyu with its natural deep harbour and access to the oil and gas pipelines leading to Yunnan. They also expect China to drop the controversial Myitsone dam project, as it stands, in northern Kachin State. Apart from its location close to conflict zones and its deep unpopularity, some analysts have also questioned its economic viability.

The Dawei project might only make sense, they said, if the refinery was bigger and had access to a pipeline cutting eastward across to the Gulf of Thailand to tap the Thai market and for onward shipment to southern China.

“Why was it approved?” asked an investment analyst who requested anonymity, noting that it came on the last day of the outgoing military-backed government, suggesting that China “had some favours to call in”.

“Why such a big investment when the commodity market is on its knees, and projects are being shelved everywhere? It’s a nonsensical investment at this stage, but China does not seem to be concerned about cycles,” he added.

A few analysts do see the project as feasible, however. BMI Research, part of Fitch Ratings Group, gave the plan a positive assessment.

“Although the exact timeline for the project is not available, we remain confident that the project will go ahead for the following reasons: The investment is aligned with the strategic interests of both China and Myanmar. The project would allow Guangdong Zhenrong to make inroads into a growing Myanmar market. It will help to alleviate Myanmar’s yawning fuels deficit, which domestic refinery output is not able to meet,” BMI said.

It said chronic under-utilisation of Myanmar’s three ageing refineries meant the country had to import to cover over 60pc of its annual fuel requirements.

BMI estimated that consumption of refined products would rise from under the current 50,000bpd to 60,000bpd by 2020.

President of KWR International Keith Rabin said Myanmar needs a deep sea port and the area is already closely linked to Thailand in terms of its local economy.

“Further, having a refinery in that location which promises to allow petroleum supply from the Middle East to offload and be refined and sent to Thailand as well as Myanmar and other markets makes conceptual sense and can promise benefits in terms of added value, employment and broader economic development – though obviously it will not be easy,” he said.

Commercial or strategic sense aside, the project is likely to face strong local headwinds.

Ko Thant Zin, coordinator of the Dawei Development Association, a civil society group, said the Chinese company had approached the local community four years ago and even took some residents to China.

“But they failed to get our welcome,” he told The Myanmar Times.

The refinery and port would involve moving villages and would pose environmental risks to communities depending on fishing and hopeful of developing tourism.

“Among the community there were strong protests against the project. They did not even let them know about the agreement and approved it within the last minutes of the government transition. It is very strange and can’t be acceptable,” Ko Thant Zin said.

Daw Lae Lae Maw, the new chief minister of Tanintharyi who has worked as a doctor giving free health- care in remote villages, told The Irrawaddy that her priorities would be to develop agriculture and retrieve land confiscated by the former government and military-related holdings.

She also said she would reassess investments in the Dawei seaport project. “If it doesn’t benefit the residents, we have no reason to accept it,” she was quoted as saying.

Credit:MMtimes

Foreign Investment Surge in Doubt

Myanmar's first civilian-backed government in more than 50 years is pledging an open economy and has a raft of new business friendly laws on its side. But it remains unclear whether this will lead to an immediate surge in the volume of foreign investment that the economy desperately needs.

A shop assistant reaches for a product in a drug store. Photo: Kaung Htet / The Myanmar Times

The country represents an almost unrivalled investment opportunity for firms across the globe. The Asian Development Bank said this month that it expects real GDP to have increased 7.2 percent in the 2015-16 fiscal year, and projects 8.4pc for 2016-17. Across a host of sectors the scope for growth is immense.

“Pharmaceuticals, health, agriculture, real estate, infrastructure – they are all going to be massive,” said Edwin Vanderbruggen, a partner at law firm VDB Loi in Yangon. “It’s one of the only spots in the world where in certain sectors growth will jump by double digits every year.”

The DICA numbers do not represent actual investment, but they remain a key benchmark for measuring foreign interest. After a strong finish to 2015-16, Myanmar has entered the new fiscal year boasting a – so far – smooth democratic transition, and has passed a series of new laws favourable to foreign investment.

An amended mining law that could change the economics of that sector for foreign investors was passed in December. An Arbitration Law was enacted in January, meaning Myanmar’s courts now recognise arbitration decisions made in other countries. That same month the government passed a Condominium Law that allows foreigners to own up to 40pc of residential units in a block.

A revised foreign investment law that would potentially reduce restrictions on foreign investments across many sectors will go before parliament this year, as will a new Companies Act.

Officials at the Myanmar Investment Commission, of which DICA acts as secretary, think approved investments are most likely to increase in manufacturing, infrastructure, real estate, transportation and telecoms.

But MIC secretary U Aung Naing Oo also projects annual investment approvals of around $6 billion a year until 2020. That suggests only a modest potential increase, not a sudden surge. People in the international business community are cautious about expecting a sharp rise in investment.

Many foreign companies were undertaking projects in Myanmar – whether exploring opportunities or actual investment – well before the elections, said Martin Jancik, Myanmar country manager for Tractus Asia.

A significant increase in foreign investment will rely on the new government focusing on attracting investment into specific sectors like infrastructure and agriculture, and will not happen overnight simply as a result of the transition, said Mr Jancik.

“It’s more a function of business fundamentals,” he said. “The change in power is positive, but the previous government had already taken steps in laying groundwork for attracting foreign investors, for example, by passing investment friendly laws.

Issuing new laws is less important than applying them in a transparent and predictable way, said Mr Vanderbruggen of VDB Loi, adding that no investor ever set up a car factory because of a new Companies Act.

“People come here for the market [opportunities] not because there are good laws,” he said.

Some of the new laws are steps in the right direction, but do not solve inherent issues. The Condominium Law, for example, allows foreign investors to buy units but it does not solve the issue that foreigners are prohibited from owning land.

This has not stopped joint-venture residential projects aimed at overseas buyers, but will remain a source of uncertainty for foreign investors.

The amended mining law lays the ground for equity and profit sharing agreements between foreign firms and the government.

But even if the details – yet to be announced – of these agreements make new projects viable, it still takes foreign companies years not months to get permits, according to officials at foreign mining firms.

The revised Myanmar Investment Law, which would combine the Foreign Investment Law and the Myanmar Citizens Investment Law into a single piece of legislation, is another step in the right direction.

That would, in theory, allow any investor – foreign or domestic – to invest in “any enterprise in any sector” with the exception of just a few sensitive sectors, according to law firm Allen & Overy.

But until that law and its accompanying regulations are passed, existing and more stringent regulations will remain in place. Investment in many activities still requires a joint-venture with a local firm, and others require both a joint venture and approval from the relevant ministry.

Foreign firms and joint-ventures also face trading restrictions, although there have been signs of a change. Late last year the Ministry of Commerce allowed joint ventures to import chemical fertilisers, seeds, insecticides and hospital equipment.

But this web of restrictions means that liberalisation in one area may have little material impact.

An earlier removal of retail activities from a list of activities prohibited or restricted under the Foreign Investment Law did not bring an influx of investors – despite great interest – because separate import and trading restrictions still applied, said Chris Burkett, senior associate at Allen & Overy.

In areas where foreign investment does not face additional restrictions, there remain a host of difficulties including sourcing adequate facilities, human resources, logistics, corruption and uncertainty over how projects will be taxed.

For US firms, the Specially Designated Nationals list, which contains 38 individuals and 77 entities subject to US sanctions, also creates headaches.

US companies have to undertake considerable due diligence to make sure they are not doing business with people or entities on the list.

But there are other trends that bode well for outside investment. One is the extent to which the government has improved the way it tenders projects across infrastructure – where there is huge scope for foreign firms to get involved.

“The government is at the origination of many projects across mining, infrastructure, oil and gas,” said Mr Vanderbruggen, who has run several tenders for the government.

But the tenders are often structured in such a way – lacking a clear business case for example – that international firms do not bid, he said.

Some come with a very short deadline, which means that international firms are passed over because they request time to run a feasibility study, he added.

But international investors want to bid for transparent international standard tenders, and on transparency at least the previous government made progress, said Mr Vanderbruggen.

Andrew Lee, Myanmar country head for General Electric, is “cautiously optimistic” on the outlook for foreign investment.

“We’ve submitted bids in tender processes for healthcare and power generation projects through our channel partner and developers or contractors – these tenders were very transparent,” he said.

One example is the $300 million Myingyan power plant – set to be one of the largest gas-fired independent power plants in Myanmar – which used an international-standard bidding process under International Finance Corporation guidelines. The tender process took some time to work through, but Mr Lee hopes that tenders will become similar across many sectors, and increasingly in accordance with international standards.

“The country needs billions [of US dollars] to be spent on power plants, transmissions, substations, distribution,” he said. “That’s going to attract a lot of foreign investors, but the Myanmar government is also seeking to work with more international firms that follow these best practices.”

Mr Wicklein of the ADB noted that concessions for operating toll roads are also being competitively tendered.

If the government was able to devote funds to hiring experts to help it build business cases and create a visible pipeline of projects across different sectors this would also raise foreign firms’ incentive to bid for tenders, added Mr Vanderbruggen.

The prospect of 15 toll road projects is much more attractive to foreign firms than a stand-alone tender, he added. At the other end of the spectrum foreign investment can also take the form of foreign firms making equity investments in individual Myanmar firms.

Institutional investors – large entities like pension funds or investment banks – are more eager than in the past to put money to work in Myanmar, said Daw Thiri Thant Mon, managing director at Sandanila, a Yangon-based investment advisory firm.

But those investors also want to see companies that are sufficiently corporatised, she added.

This means companies that hire professional managers and chief executives, have boards, publish results and are essentially run to the same standard as a public company. And until recently Myanmar’s firms have had no incentive to take such steps.

“They didn’t have access to international investors anyway,” she said. “And local investors were groups of people they knew.”

She has found that many firms understand the need to change, although that change will still take time.

“I don’t expect anything in this country to go quickly,” she said. “But then sometimes I’m surprised by how fast things can move.”

Credit:MMTIMES