Oct 2, 2014

Nine foreign lenders gain Myanmar licences

Myanmar has granted nine foreign banks, including three Japanese lenders and Australia's ANZ, coveted licences to operate on a limited basis, the government's biggest move to date to bring in much needed foreign capital to a fast growing economy.

Crippled by decades of mismanagement under military regimes and cut off from much of the world due to Western sanctions, the domestic banking sector remains ill-equipped to provide services to local citizens, let alone global companies.

While the licences are limited to one branch that can provide loans to foreign companies and only in foreign currency, they will provide the winning bidders a strong foothold in what investors and economists see as one of Asia's most promising markets.

Myanmar's economy is expected to grow 7.75 percent in the 2014/15 financial year from 7.3 percent last year, International Monetary Fund data shows.

“Given its size, economic potential and its strategic position between China and India, Myanmar is forecast to be one of the fastest growing economies in the region over the medium term,” Andrew Geczy, chief executive of international and institutional banking for Australia and New Zealand Banking Group (ANZ), said in a statement.

The core banking units of Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group all gained licences - underscoring Japan's growing investment and influence in a country that is home to big projects such as the Thilawa economic zone near Yangon.

Also making the cut were the Industrial and Commercial Bank of China Ltd, Singapore's Oversea-Chinese Banking and United Overseas Bank, Thailand's Bangkok Bank and Malaysia's biggest lender Malayan Banking Berhard (Maybank).

The bidding process was open to around 40 international banks with representative offices in the country.

Twenty-five banks applied.

“This process has taken a very long time and been incredibly competitive,” said Veronica O'Shea, a partner at law firm Herbert Smith Freehills in Singapore.

“These banks were never expecting to get a full licence, as long as they can do a reasonable amount of commercial activity then they will be very happy,” she said.

LOST OPPORTUNITY?

US banks did not apply, as the United States maintains some sanctions on Myanmar.

These measures include a Specially Designated Nationals List, a so-called black list that forbids US nationals or companies from doing business with persons or entities listed.

By contrast, the European Union, Australia and other countries have lifted sanctions in response to widespread political and economic reforms initiated by the reformist, semi-civilian government that took over from a military junta in March 2011.

The foreign banks will be allowed to lend to local institutions - a cooperation which is expected to encourage domestic outlets to improve their operations and cut down on corruption.

The tight restrictions are aimed a giving local banks time to grow, but some analysts said local businessmen, in dire need of capital, would benefit from foreign lenders.

“They have no opportunity to engage and finance local entrepreneurs,” said Sean Turnell, an expert on Myanmar's economy at Australia's Macquarie University.

A United Nations study released in May found that only 4 percent of Myanmar citizens surveyed had savings accounts in their own names, while a 2013 report by the International Finance Corporation estimated that less than 20 percent of the population has access to financial services.

The licences are preliminary and banks have 12 months to comply with central bank requirements before they become final.

A minimum paid-in capital of $75 million (R845 million) will be required.

Source: Reuters

Sep 29, 2014

Vietnam's Hanel DTT plans Myanmar e-gov't platform

Viet Nam's Hanel DTT Technology Joint Stock Company signed a cooperation agreement with Sundrew Myanmar Company to build an open e-government platform (OEP) based on open source technologies in Myanmar.

The ceremony for the signing of the agreement was held at a Viet Nam-Myanmar business matching session in Yangon, Myanmar, on Wednesday.

The two sides have agreed to share their resources to implement e-government projects in Southeast Asia, and work in government-to-government (G2G) systems on the projects.

They will also exchange information, experience, technology and experts to build OEP communities in order to expand OEP functions and carry out projects of the two countries.

The agreement marks an advance in bringing Vietnamese technology into the world.

OEP has been carried out in Da Nang City, Ha Noi City and in the fourth level of public healthcare services of the Ministry of Health. The OEP 1.1 version is expected to be released at the end of 2014, with basic functions meeting the demands of authorities for managing citizens and exchanging data with other cities and ministries.

The OEP 2.0 version will be launched in 2015 with improved functions to support technologies such as cloud computing, mobility and big data.

DTT has been providing solutions for e-government and enterprise integration for enterprises and organisations in Viet Nam. Its parent firm, Hanel Limited Company, which was established in 1984, focuses on different fields including electronics, computers and telecom; real estate and financial management; and building infrastructure for hi-tech parks.

Earlier, VNPT International, a member company of the Viet Nam Posts and Telecommunications Group (VNPT), inaugurated its first representative office in Yangon on Tuesday.

At the opening ceremony, member companies of VNPT signed memorandums of understanding (MoUs) with Burmese telecom enterprises. According to the MoUs, VNPT-I will continue to cooperate with its partner, the A1 Construction Company Ltd, to implement telecom and software products and IT solutions.

VINASAT centre, under the management of VNPT's subsidiary Viet Nam Telecom International (VTI), will provide satellite bands for the Myanmar Ministry of Defence.

VNPT and the Elite Telecom Public Company Limited will also survey the market and set up a plan to establish a joint venture to provide Internet services there.

In a meeting with Viet Nam's Minister of Information and Communications Nguyen Bac Son on Monday in Nay Pyi Taw, Myanmar President Thein Sein said that Viet Nam and Myanmar had signed an agreement to cooperate with each other in 12 fields, including telecom and IT. He added that Myanmar would focus on investing in the two above-mentioned sectors in the near future, and affirmed that the country would help Vietnamese enterprises in all fields, especially in telecom and IT, to learn about the Burmese market to enhance co-operation.

Myanmar is considered to be an emerging telecom market. At the end of 2012, only 5.4 million of its 60 million people, equivalent to nine per cent, owned mobile phones, compared to 70 per cent in Cambodia, 87 per cent in Laos and 100 per cent in Thailand. The government of Myanmar aims to increase the number of mobile phone users to 75 to 80 per cent by 2016.

Source: VNS/VNN Hanel DTT, Myanmar

Ministry of Lifestock, Fisheries and Rural Development: EOI for Construction of Economic Housing

for more information on this tender opportunity, please contact evi@myanmar-business.org

Draft of amalgamated investment law nearing completion, says DICA

Draft legislation amalgamating Myanmar's two investment laws is expected to be completed in November, Directorate of Investment and Company Administration director general U Aung Naing Oo has told Mizzima.

U Aung Naing Oo said the legislation will merge the Foreign Investment Law enacted in November 2012 and the July 2013 Myanmar Citizens Investment Law.

They replaced laws enacted in November 1988 and March 1994 respectively.

U Aung Naing Oo said the reasons for merging the laws included Myanmar being the only remaining member country of the Association of Southeast Asian Nations with two investment laws.

"Laos had two investment laws but they were combined in 2007," he told Mizzima on September 27.

U Aung Naing Oo said another reason was that ASEAN and the World Trade Organisation wanted a level-playing field in Myanmar for domestic and foreign investors.

Consultations on the draft law were continuing with the business community but have been completed with relevant government ministries.

"I cannot yet say what provisions [in the existing laws] will be amended or modified until discussions are completed with stakeholders in the business community," he said.

U Aung Naing Oo acknowledged that the amalgamated law could include a list of sectors restricted to Myanmar investors.

"I will be able to reveal the list after the consultations with stakeholders," he said.

U Aung Naing Oo said the draft legislation would be known as the Myanmar Investment Law and could tentatively be passed by parliament in the first quarter next year.

The International Finance Corporation, part of the World Bank Group, has been providing technical expertise for the drafting process, the IFC's senior operations officer in Yangon, Charles Schneider, told Mizzima in an email on September 27.

"A draft law has been prepared and consultations with stakeholders are planned to take place soon," Mr Schneider said, adding that once the legislation was enacted it would streamline investment procedures and strengthen investor protection.

“A combined investment law will clarify investment rules and be an important step forward towards creating a level playing field for all investors," he said.

Mr Schneider said Myanmar was the only ASEAN member with separate domestic and foreign investment laws.

"Combing these laws is also a part of Myanmar's integration within ASEAN," he said.

Source: Mizzima

Myanmar Railways Invites Tender to Introduce Luxury Trains

Myanmar Railways has invited tenders from local and foreign businesses to set up a joint venture to introduce luxury train cars, which will target foreign tourists, to the railway system, U Zaw Phay Sein, general manager of the state-run enterprise, said.

The joint venture will be expected to handle the tasks of repairing steam train engines and buying or constructing new luxury train cars that meet international standards.

“We will invite tenders from private businesses to set up a joint venture with the government. We will initiate the operations after carefully scrutinising the bidders and choosing [the winner],” said U Zaw Phay Sein.

The tender invitation was issued on September 15 and can be submitted until after October 15, with a submission fee of K10,000.

“The main thing is to be able to provide full service to foreign tourists. Some tourists like to experience luxury train rides,” U Tin Tun Aung, joint secretary of the Union of Myanmar Travel Association, told Myanmar Business Today.

Source: Myanmar Business Today

PTTEP to Invest Additional $3.3b in Myanmar in 2014-18

PTT Exploration and Production Public Company Limited (PTTEP), the upstream arm of Thailand’s state-run PTT Pcl, said it plans to spend an additional $3.3 billion on projects in Myanmar during 2014-18.

Thailand’s top oil and gas explorer, which has been operating in Myanmar for 25 years, has already invested $4 billion in the country.

PTTEP plans to spend a total of $16 billion for all regions over that period, the company said in a statement. The allocation for Myanmar will go towards seven exploration projects: Myanmar M11, Myanmar M3, MOGE 3, Myanmar PSC G and EP 2, and Myanmar MD-7 and MD-8.

PTTEP President and CEO Tevin Vongvanich said: “We’ve continually invested in Myanmar .... Our dedicated goal remains to conduct our business utilising both our expertise and experience in finding and developing petroleum resources for the benefit of both the Myanmar and Thailand.”

As of August, PTTEP’s cumulative production of natural gas and condensate from Myanmar acreages topped 1.26 trillion cubic feet and 9 million barrels, respectively.

The energy giant said its parent was keen to invest and develop energy-related infrastructure, refineries, gas pipelines, petrochemical and power plants in Myanmar.

PTTEP has been a joint venture partner in Myanmar’s two key offshore gas production projects – the Yadana and Yetagun – which came on line in 1995 and 1997, respectively.

The onshore Myanmar MOGE 3, Myanmar PSC G and EP 2 are PTTEP’s latest acquisition following the recent conclusion of a production sharing contract (PSC) to step up the company’s presence in the upstream works in Myanmar.

PTTEP, ranked among Asia’s top 10 explorers, is looking for overseas oil and gas assets to boost Thailand’s energy security. The country uses gas for almost 70 percent of its electricity generation.

Extensive exploration drilling program has started in Block PSC G and EP 2 and the firm said it will further expand into offshore areas late this year. PTTEP’s newest Myanmar offshore inclusion Zawtika gas field’s production has also been ramped up to 300 million cubic feet per day (MMSCFD) and is shared by both Thailand and Myanmar. PTTEP has an 80 percent stake in the project with a 20 percent share held by state-owned Myanma Oil and Gas Enterprise.

Source: Myanmar Business Today

Sep 26, 2014

Myanmar means business

Myanmar is changing fast and there are at least three changes that are currently visible. First, there is transition underway from a military system to democratic governance. Second, the economy is moving away from a centrally-planned superstructure to a market-led framework. Third, after decades of violence, we are seeing peace and normalcy return to this beautiful country.

All these put together are offering opportunities never seen before to investors near and far. Many countries have either initiated or are at an advanced stage of consultations to carve out an engagement framework that would offer their firms preferential access to one of the few final frontier markets in Asia.

A growing economy
Call it the ‘gold rush’ or simply a case of waking up to smell the coffee, the fact is these transitions have the potential to give Myanmar a chance to retrieve its place as one of the most dynamic economies in Asia. And given a history of robust ethnic, cultural and religious linkages as well as the close physical proximity, India, too, would do well to chalk out a more proactive agenda of engagement with Myanmar.

There are two imperatives for this. First, Myanmar — like the other CLMV countries (Cambodia, Laos, Myanmar and Vietnam) — represents a rapidly growing economy with rising consumption, strategic location and access, rich natural resources (oil, gas, teak, copper and gemstones), biodiversity and an industrious workforce with low wages. And it offers significant opportunities for trade in goods and services, investment and project exports.

Second, Myanmar’s strategic connectivity to India’s North-East through the land route and maritime connectivity through the Bay of Bengal make it a bridge between India and Asean , which is crucial in the context of our growing engagement with the region.

We get two benefits if we establish strong land and sea links between our North-East and Myanmar. One, it helps India and Myanmar bond better, and two, it creates gateways for our merchandise exports to Asean countries.

Trade and investment
The good news is that businesses are beginning to respond to these dynamics and emerging opportunities spanning agriculture, plantation, infrastructure, information technology, healthcare and education.

With bilateral trade at $2.18 billion in 2013-14, India and Myanmar are eyeing $3 billion turnover by 2015 and Indian investments in Myanmar, which amounted to $283 million till 2013, are expected to soar to $2.6 billion over the next few years.

India’s engineering sector is eyeing the Myanmar market to create a bigger presence for engineering exports, and oil and gas companies ONGC Videsh and GAIL are aggressively scouting for more exploratory blocks in Myanmar. United Bank of India, State Bank of India and Bank of India have set up representative offices in Myanmar and so has the Exim Bank of India.

These have brightened the outlook for trade and investment, even as we wait for larger scale full operations.

Need a big leap
However, India’s strategy in Myanmar now needs to move aggressively towards a big leap forward in economic ties, cooperation and investments. Other countries such as China, Japan, the UK, France and the US have been moving at a quick pace for prime slots in vital sectors such as energy, oil and gas, mining and manufacturing and unless we take some proactive measures to step up our presence, we will fall behind.

Infrastructure and connectivity are potential game-changers in India’s equations with Myanmar. In connectivity, a top priority is developing direct flights between India and Myanmar with the larger objective of expansion of our trade volume.

There is currently only one twice-weekly direct Air India flight from India to Myanmar, from Kolkata to Yangon (besides seasonal flights to Bodh Gaya for Myanmar pilgrims).

In contrast, there are nearly 100 flights from Yangon and Mandalay to Bangkok and over 40 to Singapore. The Indian aviation players would do well to explore the new destinations that are opening up and create direct air links which will also facilitate closer business interaction.

Myanmar’s growing need for infrastructure, for instance, ports, to enhance sea and land connectivity, offers a lucrative playing ground for India.

The Myanmar government has put huge emphasis on infrastructure development projects as it sees connectivity as a key factor in promoting trade and enabling Myanmar’s integration with the Asean Economic Union by 2015.

The two countries are working on extension of the India-Myanmar-Thailand trilateral highway project to Laos and Cambodia, which would enhance regional connectivity and commerce.

Port connectivity can be an asset and large Indian companies should consider investing in the development of the Kyaukphyu Special Economic Zone for its vantage point in the Bay of Bengal.

India has developed another port a little further north at Sittwe intended to link Kolkata with Mizoram and our North-East through an inland waterway and road along the Kaladan river.

It is also extending a road linking the Mizoram border to western Myanmar. These could well be developed into full-fledged economic corridors with industrial hubs in key locations benefiting trade and commerce. Of course, timely completion of such projects is the key.

Myanmar has opened doors to support the agriculture sector and companies can tap opportunities in the entire value chain including seeds, agri-machinery, pre- and post-harvest technology.

Further, in the energy space, companies should look at setting up power stations, transmission and distribution lines and supply of gensets.

As Myanmar further opens up and modernises, its needs will multiply and diversely so.

Indian companies are evaluating opportunities, but time is not on our side as the numbers of global players who want to put Myanmar on fast gear are growing. The Indian Government too will have to double its efforts in leading the critical connectivity projects. It is anybody’s game. Let it be India’s.

Source: The Hindu Business Line

 
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