Feb 10, 2016

Singapore-Japan Consortium Signs New $1.5-b International Airport Deal

A consortium comprising Japanese and Singaporean companies has signed a framework agreement with the Department of Civil Aviation (DCA) to build a new international airport in Bago.

The signing is seen as an important step toward the eventual inking of the Hanthawaddy International Airport concession agreement.

In October 2014, the consortium – comprising Japan’s JGC Corporation, and Singapore-based Yongnam Holdings Limited and Changi Airports International – was named by DCA as the tenderer for the design, construction and management of the project on the basis of a public-private partnership.

JGC holds the largest interest of 55 percent in the consortium, while Yongnam and Changi Airports International hold 25 percent and 20 percent respectively.

“We need to discuss more details of the project and discussions will take more than one year. The consortium expects to start construction in 2017 when the discussions are over,” U Kyaw Soe, a director at the DCA, told Myanmar Business Today.

A major drawback for the project is the lack of supporting infrastructure including a connecting road between Bago and Yangon. The government, in cooperation with the Korean International Cooperation Agency (KOICA), is planning to build a road connecting the new airport, Mingaladon Airport in Yangon and the Yangon Central Railway Station, U Kyaw Soe said.

“We are working together on the project with KOICA. They will provide $5 million to build the related infrastructure. KOICA is now assessing if the road is going to be build underground or above the ground,” he said.

Located on a site of about 9,000 acres, 80 kilometres northeast of Yangon near Bago, the new airport is expected to have an initial capacity of 12 million passengers per year, making it the largest airport in Myanmar. Once operational, the airport is expected to become the main international gateway into Myanmar, particularly the Yangon metropolitan area.

The idea of the new airport was first proposed in the early 1990s. The project started in 2001 but was halted suddenly in 2004. It was put back on the table in 2012 with an estimated completion date of 2016 was proposed. After that, the deadline kept moving – up to 2019.

In a joint statement, the companies of the consortium said the project is now planned for completion by 2022. An estimated $1.5 billion in investment is needed for the project.

A portion of the project cost will be supported by an Official Development Assistance (ODA) loan from the Japanese government, to which the Myanmar government plans to apply for, following the signing of the agreement. Further discussions will be held between the consortium and DCA upon the signing of the agreement.

Given its capacity, the new airport is expected to boost the flow of business and leisure travellers as the country sees growth in trade and tourism. Also, the development of related public infrastructure, is expected to increase commercial and industrial activities around Bago.

Source: Myanmar Business Today

Feb 5, 2016

Myanmar Eases Restrictions on Petrol Stations, Exports to China

State-run Myanmar Petroleum Products Enterprise (MPPE) has introduced new laws aimed at easing the burden of doing business in the petroleum market.

From now, new petrol stations will be able to operate in 3,200 square foot plots of land which must be in 40’x80’ plots, according to MPPE. In the past, 10,000 square feet of land was needed to open a new petrol station.

“It is hard to get enough land to meet the petrol station requirements that were on the books, therefore, we decreased the required space of the petrol station,” U Myint Zaw, director of MPPE, told Myanmar Business Today.

If the space of the new proposed petrol station is only 3,200 square feet wide, the station will not be allowed to store more than 3,200 gallons of petrol and if located within the city, the station must store the petrol using underground storage.

However, if the proposed space of the petrol station is more than 8,000 square feet, the station is allowed to store up to 12,800 gallons of petrol. If the proposed space of the petrol station is more than 10,000 square feet, the station is allowed to store more than 26,000 gallons of petrol but only 16,000 gallons can be stored above ground, U Myint Zaw added.

“Repealing this law is good because it is really hard to get the 10,000 square feet space. With the release of the regulation, more petrol stations can open and it will be good for the consumers also,” Dr U Win Myint, secretary of Myanmar Petroleum Trade Association (MPTA).

Before building a new petrol station, prospective owners must obtain approval from their local fire brigade to ensure they are outside of the regulated distance of 30 metres from public facilities such as schools, hospitals, culturally relevant landmarks and highly crowded places, according to Deputy Director of Myanmar Fire Force U Aung Swe.

If petrol station owners do not comply with these regulations, they could face up to three years in prison.

In addition to easing restriction on petrol stations, exporting petroleum to China is now legal as of January 6 for the first time in Myanmar, according to the Ministry of Commerce.

The exporters are only allowed to export to China and they will be punished if they sell this petroleum in local market due to their class restrictions that determine whether they can sell gas internally or if they can export petroleum products.

“We are planning to decrease the tax for exporting petroleum to China. However, if the exporters sell this petroleum in local market, the government will lose its tax money. Therefore, we are negotiating how to punish these exporters,” an official from the Ministry of Commerce said.

Petroleum is mainly imported via Singapore for local use because Myanmar does not have ports capable of handling large ships carrying oil from Saudia Arabia. Therefore, petroleum importers must have the cargo redistributed to smaller ships in Singapore to bring into Myanmar ports.

In addition to shipping difficulties, the petroleum products that Myanmar exports to China is less expensive and more convenient for Chinese importers than to directly ship the product into China and distribute it over land to the western reaches of the country. Karin and Shan state help facilitate this trade by importing oil from Thailand and exporting it to areas of Western China.

The yearly petroleum consumption in Myanmar is about 40 million gallons per month. During the 2014-15 fiscal year, 278.08 million gallons of gasoline and 531.54 million gallons of diesel were consumed by the local market, according to the Ministry of Energy figures.

Myanmar produces 58,000 barrels of oil per day on average from oil derricks in Ayeyarwaddy region and off-shore drilling near Rakhine, Gulf of Mottama and Martaban.

There are currently 12 government-owned petrol stations and 1,718 private petrol stations around the country. Among them, there are 59 stations in Naypyitaw, 133 stations in Yangon, 919 stations in Mandalay and the rest in other regions and states which will service the nation’s roughly 470,000 petrol vehicles. Also, MPPE said they have received 603 applications to open new petrol stations in Myanmar.

Source: Myanmar Business Today

Feb 4, 2016

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Jan 27, 2016

Premium hospital for Yangon

IHH Healthcare, Asia's largest hospital operator by market capitalization, is building a 250-bed hospital in Yangon, Myanmar's former capital, in its latest expansion into an emerging market.

The Malaysian premium healthcare provider broke ground on Sunday at the $70- million Parkway Yangon hospital on a 17,400 sq. meter plot leased for 50 years.

The project is due for completion in 2020, and being undertaken by a joint venture consortium, Andaman Alliance Healthcare, comprising wholly-owned Parkway Healthcare Indo-China, two local partners, AMMK Medicare Company and Global Star, and Singapore's Macondray Holdings.

Using a build-operate-transfer model, Parkway Yangon is being pitched as a "catalyst" for training healthcare professionals that complements national efforts to improve medical services.

The Myanmar project comes after IHH recently announced a 350-bed in Chengdu, China, as part of its expansion plans for emerging markets that target their growing middle classes.

IHH is controlled by Malaysian state investment fund Khazanah Nasional and managed by fully-owned Parkway Pantai in Singapore. The group already has nearly 10,000 beds across 49 hospitals in key markets Malaysia, Singapore and Turkey, and six other countries.

Source: Nikkei Asia Review

Jan 22, 2016

Fourth PTT fuel station in Myanmar opened

PTT has opened a fuel station in Myawaddy, the fourth in Myanmar, under its plan to grow the retailing business presence in Asean.

The station in Myawaddy which is connected to Thailand’s Mae Sot is aimed to serve growing border trade between Thailand and Myanmar.

PTT has planned to open 43 stations in Myanmar within 2020. By the year, the number of stations in Cambodia will also be raised from 20 to 65. In the region, it also opens stations in Laos and the Philippines.

Source: The Nation

KBZ Group: Don’t wait too long to invest in Myanmar’s growth

World Finance: After 50 years of isolation under military rule, Myanmar’s economy has been slowly opening up in the past few years. That may pick up pace now that Aung San Suu Kyi’s party has won the election. With me to discuss the investment opportunities moving forwards is Nyo Myint, Senior Managing Director of KBZ Group of companies and Zaw Lin Aung, Deputy Managing Director of KBZ Bank.

Well Nyo Myint, if I might start with you: what sort of changes have you seen to Myanmar’s economy recently?

Nyo Myint: Myanmar’s economy has seen significant growth. Every year since 2010 the economy has grown at least eight percent. And in the 2014-15 fiscal year, the country recorded foreign direct investment of $8.1bn. That was more than $300m the country received in 2009-10, before the liberalisation occurred.

There has been the same internal economic growth for the last few years. However, the growth for this year, 2015-16 is projected to moderate to 6.5 percent due to the severe floods that took place in the country.

World Finance: And Zaw Lin Aung, over to you now. So the financial sector: what’s been the knock-on effect for you?

Zaw Lin Aung: In the last four years there have been significant developments in the financial services sector. The major development was the awarding of the authorised dealer licences to four private banks in November 2011. And KBZ Bank is one of the licence holders in the industry, so we can engage in international banking and trade finance business.

In December 2011, ATM machines were allowed to be installed; within four years, over 1,000 ATMs have been deployed across the nation. Our KBZ Bank has the largest ATM network in Myanmar. Now Visa and Mastercard can be used in the country.

The other development was in the last year. Nine foreign banks were awarded banking licences, which encouraged healthy competition and improved our financial sector as a whole.

World Finance: And Nyo Myint, Aung San Suu Kyi has of course recently won the election, so what’s the business sentiment surrounding this?

Nyo Myint: Most of the multinational companies are believed to be prepared to invest in Myanmar. Apart from the financial aids and grants to be contributed by international institutions. So we look forward to moving business more vigorously during the tenure of the new government.

The winning party also said they are committed to financial sector reform, which may lead to a lower inflation rate, steady the local currency, more autonomy to certain banks, greater transparency, and so on.

World Finance: And Zaw Lin Aung, what would you say are the biggest growth opportunities for enterprises today?

Zaw Lin Aung: There’s a huge opportunity in the emerging economy like Myanmar, not just fundamental sectors like infrastructure, but knowledge-based industries, as well as education and hospitality.

In the short term there are many opportunities in the tourism industry. The communications industry is very promising with the loss of potential. The mobile phone industry has seen massive growth, but it’s still in its infancy in Myanmar.

Developments in other forms of communication are needed much more.

I can recommend business opportunities in four key areas: especially in infrastructure, manufacturing, communications and education, for the quick win.

World Finance: And Nyo Myint, how important would you say it is for companies to focus on social development?

Nyo Myint: Of course, social development is central to this transformation that is happening in Myanmar. There is no point in having the economic liberalisation if it doesn’t filter down to all people in the country, and allow everyday people to live better lives.

Formerly I was part of the public sector, and for 15 years now I have been in the private sector. I have now witnessed first-hand the significant contribution of the private sector to social development.

The Brighter Future Foundation, which is the social arm of our Kanbawza Group of Companies, is the biggest private donor to the country, and has been conferred the best philanthropic foundation award in Myanmar for 2015 by the President of Myanmar for our latest contribution to society.

Apart from being the highest taxpayer for four consecutive years in the history of the bank and the group of companies.

World Finance: And Zaw Lin Aung, finally, what sort of trends do you forsee impacting Myanmar’s economy over the next 12 months?

Zaw Lin Aung: Myanmar’s business over the next 12 months will be business as usual. The growth rate for the last five years has been consistently very positive. I can forsee the growth rate continuing even more in the near future. But I understand western countries are taking a wait-and-see approach for the next six months, during the political party handover and the sitting of the next parliament.

But many countries are within our reach, including Japan, China, South Korea, India, as well as our ASEAN countries have been doing business in Myanmar for many years, and will surely increase their operation in the next 12 months.

So I urge western countries not to wait too long and miss out on the first mover advantage.

World Finance: Zaw Lin Aung, Nyo Myint, thank you.

Nyo Myint: Thank you.

Zaw Lin Aung: Thank you so much.

Source: World Finance

Jan 20, 2016

Bitumen (Iran origin) available to Maynmar importers

We are pleased to quote our bitumen sample offer as below terms & conditions:

Commodity: bitumen 60/70

Source: Jey Refinery-Iran

Min order: 500mt

Package: in New Steel drum180kg

Delivery moods: FOB-CFR-CIF

Shipment time: from within 15 working days( different based on ports)

15 days free time at destination (different based on ports)

Inspection: SGS

Specification: as per attached

Price: 243usd/mt on FOB/Bnd-Iran

Validity: one week