Myanmar Rice Shipments May Double This Year, Group Predicts

Rice exports from Myanmar may more than double to 1.5 million metric tons this year, an industry group forecast, highlighting the country’s potential to boost overseas trade as its government pursues reform.

As the government starts to purchase production at above- market prices to encourage greater planting, shipments may increase to as much as 2 million tons next year and reach 3 million tons by 2015, according to the Myanmar Rice Industry Association. Sales totaled 700,000 tons in 2011.

An advance in exports may bolster global stockpiles, while boosting competition for Thailand, Vietnam and India. The projected gain may make Myanmar the world’s sixth-largest shipper this year, with volumes at the highest level since the 1960s, when the country was the world’s largest exporter, according to data from the U.S. Department of Agriculture.

“Myanmar coming into the market will take away some markets from Thailand, worsening Thai rice exports,” said Vichai Sriprasert, honorary president of Thai Rice Exporters Association. “In the long run, Myanmar has the potential to become the top exporter because of its fertile land and water.”

The price of 100 percent grade-B rice from Thailand, a benchmark variety from the largest exporter, plunged 18 percent from a three-year high in November to $546 per ton on Jan. 18. Rough rice traded on the Chicago Board of Trade, which was at $14.49 per 100 pounds at 5:33 p.m. in Singapore, has lost 2.5 percent this year. Prices have declined as India resumed exports of non-basmati rice after a four-year ban.

‘Economic Frontier’

Myanmar has the potential to become the Asia’s “next economic frontier” if it takes advantage of its natural resources, young labor force and proximity to China and India, the International Monetary Fund said last week. The country, which shares borders with the world’s two most-populous nations, may grow 5.5 percent in 2011-2012, the IMF said.

Myanmar President Thein Sein has been releasing dissidents and engaging with the opposition, prompting the U.S. and Europe to reassess sanctions against the former military dictatorship. The country is the “most promising” Asian market as the government reforms the political system in a nation that has ample natural resources, investor Jim Rogers said in November.

Target Markets

While local consumption accounts for 11.5 million to 12 million tons per year, total milled-rice output may increase 11 percent to 13.5 million tons in the year that started in October, and climb to 15.5 million tons over the next three years, the association said in an e-mail. Target markets for white-rice sales are Africa, Indonesia and the Philippines, it said.

The increase in planting was driven by a government policy of buying rough rice at about 10 percent above the market rate, according to the association. The program started in about the middle of January, it said.

Global rice stockpiles may gain 3 percent to 100.1 million tons in 2011-2012, the highest level since the season ended 2003, as worldwide output increases 2.5 percent to a record 461.4 million tons, according to projections from the USDA.

Myanmar has agreed to sell 200,000 tons of white rice to Bulog, Indonesia’s state food agency, the association said in a separate statement on Jan. 29. That’ll be the first exports to Indonesia in more than 10 years, it said.

Source: Bloomberg

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Myanmar Taps Singapore for Training on Economic, Monetary Policy

Myanmar’s President Thein Sein is tapping Singapore’s expertise in financial management and monetary policy as he aims to transform an economy isolated by Western nations for more than two decades.

Singapore officials agreed to train their Myanmar counterparts across a range of areas, including economic planning, central banking, trade facilitation and legal reforms, according to a statement issued yesterday by Singapore’s Ministry of Foreign Affairs. Thein Sein concludes a four-day visit to Singapore tomorrow.

Myanmar is seeking technical assistance from international financial institutions and would like to see a stock exchange in place soon, Thein Sein was quoted as saying in an interview published today with Singapore’s Straits Times newspaper. The government prioritizes peace and stability over economic development, the report said.

Thein Sein is consolidating political support among Asian nations as he pushes the U.S. and Europe to lift financial and economic sanctions. He has released hundreds of political prisoners, sought peace with ethnic minority groups and engaged in a dialogue with democracy advocate Aung San Suu Kyi, who will stand in April 1 by-elections.

‘Huge Impact’

“We welcome every foreign company that visits Myanmar,” Hla Maung Shwe, vice president of the Myanmar Chamber of Commerce and Industry, said in a Jan. 27 interview in Hong Kong. The end of sanctions would “have a huge impact on our economy,” he said.

Myanmar has the potential to quickly boost economic growth if the government modernizes the financial sector and makes it easier for companies to trade and invest by ending its multiple exchange rate system, the International Monetary Fund said on Jan. 25. Myanmar’s economy may grow 5.5 percent in the 2011-2012 fiscal year and 6 percent in 2012-2013 on commodity exports and higher investment, the IMF said.

Under Myanmar’s multiple exchange-rate system, the kyat is pegged to 8.5 per 1 IMF-issued special drawing right, equivalent to about 6.4 kyat per dollar. Unofficial rates are more than 100 times higher, trading at 770 kyat per dollar on Oct. 28, according to the Irrawaddy, an online newspaper for exiles from the country formerly known as Burma. The difference hinders trade and increases costs for foreign businesses, according to a 2008 IMF working paper.

Singapore and other members of the Association of Southeast Asian Nations this month repeated a call for Western nations to lift sanctions against the former military dictatorship. The city-state was Myanmar’s third-largest trading partner in 2010 behind Thailand and China, according to statistics compiled by the European Union.

Singapore-based Yoma Strategic Holdings Ltd., a developer of properties in Myanmar, rose to the highest in more than four years yesterday in Singapore trading as the company may benefit from political reforms in Myanmar. The shares gained 5.6 percent to 37.5 Singapore cents as of 11:02 a.m. local time.

Source: Bloomberg

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Investment Opportunity: Myanmar Sturgeon Farm

We welcome inquiries from serious companies experienced in fish farming and caviar production. For more details on this project, please contact us at evi@mynamar-business.org.

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IMF notes Myanmar’s ‘potential’ in Article IV mission

The government faces a “historic opportunity to jump-start the development process and lift living standards”, the International Monetary Fund said at the conclusion of its Article IV Mission to Myanmar last week.
The IMF delegation issued a press release via the state-run New Light of Myanmar newspaper on January 25 following its January 9-25 visit, during which the team met with government officials and other “key counterparts”.
Ms Meral Karasulu again led the mission, which followed the latest Article VIII Mission in December 2011.
“Myanmar has a high growth potential and could become the next economic frontier in Asia, if it can turn its rich natural resources, young labour force, and proximity to some of the most dynamic economies in the world, into its advantage,” Ms Karasulu said.
“Delivering on these expectations with inclusive and sustainable growth should start with establishing macroeconomic stability. This process has already begun with plans underway to unify the exchange rate and lift exchange restrictions on current international payments and transfers. As this essential process continues, channelling the reform momentum to improving monetary and fiscal management and to structural reforms would allow taking full advantage of the positive effects of exchange rate unification,” she added.
Ms Karasulu said further modernising the economy would involve a process of removing “impediments to growth by enhancing the business and economic climate, modernising the financial sector, and further liberalising trade and foreign direct investment”.
She said the government’s recent efforts “go in the right direction” that would benefit from “broader consultation with stakeholders and using the best international practices distilled from other countries’ experiences”.
The release said exports of commodities and higher investment supported by robust credit growth and improved business confidence would increase Myanmar’s real gross domestic product (GDP) to 5.5 percent in the 2011-12 financial year, and 6pc in the 2012-13 year.
Inflation stood at 4.2pc for the 2011-12 year and was expected to rise to 5.8pc in 2012-13 “as the recent decline in food prices phases out”.
The IMF said the Myanmar kyat has appreciated by about 32pc since 2009-10, adding that the “appreciation pressures are primarily due to large foreign inflows into the economy, which cannot find an outlet due to exchange restrictions on current international payments and transfers”.
“Reforming the complex exchange rate system is a priority to eliminate constraints on economic policy,” Ms Karasulu said, adding that the Central Bank of Myanmar is already performing the technical work in order to “establish the necessary market structure for this important process.”
However, the press release said unification of the exchange rate would require moving away from the export first policy, perhaps by allowing all foreign currency bank account balances to be used to purchase imports, easing import licensing requirements and improving access to the foreign currency exchange counters.
“A successful exchange rate unification would require improvements in all areas of macroeconomic management … start[ing] with establishing a monetary policy framework to focus on price stability. The authorities’ plan to grant operational autonomy and accountability to CBM is a welcome first institutional step towards this goal,” the release said.
“While the recent reduction in interest rates is welcome, we do not see room for further interest rate cuts in the near term in light of the buoyant growth expectations and the inflation outlook. Within the current regulatory constraints on financial intermediation and impediments to productive investment, lower real interest rates would risk channelling savings to potentially speculative outlets, such as real estate.
“The onus of stimulating productive investment is now on structural policies to reduce barriers to private sector development and improve financial intermediation,” it said.
“Further reducing inflation would require stopping the financing of the fiscal budget deficits through money creation,” it added.
The release also applauded the decision to discuss the national budget in this sitting of the hluttaws, which commenced on January 26, because it provided an “historic opportunity to redefine national spending priorities and bring fiscal transparency”.
“We welcome the authorities’ plans to reorient spending to health and education, while targeting a moderate fiscal deficit, which we project to be about 4.6pc of GDP, about 1pc lower than the last year’s deficit. A prudent fiscal policy is essential to maintain macroeconomic stability, especially during the exchange rate unification process,” it said.
It added that a market-determined exchange rate would also clearly show the losses made by state economic enterprises. The release said the fiscal balance was expected to improve when the Shwe and Zawtika natural gas projects came online but suggested that the revenues “should be used to build human capital and infrastructure. These are key priorities to alleviate poverty and reduce bottlenecks to industrialisation”.
However, it warned that additional revenues, “primarily from non-resource-based sources”, needed to be identified to “safeguard fiscal sustainability and prevent boom-and-bust cycles associated with fluctuations in commodity prices”.
“There is room to increase revenues by improved tax policies that should emphasize direct taxation over indirect taxes to protect the poor. In this regard, recent efforts to simplify the structure of several taxes are welcome and should go further, while reforms to tax administration remain essential to broaden tax bases and reduce tax avoidance,” it said.
“Modernisation of the financial system should be expedited to facilitate broad-based growth,” the release said.
It added that banks needed to begin by phasing out deposit-to-capital ratios and expanding the list of collateral beyond landed property to all crops.
Banks also needed to expand their networks, especially in rural areas because it is “essential to increase access to finance”.
“Nurturing a stronger commercial banking culture requires price competition … A level playing field between state and private banks, including in the areas of regulation and supervision, is critical to promote competition,” it said, adding that allowing joint ventures with foreign banks would help to develop the industry’s technology and best prepare it for ASEAN financial integration in 2015.
The release also highlighted the need to provide more credit to the agricultural sector, which about 70pc of the population relies on for income.
“Besides increasing lending facilities of Myanma Agriculture Development Bank and micro finance, private banks should also be encouraged to lend to agriculture. The planned land reform provides a unique opportunity, and should ensure that land titles of farmers can be used as collateral. However, credit alone will not suffice to increase rural growth, which is essential to alleviate poverty. Investment in rural infrastructure, including through community-driven development initiatives, and spending on health and education, are also essential,” it said.
Action needed to be taken to facilitate foreign direct investment assistance in areas other than energy, the release said. These should include the elimination of exchange restrictions on current international payments and transfers.

Source:  Myanmar Times

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"Open door" Myanmar offers 8-year tax break to foreign firms

Myanmar's government said Saturday it planned to offer eight-year tax exemptions to foreign investors as Western companies "rushed" to build ties with the one-time closed-door country.

Industry Minister U Soe Thane told reporters there had been huge interest in Myanmar from business leaders he had encountered at the World Economic Forum in Davos as the Southeast Asian country's reform process gathers pace.

"They are rushing to us," he said. "We are just opening the door."

The minister said that Myanmar expected its economy to grow by six percent in the coming year and that it should be an attractive location to foreign investors -- citing as proof his successful visit to Davos.

"I have met with a lot of people -- not just ministers but CEOs. We have engaged with them, explained our potential, our location at the junction of China and India. Our location is very favourable.

"We have a lot of hydro potential, we have lots of fishing potential, a big fisheries area. Also our people know the English language, it is easy to communicate," he said.

Deputy railways minister Lwin Thaung said the government was looking to enact radical legislation to attract investors.

"Presently we have a Myanmar investment law which is rather restrictive, but we are now revising it," he said.

"We have hired foreign consultants ... and we have told them to draw up the law so as to be more attractive than our neighbours.

"It will give tax exemptions for up to eight years and, if the enterprise is profitable for Myanmar, we will extend the incentive. We have already drafted the bill ... and at the end of February the law will come out."

The European Union is considering lifting sanctions against Myanmar as soon as February, according to diplomats in Brussels, while Washington has promised further reforms will be met with US rewards.

A few Western corporations such as French oil giant Total do have a presence because the sanctions framework permitted firms that were already operating in the country at the time they were imposed in the 1990s to stay.


Source: AFP

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IMF sees Myanmar as Asia's next economic bright spot

The International Monetary Fund (IMF) has commended Myanmar's economic reform efforts, saying that the nation has the potential to become the next economic bright spot in Asia.
"The new government is facing a historic opportunity to jump-start the development process and lift living standards," the Washington-based body said in a statement released earlier this week, reported Xinhua.

"Myanmar has a high growth potential and could become the next economic frontier in Asia, if it can turn its rich natural resources, young labour force, and proximity to some of the most dynamic economies in the world, into its advantage," the global lender said.
An IMF mission headed by Meral Karasulu visited Naypyitaw and Yangon between Jan 9 and 25.
Karasulu noted that Myanmar's recent reform efforts "go in the right direction."
The Asian country "would benefit from broader consultation with stakeholders and using the best international practices distilled from other countries' experiences", the mission head said.
The IMF has projected Myanmar's real gross domestic product to grow about 5.5 per cent this fiscal year and 6 per cent next fiscal year.


Source: The Economic Times

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Srithai mulls Myanmar move: too few workers, too high wages in Thailand

Srithai Superware Plc, the world's leading melamine producer, is looking to Myanmar as a production base in the near future.

President Sanan Ungubolkul will visit the country soon to look for potential locations to set up a new factory.
Srithai has about 700 workers from Myanmar at its factory in Thailand and operates its SNatur direct-sales business in Myanmar, achieving a positive response. It plans to set up a branch office for direct sales in that country this year.
Mr Sanan said if the company does build a new plant in Myanmar, it will invest 50 million baht and use it as a production base for exports.
Srithai exports melamine products to over 100 countries.
"We can't expand our production capacity in Thailand due to the labour shortage and higher wages. Myanmar and Vietnam are alternative bases," said Mr Sanan.
The planned hike in the daily minimum wage means Srithai plans to raise its product prices in April.
The embargo on Iranian oil has driven up oil prices and thus costs, another factor in the company's decision.
Apart from Myanmar, the company will spend almost 300 million baht to produce closure products at its factory in Vietnam.
Registered capital of Srithai Vietnam will go up to 335 million baht this year from 270 million.
The closure products will serve a giant soft drink firm in Vietnam as part of a three-year contract. The first delivery will start in August.
This will push sales in Vietnam this year to 540 million baht, up from 340 million last year, before rising to 600 million in 2013.
In Thailand, the firm is poised to spend one billion baht on investment this year.
Some 100 million baht will be used to expand its melamine business at its factory in Nakhon Ratchasima province, 600 million will be used for its plastic products and the remaining 300 million is for expanding its direct sales business and overseas investment.
For SNatur direct sales, it plans to expand to Cambodia and Indonesia before reaching 10 countries in a few years. Sales of SNatur are expected to reach 460 million baht this year, up from 353 million last year.
Srithai's total sales this year are projected to reach 7.8 billon baht, up from 6.65 billion last year.
SITHAI shares closed on the Stock Exchange of Thailand at 8.70 baht, down 10 satang, in trade worth 1.23 million baht.

Source: Bangkok Post

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