140424 한미얀마간 경제협력방안(수정본)

The Ideal Economic Cooperation Between Korea and Myanmar

April 28. 2014

Dr. Lee, Nam Kee Chairman

Global Business Cooperation Association

Dr. Lee, Nam Kee • Chairman, Global Business Cooperation Association (GBCA) , Korea

•  Former Economic Minister & Chairman of Fair Trade Commission, Th

e Government of the Republic of Korea

I.  What is and what does the Korea global Business Cooperation Association. 1. Brief History 2. Main Function 3. Members. 4. Introduction of Korean Business Delegation

II. Present status of Economic Cooperation between Korea and Myanmar 1. General Structure of Myanmar Industry 2. Export and Import Statistics between Korea and Myanmar 3. Export and Import by items between two countries. 4. Investment including JVC

Contents

III. Ideal Economic Cooperation between Korea and Myanmar 1. SWOT Analysis of Myanmar Economy 2. Basic principle of Economic Cooperation 3. Useful Business Model 4. The Changing trend of important systems in Myanmar 5. Recommended Business Area with Myanmar

IV.  Conclusion

Contents

I.  What is and what does the Korea global Business Cooperation Association

1. Brief History

•  June, 2013~Nov. 2013 Preparation to establish of GBCA

•  Nov.10, 2013 Preparation committee to establish GBCA

•  Feb.14, 2014 General Meeting for Establishment of GBCA Dr. Lee, Nam Kee was invited as chairman of GBCA

•  Fer.22, 2014 Agreement of Business Cooperation between GBCA and Mid-west university, USA


2. Main Function

•  Business Matching with foreign business partner and support them

•  Development of new Marketing and Job increasing through innovation and crea

tion

•  Supply of IT technology for SME Venture

•  Training of Professional manpowers to develop global Industrial Market

•  Survey and Advertising of domestic and foreign market

•  Others related with above

3. Members

•  General Members(Individual): 475

•  Business Member(Corporation): 147

•  Special Members(Corporation and Individual): 6

•  Advisory group(Individual): 3


4. Introduction of Korean Business Delegation

•  Total: 13 person

•  Cosmetic: 3

•  IT: 4

•  Manufacture: 3

•  Artist: 1

•  Others: 2


II.  Present status of Economic Cooperation between Korea and Myanmar

1. General Structure of Myanmar Industry

•  Industrial Structure - Service: 41.8% - Agriculture: 28.8% - Manufacture:19.3% - Others: 0.1%

•  Main Export Items - Natural gas , Crude Oil, Wood, Bean, Clothes(raw)

•  Main Import Items - Clothes, Petroleum, Fertilizer, Machinery

•  Main Natural Resources: - Oil, Led, Zinc, Natural Gas


2. Export and Import statistics between Korea and Myanmar

(unit: million US＄)

Year Export Import

2010 160 479

2011 299 667

2012 351 1,331

2013(P) 502 2,079


3. Export and Import by items between two Countries

Item Export & Import 2011 2012

Clothes Export 232.497 278.617

Agriculture Products Export 21.395 29.126

Forestry Products Export 13.145 14.351

Rail and Iron Structure Import 19.866 757.565

Construction and Mining Machinery Import 152.067 67.692

Artificial silk Products. Import 44.793 46.313

(unit: million US＄)


4. Investment including JVC

•  Total direct investment from Korea to Myanmar by the end of 2012 - New establishment of company:82 companies -  Invested Amount: 1,387 million US＄ - Main Invested Area: Mining, Hotel, Restaurant etc.

•  Main Investment countries to Myanmar - China: 34.3% - Thailand: 23.5% - Hong Kong: 15.5% - Korea: 7.2%

•  Total Investment from foreign countries to Myanmar - 2010: US＄1 billion - 2011: US＄1 billion - 2012: US＄1.9 billion

III.  Ideal Economic Cooperation between Korea and Myanmar

1. SWOT Analysis of Myanmar Economy

Strength •  Plenty of Natural Resources(Forest,

Natural Gas) •  Low Labor cost and Good quality

Weak

•  High Rely on Agriculture and Low Productivity

•  Shortage of Infrastructure

Opportunity •  Big Neighbor Market

- China, India •  Logistics Base to connect East and W

est of South Asia

Threat

•  Low level of Index of Economic Freedom(172/179): 2013 Heritage Foundation

•  Shortage of transparency in Administration.

2. Basic Principle of Economic Cooperation

•  Win-Win and Balance Strategy

•  Maximum Synergy Effects

•  Up-grade of Economic + Living Standard of both countries

•  Mutual Benefits through complementary activity

•  Korea → High Technology, Capability of planning

Myanmar → Execution on the site, Reasonable labor cost + plenty raw materials.


3. Useful Business Model


Planning

Technology

Enforcement

Execution

KOREA MYANMAR

INVESTOR

4. The changing trend of important systems in Myanmar < Investment policy >

•  Abolition or soften economic sanctions to Myanmar from EU & USA

•  Legislation of special Economic Zone Law ; Tax Exemption, Favor of using land

, One- stop service related with export & Import

•  Amendment of Investment law from foreign country (Nov. 2012)

- Exemption of Income Tax for 5 years

- Guarantee to send profit to invested country


4. The changing trend of important systems in Myanmar < Foreign currency >

•  Farewell to “Foreign Exchange Certificate” (FEC) → US Currency (Jan. 2014)

•  Fixed Rate System(1＄ = 6kyat) → Management changing Rate system

※ Marketing Rate : 1＄ = 800 kyat


4. The changing trend of important systems in Myanmar

< Tax System >

•  Business Tax to Foreign Invested Co. → 30%

•  Foreign Currency Income Tax

- Foreigner → 15%

- Native → 10%


4. The changing trend of important systems in Myanmar < Financing system >

•  USA → General licensed to 4 big Myanmar Bank (MEB, MICB, AGD, Aveyarwa

dy Bank)

- Can do business with US Company

•  Maintenance of Basic Rate

- 12% → 10%(2012) and Maintain

•  Plan to open stock Market in 2015.


4. The changing trend of important systems in Myanmar < Labor system >

•  Maintenance of low labor cost

- Cheaper than Vietnam and Indonesia

- US＄70~80/ Month: Unskilled labor

•  Unskilled labor: only Myanmar labor

Skilled labor: should increase native labor using

- 0~2 year : 25%

- 2~4 year : 50%

- 4~6 year : above 75%


4. The changing trend of important systems in Myanmar < Trade system >

•  Comparatively low custom tax

- More or less 5% except Jewelry & Luxury item

•  Expecting to abolish licensing system for Export and Import in soon

-  Import: 166 Export: 152 abolished (March, 2013)

•  Agreement of Avoidance of double Taxation.

- Korea, UK, Malaysia, Singapore, Vietnam, India.


5. Recommendable Business Area with Myanmar < Agriculture Area >

•  Decreased weight, but still the largest Industry

- weight in GDP: 38.8% (2012)

- Cambodia: 34.7% , Vietnam: 21.5%

- Thailand: 8.6%

- Deregulation of Product Quantity and price control → continuously increasing

of production


5. Recommendable Business Area with Myanmar •  High Growth potentiality - reasonable labor cost and plenty labor and land

•  Ownership of land → Government (1960) - ploughing right(Cultivated) → Tradable

•  Still low foreign investment(1988~2012) - Electricity: 47% - Crude oil$ Gas: 34% - Mining: 7% - Manufacture: 4% - Hotel& Tour: 3% - Agriculture:1%


5. Recommendable Business Area with Myanmar < Infrastructure Area > •  Poor Infra. - High Logistics cost: shortage of pavement road and rail road - Difficulty to get raw materials & Export: Problem of sea port and Airport - Logistic performance Index: 129/155 -  Infrastructure Index: 133/ 155 (Same level with Laos, Cambodia)

•  Expansion plan of Infrastructure for Tourism Master plan - Expansion ; Mandaley and Nai pyi Taw Airport - Expansion ; Industrial Meeting, Incentive tour, Convention, Exhibition, Facilitie

s (Yangon, Mandaley, Bargan, Inlei Lake)

•  Licensing power related with Infra. is concentrated in government - Necessary to get final permission from Myanmar Investment Commission.


5. Recommendable Business Area with Myanmar < Electricity-Power plant >

•  Low Electricity supply (26%)

- production of Electricity: 7,346 million KWH

- Hydro-electric Power: 68%

- Steam Power : 32%

- Demand(2012) → 1,890MW

- Capacity: 1,500MW

- Loss Rate → 27% (shortage of skilled labor and Investment from Government)


5. Recommendable Business Area with Myanmar < Electricity-Power plant >

•  Increasing Steam Power Plant

•  Big chance to invest in sending and distribution line of Electricity

- Decreasing loss rate

- 2001~2031: 6 stages five years plan ○  2011.4~2016.3 1,576 Mile → 1,623 Million Dollar

○  2016.4~ 2021.3 1,928 Mile → 1,810 Million Dollar

○  2021.4~2026.3 675 Mile → 1,552 Million Dollar

○  2026.4~2031.3 140 Mile → 2,258 Million Dollar


5. Recommendable Business Area with Myanmar < Solar Energy >

•  The Merit of solar Energy

- Unlimited & 10,000times more than global energy consumption

- Safe & the life cycle of facility is about 20 years long

- No Pollution and green Energy

•  Stand-Alone off-Grid System(With Battery)

- Easy to operate & Maintenance system(the cost is comparatively low)

- Cheap installation cost: under 1 dollar/Watt

※ Installation Budget for 200 houses: 3.8 Million Dollars


5. Recommendable Business Area with Myanmar < General items >

•  Instant Healthy Food

•  Cosmetics

•  Skin-care & Beauty

•  Machinery(Agricultural)

•  Forestry Product(Wood pellet)

•  Educational Equipment.


< Very Attractive country to have business >

1. Possibility of high Economic growth in Asia

2. Considering the relatively low labor cost and Geographical circumstance, Fit for

Manufacturing Bases for South East Asia

3. Development of Plenty Natural Resources

4. Effective Marketing to consumer Goods Using “First-Mover Advantage” strategy

IV.   Conclusion

THANK YOU

140424 한미얀마간 경제협력방안(수정본)

Presentations & Public Speaking