macro and market
TRANSCRIPT
Classification: Confidential (C-3)
Myanmar Pitchbook
Prepared by TMB Analytics
Date: December 2016
-2-
2015 GDP size: 67.0 USD bil (Thai 395.3)
GDP growth: 7.0%(2015) 7.7%(2020F)
GDP per capita: 1,292 USD(2015) 2,039(2020F)
2015 Unemployment rate: 5.0%
Minimum wage per month 56 USD (Thai 274)
Inflation: 11.5%(2015) 6.6%(2020F)
Export toMyanmar
Thailand 28%
Singapore 17%
Japan 7%
Main Exporters Major Thai Exports(excl gold)
Oil&Gas 11%
Con Mat 10%
Foods 9%
36% 22% 42%
Agriculture
Industry
Services
Source: UN, MOC, BOI, IMF, CEIC, and TMB Analytics
General Info
Population
54.4 mil people(Thai 68.1)
Economy
GDP Component (2015)
70%
7%
23%
Labor Force (2015)36.2 mil people (66.5% of total population)
FDI (2009-13)
From..China 37%UK 34%Thailand 3%In..Electricity 30%Oil&Gas 23%Telco 16%
Country Summary
0
Lower Middle
Used currency
Kyat and USD
Income Status
(As of July 2016)
Size
676,578 sq km(Thai 513,000)
Capital
Nay Pyi Daw (เนยปิ์ดอร)์
Ks
0
2
4
6
8
10
12
14
2010 2012 2014 2016E 2018F 2020F
400
800
1,200
1,600
2,000
2,400
5
5.5
6
6.5
7
7.5
8
8.5
9
2010 2012 2014 2016E 2018F 2020F
GDP Growth
(LHS)
GDP per Capita
(RHS)
-3-
Economy: Myanmar Macroeconomic Outlook
Strong Economic Growth
Sources: IMF and TMB Analytics
Stable Inflation Outlook
Inflation Rate IMF’s forecast
IMF’s forecast
Strong economic growth from
construction, manufacturing, and
services. With sound institutional and
policy frameworks, GDP growth is
expected to be no less than 7.5%,
resulting in continue rise in GDP per
capita. Relative low growth in 2015 was de to the flood.
Steadily declining Inflation
rate in medium term horizon is
expected from now available
monetary and fiscal tightening. A rise
in the past was a result of strong
aggregate demand, government’s limited tools, and the flood in2015.
USD%
%
Nevertheless, supply constraints especially in infrastructure services
and labor skill level shortage, continue to be a concern.
-10
-8
-6
-4
-2
0
-13
-11
-9
-7
-5
-3
-1
2010 2012 2014 2016E 2018F 2020F
10
15
20
25
30
35
40
45
50
-5
-3
-1
1
3
5
7
2010 2012 2014 2016E 2018F 2020F
-4-
Economy: Myanmar Stability Conditions
Sources: IMF and TMB Analytics
Fiscal Balance (LHS)
Gross Public Debt
(RHS)
%GDP%GDP
CA Balance (RHS)
CA/GDP (LHS)
USD bn%
Widening current account
deficit is expected to slow
down, but international
reserves level remains
insufficient. The reserve is
expected to be low, at 2.3 months of
imports in 2016, considering the
amount of development the country needs.
Vulnerability in financial
sector stems from rapid credit-to-
private-sector growth (annual
average of 50% from 2011-2014 )
and lack of regulatory and
supervisory framework.
IMF’s forecast
IMF’s forecast
Stable Current Account Deficit
Expected Stable Fiscal Deficits
stabilize
Large fiscal deficit but stable
public debt level is expected. Expansionary policies in the past
caused the deficit which was
financed through CBM printing
money. This unsustainable approach
is expected to alleviate, assuming
successful ongoing reforms.
stabilize
-5-
Ease of Doing Business in Myanmar
Sources: World Bank and TMB Analytics
146
66
149
143
175
179119
159
188 164
78
42
37
6882
27109
56
51
23
Starting a Business
Dealing with Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Minority Investors
Paying Taxes
Trading across Borders
Enforcing Contracts
Resolving Insolvency
Myanmar Thailand
Solving Insolvency
Starting a Business
11 steps or 13 days Dealing with
Construction Permit
14 steps or 95 days
Getting Electricity
6 steps or 77 days
cost 1,270% of income
per capita
Registering Property
6 steps or 85 days
Paying Taxes
31 payments or 282 hours
Enforcing Contracts
1,160 days and cost
51.5% of claim
Getting CreditDTF score 10
Protecting Minority Investors
Trading Cross Border
170
139
131
82
78
46
23
Myanmar
Lao
Cambodia
Vietnam
China
Thailand
Malaysia
Myanmar Ranked 170th (out of 190) in Ease of Doing BusinessRanking
! !
!
Note: 1) East of doing business is base on 2016 version, released on Oct 2016
Energy, 12%
Bev, 12%
+
++
+
+
++
(Others 48%)
50%
70%
100%
80%
80%
Thailand26%
16.2USD bil
5 yr Outlook
• Expect economy growth of no less
than 7.5% in and steady inflation
rate in medium term
• Under GSP agreement*
• Part of AEC Single Market
• Most good tariff reduce to 0%
Source: Ministry of Commerce, BOI, Index Mundi, CEIC and TMB Analytics
2015-2%
201210%
201321%
201412%
Thailand Export to Myanmar Landscape
TotalEx Growth
Note: 1) Unless state otherwise, data in this slide is from 2014, as 2015 experienced one off event
2) In 2014, Thai export 227.7 USD bil, 4.2 USD bil (1.8%) went to Myanmar
* See appendix for affected sectors under GSP agreement
Border Export2.7 USD bil
64%
Border
Est.Border Ratio
Thai Export to Myanmar
4.2 USD bil
Myanmar market has positive outlook in align with ongoing market liberalization
Currency
Settlement
46% USD
52% THB
Con Mat, 9%
Foods, 9%
Machinery, 10%
-6-
20157%
201215%
201314%
201418%
Border Ex Growth
Myanmar flood
Ranong*
20% -
Kanchanaburi
2% -
SEZ Phase II
Focus Cluster
Ecotourism
Agriproduct Processing
Tak
64% ++
SEZ Phase I
Focus Cluster
Distribution Center
Labor Intensive Mfg
Chiang Rai
15% +
SEZ Phase II
Focus Cluster
Tourism
Processing Foods
Agriproduct
Processing
Logistics
*SEZs Phase I, began
developing in 2014
Phase II is expected to start in 2017
Share Growth
Share Growth
Share Growth
Share Growth
FDI Landscape and Opportunity for Thai Investors
Potential FDI Sectors for Thailand
• Opening investment opportunity
A result from ongoing politic and economic reform
toward market liberalization
• Supportive trade agreement
ASEAN 0-5% tariff rate (by 2018)
• Supportive tax system:
Tax benefits on supported industries
• Pro investment infra:
Three SEZ: Dawei, Thilawa and Kyaukpyu*
Supportive Investment Environment
Agriproduct and Processed Foods
Mandalay
*data as of Jan 2016
30% 23% 16% 17%
Electricity Oil&Gas Telco&Transportation Mfg
0%
5%
10%
15%
0
2,000
4,000
6,000
8,000
2011 2012 2013 2014 2015
2012 onwards, FDI growth is a leap in
various sectors from energy, to telco and
mfg, despite relative smaller growth in 2015 from the flood.
37% 34%
5% 3%Singapore China S.Korea Thailand
By investment countries (2011-15 avg)
By sectors (2011-15 avg)
USDmn % of GDP
FDI inflow is on an upward trend
Source: BOI, CEIC and TMB Analytics
Construction/Con Mat
Jewelry/Mining
Toungoo
Energy
• Rich natural resources and
supportive climate
• Lack of full cycle players
Textile
YangonRetail
• Growing demand
along striving city
• Cheap labor
• Lack of major
players
-7-
-8-
Local currency Guide: Myanmar Kyat
Source: Bloomberg, IMF, and TMB Analytics
Currency Description
FX Regime & Performances
Name
Regulator
Monetary Policy
Monetary
aggregate
The reserve money targeting
framework has been introduced
since 2014
Managed
arrangement
Kyat (จา๊ดพม่า)
Central Bank of
Myanmar (CBM)
The currency is soft peg US
dollar within +/- 2% band. Year-
to-date, MMK gains 0.69%
against USD, strengthening
less than ASEAN peers
Spot Forward The spot market consists of the
retail money changer, commercial
bank market, and FX auctions
organized by the CBM
Control on Exports and Imports of
Export/Import: Exporters and importers
can take out/bring in foreign currency up
to US$10,000 or its equivalent without
declaration.
FX movement MMK and THB against USD
30.50
31.50
32.50
33.50
34.50
35.50
36.50
37.50
800
900
1,000
1,100
1,200
1,300
1,400
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
USD/MMK USD/THB
↑ MMK weaker↓ MMK stronger
↑ THB weaker
↓ THB stronger
(average price MMK/THB is 34 MMK per 1 THB)
MMK=-1242+69THBR^2 =0.88
-9-
Regulations, Process and Benefits for Thai Exporters
Check type of export to determine
maximum cap each entry
Priority item: No cap
Optional item: Cap at 100,000 USD
per entry
(See appendix for goods in each type)
Check inspection requirement
(see appendix for exception goods)
Pay Import tax (Custom duties)
5-300% Garment
15-200% Machinery/equipment
5-300% Vehicle
25% Others
Contact bank to facilitate
transaction
AEC Benefit
Inclusion List:
99% tariff exempted
Sensitive List:
Reduce to 5% tariff by 2018
• AEC single market (AFTA)
• BIMSTEC
• RCEP (in progress)
• ASEAN-Hong Kong (in process)
Goods Delivery
Receive Export Order Payment
1
Production for export
goods. Seek bank advise if
needed.
No FX restriction for
payment in USD or any
other currencies
Path toward
Market Integration
2 3
Sources: BOI, CEIC and TMB Analytics
No Specific production
requirement
Declare at Custom on type, origin and
price of goods
Check if the goods is tax exempted
(see appendix for complete list)
Check Myanmar importers as some goods
can only by imported by its government
(see appendix for complete list)
Transaction exceeding of
10,000 USD or equivalent
need to be declared
-10-
Preparation1 Setting Up Business2
Regulations and Process for Thai Investors
Company name reservation
Company Registration
• Reserved name with DICA
through its online system or
CRO. Then obtain reference
letter from ward chief (2 days)
• Acquire Business Incorporation
Certificate online or through
CRO (1 day)
• Obtain signature of the directors
before lawyers/ certified
accountant (1 day)
• Pay stamp duty and registration
fee with DICA (1 mil kyat and
60,000 kyat respectively)
(1 day )
2.1
Check Minimum investment
requirement
Determine investment and
business form (see appendix for
available entities)*
• Manufacturing: 150,000 USD• Services: 50,000 USD
• No local partnership required
Company Account Opening
Tax Registration
Start business
• Use the document, acquired
from DICA, to open account at
local banks. Deposit the
minimum investment amount
(1 day)
• At least 30 days before starting
business, complete Commercial
Tax Registration form with
Township Internal Revenue
Department Office (1 day)
• Corporate Income Tax = 25%
(as of Mar 16)
2.2
Obtain Certificate of Incorporation
• Submit evidence of bank
account to DICA to complete
registration process (4 days)
DICA stands for Directorate of Investment and Company Administration CRO stands for Company Registration Office
Register business for SEZ
• Register company and
investment permit online or at
designated SEZ One Stop Service (2 days)
+
Sources: BOI, CEIC and TMB Analytics * Trading business is not allowed
-11-
Benefits for Thai Investors
General Benefit
Right to deduct depreciation on capital
assets that are subject to income
assessment
A relief from tax of up to 50%, on
profits accrued on exports goods
Right to deduct expense for R&D
business
+ or
Income Tax Exemption in the first 5 years
Exemption from custom duty on imported cap
good used fro business and up to 3 years for
imported raw mat
A relief for up to 50% from commercial tax on
goods produced for export
Right to carry forward and sell off losses for 3
consecutive years Maximum of 70 years land lease contract
Business in non SEZ
Business in SEZ
• Income Tax exempted for the first 7 years and
50% relief for 5 year after (and further 50% relief
for 35 years after if the profit is used for
reinvestment)
• Import Tax exempted for machinery / raw mat
• Export Tax exempted in the first 7 year and 50%
relief for 5 years after
• Right to carry forward and sell off losses for 5
consecutive years• Maximum of 75 years land lease contract
Sources: BOI, CEIC and TMB Analytics
THANK YOU
Disclaimer
This document is issued by TMB Analytics, a division of TMB Bank PCL. All analyses are based on information available to
the public. Although the information contained herein is believed to be gathered from reliable sources, TMB makes no
guarantee to its accuracy and completeness. TMB may have issued, and may in the future issue, other reports that are
inconsistent with, and reach different conclusions from, the information presented in this report. Opinions or predictions
expressed herein reflect the authors’ views, not that of TMB, as of date of the analysis and are subject to change without
notice. TMB shall not be responsible for the use of contents and its implication.
-13-
Appendix
• GSP benefit sectors: Agriculture & Processing Agriculture, Textiles, Garments, Auto Parts to EU, Japan, Australia, and Russia.• Goods that can only be imported by Myanmar Government
• MSG, soft drink, bread, gum, wafer, chocolate, can food, noodle, liquor, cigarette, fruit, furniture made from plastic
• Type of item exported
• Priority item: industrial machinery and raw mat, fertilizer, pesticide, other Agriculture inputs, con mat, transport equipment,
medicine, fishery equipment, Animal feed, stationary, oil
• Optional item (luxury); food, bev, textiles, personal belonging, elec appl, furniture, vehicle
• Export goods that need government permission
• Sugar, gold, Naptha, plastic scrap, metal coin, PVC product, clenbuteral substance, uniform, ceramic, marble, LNG, chainsaw,
used motorcycle motor, game device, tntagilo printing machine, used vehicle, pirated articles, artifacts
• Export goods that are tax exempted
• Export by approval of Myanmar Investment Commission (MIC)
• For use of construction purpose; machinery, equipment, and parts
• Raw mat/used for packaging, (exempted in the first 3yrs)
• Commercial product for mfg and for re export
• Export by Myanmar government for national purpose
• New car export to Myanmar in US dollar
• Oil product that is imported by oil firms in corporation with government enterprise
• Medicine and medical equipment• Fertilizer, pesticide, agriculture equipment
• Pass through export to third country exporter pay 1) 5% to mm import 2) 7.5% to กรมศุล (usually car equipment)
Export to Myanmar
• Available investment entity option
• Wholly foreign owned enterprise
• JV
• Mutual contact
• Available business operation option
• Partnership
• Company Limited
• Branch
• Organization (both for profit and non profit)
FDI in to Myanmar
• More FDI information in Cambodia at
• Directorate of Investment and Company Administration (DICA)
http://dica.gov.mm/
• ดชัมลีะคู่มอืการลงทุน สาธารณรฐัแห่งสหภาพพม่าhttp://www.boi.go.th/upload/Myanmar_manual_65917.pdf