MYANMAR ECONOMIC REFORM & PROSPECT

BY

MOE MYINT KYAW, MR.

SECRETARY GENERAL, UMFCCI

SEPTEMBER 08, 2014

HISTORY OF MYANMAR• SINCE BC 200: EARLIEST INHABITANT OF RECORDED HISTORY IN MYANMAR STARTED

• 1044-1287: FIRST MYANMAR EMPIRE, BAGAN DYNASTY BY KING ANAWRAHTA

• 1510-1752: SECOND MYANMAR EMPIRE, TAUNGOO DYNASTY BY KING TABIN SHWEHTI

AND BAYINTNAUNG

• 1752-1885: THIRD MYANMAR EMPIRE, KONBAUNG DYNASTY BY KING ALAUNGPAYA (THE

KINGDOM FELL TO THE BRITISH OVER 1824-1885 AFTER THREE BRITISH-MYANMAR

WARS)

• 1885-1947: BRITISH COLONY

• 04 JAN, 1948: GET INDEPENDENCE FROM BRITISH

• 1948-1962: CIVIL WARS

• 1962-1988: MILITARY SEIZED POWER IN A COUP AND IMPLEMENT SOCIALIST SYSTEM

• 1988-2010: MILITARY TOOK POWER, IMPLEMENT MARKET ORIENTED ECONOMY

• NOV 2010: GENERAL ELECTION

• 30 MAR, 2011-PRESENT: DEMOCRATIC ELECTED GOVERNMENT, U THEIN SEIN

First Phase

• Political Reform

• National Reconsolidation

• Peace and Stability

• Freedom of Media

Second Phase

• Economic Reform

• Invite more FDI

• Change of Trade Policy

• Monetary & Finance Policy

• Conduct National Workshops in various economic sectors

Third Phase

• Public Administrative Reform

• Good Governance

• Clean Government

Forth Phase

• Private Sector Development Reform

• Encouraging Labor and Employer Org

• Promote Civil Society Org

• Establishing

FOUR PHASES OF REFORM BY NEW GOVERNMENT

SUSTAINABLE DEVELOPMENT OF AGRICULTURE TOWARDS

INDUSTRIALIZATION AND ALL ROUND DEVELOPMENT

EQUITABLE AND PROPORTIONATE DEVELOPMENT AMONG

REGIONS AND STATES

INCLUSIVE DEVELOPMENT OF ENTIRE PEOPLE

QUALITY OF STATISTICS AND STATISTICAL SYSTEM

Myanmar’s National Economic Policy

SWOT

Analysis

Strategic geographical location

Rich of natural resources

Cheap trainable work force

Peaceful culture

Favorable political environment

Strength

Low purchase power

Weak in advance education

Weak of Infrastructure

Lack of National Quality Infrastructure

Lack of Financing Facility

SMEs are too weak

Base on Speculation

Weakness

International Aids & ODA

Favorable international relation

Last Frontier in the region

Regional integration

Interest of international investors

Opportunity

High Competition in the region

Over damping of the products

Less demand of western world

Climate Changes

Tension in regional politics

Threat

ECONOMIC POTENTIAL ANALYSIS

ECONOMIC STRUCTURE OF MYANMAR

Major Export Items Major Import Items

Natural Gas Petroleum Products

Jade Machinery and spare parts

Timber Iron and steel construction materials

Pulses and Beans Plastic raw materials

Marine Products Palm oil

Raw Rubber Vehicles and spare parts

Garment Pharmaceuticals

Rice Cements

Fertilizers 6

MYANMAR’S TOP TEN TRADE PARTNERS(2012-2013)MILLION US$

Sr Country Export Import Volume of Trade

1 China 2,275 2,864 5,139

2 Thailand 4,039 840 4,879

3 Singapore 291 2,533 2,825

4 Japan 409 1,091 1,500

5 India 1,036 309 1,346

6 South Korea 282 337 620

7 Malaysia 97 360 458

8 Indonesia 31 195 227

9 Germany 47 144 192

10 Vietnam 81 74 156

Source: Custom Data and DOBT 7

MYANMAR KEY INDUSTRIES INVESTED BY VALUEPermitted Enterprises (as of 31 December 2013)

No Industry Value of Sector (USD in Mil) %

1 Power 19,300 43.6

2 Oil and Gas 14,400 32.5

3 Manufacturing 3,600 9.82

4 Mining 2,800 6.4

5 Hotel and Tourism 1,800 4.1

6 Real Estate 1,200 2.8

7 Livestock and fisheries 360 0.8

8 Transportation and Communication 300 0.7

9 Industrial Estate 190 0.4

10 Agriculture 190 0.4

Total 44,200 100

Source: Directorate of Investment and Company Registration, Ministry of National Planning and Economic Development, Myanmar 8

PERCENTAGE SHARE OF ELECTRICITY GENERATION BY SOURCE (FY 2012 – 2013)

9

• 18 ONSHORE BLOCKS & 22 OFFSHORE

BLOCKS ARE OPERATING BY MULTI-

NATIONAL COMPANIES.

• 32 ONSHORE BLOCKS ARE EXPOSED FOR

NEXT BIDDING SOON

• 23 OFFSHORE BLOCKS ARE AVAILABLE FOR

INVESTORS.

10

OIL AND GAS SECTOR

Crude Oil(MMBBL)

Natural Gas(BSCF)

Compressed Natural Gas(BSCF)

2011 – 12 6.452 436.7 7.154

2012 – 13 6.461 447.2 7.195

2013 – 14 6.520 697.1 7.194

2014 – 15 6.560 741.5 7.189

2015 – 16 6.615 744.7 7.201

Production Plan

24

MINERAL SECTOR

Eastern

Highlands

Central

Belt

Western

Ranges

Lead,Zinc

Copper

Silver

Tungsten

Antimony

Iron

Copper

Gold

Coal

Oil & Gas

Nickel

Chromite

Platinum

12

A N D A M A N

S E A

BAY

OFBANGL

KACHIN STATE

CHIN

STATESHAN STATE

KAYA STATE

KAYIN

STA

TE

MONSTAT

SAGAING

DIVISION

MAGWAY

DIVISION

BAGO

DIVISION

YANGON

DIVISION

MANDALAY

DIVI

SION

AYEYARWADY

DIVISION

TANINTHARYI

DIVISION

CHINA

LAOS

THAILAND

INDIA

BANGLADAHS

20 Industrial Zones in Yangon State

3 Industrial Zones in Ayeyarwaddy State

1 Industrial Zone in Chin Division

3 Industrial Zones in Mandalay State

1 Industrial Zone in Shan Division

2 Industrial Zone in Magway State

1 Industrial Zones in BagoState

1 Industrial Zone in Mon Division

1 Industrial Zone in Tanintharyi State

1 Industrial Zone in Sagaing State

Source : Ministry of Industry

NATIONAL EXPORT STRATEGY (NES)PRIORITY SECTORS

1. RICE

2. PULSES

3. BEANS AND OILSEED

4. FISH & CRUSTACEANS

5. TEXTILES & GARMENTS

6. RUBBER

7. TOURISM

EU GRANTS MYANMAR PREFERENTIAL TRADE RIGHTS (GSP)

• GIVEN THE POSITIVE DEVELOPMENT IN MYANMAR IN THE PAST 3 YEARS , EU

READMITTED MYANMAR TO ITS TRADE PREFERENCE SCHEME IN JULY OF 2013

• THE EU AGREED TO LIFT THE LAST OF THE BLOC’S TRADE, ECONOMIC AND INDIVIDUAL

SANCTIONS AGAINST MYANMAR IN RESPONSE TO THE PROGRESSIVE DEVELOPMENT OF

MYANMAR’S DEMOCRATIC GOVERNMENT LED BY PRESIDENT U THEIN SEIN.

• FROM 1ST JANUARY 2014, MYANMAR RECEIVED PREFERENCES UNDER THE REFORMED

GSP UNDER EBA SCHEME.

14

• Japan's investment in Myanmar during 1988 to 2013 is amount to US$ 270.283 million

• Myanmar-Japan bilateral trade is about US$ 1.414 billion in 2012

Japanese Prime Minister Shinzo Abe pledged to forgive 300 billion yen (US$ 2.97 billion) of the debts Myanmar owes Japan and offered 91 billion yen in Official Development Assistance for such purpose as developing an Industrial Park

• Japan has offered to provide US$ 205 million as an ODA loan to Myanma Port Authority to build a Port in Thilawa

THILAWA SEZ INFRASTRUCTURE(TO BE IMPROVED BY JAPANESE ODA)

1.Water supply2.Road3.Port4.Electric power-230kV power line-33kV cable-Substation-50MW power plant-Natural gas pipe

Water Purification Plant

Water Supply(40km)

Road Improvement

Substation /

Power Plant

will be set up

Electric Power-230kV power line-33kV cable-Substation-50MW power plant-Natural gas pipe

Port Improvement

16

MBF STRUCTURE

17

MBF ChairMyanmar President/Vice President

MBF Management Board- UMFCI/local Biz associations

-International biz associations

- WG leaders

President Office

MBF Secretariat

WGs

-Agro Industry &livestock

-Natural resources based

-Hotel & Tourism

-Banking &Finance

-Manufacturing &Trade

-Services

-Infrastructure

- Domestic Business

Associations

-International business

community

Govt . Secretariat

Lead Ministry counterparts

-Ministry of Agriculture & Irrigation

-Ministry of Mines

-Ministry of Hotel and Tourism

- CBM and ministry of Finance & Revenue

-Ministries of Industry, Commerce, Finance,

-Ministries of ICT, Transport, Health, & Edu

-Ministries of Transport/Electric Power

/Energy/Construction/YCDO

MBF Co Chairs- UMFCCI President

Task Force

(for initial period)

MBF Co Chairs- Union Minister - President office

USEFUL FACTS IN BUSINESS• CORPORATE INCOME TAX IS 25% OF THE PROFIT ANNUALLY

• COMMERCIAL TAX IS ABOUT 5% ON REVENUE FOR IMPORTED ITEMS & PRODUCTS MANUFACTURED OUTSIDE INDUSTRIAL ZONE. 3% COMMERCIAL TAX FOR PRODUCTS MANUFACTURED INSIDE INDUSTRIAL ZONE.

• UNSKILLED LABOUR WAGE IS ABOUT US$ 70-80/MONTH

• BANK DEPOSIT RATE IS 8% AND LENDING RATE IS 13%

• LOCAL CURRENCY IS KYAT AND EXCHANGE RATE IS ABOUT KYAT 970 PER US$

• ELECTRICITY RATE IS KYAT 50 PER UNIT FOR RESIDENTIAL AND KYAT 75 PER UNIT FOR COMMERCIAL

• TV ADVERTISING COST IS ABOUT US$ 400 TO 950 PER 10 SEC DEPENDS ON CHANNEL AND SPOT

FAQ

• DO AND DON’T OF MYANMAR IN DOING BUSINESS?

• MYANMAR PEOPLE PERSPECTIVE TOWARD THAI AND THAILAND?

• MYANMAR PEOPLE PERCEPTION TOWARD THAI PRODUCTS?

• WHAT WOULD BE THE TWO WAYS BILATERAL TRADE?

• ROLE OF BORDER TRADE BETWEEN THAILAND AND MYANMAR?

• WHAT ARE THE CONSTRAINTS DOING BUSINESS IN MYANMAR?

• MYANMAR PERSPECTIVE FOR AEC?

• WHAT WOULD BE MYANMAR IN AEC BEYOND 2015?