PwC MyanmarWeekly Business Intelligence

Issue 16117 May 2019

www.pwc.com/mm

PwC | May 2019

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PwC | May 2019

1. Weekly Key Financial & Business News

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PwC | May 2019

Weekly Key Financial & Business NewsHeadlines

CB Bank, Telenor launch new Visa card

Rubber exports expected to rise as production improves in Myanmar

Myanmar to buy power from China

Sino Great Wall: Crashing out on the belt and road

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Saudi Officials to Inspect Myanmar Fisheries

PwC | May 2019

Weekly Key Financial & Business NewsHeadlines

PTTEP Announces 2019 First Quarter Net Income

Govt still keen to build international airport in Bago

Feasibility study on Mandalay-Muse railway in process

Number of consumer complaints set to double this year: official

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A strategic partnership with benefits for China and Myanmar

PwC | May 2019 6

Rubber exports expected to rise as production improves in Myanmar

Myanmar is expecting to export around 300,000tonnes of rubber this year on the back of risingproduction at local plantations, U Khaing Myint,secretary of the Myanmar Rubber Planters andProducers Association (MRPPA) said last week.This is more than the government’s estimates of260,000 tonnes this year, he said.Rubber exports have been rising in recent years.In 2017, Myanmar sold 140,000 tonnes of rubberoverseas, which is up by 56 percent over theprevious year, according to official data.Of the 1.6 million acres of rubber plantation land,half are currently actively producing rubber,according to the MRPPA.The rubber plantations have over the years beenplanting new rubber trees while cutting downolder trees and those which no longer producelatex.The aim is for Myanmar to eventually become asubstantial exporter of rubber at a time wheninternational demand for rubber is rising.Currently, Thailand is the world’s largest rubberproducer with an annual yield of about 4.6milliontonnes. Indonesia is the second largest producer,

yielding about 2.4 million tonnes per year.Meanwhile, Malaysia produces about 2.2milliontonnes a year. “While Myanmar does not produceenough rubber to make a change in the globalmarket, the number of rubber plantations hasbeen increasing and this will generate moreproduction in the years to come,” U Khaing Myintsaid. Rubber and rubber products are among thecommodities the government is promoting underits National Export Strategy to raise total exportsand narrow the trade deficit.Currently, only 8 percent of locally producedrubber is used for domestic consumption. Theremaining 92pc is exported. Of the rubberexported, 70pc is sold to China, the world’slargest user of rubber, according to the MRPPA.Efforts are now being made to improve the qualityof rubber produced in Mawlamyaing, Mon State,where plans to construct a central marketplace fortrading rubber are being made.Source: Myanmar Timeshttps://www.mmtimes.com/news/rubber-exports-expected-rise-production-improves-myanmar.html

NewspapersMyanmar Times

13 May 2019

PwC | May 2019 7

CB Bank, Telenor launch new Visa card

Telenor Myanmar, CB Bank and Visa last weeklaunched a new CB-Telenor Visa card inMyanmar, days after the Central Bank ofMyanmar on April 24 raised annual credit cardinterest rates to 20pc from 13pc to put a lid onrunaway credit card debt.Nevertheless, the companies believe this willappeal to a growing middle-class and open upnew avenues for more to gain access to financialservices.“This new initiative will serve as a catalysttowards creating a cashless society and promotefinancial inclusion in Myanmar, as more peoplewill have access to finance and credit,” U KyawLynn, Chief Executive Officer of CB Bank, said ina statement.The CB Telenor Visa card is the first evercollaboration in Myanmar between a local bankand a telecom operator. The new credit card willalso feature Visa’s contactless paymenttechnology, which will encourage the use ofelectronic payments and and [drive] Myanmartowards a less-cash society, said Lillian Wang,Country Manager for Visa Myanmar.

Holders of the new credit card will be able to useit at more than 53 million merchant locationsworldwide, including for online shopping andhotel bookings.Currently, there are between 500,000 and600,000 credit card holders in Myanmar, 20pc-25pc of which incur late payment charges, UZeyar Aung, head of card department of CB Bank,told the Myanmar Times last month.CB Bank, the first bank in Myanmar to introducecredit cards in early 2017, has about 50,000 creditcard users. A quarter of these users fail to repaytheir credit card bills within the deadline, U ZeyarAung said.The bank will decide on who qualifies for the newCB-Telenor Visa credit card based on eachapplicant’s eligible limit and in accordance withCentral Bank guidelines.

Source: Myanmar Timeshttps://www.mmtimes.com/news/cb-bank-telenor-launch-new-visa-card.html

NewspapersMyanmar Times

13 May 2019

PwC | May 2019 8

Myanmar to buy power from China

Myanmar will buy 1000 MW of electricity fromChina as a quick solution to an ongoing domesticshortage. It will sell the excess to other countriesif needed, said U Soe Myint, deputy permanentsecretary from the Ministry of Electricity andEnergy (MOEE).The additional supply of electricity will bepurchased in batches from China Southern PowerGrid over the next two years, said U Tin MaungOo, permanent secretary of the MOEE, said at apress conference in Nay Pyi Taw“We will buy 1000MW by 2021 but it isimpossible to use all the electricity. We will resellthe excess,” U Soe Myint said.The electricity will be transported from Dohon inChina to Muse, Mine-ye, Hopone, Loikaw andPhayagyi. “Even if we are not able to buy theentire 1000MW, we will purchase at least300MW,” said U Tin Maung Oo.While Myanmar and China have both signed aninitial agreement for the purchase, the authoritiesstill need to discuss pricing and whether thepublic can afford the additional supply of power.“As more electricity is urgently needed, we need

to be careful to ensure the price is viable andreasonable for Myanmar and not purchased at aloss,” U Tin Maung Oo said, adding that the finalpricing structure will be transparent and madeavailable to the public.The country is currently experiencing a 600MWshortage of electricity and this is expected morethan double to 1500MW in the coming year,according to the MOEE’s estimates. While severalhydropower projects are currently beingimplemented, these will take a much longer timeto complete due to disagreements over the use ofland and. Meanwhile, coal-fired projects havecome under scrutiny for their damage to theenvironment while details on several other powerplants expected to come onstream have not beenrevealed, said U Soe Myint.Electricity shortages are an ongoing problem forMyanmar, where existing power supply lagsdemand. To plug the gap, the authorities haveresorted to buying electricity overseas.Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-buy-power-china.html

NewspapersMyanmar Times

14 May 2019

PwC | May 2019 9

Sino Great Wall: Crashing out on the belt and road

A Chinese firm involved in a planned US$2.5billion redevelopment of Yangon Central RailwayStation appears on the brink of collapse, withcreditors launching legal action to recover loansmade to the company.ON OCTOBER 30, 2018, Mottama Holdingsinvited journalists to a high-profile “topping-out”ceremony for its M Tower project, a 26-storeyoffice building near Hledan junction in Yangonthat used prefabricated steel structure from thecompany’s factory in the city.After putting in place the final steel beam –complete with gold-coloured bolts – more than100 metres above Pyay Road, company chair UYang Ho hailed a “new era” for Myanmar’sconstruction industry, one in which steel wouldreplace reinforced concrete as the buildingmaterial of choice for high-rise projects. M Tower,he added, “will become a prominent landmark inYangon”.Behind the scenes, though, there was less rosynews. Twelve days earlier, one of Mottama’s keypartners, Chinese firm Sino Great Wall, hadreceived notice from regulators in China that it

was under investigation for suspected violationsof information disclosure rules.Sino Great Wall won the US$80 millionengineering, procurement and construction (EPC)contract for M Tower in January 2016, shortlybefore its share price peaked at 14.4 yuan, givingit a market capitalisation of 23 billion yuan ($3.4billion). At the time, Sino Great Wall was winningbillions of dollars of foreign EPC contracts andbilling itself as a “leading private enterprise alongthe Belt and Road” – a reference to President XiJinping’s signature trade and investmentinitiative launched in 2013.Today Sino Great Wall’s share price is just 2.29yuan. The company’s debt-to-net-asset ratio ismore than 120 percent, and it is facing litigationfrom nearly a dozen creditors due to 2.7 billionyuan of overdue loans. Rather than a poster-childfor BRI, Sino Great Wall has become a cautionarytale of debt-fuelled overexpansion.

Source: Frontier Myanmarhttps://frontiermyanmar.net/en/sino-great-wall-crashing-out-on-the-belt-and-road

NewspapersFrontier Myanmar

14 May 2019

PwC | May 2019 10

Saudi Officials to Inspect Myanmar Fisheries

In the latest chapter of an ongoing story, it nowseems possible that fish exports from Myanmar toSaudi Arabia could resume in the near future. Ourreaders will recall that last March, Saudi Arabiabanned imports from Myanmar fisheries; themove came after health concerns were raisedabout fish imported to Saudi Arabia from certainAsian countries. Government officials andrepresentatives from the Myanmar FisheryFederation have been working with Saudi officialson the matter ever since.Now, officials from Saudi Arabia are set to visitMyanmar to personally inspect over 20 fish pondsand cold storage facilities. If the facilities andproducts meet the health requirements, Myanmarwill be able to export to Saudi Arabia again.Before the Saudi officials’ visit, the FisheryDepartment is helping fisheries to obtain acertificate of Good Aquaculture Practices (GAqP),showing that they are, for example, avoidingunsanitary conditions. The ASEAN economiccommunity has been encouraging fisheries todevelop and apply quality management systemsthat ensure food safety and support the

competitive position of ASEAN fisheries’ productson world markets.U Thet Naing, the Deputy Director of QualityControl and Research Department under theFishery Department, said: “About 20 percent ofthe fishery ponds do not have any managementsystem, while another 20 percent only finish halfof the requirements in the ASEAN system. Theremaining 60 percent are doing well at meetingthe requirements. Because of that, we havereminded both the fishery owners and theMyanmar Fishery Federation to focus on this. Ifthey need anything, they should contact thedepartment and we will help.”“The Saudis want to inspect our fish farms,” UWin Kyaing, General Secretary of the MyanmarFishery Federation, said. “However, the farmshave been exporting their products to the EU, soif they can pass the EU health tests, they shouldbe able pass those of other countries. Thestandards are the same.Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/saudi-officials-inspect-myanmar-fisheries

NewspapersMyanmar Business Today

15 May 2019

PwC | May 2019 11

Govt still keen to build international airport in Bago

The government is still expecting to buildHantharwaddy International Airport in Bago withsupport from the Japanese, said U Win Khant,Permanent Secretary of the Ministry of Transportand Communications.“As Hantharwaddy is an essential airport, we’vebeen trying hard to get construction started. Weare seeking help from Japan to manage theconstruction of aircraft runways,” U Win Khantsaid during a press conference detailing thegovernment’s performance in its third year inpower, on May 13.U Aung Ye Tun, assistant permanent secretary ofthe same ministry, said negotiations with Japan’sMinistry of Land, Infrastructure, Transport andTourism are ongoing.A tender for the construction of the US$1.5 billionairport was first launched in 2012. The projectwas awarded to a consortium comprising Japan’sJGC Corporation, Singapore-listed YongnamHoldings and Singapore’s Changi AirportsInternational.Last year, Yongnam announced that theframework agreement signed between the

Department of Civil Aviation and the consortiumin 2014 to design, construction and managementof Hanthawaddy International Airport on thebasis of a public-private partnership (PPP) hadexpired. The contract was not renewed.An earlier tender awarded to a South Koreanconsortium collapsed.The authorities say Hantharwaddy will help theexisting Yangon International Airport handleexcess capacity in the future.“Myanmar only has three international airports inYangon, Mandalay and Nay Pyi Taw andpassengers are increasing. Although there wereonly 9.26 million travelers to Myanmar in 2016,the number increased to around 10 million in2018,” U Win Khant said.Meanwhile, tenders for the construction of Heho,Mawlamyine and Kawthaung airports have beencalled for under PPP arrangements.

Source: Myanmar Timeshttps://www.mmtimes.com/news/govt-still-keen-build-international-airport-bago.html

NewspapersMyanmar Times

15 May 2019

PwC | May 2019 12

PTTEP Announces 2019 First Quarter Net Income

PTT Exploration and Production Public CompanyLimited (PTTEP) reported its first quarter’s netincome of USD 394 million (equivalent to MMK602,820 million).Phongsthorn Thavisin, PTTEP President andChief Executive Officer, said the companyrecorded recurring net income in the first quarterof this year at USD 374 million (equivalent toMMK 572,220 million) an increase of 23% fromUSD 304 million (equivalent to MMK 465,120million) in the same period of 2018. However,profits from non-recurring items was USD 20million, decreased from USD 119 million in thesame period last year. This was mainly driven by aless appreciated due to currency changes, whichmostly has no impact to the company’s cash flow.Consequently, PTTEP reported net income for thefirst quarter this year at USD 394 million(equivalent to MMK 602,820 million), a decreaseof 7% from USD 423 million (equivalent to MMK647,190 million) in the same period last year.For the first quarter of 2019, the Company’s totalrevenues were USD 1,428 million (equivalent toMMK 2,184,840 million), this is an increase of

15% from USD 1,240 million (equivalent to MMK1,897,200 million) in the same period last year.This was primarily driven by improved averagesales volume to 319,230 barrel of oil equivalentper day (BOED), compared to 293,099 BOED inthe first quarter of 2018 as a result of theacquisition of additional participating interests ofthe Bongkot Project, coupled with higher averageselling price from USD 44.01 per barrel of oilequivalent (BOE) to USD 46.21 per BOE.Consequently, PTTEP has operating cash flow ofUSD 943 million (equivalent to MMK 1,442,790million) and EBITDA Margin of 76% at the end ofthe first quarter.“PTTEP is moving forward with the new “Expand& Execute” strategy which we’ve activelyimplemented since earlier this year and havesuccessful achieved several major milestones.

Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/pttep-announces-2019-first-quarter-net-income

NewspapersMyanmar Business Today

15 May 2019

PwC | May 2019 13

Feasibility study on Mandalay-Muse railway in process

A feasibility study for a proposed US$9 billionrailway linking Mandalay to Muse is beingconducted, said U Ba Myint, managing director ofMyanma Railways, which comes under theMinistry of Transport and Communications.“We estimate that it [the railway project] will costabout US$8.9billion,” he said at a pressconference in Nay Pyi Taw on May 13.A Memorandum of Understanding to study thefeasibility of the project was signed betweenMyanma Railways and China Railway EryuanEngineering Group in October last year.The railway, which is expected to be a single line,will be 421 kilometers long. Trains will run at thespeed of 160 km per hour, resulting in total traveltime of 3 hours from Mandalay to Muse.If this railway is successfully completed andimplemented, it could become the firstinternational or inter-regional railway forMyanmar, said U Win Khant, permanentsecretary of the Ministry of Transport andCommunications.“The project will be submitted to the state if itturns out to be beneficial based on the final report

of the feasibility study. If it is to be carried out, atender will be invited and the project will beconducted via Public Private Partnership,” hesaid.This article has been corrected. The Mandalay-Muse railway is estimated to cost US$9 billion,not the feasibility study.

Source: Myanmar Timeshttps://www.mmtimes.com/news/feasibility-study-mandalay-muse-railway-process.html

NewspapersMyanmar Times

15 May 2019

PwC | May 2019 14

Number of consumer complaints set to double this year: official

The Department of Consumer Affairs says that 80percent of the complaints it receives from thepublic is regarding telecommunications serviceproviders.This was revealed by the department’s director UMyint Cho during a press conference earlier thisweek.There are currently four companies providingtelecommunications services in the country:Myanma Posts and Telecommunications, Oredoo,Telenor,and My Tel.“The most common complaints we receive areregarding matters such as being billed for servicesthat weren’t subscribed to or having serviceterminated unreasonably. However, thecompanies already have customer-service linesand apps that customers can use at anytime of theday. In many cases, the people who complained tothe department would have been better served ifthey had used their telco’s customer-servicefacilities.“Only if the issue is something that can’t beresolved through those channels should membersof the public get in touch with the department,” U

Myint Cho said, adding that the department isexpecting to receive twice as many complaints asit did all of last year.“For the whole of last year, the departmentreceived 400 complaints. We are only in thesecond week of May this year, but we have alreadyreceived 500.”One member of the public who spoke to MyanmarTimes said, customer-service hotlines were nothelpful in resolving his issues.“I topped up my phone with K3000 worth ofcredit one night, but by the next morning I hadonly K800 in credit left. I thought I was beingbilled for nothing so I called my service provider’scustomer-service line only to get a recording. Myproblem was only solved after I commented onthe company’s Facebook page,” said U Tun.

Source: Myanmar Timeshttps://www.mmtimes.com/news/number-consumer-complaints-set-double-year-official.html

NewspapersMyanmar Times

15 May 2019

PwC | May 2019 15

A strategic partnership with benefits for China and Myanmar

Myanmar’ growth potential depends mainly onfour key areas: energy, mining, agriculture,manufacturing and infrastructure.The country is likely to see an economic rise dueto abundant low-cost labour compared to othercountries in the region. Myanmar has sufferedfrom international sanctions for years, as well assevere import restrictions imposed by the formerjunta. Many economists say there is likely to behuge economic growth in Myanmar after joiningChina’s Belt and Road Initiative.The Belt and Road initiative or the New Silk Roadis a modern initiative put forward by ChinesePresident Xi Jinping in 2013, which aims toexpand China’s transport and communicationnetwork and connect China with many of theworld’s economies under the umbrella of “jointprofit”. This initiative is cross-border and notlimited to the Asian region, reaching manygeographically distant countries. Of course,neighbours have the largest share of the projectsraised by this initiative. It is logical that thenearest countries are the first beneficiaries ofsuch a huge project.

When dealing with the special relationshipbetween the Chinese and Myanmar and thepolitical and economic relations that bring themtogether, more emphasis should be placed on theeconomy. Chinese investor plays a key role insupporting Myanmar’s economy.Today, many Chinese companies in Myanmar areinvesting in natural resources and introducingadvanced technology to the country. For its part,the Chinese government attaches greatimportance to the promotion of investment inMyanmar because of the great benefit to China,based on the economic studies that push theChinese government to move towards thisneighbouring country.China is an important political and economicplayer in Myanmar, through China’s projects tobuild bridges, roads, ports and many other vitalprojects, which serve the Belt and Road Initiative.

Source: Myanmar Timeshttps://www.mmtimes.com/news/strategic-partnership-benefits-china-and-myanmar.html

NewspapersMyanmar Times

17 May 2019

PwC | May 2019

2. Weekly Key Policy News

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PwC | May 2019

Weekly Key Policy NewsHeadlines

The National League for Democracy's power fail

Country’s business leaders speak at Myanmar Times economic forum

New policy aims to raise number of new cars on the road

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MIC Aims to Facilitate Foreign Investments

Myanmar state counselor calls for working with private sector to achieve development goals

PwC | May 2019 18

The National League for Democracy's power fail

Widespread blackouts have returned to Yangonfor the first time in several years. In recent weeks,many township-level electricity distributionoffices have been forced to introduce scheduledoutages to cope, with supply falling far belowdemand.The ostensible reason is the lack of water in thecountry’s hydropower dams, which producearound half its electricity. But the real problem isthe National League for Democracy government’sfailure to bring enough new power generationcapacity online. In a few weeks or, at most, acouple of months, the monsoon rains will havebegun to fill the dams and a fairly steady supplywill return. But we should not let that distractfrom the huge power supply problem thatMyanmar is facing. This year’s outages will seemmild compared to what we can expect in the nextthree to five years. Since the NLD took office inMarch 2016, Myanmar has added barely any newgenerating capacity. The exception is theMyingyan gas-fired plant developed bySingaporean company Sembcorp. But in that case,most of the negotiations that enabled

construction to take place occurred under theformer Union Solidarity and Development Partyadministration. The NLD can claim very littlecredit, aside from not messing it up. With newfactories opening and millions of householdsbeing connected to the grid, demand is increasingat 10 to 15 percent a year. At that rate, Myanmarneeds to add a plant the size of Myingyan everytwo years or so. But it can’t do this because it hasprecious little domestically produced gas to workwith. There is scope to get more out of existinginfrastructure, by refurbishing hydro and gas-fired power plants and improving transmissionand distribution systems. But that will only workfor a short while. At some point, you need tobegin generating more power. The only majorpower projects that have received any sort ofapproval from the government since 2016 are fourgas-fired plants (most of which would useimported gas) and a handful of small andmedium-sized hydropower projects.Source: Frontier Myanmarhttps://frontiermyanmar.net/en/the-national-league-for-democracys-power-fail

NewspapersFrontier Myanmar

13 May 2019

PwC | May 2019 19

Country’s business leaders speak at Myanmar Times economic forum

The Myanmar Times successfully held the talk“Myanmar’s economy towards GE2020 andbeyond”, at Wyndham Grand Yangon Hotel onMonday May 13.The event gathered investors, executives,managers, policymakers and researchers to lookat what lies ahead for Myanmar’s economy. It wasmade possible by the generous support of MTower, Eneos, Marga Group, Bata and TunCommercial Bank.Special thanks is extended to the five businessleaders on the panel: Aung Htun, deputy chair,Myanmar Investment Holdings; Serge Pun,executive chair, Yoma Strategic and FirstMyanmar Investment Co; Than Lwin, seniorconsultant, KBZ Bank; Peter Beynon, countrychair, Jardine Matheson in Myanmar andCambodia; and Alok Verma, acting chief executiveofficer, Ooredoo Myanmar.The Myanmar Times would also like to expressour gratitude to the two keynote speakers, MaCherry Trivedi from the Myanmar Institute ofDirectors and Sean Turnell, Daw Aung San SuuKyi’s economic adviser.

“The aim for our inaugural economic forum wasto discuss the prospects and investmentopportunities in the economy over the next fewyears as Myanmar heads towards the nextGeneral Election but also beyond that,” said KangWan Chern, editor of the Myanmar Times. “Wehope the event was fruitful for all who attended.”Her keynote speech on corporate governancehighlighted that such principles, includingdeveloping the next generation of leaders, shouldapply to businesses, governments and other typeof organisation. She also touched on businessfunding for political parties, and the importanceof transparency, and making choices aboutadvertising by working with professional mediaand not purveyors of fake news on social media.Local laws in Myanmar right now do not restrictpolitical contributions from businesses. It is up tothe board level to ensure that ethical standardshave been set for themselves.Source: Myanmar Timeshttps://www.mmtimes.com/news/countrys-business-leaders-speak-myanmar-times-economic-forum.html

NewspapersMyanmar Times

14 May 2019

PwC | May 2019 20

New policy aims to raise number of new cars on the road

The Ministry of Industry launched a newautomotive policy this month, with the aim ofsupporting transport and auto-related businessthrough sustainable development and moreforeign direct investments.Under the new policy, the usage of left-hand drivevehicles will be promoted for road safetypurposes. Control measures on imports of usedright-hand drive vehicles, which now dominatethe market, will also be implemented.Meanwhile, tax incentives will be given to carmakers with local assembly and production plantsthat meet international standards. Over thelonger term, the country will aim to build up itsauto-parts manufacturing industries to serveoverseas markets.This is expected to help increase the usage of newleft-hand drive vehicles in the economy by 4percent, or 200,000 new vehicles, in the first fiveyears and to 400,000 vehicles in next five. Overthe longer term, the ministry is targeting a total of1.2 million new vehicles.The number of vehicles used in Myanmar hasspiked since the authorities liberalised vehicle

imports in 2012. Now, automakers estimate thatthe number of vehicles used in Myanmar willexceed two million in 2020, more than doublingfrom 721,324 in 2016, or 15 units per 1000 people.More than half the number of vehicles is inYangon. In 2011, there were only 365,000vehicles on the road, according to official data.However, the ratio of new car sales to the totalnumber of vehicles on the road is now just lessthan 1pc. As such, the new policy is expected todrive further growth in domestic automotivemanufacturing and auto-related businesses alongthe supply chain, such as machinery and partsmanufacturing, supply of raw materials, after-sales services, parts distribution and insuranceand financing services providers. It will alsogenerate many employment opportunities, DawYi Yi Kyaw, general manager of No.1 HeavyIndustrial Enterprise under the Ministry ofIndustry, told the Myanmar Times.

Source: Myanmar Timeshttps://www.mmtimes.com/news/new-policy-aims-raise-number-new-cars-road.html

NewspapersMyanmar Times

15 May 2019

PwC | May 2019 21

MIC Aims to Facilitate Foreign Investments

The Myanmar Investment Commission (MIC)collaborated with the DaNa Facility, a UK aid-funded program, to organize a one-day workshopto promote and facilitate foreign investments.Over 50 officials, who represented 16 differentagencies of the Myanmar Government that dealwith such investments, were in attendance. Theworkshop provided an enhanced understandingof foreign investors’ requirements. It also dealtwith the adverse effects of bureaucratic rules andregulations on investors, as well as ways tosupport DICA in responding to their needs.This workshop was the first in a series designed toattract both domestic and foreign directinvestment; the series as a whole will reach out toinvestment agencies in the various states andregions of Myanmar. The second workshop (16-17May) will be held in Yangon, and cover lowerMyanmar; the third (20-21 May) will be held inMandalay, and cover upper Myanmar. All threewill review the Myanmar-language version of theUnited Nations Economic and Social Commissionfor Asia and the Pacific (UNESCAP) Handbook onInvestment Promotion and Facilitation. This

document was prepared jointly by DICA and theDaNa Facility.The workshop also reviewed recent developmentsin responsible and inclusive business, financialinclusion, the business environments of statesand regions, as well as in the Private SectorDevelopment (PSD). These developments willstrengthen the business environment, empowerthe private sector to create jobs, and improve theincomes of men and women in Myanmar. Theeffects will be especially apparent to the poorestpeople who live in more remote areas of thecountry. Attracting responsible and inclusivebusinesses, and building on the competitivestrengths of the various states and regions, canplay a critical role in strengthening the economyand social well-being of those areas; it can thusaid in supporting national security and peace.

Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/mic-aims-facilitate-foreign-investments

NewspapersMyanmar Business Today

15 May 2019

PwC | May 2019 22

Myanmar state counselor calls for working with private sector to achieve development goals

YANGON, May 11 (Xinhua) — Myanmar StateCounselor Aung San Suu Kyi has called forworking together with the private sector toachieve the country’s development goals, whileensuring the maintenance of a responsible andsustainable business environment.In her video message on the occasion of theYangon Region Investment Forum 2019, whichbegan on Friday, Aung San Suu Kyi affirmed herbelief in the power of collaboration to achieve thedevelopment goals, encouraging investors toconsider public-private partnership (PPP)mechanisms.She emphasized that trade and investmentremained the two major drivers of Myanmar’seconomic development, citing that investment inthe manufacturing sector represented 31 percentof the total investment in fiscal year 2017-18,while there was only 0.3 percent in 2010-11. Thesector’s contribution to the gross domesticproduct (GDP) reached 24 percent in that year.The Yangon Investment Forum was the second ofits kind designed to allow domestic andinternational investors to gain first-hand

information about investment potential in theregion.According to statistics, in the first seven monthsof the fiscal year 2018-19 which began in October,2.54 billion U.S. dollars of foreign directinvestment flowed into Myanmar.Yangon region accounts for 25 percent of thenational gross domestic products, growing at anaverage rate of 9.2 percent year-on-year.The region also takes up 85 percent of the totalforeign trade, having attracted a total of 20.2billion U.S. dollars of foreign investment from845 enterprises up to the fiscal year 2017-18 since1988-89.The region’s population is predicted to grow fromthe current 7 million to 10 million by 2030.

Source: Consult Myanmarhttps://consult-myanmar.com/2019/05/17/myanmar-state-counselor-calls-for-working-with-private-sector-to-achieve-development-goals/

NewspapersConsult Myanmar

17 May 2019

PwC | May 2019

3. Weekly Investment News

23

PwC | May 2019

Weekly Key Investment NewsHeadlines

More FDI expected in power sector in five years

Parliament Approves $40M French Loan to Upgrade Hydropower Plants

More than US$2.5 B worth of foreign investments had entered Myanmar till May

24

Thai, Myanmar Hotel Operators Sign MOU for $63 Million Project KMA

RecyGlo wins Seedstars Yangon 2019, to represent Myanmar at Seedstars World

PwC | May 2019 25

More FDI expected in power sector in five years

Myanmar’s power sector will spearhead growth inthe infrastructure industry and draw the bulk offoreign direct investments (FDI) over the next fiveyears, Fitch Solutions Macro Research said in areport released April 23.With just 40 percent of all households enjoyingaccess to electricity as at September 2017, whichis amongst the lowest in Asia, the research firmsaid.With power cuts still taking place often during thesummer months, major impediment to economicdevelopment, and the government is aiming forfull electrification by 2030.In Myanmar, almost half of all uncompletedprojects in the pipeline, valued at US$1 billion,are related to the power sector. This, althoughaligned with the government’s aim for fullelectrification by 2030, indicates that the countryis likely to fall short of capacity requirements.“Projects in planning or under construction onlyhave a total of 7,319MW of capacity. As such, weexpect more power projects to be undertaken inthe next decade in order to boost generationcapacity. We currently forecast Myanmar’s

construction sector to grow at an annual averageof 8.9pc in real terms, from 2019 to 2028, largelydriven by infrastructure in the power sector,”Fitch Solutions said in its report.The expansion of Myanmar’s power infrastructuresector will be spearheaded by the construction ofnatural-gas fired power plants. Just last year, thegovernment announced four such projects, to becompleted by 2021 and adding some 3100 MW inpower generation capacity to the grid.There are currently nine gas power projects in thepipeline, with the largest being the US$1.25billion Ayeyawady Combined Cycle Power Plant,which is currently at planning stage.More investments in transmission infrastructurecan also be expected. “The poor state oftransmission infrastructure means that we arelikely to see more grid and transmission projectsas electricity capacity expands,” Fitch Solutionssaid.

Source: Myanmar Timeshttps://www.mmtimes.com/news/more-fdi-expected-power-sector-five-years.html

NewspapersMyanmar Times

13 May 2019

PwC | May 2019 26

Parliament Approves $40M French Loan to Upgrade Hydropower Plants

YANGON—The Union Parliament approved onThursday a €35.7-million (US$40 million or 60-billion kyats) loan from Agence Française deDéveloppement (or the French DevelopmentAgency) to be used for major upgrades to fivehydropower plants in four regions as Myanmarexperiences country-wide waves of regular powercuts.Of the 606 lawmakers in attendance, 546 voted infavor and seven voted against accepting the loan.The loan will have to be repaid at an interest rateof 0.68 percent within 20 years preceded by aseven-year interest-free grace period.The loans will be used to carry out majormaintenance works, including the assembly ofnew generators, at the Ye Nwe and Zaung Tupower plants in Bago Region, the Mone Chaungpower plant in Magwe Region, the Kin Tar powerplant in Mandalay Region and the Thapan Seikpower plant in Sagaing Region.Due to a lack of maintenance carried out on eachplant for periods of between 10 and 35 years, theycannot currently operate at full capacity. Forcedemergency shutdowns due to mechanical

breakdowns cause these plants to lose 246kilowatts of power per year, Deputy Minister ofthe Ministry of Electricity and Energy U TunNaing said in Parliament.Hydropower remains Myanmar’s main source ofelectricity, followed by natural gas and coal.According to the MOEE, the country faced powershortages of up to 400 megawatts in April. This isexpected to rise by up to 1,588 megawatts in2020.Due to water shortages following severe highsummer temperatures across the country and alow capacity to produce electricity at hydropowerplants, major cities meanwhile are experiencingregular daily blackouts. The electric supplycorporation in Yangon and Mandalay has beendistributing electricity in rotational shifts, withblackouts lasting one hour or more at a time.

Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/parliament-approves-40m-french-loan-upgrade-hydropower-plants.html

NewspapersThe Irrawaddy

16 May 2019

PwC | May 2019 27

More than US$2.5 B worth of foreign investments had entered Myanmar till May

More than US$2.5 billion worth of foreigninvestments entered Myanmar till early May ofthis fiscal year and transportation andcommunications sector topped the list of foreigninvestment amount in 2018-19 FY, according toDirectorate of Investment and CompaniesAdministration (DICA).It is more US$718 million than in compared withthe foreign investments entered in the sameperiod of last fiscal year.Transportation and communications sectortopped the list of foreign investment amount withUS$1.155 billion and followed by industrial sectorwith US$668 million. Other services sector stoodthird with US$274 million. The rest of the foreigninvestment in sectors as per following: overUS$93 million in electricity supply sector, overUS$60 million in hotel and tourism sector, overUS$54 million in housing development sector,over US$48 million in industrial sector, aboutUS$34 million in livestock and fishery sector,over US$14 million in farming sector and overUS$10 million in oil and gas sector. More thanUS$134 million of foreign investment entered at

Thilawa SEZ.Myanmar is implementing to develop a 20-yearelevation of investment project to reach to a levelof middle income countries in 2030.Myanmar is planning to earn more than US$220worth of investment within 20-year time and tohave investments which have responsibility andaccountability.Myanmar is planning a short term elevation ofinvestment project from 2016 to 2020, a mediumterm elevation of investment project from 2021 to2025 and a long term elevation of investmentproject from 2026 to 2035.Myanmar Investment Commission (MIC) drewforeign direct investment policy in 2013 incooperation with Japan InternationalCooperation Agency (JICA) and it wasimplemented since 2014.

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/more-than-us25-b-worth-of-foreign-investments-had-entered-myanmar-till-may

NewspapersEleven Myanmar

16 May 2019

PwC | May 2019 28

Thai, Myanmar Hotel Operators Sign MOU for $63 Million Project KMA

Myanmar-owned KMA Hotel Group has signed aMemorandum of Understanding (MOU) with oneof Thailand’s largest hotel and resort operators,the company has announced, to partner on aUS$63 million (96.86 trillion kyat) investment inseveral new and existing hotels throughoutMyanmar.Centara Hotel and Resort, a subsidiary of Thaiconglomerate Central Group of Companies,currently operates in several ASEAN markets,including Thailand, Vietnam and Indonesia; theMOU marks the brand’s first project in Myanmar.“Our partnership with KMA Hotels represents asignificant milestone for Centara,” Centara CEOThirayuth Chirathivat said in a preparedstatement. “It gives us the opportunity toestablish a significant presence for Centara in acountry with huge potential for tourismdevelopment.”KMA Group, or the Kaung Myanmar AssociationGroup of Companies, is owned by Myanmarnational U Khin Maung Aye. Other divisions ofthe conglomerate operate in construction, realestate, agriculture, mining and import-export

businesses. U Khin Maung Aye is also thechairman of Co-operative Bank Ltd., or CB Bank,one of Myanmar’s largest banks.The MOU covers six separate projects: therenovation and reopening of three existing KMA-owned hotels and the construction and operationof three brand new hotels, all operating undereither the upscale Centara or upper upscaleCentara Boutique Collection brand.Three existing KMA hotels in Inle, Naypyitaw andTaungoo will be renovated and reopened with thenew branding, and three entirely new hotels willbe developed in Bagan and Than Daung,according to a KMA spokesperson. The first toopen, Centara Paradise Inle Lake Resort & Spa, isexpected to open its doors in the fourth quarter ofthis year.Management agreements for the hotelswill be signed in Bangkok and in Yangon in Juneof this year. They expect the hotels to employabout 1,000 in staff.Source: Consult Myanmarhttps://consult-myanmar.com/2019/05/17/thai-myanmar-hotel-operators-sign-mou-for-63-million-project-kma/

NewspapersConsult Myanmar

17 May 2019

PwC | May 2019 29

RecyGlo wins Seedstars Yangon 2019, to represent Myanmar at Seedstars World

RecyGlo, a Yangon-based startup that offersrecycling waste management solutions forbusiness and households, has been named thewinner of Seedstars Yangon 2019. The startup,together with nine other finalists from Myanmar,presented its businesses at a pitching contest heldon May 16 at Seedspace Yangon, a co-workingbranch of Seedstars. Klenic, a startup that helpsclinics digitize information such as medicalrecords and queue management, and Hydro Plantthat builds precision-control system for farmersto be more productive, took the second and thirdplaces, respectively. RecyGlo will be representingMyanmar as it joins the Seedstars Asia Summitand further competes for up to $500,000 inequity investments and other prizes at the globalsummit of Seedstars World in Switzerland. Earlierthis year, RecyGlo raised a sum of $150,000 fromOslo-based Katapult Ocean accelerator, puttingits valuation at $1.8 million post-investment.RecyGlo provides B2B and B2C recycling relatedsupply chain services, which involves educatingthe consumers on waste management. “We arecurrently handling recyclable products like paper,

plastic, and cans, but later, plan to handle othersproducts like electronic and used clothes, etc,”said Shwe Yamin Oo, CEO, and cofounder ofRecyGlo. The startup was born out ofPhandeeyar’s annual startup challenge in 2017.Since its inception, it has raised a total of$200,000 in investments. Going forward, as itlooks to expand its business, it will welcomeregional investors.Outside Yangon, the startup is aiming to expandits business across Nay Pyi Taw, Mandalay,Nyaung Shwe, Inle and Bagan, among others .RecyGlo claims monthly revenue of between$30,000 to $50,000 and projects to receive up to$500,000 in 2019.

Source: Deal Street Asiahttps://www.dealstreetasia.com/stories/recyglo-seedstars-yangon-136190/

NewspapersDeal Street Asia

17 May 2019

PwC | May 2019

3. Weekly New Tenders

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PwC | May 2019

Tenders (Myanmar)List

Note: tenders information are collected from http://www.mmtimes.com/, https://tender.yangon.gove.mm, http://consult-myanmar.com/, and http://www.myanmar-opportunities.org/mm/tenders http://www.buildersguide.com.mm/en/ .

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STB: Request for Proposal – Myanmar In-Market Consultant for Singapore Tourism Board, Closing Date: 20 May 2019 (Individual)

PwC | May 2019

Tenders (Multilateral organizations) List

Note: tenders information are collected from https://wbgeconsult2.worldbank.org, www.devex.com, www.adb.org, https://www.ungm.org

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ADB: TA-8785 REG: Mekong Business Initiative - 243 Monitoring and Evaluation Expert (48270-001), Closing Date: 19 May 2019 (Individual)

ADBTA-9074 MYA: Capacity Development for Project Implementation - Environment Safeguard Consultant (49297-001), Closing Date: 21 May 2019 (Individual)

ADB: SC 112736 MYA: Improving Non-Communicable Diseases Prevention and Treatment Project, Closing Date: 19 May 2019 (Individual)

IWAI: RFP for Appointment of Port Operator/Contractor for Management, Operation & Maintenance of Port & IWT Terminal at Sittwe and IWT Terminal at Paletwa under Kaladan Multi-Modal Transit Transport Project, Closing Date: 10 June 2019

PwC | May 2019

4. MIC Permitted Projects

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PwC | May 2019

MIC Permitted Projects (Meeting 7, 2019)

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No. Name of Company Type of Investment Form of Investment

1 Elerclever (Myanmar) Co., Ltd Education services Joint Venture

2 Kaung Myat Co., LtdGold resort & lodging services on B.O.T basis

Wholly Myanmar Owned

Source: DICA

PwC | May 2019

5. Upcoming Events

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PwC | May 2019

Upcoming Events (May 2019) List

Date Location Name of Event Sector Price Focus Points

28-30 May 2019

Mandalay

Mandalay International Livestock and Agriculture Show

Livestock and Agriculture

Free

“Mandalay International Livestock andAgriculture Show (MILAS) successfully heldfor the past 2 years since 2016. The 1stedition in 2016 showcased over 48 brandsand companies from 14 countries with total60 booths. We had 1300 + local and foreignvisitors in 2016. The 2nd edition in 2017showcased over 60 brands and companiesfrom 15 countries with total 87 booths.”

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Note: Events information are collected from https://www.go-myanmar.com/events-and-conferences and https://10times.com/myanmar .

PwC | May 2019

Upcoming Events (June 2019) List

Date Location Name of Event Sector Price Focus Points

11-12 June 2019

YangonEmerging Asia Banking & Fintech Summit

Banking and Fintech

TBC

“The modernisation of banks is taking root,with many financial institutions rising to thechallenge of adopting international bestpractices and investing in systems that willtransform the way they operate.This is theonly exclusive Summit dedicated to thebanking needs of Asia’s emerging markets.The Summit will dive into issues that keeptop management of banks and financialinstitutions up at night! Probe the challengesand, more importantly, the best practices tosuccessfully operate in markets such asMyanmar, Cambodia, Vietnam, Laos etc.Hear from innovative industry experts fromcountries such as Thailand, Singapore andJapan.”

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Note: Events information are collected from https://www.go-myanmar.com/events-and-conferences and https://10times.com/myanmar .

© 2019 PricewaterhouseCoopers Myanmar Co Ltd. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Myanmar Co Ltd, which is part of the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

www.pwc.com/mm

PwC Myanmar Weekly Business Intelligence Publication

For further information please contact:

Jovi SeetSenior Executive Directorjovi.seet@sg.pwc.com

Brandon LyeDirectorbrandon.ys.lye@sg.pwc.com

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