PwC MyanmarWeekly Business Intelligence

Issue 17203 Aug 2019

www.pwc.com/mm

PwC | August 2019

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PwC | August 2019

1. Weekly Key Financial & Business News

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PwC | August 2019

Weekly Key Financial & Business NewsHeadlines

Growth potential seen in microfinance sector

13.44 million tons of gas, 19 million tons of crude oil exported to China till June this year

Myanmar Liquor Association urges stricter control over grey market

Myanmar Govt to Launch Satellite, Improve Communications

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Mandalay: City of the future?

PwC | August 2019

Weekly Key Financial & Business NewsHeadlines

CPI hits 154.56 pc in late June

Nation’s electricity production expected to exceed estimates

Gold AYA Motors Int’l Group to manufacture 5,000 units annually

Lender Easy Microfinance Provides K134 Billion of Loans in Three Years

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Growing Myanmar’s gig economy

PwC | August 2019 6

13.44 million tons of gas, 19 million tons of crude oil exported to China till June this year

Since Myanmar-China oil and gas pipelines wereopened till June 2019, Myanmar exported 13.44million tons of gas and 19 million tons of crude oilto China, according to data from the YunnanProvince government.The pipeline is around 1,420 kilometers long.Through this pipeline, gas export started in 2013and crude oil export in 2017.In the current 2018-2019 fiscal year, Myanmar isexpected to earn K1,678 billion from offshore oiland gas production, K193 billion from onshore oiland gas production and K306 billion in royalties.This fiscal year, it is also expected to 653,310million cubic feet from offshore oil and gasprojects—288,350 million cubic feet from Yadanaproject, 182,500 million cubic feet from Shweproject, 124,100 million cubic feet from Zawtikaproject and 58,360 million cubic feet fromYetagon project. Moreover, 868,360 barrels ofcondensate can be produced this year fromYetagon project. Rates of gas production in thecurrent financial year are 44 percent from Yadanaproject, 28 percent from Shwe project, 19 percentfrom Zawtika project and 9 percent from Yetagon

project.From oil and gas exploration and production thisyear, the government is expected to earnK1678716 million including K386,283 million inrevenues, K20,400 in signature bonus andK1,272,033 million, K193,615 million from inlandoil fields and K306,392 million in royaltiestotalling K2,178,723 million.

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/1344-million-tons-of-gas-19-million-tons-of-crude-oil-exported-to-china-till-june-this-year

NewspapersEleven Myanmar

29 July 2019

PwC | August 2019 7

Growth potential seen in microfinance sector

With a quarter of the Myanmar population livingunder the poverty line and as much as 87 percenthailing from rural areas, according to the WorldBank, the microfinance sector has good potentialto grow in Myanmar. However, providers can bemore efficient in their funding if there is betterfinancial data on borrowers.Microfinancing has grown rapidly since thecountry passed the Microfinance Business Law in2011 allowing microfinancing firms to operate,with some 180 companies now serving 3.4 millionclients and a total loan portfolio of K350 billion,according to the Myanmar MicrofinanceAssociation (MMFA).Over the past two years, foreign and local bankshave also financed the growth of the sector.Yoma Bank, for example, has lent more than K70million to at least ten microfinance institutions inMyanmar, U Kaung Myat Lu, MicrofinanceInstitutions Relationship Manager of Yoma Bank,told The Myanmar Times.However, a lack of credit or financial history forborrowers continues to hamper the industry withmany borrowing from multiple microfinance

firms to cover loans still owed to other providers.As the country has yet to establish a functioningcredit bureau, there is limited data available tominimise these practices.Currently, microfinance institutions and thegovernment are testing credit registry to solveoverlapping credit issues, said Daw Phyu YaminMyat, secretary of the MMFA.Despite the challenges, Early Dawn MicrofinanceCo Ltd chief executive officer GonzaloGonzaleznoted that quite a number of local andforeign investors have voiced their interest inbacking financial services, including inmicrofinance.As such, “reforms are needed to attract theseinvestments as microfinance in this country stillhas a lot of growth potential,” he said, adding thatinvestors will evaluate such factors as financinggoals, operations, product, quality of managementand repayment track record before choosing tosupport a microfinancing scheme.Source: Myanmar Timeshttps://www.mmtimes.com/news/growth-potential-seen-microfinance-sector.html

NewspapersMyanmar Times

30 July 2019

PwC | August 2019 8

Myanmar Liquor Association urges stricter control over grey market

The Myanmar Liquor Association (MLA) releaseda statement last Wednesday urging thegovernment to tackle the grey market andimplement more transparent regulations for thevaluation of liquor imports.The statement also provided a clarification thatMLA does not object to the importation of liquorif there is a “level playing field” for the localmanufacturers.“The MLA has always taken the stand that it ishere to promote the local liquor industry. Wehave not objected to any business that wishes tostart up in Myanmar, provided they set up theirprocessing or manufacturing factilities in ourcountry. If they import the products it should bedone so that the local manufacturers are notpenalised,” said U Soe Lwin, president of MLA.The association warned that the relaxation on theban does not tackle the grey market where illegaltrading is conducted resulting in revenue andduties lost for the government.“The main problem we see with the relaxation ofthe importation policy is that it does not addressthe “grey market” situation where the wines are

smuggled through our border areas and they arenot taxed and government revenue is not paid.The situation needs to be equalised andformalised so that the market is fair towards thelocal manufacturers [who are paying taxes anddues].” pointed out U Win Thaw, the secretariatof MLA.The local liquor manufacturers pay more thanK180 billion towards taxes and other governmentlevies every year, the statement said. The non-payment of the revenue is estimated that as muchas a fifth is lost in unpaid taxes every year in“wine grey market” activities, it continued.“Big international players have very deep pocketsand can create situations where the localproducers are put into a disadvantage. We urgethat the government give due consideration to thelocal industry and create a level business situationwhere we can all compete in a fair and just playingfield,” said U Htay Lwin, MLA general secretary.Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-liquor-association-urges-stricter-control-over-grey-market.html

NewspapersMyanmar Times

30 July 2019

PwC | August 2019 9

Myanmar Govt to Launch Satellite, Improve Communications

ANGON—Myanmar is planning to launch its ownsatellite system, Myanmar Sat 2, next week; thesatellite is expected to provide a bettercommunication system across the country,according to a communications ministry engineer.Chief Engineer of the Ministry of Transport andCommunications’ Information Technology andCyber Security Department U Win Aung told thegovernment newspaper that the satellite willprovide a high-speed communication systemacross the country, including far-flung areas.The satellite will reinforce the capacity ofcommunication operators particularly in mobileand internet networks, he said.Myanmar Sat 2/Intelsat 39 will be launchedWednesday, Aug. 7, from a launch base of theArianespace satellite launching company inFrench Guiana, the French territory in SouthAmerica.The satellite was produced by California-basedMaxar Technologies, which dispatched it to thelaunch site last month.A committee led by Vice President U Myint Sweon establishing the satellite system has been

discussing the satellite’s implemention since2017. Last year, the Department of InformationTechnology and Cyber Security signed anagreement with Intelsat Global Sales & MarketingLimited to launching the satellite.The total cost of project is $155.7 million (234.6billion kyats), according to the Myanmargovernment.Currently, Myanmar government ministries arerequired to use leased satellite channels from theU.S, China, Thailand, Vietnam and Indonesia,which cost more than $10 million annually.Vice President U Myint Swe said in April that,after launching Sat 2, government ministries willbe able to use communication systems moreefficiently and cost effectively for education,health and other sectors on a long-term basis.

Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/myanmar-govt-launch-satellite-improve-communications.html

NewspapersThe Irrawaddy

31 July 2019

PwC | August 2019 10

Mandalay: City of the future?

An energetic mayor and revamped municipalauthority are giving Myanmar’s second city atech-based makeover, which is being embraced byresidents tired of past mismanagement."MANDALAY is like a Phoenix from ancientGreek mythology. Like the mythical bird,Mandalay will always rise and regenerate fromthe ashes," the renowned author Mya Than Tintwrote in his book about the city’s history, Whenthe wind blows from Taungthaman Lake,published in 1999.He observed that Mandalay had twice risen fromashes. The first time was in 1945, after World WarII, when much of the city was flattened byJapanese and Allied bombing raids, and the nextin 1984, when the city was destroyed by fire. Onboth occasions, Mandalay had picked itself up,struggled into recovery and moved forward.Since 2016, Mandalay has undergone anotherkind of resurrection. A legacy of mismanagementunder successive post-colonial governments hadturned the former seat of Burmese royalty, andcapital of independent Burma before it wasannexed by the British in 1885, into an

unattractive sprawl with meagre services and fewgreen spaces. Now, the city’s municipal rulers,along with many of the proud citizens among itspopulation of more than 1.2 million, say thatMandalay is becoming the country’s “smart city”.Mandalay, Yangon and Nay Pyi Taw were among26 cities chosen to participate in the Associationof Southeast Asian Nations Smart Cities Networkwhen it was established at the ASEAN summitheld in Singapore in April 2018. The scheme,promoted by Singapore during its chairmanshipof the bloc last year, aims to use digital technologyto meet the challenges posed by rapid urbangrowth in the region, such as ballooningpopulations fed by migration from ruralhinterlands, climate stress and obsolete oroutdated infrastructure, to improve the quality oflife for urban residents and provide them withbetter services.

Source: Frontier Myanmarhttps://frontiermyanmar.net/en/mandalay-city-of-the-future

NewspapersFrontier Myanmar

01 Aug 2019

PwC | August 2019 11

Nation’s electricity production expected to exceed estimates

Myanmar can produce about 200 moremegawatts of electricity than estimated in fiscalyear 2018-2019, said U Maung Maung Win,deputy minister of the Ministry of Planning andFinance.He made the comment while discussing the JointPublic Accounts Committee report on the six-month national plan and income in thePyidaungsu Hluttaw (Assembly of the Union) onTuesday. The Ministry of Electricity and Energyexpects to produce 5865MW by the end of thefiscal year, according to the national plan.It produced 5901MW during the six-monthperiod ending in March, exceeding the estimate of5865MW, or 36MW more than expected, he said.It expects to produce another 153MW surplusduring the second six-month period. “Theministry expects to produce (MVA) 6054MW ofpower by the end of this year,” he said, or 189MWmore than the original goal.As the country has to provide billions of kyat inelectricity subsidies, people are encouraging thesector’s privatisation, but the country would thenhave to buy power back, so such a move is not

possible yet, said Deputy Minister of Electricityand Energy U Tun Naing.If Shwe Li No. 3 Hydropower Plant was permittedfor private operation with foreign investment, thegovernment wouldn’t have to spend any moneyfor it, but the energy would have to be purchasedat K101 per unit. “Privatisation of every non-performing state enterprise will not solve all theproblems,” he said.The private sector is generating power now. In thefirst six months of this year, the country’s 17private power plants produced 42.48pc of totaloutput, he said. There are also plans to transfersome hydropower projects to the private sector.

Source: Consult Myanmarhttps://consult-myanmar.com/2019/08/01/nations-electricity-production-expected-to-exceed-estimates/

NewspapersConsult Myanmar

01 Aug 2019

PwC | August 2019 12

CPI hits 154.56 pc in late June

Consumer Price Index (CPI) reached 154.56 percent in late June, up 9.51 per cent compared withthe same period last year, according to the reporton the CPI and inflation rate issued by the CentralStatistical Organization (CSO).According to the calculations using 2012 as thebase year, the CPI for food group hit 170.65 percent with the non-food group, reaching 131.92 percent. An increase in the CPI is due to a significantincrease in commodity prices.According to the same calculation, the CPIincreased from 141.13 per cent in June to 148.95per cent in November last year. In late June, allregions and states saw a slight increase in the CPI.Mon State saw the highest with 1.44 per cent andSagaing Region, the lowest with 0.03 per cent.In November, 2012, the CSO conducted ahousehold income and consumption survey on32,669 households in 82 townships across thecountry. The survey covered 438 goods andservices.For the calculation of CPI, the CSO took samplesfrom 274 items—108 for the food group and 166for the non-food group.

In late June, the average inflation rate was 8.08per cent and the year-on-year inflation, 9.51 percent.

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/cpi-hits-15456-pc-in-late-june

NewspapersEleven Myanmar

01 Aug 2019

PwC | August 2019 13

Gold AYA Motors Int’l Group to manufacture 5,000 units annually

Gold AYA Motors International Group in MyothaIndustrial Park, Mandalay Region canmanufacture 5,000 cars annually. They are tomanufacture 10 models of 7 types of cars. Theyinclude SUV, MPV and Pickup trucks. Thecompany said that they are going to penetrateASEAN market.The manufacturing was demonstrated andintroduced at the factory in Myotha IndustrialPark, and Regional Chief Minister of Mandalay DrZaw Myint Maung, officials and media attendedthe event.Dr Zaw Myint Maung said “Foreign DirectInvestment is mandatory in a developing countrylike Myanmar. Good environments are necessaryfor FDA to come in, so they must be created.Investment comes for profit. We will get benefitsfrom the profit they make. Only one cannot win.We must use win-win method.”Gold AYA Motors International Group Co, Ltdwas established in Myanmar in 2017 by ShinningStar Group to implement The Belt and Roadproject. This assembling company has invested$30,000,000.

“We intend to manufacture 50,000 cars in 5years’ time. We plan to reach above 10 per centmarket share and above 40 per cent productivityin country. The cars are up to standard to beexported to ASEAN countries,” said DeputyGeneral Manager Mr Jacky Yan.The factory is located 100 kms from Mandalay.There are parking spaces for manufactured cars,warehouses for machines and parts andshowrooms. The car assembling was 7,200 squaremeters wide.The engine displacement of cars are 1.5L (AutoGear) and the maximum speed is 160km/h. Eachcar weighs 13 tons. Fuel consumption is only 8liters for 100 km. “Car production is a foundationfor the development of Myanmar’s economy andapart from manufacturing the whole car, there areother related work places which can employ 113locals. Theory and practice will be exchanged. 82per cent of workers are locals” said Mr Yan.Source: Global New Light of Myanmarhttp://www.globalnewlightofmyanmar.com/gold-aya-motors-intl-group-to-manufacture-5000-units-annually/

NewspapersGlobal New Light of Myanmar

02 Aug 2019

PwC | August 2019 14

Lender Easy Microfinance Provides K134 Billion of Loans in Three Years

Local lending company Easy Microfinance saysthat since it started operations in July 2016, it hasprovided K134 billion in loans to individuals andgroups.During this three-year period, it provided K113billion ($74 million US) in loans to groups, andK40 billion ($26 million US) to 120,000individuals.Groups wishing to apply for a loan must have fiveto ten members; they can then get a loan fromK100,000 up to K1,000,000 with terms of five totwelve months.In providing loans to individuals, the companycan provide amounts ranging between K1 millionand K10 million to small enterprise owners onterms of between six and twelve months.Easy Microfinance is also aiming to provide loansto small- to medium-sized enterprises (SMEs)and to entrepreneurs.The interest rate for loans is two-and-a-halfpercent per month, and loan fees are two percent.Easy Microfinance, which has opened 16 branchesin Yangon Region, Naypyidaw, Sagaing Region,Mon State, and Magway Region, signed

agreements with Yoma Bank in October 2018 toprovide K8 billion in loans to SMEs in six areas.

Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/lender-easy-microfinance-provides-k134-billion-loans-three-years

NewspapersMyanmar Business Today

02 Aug 2019

PwC | August 2019 15

Growing Myanmar’s gig economy

Across Asia, contract and freelance positions infirms from start-ups to large conglomerates arebecoming more commonplace. While still novel inMyanmar, the so-called “gig” economy isexpanding as companies turn more cautious whenhiring. Meanwhile, workers are opting for thefreedom to maintain a better work-life balance oropportunity to earn from diversified sources ofincome.A 2019 global Deloitte survey of over 13,000millennials found almost half of respondentsbelieve gig workers earn as much as those in full-time jobs and the same number think gig workershave a better work-life balance. In Asia Pacific,eight in 10 talent managers hire or use gigworkers, according to a 2018 report fromKellyOCG.In Myanmar, freelance and contract jobs arebecoming a good way for companies to avoid thecommitment of hiring full time and for jobseekersto earn extra income. Compared to the rest of theregion though, gig opportunities are lesscommon, said Ma Hani Mya Win, founder ofChatesat, an online platform which connects

freelancers to employers.“Employers are mostly still hiring full time. Parttime or freelance jobs are few and far between andworkers are still skeptical of the nature of short-term jobs,” she said, adding that most freelancejobs in the country are for digital work such asweb development and video editing as well asgraphic design.But things are slowly evolving. More recently,freelancers are landing jobs in Myanmar’sexpanding startup community. “Startups like theoption of hiring on short-term contracts as theycannot afford to hire full-time,” said Ma Hani MyaWin, who is now working on expanding theplatform and promote the gig economy inMyanmar.“We want to develop the market for part-timeworkers. We would like to enable people to workfrom anywhere anytime, so we connect them onlywith part-time jobs consisting mostly of three orsix-month contracts.Source: Myanmar Timeshttps://www.mmtimes.com/news/growing-myanmars-gig-economy.html

NewspapersMyanmar Times

02 Aug 2019

PwC | August 2019

2. Weekly Key Policy News

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PwC | August 2019

Weekly Key Policy NewsHeadlines

Usage of int’l prepaid cards in kyat not allowed: CBM

Foreigners welcome to set up retail-petroleum business

Finance Minister U Soe Win to Head Scandal-Hit Industry Ministry

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Myanmar to open arbitration centre for resolving commercial disputes

The Belt and Road Initiative in Myanmar: staring down the dragon

PwC | August 2019 18

Usage of int’l prepaid cards in kyat not allowed: CBM

Usage of prepaid cards from four internationalpayment providers will not be permitted in thelocal currency, the Central Bank of Myanmar(CBM) said on July 25.In a statement signed by CBM Director GeneralDaw Myint Myint Kyi of the AccountsDepartment, the CBM noted that prepaid cardsare being used to settle payments in Myanmarkyat at domestic shopping malls and restaurants.It told private banks that it had allowed prepaidcards from Master, Visa, UPI and JCB with a limitof US$5000 to be used as payment options byMyanmar nationals going abroad as well asforeigners in Myanmar. However, prepaid cardpayments in the local currency are not allowed.All private banks have been instructed to providethe prepaid card service within the CBM’sframework. In addition, the banks will have tosubmit a reply to the Accounts Department beforeAugust 9 to acknowledge receiving the CBM’sinstruction.

Source: Myanmar Timeshttps://www.mmtimes.com/news/usage-intl-prepaid-cards-kyat-not-allowed-cbm.html

NewspapersMyanmar Times

30 July 2019

PwC | August 2019 19

Foreigners welcome to set up retail-petroleum business

Foreign oil and gas companies with retailoperations can apply to set up their businesses inMyanmar, a senior official with the Ministry ofElectricity and Energy (MOEE) told TheMyanmar Times. While Myanmar remains theonly member of Asean that does not allow 100percent ownership in retail petroleum operations,it has allowed foreign oil and gas companies tocooperate with local retail petroleum operators toset up shop in the country since 2017. Thegovernment allowed private sector participationin retail petroleum operations from 2010.The senior official said foreign oil and gascompanies can participate in the importation,storage, distribution and sale of fuels as long asthey were in accordance with the rules andregulations.“Local businesses have monopolised the marketand there is no regulation over price and quality.There is also no market-pricing mechanism,which means that when the price of crude oil fallsin the global markets, they don’t lower the price atthe pump with the excuse that they bought at ahigher price,” the senior official said.

The Myanmar Investment Commission and theDirectorate of Investment and CompanyAdministration are responsible for the licensingof foreign petroleum retail operations while theMinistry of Commerce oversees quality. MOEEwill contribute their remarks in regards to theapproval process.Since allowing for foreign participation, onlyPetroChina International, through its Singaporeunit Singapore Petroleum Co, has startedoperating in the country. The company has a jointventure with Shwe Taung Energy Co, a subsidiaryof Shwe Taung Group and started operations inApril.Shell, which signed an agreement with MaxEnergy in July 2017, has yet to open any petrolstations in the country while Singapore-basedPuma Energy has announced that it plans to setup 50 franchises within 10 years.

Source: Myanmar Timeshttps://www.mmtimes.com/news/foreigners-welcome-set-retail-petroleum-business.html

NewspapersMyanmar Times

31 July 2019

PwC | August 2019 20

Finance Minister U Soe Win to Head Scandal-Hit Industry Ministry

YANGON—The President’s Office on Tuesdayassigned U Soe Win, the Union minister forplanning and finance, to concurrently serve asindustry minister, four days after U Khin MaungCho stepped down from the position.On July 26, the President’s Office announced thatU Khin Maung Cho had stepped down of his ownvolition in the wake of a corruption scandal, andthat President U Win Myint had decided toreplace him.U Khin Maung Cho is the second Union ministerto resign amid allegations of corruption. Thecharges arose after he failed to invite tenders forthe procurement of raw materials for BurmaPharmaceutical Industry (BPI), a state-owneddrugmaker under the Industry Ministry.U Soe Win, who has nearly five decades ofexperience in the finance and banking sectors,became the minister of planning and finance inMay last year after his predecessor U Kyaw Winstepped down, also in the wake of a corruptionprobe.In a separate case, the Anti-CorruptionCommission this month launched an investigation

into Electricity Minister U Win Khaing and hisdeputy U Htun Naing.The NLD government now has 25 ministries ledby 23 ministers and 20 deputy ministers.

Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/finance-minister-u-soe-win-head-scandal-hit-industry-ministry.html

NewspapersThe Irrawaddy

31 July 2019

PwC | August 2019 21

Myanmar to open arbitration centre for resolving commercial disputes

The Myanmar Arbitration Centre (MAC) will beopened on 3 August at the Republic of the Unionof Myanmar Federation of Chambers ofCommerce and Industry to resolve commercialdisputes among Myanmar entrepreneurs,according to the UMFCCI.The Commercial Disputes Coordination andMediation Work Committee of the UMFCCI hasbeen trying to set up an arbitration centre since2017. The MAC has been registered as a companywith the Directorate of Investment and CompanyAdministration, and the permission to form thecentre was granted on 11 March, 2019.“Our company is not a normal one like othercompanies. Ordinary companies need capitalinvestment. When we established the MAC, wedidn’t have to put up any capital investment. Weonly have to implement the MAC with thecompany’s guarantee,” said Dr Maung MaungThein, a consultant with the UMFCCI, at a mediaconference held on 31 July at the MAC atUMFCCI, Yangon.Although it has been set up to look intocommercial disputes, the arbitration centre will

have the authority to issue punishments, he said.Once the MAC is opened, disputes need not betaken to the court of law, thus helping people savemoney and time, he added.Currently, a training course is being conducted for42 experts, who will be responsible for hearingcommercial disputes brought to the MAC. Thearbitrators will have to remain free fromcorruption, said Dr Maung Maung Thein.“The MAC will be opened on 3 August. Clients willbe able to hire any arbitrator from MAC, for a fee.But, arbitrators from MAC will work for profit.The centre can launch operations next month. Wehaven’t decided on the charges yet,” he added.The center will allow clients involved in disputesto negotiate under their preferred law andprocedures, he added.

Source: Global New Light of Myanmarhttp://www.globalnewlightofmyanmar.com/myanmar-to-open-arbitration-centre-for-resolving-commercial-disputes/

NewspapersGlobal New Light of Myanmar

01 Aug 2019

PwC | August 2019 22

The Belt and Road Initiative in Myanmar: staring down the dragon

“As a rule, the police are soft on the tough andtough on the soft,” recalled the veteran Chinesedemocracy activitist, Mr Zha Jianguo, of his timebehind bars in China. In a New Yorker piece byhis sister, Ms Zha Jiangyang, published inDecember 2018, Zha said: “If they sense aweakness in you, it will bring out the bully inthem.” It would be wise for Myanmar’s leadersfrom both the government and civil arenas toheed the implications of Zha’s observation. TheSecond Belt and Road Forum for InternationalCooperation in April was followed by Myanmarand China inking three bilateral agreements: anagreement on economic and technicalcooperation, an MoU on a five year economic andtrade development cooperation plan, and an MoUon the China-Myanmar Economic Corridor(CMEC) Plan spanning 2019 to 2030. However,caution has gradually emerged over the BRI, asshown by Myanmar’s recent approval of only nineof China’s 38 proposed “early harvest” projects.State Counsellor Daw Aung San Suu Kyi’scomment at the forum that projects need to “notonly be economically feasible but also socially and

environmentally responsible” and be fullysupported by local communities, is an example ofMyanmar’s growing wariness in dealing withChina. Significantly, the MoU for the CMECincluded provisions to allow Myanmar to seekfinancing from international financial institutionswhen implementing projects, invite internationaltenders for investment, and choose projects tomaximise mutual benefit. These moves point to ashift in Myanmar’s approach to China thatinvolves treading more gently and is a welcomedevelopment in bilateral relations. However,there are still many issues that need to beaddressed. The public has not been told aboutwhere negotiations stand on the future of themuch-despised Myitsone Dam – a situation nothelped by a condescending comment from theoutgoing Chinese ambassador, Mr Hong Liang,that “foreign forces” were involved in opposingthe resumption of work on the project.Source: Frontier Myanmarhttps://frontiermyanmar.net/en/the-belt-and-road-initiative-in-myanmar-staring-down-the-dragon

NewspapersFrontier Myanmar

02 Aug 2019

PwC | August 2019

3. Weekly Investment News

23

PwC | August 2019

Weekly Key Investment NewsHeadlines

SK buys stake in Myanmar oil firm for 150 bln won

Govt calls for sustainable tourism investments in Tanintharyi

Government allows six JVs among local and foreign insurers

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Yakult bets on Myanmar market for further growth

FDI jumps 77pc to US$2.3 billion in first half of 2019

PwC | August 2019 25

SK buys stake in Myanmar oil firm for 150 bln won

SEOUL, July 19 (Yonhap) — SK Innovation Co.,South Korea’s top refiner, said Friday its twoaffiliates have acquired a 35 percent stake inMyanmar’s second-largest petroleum productdistributor, for 150 billion won (US$127 million).SK Innovation said the two units — SK Energy Co.and SK Trading International Co. — will eachhave a 17.5 percent stake in the holding firm ofMyanmar’s Best Oil Co. (BOC).“This is a strategic investment for us to create newgrowth momentum by securing a stable exportand trading market,” SK Innovation said.BOC holds a 17 percent market share in Myanmarand has subsidiaries like PT Power, a petroleumproduct distributor in southern Myanmar, andPSW, a oil terminal operator, according to SKInnovation.Demand of petroleum products in Myanmar isprojected to grow an average 10 percent a yearuntil 2025, SK Innovation said.SK Innovation said the latest move is also aimedat expanding its presence in the Southeast Asianmarket. Last year, SK Energy bought a 5.23percent stake in Vietnam’s PetroVietnam Oil

Corp.

Source: Consult Myanmarhttps://consult-myanmar.com/2019/07/31/sk-buys-stake-in-myanmar-oil-firm-for-150-bln-won/

NewspapersConsult Myanmar

31 July 2019

PwC | August 2019 26

Govt calls for sustainable tourism investments in Tanintharyi

Amid a rise in the number of Chinese tourists andso called zero-dollar tours to Myanmar in therecent months, the government is now calling forsustainable and quality investments forTanintharyi Region’s tourism industry.U Thaung Tun, chair of the Myanmar InvestmentCommission and Minister of Investment andForeign Economic Relations and U Ohn Maung,Minister of Hotels and Tourism, urged investorsto go for sustainable development and qualitywhen looking to invest in the region, located inthe far south of Myanmar bordering Thailand.Both ministers had met with business ownersfrom the tourism industry and other businesseson July 28 in the run-up to the TanintharyiRegion Investment Forum to be held in October.“The region has lots of potential and thegovernment and private sector can collaborate tobring in more sustainable and quality investmentfor tourism,” U Thaung Tun, also the MyanmarInvestment Commission chairman, said.The forum aims to attract responsible investmentto the region, which includes the MyeikArchipelago on the Andaman Sea. The region only

has a handful of hotels and guesthouses despitetourism being a major revenue generator.In 2018, Tanintharyi Region InvestmentCommittee endorsed five enterprises in theregion, four of which were tourism-related,according to Directorate of Investment andCompany Administration’s Statics. There arecurrently 30 hotels, 10 guesthouses and over 90travel companies in Tanintharyi Region.Community-based tourism schemes have alsobeen launched by the regional government andcovers Dawei, Myeik and Kawthaung townships.There have also been efforts to involve the seagypsies in the scheme.This comes after Bagan was named as a UNESCOWorld Heritage Site on July 7, a move which isexpected to further boost tourism to the area.

Source: Myanmar Timeshttps://www.mmtimes.com/news/govt-calls-sustainable-tourism-investments-tanintharyi.html

NewspapersMyanmar Times

31 July 2019

PwC | August 2019 27

Government allows six JVs among local and foreign insurers

The Ministry of Finance and Planning (MOFP)announced the successful applicants for life andnon-life insurers to be operated under jointventures between locals and foreigners on July 31.For non-life insurance, the MOFP has allowedAYA Myanmar General Insurance Company andSompo Japan Nipponkoa Insurance, GrandGuardian General Insurance Company and TokioMarine, Nichido Fire Insurance and IKBZInsurance Company as well as Mitsui SumitomoInsurance Company to form joint ventures.For life insurance, joint ventures have beenallowed between Capital Life Insurance and TaiyoLife Insurance Company, Citizen BusinessInsurance and Thai Life Insurance, and GrandGuardian Life Insurance Company and NipponLife Insurance.AYA Myanmar Insurance managing director UMyo Min Thu told The Myanmar Times that thestatement from the ministry “is good news to usas insurance is an important segment of thefinancial services industry”.He pointed out that the liberalisation of theinsurance industry will not only create job

opportunities but also investment opportunitiesthat would lead to economic growth.U Myo Min Thu said the company for now willfocus on life insurance but may review this focusin the coming years if the market conditions wereconducive to enter other insurance segments.“Insurers still have a lot of opportunities,” headded.The MOFP lifted restrictions on foreign insurersentry into the domestic market in January. InApril, Prudential, Dai-ichi Life, AIA, Chubb andManulife became the first foreign insurers to beallowed to establish wholly-owned life insuranceunits in Myanmar.IKBZ, which released a survey on the domesticinsurance market recently, noted that the localinsurance industry can potentially grow to K1.75trillion in the next 12 months and grow to a K4trillion market in 10 years.

Source: Myanmar Timeshttps://www.mmtimes.com/news/government-allows-six-jvs-among-local-and-foreign-insurers.html

NewspapersMyanmar Times

01 Aug 2019

PwC | August 2019 28

Yakult bets on Myanmar market for further growth

Yakult, the Japan-headquartered probiotic drinksmaker, has invested in a US$47 million factory inMyanmar’s Thilawa Special Economic Zone.Yakult, which has factories in 39 countries aroundthe world, now wants to expand into Myanmar,said Yakult Myanmar Co Ltd’s managing directorMr Hideki Kawasaki at a press conference atYakult’s new factory in Thilawa SEZ on July 31.In addition to Japan, Yakult has alreadyestablished markets in China, US, UK, theEuropean Union and Southeast Asia, where itsproducts are currently available for sale.Now, there are more than 40 million consumersof Yakult products in 40 countries includingMyanmar and Yakult’s average sales per day isworth about US$40million, said Mr Kawasaki.Built in September 2016, the factory willcommence production and operations on August 1in Myanmar and equipment installed will bealigned with Yakult’s other factories in US andEU. All stages of production will be in line withglobal production and quality control will also beensured, he said.Yakult’s probiotic drink contains more than 8000

LcS (lactobacillus casei strain stirota). Theseprobiotic cultures reach the intestines and helppreserve the balance of good and bad bacteria fora good digestive system.The product also prevents constipation anddiarrhea. Consumers can drink a carton and moredaily at any age, said officials from Yakult.In Myanmar, Yakult aims to cover 25pc of thecountry’s population. With the aim of providingjob opportunities to Myanmar housewives, its“Yakult Ladies” will distribute products based ona door to door system, said Mr Kawasaki.The business will start in Yangon and will expandto Mandalay, Nay Pyi Taw, Taunggyi andMawlamyine and it is expected to cover the wholecountry in five years, said Mr Kawasaki. ThilawaSEZ, with its infrastructure, power, machineriesand one-stop service center, hase served to boostthe confidence of Japanese investors wanting toexpand in Myanmar, Mr Kawasaki added.

Source: Myanmar Timeshttps://www.mmtimes.com/news/yakult-bets-myanmar-market-further-growth.html

NewspapersMyanmar Times

01 Aug 2019

PwC | August 2019 29

FDI jumps 77pc to US$2.3 billion in first half of 2019

Government-approved foreign direct investment(FDI) into the country stood at US$2.3 billion inthe first-half of 2019, a 77 percent improvementfrom the same period last year when approvedFDI came in at US$1.3 billion.According to statistics from the Directorate ofInvestment and Company Administration,Singapore was the top investor with US$1.3billion and 13 approved projects, China camesecond with US$330 million and over 60approved projects.By industry, transport and communicationsreceived the most investments of US$1 billion,manufacturing saw US$800 million investmentswhile services received US$160 million. AnotherUS$130 million of approved investments went tothe hotel and tourism as well as livestock andfisheries industries.The World Bank in its latest report on Myanmarnoted that FDI commitments have picked upslightly in the first-half of 2018-19 compared withthe same period of last year but remains lower bya third when compared with the annual FDIcommitments for 2017/2018.

The World Bank sees the country’s growth in themedium-term to be supported by a gradualrebound in infrastructure investment and higherproductivity in sectors of the economy that thegovernment has liberalised. Among them,wholesale and retail distributive trades as well asbanking and financial services includinginsurance will see growth.It expects implementation of large infrastructureprojects to pick up, including construction ineconomic corridors, together withimplementation of energy and transport projects.The growth momentum in the manufacturingsector will also continue.Yangon Region chief minister U Phyo Min Theinsaid at a meeting of the Yangon RegionInvestment Committee last week that the garmentindustry has become the focus of investorsrecently with textile and accessoriesmanufacturing investments in Yangon.

Source: Myanmar Timeshttps://www.mmtimes.com/news/fdi-jumps-77pc-us23-billion-first-half-2019.html

NewspapersMyanmar Times

01 Aug 2019

PwC | August 2019

3. Weekly New Tenders

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PwC | August 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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No applicable tender announced for the week ending 02 Aug 2019.

PwC | August 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-9758 REG: Advancing Cooperation in the Maritime Sector in South Asia SubregionalEconomic Cooperation Program - Economist (53175-001) , Closing date: 07 Aug 2019

PwC | August 2019

4. MIC Permitted Projects

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PwC | August 2019

MIC Permitted Projects (Meeting 12, 2019)

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No. Name of Company Type of Investment Form of Investment

1 Qunying Textile (Myanmar) Co., LtdManufacturing, print and dyeing of fabric & home textile on CMP basis

Wholly foreign owned

2 Gold emperor (Myanmar) Co., Ltd Manufacturing of various kinds of shoes on CMP basis

Wholly foreign owned

3 Myanmar Than Taw Myat Co., LtdManufacturing and marketing of cement from semi-product (clinker)

Joint venture

4 Myanmar Green Century Co., Ltd Hotel service Joint venture

5 Aquamarine Ecotourism Development Co., Ltd Eco hotel and resorts services Wholly Myanmar owned

6 AquaGold Myanmar Preal Co., LtdBreeding, rearing of oyster and sales of cultured pearl

Wholly Myanmar owned

7 Pyi Phyo Tun International Co., LtdBreeding, rearing of oyster and sales of cultured pearl

Wholly Myanmar owned

Source: DICA

PwC | August 2019

5. Upcoming Events

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PwC | August 2019

Upcoming Events (September 2019) List

Date Location Name of Event Sector Price Focus Points

12-14 SepYangon Printech Myanmar IT Free

“Printech Myanmar convenes manufacturersof technologies for rotogravure, flexography,offset printing, digital printing, hybridtechnologies, and converting technologiesand it features a display of Machinery andequipment for prepress and printing forms,Machinery, lines and special equipment forthe papermaking industry, Co-extrusionequipment for packaging plastic films,Machinery, equipment, lines for corrugatedboard production, Machinery, equipment,lines for solid board and folding boardproduction, and much more.”

17-19 Sep Yangon Myanmar Connect Telecom TBC

“Myanmar Connect is the only conference toconnect the entire telecoms industry withinMyanmar and this year will explore thetelecoms sector and the wider ecosystem inMyanmar’s continued journey towards adigital future. The event unites local andinternational, well-established telecomsplayers with start-ups and projects withpotential, making this a fantastic opportunityto forge new business connections”

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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:

Mark RathbonePwC Capital Projects and Infrastructure Leader, Asia+65 6236 4190mark.rathbone@sg.pwc.com

Jennifer TayPartnerCapital Projects & Infrastructure, PwC Singapore +65 8876 9300jennifer.c.tay@sg.pwc.com

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