PWC MYANMAR WEEKLY BUSINESS INTELLIGENCE - ISSUE 171 27 JULY 2019
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www.pwc.com/mm PwC Myanmar Weekly Business Intelligence Issue 171 27 July 2019
Disclaimer PricewaterhouseCoopers Myanmar Co., Ltd helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 158 countries with more than 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Tell us what matters to you and find out more by visiting us at www.pwc.com/mm. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. © 2019 PricewaterhouseCoopers Myanmar Co., Ltd, a company duly established and operating under the laws of Myanmar. All rights reserved. PwC refers to the Myanmar member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. The information contained in this publication is for general guidance on matters of interest only and is not meant to be comprehensive. The application and impact of laws can vary widely based on the specific facts involved. Before taking any action, please ensure that you obtain advice specific to your circumstances from your usual PricewaterhouseCoopers Myanmar Co., Ltd client service team or your other tax advisers. PwC | July 2019 2
1. Weekly Key Financial & Business News PwC | July 2019 3
Weekly Key Financial & Business News
Headlines
Proximity Finance to provide K5 billion in microfinance funding
Banks need to be more transparent on fraud
Microfinance growth expected to drive higher financial inclusion
Survey shows insurance market has potential to grow
Myanmar to pick deep-sea port location next year
PwC | July 2019 4Weekly Key Financial & Business News
Headlines
Dawei SEZ stands better chance with Japanese participation, officials say
CBM extends WeChat Pay pilot phase by three months
China Leads Investment in Yangon
PTTEP raises five-year capex to US$21B
Chronic traffic leading to higher socio-economic costs in Yangon
PwC | July 2019 5Newspapers
Myanmar Times
Proximity Finance to provide K5 billion in
microfinance funding
23 July 2019
Proximity Finance, the microfinance arm of Sundberg said this financing structure makes it
Yangon-based Proximity Designs, a social possible to continue funding microfinancing
enterprise outfit, has signed a K5 billion back-to- programmes as investing in emerging markets
back funding agreement with Yoma Bank in a like Myanmar’s can be expensive due to the
move to expand micro-lending to smallholders. hedging practices that firms need to adopt to
Back-to-back financing in this instance refers to protect earnings from volatile exchange-rate
an arrangement where Yoma Bank provides credit movements.
in local currency to local microfinance institutions He added that the deal with Yoma Bank should be
like Proximity Finance. an example for other local banks to offer local-
Proximity Finance then uses a hedging strategy currency funding to microfinance institutions.
where the US dollar acts as the hedge against This funding followed a commitment of US$8
exchange-rate fluctuations. The semi- million from the US government’s Overseas
collateralised funding will be provided by MCE Private Investment Corporation and an additional
Social Capital, a nonprofit organisation based in commitment of US$2 million subordinated debt
San Francisco, on a three-year tenor. from the Skoll Foundation to Proximity Finance
‘’This back-to-back structure of funding allows announced on April 3.
more investment into Myanmar in hard currency Proximity Finance, which mainly offers crop loans
while allowing microfinance institutions to repay ranging from K250,000 to K600,000, has served
in local currency,’’ Proximity Finance CEO Hedvig the needs of over 100,000 rural households in
Sundberg said in a press release. 2,000 villages since it started.
The funds from Yoma Bank will go towards low- Source: Myanmar Times
interest rate local-currency loans for an estimated https://www.mmtimes.com/news/proximity-
12,800 farming families in Myanmar. Proximity finance-provide-k5-billion-microfinance-
Finance will distribute these loans. funding.html
PwC | July 2019 6Newspapers
Myanmar Times
Banks need to be more transparent on fraud
24 July 2019
Banks should report fraud cases involving their makes people concerned,” said U Pe Myint, a
staff in a more transparent manner in order for senior advisor with a private bank, adding that it
them to maintain the public’s confidence in their is the bank’s responsibility to highlight cases of
ability to keep money safe. fraud to the public.
Banking experts have advised that banks should A case that came up recently involved U Ko Oo,
take steps in announcing or reporting fraud cases who opened a savings account back in September
in a more transparent manner so that the public 2017 with a local bank and up until October 2018,
can be educated on how it happened and what there was K90 million in the account. But when
steps the bank will take. he checked his account in April this year, only
Typically, most bank fraud cases are made known about K40 million remained.
to the public only when police stations make After receiving no responses from the bank for
announcements, banking experts said. They said two months following requests to solve the
banks should have more transparency in handling missing money, U Ko Oo sued the bank and called
fraud cases. a press conference to highlight the case.
Because of the lack of information from the There have also been other cases where bank
banks, especially where there were unauthorized employees have stolen cash or transferred funds
withdrawals from customer bank accounts, belonging to clients to their own accounts. These
worried customers often asked whether their cases had involved hundreds of millions.
money is safe with the bank or whether the
victims of such fraud would get compensated.
The fear of what it would do to their reputation
has kept banks from announcing such fraud and Source: Myanmar Times
the steps they have taken. “The bank may be https://www.mmtimes.com/news/banks-need-
solving the problem, but the lack of transparency be-more-transparent-fraud.html
PwC | July 2019 7Newspapers
Myanmar Times
Microfinance growth expected to drive higher
financial inclusion
24 July 2019
Efforts are being made to raise the rate of have flourished in Myanmar, local MFIs have had
financial inclusion in the Myanmar. Under the a harder time expanding.
Myanmar Financial Inclusion Roadmap for 2019 Daw Phyu Yamin Myat, Managing Director,
to 2023, authorities are working with the UN Myanmar Development Partners Co. Ltd, and a
Capital Development Fund (UNCDF) to raise the member of the Myanmar Microfinance
percentage of the population covered by the Association leadership team, said in her opening
financial sector to 60 percent from 48pc speech this is because “Myanmar’s microfinance
currently, said Willian Naing, national officer at sector is comparatively young and is managed
the UNCDF, during the Microfinance Success Asia under one regulatory department,” with the
event in Yangon on Tuesday. Microfinance Law introduced only in 2011.
By 2023, the aim is to increase the percentage of She said most local MFIs began operations in
households with access to formal bank accounts 2012. “In 2013 and 2014, international investors
to half from a quarter currently. Over the period, and bigger players entered the market. While we
more will also be done to raise formal financial are a young industry, we have [nevertheless]
inclusion for farmers to 60pc from 52pc and for grown fast and we are at the stage where the
employed individuals to 60pc from 51pc, Mr regulator is asking ‘Are we growing too fast?’
Naing said. She added that the industry “has to grow fast due
One of key contributors to expanding the rate of to demand in the country. In 2011, 25pc of the
financial inclusion is microfinance. Over the past population was living under the poverty line.
five years, the sector has grown by 260pc, with
borrowers mainly using the funds for living Source: Myanmar Times
expenses or to start or expand their businesses, https://www.mmtimes.com/news/microfinance-
Mr Naing said. He noted though, that while growth-expected-drive-higher-financial-
international microfinance institutions (MFIs) inclusion.html
PwC | July 2019 8Newspapers
Myanmar Times
Survey shows insurance market has potential to grow
24 July 2019
A survey on insurance showed that the Myanmar representing 70pc urban and 30pc rural
insurance industry has potential to grow to K1.75 demographics.
trillion in the next 12 months and grow to a K4 The survey highlighted barriers to getting
trillion market in 10 years. insurance, with 33pc of respondents saying it was
IKBZ Insurance Co Ltd, one of the largest too complicated, 22pc saying “karma” forbade
insurers in the country, unveiled on Tuesday them from taking insurance, 17pc said they have
findings on the insurance market, Insights from no one to turn to for help in understanding
Customer Survey, which showed that the insurance, 11pc mentioned affordability and 10pc
insurance market has the potential to grow to mentioned costs. However, 60pc of respondents
K1.75 trillion in the next 12 months and have a were interested in insurance despite the religious
market size of K4 trillion in 10 years. strictures.
Myanmar has the lowest insurance penetration “In our survey conducted across Myanmar, we
rate in the region, with only two million of its have noticed that there is a compelling need for
54.36 million population having any sort of insurance. While only a small sample of our
insurance coverage. respondents knew about insurance and insurance
“Current market penetration is very low but we products, after explaining the concept of life and
fully expect the industry to meet the regional health insurance, an overwhelming majority of 63
average of 5 percent within next 10 years provided percent expressed an interest in protecting
that there is sufficient access to insurance themselves and their families with an insurance
professionals and a proper suite of products,’’ plan,’’ Mancham said.
IKBZ’s deputy managing director Anil Mancham
said. Source: Myanmar Times
The survey involved 1,000 adults, consisting of https://www.mmtimes.com/news/survey-shows-
equal numbers of men and women and insurance-market-has-potential-grow.html
PwC | July 2019 9Newspapers
Myanmar Times
Myanmar to pick deep-sea port location next year
24 July 2019
Exclusive: The location for Myanmar’s first deep- 2021. We intend to construct the remaining ports
sea port will be decided next year, according to a in the near future."
senior government official. Businesses welcomed U Aung Ye Tun’s
“Construction of a Yangon deep-sea port is one of intervention.
the projects included as second priority in the “U Aung Ye Tun has made a very helpful
National Transport Master Plan. Work is being clarification on an issue which the industry is
made and the location can be finally selected and watching closely. A deep-sea port will be
approved within 2020,” U Aung Ye Tun, assistant important for Myanmar’s trade growth in the long
secretary of the Ministry of Transport and term because existing capacity won’t be able to
Communications, told The Myanmar Times. cope. Larger vessel also lowers the ocean logistics
Asked about the cost and project details, he said cost,” an industrialist, who asked not to be
an analysis would be conducted before named, commented.
construction work begins. “The government is right to start planning this
“Only after the analysis is completed, approval early on. The location will be a key factor in
will be made regarding the implementation determining the logistics cost deriving from the
method, that is, whether it is done by a public- land transport connecting the port. It is also
private partnership model or by a loan.” equally important that the government pays
In addition, the government will establish six attention to more pressing problems as well, such
inland ports in Bhamo (Bamaw), Upper Myanmar as improving the customs process,” he added.
in Mandalay, Pakokku and Magway, and Monywa
on Chindwin River, the official said.
“Our priority is in Mandalay and we will start Source: Myanmar Times
construction in this coming October. The port [in https://www.mmtimes.com/news/myanmar-
Mandalay] will finish [construction] in March pick-deep-sea-port-location-next-year.html
PwC | July 2019 10Newspapers
Myanmar Times
Dawei SEZ stands better chance with Japanese
participation, officials say
25 July 2019
The governments of Myanmar, Japan and be held where matters concerning ITD’s role will
Thailand will be meeting over the troubled Dawei also be discussed.
special economic zone (SEZ) project that has Japan is no stranger to developing SEZs in
stalled since 2013 for lack of funding. Ministers Myanmar, as Japanese companies were involved
will form a Joint Cooperation Committee to in the development of the Thilawa SEZ, south of
discuss how Japan can be more involved in Yangon. Myanmar officials in particular prefer the
developing the SEZ. Japanese to take part due to their reputation for
Located 20 kilometres north of Dawei, capital of quality and trustworthiness while U Khin Maung
Tanintharyi Region in Myanmar’s southeast coast Lwin said the government wanted the project to
bordering Thailand, the Dawei SEZ comprises start as soon as possible.
20,000 hectares of land and includes industrial as “It would better with Japanese participation, and
well as port facilities. the Japanese government has also expressed
Italian-Thai Development pcl (ITD), a Thai interest,” he said. Both the Myanmar and Thai
construction firm, was to take the lead in the governments have tried to involve Japan before
project with the initial memorandum of this but unsuccessfully. However, this time
understanding between the Myanmar and Thai around the Japan International Cooperation
governments signed in 2008. After the project Agency has carried out a survey of Tanintharyi
stalled in 2013, both governments remained Region’s coastal strip and will be releasing a
committed to completing it, but efforts to woo report soon.
other investors after sidelining ITD has been
unsuccessful. Source: Myanmar Times
Ministry of Commerce assistant secretary U Khin https://www.mmtimes.com/news/dawei-sez-
Maung Lwin said Japan will participate fully in stands-better-chance-japanese-participation-
the project and that ministerial-level meeting will officials-say.html
PwC | July 2019 11Newspapers
Myanmar Times
CBM extends WeChat Pay pilot phase by three
months
25 July 2019
The pilot phase for the use of the WeChat Pay monitor the flow of these payments, especially for
service in Myanmar has been extended for a gems bought from Chinese-owned shops.
second three-month period, Central Bank of The same number of locations, 14, including
Myanmar (CBM) director general Daw Myint certain shops at Mandalay Airport and downtown
Myint Kyi said. Yangon, were allowed the use of WeChat Pay for
The pilot phase began in February when the CBM transactions. This second extension will expire in
approved the request of Paypb Co Ltd for the use late August.
of the WeChat Pay service by Chinese tourists in
several locations. Daw Myint Myint Kyi told The
Myanmar Times the central bank needed more
time to study how the payments worked and
allowed the extension.
She said the CBM also allowed the second
transaction because it wanted to ensure that
money spent by foreigners would pass officially
through local banks as Chinese tourists have been
using WeChat Pay and Alipay mostly for paying
hotel rooms, buying souvenirs and meals in
restaurants around Mandalay even before the
central bank gave permission.
Daw Myint Myint Kyi said some shops in
Yangon’s Bogyoke Aung San Market have been Source: Myanmar Times
accepting payments through either WeChat Pay https://www.mmtimes.com/news/cbm-extends-
and Alipay. She noted that there was a need to wechat-pay-pilot-phase-three-months.html
PwC | July 2019 12Newspapers
The Irrawaddy
China Leads Investment in Yangon
26 July 2019
YANGON—China was the largest investor in according to the YRIC.
Myanmar’s financial hub, Yangon Region, in the Overall, the manufacturing, hotel/tourism, real
first nine months of the current fiscal year, estate, and fishery sectors drew the most foreign
according to the Directorate of Investment and investment during the period.
Company Administration (DICA). China is In May, the regional government held the Yangon
already the second-largest investor in the country. Investment Forum 2019, which showcased more
The director of DICA’s Yangon Region Office, U than 80 projects to local and international
Myo Khaing Oo, said on Wednesday that as of investors. At the forum, the Myanmar
July 24, Yangon Region had given the green light government promoted Yangon to investors, citing
to a total of 113 foreign investment projects in the its strategic location, infrastructure development
current 2018-19 fiscal year, which ends on Sept. and emerging workforce.
30. Of those, 65 are by Chinese companies. Despite being the smallest among the 14 states
“Chinese account for the biggest share,” said U and regions of Myanmar, Yangon Region receives
Myo Khaing Oo, who is also secretary of the nearly 60 percent of all foreign investment and
Yangon Region Investment Committee (YRIC). accounts for almost a quarter of Myanmar’s total
However, he did not reveal which sector received GDP.
the most investment from China.
In addition to the Chinese projects, the regional
government approved 17 projects from Hong
Kong; six each from India and Taiwan; four from
Japan; three each from Singapore and the British
Virgin Islands; and nine from other countries. Source: The Irrawaddy
The foreign projects were worth a total of https://www.irrawaddy.com/business/china-
US$201.022 million (303.83 billion kyats), leads-investment-yangon.html
PwC | July 2019 13Newspapers
Myanmar Times
PTTEP raises five-year capex to US$21B
26 July 2019
Bangkok-based PTT Exploration and Production Business expansion for the first-half included
Public Company Ltd (PTTEP), a state-owned oil signing production sharing contracts for offshore
and gas firm,has revised higher capital Erawan and Bongkot fields in the Gulf of Thailand
expenditure (capex) for the 2019 to 2023 period and the awarded exploration blocks in the United
to US$21.35 billion from US$16.1 billion. Arab Emirates and Malaysia.
PTTEP president and chief executive officer Phongsthorn added that the sales volume target
PhongsthornThaivisin said on July 25 that the for the 2019 to 2023 period has also been revised
higher allocation of US$21.35 billion for the five- higher to better reflect the acquisition of several
year investment plan from 2019 to 2023 was for businesses and oil-and-gas blocks in Thailand and
accelerating exploration activities, particularly for abroad.
the Zawtika offshore gas field in Myanmar’s Gulf In accordance with the revised five-year plan, the
of Moattama as well as other activities under the company has set a higher target for average
company’s expansion strategy. petroleum sales volume this year to 345,000
He said the company has successfully concluded barrels of oil equivalent per day (BOED), an
business expansion for the first-half of this year increase of 8.5pc from the 318,000 BOED
that had been planned for.Likewise, this year’s planned last year. PTTEP expects a compounded
capex has been revised to US$3.57 billion, from annual growth rate for the five-year plan period of
US$3.256 billion to align with the business 7pc.
expansion this year.
However, the higher capex does not include the
US$2.08 billion acquisition costs for Murphy Oil
Corporation’s Malaysian business completed on Source: Myanmar Times
July 10 nor the 33.8pc stake in APICO LLC https://www.mmtimes.com/news/pttep-raises-
acquired from Tatex Thailand LLC. five-year-capex-us21b.html
PwC | July 2019 14Newspapers
Myanmar Times
Chronic traffic leading to higher socio-economic
costs in Yangon
26 July 2019
Ma Win Win starts getting ready for work at 6am health, which has not been studied.
sharp each day. By 6.30am she’s already at the Pyithu Hluttaw MP U Aung Kyaw Kyaw Oo, who
bus stop waiting to board the two-hour long ride represents Hlaing township in western Yangon,
to her office downtown. It’s a long ride but she said transportation costs increase because people
has no choice, as traffic in the morning is almost have to spend extra money for petrol or in taxis
always at a standstill. With fewer cars on the road instead of buses to get to work on time.
though, it would take her half the time or less to However, no specific surveys have been carried
get to work, she said. out on the city’s chronic traffic congestion, while
Ma Win Win is not the only one having to spend urban management specialist Ko Aung Khant said
hours on the road just to get to work. Yangon, the focus in tackling the problem should be to
with a population of some seven million, suffers reduce time wastage and costs. “There needs to be
from debilitating traffic where during rush-hour, a more focused policy to tackle the problem but it
commuters can spend at least three hours on the doesn’t look like it,” he said.
road daily. Shwe Lin Ban industrial zone secretary U Nay Lin
Urban-management experts and members of Zin said the traffic in Yangon, where most foreign
parliament representing the city said the investors tend to be based, “is an additional
government need to find solutions for this challenge to doing business in Myanmar”. The
problem, as the costs to the economy and society industrial zone, located inHlaing Tharyar
“is huge”, especially since Yangon’s population township, lies to Yangon’s west.
has been forecast to grow to 10 million by 2030.
It is not just about the value lost in man-hours, Source: Myanmar Times
employers said the stress factor adds to the toll https://www.mmtimes.com/news/chronic-
while labour productivity will also be affected. traffic-leading-higher-socio-economic-costs-
There is also the pollution factor and its impact on yangon.html
PwC | July 2019 152. Weekly Key Policy News PwC | July 2019 16
Weekly Key Policy News
Headlines
Public access to info: Planned archives law alarms civil society
Govt to demand more info from prospective investors
EITI applied in forestry sector for the first time
Union ministers come under fire for corruption
Union Industry Minister Khin Maung Cho allowed to resign
PwC | July 2019 17Newspapers
Myanmar Times
Public access to info: Planned archives law alarms
civil society
22 July 2019
Myanmar’s government is proposing a new law on department is also to select which documents
storing records and archives which critics fear will from non-government entities and Myanmar
restrict public access to state information. citizens to preserve “so that they can be used in
If approved by parliament, the law would make national matters.”
accessing information stored in the National “As the records and archives are stored
Archives Department without permission a systematically, [they can be used] as evidence for
criminal offence, with a maximum prison the matters of the nation and in the interest of the
sentence of three months and K200,000 fine. country and the people,” the bill reads.
Advocacy group Free Expression Myanmar (FEM) Archives department director Daw Saw Sandar
warns that the government would be in complete Win confirmed to The Myanmar Times that no
control of deciding who can access government- public consultations were made on drafting the
held information, even with the lowest bill, but she said members of the public could
classification of confidentiality. raise their concerns by submitting letters to the
Parliament’s Economic and Financial Hluttaw. “The public will voice their opinion
Development Committee, chaired by MP U Khin concerning this bill. They will submit their
Aye from the ruling National League for feedback to Pyithu Hluttaw.”
Democracy party, has proposed a National Lawmakers who wish to amend the bill must
Records and Archives Bill to replace the 1990 law, submit their names by July 23.
as amended in 2007.
The new law seeks to require government bodies
to transfer documents which are “important for Source: Myanmar Times
the nation’s heritage” to the National Archives https://www.mmtimes.com/news/public-access-
Department, under the Ministry of Planning and info-planned-archives-law-alarms-civil-
Finance (MOPF), and store the records there. The society.html
PwC | July 2019 18Newspapers
Myanmar Times
Govt to demand more info from prospective investors
22 July 2019
The government has announced it will require the ministry and who signed the notification.
more detailed documentation for investment From August 1, proposal forms will require a
proposals from August 1 following an summary of the parent company’s services, how
investigation by The Myanmar Times into much it can invest in the business, technological
repeated transparency failures under the experiences of the parent company and whether
investment body. there will be benefits for the production chain for
In a notification signed on July 18 but released on the proposed business and its related businesses.
July 22, the Ministry of Investment and Foreign For endorsement application forms, information
Economic Relations announced a series of necessary will include a summary of the parent
changes to the proposal form (Form 2) and company's services, capital amount of the parent
endorsement application forms to both the company, amount the parent company can invest
Myanmar Investment Commission (MIC) at the in the business, technological experiences of the
Union level (Form 4-a) and to regional and state parent company, plan to transfer and bring in
investment commissions (Form 4-b). technologies and whether there will be benefits
The changes will allow the ministry to scrutinise for the production chain for the proposed
business proposals more effectively and with business and its related businesses.
more information, the notification says. A Myanmar Times investigation, published in
Under the new Investment Law which was early July, shows that multiple disclosure
enforced two years ago, regional or state requirements for both the MIC and investors are
commissions can approve proposals of up to not enforced.
US$5 million while any projects involving a
higher amount will need a green light from the Source: Myanmar Times
Union MIC. https://www.mmtimes.com/news/govt-demand-
The MIC is chaired by U Thaung Tun, who heads more-info-prospective-investors.html
PwC | July 2019 19Newspapers
Myanmar Times
EITI applied in forestry sector for the first time
24 July 2019
Myanmar’s forestry sector was included in the rates and revenues, said Daw Moe Moe Tun, a
Myanmar Extractive Industries Transparency civil society representative for the EITI tripartite
Initiative (MEITI) report for the first time this coalition between the government, private sector
year. Myanmar is the second country to have its and civil society. “We are worried about these
forestry sector included in the EITI. differences, some of which are huge,” said Daw
Guided by the belief that a country’s natural Moe Moe Tun.
resources belong to its citizens, the EITI is the As such, the objective of the EITI reports in
global standard for promoting open and Myanmar will be to examine and reconcile the
accountable management of its resources. It differences in the amount of payments among the
requires the disclosure of information along the respective government ministries, departments,
extractive industry value chain from the point of organisations and companies.
extraction, to how revenues make their way According to the report, direct payments to the
through the government, and how they benefit government from timber companies amounted to
the public. K 584 billion during fiscal 2015-16. Total
In preparing the Myanmar forestry report, EITI government receipts amounted to K714.7 billion.
compared data from the Forest Department, During the year, a total of 679,794 Hoppus tonnes
state-owned Myanmar Timber Enterprise (MTE), of timber was produced. Data showed that MTE
Internal Revenue Department, Treasury sold US$296.5 million worth of timber, while
Department and Customs Department as well as US$207.2 billion worth was officially exported,
data issued by timber companies. mainly to India.
EITI’s work in the Myanmar forestry sector
revealed discrepancies between information Source: Myanmar Times
recorded by state-owned companies and https://www.mmtimes.com/news/eiti-applied-
government departments, such as production forestry-sector-first-time.html
PwC | July 2019 20Newspapers
Myanmar Times
Union ministers come under fire for corruption
26 July 2019
President U Win Myint has reportedly decided to that the ACC had visited the office of the Ministry
replace Union Industry Minister U Khin Maung of Electricity and Energy (MOEE) to start its
Cho for his involvement in a corruption scandal, investigation
Myanmar Times understands. This makes him the However, an official from MOEE who requested
second minister to step down on counts of anonymity said the ministry was in the dark over
corruption. In May last year, U Kyaw Win the investigations as the ACC has not issued an
relinquished his position as finance minister in official statement. “As far as we understand,
the midst of a corruption investigation. questions were asked about hydropower
Meanwhile, the Anti-Corruption Commission projects,” the official said, adding that personnel
(ACC) is investigating the bank transactions related to the investigation was called for
related to the accounts of the Union Minister of questioning.
Electricity and Energy, his deputy and their wives. “We don’t have a record of who were summoned.
A letter dated July 9 was issued by the ACC to the No one from our department was summoned,”
Central Bank of Myanmar (CBM) requesting that the official said, adding that the minister’s office
all private local and foreign banks check the bank did not know when the ACC started the initial
account transactions of Minister of Electricity and investigations nor on what the investigation was
Energy U Win Khaing, his wife Daw Hla Hla Mu, about. U Tun Naing has also been kept in the
Deputy Minister U Tun Naing and his wife Daw dark. The Myanmar Times contacted ACC official
Thin Thin Maw. The banks were to report back on U Kyaw Soe a number of times but could not
the transactions as soon as possible.A letter from reach him for comment.
the CBM dated July 10 said all banks must reply
within three working days to the central bank on Source: Myanmar Times
the information requested. https://www.mmtimes.com/news/union-
Meanwhile, several local media outlets reported ministers-come-under-fire-corruption.html
PwC | July 2019 21Newspapers
Eleven Myanmar
Union Industry Minister Khin Maung Cho allowed to
resign
27 July 2019
Union Minister for Industry Khin Maung Cho has of Health and Sports. New models of ambulances
been allowed to resign, according to Order No. installed with medical equipment and medical
32/2019 issued by the President Office on July grade trimming parts will be manufactured in
26. 2018-2019 fiscal year.
The order stated that the minister was allowed to Under the current government led by the
resign of his own volition according to Section 235 National League for Democracy, three union
Sub-section (b) of the Constitution and Section 68 ministers including Khin Maung Cho have
Subsection (a) of the Union Government Law. resigned.
"It was related to the ambulance issue and in Dr Le Le Maw, who served as Taninthayi Region
another issue, tender was not invited to buy raw Chief Minister, is also in detention facing a court
materials for BPI. It might also include the matter trail after alleged corruption.
in which ambulances are expensive," said a
member of parliament, also a member of the
Lower House's Committee for Investment and
Industrial Development.
No (15) Heavy Industries (Thagara) under the
Ministry of Industry converted Toyota Hi-ace cars
into ambulances. Production started in 2018 and
assembling cost of an ambulance was K74 million.
Public criticisms emerged that local production
cost of ambulances was more expensive than Source: Eleven Myanmar
imported ones, calling for investigation. https://elevenmyanmar.com/news/union-
According to ministry sources, 55 standard type industry-minister-khin-maung-cho-allowed-to-
ambulances were manufactured for the Ministry resign
PwC | July 2019 223. Weekly Investment News PwC | July 2019 23
Weekly Key Investment News
Headlines
Special economic zones pull in over $208 mln in investment
Proximity Finance signs $3.28m loan agreement with Yoma Bank
Rakhine Rebels Eager for Foreign Investment
UK’s CDC Group invests $30m in Myanmar’s telco firm Frontiir
Peninsula Hotel Shareholder Eyes $1.6-Billion Project in Rakhine
PwC | July 2019 24Newspapers
Global New Light of
Myanmar Special economic zones pull in over $208 mln in
investment
22 July 2019
More than 110 enterprises, including four Zone B have been sold. Over 60 per cent of
domestic businesses, invested US$208 billion in businesses in Thilawa are domestic-oriented
the Special Economic Zones (SEZs), under the manufacturing enterprises, while 40 per cent are
Special Economic Zone Law, as of 10 July in the export-oriented manufacturers, according to a
current fiscal year, according to figures released press statement issued by the company in June
by the Directorate of Investment and Company this year.A company exporting at least 75 per cent
Administration. of the production in value is registered as a Free
Singapore topped the list of foreign investors, Zone investor, and is exempt from paying
accounting for more than 37 per cent of the corporate tax for 7 years from the time it starts
overall investment, followed by Japan and commercial operations. Companies such as
Thailand. FDI also flowed into the SEZs from the logistics which support export-oriented
Republic of Korea, Hong Kong, the UK, the UAE, manufacturing can also be free zone companies.
Malaysia, Austria, China (Taipei), Panama, China, Domestic-oriented manufacturing companies are
Brunei, Viet Nam, Australia, France, Switzerland, regarded as promotion zone companies and they
and the Netherlands. are eligible for a five-year holiday on corporate
Currently, 74 businesses are operational in the tax. There are other tax incentives for free zone
Thilawa SEZ and 18 businesses are beginning to and promotion zone investors on import of capital
export goods. The SEZ is employing over 20,000 goods, raw materials, and merchandise, and
workers, including permanent and construction consigned goods and vehicles. Further details
workers, according to the management about the tax system are available on
committee. http://www.myanmarthilawa.gov.mm.
The Myanmar Thilawa SEZ Holdings Public Source: Global New Light of Myanmar
Limited’s annual report for 2017-2018 stated that https://www.irrawaddy.com/business/china-
97 per cent of Thilawa Zone A and 61 per cent of leads-investment-yangon.html
PwC | July 2019 25Newspapers
Deal Street Asia
Proximity Finance signs $3.28m loan agreement with
Yoma Bank
22 July 2019
Myanmar-headquartered microfinance institution customers to touch 200,000 in the next five
Proximity Finance has signed a $3.28-million years. Yoma Bank, one of the largest lenders in
back-to-back funding agreement with Myanmar’s Myanmar, partnered with Telenor, Myanmar’s
largest commercial lender Yoma Bank to support largest telco firm, to develop a mobile wallet
micro-lending for smallholder farmers. Yoma payment platform called Wave Money in 2015. In
Bank’s financing will go towards offering a low- April this year, Yoma Bank provided $1.46 million
interest loan for around 12,800 families. The support to Mahar Bawga Finance Company
bank first introduced its back-to-back loan Limited.
scheme to Proximity Finance in mid-2017. Yoma
Bank’s back-to-back financing scheme, which
comes with three-year tenor, is semi-
collateralized with USD provided by social impact
investor MCE Social Capital. “This back-to-back
structure of funding will allow more investment
into Myanmar in hard currency while allowing
MFIs to repay in local currency. This deal with
Yoma Bank should continue to be an example for
other local banks,” Proximity Finance chief
executive Hedvig Sundberg said in a statement.
Proximity Finance is one of the largest MFIs in
Myanmar with over 100,000 end customers and a
portfolio of over $20 million. It offers crop loan, Source: Deal Street Asia
small business loan, livestock loan, and on-the-go https://www.dealstreetasia.com/stories/proximit
loan. The company expects its number of y-finance-yoma-bank-146068/
PwC | July 2019 26Newspapers
The Irrawaddy
Rakhine Rebels Eager for Foreign Investment
23 July 2019
YANGON—The Arakan Army (AA) has signaled to war is too risky for investors.
foreign developers it wants them to invest in So far, armed conflict between the AA and the
Rakhine State, noting that the region is on an military has displaced more than 50,000 people
essential part of Chinese President Xi Jinping’s in Rakhine State, and bilateral peace talks have
signature Belt and Road Initiative (BRI)—the been stalled since April. Fighting remains intense,
proposed comprehensive trade and logistics route with the military reinforcing troops in the region
linking China and Europe through Central Asia, with navy frigates, Russian attack helicopters and
the Middle East and Russia. artillery units.
The AA’s political wing, the United League for Still, international developers from Singapore,
Arakan (ULA), announced in a three-part Malaysia and China have proposed billion-dollar
statement that it is accepting investments from projects in the state capital of Sittwe and in
foreign investors, including BRI-related projects. Kyaukphyu Township, on Ramree Island, in
Elsewhere in the statement the ULA refuted the recent months.
Myanmar military’s accusation that the AA is
terrorist group and said its armed struggle against
the military (or Tatmadaw) is for self-
determination.
As battles rage throughout the north (and in some
parts of the south) of Rakhine State—including in
Kyaukphyu Township, the site of large Chinese
oil-and-gas pipelines and deep seaport projects—
the AA’s embrace of foreign investment has Source: The Irrawaddy
attracted both praise and criticism. Some https://www.irrawaddy.com/news/burma/rakhi
question if doing business in a region racked by ne-rebels-eager-foreign-investment.html
PwC | July 2019 27Newspapers
Deal Street Asia
UK’s CDC Group invests $30m in Myanmar’s telco
firm Frontiir
24 July 2019
CDC Group, the UK-based development finance a statement. CDC Group, which is also owned by
institution, has invested $30 million in Yangon’s the UK government, is an investment firm that
internet service provider Frontiir, marking its invests in private equity, venture capital, debt and
first direct equity investment in Myanmar. guarantees, mezzanine and other types of
Despite Myanmar’s growing mobile broadband investment. The firm primarily invests in sectors
penetration, access to digital services in the such as financial services, infrastructure, health
country is still very low, which poses a significant and education, food processing business,
challenge to communities and businesses. The agriculture, manufacturing and construction,
data usage there also remains unaffordable. among others. CDC has investments in the
CDC’s investment will help Frontiir connect over Myanmar Opportunities Fund II and Irradwaddy
2 million people on the internet in Myanmar. The Green Towers, among others. The group recently
company’s service called ‘Myanmar Net’ claims to made headlines for its $40 million investment in
the fastest-growing internet service in the country Indian grocery delivery firm BigBasket in April
since its inception four years ago. Going forward, this year.
Frontiir plans to expand its service coverage to
lower-income townships within Yangon and
Mandalay, and expects to grow to 22 cities and
towns by 2022. “With CDC’s investment, we are
excited to have the opportunity to create
thousands of jobs and provide millions with
unlimited internet for as low as 200 Kyats ($0.13)
per day, and triple our foreign direct investment Source: Deal Street Asia
into Myanmar over the next 3 years,” Frontiir https://www.dealstreetasia.com/stories/cdc-
chief executive and chairman Wai Lin Tun said in group-frontiir-146491/
PwC | July 2019 28Newspapers
The Irrawaddy
Peninsula Hotel Shareholder Eyes $1.6-Billion
Project in Rakhine
24 July 2019
YANGON—Singapore firm Huacheng interrogated. Neither the Myanmar military, the
International Resources Ltd and China’s Shanghai Home Affairs Ministry or the government have
Bright Industry have jointly proposed a US$1.6- commented on the situation regarding the six
billion (2.41-trillion-kyat) development project to detainees.
the Rakhine State cabinet. The Irrawaddy has learned that the founder of
Representatives from the two firms visited Sittwe, Huacheng International Resources is Chua Hwa
the capital of conflict-ridden Rakhine State, on Por, whose headquarters are located in
July 12 and met with National League for Singapore’s Suntec Tower Three. He is also the
Democracy (NLD)-appointed Chief Minister U second-largest shareholder in the iconic
Nyi Pu. Peninsula Hotel Group, which operates a global
The state government has yet to provide any hotel and luxury residence business that earns
details of the project. multi-million-dollar revenues annually.
The Singapore business delegation’s visit was in An op-ed briefly published in the South China
defiance of its own government’s advisory Morning Post (SCMP) claimed that Chua Hwa Por
discouraging travel to Rakhine State, and comes has close ties to mainland China, and linked him
on the heels of the city state’s recent deportation to Politburo member Li Zhanshu, Chinese
of six Arakanese people, which attracted criticism President Xi Jinping’s right-hand man. The
and prompted protests outside Singaporean daughter of Li was spotted in a luxury hotel of
embassies in Japan and the US. Chua Hwa Por in 2017. Li’s official position is
The six deported Arakanese, who included the head of the Communist Party’s General Office.
brother of the Arakan Army (AA)’s chief, were all Source: The Irrawaddy
arrested upon their arrival in Yangon. As of https://www.irrawaddy.com/business/peninsula-
Wednesday, their family members had no idea hotel-shareholder-eyes-1-6-billion-project-
where they were being held or if they were being rakhine.html
PwC | July 2019 293. Weekly New Tenders PwC | July 2019 30
Tenders (Myanmar)
List
No applicable tender announced for the week ending 26 July 2019.
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/ .
PwC | July 2019 31Tenders (Multilateral organizations)
List
ADB: TA-9578 REG: Implementing Trade Facilitation Initiatives under the South Asia Subregional
Economic Cooperation Program - Programs Analyst (52123-001), Closing date: 01 Aug 2019
Note: tenders information are collected from https://wbgeconsult2.worldbank.org, www.devex.com, www.adb.org, https://www.ungm.org
PwC | July 2019 324. MIC Permitted Projects PwC | July 2019 33
MIC Permitted Projects (Meeting 11, 2019)
No. Name of Company Type of Investment Form of Investment
Manufacturing of inflatable and assorted
1 Yangon Shinkwang Marine Co., Ltd Wholly foreign owned
boats on CMP basis
Construction; selling/leasing and
2 Lesso Home Development (Yangon) Ltd management of commercial: office, Joint venture
wholesale and retail building/units
3 School City Co., Ltd Basic education service Joint venture
Source: DICA
PwC | July 2019 345. Upcoming Events PwC | July 2019 35
Upcoming Events (August 2019)
List
Date Location Name of Event Sector Price Focus Points
“Builders Myanmar is set to be Myanmar's
most complete Building & Construction
event in Myanmar that brings together an
international congregation of building and
01-03 Aug Real Estate and
Yangon Builders Myanmar Free construction companies, contractors,
2019 Construction
property developers, architects and also its
supporting industries gathered in Yangon to
showcase the latest developments in the
building and construction industry.”
“Powerex Myanmar and Electric Expo
Myanmar is the only specialized Power,
Power Generation and Power Transmission
Equipment, Technologies & Supplies in
01-03 Aug
Powerex Myanmar Expo Myanmar that brings together an
2019 Yangon Power Free
Myanmar international congregation of Power and
Electric related companies and also its
supporting industries gathered in Yangon to
showcase the latest developments in the
power industry.”
Note: Events information are collected from https://www.go-myanmar.com/events-and-conferences and https://10times.com/myanmar .
PwC | July 2019 36www.pwc.com/mm
PwC Myanmar Weekly Business Intelligence Publication
For further information please contact:
Mark Rathbone
PwC Capital Projects and Infrastructure Leader, Asia
+65 6236 4190
mark.rathbone@sg.pwc.com
Jennifer Tay
Partner
Capital Projects & Infrastructure, PwC Singapore
+65 8876 9300
jennifer.c.tay@sg.pwc.com
© 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.
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