PwC MyanmarWeekly Business Intelligence

Issue 16913 July 2019

www.pwc.com/mm

PwC | July 2019

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PwC | July 2019

1. Weekly Key Financial & Business News

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PwC | July 2019

Weekly Key Financial & Business NewsHeadlines

Low-cost housing problems at Yuzana

Master Plan Prepared For Chinese-Backed Kachin Economic Zone: State Minister

KB Kookmin Bank interested in expanding Myanmar business

Concerns may emerge when Bagan hotels, businesses are forced to move

4

MTSH planning a mall for Thilawa SEZ

PwC | July 2019

Weekly Key Financial & Business NewsHeadlines

Kyauk Phyu impact assessment launched

Rice trading center in Shwebo to go public

Kaladan project’s port and river terminal completed

Hanthawaddy International Airport Project to Begin Next Year

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Over 65 percent of fish farms in Yangon operating without permission

PwC | July 2019 6

Master Plan Prepared For Chinese-Backed Kachin Economic Zone: State Minister

YANGON—A Kachin State minister said a masterplan for a planned, Chinese-backed, modeleconomic zone along the China-MyanmarEconomic Corridor has been prepared, and theMyanmar government is engaged in deepdiscussions with the company for the project’simplementation to avoid further challenges.The Kachin State government and the YunnanTengchong Heng Yong Investment Company(YTHIC) signed a memorandum of understanding(MOU) in May 2018 for implementation of theMyitkyina Economic Development Zone (MEDZ),also known as the Namjim Industrial Zone, whichis 25 kilometers from the Kachin State capital ofMyitkyina.YTHIC and the Myitkyina Economic DevelopmentZone Committee (MEDZC), formed by the KachinState government, are expected to build themassive MEDZ on approximately 4,700 acres ofland along historic Ledo Road.The road was built during World War II so theAllies could deliver supplies to China in aid of thewar effort against Japanese forces. It was anoverland connection between Ledo, in India’s

Assam State, and Kunming, in China’s YunnanProvince.Amid criticism over the project’s perceived lack oftransparency, Kachin State Minister of Finance,Revenue, Planning and Economic Development UWai Lin said, “The master plan is vital for theimplementation [of the project]. At the sametime, we are also working on a feasibility study.”The MEDZ is expected to cost more than US$400million (603.6 billion kyats). It will include nearly500 factories and 5,000 buildings.“Before implementing the project, we already metseveral times for detailed negotiations. Wedigested each fact point by point. So far, we’vediscussed nearly 70 points,” he told reporters at apress conference Friday. “If we don’t discuss [theproject] in detail, our government and state willface a lot of challenges.”

Source: The Irrawaddyhttps://www.irrawaddy.com/business/master-plan-prepared-chinese-backed-kachin-economic-zone-state-minister.html

NewspapersThe Irrawaddy

08 July 2019

PwC | July 2019 7

Low-cost housing problems at Yuzana

Apartments in the Yuzana housing project, a low-cost residential complex in Yangon’s DagonSeikkan township, first went on sale to the publicin March 2016. The project was developed by theDepartment of Urban and Housing Development(DUHD).Though apartments at the complex have beenavailable for purchase and rent, many residentshave complained about the quality of thebuildings. Some of the newly-built apartmentshave problems with electricity and plumbing,given that electricity wires and pipes had beenstolen.Residents were also concerned about the strengthand structural integrity of the buildings. Eventhough the foundations were constructed withreinforced concrete, some believe that the use ofunqualified contractors has lead to fracturing inthe walls.“Many of the residents are permitted to stay, butwe don’t feel comfortable without a properelectricity supply – a problem we thought wouldbe resolved when the apartments first started tosell,” Daw Su Hlaing Htwe, who bought an

apartment two years ago, told Metro.“When we started living here, we didn’t haveelectricity. We only started to receive electricityabout a month after moving in. Squatters startedliving nearby and many of our things were stolen.There are no effective measures for security in thehousing so far,” said Daw Su Hlaing Htwe.Potential buyers’ names were entered into a draw,and those whose names were selected were ableto purchase the properties. Despite having theirnames selected, many of the apartments were stillnot ready when the buyers went to inspect theproperty. These apartments were agreed to betransferred only after the contracts had beensigned, said the Department of HousingDevelopment’s deputy director Daw Khin Theingi.“We need to finish the apartments by thedeadline. The buyers will have to sign thecontract, and we guarantee that the rooms will becompleted after the contract has been signed,”said Daw Khin Theingi.Source: Myanmar Timeshttps://www.mmtimes.com/news/low-cost-housing-problems-yuzana.html

NewspapersMyanmar Times

08 July 2019

PwC | July 2019 8

KB Kookmin Bank interested in expanding Myanmar business

KB Kookmin Bank, one of South Korea’s top fourbanks, is interested in expanding its presence inMyanmar with more financial products andservices, especially in the areas of providingfinancing for housing and small-and-mediumenterprises (SMEs).KB Kookmin’s chief representative in Yangon,Kim Chang-woo, said the bank “is consideringexpanding its business in Myanmar by providinglocal financial products and services”.He told The Myanmar Times that the expansionincluded collaborations with Union of MyanmarFederation of Chambers of Commerce andIndustry for products and services tailored toSMEs, support for state-owned enterprises,digital remittance services for Myanmar workersin South Korea and collaborations withConstruction, Housing and InfrastructureDevelopment (CHID) Bank.Kim was commenting on the bank’s chiefexecutive officer Hur Yin’s meeting on July 4 withMyanmar’s Minister of Construction U Han ZawinSeoul, where there were discussions oncollaboration in provision of financing for

housing.Hur Yin said the bank will actively supportMyanmar’s housing financing policy. KBKookmin, which applied for a banking license in2014 but failed to obtain one, has had a presencein Myanmar through KB Finance since March2017. The subsidiary provides microfinancing.Hur Yin said the bank will need to acquire thelicense and strengthen cooperation withMyanmar especially in housing and infrastructurefinancing. Projects the bank has been active ininclude the Korea – Myanmar Industrial Complexand Dala township development, both in YangonRegion.The bank, which has a representative office inMyanmar since 2013, has conducted housingfinance workshops with the Ministry ofConstruction, Central Bank of Myanmar andCHID Bank over the past five years.

Source: Myanmar Timeshttps://www.mmtimes.com/news/kb-kookmin-bank-interested-expanding-myanmar-business.html

NewspapersMyanmar Times

09 July 2019

PwC | July 2019 9

Concerns may emerge when Bagan hotels, businesses are forced to move

On July 6, the United Nations Educational,Scientific and Cultural Organization (UNESCO)designated Bagan as a World Heritage Site,marking Myanmar’s second entry to the list afterWorld Heritage Status was granted to the ancientPyu cities of Sri Ksetra, Halin and Beikthano in2014.The ancient city has more than 3500 survivingstupas, temples, monasteries, fortifications andother monuments, according to the Departmentof Archaeology and National Museums. It also hasarchaeological sites and the remains of an ancientwater-management system.Now, the government and the public have tocooperate to conserve the archaeological site,including removing all hotels to a dedicated hotelzone by 2028, failing which its newfound statuswill be revoked, said U Arkar Kyaw, DeputyMinister of Religious Affairs and Culture.According to UNESCO rules, the distancebetween a pagoda and building must be 120 feetand the public cannot dig deeper than six feetunderground. “In issuing those rules, UNESCO islooking at how to preserve Bagan and to ensure it

does not deteriorate further from its currentcondition,” U Arkar Kyaw said.Removing the hotels though, could prove to beeasier said than done. There are over 300 hotelsin Bagan but most of them are small familybusinesses with only 30 to 50 rooms, according todata from Ministry of Hotels and Tourism.“The prices of the hotels are worth hundreds ofmillions of dollars and these are properties sittingon land owned by the local people. If they areremoved, it will be difficult to compensate themfor the land,” said U Lin Htut Oo, deputy directorof the Ministry of Hotels and Tourism.“The total land area of five hotels in the zone isaround 300 acres, which is larger than the NewBagan Area. It isn’t even possible to compensate,”he added. In total, there are about 4500 guest andhotel rooms in Bagan, including municipal guesthouses, according to the Ministry of Hotels andTourism.Source: Myanmar Timeshttps://www.mmtimes.com/news/concerns-may-emerge-when-bagan-hotels-businesses-are-forced-move.html

NewspapersMyanmar Times

10 July 2019

PwC | July 2019 10

MTSH planning a mall for Thilawa SEZ

Myanmar Thilawa SEZ Holdings (MTSH), aYangon Stock Exchange listed real estatedeveloper with a focus on developing SpecialEconomic Zones (SEZ), is planning to build a mallin the Thilawa SEZ south of Yangon.MTSH executive director U Thurane Aungdeclined to say how much the company would beinvesting as a board decision would be madefollowing a feasibility study. Construction of themall would begin after the dry season, which runsthrough October to May.“The board will make a decision on the height ofthe mall and the potential returns from theproject,” he told the Myanmar Times, adding thatthe mall would be leased out to well-known malloperators through bidding.Meanwhile, MTSH chief executive officer U KyawZaw Wai said the company may pay out K250 ashare in dividend as a result of the rise in netprofit for the financial year ended March 31,2019(FY19).MTSH posted a 20.7 percent rise in net profit toK15.60 billion for FY19 compared to thecorresponding period of last year.

U Kyaw Zaw Wai said the retained profit for theyear under review has risen by 18.4pc to K45billion compared to the previous correspondingperiod in FY18.“A portion of the retained profit will be used forlong-term investment,” he said. MTSH closedunchanged at K3,350 on July 9 on overalllackluster market trade. The stock has risen13.5pc year-to-date.“We hope to attract more interest to the shareswith potential businesses,” U Thurane Aung said,adding that weak market sentiment has putpressure on stock performance.Besides the mall project in Thilawa SEZ, thecompany will be conducting a study on a railwayproject for Thilawa Port as well as investmentsinto Kyaukphyu Port, Rakhine State andMyitkyina economic development zone, KachinState.

Source: Myanmar Timeshttps://www.mmtimes.com/news/mtsh-planning-mall-thilawa-sez.html

NewspapersMyanmar Times

11 July 2019

PwC | July 2019 11

Rice trading center in Shwebo to go public

After opening its fifth outlet in Sagaing Region,Shwebo Rice Trading Center is planning tochange its corporate status to public to be on parwith other trading centers in Myanmar, U PhyoThura, vice president of the company, told TheMyanmar Times on July 10.This will help elevate the center’s presence in theinternational market and make it easier toconduct export activities, he said.Public companies are required to obtainpermission from both the Directorate ofInvestment and Company Administration and theSecurities Exchange Commission of Myanmarbefore they are officially allowed to sell theirshares over the counter.Unlike a private company, which has ashareholder limitation of not more than 50, thereis no shareholder limit for public companies.Currently, 70pc of rice from Shwebo, Sagaing, isexported to China via the border however thereare strict quotas in place to limit illegal trade. Toexport via the maritime route, Shwebo is trying toconform to the rice import regulations set byChina, he said.

“We plan to establish a public firm by next yearand ensure all our rice mills are in line withregulations by the rice trading season next year,”U Phyo Thura said.Shwebo land is suitable for irrigated paddy, thecultivation rate of which has increased afterThaphanseik Dam was built in 2003. There areabout a million paddy fields in Shwebo, which isamong the main producers of high-grade Paw Sanpaddy in Myanmar. There are about 300,000acres worth of paddy fields in Shwebo thatharvest only the Paw San variety.Myanmar exported more than 1.7million tonnesof rice and broken rice worth US$ 531.7millionfrom October1, 2018 to June28, 2019 to Belgium,Indonesia, China and the Netherlands.In comparison, the country exported 3.6milliontonnes of rice in 2016-17.

Source: Myanmar Timeshttps://www.mmtimes.com/news/rice-trading-center-shwebo-go-public.html

NewspapersMyanmar Times

11 July 2019

PwC | July 2019 12

Kyauk Phyu impact assessment launched

Myanmar has launched the environmental andsocial impact assessment (ESIA) and preliminarygeological survey of Kyauk Phyu Deep-Sea Port(KPDSP) project in Kyauk Phyu, western Rakhinestate, Xinhua reported.Authorized by Kyauk Phyu Deep Sea Port SpecialEconomic Zone Management Committee(KPSEZMC), CITIC Consortium will conduct thestart-up works on behalf of the project's JointVenture incorporated in the future.Strictly following Myanmar laws and regulations,and international practice, CITIC Consortiumpledged to carry out the project's preparationworks in a rigorous, open and transparentmanner. During the process of ESIA, CITIC willdevelop participation mechanisms for allstakeholders of the project in order to takeextensive and adequate consultation.

Source: Mizzimahttp://www.mizzima.com/article/kyauk-phyu-impact-assessment-launched

NewspapersMizzima

11 July 2019

PwC | July 2019 13

Kaladan project’s port and river terminal completed

The construction of Sittwe’s sea-port and theinland water terminal in Paletwa has beencompleted, the Indian embassy said in a July 9statement in Yangon.The sea-port and water terminal forms part of theUS$484 million Kaladan multi-modal transittransport project that would link Kolkata in Indiato Sittwe in Rakhine State and then link Sittwe viaa river route to Paletwa in Chin State and fromPaletwa by road to Zorinpui in India’snortheastern state of Mizoram.The Indian government has also invitedcompanies keen to operate and maintain the sea-port and water terminal. The road portion of theproject from Paletwa to Zorinpui is still underconstruction with its completion to help supportthe growth of bilateral trade between Myanmarand India.The project was first mooted in 2008 when bothcountries signed an agreement to connect theKolkata and Sittwe sea-ports.

Source: Myanmar Timeshttps://www.mmtimes.com/news/kaladan-projects-port-and-river-terminal-completed.html

NewspapersMyanmar Times

12 July 2019

PwC | July 2019 14

Hanthawaddy International Airport Project to Begin Next Year

YANGON—The long-postponed, Japan-backedHanthawaddy International Airport project willstart next year, Deputy Director-General U YeHtut Aung of the Ministry of Transport andCommunications told The Irrawaddy.The Civil Aviation Department, the YangonAerodrome Co Ltd—which operates YangonInternational Airport—and Japanese governmentofficials, led by the deputy transport minister,have held five rounds of talks on the airportproject, located near Bago, 80 kilometers north ofYangon, he said.“If we reach agreements on basic points, we willbe able to sign the contract within the first threemonths of 2020,” U Ye Htut Aung told TheIrrawaddy.The Japanese government has offered to provideofficial development assistance (ODA) loans forall the costs of the project on the condition thatJapanese companies can build and operate theairport.“Previously Japan said it would provide ODAloans to cover 50 percent of the costs as aJapanese company won the tender, and it said it

would provide loans for 100 percent of the costs ifJapanese companies can both build and operatethe airport,” he said.A South Korean consortium led by IncheonInternational Airport Corporation won the tenderthat was first called in 2012. As the consortiumfailed to put in the required investment in the setperiod, a new tender was called in 2014 and waswon by a Japanese-Singaporean consortium thatincluded Changi Airports International.The initial agreement was cancelled afternegotiations failed over details of the project.Local media reported that Yangon Aerodrome CoLtd opposed the point that all internationalairlines will only use the new airport after itsopening. Other complications included the needfor ground transport links between the airportand Yangon.

Source: The Irrawaddyhttps://www.irrawaddy.com/business/hanthawaddy-international-airport-project-begin-next-year.html

NewspapersThe Irrawaddy

11 July 2019

PwC | July 2019 15

Over 65 percent of fish farms in Yangon operating without permission

There are over 80,000 acres of fish farms inYangon Region, but just over 37,000 acres arerunning legally with permission, said RegionMinister for Agriculture, Livestock, Forestry andEnergy Han Tun.The minister disclosed the information during asession of Yangon Region Parliament on July 12.The information came after MP Than Naing Oofor Pabedan Township Constituency No (1)questioned of plans to improve income of fishfarms under the Department of Agriculture,Livestock and Irrigation."Yangon Region has more than 80,000 acres offish farms. Of them, only 37,382 acres arerunning officially after receiving land form (La-Na37)," said Minister Han Tun.He said the remaining acres of fish farms runningillegally must apply for land permission. For thoseillegally running firms, respective township landmanagement committees had instructed toaddress the issue under a directive from theministry, he added.He said the Fisheries Department had to set floorprice in auctioning fish farm. In doing so, 10

percent has to be added to the original price of afish farm.The government received farm taxes of K390.541million in the 2016-2017 fiscal year, K497.672million in 2017-2018 FY, K652.715 million in2018-2019 FY and K690.139 million in 2019-2020 FY.

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/over-65-percent-of-fish-farms-in-yangon-operating-without-permission

NewspapersEleven Myanmar

13 July 2019

PwC | July 2019

2. Weekly Key Policy News

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PwC | July 2019

Weekly Key Policy NewsHeadlines

Myanmar, Japan revive talks on building Hanthawaddy airport

No decision made on Malaysian proposal for “Sittwe New City” project

YCDC plans to open Yangon City Hall as a public place

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Myanmar's new insurers face a tough sell

Myanmar’s $400m stock market to open to foreigners

PwC | July 2019 18

Myanmar, Japan revive talks on building Hanthawaddy airport

Myanmar and Japan will form a joint venture andsign an agreement next year to kickstart the longpostponed Hanthawaddy International Airportproject located 80km north of Yangon near Bago.According to several government officials, boththe Myanmar and Japanese governments havemet at least four times to nail down details of theproject, which would be financed by Japanesegovernment loans and involve the country’sconstruction and airport operators.While details on cost have not been announced,the last tender valued the project at US$1.5billion. The Japan International CooperationAgency has estimated the project to cost US$2billion. The new airport would be built on some3600 hectares of land belonging to theDepartment of Civil Aviation (DCA). Also, anupdated design for the airport would have to beapproved, with a connection to the railwaynetwork included.Discussions are also underway to link the newairport with Yangon via an express highway in thefirst phase and an express railway in the secondphase.

Both Ministry of Transport and Communicationsdeputy permanent secretary U Aung Ye Tun andDCA deputy director general U Ye Htut Aung toldThe Myanmar Times that the airport project hasthe backing of the government and has been giventhe priority to start as soon as possible.“Both sides are negotiating to implementHanthawaddy International Airport supported byJapanese loans. After negotiations are complete,the next is conducting surveys at the grounds,” UAung Ye Tun said.U Ye Htut Aung added that Myanmar and Japanwill sign the agreement in 2020, after tenders toJapanese firms likely to be conducted as soon asthe third quarter of this year. “If the tender issuccessful, we can sign contracts in early 2020and construction can begin immediately,” he said,adding that Narita International AirportCorporation may be one of the Japanesecompanies interested in the tender.Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-japan-revive-talks-building-hanthawaddy-airport.html

NewspapersMyanmar Times

09 July 2019

PwC | July 2019 19

No decision made on Malaysian proposal for “SittweNew City” project

No decision has been made on a proposal by GoldCoast KTMG Development, a company withMalaysian owners, to develop a new city nearSittwe, capital of Rakhine State, says a seniorminister in the state government.“We have not decided on it and there have beenno detailed discussions other than thepresentation of the proposal. The company needsto submit details to the Myanmar InvestmentCommission as this is a large project,” U KyawAye Thein, the state government’s Minister ofFinance, Revenue, Planning and Economy, said.Gold Coast KTMG representatives met withRakhine State government officials in June topresent the proposal on the so-called “Sittwe NewCity” project, to be developed on 7,000 acres ofland with an estimated cost of US$38 billion.Gold Coast KTMG registered as a company in thecountry this past February but has no knowntrack record, in Malaysia or Myanmar, formultibillion-dollar development projects.U Kyaw Aye Thein said the “Sittwe New City”project as shared by the Gold Coast KTMGrepresentatives involves building residential and

industrial zones with a port on farmland notowned by the state government.The state government has been trying to wooinvestors, holding an investment forum inFebruary attended by State Counsellor Daw AungSan Suu Kyi. The only foreign investment in realestate so far has been from South Korea’s BXTInternational, in a joint venture with the stategovernment to develop the Sittwe waterfrontproject on 90 acres of reclaimed land.According to state government data, foreignershave invested US$9 billion in the state, mostly inthe oil and gas industry. The state governmenthas invited foreign investors to participate inprojects such as the Ponnagyum Industrial Zone,Ka Nyin Chaung Trading Zone, Kyaetaw-MinganDevelopment in Sittwe, Mrauk-U New City andAirport, the upgrading of Ngapali Airport anddevelopment of Man Aung Island- Eco TourismDevelopment Project.Source: Myanmar Timeshttps://www.mmtimes.com/news/no-decision-made-malaysian-proposal-sittwe-new-city-project.html

NewspapersMyanmar Times

10 July 2019

PwC | July 2019 20

YCDC plans to open Yangon City Hall as a public place

Yangon City Development Committee (YCDC) isplanning to open Yangon City Hall as a publicplace, said Hlaing Maw Oo, secretary of theYCDC.The Yangon City Hall is currently occupied bydepartments; Office of Yangon Mayor and theoffice of the committee members. However, theyare dealing with office procedures for about sevenmillion people and there is not enough space forthem at Yangon City Hall. The YCDC has anotheroffice in 46th street. The Yangon City Hall islocated around Sule Pagoda and it has to beopened for public as similar kinds of place abroadare open to the public as well, she said.“We have opened an office for one stop servicesfor land and building ownership matters at theground floor. Development partners proposedholding seminars, ceremonies and meetings at thecity hall and Yangon Region Chief Minister andMayor want to do it,” she said.Some said traffic congestion in the downtownarea are caused by the City Hall where publicservices are provided. So the authorities plannedto move the YCDC office to other locations except

for managerial departments, she added.“We may have to move some of our departmentsto the place where Archive Department office wasplanned to build. We have not confirmed that wewill transform the (old) Archive Departmentoffice, which is now located inside the compoundof the air compressor factory into a museum. Butit will be opened for public,” she said.According to a report for budget of 2019-20 FYfor Yangon Region by Public Account Committeeof the parliament, it is needed to submit theproject in details although the budget proposal ofKs7 billion to build the office of the ArchiveDepartment located inside the compound of aircompressor factory in Botahtaung Township is anongoing process. Although MP Thet Htar NweWin and MP Yan Shin discussed and asked aboutthe project at the region parliament, MyintThaung, regional minister for planning andfinance didn’t clarify about it.Source: Consult Myanmarhttps://consult-myanmar.com/2019/07/10/ycdc-plans-to-open-yangon-city-hall-as-a-public-place/

NewspapersConsult Myanmar

10 July 2019

PwC | July 2019 21

Myanmar's new insurers face a tough sell

The insurance sector is about to undergo rapidgrowth thanks to a recent liberalisation, butcompetition will be fierce and attractingcustomers to new, unfamiliar products couldprove hard.WHEN THE government announced in January aroadmap for opening the nascent life and generalinsurance sectors to foreign companies, the movewas widely applauded as an important economicreform.The potential for growth is massive; in a countryof around 54 million, just 2 million people haveany form of insurance cover, according toMinistry of Planning and Finance figures.Just 0.01 percent of people have life insuranceand ministry figures from 2017 show thatpremiums amounted to just US$13 million. Whilethird-party insurance is mandatory for vehicles,only 10 percent of the country’s roughly 600,000cars had any additional cover in 2016.Japanese insurance company Dai-Ichi hasforecast the sector will expand 100-fold, to $1.3billion, over the next decade, according to NikkeiAsian Review. Even then, it would still be

relatively small; insurance premiums in Vietnamwere estimated at $5.75 billion last year.Implementation of the liberalisation process hasproceeded at pace. In April, five foreign insurers –UK-based Prudential, Dai-Ichi Life Holdings fromJapan, Manulife from Canada, AIA from HongKong and US-based Chubb – were given approvalto set up wholly owned subsidiaries to compete inthe life insurance sector. The government hadinitially said it would grant up to three licences.According to Nikkei Asian Review, foreign andlocal insurers have also proposed nine jointventures – four for life insurance and five forgeneral insurance – and are expected to receiveapproval from the regulator in July. Foreignpartners will be able to hold up to 35 percent inthese joint ventures.A government official involved in process, whospoke on condition of anonymity, told Frontier heexpected the life insurers to be able to launchoperations by the end of the year.Source: Frontier Myanmarhttps://frontiermyanmar.net/en/myanmars-new-insurers-face-a-tough-sell

NewspapersFrontier Myanmar

10 July 2019

PwC | July 2019 22

Myanmar’s $400m stock market to open to foreigners

Myanmar will allow direct foreign ownership ofshares at the Yangon Stock Exchange (YSX), amove designed to throw a lifeline to the country’sonly bourse.In a notice on Friday, the regulator, the Securitiesand Exchange Commission of Myanmar, saidforeign individuals and locally-registered entitieswould be allowed to invest in listed shares of up to35pc.No timeline was given but Ko Aung Thaw Zin,research analyst at business information firmFrontier Myanmar Research (FMR), expects suchtrading to start by year end.“It’s unclear [from the notice] whether bothresident and non-resident foreigners will bepermitted to trade. I understand the SECM hasalready prepared the follow-on regulations, whichis likely to allow [only] resident foreigners,” headded.The new Companies Law, which entered intoforce last August, opened the stock exchange tonon-Myanmar investors. The legislation allowsforeign individuals and entities to hold up to a35pc minority stake in Myanmar companies

without those firms losing the domesticregistration required to be listed. But to date theauthorities have not implemented this law.The reform, when implemented, should sparkinterest from retail investors based in Yangon, KoAung Thaw Zin said. But institutional investors,including global asset and fund managers, arelikely to be interested only when the YSX hassignificantly more listings and a broader diversityof sectors represented by its listed equities.Securing investor confidence depends onimproving corporate governance and protectionof minority shareholders, market watchers say.Myanmar performs the most poorly (out of 190countries) in protecting minority investors(185th), according to the World Bank’s 2019 Easeof Doing Business ranking.

Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmars-400m-stock-market-open-foreigners.html

NewspapersMyanmar Times

14 July 2019

PwC | July 2019

3. Weekly Investment News

23

PwC | July 2019

Weekly Key Investment NewsHeadlines

Oil and gas sector stands top FDI list

Insurance, banking and electricity to see more investor interest

7 Companies Have Expressed Interest in Mandalay Palace Restoration

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Japan's Daiwa readies fund to invest in Myanmar startups

Tanintharyi calls for tender to supply Dawei with power

PwC | July 2019 25

Oil and gas sector stands top FDI list

From 1988-1989 FY to 2018-2019 FY, thegovernment gave the greenlight to 1725investments worth over 80.234 billion USD, withthe oil and gas sector topping the list, according tothe figures released by the Myanmar InvestmentCommission (MIC).The oil and gas sector topped the list with over 22billion USD, accounting for 27.94 per cent of thetotal FDI, the energy sector, second, with over 21billion USD or 26.40 per cent, the productionsector, third, with nearly 11 billion USD or over 13per cent, the transport and communication sector,over 10 billion USD or over 13 per cent.The real estate sector accounts for over six percent of the total FDI, the hotel and tourism sector,for around four per cent, the mining sector, forover three per cent and other services sector, forover three per cent.The MIC allows the permits for special economiczones according to the relevant Special EconomicZone Laws. Currently, the Thilawa SpecialEconomic Zone only can start its operation.Since its inception till late May, the MIC allowedthe permits to more than 110 foreign investments

in the sectors of production, trade, other services,transport, housing, hotels and tourism. Theinflow of FDI into the Thilawa SEZ amounted toover 1.7 billion USD.The total investments during 30 years plus theinflow of FDI into the Thilawa SEZ reached nearly82 billion USD.Myanmar is implementing the 20-year MyanmarInvestment Promotion Plan to ensure thatMyanmar becomes a middle-income country by2030.In addition, the total FDI inflow is set to reachover 220 billion USD during the next 20 years.The inflow of more responsible investments intothe country is expected.The 20-year Myanmar Investment PromotionPlan is the short-term plan (2016-2017 to 2020-2021), the mid-term plan (2021-2022 to 2025-2026) and the long-term plan (2026-2027 to2035-2036).

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/oil-and-gas-sector-stands-top-fdi-list

NewspapersEleven Myanmar

08 July 2019

PwC | July 2019 26

Insurance, banking and electricity to see more investor interest

While the oil and gas industry has the seen themost interest from investors, banking andfinancial services, telecommunications and themanufacturing industries are expected to be thefocus in the years ahead as the country’s economygrows.Data from the Directorate of Investment andCompany Administration (DICA) shows that since2016, the manufacturing industries andtelecommunications have seen the most interestfrom foreign investors.DICA data showed that the manufacturingindustries have seen between US$1 billion andUS$2 billion in investments per year whiletelecommunications have received US$2 billionper year in the last three years.U Aung Naing Oo, permanent secretary of theMinistry of Investment and Foreign EconomicRelations, is expecting investor interest in theservices, manufacturing industries andtelecommunications to continue improving in thecoming year.YGA Capital managing director U Thura Ko Koconcurred that telecommunications and financial

services will be areas that attract investor interest.“It’s about whether the government has soundpolicy; telecommunications has good policybacking,” he said.U Aung Naing Oo noted that banking andfinancial services, and in particular insurance, willbe one industry to watch since the countryliberalised the insurance market by grantinglicenses to five foreign players in early April.“The insurance sector is one of the hot sectorsthat will surely grow in the coming year and thiswill facilitate capital flows into the country andcreate many new job opportunities,” U AungNaing Oo said.U Myint Zaw, managing director of AYA Bank,reckons the banking sector as a whole is lookingmore competitive and promising now that foreignbanks have been allowed to open branches andprovide financial services in the country.

Source: Myanmar Timeshttps://www.mmtimes.com/news/insurance-banking-and-electricity-see-more-investor-interest.html

NewspapersMyanmar Times

11 July 2019

PwC | July 2019 27

7 Companies Have Expressed Interest in Mandalay Palace Restoration

MANDALAY—Seven companies have submittedexpressions of interest (EOI) to develop MandalayPalace, the last royal palace of the last Burmesemonarchy, as a historical park, according to theMandalay regional government.EOIs were invited for submission beginning June17 and the regional government received sevenEOI applications through the first week of July.The deadline for submitting an EOI application isJuly 22, Mandalay Regional Planning and FinanceMinister U Myat Thu told The Irrawaddy.EOIs are also welcome in the development ofInwa, or Ava, the ancient royal capital ofsuccessive Burmese kingdoms from the 14th to19th centuries, as an archaeological park as well.Inwa is in Tada-U Township, Mandalay Region.The historical park will include bike paths,pedestrian walks, resting places, landscaping,restaurants and souvenir shops, along withsightseeing tours and bike rental services forvisitors. Any company, local or foreign, cansubmit an EOI, according to the Mandalayregional government.Mandalay Palace was built in 1857 by King

Mindon of the Konbaung Dynasty, a line of kingsthat ruled from 1752 to 1885. Their reign wasended by the British colonial forces, whichabolished Burma’s monarchy and sent Mindon’sheir, King Thibaw, into exile in the late 19thcentury. Mandalay Palace was largely destroyedby an Allied bombing campaign during WorldWar II, leaving only the moat and city wallsremaining. The palace complex was reconstructedin the late 1980s. Much of the buildings thatsurvive today are in serious need of care, said KoHteik Tin Aung of the Descendants of KonbaungDynasty group, which plans to submit an EOIsoon.“The palace is decaying and the government hasbudget constraints in maintaining it, so it hasinvited EOIs. We decided to submit an EOIbecause we are concerned that a potential tenderwinner will not be able to restore the palaceaccording to royal customs.Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/7-companies-expressed-interest-mandalay-palace-restoration.html

NewspapersThe Irrawaddy

11 July 2019

PwC | July 2019 28

Japan's Daiwa readies fund to invest in Myanmar startups

TOKYO -- Daiwa Securities Group will set up aventure capital fund in Myanmar, in a first for amajor Japanese financial institution.The Southeast Asian country's economy isgrowing at a roughly 6% clip, and informationtechnology startups are emerging. This makesMyanmar an attractive market for Japaneseinstitutional investors seeking relief frompersistently low interest rates at home.Taiyo Life Insurance has already decided tocontribute to the fund. Daiwa is thinking aboutlaunching more such funds, depending on howthe first one performs.The fund is likely to amount to $30 million, withan investment period of about 12 years. The planis to invest around $1 million in each promisingMyanmar startup the fund targets.Daiwa hopes to help the companies grow for a fewyears, ushering them toward initial publicofferings -- from which it would reap profits. Thelistings would be supported by the MyanmarSecurities Exchange Centre, a joint venturebetween Daiwa and state-run Myanma EconomicBank.

Myanmar is hungry for foreign investment,especially after the total authorized in the yearthrough March fell 37% on the year to $3.6billion. Money inflows slowed after the militarycrackdown on the country's Rohingya Muslimminority made global headlines.Daiwa, an early entrant into the Myanmarmarket, aims to take advantage of its deep localknowledge. Daiwa and Japan Exchange Groupwere among the investors that backed the YangonStock Exchange when it opened in 2015.The securities house started to invest its ownmoney in Myanmar startups in 2017. So far, it hasinjected a combined $25 million or so into fivecompanies, including an internet service providerand an online travel service.

Source: Nikkei Asian Reviewhttps://asia.nikkei.com/Business/Banking-Finance/Japan-s-Daiwa-readies-fund-to-invest-in-Myanmar-startups

NewspapersNikkei Asian Review

11 July 2019

PwC | July 2019 29

Tanintharyi calls for tender to supply Dawei with power

In a move to ensure that Tanintharyi Region’scapital Dawei continues to have electricity, theregional government has invited companies to bidfor a new tender to supply electricity to the capitaland surrounding area, known as Dawei district.The regional minister for electricity and energy UAung Thura told The Myanmar Times that thetender, covering both power generation anddistribution, would be for five years or untilDawei can tap power from the national grid.Interested companies have up until August 8 toplace a deposit of K30 million with the MyanmarEconomic Bank.U Aung Thura said Dawei district could get itspower needs from the national grid as early asnext year. He explained that the companysuccessful in the tender would take over fromGGS but would have to hand over to the nationalgrid should coverage reaches Dawei.Currently, the district consumes around 15 MW ofelectricity per year and that no estimations onfuture consumption have been made. U AuntThura said electricity usage depends on the costto generate it, which ranges from K250 per unit to

K600 per unit for the region compared to theminimum of K35 per unit in regions covered bythe grid.The new tender includes a separate agreement tobe signed with Myanma Oil and Gas Enterprise,the state-owned oil and gas firm supplying thegas. The agreement stipulates an advancepayment of one month as well as monthlypayments.The move comes after Global Grand Services CoLtd (GGS), which distributes electricity to theregion, failed to pay debt amounting to K8 billionas at February to the Union government fornatural gas purchased from Thailand’s PTTExploration and Production, which was suppliedto GGS through the Tanintharyi government.

Source: Myanmar Timeshttps://www.mmtimes.com/news/tanintharyi-calls-tender-supply-dawei-power.html

NewspapersMyanmar Times

12 July 2019

PwC | July 2019

3. Weekly New Tenders

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PwC | July 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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MOPF: Invitation For Bids – Advertisement, Modernization of Public Finance Management Project, Closing date: 30 July 2019

PwC | July 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-9003 REG: Integrated Resource Planning with Strategic Environmental Assessment for Sustainable Power Sector Development in the Greater Mekong Subregion - Firm 2 Energy Efficiency Market Assessment (49208-001), Closing date: 20 July 2019

WB: The Social Inclusion Evaluation of the Myanmar National Community Driven Development Project (NCDDP), Closing date: 01 August 2019

PwC | July 2019

4. MIC Permitted Projects

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PwC | July 2019

MIC Permitted Projects (Meeting 11, 2019)

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No. Name of Company Type of Investment Form of Investment

1 Yangon Shinkwang Marine Co., LtdManufacturing of inflatable and assorted boats on CMP basis

Wholly foreign owned

2 Lesso Home Development (Yangon) LtdConstruction; selling/leasing and management of commercial: office, wholesale and retail building/units

Joint venture

3 School City Co., Ltd Basic education service Joint venture

Source: DICA

PwC | July 2019

5. Upcoming Events

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PwC | July 2019

Upcoming Events (August 2019) List

Date Location Name of Event Sector Price Focus Points

01-03 Aug 2019

Yangon Builders MyanmarReal Estate and Construction

Free

“Builders Myanmar is set to be Myanmar'smost complete Building & Constructionevent in Myanmar that brings together aninternational congregation of building andconstruction companies, contractors,property developers, architects and also itssupporting industries gathered in Yangon toshowcase the latest developments in thebuilding and construction industry.”

01-03 Aug 2019 Yangon

Powerex Myanmar Expo Myanmar

Power Free

“Powerex Myanmar and Electric ExpoMyanmar is the only specialized Power,Power Generation and Power TransmissionEquipment, Technologies & Supplies inMyanmar that brings together aninternational congregation of Power andElectric related companies and also itssupporting industries gathered in Yangon toshowcase the latest developments in thepower industry.”

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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 900jennifer.c.tay@sg.pwc.com

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