opportunities in Myanmar
The IDA Private Sector Window Approach
Final Project (Development Specialist Track)
First civilian government (led by National League
for Democracy) since April 2016 leads new
economic policies and accelerated peace efforts
after decades of armed conflict.
Largest country in mainland Southeast Asia with one of the lowest population densities in the region.
Fertile lands for raising production, yields and profits in agriculture, with a rich endowment of natural resources.
Geographic location at the intersection of China and India, with a traditional role as a regional trading hub and a
key supplier of minerals, natural gas and agricultural produce.
Economic growth in Myanmar eased to 7% in 2015/16 due to a supply shock from heavy flooding (causing
inflationary pressure), a slowdown in new investment flows and a more challenging external environment.
Medium-term growth is currently projected to average 8.2% p.a.
At least 70% of Myanmars poor live in
rural areas, where poor people rely on
agricultural and casual employment for
their livelihoods. Many live near the
poverty line and are sensitive to
The lowest life expectancy in ASEAN and the second-highest rate of infant and child mortality.
Just one-third of the population has access to the electricity grid and road density remains low at 219.8 km per
1,000 square km of land area.
Reducing poverty and boosting shared prosperity will entail increasing access to essential services, economic
opportunities and markets.
Struggles over land have defined conflicts in the countrys history.
Past government acquired lands for extracting natural resources, commercial farming, and
ambitious infrastructure projects, such as building of the new capital city of Nay Pyi Taw.
Claims over land acquisition injustices dominate public discourse and the new
governments agenda. In parallel, infrastructure and institutions for land administration and
property markets are grossly outdated and weak.
Issues in access, security, and transactability of land are likely to continue taking a
prominent role as the demand for land increases in step with growing private investment
and economic prosperity.
Reaching agreement on land claims, building a robust land tenure system, and land markets
will be crucial to the countrys future.
Measures to institute strong and effective land administration.
In January 2016, the outgoing government endorsed the National Land Use Policy and the current government
continues to use it as the starting point for its land-related work in a multi-stakeholder consultation process
involving the civil society.
NLUP sets principles for the future Land Information Management in Myanmar, including land records and
Myanmar has already started working on a One Map approach for establishing a unified base for all location-
based planning, decision-making, and monitoring in the country. Maps and data may seem small steps in resolving
such complex issues. Yet, robust and accessible information on boundaries, ownership, and land use are
important tools. They help citizens and businesses exercise land rights and buy and sell land, while enabling the
government to enforce land laws and regulations in a fair and transparent manner.
Goal and Objective
Reducing rural poverty.
Increasing rural access to essential services,
economic opportunities and markets.
Providing support to help increase agricultural
incomes and productivity, rural electrification,
community-driven investments in local
infrastructure and services, improve Ayeyarwady
River navigation and flood control, and reduce
vulnerability to shocks.
Strategy and Approach
Create an enabling environment.
Make complementary investments.
Directly invest in the private sector.
Six Possible Facilities for Pilot
A risk mitigation facility to unlock transformative infrastructure and Public-
Private Partnership (PPP) investments.
A local currency hedging facility to tackle the lack of options for coping
with local currency risks.
An SME guarantee facility to further expand access to finance for SMEs.
A co-investment facility to enable investments in SME equity, agribusiness,
technology and social services.
A first loss facility to expand access to political risk insurance guarantees in
the most challenging environments.
A reinsurance arrangement to enable increased deployment of guarantees
where private options are currently limited.
(1) Risk Mitigation Facility
To provide guarantees in order to supplement existing instruments
covering key non-commercial counterpart risk (e.g. breach of contract
pertaining to SOE payments under power purchase agreements, water
purchase agreements or road use minimum revenue guarantees).
Such coverage enhances project viability to facilitate private sector
The facility will be deployed without sovereign indemnity and guarantees,
thus de-linking Myanmars government capital expenditures for a project
from any additional guarantee obligation required to de-risk the project.
A key consideration is to assess when, given the nature of the risks
covered, a sovereign counter-guarantee is an effective mitigation strategy.
(2) Local Currency Hedging Facility
To hedge market risk (interest rate, exchange rate) of kyat (Myanmars
currency) financing for projects in Myanmar.
Cross currency/ interest rate swaps and/ or forwards to facilitate local
currency financing solutions for project loans.
Once experience is gained and a diverse pool of currency exposures is
built up, the facility will provide clear additionality vis--vis existing
solutions which cannot be used due to a lack of sufficient deep/ liquid
bond markets (essential for pricing hedges), creditworthy counterparts,
and a local skill base trained in prudent employment of hedging products.
Two challenges: development of a pricing model (since market prices
usually used for this are largely absent); and whether such arrangement can
have a sustainable impact beyond facilitating one transaction.
(3) SME Guarantee Facility
To support a portfolio of SME finance projects requiring credit risk
Instruments will primarily include risk sharing facilities, partial credit
guarantees, loans and small equity investments.
Complementary advisory services will be needed for banks to support
prudent growth of SME portfolio with appropriate risk management
Two key challenges: pricing, and ability to generate a sustainable impact
beyond the time horizon of the guarantee itself.
(4) Co-investment Facility
To facilitate pioneering private investments in sectors such as agribusiness,
entrepreneurship, technology and social inclusion by de-risking them
To be deployed through existing and new blended finance investment
Complementary engagements and advisory services will be needed to
support project development and build client capacity.
(5) Shared First Loss Facility
The facility will include risk sharing or allocation of losses to a first loss
To act as a risk mitigant and provide an added layer of reassurance to
To guarantee providers covering investments against non-commercial risks
Designed to support multiple investments through a revolving feature as
guarantees mature or are cancelled, the capacity released will be used to
support additional investment.
(6) Reinsurance Arrangement
Risk sharing arrangement where the International Development
Association shares Multilateral Investment Guarantee Agencys risk
exposure and receive a share of the premium income paid by the private
sector participant for a guarantee.
Coverage to protect against key political risks of expropriation, breach of
contract, transfer restrictions and inconvertibility, and war and civil
Private sector will be a critical partner in helping Myanmar create good
jobs, drive economic transformations, and reduce poverty.
The facilities will address gaps or capacity limitations in current settings of
They will ramp up private infrastructure, expand SME finance (including to
underserved sectors), expand agribusiness supply chains, and help pioneer