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Engineering Service Prospect in Myanmar
Submitted byName of the student: Vijay Dadhwal
MMMSem V
Roll No. 017
Under the guidance of
Name of the Guide: Prof R VenkateshIn partial fulfillment of
MMM course
University of Mumbai
(2011-2014)
Prin.L.N.Welingkar Institute of Management
Development & Research Matunga,
Mumbai400019.
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CERTIFICATE FROM GUIDE
This is to certify that the project entitled______________________________
_______________________________________________________________
is successfully done by Mr./Ms./ ____________________________________
during the third year of his/her course ________________________________
in partial fulfillment of the master Degree in __________________________
Management under the University of Mumbai through the Prin.L.N.Welingkar
Institute of Management Development & Research Matunga, Mumbai400019.
This project represents the work done by Mr./Ms./ ______________________
under my guidance & the record of interactive sessions with me during the
preparation of the Project are as under:
Interactive session No. Date Signature of Guide
(Minimum Three)1.
2.
3.
Date: ________ Signature of the Project Guide
Name of the Project Guide:Address:TelNo./Mobile No.
Email ID
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ACKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported me for
this project.
My deepest thanks to professor, R. Venkatesh the Guide of the project for guiding and
correcting various documents of mine with attention and care. He has taken pain to go
through the project and make necessary correction as and when needed.
I express my thanks to the Principal of, Prin.L.N.Welingkar Institute of Management
Development & Research- Mumbai, for extending his support.
My deep sense of gratitude to Mr. R V Gaikwad (Chief, Project & Business
Development), Mukand Engineers Limited - Mumbai, for support and guidance.
Thanks and appreciation to the helpful people at Mukand Engineers Limited, for their
support.
I would also thank my Institution and my faculty members without whom this project
would have been a distant reality. I also extend my heartfelt thanks to my family and
well wishers.
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INDEX
SN Description Page No. Remark
1 Executive Summary 02
2 Introduction 03
3 Economy Statistics 10
4 Business Prospect 23
5 Taxation 41
6 Human Resources & Employment Law 46
7 Commercial registration & licensing requirements 49
8 Banking & Financial Structure 54
9 Myanmar: Challenges - Strength - Opportunity 58
10 Conclusion 66
11 Bibliography 69
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EXECUTIVE SUMMARY
Myanmar is at a pivotal movement. The government has ushered in a series of
political and economic reforms after decades of authoritarianism, a revived peace
process is under way to address on-going ethnic conflicts and communal violence,
and the foundations of an open market economy are being laid after years ofisolation.
There is everything to play for- but also a major risk of disappointment. Today,
Myanmar is enjoying a groundswell of goodwill from an international community
that is keen to support the country in its process of change and opening. Investors
are understandably interested in this highly unusual and potentially promising
market prospect. Myanmar is at the heart of the worlds fastest-growing region
and beings its transformation in the digital age. Severe underdevelopment, after
nearly a century of economy stagnation, poses fundamental channelizes for an
economy that know only contributes 0.2% of Asias GDP. But it also gives
Myanmar an opportunity to use its Greenfield situation to leapfrog over
intermediate stages of economic development and to create sufficient jobs to meet
the high expectations of its people.
Much uncertainty remains. Investors are actively considering Myanmar, but many
want reassurance that the government can resolve ethic and communal violence,
maintain its momentum towards political and economic reform, and ease
constraints on doing business. Those political and economic choices will
determine the sustainability of change and the level of interest from investors and
supportersand therefore the success of Myanmars economic transformation.
By developing a diversified set of sectors, Myanmar has the potential to more than
quadruple the size of its economy to over $200 billion by 2030. But if it fails to
build a compelling growth plan and implement it effectively, todays goodwill and
cautious optimism could evaporate all too rapidly.
In this report, we assess the economic potential that Myanmar offers and explores
how the nation can seize todays window of opportunity to vault itself into a newera of growth and development.
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INTRODUCTION
BASIC DATA
TIMELINE OF KEY EVENTS
POLITICAL SYSTEM & GOVERNANCE STRUCTURE
KEY MINISTERS
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REPUBLIC OF THE UNION OF MYANMAR
Flag State Seal
CAPITAL: NAY PYI DAW
Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bm.html
Figure: 1
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THE GOLDEN LANDMYANMAR
BASIC DATA
Area 676,578 sq km (second largest country in Southeast Asia)
Land: 653,508 sq km
Water: 23,070 sq km
Total land borders 5,676 km
Border countries Bangladesh: 193 km
China: 2,185 km
India: 1,463 km
Laos: 235 km
Thailand: 1,800 km
Population 54.5 million (July 2012 estimate)
Main cities population Rangoon: 4,259,000
Mandalay: 1,009,000
Nay Pyi Taw (capital): 992,000
Ethnic groups Burman 70%, Shan 9%, Karen 7%, Rakhine 4%,
Mon 3%, Ka Chin 2.5%, Kayah 0.5%, Chin 0.3%,
Other 3.7%
Religions Buddhist 89%, Christian 3%, Muslim 4%, Animist 1%,
Other 2%
Age structure 0-14 years: 27.5%15-64 years: 67.5%
65+ years: 5%
Urbanisation 34% of the total population lives in cities
Road density 2 km per 1,000 people4 (relative to 11 km in other
Southeast Asian countries)
Motor vehicles 18 per 1,000 people5 (relative to 250 in Indonesia
and 370 in Thailand)
Climate Tropical monsoon
Summer (June to September): cloudy, rainy, hot, humid
Winter (December to April): scant rainfall,
mild temperatures, lower humidity
Languages Burmese; numerous minority ethnic group languages
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Currency 1 Kyat (MMK); MMK 1 = 100 pyas.
Average official exchange rate in April 2012:
MMK18:US$1 (managed float currency regime
introduced by Myanmars Central Bank in April 2012)
Average free-market exchange rate in 2012:
MMK 800-820: US$1 (Reuters)Time GMT + 6.5 hours
Fiscal year 1 April to 31 March
Natural resources Petroleum, timber, tin, antimony, zinc, copper,
tungsten, lead, coal, marble, limestone, precious
stones, natural gas, hydropower
Environmental issues Deforestation, industrial pollution of air, soil and
water, inadequate sanitation and water treatment
contributing to diseaseTable: 1
STATES AND DIVISIONS
1. Thaninthayi
2. Mon
3. Yangon
4. Ayeyarwaddy
5. Kayin
6. Bago7. Rakhine
8. Magwe
9. Mandalay
10.Kayah
11.Shan
12.Sagaing
13.Chin
14.Kachin
Rivers
A = Ayeyarwaddy : C = Chindwin : M = Mekong : S = Sittoung : T = Thanlwin
these rivers generally flow north to south
Source: http://www.asterism.info/states/
Figure: 2
http://www.asterism.info/states/1/http://www.asterism.info/states/2/http://www.asterism.info/states/3/http://www.asterism.info/states/4/http://www.asterism.info/states/5/http://www.asterism.info/states/6/http://www.asterism.info/states/7/http://www.asterism.info/states/8/http://www.asterism.info/states/9/http://www.asterism.info/states/10/http://www.asterism.info/states/10/http://www.asterism.info/states/11/http://www.asterism.info/states/11/http://www.asterism.info/states/12/http://www.asterism.info/states/12/http://www.asterism.info/states/13/http://www.asterism.info/states/13/http://www.asterism.info/states/14/http://www.asterism.info/states/14/http://www.asterism.info/states/14/http://www.asterism.info/states/13/http://www.asterism.info/states/12/http://www.asterism.info/states/11/http://www.asterism.info/states/10/http://www.asterism.info/states/9/http://www.asterism.info/states/8/http://www.asterism.info/states/7/http://www.asterism.info/states/6/http://www.asterism.info/states/5/http://www.asterism.info/states/4/http://www.asterism.info/states/3/http://www.asterism.info/states/2/http://www.asterism.info/states/1/7/29/2019 MMM -International Marketing Project - Engineering Service Prospect in Myanmar
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TIMELINE OF KEY EVENTS
1885-1948British colony with the second largest economy in South-East
Asia (after Indonesia), the largest exporter of rice and teak
1941Aung San announced the formation of the Burma IndependenceArmy (BIA) in anticipation of the Japanese invasion of Burma
in 1942
1947 General Aung San and several cabinet ministers are assassinated
1962The military led by General Ne Win took control of Burma
through a coup dtat
1948-1988 Nationalisation of industry and socialism
1988Democratic unrest as the economy was opened to foreign
Investors
1990Aung San Suu Kyis National League for Democracy (NLD)
wins elections but results annulled
1992The military replaced General Saw Maung with General Than
Shwe
1997 US sanctions on Burma
2000 EU sanctions on Burma; Burma joins ASEAN
2001Reversal of investor-friendly policy, many sectors closed to
foreign investment
2007Crackdown on saffron revolution sanctions intensified,
more investors pull out; Burma turns to China
2010 Limited democratic elections held
2011 New civilian administration, rapprochements with the West2013 SEA Games host
2013 22nd World Economic Forum held in Nay Pyi Taw (Capital)
2014 ASEAN Chair 2014
Table: 2
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POLITICAL SYSTEM AND GOVERNANCE STRUCTURE
Official name Republic of the Union of Myanmar (previously Union of
Myanmar; Union of Burma)
Local name Pyidaungzu Myanma Naingngandaw
Independence 4 January 1948 (from the UK)Constitution Approved by referendum on 29 May 2008 and reformed
by a series of acts in 2011
Government type Nominally civilian parliamentary government
(took office in March 2011)
The Executive Chief of state: President Thein Sein (since 4 February 2011,
5 year term); Vice President Tin Aung Myint Oo (since 4
February 2011resigned 3 May 2012 but his resignation was
not accepted by the President); Vice President Sai Mouk Kham
(since 3 February 2011)Head of government: President Thein Sein
Cabinet: Appointed by the President and confirmed by
Parliament
Elections: President elected by the Parliament from three Vice
Presidents. Each Vice President is nominated by the upper
house, lower house and military members of Parliament
The Legislative Structure: bicameral, consisting of the House of ationalities,
Amyotha Hluttaw (224 seats, 168 elected and 56 appointed by
military) and the House of Representatives, Pythu Hluttaw(440 seats, 330 elected and 110 appointed by the military)
Elections: 7 November 2010 and by-elections on 1 April 2012
to fill 46 vacant seats (next elections to be held in December
2015)
The Judiciary Mixed legal system of common law and customary law is in
place. However the judiciary is not independent from the
executive and a fair public trial is not guaranteed
Key political
parties
USDP (Union Solidarity and Development Party, led by Shwe
Mann and Htay Oo), NLD (National League for Democracy,
led by Aung San Suu Kyi), NUP (National Unity Party, led by
Tun Ye), NDF (National Democratic Force, led by Khin
Maung Swe and Than Nyein), Shan Nationalities Democratic
Party (led by Sai Aike Paung), Rakhine Nationalities
Development Party (led by Dr. Aye Mg), other ethnically
based partiesTable:3
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ECONOMY STATISTICS
ECONOMIC INDICATORS
CURRENCY
GDP (GROSS DOMESTIC PRODUCT)
POPULATION
UNEMPLOYMENT RATE
INFLATION RATE
INTEREST RATE
TRADE FIGURE
GOVERNMENT STATISTIC
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THE ECONOMY - BRIEF
Major exports: Petroleum gases (42%), Dried legumes (12%), Wood
in the rough (8%), Natural rubber (3%), Precious
stones (3%)
Major imports: Self-propelled bulldozers, excavators and road rollers
(5%), Motorcycles (5%), Motor vehicles for
transporting goods (3%), Palm oil, crude (2%),
Structures and parts thereof (bridges, lock gates,
towers, etc) (2%)
Major trade partners
(exports):
Thailand (46%), China (16%), India (13%), Japan
(7%), Malaysia (4%)
Major trade partners
(imports):
China (65%), Korea, Rep. (9%), Thailand (6%),
Indonesia (5%), Japan (5%)
Source: http://atlas.media.mit.edu/
Table: 5
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MYANMAR | ECONOMIC INDICATORS
MARKETS LAST PREVIOUS AVERAGE UNIT REFERENCE
CURRENCY 974 970 893.43 9/13/2013 Month
GDP LAST PREVIOUS AVERAGE UNIT REFERENCE
GDP 53.14 51.44 21.43 USD Billion 12/31/2012 Year
GDP ANNUAL GROWTH RATE 6.3 5.5 9.71 Percent 12/31/2012 Year
GDP PER CAPITA 824.19 741.67 331.76 USD 12/31/2011 Year
GDP PER CAPITA PPP 1324.61 1254.53 828.24 USD 12/31/2011 Year
LABOUR LAST PREVIOUS AVERAGE UNIT REFERENCE
POPULATION 52.8 52.4 38.31 Million 12/31/2012 YearUNEMPLOYMENT RATE 4.01 4 4.04 Percent 12/31/2011 Year
PRICES LAST PREVIOUS AVERAGE UNIT REFERENCE
INFLATION RATE 2.85 2.37 4.33 Percent 3/31/2013 Month
MONEY LAST PREVIOUS AVERAGE UNIT REFERENCE
INTEREST RATE 10 10 10.19 Percent 7/31/2013 Month
TRADE LAST PREVIOUS AVERAGE UNIT REFERENCE
BALANCE OF TRADE 181.7 29.9 32.6 USD Million 3/31/2013 Month
CURRENT ACCOUNT -1684.9 1828.7 154.53 USD Million 12/31/2011 Year
CURRENT ACCOUNT TO GDP -2.7 0.03 -0.21 Percent 12/31/2011 Year
EXPORTS 860.1 637.8 763.32 USD Million 3/31/2013 Month
IMPORTS 678.4 607.9 729.82 USD Million 3/31/2013 Month
GOVERNMENT LAST PREVIOUS AVERAGE UNIT REFERENCE
GOVERNMENT DEBT TO GDP 53.53 52.99 83.48 Percent 12/31/2011 Year
GOVERNMENT BUDGET -5.4 -3.9 -2.66 Percent of GDP 12/31/2012 Year
CREDIT RATING 15 Month
Source: http://www.tradingeconomics.com/myanmar/indicators Table
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MYANMAR KYAT
The USDMMK spot exchange rate depreciated 1.0000 or 0.10 percent during the
last 30 days. From 2012 until 2013, the USDMMK averaged 893.6900 reaching an
all time high of 988.0000 in July of 2013 and a record low of 847.9500 in October
of 2012. The USDMMK spot exchange rate specifies how much one currency iscurrently worth in terms of the other. While the USDMMK spot exchange rate is
quoted and exchanged in the same day, the USDMMK forward rate is quoted
today but for delivery and payment on a specific future date.
MYANMAR GDP
The Gross Domestic Product (GDP) in Myanmar was worth 53.14 billion US
dollars in 2012. The GDP value of Myanmar represents 0.09 percent of the world
economy. GDP in Myanmar is reported by the World Bank. Myanmar GDPaveraged 21.43 USD Billion from 1998 until 2012, reaching an all time high of
53.14 USD Billion in December of 2012 and a record low of 6.46 USD Billion in
December of 1998.
Graph: 1
Graph: 2
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MYANMAR GDP ANNUAL GROWTH RATE
The Gross Domestic Product (GDP) in Myanmar is expected to reach 6.30 percent
in 2012 from the previous year. GDP Annual Growth Rate in Myanmar is reported
by the Central Statistics Organization, Myanmar. Myanmar GDP Annual Growth
Rate averaged 9.71 Percent from 1994 until 2012, reaching an all time high of
13.84 Percent in December of 2003 and a record low of 5.30 Percent in December
of 2010. Myanmar, formerly known as Burma, is the poorest country in Southeast
Asia. Myanmar was under a military regime for decades, yet since 2011, a
transition to democracy has been taking place. The new, civilian led, reformist
government has taken charge and the country has begun to open up to foreign
direct investment. Myanmars economy is pretty diversified. The most important
sector of the economy is services, which has been growing steadily in the last fewyears, and now account for over 38 percent of GDP. The share of agriculture has
been declining, and now represents 36 percent of GDP. Finally, industry
contributes the remaining 26 percent of GDP.
Graph: 3
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MYANMAR GDP PER CAPITA
The Gross Domestic Product per capita in Myanmar was last recorded at 824.19
US dollars in 2011. The GDP per Capita in Myanmar is equivalent to 7 percent of
the world's average. GDP per capita in Myanmar is reported by the World Bank.
Myanmar GDP per capita averaged 331.76 USD from 1998 until 2011, reachingan all time high of 824.19 USD in December of 2011 and a record low of 129.19
USD in December of 2001.
MYANMAR GDP PER CAPITA PPP
The Gross Domestic Product per capita in Myanmar was last recorded at 1324.61
US dollars in 2011, when adjusted by purchasing power parity (PPP). The GDP
per Capita, in Myanmar, when adjusted by Purchasing Power Parity is equivalent
to 6 percent of the world's average. GDP per capita PPP in Myanmar is reported
by the World Bank. Myanmar GDP per capita PPP averaged 828.24 USD from1998 until 2011, reaching an all time high of 1324.61 USD in December of 2011
and a record low of 365.08 USD in December of 1998.
Graph: 4
Graph: 5
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MYANMAR POPULATION
The total population in Myanmar was last recorded at 52.8 million people in 2012
from 21.5 million in 1960, changing 146 percent during the last 50 years.
Population in Myanmar is reported by the World Bank. Myanmar Population
averaged 38.31 Million from 1960 until 2012, reaching an all time high of 52.80Million in December of 2012 and a record low of 21.50 Million in December of
1960. The population of Myanmar represents 0.70 percent of the worlds total
population which arguably means that one person in every 144 people on the
planet is a resident of Myanmar.
MYANMAR UNEMPLOYMENT RATE
Unemployment Rate in Myanmar increased to 4.01 percent in 2011 from 4 percent
in 2010. Unemployment Rate in Myanmar is reported by the Central StatisticsOrganization, Myanmar. Myanmar Unemployment Rate averaged 4.04 Percent
from 1994 until 2011, reaching an all time high of 4.15 Percent in December of
1995 and a record low of 4.00 Percent in December of 2009. In Myanmar, the
unemployment rate measures the number of people actively looking for a job as a
percentage of the labour force.
Graph: 6
Graph: 7
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MYANMAR INFLATION RATE
The inflation rate in Myanmar was recorded at 2.85 percent in March of 2013.
Inflation Rate in Myanmar is reported by the Central Statistics Organization,
Myanmar. Myanmar Inflation Rate averaged 4.33 Percent from 2010 until 2013,
reaching an all time high of 8.27 Percent in April of 2011 and a record low of 0.28Percent in August of 2012. In Myanmar, the inflation rate measures a broad rise or
fall in prices that consumers pay for a standard basket of goods.
MYANMAR INTEREST RATE
The benchmark interest rate in Myanmar was last recorded at 10 percent. Interest
Rate in Myanmar is reported by the Central Bank of Myanmar. Myanmar Interest
Rate averaged 10.19 Percent from 2011 until 2013, reaching an all time high of 12Percent in November of 2011 and a record low of 10 Percent in October of 2012.
In Myanmar, the benchmark interest rate is set by the Central Bank of Myanmar.
The benchmark interest is the Central Bank Rate.
Graph: 8
Graph: 9
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MYANMAR BALANCE OF TRADE
Myanmar recorded a trade surplus of 181.70 USD Million in March of 2013.
Balance of Trade in Myanmar is reported by the Central Statistics Organization,
Myanmar. Myanmar Balance of Trade averaged a surplus equivalent to 32.60
USD Million from 2010 until 2013, reaching the best surplus at 593.30 USDMillion in August of 2011 and the worst deficit at 639.80 USD Million in June of
2011. Myanmar had been trading mostly with neighboring countries due to
political circumstances and poor infrastructure, but the change to democracy is
likely to allow access to new markets. Oil and natural gas dominate Myanmar's
exports. Other exports include vegetables, wood, fish, clothing, rubber and fruits.
Myanmar mainly imports fuel, vegetable oil, vehicles, pharmaceutical products,
construction equipment, polymers, tires and machinery. Myanmar's main trading
partners are China, India, Japan, Indonesia, Germany and Hong-Kong
Graph: 10
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MYANMAR CURRENT ACCOUNT
Myanmar recorded a Current Account deficit of 1684.90 USD Million in 2011.
Current Account in Myanmar is reported by the Ministry of National Planning and
Economic Development, Myanmar. Myanmar Current Account averaged a surplus
equivalent to 154.53 USD Million from 1994 until 2011, reaching the best surplusat 1828.70 USD Million in December of 2010 and the worst deficit at 1684.90
USD Million in December of 2011. Current Account is the sum of the balance of
trade (exports minus imports of goods and services), net factor income (such as
interest and dividends) and net transfer payments (such as foreign aid).
MYANMAR CURRENT ACCOUNT TO GDP
Myanmar recorded a Current Account deficit of 2.70 percent of the country's
Gross Domestic Product in 2011. Current Account to GDP in Myanmar is reported
by the Ministry of National Planning and Economic Development, Myanmar.
Myanmar Current Account to GDP averaged -0.21 Percent from 1994 until 2011,
reaching an all time high of 0.03 Percent in December of 2010 and a record low of
-2.70 Percent in December of 2011. The Current account balance as a percent of
GDP provides an indication on the level of international competitiveness of a
country. Usually, countries recording a strong current account surplus have an
economy heavily dependent on exports revenues, with high savings ratings but
weak domestic demand. On the other hand, countries recording a current account
deficit have strong imports, a low saving rates and high personal consumption
rates as a percentage of disposable incomes.
Graph: 11
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MYANMAR EXPORTS
Exports in Myanmar increased to 860.10 USD Million in March of 2013 from
637.80 USD Million in February of 2013. Exports in Myanmar is reported by the
Central Statistics Organization, Myanmar. Myanmar Exports averaged 763.32
USD Million from 2010 until 2013, reaching an all time high of 1256.60 USD
Million in August of 2011 and a record low of 502.60 USD Million in April of
2011. Oil and natural gas dominate Myanmar's exports. Other exports include
vegetables, wood, fish, clothing, rubber and fruits. Myanmar's main exports
partners are China, India, Japan, South Korea, Germany, Indonesia and Hong
Kong.
Graph: 12
Graph: 13
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MYANMAR IMPORTS
Imports in Myanmar increased to 678.40 USD Million in March of 2013 from
607.90 USD Million in February of 2013. Imports in Myanmar are reported by the
Central Statistics Organization, Myanmar. Myanmar Imports averaged 729.82
USD Million from 2010 until 2013, reaching an all time high of 1248.00 USDMillion in June of 2011 and a record low of 334.20 USD Million in October of
2010. Myanmar mainly imports fuel, vegetable oil, vehicles, pharmaceutical
products, construction equipment, polymers, tires and machinery. Myanmar's main
imports partners are China, Japan, India, Indonesia, Germany, France and Hong
Kong.
MYANMAR GOVERNMENT DEBT TO GDP
Myanmar recorded a Government Debt to GDP of 53.53 percent of the country's
Gross Domestic Product in 2011. Government Debt to GDP in Myanmar is
reported by the Central Statistics Organization, Myanmar. Myanmar Government
Debt To GDP averaged 83.48 Percent from 1998 until 2011, reaching an all timehigh of 140.95 Percent in December of 2001 and a record low of 52.99 Percent in
December of 2010. Generally, Government debt as a percent of GDP is used by
investors to measure a country ability to make future payments on its debt, thus
affecting the country borrowing costs and government bond yields.
Graph: 14
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MYANMAR GOVERNMENT BUDGET
Myanmar recorded a Government Budget deficit equal to 5.40 percent of the
country's Gross Domestic Product in 2012. Government Budget in Myanmar is
reported by the Central Statistics Organization, Myanmar. Myanmar Government
Budget averaged -2.66 Percent of GDP from 1994 until 2012, reaching an all time
high of 0.79 Percent of GDP in December of 1998 and a record low of -5.40
Percent of GDP in December of 2010. Government Budget is an itemized
accounting of the payments received by government (taxes and other fees) and the
payments made by government (purchases and transfer payments). A budget
deficit occurs when an government spends more money than it takes in. The
opposite of a budget deficit is a budget surplus.
Graph: 15
Graph: 16
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THE ECONOMYBRIEF
Myanmar is rich in natural resources such as arable land, forestry, minerals, and
natural gas, as well as freshwater and marine resources, gems and jade. The
country has recently emerged as a natural gas exporter, with exports to
neighboring countries providing an increasingly important revenue stream.
The most productive segments of the economy are currently the extractive
industries, in particular oil and gas, mining and timber. Other areas such as
manufacturing and tourism, which represent a small share of economic activity,
are largely accounted for by state industries. While the Myanmar government has
good economic relations with neighbors such as China and Thailand, significant
improvements in the business and political climate and economic governance will
be required to attract serious, long term investment, particularly from western
economies. Initial steps towards reform and opening the economy were taken in
2011 through the lowering of export taxes and an easing of restrictions on the
financial sector.
Its Exports of gas increased by nearly 15% to an estimated US $3 billion.
Gemstones and jade exports, however, declined after doubling in FY10. Higher
levels of imports, particularly construction materials and machinery, widened the
current account deficit to an estimated 2.7% of GDP in FY11 from 0.9% in FY10.
Increased foreign investment in energy and hydropower, estimated at US $2.8billion in FY11, helped lift international reserves to approximately US $8 billion
by March 2012, equivalent to 9.4 months of imports. Foreign investment in other
industries is insignificant owing to barriers to entry and the poor business
environment.
The monetary authorities lowered administered bank interest rates by 4 percentage
points from 17% to 13% for lending and from 12% to 8% for deposits in FY11,
though banks were also given some flexibility in setting deposit rates. Yields on
treasury bonds made them attractive investments for banks, which reduced centralbank monetisation of the fiscal deficit in FY11.
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ECONOMIC PROSPECTS
Going forward, GDP is expected to grow 6.3% in FY13, driven by improved
business confidence following recent political and economic reforms. However,
short term risks to growth include the rapid appreciation of the Kyat and potential
slowdown in neighbouring countries due to the European sovereign debt crisis, aswell as operational challenges that may be faced by the authorities.
While important steps have been taken to reform and diversify the economy, many
structural barriers will need to be overcome to realise its full potential.
The government that took office in March 2011 has an opportunity to rejuvenate
the economy after more than 50 years of stagnation. In a promising start, the
authorities took steps to unify the multiple exchange rates and are preparing other
reforms, including a new national development plan.
New currency arrangements from 1 April 2012 involve a managed float of the
Kyat with a reference exchange rate of MMK818/US$1. The government plans to
establish a formal interbank market and relax exchange restrictions on current
international payments and transfers. Fiscal policy in FY12 targets a modest fiscal
deficit equivalent to 4.6% of GDP.
Among the planned reforms is a land law giving farmers the right to own, sell, and
mortgage their land. Credit to the farm sector remains inadequate, even though the
Myanmar Agriculture Development Bank has doubled its funding for farmers ineach of the past two years. A microfinance law was approved in November 2011
to expand microcredit to farmers.
The government is preparing a new foreign investment law that is expected to
offer tax breaks to investors and allow them to lease private land and repatriate
investment proceeds using market exchange rates. Special economic zones in
Dawei in southern Myanmar, Thilawa near Yangon, and Kyaukphyu on the west
coast will be established to attract investments.
Gas production and exports are scheduled to increase sharply in FY13 when the
Shwe and Zawtika gas fields and pipelines to the Peoples Republic of China
(PRC) and Thailand, now under construction, are completed. Inflation has been
quickening to just over 6%. The authorities raised administered electricity prices
in late 2011 and fuel prices in early 2012. A government plan to help farmers by
supporting rice prices is likely to lead to higher retail prices of rice.
Relaxing foreign exchange controls is expected to propel imports upward and
contribute to a widening of the current account deficit. Easing of economic
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sanctions imposed on Myanmar by industrial countries would lead to higher levels
of trade and investment, as well as the resumption of assistance and concessionary
financing both from these countries and from international financial institutions.
ECONOMIC STRUCTURE
Myanmars economy is dominated by natural resources and commodities. Its
largest exports are natural gas.
Myanmar Key Industries
No Industry No USD in mil %
1 Power 5 18,874 46.40%
2 Oil and Gas 109 14,063 34.60%
3 Mining 66 2,814 6.90%
4 Manufacturing 164 1,761 4.30%5 Hotel and Tourism 45 1,056 2.60%
6 Real Estate 19 1,056 2.60%
7 Livestock and Fisheries 25 324 0.80%
8 Transport and communication 16 314 0.80%
9 Industrial Estate 3 193 0.50%
10 Agriculture 7 173 0.40%
11 Construction 2 38 0.10%
12 Other Services 6 24 0.10%
Total 467 40,699 100%
Source: Ministry of National Planning and Economic Development Table: 7
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MAJOR INVESTORS IN MYANMAR
China surpassed Thailand to become the largest foreign investor in Myanmar in
FY10-FY11, when approximately US$20 billion of energy and infrastructure
development projects were announced.
Thailand is the second largest foreign investor in Myanmar, with approximately
US$9 billion invested in manufacturing and mining projects. Investment has been
particularly strong in oil and gas through PTT Exploration and Production, the
overseas arm of state owned PTT, which operates the Zawtika gas project in the
gulf of Mottama, while also being a partner in the Yetagun and Yadana offshore
gas projects. According to the commercial counsellor at Thailands embassy in
Myanmar, Mr Prajuab Supinee, new Thai investors are showing an interest in
consumer goods manufacturing and agriculture ventures.
South Korea is the fourth largest Foreign Direct Investment (FDI) contributor,
with 48 projects amounting to US$2.9 billion being undertaken since 1988. South
Korean companies (including large conglomerates like Daewoo and Samsung) are
looking to further increase their investments in construction, mining, agriculture,
electricity, energy, logistic and freight-forwarding, vehicles and auto parts,
communication and multimedia, iron and steel, agro-fishery, timber and wood,
financing, real estate, garment, transport, hotel and tourism and civil engineering
industries, according to the Korea Trade-Investment Promotion Agency.
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Major Investors
No Country No USD in Mil %
1 China 5 13,949 34.27%
2 Thailand 61 9,568 23.51%
3 Hong Kong 38 6,308 15.50%
4 Republic of Korea 49 2,941 7.23%
5 UK 52 2,760 6.78%
6 Singapore 72 1,804 4.43%
7 Malaysia 41 1,027 2.52%
8 France 2 469 1.15%
9 United States 15 244 0.60%
10 Indonesia 12 241 0.59%
11 Netherland 5 239 0.59%
12 Japan 24 216 0.53%13 India 6 262 0.64%
14 Philippiness 2 147 0.36%
15 Russian Federation 2 94 0.23%
16 Australia 14 82 0.20%
17 Austria 2 73 0.18%
18 Panama 2 55 0.14%
19 Vietnam 3 42 0.10%
20 United Arab Emirates 1 41 0.10%
21 Canada 14 40 0.10%22 Mauritius 2 31 0.08%
23 Germany 2 18 0.04%
24 Republic of Liberia 2 15 0.04%
25 Denmark 1 13 0.03%
26 Cyprus 1 5 0.01%
27 Macau 2 4 0.01%
28 Switzerland 1 3 0.01%
29 Bangladesh 2 3 0.01%
30 Israel 1 2 0.00%
31 Brunei Darussalam 1 2 0.00%
32 Sri Lanka 1 1 0.00%
Total 438 40,699 100%Source: Ministry of National Planning and Economic Development Table: 8
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Australia Travel bans for members of
the Government.
Sanctions directed at
financial transactions.
Easing of sanctions and move to
normalise trade ties announced in April
2012.
Lifting of all remaining economic,
financial and travel sanctions announced
on 7 June 2012 and expected to come into
effect in the coming weeks.
Exceptions: arms embargo will remain
in place.
Timeline: no timeline, sanctions lifted
permanently
Canada Perceived as having some of
the toughest sanctions.
Economic sanctions
imposed in 2007 through the
Special Economic Measures
(Burma) Regulations.
Ban on all goods exportedfrom Canada to Myanmar
except humanitarian goods.
Ban on all goods imported
to Canada.
Freeze on assets in Canada
of any designated Burmese
nationals connected with the
Burmese State.
Prohibition on the provision
of Canadian financial services
to and from Burma.
Lifting of most sanctions announced on
24 April 2012.
Exceptions: ban on arms deals
maintained.
Timeline: not specified.
Japan The Japanese Government
did not impose sanctions and
Debt write-off of US$3.7 billion and
resumption of development aid
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maintained trade ties with
Myanmar, however official
development assistance was
suspended except
humanitarian aid.
Japanese companies have
held back from investing in
Myanmar in recent years so
as not to jeopardise relations
with the US and the EU.
announced in April 2012.
SUSTAINABILITY OF POLITICAL REFORMS AND LONG TERM
PROSPECTS
While the international community has responded to recent democratic reforms
undertaken by the Myanmar Government with immediate actions to ease
economic and financial sanctions, the preferred approach has been to temporarily
suspend sanctions rather than lift them completely.
Given that the sustainability of political reforms requires the commitment of the
government, the above should be seen as an incentive mechanism to encourage
further progress rather than a risk that sanctions will be re-imposed.
President Thein Sein has recently announced a second wave of reforms which aim
to triple the size of the economy in five years and further accelerate the pace of
change.
The government gave permission, for the first time, to the publication of the
International Monetary Fund (IMF) annual assessment of the country,
demonstrating its willingness to re-engage with the international community,
according to IMF mission chief for Myanmar, Meral Karasulu. The IMF has also
noted that the authorities have been actively seeking its advice, and that the Fund
is scaling up technical assistance in line with the authoritiespriorities.
The Myanmars new draft foreign investment law is being put forward for
approval by Parliament this year.
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It sets out land-use terms, legal structures and incentives for foreign companies
such as a five-year tax holiday from the start of commercial operations,
demonstrating the governments commitment to attract long term foreign
investors.
CONDUCTING BUSINESS IN MYANMAR
FORM OF BUSINESS
Under the Foreign Investment Law, a foreign entity may establish its presence in
Myanmar as a limited liability company (private or public), a registered branch
and a representative office of a company incorporated outside Myanmar, a sole
proprietorship, a partnership or a joint venture with a citizen, private company,
cooperative society or State-Owned Economic enterprise (SEE). A foreign entity
may also enter into a production sharing contract with an SEE for exploration,
extraction and sale of petroleum and natural gas and mining operations.
LIMITED LIABILITY COMPANY
A limited liability company may be 100% owned by foreign investors except
certain industries that are closed to private investment and can only be carried out
by the government. The government, on a case-to-case basis, may permit these
activities to be carried out by any person or economic organisation, with orwithout a joint venture with the government and subject to unspecified conditions.
There are two types of limited liability Company in Myanmar, namely a private
limited liability company and a public limited liability company.
Currently, there is no public foreign company in Myanmar. A private limited
liability company is required to have at least two shareholders and the number of
members is limited to 50. The transfer of shares to a foreigner is restricted. A
public limited liability company is required to have at least seven shareholders.
REGISTRATION OF COMPANIES
Foreign investors may register their companies under the Myanmar Companies
Act (CA) or in conjunction with the Union of Myanmar Foreign Investment Law
(MFIL). The differences between companies registered under the CA and the
MFIL are:
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Companies registered under the CA- Manufacturing company- Service company
US$150,000US$50,000
Registration fees on the incorporation of a company are US$2,500.
Branch of a company incorporated outside Myanmar
A foreign company can also set up its branch office in Myanmar. A foreign branch
formed under the CA does not need to obtain an MIC permit, and is only required
to apply for a permit to trade and then for registration. The branch is allowed to be
formed as a manufacturing or a service company (for instance oil companies are
set up mostly in the form of branches).
In contrast, a foreign branch formed under the MFIL is required to obtain an MIC
permit in addition to a permit to trade and a registration certificate. Registrationfees payable on the registration of a branch are US$2,500.
Representative office of a company incorporated outside Myanmar
Foreign companies with business relations or investment projects in Myanmar
may apply to set up representative offices in Myanmar (this being a common
practice for banks). In contrast with a branch, a representative office of a company
incorporated outside Myanmar is not allowed to perform direct commercial or
revenue generating activities in Myanmar. However, it is permitted to liaise with
its head office and collect data useful for the head office.
Joint venture
Foreign investors can set up their business in the form of a joint venture, either as
partnerships or limited companies, with any Myanmar partner (an individual, a
private company, a cooperative society or a state owned enterprise).
In all joint ventures, the minimum shareholding of the foreign party is 35% of the
total equity capital.
Foreign Investment Restrictions
Foreign investment in Myanmar is governed under the Foreign Investment Law
(FIL) 1988.
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Economic activities prohibited under the SEE Law
The SEE Law specifies 12 economic activities that are closed to private
investment and can only be carried out by the government:
1. Extraction and sale of teak in Myanmar and abroad
2. Cultivation and conservation of forest plantations, with the exception of
village- owned firewood plantations cultivated by the villagers for their
personal use
3. Exploration, extraction and sale of petroleum and natural gas and
production of products of the same
4. Exploration, extraction and export of pearls, jade and precious stones
5. Breeding and production of fish and prawns in fisheries that have been
reserved for research by the government
6. Postal and telecommunications Services
7. Air and railway transport services
8. Banking and insurance services
9. Broadcasting and television services
10. Exploration, extraction and export of metals
11. Electricity generating services, other than those permitted by law to private
and cooperative electricity generating services
12. Manufacture of products relating to security and defense which the
government has, from time to time, prescribed by notification.
The government, on a case-to-case basis, may permit these activities to be carriedout by any person or economic organisation, with or without a joint venture with
the government and subject to unspecified conditions.
Sectors allowed for foreign investment
Based on the MIC Notification No. 1/89 of 30 May 1989, foreign investments may
be made into the economic activities (other than 12 economic activities restricted
under the SEE Law above) which are classified into nine sectors as follows:
1. Agriculture and irrigation2. Livestock and fishery3. Forestry4. Mining5. Power6. Oil and gas7. industry involving food stuffs, textile, personal goods, household goods,
leather products and similar products, transport equipment, buildingmaterials, pulp and paper, chemicals, chemical products andpharmaceuticals, iron and steel and machinery and plant
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8. Construction9. Transportation and communications
Investment proposals in sectors other than those listed above are considered on a
case-by-case basis by the MIC.
INVESTMENT INCENTIVES
Incentives under the MFIL
Companies registered under the MFIL which have obtained MIC permits are
entitled to the following special benefits and tax incentives. The benefits and
incentives are granted by the MIC at its discretion.
Exemption from income tax for up to three consecutive years for an
enterprise engaged in the production of goods or services. The exemption
may be extended by the MIC for a further reasonable period, depending on
the success of the enterprise.
Exemption or relief from income tax on profits of the business that are
maintained in a reserve fund and subsequently re-invested within one year
after the reserve fund is made.
Accelerated depreciation of machinery, equipment, building or other capital
assets used in the business at the rate fixed by the MIC.
Relief from income tax of up to50% of the profits accrued on exported
goods.
The right to pay income tax payable to the state on behalf of foreign
employees and the right to deduct such payments from assessable income.
The right to pay income tax on the income of the foreign employees at the
rates applicable to citizens residing within the country.
The right to deduct expenses incurred in Myanmar on research anddevelopment relating to the business of the enterprise from assessable
income.
The right to carry forward and set off losses for up to three consecutive
years from the year the loss is sustained.
Exemption or relief from customs duty or other internal taxes on machinery
equipment, instruments, machinery components, spare parts and materials
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used in the business, and items which are imported and required to be used
during the construction period of the business.
Exemption or relief from customs duty or other internal taxes on imported
raw materials for the first three years of commercial production following
the completion of construction.
SPECIAL ECONOMIC ZONES
In addition to foreign investment under the MFIL, foreign investors may invest
under the Myanmar Special Economic Zone Law of 2011(Myanmar SEZ Law)
and the Dawei Special Economic Zone Law of 2011 (Dawei SEZ Law). The
Myanmar SEZ Law is a basic law for any Special Economic Zone (SEZ) within
Myanmar whereas the Dawei SEZ applies only to a specified designated area, i.e.
the Dawei SEZ, which is located in the Tanintharyi Region in the south, and is the
first SEZ in Myanmar.
The main regulatory body handling foreign investment under the Myanmar SEZ
Law and the Dawei SEZ Law is the Central Body for theMyanmar Special
Economic Zone which was formed by the Presidents Office in April 2011.
Subordinate regulatory bodies are the Central Working Body and the Dawei SEZ
Temporary Supporting Working Body, as formed by the Presidents Office in
April 2011. The Myanmar SEZ Law and Dawei SEZ Law contain, inter alia,
provisions relating to developers and investors, exemptions and reliefs,
restrictions, duties of developers or investors, land use, banks and financemanagement and insurance business, management and inspection of commodities
by the customs department, quarantine, labour and guarantee of non-
nationalisation.
In general, the investment projects in the Dawei SEZ must be approved by the
Central Body. Tax exemptions or relief may be granted under the Dawei SEZ Law
upon application by the investor.
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INVESTMENT GUARANTEE AND PROTECTION
Investment Guarantee and Protection
The MFIL provides an explicit guarantee that an economic enterprise with an MIC
permit cannot be nationalised during the term of the contract or during any
extended term. The MFIL also includes a provision which expressly provides that
upon the expiry of the contract term; the government guarantees that an investor
may remit his investment and profits in the foreign currency in which such
investment was made, as specified. Investment businesses in the Dawei SEZ are
guaranteed against nationalisation under the Dawei SEZ Law. Under the Dawei
SEZ Law, foreign investors may be allowed to exchange and remit their own
foreign currency within the Dawei SEZ and abroad.
Investment protection agreements
Myanmar has investment protection agreements with China, India, Kuwait, Laos,
the Philippines, Thailand and Vietnam.
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TAXATION
CORPORATE INCOME TAX
PERSONAL INCOME TAX
COMMERCIAL TAX
OTHER TAXES
PROPERTY TAX
STAMP DUTY
CUSTOM DUTY
EXCISE DUTY
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CORPORATE INCOME TAX
Scope
Resident companies are taxed on a worldwide basis, and as such, income from
sources outside of Myanmar is taxable. A resident company is a company as
defined and formed under the Myanmar CA 1913 or any other existing law of
Myanmar. MFIL companies are treated as resident companies. However, MFIL
companies are not taxed on their foreign income. Non-resident companies are
taxed only on income derived from sources within Myanmar. A non-resident
company is a company that is not formed under the Myanmar CA 1913 or any
other existing law of Myanmar. Generally, foreign branches are deemed to be
nonresident companies. Income received from any capital assets within Myanmar
and from any source of income within Myanmar is deemed to be income received
within Myanmar. The income is generally subject to tax under the normal rules for
residents, except that different tax rates apply. Newly established economic
enterprises and MFIL companies are entitled to enjoy exemptions and relief from
taxes.
A partnership is taxed as an entity and not on the individual profit share of the
partners. Partnership income is not taxed in the hands of the partners.
Tax rates
Corporate tax rates vary depending on the type of taxpayer and broadly, nature of
income.
Type of Taxpayer or Income Tax Rates
Companies incorporated in Myanmar under Myanmar Companies Act
Trade/business income
Rental income from movable or immovable property
25%
25%
Enterprises operating under MFIL 25%
Foreign organisations engaged under special permission in State-
sponsored projects, enterprise or any undertaking
25%
Non-resident foreign organisations such as a branch of a foreign
company
35%
Capital gains tax (except transfer of shares in an oil and gas company
where the rates ranging from 40% to 50% will apply on gains)
Resident companies
Non-resident companies
10%
40%
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HUMAN RESOURCES
&
EMPLOYMENT LAW
EMPLOYMENT OF FOREIGNERS
LABOUR LAWS IN MYANMAR
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HUMAN RESOURCES AND EMPLOYMENT LAW
Employment of Foreigners
There is no restriction on the number of expatriate employees. However,foreigners cannot be appointed as directors in companies formed under the CA and
owned by Myanmar citizens. In addition, the employment of foreigners as experts,
technicians, managers, general managers or managing agents in companies owned
by Myanmar citizens must be approved by the MIC. In the appointment of
personnel in an organisation formed under the Permit issued by MIC, preference
shall be given to citizens. However, MIC can consider the request for appointment
of experts and technicians from abroad on a case-by case basis.
An economic organisation formed under a Permit shall make arrangements forlocal and foreign training so as to ensure its local personnel are proficient in their
work and are able to be promoted to higher ranks of services.
Work Permit Processing and Requirements (Managerial, Supervisor,
Expertise)
Employment of foreign experts and technicians by the enterprises formed under
the Permit issued by MIC is allowed. The following procedures would have to be
completed to employ foreign experts and technicians:
The investor has to mention the number of foreign experts/ technicians to
be employed in the investment application form submitted to the MIC.
After obtaining MIC permit, the company has to apply for an appointment
and stay-permit.
With the endorsement of MIC, the company has to apply for a work permit
from the Directorate of Labour under the Ministry of Labour, and for a stay
permit and visa from the Immigration and National RegistrationDepartment under the Ministry of Immigration and Population.
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Labour Laws in Myanmar
Existing labour laws in Myanmar include:
Employment and Training Act (1950),
Employment Restriction Act (1959),
Employment Statistics Act (1948),
Factories Act (1951),
Labour Union Law (2011),
Leave and Holidays Act (1951),
Minimum Wages Act (1949),
Oilfields Labour and Welfare Act (1951),
Payment of Wages Act (1936),
Social Security Act (1954),
Shops and Establishments Act (1951),
Trade Disputes Act (1929)Workmens Compensation Act (1923).
These laws govern labour relations problems and deal with subjects such as work
hours, holidays, leaves of absence, woman and child labour, wages and overtime,
severance pay, workmens compensation, social welfare, work rules and other
matters.
A Social Security Act established a fund with contributions by employers,
employees and the government.
The Myanmar Special Economic Zone Law (2011) and Dawei Special Economic
Zone Law (2011) prescribe special rules applicable to foreign employees, work
permits, and minimum percentages of employees which must be citizens.
Myanmar has been a member of the International Labour Organisation (ILO) since
1948.
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if approved by the MIC. The lease can be extended if the project is mutually
beneficial to the investor and the state. A foreigner or foreign company is required
to apply to MIC with the land lease agreement or other documents that evidence
the agreement to lease from the person who has the right to lease. The land lease
agreement is concluded upon receiving the approval from MIC and shall be sent
back to MIC.
Arbitration law
There are two main laws in Myanmar relating to arbitration, namely the
Arbitration Act 1944 which relates to local arbitration within Myanmar and the
Arbitration (Protocol and Convention) Act which relates to foreign arbitral
awards. According to the Myanmar Export/Import Rules and Regulations issued
by the Ministry of Commerce, entrepreneurs having trade disputes with foreign
companies can only resolve the disputes in accordance with the Arbitration Act
1944, thus requiring contracts to be under Myanmar arbitration.
Economic and Trade Agreements
Myanmar has agreements with the following countries:
Economic agreements with China, Cuba, Kuwait, Malaysia and Singapore
Trade agreements with Bangladesh, China, India, Israel, Korea (Rep.), Laos,
Malaysia, Pakistan, the Philippines, Sri Lanka, Thailand and Vietnam - an
economic and trade agreement with Turkey. Myanmar is a member of the
ASEAN Free Trade Area (AFTA) which was initiated in 1992. AFTA seeks
to eliminate tariff barriers among ASEAN countries, and the key to this is the
Common Effective Preferential Tariff (CEPT) Scheme, under which tariffs are
gradually reduced to 0%-5% by 2010 or 2015.
Myanmar is also a signatory to the ASEAN Framework Agreement on Services
(AFAS) which is aimed at strengthening the cooperation among service suppliers
in the ASEAN region, reducing restrictions to trade in services, and progressively
liberalising trade in services among ASEAN counties. In addition, Myanmar is
also a party to the Framework Agreement on the ASEAN Investment Area (AIA)
which is aimed at establishing the ASEAN region as a competitive investment area
by 1 January 2010, as well as facilitating a liberal and transparent investment
environment and free flow of investments in the region by 2020.
As a member of ASEAN, Myanmar is a party to the following:
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The ASEAN-China Free Trade Agreement, under which a zero tariff markettook effect for the ASEAN-6 on 1 January 2010, which is expected to beachieved by 2015 for the rest of the participating countries
The ASEAN-Korea Framework Agreement on Comprehensive EconomicCooperation, under which tariffs on 90% of products were eliminated as from
1 January 2009. A Free Trade Area for Trade in Goods is intended to berealised by 2012 for the ASEAN-6 and by 2018 for the rest of theparticipating members - the ASEAN-Japan Agreement on ComprehensiveEconomic Partnership, under which tariffs on 90% of imports from Japan areexpected to be eliminated by the ASEAN-6 within 10 years of the agreementtaking effect. A more gradual tariff elimination table has been set for theremaining four ASEAN members
ASEAN-India Framework Agreement on Comprehensive EconomicAgreement, which aims to establish an ASEAN-India Free Trade Area with
five ASEAN members by 31 December 2012 and with the remainingmembers by 31 December 2017 - a free trade agreement between ASEAN andAustralia and New Zealand. Negotiations for an EUASEAN Free TradeAgreement commenced in May 2007.
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BANKING
&
FINANCIAL STRUCTURE
FINANCIAL STRUCTURE OF MYANMAR
FOREIGN EXCHANGE RATES
INTEREST RATES
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BANKING IN MYANMAR
Financial structure of Myanmar
The financial sector of Myanmar is made up of state owned banks, private banks,
finance companies and representative offices of foreign banks.
A new banking law license allows 19 domestic private banks to operate and
permits 32 foreign banks to open representative offices in Myanmar.
The Central Bank of Myanmar has also allowed 11 out of a total of 19 local
private banks to operate foreign currency accounts. However, only four banks
have started operating Foreign Currency accounts up to date.
State owned banks
The following table presents the state owned banks operating in Myanmar at the
time of publishing.
SN Name of Bank
1 Myanmar Foreign Trade Bank (MFTB)
The bank specialises in conducting foreign exchange operations concerning
external and non-trade foreign exchange operations.
The functions of the bank are to accept deposits in Kyats as well as foreign
currencies, provision of loans and advances bolt seemed and unseemed, issuing,
accepting, discount buying, selling and collecting all securities, including Bills
of Exchange, sale and purchase of travellers cheques and foreign currencies,
fund transfer issues and handing of Bank Guarantees.
2 Myanmar Economic Bank
Myanmar Economic Bank (MEB) originated from the State Commercial Bank
(SCB), established in 1954, which provided a wide range of commercial bankingservices across the country.
The functions of the bank are accepting current accounts, savings and deposit
accounts, issuing of saving certificates, advancing loans to economic enterprises
and personal loans, and financing private business undertakings such as
production, trade and services.
3 Myanmar Investment and Commercial Bank
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The functions of the bank are providing investment development and
commercial banking facilities to local and foreign investors, partnership firms,
joint ventures, limited companies, organisations, sole proprietorships and
exporters.
4 Myanmar Agriculture and Development Bank
The bank was established with the intention to promote agricultural, livestock
and rural society economic enterprises including processing and production.
The bank has a country wide network of 14 regional offices, 164 branches and
48 agency offices providing short and long term credit for crop production, salt
production, livestock, fish and dairy farming etc. Clients receive 10% interest on
their deposits and are allowed to borrow four times their savings at 15% interest
where the funds are used in relation to farm development.Table: 9
Private Banks
The following table presents the private banks operating in Myanmar at the time
of publishing.
S.N Bank Name
1 Myanmar Citizens Bank Ltd
2 First Private Bank Ltd
3 Yadanabon Bank Ltd
4 Myawaddy Bank Ltd
5 Yangon City Bank Ltd
6 Yoma Bank Ltd
7 Myanmar Oriental Bank Ltd
8 Asia-Yangon Bank Ltd
9 Tun Foundation Bank Ltd
10 Kanbawza Bank Ltd *
11 Myanma Industrial Development Bank
12 Myanma Livestock and Fisheries Development Ltd
13 Sibin Tharyar Yay Bank Ltd
14 Innwa Bank Ltd
15 Co-operative Bank Ltd*
16 Asia Green Development Bank Ltd*
17 Ayeyarwaddy Bank Ltd*
18 United Amara Bank Ltd
19 Myanma Apex Bank Ltd
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Table: 10
* With effect from 9 July 2012, these banks have started operating Foreign
Exchange Accounts.
REPRESENTATIVE OFFICE OF FOREIGN BANKS
The following table outlines representative offices of foreign banks in Myanmar
SN Name of Bank
1 United Overseas Bank Ltd.
2 Overseas-Chinese Banking Corporation Ltd.
3 Malayan Banking Berhad (MAYBANK), Malaysia
4 Bangkok Bank Public Company Ltd.
5 National Bank Ltd.
6 Brunei Investment Bank (BIB)
7 First Overseas Bank Ltd.8 First Commercial Bank, Singapore Branch
9 CIMB Bank Berhad
10 Sumitomo Mitsui Banking Corporation
11 DBS Bank Ltd.
12 The Bank of Tokyo-Mitsubishi UFJ,Ltd
13 Bank for Investment and Development of Vietnam
14 AB Bank limited
15 Industrial and Commercial Bank of China Ltd.
16 Mizuho Corporate Bank Ltd.
17 Siam Commercial Bank Public Company Ltd.
18 Krun Thai Bank Public Company Ltd.Table: 11
Interest rates
The following table presents approximate interest rates in effect at March 2013
Rate per annum
Central Bank Rate 10%Minimum Bank Deposit Rate 8%
Maximum Bank Lending Rate 13%Table 12
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MYANMAR
CHALLENGES
STRENGTH
OPPORTUNITY
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MYANMAR OPPORTUNITY
Sustain rapid growth
Myanmar witnesses sustain rapid growth in diversified economic base/ sector.
Manufacturing, agriculture, infrastructure, energy/mining, tourism, financialservices and telecom are the major seven sectors which provide most contribution
to GDP and these sectors has sizeable potential to contribute in Myanmar GDP.
Sectors in particular agriculture, energy/mining, manufacturing, and
infrastructure could be important for driving growth because together they
account for almost 85% of the total growth opportunity in the seven sectors.
In terms of employment potential, manufacturing, infrastructure, and tourism are
likely to be the most important sectors and could account for 92% of the
employment potential in the seven sectors.
Overall, the seven sectors could together potentially contribute more than $200
billion to GDP by 2030 and create over ten million additional non-agricultural
jobs. This would be a remarkable leap forward for Myanmar and a very large
opportunity in Myanmar itself and overseas.
AGRICULTURE:
Agriculture contributed 44% of GDP in 2010 and 52% of workers were employed.By 2030, agriculture sector GDP could more than double to approx $49 billion by
catering six main sources of value and are (refer graph: 21)
Increase crop yields
Shift to high-value crops
Increase land under cultivation
Increase livestock production
Increase fishery production
Reduce losses by implementing advance supply chain and cold storage.
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INFRASTRUCTURE (TRANSPORT, WATER AND UTILITIES AND
REAL ESTATE)
Infrastructure construction and operations contributed an estimated $10.5 billion to
GDP in 2010 and provided employment for 500,000 people. By 2030, its
estimated that the GDP contribution could be $48.8 billion and employment 2.3
million.
Myanmar will need total infrastructure investment of $320 billion between 2010
and 2030. The most significant investment needs to be in residential and
commercial residential estate, which could potentially comprise around 60% of the
total requirement. Other areas like power plants, water treatment plants, and roads
and rail networks, airport and Sea port.
The demand for new infrastructure is likely to rise, if Myanmar begins to undergo
a structural economic shift to manufacturing and urbanize.
TELECOMMUNICATIONS
The telecommunications contributed $100 million to GDP and accounted
approximately 2,600 Jobs. In 2030, its estimated that the sector could contribute
$6.4 billion to GDP and employ around 240,000 people.
Myanmar has the lowest penetration of telecommunications infrastructure of any
ASEAN country. (Source: Ibid).
Less than 3% of citizens had access to a mobile phone in 2011.
FINANCIAL SERIVIES
The financial services sector contributed $200 million to GDP and around 7,000
jobs. In 2030, it is estimated that the sector could contribute $11.1 billion to GDP
and about 400,000 jobs.
Myanmar has four large state-owned banks (refer table 9) , 19 local private
banks(refer table 10) and 18 representative office of foreign banks(refer table 11).
the penetration of banking products is currently very low and well below that of
other ASEAN countries.
TOURISM
Myanmars rich cultural heritage and natural attractions are significant strengths
and suggest considerable potential in tourism, especially considering the growth of
the consuming class in Asia. In 2010, Myanmar had the lowest number of tourism
of any ASEAN country.
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It is estimated that Asian tourisms could make 525 million trips within the region
by 2030.
In 2010, the tourism contributed $600 million to GDP and employed close to
2700,000 people. By 2030, the tourism services could contribute $14.1 billion to
GDP and employ around 2.3 million people.
The growth in tourism sector is dependent on supporting infrastructure such as an
air, water, rail, and road infrastructure is in place to support the expansion of
hotels and airports.
A $200 BILLION OPPORTUNITY: IMPLICATIONS FOR THE PRIVATE
SECTOR
MYANMARS COMPANIES
Myanmars companies are likely to experience both significant growth potentialand intense competitive pressure over the next few years. The environment will be
one of enormous change. Market pressures, prices, the regulatory environment,
and ways of doing business will all shift as Myanmar integrates into the global
economy and the ASEAN economic community is realized. Myanmars
companies, which are generally currently small by international standards, are
likely to increase their chances of success if they keep three interlinked
imperatives in mind:
Prepare to compete in Myanmar and abroad.Quickly reach international standards.
Seize the opportunities of foreign partnerships.
INTERNATIONAL COMPANIES
International companies need to weight up the advantages of fast growth in
Myanmar, at potentially high margins, with access to cheap labour and natural
resources and compare these to the risks inherent in the peace and transformation
process and potentially the small-scale of opportunity relative to other Asianmarkets. For those companies overseas that decide to invest, there are four
potentially useful ways of looking at how to approach Myanmar.
Move fast to assume a leadership position.
Be prepared for a longterm commitment.
Develop a deeper approach than elsewhere.
Form partnerships with local companies.
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CONCLUSION
By 2030, Myanmars economy could be more than four times as big as it is today,
with GDP of over $200 billion (refer table 23). The seven sectors which will
contribute maximum share in GDP, will contribute more than $200 billion by2030. It has been estimated that, overall service industry will contribute about
$100 billion of $200 billion (estimated) by 2030 and engineering services will
share the pie by $45 billion. The engineering services in Manufacturing, Energy &
mining, Telecom and Infrastructure sector includes: Basic Design Engineering,
Detail Design Engineering, Research & Development, Inspection, Quality Check,
Product Improvement and Commissioning.
Myanmar, a nation eager to take its place in the world and join Asian neighbours
in todays wave of rising prosperity, has an exceedingly demanding agenda ahead:boosting productivity, building the infrastructure needed to support growth,
developing skills, and creating employment-and all with limited funds and
governmental capacity. After a series of political and economic reforms, Myanmar
has the goodwill of the international community as it embarks on this monumental
task. But it needs to maintain a steady course of change and progress, in order to
maintain the trust of the businesses and investors-necessary for reaching its
potential.
Only 4% of Myanmars citizen comes under consuming class and it has been
estimated that Myanmars consuming class could grow more than seven-fold
around 19 million by 2030. The fact that this underdeveloped economy is
embarking on its transformation in the digital age should reinforce that potential.
So, too, should the fact that Myanmar is still largely an agrarian nation, but one
that is on the cusp is a wave of urbanization sweeping across Asia and the rest of
the development world.
This is Myanmars moment: seize it and the nation has a chance to b ecoming one
of the most exciting economic transformations the world has seen.
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Figure 3
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BIBLIOGRAPHY
Mckinsey Global Institue - Report
Pricewaterhouse coopers - ReportBain & Company INDUSTRY_BRIEF_PE_in_Southeast_AsiaReport
Deloitte APAC_March2013Report
KPMG Investing in MyanmarReport
World Economic Forum: New Energy Architecture MyanmarReport
Myanmar Information Management Unit (MIMU)
Directorate of Investment and Company Administration- (DICA)
World Data Bank
Wikipedia
Tradingeconomic.com
http://www.president-office.gov.mm/en/
http://www.dica.gov.mm/index.htm
http://atlas.media.mit.edu/
REFERENCE DATA
FIGURE
Figure 1 Map
Figure 2 State and RiversFigure 3 Myanmar Overview Map
TABLE
Table 1 Myanmar Basic DataTable 2 Timeline of Key EventTable 3 Political System and Governance StructureTable 4 Key ministersTable 5 The Economy Statics
Table 6 Economic IndicatorsTable 7 Myanmar Key IndustriesTable 8 Major Investors in MyanmarTable 9 State owned banksTable 10 Private Banks listTable 11 Representative offices of foreign banksTable 12 Interest rates
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GRAPH
Graph 1 Myanmar KyatGraph 2 Myanmar GDPGraph 3 Myanmar GDP Annual Growth RateGraph 4 Myanmar GDP Per CapitaGraph 5 Myanmar GDP Per Capita PPPGraph 6 Myanmar PopulationGraph 7 Myanmar Unemployment RateGraph 8 Myanmar Inflation RateGraph 9 Myanmar Interest RateGraph 10 Myanmar Balance Of TradeGraph 11 Myanmar Current AccountGraph 12 Myanmar Current Account To GDPGraph 13 Myanmar ExportsGraph 14 Myanmar ImportsGraph 15 Myanmar Government Debts to GDP
Graph 16 Myanmar Government BudgetGraph 17 Per capita GDP, Purchase Power Parity (PPP)Graph 18 Sector Share of GDP (%)Graph 19 Labour Productivity and share of employmentGraph 20 Labour productivityGraph 21 Agriculture Sector contribution to GDPGraph 22 Sector vs EmploymentGraph 22 Sector vs EmploymentGraph 23 Sector contributing to GDP and potential
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