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COVID-19 second wave more severe on local firms than first

The economic impact of the second wave of the COVID-19 pandemic, has been more severe on Myanmar businesses than the first wave, according to the World Bank’s latest firm-level survey. The latest survey, the fourth in a series of eight surveys planned, was conducted in September and covered a nationally representative sample of 500 firms. The survey, which covers the second wave of COVID-19 and re-introduction of stay-at-home orders that started initially in Rakhine in late August and then in Yangon in early September, found that local firms were not well-prepared to withstand the second wave. Of those surveyed, 66 percent reported that they were not ready, and agricultural, micro and smaller firms were founded to be the least prepared.

On average, 83pc of firms in Myanmar reported a negative impact on their businesses, an increase from the 75pc reported in August. Firms of all sizes experienced a rise in temporary closures in September after the government imposed stay-at-home orders on businesses in Yangon. As compared to August, all sectors except those in agriculture, saw a rise in business closures. As people have lower incomes, spending has declined and consumer demand has fallen. As a result, there are more difficulties for businesses. It will take time for the country’s economy to recover. That efforts are needed to rebuild entire supply chains using resources in the country, from raw material to finished products, to meet the needs of the domestic market and to increase export capacity to foreign markets. Reducing in sales remains the number one concern of firms surveyed, more so far smaller firms than larger ones.

The share of firms reporting a reduction in sales in 93pc in September, a 12 percentage point increase from August. Issues related to capital appears to be a growing problem for a greater share of firms in September. There were more firms that filed for insolvency and bankruptcy, laid off workers and experienced difficulties with making payments on loans and credits facilities compared to before. In September, half of the surveyed firms in agriculture and about a third of retail and wholesale firms reported the likelihood of falling into arrears within the next three months. With the onset of the second wave, firms reported less confidence that they will remain open for business. Firms in September expressed less confidence regarding their likelihood of remaining operational in one month, compared to August.

Source: Myanmar Times

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Myanmar citizens raise investments in the country despite pandemic

Despite COVID-19, Myanmar citizens’ investment across the regions and states for fiscal 2019-20 amounted to over K1.88 trillion, which is around K200 million higher than in the previous fiscal year. Approval was given to over 130 Myanmar businesses to invest in nine sectors during the period, data showed. Yangon Region received the highest volume of investments with over K901 billion from 50 local investors.

Mandalay Region received funds of K410 billion, while Shan and Ayeyarwady received K170 billion and K161 billion, respectively. Investors also channeled funds into Bago, Tanintharyi, Sagaing, Mon and Kayin. They also invested in the other states and regions, including the two poorest – Rakhine and Chin. The majority of the investments were in the industry, hotels and tourism and housing and development sectors. A handful of investors also channeled funds into the power supply, oil and gas and mining sectors, which is typically dominated by foreign investors.

Despite the government’s plan to promote growth and value-add in agriculture, livestock and fisheries, few local firms invested in the sector. The MIC then issues a Commercial Operation Certificate which enables investors to enjoy benefits such as tax relief and exemptions and other privileges. In fiscal 2019-2020, over 23,000 job opportunities were generated as a result of Myanmar citizens’ investment, data showed. Some 22,700 locals and over 480 foreign workers were employed.

Source: Myanmar Times

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Myanmar to promote agri-exports posts COVID-19

Myanmar will raise efforts to add value to the domestic agriculture industry by promoting exports post COVID-19, said U Khin Maung Lwin, assistant secretary for the Ministry of Commerce. They will take action to promote their best crops internationally, including rice, corn and beans after the pandemic, adding that similar efforts will be made to promote Myanmar fisheries and livestock, as “these areas have good export potential.” Despite the pandemic, agriculture and maritime exports have increased in the current fiscal year so far, compared to the same period in fiscal 2019-2020. For example, Myanmar has so far exported about 2.2 million tonnes of corn to Thailand, which pigeon peas are being sold to India.

The country will also focus on promoting the export of new crops such as coffee and is already making efforts to penetrate new markets. According to the Myanmar Coffee Association, Myanmar will expand its local highland coffee exports through Singapore. They are connecting with new markets in the region through Singapore. The association last month participated in the Singapore Specialty Coffee Online Auction 2020, which provides a platform for global coffee bean producers to promote and introduce their beans to an Asian market, using Singapore as a hub. Myanmar’s coffee garnered international interest during the auction, despite the lack of buyers due to COVID-19. A local coffee entrepreneur demand for Myanmar-produced coffee should rise due to its superior quality. Then, their coffee production rate and sales will gradually get broader.

Raising exports will also help the country further narrow the trade deficit. In fiscal 2019-20, total trade between Myanmar and foreign countries amounted to US$36.6 billion. Between October 1, 2019 and September 30, Myanmar exports totaled over US$17.6 billion while imports reached over US$19 billion. As a result, the country recorded a trade deficit of US$1.3 billion, up from over US$ 1 billion in fiscal 2018-19. Myanmar needs to make preparations and arrangements to increase trade volumes as it might face setbacks due to COVID-19 in fiscal 2020-21. The NLD government has already moved key trade administrative functions, such as applying for import and export licenses, online. Myanmar can further increase exports by producing value-added products which are competitive in price and quality.

Source: Myanmar Times

The average inflation rate was 5.81%, and the inflation rate fell for seven consecutive months

The average inflation rate in September 2020 was 5.81 percent, and inflation has been declining for seven consecutive months since March 2020, according to the Consumer Price and Inflation Index released by the Central Statistics Office. The average inflation rate rose for 18 consecutive months from April 2018 to September 2019. It fell slightly in October and November 2019, and in December 2019. As of September 2020, the average annual rate of inflation is 5.81 percent, and the average annual rate of inflation-core inflation, excluding food and fuel prices, is 11.23 percent. The annual on-year inflation rate is 2.03 percent, and the calculated annual year-on-year inflation rate excluding food and fuel prices is 4.74 percent. However, since the outbreak of COVID-19 in Myanmar in March 2020, declining household consumption and falling fuel prices pushed year-on-year inflation from March 2020 to 2.03 percent in September.

For the country as a whole, the average inflation rate, based on consumer prices in the 2012 base year, averaged 5.81 percent year-on-year through September 2020, down 0.62 percent from 6.43 percent a year on-August 2020. The average inflation rate from October 2019 to September 2020 rose from 8.61 percent in September 2019 to a record high of 9.20 percent in February 2020. However, in September 2020, due to the effects of the COVID-19 epidemic in Myanmar, public consumption declined and consumer price growth slowed. In September 2020, the average inflation rate in Ayeyarwady Region was the first highest at 10.83%. Mandalay is the second highest with 9.54%. It was the third highest in the Union Territory with 7.48%.

Annual inflation was the highest change rate in the Union Territory at 5.53% and the lowest in Mon State at 2.80%. Inflation is the long-term increase in general prices, which means that the prices of basic commodities continue to rise. For a period of time, when the general price of goods and services in the business environment rises, the same unit of currency can be purchased, but less goods and services can be purchased. In other words, inflation affects the purchasing power of money. It depreciates the value of a currency unit. The measure of inflation is called the Inflation Rate, which refers to the annual percentage change in a general price index, called the Consumer Price Index (CPI).

Source: Daily Eleven


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Myanmar goods trade deficit with Singapore estimated at $10.7 bln in 4 years

MYANMAR trade deficit in goods with Singapore was estimated at US$10.72 billion in the past four years, the statistics issued by the Central Statistical Organization under the Ministry of Planning, Finance and Industry indicated. The value of Myanmar’s bilateral trade with Singapore topped $15.46 billion between the FY2016-2017 and the FY2019- 2020 (as of August). The CSO reported that imports surpassed exports in trade with Singapore in the past four years, with exports reaching over $2.37 billion and imports valued at over $13.09 billion.

Singapore is Myanmar’s second-largest trading partner in the region, after Thailand. It accounted for 10.56 pc of total trade in FY2016-2017 with an estimated trade value of $3.4 billion, 11.59 pc in FY2017-2018 with a trade value of $4.15 billion, 9.98 pc in the FY2018-2019 with $3.5 billion and 12.76 pc in the FY2019-2020 (Oct-August) with $3.64 billion respectively. Myanmar exports agricultural products such as broken rice, pulses, sesame seeds, onion, footwear, textiles and clothing, minerals, and other products to Singapore.

At the same time, it imports plastic, fuel oil, edible oil, transport equipment, chemical elements and compounds, wheat flour, pharmaceutical products, dairy product and consumer products. Next, Singapore is the top source of foreign direct investments into Myanmar in the incumbent government period, bringing in the capital of $10.9 billion by 124 Singapore-listed enterprises, according to data released by the Directorate of Investment and Company Administration (DICA). Singapore companies put investments into urban development, real estate, power and manufacturing sectors.

Source: The Global New Light of Myanmar

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Export rice prices slide in October

The prices of rice in the export market slightly decreased in October owing to the coronavirus impacts, as per data of Myanmar Rice Federation (MRF). In October, the export prices of white rice (low quality), broken rice and parboiled rice slipped compared to September’s rate. The prices moved in the range of US$330-415 per tonne of white rice depending on quality, $220-310 per tonne of broken rice and $440-485 per tonne of parboiled rice, indicating a slight decrease compared with the previous months.

Consequently, the price of low-quality rice, which is primarily exported to foreign countries, also dropped by K1,000-3,000 against last month’s rate in the domestic market. Following the coronavirus resurgence in Myanmar, high-quality rice (Shwebo Pawsan variety) was highly demanded in the domestic market. The domestic retail market in October saw a significant rise to K57,000 per 108-pound bag from K50,000 registered in September.

Ayeyawady Pawsan variety was priced K36,000 per 108-pound-bag in the domestic market last month, while low-quality rice fetched K21,500-23,700, MRF data showed. The export price of Myanmar’s rice is relatively lower than in other Asian countries such as Thailand and Viet Nam. Yet, the prices are higher than those market prices of India and Pakistan, MRF’s data showed. Next, the Ministry of Commerce, Myanmar Inspection and Testing Service (MITS), the authorized organization of the State and MRF implemented rice reserve scheme on 30 April. The state’s emergency rice reserve is to ensure food security, keep the price stable in the domestic market, continue to export them regularly and lessen the worries of the consumers during the COVID-19.

There is self-sufficiency in the domestic market, and people do not need to concern over the shortage of rice. A total of 321,771 bags (108 pounds per bag) from reserved rice have been sold between 10 July and 26 October 2020. MRF will sell up to 1 million bags of reserved rice. About 678,229 bags are left to sell, MRF data showed. Additionally, the volume of rice and broken rice exported between 1 and 16 October in the current financial year 2020-2021 reached 35,637 tonnes, worth over US$14 million, as per MRF’s data.

MRF expected to ship 2.4 million tonnes of rice, and broken rice in the last FY ended 30 September 2020. The country surpassed the export target, sending over 426,611 metric tons to neighbouring countries through border trade and over 2.15 million tonnes of rice and broken to foreign trade partners via maritime trade, totalling over 2.58 million tonnes. A surge in rice shipping through sea trade was contributed to meeting year’s export target, MRF stated. Myanmar targets to export 4 million tonnes of rice and broken rice in the current financial year 2020-2021, stated U Aung Than Oo, vice president of Myanmar Rice Federation (MRF). Myanmar shipped 3.6 million tonnes of rice in the FY2017-2018, which was an all-time record in rice exports. The export volume plunged to 2.3 million tonnes, in the FY2018-2019. 

Source: The Global New Light of Myanmar

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Japan wants to join Myanmar-Thai government-level committees for development of Dawei SEZ project

Japan wants to be part of the Myanmar-Thai government-level committees for the development of the Dawei SEZ project, and has received official proposals from the Myanmar and Thai governments, said Deputy Minister for Power and Energy Dr Tun Naing, chairman of the Dawei SEZ management committee. The Deputy Minister made the remarks at the Myanmar-Japan-Thailand Tripartite Working Level Meeting on November 5 at the Dawei SEZ Management Committee.

Japan wants to join the Joint High Level Committee (JHC) and has received official proposals from the Myanmar and Thai governments. He welcomed the opinion polls of the relevant governments and said Myanmar would respond positively. Dr Tun Naing, Deputy Minister for Electricity and Energy of the Dawei Special Economic Zone Management Committee, said that the necessary steps for the three countries to work together as soon as possible for the success of the Dawei SEZ are to be completed as soon as possible.

International investors will be invited for the Dawei SEZ projects, and those interested in investing in the Dawei SEZ projects during COVID-19 are conducting in-person and online discussions. Once the Dawei SEZ project is launched, the Italian-Thai company and future investors will have to comply with international standards for environmental compensation and relocation of those affected by the project. The Dawei SEZ Management Committee will send a letter to the Italian-Thai company to start the project as soon as it receives the evidence that it will be responsible for the capital and specific operational requirements for the Dawei SEZ project.

Source: Daily Eleven

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Watermelon growers encouraged to switch to potential crops

THE Department of Agriculture is enticing watermelon growers to turn to other crops which have market certainty, said U Win Hlaing Oo, head of Sagaing Region Department of Agriculture. The number of watermelon growers has dropped by 75 per cent due to price instability and transport difficulties. They are encouraging them to switch to other crops. As there is no contract farming of watermelon, the growers will definitely suffer a loss when the price drastically plunges.

The Agriculture Department is providing necessary technical assistance to the growers, yet it urges them to choose other crops which have the potential market. The watermelon cultivation is lucrative. However, large investment capital, market uncertainty and high quality standards of products set by the traders are posing difficulties to the growers, industry sources said. At present, China’s tightened border control amid the coronavirus pandemic is causing transport problems. With price instability and market uncertainty, coupled with the high quality standards, the growers have to struggle very hard. It is said that watermelon production has fallen by 60 per cent since the outbreak of COVID-19.

The Agriculture Department is demonstrating how to grow high yield wheat in Paukin area, in coordination with the Korea International Cooperation Agency. Their department is encouraging the growers to cultivate wheat while some are also planning to grow black bean and pigeon peas this winter. Watermelon prices jumped from around 1,300 to over 4,000 Yuan per tonne this year and about 20 to 30 truckloads of watermelons are daily sent to China at present.

Source: The Global New Light of Myanmar

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Sales and marketing of the Korea-Myanmar industrial zone will begin next year and will be priced

Sales and marketing of the Korea-Myanmar Industrial Zone will begin next year and will be priced according to market conditions and the sales value of the surrounding industrial zones, according to Korea-Myanmar Industrial Complex-KMIC Development Co., Ltd. In addition, the KMIC Easy Service Center will be set up to assist government officials in facilitating investment permits and plant construction activities. KMIC will be able to provide more transparent and easy-to-follow processes to incoming companies.

The Myanmar government provides government-owned land in Hlegu Township to provide electricity and water. Water use and access roads will be funded by the Korean government. The combination of world-class infrastructure and central location will enable companies to develop potential markets. KMIC, a joint venture between Myanmar and Korea, is planning to build a $ 120 million international standard industrial zone project on more than 550 acres of land in Hlegu Township, Rangoon Region, by 2025, according to the Myanmar Investment Commission.

KMIC Development Co., Ltd., a joint venture between the Ministry of Construction and Korea Land and Housing Corporation, is planning to complete a $ 120 million industrial zone project in Nyaungbin, Hlegu Township, Rangoon Region, by 2025,” said an official from the Myanmar Investment Commission. Hlegu Township Nyaung Nyit Pin Training School On August 7, 2019, a joint venture agreement was signed between the Department of Urban and Housing Development and the Korea Land and Housing Corporation to implement the KMIC Industrial Complex project on 555.81 acres of land, according to the Ministry of Construction.

Source: Daily Eleven

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Asean manufacturing sector continues to struggle in the mire, with Myanmar among the seven countries surveyed the worst

The ASEAN manufacturing sector continues to struggle in the bottom line, with Myanmar outperforming the worst of the seven countries surveyed, according to an October IHS Markit survey sponsored by the Nikkei. According to the latest data from the IHS Markit Purchasing Managers’ Index (PMI), the downward trend in the ASEAN manufacturing sector continued in October. The sector has been in decline for eight consecutive months, but the rate of decline has weakened and softened within a month. According to the latest data, both production and new order volumes continued to decline, and the decline was slightly lower and generally moderate. However, companies remain optimistic about production for the next 12 months.

The ASEAN PMI in October stood at 48.6, slightly lower than the significant 48.3 in September, indicating a modest decline in the ASEAN manufacturing sector. By country, four of the seven participating countries reported operating declines in October, with Burma hitting a record 30.6. Elsewhere, Indonesia posted a modest decline of 47.8, but was slower than in September. Malaysia, on the other hand, has seen a slowdown in the 48.5 index, signaling a moderate decline. The Philippines was below 50 in October with a score of 48.5, falling again. Thailand rose for the first time since December 2019, hitting a one-and-a-half-year high of 50.8. Vietnam also saw strong growth in October, with an index of 51.8. In October, Singapore recorded the first increase in manufacturing conditions since July 2018, raising the index to 52.

Overall, the ASEAN manufacturing sector remained challenging in October, and the continued decline in factory production and new orders was the main reason for the overall downturn. However, the decline was not as noticeable as in September. Weak external demand has been a major drag on factor as new export orders have plummeted. As inventory declines further, the latest data underscores further signs that pressure is on productivity. As a result, job cuts continued and the rate of layoffs changed slightly from last month, and overall remains strong. Consumer demand weakened, and companies cut their purchases in October. The latest drop was the slowest since February, but remains strong. However, there were still difficulties in delivering supplies, and the average time to complete the work was longer than in September.

Production costs rose sharply in September, and overall, pressure on profits increased, and average sales fell further. Looking to the future, companies are confident that production will increase in the coming year. Success has been the highest since January, slightly below the survey’s long-term average. Lewis Cooper, an economist at IHS Markit, said: “The October data highlights the continued downturn in the ASEAN manufacturing sector. As manufacturing and new orders continued to decline, operating conditions declined for the eighth straight month, and the decline was slightly weaker than the previous month. Due to weak demand and weak production pressures, the workforce continues to cut. The only positive sign is the futures index, which is above 50, ”he said.

Source: Daily Eleven