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Myanmar manufacturing sector continues downturn in March

Myanmar’s manufacturing sector recorded an accelerated downturn in February 2021 as political changes led to factory closures. The IHS Markit Myanmar Manufacturing Purchasing Managers’ Index measures the seven-month low in output, new orders, purchasing and stocks of both inputs and finished goods, stated the IHS Markit on 1 April 20201. The layoff is extended, and the workers are asked to return to their hometowns amid the political changes. The HIS Markit stated that higher material costs and unfavourable exchange rate movements contributed to a sharp increase in cost burdens. Exports of finished industrial goods drastically plummeted to US$3.209 billion between 1 October and 19 March in the current financial year 2020-2021, a severe drop of $1.7 billion compared with the corresponding period of the previous FY, according to the Ministry of Commerce. As per the ministry figures, the exports of finished industrial goods totalled $4.9 billion during the same period in the 2019-2020FY.

Myanmar’s manufacturing sector is primarily concentrated in garment and textiles produced on the Cutting, Making, and Packing basis, contributing to its GDP to a certain extent. Myanmar’s garment export dropped by over 25 per cent as of the first quarter of the current FY compared with a year-ago period on the back of a slump in demand by the European Union market, according to the Ministry of Commerce. At present, the CMP garment factories temporarily shut down and left thousands of workers unemployed. Myanmar mainly exports CMP garments to markets in Japan and Europe, along with the Republic of Korea, China, and the US. The garment sector is among the prioritized sectors driving up exports. The CMP garment industry has emerged as a promising one, with preferential trade from Western countries. Myanmar’s garment factories operate under the CMP system. Those engaged in this industry are striving to transform CMP into the free-onboard (FoB) system. As the factories cannot enter into a contract for FoB, Own Design Manufacturing (ODM) and Own Business Manufacturing (OBM), the income is limited, according to the MGMA.

According to data from the Ministry of Commerce, exports of garments manufactured under the cut-make-pack (CMP) system were valued US$4.798 billion in the last financial year 2019-2020. Although the sector is struggling due to the cancellation of order from the European countries and suspension of Western nations’ trade during the pandemic, export values rose in the previous FY (1 October 2019-30 September 2020). The export value of CMP garments was only $850 million in the 2015-2016FY, but it has tripled over the past two FYs. In the 2016 2017FY, about $2 billion was earned from exports of CMP garments. The figure increased to an estimated $2.5 billion in the 2017-2018FY and $2.2 billion in the 2018 mini-budget period (from April to September). It tremendously grew to $4.6 billion in the 2018-2019FY, according to the Commerce Ministry. Since an outbreak like COVID-19 might happen in the future, it is necessary to prepare for a sufficient raw materials supply. That is why the public and private sectors will cooperate in setting up the supply chain on our own sources, including weaving, knitting, dyeing, and sewing factories. The MGMA has more than 500 members and garment factories in Myanmar, employing more than 400,000 workers. Investors prefer to invest in countries with inexpensive labour, such as Myanmar.

Source: The Global New Light of Myanmar

Rice prices remain low due to lack of money in circulation

The rice and paddy price extends its drop at March-end due to the brokers’ lack of money in circulation and lower pricing. The rice is regularly traded in Yangon as urban people keep supply to ensure food security in need. The rice price was pegged at around K21,000-22,000 per bag in March-end, with a small decrease of K2,500 as against the previous months. Meanwhile, the paddy prices move in the range of K506,000 to 626,000 per 100 baskets, depending on the rice crops’ quality. The paddy prices indicated a decrease of K6,000-46,000 per 100-baskets upon different qualities and varieties, as per the domestic rice market. Only a small number of rice export companies are buying the rice at present owing to the disruption in banking, said U Than Oo, secretary of Bayintnaung Rice Wholesale Centre.

Since early February, the local private banks have been closed down, causing transaction Rice prices remain low due to lack of money in circulation problems. Consequently, the export companies are buying less in the domestic market. The rice exports are currently conducted for the previous contract only. Additionally, the US dollar is appreciating against the Kyat. However, the farmers are paid lower than the actual market price and suffering losses, he added. Next, the informal money transfer system Hundi is available in border trade only. In contrast, it cannot be done in maritime trade. In Sino-Myanmar border, exchanging Yuan is quite easy through hundi agent. Similarly, the traders use hundi for exchanging Baht on the Myawady border with Thailand.

Nevertheless, overseas trade with European and African countries is carried out with a letter of credit through banks. The disruption in banking poses difficulties to the maritime trade. Bayintnaung rice wholesale centre, a primary market for rice exports via maritime trade, has been closed down since 11 February. Additionally, Myanmar traders are shipping rice to China under new permits for 2021. Myanmar shipped more than 720,000 tonnes of rice and broken rice to foreign countries between 1 October and 15 January of the current financial year 2020-2021, earning over US$275 million, Myanmar Rice Federation stated. Weather changes affected irrigation water resource availability in agriculture. As a result of this, Myanmar set the rice export target at only 2 million tonnes in the current FY as summer paddy growing acreage drops, said the chairman of the Myanmar Rice Federation (MRF). Myanmar generated over $800 million from rice exports in the previous FY2019-2020 ended 30 September, with an estimated volume of over 2.5 million tonnes.

Source: The Global New Light of Myanmar

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Muse border trade nearly comes to suspension due to COVID-19

Muse border trade comes to the verge of standstill following the detection of the coronavirus case in the border market, said the vice-chair of Muse Rice Wholesale Centre. On 29 March, one Myanmar citizen tested positive for COVID-19 was found in Kyalgaung precious stone market, prompting China to restrict border access at the Man Wein checkpoint, which is a major border crossing between Muse and Kyalgaung areas. Man Wein post has been closed down since 12:30 pm of 30 March. Man Wein is the important cross-border point between Myanmar and Ruili, China.

Following the detection of coronavirus case in Kyalgaung border, the Ruili Kyalgaung river crossing is also closed. The coronavirus tests and vaccination are now offered in Kyalgaung. Furthermore, China imposed the lockdowns on Kyalgaung and Ruili cities between 1 and 7 April, Muse Rice Wholesale Centre stated. Consequently, there is no trade flowing in and out of the country via the Muse border, and the Muse border nearly comes to a halt. However, Kyinsankyawt and Wan Ding posts give the green light to over 400 watermelon trucks.

Around 400 trucks of watermelon and muskmelon daily enter China via Kyinsankyawt and Wan Ding posts. They do not need to pass the Man Wein checkpoint for Ruili. The watermelon trucks are the exception. To summarize, rice, broken rice, sugar, corn, fishery products, and other consumer goods cannot be traded for now. Since early March, Muse border trade has returned to normal, with a thousand trucks daily plying to and from Muse border. Myanmar is daily shipping rice, broken rice, green grams, peanuts, various pulses and beans, onion, chilli, fishery products, consumer goods, watermelon and muskmelon to China with over 700 trucks through the land border. Meanwhile, building materials, electric appliances, medical devices, consumer goods, and fertilizer are imported daily with 200 trucks.

Source: The Global New Light of Myanmar

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Myanmar export value exceeds $1,600 mln in Jan this FY

Myanmar average export value for January in the 2020- 2021 financial year reached US$824.38 million, and border export value reached $811.15 million, with total export value coming at $1,635.53 million as a result. Meanwhile, standard import value for the same period reached $1,581.94 million, and border import reached $399.68 million, reaching a total of $1,981.62 million.

As a result, Myanmar total trade value for January 2020-2021FY reached $3,617.15 million, creating a trade deficit of $346.09 million. From October to January of the current 2020-2021FY, Myanmar normal export value generated $2,978.58 million, and border export reached $2,681.65 million, totalling $5,660.23 million.

The average import value for the same period reached $4,721.97 million, and border import reached $1,167.60 million, totally bringing $5,889.57 million. Consequently, the total trade value of Myanmar for October to January of 2020- 2021FY reached $11,549.80 million, generating a trade deficit of $229.34 million, according to the monthly trade report by the Central Statistical Organization.

Source: The Global New Light of Myanmar

The giant French energy company “Total” says it will not suspend gas production in Myanmar

The giant French energy company “Total” will not suspend gas production in Myanmar, a company official said on April 4. In the wake of the escalating crackdown on protests in Burma, there have been widespread calls for international companies to suspend operations in the interests of the military. Total Company’s gas production supplies millions of people in Rangoon, Myanmar, as well as western Thailand, so the company has a responsibility to continue operating in Myanmar, said Patrick Puyan, chief executive officer of the company.

Should a company like Total make a decision that would cut off power to millions of people and affect hospitals and operation, said in an interview with a French newspaper. The chief executive officer said he was outraged by the repression in Burma, but refused to do anything that would further harm local staff and the people of Burma, who are currently suffering. Italy’s Benetton and Sweden’s H&M have suspended all new orders from Myanmar, while French energy giant EDF has suspended operations, including a $ 1.5 billion hydropower project.

The Burmese oil and gas industry, which is controlled by the military, is owned by Total. It has a joint venture with US energy company Chevron, which generates around $ 1 billion a year from gas sales, according to AFP. Total paid around $ 230 million in taxes and production rights to the Myanmar government in fiscal 2019, and $ 176 million in 2020, according to the company’s financial statements. According to Puyan, Total has not been able to pay around $ 4 million a month in taxes since the military shut down after the military took power in Burma, and will donate the equivalent amount of revenue owed to the Burmese government to human rights groups in Burma, according to the company’s chief executive.

Source: Daily Eleven

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Myanmar-Thailand border trade down by $360 mln as of 12 March

THE value of Myanmar’s bilateral trade with the neighbouring country Thailand through the land border has registered a decrease of US$360 million between 1 October and 12 March of the current financial year 2020-2021 as against a year-ago period, the statistics issued by the Ministry of Commerce indicated. The ministry reported that exports surpassed imports in trade with Thailand this year, with exports reaching over $1 billion and imports valued at over $538.5 million, totalling $1.57 billion. During the corresponding period of the past FY2019-2020, Myanmar-Thailand border trade touched a high of $1.9 billion. Following some traders tested positive for COVID-19, some border posts were temporarily halted last year.

At present, fruits and agricultural products such as cucumber, mango, tomato and vegetable, fishery products, building materials and other pharmaceutical-related goods and equipment can be traded. Myanmar-Thailand friendship bridge No. 2 is also open for trading. The halt in trading undoubtedly harmed the traders and truck drivers from both sides, said a trader from Myawady. During the last FY, Myanmar has increasingly exported corns to Thailand through the Myawady border. Myanmar’s corn exports to Thailand significantly soared to over 1.2 million tonnes through border posts between Myanmar and Thailand during October and May period in the 2019-2020FY, an official of the Ministry of Commerce said.

At present, Myanmar exports the corn to Thailand through Myawady and Tachilek land border. About 5,000-6,000 tonnes of corn are daily sent to Thailand through Myawady, while the Tachilek border does not regularly export. Myanmar is allowed for corn export between 1 February and 31 August with Form-D, under zero tariff. Thailand imposed 73 per cent of tax on corn import to protect their growers’ rights if the corns are imported during the corn season of Thailand, following the notification of the World Trade Organization regarding corn import of Thailand, said a corn exporter. Myanmar intends to reach an export target of one million tonnes of corns to Thailand this year, said U Min Khaing, chair of the Myanmar Corn Industrial Association.

Additionally, exports of natural gas from the Taninthayi Region has contributed to the enormous increase in border trade with Thailand in the previous years. This year, gas exports via the Hteekhee border drastically fell. There are seven border posts between Myanmar and Thailand, Tachilek, Myawady, Kawthoung, Hteekhee, Myeik, Mawtaung and Maese. Except for Tachilek and Myawady, the remaining border posts showed a decrease in the trade this FY. The value of border trade stood at $162.4 million via Tachilek, $600.5 million via Myawady, $170 million via Kawthoung, $63.6 million via Myeik, $502.24 million via Hteekhee and $7.2 million via Mawtaung. Maese border post has not witnessed any trade yet. Myanmar primarily exports natural gas, fishery products, coal, tin concentrate (SN 71.58 per cent), coconut (fresh and dry), beans, and bamboo shoots to Thailand. It imports capital goods such as machinery, raw industrial goods such as cement and fertilizers, consumer goods such as cosmetics and food products from the neighbouring country.

Source: The Global New Light of Myanmar

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Announcement on Extension of the Precautionary Restriction Measures Relating to Control of the COVID-19 Pandemic until 30 April 2021

  1. With a view to the further strengthening of measures to contain the spread of the COVID-19 pandemic, the Ministry of Foreign Affairs of the Republic of the Union of Myanmar has issued the following announcements regarding temporary entry restrictions for visitors from all countries. All those restrictions were extended until 31 March 2021 by the Ministry’s announcement dated 26 February 2021.
    (a) Announcement dated 15 March 2020 regarding precautionary measures for all travellers visiting Myanmar;
    (b) Announcement dated 20 March 2020 regarding additional precautionary measures for travellers visiting Myanmar and temporary suspension of issuance of visa on Arrival and e-visa;
    (c) Announcement dated 24 March 2020 regarding additional precautionary measures for travellers from all countries visiting Myanmar;
    (d) Announcement dated 28 March 2020 regarding temporary suspension of all types of visas (including social visit visas) and visa exemption services.
  2. In order to continue its effective response measures to protect the population of the country from the risks of importation and spread of the COVID-19, the Government of the Republic of the Union of Myanmar has decided to extend the afore-mentioned entry restriction measures until 30 April 2021.
  3. In case of urgent official missions or compelling reasons, foreign nationals, including diplomats and United Nations officials, who wish to travel to Myanmar by available relief or special flights, may contact the nearest Myanmar Mission for possible exception with regard to certain visa restrictions. However, all visitors must abide by existing directives issued by the Ministry of Health and Sports relating to the prevention and control of the COVID-19 pandemic.
    Ministry of Foreign Affairs
    Nay Pyi Taw
    Dated. 31 March 2021

Source: The Global New Light of Myanmar

Working Committee to address impact of COVID-19 on the country’s economy meets

The meeting (3/2021) of the Working Committee to address the impact of COVID-19 on the country’s economy was held in the afternoon of 30th March,2020. The meeting was chaired by U Aung Naing Oo, Union Minister for Investment and Foreign Economic Relations.

Members of the working committee Deputy Ministers, from Ministry of Planning, Finance, Industry, Ministry of Labour, Immigration and Population and Ministry of Commence, and representatives of the Ministries concerned joined the meeting.

In the meeting, the Union Minister highlighted that a six- month extension of the grace period of COVID loan under the guidance of the State Administration Council, the formation of monitoring teams in states and regions to scrutinize the use of COVID-19 loan by the businesses and the revision of functions of the working committee. The meeting also discussed matters relating to measures to address the economic impacts of the COVID-19 and further measures to proceed expeditiously.

Source: The Global New Light of Myanmar

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Myanmar rice export company buying less following transaction problem

ONLY a small number of rice export companies are purchasing the rice at present owing to the disruption in banking, said U Than Oo, secretary of Bayintnaung Rice Wholesale Centre. Since early February, the local private banks have shut down, disrupting banking. Consequently, export companies are buying less in the domestic market. The rice exports are currently conducted for the previous contract only. The brokers have started buying the summer rice crop. However, the number of buyers has sharply reduced. The banking disruption hinders a new deal.

Only the old contracts are being sorted out. Yet, the rice trade is not regular. What a main problem is the shipment with ocean liners. Additionally, the US dollar is appreciating against the Kyat. However, the farmers are paid lower than the actual market price and suffering losses, he added. Despite the gain in US dollar, the rice and paddy are priced lower in the domestic market. The prices should have been offered higher along with the high exchange rate. Moreover, the number of buyers is smaller in the meantime. Only the cash payment is accepted amid political changes. The farmers are also holding the stocks for now.

The informal money transfer system Hundi is available in border trade, whereas it cannot be done in maritime trade. In Sino-Myanmar border, exchanging Yuan is quite easy through a hundi agent. Similarly, the traders use hundi for exchanging Baht on the Myawady border with Thailand. Nevertheless, overseas trade with European and African countries is carried out with a letter of credit through banks. The disruption in banking poses difficulties to the maritime trade. The price of low-quality rice stands at K21,500 at present, with a slight decrease of K2,500 against the previous months, as per the domestic rice market. Bayintnaung rice wholesale centre, a primary market for rice exports via maritime trade, has been closed down since 11 February.

Source: The Global New Light of Myanmar