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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

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US dollar gains up to K1,500 in April first week

According to the Central Bank of Myanmar’s data, the US dollar value against Kyat appreciates in the domestic forex market, reaching up to K1,500. The dollar exchange rate stood at K1,469 on 31 March and strengthened to K1,495 on 6 April. The exchange rate rose by K20 in a week. Nevertheless, the local forex market rate is K70 higher than the rate set by the CBM. The CBM set a dollar exchange rate at K1,495 on 6 April.

In contrast, it stood at K1,570 in the local forex market, a money changer reported. A dollar was valued at only K1,330 in January-end. The dollar exchange rate jumped to K1,441 in February, with an increase of K100 against January’s rate. The local forex market’s data showed that the dollar exchange rate touched the maximum of K1,345 and the minimum of K1,327 in January 2021. The rate moved in the range of K1,335-1,465 in February. It reached the lowest of K1,420 and the highest of K1,550 in March.

In 2020, the exchange rate moved in the range of K1,465- 1,493 in January, K1,436-1,465 in February, K1,320-1,445 in March, K1,395-1,440 in April, K1,406-1,426 in May, K1,385-1,412 in June, K1,367-1,410 in July, K1,335-1,390 in August, K1,310-1,355 in September, K1,282-1,315 in October, K1,303-1,330 in November and K1,324-1,403 in December. In 2019, the rates are pegged at K1,508-1,517 in July, K1,510-1,526 in August, K1,527-1,565 in September, K1,528-1,537 in October, K1,510-1,524 in November and K1,485-1,513 in December. On 20 September 2018, the dollar exchange rate hit an alltime high of K1,650 in the local currency market.

Source: The Global New Light of Myanmar

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Domestic gold price rises to around K1.4 mln on global trend

According to the domestic gold market, the domestic gold prices rose to K1.4 million per tical (0.578 ounces, or 0.0016 kilograms) with the climbing of international gold price, according to the domestic gold market. The international gold price was around US$1,683 per ounce at the end-March but sharply jumped to $1,730 on 2 April. The gold price rose by $47 in two days. With the climbing of international gold price, the gold price in Myanmar has also skipped to 1,393,000 per tical on 2 April from K1,275,000 per tical on 31 March, with a significant rose to K18,000 per tical in two days.

However, the rate has not touched the maximum of over K1,410,000 per tical registered in February, according to the domestic gold market. In January 2021, the domestic gold fetched the highest price of K1,336,000 per tical on 6 January. It reached the lowest price of K1,316,000 per tical on 28 January. It reached the lowest level of K1,340,000 (2 February) and the highest level of K1,410,000 (3 February). In March, the rate fluctuated between the most elevated of K1,391,000 (25 March) and the lowest of K1,302,000 (4 March), the gold traders said. The local gold price reached the lowest level of K1,310,500 (2 September) and the highest level of K1,314,000 (1 September).

In October, the rate ranged between K1,307,800 (30 October) and K1,316,500 (21 October). The rate fluctuated between the highest of K 1,312,000 (16 November) and the lowest of K1,278,000 (28 November). In December, the pure yellow metal priced moved in the range of K1,275,000 (1 December) and K1,333,000 (28 December), according to the gold traders. With global gold prices on the uptick, the domestic price hit fresh highs last year, reaching K1,000,000 per tical between 17 January and 21 February, crossing K1,100,000 (22 June to 5 August), climbing to over K1,200,000 (7 August-4 September), and then reaching an all-time record high of K1,300,000 on 5 September in 2019.

Source: The Global New Light of Myanmar

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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

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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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Companies registered on MyCO exceed 1,700 in Q1: DICA

The number of companies registered on the online registry system, MyCO, reached over 1,700 in the first quarter of this year, stated the statistics released by the Directorate of Investment and Company Administration (DICA). The registration and re-registration of companies on the MyCO website commenced on 1 August 2018, keeping with the Myanmar Companies Law 2017. During Q1 of 2021, the number of registered companies on MyCO was1,373 in January, 188 in February and 163 in March, the DICA’s statistics showed. At present, 100 per cent of the applicants are using the online registration platform, the DICA stated. When the online registry was launched in August 2018, 1,816 new companies registered on MyCO. The figure stood at 2,218 in September 2018, 1,671 in October, 1,431 in November and 1,364 in December 2018.

In 2019, the figure stood at 1,733 in January 2019, 1,419 in February, 1,108 in March, and over 1,045 in April, 1,411 in May, 1,307 in June, 1,428 in July, 1,302 in August and 1,181 in September. The figures reached a fresh new peak of 2,059 in October 2019. Then, 1,615 new companies in November and 1,772 in December were recorded, data of the DICA showed. Last year, the figures of registered companies stood at 1,415 in January, 1,298 in February and 1,015 in March, only 348 companies in April, 798 in May, 1,314 in June, 1,650 in July, 1,551 in August, 1,378 in September, 1,693 in October, 1,099 in November and 1,521 in December, as per statistics of the DICA. Besides, all registered companies need to file annual returns (AR) on the MyCO registry system within two months of incorporation. At least once every year (not later than one month after the anniversary of the incorporation), according to Section 97 of Myanmar Companies Law 2017.

According to Section 266 (A) of the Myanmar Companies Law 2017, public companies must simultaneously submit annual returns and financial statements (G-5). All overseas corporations must submit ARs in the prescribed format on MyCO within 28 days of the financial year ending, as per Section 53 (A-1) of the Myanmar Companies Law 2017. As per DICA’s report, more than 16,000 companies were suspended as of September-end for failing to submit AR forms within the due date. Newly established companies are required to submit ARs within two months of incorporation or face a fine of K100,000 for filing late returns. The DICA has notified that any company which fails to submit its AR within 13 months will be notified of its suspension (I9A). If it fails to submit the AR within 28 days of receiving the notice, the system will show the company’s status as suspended. Companies can restore their status only after shelling out a fine of K50,000 for the AR fee, K100,000 for the restoration of the company on the register, and K100,000 for late filing of documents. If a company fails to restore its status within six months of suspension, the registrar will strike its name off the register, according to the DICA notice.

Source: The Global New Light of Myanmar

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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