Posts in category: Business Article

Economy

Martial law orders in 8 townships in Northern Shan State

              Two weeks after the attack by ethnic armed groups called Northern Alliance, the SAC imposed martial law in eight townships in the Northen Shan State, where fighting was the most intense. The affected townships are: Kunlong, Kutkai, Namhkan, Muse, Lashio, Theinni, Laukkaing and Konkyan. Under martial law, executive and judicial powers in these regions have been transferred to the corresponding North-East Military Command and Laukkai Regional Command.     

Terrorists attacked with drop bombs near Myanmar China border that destroyed 120 loaded cargo trucks

              The fighting has escalated to new heights when on November 23^rd, the SAC reported that ethnic armed organizations (EAOs) had launched a drone strike in Muse, destroying 120 cargo trucks out of 258. The trucks were carrying household goods, consumer goods, clothes, and building materials which were lost as a result of the subsequent fire. The attack was centered near a trade terminal, and has caused the most property damage since the operation began.

Since the fighting began, Myanmar-China bilateral trade has been heavily disrupted as vital transportation routes have been marred by conflict. Muse, which normally facilitates US$60 million in trade monthly, has not overseen any passage of goods. Similarly, Chin Shwe Haw, located near China’s Yunan province, has halted all trade movement. Essential items, particularly rice, have seen price increases, putting pressure on local residents.

Banking and finance

CBM announcements on rumour of bank deposit

              The CBM has moved to quell rumors of cash withdrawals being restricted at certain banks, and that there is, in fact, no limits of any kinds being imposed on any kind of cash withdrawal. It has reassured the populace that the banking industry has been performing excellently and that there is no need to panic. The rumors were suggested to be the result of needless fearmongering on social media intended spur to public into a state of uncertainty. The CBM has been cooperating with the relevant organizations to take action.

CBM assures fully guaranteed on public loss of bank deposits

              In the interim, the CBM has assured that mechanisms are in place to assure all customer’s deposits accounts are guaranteed. In the case of bank branch failure or closure, customers can withdraw their money at other branches. Arrangements have been made to reimburse customers if they have lost their deposits due to unforeseen circumstances, provided that evidence is provided. Mobile banking services and digital financing services remain functional to ensure customers can access to their accounts at all times.

              However, at the same time, the CBM has cautioned against excessive withdrawals, citing the dangers of inflation. Irregular amounts of money in outside circulation encourages speculation in property, gold, and FX, leading to higher inflation rates. The CBM has warned that individuals who withdraw abnormal amounts of cash may be monitored for suspicious activity.

KBZ announced old deposit accounts can be used as before

              KBZ has removed all restrictions on its deposits accounts as of November 15. All deposits accounts, including savings, call, current, and fixed deposits accounts are no longer subject to any restrictions on deposits, withdrawals, or transfers. Currently, KBZ is the first major bank in Myanmar to do so.

              This has been the first instance since 2021 that there have been no transaction limits imposed on customer’s accounts. During the bank run in 2021, KBZ was one of many banks that were forced to limit the amount of money that customers could withdraw from their accounts through various channels. The limit was Ks.400,000 per card. When long lines began to form at ATMs, they were soon disabled and withdrawal services shifted to appointments only. As the crisis subdued, KBZ gradually resumed normal operations, setting a new limit of Ks.10 million per week.

Equity market in downward spiral

              The Yangon Stock Exchange (YSX) has reported its lowest valuation in terms of total trade value in October. After a shaky performance in the first half of 2023, the YSX hit a record high of Ks. 2 billion in total trade value in July alone, nearly matching the total values from January to June put together. Part of the reason for this massive upswing is due to the addition of a new listed company, Myanmar Agro Exchange Public Co.Ltd (MAEX). However, from that point onwards, total valuation and total trade volume have seen a steady decline. In August, it almost halved to Ks.1.3 billion with 509,827 traded shares; in September, Ks.1.4 billion with 302,164 shares; by October, it has dropped to Ks. 772 million with 305,102 shares.

              The YSX was first established in late 2015 and began operations in earnest around 2016 with three listed companies. Today, there are a total of eight companies listed on the exchange, spanning a wide range of industries, from banking, investment, to hospitality and wholesale.

Discussion of direct payment in Taka and Kyat in Myanmar Bangladesh Trade

              On November 10, the CBM Governor Daw Than Than Swe met Bangladeshi Ambassador Dr.Md. Monwar Hussein in Naypyidaw and discussed the possibility of using direct Kyat/Taka payments to facilitate banking and trade between the two countries. The Bangladeshi currency joins the Indian Rupee as part of the Myanmar government’s plans to expand its foreign reserve portfolio and reduce the economy’s reliance on the US Dollar. The Chinese Yuan and Thai Baht have already been implemented to facilitate trade payments earlier this year, and there have been talks to include the Russian Ruble as well.

Trade

Companies to face legal actions of failing to deposit export earnings

Starting from November 17, 2023, the Trade Department is enforcing strict measures against companies that do not deposit their export earnings into designated bank accounts, as outlined in the existing law since November 6. Exporters must deposit earnings in foreign currency within 45 days for Asian countries and 90 days for countries outside Asia. Failure to comply results in legal action under the Foreign Exchange Management Law, as per the CBM’s notification 27/2022. The Trade Department reiterated the deposit requirement on November 6 and warned of legal consequences. Exporters failing to comply face suspension of registration for two weeks, with subsequent legal action if non-compliance persists. The process involves notifying the Ministry of Commerce, AD banks, and the Union of Myanmar Federation of Chambers of Commerce and Industry. Export/import registration is restored only upon confirmation from the CBM that earnings have been settled.

Traders allows to shift licenses from Muse/Chin Shwe Haw route to other posts

              As a result of the conflict that disrupted trade in Northern Shan State and the ensuing closure of the Mandalay-Muse Highway, the Ministry of Commerce has permitted exporters to repurpose their licenses from Muse and Chin Shwe Haw to other posts along the Myanmar-China and Myanmar-Thai borders. Moreover, trade over sea will also be permitted on a case-by-case basis. According to observers, traders will most likely shift over to Lweje, located in Kachin state, and Mong La in eastern Shan State. The alternative routes are not without issues, however, in the form of additional overhead and logistics costs. For one, cargo trucks cannot directly enter China through Mong La, and would have to instead transfer their goods using Chinese short-haul truck services there. While entry into China is possible in Lweje, there is no direct trade route that links Lweje with major cities, requiring traders to make an additional stop at the city of Bhamo. Transport costs and duty fees have also increased. Muse’s infrastructure is able to handle large volumes of trade as one of the main trade hubs in Myanmar, which cannot be said for Lweje and Mong La. Traders have added that sea routes are also unfeasible due to the time constraints and distance.

Muse traders trying to export fruits to other borders- Loije and Mong La

              These challenges disproportionally affect Myanmar traders over Chinese traders. Chinese exporters primarily transport non-perishables, such as building materials, over to Myanmar. The value of their goods is not as affected as much by the change in the logistics situation. In contrast, Myanmar exports agricultural products, the quality of which can easily decline due to damage from longer transport times. Currently, traders are only transporting fruit, in lieu of rice, peas, and other agricultural products. Particularly, watermelon traders have reported that damages can devalue their cargo to the point of not covering transport costs by the time it arrives in China. The demand for watermelons has also settled down, leaving the Myanmar watermelon industry in a difficult situation.

Rubber prices drop in Mon State due to trade route blocked

              The closure of major trade routes has also affected the price of rubber in Mon State. Rubber prices for the RSS-1 variety were around Ks.1700-1800 per pound in October, and has since fallen to Ks.1450 in November. According to one farmer, normally, prices would normally be around Ks.2000 per pound this time of year. Other rubber varieties, including Local-3, has similarly fallen. The closure of the roads has not only prevented the export of rubber, but has also prevented the arrival of local traders and buyers, further exacerbating the situation. Farmers have added that if the current prices continue, their business may soon become unsustainable, notwithstanding the numerous security concerns.

              The majority of Myanmar’s rubber production is exported to China. It is also shipped to neighboring ASEAN countries, including Thailand, Vietnam, and Malaysia, as well as South Korea and Japan. There are over 1.6 million acres of rubber plantations total, with Mon state accounting for over 30%. 360,000 tons of rubber were produced last year, of which 200,000 tons were exported. In 2021, the rubber trade accounted for more thanUS$449 million.

Mandalay to host International Trade Fair & Investment Forum in December 2023

              The Mandalay Region Chamber of Commerce and Industry (MRCCI) has announced that the city will host the Mandalay International Trade Fair and Investment Forum for the second time in December 2023. The event will feature 262 booths from various countries, including China, India, Bangladesh, among others, showcasing a wide range of products such as foods, cosmetics, medicines, and machinery. The event will boost investment, create new opportunities, and promote business between the countries, according to MRCCI President U Win Htay.

Investment

Re-constitution of Kyauk Phyu SEZ Management Committee

The Kyauk Phyu SEZ Management Committee has underwent a change in constitution, as of November 20, 2023, as per Directive 3/2023 from the Myanmar SEZ Central Committee . Most notably, Ministry of Commerce Officer on Special Duty U Kyaw Shwe Tun replaces U Myint Thein as Chairman of the committee. U San Shwe Maung from the Rakhine State Government has stepped down from one of the Vice-Chairman seats and has assumed the role of a member, leaving retired Department of Urban and Housing Department Deputy Director-General U Win Myint as sole Vice Chairman. The committee serves an overseeing role and assumes the duties and responsibilities as laid out in the Myanmar SEZ Law.

Extension of Call for EOI on formation of public company in Kyaw Phyu SEZ

Kyauk Phyu SEZ in Rakhine State is one of three SEZs in development in Myanmar, the others being Dawei SEZ in the Tanintharyi Region and Thilawa SEZ in Yangon. In order to bolster further investment, the SEZ central committee will call for an Expression of Interest (EOI) for the establishment of the Myanmar Government Designated Entity Consortium to collaborate in the deep-sea port project in Kyauk Phyu SEZ. To join the consortium, Myanmar-owned companies must be domestically owned private or public companies and must be legitimately registered under the Myanmar Companies Law 2017. They should have continuous operations, possess the relevant documentation issued by the Directorate of Investment and Company Registration (DICA), and not be suspended on its online platform.

Moreover, eligible companies must have a minimum of 10 years of incorporation or five years of experience in successful infrastructure development. A company must have a minimum turnover of US$20 million or an equivalent amount in foreign or local currency over the past three years. Entities seeking inclusion in the consortium must not be blacklisted or disqualified by the ministry, Naypyitaw Council, or regional and state governments.

Energy

Formation of a leading committee for the purchase of fuel from Russia

The SAC as announced the formation of a committee to oversee the purchase of fuel from Russia. The committee will be responsible for: the proper storage of fuel; reviewing prices and costs; ensuring proper quality control; drafting standard procedures and regulation and assuring compliance; coordinating between relevant public and public organizations; reporting monthly foreign currency; tracking logistics; and among other tasks as deemed relevant to the country’s policy goals. The committee will be chaired by Lt.Gen Nyo Saw, along with membership by various ministries, including the Ministry of Transportation and Communications, Ministry of Electric Power, and the Ministry of Commerce. In addition, individuals from the private sector also constitute membership, including STAR HIGH, Yetagon Energy Trading, and SWAN Energy.

The Myanmar government continues to forge stronger relations with Russia, with collaborative projects in energy, finance, and tourism. There have been discussions between the two countries to facilitate direct Kyat-Ruble payments for fuel, as well as adopting the Russian card payment system Mir in Myanmar. Furthermore, Russia has expressed interest in developing Myanmar’s renewable energy goals, with projects such as nuclear power plants and wind plants currently in progress.

Myanmar, China signed agreement to purchase electricity from three solar projects

Myanmar’s renewable energy efforts continue to show progress, as the Myanmar government has signed an agreement for purchasing electricity from three solar projects, Kyeeon Kyeewa, Kinda and Sedoktaya in the Magway and Mandalay regions. The total capacity from the three projects will be 90MW, which while modest, nonetheless signals further development in the developing renewable energy sector of Myanmar, especially solar energy. Currently, there are 14 power projects in development, and six in operation providing 180MW of power to the country. China continues to invest in Myanmar’s development as part of its Belt and Road Initiative, which will further improve relations and cooperation between the two countries.

Transportation

Security forces clear and restore Pyin Oo Lwin to Kyauk Me road

The conflict has affected many key transportation routes along Myanmar’s northern region. Not only was the Mandalay-Muse highway affected, the highway that connects Pyin oo Lwin to Lashio was disrupted at thirteen separate locations. Regional transport between villages along these points were reportedly blocked by deep ditches, earth mounds, and felled trees. The relevant authorities have managed to clear twelve of the blockades since 19 November and are actively attempting the clear the rest. In the interim, they have assured travelers that much of the highway has returned to normal conditions and they have guaranteed safety by conducting security patrols around the region.

Authority temporarily closure of Land routes and waterway in Rakhine State

The fighting has also escalated in Rakhine State as well. The Yangon-Sittwe Road has been closed by the authorities; there have been reports that EAOs have also been conducting their own stop-and-search operations along some sections of the road. Waterways have also been blocked. The authorities have begun increasing their security efforts in order to restore normalcy for residents in the region, as they are the most likely to be affected by the disruptions. 

COVID

In order to continuously control the infection of COVID-19, the rules and restrictions have been extended until the end of December 2023.

Economy

It is estimated to 56.2 Million People living in Myanmar as of October 2023 based on 2014 Census by Department of Population. By States and Regions, Yangon Region has highest population of 9 Million people and followed by Shan State and Mandalay Region with 6.8 Million respectively. Among the States, Kayah and Chin are lowest populate states with 0.4-0.5 Million population while Tanintharyi Region has been lowest populate region with 1.6 Million people among any other regions. Compared to 2019 Inter-census population, 2.2 Million people has been increased within 4 years. Populations by States and Regions are as seen in the following Figure: 2023 Estimated Population of Myanmar by States and Regions

Figure: 2023 Estimated Population of Myanmar by States and Regions

Source – Department of Population

The Copy Rights Law of Myanmar came into force on 31st October 2023 with the issuance Notification No.218/2023 by the State Administration Council as the effective date of the Copyright Law 2019 (CRL) of Myanmar. The law protects the literary and artistic works of not only the Myanmar Citizens but also the Foreigners residing in Myanmar who first publish their works in Myanmar or first publish their works outside Myanmar but re-publish them in Myanmar within 30 days of the first publication date.

Likewise CRL, the Industrial Design Law of Myanmar also came into force on 31st October 2023 with the issuance Notification No.217/2023 by the State Administration Council as the effective date of the Copyright Law 2019 (CRL) of Myanmar. Since 31st October 2023, creators of Industrial Designs can file applications for registration of their Designs with the Intellectual Property Department (IPD).

Central Committee on Ensuring Smooth Flow of Trade and Goods Chairman State Administration Council Member Deputy Prime Minister General Mya Tun Oo has highlighted the importance of reviewing the work processes at all the trade camps of Myanmar to revitalize the trade sector. Traders need to ensure that imports of basic necessities should be met while maintaining the capacity to export as well. The 13 member committee will try to facilitate export goods by minimizing interruptions in production, and work towards ensuring the smooth flow of official currency.  

The Supervisory Committee on Fuel Oil Import, Storage and Distribution was reorganized on 13^th October 2023 in order to effectively steer the oil import, storage and distribution sector and ensure standard quality for the imported fuel oil and stable prices for energy consumers, incorporating the stakeholders from the public and private sectors into the committee. The Committee is chaired by the Deputy Minister for Energy, Permanent Secretary as secretary for the committee, Director General of the Petroleum Products as Joint Secretary and followed by members such as DGs of Trade Department, Petroleum Products Regulatory Department, DDG of the Foreign Currency Management Department. The committee is majorly responsible for supervisory measures on stabilizing fuel prices, import license issuances, managing and distribution of imported fuel oils and so on.

Trade

There are 505 Garment factories, 48 footwear factories, 8 wig manufacturers and 177 factories associated in manufacturing of bags, sports units, sports shoes, and socks in Myanmar and the majority of them are residing in Yangon and operating under Cut-Make-Pack (CMP) System. CMP Garment system has been one of top FDI Sectors of Myanmar and China has been major FDI Investor in Myanmar and followed by Chinese Taipei, Thailand, South Korea and Japan. Finished products are majorly exported to ROK, Japan and EU countries and as of presence, 37.5 % of orders are by Japan and other 25.3 % by ROK.

For the first six-month of FY 2023-24, Garments exports has reached USD 4.3 Billion. 

Ministry of Commerce issued the notification of the measures to be taken against companies whose export earnings will not be allowed to take into the country with the Notification No.27/2022 issued on 6th October, 2023. According to the Notification, export earnings of goods to the Asian countries shall be deposited within 45 days, and those to other countries deposited within 90 days and if non-compliance is found, action will be taken in accord with the Section 42-A of the Foreign Exchange Management Law.

In order to be more getting involved in legitimate exports and bolstering exports, the Ministry of Commerce has been paving ways by granting special privileges to exporters who are earning Foreign Currencies for the country. Besides, The Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) also planned to give another special privilege to the exporters on top of that.

The Ministry of Commerce has revealed three priority sectors for imported goods. Traders are encouraged to spend foreign currency to make these goods available. The first promoted sector are goods essential for everyday use and the benefit of the population: pharmaceuticals, medical devices, fertilizers, pesticides, seed, diesel, petrol, edible oil, raw materials used in livestock businesses, veterinary drugs, industrial raw materials, PET chips, food materials, plastic raw materials, medicine and herbal raw materials, packing materials, lubricants, engine oil, other industrial oil, tar and LPG gas.

The second sector covers raw materials and other inputs required for manufacturing: iron and steel, paper and stationery, equipment for electricity generation, transmission and distribution, construction material, machine and spare parts, transmission and distribution, tires and rubber products.

Finally, the third sector promotes various electronic electrical goods, telephones and telecommunication devices, as well as foodstuff, consumer products, vehicles for commercial purposes and machinery.

To incentivize Myanmar expatriates working abroad to remit a portion of their income, the Ministry of Commerce has announced that expatriates would be eligible for an EV import license for an EV worth 5% of their remitted income. Under this program, those who transfer $200,000 would be able to import an EV worth $10,000, and remittances below that threshold and above $50,000 would be able to import an EV worth $2500.

              The announcement is part of a series of moves to shore up the administration’s foreign reserves. However, it is unlikely to have any substantial impact. Firstly, few Myanmar expatriates are actually able to earn enough income to be able to remit $50,000 annually, let alone $200,000. Secondly, even among those that meet the requirement, few would feel that an EV import license would be an attractive enough offer. Thirdly, with current EV import restrictions, there would be difficult to find vehicles on the market that hit the $10,000 price-point. Realistically, the license to import an electric motorcycle, which fits the $2500 criteria, would be the only tangible benefit from this scheme.

Regarding food product imports, FOOD and Drug Administration under the Ministry of Health notified food importing companies to seek import recommendations (IR). They can seek IR through the FDA website http://fda. gov.mm.

Investment

The Myanmar Investment Commission (MIC) has approved six new investment projects in various sectors, including power, manufacturing, hotels, and tourism. These projects will bring a total investment of approximately Ks.314.73 billion ($72.98 million), as well as creating over 2,600 job opportunities for locals. Additionally, eight existing businesses were granted permission to expand their capital.

As of the end of August 2023, out of 52 foreign countries, Singapore, China, and Thailand were the leading nations in terms of foreign direct investments (FDI) in Myanmar. The power sector attracted the most FDI, accounting for 28.45% of total investments, followed by the oil and natural gas sector (24.46%) and manufacturing sector (14.38%). In addition to these sectors, the agriculture sector attracted $2.578 million from three enterprises, while the transport and communication sector saw capital expansion of $77.82 million. The livestock and fisheries sector also received over $23 million in increased capital.

Myanmar received a total of $484.155 million in foreign direct investments in the past five months, which included capital expansion by existing enterprises. During this period, the power sector remained the top choice for FDI.

Singaporean asset management corporation Keppel has completed the sale of the 5-star rated Sedona hotel to Springfield Blossom Ventures, another Singaporean registered company. The luxury hotel was sold for US$ 57.4 million, higher than its managing company Straits Greenfield’s net asset value of US$43.9 million, as of February. The sale was first announced earlier this year in March and according to Keppel, is “in line with asset monetization plans to unlock value that can be invested to pursue new opportunities.”

              Sedona Hotel Yangon is one of Myanmar’s oldest international hotels, being in business since 1996. In 2016, it expanded by adding an all-new 30-storey building, increasing its capacity by 430-beds. Sedona, like many other hotels during the COVID-19 epidemic, operated in a reduced capacity, not accepting any new bookings.

Energy

The 500kV Phayargyi Substation is on track to be completed by December of this year. The substation would be able to transfer electricity from power stations located in the northern areas of Myanmar into the south with greater transmission capacity, efficiency and reliability. The substation, located near milestone 40 on the Yangon-Mandalay highway was part of the National Power Transmission Network Development Project along with Hlaingtharyar Substation and began implementation in 2018.

              The Tha-Htay hydropower project in Rakhine State is 77.5% complete as of July 2023, and would be completed during the 2025-2026 fiscal year. Situated on the Tha-Htay River in Rakhine state, the project has a total planned capacity of 111MW and would be able to provide clean renewable energy to over a million people. The dam is being developed with assistance from Japanese engineering consulting group “The Kansai” to ensure compliance with modern standards.

On October 11, Russian Energy Minister Nikolay Shulginov and Myanmar’s Energy Minister U Ko Ko Lwin met in Moscow to discuss bilateral energy cooperation. If Myanmar were to cooperate with Russian energy company INTER RAO, they would provide assistance with the petrochemical sector, focusing on the development of oil, coal, and natural gas resources. Myanmar would focus on pursuing renewable energy sources, such as solar and wind, while greatly appreciating the help of its allies. Both countries agreed to discuss further discussions in the future.

On the same day, U Ko Ko Lwin and Science and Technology Minister Dr. Myo Thein Kyaw participated in the Sixth Russian Energy Week International Forum. They discussed the issue of worrying carbon dioxide emissions and the potential of nuclear technology as a potential solution for clean power. The Myanmar government has been eyeing nuclear power as a way to solve its own energy issues; the Ministry of Energy has signed a memorandum of understanding with Rosatom Chairman Alexey Likhachev to develop nuclear infrastructure.

COVID-19

In order to continuously control the infection of COVID-19, the rules and restrictions have been extended until the end of November 2023.

Economy

The State Administration Council was reformed again on 25^th September 2023 with 18 Members. Two new members are General Maung Maung Aye and Lt. General Nyo Saw.

With reform of SAC, the government has reshuffled the cabinet with the following reassignment: Lt-Gen Soe Htut, Union Minister for Union Government Office (1) to the original military duties, U Aung Naing Oo, Commerce Minister to Union Minister for Union Government Office (1), U Tun Ohn, Deputy Minister of the Ministry of National Resources and Environmental Conservation to Union Minister for Commerce.,

According to the amending the Union Taxation Law 2023 on 12^th September, 10 % of income tax shall be levied over the total foreign exchange income obtained aboard except the salaries of the citizens living in the foreign countries and will be effective from 1^st October to 31^st March 2023.   Without subtracting the amount of exemption, 2% tax shall be levied over the incomes. Moreover, the taxpayer shall have the right to subtract the amount paid as tax abroad from the calculated amount of tax under this law.

In Myanmar, 90% of Fuel Oil is imported by neighboring countries and only 10% locally produced. Due to Foreign Exchange rate fluctuation and high global oil prices, regular diesel and octane 92 prices increased by 47 per cent and 27 per cent respectively during May to mid- September. The Supervisory Committee on Oil Import, Storage and Distribution of Fuel Oil is steering the fuel oil storage and distribution sector effectively so as not to have a shortage of oil in the domestic market and to ensure price stability for energy consumers. The Petroleum Products Regulatory Department regulates daily reference oil for oil with a reasonable price and also inspects the fuel stations whether overcharging or not. Fuel prices have decreased to 2 to 5%, MMK 11 to 130 per liter on average towards the end of September. As of 21^st September 2023, prices were MMK 2,330 for Octane 92, MMK 2,435 for Octane 95, MMK 2,530 for diesel and MMK 2,610 for premium diesel.

Banking and Finance

Central Bank of Myanmar has provoked 166 Money Changer Licenses alongside March 2023 to September 2023 as its fail to comply with the rules and directives by CBM in which 123 Money changer companies were provoked on 19^th September, 13 Forex Exchange License on 12^th July, 10 Forex Money Chargers and 20 Money chargers on 12^th July.

Even though the Central Bank of Myanmar CBM has set MMK 2,100 as a reference rate for USD transactions, the Unofficial Grey Market rate is 1.5 to 2 times much more than the reference rate. In September 2023, the Market rate was 25% lower than that in August 2023 with the highest exchange rate up to about MMK 4,000.

Compared to two and half-years ago, prior to 2021, the banking sector of Myanmar has been in dire straits such as poor banking operations and Foreign Currencies have always been run out. However, since 2021, the Competency of the Central Bank of Myanmar and Ministry of Finance has been carried out strictly in order to address the banking crisis and financial service sector and economy on those issues: the bank structure/size (1/6 size of Singapore bank); banking loan issues; building trust between Savers and banks; and restriction on withdrawals. Banking sector operates smoothly even in difficulties.  

The 8th Eastern Economic Forum (EEF) took place in the Russian city of Vladivostok from 10th-13th September, 2023 and Myanmar has done bilateral agreements with Russia in different sectors, especially Tourism and Energy Sector. As it is direct payment transacted with MMK to Yuan in procuring Russian Petroleum, the Union Minister of Ministry of Investment and Foreign Economic Relations has prepared and developed mutual agreement between Rubles to MMK (Direct Transaction between Myanmar (Kyat) and Russian (Rubles) in procuring Russian Petroleum at Eastern Economic Forum. Besides, the Russian payment “MIR” system will be available in Myanmar in October.

Trade

Myanmar normally produces 2.5-3 Million tons of Corns per year and Corns are majorly cultivated in Shan, Kachin, Kayah and Kayin States and Mandalay, Sagaing and Magwe Regions. It is planned to export 60,000 tons of corn from Shan State to China in October, 2023 and expect 2 Million tons in 2023 as same amount as the 2022 Corn Season. Corns are normally delivered through China, Thailand border points and also exported to India, the Philippines and Singapore. Thailand is the major export country and the rest to those countries.  In terms of tax, Thailand exempted Zero Percent on Myanmar Corn exports from 1^st February to 31^st August 2023. Current FOB prices on corn are between USD 270 and 290 and MMK 1,150-1170 per viss in the domestic market (YRCCI).

Online Sales or Online Shopping businesses can be registered at eComReg System of Department of Trade under the Ministry of Commerce coming 2^nd October 2023 and registration period is from 2^nd October to 31^st December when registration fees will be exempted. For those Online Businesses which haven’t done registration, will be faced action coming 1^st January 2024. The applicants need to submit their business names, logos and recommendation letters of respective wards, police stations and have to pay MMK 4,000 for online application form. The Online Businesses are granted only for Official businesses.

Investment

In the Mandalay Region Trade, Investment and Tourism Promotion Conference held in Nanning, China on September 16, 2023, Union Minister for Commerce pointed out that Mandalay and the surrounding region was a strategic location for cooperation with China, which includes the China-Myanmar Economic Corridor, and the China-Myanmar railway project. The increased ease of doing business should encourage Chinese businesses to invest in rising industries such as food production, garments, jewelry, renewable energy, and logistics. Additional projects such as Mandalay Myotha Industrial Zone project, Amarapura Tourism project, Mingala Mandalay project, Yetagun¬taung City project, and fruits and vegetables market were also discussed at the conference, and five agreements regarding economic cooperation, agreements, and honey trading were signed.

Manufacturing

Myanmar’s manufacturing sector attract FDI surpassing US$63.5 million in April-August

In the first five months of the 2023-2024 financial year, Myanmar’s manufacturing sector attracted over $63.5 million in investments from 26 enterprises, including expansion by existing companies. Chinese firms were the primary investors in this sector. The Myanmar Investment Commission approved 31 foreign projects from seven countries during this period, totaling $484.155 million in foreign direct investment (FDI). Most importantly, the power sector received the most FDI, amounting to $317.178 million from two enterprises.

Other sectors also received investment, with agriculture drawing $2.5 million from three enterprises, transport and communication seeing a capital expansion of $77.82 million, and the livestock and fisheries sector receiving an additional $23 million in capital. The focus in the manufacturing sector is on enterprises that require significant labor to create job opportunities for the local community. In particular, the garment and textiles industries play a vital role in the country’s GDP.

In response to H&M Group’s decision to phase out outsourcing from Myanmar, the Myanmar Garment Manufacturers Association (MGMA) is committed to improving the garment sector in collaboration with international brands and partners. The MGMA has implemented a Voluntary Labor Compliance Assessment (VLCA) since February 2020 to assess factories’ compliance with national labor laws and international standards. An online version of the assessment was launched in November 2022, with over 220 factories completing it and more than 100 still undergoing assessment.

Tourism

The government has been eager to revitalize Myanmar’s tourism industry. Since January, more than 750,000 tourists from China, Thailand, Japan, South Korea, and India have visited Myanmar through various channels. Sixty percent of all visitors arrived through the China-Myanmar border and the Thai-Myanmar border; and a further 190,000 by international flights. The Ministry of Hotels and Tourism aims to attract more Russian, Chinese, and Indian tourists in the next few years.

To further improve relations, visa-on-arrival services will be provided for Chinese and Indian tourists for a one-year trial period, and only valid for tourist visas. Visitors will be required to fill out VOA applications, readily available at all airports, and provide two recent photographs as well pay a VOA fee.

The Ministry of Hotels and Tourism has also revealed in a recent announcement a list of Myanmar’s fourteen most important destinations for local and international tourists alike. On the list are some of Myanmar’s already well known locations, including the culturally-rich sites of Bagan, Inle Lake, and Taunggyi and  Ngapali, Chaungtha, and Ngwe Saung beaches make up the country’s coastal attractions. Kyauk Phyu and Manaung of Rakhine State stands out as a particularly hidden gem with much untapped potential: Manaung Island offers stunning beaches with plentiful opportunities to dive and snorkel in pristine waters full of marine life. The island appears poised to receive much investment and development in the coming years.

Previously, crossing the Myanmar-China border required special documents known as the one year Border Pass (BP) and the seven days Temporary Border Pass (TBP). Now, there are plans to streamline this process by allowing Myanmar and Chinese citizens to enter and exit the country using only valid passports instead. Officials say that this will improve security and coordination efforts between the two countries, as well as improving the efficiency of border checkpoint inspections. It will serve to attract more tourists, but more crucially, it will improve trade. The Myanmar-China border checkpoints are important junctions for bilateral trade, and it is important to facilitate the underlying processes as much as possible.

Transportation

The city of Sittwe in Rakhine State is establishing direct trade ties with Kolkata, India, using a cargo ship via the Sittwe Jetty, part of the Kaladan Multi-Modal Transit Transport Project. Previously, goods from all across Myanmar were exported to Bangladesh, but now a new route from Sittwe to Paletwa via maritime routes is enabling goods from Rakhine to India. This project includes dedicated jetties in Sittwe and Paletwa and a completed road connecting Mizoram, India, to Chin State, Myanmar. The Sittwe Jetty was inaugurated on May 9, 2023, as part of the India-Myanmar Friendship Programme, involving a $484 million investment from India.

Despite sharing an extensive land border and close cultural and historical ties, India is only Myanmar’s fourth largest trading partner, behind China, Thailand, and Singapore. India is a crucial source of pharmaceutical goods, and India’s strategic importance has only grown in 2023 as Myanmar seeks to bolster relations with its closest neighbors when relations with the West become strained. Myanmar, likewise, is part of India’s ambitious “Act East” policy, a counterpart to China’ Belt and Road Initiative (BRI); both policies strive to establish strategic economic relations in the Southeast Asian region.  The expansion of trade routes is the latest in a series of moves to facilitate bilateral trade between the two nations.

COVID-19

While COVID-19 cases in Myanmar have been lowered due to the arrival of vaccines and other preventative measures, there is still a need to remain vigilant. The Central Committee on Prevention, Control and Treatment of Coronavirus Disease has extended COVID-19 restrictions until 31^th October 2023. The restrictions include social distancing requirements and a ban on public gatherings.

A ceremony to welcome the Boeing 737-400 cargo aircraft from the state-owned Myanmar National Airlines, was held at Yangon International Airport yesterday. The cargo plane (Aircraft No 9M-POS and Flight No 3G087) departed from Kuala Lumpur, Malaysia, and arrived at Yangon International Airport at 2 pm.
The plane will be able to carry up to 18 tonnes in tonnage, and it will also be able to transport cautious goods that cannot be carried on a regular flight.
Based in Yangon, it has planned to run trips to cities in the People’s Republic of China, Kuala Lumpur of Malaysia, Singapore, Hong Kong and India.
As a commemoration of the 75th Diamond Jubilee of Myanmar National Airlines, Boeing 737-400 (Aircraft No 9M-POS and Flight No 3G087) cargo aircraft has been brought to Yangon, and with this aircraft, Myanmar National Airlines will be able to expand its cargo flights. 

Source: The Global New Light of Myanmar

Economy

New Union Cabinet was reformed with 32 members in Union Cabinet in which Prime Minister is Senior General Min Aung Hlaing and 4 deputy prime ministers such as Vice Senior General Soe Win, General Tin Aung San (Union Minister of Ministry of Defense), General Mya Tun Oo (Union Minister of Ministry of Transports and Communications), U Win Shein (Union Minister of Ministry of Planning and Finance) and U Than Swe (Union Minister of Ministry of Foreign Affairs).

The U.S. Government has announced sanctions on three Foreign Companies such as Asia Sun Network: Asia Sun Group Co Ltd, Asia Sun Trading Co Ltd, and Cargo Link Petroleum Logistics Co Ltd and two individuals such as Khin Phyu Win and Zaw Min Tun for their roles which are doing procurement with the Government in Jet Fuel Industry on 23^rd August 2023.

Banking and Finance

Singapore United Overseas Bank puts a stop to doing banking activities (i.e. restricting all incoming and outgoing payments to and from Myanmar Accounts) or cut off counterparts with Myanmar in Bank Relationship in coming 1^st September 2023 which makes a bit burden in the government inaccessible to global financial system. In cutting ties, there is also curb in Visa Card and MasterCard transaction with all Myanmar Individuals and banks. Besides, all nostrum accounts at the Hong Kong branch will have been closed by September 2023.

The Central Bank of Myanmar set the reference rate at MMK 2,100 per USD while one USD is exchanged around MMK 3,700 in the grey market which is a large price difference between the reference of the CBM and the unofficial market rate. Even though August has hit the highest price up to MMK 4,000 in grey market in previous year 2022, it was MMK 3,700 in 2023. In order to control the soaring dollar in the Market, the CBM has injected a total of USD 443.8 million in 2021 and 65 million USD sold in the January 2022. Besides, the CBM revokes money changer licenses of 43 companies in half a year and revoked the licenses of 13 companies and 20 Money Changers on 14^th August 2023 for being failed to comply or abide with rules and directives issued by CBM.

Foreign Currency Exchange for Petty cash, foreign currencies of USD 300 to 500, can be exchanged at the Yangon International Airport and 12 Private Banks such as KBZ bank, CB Bank PCL, MAB, AFDB, Yoma Bank, UAB, ADB, MOB, MCB, GTB and Innwa Banks in order to curb currency transactions at grey markets. Besides, the authorities also arrange three AD banks to sell Foreign Currencies every day. People can exchange seven foreign currencies such as US dollar, Euro, Singapore dollar, Baht, Ringgit, Yuan, and Yen.

Central Bank of Myanmar announces to shift to Online Gold Bar Transaction as same as the online trading of the foreign currency market (Forex Market) which has been launched since 22^nd June, 2023 in order to ensure gold price stability and gold quality. In order to more stabilize the gold market and access whether registered businesses or not, The CBM instructed the supervisors to inspect whether the price manipulators make price instability at gold shops, and whether the shops have relevant work licenses and other certificates including the legal trading price and payment methods.

In order to be more facilitated in official cash transferring of Myanmar Remittance workers in Thailand to their motherland, “Dee Money Mobile Application” was jointly developed by two Myanmar-Thai Fin-Tech companies which is more reasonable transferring fee and more reliable than any other remittance ways. There will be only charged 49 baht per service fee in transferring baht equivalent to 10 Million Kyats through the application.

The new partnership between KBZ Pay, Myanmar’s pioneering and largest e-wallet and KBank’s digital banking solutions – K PLUS Mobile Banking, a leading digital banking solution provider in Thailand, partnered in offering Joint cross-border digital remittance services for Myanmar Migrant Workers in Thailand. The service has been available since 16^th August 2023 and any transaction will be free of charge up to 31^st October, 2023.

Trade

On 7th August 2023, sections of the Myawaddy-Kawkareik Asia highway collapsed due to a massive landslide caused by heavy rains.  A few vehicles were initially caught under the debris, but it was reported that no one was seriously injured. In the meantime, to the Ministry of Construction has constructed a temporary bridge to connect the highway within a month. Due to the COVID outbreak in 2020-21, Myanmar-Thailand Trade through Myawaddy-Mae Sot border and all trading activities has been cancelled. When it has been resumed, it is prone to temporary closures due to frequent clashes between ethnic militia and insurgents.

Zero-tariff corn exports to Thailand under a preferential tariff scheme ended on 31st August 2023 and Certificate of Origin Form D (An issue for goods eligible for preferential tariffs under CEPT scheme for ASEAN countries) since the initiation of tax exemption on February 2023. As a consequence, Thailand will impose a maximum of 73% tax to protect its domestic production. Although demand will decrease temporarily through Thailand’s growing season, it is anticipated that the market will overcome such setbacks and continue expanding steadily.

The trade agreements between Myanmar and Laos were signed on 8 May 1995, and the bilateral border re­gion management and cooperation agreement was signed on 27 March 1997 in Yangon by the foreign ministers of the two countries. The Opening Ceremony of Kenglat Border Trade Post established between Myanmar and Laos funded by the Lancang- Mekong Cooperation Special Fund 2021 was held on 26^th August 2023. Even though the trade post was constructed in 2013 and finished by and temporarily opened in 2015, the opening ceremony was held in 2023. By opening the trade post, there will further increase promotion of bilateral trade between two countries.

Investment

Power Sector has been leading FDI sector among others for many years and likewise from April to July 2023, there are total USD 317 Million from two enterprises from Singapore and China. Among by Foreign investors, Singapore majorly invests in power sector with investing USD 335 Million by 4 enterprises and followed by china with USD 124 Million by 10 enterprises. The others are India, ROK, Samoa and USA.  

Pact Myanmar Microfinance shut down

Pact Global Microfinance Fund closed down in late June, after 25 years of operation. PGMF was the leading microfinance institution in Myanmar, forgiving US$156 million in loans to 890,000 borrowers before its exit. According to the Myanmar Microfinance Association, the 3 largest MFIs after PGMF were Vision Fund, Sathapana, and Dawn Microfinance. International MFIs also face difficulties in acquiring credit from abroad. This shift in climate is likely to result in the microfinance sector leaning more and more towards commercial purposes, with altruistic enterprises falling behind. 

Manufacturing

The Taninthayi Regional Government has unveiled plans to construct a 20-tonne refined cooking oil mill in a collaborative effort with local businesses. Highlighted by the growing demand for cooking oil, the refinery aims to simultaneously increase domestic production as well as reduce reliance on imports. With the local Resources of having 556,000 acres of oil palm plantations in the Region (especially in Bokpyin and Kawthaung townships), there is potential growth up to a net exporter of cooking oil on top of local consumption. However, there is an environmental issue or impact that mass production leads to further deforestation, especially in coastal region.

The Swedish garment company H&M announced that it would cease operations in Myanmar over concerns of labor abuses. An investigation revealed various cases of workplace abuse, including numerous counts of wage theft and unpaid overtime. There are 26 suppliers and 39 factories of H&M in Myanmar. According to the Myanmar Garment Manufacturers Association, Myanmar exported US$384 worth of textiles in April 2023, and the textiles industry brought in US$ 5 billion for the country in 2022. As a consequence of ceasing operations in Myanmar, there would come as a huge blow to Myanmar’s garment and textile industry, which operates on a cut, make, and pack (CMP) system. With H&M’s exit, Myanmar’s garment factories might face diminished output. There are fears that mass layoffs could occur; the majority of Myanmar’s textile workforce are women. The MGMA is encouraging to deepen the ties between the international garment brands and local factories and foreign-owned factories established in the country. MGMA is willing to work together with international brands and partners to carry out responsible businesses in Myanmar and commit to keep improving the situation of Myanmar’s garment sector

Energy

The Ministry of Electric Power has reopened tenders for investors regarding the Shwe-Li 3 Hydropower project on the Shweli River in Shan state. The tender includes implementation, power generation, maintenance, and eventual retransfer from the private to the public sector. Power projects are crucial for the current administration to address Myanmar’s energy needs. Additionally, the hydropower project is also part of their efforts to expand to renewable energy sources and thus lessen the need for fuel and gas imports. Shwe-Li 3 was previously managed by Électricité de France (EDF), a French energy company, that exited the country in early 2021. 

COVID

While COVID-19 cases in Myanmar have been lowered due to the arrival of vaccines and other preventative measures, there is still a need to remain vigilant. The Central Committee on Prevention, Control and Treatment of Coronavirus Disease has extended COVID-19 restrictions until September 30, 2023. The restrictions include social distancing requirements and a ban on public gatherings.

Economy

Generally, Myanmar normally consumes about one million tons of edible oils per year in which 0.6 million tons of palm oil are imported annually. In FY 2022-23, 8.3 Million Acres of edible oil crops such as groundnut, sesame, sunflower, and mustard have been grown up and it is estimated to produce more than 680,000 Tons of edible oil for the whole fiscal year. The edible oil sector cultivation and production are called for the local and foreign Investors to invest and government provides tax incentive such as three to seven year tax exemption on income tax for self-sufficiency of edible oil in Myanmar.

Banking and Finance

1. CBM allows export earnings by 50:50

Central Bank of Myanmar announced to lower Mandatory Conversion of Export Earnings to Myanmar Kyats from 65% to 50% with the Notification 15/2023 on 13^th July 2023 which amends Notification 36/2022, issued on August 2022, “Exporters required 65% of the export earnings to be converted into Myanmar Kyats”. Hence, it is the gradual improvement in Foreign Exchange issues and shortage of Foreign Exchange Currency of Myanmar.

• Mobile financial services and digital payment growth

With the accelerative effort of the Central Bank of Myanmar on Digital payment system throughout the country in line with National Payments System Strategy (2020-2025), the Financial Technology Payment system has been enormously increased and Mobile financial services and digital payment system of Myanmar including for bank institutions, i-banking, mobile banking, mobile pay and mobile financial services have become remarkably boomed to 31.67 Billion in 2022, which was 47 percent increase compared to the previous year 2021.In order to develop financial services sector, CBM has already permitted those services and launched MMMQR Specification Version 1.0 for QR code payment in January 2019, achieving interoperability between payment systems of financial institutions through MMQR Specification Version 1.0 and stepping up to use crop-border QR code payment interoperability, the notification mentioned. On top of that, the Central Bank of Myanmar, is endeavoring to improve payment service providers’ platforms providing digital transaction services across the country to, especially, Nay Pyi Taw to become a digital city with the latest financial technology. Since May 2023, the CBM has been implementing digital salary payments to the officials and staff under the ministries to strengthen digital payments in the capital city.

The Central Bank of Myanmar has granted licenses to the public in terms of clearing system with QR Code Payment system in areas which are not easily accessible to use. Hence, Digital Payment system is widely available in places, re­gions, various strata, and var­ious areas where there are no banking services Those clearance licenses are provided to those companies such as Nature Link Pay Co Ltd (brand name: Trusty E-Commerce), Zego Pay Co Ltd (brand name: Zego Money), and Internet Wallet Myanmar Ltd (brand name: OK$) in February, and Univer­sal Pay Co Ltd (brand name: Unipay) in compliance with the terms and conditions of the license on 10 July, according to the statement of the CBM.

A new type of “twenty-thousand-kyat” banknote was officially released in 31^st July 2023, with a commemoration of the completion of the Maravijaya Buddha Image in order to propagate the Theravada Buddhism and bring peace towards the country and in celebration of a year birthday of a white elephant, “Rattha Nandaka. Those note will be issued within a limited amount and be distributed only by exchange of the same value with various types of old banknotes that should not be appropriate for circulation in Myanmar. To being with, the old banknotes will be exchanged with the equal value at CBM Nay Pyi Taw, Yangon Branch and Mandalay Branch. As soon as the official announcement is released on 24^th July 2023, there is fluctuation in Foreign Exchange Currency at the Market Rate of 1 USD is equivalent to MMK 3,450 and 1 Baht is 100 MMK and 1 RMB is 450 MMK.

Trade

The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement between the ten member states of ASEAN, Australia, China, Japan, the Republic of Korea, and New Zealand, came into effect in January 2022.Since July 2023, the authorized producers and exporters get benefits from preferential tariffs through the Certificate of Origin (CO) Form RCEP. That CO Form is available for products originating in Myanmar and intended for Export to ASEAN member countries, except: the Philippines and Vietnam. Interested parties can easily apply through export and import offices and border checkpoints under the Department of Trade, with established rules and regulations. Besides, for manufacturing related products, traders can obtain approved exporter status through the Online CO Application System (https://on­lineco.myanmartradenet.com . Specifically, Cambodia, Laos, and Myanmar have been granted access to preferential tariffs, while Viet Nam receives moderate tariff benefits. Furthermore, the least-developed countries will enjoy additional exemptions as outlined in the United Nations charter supporting the Least-Developed Countries (LDCs), especially CLM countries. According to the agreement, RCEP members have to grant a 65 per cent customs tariff exemption. However, Myanmar, Cambodia, and Laos are only entitled to give a 30-per-cent tax-exempt to other entities a 30 percent tax to other entities. Furthermore, ten years after the agreement’s implementation, members are obligated to grant an 80 per cent tax exemption. Myanmar, however, has been given a transition period of up to 15 years for its trade sector

Online Shopping and sales have been strong since the pandemic periods, however, there is no handle tax issues and controlling over the products. As a matter of fact, Taxes should be paid wherever transactions are conducted. By doing this, it can save taxes for the country. Therefore, in accordance with the Section 4 and Sub-section (c) of the Essential Goods and Services Act, Online Sales have been declared as “Essential Service” by Ministry of Commerce, starting from 4^th July, 2023. The Ministry has also empowered to issue prohibition orders, regulatory orders, supervision orders, protection orders, and necessary actions related to this service. This is done in order to restrict and prevent goods and services that may harm the interests of citizens, and to prevent the domestic transportation of goods and animals that may cause dangers, epidemics and unacceptable problems. Violation of the law is punishable by a minimum of six months to a maximum of three years in prison and a fine of not more than MMK 500,000, according to the law.

Energy

Renewable Energy has been enormously used throughout the world in order to fill up the Energy Demands and it’s environmentally benefits so that Governments throughout the World majorly focus on the Renewable Energy Sector. Among renewable energy, the countries have been using Gasohol called biofuel, which is a mixture of Ethanol 5% and Diesel 95%. Not only in European Countries but also in ASEAN Countries has majorly focused on renewable energy and ASEAN Countries planned to have 23% Bioethanol Fuel generation in 2025 and 35% in 2030. In Nationally Determined Contributions (NDCs) report, Myanmar is a country trying to reduce carbon emission by 2030 and start using Biofuel energy.  Myanmar will produce 70,000 tons of bioethanol (2 million gallons per month) from Maize and Molasses.

Transportation

Road Transport Administration Department (RTAD) under the Ministry of Transport and Communication released that there are registered 3,206 electric vehicles as of June 2023. Among those, 77% (2,474) are two-wheelers vehicles, 15% (467) are passenger vehicles and 8% (263) are three-wheelers vehicles. Besides, as of June 2023, there are registered 6.3 million (6,366,854) gasoline cars, 512,283 diesel cars, 12,888 CNG cars, 69 LPG cars and 3,884 HV cars. The Steering Committee for the National Development of Electric Vehicles and Related Industries is mainly responsible for establishing policies for the development of electric vehicles and related industries, implementing tax exemptions for use of electric vehicles and provide other reliefs, setting necessary command instructions, rules and regulations and building public charging stations.

COVID As of 31st July 2023, there are (641,053) 639,740 active cases of COVID-19 in which 97 % have been recovered from the disease and compared to previous month, 1313 cases has been increased. Compared to previous month, only 2% active cases have been increased. However, the government has been continuously controlling the infection of COVID-19 and the rules and restrictions have been extended until the end of August 2023 by the Ministry of Health.

Economy

According to Myanmar Economic Monitor June 2023, the World Bank forecasted that the economic conditions in Myanmar has become stabilized in the first 2023 and GDP is being increased by 3% in the year up to September 2023 which is still 10% lower than in 2019 but higher than in 2021 and 2022. Its current account deficit is expected to widen to almost 6% of GDP in 2023, 3.6% boost up than previous year and the fiscal deficit is estimated to have widened to 5.4% of GDP in 2023. Exchange rate has remained steadily while CPI inflation has become eased. Average Inflation rate is projected to ease to 14% this year up to September 2023.  Even though the economic situation is gradually bounding back, the household incomes still remain weak which limit the ability of domestic demand to drive growth. Higher prices and electricity shortages still make it difficult for many businesses to operate feasibly.

One article from New Light of Myanmar newspaper pointed out that the remarkably risen in commodity prices such as foodstuffs and foods amidst 2023 and the majority of dwellers living in Yangon City areas have been trying to overcome daily challenges of hiking prices to cover the cost of their families’ households. The basic breakfast meals such as tea, noodle and Monhinga on the roadside has risen to two times than the previous year. Even, consumption rate of breakfast for the personnel can range between MMK 1,000 to 1,500 per daily. Besides, most of the residents in Yangon city critically face unbalance between income and expense due to rising prices of goods.

2020-2023 Labor Force Report was released by Directorate of Labor, Ministry of Labor in March 2023. The Report was accumulated based on projection method under the great support by Meikhtila University of Economics as there was difficulties to collect data in some areas of countries due to security concerns. The report has not been publicly released yet but sooner or later it will be publicly released through www.mol.gov.mm . According to the findings observed through projection, 90% of the male workers in Myanmar are in the late thirties (30-50) with the highest while 70% of female workers in the late twenties (25-29) with highest among other age groups. It is analyzed that the male workers work until 65 while small amount of female does. 60% of male work until 65 while only 20% of female work until 65. (Reference to “Myanma A Lin” Newspaper, 18^th June, 2023.)

Banking and Finance

The United State Government made one-sided economic sanctions on Myanmar two state-owned banks: Myanmar Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB) with the issuance of 20th June, 2023. As the banks do not sign up Foreign Currency Accounts at the US-based banks or branches, there will be neither any losses of currency nor does not make harmful on payment services in International trading. As foreign banking services can be done in almost local private banks and their foreign bank branches apart from those two, public should not be worried about it. In line with rules and regulations adopted by the Foreign Currency Supervisory Committee under Central Bank of Myanmar, the transfer, payment and receiving of foreign currencies, imports and exports, and transfer of employees’ and seafarers’ salaries will continue to be conducted conveniently.

In 2013, the Central Bank of Myanmar implemented a forex market in which interbank transactions can be made between AD banks (Authorized Dealers) and Bank-customer transactions for the Foreign Exchange Market. The system is also supported by International Forex Trading Platform to make the authorized dealers to deliver a complete function for inter-bank transactions. Since 22nd June 2023, the CBM has led the online trading platform for bank-customer transactions and transac­tions between clients. The total turnover for the trading of the six authorized banks was US$6.89 million with an exchange rate of MMK 2,920 in 2023. Furthermore, the CBM also provided USD SWAP Financing and sold 1.2 million dollars. The CBM also issued that exchange rate transaction on the platforms are the actual value and do not rely on other platforms on social media as they are grey market rates. However market rates are still known as K 3,150 to 3,200 on 29 June 2023.

In line with the Notification issued on 23^rd June of CBM, the Monitoring and Steering Committee on Gold and Currency Market under the CBM suppressed on the Foreign Exchange Manipulators, as known as “Illegal Hundi Business Operators”, in Big cities; Yangon and Mandalay because of illegally transferring money without relevant license, also doing Online Gambling businesses and has already been escalated those during June with prosecution under the existing laws. According to the law, Inspection and prosecution against those unscrupulous traders who intend to interfere with the free and fair operation of the market and are involved in illegal foreign currency hold­ing and illegal money transfer businesses will be carried out under the Foreign Exchange Management Law and the re­lated laws.

The launching ceremony of the Aungbarlay Online Lottery System was held at the Myanmar International Convention Centre – II in NayPyiTaw on 8^th June, 2023. The sole purpose of upgrading to Online Lottery system is to solve the problem of higher prices of lottery tickets in set price. Online system has many impacts that will allow people to buy within set price, easily through an online lottery application system by using their mobile phones at any times. Not only being easily accessible to buy the tickets not only Payment system can be through the application and small prizes for winning lottery will also be delivered through online or their banking accounts. The system is jointly implemented by relevant ministries and department under the leadership of the Ministry of Finance and Revenue and Myanmar Telecom International Co Ltd.

Trade

In accordance with the new bulletin (9/2023) released by the Trade Department under the Ministry of Commerce, Import licenses can be commenced through Automatic and Non-automatic licensing systems on Myanmar Trade 2.0 platform since 22nd June, 2023. As being digitalized licensing system, import license for certain lines (1,525 lines) through both Sea and Border Trade will be automatically passed on the system. Under Non-automatic licensing system, Seaborne trade and commodities lines which did not require Import licenses are mandatory to import licenses during the licensing process after 60 days initiated since 22nd June, 2023 and will be allowed to be imported within 30 days from 22nd June, 2023. In line with Customer Tariff of Myanmar 2022, there are altogether 3,075 commodities lines with 10 digits HS code were notified to be permitted license automatically on Trade Net 2.0 and since June 22nd, 2023, Only 1,525 lines have already been granted licenses through automatic import licensing system.

In order to promote Border Trading between China and Myanmar and facilitating bilateral currency transaction, the CBM has allowed Myanmar eligible banks to open Renminbi-Myanmar (RBM) accounts for importers and exporters engaged in border trade and it is required to have RBM to do directly border trades in China-Myanmar Border points since 14^th June, 2023.  The banking transaction for imports in Myanmar-China border trade will start from 1st August 2023. The importers must use the banking system with for­eign currency (Yuan) pur­chased from local banks or export earnings deposited in local bank accounts, the CBM directed. Additionally, companies need to show export earnings or income statements, cred­it advice or bank statements while seeking a license from the department. The import license will be granted for the amount not exceeding the account balance after screening the bank statement or export earnings or foreign currency purchase records. Importers who have already sought import licenses are required to bring in the goods by 31 August 2023. If they failed to import before the deadline, their import licenses will get cancelled. Regarding export earnings and income statements, the bank deposits put in the account after 1 January 2023 can be used. Exporting companies can use their earnings for imports or transfer them to other entities for import purposes at border checkpoints.

Permits to import New Vehicles from Foreign Countries have been suspended since September 2021. According to Car Importing Polices for 2022, Car sales centers have not been approved to import and at the present, commercial vehicles are allowed only to be imported at a rate of five vehicles per week. In June, 2023, the Customs Department has issued an announcement on the easing of custom duty taxes/rates on imports of domestically semi-knocked down (SKD) and completely knocked-down (CKD) system vehicles. According to the Statement, the tax rate of SKD system passenger cars with above 2000 CC and 2001 CC has been reduced from 7.5 percent to 5 percent while the CKD system passenger cars with above 2000 CC and 2001 CC from 5 percent to 3 percent respectively.

Investment

U.S based Pact Global Microfinance Fund (PGMF), the largest microfinance in Myanmar, announced that the loss of USD 156 Million in debt taken by 890,000 people would be waived and the operating in Myanmar will be closure on June 30, 2023. PGMF has served nearly 15,000 villages in rural areas and 2.3 million clients over 25 years in which 99% of clients are women.

Manufacturing

In order to accelerate the development of Iron and Steel Businesses in Myanmar, the Myanmar Iron and Steel Association (MISA) was opened its office at the 13th Floor of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) on 21st June, 2023. MISA has been a cluster of Myanmar Industries Association (MIA) since 2014 and has also joined the South East Asia Iron and Steel Institute (SEAISI) since December 2018. The MISA will move forward to the development of industry standards which are compatible with the country and the production of iron and steel products that meet international standards and cooperate with international organization to promote Small and Medium Steel Enterprises and disseminate iron and steel information and receive technical assistance from the regional countries by holding seminars and research paper reading sessions. Up to today, Myanmar’s steel demand is estimated at 2.5 million ton per year which covers 92 percent of which are being imported and forecasted to grow up to 5.4 million tons per year in 2023.

Energy

Deapin Hydro Power Station I has been operating safely for more than 10 years continuously in Myanmar with the exceeding amount of 10 billion kWh since the beginning of operation. The Power Station is the first hydropower station project invested in and operated by China Datang Corporation in Myanmar, distributing electricity from Bhamo, the second largest city in Kachin State since 2012.  Up to recent year, DAPEIN 1 Hydropower Station has already delivered 620 million kWh of free electricity to the Bhamo Area.

Transportation

Kolkata- Bangkok Highway is a trilateral highway connecting Bangkok (Thailand) with Kolkata (India) as part of BIMSTEC (the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) and is likely to be opened in coming 4 years and. According to the plan, that trilateral highway will start from Bangkok in Thailand across the different cities such as Sukahothai, Mae Sot in Thailand, Yangon, Mandalay, Kalewa and Tamu in Myanmar, Moreh, Kohma, Guwahati, Srirampur, Silguri in India and end in Koltaka (India) with the approximate distance of over 2,800 km. The longest stretch of the highway will be in India and smallest in Thailand. According to the plan, portion of the highway in Thailand has already completed while in Myanmar, be possibly finished in coming three years.

COVID

Currently, new COVID-19 Variants, XBB 1.16 has been spreading around not only in Myanmar but also countries through the world. As of 29th June, 2023, there are 639,740 active cases of COVID-19 in which 97 % have been recovered from the disease and compared to previous month, 1283 cases has been increased. However, the government has been continuously controlling the infection of COVID-19 and the rules and restrictions have been extended until the end of July 2023 by the Ministry of Health.

Economy

Cyclone Mocha hit three distinct states and regions of Myanmar, Rakhine State, Chin State and Magway Region on 14^th May, 2023 and destroyed home and infrastructure of local communities living there. Aftermath, it has also major impact on commodity prices such as the price of basic commodities has been very high. On top of it, there is soaring prices and being double prices in basic shelter materials such as tarpaulins, GI sheets, and iron nails. Not only being higher in commodity price but also the running out of the commodity including medicines at the current situation.

Banking and Finance Sector

Market Foreign Exchange rate has increased from MMK 1890 to MMK 1950 in official Market Exchange counter at the end of May 2023 due to the speculation. The rumor has it that the reference exchange rate will also have been increased to market rate by Central Bank of Myanmar. However, the Central Bank of Myanmar announced on 26^th May that it would not change the reference exchange rate and promotes Foreign exchange currencies instead and support USD liquidity and MMK liquidity. Besides, the CBM stated that actions will be taken if the AD licensed private banks participate in speculation.

Myanmar has gained the remarkably raising Inflation rate throughout history. Myanmar Annual Rate of Inflation or (CPI) Inflation rate has climbed up to 18.25 % in the first quarter of FY 2022-23, and Year-on Inflation rate is 18.46%. Annual Rate of inflation is 27.98 % and average Inflation for Q2 (Jul-Sep 2022) was 28.14 %. Compared to the FY 2021-2022, it has gained 7 % increase of CPI and 4 % increase in annual rate of inflation.

Regulations on overseas remittance – Foreign Exchange Authorized Dealers Bank (AD) banks in Myanmar will scrutinize the companies whether they pay the personal and corporate income taxes to the government and allow the businesses to transfer above USD 10,000 remittances after checking tax bills.

According to the Myanmar Annual Tax Compliance Remainder for FY 2022-23, all taxpayers – including companies, organizations, or individuals – must file their annual tax returns especially Corporate Income Tax, Commercial Tax and Annual Salary Statement to their respective tax offices through in-person or applying through www.ird.gov.mm before the end of June, 2023.

Trading Sector

An MSME Fair 2023 was held on 7th May, 2023 in Lotte Hotel, Yangon and mainly conducted by UMFCCI (Union of Myanmar Federation of Chambers of Commerce and Industry) in order to promote the development of MSME sector within Myanmar. There are over 120 product shows displayed including Myanmar Traditional Costume Fashion Show.

Myanmar is the largest trade partner of Yunnan Province as well as the largest import source and export market. China and Myanmar has been closest business partners’ countries throughout ages. China-Lancang Trade Fair between the Myanmar Trade Promotion Organization under the Ministry of Commerce, and the Lancang People’s Government in Yunnan Province, the People’s Republic of China, was conducted from 25th to 28th May in NayPyiTaw. A total of 65 businesspersons, organizations and companies from Myanmar and 70 businesspersons from China have participated on the trade fair. As a part of the program, Myanmar-China economic and trade cooperation discussion and the signing ceremony was took place on 26th May 2023 at the Plenary Hall of the Myanmar International Convention Center II (MICC- II). About 17 companies from both countries signed nine agreements on cooperation and trade in areas such as agricultural products, foodstuffs, soft drinks and beverages, pharmaceutical products, household electronics, and electric vehicles.

Foreign Direct Investment Sector

India-based Adani Business Group has sold Adani Ports and Special Economic Zone (APSEZ) Ltd, the largest port group developer of India, implemented in Yangon, to Solar Energy Companies with USD 30 Million. The business group has totally invested USD 195 million in Myanmar. In May 2022, the APSEZ had announced the signing of a Share Purchase Agreement (SPA) for the sale of its Myanmar Port. According to the Statement, the buyer will pay the said amount to the seller within three business days on completing all the necessary compliance by the seller. On receipt of the total transaction value, the APSEZ shall transfer the equity to the buyer and its exit will stand concluded.

According to a local newspaper, Myanmar Economic Holding Limited sued the HSL Group Joint Venture Company for USD 21 million and the defendant will confront witnesses in order to dispute their testimony and questions in coming June 2026.

Manufacturing Sector

By 2022-23 GDP by composition, the manufacturing sector is the second largest portion with (34%)and largely contributed toward national economy. Myanmar manufacturing sector is mainly comprised of the garment and textiles produced on the CMP (Cutting, Making and Packing). Throughout nationwide, about 541 factories are operated under the Myanmar Garment Association and mostly from China, and followed by Myanmar, the Republic of Korea. In April 2023, the manufacturing sector almost hit USD 3.7 Million investment which is mainly from a Chinese enterprise with USD 2 Million USD.

Although there was a terrible electricity shortage in hot season of this year,  Purchasing Managers’ Index (PMI), Myanmar Manufacturing Index has bumped up to 57.4 in April 2023 with the fastest pace since the series began in 2016 and grew the most on record  due to increasing orders and production growth in last 18 months. 

Transportation Sector

The opening ceremony of Sittwe-Kaladan Jetty International Port under the Indian-funded Kaladan Multi Modal Transit Transport Project was held in Sittway Township of Rakhine State on 9^th May 2023. It has major achievement for transportation sector through 2022-23 because of its mutual benefits to India and Rakhine and China States in Myanmar. Besides, as it is a multimodal transport system by linking the sea route, inland waterways and road, it has major impact such as the flow of the transport and goods between Rakhine State and also promotes the socio-economic status of residents living alongside the Port

COVID

There are eight cases of Covid-19 Omicron XBB.1.16 sub variant in Sittwe, Myanmar. The Ministry of Health has also warned that the XBB.1.16 is more infectious than previous one. As of May 27,2023, there are 638,491 Coronavirus cases in Myanmar and total 617,455 have been recovered from infection out of 10 Million specimen test. In order to continuously control the infection of COVID-19, the rules and restrictions have been extended until the end of June 2023 by the Ministry of Health.

Economy

Throughout April 2023, National Planning Law, Union Tax Law, and Union Budget Law were released by the Government. The FY 2023-2024 National Planning Law was promulgated on 31^th March 2023, enacted since 1^st April 2023 and released on 7^th April 2023. According to FY 23-24 law, the country achieved GDP growth by 3.4% in 2022-23 FY and the growth target will be at 4.1% in FY 2023-24. GDP by composition, the service sector has been the highest composition with 42%, and followed Manufacturing Sector by 34% and Agriculture Sector by 24%. It is targeted to grow 5.5% in Service Sector, 3.4% in Manufacturing Sector and 2.4% in Agriculture in FY 2023-24.

Trade

Throughout FY 2022-23, total foreign trade volume of Myanmar was USD 34 billion which is 9% increase compared to the previous year trading volume of USD 29 Billion. Among the development in trading sector with April 2023, after successfully implementing the Direct Trade Payment Systems Yuan/Kyat and Baht/Kyat at China and Thailand throughout 2021-2022 FY of Myanmar, the Central Bank of Myanmar has formed working committee on Rupee/Kyat direct payments for India-Myanmar trade with associated government departments, state-owned banks and private banks from Myanmar. In terms of Trade Statistics, India has been Top-5 major exporting countries after China and Thailand up to February 2023. Hence, it is estimated that Trading with India border will be increasing after implementing the Rupee/Kyat Payment Systems. 

In export sector, fishery product has been one of the major exporting products of Myanmar exported to 40 countries (especially Japan, European Countries, China, and Thailand and neighboring countries) through marine trading. In 2022-2023 FY, it mainly contributed towards Country’s economy with an income of USD 765.947 Million which is however 8 % decrease (USD 59 Million) compared to previous Fiscal year (USD 826 million).In exporting to neighboring countries, they are normally delivered through Muse, Myawaddy, KawThaung, Sittway, Myeik and Maungtaw borders. There are 20 fish species products including hilsa, rohu, catfish, and seabass exporting to Foreign Countries.

In import sector, the automatic licensing and non-automatic licensing systems on Myanmar Trade Net 2.0 platform will have commenced on coming 1^st June, 2023. As it is digitalized licensing system, it does not need to apply for import license for certain lines (3,075 lines) and those lines will be automatically passed through the system. According to Notification 19/2023 of MOC under the Customs Tariff of Myanmar 2022, 8,774 commodities lines with 10 digits HS Code for export are required to be applied for export/import licenses on Tradenet 2.0 and they will be granted licenses through non-automatic import license. Only after traders of those items have received licenses first in line with the export/import regulations through the non-automatic licensing process, the shipment by air, sea and road will be given the green light.

Recent developments of Electric Vehicles in Myanmar

There are four types of Electric Vehicles which can be imported to Myanmar notably as Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV), Plugin Hybrid Electric Vehicle (PHEV) and Fuel Cell Electric Vehicle (FCEV). On recent development, the first EV Express Bus will be initiated by Local Express Bus Transport Service, Mandalarmin Transport Co Ltd, in coming months on Yangon-NayPyiTaw-Mandalay Trips and the passengers can start using it in coming months. For Public Use, MG Myanmar launched MG4 Electric Vehicle at the Myanmar Plaza on 3^rd April 2023. MG Myanmar has been one of the Authorized EV Vehicle Importing Companies of Myanmar and has been launching first to the Public. In terms of Power Station for EVs, there are 19 Charting Stations on pilot project, have been implementing within this year. However, on 5^th April, 2023, the power station on the Yangon-Mandalay Highway Road in Bago Region was finished. It was mainly constructed by Earth Renewable Energy Co,.Ltd. In terms of Commercial Tax, it was categorized under the Special Commercial Tax and Tax on EVs has been exempted from 1^st April 2023 until the end of March 2024 with Zero Percent Custom Duty. Besides, the Road/Bridge Tolls Fee, 100 percent wheel tax, city entrance fee, charges for overweight load, showroom fee and so on have also been exempted for two years from 1^st April 2023 to 31^st March 2025.

Banking and Finance

The FY 2023-2024 Union Taxation Law, Union Budget Law were enacted since 1^st April 2023 and released on 7^th April, 2023. The significant changes in 2023 Union Tax law stated that increasing tax rates on specific goods such as liquors and income tax threshold for SME companies, and the commercial tax exemption on Battery Electric Vehicles (“BEVs”) including Battery-used electric 2/3 wheeled Vehicles, accessories, battery charging services and solar-related equipment..

In recent development in Banking and Finance Sector throughout the years 2021 to 2023, the savings at the private banks in Myanmar has significantly boosted up to 14.42 percent and 7.81 percent in loans compared to the previous fiscal year. The total credit to the GDP ratio is also 28 percent. Savings at the banks of the Central Bank of Myanmar and balance has also gained an increase of 35 and 36 percent compared to the previous year. The turnover of the Interbank Market also bumped up to 98 percent (MMK 1,166 billion) compared to the previous year and the turnover between the foreign banks and private banks get higher than previous years.

In Private banking sector development, even though there used to be are two prepaid card services such as Manchester United Prepaid Travel Card (Visa) and CB MNA Visa Prepaid Card at CB Bank Myanmar, , the prepaid card services newly launched by CB Bank can be used up to USD 1,000 per month since 21^st April 2023. Moreover, it can be used to withdraw Cash from more than 210 countries around the world. The features can also topped up with CB Pay and ibanking. In transferring money, a total of 50 Million kyats can be daily transferred from CB Ban to any local bank by using ibanking service through smartphones, tablets and laptops. Ibanking account can be created at CB Bank Branches and Business IBanking account at CB Bank (UFC Tower 2^nd Floor)

Investment

Throughout FY 2022-23, there were total USD 1.64 Billion of approved 87 Foreign Direct Investment projects by 12 Sectors which has been an increase of 39% compared to previous FY 2021-2022 (USD 0.6 Billion). In every years, Power Sector has been the highest FDI sector and mainly invested by China. In 2022-23 FY, more than half of total investment covered the sector with USD 820 Million and followed by service sector with 31% (USD 504 Million) and Manufacturing Sector with 17% (USD 271 Million). By countries, Singapore, China, Thailand and Hong Kong (SAR) are major investors of Myanmar.

Transportation

Major improvement within The bridge project is being implemented on Hsenwi -Kunlong-Chinshwehaw road (49/6 miles) in Kunlong Township of Lashio District with the funding of 140 Million Yuan by the Chinese Engineers and workers of China Yunnan Sunny Road and Bridge Construction Company Limited under the supervision of Ministry of Construction, Myanmar for improving the traffic and logistics sector of the Northern Shan State.  As of April, the construction period is scheduled within 30 months since 2021 and currently the project completion is on 92% and is planned to complete in June 2023. The 6-span Box Girder type bridge is 12 metres in width, and the approach road is 3.54 kilometres long on the Kunlong side and 435 metres long on the Hsenwi side. It has a load capacity of 75 tonnes.

China is major trading partners of Myanmar for decades and because of this project, This Kun long Bridge is going to be a major trading area between China and Myanmar across Lashio, TheinNi, Kunlong and Chinshwehaw and as it is exported main agricultural products such as sesame, peas, sugarcane and corn, it can become trade facilitation between two countries.

Energy

Electrification sector

There are five major types of electric power installation in Myanmar by types such as Thermal, Diesel, Hydel, Gas and Solar. In coming months, Myanmar has potential projects on Cross-border power line projects with neighboring countries such as Laos, China and Thailand to generate electricity across the country. Among electrification by types, over the half of the power generation  is by Thermal Power Stations with 52%, 45% Hydropower and the other 3% by Solar power. There are 28 hydropower stations generating 3,225 MW capacity, thermal stations generating 3,738 MW capacity and 6 solar power stations generating 180 MW to 2,143 MW. Currently, 3 solar power stations have been constructed near Naypyitaw and will be completed in 2025-2026.

 On 3^rd April, 2023, the MoU amendment signing ceremony on Myanmar-Laos Power Cooperation and signing ceremony of Notice to Proceed (NTP) to conduct a feasibility study on cross-border power project to hand over to Consortium of PISASAI Energy and Mine Investment Pte Ltd and Primus Sapphire Power Limited between the two countries’ Electricity and Energy Ministries were held in NayPyiTaw. The MOU has been signed since 2018 for 5 years and there was major progress in power transmission/selling project. The project will have been extended for next term and Mekong hydropower project development program as well and will be reached to Kengtung in 2024 and Meiktila in 2026 and is able to support the electrification of Myanmar.

Fuel and Energy Sector

According to the Myanmar Petroleum Trade Association, in the peak season of April, the country had stocked a total 4.3 million gallons of 92, 10.4 million gallons of 95, 1.7million galloons of 97, 30.9 million gallons of diesel and 2.9million gallons of premium diesel to fulfill demand. It is mainly imported from Singapore through THE tanker ships. There will be no more shortage of the Fuel oil in Myanmar.

COVID

The Ministry of Health and Sports has confirmed the new detection of Omicron Variant (SARs-CoV-2) since February 2023 and has conducted COVID-19 Molecular Disease surveillance. In April 2023, there was a slight increase of the outbreak of Omicron Variant XBB.16 in Myanmar. It is 1.27 times faster infection more than the previous ones even though the symptoms were not more severe. As of April 28^th 2023, there have been confirmed Covid cases of 6.3 Million, death among lab confirmed was 19,490, and recovered cases were 6.1 Million out of 10 Million total specimen test.

In order to continuously control the infection of COVID-19, announcement of the extension of the restriction of COVID’s rules and restrictions have been extended until 31 May 2023.