Posts in category: ECONOMY

The government is drafting plans to reform the agriculture sector in line with the Myanmar Economic Recovery and Reform Plan (MERRP), which is now being drafted, according to the Ministry of Agriculture, Livestock and Irrigation (MOALI) in a November 18 statement. While the plan has yet to be finalized and made official, MOALI understands it includes a framework for agricultural development and reform. This aligns with MOALI’s aim is to develop more high quality agriculture, livestock and fisheries products to raise exports and stabilize prices. It also plans to raise investments in value-added food industries and carry out reform programs across the industry. The ministry will work to strengthen linkages between farmers and food producers.

Funds will be channeled into improving domestic logistic infrastructure and storage facilities, while work will be done to clarify farmers’ land rights, accelerate contract farming and hire purchase ways for agricultural equipment. Key to reform is finding and fostering new private sector business opportunities in the agriculture sector, Paul Pleva, Office Director, Economic Growth, USAID Burma, said during the International Market Opportunities for Myanmar Agricultural Products webinar last week. USAID is ready to support upgrades and where they exist, build on existing contacts and relationships, such as those established in the US, Germany, Japan and Netherlands to improve trade. USAID supports agriculture because strong economic links between communities promotes social cohesion.

In the previous year, Myanmar exported agriculture products worth US$3.7 billion, according to the Ministry of Commerce. The government is drafting the MERRP after a recent review of the COVID-19 Economic Relief Plan (CERP), which was rolled out on April 27, as the CERP was implemented as a short term response plan to mitigate the immediate impact of COVID-19 on households and businesses, the MERRP as an extension of the CERP will set out a recovery plan aimed at rebuilding the Myanmar economy over the longer term. The new plan will focus on macroeconomic and financial stability and priorities growth strategies that are sustainable for the economy in the long run, such as investments in energy sources that are renewable. It will also include support for agriculture, infrastructure that boosts connectivity as well as human capital and innovation.

Source: Myanmar Times

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

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

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

Source: Daily Eleven

The domestic gold market has reopened yet it still remains sluggish, said U Ohn Myaing, general secretary of Myanmar Gold Entrepreneurs Association. “The demand is low and the trade isn’t lively yet. Transactions take place only between the sellers who want to cash out and the investors,” he said. On 2 November, pure gold fetched K1.31 million per tical (0.578 ounces, or 0.016 kilograms) in the domestic market, while the gold has registered at US$1,880 per ounce in the international market. “The domestic gold price is about K20,000 lower than the international rate,” he continued.

“It is hard to predict the domestic gold price amid the COVID-19 pandemic and the tensions between China and the US,” he highlighted. Yangon Region gold market, which was temporarily suspended amid the COVID-19 resurgences, was back into business on 26 October. The virtual trade is also available through the Zoom app, Yangon Region Gold Entrepreneurs Association stated. There are more than 10,000 gold shops in the region, and about 50 visses of gold were traded earlier. During the first wave of COVID-19, Yangon gold market was closed between 29 March and 18 May. According to gold traders, during the past four months, the domestic gold was priced with the minimum rate of K1,216,500 (1 July) and the maximum rate of K1,296,500 (27 July).

The price moved in the range of, K1,286,500 on 13 August and K1,332,500 on 7 August. The local gold 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). 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 1,200,000 (7 August-4 September), and then reaching an all-time record high of K1,300,000 on 5 September 2019. 

Source: The Global New Light of Myanmar

Microfinance Supervisory Committee has asked the microfinance institutions (MIs) not to collect the loan repayments from borrowers in November and December, and that two-month repayment amount will be suspended until April 2021. However, the borrowers from COVID-19 stricken Yangon and Bago regions and Rakhine State are entitled to this relaxation only, according to the decision of the Central Committee on Prevention, Control and Treatment of COVID-19 meeting held on 23 October 2020.

The committee stated that the lenders are asked not to collect the interest rate during the suspension time and the repayment to be made between May and October 2021 in instalment. The State-owned Myanma Economic Bank will give loan (equals to two-month repayment amount of the borrowers) to the MIs, with zero interest rate instead. Otherwise, the government pay the loan repayment to the MIs on behalf of those borrowers. It is one -year grace period. The MIs must collect the loan in the second half (six months) from their borrowers and repay the government’s loan. The MIs are experiencing difficulties in collecting the loans from borrowers hit hard by the COVID-19 during the coronavirus crisis. The committee also notified that the MIs not to collect the loan repayments from borrowers by force.

In 2011, the Microfinance Law was enacted to promote rural development, and the MIs play a pivotal role in financing firms for rural people. MIs can help support Myanmar’s small businesses as SMEs constitute 90 per cent of companies in Myanmar and plays a crucial role in creating jobs.
There are 4.6 million borrowers from the microfinance institutions across the country. Additionally, the government is providing the loan from the COVID-19 funds to ease the economic burden faced by the virus-stricken businesses.

Source: The Global New Light of Myanmar

Yangon used to be busy and have a lot of people everywhere, but now number of vehicles and people has become smaller and smaller due to the ongoing Covid-19 crisis. The number of those who are staying at home has been gradually increasing as they curb possible contacts in their daily relationship. At such a time, much of the work is shifted to online. In the financial market, the trading on Yangon Stock Exchange is moving more sluggishly than normal. The value traded on YSX by normal trading system during August reached K747.5 million worth of 118,850 shares. The value traded on YSX by block trading system reached K197.45 million worth of 54,874 shares. The total value traded on YSX during August touched K944.95 million and the value traded daily was around K47 million, cited for the announcement of the YSX.

The YSX’s trading decreased by about 5% when it was compared to July this year. As a new development step, the YSX allowed the foreigners and external organizations to buy shares of YSX listed companies starting on 20 March in 2020. It was learnt that the foreigners and external organizations bought more than 53,200 shares from YSX listed companies during five months following the official announcement of the YSX. The official statistics recorded on 9 September indicated that the foreigners and external organizations bought 9,606 shares from FMI, 37,974 shares from MTSH, 5,465 shares from Ever Flow River Group Public Co., Ltd and 200 shares from TMH Telecom Public Co., Ltd. The YSX allowed foreign investors and organizations to participate in the share trading with the purpose of picking up stock share trading speed among YSX listed companies. The foreigners have to open designated bank accounts and trade in stock shares. It is already informed by Securities and Exchange Commission under the Ministry of Planning, Finance and Industry. The foreigners living inside the country and those from foreign countries are allowed trading in stock shares of YSX listed companies.

In a bid to extend YSX share trading into the international community, regulatory procedures have to be observed as Myanmar instructed. If the return on the investment is wanted to be sent to the relevant foreign country, the foreign listed company will have to be under supervision by the Central Bank of Myanmar following rules and regulations as well as directives issued by the Central Bank of Myanmar besides the provisions of Foreign Exchange Management Law. It is aimed at ensuring a systematic financial flow when the YSX carries out share trading. Only then can errors be reduced at a time when financial matters are being carried out and stock shares are being traded in. The global pandemic of Covid-19 slowed down the favourable prospects for economic growth and local and foreign investments in Myanmar.

Businesses and investments are moving to the countries having better economic potentials in the future right now when there has been an increase in the number of business contacts. The YSX is one of the interesting businesses of international investors. There is also a plan to change State-owned businesses into YSX listed companies in order to attract the attention of local and foreign investors in the YSX running with slow share trading. It is to intend local and foreign investors to pay more attention to share trading among the strong businesses.

The international investors have shown great interest in doing business in Myanmar. The foreign investment volume reached USD5.2 billion during 2019-2020 financial years reported by Myanmar Investment Commission. The MIC has so far allowed more than 330 new foreign investments. The foreign investment volume the MIC expected for this financial year is USD5.8 billion. According to investment promotion project of the State, foreign investment volume has been expected to be USD5.8 billion by the MIC year on year until 2020-2021FY. Moreover, foreign investment volume has been expected to be USD5.8 billion from 2021-2022 to 2025-2026FY as well. With such expectations, investment volume will increase and businesses will develop. At the same time financial flow will be smooth and secure and then the YSX’s share trading will make progress.

The YSX started on 25 March in 2016 has been in operation for more than four years. The FMI, the MTSH and the Myanmar Citizens Bank and the First Private Bank became YSX listed companies within one year of its birth. The share volume among these four listed companies reached 3.6 million and was valued at K800 billion within one year. At such a time, the YSX is planning to invite the public to the share trading encouraging profitable State-owned businesses to participate in the stock exchange. This move will be able to make the share price go down, thereby revitalizing slow-running YSX livelier than now. A Japanese company named Daiwa Securities suggested that Myanmar government should privatize State-owned businesses and encourage them to participate in the YSX.

The share volume in the hands of YSX listed companies reached more than 300,000 with 33,000 people opened bank accounts. The share trading is now running slow affected by the Covid-19 pandemic, but share prices are not expected to be going down too much. The FMI stood at K9,900 on closing market price chart, the MTSH at K3,700, the MCB at K8,000, the FPB at K22,500, the TMH at K2,700 and the EFR at K3,050 respectively. The YSX’s share trading went on to some degree despite Covid-19 crisis. The share trading of some listed companies went well but some didn’t. The share value for the whole month of August stood at K47 million. The YSX Expo that is held every year was held via online in order to avoid crowds as the Covid-19 cases were still going on.

When taking a look at share trading throughout the year, the share trading valued at K72 billion in 2016, K29 billion in 2017, K14 billion in 2018 and K14.5billion in 2019. When reviewing the share trading on the YSX, it is like running slow. The YSX allowed foreigners to own 32 % to the listed companies. The share trading did not become brisk as expected although it went well. At such a time, the stock market is expected to be better in the post period of Covid-19. Some State-owned businesses should be changed into public ones and they should be YSX listed ones. If investments and businesses enormously increased, the stock share trading would develop a lot, attracting the attention of local and foreign investors. 

Source: The Global New Light of Myanmar

The annual rate of inflation in Myanmar, based on the Consumer Price Index, fell to 6.43 per cent in August 2020, according to a report released by the Central Statistical Organization, under the Ministry of Planning, Finance and Industry. The US dollar against Kyat is relatively weak in August, with a fall of about five Kyats than the previous month and a sharp drop of K141 against a-year ago period. However, the gold price significantly rose in August on the back of global cues. Similarly, the imported oil price went up against July’s rate, causing truck fares and food price to rise. Nevertheless, there was a remarkable increase in CPI for the food group, household goods and maintenance, other commodities, clothing, education services, recreation, culture and non-food.

The price of the education group is stable due to the closure of schools amid the COVID-19. The cost of telecommunications and tobacco and beverages dropped, the report stated. Starting from August 2019, the consumer price index rose, and the inflation rate has remained above 8 per cent since June 2019. It reached a peak of 8.61 per cent in September and dipped in November. It touched the highest level at 8.81 per cent in December 2019 because of the high season. Afterwards, despite the drop in fuel oil price and gain in local currency, power tariff hike led to higher inflation rate up to 9.2 per cent in February 2020. Then, it gradually declined due to the coronavirus outbreak in March. The inflation rate was registered at 8.35 per cent in May 2020, and so, the month of June with 7.91 per cent. It gradually inclined to 7.14 per cent in July and the rate extended its drop to 6.43 per cent in August.

The annual rate of core inflation, which strips out volatile food and energy prices, was 11.96 per cent in August 2020, the inflation data indicated. In August, Ayeyawady Region recorded the highest inflation rate at 11.6 per cent, followed by Mandalay Region at 10.44 per cent, and Nay Pyi Taw at 7.73 per cent. The rate fluctuated with a maximum rate of 5.85 per cent in Ayeyawady Region and a minimum rate of -4.15 per cent in Mon State. Earlier, the inflation rate was calculated based on a 2006 survey. The base year was later changed to 2012. The Central Statistical Organization conducted a Household Income and Expenditure Survey in 82 townships in November 2012. To reduce the inflation rate, the concerned authorities have been making efforts based on policies on finance, currency, trade, and foreign currency control, in keeping with the second five-year National Development plan (2016-2017FY-2020-2021FY). 

Source: The Global New Light of Myanmar

Microfinance Supervisory Committee (MSC) will take legal action against the microfinance institutions if they forcibly collect loans in the pandemic period, according to the committee’s announcement released on 13 October. The committee also announced that the microfinance businesses should not forcibly collect the loans plus interests when the members’ businesses and income are lower in the pandemic period, and they should only negotiate the date of repayment of the loans and interests.

The committee has also announced that if the members are forcibly asked to return the loans and interest, they are entitled to complain to the committee in detail mentioning the contact phone number or address. The committee will take legal action against the microfinance institutions under the Microfinance Law. The committee announced in April that the livelihood businesses and enterprises operating with the loans in COVID-19 period might be adversely affected by the economic impact caused by the pandemic. So, the institutions should not forcibly ask for repayment of the loans and interests.

In July, the committee issued an instruction that the institutions are allowed to collect the loans only from those who are ready to return the loans, and they need to provide the new loans or internal loans. They also need to negotiate re-fixing of the paying back period. There are many microfinance institutions in 252 townships across the country with 4.6 million loan takers.

Source: The Global New Light of Myanmar

The Myanmar coffee market is slumping on the back of ailing demand, which has persisted since March, when COVID-19 first hit the country. The domestic coffee maker relies heavily on coffee shops, and hotels for revenue and growth. However, domestic consumption has dropped by at least 70 percent since the end of the March due to the COVID-19 pandemic, according to the Myanmar Coffee Association.

The rate of sales at local shops has declined sharply. All the shops are closed due to the pandemic. Although the export market has held up well, it might also slow down in the coming year. Based on domestic coffee consumption trends, 90pc of the population drink ready-made coffee made with cheap imported coffee powders, and the rest of the population consumes steamed local coffee. In Myanmar, most coffee users pre-order the year’s supply and collect in advance.

COVID-19 broke out soon after they collected this year’s orders, which were made based on much higher consumption forecasts than what they are seeing in the market now. The purchase of local coffee beans will also be affected because domestic consumption and foreign orders might decline due to the aftermath of COVID-19 in the coming year, coffee entrepreneurs say.

Source: Myanmar Times

The Microfinance Business Supervisory Committee in October 13 repeated instructions for microfinance institutions (MFIs) not to force borrowers who are unable repay their debts to do so amid the current period of declining business and income. It is the third time of the committee has issued the statement since COVID-19 first struck Myanmar in March. The latest statement comes amid worsening economic conditions as the number of COVID-19 cases continues to rise daily.

MFIs in Myanmar are once again facing increasing difficulties collecting loan repayments from borrowers affected by COVID-19. The MFIs had been able resume their business of lending in May and June. But operations were disrupted again from late August onwards as the number of cases began to spike once more. With factories told to close in late September and businesses told to restrict operations, the number of defaults has begun spiking again in recent weeks. At the same time, the MFIs are also becoming more cautions of who they lend to, resulting in less business overall. The microfinance business is now just 10 percent of levels seen in May and June, when business had started to pick up from the first wave of COVID-19.

The statement is just a warning to MFIs not to collect by force as the clientele are mostly those who are directly affected by COVID-19 and not able to repay their loans at this time. MFIs are still able to negotiate or work with their borrowers for loan repayment arrangements. The industry will cooperate with the government over the coming months while focusing efforts on resuming normal operations based on borrowers’ income situations. In July, the government provided K100 billion in short-term commercial loans to MFIs at interest rates not exceeding 9 percent with collateral through the State-owned Myanmar Economic Bank. There is a one year grace period.

Source: Myanmar Times

The prices of rice in export and domestic markets slightly increased in September amid the coronavirus crisis, as per data of Myanmar Rice Federation (MRF). Following the coronavirus resurgence in Myanmar, rice was highly demanded in the domestic market. The domestic retail market in September saw a rise of K1,000-1,500 per 108-pound bag compared to August’s prices, said traders from Bayintnaung market. The prices of rice last month for Pawsan varieties moved in the ranges of K38,000-50,000 per 108-pound-bag in the domestic market, while low-quality rice fetched K22,000-26,500, MRF data showed. When the volume of old rice stock has become smaller, the surging coronavirus cases in September prompted the people to make bulk-buying, making the price up by around K1,000-3,000 per bag compared with the previous month.

The residents prefer old rice to the newly harvested crop. The fresh rice will enter the market soon, so the price of new rice is likely to slide. But, the cost of old rice is expected to remain strong. There is self-sufficiency in the domestic market, and people do not need to concern over the shortage of rice. A total of 100,100 bags (108 pounds per bag) from reserved rice have been sold between 10 July and 3 October 2020, and about 701,689 bags are left to sell, MRF stated. In September, the export prices of white rice (low quality) and parboiled rice range US$385 to 500 per metric tonne depending on quality, indicating a slight increase compared with the previous months. The foreign market purchases our rice as the price is relatively lower than other Asian countries such as Thailand and Viet Nam, MRF data showed. Yet, the prices are higher than those market prices of India and Pakistan, MRF’s data showed. MRF expected to ship 2.4 million tonnes of rice, and broken rice in the Financial Year2019-2020 and the country meet the export target before the financial year-end. Between 1 October and 11 September, Myanmar sent over 413,490 metric tonnes to neighbouring countries through border trade, while over 2.117 million tonnes of rice and broken rice were shipped to foreign trade partners via maritime trade, totalling over 2.53 million tonnes.

Over the past eleven months, the value of Myanmar’s rice and broken export was estimated at US$774.89 million. A surge in rice shipping through sea trade was contributed to meeting year’s export target, MRF stated. Myanmar has shipped rice to 66 foreign markets. China is the main buyer of Myanmar rice, followed by Malaysia and Philippines. Madagascar is the fourth-largest buyer and Guinea the fifth-largest buyer of Myanmar rice. In the 2019-2020FY, Myanmar has exported broken rice mostly to Belgium, followed by China, Senegal, Indonesia and Thailand. Broken rice has been placed in 60 foreign markets. Myanmar targets to export 4 million tonnes of rice and broken rice in the current FY 2020-2021, said U Aung Than Oo. Myanmar shipped 3.6 million tonnes of rice in the FY2017-2018, which was an all-time record in rice exports. The export volume plunged to 2.3 million tonnes, in the FY2018-2019.

Source: The Global New Light of Myanmar