Posts in category: ECONOMY

India and Myanmar have agreed to work towards launching the Sittwe Port in Rakhine State in the first quarter of 2021, according to announcements by the Myanmar government and the Ministry of External Affairs of India. The developments were made during the visit of an Indian government delegation to Myanmar. The Sittwe Port is a major part of the Kaladan Multi-Modal Transit Transport Project funded by India. It aims to correct the Seaport of Kolkata in India to Sittwe by sea. It will then link the Sittwe seaport to Paletwa, Chin State, by inland waterway and from there connect further to Mizoram in India by road.

The project comprises three stretches which include shipping, inland water and road transport. The longest among these stretch is the shipping segment from Kolkata to the Sittwe Port. India has already completed the development of Sittwe Port and Inland Water Transport terminals at Sittwe and Paletwa. The port and inland waterway terminal operator and maintenance contractor has also been selected. Mean while, the road from Paletwa to Zorinpui in Mizoram, India is still under construction. The total project cost of the Kaladan Multi-Modal Transit Transport Project, which is expected to boost trade and commerce and contribute to development in Rakhine and Chin, is estimated at around US$484 million. Besides that project, both sides also discussed progress in the ongoing Indian-assisted infrastructure projects, including the Trialateral Highway.

The two countries have also explored new avenues of cooperation, including fresh investments in oil and gas and power, infrastructure, and pharmaceuticals. Meanwhile, both sides agreed to deepen cooperation to overcome the challenges posed by the COVID-19 pandemic, with the Indian delegation presenting 3000 vials of Remdesivir, an antiviral treatment medication. Notably, India indicated its willingness to priorities Myanmar in the sharing of viable vaccines aas and when these become available.

Source: Myanmar Times

THE US dollar exchange rate keeps falling in the local forex market. However, the Central Bank of Myanmar (CBM) purchased US$12.7 million in the auction market within four days, forex market data showed. In a bid to keep the exchange rate stable, the CBM purchased 1.8 million dollars on 21 September, 3.3 million dollars on 22 September, 3.8 million dollars each on 23 and 24 September at an auction market rate.

The CBM has purchased $30.9 million in the auction market between 1 and 24 September. Despite the CBM’s purchase, a dollar touched a low of K1,312 at the opening time on 24 September. The instability in the exchange rate posed difficulties to those stakeholders engaged in the agriculture and livestock supply chains including farmers, traders and exporters. That is why the stable exchange rate is vital of importance for the businesses. At present, the local forex market sees the weak sentiment amid the coronavirus outbreak and the trade disputes between the US and China, the business experts shared their opinions.

This year, the exchange rate moved in the range of K1,456-1,493 in January, K1,436- 1,465 in February, K1,320-1,445 in March, K1,395-1,440 in April, K1,406-1,426 in May, K1,385- 1,412 in June, K1,367-1,410 in July and K1,335-1,390 in August. Last year, the rates are pegged at K1,508-1,517 in July, K1,510-1,526 in August, K1,527- 1,565 in September, K1,528- 1,537 in October, K1,510-1,524 in November and K1,485-1,513 in December. On 20 September 2018, the dollar exchange rate hit an all time high of K1,650 in the local currency market.

Source: The Global New Light of Myanmar

The Japan International Cooperation Agency (JICA) will disburse ¥15 billion (K190 billion) in funds under an emergency two-step loan program to help small and medium size enterprise (SMEs) in Myanmar, said JICA loan project director at the Myanmar Economic Bank. This is also the third tranche of funds distributed under the program. They are preparing to approve phase 3 of the loan agreement with JICA.

JICA’s loan has a term of 40 years at an interest rate of 0.01 percent. The funds will be distributed to state-owned and local banks, which the repackage the funds into individual loans to borrowers. Under phase 1 the program, a total of K99 billion was distributed in 2018 via 10 local banks in 2018. Phase 3 was approved by parliament in August. A borrower is allowed a maximum loan of K500 million at an interest rate of 5.5pc if there is sufficient insurance coverage, or between 6pc-10pc with lower or no insurance coverage.

The loans are repayable to the banks in five years. In the past, 80pc of the loan amount had to be allocated for fixed capital purposes, while the remaining 20pc was for working capital. Due to the current COVID-19 circumstances though, borrowers are allowed to use the latest tranche of loans solely for working capital purposes. New businesses which are less than a year old and businesses with lower income levels are free to apply for the loans.

Source: Myanmar Times

The Ministry of Commerce has called for export potential with Myanmar products to Saudi Arabia’s market. The ministry recently negotiated with Saudi Arabian ambassador to Myanmar concerning the items identified as export potential, including honey, fish, prawn, fishery products. At present, Saudi Arabia has received Myanmar’s answers to the queries they sent regarding the new regulations. Suppose the cold storages and processing companies are found to be in accordance with the fishery import standards of Saudi Arabia. In that case, Myanmar can resume exports of the fishery products to Saudi Arabia. Myanmar exports to Saudi Arabia accounted for 30 per cent of its farm-raised fish exports and 40 per cent of rohu exports and 60 per cent of river catfish. Earlier, Myanmar yearly earned estimated US$20-35 million from fishery products exports to Saudi Arabia.

Myanmar exports marine products, such as fish, prawns, and crabs, to markets in 40 countries, including China, Saudi Arabia, the US, Japan, Singapore, Thailand, and countries in the European Union. Additionally, the wild-caught fish are sent to the UK, Italy, France, Cyprus, the Netherlands, Sweden, Greece, Belgium, and Germany markets. Export earnings from the fisheries sector during the period between 1 October and 11 September in the 2019-2020 financial year reached US$810.99 million, an increase of $119.8 million from the year-ago period, according to statistics released by the Commerce Ministry. Myanmar’s fisheries sector is hit hard by the coronavirus fallouts and the Ministry of Commerce is endeavouring to explore more fish and seafood foreign market to effectively mitigate the impacts caused by the pandemic, Yangon Region Fisheries Department stated. The MFF is making concerted efforts to increase marine export earnings by developing fish farming lakes which meet international standards and adopting advanced fishing techniques.

Myanmar’s economy is more dependent on agricultural sector to a large extent. Also, fisheries sector contributes a lot to the national gross domestic product (GDP). Its fishery production including shrimps and saltwater and freshwater fish are far better than the regional countries. If the country can boost processing technology, it will contribute to the country’s economy and earn more income for those stakeholders in the supply chain.There are 480,000 acres of fish and prawn breeding farms across the country and more than 120 cold-storage facilities in Myanmar. Myanmar exported 340,000 tonnes of fishery products worth $530 million in the 2013-2014FY, 330,000 tonnes worth $480 million in the 2014-2015FY, 360,000 tonnes worth $500 million in the 2015-2016FY, 430,000 tonnes worth $600 million in the 2016-2017FY, 560,000 tonnes worth $700 million in the 2017-2018FY, and over 580,000 tonnes worth $728.257 million in the 2018-2019FY, according to the Commerce Ministry. 

Source: The Global New Light of Myanmar

On September 16, the ministerial – level “Joint Commission on Cooperation in the field of Trade and Industries” was held in Nay Pyi Taw and Seoul respectively. Due to COVID-19, it was organised on-line. The Joint Commission was the first of its kind as a follow-up to the summit meeting in September 2019. President Moon Jae-In of the Republic of Korea (ROK) and Daw Aung San Suu Kyi, State Counsellor, signed the MOU on establishment of the Joint Commission with a view to elevating trade and investment to a new height. The Joint Commission was well-timed as this year marks the 45th anniversary of the diplomatic relationship between the ROK and Myanmar. The ROK government has been actively pursuing the New Southern Policy, its flagship diplomatic initiative, and in that context, looks to Myanmar as the last frontier market in the ASEAN region.

The leaders’ commitment to upgrading investment and enhancing people-to-people exchanges has shown specific outcomes. The two sides are working together to identify suitable projects, which will be borne by a newly established soft loan to the amount of US$ 1 billion. The Myanmar government has granted new working licenses to three Korean commercial banks, thus making Korea the country with the highest number with a total of four licensed banks in Myanmar. A new direct flight by Myanmar Airways International, launched in past December, is another welcome development. Korea-Myanmar Industrial Complex (KMIC) is expected to draw as many as 150 to 200 Korean companies once it is up and running. Korea is working with the Myanmar side on drawing blueprint for Dala new town.

At the Joint Commission meeting, both sides reaffirmed the importance of “Korea Desk”which will serve as a one-stop shop and gateway for new investors from Korea. Over the past few years, the horizon of Korean investment has considerably widened. The successful Joint Commission meeting was a small but significant step to make Korea’s commitment to working together with its time-honored friend, Myanmar, towards the visionary and inspiring message President Moon delivered during his state visit-“Korea will be a trustworthy partner in turning Myanmar’s dream of the miracle in the Ayeyarwady river into reality”.

Source: Myanmar Times

A second stock exchange, or pre-listing board, will be set up for the purpose of purpose of trading shares in public companies that have yet to list on the Yangon Stock Exchange(YSX). However, no futher details were provided on when this would take place. The pre-listing board is for investors to buy and sell the shares of Myanmar public companies that have yet to meet the criteria to be listed on the YSX, secondary listing boards are common to enable companies that have yet to meet main board listing criteria to raise capital by selling their shares.

This will be beneficial to small and medium-sized enterprises (SMEs) in particular, they will have the opportunity to raise capital. There are currently more than 260 public companies registered under the Myanmar Companies Law. Only six public companies are listed on the YSX. Most public companies do not meet the criteria for listing on the YSX. Establishing this market creates the right environment for unlisted public companies and exposes them to new challenges and opportunities that raise their potential of listing on the YSX in the future. The new board will be established with the approval of the Ministry of Planning, Finance and Industry and under the supervision of the SECM.

Discussions to establish a second stock exchange for public companies commenced last year. The move is also expected to create an official platform for the trading of shares in public companies. Currently, the shares are traded in the over the counter (OTC) market, which is loosely regulated. Public companies are set up with two main objectives- to raise capital from the public and compete for government tenders. They are also required to obtain permission from the SECM and other authorities and meet a list of criteria before they are officially allowed to sell their shares.

Source: Myanmar Times

A sugar glut in Myanmar has led prices to a 10-year low, as tonnes of sugar meant for export now remain in the country. There is too much sugar left in the market and the price can’t get any higher. Farmers have also started to reduce sugarcane acreage this year. According to the association’s estimates, there might be 150,000 tonnes to 200,000 tonnes of unwanted inventories in the country and prices are now between K840-K860 per viss, the lowest in over a decade. On the domestic front, “consumption has fallen drastically as there are no festivals or events during COVID-19. With people spending less, there is an impact on the sugar-rice snacks and beverage markets which in turn is having repercussions on the sugar market.

Overseas demand had fallen too. Earlier this year, Greece called off an offer to buy sugar from Myanmar at US$400 per tonne per month on a free on board system. But the future looks bleak for the sugar market. Despite lower sugarcane acreage, traders are predicting sugar prices will continue to drop in the coming months as a result of the glut and lower local consumption. There is now less than 50,000 acres of sugarcane fields in Myanmar and this is down from about 460,000 acre of sugarcane plantation before. Sesame and different types of paes are being planted instead of sugarcane.

In fact, sugar prices had already been on their way down since last year, and some 4500 sugarcane farmers from Sagaing, Mandalay and Shan State had submitted a report to the President to make their situation known. With domestic inventories piling up, the farmers also asked for a limit on sugar imports from aboard. The drop in demand and reduced sugarcane acreage has also impacted sugar mill operators further along the value chain.

Source: Myanmar Times