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Finland-backed fund invests in Myanmar microfinance sector

Finfund, which invests in responsible and profitable businesses in developing countries, has injected US$5.5 million in Early Dawn Microfinance Co., Ltd, the third largest microfinance company in Myanmar in terms of client outreach. The financing will support Early Dawn’s expansion in Myanmar’s underserved townships and peri-urban areas. Finnfund gets its funding from the State of Finland and the private capital markets, as well as retained earnings from its investments. All profits get recycled into new projects that drive sustainable development.

The state-owned fund makes 20-30 new investments worth €200 million- €250 million each year. At the end of 2019, Finnfund’s portfolio comprised 183 projects in 52 countries worth €957 million. This is its third investment in the microfinance sector in Myanmar, where almost 70 percent of the population lacks access to formal financial services. Early Dawn provides group loans to low-income women, and more recently expanded to extend individual loans to small businesses.

During the investment process, they have been impressed by Early Dawn’s commitment to responsible and sustainable conduct of business. Under instructions from the government, the lender has also rescheduled repayments and restructured loans to help borrowers survive the pandemic. Finnfund also favours businesses that advance gender equality. Almost all of Early Dawn’s clients are women, while 66pc of senior management and 60pc of board members are female.

Source: Myanmar Times

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Myanmar will strive to implement RCEP trade deal, says State Counsellor

The Regional Comprehensive Economic Partnership (RCEP) agreement will bring investments into Myanmar and create jobs but is expected to heighten competition for small enterprise, business people say. The RECP, the world’s largest free trade agreement, was signed by Myanmar and 14 other Asia-Pacific countries on Sunday. It covers the 10 member states of the Association of Southeast Asian Nations (ASEAN), of which Myanmar is part of, as well as the People’s Republic of China, Japan, South Korea, Australia and New Zealand. The deal represents around 30 percent of the world’s population, 30pc of global GDP and about 28pc of international trade.

Myanmar will try its best to implement the RECP provisions, said State Counsellor Daw Aung San Suu Kyi. U Than Aung Kyaw, director genereal of Foreign Economic Relations Department, said the RECP will play a key role in establishing free trade areas and will boost reforms in e-commerce, government procurement and intellectual property rights. The Union of Myanmar Federation of Chambers of Commerce and Industry’s (UMFCCI) vice president U Maung Maung Lay said the deal will bring about more attractive tax rates for businesses, benefit consumers and pave the way for globalization. Living standards will improve and there will be more competitive measures. It will reduce corruption and create more job opportunity. There will be a better supply chain and prices of products will be cheaper for high import volume. Myanmar needs to support small enterprises to develop and become more competitive, or else outside players will dominate the local market.

Myanmar’s manufacturing capacity and worker skills need to improve and have a good environment. Get rid of red tapes and welcome businesses with red carpet. The RECP programme could also be a timely remedy to support Myanmar’s recovery from the COVID-19 shock next year, facilitating trade and investments. The economics shock from COVID-19 has dealt a heavy blow to an already difficult situation for tourism, food and beverage and retail businesses, which had been hit by lower tourist arrivals caused by the northern Rakhine crisis. But foreign investment approvals in the fiscal year ending September 30 recorded the highest amount over the past five years.

Producers in Myanmar will also have access to bigger markets under the RCEP deal. But the business environment and e-services need to catch up. The government’s special car import licenses for officials, announced in September, has come under attack by business groups and opposition politicians for undermining Myanmar’s FDI environment and hurting automotive investors. According to the RCEP, Cambodia, Laos and Myanmar will enjoy special arrangements regarding tax and customs reductions. Member countries covered by RCEP will have to reduce 65pc of customs for all goods, but the three frontier economies will only need to lower 30pc. After 10 years, the other countries will have to reduce customs taxes to 80pc in total but it will only apply to Myanmar in 15 years’ time.

Source: Myanmar Times

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China forecast to be top Myanmar investor this fiscal year: UMFCCI

With the bulk of Chinese capital invested in the infrastructure sector, China is likely to be the top foreign investor in Myanmar in fiscal 2020-21, according to the Union of Myanmar Federation of Chamber of Commerce and Industries (UMFCCI). Investments are also likely to come from China as the country has already started to recover from COVID-19.

Myanmar can expect Chinese funds to flow into strategic infrastructure projects that support its Belt and Road Initiative. China invested over US%3.47 billion in 375 businesses in Myanmar since fiscal 2016-17, according to the Directorate of Investment and Company Administration (DICA). Besides China, another potential investor is likely to be the US.

The US appears keen to accelerate its investments in Myanmar and it could seek to offset some of China’s current projects in the country beyond COVID-19. The US may increase its investments in energy, telecommunications, tourism, and natural gas production sectors. Myanmar is targeting US$5.8 billion in foreign investments in 2020-21 and US$ 8.5 billion in 2021-22. It is aiming to promote and draw investments into the agriculture, fisheries, industrial and technology sectors this year.

Source: Myanmar Times

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Myanmar citizens raise investments in the country despite pandemic

Despite COVID-19, Myanmar citizens’ investment across the regions and states for fiscal 2019-20 amounted to over K1.88 trillion, which is around K200 million higher than in the previous fiscal year. Approval was given to over 130 Myanmar businesses to invest in nine sectors during the period, data showed. Yangon Region received the highest volume of investments with over K901 billion from 50 local investors.

Mandalay Region received funds of K410 billion, while Shan and Ayeyarwady received K170 billion and K161 billion, respectively. Investors also channeled funds into Bago, Tanintharyi, Sagaing, Mon and Kayin. They also invested in the other states and regions, including the two poorest – Rakhine and Chin. The majority of the investments were in the industry, hotels and tourism and housing and development sectors. A handful of investors also channeled funds into the power supply, oil and gas and mining sectors, which is typically dominated by foreign investors.

Despite the government’s plan to promote growth and value-add in agriculture, livestock and fisheries, few local firms invested in the sector. The MIC then issues a Commercial Operation Certificate which enables investors to enjoy benefits such as tax relief and exemptions and other privileges. In fiscal 2019-2020, over 23,000 job opportunities were generated as a result of Myanmar citizens’ investment, data showed. Some 22,700 locals and over 480 foreign workers were employed.

Source: Myanmar Times

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Japan wants to join Myanmar-Thai government-level committees for development of Dawei SEZ project

Japan wants to be part of the Myanmar-Thai government-level committees for the development of the Dawei SEZ project, and has received official proposals from the Myanmar and Thai governments, said Deputy Minister for Power and Energy Dr Tun Naing, chairman of the Dawei SEZ management committee. The Deputy Minister made the remarks at the Myanmar-Japan-Thailand Tripartite Working Level Meeting on November 5 at the Dawei SEZ Management Committee.

Japan wants to join the Joint High Level Committee (JHC) and has received official proposals from the Myanmar and Thai governments. He welcomed the opinion polls of the relevant governments and said Myanmar would respond positively. Dr Tun Naing, Deputy Minister for Electricity and Energy of the Dawei Special Economic Zone Management Committee, said that the necessary steps for the three countries to work together as soon as possible for the success of the Dawei SEZ are to be completed as soon as possible.

International investors will be invited for the Dawei SEZ projects, and those interested in investing in the Dawei SEZ projects during COVID-19 are conducting in-person and online discussions. Once the Dawei SEZ project is launched, the Italian-Thai company and future investors will have to comply with international standards for environmental compensation and relocation of those affected by the project. The Dawei SEZ Management Committee will send a letter to the Italian-Thai company to start the project as soon as it receives the evidence that it will be responsible for the capital and specific operational requirements for the Dawei SEZ project.

Source: Daily Eleven

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Sales and marketing of the Korea-Myanmar industrial zone will begin next year and will be priced

Sales and marketing of the Korea-Myanmar Industrial Zone will begin next year and will be priced according to market conditions and the sales value of the surrounding industrial zones, according to Korea-Myanmar Industrial Complex-KMIC Development Co., Ltd. In addition, the KMIC Easy Service Center will be set up to assist government officials in facilitating investment permits and plant construction activities. KMIC will be able to provide more transparent and easy-to-follow processes to incoming companies.

The Myanmar government provides government-owned land in Hlegu Township to provide electricity and water. Water use and access roads will be funded by the Korean government. The combination of world-class infrastructure and central location will enable companies to develop potential markets. KMIC, a joint venture between Myanmar and Korea, is planning to build a $ 120 million international standard industrial zone project on more than 550 acres of land in Hlegu Township, Rangoon Region, by 2025, according to the Myanmar Investment Commission.

KMIC Development Co., Ltd., a joint venture between the Ministry of Construction and Korea Land and Housing Corporation, is planning to complete a $ 120 million industrial zone project in Nyaungbin, Hlegu Township, Rangoon Region, by 2025,” said an official from the Myanmar Investment Commission. Hlegu Township Nyaung Nyit Pin Training School On August 7, 2019, a joint venture agreement was signed between the Department of Urban and Housing Development and the Korea Land and Housing Corporation to implement the KMIC Industrial Complex project on 555.81 acres of land, according to the Ministry of Construction.

Source: Daily Eleven

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Second review of Myanmar’s investment policy conducted

The Ministry of Investment and Foreign Economic Relations (MIFER) has conducted a review of Myanmar’s investment policy with the aim of restructuring and creating an attractive environment for local and foreign investors. The review, conducted with the help of the Organization of Economic Co-operation and Development (OECD), focused on infrastructure connectivity, building a green development investment framework, improving land use rights and enhancing the role of the economic zones, according to the MIFER. The outcome of the review, which is the second conducted in six years, will be released this month.

Although substantial progress has been made on the investment front since the first review in 2014, the reform momentum needs to be deepened for new investments to be viable and growth to be sustainable. This second review takes stock of Myanmar’s recent achievements and assesses the remaining challenges in attracting new investments with a view of enabling a responsible business environment and ensuring the benefits are shared with society. It places a strong emphasis on haw foreign investments can help Myanmar achieve the Sustainable Development Goals and improve the lives of the people of Myanmar, the OECD said.

The MIFER will seek to develop more Special Economic Zones and new industrial zones in strategic areas and sectors, and partnership with reputable, internationally experienced developers. Also, they will aim to modernize and expand fiscal incentives on offer under a revised Myanmar Investment Law and through a revised Myanmar Investment Promotion Plan. The OECD released the first Myanmar Investment Policy Review in 21014, as a result of which the Myanmar Investment Law and the Myanmar Companies Law were enacted to support and regulate further investments in the country. The first investment policy review included financial sector reform, investment promotion and facilitation, infrastructure development and responsible business practices.

Source: Myanmar Times

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Transport, communications sector tops FDI line-up in incumbent government period

Under the Myanmar Investment Law, transport and communications sector tops the foreign investment line-up over the four years of incumbent government period, bringing in the capital of US$6.135 billion, according to the Directorate of Investment and Company Administration (DICA). The quantum of investment in transport and communications sector is higher than in any other sectors, attracting 29 enterprises. Between the 2016-2017 and 2019-2020 budget years, the manufacturing sector has absorbed FDI of $6.13 billion from 706 projects.

Real estate sector has attracted $3.6 billion from 29 projects. The power sector has drawn 19 foreign investment projects worth $3.17 billion. Twenty-four projects worth $725.9 million has been approved in the hotels and tourism sector, while the existing enterprises increased the investments of $363 million in the oil and gas sector. The livestock and fisheries sector has pulled in an investment of $452.68 million from 36 foreign enterprises. The agricultural sector has also attracted $181.98 million from 18 foreign projects, while industrial estate sector received $390.459 million from five enterprises. The mining sector has received over $11 million from existing enterprises. Over $2.63 billion in FDI has been pumped into the other services sector from 106 businesses.

The Myanmar Investment Commission (MIC) and the respective investment committees granted permits and endorsements to 1,032 foreign enterprises over the past four years, with estimated capitals of $25.18 billion. Of them, Thilawa Special Economic Zone attracted investments worth $1.36 billion from 60 enterprises under the Special Economic Zone Law in the past four years, while FDI of $23.8 billion flowed into the country under the Myanmar Investment Law, the DICA’s data showed. Of 36 foreign countries investing in Myanmar in the past four years, Singapore put the most massive investments under Myanmar Investment Law, followed by China and Hong Kong (SAR).

MIC is prioritizing the labour-intensive businesses. In the incumbent government period, domestic and foreign projects employ over 670,000 residents, according to the DICA. Those enterprises have created over 96,000 jobs in the FY2016-2017, 110,000 jobs in the FY2017-2018, over 53,000 jobs in the 2018 mini-budget period, over 180,000 jobs in the FY2018-2019 and 210,000 jobs in the FY2019-2020 respectively. 

Source: The Global New Light of Myanmar

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Myanmar aims to hit FDI target despite higher uncertainty this year

Foreign investors are still keen to invest in Myanmar despite COVID-19, even though a number are holding back due to the uncertainty surrounding the investment environment in the country, according to U Maung Maung Lay, Vice President of the Union of Myanmar Federation of Chamber of Commerce and Industry (UMFCCI). Many foreign investors want to expand their businesses here but there is no certainty for growth and returns at this point. It is very difficult for growth and returns at this point. It is very difficult for them to invest during the COVID-19 period.

This is because of travel restrictions imposed to control imported cases of the virus, under which international flights have not been allowed to land in Myanmar since March. It has not been possible for potential investors to enter the country to conduct the surveys and negotiations needed to make concrete investment decisions and as a result, the Myanmar economy has halved in the six months since the pandemic was announced. Garment manufacturers, which contributes significantly to Myanmar’s exports to Europe, Korea and Japan, have been affected, while 80 percent of the construction sector is now facing various challenges from pricier imports of construction materials to the inability to continue developing ongoing projects.

Local businesses have also been affected by declining demand and many are also unable to procure raw materials from China to continue operations. Myanmar has so far received 24 foreign investment proposals worth US$3.5 billion for fiscal 2020-21. Most of the proposals were submitted to the Myanmar Investment Commission (MIC) in fiscal 2019-2020, however, due to the large capital amounts involved, the projects require MIC permits before getting the green light to proceed. The MIC has to consider the possible impact on the environment and local communities before giving approval. In any case, the MIC intends to reach its foreign direct investment (FDI) target of US$5.8 billion for the current fiscal year. It will priorities investments in agriculture, healthcare, industrial and digitization. Myanmar fell short of the FDI target of US$5.8 billion in fiscal 2019-2020 due to COVID-19.

Source: Myanmar Times

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24 projects with $ 3.5 billion in foreign investment have been proposed to MIC for the 2020-2021 fiscal year

For the 2020-2021 fiscal year, 24 projects with $ 3.5 billion in foreign investment have been proposed to the Myanmar Investment Commission (MIC), according to the Directorate of Investment and Company Administration (DICA). For the next year, they have 24 proposals that the Investment Commission has to consider and then discuss the need. The value of the 24 proposals is estimated at US $ 3.5 billion. These businesses are huge because they are not available at this time.

There may be issues that may be of interest to the state next time, and there are sections that assess the needs of the state. Relevant ministries have to negotiate. After the relevant ministries, the decision must be made after submitting to the higher committees of the relevant ministries. For some countries, investment will be huge. It could also have an impact on the country. The land area is large. If the amount of investment is large, it should be submitted to the government It has to be decided. Due to such activities, this year’s target has not been achieved. The 24 investment proposals are over $ 3 billion. It is in this pipeline for the first month of the next fiscal year 2020-2021.

Due to COVID-19, some businesses were allowed to enter due to traffic restrictions, but were not allowed to do so, leading to a decline in Myanmar’s foreign investment target for the 2019-2020 fiscal year. In the 2019-2020 fiscal year, foreign investment in Burma was projected at $ 5.8 billion, but only $ 5.68 billion came in. However, in the context of COVID-19, investors have limited access; Some businesses are planning to enter but have not yet done so due to traffic congestion, as most of the government offices are located in Rangoon and Naypyidaw. According to Myanmar’s investment promotion plan, foreign investment is expected to reach $ 8.5 billion from the 2021-2022 fiscal year, but these targets will be reconsidered due to the COVID-19 outbreak.

Source: Daily Eleven