PwC MyanmarWeekly Business Intelligence

Issue 16729 June 2019

www.pwc.com/mm

PwC | June 2019

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PwC | June 2019

1. Weekly Key Financial & Business News

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PwC | June 2019

Weekly Key Financial & Business NewsHeadlines

How to Read a WEIRD Evidence-Based Yangon Consultancy Report

Negotiations still underway over Kanbauk LNG project

‘No magic bullet’ behind Thilawa’s success

Rising interest in financial products: Visa

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Yangon’s standard land prices reduced 10pc

PwC | June 2019

Weekly Key Financial & Business NewsHeadlines

Electronic cash transactions expected to surge over the next two years

Low penetration rate for SME loans, Ministry of Industry data reveals

LNG projects: delayed, not dead

MPIE: A state enterprise success story

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Average inflation rate hits 7.82 pc in May

PwC | June 2019 6

Negotiations still underway over Kanbauk LNG project

Negotiations between Total E&P, SiemensMyanmar and the government are still ongoingfor the 1,230MW liquefied natural gas (LNG)-fired power plant project in Kanbauk, TanintharyiRegion. Although reports surfaced recently thatTotal and Siemens proposed scaling back theUS$2.1 billion project that was given the go-aheadby the government in January 2018, both sideswere guarded over their statements on the futureof the project when contacted by The MyanmarTimes. Total’s Myanmar general managerRomaric Roignan said the company remainscommitted to working with the government in amutually beneficial way for all the stakeholdersinvolved in the project and in the best interest ofthe country. He added that there were discussionson how to leverage potential regional marketingsynergies to reduce the cost of electricity for end-users. Roignan noted without elaborating thatsignificant progress has been made in the projectnegotiations. It was reported that both Total andSiemens has made an alternative proposal withless financial investment on their part althoughsources said nothing has been firmed up at this

point. Siemens has decided to take a smaller roleby providing the technology and expertise.The initial proposal called for a power plant, anLNG floating storage regasification unit (FSRU)and a 450-kilometre 500kV transmission linelinking Kanbauk with Payagyi in Bago Region.The counter-proposal would see powertransmitted to Yangon through a 230kV line thatwill be financed with a soft loan from the AsianDevelopment Bank. An official from the Ministryof Electricity and Energy said there were varyingproposals being discussed at this stage. “We arenot able to comment at this stage, and it is naturaltoo that many proposals will emerge withreductions and additions,” the official said.Meanwhile Roignan said in statement that eversince the project was given the greenlight, asignificant amount of work has been completedfor the gas, power plant and transmission linepackages including environmental and socialimpact surveys.Source: Myanmar Timeshttps://www.mmtimes.com/news/negotiations-still-underway-over-kanbauk-lng-project.html

NewspapersMyanmar Times

24 June 2019

PwC | June 2019 7

How to Read a WEIRD Evidence-Based Yangon Consultancy Report

Yangon’s INGOs are full of consultancy reportswhich offer “professional” opinions aboutconditions in Myanmar. NGOs, INGOS, and UNagencies investigate transitions regardingdemocracy, environment, federalism, ethnicityand, of course, gender. These are the subjects thatdonors are interested in—and thus willing to payconsultant companies tens of thousands of dollarsto “research.” This is largely because evidence-based research provides a basis for what well-funded development projects promise their homegovernments, all on the assumption that theMyanmar people have a “will” to transition fromwhat is bad, to what is good. Such reporting thusis in tune with the principles of donors which arealways assumed to be noble, measurable, andabout “good governance.” After all, who wants tobe ignoble, weak-willed, or have bad governance?The general ideas for Yangon consultancy reportstypically start in the capitals of the Western,Educated, Industrialized, Rich, and Democraticcountries, known by the currently popularacronym, WEIRD. Such countries come toMyanmar with the hope of assisting a transition

from what was there before, which is byimplication eastern, ignorant, rural, poor, andautocratic, to the heaven-on-earth which isWEIRD. This is why the word “transition” is sopopular in such reports.This brings me to the most basic question forreading a Yangon consultancy report; somethingintuitively recognized by a Myanmar colleaguewho writes successful NGO grant proposals.My colleague’s question is, “Which WEIRDcountry paid for the report?Knowing who paid for the research is critical,because such reports typically are self-fulfillingprophecies. As a result, there is a predictabletrajectory reflected in how the “request forproposals” is written, program implementationundertaken, and the final consultancy report’sconclusions.

Source: The Irrawaddyhttps://www.irrawaddy.com/opinion/guest-column/read-weird-evidence-based-yangon-consultancy-report.html

NewspapersThe Irrawaddy

24 June 2019

PwC | June 2019 8

‘No magic bullet’ behind Thilawa’s success

Success behind the Japan-led Special EconomicZone shows the need for Myanmar to improveaccess to land and utilities and reform itsregulatory framework to capture investor interest,an SEZ investor said.Yangon’s government showcased 80 projectproposals in last month’s Yangon InvestmentForum. Apart from housing, industrial zones andhighways, the list included ambitious blueprintsof Yangon’s “New City”, Dala’s satellite urbancentre, another port between Kawhmu andKungyangon townships. Everyone at the forumpraised the Thilawa Special Economic Zones forits success. The Myanmar Times secured anexclusive interview with panel speaker andinvestor Tomoaki Yabe.For the government to replicate this public-private partnership success in other parts ofMyanmar, Mr Yabe outlined a few criteria:transparent and investment-friendly regulatoryenvironment, infrastructure and efficientbureaucracy. The government had laid outtransparent regulatory framework with the clearobjective of attracting FDI before the scheme

began, he said. Good infrastructure developed byMyanmar Japan Thilawa Development Limited(MJTD) within the area makes it attractive formanufacturers, including power supply, access towater, proper waste treatment and internetaccess. The list can go on but ultimately it all boilsdown to “the will and determination of thegovernment to improve the businessenvironment, transforming Thilawa into an evermore attractive choice for investment for themanufacturers.”Industrial zones across the country and proposedSEZs can benefit a lot by looking at why Thilawastands out.“What many of the existing industrial parks inMyanmar faces is bad management andmaintenance of infrastructures.“Even a light industry cannot operate to its fullcapacity when undermined by poor roadconditions, lack of access to clean water, andscarce energy supply,” he emphasised.Source: Myanmar Timeshttps://www.mmtimes.com/news/no-magic-bullet-behind-thilawas-success.html

NewspapersMyanmar Times

24 June 2019

PwC | June 2019 9

Rising interest in financial products: Visa

Myanmar people are receptive in adoptingcontactless payment methods, a study conductedby digital payments firm Visa reveals.Visa this week has published findings from itsConsumer Payment Attitudes Study, whichexamines the perceptions, attitudes andbehaviours Myanmar people have towardspayment and emerging payment methods. It wasbased on face-to-face interviews of 504 peopleacross Yangon, Pathein, Mandalay and Magwaylast September.The report found Myanmar people are moreinterested in getting financial products than lastyear. They also continued to have improvedperceptions towards banks on safety, trust andfacilitating payments.Forty-one percent of respondents said they nowown bank accounts, compared to 34pc last year.Further to this, 70pc of those surveyed who arecurrently without a bank account plan to open onethis year.It also found a significant increase in use andinterest in owning payment cards, such as prepaidand credit cards. Currently, 26pc of people

surveyed use or own payment cards, compared toonly 3pc in the previous year. Seven in 10 peoplesaid they plan to own payment cards compared toonly two in ten people in the previous year.The major motivators to getting a payment cardare “to be in tune with the times” and “to access asimpler form of payment”. Respondents also citedthat it is safer to carry cards than large amountsof cash and it’s more convenient as they would nothave to deal with small change. Attitudes towardsbanks also continued to improve. Four in fivepeople surveyed (82pc) said that they agreed thatbanks are safe and secure, compared to 68pc fromthe preceding year. A further 77pc said banks area convenient way of managing their personalfinances. Even though Myanmar people relyheavily on cash for daily transactions – one infour people surveyed have tried going cashlessand all of the people surveyed believed Myanmarhas the potential to become a cashless societywithin the next 15 years or less.Source: Myanmar Timeshttps://www.mmtimes.com/news/rising-interest-financial-products-visa.html

NewspapersMyanmar Times

27 June 2019

PwC | June 2019 10

Yangon’s standard land prices reduced 10pc

Land prices on a per square foot basis in Yangon’stownships for the 2019/2020 fiscal year has beenreduced by 10pc compared to the last fiscal yearin order to support more sales transactions aswell as encourage landowners to pay their taxes.The standard land prices were released by theInland Revenue Department earlier this monthand these prices would be used for taxassessments in real estate sales.iMyanmarHouse.com managing director U NayMin Thu said the reduction in prices wasimplemented after it was found that governmentstandard prices were higher than actual marketprices.“Prices were reduced and this may boost sales aswell as encourage more people to pay taxes fromland sales,” he said, adding that this move wouldbe good for government coffers due to higherrevenue collection.Meanwhile, Estate Myanmar Real Estate’s U HtooMyat Naing said the government would need todo more than just a 10pc reduction in land priceto reduce tax evasion.“The 10pc reduction in price would not have a

significant effect when the property market issluggish. Reducing land prices without reducingthe tax rate will not bring significant changes tothe market,” he said. – Translated

Source: Myanmar Timeshttps://www.mmtimes.com/news/yangons-standard-land-prices-reduced-10pc.html

NewspapersMyanmar Times

27 June 2019

PwC | June 2019 11

Low penetration rate for SME loans, Ministry of Industry data reveals

Only 3pc of small and medium enterprises(SMEs) registered with the Ministry of Industryhave been given funding by financial institutions.The Ministry of Industry data showed that of73,085 SMEs registered with it, only 2,207businesses or 3pc of the total have receivedfunding from financial institutions.The Minister of Industry U KhingMaung Cho saidin a meeting on June 21 that the lack of financialdocumentation and the unavailability of collateralmakes it difficult for SMEs to get loans, even withsupport from government loan schemes forSMEs. “There’s a need to review how SMEs canget financing,” he said.The government together with variousdevelopment agencies and funds such as theJapan International Cooperation Agency (JICA),Myanma Economic Bank, Germany’s KfWDevelopment Bank and Denmark’s ResponsibleBusiness Fund have a number of loan schemesopened to SMEs and micro businesses.The government, through Myanma EconomicBank and JICA, has announced support for K60billion worth of loans to SMEs between July 2017

and January 2019. More than 98pc of allbusinesses in the country can be classified as SMEor microbusiness with most involved in the foodand beverage, construction materials, clothingand other retail goods industries.Nara Organic Green Tea managing director UKyaw Thiha said the government must think ofnew ways to support SMEs in getting loans.“Some loans are also not enough for SMEs thatneed the financing to expand while I believe theinterest charged for loans to SMEs is higher too,”he said.The JICA long-term investment loan has aninterest rate of 8.5pc over five years with amaximum limit of K500 million, SME CreditGuarantee Insurance Loan has a 13pc interest ratewith collateral or loan up to K20 million overthree years while Myanma Economic Bank’s SMEloanhas an interest rate of 9pc over five years andmaximum loan amount of K300 million.Source: Myanmar Timeshttps://www.mmtimes.com/news/low-penetration-rate-sme-loans-ministry-industry-data-reveals.html

NewspapersMyanmar Times

28 June 2019

PwC | June 2019 12

Electronic cash transactions expected to surge over the next two years

Electronic cash transactions are seeing moreadoption in Myanmar as people opt for theconvenience of not having to withdraw moneyfrom banks or automated teller machines.As such, banking officials and financialtechnology firms believe that Myanmar would seesignificant developments of such paymentsystems over the next two years.Recently, Visa country manager Ms. Lillian Wangsaid a poll from 2018 showed that a quarter of500 respondents preferred digital modes ofpayment compared to a similar poll conducted in2017 that saw only 3pc of respondents preferringdigital modes of payment.“Digital payment usage has gained momentum inrecent years and there are significant changes anddevelopments coming in the years ahead. We seepayments using cash being reduced significantlyas banks, other financial institutions, thegovernment and ordinary people adopt digitaltransactions,” she said.The rising demand for convenience has seenbanks and their partners offering more digitaltransaction services, with KBZ Bank launching

KBZPay, a mobile wallet application, late lastyear. This app crossed more than a milliondownloads earlier this year and has since reachedmore than two million.“We expect nearly four million downloads of theapp by the end of this year,” KBZ’s generalmanager for agent banking U Soe Ko Ko told TheMyanmar Times.He said the convenience of not having tophysically withdraw money motivates morepeople to use the app.U Soe Ko Ko noted though, that despite theincrease in adoption, the different digitalplatforms available made it difficult to predictwhether transactions through cards, mobile orQR code systems would become more popular.A recent Visa survey revealed that people weremore interested in contactless payment andpoint-of-sales terminal systems rather the use ofcards into slots.Source: Myanmar Timeshttps://www.mmtimes.com/news/electronic-cash-transactions-expected-surge-over-next-two-years.html

NewspapersMyanmar Times

28 June 2019

PwC | June 2019 13

LNG projects: delayed, not dead

Three high-profile power projects unveiled inJanuary 2018 are far behind schedule but couldstill be important for meeting Myanmar’sgeneration needs.In January 2018, the Ministry of Electricity andEnergy took a big punt on imported liquefiednatural gas. At a ceremony in Nay Pyi Taw onJanuary 30, it signed “notices to proceed” withthe sponsors of three LNG-to-power projectstotalling almost 3,000 megawatts.With Myanmar’s hydropower projects delayedand output from domestic gas fields declining,minister U Win Khaing has said these hugeinvestments are necessary to meet Myanmar’selectricity needs over the next decade and beyond.But Myanmar’s short-term needs are also critical,so the sponsors were given tight deadlines forcompletion, with the first electricity to beproduced from mid-2020.Eighteen months on, though, none of the threehave met key project milestones, such as thesigning of a power purchase agreement – let alonethe start of construction.And with power shortages beginning to bite in

early May, the ministry announced plans for anemergency power tender to bring in 1,400MW ofextra generating capacity in time for the 2020 hotseason.Mr Jeremy Mullins, country director at Vriensand Partners, a Southeast Asia-focused advisoryfirm, said it was too early to write off the LNG-to-power projects as failures.“These barges or other temporary solutions willbe helpful to provide the breathing spacenecessary to let the government develop a longerterm strategy, including building permanentgeneration facilities,” he said.Mullins said all three LNG-to-power projects havetheir own unique strengths and weaknesses. “It’sa Yangon electricity sector parlour game to guesswhich is the most likely to move forward,” he said.“It seems likely the projects will be built in phasesand that some will move ahead more quickly thanothers.”

Source: Frontier Myanmarhttps://frontiermyanmar.net/en/lng-projects-delayed-not-dead

NewspapersFrontier Myanmar

28 June 2019

PwC | June 2019 14

MPIE: A state enterprise success story

With new facilities, imported equipment andforeign expertise, a state-owned enterprise isexpanding its pharmaceutical business – and evenmoving into export markets.Pointing to a tablet-coating machine, a womanemployee in protective clothing proudly notesthat no other pharmaceutical maker in thecountry has such advanced equipment.“This is imported from Germany and is superexpensive,” she says, referring to a Glatt SC Smartfilm coating machine. “Only we can use it,” sheboasts.You’d probably expect the woman to be workingin the private sector, perhaps at a factory built inthe past few years with foreign investment.But the plant in Yangon Region’s Insein Townshipis run by state-owned Myanmar PharmaceuticalIndustry Enterprise and opened in 2017.The enterprise has always had a strong reputationfor producing high-quality pharmaceuticalproducts – in the same compound as the MPIEfactory is a former Burma PharmaceuticalIndustry plant, which opened in 1957 – but duringthe 1990s and 2000s it steadily lost market share

to local producers and imported products.By the end of 2015, the state-owned enterprisewas supplying only 10 percent of the domesticpharmaceuticals market, managing director U KoKo Aung told Frontier in an interview in his officein Nay Pyi Taw on May 21.“We struggled to meet domestic demand becauseof government policies,” he said. “Most drugswere available from neighbouring countries withcheap prices, so previous governments didn’t payattention to upgrading facilities and boostingproduction … so the domestic demand gap wasfilled by imported drugs.”Change was already afoot, however. Two yearsearlier, the Ministry of Industry had decided toboost drug production and ease reliance onimported medicines, especially fromneighbouring countries, and began investingsignificantly in new plant and equipment, andupgrading existing facilities.

Source: Frontier Myanmarhttps://frontiermyanmar.net/en/mpie-a-state-enterprise-success-story

NewspapersFrontier Myanmar

28 June 2019

PwC | June 2019 15

Average inflation rate hits 7.82 pc in May

The average inflation rate in late May was 7.82per cent, a slight increase compared with 7.51 percent in late April, according to the figures releasedby the Consumer Price Index (CPI) and InflationRate by the Central Statistical Organisation(CSO).The average inflation rate is calculated using 2012as a base year. The year-on-year inflation rate was9.57 per cent.In late May, Magway Region topped the list ofinflation with 11.94 per cent, followed by MonState with 10.28 per cent and Mandalay Regionwith 10.21 per cent.In November, 2012, the Central StatisticalOrganization conducted a household andconsumption survey on 32,669 households in 82townships nationwide to calculate the CPI andinflation rate.In the past, the inflation rate was calculated using2006 as a base year. Now 2012 is used as a baseyear to calculate inflation rate.The average inflation rate was 6.94 per cent inJanuary, 7.07 per cent in February, 7.28 per centin March, 7.51 per cent in April and 7.82 per cent

in May.Under the second five-year National DevelopmentPlan (from 2016-2017 to 2020-2021 FY), thegovernment has planned to reduce the inflationrates through finance, monetary, trade andforeign currency policies.

Source: Eleven Myanmarhttps://elevenmyanmar.com/news/average-inflation-rate-hits-782-pc-in-may

NewspapersEleven Myanmar

29 June 2019

PwC | June 2019

2. Weekly Key Policy News

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PwC | June 2019

Weekly Key Policy NewsHeadlines

Myanmar announces first power tariff hike in five years

Interference hampering repatriation: top official

‘US keen to invest, strengthen ties with Myanmar, but faster reform needed’

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The President Intervenes to Save Yangon from Its Govt

Phyo Min Thein and the business of government

PwC | June 2019 18

Myanmar announces first power tariff hike in five years

Electricity rates will increase substantiallybeginning in July for both residential andbusiness users in the first changes in tariffs in fiveyears, the Ministry of Electricity and Energy(MOEE) announced yesterday. The proposal bythe MOEE to raise prices was approved byparliament in April. Under the new rates,residential households and religious buildings willcontinue to pay the previous rate of K35 per unit,but only for up to 30 units. Consumers will becharged K50 for 31-50 units, K70 for 51-75, K90for 76-100, K110 for 101-150, K120 for 151-200,and K125 for over 201. Consumers who used topay K3500 for 100 units will now pay K6050, a72.9 percent increase. This excludes service fees.Business consumers, including companies,factories, government buildings, embassies, andinternational organisations, will pay K125 perunit up to 500 units, increasing by K10 for50,001-100,000 units. K180 per unit will becharged for over 100,000 units. The governmentincurs costs of K89 per unit to generate anddistribute electricity from hydropower, and K178per unit for electricity from natural gas, according

to the MOEE. It is currently supplying electricityto the public at a loss of K507 billion in the 2017-18 fiscal year and losses rose to K630 billion in2018-19, according to data from the Ministry ofPlanning and Finance. Myanmar’s presentelectricity price is financially unsustainable, withrates the lowest in ASEAN and unchanged despiteyears of discussions. The loss is set to benarrowed under the new tariffs but will notcompletely cover production and distributioncosts. “In making this decision the MOEE hastaken efforts not to raise the tariffs to a level thatis burdensome for the people. However, at itscurrent level and based on rising demand thetariffs have to rise. We have calculated the newrates to offset a portion of the current subsidies. Itwill also enable us to provide electricity to the55pc of the country that currently does not haveaccess to the grid,” U Soe Myint, deputypermanent secretary of the MOEE, told TheMyanmar Times.Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-announces-first-power-tariff-hike-five-years.html

NewspapersMyanmar Times

26 June 2019

PwC | June 2019 19

Interference hampering repatriation: top official

Despite honest action taken by the government toresolve the Rakhine issue, political interferencehas stymied the efforts of the Union Enterprisefor Humanitarian Assistance, Resettlement andDevelopment in Rakhine (UEHRD), a seniorgovernment official said.Social Welfare, Relief and Resettlement MinisterU Win Myat Aye said this during a conference forUEHRD officials at the National Reconciliationand Peace Centre in Yangon on Saturday.U Win Myat Aye is also the vice chair of UEHRD.“Although UEHRD has been working to bringabout sustainable peace and development inRakhine, its efforts have been hampered byextremists,” he said, adding that ongoing conflictsdelay development in the state.The return of rule of law in conflict areas willrequire manpower and the will to overcomeextremists, the minister said.The Union government and private sector haveset up camps for refugees who want to return, andresettlement arrangements could be usedimmediately if the conflict ends, he said. Whilethe international community criticises the

government’s efforts to deal with refugees whofled a Tatmadaw (military) crackdown in Rakhine,Myanmar will work with ASEAN countries toaddress the criticism.ASEAN countries are helping Myanmar addressthe issues, and agreements have been made onenhancing the ability of government officials todeal with the problems of distributinginformation and development in Rakhine.Following attacks by the Arakan RohingyaSalvation Army on security forces in Rakhine onOctober 9, 2016 and on August 25, 2017, themilitary responded with a crackdown that senthundreds of thousands of Muslim refugees fleeingacross the border to Bangladesh.Myanmar signed an agreement with Bangladeshon November 23, 2017 to accept returningrefugees. Plans originally called for refugees to beaccepted at Taung Pyo Letwe and Nga Khu Yacamps before being temporarily shifted to HlaPhoe Khaung transit camp.Source: Myanmar Timeshttps://www.mmtimes.com/news/interference-hampering-repatriation-top-official.html

NewspapersMyanmar Times

27 June 2019

PwC | June 2019 20

‘US keen to invest, strengthen ties with Myanmar, but faster reform needed’

The lack of infrastructure, clearer rules onbusiness and domestic politics continue to beissues weighing on investor sentiment towardsMyanmar.US Ambassador to Myanmar Scot Marciel, whospoke at the American Chamber of CommerceMyanmar’s “Improving Ease of Doing BusinessForum” yesterday, acknowledged that while thegovernment has been implementing reforms andbuilding infrastructure, more still needs to bedone in order for investors to be more confidentin channeling their funds into the country.He was critical of the “Look East Policy” pushedby the Myanmar Investment Commission sincelate last year, pointing out that investment andtrade opportunities existed globally, includingfrom the US.He added as reforms have recently gathered pace,more US companies have shown interest toinvest.The US is currently the 13th largest foreigninvestor in Myanmar, having invested a total ofUS$430 million so far. Marciel said US investorswould flock here so long as the business

environment remains welcoming with stabledomestic politics.Earlier, Marciel spoke in an exclusive interviewwith the Myanmar Times on the country’s politicsand economic reforms. Here is an excerpt of thatinterview, which has been edited for clarity andbrevity: What is the US’s stance on the economyand politics of Myanmar? We continue to supportthe people of Myanmar in their economicdevelopment needs and their move towardsdemocracy and peace. We want to help bring thebenefits of economic development through USgovernment aid and through increased bilateraltrade.The US continues to extend the GeneralisedSystem of Preferences to Myanmar and this year,bilateral trade has touched nearly US$1 billion.What is important is not the volume of trade buthow fast it is improving while US investments inthe country is also rising.Source: Myanmar Timeshttps://www.mmtimes.com/news/us-keen-invest-strengthen-ties-myanmar-faster-reform-needed.html

NewspapersMyanmar Times

27 June 2019

PwC | June 2019 21

The President Intervenes to Save Yangon from Its Govt

The Yangon regional government has a tendencyto annoy the Union government with itsunrealistic plans and its disinclination to followofficial procedures.The latest embarrassment to Naypyitaw came twoweeks ago in the form of the regionalgovernment’s budget proposal for fiscal 2019-20.The Yangon administration requested 16 billionkyats (about US$10.5 million) to construct aseven-story police headquarters with a helipadand a regional courthouse with two basements,and to purchase a 25-meter-long ferry to maketrips to a remote island in the Andaman Sea.Lawmakers in the Yangon parliament found itunacceptable to allocate such a large amount offunds while the city’s basic infrastructure needs—like building roads and upgrading the drainagesystem—go unmet. When the request hit the floorof the Yangon legislature, before being forwardedto the Finance Commission chaired by the UnionPresident—it was rejected by more than one thirdof the 92 elected lawmakers, who deemed theprojects “unnecessary.” During the debate, somewondered aloud about the fairness of the

government spending so much on the projectswhile cutting budgets for regional developmentprojects in their constituencies. Among theexamples they cited was a proposed new roadwhose length had been halved.“Instead of building what people really need, thegovernment is spending a lot on others,” U YanShin, an NLD lawmaker, told the parliament.But this parliamentary resistance couldn’t deterthe Yangon government. U Myint Thaung, theregion’s planning and finance minister, insistedthe projects were necessary to promote the rule oflaw and fulfill the transportation needs of thepeople living on Coco Island. (For your reference,according to the 2014 National Census there are950 residents on the island, which is 260 nauticalmiles—about 480 kilometers—from the city ofYangon.)

Source: The Irrawaddyhttps://www.irrawaddy.com/opinion/commentary/president-intervenes-save-yangon-govt.html

NewspapersThe Irrawaddy

28 June 2019

PwC | June 2019 22

Phyo Min Thein and the business of government

The Yangon chief minister’s business ventures,including low-cost housing and Yangon Petrol,were the main talking points from a marathonpress briefing on June 5.If there has been one defining feature of U PhyoMin Thein’s tenure as Yangon Region chiefminister, it is his eagerness to get involved inbusiness.This determination to intervene in a range ofindustries through public investment has beencontroversial, though, drawing criticism frombusinesses, lawmakers and the media.His business ventures were at the forefront of amarathon June 5 briefing held to mark theregional government’s third anniversary.Members of his cabinet opened the briefing byspeaking for three hours about their activities inthe 2018-19 fiscal year, and plans for the final twoyears of the government’s term.The final hour was allotted to answering sixquestions from journalists. The discussionfocused on three of Phyo Min Thein’s signatureprojects: the Yangon Bus Service, Yangon Petroland low-cost housing.

Paying it backYBS was launched in January 2017 after theregional government installed the Yangon RegionTransport Authority to replace the incumbent busregulator, Ma Hta Tha, which had beenestablished by the military.The network has been consolidated into around120 routes, down from more than 300. Thesystem of individual bus owners has largely beenscrapped, with most vehicles owned by one of twodozen companies.The jury is still out on whether commute timeshave improved, but the new buses imported forthe scheme have definitely improved passengercomfort.A significant number have been bought with statefunds. In early 2017, the regional governmentsigned a K70 billion contract with two Chinesecompanies to import 1,000 buses.

Source: Frontier Myanmarhttps://frontiermyanmar.net/en/phyo-min-thein-and-the-business-of-government

NewspapersFrontier Myanmar

28 June 2019

PwC | June 2019

3. Weekly Investment News

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PwC | June 2019

Weekly Key Investment NewsHeadlines

Myanmar on the radar as investors shift funds from China

Mandalay project with telco under review, says chief minister

Foreign Investments in Myanmar’s Least Developed Regions Increase

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Japan’s Nippon Life acquires 35% stake in Myanmar insurer for $21m

Myanmar’s First Solar Power Plant Joins National Grid

PwC | June 2019 25

Myanmar on the radar as investors shift funds from China

Myanmar is well-positioned to benefit from theflight of capital to the Asean region as the tradewar between China and the US plays out, officialssaid.‘’Myanmar is one of the targeted countries forbusinesses planning to shift out of China to avoidthe fallout from the trade war,” Li Fuquan, thechair of China Myanmar Economic Cooperationand Development Promotion Association, toldThe Myanmar Times.However, he warned that Myanmar faces stiffcompetition from other Asean hotspots likeVietnam and Cambodia. “Other regional countriesare also attractive for investors. So, Myanmarneeds to up its game to if it wants to drawbusinesses to its shores,” Mr Li said.He said businesses in China now expect the tradewar between the two superpowers to be a longand drawn out one and many are making plans tomove their factories and headquarters into theregion to avoid US tariffs and stay competitive.U Phyo Min Thein, Chief Minister of YangonRegion Government and chair of Yangon RegionInvestment Committee, said in June that “many

foreign investors have already shown interest inthe city because of the trade war.U Aung Naing Oo, the Permanent Secretary of theMinistry of Investment and Foreign EconomicRelations, echoed the chief minister’s sentiments.He said businesses in China are consideringmoving to four main countries: Vietnam,Cambodia, Indonesia and Myanmar.“Many Chinese business delegations have beencontinuously coming to Myanmar to explore thebusiness environment. We are on their radar forpotential expansion and as an alternativedestination for manufacturing and otherservices,” he said.Chinese investors want to manufacture andexport goods to the US from countries likeMyanmar to avoid incurring tariff expensesimposed by the US on China-made products as aresult of the trade war.

Source: Myanmar Timeshttps://www.mmtimes.com/news/myanmar-radar-investors-shift-funds-china.html

NewspapersMyanmar Times

24 June 2019

PwC | June 2019 26

Mandalay project with telco under review, says chief minister

Cooperation between China-basedtelecommunications giant Huawei and Mandalaycity in a “Safe City” project is being reviewed, saysMandalay Region Chief Minister U Zaw MyintMaung.A committee comprising Mandalay CityDevelopment Council, police, and NGOrepresentatives, chaired by Regional Minister ofElectricity and Construction U Zarni Aung, isoverseeing the project, which involves the use oftechnology to improve public safety in Mandalay.“We are working to eradicate crime, however,some parties are criticising our cooperation withHuawei at a time of intense trade tensionsbetween China and the US. We will review thecriticism, as alternative technologies could beused for the project and no formal agreement hasbeen signed for the project,” said U Zaw MyintMaung.The project involves the installation of CCTVcameras connected to police stations in Mandalaytownships with high crime rates. Artificialintelligence and facial recognition technologywould also be incorporated in the project, for

which Huawei had conducted feasibility studieson installation sites in three townships, U ZawMyint Maung said.“Such a system would improve public safety, andother cities around the world have such systemsin place.However, we will now consider theadvisability of relying too much on any onevendor for the project,” he added.“The project will cost an estimated K2 billion toput in place, and the plan was submitted to thePresident’s Office in May,” said U Zarni Aung.“As mentioned earlier, no formal agreement hasbeen signed yet for the project, as we are stillconsidering the final details of the system, and weare also seeking advice from the Office of theUnion Attorney General on the project,” said UZaw Myint Maung. About K2 billion will beneeded to implement the project, and thatamount will come from the budget, said U ZarniAung.Source: Myanmar Timeshttps://www.mmtimes.com/news/mandalay-project-telco-under-review-says-chief-minister.html

NewspapersMyanmar Times

26 June 2019

PwC | June 2019 27

Foreign Investments in Myanmar’s Least Developed Regions Increase

According to the Myanmar InvestmentCommission (MIC), the least-developed regionsof the country are Kachin, Kayah, Kayin, Chin,and Rakhine States. Now, foreign investments inthese least-developed areas are increasing,according to the Directorate of Investment andCompany Administration.At least four or five foreign investments haverecently flowed into these states. The investmentsin Rakhine, Kachin, and Kayin States have been inthe manufacturing sector; meanwhile, due toelectricity issues, the investments in Chin andKayah States have been in the eco-tourism sector.At a recent press conference, U Thant Sin Lwin,Director General of the Directorate of Investmentand Company Administration, said: “Lessdeveloped regions are receiving more interestfrom investors. However, states like Chin receiveless interest because of transportation difficultiesin that area. Meanwhile, places like Loikaw inKayah State are receiving more investment thanbefore.”The MIC divides all of the regions and states inthe country into three groups, depending on their

development, and it provides various incentivesto investors who make investments in the leastdeveloped states and regions. Among theseincentives are seven years of being tax exempt.In an attempt to boost investment in the country,the government has adopted the MyanmarInvestment Promotion Plan 2016-2017 to 2035-2036. it will implement the plan in three differentphases: the short-term goals will span the firstfive years; the mid-term goals will take anadditional five years; the long-term goals will bemet during the final ten years.According to the Myanmar Investment PromotionPlan, the country is expected to climb to number40, up from its current standing of 171 on theWorld’s Ease of Doing Business scale.

Source: Myanmar Business Todayhttps://www.mmbiztoday.com/articles/foreign-investments-myanmar-s-least-developed-regions-increase

NewspapersMyanmar Business Today

26 June 2019

PwC | June 2019 28

Japan’s Nippon Life acquires 35% stake in Myanmar insurer for $21m

Nippon Life Insurance Co, the largest Japaneselife insurer by revenue, announced that it hasagreed to acquire a 35-per cent stake inMyanmar’s Grand Guardian Life InsuranceCompany (GGLI) for about ¥23 billion ($21million). The acquisition, which is subject to therelevant regulatory approval, is expected to becompleted by October this year, with GrandGuardian to be renamed as Grand GuardianNippon Life Insurance under the terms of thedeal. Nippon Life acquired the 35 per cent stakefrom Grand Guardian Insurance Holding PublicCo (GGIH), which will hold the remaining 65 percent share. The deal comes nearly six years afterMyanmar opened the insurance sector bygranting licenses to local private insurers. Foreignlife insurers entered the market by forming jointventures with local partners. Aside from NipponLife’s partnership with Grand Guardian, threeother foreign life insurance companies formedjoint ventures with local partners, namely, CitizenBusiness Insurance, Capital Life Insurance, andFirst National Insurance. “While the lifeinsurance market in Myanmar is still in a nearly

stage of development with private insurersgranted licenses in 2013, with attractivedemographics and solid economic development,high growth rate of the life insurance market canbe expected over the long term,” Nippon Life saidin a statement. In April, Myanmar allowed fiveforeign companies to operate life insurancebusiness in the frontier country. The Ministry ofPlanning and Finance (MoPF) of Myanmar hasdecided to award Preferred Applicants ForeignLife Insurance Licences to Japan’s Dai-ichi LifeInsurance Company Limited, Manufacturers LifeInsurance Company Canada, AIA CompanyLimited, Chubb Tempest Reinsurance Limitedfrom Bermuda, and Prudential Hong KongLimited, a member of the Prudential plc from theU.K.

Source: Deal Street Asiahttps://www.dealstreetasia.com/stories/nippon-life-myanmar-insurer-141899/

NewspapersDeal Street Asia

27 June 2019

PwC | June 2019 29

Myanmar’s First Solar Power Plant Joins National Grid

YANGON—An opening ceremony Thursdaymarked the completion of the first phase ofelectricity generation from Myanmar’s first solarpower plant, which has been added to thenational grid to supplement the country’s powerneeds.Located in Minbu Township, in upper Myanmar’sMagwe Region, the Minbu Solar Power Plant wasdeveloped by Green Earth Power (Myanmar)under a build-operate-transfer (BOT) contract. Itwill have a total capacity of 170MW and produce350 million kWh (kilowatt hours) per annum,electrifying about 210,000 households, accordingto a government announcement.Each of the first three stages of construction willadd 40MW of power generation capabilities whilethe fourth and final stage will add 50MW. Withthe first stage complete, the plant is now capableof producing up to 40MW of power.State Counsellor Daw Aung San Suu Kyi attendedthe opening ceremony, where she said that,despite several of solar power’s drawbacks—itsdependence on environmental conditions,requirement for large tracts of land and high cost

of electricity and battery storage—it has manyadvantages, including low maintenance costs,reduced levels of environment-harming emissionsand increased technological development for thecountry. “While hydropower stations with longconstruction periods were under construction,solar power stations with short constructionperiods, like this one, will be constructed—aftercareful consideration—to provide electricity,” shesaid.Currently, only one-third of the country’s 60million people are connected to the electrical gridand cities are experiencing frequent blackouts.The government has vowed to roll out electricitycoverage to 50 percent of the population byDecember this year and 100 percent by 2030.The World Bank predicts that, as Myanmar’seconomy grows, electricity consumption willincrease by 11 percent a year until 2030, meaningthe government will need to triple its powergeneration.Source: The Irrawaddyhttps://www.irrawaddy.com/news/burma/myanmars-first-solar-power-plant-joins-national-grid.html

NewspapersThe Irrawaddy

28 June 2019

PwC | June 2019

3. Weekly New Tenders

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PwC | June 2019

Tenders (Myanmar)List

Note: tenders information are collected from http://www.mmtimes.com/, https://tender.yangon.gove.mm, http://consult-myanmar.com/, and http://www.myanmar-opportunities.org/mm/tenders http://www.buildersguide.com.mm/en/ .

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MOC: Invitation for tender for developing ESIA, building 2 new bridges across Thanlwin River, Closing date: 18 July 2019

PwC | June 2019

Tenders (Multilateral organizations) List

Note: tenders information are collected from https://wbgeconsult2.worldbank.org, www.devex.com, www.adb.org, https://www.ungm.org

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ADB: TA-9743 MYA: Road Safety for Highway Development in the Greater Mekong Subregion East-West Economic Corridor (50381-007), Closing Date: 11 July 2019

PwC | June 2019

4. MIC Permitted Projects

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PwC | June 2019

MIC Permitted Projects (Meeting 8, 2019)

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No. Name of Company Type of Investment Form of Investment

1 Myanmar Unilink Communication Co.,LtdNetwork facilities services, network services and application services

Wholly Foreign Owned

2 AGB Communication Co.,LtdNetwork facilities services, network services and application services

Wholly Myanmar Owned

3 Mon Petrol Co.,LtdConstruction of jetty for container storage station, bonded warehouse and operation of storage tanks for edible oils

Wholly Myanmar Owned

4 Awra Energy Public Co.,LtdConstruction of jetty and LPG storage tanks, importation

Wholly Myanmar Owned

Source: DICA

PwC | June 2019

5. Upcoming Events

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PwC | June 2019

Upcoming Events (July 2019) List

Date Location Name of Event Sector Price Focus Points

02-03 July 2019

Mandalay Education & Career Education Free

“Education & Career event will showcasesproducts like job and educational, educationproducts and accessories, educational loanand financial services, Employees jobfacilities etc.”

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Note: Events information are collected from https://www.go-myanmar.com/events-and-conferences and https://10times.com/myanmar .

© 2019 PricewaterhouseCoopers Myanmar Co Ltd. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Myanmar Co Ltd, which is part of the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

www.pwc.com/mm

PwC Myanmar Weekly Business Intelligence Publication

For further information please contact:

Mark RathbonePwC Capital Projects and Infrastructure Leader, Asia+65 6236 4190mark.rathbone@sg.pwc.com

Jennifer TayManaging DirectorCapital Projects & Infrastructure, PwC Singapore +65 8876 900jennifer.c.tay@sg.pwc.com

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