The European Times - Myanmar by The European Times

MYANMAR

THE EUROPEAN TIMES

MYANMAR • • • • • • •

President Committed to Continuing the Reform Process Minister of the President’s Office Outlines Key Policies Asia’s Last Frontier Open for Business Chairmanship of ASEAN in 2014 Myanmar Ready for EU Investment Myanmar’s Fact File Useful Numbers

4 6 7 10 12 13 14

Far-Reaching Political Reforms The Republic of the Union of Myanmar Nobel Prize Winner Symbol of Opposition Movement Nay Pyi Taw: Myanmar’s New Capital

16 19 21 22

INTERNATIONAL ORGANISATIONS • • •

World Bank Renews its Partnership Asian Development Bank Re-engaged Since 2012 Swiss Ambassador Highlights Peace Process

24 25 26

BUSINESS & INVESTMENT OPPORTUNITIES • • • • • • • • •

Fighting Poverty and Supporting Sustainable Growth New Census an Essential Development Tool UMFCCI: Strong Advocate for Private Sector Business Community since 1919 Market-Oriented Economy in a Growth Phase Focus on World-Class Capacity-Building EU Supporting Myanmar’s Transition to Free-Market Economy New FDI Law Offers Significant Incentives Kelvin Chia Yangon Ltd. The Investor’s Calendar

28 29 30 32 35 36 38 40 41

FINANCE • • •

Building the Right Foundations for Financial-Sector Development 43 Myanmar Oriental Bank 45 Banking Sector Achieving Major Milestones 46

TRANSPORT & INFRASTRUCTURE • • • • •

Ambitious Aviation, Maritime and River System Projects in Progress Development Plans for Railway Infrastructure Ports Upgrades Underway Myanmar Integrated Port Ltd. Infrastructure Improvements a Top Priority

49 51 52 53 54

ENERGY Ministry of Energy Launching Major Projects Private Sector Pioneer Discusses Myanmar’s Energy Potential Myanmar Committed to the EITI Open to International Investment in Energy Myanmar Opens Doors to EU Investors

Mining Sector Offers Enormous Opportunities Myanma Precious Resources Group New Era for Myanmar’s Mining Industry Myanmar Yang Tse Copper Ltd. & Myanmar Wanbao Mining Copper Ltd. National Prosperity Company Ltd.

63 64 64 66 68

• • • • • •

Rapid ICT Development in Progress Ministry Promoting Freedom of the Press, Open Information Elite Tech Group of Companies ICT Cornerstone of Government’s Development Programmes Information Matrix Dynamic, Diverse Business Group Open to Partnerships

70 72 73 74 76 77

CONSTRUCTION • • • •

Infrastructure Development a Top Priority Building Tomorrow’s Myanmar T.Z.T.M. Group of Companies A1 Group of Companies

79 80 82 82

RETAIL & DISTRIBUTION • • • • •

Rapidly Evolving Retail Sales and Distribution New Association Voice of High-Potential Retail Sector Loi Hein Company Ltd. International Retail and Distribution Partnerships Cho Cho Company Ltd.

84 86 87 88 89

AGRICULTURE •

Agriculture a Major Driver of the Economy

TOURISM • • • • • • • • • • •

Responsible Tourism Benefits Local Population Aureum Palace Hotel-Resort Next Big Thing in Asian Tourism Taw Win Family Company Ltd. A1 Group of Companies Lower Myanmar: Bustling Yangon and Pristine Beaches Chatrium Hotel Royal Lake Yangon Sedona Hotel Yangon Myanmar: The ASEAN’s Uncut Gem Upper Myanmar: Ancient Kingdom of Burma Protecting Exceptional Cultural and Natural Heritage

94 95 96 98 98 99 100 102 104 105 106

56 57 59 60 61

Regional Director: Aukje Oostendorp – Project Manager: Hannah Moore – International Business Analyst: Giuseppe LaCandia Project Co-ordinator: Ulrike Bruening – Editorial: Emily Emerson- Le Moing, Hannah Moore – Proofreading: Vicky Kox – Production Co-ordinator: Iskra Ilievska – Design: Martine Vandervoort, Johny Verstegen, Walter Vranken, Dirk Van Bun

MYANMAR

The European Times PO Box 685 66 – London EC1P 1XP – United Kingdom – Phone: +44 (0)208 371 2356 Fax: +44 (0)208 371 2410 – info@european-times.com – www.european-times.com The European Times is a trading name of Crystal Mediacorp Ltd

• • • • •

ICT

GOVERNMENT • • • •

MINING

This guide is protected by copyright. All rights reserved. This publication, or any part thereof, may not be reproduced, stored electronically or transmitted in any form, without the prior written permission of European Times. Every effort has been made to ensure information contained in this publication is correct and up-to-date. The authors and publisher accept no responsibility for any errors it may contain, or for any loss, ﬁnancial or otherwise, sustained by any person using this publication.

THE EUROPEAN TIMES

MYANMAR

HE U Thein Sein, President

President Committed to Continuing the Reform Process

Myanmarʼs President HE U Thein Sein vows to continue the reforms his administration launched when he was elected in 2010. In a speech he delivered to Myanmarʼs parliament in March this year,

he said, “Three years ago right here, I made a solemn pledge

that we would try to stand as a respectable country in glory while actively participating in international organisations. Our reform

process has been well received and recognised by the international community.”

THE EUROPEAN TIMES

Introduction Sector

During HE U Thein Sein’s presidency, Myanmar has achieved an impressive transformation from isolation to engagement in regional and international affairs. Myanmar’s chairmanship of the Association of Southeast Asian Nations (ASEAN), its hosting of the 27th SEA Games, its exchanges with top foreign leaders and its new flood of international investment have all been accomplished thanks to the Thein Sein administration’s decision to open the country. Myanmar has also freed hundreds of political prisoners and relaxed press censorship. The president has lived up to the promises he made in a speech to the UN General Assembly in New York in September 2012 in which he said Myanmar was on a path from which it would not backtrack. His visit to the US then was the first by a Myanmar leader in 46 years.

Long military career HE U Thein Sein was born in a small farming community in what is now known as Ngapudaw, Myanmar, in 1945. He graduated with an arts degree from Myanmar’s military academy in 1968 and advanced steadily in his 40-year military career, during which he achieved the rank of general. In the 1990s, he became a member of the State Peace and Development Council, as the military junta that ruled Myanmar was called at the time, and was made First Secretary of the council in 2004. HE U Thein Sein also chaired the National Convention which drafted the country’s new constitution. The future president was made Acting Prime Minister in May 2007 when then Prime Minister Soe Win became ill. Confirmed as Prime Minister in October 2007, HE U Thein Sein became the public face of the regime, representing it at ASEAN and UN meetings and serving as Prime Minister until he took office as President in March 2011 after being elected in Myanmar’s first general election in 20 years in November 2010. This election solidified the power of the United Solidarity and Development Party (USDP), which the President had founded. Like many other top leaders in Myanmar’s military regime, HE U Thein Sein exchanged his military uniform for a suit. While HE U Thein Sein’s critics expected him to be a figurehead who would continue to support military rule, the President began the reform process as soon as

he took office, surprising his detractors. In one highprofile move, he met freed pro-democracy leader Daw Aung San Suu Kyi, who subsequently chose to bring her National League for Democracy (NLD) party back into the political sphere. The president publicly congratulated Aung San Suu Kyi on receiving the US Congressional Gold Medal and the Nobel Peace Prize.

“What will be recorded in our history is how much we all have accomplished for the nation.” Reforms in response to Myanmar people’s wishes In January 2012, in his first interview with Western media since his election as president, HE U Thein Sein stressed to the Washington Post that Myanmar’s people are pushing for reforms and that he is responding to their wishes. He said, “With regard to the reform process we are undertaking in our country, there is a lot of encouragement from our people. The reform measures are being undertaken based on the wishes of the people [who want] to see our country have peace and stability as well as economic development. To have internal peace and stability and economic development, it is important to have good relations with the political parties that we have in our country. That is why we have had engagement with Daw Aung San Suu Kyi. In my meeting with her, we were able to reach an understanding. People would like to see peace and stability and that is why we have had engagement with the ethnic armed groups.” As soon as he had taken office, HE U Thein Sein began to push the West to lift sanctions on Myanmar. “There is a quiet determination to him; he is quiet and soft-spoken but will not flinch from a question posed to him,” says Vijay Nambiar, the UN’s top adviser on Myanmar. In his speech to Myanmar’s Parliament in March, HE U Thein Sein vowed to continue the reform process. He said, “What will be recorded in our history is how much we all have accomplished for the nation. I would like to conclude by urging everyone present here to continue to work in unison in writing the positive history of our country that we did our part in transforming Myanmar to a democratic state in a smooth and peaceful manner.”

THE EUROPEAN TIMES

MYANMAR

Minister of the President’s Office Outlines Key Policies concerns, and in November I welcomed a EU delegation. The EU now trusts our present government and truly understands what is happening in Myanmar. European Times: What are the main challenges Myanmar faces? HE U Soe Thane: One challenge is that people do not understand that we cannot adopt European standards overnight. We need to improve government, develop infrastructure, improve the financial sector, achieve peace, control corruption and find sources of financing, but our main challenge is capacity-building. European Times: How can Europe help Myanmar meet these challenges?

HE U Soe Thane, Union Minister of the Presidentʼs Oﬃce, responsible for coordinating Economic

Development, discusses the countryʼs current priorities.

European Times: What are the tasks of the Ofﬁce of the President? HE U Soe Thane: We handle administration of Nay Pyi Taw, coordination of this ofﬁce with Parliament, coordination of various ministries, the peace process and national stability, private-sector development and economic policy, and coordination between the Union and regional governments. European Times: What is the state of Myanmar’s relationship with the EU? HE U Soe Thane: Since Myanmar opened up, we have been strengthening our EU ties. In January 2012 I met the EU delegation in Davos, Switzerland to initiate the lifting of sanctions and discuss General System of Preference

HE U Soe Thane: Myanmar needs ﬁnancial, investment, human and institutional capital. We need to focus on attracting all of these forms of capital. European investors need to know that Myanmar has changed for the better and welcomes their support. We are currently trying to streamline bureaucracy and get rid of bad habits that have been a result of decades of military rule. We are working hard to empower decision-making, innovation and dialogue. European Times: Why should investors target Myanmar? HE U Soe Thane: This is a resource-rich country. We have an immense workforce of over 60 million people, and we share borders with two of the most populous economies in the world. Myanmar’s new Foreign Investment Law provides great incentives, including ﬁve-year tax holidays and many options for full or joint ownership in many sectors. There is great potential here in Myanmar, but if you are not willing to take risks, you will not be successful. At this time, we can only accept investments in low-cost, labour-intensive and agro-based industries. By the end of 2014, Myanmar will be able to begin to provide the infrastructure for high-end investments and knowledge-based industries. Agriculture and food-processing, SMEs, tourism and ICT have particularly strong investment prospects.

THE EUROPEAN TIMES

Shwedagon pagoda, Yangon

Asia’s Last Frontier Open for Business Myanmar is carving out a niche for itself in the global economy and oﬀers outstanding

partnership and investment opportunities. This ancient nation is steadily transforming itself

after more than a half century of restrictive military rule and isolation which began to end

Every aspect of the country is evolving rapidly, including its political, economic and social spheres. Highlighting just how far Myanmar has come in joining the global community of nations, US President Obama visited the country in November 2012 and Myanmar’s President HE U Thein Sein met President Obama at the White House in May 2013, when the leaders signed a bilateral investment-protection and trade-promotion agreement for their two countries.

with the 2010 general elections.

Ongoing reform agenda President HE U Thein Sein, a former general, was elected President for a five-year term in 2010 and has launched a series of far-reaching reforms. These have included providing more freedom for the press, making administrative changes to reduce red tape in government through the Public Services Performance Appraisal Task

THE EUROPEAN TIMES

MYANMAR Sector

Force, signing the Extractive Industries Transparency Initiative, establishing the foundations for a modern banking system, controlling government spending, and, in 2012, establishing a new law on foreign investment. In addition, the government’s spending on healthcare and education has risen significantly, the telecommunications sector has been opened to foreign investment, a microfinance law has been instituted and banking restrictions have been eased. And that is just the beginning. In January 2014, HE U Thein Sein said that he backed changing Myanmar’s constitution to allow any citizen to become president, apparently in reference to Daw Aung San Suu Kyi, the Nobel Prize-winning democracy advocate. Daw Aung San Suu Kyi and Speaker of the Lower House of Parliament Thura Shwe Mann have emerged as key reform leaders, while Myanmar’s Parliament has demonstrated its commitment to overseeing the executive branch and to helping to drive forward the reform process. Nevertheless, challenging times still lie ahead, particularly in the run-up to the 2015 elections – a time during which all eyes will be on Myanmar.

Vast development potential Though isolated for decades, Myanmar has vast potential to play a leading role in the international economy in many sectors. The second-largest country in Southeast Asia, Myanmar enjoys a very strategic location bordered on the north and north-east by China, on the east and south-east by Laos and Thailand, on the south by the Andaman Sea and the Bay of Bengal, and on the west by Bangladesh and India. Myanmar is rich in natural resources, including oil and gold; in fact, Myanmar’s nickname is “the Golden Land” and its gold-covered pagodas can be found throughout the country. Myanmar also has exceptional tourism potential thanks to its great natural beauty, many architectural wonders, cultural diversity – including over 130 ethnic groups – and long and rich history dating back to 1057, when King Anawrahta founded the unified state that is now Myanmar. In modern times, Myanmar (known as Burma under © Brian Scantlebury-Dreamstime.com

Independence Monument in Mahabandoola Park in Yangon

THE EUROPEAN TIMES

Introduction

colonial British rule) achieved its official independence in 1948 with U Nu as Prime Minister. He later helped found the Movement of Non-Aligned States with Indian Prime Minister Nehru, Indonesian President Sukarno, Yugoslav President Tito and Egyptian President Nasser. Coming into conflict with the military, U Nu was ousted in 1962 in a military coup led by General Ne Win, who abolished the federal system and inaugurated “the Burmese Way to Socialism”. This involved nationalising the economy, forming a single-party state with the Socialist Programme Party as the sole political party, and banning independent newspapers. A new constitution was created in 1973 but, following severe economic problems and public protests, the State Law and Order Restoration Council declared martial law in Myanmar in 1989. Over the past few years, however, Myanmar has been opening up and is widely referred to as Asia’s last frontier.

European investment in the country when it comes into force.

Investors from VISA to Starbucks are beginning to put Myanmar on their radar. One headlining project is by Statoil, which, with its partner ConocoPhillips, was recently awarded a deep-water exploration block in the Myanmar waters of the Bay of Bengal. The block covers more than 9,000 sq km. Statoil, with a 50% equity share along with ConocoPhillips, will be the operator of the project. Erling Vågnes, Senior Vice President for Statoil’s exploration in the eastern hemisphere, says, “This is a large and virtually unexplored area in a basin with a proven petroleum system and thick sedimentary deposits.”

As it strives to achieve these ambitious goals, Myanmar is forming strong partnerships with international and regional groups and funding organisations. The Asian Development Bank (ADB), for example, has resumed its activities in Myanmar and in 2012 developed a road map of its future involvement there in the form of an interim country-partnership strategy through 2014. The ADB helped Myanmar’s government set up its ﬁrst forum on international-aid management in January 2013 and is engaged in various working groups involving development partners as well as local organisations.

Statoil launches major project in Myanmar

Joining the ranks of ASEAN’s “miracle” economies

Commenting on Myanmar as an investment target, Erling Vågnes adds, “We have been following the development in Myanmar closely since 2011. Through several visits we have established a good relationship with the authorities in Myanmar, and we have had a continuous dialogue with Norwegian authorities and drawn upon experience from other Norwegian companies present in the country. We look forward to contributing to the further development of the energy sector in Myanmar with our competence and capacity.” On March 20, Myanmar began negotiations with the EU to sign a bilateral Investment Protection Agreement, which will give a major boost to

Myanmar is also strengthening its ties to other countries in the region. It actively participates in the Greater Mekong Subregion Economic Cooperation Programme and in the Association of Southeast Asian Nations (ASEAN), and it has signed investment-protection agreements with the Philippines, Vietnam, China, Laos, Thailand and Indonesia. Myanmar clearly wants to join the ranks of the East Asian “miracle” economies: South Korea, Taiwan, Singapore and Hong Kong. All began their transformation by enacting reforms and then following through with strong support for the private sector. Now Myanmar has the chance to equal or even surpass its neighbours’ success stories.

The Asia Society is another supporter of positive change in Myanmar. Through its US-Myanmar Initiative, the international organisation promotes democracy and an open economy in Myanmar while recognising the challenges the country faces. According to the Asia Society, Myanmar needs to upgrade government and management of the economy; firmly establish a rule of law and strengthen the judicial branch; protect individual rights; promote ethnic equality; instil social and religious tolerance; fight corruption; support capacity-building in government and the economy in general; bring the benefits of reforms to all the country’s people; support rural development; foster the growth of SMEs; find solutions for problems involving land and property rights; and ensure that economic development goes hand-in-hand with social development and protection of the environment.

THE EUROPEAN TIMES

MYANMAR

Chairmanship of ASEAN in 2014 © Boonsom-Dreamstime.com

Irrawaddy Bridge in Sagaing

Myanmar will host the 24th Association of

Southeast Asian Nations (ASEAN) Summit in

May, 2014. The summit is one of hundreds

of ASEAN meetings; aimed at strengthening regional cooperation and ensuring continued

economic progress. Myanmar inaugurated its Chairmanship in January, 2014 by hosting a

meeting of ASEANʼs foreign ministers in the ancient city of Bagan.

ASEAN was established in Bangkok, Thailand, in 1967 with the signing of the ASEAN Declaration (Bangkok Declaration) by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei joined the group in 1984, Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. Myanmar joined ASEAN 17 years ago but this year marks its ﬁrst term as Chairman. The social, political and economic reforms Myanmar has pushed forward in recent years have paved the way for the country to play a more active role in regional and international affairs in line with its foreign-policy objectives stated in its 2008 Constitution. The ASEAN Chairmanship is seen as proof that Myanmar has ended its history of isolation from both the regional and global stage.

THE EUROPEAN TIMES

Introduction

The May 2014 summit, to be held in Myanmar’s capital, Nay Pyi Taw, will serve as a platform for member countries to discuss methods and policies to ensure the region’s social progress, cultural development and sustainable economic growth leading up to the introduction of the ASEAN Economic Community in 2015. In addition, as at every ASEAN summit since 2010, the May summit will offer the chance for non-ASEAN countries in the region to take an active role in discussions. These meetings will involve what is known as ASEAN + 3 (ASEAN members plus China, Japan and South Korea) and ASEAN + CER (ASEAN members plus Australia and New Zealand). Myanmar has indicated that it will do its best to uphold regional standards as Chairman. Myanmar’s DirectorGeneral for ASEAN Affairs, U Aung Lynn, has said that Myanmar has carefully observed past ASEAN summits and aims for its leadership to be balanced and impartial. For example, Myanmar has promised to work closely in the coming year with other ASEAN members to formulate a code of conduct for the South China Sea. This has been a long-time goal of countries like the Philippines and Malaysia, whose territorial claims to the Sea overlap with China’s. Carl Thayer, a Southeast Asia expert and Professor Emeritus at the University of New South Wales, is positive about Myanmar’s tenure as Chairman. “I am impressed with Myanmar’s diplomats,” he says. “They see it as in their interest to reﬂect what ASEAN wants.”

“Moving Forward in Unity” The theme that Myanmar is championing for its ASEAN Chairmanship is “Moving Forward in Unity to a Peaceful and Prosperous Community.” Myanmar’s position is that the solidarity of ASEAN is essential for the association’s international credibility and that ASEAN’s ultimate goal is to ensure a peaceful, stable, socially responsible and prosperous region.

In a speech in October 2013, Myanmar’s President H.E. U Thein Sein pledged that the country would strive to ensure peace and prosperity during its year-long tenure as head of the regional bloc. The President also suggested that his government’s recent reforms could potentially serve as a model for the region. “Myanmar’s current political, economic and administrative reforms are a good example to other ASEAN countries,” he said, adding that it is a “national duty” for Myanmar citizens to actively participate in ensuring that the country’s term as ASEAN Chairman is a success.

Priorities during ASEAN Chairmanship As set out in the 1967 ASEAN Declaration, the aims of ASEAN are to accelerate economic growth, social progress and cultural development in the region through joint endeavours; to promote regional peace and stability; to support active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientiﬁc and administrative ﬁelds; to provide assistance to other ASEAN countries; to collaborate in economic development; to promote Southeast Asian studies; and to promote productive relations between ASEAN and the international community. Myanmar is committed to supporting these goals, particularly in its role as Chairman this year. According to the government, Myanmar’s priorities during its ASEAN Chairmanship are to ensure the full implementation of the remaining tasks in realising an ASEAN economic community by 2015; to review the status of community-building and set future initiatives to vitalise ASEAN; to formulate programmes which will promote the ASEAN’s external relations; to carry out a comprehensive review of the ASEAN Charter; to conduct a mid-term assessment of the implementation of the ASEAN Regional Forum vision statement and to develop a new vision for the ASEAN Regional Forum; to transform ASEAN into a people-centric organisation, accelerating the participation of women, youth, parliamentarians and media in the activities of the region; and to work on developing an ASEAN vision beyond 2015.

112

THE EUROPEAN TIMES

MYANMAR

Myanmar Ready for EU Investment HE U Paw Lwin Sein: With a GDP of US$ 16 trillion, the European Union (EU) cannot be ignored as a partner in Myanmar’s growth. Myanmar’s government and private sector recognise that the EU is technologically far ahead of us. We are a resource-rich nation with a favourable business climate. However, we lack the capital, technology and managerial expertise to succeed on our own. Now the EU is extending GSP (Generalised System of Preference) to Myanmar, so that both sides can cooperate for mutual beneﬁt. It is therefore extremely important for us to continue inviting investment from Europe and to encourage a more developed trade relationship between Myanmar and the EU.

His Excellency U Paw Lwin Sein, Myanmarʼs Ambassador BENELUX,

the

discusses

opportunities.

European

Myanmarʼs

Union

and

investment

European Times: Please provide a brief introduction on Myanmar to the readers of The European Times. HE U Paw Lwin Sein: Bridging South Asia and Southeast Asia, Myanmar has a population of 60 million, and is rich in natural resources. We can produce over 90 trillion cubic feet of natural gas. In total, we have 19.3 million hectares of arable land, of which over 6 million hectares have not yet been exploited. Moreover, Myanmar produces a variety of precious gemstones such as ruby, sapphire, jade and diamond. It has gold, copper, silver, lead, tin, tungsten and antimony deposits across the country. Our main exports are gas, pulses and beans, garment, timber, marine products and rice while our main imports are petro products, automobile, raw materials, construction material and machinery. Our major trade partners are Thailand, China, India, Japan, Korea and Singapore. The major foreign investors originate from China, Thailand, Hong Kong, Republic of Korea, the United Kingdom and Singapore. European Times: How important is Europe for Myanmar’s economy going forward?

1 12

Sectors such as energy, power, mining, hotels and tourism, agriculture and manufacturing can be attractive for the European investors. European Times: What obstacles are you facing in terms of attracting FDI and how can they be overcome? HE U Paw Lwin Sein: Infrastructural requirements are the main challenges in the short term. Another challenge is the scarcity of skilled manpower for technology-intensive industries. In an effort to meet these challenges, the government is endeavouring its utmost effort to promote infrastructural developments and to uplift the capacity of the workforce and institutions. European Times: What would you like to communicate to our business readers about your country as an investment destination? HE U Paw Lwin Sein: Myanmar is a bridge between the two giant markets of China and India, and is an active member of regional and international organisations such as ASEAN, GMS, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), WTO and the UN. The EU has lifted all sanctions on Myanmar and has reinstated GSP (EBA) arrangement with our country. Myanmar has initiated the reform measures necessary to suit the needs of a market-oriented economic system. We have a strong legal framework for foreign investors and a hardworking labour force with relatively low wages. 30 industrial zones have already been established and seven more are under construction.

THE EUROPEAN TIMES

Introduction

Myanmar’s Fact File Official Name: Republic of the Union of Myanmar Location: Southeastern Asia, bordering the Andaman Sea and the Bay of Bengal, between Bangladesh and Thailand Capital: Nay Pyi Taw Border countries: Bangladesh 193 km, China 2,185 km, India 1,463 km, Laos 235 km, Thailand 1,800 km Climate: tropical monsoon; cloudy, rainy, hot, humid summers (southwest monsoon, June to September); less cloudy, scant rainfall, mild temperatures, lower humidity during winter (northeast monsoon, December to April) Population: 60 million Ethnic Groups: Bamar/Burman 68%, Shan 9%, Karen 7%, Rakhine 4%, Chinese 3%, Indian 2%, Mon 2%, other 5% Religions: Buddhist 89%, Christian 4% (Baptist 3%, Roman Catholic 1%), Muslim 4%, Animist 1%, other 2% Official Language: Burmese/Myanmar Currency: Myanmar Kyat (MMK) Area: Total: 676,578 sq km Land: 653,508 sq km Water: 23,070 sq km Terrain: Central lowlands ringed by steep, rugged highlands Transportation: Airports: 64 (2013) Railway network: 5,031 km Road network: 34,377 km Waterway network: 12,800 km

Politics

Government type: Republic Independence: 4 January 1948 (from the UK) Legal system: Mixed legal system of English common law (as introduced in codiﬁcations designed for colonial India) and customary law Chief of state: President HE U Thein Sein (since 4 February 2011); Vice-President HE U Sai Mauk Kham (since 3 February 2011); Vice-President HE U Nyan Tun (since 15 August 2012) Head of government: President HE U Thein Sein (since 4 February 2011)

Elections: HE U Thein Sein was elected President by the parliament from among three Vice-Presidents; the upper house, the lower house, and military members of the parliament each nominate one Vice-President (President serves a ﬁve-year term)

Judicial branch

Highest court: Supreme Court of the Union (consists of the chief justice and 7-11 judges) Judge selection and term of office: Chief justice and judges nominated by the President, with approval of the Pythu Hlattaw, and appointed by the President; judges normally serve until mandatory retirement at age 70 Subordinate courts: High Courts of the Region; High Courts of the State; Court of the Self-Administered Division; Court of the Self-Administered Zone; district and township courts; special courts (for juvenile, municipal, and traff ic offenses); courts martial.

Economy at a Glance

GDP (purchasing power parity): €83.7 billion ($111.1 billion) (2013 est.) GDP per capita: €1,280 (US$1,700) (2013 est.) GDP real growth rate: 6.8% (2013 est.) GDP contributions by sector: Agriculture: 38%, Industry: 20.3%, Services: 41.7% Industries: agricultural processing; wood and wood products; copper, tin, tungsten, iron; cement, construction materials; pharmaceuticals; fertiliser; oil and natural gas; garments, jade and gems Total exports: €7.1 billion (US$9.414 billion) Export commodities: natural gas, wood products, pulses, beans, ﬁ sh, rice, clothing, jade and gems Exports - major partners: Thailand 40.7%, India 14.8%, China 14.3%, Japan 7.4% (2012) Total imports: €7.6 billion (US$10.11 billion) (2013 est.) Import commodities: fabric, petroleum products, fertiliser, plastics, machinery, transport equipment; cement, construction materials, crude oil; food products, edible oil Imports - major partners: China 36.9%, Thailand 20.2%, Singapore 8.7%, South Korea 8.7%, Japan 8.2%, Malaysia 4.6% (2012)

131

THE EUROPEAN TIMES

MYANMAR Sector

Useful Numbers © Myanmar Tourism Federation

Mandalay

Trade and Investment Myanmar Investment Commission +95 (01) 657 892, 657 824

Switzerland +95 (01) 532 754 UK +95 (01) 370 863 / 4 / 5 / 7

Union of Myanmar Federation of Chambers of Commerce & Industry +95 (01) 214 344, 214 345

Logistics

Kelvin Chia Legal Services +95 (01) 255 399

Yangon Post Ofﬁce +95 (01) 285 499

PwC Accounting Services +95 (01) 378 661, +95 (01) 378 961

Electricity Power Station +95 (01) 414 235

European Embassies France +95 (01) 212 532, 212 178, 212 520, 212 523 Germany +95 (01) 548 951 / 2 / 3 Italy +95 (01) 527 100 / 1

Dignitas Business Limousines +95 (01) 662 115

Travel Agencies (Tours & Visa purposes) Sun Far Travels and Tours +95 (01) 243 993 Sincerity General Travel Services +95 (01) 378 975 / (09) 5731 38 320, (09) 400 039 261

Yangon International Airport +95 (01) 662 811

Emergency Numbers

Railways +95 (01) 274 027, 202 175/8

Yangon Ambulance +95 (01) 295 133

Trafﬁc Control +95 (01) 298 651

Fire Brigade +95 (01) 191, 252 011 / 022

Immigration +95 (01) 286 434

Police +95 (01) 199

Yangon City Development Committee +95 (01) 248 112

Yangon General Hospital +95 (01) 384 493 / 4/ 5, 379 106

THE EUROPEAN TIMES

• Far-Reaching Political Reforms • Nobel Prize Winner and Symbol of Opposition Movement

Government

THE EUROPEAN TIMES

MYANMAR

Far-Reaching Political Reforms Yangon

Myanmar, ruled by a repressive military regime and isolated from the

international community for many years, began to institute political reforms

in 2008 when the government implemented a new constitution. The reform process gathered pace in November 2010 when Myanmar held its ďŹ rst open

elections in 20 years and chose HE U Thein Sein as its President. On November 13, 2010, the government made the decision to free Nobel Prize winner and long-time democracy advocate Daw Aung San Suu Kyi from house arrest.

Since that eventful month, Myanmar has instituted other wide-ranging political reforms and the government continues to pursue its reform agenda.

THE EUROPEAN TIMES

Government Sector

By March 2011, the transfer of power from the military regime to the new government had been completed. In August 2011, President HE U Thein Sein officially met Daw Aung San Suu Kyi, symbolising the new government’s openness to positive change. The next major political reform occurred in October 2013, when new labour laws allowing unions were instituted. In November 2011, Myanmar was appointed chairman of ASEAN for 2014 in recognition of the progress it had been making in its reform agenda. In December 2011, Daw Aung San Suu Kyi’s NLD political party was granted official recognition and registered, indicating the new government’s commitment to working productively with the political opposition. In January 2012, the government freed its highest-profile political prisoners and also signed a ceasefire with the Karen National Union (KNU) in Hpa-an, capital of the eastern Karen state.

President’s speech to parliament highlighted political reforms In a speech he delivered to Myanmar’s Parliament, the Hluttaw, in March this year, President HE U Thein Sein highlighted the political reforms his administration had achieved during his ﬁrst three years in ofﬁce. He said, “Three years ago right here, I opened the door for peace and extended a warm welcome to those individuals and organisations at home and abroad, who were not yet willing to accept the new constitution of 2008, to cooperate in common matters for the sake of the interest of the country. When we look at the achievement with regard to this approach after three years, it can be found that we have managed to achieve national consolidation to a satisfactory extent.” The President noted that as a result of Myanmar’s political reforms, the country has been able to step up its participation in international organisations, including the United Nations, ASEAN, BIMSTEC and others. In addition, Myanmar was chosen to host the 27th SEA Games and hosted the third BIMSTEC Summit and the World Economic Forum. “Our country has already reunited with the international

community in a respectful manner after these three years,” HE U Thein Sein pointed out. In his speech to parliament HE U Thein Sein also cited the 10 speciﬁc political reforms he had promised to undertake when he assumed the presidency three years ago. These were to amend regulations which did not ﬁt with Myanmar’s new constitution, to submit bills to ensure basic human rights guaranteed in the constitution, to adjust government salaries and pensions to put them on a more equitable basis, to upgrade legislation promoting and protecting farmers, to institute new labour laws, to amend laws concerning public health and social welfare, to submit bills to promote the improvement of Myanmar’s healthcare and educational system, to amend laws to guarantee freedom of the media in line with the constitution, to enact new environmental-protection laws and to make sure that mining and industrial operations observe these laws, and to review and amend regulations concerning protection from and responses to natural disasters.

Releasing political prisoners The president noted that great progress had been made in all these reforms. He said, “Today’s achievements provide good evidence of what we have done after three years.” He added, “With respect to political reforms, we have already granted amnesty and presidential pardon 49 times and over 68,000 prisoners have been released. This gesture was for the sake of all-inclusiveness in the political sphere. Moreover, we have relaxed regulations at various levels for Myanmar citizens who self-exiled themselves for various reasons in order for them to come back to the mother land without difﬁculty. As a result, some prisoners who were released and technicians and intellectuals who have returned back are now actively involved in nation-building.” Thanks to these political reforms, the number of countries with which Myanmar has ofﬁcial diplomatic relations has risen from 103 in 2011 to 115 today. As HE U Thein Sein commented in his speech, “Focusing on maintaining peace and stability and enhancing development, our new administration has been implementing with all our might and

THE EUROPEAN TIMES

MYANMAR

THE EUROPEAN TIMES

that conflicts based on sectarian views and ideology led to long-term armed insurgency, which hampered the development of the country. Today, cooperation is of the utmost importance in finding practical solutions and taking decisive actions in solving any problems that we might face. If we are fully aware of the nature of democratic transitions, we must be cognisant of the fact that we need to take steady steps to reach the status of a full-fledged democratic nation.”

Evolution in constitution, role of armed forces In discussing the reform agenda in his speech to parliament, HE U Thein Sein emphasised that Myanmar is in a transition phase. He mentioned that the 2008 constitution may need to be revised to keep pace with new developments and to make sure that it is “in full conformity with democratic norms and values.” He also made a case for an evolving role for Myanmar’s armed forces. He said, “Past history and current world affairs have shown us that it is of utmost importance for small countries like ours to safeguard our sovereignty and to rely on our own resources. Our armed forces will continue to play a role in our democratic transition. There is also the need for our armed forces to continue to be included in the political negotiation tables in ﬁnding solutions to our political issues. We will be able to steadily reduce the role of our armed forces as we mature in democracy and progress in our peace-building efforts.” Yangon

main the political, economic and administrative reform processes and development of the private sector.” He added, “Myanmar is now on the right track in a stable manner towards a democratic society and development.” In addition to speciﬁc reforms, Myanmar is creating a new political environment that fosters transparency, democracy and peaceful political negotiations. The President says, “We need to continue to nurture and replace the old vicious circles of political conﬂicts with this new political culture.” He adds, “We must learn lessons from our past history

The President concluded his speech to parliament on a positive note. He said, “We will be reassessing our government’s strengths and weaknesses of past years, and I strongly believe that we will be able to achieve greater successes and positive outcomes in the remaining months in our nation-building endeavours.” He added, “Today, Myanmar is at a crucial juncture. It is also the best time for us to build our nation in unity. I would like to conclude by urging everyone present here to continue to work in unison in writing the positive history of our country, which should show that we did our part in transforming Myanmar into a democratic state in a smooth and peaceful manner.”

THE EUROPEAN TIMES

Government

The Republic of the Union of Myanmar Type of government

Key Leaders

Myanmar has a parliamentary government which took power in 2011 after elections in 2010. Myanmar achieved its independence from Britain in 1948. Its ﬁrst constitution was written in 1947 but was suspended under the previous military regime until 2008, when a new constitution was approved by referendum. The constitution was revised in 2011.

Myanmar’s current President is HE U Thein Sein (since February 2011). Vice-Presidents are HE U Sai Mauk Kham (since February 2011) and HE U Nyan Tun (since August 2012).

Myanmar is divided into seven regions (Ayeyawady or Irrawaddy, Bago, Magway, Mandalay, Sagaing, Taninthayi and Yangon) and seven states (Chin, Kachin, Kayah, Kayin, Mon, Rakhine or Arakan, and Shan). The country’s new capital city, Nay Pyi Taw, is ofﬁcially a union territory.

Government organisation Executive branch: The government is led by a president who is Chief of State and Head of Government. The president is assisted by two vice presidents. The president appoints a cabinet which is confirmed by Myanmar’s parliament. Myanmar no longer has a Prime Minister. The position was abolished in 2011 under the terms of the country’s revised constitution. Legislative branch: Myanmar has a bicameral parliament made up of the House of Nationalities (Amyotha Hluttaw), with 224 seats, 168 directly elected and 56 appointed; and the House of Representatives (Pythu Hluttaw) with 440 seats, 330 directly elected and 110 appointed. Members of both serve five-year terms. Judicial branch: Myanmar has a mixed legal system based on English common law (as introduced in codifications designed for colonial India) and customary law. The highest court is the Supreme Court of the Union (led by a chief justice and seven to 11 judges who are nominated by the president and approved by the Pythu Hlattaw). Judges serve until the age of 70. Subordinate courts are the High Courts of the Region, High Courts of the State, Court of the Self-Administered Division, Court of the Self-Administered Zone, district and township courts, courts martial, and special courts (for juvenile, municipal, and traffic offenses).

President HE U Thein Sein, a former general, has led a process of reform in his country since he took ofﬁce in 2011. He has freed hundreds of political prisoners, met with pro-democracy leader Daw Aung San Suu Kyi, embarked on peace deals with ethnic minority groups, and relaxed media censorship. Born in a small village in Ngapudaw township, the president is from a humble farming family. He obtained an arts degree from Myanmar’s military academy in 1968 and rose steadily through the ranks until in the 1990s he became a member of the State Peace and Development Council, the military junta’s ofﬁcial title. He became the council’s First Secretary in 2004 and was named acting Prime Minister in 2007 and then Prime Minister. In 2008 he chaired the National Convention which drafted Myanmar’s new constitution. He founded the United Solidarity and Development Party (USDP), which dominated Myanmar’s elections in November 2010. He says that his goals as president are to promote peace, stability and economic growth.

Elections Presidents serve a ﬁve-year term. The upper house, the lower house, and military members of parliament each nominate one vice president. HE U Thein Sein was elected president in November 2010 from among the three nominated vice presidents. Legislative elections were last held on November 7, 2010, and will next be held in December 2015.

Union Ministers Minister for Agriculture and Irrigation: HE U Myint Hlaing Minister for Border Affairs: Lt. General Thet Naing Win Minister of Commerce: HE U Win Myint

THE EUROPEAN TIMES

MYANMAR

Minister of Communications and Information Technology: HE U Myat Hein Minister of Construction: HE U Kyaw Lwin Minister for Cooperatives: HE U Kyaw Hsan Minister of Culture: HE U Aye Myint Kyu Minister of Defense: Lt. General Wai Lwin Minister of Education: HE Dr. Khin San Yi Minister of Electric Power: HE U Khin Maung Soe Minister of Energy: HE U Zeyar Aung Minister of Environmental Conservation and Forestry: HE U Win Tun Minister of Finance and Revenue: HE U Win Shein Minister of Foreign Affairs: HE U Wunna Maung Lwin Minister of Health: HE Dr. Pe Thet Khin, MD Minister of Home Affairs: Lt. General Ko Ko Minister of Hotels and Tourism: HE U Htay Aung Minister of Immigration and Population: HE U Khin Yi Minister of Industry: HE U Maung Myint Minister of Information: HE U Aung Kyi Minister of Labour: HE U Aye Myint Minister of Livestock and Fisheries: HE U Ohn Myint Minister of Mines: HE U Myint Aung Minister of National Planning and Economic Development: HE Prof. Dr. Kan Zaw Minister of Rail Transport: HE U Than Htay Minister of Religious Affairs: HE U Hsan Hsint Minister of Science and Technology: HE U Ko Ko Oo Minister of Social Welfare, Relief, and Resettlement: HE U Myat Myat Ohn Khin

Minister of Sports: HE U Tint Hsan Minister for Transport: HE U Nyan Htun Aung Ministers of the Presidentâ&#x20AC;&#x2122;s OfďŹ ce: HE U Aung Min, HE U Hla Tun, HE U Soe Thane, HE U Thein Nyunt, HE U Soe Maung, and HE U Tin Naing Thein

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Government

Nobel Prize Winner Symbol of Opposition Movement Daw Aung San Suu Kyi

liamentary seats in a 1990 election but the military regime ignored these results. During her detention at her historic family house located on Inya Lake, she could not leave her residence even as her husband Dr. Michael Aris passed away in 1999 and Buddhist Monks took to the streets of Yangon in 2007 to protest the removal of fuel subsidies, triggering a brutal crackdown by security forces.

Daw Aung San Suu Kyi, born in Yangon in June 1945, won the Nobel Peace Prize (1991),

the Rafto Prize (1990), the International

Simón

Bolívar

Prize (1992), the Jawaharlal

Nehru Award (1993), the US Congressional (2007)

and

Gold

many

Medal

The United Nations declared that her detention was illegal under Myanmar law but the government sentenced her to prison. In 2010, when the first parliamentary elections in a decade were held in Myanmar, the government declared that no convicted criminals or spouses of foreign nationals could run for office, thus excluding Daw Aung San Suu Kyi on two counts.

other

accolades. She has long been Myanmarʼs

most

prominent

opposition ﬁgure. Her father,

Bogyoke (General) Aung San was a political and military leader

widely

regarded

ʻThe father of modern Burmaʼ was

assassinated

Decades of house arrest

In 2011, President HE U Thein Sein met with Daw Aung San Suu Kyi for the first time, demonstrating his wish for reconciliation. In the parliamentary elections of 2012, she won a seat while her NLD party won 43 out of 45 contested seats. She also took her first trip outside Myanmar in 24 years that year. In March 2014, she had her fourth meeting with President U Thein Sein, a sign that the president continues to seek reconciliation.

Though the military regime told Daw Aung San Suu Kyi that she would be freed if she left the country, she refused. Her political party, the National League for Democracy (NLD), won more than 80% of par-

She is applauded throughout the world as a true hero of democracy and remains popular amongst the local population. Ongoing talks on the Constitution may permit her to run for President in the 2015 elections.

1947

just before Burma became an independent country.

©Claude TRUONG-NGOC

In 1988 Daw Aung San Suu Kyi returned to Myanmar for the first time in decades to care for her mother, and soon became involved in political protests against the military dictatorship. She said, “I could not, as my father’s daughter, remain indifferent to all that was going on.” She initiated a nonviolent movement supporting democracy and human rights, and the following year the

military regime placed her under house arrest.

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Nay Pyi Taw: Myanmar’s New Capital © Pipopthai-Dreamstime.com

Nay Pyi Taw (whose name in Burmese means “Abode of Kings”) is the new capital of Myanmar. Built by the former military

government

project which was kept secret for years, the new capital is located in a central area linking Upper Myanmar and Lower Myanmar. Uppatasanti pagoda in Nay Pyi Taw

The former capital, Yangon (Rangoon), still the gateway to Myanmar for most visitors, is set in Lower Myanmar on the coast. Some analysts believe that the military government moved the capital not only to make it more central but also to make it more isolated and freer from potential invasion risks during the years when Myanmar was cut off from the outside world. Others suggest that the move allowed the government to distance itself from political protests in Yangon, Myanmar’s biggest city and home of around 10% of the country’s total population. Whatever the government’s reasons for the move, Nay Pyi Taw is about halfway between Yangon and Mandalay, Myanmar’s two largest urban areas. Nay Pyi Taw has an airport, and daily flights

122

on domestic airlines are available between the capital and both Yangon and Mandalay. Flights are also offered from the capital to some of Myanmar’s top tourism sites, including the Bagan temple complex. Nay Pyi Taw is connected to Yangon and Mandalay via Myanmar’s main rail line and is around four hours by car from Yangon via a new highway.

Myanmar International Convention Centre Nay Pyi Taw’s landmarks, all new, include the City Hall and the Myanmar International Convention Centre (MICC), which opened in 2010. Built with investment from China, the MICC has a main hall which can accommodate up to 1,900 people as well as several smaller meeting rooms, a VIP summit

facility, a room for press brieﬁngs, a banquet hall for up to 720 guests, and other facilities. Myanmar hosted the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit at the MICC in early March. The capital also has its own high-proﬁle pagoda, Uppatasanti pagoda, designed by the military regime as a replica of Yangon’s famed Shwedagon pagoda, the most revered Buddhist site in Myanmar. Unpopular among many, especially because of the enormous costs of its construction in a country where most still live below the poverty line, Nay Pyi Taw is nevertheless set to position itself as an economic hub as well as the country’s political centre. It is growing fast; in fact, it has been ranked one of the 10 fastest-growing cities in the world.

THE EUROPEAN TIMES

• World Bank Renews its Partnership • Asian Development Bank Re-engaged Since 2012 • Swiss Ambassador Highlights Peace Process

International Organisations

“Myanmar is a country with great potential which promises a prosperous future for those willing to commit for the long run.” Winfried Wicklein, Country Director Asian Development Bank

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

World Bank Renews its Partnership tional Finance Corporation (IFC). This arm of the World Bank Group is very active both in providing advisory services and loan/equity ﬁnancing to private companies. European Times: What are the world Bank’s goals for Myanmar? Kanthan Shankar: In Myanmar, we currently have an interim strategy which focuses on three pillars: support government reforms, strengthen institutions, and develop a long-term program and partnership with Myanmar. European Times: What are some of your projects here?

Kanthan Shankar, the World Bankʼs Country

Manager for Myanmar, discusses the Bankʼs projects.

European Times: Please provide an introduction to the World Bank’s presence in Myanmar. Kanthan Shankar: After a gap of over 25 years (from 1988 to 2012) the World Bank Group re-engaged in Myanmar and established its first country office on August 1, 2012. As the government of Myanmar had stopped paying back loans which were borrowed prior to 1988, the World Bank Group could not start regular operations till these arrears were cleared. With the assistance of Japan that provided a bridge loan, the government of Myanmar was able to clear its arrears and has become eligible for a full World Bank Group program. Myanmar is eligible for concessional financing through the World Bank’s International Development Association (IDA) facility. The World Bank Group also provides support to the private sector, through the Interna-

124

Kanthan Shankar: We are currently financing two projects. The first is a US$ 80 million Community Driven Development project which provides grants to villages for infrastructure rehabilitation that includes building of schools, clinics, water supply and sanitation, roads and other activities which build capital stock. The second project finances increasing electricity generation capacity of the national grid through replacing in efficient gas fired generators in Mon state. The new power plant when in operation will increase output by nearly 250%. We also have a pipeline of activities which are in various stages of preparation including support to the telecom sector, public financial management and primary education. In parallel our private sector arm – the International Finance Cooperation (IFC) is providing both advisory services and financing for the private sector. European Times: What are your long-term goals? Kanthan Shankar: Our long-term goal is to focus on poverty reduction through sustainable and equitable growth. Currently we are exploring the possibility of expanding our work in rural development and agriculture – where about 70% of the population live and work. We also plan on assisting Myanmar people improve their health outcomes which are among the worst in the region. IFC will continue to work towards helping the government create the necessary environment for private sector growth, create jobs and help support local investors and attract international investors into Myanmar.

THE EUROPEAN TIMES

International Organisations

Asian Development Bank Re-engaged Since 2012 public-private partnerships. ADB is also looking at opportunities for non-sovereign operations to strengthen Myanmar’s private sector. We have offices both in Nay Pyi Taw and Yangon. With the government as our main client, we work closely with other development agencies, the private sector, and civil society. European Times: Which development areas require the most support? Winfried Wicklein: To unlock the country’s tremendous potential, a number of development challenges need to be addressed, including macroeconomic stability, the investment climate, capacities in public and private sectors, and infrastructure investments. It is also important to improve agriculture and promote development in rural areas as this is where the majority of the people reside. Peace and stability is critical for inclusive and sustainable growth and development.

Newly appointed Country Director, Winfried

Wicklein, outlines Asian Development Bankʼs (ADB) strategy for Myanmar going forward.

European Times: Please provide us with a brief introduction to ADB’s presence in Myanmar. Winfried Wicklein: ADB resumed operations in Myanmar in 2012 and is providing concessional loan assistance to the government to improve power and transport. We are also engaged in technical assistance and grant projects in post-primary education and skills development, rural livelihoods, off-grid rural renewable energy, HIV/AIDS prevention, public financial management, capacity building for the civil service, and

The government has undertaken unprecedented and wideranging reforms in essentially all of these areas. The progress made in a short time span of only 2 years or so has been impressive. Persistence, patience, and steady progress along the reform path will ensure that the future of Myanmar is bright. European Times: What is your personal message to European investors considering Myanmar? Winfried Wicklein: Myanmar offers tremendous opportunities for investors. I would advise interested investors not to miss the train, so to speak, and start preparations early on. It takes time to set up business in frontier markets such as Myanmar including understanding the market, identifying partners, getting approvals, understanding the legal framework, etc. Investors from within the region may have an edge in this sense, as they are more familiar with the environment. Investors from further afar, including Europe, should not forget that Myanmar is a country with great potential which promises a prosperous future for those willing to commit for the long run.

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Swiss Ambassador Highlights Peace Process HE

Christoph

Switzerlandʼs to

Myanmar,

care and vocational training. The Swiss are champions of vocational training and this part of the project will be partly run out of a Yangon-based NGO called the Centre for Vocational Training, which does incredible work. It processes about 100 students a year and places a high value on real-world experience. We want to extend similar models to Southeastern Myanmar, speciﬁcally the Mon and Kayin states, where we are looking to build infrastructure, health facilities and schools but also provide training and education. We want people in these regions to see the dividends of peace.

Burgener,

Ambassador

discusses

the

countryʼs strengthening ties to Europe.

European Times: What will be the effect of the peace process on Myanmar’s development? HE Christoph Burgener: The peace process, which should culminate in a nationwide ceaseﬁre in 2014, will integrate over 14 armed groups and will lead the way to political dialogue between these groups and the government. A political dialogue will determine among others the strength of regional authority, the control over revenues from natural resources and the security sector reform. European Times: What is the Swiss Embassy’s role in the peace process? HE Christoph Burgener: The embassy provides advisors, including a Human Security Advisor who shares Switzerland’s experiences in democracy, federalism and the peace process. We also support many ethnic minority groups by sharing this knowledge with them. European Times: What are some trends in Swiss investment in Myanmar?

126

European Times: What role can European FDI play in overcoming Myanmar’s challenges? HE Christoph Burgener: Until a few years ago, mostly only small Swiss tourism companies were present here. After Myanmar opened up, more Swiss companies came in a process many described as “from embargo to El Dorado”. While some companies have delayed entry because of infrastructure and banking challenges, many others are still considering Myanmar, especially if they already have a presence in Southeast Asia. We want to make sure that Swiss companies respect Myanmar’s environmental and social concerns. Switzerland is providing over €21.7 million in support for Myanmar through the Swiss Development Corporation. We are setting up the programme now. It will be active in agriculture, health-

HE Christoph Burgener: If European investors can create a workforce here and respect social and environmental standards, the people of Myanmar will see that the changes towards democratisation and peace are worthwhile. The efforts of the government of the Republic of the Union of Myanmar are excellent. The recent telecommunications tender awarded to foreign operators was conducted transparently and helped build investor conﬁdence in Myanmar. Since the inauguration of President HE U Thein Sein in 2011, Myanmar’s economic landscape has been completely transformed by a slew of swiftly implemented social and economic reforms. With its rich natural resources, abundant labour force and strategic location, the country shows great potential for growth, despite the many challenges that still lie ahead.

THE EUROPEAN TIMES

• Fighting Poverty and Supporting Sustainable Growth • New Census an Essential Development Tool • Focus on Developing High-Quality Human Resources • EU Supporting Myanmar’s Transition to Free-Market Economy

Business & Investment Opportunities

“We have had a long relationship with Europe and we would sincerely like to reengage with our European counterparts and resume the old friendship.” HE Prof. Dr. Kan Zaw, Union Minister of National Planning and Economic Development

THE EUROPEAN TIMES

MYANMAR

Fighting Poverty and Supporting Sustainable Growth 26% in 2010 and we aim to bring that down to 16% by 2015. Another important goal is to open up the country to FDI, especially in areas like electricity and telecommunications, water supply and job creation, and labour-intensive industries. European Times: What are your biggest challenges and how can Europe help you meet them? HE Prof. Dr. Kan Zaw: Our main challenges are poverty, inadequate infrastructure and a need for human resources development and capacity building. We have had a long relationship with Europe and we would sincerely like to reengage with our European counterparts and resume the old friendship and HRD program connections that we mutually enjoyed in the past. HE Prof. Dr. Kan Zaw, Union Minister of National Planning and Economic Development, discusses

European Times: Why should foreign investors choose Myanmar?

European Times: What are your ministry’s top priorities?

HE Prof. Dr. Kan Zaw: We enacted our new Foreign Investment Law and our Foreign Investment Act in 2012 and the correct regulations are now in place for FDI. We want to attract FDI in labour- intensive sectors like garments, food processing, assembling and others, and also in heavy industry. The aim is to sustain GDP growth at an average annual rate of 8% within the coming few years and to do this we need to attract around €3 billion in FDI per annum.

the governmentʼs development strategies.

HE Prof. Dr. Kan Zaw: Our first five-year plan (2011-2016) targets people-centric development which improves the standard of living of Myanmar’s people. This means access to electricity, safe drinking water, agriculture, employment, tourism, banking and finance, trade and investment as well as rural development and poverty reduction. We are also formulating our Long-Term National Comprehensive Development Plan (NCDP) for 2011-2031, by which time we hope that Myanmar will have an industrial foundation. Around 70% of our population lives in rural areas and therefore our primary target is to reduce poverty in these areas. We have reduced poverty from 32% in 2005 to

Investors arriving in Myanmar will admittedly face challenges in electricity supply and infrastructure, but our competitive advantage is our large and attractively priced labour force and ideal geographic location between India and China. Dawei Special Economic Zone (SEZ) for example, will connect the Pacific and Indian Oceans and create links between Vietnam, Cambodia and Laos; while the Kyaukphyu SEZ will connect Myanmar with China. In the short term the returns might be less immediate, but in the long term the benefits of investing in Myanmar are clear.

THE EUROPEAN TIMES

MASTER REGIO Business & Investment Opportunities

New Census an Essential Development Tool Sandamuni Pagoda, Mandalay

tentious issues in multi-ethnic Myanmar. This is especially true in the northwestern Rakhine state where tensions between Buddhist groups and the local Rohingya Muslim minority have turned violent in the past. Local Rohingya have announced they will boycott the census, while the Rakhine Nationalities Democratic Party objects to the census as well because it believes the Rohingya residents will use it to legitimise their status as residents.

Myanmarʼs new census, the ﬁrst to be conducted in the country

in 30 years, is key to the governmentʼs vision of transforming Myanmar into a modern, developing economy. The current

accepted population estimate is roughly 60 million, although

this is based on extrapolations from the previous census, taken in 1983 and widely judged to be inaccurate. The new census organised by HE U Thein Sein’s government will involve around 100,000 census-takers going door-to-door throughout Myanmar from March 30 to April 10 this year. These census-takers, chosen from among Myanmar’s teachers, will present people with a 41-point questionnaire which the government believes will help give an accurate picture of Myanmar’s population. The government says that the census will help determine how resources should

be allocated for education, healthcare, housing, transport infrastructure and other services. Myanmar’s new census and its questionnaire were organised with the help of the UN Population Fund.

Challenges in certain areas The questionnaire is being protested by certain groups because it includes questions about race and ethnicity, con-

Many of the estimated more than one million Rohingya living in Myanmar are considered by law to be illegal immigrants, even though many arrived in the country from Bangladesh generations ago. Some observers also fear a backlash if the new census reveals that Myanmar’s Muslim population is much larger than 4% of the country’s total population, the percentage according to the 1983 census. Janet Jackson, the UN Population Fund’s country representative in Myanmar, points out why the census is necessary. She explains, “Myanmar has not conducted a census for 30 years, and hence lacks information that is essential to planning for inclusive development … that can beneﬁt all ethnic groups. Postponing the census now would likely mean a delay of several more years in making this data available to planners, undermining development efforts and the reform process.” She adds, “The census has the potential to enable evidence-driven, transparent and responsive planning and policy-making for the ﬁrst time in Myanmar’s history.”

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

UMFCCI: Strong Advocate for Private Sector Business Community since 1919 U

Win

Republic Myanmar

Aung, of

the

Chairman, Union

Federation

of of

Chambers of Commerce and Industry

(UMFCCI),

discusses

the organisationʼs priorities for Myanmarʼs private sector.

European Times: What is the history of the UMFCCI? U Win Aung: Established in 1919, the UMFCCI is a founding member of the International Chamber of Commerce (ICC). I have personally been involved with the UMFCCI since 1994, having started out as an Executive Committee member, after which I moved on to the position of Vice-President. In 2011, I was elected President of the UMFCCI, a position I have held since then. We now have 69 affiliated regional chambers under our umbrella, including specialised trade associations in Myanmar. Our 27,000 members consist of local and foreign companies, cooperatives and individuals.

130

European Times: What are the UMFCCI’s top priorities? U Win Aung: Our primary goal is to act as a bridge between the government and the private sector. Our objective is that the voice of our business community be heard clearly and effectively by government through the UMFCCI channels. We also contribute towards social and commercial laws that are enacted by Parliament. As such, we are a hands-on kind of organisation that plays an important role in the legislative environment in which the private sector operates. The new Foreign Investment Law (FIL), for example, was a milestone for which UMFCCI made valuable contributions. European Times: How does the new Foreign Investment Law benefit investors? U Win Aung: This new law has created a more investor-friendly environment in Myanmar, while ensuring that the benefits of foreign investment reach the people of Myanmar, not simply an elite few. It opens up almost all sectors to foreign investment and includes incentives like a five-year exemption on corporate tax (tax holiday). Unlike in some other countries, even selected sensitive areas of the economy are open to foreign investment, a fact about which I believe that the international business community has been somewhat misinformed until now. Within this framework, international companies can have a share of up to 80% of the business, while 20% of the shareholding

THE EUROPEAN TIMES

Sector Opportunities Business & Investment

will have to go to local companies. We believe that this is a fair basis upon which to build a win-win situation for both domestic and international investors. European Times: Much of the foreign investment in Myanmar up to now has been in extractive industries. Which sectors do you believe will hold the most potential for investment in the future? U Win Aung: With the democratisation process in full swing, our people have great expectations of the private sector. This includes the creation of jobs and a more prosperous middle class. Corporate social responsibility has assumed utmost importance in the private sector worldwide, and that is no less true in Myanmar. It is for this reason that we would like to see more investment in labour-intensive industries such as food processing, textiles, electronic parts and components, spare car parts, and others. Almost 90% of our natural resources are extracted, exported and processed elsewhere and then imported back into the country. This means that there is huge potential for businesses wishing to become involved in adding value to our resources. We especially need new manufacturing technologies and projects that build the skills and capacity of our people. European Times: Why should European investors choose Myanmar? U Win Aung: Firstly, of course, the EU has recently re-instated Myanmar

“With the democratisation process in full swing, our people have great expectations of the private sector.” to the EU’s Generalised Scheme of Preferences (GSP). This presents many advantages for investors looking to use Myanmar with its rich resources as a manufacturing hub and wishing to export ﬁnished products to the EU. At the same time, Myanmar urgently needs to raise the standards of its own consumer market so that more goods and services are consumed locally. I would very much like to see the transfer of European consumer standards to Myanmar, and therefore encourage European investors to engage in joint ventures with local counterparts to create an environment for transfer of knowledge, standards and experiences from the EU to Myanmar. Secondly, Myanmar urgently needs infrastructure and I see Europe capable of playing an important role in the

upgrading of our present internal transportation, communication and energy power infrastructures. Without these cornerstones of development, the sustainable growth of our economy will be impossible. European Times: What are some of the biggest challenges Myanmar faces today? U Win Aung: There is as yet a lack of understanding of the importance of corporate governance and efficient organisational structuring in the private sector. As such, the UMFCCI plays a leading role in exposing the local business community to capacity-building programmes, training seminars, and networking or business-matching events for entrepreneurs, for example. I am confident that, in time, Myanmar’s small and medium-sized companies will be able to enchance their capabilities, following the lead of many larger companies in Myanmar who have already done so. European Times: What is your personal message to potential investors? U Win Aung: For the benefit of our people, we urge you to invest in our country with a solid understanding of both our needs and your own. We are looking for companies with responsible business ethics that prioritise corporate social responsibility as a core element of their business. The UMFCCI is at your disposal to assist and support you in all of your endeavours.

312

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Market-Oriented Economy in a Growth Phase Sule Pagoda in Yangoon

In his inaugural address in 2011,

Myanmarʼs

President

HE U Thein Sein commented,

“We must turn to national

industrialisation to transform the country into a developed, rich

one

employment

with

lot

opportunities

and high per capita income.” He added, “We have to ensure a

proper

market

designed

economy

reduce

the

economic gap between the

rich and the poor and the development urban

and

gap

rural

between areas.”

Myanmar has made impressive progress

towards

these goals.

reaching

Myanmar achieved 6.5% GDP growth in the 2012-2013 fiscal year alone, largely thanks to strong increases in gas production, services, construction and commodity exports. Over the same period, Myanmar reduced its budget deficit from 4.6% of GDP in the 2011-2012 fiscal year to 3.7% of GDP in 2012-2013. On the down side, inflation rose to 7.3% in August 2013, largely as a result of increasing food prices.

132

THE EUROPEAN TIMES

Business & Investment Sector Opportunities

Yangon city

Low risk of debt distress In spite of the remaining challenges Myanmar faces, a recent joint World Bank-IMF Debt Sustainability Analysis, in a vote of conﬁdence in the country’s long-term prospects, assessed Myanmar as being at low risk of debt distress. In January 2013, Myanmar’s debts to the World Bank and the Asian Development Bank were cleared, while an agreement was reached on the resolution of the country’s debts to Paris Club creditors. As a result, Myanmar’s total external debt was reduced from 27.3% of GDP in the 2011-2012 ﬁscal year to 24.8% in 2012-2013, further strengthening the country’s macroeconomic foundations. In an effort to keep this economic success story on track, Myanmar is working hard to improve its business environment. The country was included in the World Bank’s “Doing Business” report for the first time in 2013 but scored a sobering 182 out of 189 countries surveyed. Myanmar’s current government, unlike the previous one, has openly recognised the problems in the business

climate and has promised to find solutions, and in January this year, UK-based global-risk-analysis firm Maplecroft cited Myanmar as one of the world’s top five countries in improving its business environment over the past five years.

Continuing commitment to market-based economy President HE U Thein Sein, in a recent speech to parliament, reiterated his administration’s commitment to supporting the growth of the country’s private sector. He said, “Three years ago, I talked about the marketoriented economy which we envisioned to implement and our planned necessary actions concerning the relaxation of existing rules and regulations, their amendment, and our invitation to the outside world in the interest of our country and people. I mentioned the need to promote foreign investment and establish special economic zones to achieve the job opportunities and technical know-how necessary for the country, as well as the plan to render assis-

THE EUROPEAN TIMES

MYANMAR

tance to national entrepreneurs. Our market machinery is not yet strong but the foundations of the economic system have already changed after the establishment of necessary institutions, and the long-lost role of the market and the private sector are now revitalised.” The government’s economic reforms have included eliminating the need for import and export licenses on some 600 products. As a result, demand for imports of construction materials and consumer goods, including cars, continues to increase. Meanwhile Myanmar’s parliament has approved new, investor-friendly investment regulations and the government is developing new legislation to protect consumers and ensure fair competition. The government enacted a new anti-corruption law in September 2013 and is preparing a new mining law. As a result of the government’s financial reforms, credit to Myanmar’s private sector doubled between 2012 and 2013.

FDI flows increasing All these reforms are attracting more foreign investment to Myanmar. According to the World Bank’s “Myanmar Economic Monitor” published in October 2013, FDI in Myanmar rose from €1.3 billion in the 2011-2012 fiscal year to €1.9 billion in 2012-2013, largely as a result of increasing investments in the energy sector, the garment industry, information technology, and the manufacturing of foods and beverages. At the same time, Myanmar is achieving its goal of attracting more investments in value-adding production. HE U Thein Sein points out, “When our country opened its doors to the outside world, foreign investments started flowing into the country. The Myanmar Investment Commission gave priorities to establishing factories and creating job opportunities in cooperation with the government and experts from the private sector, and as a result, many factories, including garment factories, were established. Over 200 garment factories in Myanmar are now exporting their products to high-quality markets such as Japan and Korea. We were able to graduate from labour-resource-based production to technology-based production.” Myanmar’s export totals have increased significantly, particularly concerning gas, garments and agricultural products. Myanmar’s rice exports, for example, doubled to 1.5 million tonnes in the 2012-2013 fiscal year compared to the previous year, largely as a result of strong demand from China.

THE EUROPEAN TIMES

Duty-free, quota-free exports to EU A major step forward for Myanmar was the decision by the EU and the US to end sanctions on trade with the country. Since July 2013, Myanmar once again beneﬁts from the Generalised System of Preferences (GSP) regime which allows for duty-free and quota-free access to the EU market of all products from Myanmar except ammunition. Trade with the US is set to increase. In February this year, the Export-Import Bank of the United States launched an operation in Myanmar in an effort to support US exporters there and to help reintegrate Myanmar into the world economy. Fred Hochberg, the bank’s Chairman, says that the bank’s presence in Myanmar will send “a strong signal that we are committed to strengthening economic ties with Myanmar as the nation continues its transition. This decision will improve trade ﬂows between our two countries.” He notes exciting opportunities in Myanmar for US exporters of agricultural commodities as well as exporters of expertise, services and equipment for the transport, infrastructure, energy, mining and agricultural sectors.

Strong growth in tourism Myanmar’s tourism sector has emerged as a strong driver of the economy. As President HE U Thein Sein pointed out in his recent speech to parliament, “We have seen remarkable developments in hotels and tourism. Our tourismpromotion plans have been laid down with the assistance of international institutions and the amount of inbound tourists started to soar in 2011. Since then, the tourism industry has seen a record-breaking arrival of tourists – reaching 2 million in 2013 – and our country has been branded a ‘must see’ destination. We expect to welcome three million visitors to Myanmar in 2014 and ﬁve million next year.” Given Myanmar’s great natural beauty, rich cultural heritage and off-the-beaten-track appeal, it is well placed for tourism investment and growth in the coming years. The World Bank anticipates a positive outlook for Myanmar’s economy. The Bank predicts GDP growth of 6.8% for Myanmar in the 2013-2014 ﬁscal year and an average 6.9% GDP growth over the medium term. This growth, according to the Bank, will be fuelled mainly by continued increases in gas production, trade and agriculture. The World Bank notes that Myanmar’s economy faces certain risks, including a decline in global commodity prices and a slow-down of investment from China. Overall, however, Myanmar’s economic reforms are bearing fruit.

THE EUROPEAN TIMES

Business & Investment Opportunities

Focus on World-Class Capacity-Building Capacity-building

and

human-resources

development are essential for Myanmar to attract the FDI it needs. The government not only wants to

ensure more and better jobs for Myanmarʼs people

but also to enhance the countryʼs attractions for investors by oﬀering skilled, qualiﬁed employees.

A requirement to hire local workers is built into Myanmarʼs new foreign investment law, and international investors already present in the

country are organising training programmes for local staﬀ.

Myanmar welcomes international partnerships in training, education and other capacity-building initiatives. One recent project is the Myanmar-Japan Centre for Human Resources Development, launched by the Japan International Cooperation Agency (JICA) with Myanmar’s Ministry of Commerce and the UMFCCI. The centre, which opened in Yangon in 2013, offers customised training programmes, corporate analysis and guidance for companies, and workshops and seminars which bring together representatives from industry, the government and academia. “We are conﬁdent that this centre will play a valuable role in strengthening cooperation between the government, businesses and academic institutions in Myanmar and Japan,” commented JICA President Akihiko Tanaka at the centre’s opening ceremony. He added, “Policies can be designed and implemented, facilities can be operated or maintained, but business cannot succeed without strong and capable staff.” The government of Myanmar also aims to enhance the country’s education and healthcare systems by upgrading the quality of teachers and medical professionals. The Ministry of Health launched a ﬁve-year National Health Workforce Strategic Plan in 2012, while the Ministry

of Education has adopted new programmes targeting literacy, continuing education and other issues.

International partnerships New Zealand’s University of Otago and Myanmar’s University of Medicine have formed a partnership to collaborate in research, training and capacity-building in medical microbiology, infectious diseases including tuberculosis, and other areas. University of Otago Pro-Vice-Chancellor Helen Nicholson explains, “University of Otago is committed to being a good global citizen. By linking with international partners like Myanmar’s University of Medicine, we can make new discoveries, train future scientiﬁc leaders, and do research in New Zealand that would otherwise not be possible.” Other partnerships include one between Myanmar’s Ministry of Commerce and Japan’s Nishogakusha University in Tokyo, which recently announced that they would cooperate in human-resources programmes in Myanmar. Meanwhile, Myanmar’s Ministry of Science and Technology is working with JICA to enhance Myanmar’s university-level engineering programmes. With projects like these, Myanmar is developing one of its greatest resources: its people.

THE EUROPEAN TIMES

MYANMAR

EU Supporting Myanmar’s Transition to Free-Market Economy in Myanmar. This stems from a decision by the EU High Representative, Lady Catherine Ashton, and constitutes a strong political signal that the EU remains fully committed to support the transition in Myanmar. The EU has been very responsive to Myanmar’s efforts to change political and economic scenarios, with measures such as lifting the sanctions, reinstalling the most generous trade preferential system existing, getting politically involved, etc. The EU has a broad mandate in Myanmar, covering political, development, social and economic processes. Regarding political support, we are assisting in the peace process, revision of the constitution and in all political aspects that have a bearing on the country’s path to democracy. European Times: What kind of development aid does the EU provide to Myanmar?

HE Roland Kobia, EU Ambassador to Myanmar,

discusses the strengthening of ties between Myanmar and the European Union.

European Times: Could you provide a short introduction to the EU’s presence in Myanmar? HE Roland Kobia: I have the honour of being the ﬁrst ever EU ambassador to be permanently stationed

HE Roland Kobia: In spite of Myanmar’s previous political regimes, the EU has provided development assistance to Myanmar since 1996, notably for humanitarian aid, food aid, demining etc. What is new is that thanks to the process of transition that the country is undergoing, we can now engage directly with the government and support a much more coherent development agenda. The EU has committed some €500 million to the country so far, including €200 million in 2012 and 2013 for healthcare, education, political and social reforms, peace-building, climate-change projects, and projects to stimulate trade and the private sector. On top of all that, in November 2013, Andris Piebalgs, European Commissioner for Development, announced a new and additional funding envelope for Myanmar for 2014 to 2020, with an amount of over €600 million! The EU’s support over this period will focus on rural development, education, capacity-building/governance and peace-building. Although some steps still need to be completed, the EU support for Myanmar could increase to €90 million per year. What is important for a country that wants to change its economy is to work both on the hardware and the software. In other words, the work should cover both physical infrastructure and human capital (education, skills, labour force...). For trade more speciﬁcally, the EU has a package of about €15 million that supports both government agencies and the private sector. This includes for example a €2 million

THE EUROPEAN TIMES

Business & Investment Sector Opportunities

EU grant for the SWITCH-SMART (SMEs for Environmental, Accountability, Responsibility and Transparency) programme, which aims to reduce poverty through promoting responsible production practices in the garment sector. The EU also is working on a framework for important possibilities to provide soft loans that will soon be made available to business owners in Myanmar through the European Investment Bank. The latter is active in sectors as varied as electrification, water sanitation, promotion of SMEs, infrastructures, etc. European Times: What about trade between Myanmar and the EU? HE Roland Kobia: Myanmar has great potential in international trade. While the EU was the first to lift trade sanctions against Myanmar, trade between Myanmar and the EU is still limited. To help the country develop its industrial and trade capacity, we have granted Myanmar the most preferential trade regime system possible. This is called “Everything but Arms (EBA)”, a non-reciprocal trade agreement through which the EU allows Myanmar and a few Least Developed countries around the world to export all products (except for arms and ammunitions) to our market without any customs duties, tariffs or other costs, and without quotas. Through this initiative, we hope to promote business and FDI between Myanmar and the EU. European Times: How is the EU involved in strengthening Myanmar’s private sector? HE Roland Kobia: Access to financing remains a great hurdle for local businesses since the local banking sector is still undeveloped. Through the EIB, we will be providing soft loans to SMEs and promoting the creation of a business-friendly environment. Myanmar currently ranks poorly on a number of doing-business reports. While those of us who are on the ground know that this assessment might be a somewhat unfair, it is nevertheless how the country is perceived. For example, investors considering putting money into a country will think twice if the country has an undeveloped legal framework. We want to help the government of Myanmar improve its entire legal and legislative framework so that investors’ interests will be protected. We also hope to start soon the negotiations for an EU-Myanmar Investment

Agreement which would facilitate the inflow of European capital to finance the development of private companies. European Times: How is the EU assisting with Myanmar’s transition to democracy? HE Roland Kobia: The EU aims to get involved in capacity-building at the Government-to-Government level by helping policy-makers and Parliament to redefine their roles within the new political context. We have found that Myanmar’s government is open and I would even say keen to learn best practices and adapt to international standards. The EU can provide that. European Times: In your opinion, how is the EU perceived by the local community as a partner in Myanmar’s growth? HE Roland Kobia: My impression is that the EU is seen as a reliable, trusted and neutral partner here, because Myanmar’s government and civil society understand and appreciate that we have no geo-strategic interests or hidden agendas. We are here to promote a new Myanmar based on some key principles (democracy, human rights, fundamental freedoms and the rule of law, a free-market economy, and poverty reduction). Our political agenda is therefore an agenda of values, besides one of mutual interests, promoting liberalisation, competition, protection of consumers and an overall business environment protecting investments and ensuring legal certainty. European Times: What is your outlook on Myanmar’s future? HE Roland Kobia: Despite the obvious challenges for a country that has been in economic isolation for almost six decades, I believe that the right intentions are in place. This is what is most important, and it reassures me of the readiness of the people of Myanmar to turn a page and move into a new era. Myanmar is blessed with smart, hardworking people, a population of over 60 million, a huge land area endowed with emormous agricultural potential and vast natural resources. If the transition and reforms are managed well, Myanmar has a very bright future. And I wish for Myanmar to regain its natural place in the region.

THE EUROPEAN TIMES

MYANMAR

New FDI Law Offers Significant Incentives Establishing a new law on foreign investments was one of HE U Thein Seinʼs first priorities when he took office in 2011. Getting the law approved

by parliament turned out to be a lengthy process, but the ﬁnal version of Myanmarʼs new FDI Law

was passed in November 2012, replacing the countryʼs previous FDI law of 1988. The new

law is administered by the Myanmar Investment Commission (MIC). Myanmar also instituted a new Telecommunications Law in October 2013

which opened the telecom market for foreign investors, and Telenor and Ooredoo will roll out their services this year.

The FDI law creates a number of new opportunities for international investors while also imposing certain restrictions. It is considered optional except concerning major infrastructure projects, manufacturing projects, and projects which fall under the State-Owned Enterprise Law of 1989. For other types of projects, investors can choose to operate under the new law in order to access incentives and benefits, including tax holidays. The new law guarantees foreign investors remittances of profits as well as protection from expropriation. Foreign investors may not buy land in Myanmar but can now lease property for up to 50 years with two ten-year extensions. The law provides for a five-year tax holiday, which can be extended. Following this initial tax holiday, exemptions are available for re-invested profits. Other benefits include accelerated depreciation for tax purposes on capital assets, a reduction of income tax up to 50% on profits from exports, deductions for research and development, an exemption from customs duties on capital assets to be used in the business which are imported during the construction period, an exemption from customs duties on raw materials imported during the first three years of production, a deduction for expatriates’ salaries at normal rates, relief on customs duties on imports to be used for the expansion of the business, and an exemption from commercial tax for exports. Equity in a company established through a foreign investment under the new law can be transferred with the approval of the MIC. Other provisions of the law include the requirement that all foreign investments under the law must involve the establishment of new companies, although opening branches of international companies may be allowed with the approval of the relevant ministries. The Directorate of Investment and Company Administration handles establishing new companies, which is normally done after a project receives the approval of the MIC. One important provision of the new law concerns hiring Myanmar nationals. The law specifies that foreign investors must increase the percentage of their local employees over time, from at least 25% during the first two years of the company’s operations to 50% in the second two years and 75% in the third two years.

THE EUROPEAN TIMES

Business & Investment Sector Opportunities

Timely response to project proposals Another key aspect of the new law is that it obliges the MIC to evaluate foreign investors’ project proposals for completeness and accept or reject these proposals within 15 days of submission of the application. The MIC must then provide or deny an investment permit within 90 days. The new law prohibits certain types of projects by foreign investors. These include the production of arms and explosives for defence; prospecting, exploration and production of jade and gemstones; small and medium-scale production of minerals; printing and broadcast media projects; hand-dug oil and gas wells down to 1,000 feet; small-scale retail operations until 2015; electricity generation of less than 10 MW; small-scale farming and livestock breeding; sales of cars and motorcycles; and fishing operations. However, foreign investors may apply for an exception from the MIC. For certain types of projects, foreign investors must enter into joint ventures with local partners. These include the production of bakery products and confectioneries, beer and other alcoholic beverages, or mineral water; manufacturing plastic, rubber or paper goods; large-scale minerals projects; infrastructure and building construction; development, sales and rentals of residential property; domestic and international air transport; small-scale tourism projects (although hotels ranked three stars and above can be 100% foreignowned); and large-scale retail operations until 2015. Unlike in the previous FDI law, foreign investors are not required to provide a minimum of 35% of the capital of a joint venture. The new law also requires environmental-impact studies for all projects concerning minerals, oil and gas, housing and hotel construction, hydropower and other projects producing electricity for the national power grid, and large-scale agriculture, paper and pulp, iron, steel, metals, cement, beer and other alcoholic beverages, leather, rubber, food, fish, or timber production. The overall goals of the new law are to help Myanmar benefit from its natural resources, to promote infrastructure and human-resources development, to create jobs and new educational opportunities, to promote exports, to encourage exchanges of knowledge and technologies, to boost Myanmar’s energy capacity, to protect the environment, and to create new financial and other services.

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Law Firm Offers International Expertise, Strong Local Knowledge Kelvin

Chia

international

Yangon,

law

ﬁrm,

the

set

Singapore-based

operations

Myanmar in 1994 and now has a staﬀ of over 40 there, including 30 attorneys, many of them trained

abroad. Cheah Swee Gim, Director, discusses the ﬁrmʼs support for investors and the advantages of investing in Myanmar.

What are your current goals for Kelvin Chia Yangon? Cheah Swee Gim: We are looking to expand and would prefer to recruit local talent, although it is still a challenge to find local lawyers with international experience. So, we work with a combination of foreigners and locals. The firm has identified Myanmar as its biggest engine for growth as neighbouring markets are comparatively saturated. We mainly serve the private sector, both local and foreign companies, providing legal expertise for mergers, acquisitions and joint ventures involving foreign investors and local partners. We also work closely with the UMFCCI. There is so little information for foreign investors on Myanmar and its laws and commercial practices, so I am glad to be in a position to help bridge communications between local and international firms. It is satisfying to be able to contribute my international expertise when local firms transact with foreign or multinational companies. How can you help investors from the EU? Cheah Swee Gim: European investment is still limited in Myanmar, and our European clients are largely firms with regional headquarters in Singapore or Bangkok. This is, in part, due to the limited access to economic data and information on legislation. Many international investors also arrive in Myanmar with the wrong preconceived ideas about the market and notions that there are no laws. One cannot compare this country to Singapore, for example, where the law is 100% clear. Myanmar has an adequate legal regime in place, however, and in my view, the foreign

140

Cheah Swee Gim, Director

investment laws provide sufficient legal basis for investments to be made. What gives Kelvin Chia Yangon its competitive edge? Cheah Swee Gim: We have been here for over 18 years and as such, our experience is our greatest strength. The feedback we get is that our legal advice has generally been more extensive and in-depth than what is usually expected from us and that we have a good understanding of what is happening on the ground. We want to expand to have 100 attorneys on staff. My objective is to ensure professional success for the individuals who are working for the firm. Through the firm, I want to be able to provide that platform for our local lawyers to advance in the international community. At the end of the day, I want to build a firm my lawyers and staff will be proud of. Kelvin Chia Yangon Ltd. Unit 1509 15th Floor Sakura Tower 339 Bogyoke Aung San Road, Kyauktada Township, Yangon Tel: + 95 1 255 399 info@kcpartnership.com, www.kcpartnership.com

The Investorâ&#x20AC;&#x2122;s Calendar May - December 2014 Myanmar Green Energy Summit Date: 20 - 21 May 2014

Myanmar Manufacturing Summit 2014 Date: 26 - 27 May 2014

www.cmtevents.com Venue: Park Royal Hotel, Yangon

Myanmar Banking & Finance Conference 2014 Date: 15 - 17 July 2014

www.myanmar.medipharmexpo.com Venue: Traders Hotel, Yangon

mbfc.sphereconferences.com Location: Yangon

Myanmar Medi-Pharm Expo

3rd Annual Euromoney Myanmar Global Investment Forum

Date: 21 - 23 May 2014

Date: 16-17 September 2014

www.myanmar.medipharmexpo.com Venue: Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), Yangon

In partnership with the Myanmar Investment Commission (MIC) Location: Nay Pyi Taw

Myanmar Urban Development Conference 2014

Myanmar Connect 2014

mudc.sphereconferences.com Location: Yangon

www.capacityconferences.com/Myanmar-Connect.html

Urban Real Estate Show 2014

Electric Power & Renewable Energy Myanmar 2014

Date: 16 - 17 September 2014

Date: 25 - 28 May 2014

Location: Nay Pyi Taw

Date: 30 October - 1 November 2014

mres.sphereconferences.com Venue: Traders Hotel, Yangon

www.electricmyanmar.com Venue: Myanmar Convention Centre, Yangon

THE EUROPEAN TIMES

MYANMAR

• Innovative Bank Focuses on Transparency and Ethics • Banking Sector Achieving Major Milestones

Finance

“We want to achieve equitable, sustainable development.” HE U Set Aung, Deputy Governor, Central Bank

THE EUROPEAN TIMES

Finance

Building the Right Foundations for FinancialSector Development development partners have also been extremely helpful to us and without their assistance and guidance thus far it would have been very difﬁcult to implement some of the changes we have undertaken.

“Since Myanmar’s GSP with Europe was restored, many companies are considering setting up manufacturing operations in Myanmar.” HE U Set Aung, Deputy Governor, Central Bank

of Myanmar, discusses the governmentʼs goals for the ﬁnancial sector.

European Times: What is the history of the Central Bank? HE U Set Aung: The Central Bank became an autonomous body in 2013 in line with the institutional reforms currently taking place in Myanmar. I was subsequently appointed Deputy Governor, after having been the Deputy Minister for National Planning and Economic Development. European Times: Did you work with international partners in establishing the Bank? HE U Set Aung: We worked closely with the IMF on the Central Bank Law, which has since been enacted, and our collaboration with the IMF is ongoing as we clarify our internal rules and regulations. Our new Financial Institutions Law, which is one of the most advanced in the world, is currently being ﬁnalised with the help of the IMF and the World Bank. In addition, we are working with JICA to develop our ICT and core banking systems. Our European

European Times: What is the role of foreign banks in Myanmar’s finance sector? HE U Set Aung: The guidelines for foreign investment in the banking sector will be clearly outlined in the Financial Institutions Law. The aim is to balance the role of foreign banks with that of local commercial banks. There is no doubt that foreign banks can contribute greatly to the development of the economy, but at the same time, in a time of a crisis, this can be quite dangerous. So, while we are open to foreign investment, we need to be careful that we are not marginalising domestic banks. We would like domestic banks to complement foreign banks, and to create the kind of banking environment that will sustain external shocks. Domestic financial institutions can benefit greatly from the financial and technical assistance of strong international banks and, at the same time, this creates a healthy kind of competition in the industry. European Times: What are some of the challenges the financial sector faces? HE U Set Aung: Our capacity to supervise the entire banking and financial-services sector is still limited. Of course, we are not yet in a position to require our banks to

THE EUROPEAN TIMES

MYANMAR Sector

adhere to Basel III, but we still need to be responsible for financial-sector stability, and in order to do that, we need to come up with the proper means to supervise financial institutions. This is a mammoth task for which we will need the right kind of technical and financial assistance from our development partners. As a responsible member of the ASEAN Economic Community, we are taking calculated risks as we open up the financial sector and we are fully committed to doing that. European Times: Why should investors target Myanmar?

international

HE U Set Aung: Firstly, although our domestic consumption compared to that of our neighbours is still very small, there is huge potential for it to grow given Myanmar’s population of 60 million. Secondly, there are only a few countries left that still beneﬁt from the Generalised System of Preferences (GSP). Since Myanmar’s GSP with Europe was restored, many companies are considering setting up manufacturing operations in Myanmar, in order to be able to take advantage of this potential for trade with the West. European Times: What progress is the Central Bank making in developing a comprehensive monetary policy?

HE U Set Aung: We have a monetary-policy department and are establishing a dedicated committee for this purpose as well, but developing a monetary-policy framework is not only about putting the right institutions in place. It is also about the sequence in which that takes place. In order for the policy to be effective, we first need to develop the right instruments, such as the interest-rate and reserve-rate channels, as well as the right markets, such as the foreignexchange and interbank markets. Since we have been in economic isolation for nearly six decades, all of these factors are still missing. It is for this reason that there has been some confusion about the progress of the country’s monetary policy. While some reforms are visible to the general population, others are not. We are taking great efforts to ensure that the right building blocks are laid, in terms of financial instruments and markets, before we finalise the monetary policy framework. European Times: Where would you like to see Myanmar in three years from now? HE U Set Aung: We want to achieve equitable, sustainable development and at the same time, see the right soft and hard infrastructure introduced in the right sequence. I would like to see a strong and sustained political will that goes hand-inhand with the democratic path that we have chosen.

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Finance

Innovative Bank Focuses on Transparency and Ethics Myanmar Oriental Bank (MOB), established in 1993 as one of the countryʼs ﬁrst private banks,

has been a leader in the local ﬁnancial-services

sector for two decades. The bank was the ﬁrst in Myanmar to recover from the liquidity crisis in

2003. It has also achieved an exceptionally low .2% rate of non-performing loans.

The bank is known for its innovation as well as for its strong performance. U Mya Than, Chairman, explains, “Myanmar Oriental Bank was the ﬁrst bank in Myanmar to partner with Western Union and VISA and the ﬁrst to issue credit cards successfully, which helped us weather the liquidity crisis.” The bank will continue to offer innovative new products and services. U Mya Than says, “Myanmar Oriental Bank is an active member of the Myanmar Payment Union, which was formed by 17 private and public-sector banks to modernise the payment system so that smaller and medium-sized payments could be made electronically. We have issued Myanmar Payment Union debit cards that can be used to withdraw funds at any member banks.”

European partners welcome While Myanmar’s investment laws do not allow foreigners to enter the banking sector, foreign partners who can provide technologies and capacity-building are eagerly sought, and Myanmar Oriental Bank welcomes the chance to work with European financial-services enterprises. “Now that Myanmar’s financial sector is opening up to the international financial-services industry, many changes are happening very quickly. Myanmar Oriental Bank aims to develop our human resources to keep up with this evolution. We need to train our people in electronic banking, and Myanmar also needs financing for its small and medium-sized enterprises. European investors

can play a very important role in the sustainable growth of Myanmar Oriental Bank and of Myanmar’s economy overall,” U Mya Than points out. Myanmar Oriental Bank has positioned itself as an ideal local partner thanks to its strong performance record, high standards, in-depth knowledge of the local ﬁnancial sector, and commitment to transparency. U Mya Than concludes, “Myanmar Oriental Bank is a private bank with an established history. We have a strict system of corporate governance and are constantly working towards transparency in all our activities. We aim to build trust with the public and increase our presence in Myanmar’s rural areas. Transparency and ethics are the most important factors in the future of our bank.”

“Myanmar Oriental Bank Bank of your ﬁrst choice” Myanmar Oriental Bank No. 166-168, Pansodan st., Kyauktada Tsp.,Yangon Tel: +95 1 246 224 www.mobbankmm.com

THE EUROPEAN TIMES

MYANMAR

Banking Sector Achieving Major Milestones © Information Matrix

New foreign banks can lend in dollars or kyats The international banks to be granted licenses under the new plan will serve as wholesale lenders to Myanmar banks and will be able to lend to foreign companies operating in the country. They will also be able to be involved in project ﬁnancing and trade facilitation and will be able to lend in US dollars or in the local currency, the kyat.

Myanmar has been steadily improving its ﬁnancial

services to meet international standards and

prepare for the Asian Economic Community, set to be inaugurated in 2015. A major step forward

was the Central Bank of Myanmar Law passed

in July 2013 which gives the Central Bank more

autonomy and is designed to further upgrade the countryʼs banking sector.

In another signiﬁcant move, the government recently announced that foreign banks will be allowed to operate in Myanmar by the end of 2014, and a “fast-track” process for the selection of up to ten international banks has begun. Some 35 international banks already have representative ofﬁces in Myanmar, including most major Thai banks and Singapore’s Oversea-Chinese Banking Corp Ltd (OCBC.SI), which has had a presence in Myanmar for around 20 years. OCBC Singapore’s CEO, Samuel Tsien, commented recently, “When [Myanmar’s banking sector] opens up we are quite interested to establish a business presence there. We think [Myanmar] is a market many Singaporean companies have engaged with for quite some time. There are quite a lot of Myanmar businessmen in Singapore who are already doing business with us.”

In another move to upgrade the financial-services sector, the government has passed a securities-exchange law to stimulate the development of a securities market and is planning to implement other laws related to banking, including a financialinstitutions law that will establish criteria for joint ventures. Restrictions have been removed on trading in foreign exchange among local private banks, while insurance licenses have been issued to private providers for the first time in 50 years. As a December 2013 report on Myanmar’s financial sector by KPMG points out, the sector has achieved a number of important milestones. Myanmar has dramatically reduced its sovereign debt and streamlined its micro-finance sector through the enactment of new laws. Local banks are expanding rapidly and new services such as foreign-currency accounts are now available. However, as the report observes, further modernisation of the banking sector is still needed, in particular concerning ICT infrastructure, accounting and reporting practices, and the quality of human resources. International banks entering the market can help to achieve these improvements, the government believes. The banking sector’s potential for growth is enormous. According to a 2012 study by the World Bank and the IFC, less than 20% of Myanmar’s population had access to formal financial services at that time. Demand for microfinancing is particularly high.

Microfinance sector growing fast In November 2012, the government of Myanmar enacted the Myanmar Microfinance Law, which provides a framework for the licensing and operation of microfinance institutions. Today, an estimated 150 microfinance institutions serve some 2.8

THE EUROPEAN TIMES

Finance Sector

million clients in Myanmar, with a total loan portfolio of around €205 million. The average microloan size in Myanmar is reported to be around €100 to €220. In March this year, Myanmar’s Microfinance Supervisory Committee, the regulatory body for the microfinance sector, set a limit of MMK 500,000 (around €370) for loans issued by microfinance institutions to encourage institutions to expand their lending to new businesses rather than repeatedly loaning to the same organisations. The new regulation also caps interest rates at 2.5% per month and 30% per year. Several international microfinance institutions are stepping up their presence in Myanmar. ACLEDA Bank, a microfinance bank based in Cambodia, plans to expand its operations in Myanmar from six branches to 18 by the end of 2014. Japan’s Aeon Group, through its Aeon Thana Sinsap in Thailand, opened a subsidiary in Myanmar last year and plans to open more offices there. India-based Aavishkar, a microfinance fund, is also targeting Myanmar. E. N. Venkat, Partner, Aavishkar Frontier Fund, explains, “The next logical extension for Aavishkar is to look at emerging economies. With the Frontier Fund, we plan to take the Aavishkaar model of investing to neighbouring countries like Indonesia, Sri Lanka, Myanmar, Bangladesh and Pakistan.” Meanwhile Myanmar is investing in new local banking services. 12 new branches of the Construction and Housing Development Bank, which was launched last year, will be opened in Myanmar’s major cities during the 2014-2015 fiscal year. The bank provides housing and construction loans for individuals and companies. “Under the supervision of the Ministry of Construction, our bank was founded after combining the shares of the government and constructors. Later, we are going to open up participation to everyone,” says CHDB’s Vice-Chairperson U Thein Zaw. Myanmar’s banking industry is definitely on the move.

472

THE EUROPEAN TIMES

MYANMAR

• Development Plans for Railway Infrastructure • Ports Upgrades Underway • Infrastructure Improvements a Top Priority

Transport & Infrastructure

“Our aim is to ﬁnd the necessary technical assistance and to create a transfer of knowledge into Myanmar that will beneﬁt the country as a whole.” HE U Set Nyan Htun Aung, Union Minister of Transport

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Transport & Infrastructure

Ambitious Aviation, Maritime and River System Projects in Progress HE U Nyan Htun Aung, Union Minister of Transport

HE U Han Sein, Dep Minister of Transport

U Htun Lwin Oo, Director General, Directorate of Water Resources & Improvement of River Systems

HE U Nyan Htun Aung, Union Minister of Transport, discusses the governmentʼs priorities for Myanmarʼs transport sector.

European Times: Can you give us an introduction to the Ministry of Transport? HE U Nyan Htun Aung: The Ministry of Transport was reformed in 1992 and is responsible for aviation and maritime development. The Department of Civil Aviation and the Myanmar Port Authority are the two largest departments under the umbrella of our ministry. In addition, the government-owned airline, Myanma Airways, is overseen by the Ministry of Transport. This 100% state-owned airline has more than ten Brazilian, American and French aircraft in its fleet. Myanmar has an additional seven private airlines, two of which offer regional flights, while the rest fly domestically.

The Ministry of Transport also oversees the Department of Marine Administration; Myanma Shipyards Corporation; Inland Waterways Transport Corporation; the worldclass Myanmar Maritime University; Myanmar Merchant Maritime College; the Department of Hydrology and Meteorology; the Department of Transport; and the Directorate of Water Resources and Improvement of River Systems (DWIR). European Times: What is your own professional background? HE U Nyan Htun Aung: After serving as Director General for four years and Deputy Minister for eight years

THE EUROPEAN TIMES

MYANMAR Sector

after that, I was elected by Parliament to become Union Minister at the Ministry of Transport. I graduated from Air Command and Staff College of the Air University in 1989, in Alabama, United States.

dams along the 2,000-km Ayeyarwady River, roughly 80 km apart from each other. This river is the main artery of Myanmar as it crosses the country from the southernmost to the northernmost parts.

European Times: What projects are currently underway at Myanmar’s airports?

The interior of Myanmar is classiﬁed as a dry zone and farmers in this region are faced with droughts each year. We are building four of the total 16 dams in this area, which is home to 15 million people. Due to the large water surface and relative humidity generated from these dams, the air temperature will, over time, drop somewhat. As a result, rainfall will be more frequent and the challenge of adequate irrigation for agricultural purposes will be met. Being able to improve the standard of living of these 15 million people is therefore the ultimate goal of this project, which has been designed according to the European low-head dam model.

HE U Nyan Htun Aung: We are currently upgrading and extending the existing Yangon International Airport in order to accommodate the expected inﬂux of international visitors in the future. Mandalay’s airport is also undergoing an extension and is being developed into a regional hub for cargo transport. Most importantly, plans are underway to construct a new international airport at Hanthawaddy, about 60 km outside of Yangon – a project that will cost approximately US$1.4 billion. After the third phase of construction Hanthawaddy will be able to accommodate up to 30 million travellers. European Times: Are you building connections between the EU and Myanmar’s transport sector? HE U Nyan Htun Aung: In October 2013 I visited our friends and partners in Belgium for the second time to discuss our upcoming project to build low-head dams along the Ayeyarwady River. This is a multipurpose development project that falls under the DWIR. The project will ensure that water levels remain between eight and 10 metres high, year-round, so that there is adequate water for irrigation and navigation purposes. This technique is called the waterlevel control method and is the same as the one applied to the Danube River in Austria. The area along the river consists largely of land used for agricultural purposes and proper irrigation is therefore an urgent need in this part of Myanmar. Moreover, the electricity generated through the dams will be sold to the Myanmar Electric Power Enterprise so that the project generates an income and can therefore partially fund itself. We plan to build 16 low-head

European Times: What are some of the main challenges for Myanmar’s aviation and maritime sectors? HE U Nyan Htun Aung: We urgently need more aircraft in our national fleet in order to play catch up with our regional neighbours. Currently, only 10% of international visitors to Myanmar fly on our airlines. In order to be able to expand our fleet, however, we require the finances to do so. This funding could come from loans or grants, or from investment. From 2015 onwards, for example, we will be adding a few of the latest-generation Boeing aircraft to our fleet. This has been made possible through the help of Japan International Cooperation Agency and US-based General Electric. The Ministry of Transport therefore welcomes the opportunity to further discuss such potential partnerships with European entities. Our aim is not only to find the right kind of financial assistance for the improvement of our aviation sector, but also to find the necessary technical assistance and to create a transfer of knowledge into Myanmar that will benefit the country as a whole.

THE EUROPEAN TIMES

Transport & Infrastructure

Development Plans for Railway Infrastructure to Mandalay, Mandalay to Myintkyina, Yangon to Pyay and Yangon to Mawlamyine. Service remains poor in many areas and we have been focussing on constructing new rail lines. The maintenance of existing train tracks has fallen behind and our coaches and rolling stock need updating as well. We expressed our needs in this area during the Myanmar Economic Development Cooperation Forum in Nay Pyi Taw in January 2013. We have asked for assistance from international donors. European Times: What is the signiﬁcance of the railway system for Myanmar’s economic development? HE U Chan Maung: Myanmar is endowed with many natural resources and we need the necessary infrastructure to be able to transport these goods throughout the country. Trains emit fewer pollutants than cars and are also cheaper than other modes of transportation. If we can update our rolling stock, our railways will be a strong support for the country’s economic development. We particularly welcome assistance from Germany and France because we have about 150 Alstom locomotives from France and about 50 Krupp locomotives from Germany. We need to work together with European partners to extend the life of these engines. We have made many proposals to potential public and privatesector partners in the EU and we are hoping for positive responses to our requests. HE U Chan Maung, Deputy Minister, Ministry of

Rail

Transportation,

discusses

the

governmentʼs plans for developing Myanmarʼs rail infrastructure.

European Times: What are your ministry’s main goals for the rail system? HE U Chan Maung: In the rail sector, the leading enterprise is Myanmar Railways, which carried around 53.8 million passengers in the 2012-2013 ﬁscal year and operates an average of 469 trains per day. We have more than 7,000 km of rail track in our country. The main lines are Yangon

European Times: Can EU investors be confident that their financial support will be used correctly? HE U Chan Maung: We confess that Myanmar has a history of corruption, but the President has been clear about eradicating corruption in all ministries. All processes must be transparent and we know we must ensure very good communication between donors and the ministries receiving financial support so that we can work together to achieve aims that satisfy both sides. The President has established three guidelines that the government must follow: transparency in every ministry, accountability in all actions, and all projects have to be ready to be audited by an outside party.

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Ports Upgrades Underway European Times: Can you provide us with an introduction to the Myanmar Port Authority (MPA)? U Cho Than Maung: Although our history dates back to the mid 1800s, MPA as it exists today was officially established in 1989. Our mandate is to manage all ports in Myanmar, and these are divided into two categories: Yangon Port and the eight other coastal ports. These are Sittway, Kyaukphyu and Thandwe (under the control of the Rakhine State port officer), Pathein (under the control of the Ayeyarwaddy Division port officer), Mawlamyine (under the control of the Mon State port officer), Dawei, Meik and Kyakthaung (under the control of the Tanintharyi Division port officer). Of these, only the ports of Sittway, Pathein and Mawlamyine can be considered international ports; the others are coastal and inland ports. Kyakthaung Port has recently become an international port handling border trade with Thailand. European Times: What are some of MPA’s current projects? U Cho Than Maung, former Managing Director, Myanmar Port Authority, discusses Myanmarʼs goals for its ports.

152

U Cho Than Maung: One is the construction of a new terminal at Thilawa Port, which we are completing with €148.2 million in financing from Japan’s Overseas Development Agency. Our port facilities are not yet up to international standards, and we want to work closely with our development partners to upgrade our

THE EUROPEAN TIMES

Transport & Infrastructure

Top-Performing Port Expanding its Facilities and Services ports. We are members of the ASEAN Port Association (APA) as well as the International Association of Ports and Harbours (IAPH), and we are also working with the GIZ under the Sustainable Port Development project.

“We are ready to work with our development partners and with interested investors to begin rebuilding our high-potential port system.” European Times: Can you comment on the trade volumes at Myanmar’s ports? U Cho Than Maung: As foreign direct investment in Myanmar picks up, we expect international trade to increase. Cargo activity at Myanmar’s ports rose between 20 and 30% from 2010 to 2013, and we believe that by 2018, we will be handling double the cargo trafﬁc we had in 2010. After all, before the Second World War broke out, Yangon Port was known as the best port not only in Asia, but in the entire Far East. We are ready to work with our development partners and with interested investors to begin rebuilding our highpotential port system.

Myanmar Integrated Port Limited (MIPL), a private port owned by Austin Navigation Asia Pte. Ltd., and associated with the Boustead and Wah Seong Group of Companies of Malaysia, which began operating in 1998, specialises in handling general cargo, including cars, car carriers and rolling stock, as well as edible oils.

Covering 150,000 sq m, the port is equipped with a 200-m jetty with a 9-m draft. MIPL is currently expanding to keep up with growing demand and has formed a joint-venture partnership with a Malaysian enterprise to increase capacity and implement new technologies. M. Nousseir, Chairman, explains, “We are strengthening our infrastructure to be even more versatile. We are very happy with the changes in Myanmar. This is a country we have believed in for a very long time.” The port can currently handle 6,000 tonnes of edible oil and is building two more tanks to raise capacity to 10,000 tonnes. MIPL welcomes the chance to form other partnerships in the future, for example in building new transport links to serve the port. M. Nousseir says, “There is a lot of potential in working with petrochemical companies in the future. We have the land and ﬁnances but we are open to foreign partnerships that can support our port. We are looking to grow as the Thilawa Special Economic Zone develops around us. MIPL has an outstanding track record.” Myanmar Integrated Port Limited Berth (4) Thilawa Port, Kyauktan Township, Yangon Tel: +95 1 701 970, 701 971, www.miplmyanmar.com

532

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Infrastructure Improvements a Top Priority © Information Matrix

Infrastructure development has been a vital component of

the Thein Sein governmentʼs policies since it came into power.

Myanmarʼs infrastructure was neglected

mismanaged

for years under the previous administration and now the country

needs

signiﬁcant

investment in telecommunications and power networks as well as in modern road, rail, airport and port systems.

The World Bank, the Asian Development Bank and other international funding organisations, along with some foreign companies and investors, are helping Myanmar develop its infrastructure, but more support is needed. In March this year, Myanmar hosted the “Myanmar Infrastructure Summit” to provide a platform for international industry players and potential investors to meet in Yangon and explore potential infrastructure projects and partnerships. According to the Asian Development Bank (ADB), Myanmar’s transport sector is considerably underdeveloped in comparison to other ASEAN nations. Myanmar’s road network has around 2 km of roads per 1,000 people, while the ASEAN average is 11 km per 1,000. Myanmar also has only around 18.1 vehicles per 1,000 people compared to Thailand’s 370. Transport costs in Myanmar are high and access

154

to economic and social opportunities for much of the population is severely limited because of inadequate transport links. The country needs modern transport systems which will connect urban and rural areas as well as link Myanmar to neighbouring countries and the ASEAN and global markets.

Bringing power to industry Myanmar also lacks adequate electricity. In fact, the ADB’s “Myanmar EnergySector Assessment 2013” reports that Myanmar has an average electriﬁcation ratio of only 26%. In March this year, Japanese Foreign Minister Fumio Kishida pledged 24.7 billion Japanese yen (around €179.6 million) in new loans to help Myanmar establish a new national power-generation system, while the Ministry of Electric Power recently announced tenders for projects to supply

electricity to 15 industrial zones around Yangon. The Japanese government is also participating in a project to build a gas-ﬁred power plant in the Hlaing Tharyar Industrial Zone in Yangon, the biggest of Myanmar’s industrial zones and a ﬂagship project for the government. Myanmar’s nationwide cellular penetration is also limited and estimated at around 9%. New telecom licenses awarded to Norway’s Telenor and Qatar’s Ooredoo are expected help boost mobile and Internet use throughout the country. In fact, Myanmar’s government has set a target of 80% mobile-phone penetration by 2016. Other infrastructure projects in the works include new public-transport and water-supply systems for Yangon, railroad development through tenders recently offered by the government, and new port facilities at Thilawa Special Economic Zone, among many others.

THE EUROPEAN TIMES

• Ministry of Energy Launching Major Projects • Private Sector Pioneer Discusses Myanmar’s Energy Potential • Myanmar Committed to the EITI • Open to International Investment in Energy

Energy

“We are eager to learn how to implement a more transparent and thriving energy sector in Myanmar” HE U Myint Zaw, Deputy Minister of Energy

THE EUROPEAN TIMES

MYANMAR

Ministry of Energy Launching Major Projects European Times: What are some recent developments in the energy sector?

HE U Myint Zaw, Deputy

Minister of Energy, discusses Myanmarʼs

plans

energy sector.

European Times: responsibilities?

What

are

for

its

“The government of Myanmar your

ministry’s

HE U Myint Zaw: The Ministry of Energy oversees Myanmar’s oil and gas sector, and is divided into the Minister’s Ofﬁce, which administers the Ministry and oversees the sector’s development, and the Energy Planning Department, which is in charge of policies. The ministry also oversees state-owned Myanmar Oil and Gas Enterprise (MOGE), which is responsible for the upstream petroleum sector, both onshore and offshore; Myanmar Petrochemical Enterprise (MPE), which is responsible for downstream petroleum and petrochemicals processing; and Myanmar Petroleum Products Enterprise (MPPE), which handles retail sales and distribution of petroleum products. European Times: What are the opportunities for EU investors in Myanmar’s energy sector? HE U Myint Zaw: The new Foreign Investment Law opens the door to European FDI. The government of Myanmar is looking to provide the perfect environment for FDI to directly beneﬁt the people of Myanmar. In the energy sector, there is a lot of potential for exploration and production in deep-water blocks. These projects are largely untapped, with large potential for the discovery of even more resources.

HE U Myint Zaw: The ministry has decided to prioritise domestic demand concerning new discoveries of crude oil and natural gas both onshore and offshore. Because of ﬁnancial and technical constraints, the ministry has launched onshore and offshore bidding rounds and we are working hard to ensure transparency with our international partners.

is looking to providethe perfect environment for FDI to directly beneﬁt the people of Myanmar.” “I am proud to be a We welcome investment in part developing vast ofMyanmar’s an industry natural-gas resources and in LNG pipelines, including those in the Yangon area. We also seek European funding that will play a major for renewable-energy projects, particularly in rural areas. For a long time, Myanmar did not have the infrastructure role in the to take advantage of its energy resources. Today, sustained with the government’s reform initiatives, there is truly a change occurring. Concerning the Southeast Asia Pipeline which development of this transports oil and natural gas from Kyaukphyu towards the Chinese border, people have accused the ministry of country.” seizing land illegally to complete the project, but this is not true. We worked very hard with communities along the pipeline and sometimes changed the route to comply with their requests. Myanmar joined the Extractive Industries Transparency Initiative in 2013, demonstrating that we are willing to work with international companies and stakeholders to develop the energy sector. We are eager to learn how to implement a more transparent and thriving energy sector in Myanmar.

THE EUROPEAN TIMES

Energy

Private Sector Pioneer Discusses Myanmar’s Energy Potential U Moe Myint, founder and CEO

of Myint & Associates and of the MPRL E&P Group, has an in-depth

understanding of his countryʼs energy industry. He is also the founder and majority shareholder of Asia Drilling Pte Ltd and

has served on several boards

in the banking and education sectors. He has over 30 years of experience in the ﬁelds of aviation, aerospace and energy, in Myanmar and overseas.

Following graduation from the University of Rangoon (in Myanmar) and Marshall University (in West Virginia USA), U Moe Myint qualiﬁed as a commercial pilot and spent 13 years ﬂying with Myanmar’s national airline. Next he moved to California to serve as Vice-President at Interaero Inc., dealing with aerospace parts and equipment as well as dynamic motion simulators. He returned to Myanmar in 1989 to serve as a consultant to Shell International Petroleum during its negotiations and start-up operations in the country. For almost two decades, U Moe Myint has also been active in Myanmar’s sailing activities, serving as President of the Myanmar Yachting Federation, Past Commodore and Honorary Life Member of the Yangon Sailing Club, founder and patron of the Myanmar Optimist Dinghy Association, and a member of the Myanmar National Olympic Committee.

U Moe Myint, founder and CEO of Myint & Associates and MPRL E&P Group

European Times: Can investors in Myanmar’s energy sector count on transparency? U Moe Myint: The Ministry of Energy has a very strong network of committees designed to ensure

transparency through checks and balances. The Technical Subcommittee scrutinises tenders and contracts and advises companies if something must be changed. The Financial Subcommittee works with accountants overseeing annual budget allocations

THE EUROPEAN TIMES

and financial commitments. These Sub-committees report to the Production Sharing Contracts Management Committee chaired by the Managing Director of the state-owned Myanmar Oil & Gas Enterprise (MOGE), where everything is again scrutinised before cases are submitted to the Steering Committee of the Ministry which is chaired by the Deputy Minister of Energy, before final submission to the Union Minister. For Production Sharing Contracts cases are further submitted to the Myanmar Investment Commission (MIC), the Attorney General’s office and then finally to the Cabinet. This long, well-thoughtout process ensures transparency. President HE U Thein Sein has made transparency the highest priority in the government. What he has done for this country in less than three years is nothing short of amazing. European Times: What role can European investment play in developing Myanmar’s oil and gas industry? U Moe Myint: Many oil and gas companies are interested in Myanmar’s shallow-water blocks. However, all international companies are required to have a local partner in order to bid for shallow water blocks included in the 2013 Myanmar Offshore Bid Round. Myanmar companies are also looking for long-term strategic partners which will allow them to grow together through the exchange of technology, transfer and training. The key benefit of having such a requirement in place will be towards enabling the transfer of industry expertise and best practices to the local human resource pool. It is also a means to prevent the

MYANMAR

country from falling into the resource curse, a key aspect of which is the lack of knowledge transfer. European Times: What are some of the challenges for the energy sector? U Moe Myint: In the past, the biggest challenge for Myanmar’s petroleum industry was getting access to capital. Now international banks want to work with partners in Myanmar, which is extremely important given the capital-intensive nature of the petroleum sector. The second challenge is technology. Thanks to technology, the US will transition from a net importer to a net exporter of liquid natural gas by late 2013 or early 2014, potentially competing with major exporting countries like Saudi Arabia. We are now in the process of bringing the same technology to Myanmar. A current challenge is human resources, because many of Myanmar’s oil and gas professionals emigrated. We are currently working actively to encourage Myanmar’s professionals living abroad to come home and work here. European Times: How important is the energy sector to Myanmar’s development? U Moe Myint: Myanmar has proven onshore and offshore oil and gas resources and compared to other countries around the world, is still very much under-explored through the use of both conventional and modern technology. Nevertheless, in the past, oil and gas companies, including MOGE, have taken exploration risks and drilled wells under very challenging circumstances, both technical as

THE EUROPEAN TIMES

well as political. This has led to a better understanding of the geological formations in the country’s unexplored areas and did accelerate the pace at wich key discoveries were made such as Yadana, Yetagun and Shwe Fields. If we make additional new discoveries, development, production and supply will follow. This will certainly have a significant impact on the local economy and further create thousands of job opportunities. European Times: What can you tell investors that are concerned about corruption in Myanmar? U Moe Myint: Myanmar’s energy sector has been influenced more by international companies than by the previous regime. Now our business leaders have realised they can no longer act in the old way, and our President has led an impressive turnaround. Myanmar has changed enormously in only three years, and the people in this country live in harmony with a great sense of tolerance for each other. The world needs to give Myanmar a chance. Exciting energy blocks are now in stream here and revenues will continue to flow in which the government will invest in infrastructure and public services. I am proud to be a part of Myanmar’s energy sector, because it will play a major role in the sustained development of our country.

MPRL E&P Group of Companies 84-85 Hlaing Myint Moh Lane #1 10th Quarter, Hlaing Tsp. Yangon Tel : +95 1 521 471 - 3 mprlstaﬀ@mprlnet.com.mm www.mprlexp.com

THE EUROPEAN TIMES

Energy

Myanmar Committed to the EITI

Myanmarʼs government is determined to develop

the countryʼs rich natural resources responsibly, and to help reach that goal President HE U Thein

Sein announced in December 2012 that Myanmar would

implement

the

Extractive

Industries

Transparency Initiative (EITI). The President

said, “We want to use the EITI to ensure that our resources are developed and managed in a

transparent manner for the sustainable beneﬁt of our people. Political and economic reforms

are an important part of the democratisation process. Becoming a member of the EITI will be a tangible result of these reforms.”

The President appointed HE U Soe Thane, Union Minister in the President’s Office, to head the EITI process for Myanmar. In February this year, Myanmar accomplished one of the first EITI requirements: to set up a multi-stakeholder group whose role will be to report to the EITI the income and tax payments of energy firms operating in Myanmar. The group is made up of some 50 members of the government, industry and civil society. Now the multi-stakeholder group must come up with a work plan that sets out the objectives for EITI implementation in Myanmar, including which sectors to be covered and what should be in the group’s first EITI report. Topics could include contract transparency,

Mann oil ﬁeld

beneﬁcial ownership, extensions to the hydropower and forestry industries, and others.

Transparent revenue-reporting The EITI, a G8-endorsed protocol for revenue reporting, is overseen by a non-government secretariat based in Oslo, Norway, which supports the standard’s implementation and effectiveness in resource-rich developing countries. The EITI protocol is designed to help emerging extractive sectors create better revenue-transparency habits, thus reducing or eliminating corruption. The main EITI requirement is annual publication of an EITI report, which details money paid to governments, by energy companies, for extractive projects, often including tax revenues, production volumes and social allocation of revenues. Governments disclose what they received for extractive projects while companies disclose what they have paid to governments, and the figures are then examined by independent auditors. Clare Short, current Chairwoman of the EITI board, praises Myanmar and President HE U Thein Sein for working to implement the EITI protocol. She says, “I am impressed by the commitment of the government, civil society and industry to work together for better management of Myanmar’s natural resources. The first multi-stakeholder meeting is an important milestone for the EITI process in Myanmar and the openness of the discussions is a reflection that [Myanmar’s] transition towards democracy has come a long way.”

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Open to International Investment in Energy As

Myanmar

pursues

its

ambitious reform agenda it urgently needs to improve its energy infrastructure and boost

energy

capacity

meet the needs of its rapidly developing

economy

and

bring reliable energy to its

people. According to some estimates, around 74% of the countryʼs

population

lacks

reliable access to electricity.

Through Myanmar Electric Power Enterprise (MEPE), the government buys electricity from public and private producers and MEPE sells that electricity to the Electricity Supply Enterprise (ESE) and the Yangon Electricity Supply Board (YESB). The government subsidises energy prices and to lessen its burden it raised prices in fall 2013, but revoked the increase because of public protests. On March 13, the government raised prices again in a move that analysts say will help draw more investors to energy projects. In June 2013, the World Economic Forum, in collaboration with Accenture and the Asian Development Bank (ADB), published the Myanmar New Energy Architecture Initiative, a comprehensive plan to spur on the development of Myanmar’s energy sector. The report points out that Myanmar has the potential to emerge as Southeast Asia’s new frontier for economic growth

160

Mann oil ﬁeld

and investment, and the energy sector will play a crucial role in fuelling this success story. The report notes that Myanmar needs new sources of generation, new transmission and distribution

networks, and large-scale infrastructure to improve power supply to metropolitan areas. For rural areas, the report recommends small-scale hybrid renewable systems and off-grid renewable systems.

THE EUROPEAN TIMES

Energy Sector

Tenders for offshore blocks In March, Myanmar’s government awarded tenders to international companies for the exploration of oil and gas in 20 offshore blocks. Chevron, ConocoPhillips, Statoil, BG, Royal Dutch Shell and Total were among the energy giants who won tenders. Foreign operators will be required to enter into production-sharing agreements with state-owned Myanmar Oil and Gas Enterprise (MOGE). A report published in March 2013 by the US Energy Information Administration highlights the vast potential of Myanmar’s energy sector. Myanmar’s energy resources include natural gas, oil and hydropower, all of which are underdeveloped. The government has opted to focus on production-sharing contracts to bring in investors. Myanmar’s National Electrification Programme, which will create new possibilities for investors, is expected to be announced by the end of this year once regulatory and other issues are worked out. Myanmar currently relies on hydropower for around 70% of its electricity generation, but production falls far short of demand. As a result, traditional biomass energy accounts for around two-thirds of the country’s primary energy consumption. A minimal amount of crude oil and condensates are produced in Myanmar’s onshore Salin basin and offshore Yetagun fields. Total liquids production rose from around 13,000 barrels per day in 2000 to 21,000 barrels per day in 2011. The country’s natural-gas production rose from 61 billion cubic feet in 1999 to 420 billion cubic feet in 2011 and is mainly from the offshore Yadana and Yetagun fields. Myanmar exports around 75% of its natural gas to Thailand. Recent natural-gas initiatives include the Zawtika and Shwe gas projects as well as twin crude oil and gas pipelines built in partnership with China which run from Myanmar’s Kyaukphyu port to Kunming in south-western China. A consortium of Asian oil companies, including the China National Petroleum Corporation, is building a gas pipeline connecting the Shwe gas project to China. Myanmar’s Ministry of Energy welcomes more partnerships in developing Myanmar’s energy sector. During the recent BIMSTEC summit which Myanmar hosted in early March, U Pe Zin Tun, Director-General of the Energy Planning Department under the Ministry of Energy, commented, “We need to cooperate in energy security and energy stability as well as research and development. We have energy and agricultural resources, but we need technical assistance.”

Myanmar Opens Doors to EU Investors U Ken Tun, Chief Executive Officer, Parami Energy, invites EU investors to get involved in Myanmarʼs economic development. Parami Energy, established in 2004, is now a dynamic

group of companies with core operations in the

oil and gas, power, construction and finance sectors. It is known for its high international

standards and substantial commitment to corporate-social-responsibility projects. Parami

aims to be a competent regional player in its core businesses.

European Times: How can the EU and Myanmar work together? U Ken Tun: Only 30% of Myanmar’s people have access to electricity, and our installed electricity capacity is less than 10% of Thailand’s. Myanmar is the largest exporter of gas in Southeast Asia, but we import fuel (totalling around €1.17 billion in 2011) and our refining capacity is less than 5% of Thailand’s. So, Myanmar has great potential U Ken Tun, Chief Executive Officer Parami Energy for investment in energy as well as in transport, labour-intensive industries and services. More than 56% of our population is young and eager and we are blessed with natural beauty, strategic connectivity and unexplored resources. Myanmar needs partners that can transfer knowledge, respect the environment, train our people and help Myanmar’s businesses grow regionally. Partnering with the EU can be a catalyst for Myanmar’s sustainable growth, not only financially but also in terms of human capacity, technology and expertise. Donor organisations need to recognise the right ways in which to get involved in Myanmar’s development, without simply applying a onesize-fits-all approach. We need assistance from the EU, and patient investors will be rewarded.

611

THE EUROPEAN TIMES

MYANMAR

• New Era for Myanmar’s Mining Industry

Mining

“Many countries throughout the world have already invested in our mining sector and have seen tremendous success.” HE U Than Tun Aung, Deputy Minister of Mines

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Mining

Mining Sector Offers Enormous Opportunities iron and nickel; gold, tin, tungsten, titanium and the extraction of rare-earth metals like platinum; industrial materials like coal and steel; gems; pearls; as well as salt and marine chemicals.

“There is great potential if we can combine our rich mineral deposits with new technologies. I personally invite investors to explore the mining sector.” European Times: What is the ministry doing to attract investors?

Deputy Minister of Mines HE

U Than Tun Aung discusses the enormous potential of Myanmarʼs mining industry.

European Times: What are your ministry’s responsibilities? HE U Than Tun Aung: The ministry is divided into the Minister’s ofﬁce, the Department of Mines, the Department of Geological Survey and Mineral Exploration, and six specialised mineral enterprises. These focus respectively on ferrous metals such as lead, zinc, copper,

HE U Than Tun Aung: The Myanmar Investment Commission instituted the new foreign-investment law in 2012 and now the Ministry of Mines is working towards amending Myanmar’s mining law. The new mining law’s main objectives are to promote environmental conservation and to build conﬁdence among foreign investors in Myanmar’s mining industry as an investment target. Myanmar joined the Extractive Industries Transparency Initiative (EITI) in December 2013 to show the international community that we take transparency and ethics very seriously. EU countries are worried about investing in Myanmar, but many countries throughout the world have already invested in our mining sector and have seen tremendous success.

European Times: Do you have any current projects with the EU? HE U Than Tun Aung: We are planning to work with the Geological Survey of Finland on the “Sustainable Development of Mineral Resources in Myanmar” project in 2014-2015 and further projects are expected. Technical and human-resources development are very important for us and we can achieve this through strategic partnerships with EU companies. European Times: Can you cite some investment opportunities? HE U Than Tun Aung: Investors can invest directly or through joint ventures. If foreigners are interested in exploration, they can apply for a “greenﬁeld exploration” licenses to explore previously unexplored land and complete a feasibility study at their own cost and risk. Because the ministry is not allowed to export raw ore, we are especially looking for investors that can process and add value to our mineral resources. European Times: What is your personal message to investors? HE U Than Tun Aung: Myanmar is endowed with copper, gold, lead, zinc, silver, nickel and jade, to name just a few. There is great potential if we can combine our rich mineral deposits with new technologies. I personally invite investors to explore the mining sector not only for FDI but also in partnerships with local companies.

THE EUROPEAN TIMES

MYANMAR Sector

Fast-growing Mining Group Eyes New Exploration Projects Myanma Precious Resources Group (MPRG) specialises in the exploration and production of natural resources.

With its core business in gold and jade mining, the group is expanding into various stages of the mining process, from exploring new resources to developing proven reserves. Currently the local partner for Thailand’s PTTEP three onshore blocks, namely block PSC G, EP 2 and MOGE 3. MPRG has also diversiﬁed U Htun Lynn Shein, the into the oil and gas sector. The company’s Groupʼs Chairman strength lies in its organisational setup and years of experience shared by the management team.

New Era for Myanmar’s Mining Industry

Going for gold Having partnered with Daewoo International Co Ltd on their copper/gold exploration project, and progressing with a fully owned gold exploration project in a very well known gold mining district, the Group’s Chairman, U Htun Lynn Shein explains, “The gold exploration project is very promising. Looking towards the future, we will be focussing on both exploration and production, thereby ensuring the sustainability of our business. Several additional exploration blocks are also under way to be awarded to MPRG.”

Myanmarʼs mining sector is undergoing major reforms in order to attract investors and

ensure

development.

the

sectorʼs

sustainable

Myanmarʼs vast and diverse

mineral resources include jade (considered to

Ethical approach

be the countryʼs top minerals export), copper,

Community development is at the core of MPRG’s operations. U Htun Lynn Shein says, “One of the challenges in the mining sector is illegal, unethical mining. What sets us apart is the vision we have and the emphasis we place on community development. We have connected the local villages around the mine to the energy grid, and we recently rebuilt a 50-bed hospital after the earthquake.”

well as precious stones. A lack of reliable

Welcoming the chance to work with international partners as new exploration projects arise, U Htun Lynn Shein explains, “We have such an experienced group of geologists, engineers and managers that we are well recognised as a reliable partner by well-known major mining companies.” Myanma Precious Resources Group Room 101 & 302, Shwe Than Lwin Condo, New University Ave. Bahan Tsp, Yangon, Tel: +95 1 554 981 www.mprg.com.mm, admin@mprg.com.mm

gold, coal, tin, tungsten, lithium, nickel, as geographic surveys of the countryʼs mining resources, a reputation for corruption in the industry, archaic regulations and inadequate

infrastructure have held back international

investment in mining in Myanmar. All that is set to change.

A new mining law that is set to be implemented this year is expected to boost FDI in mining and help Myanmar make the most of its mineral resources while ensuring that the people of Myanmar benefit from these mining projects. Commenting on the new mining law in a speech to parliament in February 2014, Myanmar’s Union Minister

THE EUROPEAN TIMES

Sector Mining

of Mines, HE U Myint Aung, said, “Income from the [mining] industry will go toward both corporate social responsibility projects and mine closure programmes.” The new law stipulates that a foreign investor and a local citizen engaged in a joint mining venture can determine the ownership ratio. Foreign businesses will be allowed to own 100% of mining projects in Myanmar, with certain restrictions, and will be able to lease land for mining projects for up to 50 years. A lease could then be extended twice, for a 10-year period each time. Foreign companies will also be exempt from income taxes for the first five years of operations and, depending on the investment, may be eligible for other tax reliefs. The new legislation illustrates the government’s commitment to creating a favourable environment for foreign mining companies to invest in Myanmar’s rich natural resources.

Mining industry being restructured since 2012 Myanmar launched a mining industry restructuring programme in 2012 and joined the Extractive Industries Transparency Initiative (EITI) in December 2013. EITI is an international group made up of governments, businesses and other representatives which aims to improve the accountability of the management of revenues from natural resources. EITI members must fully disclose all payments and allow observers to review both the origins and ﬁnal destination of payments. “We want to use the EITI to ensure that these resources are developed and managed in a transparent manner for the sustainable beneﬁt of our people,” said Myanmar’s President HE U Thein Sein in late 2013. He added, “Political and economic reforms are an important part of the democratisation

process. Becoming a member of the EITI will be a tangible result of these reforms.” The new mining law will not only attract new international partners but also help to upgrade mining practices. For many years, due to sanctions imposed on Myanmar by the US, EU and other Western © Information Matrix

countries, China has been the primary investor and buyer in Myanmar’s minerals sector. According to a 2012 study of Myanmar’s mining industry by Global Data, harmful mining practices have been observed at gold mines in the states of Kachin and Karen, as well as in copper mines in Northern Myanmar. The new mining law is designed to prevent these problems.

Vast resources and strategic location

Lime Stone deposits = 452

Myanmar’s mining sector offers excellent development potential. In addition to its largely untapped minerals resources, Myanmar is strategically located between China and India, both major consumers of raw materials. HE U Myint Aung comments, “Nowadays, we are in a position to invite investors from any country with advanced technology and reliable investment projects. Although exploration activities will present challenges, the mining industry has the potential to drive economic growth while fostering foreign investment.”

652

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Mining with a Social Conscience project, we attach more importance to the social beneﬁts we will bring to the country and local people.”

Myanmar Yang Tse Copper Ltd (“Myanmar Yang Tse”) and

its sister company Myanmar Wanbao Ltd

Mining

(“Myanmar

Focus on protecting the environment

Copper

Wanbao”)

are playing a key role in

Myanmar’s Monywa Copper Mine comprising of Letpadaug, Sabetaung and Kyisintaung deposits is the site of the second-largest copper mine in Southeast Asia. Early exploration and development started in the middle of the 20th century. The mine is located in a semi-arid area and has around 50,000 people living in its vicinity.

boosting the development of

Myanmarʼs mining industry while also beneﬁting the local

people. Both of the companies are subsidiaries of Wanbao

Mining Ltd, headquartered in Beijing, China.

Mineral resources will continue to play a key role in driving sustainable economic growth and boosting the per capita GDP among the people of Myanmar. It creates jobs, contributes to government revenues and nurtures a skilled workforce for industrialisation in the region, says Mr. Geng Yi, Chairman of Myanmar Yang Tse and also Managing Director of Myanmar Wanbao. Myanmar Yang Tse is proud to be the only producer in Myanmar for its LME registered Grade A Cathode Copper with the brand name of “Monywa S&K”, which is mined from its Sabetaung and Kyisintaung (S&K) deposits in the Monywa Copper Mine area. Myanmar Wanbao is developing the nearby Letpadaung deposit, which is the largest part of the Monyawa Copper Mine. It is hoped the Letpadaung mine, which is still under

166

Geng Yi, Chairman of Myanmar Yang Tse and Managing Director of Myanmar Wanbao

construction, will enter into production in 2015. Myanmar Yang Tse is an SGS-certiﬁed company, certiﬁed OHSAS 18001 for occupational-health-and-safety management, ISO 14001 for environmental management and ISO 9001 for quality management. “Myanmar Wanbao is also committed that its Letpadaung copper project is undertaken in accordance with international standards and good practice,” Mr. Geng Yi says. Sustainable development is of the utmost importance to Myanmar Yang Tse and Myanmar Wanbao, according to Mr. Geng Yi. “We never produce off-grade copper,” he says, adding that “in fact, it is inclusive sustainable development which is at the core of what we do; while seeking economic returns by increasing investment in the copper

“Our Environment and Social Management System is in line with IFC standards and efforts to preserve the natural environment are a key aspect of our corporate agenda,” Mr. Geng Yi explains. “It is our commitment to the local community that we will not upset the ecosystem we work in. We also have a nursery which includes a teak plantation and we recycle freshwater from our mine pit for irrigational purposes. We adhere to a strict zero-discharge policy, meaning that none of the solutions or liquid ﬂows associated with our operations mix with those of the surrounding natural environment.” Mr. Geng Yi emphasizes.

Commitment to the Employees and Commitment to CSR Myanmar Yang Tse and Myanmar Wanbao provide training to its 4,000 local employees and to around 1,000 local employees of its contractors, teaching them international-standard skills. “Our

THE EUROPEAN TIMES

Mining

goal is not only to become a leader in the industry, but also to become Myanmar’s partner in education and mining expertise as the country opens its doors to the world. The wellbeing of our workers, who form part of the local community, is something we not only desire to ensure, but is also an important clause within our legally binding contract that lays out the framework for our Myanmar operations,” Mr. Geng Yi says.

“At Yang Tse and Wanbao, we are committed to our community. Our aim is for our community to develop and prosper hand in hand with us. We believe in shared prosperity and mutual development.” Both Myanmar Yang Tse and Myanmar Wanbao are strongly committed to corporate social responsibility (CSR). “At Yang Tse and Wanbao, we are committed to our community. Our aim is for our community to develop and prosper hand in hand with us. We believe in shared prosperity and mutual development,” Mr. Geng Yi says. The mining companies have done a whole variety of CSR activities to beneﬁt the local people in this area, ranging from road repair, drinking water systems, electricity installations to scholarship programs, healthcare and building of schools, monasteries and pagodas. Mr. Geng Yi cites the mobile clinics that serve rural villages in the project area

as an example, saying that, between May 2012 and the end of February 2014, the clinics treated over 55,000 villagers who would otherwise have had little or no access to free healthcare. In addition, Myanmar Yang Tse’s Mine Town Hospital treats employees and members of their families. It has also provided a healthcare program to pregnant women and children under five years old within five miles for more than ten years free of charge. Myanmar Wanbao has committed to put US$1 million to its CSR programs every year at the construction stage and when the mine enters into production, together with its Myanmar partners including state-owned Mining Enterprise No 1, 2% of the net profit will be allocated to CSR projects every year, according to Mr. Geng Yi. “Myanmar Wanbao is not alone in implementing the CSR projects and the Myanmar government is also playing a critical part,” he says. Myanmar Yang Tse has also developed a long-term environmental management and CSR plan for its project. Mr. Geng Yi points out, “Comparatively speaking, this is an unusually generous social investment by a foreign company. Maximising shareholders’ value has taken a backseat as our strategy shifts to maximising stakeholders’ value. We believe that when our CSR approach truly benefits local people, financial returns will follow naturally.”

50,000 tonnes per year by 2015 Myanmar Yang Tse produced 16,000 tonnes of Cathode Copper in 2013 and aims to increase this capacity to 50,000 tonnes per year by the end of 2015, which does not include the new capacity of 100,000 tonnes per year to be realised by Myanmar Wanbao’s ongoing new development of Letpadaung deposit. Mr. Geng Yi says,

“Over the next two years, we will keep bringing fresh investment in heavy machinery, operations expansion, application of new technologies and in recruiting and training a new generation of local human resources etc. To achieve this goal, we will also continue to focus on responsible mining, sustainable development and raising the living standard of the local community.” Both Myanmar Yang Tse and Myanmar Wanbao are open to strategic partnerships. Mr. Geng Yi explains, “As Myanmar’s industrial sector develops and as Wanbao Mining’s operations in Myanmar expand, we look forward to working with partners that can cooperate with us in terms of strategic investment, technology, managerial expertise, and inclusive development to boost backwards and forwards industries in Myanmar. What we can offer, in turn, is local market knowledge and a thorough understanding as well as management of the risks involved in investing in this sector. Myanmar is a very special place and deserves a specialised and tailored approach by international investors.” Mr. Geng Yi welcomes visitors to the mine. He says, “We invite potential business associates and the media to visit our site with an open mind and see for themselves the development that is taking place in surrounding villages. The mine is set to be a model project for those that come to Myanmar, and we believe that, together with the government, as well as local and international partners, we can realise this shared vision.” Myanmar Yang Tse Copper Limited and Myanmar Wanbao Mining Copper Limited Yangon Oﬃce, 70 (1) Bo Chein Street, Pyay Road, Hlaing Township Yangon Tel: +95 1 514 194 / 5 / 6 / 7 web@myanmarwanbao.com.mm www.myanmaryangtse.com.mm www.myanmarwanbao.com.mm

672

THE EUROPEAN TIMES

MYANMAR

National Prosperity Company Limited

Community Development at the Core of Mining Operations

Established in 2006, National Prosperity Company Limited began operations in the ﬁsheries sector and has since expanded into agriculture, manufacturing, real estate, construction, as well as both jade and gold mining. At present, the company employs almost 4,000 people and places a high value on giving back to the community through shared ownership and special CSR projects. “Currently, our focus is on food production, including rice, pulses, beans and palm oil,” explains U Soe Htun Shein, Chairman of National Prosperity Company. Looking towards the future, however, he sees great potential in the development of the upcountry Modi Momi gold mine, a project in which the company has owned a 40% stake since 2011. The rest of the shares have been divided between local miners and remaining stakeholders. Altogether 18 companies participated in the bidding however the concession rights

1 68

for the 6,105-acre Modi Momi mine were fairly awarded to National Prosperity for a total of 25 years with the mining license beginning in September 2011. U Soe Htun Shein highlights, “Right now, the mine involves many shareholders and smaller mining operations. However, as it develops, we are able to modernise the site and expect an increase in production. We are in charge of the exploration, mining and processing of the gold with an already impressive current daily production that will only increase with time and investment.”

Upgrading infrastructure and seeking partners for the greater good

and local partners in bringing about transparency, community engagement and environmental sustainability.”

Forging a partnership with the community National Prosperity works hard to initiate dialogue and reach consensus with the local communities that they employ. Understanding among the many shareholders of the mine guarantees economic growth and community development around the mine. Proper precautions are being taken to ensure the health and wellbeing of the mineworkers, and to communicate the beneﬁts of the project to the local people.

While upgrades to the local infrastructure such as strong electricity grids and roads, have already been made at the site, National Prosperity is currently looking for partners to help bring the mine to its full potential. Because this mine is the largest gold mine project in Myanmar and the deposit is similar in style, nature and prospectivity to the Bendigo-Ballarat gold deposit in Australia, the Chairman explains, “We are looking to meet the very stringent requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves; or the JORC Code, which sets the standard for public reporting of mineral extraction and is currently working with assistance from an Australian company.”

Highlighting the company’s CSR efforts, U Soe Htun Shein concludes, “We have supplied the mining town with schools, hospitals, roads and 100% electrification. We want people to understand that much of Myanmar’s development will come from the mining industry, which is why we are committing 10% of our annual profits to social welfare programs. The Modi Momi mine is not only an exciting investment opportunity, it also presents us with a very real opportunity to give back to the country and to the people of Myanmar. We believe that with the help of foreign partners we can become a flagship goldmine for not only Myanmar, but the region.”

U Soe Htun Shein also explains, “We are looking to form partnerships with the international mining community in order to gain technical expertise. What we want to do is to work together with international

National Prosperity Company Ltd. No. 106 University Avenue Kamaryut Township, Yangon Tel: +95 1 526 045 national.p.p.c@gmail.com

THE EUROPEAN TIMES

• Rapid ICT Development in Progress • Ministry Promoting Freedom of the Press, Open Information • ICT Cornerstone of Government’s Development Programmes

ICT

“Our country is developing rapidly and welcomes the support of foreign investors and partners.” HE U Myat Hein, Union Minister of Communications and Information Technology

THE EUROPEAN TIMES

MYANMAR

Rapid ICT Development in Progress European Times: priorities?

What

are

your

ministry’s

HE U Myat Hein: Myanmar was left behind in economic development and ICT-services penetration, and that is why we are now reforming the sector. We drafted a new Telecom Law, which was passed in October 2013. It certainly is both a challenge and a priority for us to match neighbouring countries in terms of penetration and quality of service. We cannot do this alone and that is why we have selected two international operators - Telenor and Oredoo - who will compete fairly with our two domestic operators to upgrade the sector and ensure that we quickly catch up with the rest of the world. Myanmar’s government is working on narrowing the gap between the developed and underdeveloped parts of the country. In this regard, we are highlighting areas such as health, education and rural development. I would like to highlight here that poverty reduction is also the government’s top priority. You need only to think of concepts such as online and mobile banking, e-education and e-government, to know that the potential for the ICT sector to support the development of other sectors is great. European Times: Myanmar is still seen as a high-risk market, and competition from neighbouring countries is high when it comes to attracting investment. What are the top reasons you can give for investing in Myanmar’s telecoms sector? HE U Myat Hein, Minister of Communications and Information Technology, discusses key strategies and projects in Myanmarʼs ICT sector.

HE U Myat Hein: As a latecomer, Myanmar has the opportunity to leapfrog our development and learn from our neighbours. This presents an opportunity for investors, because Myanmar’s development will be rapid; and with the right approach, returns will be high. Investors are beginning to be aware of this; we received 91 bids from international investors during the bidding process for the two main international operator licenses we awarded. We are still issuing non-integrated licenses to foreign and

THE EUROPEAN TIMES

Sector ICT

local investors who wish to participate in our drive to offer affordable telecom and ICT services throughout the country. The huge investment requirement for telecom infrastructure building also presents more opportunities for foreign direct investment in the sector. The government of Myanmar knows that developing the communications sector is essential for building those sectors that are so crucial to the social and economic wellbeing of our people, such as health and education. Therefore, we are making sure that our legal and regulatory framework are conducive to FDI and domestic public sector investments. In the process, we are being supported by international communities such as International Telecommunications Union, the World Bank and the ADB. By establishing a regulatory structure which is in line with the international best practices, I believe we will be able to give security to investors.

“Our country is developing rapidly and welcomes the support of foreign investors and partners.” European Times: Myanmar needs thousands of kilometres of ﬁbre infrastructure and more than 15,000 towers to be installed by 2015 in order to meet targeted levels of penetration. The estimated cost of this network-infrastructure investment stands at over €3.5 billion. How do you plan to ﬁnance this? HE U Myat Hein: Our aim is to achieve a penetration rate of 75% to 80% by 2015-2016. We know that we cannot do this alone. That is why Myanmar Post and Telecommunications (MPT) is looking for a global partnership with a suitable international telecom operator. We will need a partner with technical expertise, a good

financial track record, and the ability to assist MPT in human-resource development. In turn, as a partner, MPT will place great emphasis on being transparent and fair. The process through which we choose our partners has to be transparent and accountable as well, because, after all, the whole world now has its eyes on Myanmar. European Times: What can you say to reassure our readers who might be concerned about corruption in Myanmar? HE U Myat Hein: Myanmar has transformed itself into a democratic state and respect for the rule of law is becoming the norm, rather than the exception. We are upgrading our legal structure to international standards and are focussing on reducing corruption and inefficiency in government. That is the vision of President HE U Thein Sein, who always reminds us that the funds that we receive from international donors are only to be used on those projects and in those areas that have been clearly set out. That holds true not only for foreign grants but also for our own national budget. We are very careful in ensuring that the flow of funds is apparent to all, and I am confident that this enables us to build trust with our development partners, international and domestic investors and our general public as we carry out our reforms. In this regard, I like to highlight the fact that the Union government has also formed an anti-corruption committee, which is headed by the Vice-President. Our MPs are scattered throughout the country and so their ears are to the ground and that is how the government is able to keep track of any misconducts among government ministries and agencies in utilising public funds. European Times: What is your personal message to potential investors? HE U Myat Hein: The ICT sector has become one of the key areas for investment in Myanmar today. Our country is developing rapidly and welcomes the support of foreign investors and partners. The communications and ICT sector has the potential to contribute immensely to the country’s GDP growth, and we anticipate continued strong growth in this sector for many years to come.

THE EUROPEAN TIMES

MYANMAR

Ministry Promoting Freedom of the Press, Open Information European Times: What are some of the ministry’s speciﬁc projects? HE U Aung Kyi: In our drive to transform our media from authoritarian to socially responsible, we are using the EU model and promoting freedom of the press. We are changing our media laws and actively inviting foreign news agencies to Myanmar. Another priority for the Ministry of Information is to extend media coverage throughout the country. Only 1% of Myanmar’s population receives newspapers and we look to increase that to 3% or 4% in the coming years. My mission is to be able to close the knowledge gap between urban and rural areas. We also want to increase the number of Internet users, which now totals less than 10% of the population. European Times: What role is the Ministry of Information playing in attracting FDI to Myanmar?

HE U Aung Kyi, Minister of Information, discusses his ministryʼs top priorities.

European Times: What are the current priorities of the Ministry of Information? HE U Aung Kyi: We are trying to change our ministry from a government propaganda machine to a public service. To adopt media pluralism in our country, we are leading the shift from state-owned media to publicservice media. We aim to have more commercial newspapers and broadcasters and also community-service and charitable organisations producing media in ethnic languages. All this is very different from the previous situation in Myanmar.

HE U Aung Kyi: We want to provide accurate information to any entrepreneurs that want to invest in our country. Myanmar is in the midst of an unprecedented transformation, and we welcome international assistance and expertise to help us take advantage of our large labour force and turn Myanmar into an industrial power. The strategic location of Myanmar is very important to investors from the EU, and we also offer a large new market. Myanmar has recently been admitted to the EU’s Generalised System of Preference and has already used it to create at least 10,000 job opportunities in one year. We have invited two large international telephone operators to the country to help us transform our telephone systems, and we are looking for European expertise to help us develop our ﬁlm industry. European Times: What is your personal message? HE U Aung Kyi: Myanmar is developing much later than most ASEAN countries, but we have been able to learn from their experiences and use that to our advantage. We aim to move forward even faster to help Myanmar be viewed in a better light by the international community.

THE EUROPEAN TIMES

ICT

Local IT & Telecom Company Growing in Leaps and Bounds Established in May 2009, Elite Tech Group of Companies is now Myanmarʼs most

reputable local IT & Telecom Company, specialising in retail, manufacturing and engineering services. As part of the groupʼs subcontracting work for

the state-owned Myanmar Post and Telecommunication (MPT), Elite is also

the local manufacturer of GSM, WCDMA and CDMA ʻtop-upʼ cards. For the 2012-13 financial year, Elite Tech IT Services Co. Ltd., a subsidiary of the group, was Myanmarʼs 14th largest commercial taxpayer and 18th largest income taxpayer.

Mr. Chan Nyein Zaw, Elite’s CEO explains, “Since our establishment, we have grown to have 37 mobile shops across Myanmar. We have a head ofﬁce in Yangon with additional branches in Mandalay and Nay Pyi Taw and also have operations in petrochemical trading and real estate development. We soon plan to launch our IPO and transform our progressive family business into a public company.”

Giving back is key Human resource development is at the core of Elite’s philosophy and the company strives to enrich the lives of its employees. Mr. Zaw says, “I want to make sure our staff want to ﬂourish with us. That’s why we want to offer employees a stake in the business in the future. We are constantly being approached for new projects, which, I believe, is due to our capabilities. Our capabilities, in turn, are due to our people.”

While Elite is no stranger to working with well-known international companies such as Hawaii, the group looks forward to welcoming new foreign partners on board. Mr. Zaw says, “Foreign companies need a trustworthy local partner if they are going to excel in Myanmar. More than that, however, they need to have a long-term commitment towards the country, and that is exactly the kind of partner we wish to work with.”

Leading by example Myanmar’s ICT sector has set a benchmark for transparency and fair tendering processes. However, misconceptions of corruption in both the public and private sector are still prevalent. To this, Mr. Zaw says, “No country can claim to be completely corruption-free. I believe that Myanmar’s leaders are trying their best to encourage ethical business practices. Foreign investors should not believe all they hear about

Myanmar until they have come here and have properly explored the market.” Despite its aggressive growth and plans to go public in the near future, Elite has remained mindful of its social and environmental impact throughout. Having recently formed a committee tasked with developing a cohesive corporate social responsibility strategy, the group sees giving back as part of its responsibility to the country. “As we approach our ﬁve year birthday, we want to set an example for other local companies in the telecommunications sector, by being an organisation that pays its taxes on time, cares for its employees and is an ideal partner for foreign investors,” Mr. Zaw concludes. Elite Tech Group of Companies No(A9/10), Shwe Kabar Housing, Mindama Road, Mayangone Township, Yangon Tel: +95 1 656 945, 656 946 info@elitetech-group.com www.elitetech-group.com

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

ICT Cornerstone of Government’s Development Programmes ICT master plan Myanmar’s ICT Master Plan 2015 builds on a previous master plan from 2005 whose goals were largely unrealised by the military regime. The new plan calls for a strong political commitment to ICT development, support for competition and liberalisation, new opportunities for domestic and foreign investment, good governance, effective utilisation of resources, and ICT support programmes. The Asian Development Bank is advising the government on ICT strategy.

According to its ICT strategy for 2015, Myanmarʼs government aims

to improve public-sector transparency and eﬃciency through new and better ICT tools, establish ICT infrastructure which will support

growth nation-wide, enhance access to ICT services for people all

over the country, and improve the populationʼs understanding of ICT through educational programmes and awareness projects. The government also wants to foster a competitive, technologically

advanced ICT sector which will attract local and international investment.

The government’s 2015 ICT programme outlines 27 speciﬁc action plans in three major areas, which are ICT infrastructure, industry and human resources. © Concerning infraInformation Matrix structure, action plans range from demand forecasting for telecom and broadband to the creation of an R&D centre for cyber security. For the ICT industry, action plans include encouraging software development. As for human resources, the strategy calls for developing an ICT network for Myanmar’s universities. The 2015 strategy also singles out e-education and e-government programmes as well as upgrading the ICT regulatory environment. IT services-provider Infosys was recently appointed as the advisor for Myanmar’s e-government efforts. Myanmar’s ICT sector has seen increased interest from global investors as ongoing reforms promise the pos-

174

THE EUROPEAN TIMES

Sector ICT

sibility of reaching Myanmar’s some 60 million potential ICT customers, most of whom have little or no access to communication services. Internet penetration in Myanmar is estimated at only 1%, with around 70% of users accessing the Internet via mobile devices.

The International Data Corporation estimates that Myanmar’s ICT market will grow by an average 16.1% per year between 2012 and 2016 alone. For investors in ICT, Myanmar offers reasonable labour costs, a vast untapped market, increasing government support and steadily improving ICT infrastructure.

Myanmar’s high-potential ICT sector has attracted a number of international players, including the Infocomm Development Authority of Singapore (IDA). IDA led a delegation of seven Singapore ICT companies which attended the third edition of the International Myanmar ICT Exhibition held in Yangon in October 2013.

Two foreign mobile operators Reforms of the ICT sector have already begun. Myanmar Post and Telecommunications (MPT), which is wholly owned by the Ministry of Communications, issued licenses for four mobile network operators in 2013. They are MPT’s Myanmar Public Telecom and Yatanarpon Teleport (YTP, in which MPT holds a majority share) in addition to two foreign operators, Telenor of Norway and Ooredoo of Qatar. The two foreign operators have announced that they will supply more than 30 million SIM cards during the first six months of their operations, and Ooredoo recently announced that it would also launch 3G services in Myanmar in its first six months in the country. Ooredoo is currently in active discussions with a range of industry players in Myanmar to share as much passive ICT infrastructure in the country as possible, including towers and fibre-optic links, in an effort to achieve significant cost efficiencies. “Network-sharing is seen as

of e-government platforms and incorporate ICT into policy-making and legislation. In addition, ICT education in Myanmar is rapidly expanding. Myanmar’s Ministry of Science and Technology operates 25 computer universities and colleges throughout the country, and many private institutions teach IT courses.

Singapore ICT companies already partnering with Myanmar a key issue for the communications industry, as companies split the costs of developing and operating key infrastructure,” Ooredoo Group’s CEO Nasser Maraﬁh explains. The software market in Myanmar is still largely underdeveloped as well, but demand for sophisticated applications is expected to spike as the country’s various sectors grow and require more developed solutions. Additional opportunities exist for setting up offshore development or outsourcing projects, and Myanmar can offer skilled human resources for such projects. Myanmar is also moving forward in its e-government efforts. The government has been working closely with the Korean International Cooperation Agency (KOICA) to develop the use

Two companies in the delegation are already partnering with Myanmar enterprises. ST Electronics, a leading Singapore-based provider of simulation, “edutainment”, training services and solutions, is working with Myanmar’s Nay Kyel Oo Group to offer innovative educational and entertainment solutions for the youth market in Myanmar. Singapore’s 2C2P, a comprehensive paymentsolutions provider, has forged partnerships with banks and other institutions in Myanmar. Steve Leonard, IDA’s Executive Deputy Chairman, comments, “IDA ﬁrmly believes in Myanmar’s growth prospects and is happy to help ﬁnd ways to support the development of Myanmar’s ICT services as an enabler for economic growth. We also want to help Singapore ICT companies explore and develop partnerships to participate in the growth opportunities of Myanmar.”

752

THE EUROPEAN TIMES

MYANMAR

Leading Media Enterprise Active in Print and ICT Information Matrix, founded

in 1997, has steadily grown to become one of the biggest

media enterprises in Myanmar and a leader in both print

media and ICT solutions. Now with some 450 employees, the

company

produces

daily, weekly, monthly and quarterly print publications.

On the ICT side, it provides e-Government and

develops

software

solutions

customised

applications

for

both government and private sectors.

U Thaung Su Nyein, Managing Director, explains that Information Matrix not only informs local residents but also provides essential services for foreign investors. He says, “We have one daily publication, four weeklies, one monthly and one quarterly. Our most recent project is Crossroads, an English language publication, which we ﬁrst released in time for the World Economic Forum meeting last year. Crossroads is a professional, analytical guide for foreign investors and local businesses as they try to navigate the fast-changing business environment here in Myanmar.” Looking to the future, Information Matrix aims to focus on its daily pub-

1 76

lication, 7Day Daily Newspaper, as its ﬂagship project for the coming three to ﬁve years but it has many other projects in the works as well. U Thaung Su Nyein says, “We are looking to expand in broadcasting as the legal framework is still evolving. We also want to strengthen our expertise in the IT sector. We are already big in e-government, and we want to become the ‘cool’ tech company that everyone knows about, not just the tech company that works with the government. We also see a lot of potential in mobile applications as teledensity increases in the future.”

Seeking international partnerships Information Matrix aims to expand its presence beyond Myanmar. U Thaung Su Nyein points out, “We want to grow from a local publisher into an international company that is a trusted partner in Myanmar. We know the local market better than anyone else and are very knowledgeable about what it

takes to be successful here. We have a lot to offer international partners, and we want to learn from foreign media companies’ experiences and to be able to implement new solutions here in Myanmar.” As the son of a diplomat (his late father, U Win Aung, was the former Minister of Foreign Affairs) U Thaung Su Nyein has travelled the world and takes a very international perspective on Myanmar and on Information Matrix. He sees the media and IT sectors as having the potential to bring real beneﬁts to the people of Myanmar as well as to the country’s economy. He concludes, “We are seeking to educate Myanmar’s people and develop the country.” Information Matrix Diamond Condo, Building (E) No. 497 Pyay Road Kamaryut Township Yangon 11041 Tel: +95 1 512 887, 513 515 /6 /7 /8 /9 tsn@informationmatrix.com www.informationmatrix.com

THE EUROPEAN TIMES

ICT

Dynamic, Diverse Business Group Open to Partnerships Fortune International has positioned itself as major player in Myanmarʼs rapidly developing private sector. This diverse group of

companies initially focussed on general trading and engineering, specialising in turnkey escalator and elevator solutions. Today, the group is very active in the ICT, property-development, tourism,

pharmaceuticals, chemicals, food-processing and manufacturing sectors. In the telecom sector, Fortune International plays an important role in the Fibre to the Home GSM expansion project and was the ﬁrst company in Myanmar to oﬀer ring tones.

“In the future the business segments that will be the key drivers of the group’s growth will be telecommunications, property development and pharmaceuticals manufacturing,” explains U Mya Han, Chairman and CEO. Fortune International has a history of successful regional and international partnerships, for example in property development, pharmaceuticals, and animal-health products.

European investors welcome Fortune International welcomes the chance to work with international investors, particularly from Europe. U Mya Han says, “Investment will be a large contributor to Fortune International’s future growth. European investment is very important for Myanmar because Europe is very advanced in technology, experience and capital. Telenor’s entry to the

telecom sector has brought a large inﬂux of European investment in Myanmar, and the oil and gas sector needs more European participation.” Fortune International has imported veterinary products from a French company for many years and may expand this partnership. To maintain its leading role in an increasingly competitive market, Fortune International is currently strengthening itself internally. “We need to train our people to be more efﬁcient while developing our human resources. We are striving to do this to remain competitive in the future,” U Mya Han points out. International investors should look into opportunities in Myanmar, U Mya Han believes. He says, “Myanmar is the last frontier. It has a sizeable population, the secondbiggest land area in Southeast Asia, a young and enthusiastic workforce, and shared borders with India and

China. Now that the country has opened up, there are many sectors that need investment and offer large dividends.” U Mya Han is very hopeful about the future of Myanmar and of Fortune International. He says, “I am very happy to work with foreign investors. We have been in business for many years and we have a good track record, good and competent people, a commitment to corporate social responsibility, a welldeveloped network, and a very positive relationship with both the public and private sectors.

Fortune International No 11/12, Bahosi Complex Bogyoke Aung San Road, Lanmadaw Township, Yangon Tel: +95 1 228 918 myahan-ﬁl@fortunemm.com www.fortune-myanmar.com

THE EUROPEAN TIMES

MYANMAR

• Building Tomorrow’s Myanmar

Construction

“Since the lifting of sanctions, we have enjoyed a close relationship with the EU.” HE U Kyaw Lwin, Union Minister of Construction

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Construction

Infrastructure Development a Top Priority HE U Kyaw Lwin, Union Minister of Construction, discusses the importance of infrastructure development in Myanmar. European Times: What are your ministry’s responsibilities? HE U Kyaw Lwin: The Ministry of Construction has two main departments, Public Works, which is responsible for the country’s infrastructure development, and the Department of Human Settlement and Housing Development, which is responsible for urban planning and housing development. Myanmar’s infrastructure is insufﬁcient so we are seeking help from our friends in the international community. Since the lifting of sanctions, we have enjoyed a close relationship with the EU. European Times: What are the main challenges Myanmar faces? HE U Kyaw Lwin: Our new government has only been in place for just over two years, but we have worked very hard to implement political, economic, institutional and private-sector reforms as well as capacity-building. Myanmar was once very isolated and now we are opening the country up to the world. We hope our work with ADB and JICA will prove to international investors that we are ready and willing to work together

with them to improve our infrastructure. We are also ﬁghting corruption and we are trying to be transparent in every sector. European Times: What are some recent infrastructure projects in Myanmar?

we have formed joint ventures with local companies concerning building housing developments.

HE U Kyaw Lwin: Myanmar completed the Yangon-Mandalay expressway, the country’s only expressway, without assistance, but now this road needs to be upgraded. We also need to build new roads. We have recently built over two miles of bridges across rivers, which has provided connections to places which were unreachable before.

European Times: What opportunities does Myanmar offer European companies?

European Times: What are the opportunities for the private sector in Myanmar’s infrastructure-development projects? HE U Kyaw Lwin: The private sector can participate in the construction industry not only through road and bridge construction but also in housing development. We have launched build-operate-transfer projects for road construction and

HE U Kyaw Lwin: We have a lot of needs, not only roads but also housing. As our cities are growing, affordable housing is needed. We also need to upgrade connections not only throughout our country but also between Myanmar and its regional neighbours. We welcome foreign investors to participate in these projects. European Times: What is your personal message to potential investors? HE U Kyaw Lwin: We understand that not everything can be attained overnight, but we are trying and we have made genuine progress in the right direction.

THE EUROPEAN TIMES

MYANMAR

Building Tomorrow’s Myanmar

The ﬁrst annual Building and Construction

Myanmar Trade Exhibition, held in Yangon in 2013, attracted 171 exhibitors from 24

countries and included international pavilions from

Germany,

Korea

and

Singapore.

Organised on more than 10,000 sq m of indoor and outdoor exhibition space at the

Myanmar Convention Centre, the three-day event drew around 3,500 visitors from 29

countries. It highlighted the vast potential

of Myanmarʼs construction sector and its importance to the national economy.

Building and Construction Myanmar Fair 2014 This year’s Building and Construction Myanmar fair will take place October 30-November 1, once again in Yangon’s Myanmar Convention Centre, and will provide international investors and companies with a chance to investigate opportunities in Myanmar’s building, construction and infrastructure sectors. According to Business Wire, Myanmar’s construction sector registered a compound annual growth rate of 14.52% between 2009 and 2013 and is expected to continue to grow by around 12% per year up to 2018. The construction sector is deﬁnitely in a boom phase. Myanmar has a pressing need to build or upgrade housing, schools, shopping malls, hospitals, roads, bridges, railroads, airports, seaports and industrial zones, all of which have been neglected for decades.

THE EUROPEAN TIMES

Sector Construction

Projects now underway include three major airport initiatives – including the new Hanthawaddy International Airport – as well as an urban rail network for Yangon City in a project by the Japan International Cooperation Agency (JICA) and the Yangon City Development Committee, and the construction of the Thilawa Special Economic Zone, a joint effort by the governments of Myanmar and Japan to be ﬁnanced in part by a public offering. Myanmar’s construction projects are attracting investments, capital and expertise from Japan, Korea, Europe, Myanmar’s ASEAN neighbours and others. Myanmar welcomes both Greenﬁeld investments and joint ventures with local companies in its construction sector. Global enterprises with expertise in restoration of historic properties are also being sought, given the number of heritage buildings in Yangon as well as the many former government buildings left behind when the nation’s capital was moved from Yangon to Naypyidaw.

Transforming Yangon City In fact, Yangon City is set to undergo a major transformation through the ambitious “Yangon 2040, A City of Green and Gold” urban-development plan, which includes preserving the city’s architectural heritage. All new construction in Yangon must adhere to the new Myanmar building code for high-rise buildings and must be approved by the Yangon City Development Committee before construction can begin. The Yangon urban-development plan calls for construction projects to be completed in one year although extensions can be granted. In Myanmar’s other cities, permission from local city councils is required before a construction project can get off the ground. Myanmar’s new building code puts added focus on construction methods to protect against cyclones (such as the recent Nargis cyclone) and earthquakes.

Yangon’s population is currently around 5.5 million but by 2040 the city is expected to have a population of over 10 million. Other cities in the country will grow rapidly as well. In fact, Myanmar’s urbanisation rate is estimated at around 2.4% per year and by 2031, around half the country’s population will be living in urban areas. Myanmar urgently needs to build housing, facilities and services to keep pace with this urban growth. To complete its many construction projects to the highest international standards, Myanmar welcomes international experts in all aspects of construction as well as suppliers of high-quality construction materials. Most current construction projects in Myanmar are residential initiatives stimulated by the government’s housing plans as well as private developments designed to meet growing housing needs. In 2013, Myanmar’s Ministry of Construction announced a target of more than one million new houses to be built all over the country over the next 20 years, for a total of 50,000 residential units to be built each year. According to Myanmar’s Department of Human Settlement (DHSHD), only 7,000 houses were being built as of mid-2013, well short of the annual goal.

Ambitious goals for new housing To reach its housing targets, the government has indicated it will cooperate with private-sector construction companies in projects in major cities such as Yangon and Mandalay while wholly carrying out construction in other areas of the country using government loans. Yangon alone is slated to receive 50,000 new units. Costs per square foot have been estimated by the Department of Urban and Regional Planning as around €72. Myanmar also urgently needs new office space, with demand already outstripping supply. A more favourable environment for investors is helping to spur on construction-sector growth. U Aung Zaw Naing, Group CEO of Shwe Taung Development Company, says, “We expect this process of economic and legal reforms, together with the inflow of funds from foreign investors, to facilitate financing activities for developers and contractors in the near future.” Opportunities abound for international participants in Myanmar’s construction drive.

812

THE EUROPEAN TIMES

MYANMAR

Leading Construction Company Building Tomorrow’s Myanmar Established in 1999, TZTM is responsible for some of Myanmarʼs most important development projects. The construction ﬁrm helped to build Myanmarʼs new capital city, Nay Pyi Taw, and played a major role in rebuilding Ayerwaddy after the 2009 Nargis cyclone.

U Thet Lin, Chairman

The group is strongly committed to corporate social responsibility. In the Ayerwaddy region, TZTM built a storm shelter for 500 people, a 100-bed hospital, and 700 low-cost housing units as part of their CSR efforts. U Thet Lin, Chairman, explains, “Within one day of the Nargis cyclone making landfall, TZTM was in the region beginning reconstruction and rehabilitation.”

Open to “win-win” international partnerships TZTM has ambitious goals for the future and looks to form international partnerships in reaching these targets. U Thet Lin says, “Our mission is to grow into an international company, always aware of the environmental and social context within which we work.Working with foreign investors for technical and ﬁnancial support would allow TZTM to take on large-scale projects. We offer our extensive experience and expertise here in Myanmar. Such a partnership would provide beneﬁts for both sides.”

Trusted Construction Firm Known for Transparency A1 Construction has a long history of completing major projects throughout Myanmar, including

the Sakura Tower and Residences, the Chatrium and Sedona Hotels, all located in Yangon.

The company has also built projects in Mandalay and since 2003 it has been completing initiatives for Myanmar’s new capital at Nay Pyi Taw. U Yan Win, Chairman says, “In Nay Pyi Taw, we are responsible for building everything from the Ministry of Finance to markets and the Yatanarpon Teleport Corp. U Yan Win, Chairman headquarters. A1 Construction is well known throughout Myanmar as a trusted and transparent company and a reliable partner for both the public and private sectors.”

TZTM aims to support the development of Myanmar’s tourism sector and has recently built and opened a 230-room hotel in the new capital city. “We have identiﬁed tourism as a key driver of growth in the country’s development,” U Thet Lin says. He concludes, “Myanmar needs support in ﬁnancing, human resources, technology and infrastructure. We are ready to learn from the international community as we work to improve our country.”

A1 Construction has ambitious growth plans for infrastructure as well as building projects, and U Yan Win welcomes European partnerships. He says, “We have already been working with a European partner on a 200-300 MW power plant. I have several building lots in Yangon ideal for 30-storey condominiums, and we need a partner’s financial and technical support to build them.” U Yan Win is very involved in community-service projects, including supporting the Myanmar Boxing Federation, Ayewaddy United Football Club as well as various affordable-housing projects. He says, “Myanmar urgently needs more investment in construction and I can assure investors that A1 Construction will make sure they can see where every last cent of their money goes.”

T.Z.T.M Group of Companies Room No.001/002, Building No.5 Strand (Kanner) Road, Ahlone Township, Yangon Tel:+95 1 217 101 / 212 358 info@tztmgroup.com, admin@tztmgroup.com, tts@tztmgroup.com www.tztmgroup.com

A1 Group of Companies No.33/49, Mahabandoola Garden Road Kyauktadar Tsp, Yangon Tel: +95 1 241 905 info@aone-construction.com - inquiry@aone-construction.com www.aone-construction.com

THE EUROPEAN TIMES

• Rapidly Evolving Retail Sales and Distribution • New Association Voice of High-Potential Retail Sector • International Retail and Distribution Partnerships

Retail & Distribution

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Rapidly Evolving Retail Sales and Distribution Long

cut

oﬀ

from

imported

goods

and

limited

because

international

sanctions

manufacture

its

with

easily

potential

own

products, Myanmar is only beginning

develop

its

retail sector. Observers agree, however, that retail sales and distribution oﬀer signiﬁcant growth potential.

With a population of around 60 million, a growing middle class, and rising demand for consumer goods, Myanmar is ready to welcome new shopping options, according to Daw Win Win Tint, head of City Mart, Myanmar’s top retailer. City Mart operates 15 supermarkets, five Ocean Super Centres, 19 Season Bakeries, three City Baby Clubs, three Popular Book Stores, and many other retail outlets. Daw Win Win Tint is also Chairperson of the Myanmar Retailers Association and has a clear picture of current trends. She explains, “When [City Mart] started out, the biggest challenge was that we were perceived as expensive, so it was difficult to compete with small wholesale shops.” She adds, “Initially our sales were very poor and we were losing money, but that gradually began

184

to change after we opened in the Junction 8 shopping mall in 1998. After that, our customer base started to expand. We can say that people’s purchasing power is still quite weak here [in Myanmar], but that is slowly changing.” Daw Wai Thit Lwin, Managing Director of ABC Convenience Stores, agrees with this assessment. She says, “It takes time for people to change their shopping habits – many still prefer to buy goods in traditional street markets – but supermarkets and mini-marts have a bright future in Myanmar.” In fact, according to

the Myanmar Retailers Association, modern supermarkets and convenience stores account for only 10% of Myanmar’s retail market overall, so there is plenty of room to grow. The scarcity of affordable financing to open retail outlets hampers Myanmar’s entrepreneurs and will make it difficult for local enterprises to compete with the foreign retailers expected to enter the Myanmar market, particularly after the ASEAN Economic Community is launched in 2015. Daw Sandar Khin, a spokesperson for Gamon Pwint shopping malls, notes that Myanmar’s retail

THE EUROPEAN TIMES

Retail &Sector Distribution

sector is evolving rapidly in spite of this challenge. She explains, “We have seen the industry develop a lot in the past two years. People are getting used to shopping at supermarkets and convenience stores.” Myanmar’s current banking reforms are another boost for retailers. Daw Win Win Tint says, “These reforms have brought about the re-emergence of debit cards or Myanmar Payment Union cards. As the banking sector continues to modernise I expect these facilities to expand as well. Our hypermarkets will benefit, especially for sales of white goods.”

Association linking producers and retail outlets The Myanmar Retailers Association is playing a crucial role in spurring on the development of retail sales and distribution in Myanmar. Daw Win Win Tint points out, “Many products produced by companies that were unable to deal with [Myanmar] directly as a result of sanctions found their way into the local market via grey and black product distribution. This, in turn, resulted in the products costing the distributor, retailer and finally © Hannah Moore

consumers an estimated 25% to 30% more than should be the case if direct product distribution in Myanmar were possible. Now that the majority of economic sanctions have been lifted, we are working to assist some of the country’s major distributors in cultivating relationships and securing interest from major product producers. We are doing this with a view of precipitating distribution agreements directly between producer and distributor.” The Myanmar Retailers Association has in fact positioned itself as a liaison between producers and the estimated 32,000 retail outlets in Myanmar. The association can also help producers brand their products for the Myanmar market. Daw Win Win Tint says, “We can offer access to a wide range of branding, research and advertising services. Due to the lack of established brands, along with the current low cost of advertising, it remains possible to build a premium brand in Myanmar in less than 12 months at a small fraction of the costs in more developed economies.” To international manufacturers, she adds, “If you would like to start product distribution in Myanmar, please feel free to contact us at any time for further information on our services.”

THE EUROPEAN TIMES

MYANMAR

New Association Voice of High-Potential Retail Sector Daw Win Win Tint, Managing Director, City

host networking events and training seminars and provide consulting and other services.

Retailers

the

European Times: What are the prospects for Myanmar’s retail sector?

family-owned City Mart supermarket group she

since there was no tradition of supermarket-

Daw Win Win Tint: With a consumer market of over 60 million and a growing middle class, I see great potential. Myanmar’s retail standards are still low when compared with other regional markets so the MRA’s mission is to advocate, innovate and educate. We estimate that there are over 200,000 retailers across the country, including many large players but also many smaller stores that require additional exposure and know-how to grow.

was diﬃcult. Daw Win Win Tint, the eldest child,

European Times: What challenges does the sector face?

although she was new to the business world.

Daw Win Win Tint: It is difficult for small supermarkets to grow because they do not have access to affordable loans. The scarcity of affordable financing will hinder many owners of traditional shops and markets from modernising their outlets and, therefore, from keeping up with the growing competition. These stores are part of the fabric of daily life of so many people, particularly the 70% of Myanmar’s population who live in rural areas. Local, smaller players need to be given the chance to grow, and this will only be possible through access to affordable financing.

Mart Holding and Chairperson of the Myanmar Association,

demonstrates

potential of Myanmarʼs private sector. The

heads is one of the countryʼs success stories. City Mart opened its ﬁrst store in Yangon in 1996, but the ﬁrst few years were a struggle

shopping in Myanmar and importing goods took over the management of the company

Today, in addition to the City Mart chain,

the group includes the Ocean hypermarket chain, upscale Marketplace outlets, City Care

pharmaceuticals and beauty-products outlets,

Seasons Bakeries, and City Baby Clubs, as

well as signiﬁcant interests in the real-estate sector. City Mart has around 4,000 employees.

European Times: Can you describe the new Myanmar Retailers Association (MRA)? Daw Win Win Tint: MRA acts as a uniﬁed voice for retailers across the country. By working with all stakeholders, we aim to create the right environment for the modernisation of Myanmar’s retail industry. The Association encourages the implementation of the latest technologies and best practices that will beneﬁt both consumers and employees. We foster a continuous process of learning, training and information-exchange. The MRA also serves as a bridge between the government and retailers, and we

European Times: How can foreign investors get involved? Daw Win Win Tint: In retail, size matters. By developing our human resources, supply-chain logistics and technology, both smaller and larger retailers can better serve consumers. FDI can play an important role in providing the capital and expertise necessary for this growth. Foreign investors can form joint ventures in the retail sector starting in 2016 and will have 100% ownership starting in 2020. The MRA sees great potential for collaboration with foreign companies to upgrade local retailers’ capabilities as Myanmar continues to open its doors to the world.

THE EUROPEAN TIMES

Retail & Distribution

Leading Beverages Producer Welcomes Joint Ventures The Loi Hein Group, which celebrated its 20th anniversary in 2013, has grown from a €15,000

initial

investment

into a €74-million group of companies. Dr. Sai Sam Htun, Chairman, explains, “We are focusing

business.

the

beverages

supply

and

one puriﬁed drinking water,

beverages business is all about building powerful brands, and we grow each year between 20% and 40% in this department.”

The group also has interests in the property and retail sectors and is extending its reach into ﬁnancial services, including micro-ﬁnancing and insurance. Dr. Sai Sam Htun says, “We intend to expand our company into a range of sectors, while still keeping a core focus on beverages.” Dr. Sai Sam Htun welcomes joint-venture partnerships in any of the group’s fastgrowing business activities, and indeed in any new sectors. He points out, “Such partnerships present us with the opportunity to harness foreign expertise, whilst leveraging our local knowledge to continue growing in an increasingly competitive market.

Dr. Sai Sam Htun, Chairman

Finding the financing to expand our business has been difficult as our interest rates are still high and land is costly, so finding the right partner to back us financially has also been important for us.” The Loi Hein Group has positioned itself as a very attractive partner for international investors. It offers strong brand recognition, a well-established and loyal customer base, and a transparent, ethical approach to doing business. Dr. Sai Sam Htun explains, “The Loi Hein Group can provide local market knowledge and a nationwide distribution network for multinationals entering the Myanmar market. We can grow together and both benefit from our partnership.” The group plans to add new FMCG brands to its portfolio to reach even more customers. Dr. Sai Sam Htun explains that the Loi Hein Group will continue to play

a leading role in Myanmar’s economic and social development. It contributes to a number of community-service, education and sports projects and has established a philanthropic microﬁnance division aimed at alleviating poverty and raising the standard of living of the people of Myanmar. “Our corporate social responsibility is a crucial part of our business and will remain so in the future,” he promises. Dr. Sai Sam Htun urges international investors to look into opportunities in Myanmar. He says, “You should act soon because if not, you will miss the boat.” Loi Hein Company Ltd. 117 Wardan Road, Lanmadaw Township Yangon Tel: +95 1 229 956/64 www.loiheingroup.com loihein.it@gmail.com

THE EUROPEAN TIMES

MYANMAR

International Retail and Distribution Partnerships Many international companies setting up operations in Myanmar are working with experienced local partners to handle their distribution needs. One example is global beverages giant PepsiCo, which announced in January 2014 that Korea-based Lotte Chilsung and Myanmar Golden Star (MGS) have formed a joint venture to distribute Pepsi products in Myanmar. “Lotte Chilsung Beverage Co. is honoured and excited to have this opportunity to be part of Myanmar’s future and to be partners with MGS,” says Byoung-Tak Hur, Managing Director of the new Lotte-MGS Beverages Ltd. Lotte Chilsung holds a 70% stake in the joint venture with MGS holding 30%. Lotte now has three business portfolios in Myanmar, including the beverage business, a hamburger franchise and investments in business hotels in Yangon. © Information Matrix

Myanmarʼs retail and distribution activities are evolving rapidly and are set to attract

signiﬁcant foreign investment beginning in 2015 with the advent of the ASEAN Economic

Community. According to Myanmarʼs new law on foreign investment, by the year 2015,

foreign enterprises will be able to enter the

retail sector through joint ventures with local

companies. Starting in 2020, foreign investors will have the right to 100% ownership of a retail

operation in Myanmar. Current trends in the retail sector include the development of more supermarkets, convenience stores and malls

along with new payment systems based on credit and debit cards instead of cash.

Strong demand for imported goods Demand for imported goods has always been strong in Myanmar even when international sanctions were in place. Daw Win Win Tint, head of City Mart, Myanmar’s top retailer, and Chairperson of the Myanmar Retailers Association, explains, “Myanmar is a very rich country. However, during the decades of isolation, manufacturing industries were almost non-existent. All factories were state-owned and manufactured products were of poor quality. The consumer class in search of basic products would buy imported goods from the surrounding region. The majority of these goods, approximately 80%, came from Thailand. This was a result of the government restricting international trade. Today we can trade with the rest of the world, with the majority of our imports coming from the ASEAN region and China. The West is also a trading partner, although on a smaller scale.” Myanmar’s garment industry has already attracted signiﬁcant investment and is set to boost the country’s retail sector. In fact, revenues from Myanmar’s garment industry are expected to double during the 2013-2014 ﬁscal year, according to Daw Khaing Khaing Nwe, Secretary of the

THE EUROPEAN TIMES

Retail &Sector Distribution

Leading Food Enterprise Expanding Globally Cho Cho Company Limited, founded in 1989, is one of the leading food manufacturing and distribution companies in Myanmar.

Myanmar Garment Manufacturers’ Association. She points out that the sector benefits from new regulations on foreign trade with Myanmar. “After we officially got GSP [Generalised System of Preferences] status from the EU in mid-2013, our garment exports began to substantially increase,’’ she says. She adds that international garment enterprises expressing interest in investing in Myanmar include Tesco, UK-based Dewhirst and US apparel brands Gap and Guess. Telenor, one of the two foreign telecom operators recently licensed to operate in Myanmar, is looking for local partners to handle the distribution of its products as it rapidly rolls out its new telecom network. The company plans to open 100,000 retail outlets across Myanmar in its first five years of operations in the country. “We will give priority to local entrepreneurs in selecting the retailers. We want to work with local people who are dynamic and passionate about what we do and who want to play a role in the development of a state-of-the-art telecom infrastructure for Myanmar,” says Sharad Mehrotra, Telenor Myanmar’s Chief Marketing Officer. Telenor will conduct training sessions for its new retailers and distributors to help ensure the highest standards of customer service. Such partnerships between international and local companies are seen as a potential win-win for both sides. Yasuhide Fujii, Managing Partner at KPMG Myanmar, explains, “Opportunities in Myanmar are increasing for businesses, but so is competition. Looking forward, some local firms may feel the pinch as international companies move in on their turf. We are starting to see cases where it would make more business sense for local and international firms to work together and complement each other, instead of competing, in order to become sustainable in the long term. Local and international firms in Myanmar each have their distinct strengths. We could see some positive partnerships down the road.”

Managing Director Mr. Wai Phyo, who is also ViceChairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, explains, “The core operations of our company are in food manufacturing and distribution. We are one of Myanmar’s largest manufacturers and distributors of food and are also one of the very few brands that possess the quality and expertise to export our products to foreign markets. The company places great emphasis on RND and innovation and develops all of its new products in-house. Quality management and food safety are paramount and the company has international quality certiﬁcations and operates its own laboratories. The distribution unit also adds great value to operations and allows the company to do business on a truly national level for both its internal as well as third party products that it may carry”. In addition to driving Myanmar’s economy, Cho Cho Company is also a major contributor to corporate social responsibility projects. It aims to grow regionally and internationally. Mr. Wai Phyo says, “We want to live the ASEAN dream of cross-border investment and trade facilitation, while expanding beyond the region as well. Myanmar’s products need to be able to compete globally and we look forward to playing our part in making that a reality.” Cho Cho Company welcomes joint-venture partners to expand its local as well as international business activities. Mr. Wai Phyo points out, “We maintain the highest ethical standards and have the expertise and capital requirements that investors are looking for in a local partner. Come help us rebuild our country.” Cho Cho Company Ltd. Building 3, Room 6, Myanmar ICT Park, Hlaing University Campus, Hlaing Tsp., Yangon +95 1 652 241, 652 293 waiphyo@chochoco.biz

891

THE EUROPEAN TIMES

MYANMAR

Agriculture

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Agriculture a Major Driver of the Economy

Agriculture is a crucial driver of Myanmarʼs

economy. According to the Asian Development

Bank, the agriculture sector contributed around 36% of Myanmarʼs GDP in 2010 and still accounts for around 70% of total employment as well as 30% of the countryʼs exports.

The Myanmar government’s economic-development strategies focus on improving productivity and marketing in the agriculture sector not only to stimulate GDP growth but also to help reduce poverty and boost food security. For investors, the agriculture sector offers vast potential. Myanmar has a total land area of around 68 million hectares, of which only around 18% is currently being cultivated. Some 5.7 million hectares of land is considered cultivable but is currently not being used for agriculture. Myanmar has five distinct topographical and climatic zones: the mountainous region on the Indian border, the Shan plateau, the dry central zone, the delta region, and the coast. The country’s top agricultural area is the delta region at the confluence of the Ayeyarwady (Irrawaddy), Shittaung and Thanlwin rivers. Land in this region, which is the most populated in the country, has Myanmar’s most fertile soil as well as moderately high rainfall and flat topography, and it is the centre of Myanmar’s rice production. The coastal region has high rainfall and is ideal for perennial crops like coconuts, oil palm and rubber. Myanmar’s main crop is rice, which accounts for around two-thirds of the country’s total land area under cultivation. Next on the list are beans and pulses, which are grown on around 4.2 million hectares and have recently become major export crops. Oil seeds are produced on around 3.3 million hectares, mainly in Myanmar’s dry central zone. Produc-

tion does not meet domestic demand and Myanmar imports around 200,000 tonnes of palm oil annually, making oil-palm plantations a very attractive investment possibility. Farmers produce vegetables and chillies, mainly in the mountainous highlands, while other crops include maize, cotton, rubber, sugarcane and tropical fruit. Myanmar also has one of the largest forest reserves in Southeast Asia as well as signiﬁcant resources of both ocean and fresh-water ﬁsh. Farmers raise cattle, buffalo, swine and poultry, and livestock production accounts for around 7.5% of the country’s GDP.

Leading global rice producer Myanmar continues to put the focus on rice, its top crop. It has been partnering with the International Rice Research Institute (IRRI) since 1965 to boost rice production, and the IRRI has helped Myanmar introduce new varieties of rice, including IR8, as well as new equipment and technologies. In 2011, Myanmar produced approximately 29 million tonnes of rice, making it the seventh-biggest rice producer in the world after Vietnam and Thailand. In the 2012-2013 fiscal year, Myanmar’s rice exports doubled to 1.5 million tons, mainly thanks to a significant increase in exports to China, where demand for imported rice surged. Myanmar’s President HE U Thein Sein, who grew up on a farm, recently visited the IRRI’s headquarters in the Philippines and called for continued cooperation with the international organisation. He said, “Our country has different topography and agro-ecological zones, and we need rice varieties that respond to challenges from these difficult environments.” Daw Tin Tin Myint, Head of Rice Research at the Myanmar Department of Agricultural Research, notes, “With the help

THE EUROPEAN TIMES

MYANMAR Sector

of the IRRI, we are trying to develop varieties that can tackle both ﬂooding and salinity.” In September 2013, the IRRI and Myanmar’s Ministry of Agriculture and Irrigation launched the Myanmar Rice-Sector Development Strategy, which aims to position Myanmar as the world’s number one rice producer, as it was in the 1960s.

Meeting the challenges Challenges for Myanmar’s agricultural development include problems with land distribution; around 30% of the country’s rural population is landless. Other hurdles are

small farms with low productivity; high costs of fertilisers and seed stock; inadequate infrastructure; lack of access to credit for farmers; low prices for agricultural products; lack of electricity in rural areas; natural disasters, including cyclones and floods; inadequate research, training and extension services; and insufficient irrigation. Myanmar has abundant water resources, but less than 20% of the country’s agricultural lands are irrigated, and drought is common in the dry season. In spite of these challenges, experts agree that Myanmar’s agricultural potential is enormous given the country’s extensive resources, undeveloped agricultural land and strategic location. In addition, as limited water resources inhibit agricultural production in neighbouring China and India, Myanmar’s water resources will offer a significant competitive advantage. Another plus for Myanmar is that its diverse topography and eco-systems enable farmers to produce a wide range of crops as well as fish and livestock. Myanmar’s first Agribusiness Forum, held in October 2013, highlighted investment opportunities in rice, sugar, pulses and beans, palm oil and rubber production. The ADB singles out investment in irrigation systems, rural infrastructure and projects to improve production and marketing as other opportunities for foreign investors in Myanmar’s highpotential agriculture sector.

Agricultural Products in Myanmar by Value, 2010 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Beans, dry

Fruit Groundnuts, Indigenous Indigenous Indigenous Rice, padd fresh nes with shell cattle meat chicken meat pig meat

Gross Production Value (constant 2004–2006 1,000 I$) (1,000 Int. $ of international US dollar value in agricultural trade)

Sesame seed

Vegetables fresh nes

Net Production Value (constant 2004–2006 1,000 I$) (1,000 Int. $ of international US dollar value in agricultural trade)

Int. $ = or international dollar is a hypothetical unit of currency that has the same purchasing power parity that the US dollar has in the United States at a given point in time, often used as a benchmark year for comparisons; nes = not elsewhere speciﬁed. Source: Food and Agriculture Organization of the United Nations. FAOSTAT: http://faostat.fao.org/site/339/default.aspx (accessed December 2012).

THE EUROPEAN TIMES

• Responsible Tourism Benefits Local Population • Next Big Thing in Asian Tourism • Lower Myanmar: Yangon, Pagodas and Beaches • Upper Myanmar: Ancient Kingdom of Burma

Tourism

“People need to come here to see for themselves how safe and beautiful Myanmar actually is” HE U Htay Aung, Union Minister of Hotels and Tourism

THE EUROPEAN TIMES

MYANMAR

Responsible Tourism Beneﬁts Local Population European Times: What are some recent developments in the tourism sector? HE U Htay Aung: Myanmar welcomed a record 1.06 million visitors in 2012 and close to two million in 2013. Our new Tourism Master Plan targets seven million visitors by 2020, when we hope tourism will contribute around US$7.4 billion to the national budget. There are now 14 airlines flying to Myanmar and we have around 2,500 daily arrivals. We are building a new international airport which will be completed by 2017, and we are renovating Yangon and Mandalay international airports. However, we still need quality long-haul carriers from Europe and the US to fly to Myanmar. In the future we will be providing incentives for airlines using Myanmar as an aviation hub in order to attract these airlines.

His Exellency U Htay Aung, Union Minister of Hotels and Tourism, discusses Myanmarʼs eﬀorts to launch a thriving tourism industry.

European Times: What are the top priorities for your ministry? HE U Htay Aung: Our mission is to attract responsible tourists who can add to our national revenues, while also protecting Myanmar’s cultural and natural heritage. We aim for the tourism industry to be a strong contributor to Myanmar’s economy and to help improve the quality of life of our people. We want the people of Myanmar to be involved in policy decision-making processes, which is why we are focussing on community involvement, with the help of international agencies and NGOs. We are working hard to inform our people about the good, the bad and the potentially ugly side of tourism.

European Times: What type of investment are you looking to attract? HE U Htay Aung:. We welcome investors and tourism organisations and wish them to become involved in the industry, particularly in capacity building and in the development of our human resources. We also need investment in tourism-related infrastructure, including hotels and transportation. European Times: What efforts are you making to attract FDI? HE U Htay Aung: The goal is to make people aware of where Myanmar is, how it has changed and what its advantages for investment are. As part of our effort to achieve just that, we recently established the Myanmar Tourism Federation, which groups together several private and public-sector tourism organisations. In doing so, we have encouraged the public and private sectors to work together on tourism projects. European Times: What is your personal message to potential investors and visitors to Myanmar? HE U Htay Aung: People need to come here to see for themselves how safe and beautiful Myanmar actually is and how very welcoming our people are. After all, seeing is believing.

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Tourism

The Best Home Away from Home in Myanmar’s Capital Awarded the “Luxury Hotel Brand 2013” Country Award by the World Hotel Awards Organisation The three-star Aureum Palace Hotel aims to play an important role

Myanmarʼs

tourism

industry. The ﬁrst hotel to open

in Nay Pyi Taw, Myanmarʼs capital city since 2005, the

Aureum Palace Hotel is part of

business, cultural and entertainment venues are all nearby.

and operates six hotels across

For executives or leisure travellers, the hotel provides a true home away from home. Mike Aung Myint Htun explains, “When our guests have back-to-back meetings, they want to rely on a comfortable, clean, safe and friendly place to stay, and that is what we offer.”

the Htoo Group, which owns

Mike Aung Myint Htun, General Manager

General Manager Mike Aung Myint Htun explains, “Our clients are largely state-level guests and business travellers. We regularly welcome Ministers, Prime Ministers, Ambassadors and Presidents at our hotel, and recently had the former UK Prime Minister, Tony Blair stay with us, for example. The hotel is expecting more European guests as Myanmar opens up.” The Aureum Palace Hotel is currently building additional rooms to keep up with the rising demand, a true sign of its successful track record thus far.

Mike Aung Myint Htun is very positive about the government’s efforts to open the country’s borders to the rest of the world. On the launching of the new Tourism Master Plan in Nay Pyi Taw on World Tourism Day, he says, “This shows the government’s commitment to developing tourism infrastructure and to bringing tourism in Myanmar up to international standards. We, at the Aureum Palace Hotel Nay Pyi Taw, are excited to be a part of that change.”

Value for money gives the Aureum Palace Hotel its competitive edge. Mike Aung Myint Htun says, “This hotel is well known for its cleanliness, friendly staff and excellent food. In addition, our rates are very reasonable when compared to those of some of our competitors. On principle, we do not increase our prices during conferences. That is how we earn the long-term loyalty of our guests.”

MICE segment growing fast

One of the hotel’s growth areas is the Meetings, Incentives, Conferences and Events (MICE) tourism segment, which is developing rapidly in Myanmar’s capital. The Aureum Palace Hotel Nay Pyi Taw contains its own meeting facilities, including a large ballroom, and the city’s main

Looking to the future, Mike Aung Myint Htun would like the entire group of hotels to be seen as Myanmar’s number one hotel brand. He says, “We are already one of the largest hotel groups in Myanmar and we are looking forward to more growth as the country develops. I invite international travellers to stay at our hotel for a true taste of Myanmar hospitality.” Aureum Palace Hotel-Resort Nay Pyi Taw, Hotel No.1, Hotel Zone 1, Yaza Thingaha Road, Dakhina Thiri Township Nay Pyi Taw Tel: +95 67 420 746, 47, 48, 49, 50, 51 Fax: +95 67 420745 mike@aureumpalacehotel.com www.aureumpalacehotel.com www.thebesthotelinmyanmar.com

THE EUROPEAN TIMES

MYANMAR

Myanmar is set to become the next big thing in Asian tourism. With its rich cultural heritage, unspoiled natural areas, beautiful beaches, clear waters, convenient location and exceptional

historic monuments, this is a country that has

it all. Still relatively unexplored by foreigners, mystical Myanmar oﬀers a window into the world of what has drawn visitors to this region

Bagan

Next Big Thing in Asian Tourism

for centuries.

Tourism-industry observers note that the Myanmar of today is comparable with the Thailand of 30 years ago in tourism development and is set to experience its neighbour’s explosive growth in tourism arrivals. Myanmar has already seen a massive 34% rise in tourism arrivals since it began to open its doors to the world in 2010. In fact, although Myanmar recorded the second-lowest share of arrivals in ASEAN during 2012 (1.2%), its tourism growth that year was the highest in the region at 29.7%. As tourism infrastructure improves thanks to coordinated efforts by the government and private sector, arrivals are expected to grow at an average 25% per year up to 2020. In March this year, U Hlaing Oo of Myanmar’s Ministry of Hotels and Tourism reported, “The Nay Pyi Taw, Mandalay, Bagan and Inlay regions have seen a massive inﬂux of tourists on top of the high volume in Yangon. This is encouraging foreign companies to make huge investments in the hotel sector, mainly for ﬁve-star and four-star hotels in

Yangon. The top investor in this sector is Singapore, followed by Vietnam, Thailand and Japan.” International investors in tourism projects must work with local partners through joint ventures. The local partner usually owns the building or land, while foreign investors bring in the cash to convert existing premises into hotels or build a new hotel from scratch.

Major hotel projects underway Myanmar’s tourism industry is currently the country’s ﬁfthmost-popular sector for foreign investors and a number of major hotel projects have been recently completed or are underway, including a new Novotel along Yangon’s Pyay Road, a joint venture between Max Myanmar and Accor. Another investor in Myanmar’s hotel sector is Korea’s Daewoo International, which launched a project in 2013 to develop luxury hotels in Yangon. In March this year, the World Bank’s International Finance

THE EUROPEAN TIMES

Tourism Sector

Naga men

Corporation (IFC) announced a loan to Shangri-La Asia for its two projects in Myanmar. The loan will finance the completion of the renovation of Shangri-La’s Traders Hotel in Yangon, which will boost the hotel’s capacity from 270 to 485 rooms, and it will fund the construction of the Shangri-La Residences Yangon, which will contain 240 serviced apartments. These efforts will help to satisfy Myanmar’s pressing need for more hotel rooms as its visitor numbers rise. Investing in tourism means investing in Myanmar’s sustainable economic growth, according to the IFC. Vipul Prakash, the IFC’s Director for Manufacturing, Agribusiness and Services in the Asia Pacific, explains, “At a time of growing economic interest in Myanmar, it is crucial to increase access to muchneeded business-enabling infrastructure to attract more investors and travellers, as well as helping place Myanmar on par with other commercial hubs in the region. The operation of international-standard hotels and serviced apartments will help generate jobs and provide supply-chain linkages to local farmers and suppliers, thus boosting the tourism sector and contributing to economic diversification and sustainable growth.” Myanmar’s government is urging all stakeholders in the country to work together to develop the tourism sector sus-

tainably. At a meeting in Bagan, one of Myanmar’s top tourism sites, in March this year, President HE U Thein Sein commented, “Myanmar’s government, the hoteliers association and the administrative sector need to cooperate with each other to help increase the number of tourist arrivals in Myanmar. The government will be fulﬁlling the requirements of basic infrastructure such as communication access, water, electricity, and airports. Moreover, tourist safety and regional sanitation tasks will also be carried out together with the administration sector.”

Tourism Master Plan 2013-2020 Myanmar’s Ministry of Hotels and Tourism partnered with the government of Norway and the Asian Development Bank to develop the Myanmar Tourism Master Plan 2013-2020, which aims to maximise tourism’s contribution to national employment and income generation while ensuring that the social and economic beneﬁts of tourism are distributed equitably. It also focuses on protecting Myanmar’s natural and cultural heritage. HE U Htay Aung, Union Minister of Hotels and Tourism, comments, “Strong coordination and effort are required from government, the private sector, civil society, community and devel-

THE EUROPEAN TIMES

MYANMAR

THE EUROPEAN TIMES

opment partners to jointly steer the successful implementation and monitoring of the Master Plan.”

City Hotel and Eco-Lodge

The Master Plan targets Yangon, Bagan, Mandalay, Inle, Kyeikhtiyo, Ngapali, Ngwe Saung, Putao, Myeik, Naga, Netmaung Taung and Loikaw as areas with particularly strong tourism potential. It also mentions developing the country’s remote southern islands for tourism.

The Panorama Hotel in the centre of Yangon

Myanmar supports regional cooperation in tourism development and participates in the tourism-related initiatives of ASEAN, the GMS Economic Cooperation Programme, the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and BIMSTEC. Myanmar rejoined the UN World Tourism Organisation in 2012 and is also a member of the Paciﬁc-Asia Travel Association (PATA). Several international tourism organisations are helping Myanmar to collect accurate tourism data, and Myanmar is cooperating with the International Centre for Integrated Mountain Development (ICIMOD) and the Institute for International Development (IID) to develop tourism around Inle Lake and surrounding mountain areas. Clearly Myanmar welcomes international partnerships as it works to make the most of its exceptional tourism potential.

Dynamic Construction Firm Building Four-Star Hotels Taw Win Construction, a family-owned enterprise launched in 1986, is playing a key role in building Myanmar’s future. As part of its corporate social responsibility effort, the company constructed 5,000 low-cost housing units following the Nargis typhoon in 2008. U Ko Ko Htwe, Chairman, explains that Taw Win is now focussing on Myanmar’s tourism sector and is building several hotels and shopping malls across the country. Taw Win’s tourism projects include the Mandalay Novotel and a new 500-room, four-star hotel complex in Yangon, Myanmar’s former capital but still the commercial hub of the country. He says, “There is an undersupply of hotels in Yangon and Taw Win looks forward to playing a greater role in ﬁlling that gap.” Taw Win Family Company Ltd. Oﬀ. Nr. 355, U Wisara Rd., Sanchaung Tsp., Yangon Tel: +95 1 502 923

and the idyllic Myanmar Andaman Resort are

the ideal introduction to Myanmar for business and leisure travellers. Both hotels are part of the

A1 Group, which is committed to meeting the highest international standards.

The 10-storey Panorama Hotel is strategically located in the heart of Yangon’s main business, commercial and entertainment district near the Sule Pagoda and government ofﬁces and just a 30-minute drive from the international airport. It offers 102 guestrooms and suites, all tastefully decorated and equipped with individually conU Yan Win, Chairman trolled air-conditioners, satellite TV, Wi-Fi Internet connections and mini-bars. Amenities include limousine service, phone and fax assistance, a business centre, a meeting room, room service and more. The hotel’s restaurant offers a choice of European, Chinese, Indian and Myanmar dishes. Myanmar Andaman Resort, the only man-made structure on beautiful Macleod Island in the Mergui Archipelago, is a true eco-lodge for nature-lovers. It features a secluded setting, a pristine beach, trails through the jungle and a choice of spectacular dive sites that can be explored with the resort’s experienced A-One-Diving professionals. Guests can go kayaking and snorkelling, take PADI diving instruction, and enjoy a mini-spa, drinks served on the beach and the chef ’s delicious cuisine. Both hotels offer a true taste of Myanmar. A1 Group of Companies No.33/49, Mahabandoola Garden Road Kyauktadar Tsp., Yangon Tel: +95 1 241 905 info@aone-construction.com - inquiry@aone-construction.com www.aone-construction.com

THE EUROPEAN TIMES

MASTER REGIO

THE EUROPEAN TIMES

Tourism

Lower Myanmar: Bustling Yangon and Pristine Beaches Kandawgyi Lake

revered Buddhist pagoda in Southeast Asia and is one reason Myanmar has long been known as the “Golden Land”. The Maha Wizaya Pagoda faces Shwedagon Pagoda. Built in 1980 from funds donated by people throughout the country, it celebrates Myanmar’s Buddhist heritage as well as its arts and traditions.

Myanmar is actually a union of Lower Myanmar, along the coast,

and Upper Myanmar, in the countryʼs interior, with the new capital district, Nay Pyi Taw, in between. The two regions share Myanmarʼs

long history as a trade and cultural hub but each has its own unique traditions, natural wonders and attractions for visitors. Lower Myanmar includes all the country’s coastline as well as the fertile low-lying delta of the great Ayeyarwaddy (Irrawaddy) river. Yangon (Rangoon), Myanmar’s former capital and the gateway to the country for most visitors, is in Lower Burma. This region is generally the part of the country annexed by the British Empire after the end of the Second Anglo-Burmese War in 1852, plus the former kingdom of Arakan and the territory of Tenasserim, which the British took control of in 1826. Until the early 1800s, Lower

Burma was the stronghold of the Mon people.

Golden Shwedagon Pagoda Yangon is known for its charming 19th century colonial architecture, colourful street markets and the magniﬁcent golden Shwedagon Pagoda, which was built more than 2,500 years ago. Now towering 100 metres above the city thanks to additions made by the country’s rulers over the ages, Shwedagon Pagoda is ranked the most

In the centre of Yangon is Kandawgyi Lake, formerly known as Royal Lake, built by the British colonial administration to provide water for the city. The peaceful lake is surrounded by Kandawgyi Nature Park and Yangon Zoological Gardens. Lower Myanmar is also the home of Kyaikhtiyo (Golden Rock) pagoda, a gilded boulder with a Buddhist temple. In September 2013, the government inaugurated a tourism train from Yangon to the pagoda, which is the third most important Buddhist pilgrimage site in the country. Lower Myanmar contains some of Southeast Asia’s most beautiful beaches and is marked for tourism development. Unspoiled Ngapali Beach, in Rakhine State, is a white-sand beach fringed by coconut palms that stretches for around 3 km along the Bay of Bengal. Lovely Ngwe Saung beach, a ﬁve-hour drive from Yangon, is around 5 km long and is one of the longest beaches in Southeast Asia. Lower Myanmar is also the gateway to the Mergui Archipelago, a collection of pristine islands in the Andaman Sea.

THE EUROPEAN TIMES

MYANMAR

Corporate Hotel of Choice in Myanmar Chatrium

Hotel

Royal

Lake

Yangon is a unique blend of authentic local culture and world-class amenities. “We aim to deliver a true experience of

traditional hospitality combined

with the comforts and service excellence expected by todayʼs international

business

and

leisure travellers,” says General Manager May Myat Mon Win.

“The people of Myanmar are

known for their welcoming ways and our hotelʼs 500 multilingual

staﬀ

members

ensure that each guest feels at home and at ease.”

Serving with heart and passion

approach to what we do. We serve with heart and passion and put our all into delivering a special experience for our guests.”

Indeed, personalised service and a friendly welcome set Chatrium Hotel Royal Lake Yangon apart from other luxury hotels of its class. May Myat Mon Win explains, “Where we make a difference is in our

Recognition of this, as well as of a notably high standard of safety and security, is well reﬂected in the hotel’s guest list which has included royalty, heads of state,

1 100

diplomats, celebrities and other VIPs, such as Hilary Clinton, Shinzo Abe, and Joachim Goack. Additionally, Chatrium Hotel Royal Lake Yangon has hosted numerous prestigious social events. A caring sense of responsibility extends beyond the guest experience and Chatrium

THE EUROPEAN TIMES

Tourism

and suites, including three “Club Floors” catering to executive travellers, while facilities range from six restaurants and bars to cutting-edge conference capabilities, choice of meeting rooms, outdoor swimming pools, a fully equipped ﬁtness centre and spa. Thanks to such exceptional facilities and services, the hotel has won a number of awards, including the “Best Breakfast Hotel Award” in 2013 from AsiaRooms and “Certiﬁcates of Excellence” from TripAdvisor in 2012 and 2013.

Promoting Myanmar May Myat Mon Win, General Manager

Hotel Royal Lake Yangon is committed to protecting Myanmar’s environment and aims to be a driving force behind the country’s promotion of eco-tourism. “It is important to us that Myanmar’s approach to tourism is sustainable,” May Myat Mon Win says. “Those with whom we work in the hospitality industry look to us to lead by example in participating in our efforts to preserve the global ecosystem for generations to come.” Then she highlights: “We are the ﬁrst hotel in Myanmar using ecofriendly amenities in all guest rooms.”

Upscale Amenities Part of the Thailand-based Chatrium Hotels and Residences, a noted brand of luxury properties, Chatrium Hotel Royal Lake Yangon maintains a high standard of amenities. Superior accommodation is provided by 301 well-appointed rooms

As May Myat Mon Win points out, “With Myanmar rapidly opening up, business opportunities abound and we encourage international investors to take that first step and visit us to see for themselves what enormous potential there is.” One of the hotel’s goals is to help promote Myanmar internationally as an attractive destination not only for business, but also for tourism. In addition to its aims to give every guest a memorable travel experience and projecting a positive image of Myanmar, Chatrium Hotel Royal Lake Yangon also participates widely in local and international tourism events and travel marts. Looking to the future, the hotel will play a key role in helping Myanmar meet the ambitious goals of its Vision 2020 strategy, which includes attracting seven million international visitors to the country. Gearing up for this, Chatrium Hotel Royal Lake Yangon will shortly launch a new service, e-concierge, with the aim of helping guests learn more about Myanmar. “Myanmar used to be a closed country,” May Myat Mon Win notes,” and information has historically been very scarce, but that is now changing.” As the first female General Manager of a five-star, foreign-owned hotel in Myanmar, May Myat Mon Win has a strong personal commitment to making sure that potential

visitors know more about Myanmar’s many unique attractions. She concludes, “The people of Myanmar deserve a chance to show their heart. I have lived through the country’s tough times and I am sure that we still have challenges to face. However, with the support and understanding of the international community, we sense that change is inevitable and we are excited about this new phase in the development of our country.” Chatrium Hotels & Residences’ brand is born from a passion to provide a remarkable experience. Discover our 5-star services at properties located with comfort, convenience and captivating surroundings in mind, ranging from cosmopolitan city centre living in Bangkok at Chatrium Hotel Riverside Bangkok, Emporium Suite by Chatrium, Chatrium Residence Sathon Bangkok, and Chatrium Residence Riverside Bangkok, to the relaxing beauty of Yangon at Chatrium Hotel Royal Lake Yangon. All are ideal whether for business or leisure travel, long or short stays. Chatrium Hotel Royal Lake Yangon # 40, Natmauk Road, Tamwe Township Yangon Tel: +95 1 544 500 Info.chry@chatrium.com www.chatrium.com

1012

THE EUROPEAN TIMES

MYANMAR

Luxurious Amenities, Ideal for Business and Leisure Travellers

Set in eight acres of beautifully landscaped gardens, the luxurious

ﬁve-star Sedona Hotel Yangon is an ideal choice for both business and leisure travellers. This upscale property combines local

ﬁnishing touches and architecture with state-of-the-art amenities. The hotel is a 15-minute drive from the international airport and

Yangonʼs bustling city centre, and is within easy reach of famous Shwedagon Pagoda and Inya Lake. After completion of its expansion in the first quarter of 2014, Sedona Hotel Yangon will house close to 800 rooms. Currently, it has 366 elegant rooms and suites, all with views of either the majestic Shwedagon Pagoda, romantic Inya Lake or the hotel’s swimming pool surrounded by tropical greenery and flowers. General Manager Philip Low explains, “This hotel was built with both business travellers and tourists in mind. Our meeting facilities are still top-class in terms of space, proximity to the airport and parking space, for example. As traffic and car parking become growing problems in Yangon, we pride ourselves on being able to deal with these challenges.” The hotel is famous for its outstanding food and beverage options. These

1 102

include Orzo Italian Restaurant, which specialises in authentic Italian dishes served in a dining room overlooking the pool; Paddy O’Malley’s, a convivial Irish bar with live entertainment and popular snacks like chicken wings, a sausage platter and fried calamari; the Lobby Lounge, for coffee and cocktails along with live jazz music in the evening; Brasserie, for casual international fare served at breakfast, lunch and dinner; Deli, for delicious sweet treats like White Trufﬂe Cake and Apple Pie; and the elegant Dufu, for authentic dim sum and exquisite Chinese dishes. Low says, “Since the hotel was completed in 1996, we have been very fortunate to be very strong in our food and beverage divisions, and that is still one of our strongest points.”

An array of luxurious amenities Amenities at the Sedona Hotel Yangon include the swimming pool in the garden, a ﬁtness centre, a Jacuzzi, a sauna and steam bath, authentic Thai massage and foot-reﬂexology care, a mini-golf driving bay and putting green, a business centre, drug store, shopping arcade, hair salon, laundry service, limousine and valet service, a doctor on call around the clock, and babysitting. The hotel is particularly well known for its meeting facilities, which range from small boardrooms to the Grand Ballroom which seats up to 650 guests. As Low points out, “Sedona Hotel Yangon is the best-equipped banquet

THE EUROPEAN TIMES

Tourism

and convention hotel in Myanmar. Choose from the wide variety of function rooms that have full convention facilities and the latest state-of-theart audiovisual equipment.” The Sedona Hotel Yangon attracts a VIP crowd, mainly business travellers and dignitaries from all over the world. Low aims to focus more on corporate clients in the future while still targeting the leisure segment. He is looking forward to a strong growth in visitor numbers. He says, “At present, roughly 20% of our guests are from Europe, while our clientele from the ASEAN region is very consistent. We warmly welcome European guests at our hotel, particularly as Myanmar opens itself towards the rest of the world and

as most of the EU sanctions against Myanmar have recently been lifted.” The Sedona Hotel Yangon will continue to put its guests ﬁrst. Low says, “At the end of the day, a hotel is about the little things and we are able to cater to both the details and the overall experience. For example, we are able to meet the dietary concerns of both European and non-European guests and we have taken great efforts to increase the convenience of our clients by introducing services such as Wi-Fi Internet connections and 24-hour room service. Our ideal location, coupled with the safety and security that our hotel offers, are all comforting factors for our international guests.

We are ready to meet the expectations of corporate and leisure travellers from around the world. In fact, we even offer twin-destination package deals through our sister hotel in Mandalay.” The Sedona Hotel Yangon has positioned itself as an ideal choice for visitors to Myanmar.

Sedona Hotel Yangon No. 1 Kaba Aye Pagoda Road Yankin Township, Yangon Tel: +95 1 666 900/953/959 inquiry@sedonamyanmar.com www.sedonahotels.com.sg

1032

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Myanmar: The ASEAN’s Uncut Gem in the growth of tourism?

Myanmar’s

Jehan Wick: European investment should be directed towards developing human resources and upgrading the tourism infrastructure, as these are the two pillars of the industry. Ngwe Saung, for example, is a coastal destination that I believe can compete with any other, but which is relatively unexplored because accessibility is poor. In general, Myanmar’s beaches are beautiful, but unfortunately untapped, because the necessary infrastructure is not yet in place.

Jehan Wick, General Manager of Yangonʼs Kandawgyi Palace Hotel, discusses Myanmarʼs tourism appeal. European Times: In your opinion, how important is the European market to the development of the tourism industry in Myanmar?

European Times: How important do you think the development of tourism is to the development of Myanmar as a whole?

Jehan Wick: The European market has been a key driver of growth for Myanmar’s tourism sector. Europeans tend to look for something exotic when travelling internationally, and they also seem to enjoy Myanmar’s local culture and the warmth of its people. Myanmar’s people are hospitable by nature and it is therefore important that we attract tourists that have an appreciation of this.

Jehan Wick: Tourism can contribute in a very real way to the growth of the economy but also to the welfare of the society. The knock-on effect of hotels, tour operators and airlines, for example, has the potential to lift people’s standard of living, provide them with jobs, skills training and a hope for the future.

1104

European Times: How can European investment best assist

This country is a hidden, uncut gem. What we need to do is to arrange investment in such a way that the gem is cut and polished. With Myanmar taking over chairmanship of the ASEAN in 2014, and with investment channelled to the right areas, I believe there is enormous potential for this country to showcase itself to the world. European Times: What is your vision for the future of tourism in Myanmar? Jehan Wick: To me, Myanmar is the ultimate place to see in the ASEAN region. An emerging destination with a huge variety of ethnicities, Myanmar is so colourful, so vibrant, so exciting and deserves not only a first visit, but a second and a third, too. It is my vision that this country is able to lead by example in terms of tourism in the ASEAN, and I believe that is something we will achieve.

THE EUROPEAN TIMES

MASTER REGIO Tourism

Upper Myanmar: Ancient Kingdom of Burma Inle Lake

for their clear, cool air and hill tribes who still wear colourful traditional dress. Pindaya, around 45 km from Kalaw, features a complex of caves decorated with Buddhist images, some of them drawn centuries ago. Putao, the site of the British Fort Hertz during World War II, is in Kachin state and features pristine mountain landscape and rare orchids. Adventure-loving travellers can enjoy trekking or white-water rafting in the area.

Mandalay: commercial hub

Upper

Myanmar,

centred

around

Mandalay,

remained

the

independent Kingdom of Burma (or the Kingdom of Ava) after the British annexation of Lower Burma (Myanmar) in 1852. In 1885,

Upper Myanmar also came under British control after the Third Anglo-Burmese War.

Upper Myanmar contains one of Southeast Asia’s greatest sites, Bagan, the capital of Myanmar’s ﬁrst dynasty. Rivalling Peru’s Machu Picchu or Cambodia’s Angkor Wat but without the crowds, Bagan is a collection of some 2,230 Buddhist temples set along the banks of the Ayeyarwaddy (Irrawaddy) river. The temples were built between 1057 and 1287 and represent around half of the original temple complex.

Visitors can reach Bagan by water from lovely Inle Lake, set in the Shan mountains at an elevation of around 900 m. The lake is known for the houses set on stilts built by the native Inthas, whose name means “Sons of the Lake”. In the middle of the lake is Phaung Daw Oo Pagoda, site of a popular festival each year in October. Taunggyi, capital of Shan state, and Kalaw are mountain resorts known

Mandalay, the geographic centre of Myanmar, is Upper Myanmar’s economic hub. Top sites include Mandalay Palace and many monasteries and pagodas as well as centres for traditional arts and crafts. Visitors can tour workshops where artisans mould brass, carve stone and marble, weave tapestries and fabrics, apply gold leaf, work silver and produce bamboo fans. Mandalay is the main centre for Buddhist studies in Myanmar and is a gateway to Inwa (Ava), Myanmar’s former royal capital, among many other sites. Around a day’s drive north of Mandalay is Lashio, capital of Shan state and the beginning of the famed Burma Road leading into China. Lashio has one of the country’s most colourful markets. Each morning people from the Chinese, Wa, Shan, Bamar, Lisu and Palaung cultures gather for their daily shopping, demonstrating Myanmar’s rich cultural heritage.

105

THE EUROPEAN TIMES

MASTER MYANMAR REGIO

Protecting Exceptional Cultural and Natural Heritage When

Myanmar

Tourism

Master

unveiled

Plan

its

2020, HE U Htay Aung, Union

Minister for Hotels and Tourism, commented, “This master plan outlines a path to welcoming more

visitors

Myanmar

without threatening our unique cultural heritage or endangering pristine natural environments.”

He added that the plan, established with help from the Asian Development Bank and the government of Norway, covers 38 projects which will assist in increasing Myanmar’s tourism competitiveness while protecting the country’s environmentally important areas and safeguarding ethnic communities. The Master Plan estimates that Myanmar might welcome 7.5 million visitors in 2020 – a sevenfold increase from 2013 – and that the tourism sector could provide up to 1.4 million jobs as well as billions of euros in revenues. Planned projects include expanding international air arrivals in Mandalay and Nay Pyi Taw, improving Bagan’s river pier to support more cruises, and building feeder roads in top destinations like Ngapali beach and Inle Lake.

Tourism Master Plan promoting sustainable growth All this will be good for the economy, but Myanmar’s environment and

1106

culture – both protected by the country’s years of isolation – will inevitably be threatened. “The Myanmar Tourism Master Plan provides a leading tool for the government of Myanmar to develop the sector in an environmentally and socially sustainable manner. The implementation of the plan will demand strong government leadership and coordination among a wide range of agencies and state and regional governments,” says Norway’s Ambassador to Myanmar, HE Katja Nordgaard. One effort the plan suggests is to launch community-based tourism initiatives that ensure that local people are prepared to handle an inﬂux of visitors and will be able to maintain control over tourism in their communities. At the national level, tourism ofﬁcials are promoting development that is sensitive to Myanmar’s excep-

tional historic landmarks, such as the ancient temple complex in Bagan, a candidate for the UNESCO World Heritage list. While Myanmar does not yet have any ofﬁcial UNESCO World Heritage sites, that may change soon. Myanmar’s Nat Ma Taung National Park in southern Chin state and the Indawgyi Lake Wildlife Sanctuary in central Kachin state have been ranked “priority candidates” for World Heritage status. The reserves were selected during a meeting in March between government ofﬁcials and UNESCO representatives, who discussed seven sites, including coralwrapped islets in the Andaman Sea and a river that is home to a threatened freshwater dolphin. UNESCO status would ensure the protection of the two parks, which make up only a small part of Myanmar’s natural and cultural wonders.

THE EUROPEAN TIMES

107

THE EUROPEAN TIMES

108

MYANMAR

K AN Y EIK THA ROAD, MINGALAR TAUNG N YUNT TOWNSHIP, Y ANGON TEL: (951) 249255~9, 382919, 382912, F AX: (951) 382917 RESERVATION @ KANDAWGYIPALACE - HOTEL . COM , WWW . KANDAWGYIPALACE - HOTEL . COM