Investment Opportunities in Myanmar (WHEF 2013, Bangkok)

Khine Khine Nwe Joint Secretary General UMFCCI August 10, 2013

Strategic Location

Kunming

Chennai

Yangon

 GDP - composition by sector:

agriculture: 43% industry: 20.5% services: 36.6% (2011 est.) Labor force: 37.35 million (2011 est.) country comparison to the world: 19 Employment - by occupation: agriculture: 65% industry: 12% services: 23% (2011 est.) Total land boundaries5,867 km - China 2,185 km - Lao 235 km - Thailand 1,800 km - Bangladesh 193 km - India 1,463 km

ECONOMIC CORRIDORS
Myanmar is well situated on the Northern Corridor, North-South

Economic Corridor and East-West Economic Corridor and, Southern and Western Corridors. Although East-West Economic

Corridor known as EWEC connects eastern ASEAN countries, Western Corridor and Southern Economic

Corridor are the key base to

establish Mekong-India Economic Corridor (MIEC) by extending the

link to Dawei of Myanmar.

What s new in Myanmar, what s news about Myanmar

New Government
The first democratically elected government

New Political Landscape

Measures to achieve positive changes in political, economic and social spheres are put in place, in line with the market conditions and international circumstances. June 2013 : World Economic Forum 2013 : SEA Games 2014 : Asean Chairmanship

 New Economic Landscape Myanmar is in the process of instituting a series of policy and strategic reforms with the aims of achieving national development and catching up with the economic success of neighboring countries. New Development Ideology to reduce poverty and to increase wealth to lift the country out of the least developed country status to ensure job opportunities and health and social security benefits for its people

New National Economic Policy

Sustainable development of agriculture sector towards industrialization Equitable and proportionate development among Regions and States Inclusive development of entire people Develop the Quality of statistics and statistical

system

Goals of the Fifth Five-Year Plan (2011-12 to 2015-16) To achieve an average annual GDP growth rate of 7.7%

To increase industrial share of GDP from 26% to 32% together with an increase in the service sector, reducing the currently high share of agriculture. To increase Per capita GDP growth between 30-40% from the base year of 2010, which will help attain the first goal of MDG in reducing the poverty incidence by half over the period 2000-2015.

Source: MNPED

New Reforms and Laws

Finance and Banking Unification of exchange rates in April 2012 Adopted a managed floating rates Foreign currency reserve US$7 billion in September 2011 and expected to US$ 9 billion by end of the year 2013. Central Bank Law (approved July 13, 2013 by Parliament)

 Myanmar s Foreign Investment Law FIL is revised with more exemptions and relief and approved
by the Parliament in November 2012. Ministry of National Planning and Economic Development issued the Foreign Investment Law Regulations, passed on 31 January 2013. Myanmar Investment Commission announced List of Prohibited Economic Activities List of Economic Activities allowed in the form of Joint Venture with Myanmar citizens and List of Economic Activities which shall be allowed under the specific circumstances

Aims of the New FIL

to produce products using abundant resources of the country, for the people to enjoy sufficiently and to enable the surplus to export to open up more employment opportunities for the people, as business develop and expand to develop human resources to develop infrastructures, both hard and soft

to develop respective area of studies in communication networks, transport

business such as rail, ship, aircraft, throughout the entire country, to meet the international standard To promote nationwide development and to encourage citizens to work in relevance with other countries To promote the building up of the economic enterprises and investment business in accord with the international norms.

 Special Economic Zone Law : Existing law enacted in February 2011, being revised to be one of the most investor friendly laws in the region. Taxation Law : Revised with effect from 1st April, 2012, reduction of tax rates to induce foreign and local investment. Intellectual Property Law : 11th draft in process, based on minimum standard and maximum flexibility, expected end 2013 or early 2014. New York Convention : Submitted instrument of accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (1957) in Aoril 2013.

Changes in Trade and Investment Environment

Commercial tax and Income tax for export - 10% to 0 % (except for 18 special commodities) Income tax- 10% to 0% (CMP including garment exports) Reduce Cargo inspection stations at Border Checkpoints Liberalization in documentation process for trade procedure Liberalized in car import- any citizen with foreign exchange account is allowed to import car Online Licensing system will be introduced soon. Myanmar Investment Commission reorganized. One Stop Service for Investors in Yangon (DICA) started on April 10

Top 10 Exports & Imports (2011-2012)

No
1 2 3 4 5 6 7 8 9 10 Total

Items Natural Gas Bean and Pulses jade Marine Products Garment Rice Rubber Teak log Hardwood Log Corn

Value ( US Dollar in Million)

3463.482

No

Items

Value (US Dollar in Million)

1 2 3 4 5 6 7 8 9 10

Petroleum Products Vehicles & Spare Parts Iron & Steel Construction materials Iron and Steel Materials Machinery and Spare Parts Palm Oil Plastic Raw Materials Ships, Boats and Spare Parts Pharmaceuticals Fertilizers Total

2079.765 1178.761 603.768 512.460 511.518 388.291 314.129 311.383 226.061 174.590 9053.780

1120.938 780.340 705.866 498.608 324.622 311.090 283.923

272.883 216.789 9097.000

Top 3 Trade Partners of Myanmar (2012-2013)

Export China 2166.40

Import 2748.20

Total (mil USD) 4914.60

Thailand

3752.16

789.50

4541.66

Singapore

282.89

2500.02

2782.91

Source: MOC

FOREIGN INVESTMENT OF PERMITTED ENTERPRISES AS OF (30/6/2013) (BY SECTOR) (US $ in million) Sr. Permitted Enterprises No Approved Particulars No. Amount % 1 Power 6 19237.92 44.82 2 3 4 5 6 7 8 9 10 11 Oil and Gas Mining Manufacturing Hotel and Tourism Real Estate Livestock & Fisheries Transport & Communication Industrial Estate Agriculture Construction 115 67 255 47 19 26 16 3 10 2 14372.27 2829.694 2730.883 1585.811 1056.453 347.124 313.906 193.113 185.351 37.767 33.48 6.59 6.36 3.69 2.46 0.81 0.73 0.45 0.43 0.09

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Other Services Total

11 577

38.752 42929

0.09 100

Source: DICA 2013

FOREIGN INVESTMENT OF PERMITTED ENTERPRISES AS OF (30/6/2013) (BY COUNTRY) ( US $ in million ) Sr. Permitted Enterprises Particulars No Approved No. Amount 1 China 47 14185.529 2 Thailand 66 9979.443 3 Hong Kong 49 6393.334 4 Republic of Korea* 78 3013.705 5 U.K* 60 3045.434 6 Singapore 90 2358.946 7 Malaysia 44 1034.785 8 France 2 469 9 Viet Nam*** 6 511.186 10 India 9 283.1 11 Japan 35 270.283 12 The Netherlands 7 249.136 13 U.S.A 15 243.565 14 Indonesia 12 241.497 15 Philippine 2 146.667 16 Russia Federation 2 94 17 Australia 14 99.246 18 Austria 2 72.5 19 Panama 2 55.101 20 United Arab Emirates 1 41 21 Canada 16 41.883 22 Mauritius 2 30.575 23 Germany 2 17.5 24 Republic of Liberia** 2 14.6 25 Denmark 1 13.37 26 Cyprus 1 5.25 27 Macau 2 4.4 28 Switzerland 1 3.382 29 Bangladesh 2 2.957 30 Israel 1 2.4 31 Brunei Darussalam 3 4.273 32 Sri lanka 1 1 Total 577 42929.047 Source: DICA 2013

% 33.04 23.25 14.89 7.02 7.09 5.49 2.41 1.09 1.19 0.66 0.63 0.58 0.57 0.56 0.34 0.22 0.23 0.17 0.13 0.1 0.1 0.07 0.04 0.03 0.03 0.01 0.01 0.01 0.01 0.01 0.01 0 100

Increase of FDI Since September 2012

Sr. No. Particulars 1 Oil and Gas 2 3 4 5 6 7 8 9 Power Mining Hotel and Tourism Manufacturing Real Estate Industrial Estate Agriculture Transport & Communication Existing Enterprises (30/9/2012) Approved No. Amount 62 13474.728 4 8 30 94 7 2 6 7 7 5 232 13037.498 2289.162 814.475 633.447 275 179.113 154.07 137.676 64.946 8.067 31068.182 Existing Enterprises (30/6/2013) % 42.33 40.92 7.14 3.89

Approved % No. Amount 43.37 64 13665.028 41.96 7.37 2.62 2.04 0.89 0.58 0.50 0.44 0.21 0.03 100.00 5 13207.921 9 2304.496 31 155 7 2 6 7 8 8 1254.475

992.505
275.000 179.113 154.070 137.676 87.712 21.827

3.07
0.85 0.55 0.48 0.43 0.27 0.07 100.00

10 Livestock & Fisheries 11 Other Services Total

302 32279.823

SEZs

Kyaukphyu SEZ

Dawei SEZ Thilawa SEZ

Source: Ministry of Industry

Agriculture
agro-based country Potential food basket for Asia Vast potential of land resources as well as different networks of irrigation facilities for the expansion of Agriculture Sector both horizontally and vertically

MINERAL SECTOR
Western Ranges Eastern Highlands

Abundance of precious gem stone such as ruby, sapphire, jade and diamond. Ruby

Nickel Chromite PGM

Central Belt

Lead,Zinc Copper Silver Tungsten Antimony Iron

accounts for 90% of world supply and the largest jade resource country in the world. Jade is second largest export item

with the amount of USD 2.2 Billion.

2.8 Billion USD investment by 64

Porphyry Copper Gold Coal Oil & Gas

Enterprises.

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INDUSTRY SECTOR

Foodstuff, Textile, Personal Goods, Household Goods, Leather Products

Transport Equipment, Building Materials, Pulp and Paper, Chemicals, Pharmaceuticals, Iron and Steel,

Machinery and Plant

Developing together with other sector such as agriculture, fishery, mining and oil and gas sectors ; plenty of opportunities to invest in manufacturing sector such as labour intensive industries, Small and Medium Enterprises (SMEs) and production Network FDI projects. 24

Garment Industries
Myanmar Garment Export Trend (2001-11)

900 800 700 600

US $ in Million

High Growth Potential for

Export to Japan, Korea, EU

and USA Large Domestic Demand for textile and clothing (about USD 56 million, 75% of which has been imported.)
2001 2003 2005 2007 2008 2009 2010 2011

500 400 300 200 100 0

9/30/2013

Power
At least 37,000 megawatts can be generated from hydro all over the country in the Ayeyarwaddy, Sittaung, Thanlwin and Chindwin river basins and only about 745 megawatts has been developed so far.

Energy Sector potentials for cooperation in the downstream projects in Energy Sector such as refinery plant and fertilizer plants.

OIL & GAS SECTOR

Myanmar possesses significant natural gas and oil reserves.

10th largest resource of natural gas in the world, over 90 trillion cubic feet.

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FORESTRY
Expansive forest which covers half of total area of the country, exports 80% of world teak supply Major exporter of teak in the world many hardwood and softwood species that have been neglected in the past processing value-added products commercially for exports as well Potentials for Value added production of Minor Forest Products: Bamboo, Cane, Rattan
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FISHERIES SECTOR A long sea coastline of 2,832 kilometers associated with 229,000 square kilometers of continental shelf and 486,000 square kilometers of exclusive economic zone Fishery resources that are currently being used is less than 60% of sustainable yield, potential of 1.05 million MT of fish and 29 fishery product

TOURISM SECTOR

Booming sector after reform 16.95% increased in 200910, 4.88% increased in 2010-11 and 30% increased in 2011-12 Very new white sand beaches at Myeik Archipelago comprising 800 islands Year round festivals with simple and kind hearted people

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PROMISING FUTURE BUSINESS

1. Labor intensive manufacturing garment, footwear, toy, wigs etc 2. Export oriented agro-based value added industries
Huge potential for agricultural production

huge global demand abundant potential in food supply 3. Supportive Industries SMEs & SMIs

Potential Jobs Opportunities

Agriculture Resource Fishery Mining Forestry Oil & Gas Garment Labor
Electronic Parts Assembly
Footwear Industry Mineral Processing

Food Processing

Wood Processing
Petrochemical

Others Hotel & Tourism Services Logistics Real Estate Other

Market Potential
Neighboring Markets
2 Giants Economies ASEAN Pop 600 mil
International Markets
INDIA 1.21 Billion BANGLADESH 145 Million

TOTAL : 2.839 BILLION

CHINA 1.35 Billion

EU, USA, Japan, Korea

60 Million

LAO 7 Million

Domestic market
60 million Population
BAY OF BENGAL

THAILAND 66 Million

ANDAMAN SEA

40.6% OF WORLD POPULATION

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STRENGTH
Abundant trainable labor force with basic education, hardworking, quick learning, sincere and obedient mindset of the people. Well connected to major Asian market, ASEAN, China and India. Strategic location : Geopolitical importance for regional connectivity as the tri-junction of East Asia, Southeast Asia and South Asia. Benefit of late comer in development: can leapfrog. Strong political and economic will of the leaders and strong will of the people to advance forward under the good leadership.

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Weakness

Poor infrastructure adds up in high production and transaction cost.

Underdeveloped banking and financial system. (Reforms in banking system.)

Shortage of skill workers and middle level technicians. (Skill Development

Law, schemes) Job-hopping from one workplace to another. (Insecurity, Minimum Wage Law, Social Security Scheme) Lack of financial access, incentives, modern efficient machineries, technology and management. (Training Center) Transshipment in Singapore. (Corridors and Deep Sea Ports)

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THREAT Regional inequality may cause social inequality Competitiveness International pressures amid reforms and economic sanctions. (?) Genuine change! Reversible-irreviserble! Capacity!

OPPORTUNITIES

Regional hub for multimodal transportation and a potential supply route bypassing the Malacca Strait. Huge Domestic Demand for textile and clothing (about USD 56 million, 75% of which has been imported.) GMS Cross Border Transport Agreement (CBTA) based Transit Transport. Cutting off substantially transaction cost, both time and money. Sole land-bridge between two giant economies, China and India Bharat. High potential to be a food basket and energy source for Asia (Connectivity Hub). Huge industrial potential for FDI from ASEAN and global supply chains. Lifting of economic sanctions and re-instatement of GSP/EBA by EU, by US?
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Conclusion

On the right track politically, economically and socially.

On the runway to take off which ensures the benefit for investors. Amid abundant opportunities.

From blossoms to blooms.

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