Myanmar Investment Climate
“How Thai banks can support investors to do businesses”
Oct 2013
Yangon Representative Office
Global Business Development Department
Agenda
• Quick Fact - Myanmar
• Myanmar Financial System: Structure & Products
• Investment: Initial Capital Injection & Source of Fund
• International Trade: Letter of Credit, Remittance & Guarantee
• Opportunities for Investors
• KBank: AEC Plus Strategy & Yangon Representative Office
Quick Fact
MYANMAR
Country Overview Name Republic of the Union of Myanmar
Capital Nay Pyi Taw
Area 676,578 km2 (ranked 40th in the world)
Population 54.6 million
Ethnic Group
Burma 68%, Shan 9%, Karen 7%, Rakhine 4%, Chinese 3%, Indian 2%,
Mon 2%, Others 5%
Language Burmese (Official), Numerous minority languages
Religions Buddhist 89%, Christian 5%, Muslim 4%, Animist 1%, Others 2%
Administrative
7 Regions: Ayeyarwady, Bago, Magway, Mandalay, Sagaing, Taninthayi,
Yangon
Division 7 States: Chin, Kachin, Kayah, Kayin, Mon, Rakhine, Shan
Government Unitary Presidential Constitutional Republic
• President THEIN SEIN (since February 4, 2011)
• Vice President SAI M0UK KHAM (since February 3, 2011)
• Vice President NYAN HTUN (since August 15, 2012)
Timezone 6.5 hours ahead of GMT
Fiscal Year April 1 - March 31
Currency Kyat ( MMK) – MMK970 = USD1
Membership ASEAN, BIMSTEC, WTO, UNCTAD, UNESCO, UN, WHO, WIPO, IMF
6.7% Change (YoY)
GDP Growth Forecast
• In 2012, GDP grew 6.0%, valued at more than $54 billion while GDP per capita reached $855
• Growth is forecasted to rise gradually to 6.5% in 2013 and 6.7% in 2014
• Economy will grow as the country continue to reform its policy and improve investment & business climate
5.35.5
6.06.5
Source: ADB
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2008 - 2009 2009 - 2010 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014
(A pr - May)
Overall International Trade Performance
USD Million
Source: Ministry of National Planning and Economic Development, Myanmar
4,5
43.3
4, 1
31
.4
6,4
12.7
9,0
35.1
9,0
68.9
1,8
87.4
6,7
79.1
7,5
86.9 8,8
61
9,1
35.6
8.9
77
1,4
74.3
2,2
35.8
3,4
05.5
2,4
48.3
10
0.5
-9
1.9
-4
13
.1
Import
Export
Trade Balance
1• Natural Gas
2• Beans and Pulses
3• Jade
4
• Marine Products
5
• Garment
Top 5 Export Items
1• Petroleum Products
2• Vehicles & Spare Parts
3• Construction Materials
4
• Iron & Steel
5
• Machinery & Spare Parts
Top 5 Import Items
By Country & By Products
USD MillionUSD Million
Foreign Direct Investment 2008 - 2013
Total FDI = USD 27,794 Million
By Country By Sector
2,500.26
Myanmar Financial System
“Structure & Products”
Private-owned Banks
(12)
Semi Private Banks
(7)
Central Bank of Myanmar
State-owned Banks
(4)
Domestic Private Banks
(19)
Source : Central bank of Myanmar & Deloitte
Foreign Representatives
(33)
FX
FX
(15)
Myanma Investment and Commercial Bank (MICB)
Myanma Foreign Trade Bank (MFTB)
Myanma Economic Bank (MEB)
Myanma Agriculture and Development Bank (MADB)
Structure
System• Still in an early stage, contributing a mere 0.08% of total GDP.
• Underdeveloped computerized system; Running on deposit service based.
Myanmar Financial Institutions
Foreign Currency Exchange
Myanmar Currency: Kyat
Foreign Currency Exchange: Change system
from Dual Exchange Rate (1 USD = 6 MMK) to
Managed Float System (1 USD = 800 MMK) on Apr 12
(Before: 7 rates from 6 – 1,200 MMK per 1 USD)
Foreign Exchange Certificate (FEC): FEC has NO
longer used since end of June 2013
Cross Border Payment: CBM allows to settle in 3
currencies: USD, THB & MMK
Retail Banking
• Deposit
Current Account: MMK, USD, EUR or SGD Saving Account: MMK (8% interest rate – Foreign is NOT allowed)
Fixed Account: MMK (8.5-10% interest rate – Foreign is NOT allowed)
• Lending Overdraft (13% interest rate, 1% service charges & 1% commission fees)
Hire Purchase (1% service charges, 30% down & 3-yr progressive rate)
• Cards MPU Card (Debit Card)
• Remittance International Remittance
Worker Remittance
Wholesale Banking
• Trade Finance
Letter of Credit (L/C): Import and Export
Collection
Remittance
Guarantee: Issuance and Advising
• FX Services Exchange Counter
FX Arrangement (Today ONLY)
Investment
“Initial Capital Injection & Source of Fund”
Investment: Initial Capital Injection
Private-owned Banks
(12)
Semi Private Banks
(7)
Central Bank of Myanmar
State-owned Banks
(4)
Domestic Private Banks
(19)
Foreign Representatives
(28)
Myanma Investment and Commercial Bank (MICB)
Myanma Foreign Trade Bank (MFTB)
Myanma Economic Bank (MEB)
Myanma Agriculture and Development Bank (MADB)
Which Financial Institutions are allowed to do?
Allowed by
DICA
Stated-Owned Bank
• Myanma Foreign Trade Bank (MFTB)
• Myanma Investment & Commercial Bank (MICB)
Private Bank
Focused on top private banks named:
• Kanbawza Bank (KBZ)
• Asia Green Development Bank (AGD)
• Co-Operative Bank (CB)
• Ayeyarwaddy Bank (AYA)
Investment: Initial Capital Injection (Who?)
Thailand Myanmar
MM Bank
- Submit application for
money transfer (USD)
- Deal FX Rate & Fee with
RM/Dealer
- Send MT103 to MM
Bank stating for initial
capital
- Prepare Credit Advice
for Investor to submit
with DICA
- Put money on central
account & transfer to
Investor’s account when
it is opened
- Receive Credit Advice
& apply with DICA
- Open account with the
bank as soon as receive
temporally Permit to
Trade from DICA
TH InvestorTH Investor TH Bank
Investment: Initial Capital Injection (How?)
Investment: Source of Fund
Option 1: Domestic Fund
Key Fact
- Interest rate = 13%
- ONLY 1-year term
- Need BG from foreign banks
- Can NOT do with all local banks
Option 2: International Fund
Key Fact
- Credit from main bank in TH
- Need to submit proposal to MIC/
Authorities
International Trade
“Letter of Credit, Remittance & Bank Guarantee”
International Trade: Which Bank?
Before 2012, ONLY two state-owned banks:• Myanma Foreign Trade Bank (MFTB)
• Myanma Investment & Commercial Bank (MICB)
NOW, 18 state-owned & private banksFocused on top private banks named:
• Kanbawza Bank (KBZ)
• Asia Green Development Bank (AGD)
• Co-Operative Bank (CB)
• Ayeyarwaddy Bank (AYA)
• Myanma Apex Bank (MAB)
• Myanma Oriental Bank (MOB)
• United Amara Bank (UAB)
International Trade: Standard Fee in MM
Opportunities for Investors
“Which sector would be fit for Thai investors”
Opportunities for Investors:
Manufacturing
Garment &
Apparel
Consumer
Products
Processed
Agro -Product
• Myanmar Foreign Investment Law 2012
- Corporate income tax exemption up to 5 years (from 3 years)
- Long lease for land 50 + 10 + 10 years ( from 30 + 15 + 15 years)
• Relatively competitive labor cost
- Minimum wage is around $58 – 70 per month
- Compared with monthly wage of TH@ $300, VN@$112, LA@$100, KH@$68
- Minimum wage bill has passed, awaiting details
• Export base to gain market access to India & China and to take advantage of favorable tax scheme
i.e. GSP from EU
Opportunities for Investors:
Services
Hotel, Travel,
& TourismTelecommunicationHealthcare
• “Global Hotspot” for both business and tourism
- Number of arrivals reached over 1 million mark last year
- Projected to reach 3 million in 2015
• Host of major international events e.g. WEF, SEA Games, ASEAN Summit
• Development of Hotel Zone in Yangon, Mandalay, Nay Pyi Taw, Mawlamyine
• Quality healthcare is in demand
• Major overhaul of telecommunication infrastructure and development: Telenor & Ooredoo
- Mobile phone penetration rate is 9%,
- Compared to KH@70%, LA@87%, TH@125%
Opportunities for Investors:
Trading
White GoodsConstruction
MaterialsFood & Beverage
• Growing demand for consumption
• Changing consumer behavior and lifestyle
• Positive perception toward Thai brands/products
• Ongoing infrastructure development projects for both government and private
• Influx of FDI drives the needs for construction materials
Opportunities for Investors:
Natural Resources
Oil & Gas MiningPower
• Untapped exploration fields
- 7.8 trillion cubic feet of proven natural gas reserves; worth $75 billion
- 30 exploration licenses will be offered, 1Q 2014
• Inadequate electricity capacity
- ADB estimates demand will grow 13% per year
- Production will need to increase 42% to this year’s demand
• Mineral rich including gold, copper, lead, zinc, nickel, tin, antimony, chromites
- Awaiting Mining Law, expected improved incentives for investors
KASIKORNBANK
“AEC Plus Strategy & Yangon Representative Office”
KBank – Strategy
We aim to be “Asian Bank”
We will serve :
• Outbound business customer, both Corporate & SME, through out Asia by our well established
network and partner banks.
• Inbound customer through our strong domestic network.
Outbound Inbound
KBank – Strategy
35 Partner Banks with
32 Bilateral MOUs
2 Banks
(2 MOUs)
2 Banks
(1 MOU)
1 Bank 2 Banks
(1 MOU)
2 Banks
(2 MOUs)
ASEAN
1 Banks
(1 MOU)
E.ASIA
2 Banks
(2 MOUs)
1 Rep
1 Branch
1 Rep
EU & US
23 JRBs
(23 MOUs)
24 JRBs
Under JBIC Scheme
KBank – Yangon Representative Office
KBank – Myanmar Team
Chief Representative - Yangon Office
Mr. Nuttaphong Visitkitchakarn
E-mail: [email protected]
Tel: +959 421074478
Senior ASEAN Country Business Manager
Ms. Orin Chaturabatara
E-mail: [email protected]
Tel: + 662 5626554
Senior Global Business Advisory Specialist
Mr. Ritthiwut Watthanachai
E-mail: [email protected]
Tel: + 662 562 6899
KASIKORNBANKYangon Representative Office
313/315 U Wisara Road Sanchaung T/S
Yangon Union of the Republic of Myanmar
Tel: +95 (0) 1 524285, 1 514868Fax: +95 (0) 1 516713