September 17th | 2014

Kempinski to Open First Myanmar Hotel in November

Switzerland-based Kempinski Hotels, Europe’s oldest luxury hotel company, announced that it will

open its first property in Myanmar, Kempinski Hotel Nay Pyi Taw in November. The 141-room and

suite hotel will begin welcoming guests on November 1, in time for the first ASEAN Summit to be

held in the country. Reservations can now be made via Kempinski’s website, the company said. The

newly-built property is located near the Myanmar International Convention Center (MICC), a short

drive from the capital’s international airport. Spread over four villas, the hotel features 141 rooms

and suites, including the Grand Royal Suite, which, at 1,000 square meters, is the largest in the

country, the company claimed.

Source: Myanmar Business Today (07th September)

Myanmar City U-Turns amid Outcry over Secret $8-b Housing Deal

Authorities in Myanmar’s biggest city have backed down on plans to award an $8-billion construction

contract to a barely known firm following a public outcry over its transparency in a country notorious

for graft and vested interests. The Yangon region government said an open tender would be held

for a huge low-cost housing project, one of the biggest of its kind in Myanmar, just days after the

city’s mayor stunned lawmakers by announcing a deal had been struck in secret with a firm set up

only nine months ago.

The project, covering three townships in the west of Yangon, seeks to address a shortage of

affordable accommodation in a city expected to swell far beyond its six million residents as business

and tourism grows, construction booms and investors arrive from Thailand, Singapore, India and

Japan. It aims to provide 20,000 low-cost housing units, five bridges to connect the area to the rest

of Yangon, a school and a home for the elderly. “We just can’t understand who is behind this and

why they did it secretly,” said a minister with the Yangon region government, who declined to be

identified.

Source: Myanmar Business Today (09th September)

Second City Speculation Sees Land Prices Double

Land prices have exploded west of Yangon following an announcement by the mayor of Yangon that

it will be the site of a new city. Though information on the project proposed by Mayor U Hla Myint is

still scarce, it has proven enough to drive a flury of speculation in the area. Prices have doubled in

a week, said Ko Min Min Soe, Mya Pan Thakin real estate agent.

Land prices in the village used to be about K7 million to K15 million an acre, though land with road

access stood at closer to K100 million an acre, he said. With the speculation rush, land now costs

at least K20 million an acre on August 29, and is showing no signs yet of coming back down, said

Ko Min Min Soe. There had been only moderate interest in the area until U Hla Myint’s speech at

the hluttaw on August 22. He said that a new city is to be built between the Pan Hlaing River and

Twante canal, in the area of Twante, Kyeemyindaing and Seik Gyi Kha Naung To townships on

some 30,000 acres of land. U Hla Myint said it was to be built by previously low-profile firm Myanma

Saytannar Myothit Public Company, and claimed it could cost as much as US$8 billion to complete.

However, officials have since said an open tender will be set up at a later date following an outcry

on the project.

Source: The Myanmar Times (01th September)

Vietnamese Investors to Pour in $1.5b in Myanmar

The Association of Vietnamese Investors in Myanmar (AVIM) hopes to raise its investment in

Myanmar to $1.5 billion by 2015 in making Vietnam one of the five largest foreign investors in that

country. AVIM chairman Tran Bac Ha unveiled the target at a meeting with Speaker of Union of

Myanmar Assembly Thura U Shwe Mann in Hanoi, Vietnam News Agency (VNA) reports. Ha said

businesses will work to help enhance two-way trade to $650 million to $700 million, and the number

of Vietnamese tourists to Myanmar to 35,000 in the future. AVIM representatives proposed that

Myanmar’s government and parliament develop an “open-door” legal system and improve

investment incentives for foreign investors.

Established under an initiative by the Bank for Investment and Development of Vietnam (BIDV),

AVIM comprises 76 members including Petro Vietnam, Vietnam Airlines, Hoang Anh Gia Lai Group

and Song Da Corporation. At present, Vietnamese investors have seven projects worth $600 million

in Myanmar with the biggest being Hoang Anh Gia Lai Group’s complex of hotels, apartments and

offices worth $440 million. Fifty-six Vietnamese businesses have been licensed to operate in

Myanmar so far, according to Myanmar Investment Commission (MIC) data.

Source: Myanmar Business Times (10th September)

Gov’t Eases Restriction on Foreign Economic Activities

The Myanmar Investment Commission (MIC) has eased some restrictions on economic activities for

foreign businesses, removing 11 items from the prohibited list of economic activities previously

declared, according to the commission. These economic activities lifted for foreigners include jade

and gemstone prospecting, exploration and production, small and medium scale mineral production

and distribution of newspapers, magazines and journals in Burmese and other national ethnic

languages. The commission also cut the list of economic activities previously allowed only in the

form of joint venture with local Myanmar citizens from 42 items to 30. The commission has so far

during this year permitted nearly 30 projects for investment by local entrepreneurs, while 60 for

investment by foreigners. Since June, official figures show that Myanmar attracted investment from

34 countries, totaling $46.71 billion.

Source: Myanmar Business Today (07th September)

MIC Announces Investment Categories with ‘No Tax Exemption’

The Myanmar Investment Commission (MIC) has prescribed some local and foreign investment

business categories ineligible for exemption and relief from commercial tax and custom duties,

according to a notification of the commission. These categories of businesses include manufacturing

of alcohol, beer, cigarettes and related services; distribution of gasoline, diesel, machine oil and

natural gas; and vehicle services and low technology and low investment industries which can be

carried out by Myanmar nationals except for industries that require a large labor force. The non-tax

exemption investment businesses also comprise other businesses such as renting forest areas for

agriculture and logging; construction of buildings and sale of them; vehicles and machinery rental

service; and restaurants and food-selling business.

Source: Myanmar Business Today (03rd September)

Private Companies Get Green Light for Airport Operation

The heads of five local airports in Myanmar will be allowed to approach private companies to handle

their operations, the Myanmar Civil Aviation Department has said. Kyaw Soe, head of the Directorate

of Civil Aviation, said: “Firstly, we have arranged to give the green-light to Bagan-NyaungU, Heho,

Tachilek, Thandwe and Kyaukphyu airports.” Bagan-NyaungU Airport, which has seen a massive

influx of tourists, could draw the most attention from private companies. The Directorate of Civil

Aviation got approval late last year to oversee the privatisation of 30 airports, which will be leased

or sold to private companies. The 30 airports are: Bagan-NyaungU, Heho, Dawei, Putao, Monghsat,

Kawthaung, Myitkyina, Pathein, Myeik, Bhamo, Lashio, Bokepyin, Kalay, Magway, Mawlamyine,

Khamhti, Pakokku, Hpa-an, Homemalin, Kyaukhtu, Aniskhan, Loikaw, An, Kokogyun, Monywa,

Sittwe, Thandwe, Tachilek, Kengtung and Kyaukphyu.

Source: Eleven Myanmar (07th September)

Local Construction Companies to Be Graded for Advent of AEC

Myanmar Engineering Society is inspecting the quality of local construction companies with the aim

of promoting competitiveness ahead of the Asean Economic Community (AEC). It plans to release

their grades soon, Aung Myint, vice-chairperson of the Engineering Society, said at a press

conference on Myanmar Build & Decor 2014, held at the Sule Shangri-La Hotel. “The society is

scrutinizing construction companies in a bid to promote the competitiveness of local construction

companies in the AEC that will emerge on December 31, 2015 and we will designate grades [for

firms]. Emergence of the AEC will bring not only opportunities but also challenges to the country.

The best qualified companies should easily compete in the AEC,” he said. “Normally, construction

companies have to carry out their registration at the Directorate of Company Registration. But, we

are planning to make grading. Myanmar Engineering Council will scrutinize them. “The government

passed the Myanmar Engineering Council Law on December 16 last year. Under the law, the council

has an obligation to inspect the quality of work done by construction companies. This is for the long-

term. There should be standards at a time when the AEC emerges in 2015. The council will carry

out the grading – A, B, C and D – based on facts such as the number of professional engineers and

their standards,” he said.

Source: Eleven Myanmar (13th September)

Myanmar Can Raise Per Capita Income 500% By 2030

Myanmar’s economic growth rate could rise to 9-10 per cent if the country invests more in human

capital and infrastructure and this could push its per capita income up more than 500 percent by

2030, according to a new report by the Asian Development Bank, “Myanmar: Unlocking the

Potential”. If Myanmar pursues the correct strategies per capita income could rise from about

US$900 now to about $5,000 in 2030, the report says. “The country needs to think very strategically

what the key trends are and what could be the potential drivers for growth,” Cyn-Young Park, an

assistant chief economist at the regional development bank, told Myanmar Eleven on the sidelines

of the report’s launch yesterday. “First, the government needs to focus on laying the foundation in

order to accelerate public-sector reforms, ensure macroeconomic financial stability, and create a

business-enabling environment through appropriate regular framework and strategic investment in

infrastructure,” she said. “Infrastructure needs substantial investment. Myanmar has a limited supply

of electricity. The country will need as much as US$80 billion by 2030 for meeting the demands rising

from a high-growth scenario in major infrastructure systems. The country will need $5 billion a year

on average by 2030,” she said. “The fundamental thing for inclusive growth is to create jobs, create

economic opportunities, and lay a foundation for agricultural and rural development. That would

create opportunities for rural society. That will be immediate help for people living in the countryside.”

Source: Eleven Myanmar (12th September)

Thilawa SEZ Says It Has Signed Up 18 Companies So Far

Eighteen local and foreign companies have signed deals with the management committee for

Thilawa Special Economic Zone to open plants in its first phase, which covers 400 hectares south

of Yangon, a member of the committee said. “We have signed deals with 18 companies, including

companies from Cambodia, Hong Kong, Japan, Singapore, Taiwan and the United States as well

as three Myanmar companies,” the executive said. “They will operate factories such as electronic

manufacturing, construction materials production, and glove and garment manufacturing. US-based

Ball Corporation is one of the investors,” the executive said. “Ball Corporation will invest US$40

million in the first phase and later we hope we will increase up to $100 million. We hope our

production will start sometime in July 2015. We will produce and sell only beverage cans,” Min Tala

Nyan, Ball Corporation’s country manager.

Source- Eleven Myanmar (12th September)

Malaysian Firm Makes Maiden Entry into Myanmar’s Property Market via Zaykabar

Malaysia-based Ho Hup Construction Co Bhd is set to make its entry into Myanmar’s lucrative

property market through a joint venture with local conglomerate Zaykabar Co Ltd. The firm’s 70

percent-owned unit, Ho Hup Myanmar, signed a joint venture agreement with tycoon Khin Shwe-

owned Zaykabar for “Z Villas 191 Units Land” development in Mingalardon Garden City in Yangon.

In a filing with Bursa Malaysia, Ho Hup announced that it would develop a high-end residential

property project with a gross development value (GDV) of $200 million (RM636 million) in central

Yangon. Zaykabar is the registered holder and beneficial owner of “Z Villas 191 Units Land” where

it has agreed to grant the sole and exclusive rights to develop the land to Ho Hup Myanmar into

residential units. According to the deal, Zaykabar will be entitled to a sum of cash equivalent to the

aggregate of the land cost which is pegged at $40 per square foot and shall have 60 percent of the

total net profit of the project.

Source: Myanmar Business Today (15th September)

YOMA Strategic Finalizes Major Asset Purchases

Yoma Strategic Holdings Ltd said it will be boosting its diversified business portfolio in Myanmar with

the additional acquisition of economic interests of land development rights (LDR) in its property

development, Pun Hlaing Golf Estate (PHGE). The company’s flagship high-end residential property

development at PHGE will be expanded with the acquisition of economic interests of additional LDRs

for future residential and commercial developments, Yoma said. The new LDRs will be used to add

more residences along with commercial developments to cater to the increased demand from the

existing and projected future occupants at PHGE, the Singapore-based firm added.

Andrew Rickards, CEO of Yoma Strategic, said, “PHGE has established itself as one of the most

desirable locations to live in Myanmar today and we are delighted with the opportunity to expand the

number of developments on the estate.” Yoma Strategic had previously launched a number of

project developments within PHGE such as Ivory Court Residence, Lakeview Apartments, Ivory

Court Villas, Rose Garden Villas and Bamboo Grove Garden Villas. The total land area represented

by the LDRs being acquired for these new developments totals approximately 31.3 acres. The group

is also acquiring economic interests in an additional 12 acres of LDRs adjacent to the Early Years

Centre managed by Harrow International Management Services to be used for the development of

an international school, and the rights to operate the PHGE Golf and Country Club which includes

approximately 219.2 acres.

Source: Myanmar Business Today (15th September)

Banks Brace For September Licenses

The domestic financial industry is rife with speculation on which foreign banks will receive licenses

to operate, though local banking players say little about the process has been revealed to them. The

licensing process is expected to conclude this month, with between five and 10 foreign banks likely

to receive licenses, out of the 25 banks still in the hunt in mid-July. Yet foreign bank representatives

and Central Bank of Myanmar officials are staying mum on the process, leading to intense

speculation about who will eventually be declared a winner.

Four banks from Japan, Thailand and Malaysia, three from Singapore, Taiwan and South Korea, as

well as one each from Australia, China, France, India, Mauritius and Vietnam, were included on the

central bank’s mid-July list of shortlisted competitors. United Kingdom-based giant Standard

Chartered was a surprise omission from the shortlist, as it also has a Yangon representative office

and was thought to be interested in a license. The firm’s representatives said they had decided not

to pursue a license due to commercial reasons, though left the door open for future involvement in

Myanmar. Myanmar Bankers Association officials told The Myanmar Times the Central Bank has

not extensively consulted them on the process or openly shown the selection criteria.

Source: The Myanmar Times (15th September)

Dala in Limbo After Speculation Rush

The ongoing speculation rush in the Yangon new city area to the west of the existing city is not the

City's first, and likely not its last. Nearby Dala township, across the Yangon River from downtown,

experienced a similar speculation boom a year ago. While the latest Yangon new city rush occurred

following a surprise announcement by the mayor last month that the area would be the site of a

US$8 billion city extension, the Dala township rush a year ago came after an announcement that a

bridge would be built linking it with downtown Yangon. Last year’s bridge announcement set off a

buying rush, with speculators driving up land prices overnight. Yet insiders say that since the initial

rush, it has been quiet in Dala Township. “Nobody’s buying land in Dala Township,” said U Hla Chit,

an area real estate agent.

Prices are still high a year after the rush, even though some officials have cast doubt on when the

bridge will be built. “There are inquiries into local property but people never buy because the land

prices are still too high from last year. Although prices aren’t increasing any more, they’re not

dropping, either, after we heard about the bridge,” he said. U Hla Chit said he pegged a relatively

central lot of 2400 square feet from K50 to K70 million, while the more removed of the 60 by 40 ft

lots can be K45 million. Some lots on main roads are asking over K100 million. Dala Township has

long been overlooked in favor of nearby Yangon, as it is a tough place to get to. Currently,

transportation to the area requires a ride on an often-crowded ferry across the Yangon River, or a

time-consuming trip by land to the nearest bridge over the Hlaing River.

Source: Myanmar Times (15th September)

Yangon Mayor Issues Stern Warning To Illegal Builders

Illegal building in Yangon, constructed without approval from the government, “will be dealt with,”

which could include demolishing the structures, the city’s Mayor U Hla Myint warned at a session of

the regional parliament. Despite facing legal action and the suspension of projects, the illegal

construction of buildings has not declined, so the wrecking ball option is being considered now, he

said. “As the City Development Ace of 2013 has already been enacted, illegal buildings will be

harshly dealt with. We are considering to go even as far as demolishing them,” U Hla Myint said.

Officials from Yangon City Development Council (YCDC) are negotiating with legal experts, regional

government and other relevant organizations on the enforcement measures to address the issue.

Contractors who build without proper permits will face charges under Article 68 of the City

Development Act and will have to pay fines ranging from K10,000 to K50,000 for each day during

the legal proceedings. Those found guilty of violating the law must pay the fine, cease construction

and face being sentenced to a jail term of up to one year. Prior to enactment of the City Development

Act, the fine was fixed at K10,000 per day. Contractors were able to pay a fine of K300,000 per

month and complete construction without seeking authorization. After construction was completed,

land owners and tenants with informal deeds had to face the consequences, leading to disputes.

Source: Myanmar Business Today (15th September)

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