Myanmar Business Today - Vol 2, Issue 26

July 3-9, 2014
Myanmar Business Today
mmbiztoday.com
mmbiztoday.com July 3-9, 2014| Vol 2, Issue 26MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL
Myanmar Summary
Myanmar Summary
Inside MBT
GSPNegotiationswithUSin“FinalStage”
T
he Ministry of
Commerce has
announced nego-
tiations with the United
States regarding My-
anmar’s GSP status are
nearing the end.
GSP, or Generalised
System of Preferences,
is a system where up to
5,000 products may be
exported by a nation to
the United States (in this
case) duty-free, absolving
them of entry duty fees.
These negotiations
come after the United
States extended limited
trade sanctions on My-
anmar for another year,
which includes a ban on
doing business with indi-
viduals and companies on
the SDN list, as well as a
ban on the importation of
jadeite and rubies.
“The sanction exten-
sions were carried out
according to their [USA]
protocols, as set require-
ments have not been met.
GSP is a commerce-re-
lated issue, and negotia-
tions regarding that have
reached the last stage,” U
Toe Aung Myint, direc-
tor of International Trade
Promotion under the
Htun Htun Minn Ministry of Commerce,
said.
The visit to Myanmar
last month by United
States Secretary of Com-
merce Penny Pritzker saw
agreements made for My-
anmar to apply for GSP
status as soon as possible.
“The US Ambassador
that the decision to grant
ed by existing sanctions,”
said U Toe Aung Myint.
Myanmar currently has
GSP status with 38 coun-
tries, including 28 in the
European Union.
Advisor to the minister
for commerce, Dr Maung
Aung, said while it’s likely
Myanmar will be granted
GSP status, it will not be
soon.
Myanmar’s exports re-
ceived GSP status in the
past, however, it was
withdrawn in July 1989
due to non-compliance of
standard regulations.
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Myeik Economic Zone
Master Plan Proposed
A
plan for an eco-
nomic zone in
Myanmar’s South-
eastern Tanintharyi re-
gion has been submitted
to the regional govern-
ment, according to the
Ministry of Electric Power
and Industry of the re-
gion.
The Myeik Economic
Zone will be privately
owned and will include a
harbour and adjoining in-
dustrial zone, in addition
to zones that will “stream-
between the harbour and
adjacent warehouses and
businesses.
“The implementation of
the project is being led by
young people and that’s
why the regional- govern-
ment is supporting it,”
Dr Win Aung, Tanintha-
ryi Regional Minister for
Power and Industry, said.
“We would’ve needed to
apply to the Union Gov-
ernment if this project
was larger, but it is on the
scale of a small-medium
enterprise,” he added.
The Myeik Future De-
velopment Public Compa-
May Soe San ny (MFDPC), which was
set up in March, intends
to start implementing the
project within this year,
however, they requested
revisions to the existing
master plan.
The 1,000-acre project,
which is to the east of
Myeik Airport, will still
require negotiations with
local residents regard-
ing compensation for the
land required in the pro-
vision of the master plan.
“Previously 1,500 resi-
dential plots were allo-
cated but there were no
market or public spaces
included, except for one
school. We asked that
the plan be re-drawn as it
had many issues,” U Aung
Myo Lat, managing direc-
tor of the (MFDPC), said.
He said that although
the company has received
K100 billion for the pro-
ject, and has invited other
businesses to invest, it
will take many years to
complete.
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Master Plan topfa&;qGJí
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Contd. P 9...
The Missing Middle Ground: US Invest-
ment Reporting Requirements P-3
Myanmar: Professional Skill Gaps, and
Rising Wages P-4
Myanmar for The First Time Allows
Registration of Secured Loan on A Local
Asset P-7

July 3-9, 2014
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BusinessNewsinBrief
MEP calls gas turbine tender
The Ministry of Electric Power has invited foreign
and local investors to submit proposal for renting gas
engine or gas turbine generator at Kyaukphyu in Ra-
khine state, a ministry announcement said. Natural gas
gas. The deadline for submission of technical and com-
mercial terms of the proposal is 15 July.
holder
Yoma Strategic Holdings said it has received a written
of the land in Pun Hlaing Golf Estate (PHGE), accord-
ing to Singaporean media reports. The 250 acres of land
comprises a 222-acre golf course and country club and
27.5 acres of land development rights, alongside some
related businesses infrastructure and facilities. Yoma
estimates the land value of 100 percent of PHGE and
the related businesses, infrastructure and facilities to
intends to undertake a rights issue to fund the transac-
tion.
nomic growth
The Myanmar Ministry of Finance will shape a capi-
tal market in the country after joining the Financial
Services Agency (FSA) and the Japan International
Agency (JICA), state-run media reported. The develop-
ment of capital markets depends on the Yangon Stock
Exchange, which is expected to come into practice in
2015, Deputy Minister of Finance Dr Maung Maung
Thein said. Tatsushi Terada, deputy secretary general
of Financial Services Agency, pledged Japan will share
its experience on stock exchange with Myanmar so that
the country can boost its economy through capital mar-
kets.
Myanmar, Singapore JV to build Thilawa jetty
build a jetty and petrol storage tanks at Thilawa port
in Yangon. Singapore-based Puma Energy Irrawaddy
company, Puma Energy Asia Sun, for the project under
a build, operate and transfer agreement with the gov-
ernment.
plant project
American machinery manufacturer Caterpillar Inc is
assisting in a project that will help meet Myanmar’s in-
creasing power demand, with the 52MW Ywama Power
lion facility entered commercial operations in Febru-
ary, and was delivered on a turnkey basis by Caterpillar
Energy Solutions’ local dealer, Myan Shwe Pyi Tractors
Ltd (MSP CAT). Caterpillar delivered turnkey power
plant supply, project management and commission-
erator with complete electrical and mechanical balance
of the plant equipment. MSP CAT is also supplying a
long-term operation and maintenance contract for
Singapore-based UPP Power Ltd the owner of the site.
The power plant is delivering electricity to the Myan-
mar Electric Power Enterprise (MEPE) under a 30 year
contract.
WongP sets up Myanmar unit, builds ASEAN
presence
WongPartnership has become the latest Singaporean
es a regional strategy. WongPartnership has opened a
base in Yangon, its second in the ASEAN region. The
from Singapore. WongPartnership’s co-managing part-
growth in the ASEAN region. “Myanmar has been a hot
spot for foreign investments, and we’ve been advising
a growing number of transactions and projects,” said
Star Beverage on its joint venture with South Korea’s
Group in its Yangon hotel development joint venture
and assisted Amara Communications in its bid for a
public telecommunications licence as part of a consor-
tium.
Myanmar Summary
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taqmufttHkESifh0efaqmifrIXmersm;wefzdk;rSm a':vm oef; 100
&Sdrnf[k ½dk;ru cefYrSef;xm;onf/

July 3-9, 2014
mmbiztoday.com
3LOCAL BIZ
Myanmar Summary
US Gov’t Needs to Clarify Its Investment
Reporting Requirements
A
merican business-
es had until the
end of the June to
the US government de-
tailing their investment
activities in Myanmar.
Under General License
17 (GL 17), US businesses
engaging in new invest-
ment in Myanmar must
report their investment
activities to comply with
the Reporting Require-
ments on Responsible In-
vestment in Burma. Any
US person investing more
than $500,000 in Myan-
mar, or investing in the oil
and gas sector, is required
to submit a report.
On her recent commer-
cial diplomacy mission to
ASEAN, US Secretary of
Commerce Penny Pritz-
ker celebrated the grow-
ing relationship between
Myanmar and the United
States and encouraged
American companies to
consider Myanmar as a
destination for invest-
ment. Often viewed as
the gold standard for in-
vestment, American com-
panies not only produce
high quality products
and services, but are also
known to institute vigor-
ous standards in terms of
sustainability, corporate
social responsibility, and
respect for human rights
– helping to facilitate
broad-based economic
growth and prosperity.
According to the US Em-
bassy’s website, American
companies have invested
billion) in Myanmar and
have planned or already
implemented dozens of
Aundrea Montaño corporate social responsi-
bility programs.
In order to reconcile
American business’ in-
creasing interest in My-
anmar with the country’s
rocky past, the United
States government insti-
tuted the reporting re-
quirements as a means to
maintain this gold stand-
ard and encourage re-
sponsible investment.
The reporting require-
ments have been met with
mixed responses from
both the business com-
munity and human rights
organizations.
On the business side
The added duty of the
reporting requirements is
made more complex with
business environment,
which makes account-
ing for every operational
component – if we are
honest – nearly impos-
sible, and in many ways
erodes the competitive-
ness of US companies.
Some businesses also
fear becoming a target
of unwarranted scrutiny
that could damage glob-
al brand identity, while
others feel the reporting
requirements do not rep-
and level of investment.
Anthony Nelson, direc-
tor of public relations at
the US-ASEAN Business
Council said, “US com-
panies view responsible
investment and the per-
formance of CSR as part
of our competitive ad-
vantage. US business is
committed to investing in
Myanmar the right way,
but the reporting require-
ments add an additional
layer of bureaucratic and
legal complexity to US
investment in Myanmar,
that taken along with re-
maining sanctions and
give a head start to com-
petitors. We encourage
the US government to
continue clarifying the re-
quirements. ”
While the requirements
are meant to address key
foreign policy concerns in
Myanmar in regards to hu-
man rights and responsible
investment, and even as-
sist US companies in plan-
ning strategic engagement
and due diligence policies,
they are not a “catch all” re-
porting mechanism.
In early June, the US
Campaign for Burma re-
leased its Report Card:
US Companies Investing
in Burma. Coca-Cola was
the shining star of the re-
port, and it makes sense
given the company’s in-
ternal infrastructure de-
veloped over decades
of working in high-risk
countries around the
world. With physical op-
erations and distribution
in Myanmar, Coca-Cola’s
investment in the country
is clear and transparent –
a true representation of
American business.
However, not every type
of investment in Myan-
mar is as clear and clean
cut, and may pose a chal-
lenge to the reporting
requirements in its cur-
rent form – presenting
American companies.
In the same report, Cap-
ital Group was labeled an
“irresponsible investor,”
and cited by the report
as refusing to “answer es-
sential questions about
human rights due dili-
gence policies and proce-
dures,” and that “it has no
responsibility to answer
because its investments
are ‘passive’.”
When asked about how
the State Department
deals with incomplete,
inaccurate or potentially
troubling information in
submitted reports, Pub-
Sardar at the US Embassy
in Yangon, did not want to
speculate on hypothetical
situations, but did note,
“The reports posted thus
far have adhered to the
instructions laid out in
our FAQs.” The FAQs re-
fer to the frequently asked
questions found at www.
humanrights.gov, which
also states the reporting
requirements).”
According to its pub-
this year, Capital Group is
a minority investor (less
than 1 percent) in Yoma
Strategic Holdings Ltd
– a conglomerate incor-
porated in Singapore and
traded on the Singapore
Stock Exchange – and
posses no controlling
stake in the company, nor
does itself have opera-
tions or a supply chain in
Myanmar. The US report-
ing requirements do not
address how to deal with
such passive investments
– an emerging limitation
in a process meant for
good – that could result in
the misinterpretation of
a company’s investment
intensions. Even though
Capital Group has been
labeled an “irresponsible
investor,” they have fully
complied with US law per
GL 17 and the Responsi-
ble Investment Reporting
Requirements.
On the human rights
side
Rights groups view
transparency in US in-
vestment as the para-
mount concern. Ad-
vocates look at the US
reporting requirements
as zero-sum, which re-
sire for Capital Group to
dig deeper. Rights group’s
have a legitimate desire
to present a transparent
view of American invest-
ment in Myanmar so that
civil society can play an
active role in the coun-
try’s economic develop-
ment. As such, human
rights groups want the re-
porting requirements to
go further to account for
every possible scenario.
However, at this point
and time there exists no
middle ground that ac-
counts for every invest-
ment scenario.
ing requirements
In order for the report-
ing requirements to be
value, the United States
government needs to ad-
dress how to make the
process less onerous,
while maintaining high
standards, and work to
clarify the requirements
on how to deal with indi-
rect investment.
First, the US govern-
ment must seek input
from companies interest-
ed in entering the coun-
try, but remain hesitant.
This input, combined
with information ob-
tained in current investor
reports, can help guide US
American companies and
human rights stakehold-
ers. A balanced approach
that addresses the needs
of both the business com-
munity and human rights
organisations should be
the goal. While seemingly
incompatible, we must
mon ground, understand-
ing that no one group will
get 100 percent of every-
thing they want – it’s just
the reality.
how to report passive in-
vestment should be intro-
duced in the near term.
Reporting standards for
passive investment could
be determined by the de-
gree of stakeholder con-
trol, an investor’s ability
sions and operations, and
the percentage of a busi-
ness’ operations that are
physically in Myanmar.
If the United States
wants to encourage in-
vestment in Myanmar,
then clarifying the report-
ing requirements sooner
than later will help make
this goal a reality – pro-
viding strategic economic
advantage to both Myan-
mar and the US.
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“
In order for the reporting require-
ments to be effective and retain
their value, the United States gov-
ernment needs to address how to
make the process less onerous, while
maintaining high standards, and work to
clarify the requirements on how to deal
with indirect investment.”
A man working in the Coca-Cola bottling plant near Yangon. Coca-Cola is among dozens of American
companies investing in Myanmar.Coca-Cola came out as a responsible investor in the US Campaign for
Burma’s recently released report “Report Card: US Companies Investing in Burma”. It makes sense
given the company’s internal infrastructure developed over decades of working in high-risk countries
around the world. However, not every type of investment in Myanmar is as clear and clean cut, and may
American companies.
LynnBoBo/EPA

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 4
Myanmar Summary
Myanmar:ProfessionalSkillGaps,andRisingWages
W
ith the relative-
ly rapid open-
ing of Myanmar
to the international econ-
omy following the coun-
try’s 2011 liberalisation,
the domestic and interna-
tional business communi-
ties in that country has oft
been trumpeted.
However, there are of
course notable side-ef-
fects to this change that
are, for the people of
Myanmar, more harmful
than not. In particular,
one of these addresses
panies to trained profes-
the Myanmar job market.
As with any country that
the outside world, the so-
cialist regime of General
Ne Win and the subse-
quent SLORC adminis-
tration did more than de-
stroy hints of democracy
and rule of law in Myan-
mar. Rather, they reduced
Yangon (then Rangoon)
from a shining beacon of
educational excellence in
Southeast Asia, to a literal
backwater.
In established disci-
plines, the people of My-
anmar were no longer
learning at the same level
as their regional or inter-
national counterparts,
programming there was
Gregory Arnold
virtually no education
available. The results
when Myanmar opened
up in 2011, its own do-
mestic workforce could
not match the skills or
abilities of those people
(either from Myanmar or
foreign) who had studied
abroad.
Companies proceeded,
and have continued, to re-
ries for more-skilled em-
ployees. And while this is
a logical trend, it ignores
that the educational sys-
tem of Myanmar, while
improving, will continue
to lag behind the needs
for talented employees for
quite some time.
As such, the responsi-
bility ultimately falls on
the company, with no real
cheap options available.
While Myanmar employ-
ees may be willing to work
for less than their foreign
colleagues, said company
must then be willing and
able to train these individ-
uals, which costs time, if
not money. Similarly, there
are likely very few foreign
professionals willing to
work for wages that Myan-
more acceptable.
Ultimately, until the
education system of My-
anmar reaches a level
where it can compete with
the neighbouring ASEAN
states, let alone on a glob-
al level, the main source
of skilled labor in the ser-
vice sector will come from
a number of sources.
First, as has been seen
so vibrantly in the current
Yangon business commu-
nity, the number of My-
anmar citizens who have
returned from abroad.
From Singapore to the
United States, the Myan-
mar diaspora has proven
to be willing and able to
take what they’ve learned
abroad to aid the country
of their birth.
Similarly, there are siza-
ble expatriate groups that
have sought to provide
international skills to the
Myanmar business and
economic communities.
As an example, the inter-
national student business
AIESEC provides compa-
nies access to young pro-
fessionals from over 125
have the ability to not
only meet the needs of the
Myanmar business world,
but also to impart these
skills upon local employ-
ees.
Gregory Arnold is a re-
cent graduate of George
Washington University.
He is currently serving
as the Sales Director for
AIESEC Myanmar.
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Students attend an Android OS course in the Myanmar ICT Park in Yangon.
SoeZeyaTun/Reuters

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 5
Commercial Tax Cut Necessary to Protect
Local Businesses: IRD
T
he Internal Rev-
enue Department
(IRD) said a com-
mercial tax cut is essential
despite criticism from for-
eign tax analysts that the
initiative is overprotective
of local businesses.
Commercial tax is a
monetary levy, paid to the
government indirectly by
consumers, on the sale
of locally manufactured
goods and services.
The government low-
ered the commercial tax
year – cutting it from the
in previous years.
Since President U Thein
Sein came to power in
2011 his government has
introduced sweeping eco-
nomic and political re-
forms, opening the coun-
try up to foreign trade and
investment.
May Soe San IRD Director U Tin Tun
Naing said the country’s
commercial tax reforms
have been critical to help-
ing local businesses com-
foreign businesses enter-
ing the country.
“Cutting commercial
tax for domestic prod-
ucts, while imposing 5
percent commercial tax
on imported goods, helps
maintain the demand for
locally produced goods
and services,” he said.
U Tin Tun Naing said
items, the tax is imposed
on all locally manufac-
tured products through-
out Myanmar.
“It doesn’t matter where
these products are pro-
duced, whether in an in-
if the manufacturing
business is registered as
a state-owned or a public
business the tax applies,”
he told Myanmar Busi-
ness Today.
Emergent Services CEO
and economist U Myint
Thaung said the country’s
commercial tax cut ben-
means consumers have to
pay less for products.
“By decreasing the price
of local goods and servic-
es consumers are encour-
aged to choose locally
manufactured products
over more expensive for-
eign imports,” he said.
Currently, tax revenue
in Myanmar comes from
commercial tax, income
tax, stamp tax and lottery
tax.
U Myat Thin Aung,
chairman of Hlaing Thar
Yar Industrial Zone, said
despite the loss of income
from commercial tax cuts,
state revenue is being
supported by other sourc-
es of revenue.
According to the IRD,
cluded in the commercial
tax cut include tobacco,
betel, beer, teak, logs,
gem, car, fuel and natural
gas, among others.
Myanmar Summary
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Myanmar Summary
ChinIndustrialZonestoGoLive
byFY’14;SettoBoostSMEs
May Soe San
I
ndustrial zone devel-
opment projects in
Chin state’s Hakha
and Tedim are expected
to be completed by the
started in April, a minis-
ter said.
The projects are aimed
at supporting the devel-
opment of small and me-
dium enterprises (SME)
in Myanmar’s impover-
ished Chin state, U Ram
Mann, Chin state minister
for planning and econo-
my, told Myanmar Busi-
ness Today.
“The projects will priori-
tise businesses relating to
automobile, and the elec-
tricity for these industrial
zones will be supplied
through the national grid
in Hakha,” the minister
said.
“Land negotiations are
currently under way for
the industrial zone pro-
ject in Hakha, which will
have an area of at least
25 acres,” U Kyin Hlyan
Paung, Chin state minis-
ter for electricity and in-
csif;jynfe,f&Sd[m;cg;ESifhwD;wdef
NrdKUwdkYwGif pufrIZkefpDrHudef;udk
dustry, said.
The projects will be ini-
tiated with small enter-
prises and required fa-
cilities will be developed
added.
A 20-acre industrial
zone project is also be-
ing developed in Tedim,
which will become the
Chin state and is expected
to create employment op-
portunities for the state’s
citizens.
U Salai Kyam, secretary
of Chin National Demo-
sharing is an important
element when a special
economic or industrial
zone is being developed.
“The zones should be
developed according to
international standards
while socio-economic
standards should also be
considered.”
Contd. P 11...

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 6
Myanmar Summary
C
entral Bank Deputy
Governor Daw Khin
Saw Oo said the
government’s newly pro-
posed bill on monetary
policy will help curb ris-
the country.
On June 20, Upper
House representative My-
int Kyi made the propo-
sition to introduce more
government policies to
tackle Myanmar’s grow-
Since President U Thein
Sein came to power, the
country’s sweeping eco-
nomic and political re-
forms have helped My-
anmar’s economy rapidly
expand.
However, the increase
-
eign investments coming
into the country have also
undercut the value of My-
anmar’s currency.
In June, the IMF re-
leased a report estimat-
year, ending March 2015.
The IMF’s Myanmar
mission chief, Matt
Davies, said without re-
forms to the country’s
monetary policy, the high
-
dermine Myanmar’s fu-
ture economic growth.
“Fiscal and external
Tom Stayner demand-side pressures
-
stillinfant macroeconom-
ic management tools,”
Matt Davies said.
New government poli-
cies targeting this con-
cern include work with
the World Bank to man-
age Myanmar’s budget
and engagement with pri-
vate banks to protect the
country’s monetary re-
serves, Khin Saw Oo told
reporters.
Khin Saw Oo said al-
already in place to man-
problem, the majority of
parliament members voted
that more monetary policy
is needed.
April 2014, from 5.53
percent and 1.48 per-
cent respectively in the
same months in 2013 and
2012,” Khin Saw Oo said.
Over 90 government
members supported the
bill, while only 10 parlia-
ment members vetoed the
proposal.
The Myanmar Kyat’s
value has stabilised in
recent months but the
increase of foreign banks
into Myanmar could see
international capital drive
down consumer interest
in the currency.
Davies said Myanmar’s
macroeconomic manage-
to address the country’s
Parliament’s agreement
on the monetary policy
bill shows authorities are
taking action to manage
concerns.
However, the IMF
warned continual im-
provements to macroeco-
nomic policy are needed
to protect Myanmar from
“Ensuring this growth
is sustainable and in-
clusive requires deci-
sive implementation of
a broad range of policies
and structural reforms,”
Davies said.
The current exchange
rate of Kyat and the US
dollar is approximately $1
to K975.
The Central Bank of
Myanmar adopted a man-
exchange rate in April
2012, setting a daily rate
of K818 per dollar, near
the black-market level at
that time.
pegged to the International
Monetary Fund’s special
125 times stronger than the
black market and available
only to state-owned com-
panies.
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2014 Tourist Receipts Expected to Top $1 Billion
M
yanmar’s tour-
ism industry is
expected to earn
more than $1 billion this
year, said U Thet Naign
Toe, vice chairman of the
Union of Myanmar Travel
Association (UMTA).
In 2012 and 2013, in-
come from tourism re-
ceipts were $534 million
-
tively, according to sta-
tistics published by the
Ministry of Hotel and
Tourism.
Between January and
May of this year, Myan-
mar’s tourism industry
brought in more than
$552 million with more
than 1.05 million tourists
visiting the country last
year.
This year, Myanmar ex-
Kyaw Min pects more than 3 million
tourist arrivals, U Tin Tun
Aung, secretary of UMTA
said.
Arrivals from China
and Japan make up the
majority of tourists from
Asia, while arrivals from
France, Spain and Brit-
ain make up the largest
number of tourists from
Europe. Tourist arriv-
als from Thailand have
slowed this year.
“Myanmar’s tourism in-
dustry is going to contin-
the hotel and service sec-
tor for tourists needs to be
upgraded. Only then will
more tourists visit Myan-
mar,” he continued.
According to UMTA,
tourist arrivals have in-
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Myanmar Summary tar&duef a':vmwpfbDvD,H
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wpfqwdk;wufvmaMumif;
od&onf/
A cashier carries piles of kyat banknotes in a private bank in Yan-
gon.
SoeZeyaTun/Reuters
A tourist looks at lacquer-ware, a famous handicraft in Myanmar, at a workshop at Bagan in Mandalay
region.
UAung/Xinhua

July 3-9, 2014
mmbiztoday.com
7LOCAL BIZ
K7.3 Billion Worth of
Illegal Goods Seized over
Eight Months
Htun Htun Minn
A
cargo inspec-
tion team seized
K7.3 billion ($7.3
million) worth of ille-
gal goods at the Yangon
Port over the last eight
months, said the Ministry
of Commerce.
“This operation is car-
ried out to control smug-
gling and to protect con-
sumers in the Yangon
from the Department of
commerce and Consumer
Liquor, beer and food
products were the most
commonly seized items.
The mobile team made
arrests in 12 cases, which
included four customs of-
fenses, six police cases.
“The mobile team’s ob-
jective in examining cargo
for illegal goods will pre-
vent the loss of state in-
come,” said Dr Thein Na-
ing, an exporter.
Mobile teams examin-
ing cargoes at Myanmar’s
ports are relatively new.
Previously, mobile
teams only inspected
goods being transported
across Myanmar’s bor-
ders via vehicle transport.
Myanmar for The First Time Allows Registration
of Secured Loan on A Local Asset
Htun Htun Minn
M
yanmar reached
-
cial milestone in
its path to economic re-
forms as local authorities
upgraded their existing
administrative practice
to accommodate the reg-
istration of international
secured lending.
In a landmark test case,
a wholly foreign owned
Myanmar company which
cross-border loan, was al-
lowed to register security
for that loan on its assets
in Myanmar.
Previously, lenders were
essentially only able to
take security on any as-
-
shore.
Myanmar law and tax
-
sisted on the completion
a secured interest on My-
anmar assets for a foreign
loan in modern times.
The names of the parties
have not been disclosed.
Myanmar has improved
its regulatory framework
-
ing as part of the Foreign
Investment Law and the
Foreign Exchange Man-
agement Act, which were
enacted in 2012.
Nevertheless, the ad-
ministrative practice for
registering security un-
Myanmar Summary
der Myanmar law in gen-
eral remained untested in
modern times as regards
international loans.
VDB Loi’s Managing
Partner Jean Loi said:
“This was a genuine test
case, with a lot riding on
it.
“It really was a col-
Myanmar authorities to
revamp administrative
practices and processes.”
Senior partner Edwin
Vanderbruggen, who led
the team which handled
the matter, said: “We are
very pleased with the re-
-
tough, but also very inter-
esting. Anyway, the door
is open now, so it should
-
nancing deals.
“Until now, lenders
would have to take securi-
as shares of the parent
of a Myanmar company.
has left the barn, the gates
are open to do so much
more, such as a mort-
gage on land lease rights,
a pledge on shares or a
on movable assets, cash
and contractual rights in
Myanmar.”
The re-vitalising of the
country’s administra-
tion of secured interests
comes at a very timely
moment when the Cen-
tral Bank of Myanmar is
pondering the issuance
of a number of corporate
banking licenses to for-
eign banks.
A process is underway
for the selection of the
banks that will receive the
A strengthening of the
country’s practice with re-
spect to creating and en-
forcing security on loans
is a welcome develop-
ment from that perspec-
tive as well, Edwin said.
Myanmar Summary
Myanmar Summary
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a&;tajccHrlabmiftm; tqihf
jr§ifhwifEdkifcJhjcif;jzpfonf/
SherpaHossainy

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 8
Myanmar Summary
GEtoAssistGov’twithEnergyInfrastructure
Phyo Thu
D
eputy Minister for
Electric Power U
Maw Thar Htwe
said that US-based power
solutions giant General
Electric (GE) is helping
Myanmar develop its en-
ergy infrastructure and
improve the country’s
electricity woes.
Experts have expressed
concern Myanmar’s pow-
er infrastructure is strug-
gling to keep pace with
the country’s fast-paced
economic development.
Currently, Myanmar’s
electricity sector is unable
to generate enough power
to meet national demand,
with about 70 percent of
the country getting no
electricity, according to
ADB estimates.
“On June 17, we received
GE’s assessment and we
are preparing to work
with the company to sup-
port the country’s current
electrical improvement
plans,” the minister said.
The company’s evalua-
tion provided a roadmap
on procedures to help
Myanmar overcome their
power infrastructure and
supply shortcomings.
Stuart Dean, GE’s ASE-
AN regional CEO, said his
company’s assessment is
designed to assist the gov-
ernment in implementing
proposed generation, dis-
tribution and rural elec-
GE has held discussions
with Myanmar engineers
regarding the facilities
cy and storage targets
throughout the country.
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od&onf/
Rare Crane Species Found in Northern Myanmar
Htun Htun Minn
O
rnithologists from
British nature con-
servation group
Fauna & Flora Interna-
tional (FFI) found a large
sarus crane population in
the wetlands surrounding
Indawgyi Lake in Kachin
state while undertaking a
recent water bird census.
“First we just saw their
charismatic red heads
sticking out of the tall
green grass, but through
our telescopes we soon
spotted the amazing num-
ber of nine individuals,”
said Ngwe Lwin, who was
counting wetland birds
together with his team of
FFI ornithologists, and
Win Zaw Lun, a ranger of
Indawgyi Wildlife Sanctu-
ary.
This species, which at a
height of up to 1.8 metres
birds, has been frequently
recorded in Rakhine state
and the Irrawaddy delta,
but is very rare in north-
ern Myanmar.
Previously only very
small groups of 2-3 indi-
viduals have been spotted
in Indawgyi, but never
before has such a large
group been seen.
Ngwe Lwin, Fauna &
Flora International’s
Terrestrial Conservation
Programme Coordinator
said, “Finding this large
group of sarus crane in
Indawgyi area has shown
us that this species, which
on the IUCN Red List of
Threatened Species, is
still safe in the Indawgyi
area. We hope to see more
in the future.”
Sarus cranes are large
non-migratory birds
found in parts of the In-
dian Subcontinent, Indo-
china and Australia.
Sarus cranes in Myan-
mar belong to the sub-
species of the eastern
sarus crane Grus antigone
sharpii that formerly oc-
curred throughout Indo-
china.
it has been decimated
throughout this range,
but still occurs in smaller
numbers in Myanmar, Vi-
etnam, and Cambodia.
Eastern sarus cranes in
Yunnan Province (China)
and Laos are either rare
or recently extirpated,
while the eastern sarus in
Thailand was thought ex-
Myanmar Summary
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ESifhyef;ref(FFI) rS iSufavhvm
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onfrSm&Sm;awmifh&Sm;yg;jzpfonf/
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awGU&Sd&aomfvnf; ,ckuJhodkY
tajrmuftjrm;awGU&Sd&jcif;rsKd;
r&Sdao;ay/
Telenor, Samsung Sign
Partnership Deal
N
orway’s Telenor,
one of the winners
of Myanmar’s
coveted telecommunica-
tions licences, has signed
a deal will mobile device
manufacturer Samsung to
work together in the mar-
ket of Myanmar.
Both companies will
work together in the de-
velopment of joint market
vice bundles and promo-
tional activities, Telenor
said.
Petter Furberg, CEO of
Telenor Myanmar, said
the deal marks the begin-
ning of more alliances and
teaming opportunities in
telecommunications be-
tween Telenor and Sam-
sung.
Sharad Mehrotra, chief
enor Myanmar, said, “Our
interest is to have inno-
vative value propositions
for the mass market and
we consider Samsung as a
good partner to work with
in achieving both compa-
nies’ strategic ambitions.”
Through this deal,
the two parties agree to
Aye Myat
strengthen the coopera-
tion framework in the
Southeast Asian market.
Nam Sik Ahn, manag-
ing director of Samsung
Myanmar, said, “We see
Telenor and Samsung will
complement each other in
partnership will strengthen
footprint of both companies
in Myanmar.”
Myanmar Summary
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Telenor Myanmar CEO
Petter Furberg u ,ckuJhodkY
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tirpated in the mid-20th
Century.
FFI is now planning
survey, to gain greater
knowledge and help de-
termine the threats to the
species.
“We have alerted lo-
cal communities not to
destroy their nests or
to attempt to catch the
cranes,” said Ngwe Lwin,
who is educating local
communities.
Once survey results
have been reviewed, FFI
will follow up with con-
servation actions in col-
laboration with the wild-
life sanctuary and local
communities to ensure
the survival of this charis-
matic species in wetlands
of Indawgyi Lake, the
group said.
BjornOlesen/FFI

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 9
Myanmar Summary
Microsoft Tapped to Assist Myanmar Develop
Cyber Security Measures
Htun Htun Minn
M
icrosoft will
work with the
Ministry of
Communications and In-
formation Technology to
increase Myanmar’s cyber
security, said U Kyaw Aye
Naing, executive direc-
tor of local IT company
Knowledge Centricity,
which is the American
IT giant’s market devel-
opment partner in the
Southeast Asian nation.
The company’s support
aims to increase the min-
istry’s awareness about
cyber crime in the country
and help Myanmar devel-
op a legislation to prevent
in the future.
U Kyaw Aye Naing said
Microsoft has submitted
a framework on how My-
anmar should conduct the
country’s cyber security
infrastructure to the min-
istry.
“Microsoft will use their
expertise to show Myan-
mar what to do when cy-
ber security threats arise.
There are also plans for
the company to support
the implementation of
cyber legislation through-
out Myanmar,” U Kyaw
Aye Naing told Myanmar
Business Today.
Attacks on government,
company and other im-
portant websites through-
out the country have
prompted Myanmar to
become more aware of the
need for cyber safeguard-
ing measures.
In their report, Micro-
soft stated, while no cyber
crimes have been identi-
-
troducing cyber security
legislation will help deter
Executive member of the
Myanmar Computer As-
sociation, U Zaw Win, said
the country’s increased
mobile internet usage has
made cyber security legis-
lation a necessity through-
out the country.
“Although there aren’t
many cyber crimes, as the
internet becomes faster
the need to educate users
and protect their personal
information will become
Enterprises in Asia Pa-
to spend nearly $230 bil-
lion in 2014 to deal with
issues caused by malware
deliberately loaded onto
pirated software – $59
billion dealing with secu-
rity issues and $170 billion
dealing with data breaches
– according to a new joint
study conducted by IDC
and the National Univer-
sity of Singapore (NUS).
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Reuters

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 10
Myanmar Summary
Contd. P 12...
Contd. P 12...
Removing the Bottlenecks on the Road to
Middle Income and Making Impact Investible
Maximilian Martin
A
t the shores of Lake
Constance in Swit-
zerland, the fourth
edition of the three-day
Impact Economy Sympo-
sium & Retreat drew to
a close on June 15. The
event annually convenes
leaders, and practitioners
from the worlds of invest-
ment, business, govern-
ment, and philanthropy
in order to showcase the
innovations, and opportu-
nities that have surfaced
in the promotion of im-
pact. Myanmar was one
of the four focus countries
featured this year.
Given the magnitude of
challenges and opportu-
nity the country faces, Im-
pact Economy included
Myanmar in the EMICs,
a new set of key countries
that present exceptional
opportunities to achieve
both impact and value.
The EMICs (Ethiopia,
Myanmar, Iran, and Co-
lombia) are high-stakes,
high-opportunity coun-
tries whose characteristics
allow impact investors to
enabling them to prosper.
Even so, the EMICs face
important infrastructural
which raise the ques-
tion of how a responsi-
ble and forward-looking
approach to investment
and business innovation
can serve to drive large-
scale positive impact. In
this exclusive Myanmar
Business Today series, I’ll
share key content covered
at the conference.
Overcoming isolation
after almost three dec-
ades, Myanmar is now
emerging as a high growth
economy. Given the coun-
try’s strategic geographic
location, its abundant
natural resources, po-
tential for tourism, more
than 50 million popula-
tion with a young labour
force and competitive
wages, Myanmar has the
potential to soon leave its
current status as Asia’s
last frontier behind. Ac-
cording to Deutsche Bank
research, Myanmar could
well become a $100-bil-
lion economy by 2018.
In terms of fundamen-
exciting opportunities
for investors. It is pursu-
ing an ambitious develop-
ment strategy that aims
to achieve both high and
inclusive growth, and has
started laying the corre-
sponding building blocks
– physical, legal and in-
stitutional infrastructure.
All of which is needed: 70
percent of the population
lacks access to electricity,
80 percent of SMEs oper-
ate in the informal econo-
my and over 30 percent of
-
nutrition.
FDI is graduating
beyond extractive
industries
Capital is needed to
deliver on the country’s
middle-income ambi-
tions. The landmark pas-
sage of the 2012 Foreign
Investment Law (FIL),
the recent termination of
international sanctions
and the passage of nearly
20 additional pieces of
legislation that govern
private investment have
all helped to almost dou-
ble foreign direct invest-
ment (FDI) since 2008.
Historically, over 80
percent of FDI volume has
been in deals within the
oil and gas, hydroelectric
and mining industries.
The most active areas of
recent investment have
been in the manufactur-
ing, hotel and tourism
industries. At present,
most foreign investment-
comes from Myanmar’s
neighboring countries
in East Asia: China and
Hong Kong, Thailand,
Korea and – out-of-re-
topinvestors. As per the
recent OECD Investment
Policy Review, approved
Chinese investment has
however decreased rap-
idly over the past year,
declining from $8 billion
million in 2012, though
-
state investments as they
do not aggregate invest-
-
shore locations such as
the British Virgin Islands
or the Cayman Islands.
Bottlenecks need to
be overcome
Opening the economy
is showing results, but a
number of bottlenecks
limiting foreign invest-
-
eral business climate
has room for further im-
provement. In 2014, the
European Commission’s
Report to the EU on My-
anmar/Burma Invest-
ment Relations expressed
concern about Myanmar’s
legal environment as well
as changing requirements
placed on foreigners for
licensing. Work lies ahead
on investment protection
standards, restrictions
on investment in several
sectors, local partner re-
quirements and capac-
ity levels at the Myanmar
Investment Commission
(MIC), which reviews all
foreign proposals to grant
licenses to operate.
The OECD ranks Myan-
mar as the 2nd most re-
strictive country globally
in its FDI Restrictiveness
Index. Next to the quality
of regulation, corruption
remains a chief concern
in Myanmar. The World
Bank ranks Myanmar the
2nd most corrupt country
globally, particularly in
relation to the procedure
of receiving licenses to
-
ings and opening land
leases. Transparency In-
ternational ranks Myan-
mar 157/177 in their cor-
ruption perception index,
more favourable than the
World Bank rating. With
the recent passing of laws
governing investment,
the OECD has cautioned
that government capacity
levels might prove insuf-
levels of investment, par-
ticularly given the cen-
tral role of the Myanmar
Investment Commission.
In order to operate suc-
cessfully in Myanmar,
stakeholders must have
competent and well-
connected legal advice in
order to manage the com-
plex legal environment.
There are several
pathways to driving
impact
In consideration of the
tremendous catch-up po-
tential to investment, the
question that emerges
concern show to drive
investments that have a
wider positive impact on
the country. For those in-
vesting for impact rather
-
nancial bottom line driv-
en deals in sectors such as
infrastructure or mineral
extraction, it is key to be
aware of the realities of
the small and medium en-
terprise and social busi-
ness landscape in Myan-
mar. There are still only
a few examples of impact
investing and very limited
data and track record.
The relatively undevel-
oped banking sector and
a general lack of funding
options for enterprises
seeking between $50,000
and $250,000, paired
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“
Work lies ahead on invest-
ment protection standards,
restrictions on investment in
several sectors, local partner
requirements and capacity levels at
the Myanmar Investment Commis-
sion (MIC), which reviews all for-
eign proposals to grant licenses to
operate.”
extraction, it is key to be aware of the realities of the small and medium enterprise and social business landscape in Myanmar. There are still
only a few examples of impact investing and very limited data and track record.
SoeZeyaTun/Reuters

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 11
Myanmar Summary
Damco Launches First Container
Freight Station in Myanmar
Zwe Wai
T
hird-party logistics
provider Damco
has started operat-
warehouse and Container
Freight Station (CFS) fa-
cility in Myanmar, the
Netherlands-based com-
pany said.
This brand-new 4,000
square metre facility is
C-TPAT compliant and
located within 15 kilome-
tres from Yangon Port
and major industrial loca-
tions, Damco said.
Thefacilityissuitablefor
import and export activi-
ties for Fast Moving Con-
sumer Goods (FMCG),
consumer electronics, ap-
parels, components, ma-
chinery and project cargo,
-
ary of Danish conglomer-
ate Maersk, said.
“This state-of-the-art,
international standard
CFS facility enables us to
provide superior service
to our customers through
direct control and man-
agement of the entire
operation and service de-
livery process,” Kiattichai
Pitpreecha, managing
director of the Thailand,
Malaysia and Myanmar
cluster.
Since international
sanctions were lifted in
2012, Myanmar has es-
tablished itself as a new
frontier market, with po-
tential to become a ma-
jor sourcing country and
consumer market.
The country’s strategic
location between three
drivers of global eco-
nomic growth – China,
India and Southeast Asia
– makes it one of the most
unique emerging markets
in Asia.
“Emerging markets
have always been one of
Damco’s focus areas and
core strengths, with many
of our key customers
sourcing their products
from or operating in these
markets.
the same service quality
for cargo shipped out of
Myanmar as any other
country in which we oper-
ate,” Kiattichai added.
Damco has 11,400 em-
ployees in more than 300
-
tries around the world. In
2013, it had a net turnover
of $3.2 billion, managed
2.8 million Twenty-foot
equivalent unit (TEU) of
ocean freight and sup-
ply chain management
volumes and air freight-
ed more than 225,000
tonnes.
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Damco

July 3-9, 2014
mmbiztoday.com
LOCAL BIZ 12
Myanmar Summary
with a high unmet de-
lending in rural agricul-
tural regions is part of
the explanation. In addi-
options, businesses who
seek to target social and
environmental perfor-
returns part of their DNA
need to acknowledge in-
stitutional limitations,
which include that fact
that Myanmar currently
enforces health and safety
laws in an unsystematic
manner. Moreover, im-
pact investors also need to
deal with the perception
that social enterprises en-
-
tainability. There is some
indication that conscious
-
investible in the country
on a wider scale.
At the current develop-
ment stage, a focus on im-
plementing corporate so-
cial responsibility practices
that align with internation-
al standards could be an
interim step and a lower
hanging fruit. Beyond ag-
riculture – with rice as
the key crop accounting
for over 90 percent of the
food grain production in
the country and covering
country’s cultivated land
area – improving social
and environmental perfor-
mance in the extractive in-
dustries is another key the-
atrefor achieving progress,
which will be examined in
the next article in this se-
ries. In 2012, the value of
the global metals and min-
ing industry approached $1
trillion, while accounting
53 mining countries, three
quarters of whom were low
or middle income.
In Myanmar, jade is
often assumed to lead
the country’s mineral ex-
for the industry are hard
to identify. The Harvard
Kennedy School assumes
exports of the stone
-
lion in 2011, but this is
just an estimate.
Raising the industry’s
social and environmental
performance is possible,
and Myanmar’s many ef-
forts also includes plans
to join the Extractives In-
dustries Transparency In-
itiative (EITI), which pro-
vides a methodology used
by 44 countries around
the world to improve the
transparency of their ex-
tractive industries. Those
looking to invest for im-
pact in Myanmar to help
remove the bottlenecks
on the road to middle in-
comeare well advised to
assess how impact inves-
-
Electricity Master Plan Hopes to Solve
Myanmar’s Electricity Woes
vestment picture as more
foreign capital is deployed
in the MIC’s priority sec-
tors, where their compar-
ative advantage as long-
term, smaller ticket size,
holistic investors truly
lies, and how the ventures
they fund can have a wid-
helping to make impact
investible in the country.
Maximilian Martin is
the founder and global
managing director of Im-
pact Economy, an impact
investment and strategy
Switzerland.
D
eputy Union Min-
ister for Electric
Power U Maw Tar
Htwe said Myanmar plans
to increase the country’s
electricity reserves by 30
percent to combat nation-
wide power shortages.
Myanmar’s annual elec-
tricity consumption rate
is expected to increase 13
percent per year, current-
-
watts (MW).
The government’s
Electricity Master Plan
(EMP) aims to produce
year of 2030-31 to meet
the country’s rising power
demands.
Currently, Myanmar’s
electricity sector is un-
able to generate enough
power with 70 percent of
the country’s population
deprived of electricity.
Hydroelectricity will
produce over 37 percent
of the plan’s power out-
put, with 20 percent com-
ing from natural gas, 33
percent from coal and
more than 9 percent from
other renewable energy
sources.
Myanmar’s Electric-
ity Master Plan includes
over 40 projects spread
throughout the country,
according to the Ministry
Htun Htun Minn of Electric Power.
The World Bank will
provide loans for the
project in phases and es-
timates the cost of Yan-
gon’s power infrastruc-
ture upgrade at around
$214 million, according to
U Maung Maung Thein,
union minister for electric
power.
Asian Development
Bank (ADB) and Word
Bank started assessing
the government’s EMP in
2012 and have provided
technical support to the
project ever since.
Union Minister U
Maung Maung Soe said
based on the banks’ eval-
uations, the government’s
EMP will be unviable
without investment from
foreign companies.
technology, funds or state
budget to complete the
EMP on our own, that’s
why we invite invest-
ments,” U Maung Maung
Soe said.
Myanmar will imple-
ment electricity projects
throughout the country in
three ways – construction
by state, local business
U Maung Maung Soe-
said more than 90 per-
cent of international com-
panies showing interest in
the country’s Electricity
Master Plan have come
from China
“Many Chinese compa-
ny’s have business inter-
ests in the country so we
to implement the Elec-
tricity Master Plan,” U
Maung Maung Soe said.
The government has
taken out $200 million
in loans from the World
Bank and Asian Devel-
opment Bank to address
the country’s 15 percent
decrease in nationwide
electrical output this year.
power shortages include
Yangon, Mandalay, Saga-
ing and Magway.
U Maw Tar Htwe said
Myanmar’s cheapest form
of power, hydroelectric-
ity, can’t always be relied
on to meet the country’s
power shortages.
“Hydropower supply
increases in the rainy sea-
son but decreases in sum-
mer. We need to build up
our coal and natural gas
supplies to be able to deal
with these changes inour
water-based economy,”
the minister said.
-
ject in Myitsone, Kachin
state has been suspended
for months due to public
opposition, according to
the Ministry of Electric
Power.
However, authorities
more projects, generat-
ing an extra 390MW,
in hopes of securing the
country’s Electricity Mas-
ter Plan’s future.
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“
At the current develop-
ment stage, a focus on
implementing corporate
social responsibility prac-
tices that align with internation-
al standards could be an interim
step and a lower hanging fruit.”
AthitPerawongmetha

July 3-9, 2014
mmbiztoday.com
REGIONAL BIZ 13
Myanmar Summary
China Urges Peaceful Development of Seas,
Adam Jourdan
C
hina, involved in
a growing dispute
with its neighbours
over the energy-rich
South China Sea, wants
to promote peaceful de-
velopment of the oceans,
Premier Li Keqiang said,
past had only brought
“disaster for humanity”.
China claims almost the
entire ocean, rejecting ri-
val claims to parts of it
from Vietnam, the Philip-
pines, Taiwan, Malaysia
and Brunei in one of Asia’s
most intractable disputes
It also has a long-running
dispute with Japan in the
East China Sea.
“China will unswerv-
ingly follow the path of
peaceful development
of hegemony in maritime
-
time summit in Greece on
Friday in comments car-
ried by China’s Foreign
Ministry website on Sat-
urday.
“Developing the oceans
through cooperation has
helped many nations
sea has only brought dis-
aster for humanity.”
Concern over China’s
motives has risen in the re-
gion after China sent four
more oil rigs into the South
China Sea, less than two
months after it positioned
a giant drilling platform in
waters claimed by Vietnam
around the Paracel Islands.
The lack of any break-
through in the dispute
suggests China and Vi-
etnam are far from re-
solving one of the worst
breakdowns in relations
since they fought a brief
war in 1979.
Among the obstacles
is Beijing’s demand for
compensation for anti-
Chinese riots that erupt-
ed in Vietnam after the
drilling platform was de-
ployed at the beginning of
May.
Speaking at a forum in
Beijing on Saturday, Chi-
na’s top diplomat, State
Councillor Yang Jiechi,
who visited Vietnam this
week to discuss the rig
dispute, said China had
both the patience and sin-
cerity to push for talks to
resolve such spats.
But China would not
he added.
“China will not trade its
core interests and will not
swallow the bitter pill of
harming China’s sover-
eignty, security and de-
velopment interests,” said
Yang, who outranks the
foreign minister.
China’s state news agen-
cy Xinhua, in a report
late on Friday, accused
Vietnam of encouraging
-
puted waters around the
Paracel Islands by using
-
ing the problem was ram-
pant.
“Vietnamese seized by
Chinese law enforcement
-
ing confessed that they
were given large subsidies
by the Vietnamese gov-
-
ed waters’,” Xinhua said
in the English-language
report.
“In addition, armed Vi-
have repeatedly looted
posing a serious threat to
-
ermen’s lives and prop-
erty,” it added.
The Philippines said
this week it will ask an
international arbitration
tribunal in the Hague to
make a speedy ruling on
its dispute with China
over exploiting waters in
the South China Sea af-
ter Beijing refused to take
part in the proceedings.
Reuters
Philippines May Loosen Rice-
Import Curbs as Prices Soar
Adam Jourdan
T
he Philippines is
considering easing
rice-import curbs
as Asia’s second-biggest
buyer battles record-high
domestic prices and seeks
to limit losses at a state
agency, Economic Plan-
ning Secretary Arsenio
Balisacan said.
Policy makers will con-
sider a proposal next
month to adopt a free
market and allow pri-
vate traders to import as
much rice as they want,
-
Manila yesterday. The
government would in-
imports, he said.
“We need to get our
trade policy right to ad-
dress rising rice prices,”
Balisacan said. “Our ap-
proach in restricting rice
imports without an ade-
quate assurance that local
rice production would be
was the main factor” that
led to higher prices, he
said.
President Benigno
Aquino is seeking to
at the fastest pace since
November 2011, boosted
by the higher cost of rice,
a staple in the Southeast
Asian nation. Debt at the
National Food Authority,
which subsidizes farm-
ers by buying their rice at
higher prices, will prob-
ably climb to 180 billion
pesos ($4.1 billion) by
changes to the program,
Aquino said, or twice the
nation’s defense budget
this year, according to
Bloomberg calculations.
“Moving to a free market
allows the government to
plug its cash leaks stem-
ming from rice subsidies,”
said Jonathan Ravelas,
chief market strategist
at BDO Unibank Inc. in
Manila. “It also provides
more market access for
people to buy rice.”
Record Prices
The government had
planned to import 1 mil-
lion metric tons of rice
this year, including
200,000 tons secured last
year after Super Typhoon
Haiyan struck in Novem-
ber. Separately, it allowed
private traders in Febru-
rice from overseas.
Consumer prices
climbed 4.5 percent in
May from a year ear-
lier. Retail prices of well-
milled ricerose 20 percent
from a year earlier to a
record as of the second
week of June, according
to the Philippine Statis-
tics Authority.
That’s in contrast
to prices of Thai 5-per-
cent broken white rice, an
Asian benchmark, which
in the past year as the
Thai government acceler-
ated sales of stockpiles to
make payments to farm-
ers. Thai reserves have
more than doubled to al-
most 14 million tons from
2010-2011 crop year prior
to the start of the govern-
ment’s rice purchase pro-
gram, according to data
from the U.S. Department
of Agriculture. Reuters
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National Food Authority (NFA) workers walk atop sacks of rice as they make an inventory of rice stocks
at a government rice warehouse in Taguig, Metro Manila.
ErikDeCastro/Reuters

July 3-9, 2014
mmbiztoday.com
REGIONAL BIZ 14
A Flying Beetle in India Threatens
to Push up Latte Prices
I
t’s 10 o’clock in the
morning and a dozen
workers are uprooting
M.G. Bopanna’s planta-
tion in southern India
where they lie ready to be
burned.
The plants are bursting
with green cherries but
inside their hard bark lurk
destructive white stem
borer beetles. The bushes
have to be destroyed to
prevent the tiny winged
creature from threatening
Bopanna’s entire crop of
The beetle, which bores
through plants’ bark and
feeds on their stems, is
thriving this year due to
unusually warm weather
and scant rains in arabica
growing areas in India,
the world’s sixth biggest
If the hot spell continues
and the pest continues to
could fall to its lowest in
17 years when the harvest
starts in October, push-
ing up global prices that
are already rallying due
to drought in top exporter
Brazil.
The damage caused by
the beetles is so severe
that Bopanna has hired
an excavator to uproot
acre plantation at the hill
station in the tropical for-
est of the Western Ghats,
west of high-tech hub
Bangalore.
Rajendra Jadhav “Every time we think we
have uprooted all the in-
fected plants, then after a
has tended the plantation
bought by his father for
nearly four decades.
“Earlier whenever there
was an outbreak, we used
per acre. This year I have
uprooted more than 200
plants per acre,” he said.
pesticide to control white
stem borers, so the state-
farmers to uproot and
burn infested plants to
limit their spread.
“You may take all precau-
tions, but if your neighbour
is lethargic then white stem
neighbour’s plantation,”
said N. Bose Mandanna, a
grower from Madikeri who
plants from his 34 acre
SCANT RAIN
In most years heavy
rainfalls and low temper-
atures restrict the spread
of the white stem borer.
But this year southern
Karnataka state’s Kodagu
and Chikmagalur dis-
tricts, which account for
two-third of India’s total
received half the usual
rainfall since the start of
monsoon season on June
1.
The state run weather
department said earlier
this month that rainfall
in July and August is ex-
pected to remain below
average.
“The pest infestation
will rise quickly if rain-
fall remains subdued in
the next few weeks,” says
Mandanna, a fourth-
planter.
production could drop
as much as 20 percent
in the 2014/15 season to
said a spokesman at Ruchi
That would pull down
three quarters of which
tonnes, the lowest level
since 1997/98, estimates
Ruchi Soya.
Italy, Germany and Bel-
gium are the main buyers
-
ally pay a premium for it
over global prices. Star-
bucks, J.M. Smucker Co
and Kraft Foods Group are
leading buyers of arabica.
Bopanna and other
farmers are replacing af-
fected plants with new
seedlings, cultivating
instead a robusta vari-
ety that is cheaper than
arabica but resistant to
white-stem borer.
“I would love to have an
with arabica, but I have to
consider earnings as well.
How I would pay workers
if the pest damages my
entire arabica crop?” asks
Bopanna, who is planning
-
busta this year.
-
cally roasted and ground
for brewing and can range
widely in quality, with
some reaching the high-
est levels. Robusta, on the
other hand, is more bitter
and either processed into
a roasted blend to reduce
the cost. Reuters
China Charges Former Head of
Planning Ministry With Bribery
Ccharges against the
former deputy di-
rector of the economic
planning ministry, saying
he illegally received mon-
ey and goods in bribes.
Liu Tienan, 59, former
deputy head of the Na-
tional Development and
Reform Commission, was
accused of seeking gain
for others, a statement
on the Supreme People’s
Procuratorate saidye-
sterday. The case was
Henry Sanderson
Intermediate Court in
Langfang city in central
China’s Hebei province,
it said. The procuratorate
described the bribes as
“extremely large.”
The prosecution of Liu,
which will almost cer-
tainly result in conviction,
could vindicate public
claims made against him
by a journalist months
before his downfall from a
ministry with control over
a vast swathe of the econ-
omy. Liu was stripped in
May 2013 of his position
at the NDRC, which ap-
proves infrastructure pro-
jects and controls energy
prices, after Luo Chang-
ping, deputy managing
editor of Caijing Maga-
zine, posted allegations
on his microblog in De-
cember 2012.
Luo, an investigative
journalist who has writ-
ten a book about corrup-
tion, said in his posts that
his academic credentials
and that his son received
payments in U.S. and Ca-
nadian dollars into bank
accounts from a business
executive. The Commu-
nist Party’s disciplinary
body announced via Xin-
hua on May 12, 2013 that
Liu was the subject of an
Whistle-blower Crack-
down
Since Luo’s case, how-
ever, the party has taken a
harder line against those
using Sina Corp. (SINA)’s
Weibo service to act as
whistle-blowers or ex-
press views it considers
subversive, even as the
party’s discipline body
has continued with its an-
ti-corruption campaign.
Charles Xue, a venture
capitalist who talked
about sensitive topics to
his millions of followers
on Weibo, was detained
in August on charges of
visiting prostitutes. Re-
leased for medical rea-
seen publicly on June 21,
the China Youth Daily re-
ported a day later.
The government last
week released new rules
barring domestic journal-
ists from writing stories
without the approval of
their employer or in dif-
ferent areas than they
normally cover, accord-
ing to Xinhua. The regula-
tions prevent journalists
from setting up their own
websites or advertising
and public relations com-
panies, it said.
Bloomberg
Myanmar Summary
Myanmar Summary
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Madikeri in the southern Indian state of Karnataka. If the hot spell continues and the pest continues to
-
ing up global prices that are already rallying due to drought in top exporter Brazil.
RajendraJadhav/Reuters
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July 3-9, 2014
mmbiztoday.com
REGIONAL BIZ 15
Myanmar Summary
Inspection Tensions Add to Bangladesh
Garment Industry's Woes
I
t took Western safety
inspectors only about
an hour to tour a fac-
tory the size of three foot-
-
ing a partial shutdown
of Sonia & Sweaters Ltd,
a Bangladesh clothing
supplier to Wal-Mart
Stores Inc (WMT.N) and
Debenhams (DEB.L).
Two weeks later, the
group that the inspec-
tors represented changed
its mind and allowed the
factory to stay open, even
though none of the re-
pairs they suggested had
been carried out.
Such erratic decision-
making poses a new set
of problems for Bangla-
desh’s $22 billion gar-
ments industry, whose
safety record has been un-
der the microscope since
the collapse of a factory
near Dhaka that killed
more than 1,100 workers
last year.
More than a year af-
ter the public outcry that
spurred Western retail-
ers into demanding bet-
ter standards from the
factories that make their
clothes, it also highlights
the practical complexities
of improving the condi-
tions of millions of poor
workers whilst also safe-
guarding their jobs.
Export growth in the
sector has slowed as buy-
ers turn to India, Myan-
mar, Vietnam and Cam-
bodia because of concerns
over workshop safety,
Nandita Bose higher wages and political
instability.
Now factory owners say
they are concerned about
arbitrary shutdowns and
meeting the cost of de-
mands for remedial work,
while workers worry
about who will pay their
wages if their workplace
is temporarily closed.
“We went through inex-
plicable harassment dur-
ing this whole process,
and I am sure they don’t
care about that,” said So-
nia & Sweaters Director
Mahabubur Rahman, of
his experience of the in-
spection.
“But with their trigger-
happy attitude, I am left
wondering if they at least
care about the workers,
who they are meant to
protect, because nobody
has to explain to them
what the implication of
one factory shutdown is.”
The garment industry
accounts for 80 percent
of Bangladesh’s exports,
and turmoil in the sector
has put at risk the liveli-
hoods of nearly 4 million
garment workers, mostly
women.
FACTORY INSPEC
TIONS
The collapse of the
eight-storey Rana Plaza
building in April 2013
brutally exposed the in-
adequacy of the safety
regime in Bangladesh,
factories are inspected by
technical equipment and
the required expertise.
The disaster led to the
creation of the Accord on
Fire and Building Safety,
an inspection group led
by European retailers,
and the North Ameri-
can brands-led Alliance
for Bangladesh Worker
Safety, which together are
scrutinizing around 2,100
factories.
The groups, which have
a mandate to recommend
the closure of dangerous
factories and demand re-
pairs, are now embroiled
in a debate over the in-
spection process and the
question of who pays
for upgrades and wages
while factories stand idle.
Making the situation
worse, almost all global
retail brands have opted
to stay out of the argu-
ments between inspection
agencies and suppliers,
according to industry of-
When the inspection
groups were set up, retail-
ers did not commit to pay
for improvements they
demanded - some Bang-
ladesh factory owners are
very wealthy and political-
ly connected - but agreed
to discuss assistance with
wages and improvements
them.
Wal-Mart spokesman
Kevin Gardner said, as a
founding member of the
Alliance, the company’s
contributions have made
funds available to help
factory owners make nec-
essary repairs and to sup-
port workers who may be
temporarily displaced.
This includes an ini-
tial worker safety fund of
nearly $50 million and
growing, and more than
$100 million in access to
low-cost capital funding
-
tural safety. Debenhams
declined to comment.
Reuters
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DavidGoldman/Reuters
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