April 5th | 2014 ECONOMY Developing Myanmars Stock Market : Sate the Dire Need for Capital

Source : Myanmar Business Today (3rd April) Stock market capitalization is the total monetary value of stock companies sold through stock market. The more liquid the stock market, the higher the stock market capitalization to GDP ratio. For example, Singapore stock market ratio of stock market capitalization to GDP is 150 and for Thailand its around 100, while Vietnams is around 20 even after more than a decade of existence. For Zambias stock market the ratio is only 14 after more than 15 years of operation, according to World Bank data. Vietnams stock market capitalization to GDP was very minimal after they started operation in 2000 and till 2005 the ratio was less than 1 percent of GDP. The development of a new stock market involves several factors and parties such as government, business organizations and the public. Myanmar business organization definitively needs education, training and accountability for raising capital through Myanmars stock market. In short, Myanmar business organizations need practices of good corporate governance in order to avoid similar pitfalls as the Chinese stock market. We all should be mindful of the old saying Rome was not built in a day. It will take some time for Myanmars stock market to become a liquid market like Vietnams. Less liquid market means less trading (buying and selling stock), less trading causes low stock market value (price). Therefore, even for the same company listed in Yangon Stock Exchange and Singapore Stock Exchange, valuation of the listed company in Singapore will be higher than the company listed in the newly-opened Yangon Stock Exchange. The company listed in Singapore will then be able to raise more capital to invest and expand their business because of the higher valuation. Since new Myanmar stock market is not liquid, Myanmar companies value will be less, so the equity capital they can raise from the stock market will be limited. Consequently, Myanmar companies with less capital will face hard time competing with international businesses.

GDP Growth Prospects Strong In The Short Term Source: Myanmar Times (2nd April)
Surging credit growth in the banking sector, rising investments and continued economic reform last year resulted in economic growth to the tune of 7.5 percent gross domestic product (GDP) for the 2013 fiscal year, according to the Asian Development Bank (ADB). In its annual Asian Development Outlook report, the ADB highlighted a 59.5pc increase in capital goods imports to US$5.8 billi on last year, as well as resurgence for the agriculture sector, after being hit by flooding the year before. Business confidence has markedly improved in recent years, as reflected in a rapid increase in new business registrations, which exceeded 5,000 in the 10 months to January 2013, more than in the whole of the previous fisc al year, the report states, adding that private sector credit maintained a rapid growth at 46pc for the last fiscal year. In the oil and gas sectors, the ADB also pointed to a 68.8pc increase in natural gas exports to 7.7 trillion cubic feet in the 12 months to September 2013, with the Shwe and Zawtika gas fields starting production. Last years economic growth exceeds prior outlooks by

the World Bank and ADB, both of whom revised growth up to 6.8 percent in October. As a result of high GDP growth last year and the prospect of continued reforms and investment from abroad, growth is expected to increase a further 7.8 percent for the 2014 fiscal year, the ADB stated.

Myanmar Developer Yoma Sees Long Road To ASEAN Integration

Source : Myanmar Business Today (1st April) Myanmar-focused conglomerate Yoma Strategic Holdings Ltd said Southeast Asia needs to work exceptionally hard to realize a balanced, European Union-style integration of such disparate economies. Yoma is listed in Association of Southeast Asian Nations (ASEAN) member Singapore whose advanced island-state economy contrasts with that of fellow member Myanmar, rich in gems and natural gas but paralyzed by decades of military rule and isolating sanctions. Elsewhere in ASEAN, communist Laos has an economy that is less than 3 percent the size of that of monarchist neighbor Thailand, according to The World Bank. The population difference would suggest a size of 10 percent. That we will all share the benefits of integration is beyond dispute, Yoma Chai rman Serge Pun said at the Reuters ASEAN Summit. But a lopsided result where some members benefit more than others is not sustainable. I think we will make it happen, Pun said. But I feel that there has been ... over expectation of what ASEAN integration will do for all of us.

INVESTMENT Joint Venture Deals No Easy Task In Myanmar, Say Experts

Source : Myanmar Times (31st March) The process of collecting monthly accounting data, creating clear business units and traceable asset ownership are lengthy and complex and a must for joint venture deals with international partnerships, experts said at a KPMG business forum on March 25. The forum, titled Creating Positive Business Partnerships, focused on how local Myanmar companies can look at restructuring acc ounts, company business units and operating systems to pave the way for joint ventures with international investors. U Win Aung, chair of the UMFCCI, said in his opening remarks that Myanmar was entering a new era of economic development and that the rapid prog ress in the country is new Myanmar blooming into its full potential. But, U Win Aung said, there is a recognition t hat Myanmar can become more competitive through international joint ventures with locally-based companies. Bangkok-based KPMG executive director Ian Thornhill addressed the forum on common international investor concerns they had managed in Myanmar joint ventures. These concerns pertained to accounting practices, asset management and legal obligations. One of the challenges was the desire of international investors to review monthly accounting reports of a potential local joint venture partner, Mr Thornhill said. Statutory requirements are to submit an audited balance sheet of profit and loss every year, but even if those sets of accounts are 100-percent accurate and perfect, what happens if the joint venture partner wants to do a deal in November or December. That information is already six months out of date, he said.

Japan Agrees To Invest In Dawei SEZ

Source : Myanmar Business Today (31st March) Japan has agreed to invest in the Dawei Special Economic Zone (SEZ) in southern Myanmar, said an official accompanying Japanese Foreign Minister Fumio Koshida who is on a visit to Myanmar, according to local media reports. The official said Koshida agreed to invest in Dawei SEZ during his meeting with his Myanmar counterpart Wunna Maung Lwin in Nay Pyi Taw. Japan initially agreed to construct the road linking Dawei SEZ and Thailand and feasibility studies would be conducted soon for this.

HOTEL & LEISURE IFC To Lend Shangri-La Asia $80m For Myanmar Projects
Source : Myanmar Business Today (31st March) International Financial Corp (IFC) will lend $80 million to Shangri-La Asia Ltd for the expansion of the Traders Hotel and the construction of the Shangri-La Residences in Yangon, local media reported, citing Vikram Kumar, resident representative of the IFC in Myanmar. Shangri-La Asia has been facing acute shortage of hotel rooms due to a steep rise in tourist arrivals in Myanmar. The 270-roomed Traders will have 485 rooms on completion of the expansion project, while the Shangri-La Residences will have 240 rooms.

RESIDENTIAL Bids For Yangon Low-Cost Apartments Reach 14,000

Source: Myanmar Times March 30 The number of applicants of two large-scale, low-cost housing projects in North Dagon township reached more than 14,000 last week as the government prepares to announce the winners of nearly 1250 units, officials said. The applicants are competing for apartments in the government subsidised Bo Min Yaung and the 114-acre Bo Ba Htoo housing projects, for which the application deadline has concluded for the first, while proposals for the latter must be submitted by March 31. Though about 14,000 people applied for the 448 apartments of Bo Min Yaung, just 310 had applied for the 800 homes in the Bo Ba Htoo complex as of last week.Yangon City Development Committee (YCDC) deputy director of building engineering U Nay Win has told The Myanmar Times that unsuccessful applicants for Bo Min Yaung will automatically be considered for Bo Ba Htoo and need not reapply. Altogether, YCDC plans to build a total of five affordable homes complexes, including those in Pin Lone, Ayeyarwon housing in Dagon Seikan and another estate at the University in East Dagon, he said. Work at Bo Ba Htoo is already some 20 percent complete, and is scheduled for completion in December.

REFORMS Privatization Law Essential, Say Economists

Source: Myanmar Times, March 30 President Thein Seins chief economist, U Myint, is calling on the government to pass stringent privatization laws amid conce rns of continued cronyism and rent-seeking in the sale of government-owned property, services and other businesses. There should be regulatory control of privatization in the interests both of the public and the businesses concerned. Ensuring balance between the two needs a strong law, he said, adding the parliament should make establishing a privatization law a top priority. People are worrying that all the state-owned property went to cronies, he said, adding that he has continue to propose suggestions to fix the problem directly to President U Thein Sein, House Speaker Thura U Shwe Mann and National League for Democracy leader Daw Aung San Suu Kyi. In order to deal with the issue, U Myint suggests that the entire process of selling government entities be made 100-percent transparent, from the tender process all the way through the transfer stage this includes making available signed leases, concession paperwork, tender proposals and the various contracts and licenses that go into the sales process.

Myanmar Parliament Speaker, Opposition Leader Agree On Constitution Amendment

Source : Myanmar Business Today (31st March) Myanmar parliament speaker and chairman of the ruling party, the Union Solidarity and Development Party (USDP), Thura U Shwe Mann and opposition leader Aung San Suu Kyi agreed last week on the need for amending the 2008 constitution. The move is necessary for rule of law and eternal peace, both the leaders said at a joint press conference in Nay Pyi Taw following the end of the 9th parliament session. Both USDP and NLD said the parties will run in the upcoming by-election in all 30 vacant constituencies. The by-election is expected to be held before the end of this year.

YANGON (MYANMAR) H2 2013 PROPETY MARKET REPORT

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