ECONOMY Archives

Govt announces priority sectors for emergency loans in Myanmar

Workers near sewing machines in a closed garment factory near Yangon. The workers were seeking to claim their salaries and overtime pay on March 8. Photo: EPA The committee set up by the government to handle the economic impact caused by the COVID-19 pandemic has issued a statement on which sectors of the economy would be prioritised for emergency low-interest rate loans that are part of a stimulus package.

Cut-make-pack enterprises in the garment industry, hotels and tourism businesses, and small and medium enterprises would be given preference for the loans. In the announcement, the task force said that these sectors are priorities in the country’s economy and also the ones most immediately affected by the global economic slowdown brought on by the pandemic.

Loans with interest rates of 1 percent for businesses in the categories will be disbursed from a K100 billion fund set up by the government. The sum is further divided into a K50 billion revolving fund and K50 billion social welfare fund.

On 29 March, he Ministry of Planning, Finance and Industry (MOPFI), which is part of the task force, announced that the loans will be provided at an interest of 1 percent for a one year period. MOPFI announced that the interest and loan period will be reviewed as required depending on the impact for the country’s economy.

The government noted that failure to pay back the loans shall be met with legal proceedings in accordance with the existing laws. Applications have to be submitted between March 30 to April 9.

On 30 March, the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) announced that it will cooperate with the government to respond to the impact on the country’s economy and that it helps the sectors most impacted to apply for the loans.

The government also officially announced that the 2 percent advance tax on export items will be lifted until the end of 2019-20 fiscal year.

Source: Myanmar Times

Maritime trade up $2.27 bln in 2019-20FY

The value of Myanmar’s maritime trade for the period between 1 October and 20 March in the 2019-2020 fiscal year totalled US$13.49 billion, an increase of over $2.27 billion compared to the year-ago period, according to the Ministry of Commerce.

While maritime exports were valued at $5.23 billion, imports were registered at $8.25 billion. Compared to the same period in the 2018-2019 fiscal year, imports were higher by $1.34 billion, while exports registered an increase of $932 million. Meanwhile, the value of trade through the border crossings was estimated at $5.19 billion, an increase of $501.37 million.

The country’s total external trade reached $18.68 billion, which was higher than the $15.9 billion recorded in the year-ago period.
Myanmar exports agricultural products, fishery products, minerals, livestock, forest products, finished industrial goods, and other products, while it imports capital goods, consumer goods, and raw industrial materials.

The country currently has nine ports involved in sea trade. Yangon Port is the main gateway for Myanmar’s maritime trade and includes the Yangon inner terminals and the outer Thilawa Port.

Source: The Global New Light of Myanmar

Htikhee border trade falls by $237.78 mln

Bilateral trade between Thailand and Myanmar through the Htikhee border between 1 October and 20 March in the 2019-2020 financial years sharply fell to US$973.28 million from $1.2 billion registered in the year-ago period, according to the Commerce Ministry
data.

Over the five months period, exports through the Htikhee border stood at $959.16 million, while imports fell short of $14 million. Exports of natural gas from Taninthayi Region contributed to the enormous increase in trade through the Htikhee border in the 2018-2019 fiscal.

The Myawady border sees the largest trade among the Myanmar-Thailand checkpoints. The rise in exports through the Htikhee border boosted the value of the Myanmar-Thailand border trade in the 2018-2019FY. In the 2019-2020 fiscal, trade values at Htikhee border surpassed those registered at Myawady border.

Trade values stood at $$68.58 million at Tachilek gate, $589.34 at Myawady, $199 million at Kawthoung, $93.886 million at Myeik, $973.28 million at Htikhee, $12.6 million at Myawady and $2.53 million at Maesei respectively.

Myanmar primarily exports natural gas, fishery products, coal, tin concentrate (SN 71.58 per cent), coconut (fresh and dry), beans, and bamboo shoots to Thailand. It imports capital goods such as machinery, raw industrial goods such as cement and fertilizers, and consumer goods such as cosmetics and food products from the neighboring country.

Source: The Global New Light of Myanmar

China provides US$6.7 million for 22 projects in Myanmar

Officials from China and Myanmar signing documents for the latest phase of the Mekong-Lancang cooperation initiative in Nay Pyi Taw on Monday. Photo - Ministry of Foreign Affairs

The Ministry of Foreign Affairs announced on 23 March, 2020, China will provide US$6.78million (K9.45 billion) to Myanmar for 22 projects under the of the Mekong-Lancang cooperation initiative,

The Mekong-Lancang Cooperation Special Fund is a cooperation mechanism set up by China that involves Cambodia, Laos, Myanmar, Thailand and Vietnam with the aim of promoting cooperation in the areas of political, security, and economic and social development.

The projects cover sectors such as agriculture, water resources, education, society and culture, research, information and technology, rule of law, human resource and investment, said the Ministry of Foreign Affairs in its announcement.

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The Mekong-Lancang initiative, established in 2016, aims to reduce the development gap and promote sustainable development in the Mekong region and was first proposed by Chinese Prime Minister Mr Li Keqiang at the ASEAN-China Summit held in Myanmar in 2014. Myanmar received US$2.4million for 10 projects from the Mekong-Lancang Special Fund 2017 and US$7.2million for 19 projects from Mekong-Lancang Special Fund 2018.

Of the latest tranche of funding, about US$5 million will be spent on 12 projects related to agriculture, farming, and rural development. The Mekong-Lanchan Cooperation Programme involves the People’s Republic of China and five countries of the Mekong region – Cambodia, Laos, Myanmar, Thailand, and Vietnam, and aims to bring about cooperation in political, security, economic, and social development issues in the member countries.

China initially put in US$400 million for the implementation of the development projects, and the Ministry of Agriculture and Irrigation is currently acting as the focal point of the initiative in Myanmar.

Source: Myanmar Times

Thai-Myanmar trade hit by border closures

A file image of a border crossing on the Myanmar-Thai border. Chan Mya Htwe/The Myanmar Times

Myanmar’s trade with its ASEAN neighbour Thailand cannot help but be affected by the closure of crossing points along the countries shared border.

Thailand has closed several gates along the Thai-Myanmar border to goods and people and will allow only goods through two crossing points as part of efforts to curb the spread of the COVID-19 coronavirus.

Elsewhere, Thailand also closed the Tachileik, Htee Khee, and Mawtaung border gates to both people and goods on 23 March. The entry of people, goods and vehicles at the permanent and temporary crossing points in Ya Naung District will also be suspended until the situation returns to normal.

Although Thailand closed Tachileik gate, goods can still go through Myawaddy gate. Trade is not completely halted but there will be effects as the flow of goods is now restricted. It is still too early to say what the overall effects will be.

Myanmar’s main export through Myawaddy is maize and some US$1.5 million of the crop is sent to Thailand annually. Thai-Myanmar border trade is conducted mainly through the Myawaddy, Tachileik, Kawthaung, Myeik, Htee Khee, Maw Taung and Maese border trade areas.

2019-2020 fiscal year, trade volume via the Myawaddy border trade area has reached a total US$555.32 million, with exports reaching US$167.88 million and imports US$387.44 million.

Tachileik saw trade worth US$63 million, Kawthaung US$171 million, with US$145million ub exports. Myeik saw US$90million, with US$35million in exports and US$55 million in imports. Htee Khee saw US$882million – with US$868 million in exports and US$14 million in imports. Maw Taung saw trade volumes of US$11million, while Maese saw slightly more than US $2 million.

Source: Myanmar Times

India to import 400,000 tonnes of mung bean from Myanmar in 2020-21FY

India government has granted permission to import 400,000 tonnes of mung bean from Myanmar in the next fiscal of 2020-2021.

In 2019-2020 FY, India announced that they would need an import quota of 150,000 tonnes of mung beans. At the end of December 2019, India wanted Myanmar to export 250,000 tonnes by 31 March. India usually buys mung beans, pigeon peas, green grams, and yellow peas on a quota basis. But this time, India announced the permission to import 400,000 tonnes of mung beans only.

With permission to import 400,000 tonnes of mung beans in the next fiscal, it is likely that there will emerge a good beans market for the local farmers in the next beans season. After the announcements, the mung bean price goes up for a reasonable percentage in the market. Now, the price of the mung bean is K950,000 per tonne.

Myanmar embassy in New Delhi, India announced that India granted to import 400,000 tonnes of mung beans from Myanmar in 2020-2021FY, which have been restricted as import commodity since 2017 by the Indian central government according to 2015-2020 foreign trade policy.

On 17 March 2020, the India Ministry of Commerce and Industry announced that this restriction is not really concerned with the bilateral Memorandum of Understanding (MoU). Additionally, India has permitted to import 250,000 tonnes of mung beans from Myanmar, extended its deadline to the end of April for 2019-2020 FY, under the permission of the Directorate General of Foreign Trade (DGFT) on 3 March.

On 19 March, the directorate also announced that the import of 400,000 tonnes of mung beans, allowed for the 2020-2021FY, will be undertaken from 1 May 2020 to 31 March 2021. The local bean mills and bean cleansing businessmen are required to apply for the quota through the directorate Website from 20 to 31 March. The beans exporting companies have to export paper writing help the beans to India not later than 31 March 2021 as there will no longer be an extension of the import of the mung beans.

Source: The Global New Light of Myanmar

COVID-19 will lead to slower Myanmar economy: MIC

A pedestrian wearing a face mask walks among a crowd in front of Sule Square in Yangon. Photo: Mar Naw/The Myanmar Times

Myanmar should brace for the consequences of COVID-19 on the local and global economy. The Myanmar Investment Commission (MIC) said the economic slowdown caused by the virus outbreak is already being felt in other countries and will likely have an impact on Myanmar.

Major economies such as China and the US have announced large stimulus packages in attempts to counter the effects that the pandemic are having on businesses and stock markets, so the dramatic economic impact the virus has had around the world is bound to dampen the ability of businesses to invest in countries like Myanmar.

Right now, many garment factories in Myanmar are already shutting down or limiting their operations due to a shortage of raw materials from factories that were closed by the virus outbreak in China. Such supply chain disruptions may factor into the decision-making process of investors looking at Myanmar.

Additionally, a protracted slowing of the global economy would mean consumers are likely to limit spending on things like clothing, which in turn would cause investors to delay or abandon investments in garment factories in Myanmar.

Already the Yangon Region Investment Forum that had been set to take place this year has been postponed indefinitely due to travel restrictions imposed around the world to curb the spread of the virus.

The number of Chinese investors inquiring about opportunities in Myanmar has also decreased since the end of December when the virus started spreading.

Economist and researcher U Zaw Oo pointed out in an article about the effects of COVID-19 on Myanmar’s economy that 26pc of FDI in Myanmar is from China and four major projects under the Belt and Road Initiative – the Muse Cross Border Trade Zone, China-Myanmar Economic Corridor, Kyaukphyu Special Economic Zone, and New Yangon City Project – could be delayed or suspended depending on China’s economic situation.

While China is one of Myanmar’s top investors, Singapore, Thailand and Hong Kong are also important and since COVID-19 has affected those countries, the impacts on Myanmar will be huge.

However, some observers say they can only watch and hope that Myanmar will be able to ride out the slowing of economy of major economies around the world.

Source: Myanmar Times

Myanmar-Bangladesh trade up $289 mln

The value of border trade between Myanmar and Bangladesh, as of 6 March in the 2019-2020FY, reached US$298.3 million, an increase of $289.18 million compared with the same period in the previous fiscal, according to monthly data issued by the Ministry of Commerce.

Compared with the 2018-2019FY, border exports between the two countries increased to $10.732 million in the current fiscal, whereas border imports were valued at $278.445 million. This FY, Myanmar exported goods worth $19.62 million to Bangladesh and imported goods valued at over $278.7 million.

Border trade between the two countries is conducted through the Sittway and Maungtaw camps. Between 1 October and 6 March in the current FY, trade through the Maungtaw gate reached $8.004 million, while trade at the Sittway border checkpoint was valued at $290.311 million.

Goods traded at the Myanmar-Bangladesh border include bamboos, ginger, peanuts, saltwater prawns and fish, dried plums, garlic, rice, mung beans, blankets, candy, plum jams, footwear, frozen foods, chemicals, leather, jute products, tobacco, plastics, wood, knitwear, and beverages.

According to the ministry’s annual statistical data, Myanmar’s total border trade with Bangladesh exceeded $23.2 million in the 2018-2019FY. The bilateral border trade was pegged at $263 million in the 2018 mini budget period, $29 million in the 2017-2018FY, $10.6 million in the 2016-2017FY, $11.5 million in the 2015-2016FY, $14.3 million in the 2014-2015FY, $22.8 million in the 2013-2014FY, and $3.83 million in the 2012-2013FY.

Source: The Global New Light of Myanmar

COVID-19 could hit Myanmar’s FDI: MIC

The flow of foreign direct investment (FDI) into Myanmar could be hampered by the global COVID-19 pandemic, hitting manufacturing businesses which rely on labours and imports of raw materials.

The COVID-19 outbreak could curb FDI inflow in Myanmar to a certain extent. Manufacturing business depending on labour productivity and importing raw materials will be primarily affected by this global pandemic.

Currently, more than 10 garment factories in the country have shut down on losses caused by the COVID-19 outbreak. The MIC has approved foreign investment proposals from the manufacturing sector every month and it currently has approved new projects primarily for the manufacturing sector.

In the 2019-2020 fiscal year, starting from October 1, 2019 until the first week of March 2020, US$2.9 billion worth of FDI commitments have been approved by the body. Last week, the Myanmar government started to examine and prepare for the impact of COVID-19 on the national economy.

On March 13, the Working Committee was formed to address the issue and is chaired by U Thaung Tun, minister for investment and foreign economic relations and also chair of the Myanmar Investment Commission.

After the World Health Organization declared the COVID-19 virus as a pandemic on March 12, Myanmar’s Office of the President put up an announcement the next day prohibiting huge gatherings, including the Thingyan Festival, the most celebrated in the country, to ramp up measures in the fight against the disease.

The ban in celebrating festivals and holding public events started on Friday up to April 30, the President’s Office said. The government is also said to be preparing to quarantine or turn away tourists from Italy, Germany, France, Spain, and Iran, the countries that have been hit the worst by COVID-19.

A tourism organisation, Union of Myanmar Travel Association, confirmed that the government is preparing to quarantine or turn away tourists from the five countries, adding that more countries may be added to the list.

Source: Myanmar Times

Central Bank of Myanmar cuts interest rates by 0.5%

The Central Bank of Myanmar has announced on Thursday that it will reduce interest rates by 0.5 percent, effective April 1. Photo: Theint Mon Soe/The Myanmar Times In 13 March 2020, the Central Bank of Myanmar (CBM) announced that it will reduce interest rates by 0.5 percent, effective April 1.

According to the directive, the minimum bank deposit rate will be lowered to 7.5pc from 8pc, while the maximum lending rate will be lowered to 12.5pc for collateralised loans and 15.5pc for non-collateralised loans, from 13pc and 16pc, respectively.

The move comes shortly after the World Health Organization defined the COVID-19 outbreak as a pandemic on March 12, triggering a collapse in global markets.

Central banks around the world have also eased rates to stimulate their economies. On March 11, the Bank of England announced an emergency rate cut by half a percentage point to 0.25pc. The week before, the US Federal Reserve lowered the federal funds rate by half a percentage point to a range between 1pc to 1.25pc, its deepest cut since 2008.

In Myanmar, the tourism, manufacturing, and agriculture sectors have been hardest hit as a result of the pandemic.

The CBM has long been under pressure to cut rates to more attractive levels to stimulate growth, but its officials have been hesitant to do so to keep the minimum deposit rate at a higher level than inflation, as this encourages savings.

According to the CBM, the annual rate of inflation is now 8.8pc.

Source: Myanmar Times

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