US Sanctions are finally lifted
Investment Law to be in place by March 2017
Government committee to be formed to manage international investment into Myanmar
Amata hotel group gets US$13.5M convertible loan from IFC
Yoma to spin off its tourism-related business as part of a reverse takeover of SHC Capital Asia
Sanctions Lifted - Myanmar’s former dictator Senior General Than Shwe was among those removed from the US Treasury’s blacklist following the lifting of Myanmar sanctions recently. Another 16 senior military officials, including former Vice Senior General Maung Aye, have been removed from the US Treasury’s Office of Foreign Asset’s Specially Designated Nationals and Blocked Persons (SDN) List. Apart from senior military officials, military-related businesses removed from the list include Myanmar Economic Holdings Limited, the Myanmar Economic Corporation, Myawaddy Bank and the Directorate of Defence Industries, which is Myanmar’s state-owned arms and ordnance manufacturer. Five top crony business men, along with their family members and businesses, are no longer under sanctions; they are Tay Za, Khin Shwe, Htay Myint, Zaw Zaw and Stephen Law. President Barack Obama formally announced the lifting of US sanctions on Myanmar by terminating an emergency order that deemed the policies of the former military government a threat to US national security. The move followed a meeting between Myanmar’s State Counselor Aung San Suu Kyi and Obama in Washington last month, in which she requested the lifting of economic sanctions against her country. More than 50 individuals along with their families and their businesses in hotels, agriculture, construction, banking, and logging were released from sanctions. A key figure is Lt. General Thein Htay, chief of the Directorate of Defence Industries, who was blacklisted in 2013 for alleged arms trading with North Korea. Another three Burmese firms, Soe Min Htike Co. Ltd., Asia Metal Company and Excellence Mineral Manufacturing Company, sanctioned in 2013 for working with North Korea, have been removed from the SDN list. Also among the individuals are family members of Shwe Mann, former Union Solidarity and Development Party chairman and Aung San Suu Kyi’s close ally from the previous Thein Sein government. His wife Khin Lay Thet and son Aung Thet Mann—who is the CEO of Ayer Shwe Wah, a subsidiary of Htoo Trading Company owned by Tay Za—are also no longer sanctioned. Khin Shwe, the president of Zay Gabar Company who was also removed from the list, said it was “a move” by the US government “at the right time”. “Any delay in lifting sanctions could lead to backsliding in the country’s democratic transition as Myanmar is in urgent need of economic development,” he said. “Business people removed from the list can create jobs for thousands of people when international investment comes in,” he added.
Outsiders Urged to Sign NCA - Aung San Suu Kyi has called for ethnic armed groups currently outside of the Nationwide Ceasefire Agreement (NCA) to sign the accord before the next “Panglong” peace conference, scheduled for February. She was speaking during a meeting in Naypyidaw of the Union Peace Dialogue Joint Committee (UPDJC), comprising of government, military and ethnic armed group representatives that is responsible for holding political dialogue over a federal restructuring of the state. At the insistence of the military, signing the NCA is a prerequisite for ethnic armed groups taking part in the political dialogue—a central component of Myanmar’s peace process aimed at ending over 60 years of civil conflict in Myanmar. Suu Kyi, who chairs the Committee, said that she wanted to accelerate the peace process and urged all respective ethnic armed groups not to stall or attempt to buy time. Out of more than 20 ethnic armed groups in Myanmar, only eight signed the NCA in October of last year, the largest being the Karen National Union and the Restoration Council of Shan State. She also recommended that ethnic armed groups engage in more face-to-face trust building with each other. Several of Myanmar’s largest ethnic armed groups, such as the United Wa State Army and the Kachin Independence Organization have not signed the NCA. Other ethnic armed groups such as the Ta’ang National Liberation Army, the Myanmar National Democratic Alliance Army (Kokang) and the Arakan Army—who have engaged in fierce conflict with the Myanmar Army over the last two years—were prevented from signing the NCA.
Myanmar Investment Law - The newly enacted Myanmar Investment Law will be released by the end of March next year at the latest, according to Maung Maung Win, deputy minister of national planning and finance. The law, enacted recently, combines the Myanmar Citizens Investment Law and the Foreign Investment Law. “Normally it takes at least three months to release rules and regulations following a law,” Maung Maung Win Said. “If there is a delay, we will finish by the end of this fiscal year, at the end of March.” The rules and regulations are now being drawn up by the Directorate of Investment and Companies Administration (DICA) under the Ministry of National Planning and Finance and they are trying to complete them as soon as possible. Aung Naing Oo, director general of DICA and secretary of the Myanmar Investment Commission (MIC) confirmed this. The business community expect that the rules and regulations will include information on which industries to invest in, government incentives, and which areas the government or the MIC will be overseeing. “The MIC will continue to handle some investment but state and divisional governments will also manage some areas,” he said. “It will allow business people to work more easily” but acknowledged that during the new government’s first six months (April to September) foreign direct investment (FDI) significantly declined compared to last year. According to DICA figures, pledged foreign direct investment from April to September this year was US$1.4 billion while the same period of 2015 was $3 billion. “The next six months have the potential to see much more FDI volume,” he said. He added that the government had some development investment plans including: technology in the agricultural sector, new payment cards to be issued by banks, inviting the local business community to invest in health care, and new infrastructure projects. The rules and regulations will provide greater detail on how investors can engage with these sectors, he said. Nyo Myint, senior managing director of KBZ Group, said that business people are waiting for the government’s “dos and don’ts” before investing. “It’s better for us if those rules and regulations come out as soon as possible. I expect that they will attract people to invest in Myanmar,” he said.
KBZ Insurance to List - The KBZ banking group is seeking to list its insurance arm on the Yangon Stock Exchange by the end of next year. The size of the initial public offering has not yet been finalized, but the listed arm could have a market cap. of between US$500 million – $750 million, senior managing director of KBZ group Nyo Myint said. The insurance arm has paid-up capital of $55 million. KBZ plans to list 40 percent of the firm, he said. Trading started on the Yangon Stock Exchange in March this year and so far three companies have been listed. Meanwhile KBZ’s banking arm is seeking a partnership with a financial technology company to boost digital and mobile banking solutions across the country, group executives said.
Thai/Myanmar Money Remittance - Thailand’s True Money is to provide electronic payment services between Thailand and Myanmar. This will allow the company to tap into the potentially lucrative stream of remittances that passes from several million Burmese migrant workers in Thailand to their families. In March this year, the central bank of Thailand eased regulations to allow companies holding payment licences under the law regulating e-payment to act as international money transfer agents using websites and mobile phone apps. True Money will team up with the AGD Bank to develop a payments service capped at 200,000 baht (7.3 million kyats/US$5,730) per day per person. Burmese migrants working in Thailand transfer around 77 billion baht (US$2.2 billion) home annually, with an average of 30,000 baht ($860) worth of transactions per person per year. However, most of this remittance money passes through informal channels, including the hundi system, which involves a network of brokers spread across the two countries, despite the option of using banks since 2012.
Huawei Expands - China’s Huawei has teamed up with information technology and services provider KMD Group to boost its presence in Myanmar’s mobile phone market. Huawei aims to increase its market share in Myanmar where the brand already enjoys a strong position in the growing mobile phone market. Huawei’s brand power is significantly higher in Myanmar than in its home market, China, according to a report on Myanmar’s consumer market titled “Spotlight on Myanmar,” conducted by WPP and Millward Brown companies. In February this year, a Huawei-backed information technology training center opened in Yangon’s Thanlyin University of Science and Technology. The Huawei Authorized Information and Network Academy (HAINA), one of several set up across the globe, aims to boost human resources in Myanmar’s information technology sector.
Thilawa SEZ Stock Split - Thilawa SEZ Holdings has proposed splitting its shares at a ratio of 1:10 in order to increase its stock’s liquidity and affordability. The number of issued and paid up shares will rise from 3,892,915 to 38,929,150, while the value of shares will change from 10,000 to 1,000 kyats (US$7.85 to $0.78) per share, according to the proposal. A date has not yet been confirmed for the stock split. The company also announced that it has appointed a new chief financial officer, Wei Hua Tan, a former chief financial officer of UAE-based Al Maabar International Investments Company, with interests in real estate and the hospitality sector. He will assume the position earlier held by Tun Tun, who also acts as the executive director and chief financial officer of First Myanmar Investment (FMI).
More TV Channels - The Ministry of Information says that 42 companies have been included in the initial content provider list to work under state-owned Myanmar Radio and Television (MRTV). From among these companies, five will be selected to run their own channels under MRTV, one of four entities granted a broadcasting license by the ministry. Others include the Forever Group, Shwe Thanlwin Co., and Myawaddy TV. MRTV currently has 10 channels. “Five channels will be working under MRTV. There is a third party that will select five companies from among the 42 on the content provider list. The whole procedure is expected to finish within the next three months,” Myo Myint Maung, deputy permanent secretary of the Ministry of Information, said. “We will provide five channels to the private sector. Companies must submit their detailed proposals to the selection committee, who will choose by the end of this year,” he said. Of those companies designated as approved content providers some already have a satellite TV broadcasting service. The Democratic Voice of Myanmar (DVB TV) is one such group—a news organization which long operated in exile from Thailand and Norway. Nyi Lin Seck, former channel director of the 5 Network, part of the Forever Group, said that most companies want to set up entertainment channels, including shopping networks, which could bring in more money than news channels. “In my experience, channels can’t run 3-5 years unless they spend at least US$3 million.” He added that the government should grant licenses to companies with strong capital, who can commit to long-term investment.
First Mobile Financial Services Licence - Myanmar’s Central Bank has granted the first mobile financial services license to Wave Money, a mobile money-transfer joint venture between Norway’s Telenor, Myanmar’s Yoma Bank and First Myanmar Investment. The Central Bank issued the Regulation on Mobile Financial Services on March 30. Wave Money is now directly regulated by the Central Bank as a non-banking financial institution. In an announcement, Wave Money said the new regulations would help millions of people in Myanmar access financial services via mobile phone operators. Telenor owns 51 percent of Wave Money, with First Myanmar Investment holding 44 percent and Yoma Bank 5 percent. The total investment is around US$17 million. After its first year in Myanmar, 4,000 “Wave shops” have been set up across the country, where users can transfer money via mobile accounts or agents. In April, the Central Bank announced that mobile financial service providers could allow customers to open mobile accounts and deposit and transfer money between them. People-to-people, people-to-government, people-to-business and business-to-business money transfers are now permitted under the Central Bank’s regulations.
Yoma to Spin Off Tourism Business - Yoma Strategic Holdings says that it will be spinning off its tourism-related business as part of a reverse takeover (RTO) of Catalist-listed SHC Capital Asia Ltd. Yoma announced its intention to partner with other players to establish a new tourism platform engaged in various tourism-related businesses focused on Myanmar, and its acquisition of the remaining 25 per cent interest in “Balloons over Bagan” through its 70 per cent-owned subsidiary, Chindwin Holdings Pte Ltd. Its wholly-owned subsidiary, Yoma Strategic Investments Ltd (YSIL), has signed a conditional sale and purchase agreement for the proposed sale of its tourism-related businesses with SHC. These tourism-related businesses comprise the “Balloons over Bagan” business; Pun Hlaing Lodge1, a proposed hotel development in Hlaing Tharyar Township in Yangon, Myanmar, currently under construction; and a parcel of land in Nyaung U in Myanmar intended for the construction of a proposed commercial and tourism-related hospitality development. First Myanmar Investment Company Ltd (FMI), which holds 30 per cent of both “Balloons over Bagan” and Bagan Land is also a party to the agreement and it will participate in the proposed RTO by way of sale of its 30 per cent-interest in these tourism-related businesses to SHC. SHC will also simultaneously acquire additional tourism-related businesses which comprise Hpa-An Lodge, a hotel/lodge business, and Asia Holidays, a Myanmar-based destination management company. Following the proposed RTO, SHC will transform into a Myanmar-focused tourism company. A new CEO, Mr Michel Novatin, an industry veteran with over 40 years of extensive experience in managing luxury hotels, has been identified to lead the management team of this tourism platform. Under the SPA, the transferred businesses and the additional tourism-related businesses will be injected into a target company which is to be subsequently acquired by SHC for S$70.68 million. The said consideration is to be satisfied by the issue and allotment of new consolidated SHC shares at an issue price of S$0.263. YSIL will be issued 167 million SHC shares valued at S$43.94 million, giving it a 53.48 per cent stake in SHC before any proposed compliance placement of SHC. FMI will be issued shares valued at S$11 million.
Electricity Contract - Electric Power Generation Enterprise (EPGE), a state-owned utility under the Ministry of Electricity and Energy has announced that a consortium led by National Infrastructure Holdings has won a tender to generate 300 megawatts of electricity for five years to prevent the city’s frequent blackouts. The consortium is made up of four companies: National Infrastructure Holdings Co. Ltd., MCM Pacific Pte. Ltd, APR Energy Plc. and ACE Resources Group Pte. Ltd. Registered in Myanmar in 2015, National Infrastructure Holdings has an affiliation with Asia World Co. Ltd., run by Stephen Law. Both Asia World and Stephen Law were blacklisted by the US government from 2008 until earlier this month. National Infrastructure Holdings’ current director Maung Kyay is a close associate of Stephen Law’s. Due to Asia World’s murky background, he is believed to have set up new companies under different names to act as fronts for doing businesses with western companies. This is how National Infrastructure Holdings came in to being in 2015. The following year, in partnership with Dutch energy giant Shell, the Holdings opened a road trial project near Naypyidaw International Airport. Based in Jacksonville, Florida, APR Energy primarily supplies government utilities in developing nations with power plants that can be erected quickly to deal with a country’s short-term lack of supply. The company has been in Myanmar since 2014, deploying gas power modules at a power plant in Kyaukse Township in Mandalay Division. Madeleine Albright, who chairs Albright Capital Management (ACM), has been a shareholder of APR Energy since Aug. 2009 and materially increased that investment in March 2011. ACM was among the members of an investor consortium who acquired APR and took the company private early this year. Myanmar has been facing power shortages, especially during the hot season of March-May, since the late 1990s due to underdeveloped infrastructure, ageing power plants, and insufficient investment. Hydropower stations, one of the country’s main electricity sources, become idle in the hot season as reservoirs dry up. More than half of the country’s population still has no access to electricity but the country is facing annual growth of 400 megawatts in demand as more people are connecting to the national grid.
Culture and Tourism
The Temples in Bagan - Renovation and conservation work to nearly 400 earthquake-hit ancient temples and pagodas in Bagan will start on January 1 of next year. Officials from Bagan’s Department of Archaeology, National Museum and Library, said that with the collaboration of local and international experts, they will carry out repairs and preserve 389 damaged pagodas in the ancient capital. Over 400 pagodas and temples—out of a total of 3,252—across the Bagan plain were damaged when a 6.8 magnitude earthquake struck Myanmar on August 24. Following the quake, an emergency response, initial assessment and a detailed assessment have taken place to check the extent of the damage, including harm to murals, all of which have high historical and cultural heritage value. Aung Aung Kyaw, the director from the department, said the findings of the detailed assessment will be presented at a meeting from Oct. 25-26 where further details and guidelines of the restoration work will be discussed for the next year. “We will work carefully and make sure not to restore the modified parts which caused a burden for the ancient temples,” he said, adding that the work would take two to five years.
Previous reconstructions were part of crude renovation efforts carried out across Bagan under the previous military regime in the 1990s, which have been blamed for preventing Bagan—the site of an ancient Burmese royal capital—from being granted World Heritage Site status by UNESCO. It was these crude reconstructions that reportedly suffered the most damage in the August earthquake. The more than 3,000 temples of Bagan, mostly dating from between the 9th and 13th centuries, when the Kingdom of Pagan ruled over much of lowland Myanmar, are considered Myanmar’s biggest tourist draw. According to the Ministry of Culture and Religious Affairs, the Aug. 24 earthquake damaged a total of 449 temples, including iconic favorites such as Sulamani, Ananda, Htilominlo, Myazedi, Shwesandaw, Lawkananda and Dhamma Yazaka, as well as the murals at Ananda Oakkyaung. Repair and conservation work on 389 of the damaged structures is expected to begin in the new year with the help of UNESCO. According to the Bagan Archaeological Department, 36 temples considered most at risk of further damage will be prioritized, followed by 53 temples in a second-tier risk category.