Myanmar’s union government has increased the country’s daily minimum wage for an eight-hour work day from Kyat 3,600 (US$2.65) to Kyat 4,800 (US$3.54). The revised wage, which came into effect from 14 May will apply to all businesses with 10 or more employees irrespective of the location or type of work.
By Dezan Shira & Associates
Editor: Rohini Singh
In a long-awaited move, Myanmar’s government recently permitted seven of the 13 foreign banks operating in Myanmar to provide export-financing services. This puts the foreign banks at par with their local counterparts, and provides additional options for local businesses to access credit at more competitive rates.
The decision is a welcome development as Myanmar’s banking system has been highly restrictive for foreign players. Besides providing export financing services, the select foreign banks will be allowed to extend credit to foreign businesses as well as local banks.
While foreign banks may cooperate with local lenders to offer additional services, they will continue to be prohibited from pursuing retail operations, such as opening of saving accounts, local money transfers, and extending loans in local currency.
Overall, Myanmar’s banking sector is in its formative stages of development – bank loans in the nation of 51 million comprise a mere 19 percent of its GDP, far below other emerging economies like Vietnam (36 percent) and Cambodia (108 percent).
By: Vasundhara Rastogi
Myanmar is among the fastest growing economies in Southeast Asia with significant market potential for the growth and expansion of foreign companies. Some of the strategic advantages that the economy offers include its large youthful population and workforce, its low-cost base, natural resources, and its strategic location between two of the largest economies in the world – India, and China. The country, in 2017, recorded a growth rate of 6.3 percent. Albeit relatively slow, the economy remained strong and steady.
By Dezan Shira & Associates
Editor: Vasundhara Rastogi
On December 6, 2017, Myanmar’s President U Htin Kyaw approved the new Myanmar Companies Act, 2017, replacing the country’s century-old Companies Act of 1914. The new law aims to change the way companies are regulated in the country. It will modernize company formation and management, and significantly revise corporate governance in Myanmar, bringing the country’s company legislation at par with international standards.
The Act was drafted by Myanmar’s Directorate of Investment and Company Administration (DICA) with technical assistance from the Asian Development Bank (ADB). It offers a wide range of regulations that are relevant to foreign investors and businesses operating in Myanmar. Some of these are discussed below.
By Yogesh Dubey
Editor’s Note: India’s Prime Minister Narendra Modi made a brief official visit to Myanmar last week. This article was originally published in The Diplomatist Magazine, July 2017, and has been republished with the permission of L.B. Associates (Pvt.) Ltd., a contract publishing house.
Myanmar shares a long land border of over 1600 km (994 mi) with India as well as a maritime boundary in the Bay of Bengal. Four of India’s northeastern states: Arunachal Pradesh, Nagaland, Manipur, and Mizoram share an international boundary with Myanmar.
Both India and Myanmar share a heritage of religious, linguistic, and ethnic ties. Myanmar has a substantial population of Indian origin (estimated to be around 1.5 to 2 million). Further, Myanmar is a gateway to Southeast Asia and East Asia – regions with which India is seeking greater economic integration through its ‘Look East’ and ‘Act East’ policy. In fact, Myanmar is the only Southeast Asian country India shares a land boundary with.
By Bradley Dunseith
As Myanmar continues to liberalize its regulatory landscape, new opportunities are emerging for cross-border trade. Myanmar borders India and China – the world’s most populous countries – and is a member of the Association of Southeast Asian Nations (ASEAN). Political reforms in Myanmar has spurred world powers to lift trade sanctions against the South East Asian nation formerly called Burma.
Import and export operations in Myanmar have become easier and more profitable. In the financial year (FY) 2016-17 (ending 31 March) private players have exported US$4.8 billion and by sea and US$3.2 billion over land; private players have imported US$1.3 billion by sea and US$2.8 billion over land. In this article we explain best practices for importing into and exporting out of Myanmar. As Myanmar continues to undergo economic reforms, we advise all businesses to monitor new and upcoming legislations closely.
ASEAN Regulatory Brief: Philippines Green Energy Initiatives, Myanmar Industrial Zone Land Use, and Brunei Companies Act Amendments
Philippines: Tax incentives announced for companies going green
The Philippines Board of Investment (BOI) has announced that it is planning to introduce tax incentives for companies going green. The initiative under the Climate Incentives for Manufacturing (CLIMA) program will target firms in the manufacturing sector. To qualify, enterprises should promote energy efficiency and use technology that reduces greenhouse gas emissions. While the exact nature of the incentives are not known, they are likely to be in the form of capital equipment incentives and income tax holidays.
By Bradley Dunseith
In April, 2017, the World Bank (WB) released their biannual East Asia and Pacific Economic Update, entitled, “Sustaining Resilience.” As the title suggests, the WB anticipates growth in East Asia and Pacific, including ASEAN states, to remain resilient despite risks from global and regional vulnerabilities. In this article, we go through “Sustaining Resilience” and summarize the WB’s forecast for developing ASEAN states generally as well as their country specific predictions for economic growth.
About the report
The WB predicts that large developing economies will continue to grow moderately while smaller regional economies will benefit from the rapid growth of their neighbors as well as high commodity prices. The WB marked that poverty has continued to decline in most countries and will continue to fall with sustained growth and rising labor incomes. However, the WB report noted that global policy uncertainties means that countries must address macroeconomic vulnerabilities so as to prepare for external shocks to the economy. External shocks – such as changes in US policy – disproportionately affect smaller countries; as such, the WB report strongly recommends small economics to improve the efficiency of their public spending in preparation of needed structural changes.
Singapore: Innovation fund created to fuel growth
As part of its bid to fuel economic growth, Singapore’s government is setting up a S$1 billion (US$718 million) fund to help innovative companies to develop their businesses and expand overseas. Billed as the Makara Innovation Fund, the project is a collaboration between the Intellectual Property Office of Singapore (IPOS) and local private equity firm Makara Capital. According to IPOS, the fund will invest S$30 million (US$21.5 million) to S$150 million (US$107.5 million) each in 10 to 15 companies with globally competitive technologies over the next eight years.
According to Bloomberg’s 2017 innovation index, Singapore ranked sixth ahead of the U.S. and Israel. According to Bloomberg estimates, Singapore has the third-largest number of patents granted per one million inhabitants, trailing only South Korea and Japan. As per latest available data from 2015, Singapore had 10,814 applications for patents, the largest number of any Southeast Asian nation, according to the World Intellectual Property Organization. According to IPOS, the agency plans to double the number of intellectual property experts in Singapore to 1,000 over the next five years and will train 4,000 people a year. It will also assist companies in using intellectual property as collateral for financing. IPOS expects these initiatives to add about S$1.5 billion (US$1.07 billion) in value to Singapore’s economy over the next five years.
Malaysia – EU trade to grow by 20-30 percent
Malaysian and EU authorities expect the proposed Malaysia-European Union (EU) Free Trade Agreement (FTA) will increase trade volumes from 10 percent to 20-30 percent. The growth is based on EU’s existing FTA with South Korea, which grew by 35 percent in the last five years. Both South Korea and Malaysia have similar EU trade volumes. Both parties are pushing to implement the agreement by the end of 2017. The countries met at the ASEAN Regional Seminar on Transit and Transshipment along with eight ASEAN member states.
Malaysia’s trade with EU has moved away from being a participant country to sharing best practices, especially in the area of export control after they implemented the Strategic Trade Act (STA) 2010. The act is an export control law that encourages exports of strategic items. Both parties also focused on trade laws, transit and transshipment regulations, regional cooperation, and challenges in building strategic trade controls. EU is Malaysia’s third largest trading partner, with the last three years witnessing a positive trade balance and a growing number of EU companies investing in Malaysia.