Posts in category: ECONOMY

A sugar glut in Myanmar has led prices to a 10-year low, as tonnes of sugar meant for export now remain in the country. There is too much sugar left in the market and the price can’t get any higher. Farmers have also started to reduce sugarcane acreage this year. According to the association’s estimates, there might be 150,000 tonnes to 200,000 tonnes of unwanted inventories in the country and prices are now between K840-K860 per viss, the lowest in over a decade. On the domestic front, “consumption has fallen drastically as there are no festivals or events during COVID-19. With people spending less, there is an impact on the sugar-rice snacks and beverage markets which in turn is having repercussions on the sugar market.

Overseas demand had fallen too. Earlier this year, Greece called off an offer to buy sugar from Myanmar at US$400 per tonne per month on a free on board system. But the future looks bleak for the sugar market. Despite lower sugarcane acreage, traders are predicting sugar prices will continue to drop in the coming months as a result of the glut and lower local consumption. There is now less than 50,000 acres of sugarcane fields in Myanmar and this is down from about 460,000 acre of sugarcane plantation before. Sesame and different types of paes are being planted instead of sugarcane.

In fact, sugar prices had already been on their way down since last year, and some 4500 sugarcane farmers from Sagaing, Mandalay and Shan State had submitted a report to the President to make their situation known. With domestic inventories piling up, the farmers also asked for a limit on sugar imports from aboard. The drop in demand and reduced sugarcane acreage has also impacted sugar mill operators further along the value chain.

Source: Myanmar Times

Jade sales have taken a hit as a result of poor demand from China in the wake of COVID-19 and prices of the green mineral have halved in recent month. Demand from China has fallen. The Chinese government does not encourage investments or trade in this area. Meanwhile, production of high-quality jade in Hpakant, Kachin State, has also declined amid the pandemic.

There are just a few active jade miners currently, even through small-scale jade mining blocks have been granted. As a result, commercial-quality jade has become more affordable in the market.The other reason for the lower demand is the cancelling of gems emporiums, where jade is legally auctioned to foreign buyers. Before COVID-19 , Myanmar typically held large-scale emporiums twice a year in Nay Pyi Taw. Other jade and gems fairs in Yangon, Mandalay and Myitkyina have also been called off, although there have been enquiries on when these will resume.

The majority of Myanmar jade is exported to China. As a result, the Myanmar government has potentially lost billions in revenue from having to suspend this year’s gems emporiums due to the outbreak of COVID-19. Each fair typically draws revenues of €500 million each. As the state receives a 40 percent share of capital emporium sales in the form of taxes, its revenue has declined about €400 million this year.

Source: Myanmar Times

Government travel restrictions and orders to defer repayments and lower interest rates on loans due to COVID-19 have reduced the ability of Myanmar’s microfinance companies to help rural people who desperately need capital. The inability to collect repayments from borrowers has hurt the companies’ liquidity and cash flows, limiting their ability to make loans. The Planning, Finance and Industry Ministry’s Microfinance Business Supervisory Committee overseas about 190 companies with 4.6 million members, most of them low-income.

The country hit by a second wave of COVID-19 infections, Daw Phyu Yamin Myat, general secretary of the association, shared her views on the challenges facing microfinance companies. They are following the Health and Sports Ministry’s guidelines and practicing social distancing as much as possible at their offices. Few clients can repay their loans. They cannot recover the money if the clients cannot repay their debts. The amount of money available to us has become less and less as they have loaned money to people who cannot make repayments. They think if people get back to work, the situation will improve and they will not have large losses. They are in semi-lockdown or lockdown, which can interfere with work.

Microfinance companies have not been able to grow during this time. All have been badly hit. If they compare business expansion with population growth, the development ratio is zero. Over 40 of the 200 financial companies are practicing corporate social responsibility under some of the government’s plans. There has been no damage to microfinance firms yet, but it could happen at any time. The lending of money to businesses is essential. Although there is an income stream from repayments, the companies might have other problems. They haven’t fully recovered loans from our clients. A business going belly-up might set off a chain reation, so they should advise their clients to consult with the association if they have problems.

Source: Myanmar Times

Japan’s aid agency is to provide US$280 million of concessional loans to the Myanmar government in support of the country’s economic recovery from the downtown brought up by the pandemic. The Myanmar government and the Japan International Cooperation Agency (JICA) signed a concessional loan agreement of ¥30 billion (US$280 million) in Nay Pyi Taw on Tuesday (September 1), called the COVID-19 Crisis Response Emergency Support Loan.

Based on the loan agreement, JICA is providing US$280 million concessional loan to the Myanmar government to support resilient economic recovery through implementation of COVID-19 Economic Relief Plan (CERP) and related policies for investment and trade promotion as well as financial sector strengthening. The CERP was announced in April by Daw Aung San Suu Kyi’s government and is estimated to cost $2 billion in total. The loan proceeds are going to be spent on this. This implementation of the policy reforms is also supported by JICA’s ongoing technical cooperation projects in the field of investment promotion, industrial development, trade facilitation and financial sector reform. JICA highly appreciates Myanmar government’s swift policy response to the economic impact of COVID-19 embodied in CERP.

The emergency support loan not only fills the critical financial gap for the implementation of short-term relief measures but also lays the groundwork for the sustainable long-term recovery through supporting prioritized economic policy reforms, leveraging JICA’s technical cooperation projects.This is the second measure from JICA to support Myanmar’s COVID-19 response. The aid agency in June rolled out a JPY5 billion SME financing programme. Last week, the EU and Myanmar inked a financing agreement support agriculture and nutrition in Myanmar. The EU will invest K180 billion over the next five years to support the Ministry of Agriculture, Livestock and Irrigation.

Source: Myanmar Times

Japan will provide ¥45 billion in emergency funding to assist Myanmar in supporting the economy in the wake of COVID-19. Japanese Foreign Minister Toshimitsu Motegi extended the financial support during his meeting with State Counsellor Daw Aung San Suu Kyi in Nay Pyi Taw on August 24. This will consist of ¥30 billion in emergency budget support and ¥5 billion in official development assistance (ODA) loans to help small and medium-sized enterprises(SMEs) in Myanmar respond to COVID-19. Japan is pursuing cooperation with Myanmar in all areas, including health, education, agriculture, and administrative capacity building while promotion responsible investment by Japanese companies.

The two sides also discussed plans to facilitate a rapid economic recovery in Myanmar and keep the channels clear for more Japanese investments in the country. Negotiations to relax travel restrictions to allow Myanmar technicians and businessmen to enter Japan under a business track program starting next month also took place. Japan has so far provided technical as well as medical supply and equipment assistance equivalent to US$30 million to Myanmar.The additional support came shortly after more than K80 billion was freed up for the prevention, control and treatment of COVID-19 activities in the coming fiscal year under a Debt Service Suspension Initiate (DSSI) endorsed by the World Bank and countries under the G20. The DSSI was endorsed in April in response to a call by the World Bank and the International Monetary Fund(IMF) to grant debt-service suspension to the poorest countries to help them manage the impact of the COVID-19 pandemic.

The main goal of the DSSI is to allow poor countries to concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of the most vulnerable people. Borrowers therefore commit to use freed-up resources to increase social, health, or economic spending in response to the crisis. Myanmar has so far also received half of a US$700 million fund provided by the IMF in July to support its economy. The second tranche of funds will be received in the coming fiscal year. The government will also be able to tap into remaining funds from the World Bank, Asia Development Bank and Japan International Cooperation Agency awarded this year to support the economy moving forward. It will also be spending more to ease the impact of COVID-19 on the economy, leading to a forecast budget deficit of 5.41 pc of GDP this year.

Source: Myanmar Times

The prices of sesame seeds are expected to remain higher on the back of strong demand from China even when the fresh sesame will be harvested in September. The prevailing price of sesame is pegged at K160,000-210,000 per bag depending on quality. The price significantly rose as against that in early July. The price is likely to fluctuate around K200,000 per bag during the harvest time. As the sesame stockpile is thin, there is no way of the price drop in the coming weeks. This year, high sesame producing regions of Myanmar (Magway, Mandalay and Sagaing regions) experienced low yield due to drought impacts. During the meantime, China high demand hiked the prices.

Myanmar increasingly sends sesame seeds to China market. The price fluctuates a bit. The gradual increase in sesame prices since last week of July has been attributed to high demand by China when the drought reduced crop yield in the country. The various varieties of sesame are priced good, especially black and white sesame varieties. Myanmar exports 90 per cent of sesame production to foreign markets. China is the leading buyer of Myanmar sesame, which is also shipped to markets in Japan, South Korea, China (Taipei), UK, Germany, the Netherlands, Greece, and Poland among the EU countries. The EU markets prefer organic-farming sesame seeds from Myanmar. Japan prefers Myanmar black sesame seeds, cultivated under good agricultural practices (GAP), and purchases them after a quality assessment. Black sesame seeds from Myanmar are also exported to South Korea and Japan. Meanwhile, China buys various colored sesame seeds from the country.

The number of sesame acreages has increased in the country. Sesame is cultivated in the country throughout the year. Magway Region, which has gained a reputation as the oil pot of Myanmar, is the primary producer of sesame seeds. The seeds are also grown in Mandalay and Sagaing regions.
Of the cooking oil crops grown in Myanmar, the acreage under sesame is the highest, accounting for 51.3 per cent of the overall oil crop plantation.
The volume of sesame exports was registered at over 96,000 tonnes, worth $130 million, in the 2015-2016 financial years, 100,000 tonnes, worth $145 million, in 2016-2017FY; and, 120,000 tonnes, worth $147 million, in 2017-2018FY.

Source: The Global New Light of Myanmar

Declining consumer spending and demand as a result of COVID-19 has suppressed inflation levels in Myanmar. Inflationary pressure first showed signs of easing in March, after the first cases of the coronavirus were reported in Myanmar. Inflation has continued to decline over the past three months, settling at 7.9 percent in June. The trend of falling inflation is similar to the rest of the world. Consumers all over the world and in Myanmar are spending less due to COVID-19 restrictions. Domestic consumer demand is falling and this is resulting in softer inflation.

Inflation in Myanmar had in fact been on a steady rise before the pandemic. Local businesses have suffered as a result of poor consumer demand. Due to COVID-19, the majority of Myanmar firms have experienced lower sales and cash flow shortages, resulting in reduced access to credit needed to support operations. The survey also revealed that 16 percent of firms had temporarily closed their operations for an average of eight weeks as a results of COVID-19.

As a result, Myanmar’s inflation is forecast to fall further this year and remain at around 6pc until next year. Meanwhile, GDP growth is forecast to drop from 6.8 pc in fiscal 2018-19 to just 1.8pc in the current fiscal year. The World Bank’s forecasts are more dire, with GDP expected to slump to just 0.5pc last year. However, if the domestic spread of the coronavirus is brought under control and the global economy recovers swiftly, GDP could recover as soon as next year, reaching 6pc according to ADB and 7.2pc according to the World Bank.

Source: Myanmar Times

With the record high global gold price, the domestic gold price also hit a new record on 7 August with K1,332,500 per tical, according to the domestic gold market. Although the domestic gold price was a record high at K1,307,000 per tical (0.578 ounces, or 0.016 kilograms) on 5 September 2019, the gold price is a new record high again. While the domestic gold price was highly recorded at K1,300,000 per tical on 5 September 2019, the price of the global gold price has only risen to $1,550 per tical. With the rising of the global gold price, the global gold market saw the gold being sold for $20,000 per ounce on 5 August and the price continued to hike and hit a new record high at $2,062 per ounce on 7 August.

With the rising of the global gold price, the domestic one also hit the new record. The dollar versus the kyat exchange rate was K1,373 per dollar on 7 August. At present, there is a high demand for gold in the local market, according to a domestic gold trader.
With the slightly rising of domestic gold price together with the global gold price starting from 2019, the local gold price reached K1,000,000 per tical between 17 January and 21 February, K1,100,000 between 22 June and 5 August, K1,200,000 between 7 August and 4 September and, then reached an all-time high of K1,300,000 on 5 September 2019.

In April, the coronavirus risks caused the shutdown of the gold market, and the market reopened on 18 May with a minimum rate of K1,214,100 (27 May) and a maximum rate of K1,236,000 (18 May). The price was moving in the range of K1,209,600 on 6 June and K1,219,500 on 1 June. The local gold reached the lowest level of K1,216,500 (1 July) and the highest level of K1,296,500 (27 July), according to the gold traders.

Source : The Global New Light of Myanmar

The Myanmar Investment Commission(MIC) on July 31 approved the US$230.6 million Hlegu Industrial Park, which will be developed by Singapore’s Sembcorp Industries. The project, set to cover some 1487 acres in Hlegu township,Yangon, was signed between Sembcorp CSSD Myanmar Co and local partners City Mart Holding Co Ltd (CMHL), and Myanmar Agribusiness Public Corp( MAPCO) in July 2019.Sembcorp is expected to hold a 67 percent stake in the project, while City Mart Holding and MAPCO will hold 18pc and 15pc, respectively.

The industrial park has already approved by the Yangon Region Assembly and will focus on food-based industries.Despite having received MIC approval though, the development will likely be delayed due to COVID-19 restrictions. The investors had been expecting MIC approval in January and construction to commence in March, but things were delayed by COVID-19. Once completed, the industrial park will feature an access road to Thilawa Port via the Yangon-Mandalay Road so that goods produced in Hlegu can easily be exported and also reach parts of the Myanmar hinterland.

Better known for building the US$310 million Sembcorp Myingyan Independent Power Plant in Mandalay, Sembcorp is not new to industrial development, having partnered with countries like China, Indonesia and Vietnam to create integrated townships and industrial parks. The Hlegu Industrial Park was one of seven new projects valued at US$462.7 million in total and with the potential to generate more than 3600 jobs. The other major new investment involves a US$180 million shopping mall from AEON Japan. Singapore, China and Thailand are the top investors in Myanmar this fiscal year, More than half the capital was channeled into the power and oil and gas sectors, while 15pc was channeled into manufacturing.

Source: Myanmar Times

A new Special Economic Zone(SEZ) will be implemented in Mon State, connecting Myanmar with the Mekong Subregion East-West Economic Corridor, government officials said at a Myanmar-Japan Investment Forum on July 29. The SEZ in western Yangon aims to connect with Danang, Vietnam, and will be the largest SEZ in Myanmar if approved. It is expected to cost US$ 117 million to develop and take at least five years to complete.

The criteria for the project includes easy connectivity with countries involved in the economic corridor, being able to construct a deep-sea port and connectivity to Thilawa SEZ via a local transport network. To choose a strategic location, feasibility studies will be conducted and a Master Plan will be drafted with help from an international advisory team. Developers will be selected transparently based on a tender system.

The aim of connecting the Mon State SEZ with Thilawa is for the two areas to operate as a single industrial zone with global standards of transparency and quality.The project includes enhancing urban management capabilities to develop Mawlamyine in Mon State and Hpan-an and Myawady in Kayin State.

Source: Myanmar Times