Roundtable speech by Myanmar Consul
General on March 5
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Executive Committee Members, Distinguished
Guests, Ladies and Gentlemen.
First of all, I would like to express my
sincere appreciation to all members of the Hong Kong Chamber of Commerce for giving me a
chance to address today. May I take this opportunity to present some information about my
country including basic facts, recent economic situations, outline of Myanmar Investment
Law and brief idea of investment opportunities.
Please allow me to explain the basic facts of
our country. Our country, the Union of Myanmar in its official name, is the largest
country in the Indochina Peninsular with a total land area of about 676, 000 sq kms. It is
rich in natural resources, vast fertile land, long navigable rivers, snow-capped mountains
and beautiful seashores. As it is mainly situated in the Tropical Region, Myanmar has a
tropical monsoon climate with three seasons: the hot season, the rainy season and the cold
season. Annual rainfalls vary from 500cm in the coastal regions to 75cm and less in the
central dry zone. Average temperatures range from 32 Degree Celsius in Central Myanmar and
lower areas to 21Degree Celsius in the Northern highlands.
Myanmar has a population of more than 51
million inhabitants. Among them, about 85% of the population are Buddhists while
10% are Christians and the rest are Muslims, Hindus and Animists. There are over one
hundred different national races. At present, the government of the Union of Myanmar tries
to keep the unity among the national brethern without racial discrimination.
Now let me focus my presentation into the
recent economic developments and reforms in our country. In order to achieve sustainable
development with its natural resource endowments, Myanmar launched a wide-ranging economic
policy change in 1988. Centralized economy was replaced by a market - oriented one . A
number of economic reform measures were initiated.
Nowadays, Myanmar Economy can be broadly
divided into two sectors namely the productive sector and the services sector. Annual
average GDP growth of 7.5% was achieved in implementing the four year plan from 1992-93 to
1995-96. The estimated annual average GDP growth during the five-year plan from 1996-97to
2000-2001 is over 8%. For the third short-term five-year plan from 2000-2001 to 2005-2006
is 10%. The largest contribution to GDP is from the Agriculture Sector , it is followed by
the Trade, Processing and Manufacturing, Livestock and Fishery Sectors. With regard to the
Foreign Trade, both exports and imports increased during 1995-96 to 1998-99 period. In
1999-2000, export increased 22% and import contracted by 10.0% due to priority given to
import of production supportive items only. The main export items are the agricultural
products, marine products, forest products, manufactured products and mineral products.
The country’s imports consist largely of manufactured goods
particularly the capital goods which constitute more than 40% of total imports. Major
Trading Partners are South East Asian Countries, Japan, PRC, North America and Eastern
Europe. More than 80% of total exports go to the Asian region and round about 90% of total
imports come from this region.
Besides, the government also pays emphasis on
the development of bilateral trade relations with the five neighboring countries- India,
Bangladesh, People’s Republic of China, Laos and Thailand-
using border trade as a mechanism for trade expansion. Until now, Myanmar has signed
border trade agreement with China, India, Bangladesh, Thailand ; and also exchanged a
draft agreement with Laos. The total volume of Border Trade from April to December in the
year of 2000 amounted to about US $ 227.83 millions .
As of November, 2000 the amount of Foreign
Direct Investment (FDI) to Myanmar reached more than US $ 7304.309 millions with 346
enterprises. Singapore is the largest foreign investor in Myanmar. Region-wise, ASEAN, EU,
Asia are the biggest investors. Among the economic activities, twelve items are restricted
and are to be carried out solely by the state. These activities include the extraction and
sale of teak, exploration and sale of pearls, jade, precious stones, etc. But there is a
reservation that the government may grant foreign investors to carry out those activities
in the interest of the state. The biggest sectors of foreign investment in Myanmar are
Manufacturing, Oil and Gas, Hotels and Tourism and Mining.
Among the foreign investors, Hong Kong is the
12th biggest investor with the total amount of US$140 millions. There are
altogether (26) enterprises from Hong Kong having foreign investment enterprises in
Myanmar . These enterprises include:
- Seventeen Garment Companies in Manufacturing Sector
- Four Companies in Hotels and Tourism Sector
- One Limited Company in Marine Products Sector
- One Limited Company in Transport Sector
- One Company in Exploration, Mining, Production and Marketing
of Gold
- One Oil and Gas Company
- One Company in other Services Sector
Here, I would like to express investment
opportunities sector by sector. Agriculture is the backbone of our economy and it
contributes about 40% to the GDP. We have vast potentials of land resources for
cultivation and for further expansion of the cultivable land with the total area of 67.6
million hectares, of which only 13% is under cultivation. Foreigners or organizations
consisting of foreigners may also apply to MIC for the right to cultivate or utilize land.
Besides, investors are encouraged into the assembly and manufacture of farm machinery and
implements. Since Myanmar is an agricultural based country, fertilizers are in great
demand. The present production capacity of fertilizer is about 1200 metric tons per day or
438,000 tons a year which is far from the country's demand of 600,000 metric tons
annually.
Having a long coastline of 2832 km, Myanmar's
continental shelf covers about 228,780 sq km and exclusive economic zone is 486,000 sq kms
wide, the country is endowed fishery resources with a sustainable annual yield of 1.05
million metric tons in marine fishing and 1.5 million metric tons in fresh water fishing.
Only 58% and 15% are exploited respectively. However, only 8% of the total production can
be exported due to the insufficient numbers of processing facilities, ice plants, cold
storage, etc. Licenses can be obtained for joint-venture fishery projects. Other
opportunities granted to the foreign investors in Livestock and Fishery Sector are :
Breeding of pig, poultry and cattle, production of vaccines for pig, poultry and pets,
veterinary pharmaceuticals, setting up of ice plant, cold storage facilities, fish meal
and canning plants, shrimp farm and production of bee products.
About 343,767 sq kms or approximately 51% of
Myanmar's land area is covered with forests and more than 8000 species of plant can be
found. And Myanmar has a reserved forest areas of 41,000 sq miles with a sustainable yield
of 0.3 million hoppus tons of teak and 0.6 million hoppus tons of hardwood. The main
export items are teak, veneer, furniture, carving, flooring products, moulding, etc.
Besides, there are ample opportunities for more exploitation of cane and bamboo resources.
At present, privately - owned and joint-venture investments are permitted to produce semi
and full manufactures. Timber exploitation has been undertaken solely by Myanmar Timber
Enterprise but investors can negotiate with Myanmar Timber Enterprise to extract it on a
contractual basis.
Myanmar's mineral resources are greatly
under-utilized. All mining activities are administered by the Ministry of Mines. It
encourages joint ventures between its enterprises and foreign investors to explore,
develop and exploit these resources and also for the increased production of copper, gold,
lead, zinc, iron and steel, dimensional granite and marble, etc. So far, 50 foreign
enterprises are allowed in this sector. Apart from these minerals, Myanmar is abundant
with various gems such as ruby, jade, sapphire, etc. Myanmar Gems enterprise under the
Ministry of Mines is looking for foreign joint-venture partners in setting up gem cutting,
polishing and manufacturing technology. Myanmar Gems Enterprise will contribute in the
form of raw gems. Participation in mining activities can be through production sharing or
profit sharing.
The country's abundance of hydroelectric
potential stands at the forefront of investment opportunities in this sector. Although 41%
of current electricity originates from hydroelectric plants, only 1% of hydroelectric
potential is being utilized. The Ministry of Electric Power is inviting foreign investors
to take part in joint-venture hydropower projects that are currently in various stages of
implementation. Additionally, there are also opportunities to operate other power stations
on a joint-venture-basis.
Myanmar also has a blossoming oil and natural
gas industry. The Myanmar Oil and Gas Enterprise (MOGE) is solely responsible for the
exploration, development, production and transportation of crude oil and natural gas in
the country. Since 1971, it has also undertaken offshore operations. Since 1989, Myanmar
has invited foreign oil companies to invest in exploration and exploitation of oil and gas
on mutually beneficial terms. Currently, a total of 51 international oil and gas companies
are operating production-sharing contracts in onshore and offshore areas. Other investors
are also welcomed. Foreign Companies of Total and Unocal has drilled a number of appraisal
wells in blocks M5 and M6 in the Gulf of Mottama, resulting in the discovery and
development of the Yadanar gas field. Natural gas from this field is being exported to
Thailand with a submarine pipeline. Another pipeline is being planned to Yangon to supply
gas for domestic usage. Moreover, other foreign investors like Texaco, Premier, Nippon Oil
have discovered significant amounts of natural gas and condensated in the Yetagun area at
Andaman Sea. The estimated volume of natural gas is 1.2 trillion cubic feet. Apart from
the offshore projects, natural gas has also been found at the onshore areas of Aphyauk and
Myanaung. Other onshore areas that are worth exploring are: the Hukaung Basin, Chindwin
Basin, Salin Basin, Sittaung Basin, Shwebo-Monywa Plain, Bago Yoma region, Pyay Embayment,
Ayeyarwady Delta Basin, and Yakhine Coastal Plain.
In the manufacturing sector, six Myanma
Industries under the Ministry of Industry (1) are responsible for production of goods .
The six enterprises are Myanmar Ceramic Industries, Foodstuff Industries, General
Maintenance Industries, Paper and Chemical Industries, Pharmaceutical Industries and
Myanmar Textile Industries. Altogether 138 factories are producing a variety of goods in
this sector. Most of these factories have ample capacity for the foreign investors to take
advantage in the manufacturing sector. Some factories need renovation and modernization to
enhance their production capacity to the maximum level. As a part to enhance the
manufacturing sector, the government has set up industrial zones where incentives and
facilities are provided for the development to private industries. Presently, 18
Industrial Zones have been established.
Since Myanmar products are mainly exported by
the ships, at present , Myanmar has sufficient facilities for the shipments .Yangon is the
main International Port, handling 90% of the cargo being carried. Thilawa ,the name of the
latest International Terminal ,was opened in 1996. The port now handles shipping cargos .
Conventional break-bulk cargo , containerization and services are the main functions of
the port. Beisdes Yangon , there are eight other ports in Myanmar. They are Sittwe, Kyauk
Pyu and Thandwe in Rakhine State, Pathein in Ayeyarwaddy Division , Mawlamyine in Mon
State and Dawei ,Myeik and Kawthoung in Thanintharyi Division. Ports in Myanmar are run by
the Myanmar Port Authority on the basis of BOT( Build, Operate and Transfer) Scheme as
well as joint-ventures. There are also a number of suitable sites for the development of
deep seaports.
There are invaluable access to develop the
tourist industry in Myanmar. In order to promote tourism industry, the tourism development
management committee had been formed to lay down guidelines for systematic co-operation
and formation of hotels. In order to facilitate the visitors, construction of new hotels,
motels and inns were undertaken. In 1988-89 there were (39) hotels in Myanmar with the
capacity of (1,240) rooms, but at present more than (600) hotels, motels and inns with the
capacity of more than (15,000) rooms are available.
As you all know, Myanmar culture dates back
along with Buddhism. Myanmar is a cultural destination with its cultural heritage and is
also blessed with natural environment. Myanmar is endowed with natural favourable
conditions for the development of tourism industry, there are also tourist attractions of
ancient cities like Mrauk-u, Bagan, Innwa , traditional culture of national races such as
Padaung, Kachin, Lahu ; vast and beautiful beaches such as Ngapali, Chaungtha, Ngwesaung
and snow-capped mountains in Putao, archipelagos such as the Myeik archipelagos with
abundant coral reefs and marine life for natural lakes such as Inlay and Indawgyi.
Recently, special arrangements for package tours are being permitted to view a gigantic
jade boulder weighing over 2000, tons at Phakant which is in Northern Myanmar. Although
Myanmar is endowed with favourable conditions for the development of tourism, some news
agencies from the West have been broadcasting and fabricating news regarding Myanmar as
propaganda, with the intention of preventing tourists from visiting Myanmar. This has
disrupted the development of the tourism industry.
To develop the banking and finance industry,
the Central Bank of Myanmar has issued banking licenses to twenty domestic banks to
operate domestic banking services. Altogether 45 foreign banks have also been granted
licenses to establish representative offices in Yangon .
As an initial step towards a more liberalized
economy, the government formed the Foreign Investment Commission in December, 1988 after
Foreign Investment law had been promulgated in November of the same year. In 1993, the
government reformed Foreign Investment Commission as the Myanmar Investment Commission
(MIC) to administer the Foreign Investment Law. If a foreign investor wants to set up his
business in Myanmar, he shall submit a proposal form to the Investment commission. He can
set up his business either in the form of wholly foreign-owned or a joint - venture with
any partner. In all joint-ventures, the minimum share of a foreign company is 35% of total
capital. The Commission issues a permit if the proposal is approved. In forming an
economic enterprise under a permit, contracts should be executed as necessary. Besides,
that enterprise should effect insurance with the Myanma Insurance Corporation in respect
of the prescribed types of insurance.
According to Myanmar Foreign Investment Law,
Myanmar Investment Commission may grant:-
- exemption from custom duty and other internal taxes on
imported raw materials during the first three years of commercial production and
operational periods
- right to deduct the research and development expenditure, etc.
Enterprises operating under the Foreign
Investment Law shall have the State guarantee against nationalization and expropriation.
The minimum amounts of foreign capital required are US$ 500,000for an industry and US$
300,000 for a services organization respectively. According to the Myanmar Investment Law,
foreigners cannot own land but can lease it for periods up to 30 years or more, if
approved by MIC, from the government. Besides, a foreigner or a foreign company cannot
lease any immovable property from the private sector more than one year at a time.
After explaining some salient points about
the Myanma Investment Law, I would like to express about some brief ideas of Export,
Import and Customs Clearance. An enterprise permitted to Foreign Investment Law has to be
registered as exporter - importer with the Directorate of Trade under the Ministry of
Commerce. Applications for registration may be made for one to three years. On expiry of
the validity of registration certificate, it may be renewed on payment of renewal fees.
Then, export license can be obtained in conformity with the rules and regulations. In
applying for an export license, the applications should attach a sales contract or
agreement and/or proforma invoice mentioning detailed specification with regard to grade,
quantity, price, name of buyer and country, method of payment, shipment period and the
country of destination. An irrevocable Letter of Credit has to be opened at Myanmar
Foreign Trade Bank by the buyer through correspondent or acceptable bank. Myanmar products
can be exported with the exception of some selected items or restricted items such as
teak, rice, etc. However, reserves are to be craned out only by the State. The export of
timber in log form was not permitted and only value-added timber finished products are
permitted to be exported .
In import license, an irrevocable Letter of
Credit (L/C) has to be opened by the importer at the bank. If the purchase is made on
F.O.B basis, the importer has to secure insurance from Myanmar Insurance and freight
booking from Myanmar Five Star Line. Import license fees are payable on all imports from
abroad. License fees must be paid according to the specified rate for import of goods on a
consignment basis. Import license fees are payable on the CIF (Yangon )(Cost Insurance
Freight) value of goods imported from abroad .
There are fifteen types of taxes and duties
under four main categories. Corporations incorporate in Myanmar are treated as resident
and taxed at the rate of 30% on income accruing or arising in Myanmar and outside of
Myanmar. For enterprises or companies operating under the foreign investment law and those
formed under the Myanma Foreign Companies Act, income tax is payable at 30%. For a
non-resident foreign investor, the income tax is 35%. Commercial tax is payable on goods,
imported or produced in Myanmar, trading sales, and services ranging from 0% to 200%.
Export tax is payable at 10% except the CMP( Cut , Making and Packaging ) basis.
According to the Myanmar Investment Law,
domestic borrowings in foreign currency is not available. Domestic borrowing in local
currency can be provided by the commercial banks operating in the country. Foreign
borrowings and foreign equity investments require prior approval of MIC. All foreign
investments should be registered with MIC to enable applications for capital repatriation
and profit remittance. Remittance of profit and capital repatriation are subject to
approval of MIC and are also subject to Exchange Control regulations.
Besides, Myanmar has an active labor force of
19 million. Fairly well trained manpower and skilled labor are available. The labor cost
in Myanmar is quite low compared with its neighboring countries. The working hours in
Myanmar are 48 hrs a week for Companies and factories, 44 hrs a week for Oil field and
Mines, 40 hrs a week for underground mines. Required manpower can be recruited through
Township Labor Offices. Those who work in private business have the right to enjoy 6 days
casual leave, 30days medical leave, 10 days earned leave and 21 public holidays in a year
with wages. Moreover, women workers can enjoy maternity leave with wages covered by the
Social Security Act of 1954.
Like your Chamber, the Union of Myanmar
Federation of Chamber of Commerce and Industry plays a vital role in the private sector.
The Union of Myanmar Federation of Chamber of Commerce and Industry is to be nurtured and
encouraged to become a dynamic economic force which can serve national interests. The
Federation is, in turn, to strive to establish more contact with international chambers of
commerce and industry, especially with the families of ASEAN and Asian Region.
Now, I have explained some of the economic
reforms and investment opportunities implemented in our country. We are, hereby, assigned
not only for consular affairs but also for the trade and investment promotion between
Myanmar and Hong Kong. In this regard, I am very glad to have a great opportunity to
co-ordinate for the business delegation to Myanmar with the members of Hong Kong Trade
Development Council and Chamber of Commerce very soon. When your delegation arrive
Myanmar, the departments concerned will meet and discuss your necessary information in
details. So, I do hope the mutual benefits in trade and investment sectors between Hong
Kong and Myanmar will be enhanced.
Before concluding my speech, may I thank you , once again.
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