Myanmar to issue new rules, regulations to govern joint venture banks

YANGON, April 30 (Xinhua) — Myanmar will issue fresh rules and regulations to govern banks set up on joint venture basis by domestic and foreign banks this year, said a finance official Tuesday.

U Thein Zaw, deputy director general of Financial Institution Supervision Department of Central Bank of Myanmar, told the opening of the first-ever Taiwan-based First Commercial Bank’s representative office in Yangon — FCB which resumed operation after an absence of 15 years.

The opening was also attended by Tsai Ching Nien, chairman of the Board of Directors of FCB and officials concerned from domestic private banks.

So far, 23 foreign banks opened representative offices in Myanmar, including those from Brunei, Bangladesh, Cambodia, China, India, Japan, Malaysia, Singapore, Thailand and Vietnam.

There are 19 private banks and three state-owned banks in Myanmar.

In January this year, U.S.-based Western Union started money transfer services in Myanmar with seven local private banks.

Moreover, four Myanmar private banks, including Cooperatives Bank, Kanbawza Bank, Asia Green Development Bank and Ayeyawaddy Bank have also been allowed to handle remittance to homeland from Myanmar migrant workers working in Singapore, Thailand and Malaysia starting February.

In the latest development, the United States authorized financial services with four Myanmar banks in February this year.

The four Myanmar banks were granted by U.S. Treasury Department general license that offered them access to American financial system. These include State Economic Bank, Myanmar Investment and Commercial Bank, private-owned Asian Green Development Bank and Ayayawaddy Bank.


World Bank revises 2013 growth figures

The World Bank has revised its growth prediction for Cambodia upwards to 7 per cent for 2013, from its January prediction of 6.7 per cent, a revision it attributes to the performance of the Kingdom’s agriculture, tourism and garment sectors.

Cambodia’s outlook is generally positive, according to the World Bank, which expects inflation to remain at 3 per cent in 2013.

Though it has eased slightly, credit growth “continues to raise concerns” for the bank, which called for “close monitoring” of the situation.

“Credit growth . . . has been driven largely by wholesale and retail financing . . . starting in 2011 agriculture financing has eased to 29.2 per cent (year on year) in January 2013, from 34.0 per cent in December 2012, and 34.6 per cent in January 2012,” said the World Bank.

While acknowledging the level of banking integration in Cambodia – demonstrated by the “large presence” of foreign banks – the IMF was also cautious about maintaining effective controls on credit growth.

“Going forward, it is important for Cambodia to manage financial deepening while ensuring financial stability. For that, moderating credit growth and continued supervisory and regulatory improvement would be necessary,” Faisal Ahmed, the IMF representative for Cambodia, told the Post two weeks ago.

Having ceased loans to Cambodia in 2011 after concerns about the forced evictions at Boeung Kak lake, the World Bank told the Post in December last year that it would wait until after this year’s general elections to discuss re-introducing loans.

By Daniel de Carteret │29 April 2013│The Phnom Penh Post

Kingdom spending $3m to boost rubber quality

A $3 million initiative to purify the quality of rubber trees planted across the country is intended to spur farmers to plant more rubber, a government official said.

Ly Phalla, director general of the General Directorate of Rubber at the Ministry of Agriculture, Forestry and Fisheries, said last week that the project would examine different varieties of rubber and determine the best types for farmers to grow.

He said the project, commenced this year and expected to be completed in 2015, would cover more than 100 hectares of rubber plantations across the country.

“We do whatever we can to purify all kinds of rubber. Any farms examined by me must be posted with a billboard saying ‘recognised by the general [rubber] directorate’, so the farmers will know that planting is not wrong, because it is recognised, ” he said.

He said Cambodian farmers plant around 50 or 60 different kinds of rubber, but only six kinds are particularly popular among farmers.

Mak Kimhong, director general of the Chup Rubber Plantation and president of the Cambodia Rubber Plantation Association, said high-yield varieties of rubber were dependent on the type of soil, and therefore purifying rubber could help it find the right kind of soil.

“Mistakes with planting rubber even one time is wrong for 30 years, so to purify is very good for this agri-industry,” he said, adding that some activities should be done to enhance the quality of rubber output.

According to Phalla, Cambodian rubber plantations grew 31.5 per cent, to 280,355 hectares in 2012, from 213,104 hectares in 2011.

Cambodia has 55,361 hectares of rubber plantations that are ready for harvesting, while the remaining plantations covering 224,994 hectares are still growing. The quantity of dry rubber was 64,524 tonnes in 2012, and Cambodia exported 59,917 tonnes.

Phalla told the Post last week that his officials are drafting a law on rubber for managing the processes of the business in Cambodia, in order to ensure quality for export.

By Rann Reuy  │ 29 April 2013

│ The Phnom Penh Post

Industrial sector slump continues

HA NOI (VNS)— The national index of industrial production (IPP) experienced a year-on-year increase of 5 per cent in the first four months of this year, said the General Statistics Office (GSO).

However, the office said the index’s growth remained low compared with the rate of 5.9 per cent at the same period last year.

The index assesses the processing and manufacturing sector, which accounts for more than 70 per cent of the nation’s total industrial production value. Figures show it surged 5.5 per cent followed by a modest reduction of 0.5 per cent in comparison to the first four months of 2012.

The production of steel decreased more than any other product, dropping 11.5 per cent. Textile industry output plunged 9.6 per cent while televisions production slumped 7 per cent.

The low indices show that the industrial sector still faces difficulties brought by the global economic downturn. This has led to a slump in purchasing powers in both domestic and foreign markets, the GSO said.

Great efforts to reduce domestic stockpiles of goods have led to decreases in industrial production, especially in the processing and manufacturing sectors, since the beginning of this year.

As of April 1, the inventory index for the two sectors saw a 13.1 per cent year-on-year rise, down 3.4 per cent from the previous month and 19 per cent in comparison with same time last year.

To overcome difficulties, experts recommend that industrial producers restructure production so they can churn out high-quality products and sell them to a wider market.

They also suggested the Government provide firms with easier access to capital and improve tariffs and the business environment. — VNS

Garment sector on the rise

The lifting of European Union sanctions on April 22 might herald a bright future for Myanmar’s garment sector if the country can benefit from the generalised system of preference status, which lowers import tariffs, in the EU and United States.

U Myint Soe, chairman of the Myanmar Garment Manufacturers Association (MGMA), said at the start of a business matching event between Myanmar and Hong Kong garment and textile industries on April 24 that Myanmar might be granted GSP status on June 4.

“EU sanctions were lifted last Monday and hopefully we will be granted GSP status by the US on June 4,” he told the 30 representatives at the meeting, which was held at the Union of Myanmar Federation of Chambers of Commerce and Industry. “This is the huge opportunity for international companies to invest in Myanmar’s garment sector.”

“If we can get GSP status from the US it will mean we can do more business with international companies. They will be able to invest in Myanmar and be assured that they can get access to the EU and US markets,” he said.

U Myint Soe said Myanmar’s garment sector had many incentives for foreign companies, including tax breaks, cheap labour and an attractive foreign investment law. However, he said electricity shortages in the hot months were problematic but expected the shortages would be solved by the government, which is working to ensure adequate supplies.

Myanmar’s garment exports hit a high of about US$826 million in 2001, just before the United States announced a ban on imports. But by 2012, the value of exports had recovered to more than $900 million, with more than 75 percent shipped to Japan and South Korea. Less than $200 million worth of goods were sent to Europe.

U Aung Win, MGMA vice chairman, told The Myanmar Times: “We have continuously made and exported garments since 1993. We are waiting for GSP status but we must also ensure that our quality levels meet the standards required for those markets.”

He added that there are more than 300 garment factories in Myanmar.

Daw San San Myint, deputy director of Myanmar Investment Commission’s Yangon branch, which opened on April 10, said most of the information requests handled by the office since it was opened have concerned the garment sector. She added that 25 of 40 requests have been about the sector.

“MIC has to explain to investors about the foreign investment law first, especially equity ownership ratios, as well as taxation,” she said. “Companies from Singapore, Hong Kong and Taiwan have shown the greatest interest so far but I think there might be investments made from the EU and possibly Canada too if Myanmar is granted GSP status,” she said.

Mr Lewis Leung, president of Price Edward Road Management in Hong Kong, which operated garment factories in Myanmar from 1995 to 2000, said Myanmar could compete with Cambodia and Bangladesh if it receives GSP status.

“Myanmar can compete with them but the profit won’t be as high as in Bangladesh,” he said. “I am interested in investing in Bago Region because it is so near to Yangon and has a large available workforce,” he said. He added that the quality of Myanmar’s garments is good.

However, U Myint Soe said companies would need to increase their awareness of international standards, especially labour rights and conditions. But the MGMA, International Labour Organisation and labour activists would assist companies in this effort.

He added that the average wage for a garment worker is about $100 a month.

U Myat Thin Aung, chairman of the Hlaing Tharyar Industrial Zone, said many international companies operate garment factories in Thailand but might shift production to Myanmar if it is given GSP status.

“But we still need to solve the electricity shortages and high land prices,” he added.

MIC data shows that most garment production in Myanmar – about 60pc – is cutting, manufacturing and processing work, which provides quick profits to operators but does not help the nation to build a manufacturing base since all raw materials are imported from abroad.

By Soe Sandar Oo   |   29 April 2013   |   The Myanmar Times

Credit growth in Cambodia’s banking sector slightly up in 1st two months

Cambodia’s banking industry recorded a slight increase in lending in the first two months of this year after a sharp rise last year, according to a consolidated data provided by the National Bank of Cambodia (NBC) on Saturday.

The data showed that the kingdom’s 33 commercial banks had lent a total of 5.99 billion U.S. dollars to customers by the end of February this year, up 1.7 percent from 5.89 billion U.S. dollars at the end of December last year, the report said.

It added that 32 percent of the loans went to wholesale and retail trade, 10 percent to agriculture, 9 percent to manufacturing, 8 percent to construction, 6 percent to hotels and restaurants, 6 percent to mortgages and the remaining percentage went to financial institutions, real estate and personal borrowing.

The credit growth has eased in the first two months of this year after it sharply rose in the whole year of 2012.

Last year, the banks lent 5.89 billion U.S. dollars to customers, up 34 percent year-on-year, said the NBC’s report.

The Washington-based International Monetary Fund (IMF) warned in January that the surge in lending by Cambodia’s banks could put the country’s financial stability at risk.

“Rapid credit growth and excessive risk taking by banks in 2012 could threaten financial stability,” the Fund said in its consultation report.

According to the World Bank’s April 2013 Economic Outlook released this week, the declining trend of credit growth this year was thanks to slower growth in agriculture, manufacturing, retail, and construction financing.

“Financial deepening continues, and credit growth, though eased, continues to raise concerns as a financial risk,” the bank said. ” Close monitoring is warranted.”

By the end of February this year, the NBC said that the banks received 6.25 billion U.S. dollars, up 1 percent from 6.19 billion U.S. dollars at the end of last year.

Cambodia has the population of about 14.5 million. Its banking sector has been serving about 1.6 million borrowers and 1.9 million depositors, according to the NBC.

By Xinhua│28 April 2013│

Cambodia’s oil imports down 12 pct in Q1

Cambodia imported 412,190 tons of petroleum in the first quarter of 2013, a 12 percent decrease compared with the 471,000 tons it imported at the same period last year, the commerce ministry’s report showed on Saturday.

During the January-March period this year, the country spent 397 million U.S. dollars to buy the petroleum, down 15 percent from 469 million U.S. dollars at the same period last year, it said.

Currently, the country totally purchases petroleum from Vietnam, Singapore and Thailand as its seabed’s oil and gas have not been exploited.

On April 8, during the official visit of Cambodian Prime Minister Hun Sen to China, Hun Sen and Chinese Premier Li Keqiang witnessed a signing on a Memorandum of Understanding on the 5 million tons oil refinery project among China Development Bank, China Export and Credit Insurance Corporation, China Perfect Machinery Industry Corporation and Cambodian Petrochemical Company.

The oil refinery project, which is estimated to cost 1.67 billion U.S. dollars, will be built on the 80-hectare area within the boundary of Preah Sihanouk province and Kampot province in Cambodia.

By Xinhua│27 April 2013 │