Yangon EconomyThe Yangon Economy
Yangon's economy - the power of the country
The Yangon area is a place where most of the nation's revenue is earned. The goods also flow into the area from all corners of the countryside. There is no doubt that the regional economy will lead to the growth of other areas and countries. Below are the opinions of economists on the evolution of Yangon:
"Yangon's economy is good, but there are many problems and limits. Yangon's growth is the only way to make the whole national wealth. We had a big hike from all parts of the land to Yangon to find good employment, and as a consequence the town became a big town.
The price of consumables and groceries is high in Yangon and other parts of the countryside are following. Raw material costs must be kept under control to become a prosperous people. Medium-sized businesses cannot be improved until it is possible to control the price. Raise the pay is not the response because this will end up in the issue and the Nation will not sophisticate.
There is a price issue for raw materials in every single state. In order to promote the economy, there should be more discussion and discussion between the governments and business people.
The ten trends that will shape the economy in 2017
The year 2017 was an exciting year for Myanmar, with important economic trends that saw some $4.5 billion in FDI inflows between April and November, creating tens of thousand native employment and driving large sections of the populace into the centre-range. They include opening up the cab sector to overseas taxis, authorising a number of new properties and joint promotional activities and measures to alleviate a paralysing cash crisis that has hampered the economic expansion and innovativeness of small and medium-sized businesses.
Myanmar's Directorate of Investment and Corporate Administration (DICA) anticipates that FDI flows for the 2016-17 financial year will top last year's $6.7 billion. At the same time, investors' trust in the government's capacity to implement important legislation and commercial reform has declined. The second Myanmar poll carried out by Roland Berger in cooperation with the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) in the second half of 2017 showed that short-term optimism fell to just 49% between June and August from 73% a year ago.
Overall, despite the appreciation of the World Bank's Ease of Doing Index, the economy is still one of the least appealing places to do busines. In summary, there are ten major financial landmarks and set-backs that have marked Myanmar's economy this year:
Malaysia's Grab and Uber, based in the USA, debuted in Yangon in the first half of the year and joined the Oway Ride and Hello Cabs cabs. Businesses want to make it easy for shuttle services to find people by offering a more effective cab reservation system.
Businesses were inspired by U Phyo Min Thein, Chief Minister of the Yangon region, to start in the town and increase competitiveness in the area' s cab business by improving services and establishing a system of more fair tariffs. At Yangon, most of the approximately 60,000 cabs on the roads are owned by single operators and the fare is negotiable between the rider and the potential mileage.
There' s no system to follow a cab - e.g. via GPS - if there are any issues. As a rule, cabbies do not accept journeys to unfavourable locations at noon. Against this background, the Yangon government's goal is for cab companies to educate and promote sound driver training, promote sound competitive practices within the industry and make available to the local authorities transportation information to reduce congestions and the city's transportation system.
Last October the German federal administration introduced a new car-politics, according to which only new left-hand drivers are allowed to be imported from next year. In this way, the German federal administration wants to allow older right-hand drivers to be phased out in order to increase road accidents and road use. Laws on foreigners and alien workers, which are considered to be the formal priority for the administration, have been criticised by attorneys and financial experts for promoting bureaucracy and the creation of an anti-investment climate.
Under the Aliens Act, non-Myanmar nationals over 10 years of age and wishing to stay in the state for more than 90 nights must obtain a Foreigner Registration Certificate (FRC) and always have it. For the FRC owner to travel within Myanmar for more than 24hrs, a" Registrar" - designated as someone who runs a Township Immigrant, Employment Agency or higher - is required.
Nine overseas economic associations have also issued a common declaration expressing their concerns about the proposed legislation, as the demands are too high and would constitute an obstacle to the establishment of enterprises or the posting of expatriate employees in Myanmar. Myanmar Centre for Responsible Businesswoman Vicky Bowman said the bills raise a variety of issues, from extra bureaucratic delay to increased bribery possibilities.
"Every dealings with regulatory agencies that involve getting permits is a corrupt business, and that concerns overseas investors," she said. Burma has been formally accepted into China's Belt and Road Initiative (BRI). In Myanmar, the project aroused great interest when State Councillor Daw Aung San Suu Kyi visited the Belt and Road Forum for International Cooperation in Beijing in May.
That has proceeded to block negotiation between China and Myanmar over the Kyaukphyu Special Economic Zone (SEZ), which is made up of an industry estate and a $7. 2 billion deep-sea harbor in Rakhine State. As part of the original ownership approved by the U Thein Sein U Thein in 2015, it was decided that China holds 85% of the deepwater harbor, while Myanmar holds the other 15%.
Myanmar Times in an October one-on-one statement by Yuan Shaobin, President of Myanmar's International Security Council (CITIC), said the Myanmar Times had accepted that Myanmar would take a higher 30% interest. On Kyaukphyu, China's Myanmar project, China's Kyaukphyu is led by China's leading research group. Now it is up to Nay Pyi Taw and the authorities to push the talks forward.
Three or more industry and investors' trust in the country's governments has fallen. In the Roland Berger/UMFCCI poll, more than three-quarters of the 600 respondents named bad execution or the absence of a clear economy policies as the primary cause of their dwindling trust in the economy.
The results of the second EuroCham Myanmar and Myanmar Confidence Survey show that more than three fourths of the 70 Myanmar-based businesses in Europe consider the operating climate to be bad or in need of improving, up from 67% in 2016. Indeed, about a third thought the operating climate had deteriorated in the last 12 month in comparison to only 18% in 2016.
In Myanmar, businesses identified regulation, a shortage of skilled workers and legislative insecurity as the main challenge. World Bank noted that capital spending has also slowed during the year as a result of the slowdown in investor spending as a result of governments' holding back to greater transparency in their agendas and the spread of the human rights situation in Rakhine, she said.
After only a few weeks of its adoption, top DICA officers said that the Myanmar Companies Act could not be implemented until August 2018, after a statute had been drawn up and a business register essential for the enforcement of the Act had been made. Myanmar's Business Act, which supersedes the regulations passed over a hundred years ago, was passed on 6 December by President U Htin Kyaw without a starting date.
Launched by the former army in 2014, the new Act sets out policies for how a business is run and ruled, removes obsolete stock transfer laws and provides greater shareholder shelter. One of the new arrangements allows non-resident enterprises to acquire up to 35% of the shares in domestic enterprises, leading to much needed reform for enterprises with liquidity bottlenecks in the area.
Corporate law was already adopted when two other important legislation - the Investment Act and the Condominium Act - came into force this year. In December, TMH Telecom Public Company was listed as the fifth entity on the Yangon Stock Exchange (YSX). Myanmar's central bank (CBM) said in November that it would allow up to three years for bank overdrafts, which account for most of its credit, to be recovered.
Bank overdrafts are valued at $9 billion, which corresponds to about 70 percent of the entire credit volume of domestic bankers. It was announced just after CBM allowed even municipal bankers to grant credit without the need for security in the shape of real estate or ownership, provided they have the right riskmanagement processes, said U Set Aung, deputy minister in the Ministry of Planning and Finance, The Myanmar Times in October.
CBM also gradually took measures to regulate enterprises in the field of finance technologies (fintech). CBM's approval processes for finishing chemicals businesses were debated by MEPs during a meeting of the Yangon Regional Parliament in October. Myanmar's first of its kind, the $300 million 225 megawatt facility, is being built by Singapore's Sembcorp Industries, which in January concluded a Building Operation Transfers Arrangement (BOT) with MOEE.
As part of the contract, Sembcorp Myingyan Energy Company will construct and run the Myingyan Solar Energy Station for 22 years, after which the system will be handed over to the Myanmar authorities. The two 71st 5-megawatt turbines for the installation are now being produced on a test base, with electricity being distributed from these turbines scheduled for January 2018, according to the state.
Phase 1 of Junction City, a joint Shwe Taung Group and Keppel Land joint venture in Singapore, was completed with the formal opening of the Pan Pacific Yangon global luxurious resort on December 8. The Junction City Shopping Centre and Junction City Tower, a class A building, will be expanded by Pan Pacific Yangon.
Phase 2 of Junction City, consisting of assisted living units and bureaus, will begin in 2018. It was launched in November following the signing of an Yoma Central contract by Singapore publicly quoted Yoma Strategic Holdings with Peninsula brand luxurious homes, two Grade A tower units, a commercial property and served-apartment.
It is being jointly developped by Meeyahta Development Ltd, a Yoma Strategic, First Myanmar Investment Company (FMIC), several Mitsubishi and International Finance Corporation and the Asia Development Bank. In a second subproject, the former Burma Railway Company headquarter will be converted into a luxurious Peninsula Yangon hospital.
Construction of both complexes near Bogyoke Aung San Road, not far from Junction City, is scheduled for completion in 2021.