Investment Opportunities in Myanmar (WHEF 2013, Bangkok)

1. Investment Opportunities in Myanmar(WHEF 2013, Bangkok) Khine Khine Nwe Joint Secretary General UMFCCI August 10, 2013

2. GDP - composition by sector: • agriculture: 43% • industry: 20.5% • services: 36.6% (2011 est.) • Labor force: • 37.35 million (2011 est.) • country comparison to the world: 19 • Employment - by occupation: • agriculture: 65% • industry: 12% • services: 23% (2011 est.) • Total land boundaries5,867 km - China 2,185 km - Lao 235 km - Thailand 1,800 km - Bangladesh 193 km - India 1,463 km

3. Economic Corridors Myanmar is well situated on the Northern Corridor, North-South Economic Corridor and East-West Economic Corridor and, Southern and Western Corridors. Although East-West Economic Corridor known as EWEC connects eastern ASEAN countries, Western Corridor and Southern Economic Corridor are the key base to establish Mekong-India Economic Corridor (MIEC) by extending the link to Dawei of Myanmar.

4. What’s new in Myanmar, what’s news about Myanmar • New Government The first democratically elected government • New Political Landscape Measures to achieve positive changes in political, economic and social spheres are put in place, in line with the market conditions and international circumstances. June 2013 : World Economic Forum 2013 : SEA Games 2014 : Asean Chairmanship

5. New Economic Landscape Myanmar is in the process of instituting a series of policy and strategic reforms with the aims of achieving national development and catching up with the economic success of neighboring countries. • New Development Ideology • to reduce poverty and to increase wealth • to lift the country out of the least developed country status • to ensure job opportunities and health and social security benefits for its people

6. New National Economic Policy • Sustainable development of agriculture sector towards industrialization • Equitable and proportionate development among Regions and States • Inclusive development of entire people • Develop the Qualityof statistics and statistical system

7. Goals of the Fifth Five-Year Plan (2011-12 to 2015-16) • To achieve an average annual GDP growth rate of 7.7% • To increase industrial share of GDP from 26% to 32% together with an increase in the service sector, reducing the currently high share of agriculture. • To increase Per capita GDP growth between 30-40% from the base year of 2010, which will help attain the first goal of MDG in reducing the poverty incidence by half over the period 2000-2015. Source: MNPED

8. New Reforms and Laws • Finance and Banking • Unification of exchange rates in April 2012 • Adopted a managed floating rates • Foreign currency reserve US$7 billion in September 2011 and expected to US$ 9 billion by end of the year 2013. • Central Bank Law (approved July 13, 2013 by Parliament)

9. Myanmar’s Foreign Investment Law “FIL” is revised with more exemptions and relief and approved by the Parliament in November 2012. Ministry of National Planning and Economic Development issued the Foreign Investment Law Regulations, passed on 31 January 2013. Myanmar Investment Commission announced - List of Prohibited Economic Activities List of Economic Activities allowed in the form of Joint Venture with Myanmar citizens and List of Economic Activities which shall be allowed under the specific circumstances

10. Aims of the New FIL • to produce products using abundant resources of the country, for the people to enjoy sufficiently and to enable the surplus to export • to open up more employment opportunities for the people, as business develop and expand • to develop human resources • to develop infrastructures, both hard and soft • to develop respective area of studies in communication networks, transport business such as rail, ship, aircraft, throughout the entire country, to meet the international standard • To promote nationwide development and to encourage citizens to work in relevance with other countries • To promote the building up of the economic enterprises and investment business in accord with the international norms.

11. Special Economic Zone Law : Existing law enacted in February 2011, being revised to be one of the most investor friendly laws in the region. • Taxation Law : Revised with effect from 1st April, 2012, reduction of tax rates to induce foreign and local investment. • Intellectual Property Law : 11th draft in process, based on minimum standard and maximum flexibility, expected end 2013 or early 2014. • New York Convention : Submitted instrument of accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (1957) in Aoril 2013.

12. Changes in Trade and Investment Environment • Commercial tax and Income tax for export - 10% to 0 % (except for 18 special commodities) • Income tax- 10% to 0% (CMP including garment exports) • Reduce Cargo inspection stations at Border Checkpoints • Liberalization in documentation process for trade procedure • Liberalized in car import- any citizen with foreign exchange account is allowed to import car • Online Licensing system will be introduced soon. • Myanmar Investment Commission reorganized. • One Stop Service for Investors in Yangon (DICA) started on April 10

13. Top 10 Exports & Imports (2011-2012)

14. Top 3 Trade Partners of Myanmar (2012-2013) Source: MOC

15. Source: DICA 2013

16. Source: DICA 2013

17. Increase of FDI Since September 2012

18. SEZs

20. Source: Ministry of Industry

21. Agriculture • agro-based country • Potential food basket for Asia • Vast potential of land resources as well as different networks of irrigation facilities for the expansion of Agriculture Sector both horizontally and vertically

22. MINERAL SECTOR Eastern Highlands Western Ranges Abundance of precious gem stone such as ruby, sapphire, jade and diamond. Ruby accounts for 90% of world supply and the largest jade resource country in the world. Jade is second largest export item with the amount of USD 2.2 Billion. 2.8 Billion USD investment by 64 Enterprises. Nickel Chromite PGM Lead,Zinc Copper Silver Tungsten Antimony Iron Central Belt Porphyry Copper Gold Coal Oil & Gas

23. INDUSTRY SECTOR • Foodstuff, • Textile, • Personal Goods, • Household Goods, • Leather Products • Transport Equipment, • Building Materials, • Pulp and Paper, • Chemicals, • Pharmaceuticals, • Iron and Steel, • Machinery and Plant Developing together with other sector such as agriculture, fishery, mining and oil and gas sectors ; plenty of opportunities to invest in manufacturing sector such as labour intensive industries, Small and Medium Enterprises (SMEs) and production Network FDI projects.

24. Garment Industries High Growth Potential for Export to Japan, Korea, EU and USA Large Domestic Demand for textile and clothing (about USD 56 million, 75% of which has been imported.)

25. Power At least 37,000 megawatts can be generated from hydro all over the country in the Ayeyarwaddy, Sittaung, Thanlwin and Chindwin river basins and only about 745 megawatts has been developed so far. Energy Sector potentials for cooperation in the downstream projects in Energy Sector such as refinery plant and fertilizer plants.

26. OIL & GAS SECTOR Myanmar possesses significant natural gas and oil reserves. 10th largest resource of natural gas in the world, over 90 trillion cubic feet.

27. FORESTRY • Expansive forest which covers half of total area of the country, exports 80% of world teak supply • Major exporter of teak in the world • many hardwood and softwood species that have been neglected in the past • processing value-added products commercially for exports as well • Potentials for Value added production of Minor Forest Products: Bamboo, Cane, Rattan

28. FISHERIES SECTOR A long sea coastline of 2,832 kilometers associated with 229,000 square kilometers of continental shelf and 486,000 square kilometers of exclusive economic zone Fishery resources that are currently being used is less than 60% of sustainable yield, potential of 1.05 million MT of fish and fishery product

29. TOURISM SECTOR Booming sector after reform 16.95% increased in 2009-10, 4.88% increased in 2010-11 and 30% increased in 2011-12 Very new white sand beaches at Myeik Archipelago comprising 800 islands Year round festivals with simple and kind hearted people

30. PROMISING FUTURE BUSINESS 1. Labor intensive manufacturing – garment, footwear, toy, wigs etc… • 2. Export oriented agro-based value added industries • Huge potential for agricultural production • huge global demand • abundant potential in food supply • 3. Supportive Industries • SMEs & SMIs

31. Potential Jobs Opportunities Agriculture Food Processing Fishery Resource Mineral Processing Mining Wood Processing Forestry Petrochemical Oil & Gas Garment Electronic Parts Assembly Labor Footwear Industry Others Hotel & Tourism Logistics Services Real Estate Other

32. Market Potential TOTAL : 2.839 BILLION Neighboring Markets 2 Giants Economies ASEAN Pop 600 mil INDIA 1.21 Billion CHINA 1.35 Billion International Markets BANGLADESH 145 Million LAO 7 Million EU, USA, Japan, Korea 60 Million Domestic market THAILAND 66 Million 60 million Population BAY OF BENGAL ANDAMAN SEA 40.6% OF WORLD POPULATION

33. STRENGTH • Abundant trainable labor force with basic education, hard-working, quick learning, sincere and obedient mindset of the people. • Well connected to major Asian market, ASEAN, China and India. • Strategic location : Geopolitical importance for regional connectivity as the tri-junction of East Asia, Southeast Asia and South Asia. • Benefit of late comer in development: can leapfrog. • Strong political and economic will of the leaders and strong will of the people to advance forward under the good leadership. 33

34. Weakness • Poor infrastructure adds up in high production and transaction cost. • Underdeveloped banking and financial system. (Reforms in banking system.) • Shortage of skill workers and middle level technicians. (Skill Development Law, schemes) • Job-hopping from one workplace to another. (Insecurity, Minimum Wage Law, Social Security Scheme) • Lack of financial access, incentives, modern efficient machineries, technology and management. (Training Center) • Transshipment in Singapore. (Corridors and Deep Sea Ports) 34

35. THREAT Regional inequality may cause social inequality Competitiveness International pressures amid reforms and economic sanctions. (?) Genuine change! Reversible-irreviserble! Capacity!

36. OPPORTUNITIES • Regional hub for multimodal transportation and a potential supply route bypassing the Malacca Strait. • Huge Domestic Demand for textile and clothing (about USD 56 million, 75% of which has been imported.) • GMS Cross Border Transport Agreement (CBTA) based Transit Transport. Cutting off substantially transaction cost, both time and money. • Sole land-bridge between two giant economies, China and India Bharat. • High potential to be a “food basket” and “energy source” for Asia (Connectivity Hub). Huge industrial potential for FDI from ASEAN and global supply chains. • Lifting of economic sanctions and re-instatement of GSP/EBA by EU, by US? 36

37. Conclusion • On the runway to take off which ensures the benefit for investors. • On the right track politically, economically and socially. • Amid abundant opportunities. From blossoms to blooms.

38. Thank you for your attention