MYANMAR TARGETS FDI FROM EAST ASIA IN LONG-TERM INVESTMENT PLAN

Source: The Myanmar Times, October 19, 2018

Myanmar is gunning for more foreign direct investments (FDI) from East Asia in the next 20 years under its new Myanmar Investment Promotion Plan (MIPP), U Than Aung Kyaw, deputy director general of the Directorate of Investment and Company Administration (DICA) told The Myanmar Times at a book launch in Yangon on Thursday. Besides strengthening trade ties with its ASEAN neighbors, Myanmar will also target FDI from East Asia, which includes South Korea, Japan and Greater China under its 20-year investment plan, U Than Aung Kyaw said.

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RESEARCH VIEW

Colliers believes that Myanmar’s economic recovery will be supported by sustained FDI inflows, improving investment sentiment, and continuing strong growth in garment exports and domestic consumption. In addition, infrastructure construction activities related to upgrading connectivity, and electricity infrastructure such as gas-to-power plants and upgrading the Yangon-Mandalay expressway, will help maintain the growth momentum. According to ASEAN+3 Macroeconomic Research Office (AMRO), the total FDI approvals as of FY2017/18 declined to USD5.7 billion, compared to USD6.7 billion the previous year, as a result of no applications in the oil and gas sector, and a sharp drop in transport and communication sector. However, on a positive note, there has been a diversification of approved FDI projects in FY2017/18 with manufacturing and real estate projects growing by 41.7 percent and 51.7 percent respectively.

GOVT DEPLOYS STRATEGY TO RAISE TAX REVENUES

Source: The Myanmar Times, October 19, 2018

Myanmar will implement plans to raise tax revenues in the coming years. “Our target is collect over 15 percent in taxes to GDP,” said U Min Htut, director general of the Internal Revenue Department under the Ministry of Planning and Finance. The tax to GDP ratios of other ASEAN countries are all above 10pc, with Thailand topping the list at 17pc. The most Myanmar has ever achieved in terms of tax collection is just around 10pc of GDP in 2014-15. Since then, the country’s tax take has averaged 7-8% of GDP, according to official data.

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RESEARCH VIEW

As Colliers sees it, fiscal reform needs to continue on several fronts. Continued enhancements in revenue administration, particularly streamlining of procedures and automation are needed. However, revenue administration reform would not be enough to pull up the relatively low tax collection in Myanmar. Expanding the tax base through several tax measures is required. In this regard, authorities may consider the introduction of Value Added Tax (VAT) and other similar tax measures. In terms of expenditure management, the medium-term planning framework needs to be further strengthened, to improve forecasts of fiscal spending and effectively direct budget resources to development priorities, especially on improving infrastructure developments in the country. Overall, the progress made in implementing the money-targeting framework has been commendable and should be continued. The introduction of a more disciplined monetary and taxation policy framework has contributed towards reducing macroeconomic imbalances and inflation. The reserves money-targeting framework has helped the Central Bank of Myanmar (CBM) in making annual forecasts for reserve money growth and provides a guide towards reducing CBM’s direct financing of the fiscal deficit. We commend the ongoing efforts by MoPF and CBM to reduce fiscal deficit monetization with the commitment to phasing out CBM financing by 2020. This, in turn, should contribute towards greater fiscal and monetary discipline and help to anchor inflation expectation.

NEW BEACHES EXPLORED IN AYEYAWADY REGION

Source: Source: Eleven News, October 19, 2018

The government is now exploring untouched beaches in Ayeyawady Region with the aim to bolster the booming tourism industry. At present, the development of tourism industry has given first priority to the Gaw Yan Gyi Island and Shwe Thaung Yan Beach. A tar-paved road is being built on the concrete bridge. Upon completion of the road, visitors from Chaungtha Beach can easily go to the Shwe Thaung Yan Beach as transportation is now accessible.. Businesses had already invested in real estate there. The Shwe Thaung Yan Beach will be overtaking the Chaungtha Beach’s popularity soon. Around 70,000 vacationers visit Gaw Yan Gyi Island, a nearby island in the Ayeyawaddy Region, per year because the beach in Gaw Yan Gyi Island is very beautiful.

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RESEARCH VIEW

The Ayeyawady Region is filled with pristine undeveloped beaches. Given such, investors and hotel developers are seeking to expand the potential tourist area across the region to capitalize on the public’s growing interest in beach vacation spots. As increasing global awareness is one of the main factors driving the vacation tourism market, developers should attempt to phase out and control the construction and foot traffic around the area in order to prevent congestion. However, since travelling costs around Myanmar is considered expensive, transportation alternatives and increased options for air travel or promotions during off season will attract more domestic travellers.