Business Round Up (February 4)

By The Irrawaddy 4 February 2017

Economic Growth Slowed This Year, Says IMF

The IMF said economic growth in Burma slowed in the first half of the 2016-17 fiscal year but was expected to pick up pace in the second half. The upswing is expected mainly due to a resumption of construction activities in Rangoon following a temporary halt over regulations and compliance issues, the fund said in a statement.

Growth in Burma’s agriculture sector was also slower than expected in the first half of the financial year, the fund said. It added that additionally, the external environment was weak due to slowing demand from trading partners, as well as declines in the price of natural gas and other commodities starting in 2015 and 2016.

The fund expected growth for this year to be 6.3 percent. Around 7 percent inflation was projected and the external current account deficit was projected to rise to about 6.5 percent of GDP.

Risks to the growth outlook relate mainly to concerns over five factors, the fund said: policy clarity, financial sector vulnerability on the back of rapid credit growth in recent years, weak commodity prices and slow export demand, global financial market volatility, and natural disasters.

Earlier this week, the World Bank provided similar growth estimates, revising this year’s projected growth downwards from the previous year.

Growth for 2017 was expected to ‘‘moderate from 7.3 percent in 2015-2016 to 6.5 percent this year,’’ the bank said.

However, it projected an average 7.1 percent growth rate over the next three years.

Australia Firm Moves Ahead on Lashio Zinc Mining and Refinery

Australia-based Top End Minerals has completed technical due diligence on the Lashio zinc refinery, according to an industry report.

Corporate due diligence and financial due diligence are to start this month, according to the report.

Top End acquired the option to purchase a 60 percent interest in the Longh Keng zinc mine and Lashio zinc refinery for US$43 million in late November 2016. The assets are held by Cornerstone Resources (Myanmar) Ltd, which will be the focus of the upcoming due diligence, the report said.

The 8-square-kilometer mining lease hosts two high-grade zinc outcrops. The refinery plant produces some 10,000 tons of refined zinc per year.
Top End paid an upfront non-refundable deposit of US$500,000 for the nine-month option agreement, the report said. It added that shares in Top End had risen by 250 percent in the last three months.

ADB to Cooperate on Boosting Infrastructure

The government signed a partnership agreement this week with the Asian Development Bank (ADB) to promote public-private partnerships (PPPs) to develop Burma’s transport infrastructure.

The bank is set to assist the government in creating plans, choosing contractors and raising funds for key infrastructure such as roads and ports.
Domestic and foreign firms will be eligible to bid on project proposals which the bank will help design, while the government will choose the eventual funding sources.

This will be the first time the ADB will serve as a strategic and operational adviser to an entire nation’s transportation sector, according the Nikkei Asian Review.

Hotels Open at Inle Lake and Rangoon

The Best Western hotel group has opened a new 48-room hotel on the riverfront at Nyaung Shwe near Inle Lake, the group’s third hotel in Burma.

The group’s first two hotels, the Best Western Green Hotel and the Best Western Chinatown hotel, are located in downtown Rangoon.

Best Western is seeking to expand further in Burma with more properties, according to a statement.

Meanwhile the Wyndham hotel group also launched a new hotel, the 60-room Tryp Yangon, based in Mayangone Township, which will be managed by the Kosmopolitan Hospitality group.

Wyndham is one of the world’s largest hotel groups with some 8,000 properties.

It is due to open another hotel, to be called the Wyndham Grand Yangon Royal Lake, on Kandawgyi Lake in Rangoon next year.

Concerns Over Draft Laws on Foreign Workers

The government’s draft Foreign Worker Law has sparked expressions of concern among the foreign business community and other foreign residents.

A statement from a group of foreign chambers of commerce and industry based in Rangoon raised a variety of concerns over the draft legislation, including a provision that would require holders of a Foreigner Registration Certificate to seek approval of the relevant authorities for any absence of more than 24 hours from the registered place of residence.

‘‘While we understand the rationale behind such regulation, we would like to point out that such stipulation, irrespectively of its actual enforcement, would impede companies from our countries to post employees in the Republic of the Union of Myanmar,’’ said the statement signed by the heads of chambers representing businesses from the United States, the European Union and Australia, among others.

‘‘To our understanding, it would in practice hardly be possible for foreign employees to comply with such regulation, particularly for business trips on short notice, including meetings with the government authorities in Nay Pyi Taw’’ the statement said.

‘‘The resulting risk of exposing any employee to a situation of incompliance with prevailing Myanmar law would be a major impediment for foreign companies to establish a business in the Republic of the Union Myanmar, not to speak of launching large investment projects,’’ it added.

The Foreign Worker Law along with another piece of legislation, The Law Concerning Foreigners, are due to be presented for consideration in the current legislative session. Both draft laws emerged from the Ministry of Labor, Immigration and Population.