Business Roundup (February 18)

By The Irrawaddy 18 February 2017

Asian Development Bank Issues Guarantee for Burma

The Asian Development Bank (ADB)’s Trade Finance Program (TFP) issued its first guarantee for Burma, the ADB announced on Thursday.

This guarantee will enable the import of fertilizers from Italy. The Burmese customer is a trader in agricultural produce that imports fertilizer to sell to local farmers. The exporter is a multinational specializing in fertilizer and nutritional agriculture products.

The TFP issued the guarantee in favor of the Italian Banca Popolare di Sondrio respecting a payment obligation by Burma’s United Amara Bank (UAB), one of the TFP’s local partners.

“We are grateful that through ADB’s TFP, we were able to connect our customer in Myanmar with the supplier in Italy. The TFP not only connected the banks but also bridged the transaction with a guarantee,” said UAB chief executive U Thein Lwin.

“We are delighted to begin this journey with TFP through this small step and we look forward to taking many more,” he added.

The ADB said the trade would result in increased profits for the farm producers and traders, as well as healthy agricultural products that serve the market in Burma and neighboring countries where the goods are exported.

“Myanmar is an exciting market with great potential,” said Janet Hyde, TFP Relationship Manager for Burma.

“We’re pleased to work hand-in-hand with UAB and our international partner banks to harness Myanmar’s trade growth potential and especially to help SMEs [small and medium-sized enterprises] in developing member countries. Trade growth creates new jobs and increases incomes, and is one of TFP’s main objectives.”

ADB’s guarantee supports markets in developing countries in Asia that are not well served by the international financial community. It also establishes new or increases existing bank credit lines, supporting trade that would not otherwise happen.

The TFP, backed by ADB’s AAA credit rating, provides guarantees and loans to more than 200 partner banks to support trade, enabling more companies throughout Asia to engage in import and export activities.

Since 2009, TFP has supported more than 9,200 small and medium-sized businesses across developing Asia, through more than 13,000 transactions valued at over $25.5 billion, in sectors ranging from commodities and capital goods to medical supplies and consumer goods, the report said.

Japan’s Kirin Plans to Buy Mandalay Beer

Japanese brewing firm Kirin will buy Burma’s iconic Mandalay Brewery for an estimated several hundred million yen (several million US dollars), the Nikkei Asian Review reported.

The move would make Kirin, which bought the Myanmar Brewery in 2015, the market leader in beer sales in Burma, with some 90 percent of the total beer market.

Kirin will create a local subsidiary to take over Mandalay Brewery, Burma’s oldest brewery, from Myanmar Economic Holdings, Nikkei said.

The Myanmar Investment Commission is expected to approve the deal soon, it said.

Kirin is seeking to gain a leading edge over other foreign players such as the Netherlands’ Heineken and Denmark’s Carlsberg in Burma, which is one of the few growing beer markets, the report said. The latest deal comes after Kirin made additional business acquisitions in the Asia-Oceania region.

Lion of Australia became a Kirin subsidiary in 2009. Kirin has also taken a 48 per cent stake in the beer unit of the Philippines’ San Miguel, and it plans to purchase Vietnam’s state-owned Saigon Beer Alcohol Beverage, which the Vietnamese government plans to sell, the report said.

CMP Garment Exports to Reach $1.8 Billion

Burma’s cutting, making, and packaging (CMP) garment industry is expected to earn about US$1.8 billion in fiscal year 2016-17, which ends on March 31, according to the Ministry of Commerce.

Burma exports about 33 percent of its CMP products to Japan, 25 percent each to the EU and South Korea, and 2.4 per cent each to the US and China, according to a trade publication.

In the previous fiscal year, Burma earned $627 million from CMP garment exports. Earnings this fiscal year in the sector—which includes the manufacture of shoes, garments, and bags—have already passed $1.4 billion, the report said.

Scheme to Boost Small Tourism Businesses

A tourism startup accelerator initiative has announced two new schemes to make it easier for innovative tourism businesses to begin in Burma, Cambodia, Laos and Vietnam.

The first scheme, called the Mekong Innovative Startup Tourism (MIST) initiative, is accepting applications from young companies that have plans to conduct either a traditional tourism business or a business in travel technology.

The second scheme, the MIST Market Access Accelerator, is accepting applications from mature international tourism startups needing assistance to enter the region.

Both schemes will receive applications until March 19.

Dominic Mellor, senior economist with the Asian Development Bank and head of the Mekong Business Initiative said the programs would create jobs, assist local communities and support entrepreneurship.

Applicants must show how they will create employment, generate positive community impacts, and contribute to sustainable tourism growth. Those accepted into the startup program will attend “boot camps” to develop their business plans. The top business plans for each country will win grants, with the best overall receiving $10,000 and three runners-up receiving $7,000 each.

Participants in both programs will pitch their plans to investors and others at the Mekong Tourism Forum, which will be held in Luang Prabang, Laos, and at the APEC Summit in Da Nang, Vietnam in November.

MIST is a joint venture of the Mekong Tourism Coordinating Office and the Mekong Business Initiative. It receives funding, advice and technical support from the Asian Development Bank, Australia, Amadeus Next, the Pacific Asia Travel Association and Village Capital.

Kubota Opens Heavy Machinery Facility in Thilawa

Japan’s Kubota Corporation, a heavy equipment manufacturer, has opened an import and sales facility in the Thilawa Special Industrial Zone in order to expand its operations in the farm machinery market.

The $10 million facility, which covers more than 10,000 square meters, will also do some assembly work, Kyoto reported. The plant is operated by Kubota Myanmar, 80 percent of which is owned by Kubota and the rest by Siam Kubota of Thailand.

The operation will help develop the agriculture industry in Burma, Kubota’s President Masatoshi Kimata said.

Kubota Myanmar was established with a registered capital of $23.8 million in 2015. It sells tractors, combine harvesters, rice transplanters, power tillers, diesel engines and construction machinery.

Arakan Chili Bound for Sri Lanka

Chili grown in Arakan State will be exported to Sri Lanka beginning this year in the first international export deal for the local crop, the Global New Light of Myanmar reported.

A test run to export 8,000 tonnes (8,800 tons) of chili to Sri Lanka was announced by the Arakan branch of the Myanmar Fruit, Flower and Vegetable Producers and Exporters Association (MFVO), the state paper reported.

It quoted a local exporter as saying that Sri Lanka was interested in the Arakan crop as it contained a lower percentage of pesticide than chili from other areas.

Local exporters are also hoping to export the crop to India, the report said. Arakan chili grows in all three seasons and is mostly grown in Kyauktaw, Mrauk-U, and Minbya townships.