The Irrawaddy Business Roundup
By The Irrawaddy 24 June 2017
Sanctions Off the Books, Some Restrictions Remain
The US Department of the Treasury removed sanctions regulations against Myanmar from the code of federal regulations on June 16 in a final move by the Office of Foreign Assets Control (OFAC) to culminate actions taken by the Obama administration in October of last year.
However US financial institutions must still undertake enhanced due diligence when processing financial transactions involving Myanmar because it remains a “jurisdiction of primary money laundering concern” pursuant to section 311 of the USA PATRIOT Act, the legal website Lexology noted.
Myanmar businesspersons were removed from the Specially Designated Nationals list last October. But Americans doing business in Myanmar should continue to screen counterparties because they could be designated under other sanctions regimes such as North Korea and narcotics trafficking, according to the report.
Under America’s Jade Act, a non-disclosed list of Myanmar military officials and “any other Burmese persons who provide substantial economic and political support” to the military are still subject to a visa ban, and the US Department of State’s Directorate of Defense Controls continues to maintain a policy to deny exports of defense articles and services to Myanmar.
Lexology reported that Americans were still “encouraged to remain vigilant when conducting legal business with and in Myanmar due to remaining concerns about corruption, money laundering, and informal banking practices.”
Nevertheless, the latest removal of regulations “represents another step in the improving US-Myanmar relations, recognizing Myanmar’s democratic advancement, and welcoming it back into the community of nations,” the report stated.
Bus Engines Ordered from China
Myanmar has ordered thousands of bus engines from Chinese company Guangxi Yuchai Machinery, a subsidiary of China Yuchai International, the company announced.
Guangxi Yuchai Machinery received an initial order for 2,000 of its YC6G260N heavy-duty natural gas engines to power buses to be used in Yangon’s public transportation system.
A further batch of 1,000 of the engines which are compliant with Euro V emission standards is expected to be ordered later, the statement said.
“This order coincides with the Chinese government’s One Belt One Road initiative to increase economic cooperation between China and European and Asian countries,” it added.
Guangxi Yuchai Machinery has headquarters in Yulin, Guangxi Province and is a leading engine manufacturer in China, making a wide variety of light-, medium- and heavy-duty engines for trucks, buses, passenger vehicles, construction equipment and marine and agriculture applications. It was founded in 1951 and sold 320,424 engines in 2016, according to its website.
Logistics Firm Wins Start-Up Competition
Yangon-based logistics startup Kargo won the Myanmar leg of a global competition for early startups organized on June 21 in the commercial capital. The competition was organized by Seedstars World, a Swiss operation that promotes start-ups in emerging markets.
Kargo will head to Switzerland in April next year to compete with other startups from around 80 countries for a chance to receive up to $1 million in equity investment.
The Yangon firm also received a six-digit investment a month ago from Singapore-based venture capital firm Vulpes Investment Management, DealStreet Asia reported.
Eight startups from Myanmar participated in the pitching session for Seedstars World in Yangon, including agri-mobile app Greenovator; healthcare service Doctor On Call; Agtrade, a market-matching platform for farmers, brokers and traders and Amyanpoh, a delivery solution for e-commerce, DealStreet reported.
Kargo operates a fleet of independent truck drivers and companies for on-demand delivery around the country, with services offered in Yangon, Mandalay, Taunggyi, Pathein, Pyay and Lashio.
Seedstars World works closely with Omidyar Network, AYA Bank, Ooredoo and others in Myanmar. It hopes to establish a long-term presence in the country, according to DealStreet.
Cranes Ordered for Thilawa Port
The Myanmar Port Authority has awarded contracts to a Japanese company for two ship-to-shore cranes and six rubber-tire gantry cranes for a new container terminal being constructed at Thilawa Port, a trade website reported.
The terminal is expected to be completed in the autumn of 2018 and will be able to handle more and larger ships than congested Yangon port, according to the report.
Japan-based Mitsui Engineering & Shipbuilding Co. won the US$27.3 million contract for the cranes which are due to be delivered late next year.
Thilawa is Myanmar’s first special economic zone and formally opened for business in September 2015 as a large-scale joint project between Myanmar and Japan.
Japan’s Toyo Construction Co. and JFE Engineering Corporation were awarded contracts early last year to build an 18-hectare container terminal at Thilawa, which is set to become one of the country’s key logistics hubs.
Nippon Express, Japan’s largest international freight forwarder, opened a new warehouse at the economic zone on June 1.
Global Logistics Firm Opens Office
International logistics and supply chain management firm CEVA has opened a dedicated office in Yangon.
CEVA is owned by US-based venture capitalists Apollo Management, according to its website, and employs 41,000 people in operations all over the world.
The company is offering a full spectrum of air and ocean freight services from Myanmar, where it has also operated freight management services through a partner for five years.
Myanmar has strong growth potential, said CEVA’s Mekong area manager Bruno Plantaz.
“In the past, the country infrastructure has always been a limiting and inhibiting factor, but with our global network and more importantly, our experience in emerging markets, especially in the region, we are confident that with our own office and robust IT offerings we can deliver options and solutions to the market and at the same time grow our commercial footprint,” Plantaz said in a company release.
China Freezes Myanmar Traders’ Accounts
Myanmar authorities were negotiating last week to reopen more than 300 bank accounts of Myanmar nationals frozen by banks in Shweli, Yunnan Province, China, The Irrawaddy reported.
The Myanmar authorities informed Chinese officials that the accounts belonged to Myanmar traders who were not involved in money laundering, gambling or trafficking.
Chinese bank officials said they were still checking the accounts, a Myanmar representative said.
The Chinese embassy in Yangon issued a statement on Monday saying the move was a crackdown on crime and illegal trade, but promised to free legitimate accounts and protect long-term stability with Myanmar. More than a hundred people held a protest march against the closures in Shweli on Friday.
In other media reports, traders said the accounts were mainly held by traders exporting rice and sugar. China is trying to discourage sugar imports and sugar smuggling as domestic sugar mills are facing competition from cheap imports, some reports suggested.