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Myanmar All that matters

Banking on Myanmar? We have witnessed on the ground great progress in political and economic reform in Myanmar. This month we write on banking because together with this overall positive momentum, we believe the most critical and important sector which now needs well thought through structural reform is the banking industry,

Therefore the May edition of our monthly publication is somewhat of a ‘special’ - a slightly longer, more focused report for which we tapped the minds of some of the world’s leading authorities on Myanmar’s financial and banking industry.

We begin with a contribution from Control Risks who provide a general overview on the local banking industry, with comments from U Soe Win, a Myanmar finance industry expert with over 46 years experience: Banking: a sector overview

Sean Turnell is the leading international expert on Myanmar’s banks and author of the seminal work, Fiery Dragons, published in 2009. For our second article, Sean has kindly provided an update on his magnum opus, re-emphasising his key conclusions: Fiery Dragons

Last but not least, Oxford Business Group complements these discussions with more detailed data on Myanmar’s banking sector, calling it “potentially Asia’s most sought after investment destination”: Banking industry: market intelligence

Our “In case you missed it“ section highlights significant events that took place this month: Japan forgives further debt, the kyat depreciates significantly, and the US lifts a blanket visa ban and signs a trade framework agreement with Myanmar, among other stories.

In our “Equity capital markets Myanmar” section we welcome four new companies to the Watchlist. We also discuss its performance over the month, on both a macro and micro level.

Please enjoy the report and feel free to give us any feedback. We would like to thank our guest contributors enormously and we continue to look for individuals with a particular expertise in other areas that they may want to share with our readership.

You may contact us if you wish to inquire about conducting a bespoke analysis, or even facilitate a trip on-the-ground to visit some of our key contacts in Myanmar.

Kind regards,

Billy Selig & Keith Neruda, CFA CEO, Managing Director Senior Research Advisor

Contact us: [email protected]

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Twitter: @ncra_myanmar

31 May 2013 1 USD = 940.5 MMK

All that matters Banking on Myanmar? 31 May 2013

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About NCRA Who we are

NCRA is a boutique financial advisory with a focus on Myanmar and the ASEAN block of nations.

Presence and network

With our head office in Singapore and a proposed branch office in Yangon, Myanmar, NCRA is geographically positioned to help our clients take advantage of the tremendous growth opportunities in the region.

Our CEO, Billy Selig, has been residing in Myanmar for the last 18 months. This has enabled NCRA to become one of the first teams of experienced international capital market professionals to establish a presence in Myanmar. We have developed a broad and deep-rooted network of relationships within the Burmese business community and government agencies.

Mission

NCRA’s primary value propositions are three-fold:

Firstly, we advise domestic companies on how to structure their businesses and access global capital markets.

Secondly, we assist the global investment community on sourcing and identifying the most attractive investment opportunities in Myanmar.

Thirdly, we advise international corporates on business-entry into Myanmar, assist them in finding local JV partners, and provide them with local market intelligence and market entry strategies.

Experience

The NCRA team consists of highly experienced industry professionals with over 100 years of combined experience across a range of global sectors.

NCRA’s advisors have successfully assisted in listing IPOs in mining, real estate, and power & energy sectors among others. In addition, they have also capitalized, reorganized and restructured a number of companies in frontier and emerging markets.

Independence

Our advice is independent with the sole aim of delivering the maximum return for our clients.


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NCRA CEO Billy Selig is featured in Time Magazine Dear faithful readers,

This month NCRA was fortunate enough to be interviewed and featured by TIME magazine. Our CEO Billy Selig and we at NCRA remain extremely bullish on the economic and political reforms taking place here which we believe will deliver significant opportunities to those wishing to invest in Myanmar.

As grateful as we are that we were featured in TIME, Billy was misquoted at the end of the Article. If you have read the article, please do not take the comment regarding Cyprus as being reflective of our opinion. We in no way believe investors should be buying Cyprus and selling Myanmar. Rather, our CEO was referring to countries in Europe like Spain and Cyprus being more attractive to certain investors as there is a greater rule of law and, importantly, one can borrow at LIBOR plus 3% and receive a 6% return. We at NCRA remain extremely confident that Myanmar is absolutely on the right path, although one must exercise caution in making investment decisions.

Please click on the TIME magazine cover to view the full article. We are always grateful for your comments and feedback.

Banking: a sector overview This article is a contribution from Control Risks, an independent, global risk consultancy specialising

in helping organisations manage political, integrity and security risks in complex and hostile environments. The authors of the article were Giulia Zino ([email protected]) and Jeremy Tan ([email protected]) from the Myanmar desk.

Myanmar needs international support

While foreign companies are eyeing Myanmar as an increasingly attractive investment destination, they will be confronted with a very challenging operating environment. A severely under-developed banking sector is just one of the many practical hurdles that characterise this frontier market.

Thein Sein is certainly committed to reforms in the banking sector, but the country still lacks the institutional and technocratic capacity to support the implementation of continuing reforms. International institutions such as the IMF have been invited to offer technical advice on how to overhaul the country’s financial sector, a move unthinkable just a few years ago when Myanmar viewed with suspicion any involvement from Western actors in its domestic affairs.

Nonetheless, continual support from foreign institutions will be crucial to modernising the severely underdeveloped banking sector which has been decimated by more than 50 years of economic mismanagement and isolation, culminating in the banking crash of 2002. The latter has had a long-lasting and hugely negative impact on locals’ lack of trust in the formal banking system.

Myanmar remains a challenging operating environment for foreign investors

Western expertise has been invited to help overhaul the banking system

Due to an overwhelming mismanagement of the industry, considerable international support is essential to resurrect the banking sector


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Banking sector overhaul a priority

Legislation aimed at bolstering the banking sector is also a government priority for the next few months, given its centrality to broader economic development. The parliament is currently debating a new Central Bank Law, which is likely to provide for an independent central bank and may allow foreign banks to take up majority stakes in joint ventures with local institutions, and eventually establish full ownership.

The new banking law is likely to be discussed when parliament next reconvenes (in late June), but could see some back-and-forth between parliament and the executive over the extent of foreign participation in the sector, similar to the debate seen during the adoption process of the Foreign Investment Law late last year. In its current draft form, the law would allow up to 80% foreign ownership.

Banking sector developments

Following decades of multiple exchange rates, on 1 April 2012 the Central Bank of Myanmar initiated a managed float of the kyat. This was the first significant move to unify the exchange rate away from an estimated 17 different fixed exchange rates, but the prospects for full currency liberalisation remain distant (probably unlikely before 2020). The value of the kyat is strictly maintained within a protected band and remains subject to rigid import and export restrictions.1

ATMs are becoming increasingly common in Myanmar’s main cities. Since late 2012 and from early 2013, US credit card companies Visa and Mastercard and China’s UnionPay have provided ATM services in Myanmar in partnership with local banks.

The first ever point-of-sale credit card purchase took place in January 2013 on the Visa network. Mastercard also plans to install 500 point-of-sale credit terminals this year. Vodafone is planning to launch basic mobile phone banking services in Myanmar.

The government in March this year increased the amount of cash foreigners can withdraw from US$10,000 twice per week to US$10,000 daily.

Micro-finance is gaining further momentum. Cambodian bank Acleda in February 2013 obtained a licence to operate micro-finance services in Myanmar, and a Myanmar Microfinance Bank is rumoured to be planning to open sometime this year. Access to credit for low-income households and SME’s is however still severely restricted because banks require property or land as collateral.

1 U Soe Win from Myanmar Vigour has over 46 years of professional experience advising international and local

clients in the areas of Myanmar taxation, investment laws and banking sector. He believes that, “Full currency liberalization remains distant, 1) because of certain restrictions contained in the Foreign Exchange Management Law; and 2) because Myanmar has been isolated from the international community for many decades, along with the banking industry, and while the rest of the world is utilising the most modern banking instruments, Myanmar is lagging way behind with a 19th century banking system. Moreover, if the currency were to be fully liberalized, Myanmar might fall prey to those international predators that are well versed in currency matters.”

Move to a managed float system in April 2012. Currency value is maintained within a protective band

ATM’s are increasingly common in major cities

Point of sale credit card terminals came online in 2013, initiated by Visa

Foreigners’ daily cash withdrawal allowance liberalised

Micro-finance gaining further momentum but access to credit is still extremely limited

The Central Bank Law is currently being debated. This includes foreign JV ownership limits and central bank independence

Similar to the Foreign Investment Law, the draft is likely to be passed back and forth, between parliament and the president’s office


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Foreign interest in Myanmar’s banking sector

Myanmar has the lowest banking penetration rate in Asia and foreign interest in the sector is therefore very high. Many foreign players have already opened representative offices in Myanmar.2 These are mainly from South-east Asian countries, but banks from Japan, South Korea and India are also represented. Standard Chartered also reopened its Yangon representative office in early February; it is the first Western bank to do so. While the new banking law is yet to be approved, some Japanese banks are known to have already signed agreements with local banks to provide them with assistance and expertise, while some Thai banks are enthusiastically looking for local partners for future joint-venture opportunities.

The bad guys of banking

Despite clear political will to provide an attractive operating environment for foreign players, significant integrity and reputational challenges will persist for prospective banking-sector investors. Notably, there are persistent concerns from foreign banks that their local partners could come with too much ‘baggage’ in the form of unsuitable political linkages or allegations of money-laundering linked to narcotics and corruption.

Certain banks are notoriously troublesome. Military-linked banks such as Myawaddy Bank and Inwa Bank, and two of the four state-owned banks (Myanmar Foreign Trade Bank and Myanma Investment and Commercial Bank), are suspected of involvement in the narcotics trade and money-laundering. The two military-linked banks are also tainted by dint of their connections to the former military junta and the fact that they continue to function as finance vehicles for other military-linked companies, under the military–controlled Myanmar Economic Corporation and Union of Myanmar Economic Holdings. However, others have better reputations and generally do not suffer too much from any issues related to direct government or military involvement, or from allegations of involvement in illegal activities.

US-sanctions in the banking sector

Seven of Myanmar’s 19 private and 4 state-owned banks are on the US Specially Designated Nationals (SDN) list, which bars US-based businesses, US-listed companies and US nationals from doing business with specified Burmese individuals and companies. The US in February issued General License number 19, which allows US entities to engage in certain transactions with four specified banks (Ayeryarwady Bank, Myanma Investment and Commercial Bank, Myanma Economic Bank and Asia Green Development Bank) by effectively annulling some of the legal impact of US sanctions. Interestingly and somewhat perplexingly, the controlling shareholders from two of these banks remain on the blacklist. Still, dealing with these banks will remain a cumbersome procedure.

2 According to U Soe Win, the total has reached 30 foreign banks and the number is steadily increasing.

Foreign banks, predominantly Asian, have opened representative offices in Myanmar

Many local banks come with ‘baggage’

Seven of Myanmar’s 23 banks remain on the US sanction list, although US companies can now engage with 4 of these banks,

Certain military banks are notorious for their dealings but there are others with better reputations


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Transactions with all other SDN-listed banks, such as the military-linked banks mentioned above, remain prohibited. But staying away from SDN-listed banks alone will not be enough to insulate prospective foreign banks from reputational and legal risks. The SDN list is not a comprehensive list of the good and the less savoury in Myanmar. In fact, it is very out-of-date, and does not reflect the fast-changing political and business environment of post-transition Myanmar, mainly because the US government has carefully avoided adding new names to it while it starts to re-engage with the former pariah state after a long hiatus. Some of the cash-rich and well-connected ‘new cronies’ have therefore succeeded in staying below the radar, and have managed to keep their names off the ‘bad’ list.

Myanmar’s Banks

Source: Central Bank of Myanmar website - retrieved July 2012

State-‐Owned Banks Domestic Private Banks Some Foreign Banks with Rep OfficesMyanma Agriculture and Development Asia Green Development Bank AB BankMyanma Economic Bank Asia Yangon Bank Bangkok Bank Public CompanyMyanma Foreign Trade Bank Ayeyarwaddy Bank Bank for Investment and Development of VietnamMyanma Investment and Commercial Bank Co-‐operative Bank Brunei Investment Bank [BIB]

First Private Bank CIMB Bank BerhadInnwa Bank Dai-‐ichi Kangyo BankKanbawza Bank DBS BankMyanma Apex Bank First Commercial Bank, Singapore BranchMyanma Industrial Development Bank First Overseas BankMyanma Livestock and Fisheries Development Industrial and Commercial Bank of ChinaMyanmar Citizens Bank Krungthai Bank of ThailandMyanmar Oriental Bank Malayan Banking Berhad (MAYBANK)Myawaddy Bank Mizuho Corporate BankSibin Tharyar Yay Bank National BankTun Foundation Bank Overseas-‐Chinese Banking CorporationUnited Amara Bank Shinhan BankYadanabon Bank Siam Commerical Bank Public CompanyYangon City Bank Standard CharteredYoma Bank Sumitomo Mitsui Banking Corporation

Taiwanese First Commercial BankThe Bank of Tokyo-‐Mitsubishi UFJUnited Overseas Bank

The sanction list is somewhat antiquated as the US have avoided adding new names to the list as it begins to re-engage with Myanmar


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Fiery Dragons Extracts from a conversation with Sean Turnell, a professor at Macquarie University and the world’s leading expert on Myanmar’s financial system and banking sector. The article makes reference to Sean’s seminal work, Fiery Dragons.

Central Bank independence

The first point we touched on was the Myanmar Central Bank and to what degree in future we can expect it to become independent under the proposed new Central Bank Law. Historically, at least until the unification of the exchange rates in 2012, the Ministry of Finance essentially controlled the Central Bank and instructed it to print money in order to fund the country’s fiscal deficit gap which was principally caused by the extraordinarily disproportionate spending on the country’s military and which ultimately lead to an inflation rate that ran at around 40%.

This almost hyper-inflation resulted in a systematic depreciation of the currency and a profound distrust for the formal financial system. Instead, the wealthy elite invested their cash in gold, jade and property as a hedge against inflation, causing the enormous distortion in property prices still evident today.

It remains unclear how independent the Central Bank will ultimately become and whether or not it will be given any genuine autonomy to dictate monetary policy. Sean has observed that Myanmar is looking at the Indonesian Central Bank transformation as a template to copy and supports this decision. Apparently, over 200 amendments to the Central Bank law have already been tabled but they may not ultimately support full operational independence for the Central Bank.

Private sector banks

Myanmar’s banking sector has in recent years found it challenging to extend to traditional unconnected households. As a result, less than 20% of the population has access to formal financial services, with most people relying on family savings or costly alternatives such as informal money lenders.

Private sector banks have faced considerable hurdles since the banking sector crisis in 2002 and have since then been saddled with overly conservative constraints as part of a counterproductive overreaction by the authorities. Some of these regulations make sense in the international context, such as the 10% capital requirement, but some are just peculiar; for example 25% of net profit must be set aside and put into a general reserve and deposit gathering is perversely capped in relation to banks equity capital.

Myanmar’s 19 private banks are more or less all controlled by individuals/families who own also own or control connected conglomerates. Since the 2002 banking crisis, these banks have survived on tiny equity bases and therefore with a very limited capacity or indeed propensity to lend. Expansion by way of rights issues or by forming a JV with a foreign player is problematic for these bank owners as it would likely result in a loss of control.

The Central Bank was mainly a means to print money to fund the structural fiscal deficits caused by heavy military expenditure

The exorbitant inflation rate is partly to blame for the disproportionate property prices we notice today

The level of its future independence remains unclear

Post the crisis private banks have been hampered by excessively conservative constraints

Private banks have tiny equity bases and a limited capacity, or propensity, to lend

Less than 20% of locals have access to formal financial services


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As a result, they more or less only lend to their own connected companies, state entities and more short term speculative businesses. If in the rare event an unaffiliated SME manages to secure a loan, it must pay exorbitantly high fees, high interest rates and put up very significant collateral.

Another issue is that the interest rate ceiling is controlled by the Central Bank and the banks essentially just play the interest rate spread between the centrally fixed lending rates and deposit rates, undertaking generally little to no real lending to outside parties as opposed to connected businesses or state entities. However, as Sean notes, many of the smaller banks are effectively moribund and over time there will have to be substantial sector consolidation.

An SME’s other option would be to approach money lenders, which tend to charge interest at around 60% a year or 5% per month. How effectively Myanmar’s Money Lenders Act regulates this dominant informal lending is unclear. At any rate, the fundamental challenge remains for SME’s and households to access credit at sustainably serviceable interest rates.

Micro Finance Institutions (MFI’s)

Demand for microfinance in Myanmar exceeds supply by four times. Rural micro financiers’ lending rates are capped at 30%, with deposits at 15% so they only get a 15% spread, which they deem too low given the risks they are lending against. Historically, one of the problems for the micro finance entities was that as there was no specific law regulating their activities they were not considered official financial institutions. Due to this lack of legal status, they themselves could not borrow from the formal institutions, further exacerbating their undercapitalisation. However, with the passing of the Micro-Finance Law in 2011 this has changed for the better and put the industry on a sounder long term footing.

There are over 150 registered micro financiers which also raises concerns from a regulatory and supervisory point of view. Thus the World Bank has expressed its fears that too many poorly-regulated micro financiers could raise the potential for predatory money lending practices or other abuses.

Moreover, Sean highlights that the old regime has intervened to such a degree through the imposition of Village Peace & Development Councils (VPDC’s) which have pushed aside the head man and other traditional forms of local authority such that the multifaceted trust which underpins micro finance lending models elsewhere in the world has become much harder to engender. So it is still something of an open question as to whether the traditional micro finance approach can work as effectively in Myanmar as elsewhere.

A further problem the micro finance institutions (MFI’s) face is the poor saving mobilisation brought about by Myanmar’s general macro-economic instability and distrust in depositing money with the banks. This limits the financier’s ability to access cheap and reliable sources of capital. Moreover, “underlying both the MFI’s reluctance towards independent financial sustainability and individuals’ propensity to save through the formal financial system is the understandable fear that their assets will be seized by the state.” (Fiery Dragons, Chapter 11)

Banks tend only to lend to their own connected companies, not to SME’s or households

There are many small private banks – substantial sector consolidation is required

The Micro Finance Law, passed in 2011 puts the industry on more stable footing

Traditional local trust and “peer-group” lending practices are harder to engender

Lack of trust in the system deters people making deposits and therefore the financiers lose access to cheap and reliable capital pools

Money lending is informal and interest rates are extortionate

150 registered micro financiers raises concerns at the World Bank


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Although both Aung San Suu Kyi and Shwe Mann are allegedly very interested in supporting the development of the agricultural sector, long term rural credit remains severely constrained. Banks can still neither lend to farmers directly nor for tenure of more than one year. Again, as there are no conventional property rights, or indeed the independent rule of law, accessing collateral against which to secure a loan is hugely problematic. Therefore, while it is encouraging that the leading Cambodian micro financing firm Acleda has recently entered the market, “micro finance is likely to remain no more than an ameliorative response rather than a transformative solution.” (Fiery Dragons, Chapter 11)

For definitive analysis on the micro finance sector in Myanmar, please refer to this definitive World Bank report.

Foreign bank lending

It is still not clear what sort of joint ventures foreign banks might entertain and how much ownership or management control they will in practice be allowed. But one or two may be getting itchy to make the leap into the market. However, current legislation does not provide sufficient protection with respect to legal title, nor the ability to foreclose on a failed loan. Indeed it is not known whether any foreign bank has in recent times leant against an onshore asset or to a local Burmese firm as opposed to providing mortgage finance to overseas Burmese for onshore residential purchases.

Foreign bank entrants

There is also understandable local concern that foreign banks could swamp the existing domestic ones. Currently, there is a lobby for foreign banks’ activities to be initially limited in scope while the domestic ones are given time to improve their operations as well as some protection, particularly in retail banking. Clearly however the local banking system desperately needs foreign banks’ technology and expertise, but the latter’s entry has to be balanced within the context of developing the overall economy and local financial institutions.

Insurance

Myanmar’s insurance industry has been a state-run monopoly under Myanma Insurance for more than 60 years but the government recently gave out 12 licenses which can be activated from 30 June 2013, although it appears that only five of the license recipients have made the necessary deposit of K46 billion in paid up capital with the Myanma Economic Bank. However, this industry is not open to foreign insurance companies for the time being as the government wants to encourage Myanmar insurance companies to build up much stronger foundations in advance of permitting global players to enter the market.

In Conclusion

Post the 2002 banking crisis trust in the banking system has been undermined as evidenced by the incredibly high cash to deposit ratio of over 80% and that barely 10% of the population have a bank account. Essentially, the economy runs on a cash or barter basis. The lack of property rights, let alone private land title, means that “the traditional motor of a capitalist economy is missing” and in particular SMEs, poorer households, and especially the rural sector's access to finance is severely constrained. This is compounded by “the historic failure to create reliable money,” as seen by decades of inflation and systematic currency debasement.

Rural credit is also highly constrained, especially since there are no property rights nor an independent rule of law

Although foreign banks are champing at the bit to enter the market, the lack of sufficient legal protection is a major inhibition

In order that the foreign banks do not swamp the existing local ones, there is a lobby for foreign banks’ activities to be restricted

Insurance sector is closed to foreign firms

As access to finance is constrained and therefore Myanmar is missing “the traditional motor of a capitalist economy”


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Sean emphasizes that the key for Myanmar is to fund itself rather than just rely on external borrowing. However, this requires that the right institutions are in place to support this so that “internal capital accumulation through the creation of claims against Myanmar’s own financial institutions can take place.”

As Sean Turnell concludes in his brilliant book, Fiery Dragons, "Solving the essential problem of creating a viable financial system in Burma will require fundamental institutional reform of the country’s political economy. Such reform will require, at a minimum, the creation of effective property rights, freedom to contract, a government of laws rather that of men [sic], and a modicum of macroeconomic stability. These attributes elsewhere and in history have emerged from domestic constituencies possessing the incentives and freedoms to bring about change. Burma has such constituencies, and the incentives are apparent. Freedom awaits."

Banking industry: market intelligence Paulius Kuncinas ([email protected]) is Oxford Business Group’s Regional Editor for Asia and his contribution this month is a preview of their upcoming comprehensive

report on Myanmar’s banking sector and an example of the level of detail in their analysis.

Oxford Business Group is a global publisher and consultancy producing annual investment and economic reports on more than 30 countries, offering comprehensive analysis of macroeconomic and sector developments. OBG’s acclaimed economic and business reports are the leading source of local and regional intelligence, while its online economic briefings provide up-to-date in-depth analysis.

Sector overview

With the removal of sanctions and expected entrance of foreign players driving fast transformation of the last unbanked country in Asia, Myanmar’s banking sector remains one of the most sought after investment destinations within South East Asia.

Myanmar’s policy rate in 2013 has been set at 10% whilst lending is capped at 13%. With deposits floored at 8% interest margins are tight in a country where inflation has averaged 6.5% over the last 4 years.

The 4 state banks issued 9.2% of the country’s loans in 2012 and hold 38.6% of the country’s deposits3. Of the 19 private banks, the top 3 private banks occupy 60% of the private banking market in terms of total assets, and the top 10 banks hold 90.4% of all private banking assets, or 55.4% of the combined state and private banking sector.

This combined sector comprised total assets of MMK 8.4Tn (USD 9.38Bn) at the end of FY2011/20124 according to the Central Bank of Myanmar (CBM), up 37.4% from the previous year. Assets have been growing at an explosive compound annual growth rate (CAGR) of 44% for the last 5 years, and the trend shows no signs of slowing5.

3 CBM difference between ‘private banks total’ and ‘banking sector total’ 4 CMB annual report 5 Based on reported growth of individual bank assets.

Myanmar must attempt to fund itself rather than rely on external borrowing

“Freedom awaits”

“Potentially Asia’s most sought after investment destination”

With high inflation, interest margins are small

Top three banks own 60% of the private banking market in terms of total assets

Combined assets totalled US$ 9.38 billion in 2012, growing at a CAGR of 44% for the last 5 years


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From all countries assessed by the World Bank, Myanmar has the least number of borrowers per capita in the world, with 0.83 citizens taking out a loan per 1000 people in 2011. This ranks just below the Democratic Republic of Congo and Ethiopia, which provide 1.48 and 1.87 people per 1000 with loans respectively. In the region, only Laos is anywhere near Myanmar’s loan penetration rate, where only 3.9 out of every 1000 citizens borrow from banks. Other ASEAN nations’ banks such as those in Thailand and Malaysia reach 251 and 282 people per 1000, or 25% and 28% of the population, and Singaporean banks lend to 1073 out of every 1000 citizens, or 107% lending penetration.

Loans

Loans and advances accounted for 38% of total assets in 2012, having grown 64.7% last year and 70% the previous year in real MMK terms. Sluggish growth in 2009 and 2010 has given way to a new surge of lending on the back of an increase in deposits during this period.

Yet cash and government securities still account for the majority of assets, at 52.7% of all assets in 2012. In recent years banks have been acquiring more and more government securities over cash, as in 2008 only 8.6% of the bank assets were government bonds compared to today’s 24.2%.

Deposits have been growing at a CAGR of 45% in the last 5 years, totalling MMK 7.0Tn (USD 7.8Bn) in 2012, or 15.5% of GDP6. The IMF predicts this growth to continue to reach 24% of GDP by 2014. Yet this is compared to the world average deposits/GDP ratio of 58.2% and the ASEAN average of 61%7. Myanmar has the second lowest deposits/GDP ratio in the ASEAN after Vietnam, showing the distinct lack of trust in the system.

Savers have long preferred to use alternative ways of storing their wealth such as gold, gems and land8, which has led to hikes in the price of these commodities. Although these hard assets are used as collateral, some banks are wary of the long-term stability of their value9 and further tighten the collateral requirements for future loans, exasperating the credit squeeze.

The deposits to total assets ratio within the country has remained stable at around 82% during the last 5 years, but the loans to deposits ratio has climbed slightly from 40% to 45.6%, showing gradually more aggressive lending by management. Yet still loans as a percentage of GDP remain low at 7.1% in Myanmar10.

Broad money supply is the lowest in ASEAN, at 31% of GDP in 2012 compared to the regional average of 65% . Indonesia and Cambodia are next up the list in terms of broad money, with 38.8% and 39% of GDP respectively, compared to Malaysia at the top of the group with 139% of GDP.

6 CBM 7 World Bank: http://data.worldbank.org/indicator/GFDD.OI.02 8 Various interviews 9 First Private Bank opinion 10 CBM data

Myanmar has the fewest borrowers per capita globally

Loans and advances accounted for 38% of total assets in 2012

Banks are developing an appetite for government securities over cash

In 2012, deposits totalled US$7.88bn (15.5% of GDP). Due to reach 24% of GDP by 2014

Savers favour storing wealth in gold, gems and land

Loans as a percentage of GDP remain low at 7.1%.

Broad money supply is the lowest in ASEAN, less than half the regional average


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Income/profit

The CBM annual report gives the earnings and profitability of the 19 private banks, but excludes the profits of the state-owned banks, who issued 9.2% of the country’s loans in 2012 and hold 38.6% of the country’s deposits11.

The private banks’ efficiency has remained steady since 2008 according to the CBM, with profits before tax at 28% of total income over the last 5 years. Non-interest income such as transaction fees and withdrawal, deposit, and other service charges as a share of total income has been dropping during this period, but still accounts for 19% of all revenue for the private banking sector. Despite this, non-interest expenditures exceeded income by 6%, making a loss from this unit of operations.

Overall bank profits have shown strong growth, averaging 51% on a compound basis for the past 4 years and jumping 71% and 61% in FY2010/2011 and FY2011/2012 respectively, the trend correlating strongly with the increases in deposits.

Policy

The reserve requirement set by the central bank is 10%, although in practice the liquid reserves to bank assets ratio is 45%, having dropped from 94% in 200712. Liquid assets to total liabilities must not be less than 20%, and capital must comprise at least 10% of risk-weighted assets. The maximum loan size to a single entity cannot exceed 20% of the sum of capital and reserves, and the deposit limit is 10x paid-up capital.

Government bonds are issued with 2-year, 3-year and 5-year maturities with 8.75%, 9% and 9.5% coupon rates respectively. MMK 1.84Tn (USD 2.04Bn) worth of treasuries were issued in FY2011/2012, a 40% increase from the previous year13.

According to the IMF, broad money supply hit MMK 12.6Tn (USD 14Bn) in 2012 or 31.7% of GDP, having risen 23.6% from the previous year. This growth is expected to continue in the coming years as lending volumes increase to reach 40% of GDP by 2014. The money multiplier by extension is also set to rise from its current 1.7 to 2.0 by 2014, but velocity is expected to continue is slowdown from 5.3 in 2008 to 3.2 in 2012 and 2.5 in 2014.

The credit to government as a share of CBM’s net credit is set to decline to make way for added private sector credit in the coming years. In 2009, 95% of all the central bank credit was to the government, but in 2012 this had reduced to 79% and is expected to reach 70% by 2014. On the other hand private credit as a percentage of GDP, once at 3.3% in 2009 has reached 8.2% in 2012 and is due to hit 14% in 2014.

11 CBM difference between ‘private banks total’ and ‘banking sector total’ 12 WB data 13 CBM annual report

State-owned banks own 38.6% of the country’s deposits

Myanmar Central Bank set reserve requirement at 10%

Private banks boast strong profit growth, averaging 51% over the past four years

Efficiency among private banks has remained steady since 2008 with PBT at 28% of total income over the last 5 years

Government issued US$2.04 billion worth of treasuries in FY2011/2012

Government to take a small portion of CBM’s net credit

Broad money supply growth is expected to grow, reaching 40% of GDP by 2014


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Top Banks, evolution

In 1963 Myanmar’s financial system was nationalised and in 1969 all banks were grouped under the monolith ‘People’s Bank of the Union of Burma’14. In 1988 a liberalisation of the sector and a number of new laws initiated the emergence of today’s private banks. Most notably the Financial Institutions Law of Myanmar (FIML) of 1990 laid out a three phase plan:

Allow domestic banks to run joint ventures with international banks.

Allow foreign banks to establish 100% owned, locally incorporated subsidiaries.

Allow foreign banks to set up local branches.

But as of 2013, phase 1 has yet to begin, and all Myanmar banks are locally owned and run.

The four state-owned banks

The Myanma Economic Bank (MEB) is the country’s largest with over 300 branches nationwide. It is best known for lending to other state owned enterprises (SOEs) and other state-run financial institutions such as the Myanmar Agricultural Bank (MADB) and the Myanma Small Loans Enterprise (MSLE), and is widely considered the major ‘state’ bank with little independence from the government15.

The Myanma Foreign Trade Bank (MFTB) has traditionally dealt mainly in foreign exchange related activities and servicing expatriates; and until recently was the only bank foreigners could use in the country.

The Myanma Investment and Commercial Bank (MICB) was established to focus on business and corporate banking, but has had little success due mainly to a large domestic 10% tax on foreign currency deposits.

The Myanmar Agricultural Development Bank (MADB), as the name suggests, specialises the agriculture sector, and is the most active in providing farmers with capital to expand and extend operations.

The three largest private banks

Currently, Kambawza Bank or KBZ is by far the largest private bank in Myanmar with MMK 1.8Tn total assets (USD 2.0Bn) in 2011, occupying 38% of the market. The bank was reportedly founded by Aung Ko Win, or the “schoolteacher”, in 1994, whose KBZ Group now runs two airlines and other lucrative mining and industrial enterprises.

Myawaddy Bank is number two with MMK 0.7Tn (USD 847Mn) assets, considered the “military bank” and although technically private is owned by the Union of Myanmar Economic Holdings Company (UMEH) through the Defence Ministry.

14 Sean Turnell – Profiles of Burma’s Banks, 2006 15 Sean Turnell – Profiles of Burma’s Banks, 2006

A 1990 three phase plan to liberalise the sector that is yet to be implemented


14

CB Bank is in third place with MMK 0.6Tn (USD 651Mn) assets, and was formed from grouping many of the previously state-run cooperatives into a single entity. It is now pushing to modernise its services and market to the internationally focused corporates and individuals.

Portfolios

Myanmar banks are in general very conservative with their portfolios, traditionally only lending to close associates of the shareholders or within the military elite levels rather than on a specialised credit analysis basis. While there is no set restriction on collateral requirements, banks will often lend only around 30% of the collateral they require for a loan. As such, non-performing loan ratios are purportedly extremely low, often 0% for the banks interviewed by OBG.16

Banking infrastructure

The recent reforms around Myanmar’s banking sector has drawn international financial players from all corners of the globe vying for their share of the emerging nation’s market, as local banks also compete for the nation’s 60m predominantly cash-based savers and borrowers. But official joint ventures are not yet allowed, and cooperation is limited to technology and services - plastic payment, e-banking, ATMs, mobile banking and other modern services to entice the nation’s understandably wary residents back into the system.

However, only hours after the US bank sanctions were lifted, China Union Pay (CUP) launched in Myanmar in conjunction with the existing Myanmar Payment Union (MPU). CUP is the world’s biggest card provider by cards issued, accounting for 45% of the world’s total last year17, and the monopoly for card services in the world’s most populous country. Its operations in 135 countries pushed it to second place globally in terms of combined debit and credit card purchase volume last year with 23.8% of the market in H12012. This surpassed Mastercard (21.7%) but is still a long shot from the leading Visa (46%). The three card behemoths will now add Myanmar to their competition battleground, alongside Japan Credit Bureau (JCB) which is also in the running.

Outlook

Without access to foreign capital and limited expertise, local Myanmar banks will struggle to catch up with international standards as the pressure from international banks mounts. With some of the world’s largest institutions breathing down their necks, it is likely that local financial institutions will either grow quickly, establish joint ventures, or be pushed out of the market in the coming years.

The government has announced that a new Central Bank law will be passed this June, but whether this is a pre-cursor to allowing foreign JVs is unknown. A finance official said JVs will begin sometime this year, but more time may be needed to bring local lenders to a competitive level before the gates are opened and the rep offices can start bidding for local banks’ favour.

16 0% from First Private on paper, collateral 30% across the board 17 http://www.businessweek.com/articles/2012-12-20/unionpay-visa-and-mastercards-tough-chinese-rival

Traditionally banks only lend to close associates of shareholders and the military elite

Foreign co-operation is currently limited to technology and services

The three largest global card operators vie for dominance in Myanmar

Local banks are likely to struggle as pressure from international players mounts

More time may be needed to bring local lenders to a competitive level before foreign giants move in


15

At a policy level there are also some real dangers and serious changes to be made. The flood of capital and potentially more aggressive lending by international banks could well wash away the weaker local lenders and leave inexperienced monetary policymakers gasping for air. The world is still recovering from the misjudged lending by some of those now banking on Myanmar’s door; and the Central Bank of Myanmar is faced with the daunting task of regulating their entry and activity into its country. In the developed West, regulators have been blamed relentlessly for their failures as even after decades of dedicated preparation and fine-tuning, the banks have often made a mockery of loopholes in the system. Myanmar has a long way to go before it may feel sufficiently confident about dealing with those institutions, and may well wish for a longer breathing space before it allows them full entry..

Real dangers lurk in Myanmar’s midst; it may wait before it allows foreign banks to operate


16

In case you missed it By NCRA Research Team ([email protected])

In this section of our monthly, we highlight and summarize important events that occurred over the past month at both the macro and corporate level.

US and Myanmar sign trade framework agreement

The US and Myanmar signed a trade and investment framework agreement in Washington, a day after Barack Obama met with Thein Sein at the White House. The arrangement will create a platform for government representatives of both countries to participate in on-going dialogues and cooperation on trade and investment matters. In addition, the contract will allow both countries to identify initiatives to strengthen the current on-going reform programs and implement development policies that benefit Myanmar’s poorest people. The White House is optimistic that the trade agreement will further improve its relationship with Myanmar.

Japan forgives more debt and offers further loans

The Japanese Prime Minister Shinzo Abe visited Myanmar and agreed to provide Myanmar with an additional US$504 million loan to aid the country’s infrastructural development projects including the Thilawa Special Economic Zone, while forgiving a further US$1.74 billion debt owed from pre-1988 contracts. Under the new loan terms, Myanmar will incur a 0.01% interest rate and 40-year repayment period, including a 10-year grace period. Japan’s direct investment in Myanmar amounted to $270 million as of March 2013, ranking 11th in foreign investment in the country.

US announces Myanmar sanctions move

The US maintained sanctions against several targeted officials and allies of the former military regime for another year but has lifted visa the 1996 visa blanket ban that was directed at all former military officials and their families. The US, however, possesses the right to re-impose broader restrictions again if the need arises. However, in Myanmar, the majority of the trade and investment sanctions have been lifted. Senator Mitch McConnell, who has led US sanctions discussions over human rights concerns, is eager for import bans from Myanmar to end. However, import of gems, a key revenue stream for the Junta, will still be prohibited.

Thein Sein vows to protect rights of Muslims

Thein Sein promised during a conference that his government would do all it can to defend the rights of Myanmar’s Muslims, which make up 4% of the overall population totalling approximately 60 million people. He has indicated that a special government appointed panel will be set up to investigate the cause of the ethnic conflict. One recommendation suggested by the panel includes doubling the number of security forces in the Rakhine State. In recent months, religious unrest between the Muslims and Buddhists has heightened and campaigns against the Muslim community have spread.

US and Myanmar further strengthen their relationship by signing a trade framework agreement

Japan provides further development loans and forgives more debt, in excess of US$1.7bn

Thein Sein finally speaks out and vows to protect the rights of the Muslim population

The blanket US visa ban on military members and their families and their families is lifted


17

Myanmar kyat hits record low

Myanmar’s currency, the kyat, has plunged more than 7% over the past month, creating new concerns about the country’s economic stability. The kyat depreciated to a record low of K948.49 per USD on May 23. This is the first time the Kyat has weakened significantly against the USD since it became a floating currency in 2012. A record low level was reached because of improvements in both the American and Japanese economies, resulting in a stronger US dollar and Japanese Yen. The depreciating Kyat provides some relief for farmers and exporters but it has already had a massive impact on the import industry. The daily import bill has increased by US$30 million a day between April to May, some 17% higher than the previous year.

Myanmar’s armed conflict will delay Shwe pipeline

The on-going conflict between government forces and armed ethic groups, including Shan State Army North (SSA-N) and Ta-ang National Liberation Army (TNLA) in northern Myanmar has further postponed the initiation of the Shwe pipeline project. The gas pipeline is ready for use but the current turmoil along the route has delayed the operation of the pipeline. Running an above the ground pipeline in such situations poses significant risks as considerable damage may result when stray bullets penetrate the pipeline, potentially causing explosions. The Shwe project is to channel the underwater natural gas deposits off the west coast of Myanmar to Kunming and it is expected to become the largest single source of foreign income for the government, according to The Irrawaddy.

Myanmar seeks US aid to finance agriculture loans

Myanmar is actively pursuing low interest rate loans from US to supply agriculture loans to farmers, who still struggle with debt despite the government’s subsidy of 100,000 kyats per acre for rice loans and 20,000 kyats per acre for other crop loans. Farmers are typically poor and debt-ridden. There is a critical need for technological assistance to enable faster development of modern agricultural methods and to increase efficiency and yields. Farmers currently can only obtain high interest loans from alternative financiers, as they are unable to obtain sufficient funds from the Myanmar Agricultural Development Bank and are often forced to sell their harvest almost immediately in order to repay the debt.

Foreign Investment Law having desired effect

According to senior economist Dr. Maung Aung from the Myanmar Ministry of Commerce, the foreign investment law that was passed in 2012 is starting to show positive effects in terms of FDI into Myanmar as overseas investment increased by five times in 2012. Food processing and the garment sectors accounted for US$400 million in FDI, with majority of the inwards investment coming from China, Hong Kong, Japan and Singapore. Encouragingly, foreign direct investment in manufacturing generally has increased since the law was enforced and its successful development remains critical because of the job opportunities it potentially can create for lower income households. Investment in both the telecommunication and hotel sector is also expected to rise significantly in 2013.

Armed conflict is further delaying the operation of the gas pipeline between Myanmar to China

Myanmar farmers struggle to obtain credit so Myanmar has approached the US for agricultural loans and technical expertise

Overseas Investment increased by five times in 2012

A strong dollar and yen depreciates the kyat to record lows since the managed float was implemented in April last year


18

Parkson store chain taps Yangon market

Malaysian-based retail chain, Parkson, opened an outlet in the FMI Centre in Yangon. The department store is a JV between Parkson Retail Asia Ltd, Yoma Strategic Holdings Ltd and First Myanmar Investment Co. Ltd. The parties have a respective stake of 70, 20 and 10 percent in the retail outlet. The target audience of the store is high and middle-income shoppers. Brands include Tommy Hilfiger, DKNY, D&G and Gucci.

Myanmar hardwoods won’t be exported to the EU until 2015

The European parliament has made it illegal for importers to bring in any hardwood before 2015 and requires traders to obtain a Voluntary Partnership Agreement (VPA) to buy and sell hardwood. VPA’s act as a practical mechanism to identify and exclude illegal timber from the EU market. The Myanmar Timber Entrepreneurs Association expects the country’s ability to export timber with the correct certificates to take another two years. At present, Myanmar houses over 70 wood factories that are responsible for the export of timber.

Myanmar ready to sweeten terms for foreign brewers

In a move that seeks to improve the appeal of foreign investment in the brewery sector, the Myanmar government indicated its willingness to liberalise the ownership limits of foreign breweries operating in Myanmar, subjected to a case-by-case approval by the Myanmar Investment Commission (MIC). In January, the MIC proposed four licenses for international breweries to operate in Myanmar; two of which were awarded to Thai Beverage and Carlsberg.

Parkson opens its first retail store in Myanmar

It will be several years until the EU accepts Myanmar hardwood

Foreign brewers set to receive more benign investment terms


19

Equity Capital Markets Myanmar By NCRA Research Team ([email protected])

Public Equity Market update

Our Myanmar Watchlist was up an average of 5.40% for the month of May, strongly skewed by Aussino, which shot up 75% within just one trading session on 29 May. This comes after the stock plummeted by more than 60% in recent weeks due to the SGX’s rejection of the Company’s RTO application. It is unclear if Aussino is maintaining its aspirations to RTO. We will provide an update as soon as we attain futher colour.

With the exclusion of Aussino, the Watchlist was up 3.44%, compared with the STI and SET which were down (1.42%) and (0.66%) respectively. Performance in the month of May was characterized by significant dispersion among stock performance on our Watchlist, ranging from Berli Jucker, Ratchaburi and mDR which were down (14.3%), (10.8%) and (5.1%) respectively, to the likes of Del Monte, Super Group, Tee International and Yongnam, which rallied in the double digit percentages during the month, mainly driven by their respective quarterly earnings announcements. None of these high-performing stocks made any other significant announcements during month. Their strong performance relative to the market, however, also points to continued positive sentiment towards Myanmar, further helped this month by the improving Myanmar-US relations.

Yoma Strategic Holdings (YOMA SP)

We attended Yoma’s analyst briefing following the release of the Company quarterly results, which reported a 27% YoY jump in top-line from S$16.1m to S$20.5m driven by strong residential property sales. Excluding the significant non-operating items (ie. S$9m in negative goodwill from the restructuring of its interest in Grand Central Dalian), net profit for the quarter grew by 43% YoY from S$2.1m to S$3.0m, in part due to higher selling prices for LDRs and residences.

The stock jumped as much as 4.6% on the back of the result announcement, reaching a three-month high of S$0.87.

Key highlights:

Management notes that admin expenses have risen by about 250% in FY2013 vs. FY2012 (predominantly staff costs), but this is intentional as the Company has hired over 40 senior staff in the last 18 months. The Management views this as a steady state and does not foresee further significant increases in the near term.

Star City: Residential sales remain strong and are expected to have a big impact on the top line in FY2014 and FY2015 as only S$5m out of the S$60m in residential sales have been recognized on the books on a percentage-of-completion basis. The Company has also recently launched Phase B of the development which should register growing margins as prices on residential property sales appear rise more quickly relative to costs.

Yoma’s stron QoQ performance driven primarily by strong residential property sales

Only S$5m out of the S$60m in residential sales have been recognized on the books

250% increase in admin expenses is predominantly hiring senior staff

May was characterized by significant dispersion among stock performance on our Watchlist

Aussino rockets 75% in one day, skewing our Watchlist performance


20

Landmark development: Office rental rates have come up from US$1.50 psf 18 months ago to US$6.50 at present. Rates are expected to be maintained at the US$6.00 region once the office towers are completed, and after taking into account supply that will be coming online from other developments in the city (ie. Shwe Taung). Expect rental yields of about 5%.

Telecom: As previously announced, Yoma is part of the Digicel(Soros)/Quantum consortium bidding for the telecom license and has made it clear that it is not prepared to pay an extortionate sum for the license. If successful Yoma will own 6.4% of the license bid.

Agriculture: It remains a small part of the overall business; however, further development plans, in addition to the recent planting of black pepper, could be announced soon. Yoma is exploring additional agricultural uses for the land, including the planting of rubber, eucalyptus, neem and coffee crops.

Del Monte Pacific (DELM SP)

The share price has climbed 11.8% in May. The Company posted a solid 8.1% YoY growth in top line but results on the whole fell below market expectations as earnings stayed flat YoY predominantly due to a poor performance of its non-branded business. What drove the share price up this month was the announcement by the company to initiate a further share buyback to the maximum amount of 64,715,790 shares, as well as the announcement for the application of a dual listing on the Philippines Stock Exchange, which was approved on May 27.

Super Group (SUPER SP)

This month, SUPER’s shares have realised gains in excess of 23%, mainly due to its announcement it will be disposing its 35.5% stake in non-core associate, Sun Resources, a Chinese property developer, for S$26m, recognizing a gain of S$16m from the disposal, which is expected to increase FY2013 net earnings and dividend estimate by 14%. SUPER will be investing US$20m for capex and working capital in its Botanical Herbal Extract Plant in Johor Bahru, Malaysia.

Tee International (TEE SP)

A new addition to our Watchlist, TEE’s share price was up 20% during the month of May. This is due the announcement that it plans to spin off its real estate business into a separate listing on the SGX. The company plans to pay out part of the proceeds from the spin-off as a special dividend and to use the rest to fund its expansion into new ventures. We note the company still needs to meet several criteria but it has received its ETL from the SGX.

Despite earnings results falling below expectations, DELM put in a stellar performance this month

SUPER divest in a non-core property business, realising gains of S$16m

TEE benefits from an announcement to spin-off its real estate business into a separate listing

Yoma is not prepared to pay an extortionate sum for the telecom license

Expect office rental yields of about 5%

Argi remains a small portion of the business but bigger plans are in the pipeline


21

Yongnam Holdings (YNH SP)

Yongnam has risen steadily over the past 30 days, registering a gain of 15.2% off the back of strong quarterly earnings results, positive sentiment towards its candidacy in the bidding process for the proposed new Hanthawaddy Airport in Yangon - many analysts suggest that the contract is “Yongnam’s to lose”, and perhaps most importantly Yongnam is deemed a good proxy to benefit from the unprecedented regional infrastructure boom. US$ 8 trillion is due to be invested in Asian infrastructure projects to support the transition from export-based economies to ones with significant domestic consumption. Yongnam has market leading positions in structural steel and strutting in the region.

Additions to the NCRA Myanmar Watchlist This month we add several stocks to our Watchlist, namely, Toyo-Thai Corporation, TEE International, and Tat Hong.

Toyo-Thai Corporation (TTCL TB) Toyo-Thai is a specialist Engineering, Procurement and Construction (EPC) company for turnkey projects, mainly to power plant, petrochemical, chemical, fertilizer and petroleum industries.

TTCL was the first all-round engineering company in Thailand, formed in 1985 as a JV between Italian Thai Development and Toyo Engineering. TTCL has undertaken more than 200 projects in both Thailand and overseas, including the USA, Malaysia, China and Vietnam and has earned a solid reputation for quality, safety and punctuality.

As of December 2012, the Company had five subsidiaries: Toyo-Vietnam Corporation Limited, which is engaged in the provision of engineering design and procurement of machinery and equipment, and construction services in Vietnam; Bio Natural Energy Co, which is involved in the production of electricity from methane; Toyo Thai Malaysia SDN BHD; ToyoThai Myanmar Corporation; and ToyoThai-USA Corporation.

TTCL is currently pursuing opportunities in Myanmar's power sector:

60% stake in gas-fired power plant project

In November 2012, TTCL was awarded to contract for a US$170 million, 100MW gas-fired power plant project in Ahlone Township, Yangon by Myanmar’s Ministry of Electric Power (MOEP), a 30-year Power Purchase Agreement. For this reason, TOYO THAI POWER MYANMAR Co., Ltd. (TTPMC) was established in late 2012 as the Project Company. TTCL’s direct investment in TTPMC is 5% and the rest 95% will be owned by Toyo Thai Power Corp in Singapore (TTPSG).

TTPSG with registered capital US$42 million is wholly owned by Toyo Thai Power Holdings Pte. Ltd. (TTPHD) which is expected to be TTCL’s investment arm for power plant businesses in the AEC region. Currently, TTCL’s shares in TTPHD is 60% and joint venture with 8 Coins Capital (20%) and Pacific New Power (20%).

The plant will be run on a Build, Operate, Transfer (BOT) arrangement between Ministry of Electrical Power and Toyo Thai Power Myanmar Co., Ltd.

TTCL is a specialist engineering, procurement and construction company

Originally a JV between ITD and Toyo Engineering

TTCL has 5 international subsidiaries

Awarded contract for a US$170 million gas power plant

Plant will be run on a BOT basis

Yongnam is deemed a good proxy to benefit from the unprecedented regional infrastructure boom and it looks strong in the Hanthawaddy Airport construction bid


22

The ministry will receive 7% of the 120 megawatts generated for free and the Project Company, TTPMC, rent rate will be US$1 per square foot per year. The Myanmar entity will run the plant for 30 years before transferring it to the MOEP.

The first stage of the project was completed in April 2013 and the plant can now be operated at 40MW, to be followed with another 40MW for the second stage in June 2013. Construction is expected to be fully completed within the second half of 2014, upon which the plant full capacity would be at 120MW.

The Myanmar government’s plan is to add 450MWs of gas-based capacity as part of an initiative to double the country’s installed electricity capacity by 2015. Currently, more than 20% of the power’s installed capacity is natural gas-based power generation.

On-going feasibility study for a 1000MW coal-fired power plant

TTCL has been concurrently conducting a feasibility study on a 1000MW ‘Ultra Supercritical coal-fired plant’ in the Thilawa SEZ in Yangon. The study should take around a year to complete and the project is estimated to cost circa US$1.5bn.

TEE International (TEE SP) TEE International (TEE) is a mechanical and electrical engineering solutions provider specialising in large scale and complex infrastructure services such as rebuilding and conversion of existing facilities, turnkey design and building services as well as system integration.

Projects are either fully undertaken or executed through strategic partnerships and acquisitions, and TEE has operated extensively across Asia, spanning Singapore, Thailand, Malaysia, Philippines, Cambodia, Brunei, Vietnam and China. Since 2Q 2012, TEE has been perusing opportunities in new markets (Hong Kong, Macau, Myanmar, Qatar, Saudi Arabia). 72% of FY2012 revenue, or S$103.4m, was derived from Singapore activities.

In 2011, the company acquired telecommunications and water-related engineering businesses, further strengthening its integrated business model.

TEE Land

In addition, TEE has an integrated real estate business which complements its engineering specialisation. This segment is being spun-off and listed as a separate entity on the SGX as TEE Land and has recently received an ETL from the SGX and hopes for the IPO to be completed by mid-June. Tee has real estate ambitions in Myanmar and is seeking opportunities but remains uncommitted and cautious.

Myanmar Cement Production

In Myanmar, TEE has formed a JV with Ayeyarwaddy Cement, which is backed by one of Myanmar’s largest conglomerates, A1 Group, to operate a cement plant occupying 1,100 acres in Ngayoke Kaung Village, Ngaputaw Township, Ayeyarwady. The venture is expected to be cash flow positive from the outset but recovering the entire investment is due to take about 8 years given the scale and the total costs involved (estimated to be between $250m to $300m).

TEE is a mechanical and electrical engineering solutions provider

On-going feasibility study in Thilawa

TEE has extensive experience across Asia and seeks further regional opportunities

A complimentary real estate business is being spun off, into a separate listed vehicle

Eyeing two projects in the telco sector, specifically submarine cable fibre-optic connectivity

Cement production JV with local conglomerate A1 Group

Strategic acquisitions to strengthen the integrated business model

A 30 year agreement before transferring to the MOEP

Construction is expected to be fully completed within the second half of 2014

Gov plans to add 450MWs of gas-based capacity by 2015


23

The Portland cement plant located nearby to an estimated 116 million tonnes of limestone deposits, which will bring significant cost savings on transportation. The feasibility study is still on-going and is expected to be wrapped up by June-end.

Involvement with the Yongnam/JGC consortium to build a new airport

Tee is involved with the Yongnam/JGC consortium in the tendering process for the contract to build and operate Myanmar’s new international airport. The company will take a 25% stake in a special purpose vehicle that will in turn supply up to 60% of the project consortium’s equity. Yongnam will own 50% of the SPV and represent it in all negotiations involving the project. According to a variety of sources, the contract is Yongnam’s to lose.

Tat Hong (TAT SP) TAT is the largest crawler crane company in the world, supplying cranes and heavy equipment to various industries. Its operations span Malaysia, Thailand, Indonesia, Hong Kong, China, Vietnam, Dubai and Australia. In terms of aggregate tonne-metres, it’s the top player in the Asia-Pacific region and ranked 8th worldwide, as well as being recognised as the largest tower crane player in China.

Myanmar

Intraco Ltd (INTR SP) and TAT have formed a joint venture company in Singapore to carry out the business of letting and distributing cranes and excavators in Myanmar. The JV will have an initial paid-up capital of US$3 million with both INTRACO and TAT holding a 40% stake each, with the remaining 20% to be held by Mr Aung Moe Kyaw. Intraco will incubate and operate the JV. SGX-listed Tat Hong will provide its know-how in relation to the JV’s business and operations, while Aung will contribute his knowledge of Myanmar regulations and market practices.

Project will benefit greatly from the close proximity of a significant limestone deposit

TEE is involved with the Yongnam/JGC consortium vying for the contract to build and operate what will be the new international airport in Yangon

Largest crawler crane company in the world

JV with Singaporean firm and a Myanmar national


24

Figure 1: Myanmar related public equities (Priced on 29 May 13)

Price Mkt cap Volume Price chg (%) Stock BBG code Industry (local) (US$m) (90D ave) 1M 3M 1Y Amata AMATA TB Industrials THB 22.40 791 8,791,038 (3.4%) (11.0%) +44.1% Adv. Info. Tech. AIT TB IT THB 98.25 224 847,736 +2.9% +23.2% +90.6% Aussino AUS SP Power & Energy SGD 0.140 33 12,844,280 +40.0% (46.2%) +180.0% Berli Jucker BJC TB Consumer THB 61.50 3,234 3,919,329 (14.3%) (30.2%) +60.0% Daewoo Int'l 047050 KS Conglomerate KRW 36,450 3,663 367,134 (4.5%) (5.0%) +24.9% Del Monte Pacific DELM SP Consumer SGD 0.90 919 928,744 +11.8% +21.9% +118.2% Gunkal Engineering GUNKUL TB Engineering SGD 26.25 574 4,992,540 +2.9% +33.7% +154.4% Interra Resources ITRR SP O&G SGD 0.47 165 8,685,344 (2.1%) (10.5%) +71.2% Ital Thai ITD TB Industrials THB 8.90 1,236 120,800,600 +6.6% +38.0% +166.5% Loxley LOXLEY TB IT THB 7.10 494 69,558,010 +4.4% +16.2% +118.5% LV Technology LVT TB Industrials THB 1.76 40 30,902,720 +0.6% +26.6% +11.4% mDR MDR SP Consumer SGD 0.015 104 61,369,310 (5.1%) (19.8%) +38.9% PTT PTT TB Oil & Gas THB 348.00 32,911 4,469,783 +9.8% +1.8% +15.5% PTT E&P PTTEP TB Oil & Gas THB 157.00 20,637 5,189,292 +5.0% (0.6%) +6.5% Ratchaburi RATCH TB Power & Energy THB 55.75 2,677 1,286,547 (10.8%) (9.5%) +42.7% Semen Gresik SMGR IJ Industrials IDR 18,500 11,182 7,411,033 +0.8% +6.6% +75.5% Siam Cement SCC TB Industrials THB 476.00 18,912 1,262,610 (0.8%) +4.0% +44.3% Super Group SUPER SP Consumer SGD 4.78 2,099 722,836 +23.3% +28.3% +146.5% Tat Hong Holdings TAT SP Heavy Machinery SGD 1.480 734 1,175,164 (0.3%) (2.6%) +47.6% TEE International TEE SP Engineering SGD 0.450 165 2,188,541 +20.0% +15.9% +136.6% ThaiBev THBEV SP Consumer SGD 0.675 13,352 61,910,980 +14.4% +23.0% +109.2% Toyo-‐Thai TTCL TB Engineering THB 55.50 882 1,625,536 +2.8% +40.2% +308.1% Viz Branz VIZ SP Consumer SGD 0.700 196 90,574 +0.0% +2.2% +30.3% Yongnam Holdings YNH SP Engineering SGD 0.335 334 13,675,840 +15.2% +21.2% +47.0% Yoma YOMA SP Real Estate SGD 0.855 779 11,809,920 +6.9% +0.0% +132.9%

Source: NCRA

Amata (AMATA TB) THB 22.40 Mkt cap (US$m): 791 3-mo (% chg): (11.0%) Ave daily volume: 8,791,038 12-mo (% chg): +44.1%

Who they are: Thailand’s largest industrial estate developer, manager, and infrastructure provider. It operates two export-orientated industrial estates in Thailand and is planning one in Vietnam, pending a 50-year lease approval.

Exposure to Myanmar: Amata is currently in talks with Ital Thai, hoping to play a major role in the development of the Dawei Special Economic Zone. It plans to spin off its Vietnam assets into a separate listing, which might eventually hold its Myanmar assets.

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Adv. Info. Tech. (AIT TB) THB 98.25 Mkt cap (US$m): 224 3-mo (% chg): +23.2% Ave daily volume: 847,736 12-mo (% chg): +90.6%

Who they are: AIT is a leading, rapidly growing Thai systems integrator and information and communication technology (ICT) provider. AIT provides complete ICT solutions, from configuration design, hardware and software components, implementation services, and training to enterprise networks, telecommunication service providers, and internet service providers.

Exposure to Myanmar: AIT has recently announced that it is entering into a 50:50 JV with Loxley (LOXLEY TB) to provide IT network installation services and operate a power business with sales & distribution of related equipment in Myanmar. The JV firm is currently negotiating with the Myanmar government on ICT regulations and rules before an MOU is expected to be signed in 3Q13. Management expects the project to contribute recurring income to AIT and Loxley over the long term.

Aussino (AUS SP) SGD 0.140 Mkt cap (US$m): 33 3-mo (% chg): (46.2%) Ave daily volume: 12,844,280 12-mo (% chg): +180.0%

Who they are: Designers and retailers of home furnishings (textiles and ceramics) with a brand presence in >30 countries. Have been on the SGX Watch List as reported consistent pre-tax losses for three years.

Exposure to Myanmar: By reverse takeover, Max Energy Group had planned to assume control of Aussino before the SGX rejected the deal. Max Energy Group is owned and operated by tycoon Zaw Zaw. Aussino was to operate its chain of 21 modern petrol stations and the home furnishings business was to become privatised.

Berli Jucker (BJC TB) THB 61.50 Mkt cap (US$m): 3,234 3-mo (% chg): (30.2%) Ave daily volume: 3,919,329 12-mo (% chg): +60.0%

Who they are: Lead Thailand’s trading, manufacturing and servicing fields for 130 years. Imports and distributes various products including consumer, engineering, packaging, and technical equipment. TCC Group is the majority shareholder.

Exposure to Myanmar: Burli Jucker Myanmar Ltd is a 100% owned subsidiary which owns a 15% stake in Siam Cement Myanmar Trading Ltd. Opened a converting plant and started production of soap in Yangon. Exports aluminium cans, glass containers and fertilizer products to Myanmar. Currently exploring further opportunities for forward and backward integration. Recently strengthened its sourcing and business development teams and increased its marketing budget.

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Daewoo Int'l (047050 KS) KRW 36,450 Mkt cap (US$m): 3,663 3-mo (% chg): (5.0%) Ave daily volume: 367,134 12-mo (% chg): +24.9%

Who they are: Daewoo International Corp. is a South Korean conglomerate. It produces automobiles, and is a general trading company that exports and imports steel, cement, crude oil, heavy machinery, automobile parts, and textiles.

Exposure to Myanmar: Daewoo has considerable exposure to Myanmar. It has been operating in the oil & gas sector since the late 1980’s. Among other projects, it owns a 51% stake in the US$3.73bn Shwe Gas Pipeline project in the Bay of Bangal, which expects to extract 500 million cubic feet of natural gas per day.

Del Monte Pacific (DELM SP) SGD 0.90 Mkt cap (US$m): 919 3-mo (% chg): +21.9% Ave daily volume: 928,744 12-mo (% chg): +118.2%

Who they are: Del Monte Pacific is a group of consumer companies that innovates, produces, markets, and distributes its food products worldwide. It owns the Del Monte brand in the Philippines, enjoying dominant market share throughout a number of different consumer products.

Exposure to Myanmar: The Company announced plans at the end of January to partner with Global Sky Company in Myanmar to distribute a vast range of edible consumer goods that made it a famous brand throughout the world.

Gunkal Engineering (GUNKUL TB) THB 26.25 Mkt cap (US$m): 574 3-mo (% chg): +33.7% Ave daily volume: 4,992,540 12-mo (% chg): +154.4%

Who they are: Gunkul Engineering is a manufacturer and supplier of power equipment. The primary market is Thailand with a focus on wind and solar power.

Exposure to Myanmar: Gunkul has been in Myanmar since 1997 and it is their main export destination, comprising to 15% of export sales. Currently already operating a wind power plant in Myanmar but has earmarked a further US$50m for the next two years for investments in power projects.

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Interra Resources (ITRR SP) SGD 0.47 Mkt cap (US$m): 165 3-mo (% chg): (10.5%) Ave daily volume: 8,685,344 12-mo (% chg): +71.2%

Who they are: Oil & Gas exploration and production through strategic alliances and partnerships. Assets include production and development contracts in Myanmar and Indonesia, as well as an exploration block in onshore Otway Basin, Australia.

Exposure to Myanmar: Two-thirds of revenue is coming from Myanmar. Owns 60% interest in Myanmar’s two-largest onshore oil fields in Chauk and Yenangyaung under two Improved Petroleum Recovery Contracts (IPRCs). The agreement commenced in October 1996 for a term of 20 years and 6 months. Interra is now part of private equity group Saratoga Capital, which will give it access to new capital and deal flow.

Ital Thai (ITD TB) THB 8.90 Mkt cap (US$m): 1,236 3-mo (% chg): +38.0% Ave daily volume: 120,800,600 12-mo (% chg): +166.5%

Who they are: Together with its subsidiaries, it is one of South East Asia’s leading industrial development contractors. Focuses on larger projects like MRT systems, power plants, mining, utility systems, and airports.

Exposure to Myanmar: Mandated to develop and run the Dawei Special Economic Zone. ITD was struggling to finance this mega-project, which will require up to US$8.5 billion just to set up infrastructure and >$50 billion to complete, however, the Thai and Myanmar governments recently agreed to raise funds to finance the development themselves, and there is a high chance the Japanese will step in too. This is expected to prove to international investors that the Dawei project is a sound investment.

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Loxley (LOXLEY TB) THB 7.10 Mkt cap (US$m): 494 3-mo (% chg): +16.2% Ave daily volume: 69,558,010 12-mo (% chg): +118.5%

Who they are: Loxley provides integrated telecommunication and computer services such as satellite TV uplink, video conferencing, data network communication, and internet access services. The Company also distributes office automation equipment, construction materials, consumer products, and chemical products. It is one of only three companies globally that has a specialist expertise in submarine cable fibre-optic connectivity.

Exposure to Myanmar: Loxley announced in 2011 that it was intending to make a return into Myanmar. Since, it has expressed interest in working with Italian-Thai Development (ITD TB) and has been in close talks about developments in Dawei. It has also entered a JV with AIT to provide ITC solutions to local projects. It is believed the company is looking to implement its submarine fibre-optic technology in the Andaman Sea to link oil platforms. Loxley is believed to be assessing building a 500MW power plant (not hydro) in central Myanmar subject to obtaining at least similar returns to those achieved in Thailand through the PPA fuel purchase agreement and addressing the problem of the lack of a proper transmission network in Myanmar. Capex of approx. US$ 600m spread over 3 phases is envisaged as well as bringing in another equity partner.

LV Technology (LVT TB) THB 1.76 Mkt cap (US$m): 40 3-mo (% chg): +26.6% Ave daily volume: 30,902,720 12-mo (% chg): +11.4%

Who they are: LVT is an engineering company that provides equipment and technology consulting services to the cement industry, in particular cement plant modifications.

Exposure to Myanmar: LVT has raised capital to invest directly

into Max Cement, a subsidiary of tycoon Zaw Zaw’s Max Myanmar Group of companies. This is an important strategic tie up for Max Cement as their current production facilities use the wet method. LVT will convert these facilities to energy efficient dry process.

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mDR (MDR SP) SGD 0.015 Mkt cap (US$m): 104 3-mo (% chg): (19.8%) Ave daily volume: 61,369,310 12-mo (% chg): +38.9%

Who they are: Distributor and retailer of telecommunications devices and mobile related services.

Exposure to Myanmar: mDR Myanmar Co Ltd was incorporated, with mDR retaining 51% ownership, to provide after-sales services of telecommunication devices to consumers. It will become involved in the mobile devices and accessories distribution and retail businesses. Myanmar Co Ltd has a paid-up and issued capital of US$50,000. Mobile phone penetration in Myanmar is a mere 3%, in a country of circa 60m people. Comparatively, Thailand has 120% penetration.

PTT (PTT TB) THB 348.00 Mkt cap (US$m): 32,911 3-mo (% chg): +1.8% Ave daily volume: 4,469,783 12-mo (% chg): +15.5%

Who they are: Thailand’s largest oil & gas conglomerate. It’s a state-owned, Global Fortune 500 company involved in electricity generation, petrochemical products, oil and gas exploration and production, and gasoline retailing businesses.

Exposure to Myanmar: Operating in Myanmar >20 years and currently contributes US$300m per month to the government from purchase of natural gas. US$2-3 billion investment plan in Myanmar until 2016. It has expanded its aviation-fuel business by linking with a Myanmar state enterprise. It will launch Platinum PTT Life service stations in Myanmar and aims to establish 40 new, high-end, service stations in Myanmar within 5 years. It will aggressively expand its lube oil business, aiming to rise to become the second biggest player with sales of 7 million to 8 million litres per year, an increase of 5 million litres per year from 2011. It plans to open an oil depot to support future growth for aviation fuel and refined oil.

PTT E&P (PTTEP TB) THB 157.00 Mkt cap (US$m): 20,637 3-mo (% chg): (0.6%) Ave daily volume: 5,189,292 12-mo (% chg): +6.5%

Who they are: Petroleum exploration and production company, A state owned company with >40 projects globally.

Exposure to Myanmar: Estimates that it will continue lifting 300 million cubic feet of natural gas a day at the end of 2013 in major gas field “M9” in the Gulf of Martaban. Plans to lay 300-kilometre-long gas pipeline in the gulf.

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Ratchaburi (RATCH TB) THB 55.75 Mkt cap (US$m): 2,677 3-mo (% chg): (9.5%) Ave daily volume: 1,286,547 12-mo (% chg): +42.7%

Who they are: Thailand’s largest power producer, 45% owned by Electricity Generating Authority Thailand (EGAT).

Exposure to Myanmar: Hopes to invest in 2 or 3 power plants in Myanmar. Plans for an additional 4000 megawatt coal-fired power plant at Dawei SEZ were rejected, citing the source of fuel. The agreement with Ital Thai still stands but if the fuel source switches to gas, Ratchaburi will have to recalculate.

Semen Gresik (SMGR IJ) IDR 18,500 Mkt cap (US$m): 11,182 3-mo (% chg): +6.6% Ave daily volume: 7,411,033 12-mo (% chg): +75.5%

Who they are: Indonesia’s largest cement producer with annual capacity of 20 million tonnes (could have reach 26 million this year.) and the highest local market share, 41%. The government owns a 51% stake. It is also a holding company for other state cement producing companies.

Exposure to Myanmar: US$200m set aside for a Myanmar cement plant project and will invest using a JV vehicle.

Siam Cement (SCC TB) THB 476.00 Mkt cap (US$m): 18,912 3-mo (% chg): +4.0% Ave daily volume: 1,262,610 12-mo (% chg): +44.3%

Who they are: The 2nd largest company in Thailand owned 30% by Crown Property Bureau. A diversified industrial company whose operations include chemicals, paper, cement, building materials and distribution.

Exposure to Myanmar: Has exported its products to Myanmar for almost 20 years with 220 million tons of SCG Elephant-logo cement expected in 2013, only a 1% increase YoY. In 2011, expanded Myanmar distribution network to include more towns and cities. Cement is in short supply with only 15 operational cement plants in Myanmar. It plans to build a new cement plant in the Tanintharyi region.

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Super Group (SUPER SP) SGD 4.78 Mkt cap (US$m): 2,099 3-mo (% chg): +28.3% Ave daily volume: 722,836 12-mo (% chg): +146.5%

Who they are: A leading instant beverages and convenient food brand owner with market dominance in SE Asia. It has >10 leading brands with a portfolio of >300 products, available in >50 countries. It operates 14 state-of-the-art manufacturing facilities in Singapore, Malaysia, China, Myanmar and Thailand (FY 2011) and produces many raw ingredients itself.

Exposure to Myanmar: Manufactures and distributes in Myanmar, from which it derives 16% of its revenue (FY2011). It has 30% market share in the instant coffee segment and owns 60% of Super Coffee Mix Ltd, its instant coffee production business in Myanmar. It has a 15 year, exclusive relationship with its local partner, an extensive value chain, early mover advantage and strong brand presence.

Tat Hong Holdings (TAT SP) SGD 1.480 Mkt cap (US$m): 734 3-mo (% chg): (2.6%) Ave daily volume: 1,175,164 12-mo (% chg): +47.6%

Who they are: TAT is the largest crawler crane company in the world, supplying cranes and heavy equipment to various industries. Its operations span Malaysia, Thailand, Indonesia, Hong Kong, China, Vietnam, Dubai and Australia. In terms of aggregate tonne-metres, it’s the top player in the Asia-Pacific region and ranked 8th worldwide. TAT is recognised as the largest tower crane player in China.

Exposure to Myanmar: Intraco Ltd (INTR SP) and TEE have entered into a non-binding heads of agreement to form a joint venture company in Singapore to carry out the business of letting and distributing cranes and excavators in Myanmar. Intraco will incubate and operate the JV. SGX-listed Tat Hong will provide its know-how in relation to the JV’s business and operations, while Aung will contribute his knowledge of Myanmar regulations and market practices.

ThaiBev (THBEV SP) SGD 0.675 Mkt cap (US$m): 13,352 3-mo (% chg): +23.0% Ave daily volume: 61,910,980 12-mo (% chg): +109.2%

Who they are: A leading Asian beverage producer whose principle shareholder is Charoen Sirivadhanabhakdi.

Exposure to Myanmar: ThaiBev and TCC Assets, both controlled by Thai billionaire and tycoon Charoen Sirivadhanabhakdi, have won the bid for control and now owns F&N, which in turn owns 55% of Myanmar Brewery. Myanmar Brewery brews Myanmar Beer which commands 70% market share in Myanmar.

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TEE International (TEE SP) SGD 0.450 Mkt cap (US$m): 165 3-mo (% chg): +15.9% Ave daily volume: 2,188,541 12-mo (% chg): +136.6%

Who they are: TEE International (TEE) is a mechanical and electrical engineering solutions provider specialising in large scale and complex infrastructure services such as rebuilding and conversion of existing facilities, turnkey design and building services as well as system integration.

Exposure to Myanmar: TEE has formed a JV with A1 Group to operate a cement plant and the company is also involved with the Yongnam/JGC consortium vying for the contract to build the new airport in Yangon. The company also has ambitions in the Myanmar real estate market through its subsidiary TEE Land although it has no current commitments.

Toyo-Thai (TTCL TB) THB 55.50 Mkt cap (US$m): 882 3-mo (% chg): +40.2% Ave daily volume: 1,625,536 12-mo (% chg): +308.1%

Who they are: Originally a JV between Ital-Thai and Toyo Engineering, Toyo-Thai is a specialist Engineering, Procurement and Construction (EPC) company for turnkey projects, mainly to power plant, petrochemical, chemical, fertilizer and petroleum industries.

Exposure to Myanmar: TTCL is currently pursuing opportunities in Myanmar's power sector. It is mid-way to completion of a US$170m, 100MW gas-fired power plant. It is a BOT model with the Ministry of Electric Power on a 30 year agreement. TTCL is also undertaking a feasibility study for a 1000MW coal-fired plant in the Thilawa SEZ which should take about a year to complete.

Viz Branz (VIZ SP) SGD 0.700 Mkt cap (US$m): 196 3-mo (% chg): +2.2% Ave daily volume: 90,574 12-mo (% chg): +30.3%

Who they are: Manufactures, distributes and builds brands of instant beverages and other similar products. Exports >35 product lines (coffee, tea, cereal beverages, snack foods). It provides contract manufacturing for private labels and flexible packaging printing services to third parties. It has four production plants (Singapore, China, Vietnam, Myanmar).

Exposure to Myanmar: Has been in Myanmar for >10 years. Offers instant coffee, instant cereal and instant tea (with a weighting of 40%, 40% and 20% respectively) in Myanmar. Currently the market leader in the cereal segment with a management estimated 30% market share, however, economic reforms have meant more foreign competitors for VB in Myanmar’s instant coffee market. Lower-priced local competitors also create a challenging environment. VB therefore increased advertising and promotions to defend market share.

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Yongnam Holdings (YNH SP) SGD 0.335 Mkt cap (US$m): 334 3-mo (% chg): +21.2% Ave daily volume: 13,675,840 12-mo (% chg): +47.0%

Who they are: Yongnam is an established structural steel contractor and specialist civil engineering solutions provider with over 40 years of operating track record in its primary market, Singapore, as well as throughout Asia and the Middle East.

Exposure to Myanmar: Yongnam teamed up with Japan’s JGC Group and Singapore’s Changi Airport, and is one of a group of seven consortia vying for the contract to build the new Hanthawaddy International Airport near Yangon. The tendering process is expected to be decided upon by August.

Yoma (YOMA SP) SGD 0.855 Mkt cap (US$m): 779 3-mo (% chg): +0.0% Ave daily volume: 11,809,920 12-mo (% chg): +132.9%

Who they are: Principal activities involve the development of land, sale of private residential properties, construction, automobile dealership, as well as design and project management for real estate developments.

Exposure to Myanmar: Purest of all Myanmar-focussed equity investments; based on the latest published results in September, 100% of its top line comes from local operations. The latest project is the Meeyahta development in downtown Yangon. It will include two office buildings, two serviced apartment towers, two hotels and one retail mall. A US$193m private placement recently brought in Capital International as an anchor investor. A 1:4 rights issue should raise a further US$110m to purchase an 80% stake in Meeyahta International Hotel Limited (MIHL), which owns the Land Rights to the 10 acre plot in downtown Yangon that will become a “landmark development”.

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This product is for information only and not intended to be and should not replace or be construed or be relied upon as investment, legal, tax or accounting advice or recommendation. Information on investment securities (if any) are purely factual and intended solely to provide an awareness of the business and economic environment in Myanmar, including to highlight any new market entrants and companies that directly or indirectly engage in business activities in Myanmar. The material is not intended to entice, solicit or act as a recommendation, and no investment, divestment or other financial decisions or actions should be based on the material. No representations or warranties are made as to the accuracy, correctness, reliability or completeness of the material or its contents. Neither NCRA, nor any of its affiliates, directors and employees, accept any liability relating to or resulting from the reliance upon or the use of all or parts of the materials.

The information reflects prevailing conditions as of the date of hereof, and may be subject to corrections and change at any time without notice. NCRA does not intend to, and the delivery of these materials shall not create any implication that NCRA assumes any obligation to, update or correct the materials.

We are not attorneys at New Crossroads Asia, nor do we market our services in such capacity so it is therefore imperative for any investor to consult their legal counsel as it relates to investing into Myanmar.

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