Higher Deposits at Myanma Economic Bank
Deposits at Myanmar’s largest state-owned bank have doubled in the first six months of this fiscal year. Between April and September, deposits to Myanma Economic Bank (MEB) totaled K442 billion that was almost twice the K290 billion deposited during the entire financial year 2014-15. Ministry of Finance has to reduce the size of uncompetitive state banks, as their private sector counterparts become stronger.
MEB is the largest bank in the country, with 307 branches, and is loss making, with deficits funded through Myanmar’s central bank. And MEB offers banking services in rural areas and issues highly subsidized loans to other state own banks including Myanma Agricultural Development Bank (MADB) that is also needed of fundamental reform. Commercial banks typically cover the cost of interest payments on deposits by extending loans, on which they receive interest at a higher rate. The spread between the two rates is one way in which banks make money. MEB’s revenues in the first six months were K9.334 billion. The bank had estimated on interest payment to cost K207.124 billion for the year or slightly more, and had initially requested a budget of K210.680 billion.
However, due to an unexpected jump in deposit rates, the bank has requested an additional budget of K33.790 to cover interest payments and K42.117 billion to cover operating and other expenses. The interest rate MEB receives around 4 percent on its loans to other state banks that rate is lower than 8pc interest it pays on deposits, resulting in a net loss.
International organizations such as International Monetary Fund (IMF), the World Bank that have advised the government to modernize policy reform and mergers with one or more of the other three state banks-MADB, Myanma Foreign Trade Bank, and Myanma Investment & Commercial Bank.
Improved Communication Networks with Korea Bank Loan
Myanmar Posts and Telecommunications plan to expand basic communication equipments such as Internet Fiber Cable joints and improve communication network by spending $55 million loan from Korea Exim bank (Korea Export and Import Bank). MPT is now inviting tenderfor communication development projects to build fiber cable network. Companies that get tender have to implement this project during 18 months. Korea Exim bank is Korea legal financing bank that was established in 1976. Its main purpose is to support Korea Export Amount by lending loans and supporting funds for business cooperation project with other countries.
Second Central Business Zone to state in 2016
Second Central Business Zone Project (Mindama) as first Integrated Mixed Development in Yangon will be implement for the purpose of city development. The plan has been in place since 2013. Land area of 36.551 acres located at the corner of Mindama Road and Tawwin Road that is owned by Yangon City Development Committee. This project will be implemented by YCDC with a joint venture partner, First Myanmar Construction Co., Ltd (part of Myanmar V pile) with the permission of Yangon Regional Government and Myanmar Investment Commission. The project includes one high end hotel, four office buildings, five service apartments buildings, theaters, cinema halls, restaurants, electronic and trading centers, five- stories supermarket, other business centers, convention center, IT trade center, etc.
The Mindhamma nursery and flower compound currently occupying the site will move to Palae Township at the outskirts of Yangon. The initial news of the project led to property price increases in Mayangone Township, with land near the Mindhamma site skyrocketing in 2013. Current asking land prices near Mindhamma are expensive around U$3 per square foot, but when it’s sold the prices are actually much lower than the asking price.
Myanmar V-Pile was established in 1996 as a piling company. It subsequently expanded into other areas including trading, and set up First Myanmar Construction as its construction arm, building projects including low-cost housing and an overpass. First Myanmar Construction will construct basic building and the new convention center. It will be larger than the nearby old convention center. With the implementation of this project, government expects the local economy to develop through international expo and conferences (MICE market). Within this project area, three stories basement car parks will also be included. This project is to be implemented within five years.
Angel Investment Group Plan for Supporting Entrepreneurship
Myanmar Young Entrepreneurs Association (MYEA) is now planning to establish Angel Investment Group that will invest capital in building entrepreneurs. On November 5, MYEA introduced the very first Angel Investment Forum at UMFCCI Mingalar Hall. It was attended by well-known Myanmar entrepreneurs, successful business personnel and members of MYEA and UMFCCI. U Wai Phyo, President of MYEA gave the opening speech and Dr. Aung Thun Thet clearly explained about what Angel network is all about and what is meant to Myanmar and entrepreneurs. David Beatty and Jo Ann Cork from J.E. Austin Associate Inc. were sent by State Department of USA to share knowledge and explain about how Angel investment works as well as their personal investment in the US and around the world. The panel was moderated by Sylvia Saw Mc Kaige, Group Communications Consultant of YOMA Strategic Holdings Ltd.
