Tax Revenues Expected to Rise to 4 Billion USD: Official

(Updated: 2014-11-05)

Myanmar’s Internal Revenue Department said it expected to collect approximately 4,000 billion MMK, or about 4 billion USD, in taxes in 2014, a senior official said on Monday, adding that tax revenues have continued to rise year on year since 2011.

The expected tax revenues fall short, however, of the most recent International Monetary Fund (IMF) projections for tax collection by the Burmese government.

“The income tax represents the largest amount among these taxes, and the total amount of taxes is increasing annually,” said Tin Htwe, assistant director of the Internal Revenue Department.

He said his department had collected about 1.9 billion USD in the first seven months of 2014, adding that about 1 billion USD was collected from income and property tax, about 900 million USD from commercial tax, 37 million USD in so-called stamp duty tax for those buying property, and about 16 million USD from lottery tax.

In 2013-2014, the revenue department said it collected 3,852 billion MMK, a little under 4 billion USD against 2013’s exchange rate, while in 2012 it collected 2,710 billion MMK, or about 3.1 billion USD.

Since President Thein Sein’s reformist cabinet took office in 2011, the government has been trying to raise tax revenues in order to expand public spending.

Tax collection has improved after township level tax committees were formed and tax officials received training and international technical support from international financial institutions, such as the IMF.

Over 2014, the government introduced a new property tax with some success. It reformed and lowered its property sales tax in order to encourage more buyers and sellers to register transactions. Previously, many buyers and sellers agreed not to register the change of property ownership in order to avoid taxes.

The revenue department is also trying to levy income taxes on the rapidly rising rent rates in Rangoon.

Tax evasion remains common, however, in particular for property sales tax and commercial taxes levied on businesses. A Rangoon Division Internal Revenue official estimated earlier this year that “more than 80%” of property transactions on Rangoon’s booming real estate market go unregistered and untaxed, especially when it involves expensive properties in upmarket neighborhoods.

The IMF said in a recent statement on a consultation with the Burmese government that it expected Naypyidaw to collect about 4.7 billion USD in tax revenues in 2014-2015, well above the figure cited by Internal Revenue Department officials.

It commended the government on its economic and fiscal policies, which have led to low debt levels, a small fiscal deficit, a growth in foreign investment and strong growth of gross domestic product at around 8.25% this year.

It noted, however, that “Additional efforts to mobilize revenues are also necessary to allow increases in social spending and public investment. Priority should be given to cutting back exemptions, strengthening tax administration, and preparing for the introduction of a [value-added tax].”


State Energy Firms to Professionalise

(Updated: 2014-11-05)

The Ministry of Energy is planning to pursue more joint ventures with foreign companies, as senior government officials have urged state-owned enterprises to professionalize or risk being reformed.

Energy production will improve as state-owned enterprises get better, said Minister of Energy U Zay Yar Aung. Photo: Kaung Htet

The energy sector includes a prominent set of state-owned firms, but tentative steps to modernise through forming joint ventures with foreign firms have already begun.

The fuel distribution and retail arm of Myanmar Petroleum Products Enterprise plans to partner with a foreign firm to improve its operations, while Myanma Oil and Gas Enterprise (MOGE) and Myanma Petrochemical Enterprise are also planning to work with foreign firms to upgrade certain operations.

Energy minister U Zay Yar Aung said these partnerships are the first step in eventually transitioning the state-owned firms to becoming publically owned firms – though added it will take some time for this to happen.

“It is difficult to change directly from being a state-owned enterprise to being a public company,” he said in an address at a conference on natural resource management in Nay Pyi Taw on October 16th. “But we’re implementing reform to move toward [having] public companies in this sector.”

Ministry of Finance and Revenue deputy director general U Zaw Naing said the number of state-owned firms has been dropping, declining to about 40 businesses under 14 ministries after 2012, though had it previously been 47 state-owned firms under 18 ministries.

State-owned enterprises can be slow to develop business and come to depend on the state budget, said U Zay Yar Aung.

“We don’t have enough experience on our own to change businesses – it is a big challenge for us,” he said. U Zay Yar Aung added it may take 10 years to fully change the way the state-owned enterprises do business and see them fully transition from being state-owned.

Senior government officials, including Minister for the President’s Office U Soe Thane and Finance Minister U Win Shein, said earlier this month that there will be some changes coming to state-owned firms, particularly at those that manage to consistently lose money. Some Pyidaungsu Hluttaw members have also openly criticised state enterprises which consistently lose money, noting only a few – mostly in the natural resource sector – are able to show consistent profits.

Several state-owned firms in the energy sector have already taken steps to seek foreign partners. A tender for an international firm to join MPPE in its monopoly of distributing jet fuel attracted about 24 interested bidders, though local media said a shortlist was released last month with four bidders left. Mizzima also reported on October 14th there are nine firms shortlisted in a tender to assist MOGE with professionalizing in drilling, pipeline and seismic services.

Nomita Nair, partner at legal firm Berwin Leighton Paisner, which is among the nine shortlisted firms, said government ministries often have limited numbers of people and therefore turn to consulting firms.

For the energy sector as a whole, Ms Nair said she advocates for a comprehensive approach that takes into account the range of energy industries in the country.

“From a legal point of view, a policy point of view, I see a lot of talk about the upstream side, but … a lot of focus really needs to be made on the downstream and power-generation side,” she said.

It is also important to strike a balance between revenue-generating exports and using domestic petroleum on the local market to create jobs and factories, she added.

U Zay Yar Aung also said that while the Ministry of Energy is open to joint ventures with foreign partners in the country to export petroleum abroad, it has prioritized ensuring there is enough oil and gas earmarked for domestic consumption.

“When there is sufficient oil and gas for local use, we will sell it outside Myanmar. But we want to sell high-end products rather than raw materials. This is the president’s latest policy,” he said.

Some of the present contracts require Myanmar to export its oil and gas production, though this may change in the future.


Vietnam Retail Industry Facing Many Challenges

(Updated: 2014-11-05)

According to Vietnam’s commitments to the WTO by 2015, foreign retailers can invest 100% of their capital in Vietnam instead of 50% at present. Especially, the tariffs in ASEAN countries will be practically non-existent by the end of 2015. This poses not only fierce competition for domestic retailers but also challenge to foreign companies that are operating in Vietnam.


According to the statistics of the Vietnam Retailers Association, in the first nine months of 2014, the total retail sales of the goods and services increased 11.12, earning 2,145,470 billion VND. Sales of the state-owned companies holds 10.1% of the total, up 8.4%; sales of the non-state companies accounts for 86.5%, up 11.1%; sales of FDI companies accounts for 3.4%, up 21, 6%. It is expected that in the whole 2014, the total retail sales of the goods and services will reach 2,970,300 billion VND, up 11.3% compared with 2013. By the end of 2013, Vietnam has about 724 supermarkets and 132 trade centers, 8,546 markets, and about one million small-scale household stores. By 2020, the country will have about 1,200 to 1,300 supermarkets; 180 trade centers, and 157 shopping centers.

In 2014, Vietnam is considered a global retail market that creates both challenges and opportunities to retailers. Retailers could obtain a lot of opportunities if they could understand and adjust their strategies to match with the general context.

Currently, current distribution channels accounts for 25%; meanwhile, traditional channels accounted for 100 previously. The experts predict that modern retailing will boom up and become a momentum in the retail industry of Vietnam. In 2014, there are many large retailers like Lotte (Korea) and Aeon (Japan) making strong presence in Vietnamese market. And now some large retail groups are researching and seeking investment opportunities and other retailers such as Walmart, Auchan, Robinson starting their retail operations in Vietnam. Despite a lot of opportunities, domestic retailers may compete hard with foreign enterprises.

At the forum that was held by the Vietnam Retailers Association on Oct 13, 2014, experts said that strong growth of global retail industry has posed many challenges to Vietnamese retailers. Moreover, this also opens many opportunities for the businesses who understand and adjust strategies successfully in accordance with the general context.

According to Dinh Thi My Loan, Chairperson of the Vietnam Retailers Association, there are more and more retailers to penetrate Vietnam’s market. And this trend will give businesses both of challenges and opportunities. The growing number of retailers in Vietnam forces domestic retailers to enhance their competitiveness through improvement of customers’ services and necessary skills. At the same time, management authorities must consider before granting permits to retailers. There should be more transparent and clearer policies to attract foreign investment in this sector.

Thailand- big challenge

Recent investment projects of Thailand are mostly related to retail and consumer goods sectors; for example, the Berli Jucker (BJC) has acquired the Metro Vietnam; the Robins has opened trade centres in Hanoi and the 7 Eleven are researching markets in Ho Chi Minh City. According to Vu Vinh Phu, Chairman of the Hanoi Supermarkets Association, the growing number of the Thai supermarkets in Vietnam will increase Thai imports to the Vietnamese markets.

Thai goods are highly favoured by consumers due to their good quality and reasonable prices. With a population of over 90 million, Vietnam is an important market to compete with China in the South East Asian market. The establishment of Thai distribution agents to import more Thai goods to the supermarkets and retail stores in Vietnam is a sign that the Thai people are planning a big strategy when tariff barriers between the two countries are completely removed in 2015.

According to experts, the most important strategy to compete with foreign goods in general and Thai products in particular is to increase the quality of Vietnamese products and efficiently organise a closed chain from the production to the distribution.

Consumers are paying more attention to quality of products rather than cheap products that lack origin. It is expected by 2020, domestic distribution channels will account for 80-90% of the total channels if the price of the Vietnamese products could be more competitive and customer service and quality of products are improved.


First Oil Flows From Su Tu Nau Oil Field

(Updated: 2014-11-05)

A ceremony was held in Ho Chi Minh City on October 24th to receive the first oil flow from the Su Tu Nau (Brown Lion) oil field in Block 15.1 in the Cuu Long Basin offshore the southern region.

Deputy Prime Minister Hoang Trung Hai attended the ceremony and presented the oil field’s operator – the Cuu Long Joint Operating Company with the Labour Order, second and third class. Several individuals of the PetroVietnam Exploration and Production Corporation (PVEP) were also presented with the Friendship Order on the occasion.

The Deputy PM highlighted the significance of the event, which he described as a new step forward of Vietnam’s oil and gas sector.

PVEP Director General Do Van Khanh said the success of the project has opened up new prospects for applying the technology to the exploration and exploitation of small near-shore oil fields in the Cuu Long Basin as well as in other areas.

He said the Su Tu Nau is the 7th among the nine oil fields slated to be put into operation in 2014.


1.1 Billion RMB Retrieved for Disgruntled Consumers in China

(Updated: 2014-11-05)

Chinese authorities retrieved 1.1 billion RMB (180.1 million USD) for disgruntled consumers in the first nine months of 2014 as the country places greater emphasis on protecting customer rights, official figures showed on October 14th .


In the first three quarters, China’s industry and commerce institutions processed 842,000 individual complaints filed by consumers, said the State Administration for Industry and Commerce (SAIC).


The amount of money retrieved and the number of cases processed was 12.64% and 18.2%, respectively, higher than in the same period in 2013, according to the SAIC.


Articles of daily use, household appliances, communication equipment, transport tools and food were among the most frequent subjects of complaints about goods.


For cases involving service, teleshopping, telecoms, Internet, maintenance and residential services topped the list.


Chinese authorities retrieved 1.2 billion and 1.34 billion RMB for cheated buyers in the whole of 2012 and 2013 respectively.


With heavier purses and wider choice, Chinese consumers are becoming increasingly aware of their rights at a time when the country is aiming to boost domestic consumption.


Chinese Firm Eyes Ebola Approval

(Updated: 2014-11-05)

A Chinese drug maker is seeking fast-track approval for a drug that it says can cure Ebola, as China joins the race to help treat a deadly outbreak of the disease that has spread from Africa to the US and Europe, Reuters reported on October 14th .


Sihuan Pharmaceutical Holdings Group has signed a tie-up with Chinese Academy of Military Medical Sciences (AMMS) to help push the drug called JK-05 through the approval process in China and bring it to market. The drug, developed by the academy, is currently approved for emergency military use only.


“We believe that we can file to China’s Food and Drug Administration before the end of the year,” Sihuan’s Pharmaceutical chairman Che Fengsheng said during an investor call on October 8.


Sihuan’s drug is only one contender amid a number of experimental cures worldwide to treat Ebola, although if successful it would be a boon for China’s developing pharmaceutical sector.


One of the company’s strengths was its close military ties, Che said. “We have myriad connections with the military medical science units and have developed lots of products in cooperation with the AMMS.”


Che pointed out that a Chinese vaccine against a SARS outbreak a decade ago, also developed by the military, was approved by the drug regulator rapidly after its application, signaling that JK-05 could receive similar treatment.


China’s Ebola cure bid still lags some way behind US–developed ZMapp and TKM-Ebola, but Sihuan management said the drug has proven effective during animal testing on mice.


New 5-year Plan to Raise Goals for Renewables

(Updated: 2014-11-05)

Wind, solar power targets raised, while oil exploration expanded in offshore regions


China has outlined the 13th Five-Year Plan (2016-2020) on energy, which will increase offshore oil and gas exploration and raise output targets of renewables, especially wind and solar power, according to a senior official with the National Energy Administration.


The country will increase offshore oil and gas exploration in the Bohai Sea, the East China Sea and the northern part of the South China Sea, which was newly added to the plan, said He Yongjian, deputy head of NEA’s planning department, during an energy forum in late September.


According to the plan, China will focus on raising energy output, improving its energy supply structure and accelerating renewables development.


By the end of 2020, the nation will form five energy production bases in Shanxi province, Ordos Basin, eastern Inner Mongolia, Southwestern China and the Xinjiang Uygur autonomous region.


Meanwhile, China will establish a nuclear power development belt in East China and an offshore energy exploration belt along the coast.


The country’s total wind power installed capacity will reach 200 million kilowatts by 2020, doubling the 12th Five-Year plan period’s level, and solar power will be quintupled to more than 100 million kilowatts compared with the target during the 12th Five-Year plan period.


“The wind power price will be equal to the on-grid price of thermal power by 2020, and solar power will be the same as the grid retail price by then, which means the unit wind electricity price will be reduced from the current 0.6 RMB (0.01 USD) a kilowatt-hour to 0.4 RMB a kilowatt-hour, and solar prices will be cut from 0.9 RMB at present to about 0.6 RMB a kilowatt-hour,” said an industry insider who is close to the new energy companies.


The government’s subsidies to the renewable energy industry will be capped in the future, said the official.


“The new-energy power generation companies should actively improve technology to cut costs in order to gain market share, instead of depending on government subsidies,” he said.


According to China’s previous medium and long-term nuclear industry development plan, the nation’s nuclear power installation capacity will reach 58 million kilowatts by 2020.


At present, 30 million kilowatts of nuclear capacity are being constructed, though the projects are slightly behind schedule.


According to the NEA’s He, 53 million kilowatts of nuclear power installation capacity are expected to be put into operation by 2020.


Energy consumption control will continue to be the major task during the next five-year plan. National energy consumption will reach 4.8 billion metric tons of standard coal by 2020.


The government will continue to increase its natural gas supply to replace coal consumption in coming years.


China Maps Out Agricultural Consolidation Plan

(Updated: 2014-11-05)

China is rolling out a major rural land reform which aims to promote large-scale farming and consolidate unused small patches of farm land under larger cooperatives.


The reform scheme comes as China is experiencing a continuing process of industrialization and urbanization, in which more farmers are migrating to cities for jobs, leaving behind their contracted farm lands over which they have use rights.


“More and more farmers see agriculture as a secondary job. Some farmers no longer attach importance to growing crops as they used to. Some lands are even left unattended,” Minister of Agriculture Han Changfu said in an interview with Xinhua on Friday.


The transition has triggered rising concerns over food security facing the world’s most populous country.


The key solution is to promote the concentrated use of farm lands, nurture diversified agricultural businesses, and ensure that agriculture is also a profitable business, Han said, adding that the reform plan, which has been reviewed and passed by the central authorities, will be an important policy guide for rural land reforms and agriculture management.


“The transfer of rural land use rights as well as concentrated agricultural development is a significant issue for China’s rural development. It is also a key agenda in China’s deepening of rural reforms,” he said.


According to government data, the number of Chinese migrant workers from rural regions in 2013 reached almost 270 million, which accounted for 45% of the total work force in rural areas. Meanwhile, 170 million migrant workers spent more than six months outside their hometowns in 2013.


Han said rural land transfer has also sped up in recent years. As of the end of 2014, 380 million mu (25 million hectares) of rural arable land had been transferred, which accounted for 28.8% of the nation’s total contracted arable land by farmers, up 20% compared to year 2008.


“As more lands are transferred, farmers who remain in the fields have more land to manage. This creates an opportunity for them to introduce advanced agricultural technologies and equipment, paving the way for modern agriculture,” according to the minister.


At the Third Plenary Session of the 18th Communist Party of China Central Committee held last November, Chinese leaders encouraged circulation of land use rights on the open market, nurturing of diversified agricultural business models and new players in agriculture, on the basis of concentrated, professional and organized use of rural lands.


Currently, farm leasing among villagers is the most popular form of rural land transfer, but the proportion of land transfers to rural cooperatives and local enterprises has been growing.


In China, urban land is owned by the state and rural land is normally under collective ownership. While gradual reforms since the 1980s saw the trading of urban land evolve into a vigorous property market, land in the countryside has remained largely static as farmers mostly have rights to use, but cannot directly trade or mortgage them.


“In most regions, the time is actually already ripe for farmers to transfer their land use rights. President Xi Jinping once said that the work will mark another major innovation in rural reforms,” Han said.


However, there are challenges in carrying out the reform, in terms of how to protect farmers’ land rights, enhance management of land transfer and offer support to new farmers.


For instance, some locales are forcing land transfers against farmers’ will, which violates their rights, while some companies are renting transferred lands over long periods but their businesses are not related to agriculture, Han said.


The minister explained that the reform scheme strictly prohibits leasers of transferred lands from non-agricultural purposes.


To promote the gradual transfer of rural land use rights while preventing potential risks to farmers’ interests, the first step would be the registration and confirmation of farmers’ contracted lands by keeping clear registration records, issuing land rights certificates to them, and improving the terms of land-related contracts.


This will ensure farmers’ proprietary and use rights over the contracted lands as well as their rights to benefit from land income. Meanwhile, the measure will provide evidence in solving contract disputes and deciding on compensation in case of land requisition, Han said.


He added that the country will promote the registration scheme nationwide in 2015. Chinese central authorities also announced late in 2013 that the registration work will be completed in five years.


The minister said that the process of land transfer will evolve based on consultation.


“We cannot unilaterally pursue the speed of transfers for large-scale agriculture. The process will be pushed forward step by step based on the situations of different regions. How far it is promoted will also depend on the advancement of technologies and improvement to production methods.”


Telenor SIM Cards To Go On Sale

(Updated: 2014-10-11)

Telenor SIM cards will go on sale in 1500 stores in Mandalay on September 27th 2014, the chief executive of their Myanmar operation told press on September 27th 2014.
Mr Petter Furberg also revealed the launch dates for Nay Pyi Taw and Yangon would be on October 4th 2014 and October 11th 2014 respectively. He added that SIM cards would be sold at 1500 MMK (1.50 USD) each, calls to all network would cost 25 MMK (0.025 USD) a minute and text messaging would be priced at 15 MMK (0.015 USD) per SMS.
He added that 2G internet would operate at a rate of 300 Kbps and 3G would operate at 2Mbps, at respective standard costs of 6 MMK(0.006 USD) and 10 MMK (0.01 USD) per Mb, although weekly and monthly packages would also be available.
He added that the company would be careful to distribute enough SIM cards to meet market demand and avoid black market trading.

Seafood Industry Expected to Expand After EU Checks Standards

(Updated: 2014-10-11)

There are only 19 fishery exporters in Myanmar but the number is likely to swell after the EU does standardization checks next year, Myo Nyunt, secretary of Myanmar Fishery Products Processors and Exporters Association, he said.
“We’ve heard the EU adjudicators will come and check our industries next year. But the official announcement isn’t issued yet. After their examinations, the number of seafood processors is likely to increase,” Myo Nyunt said.
Myanmar fishery products need to pass Sanitation Standard Operating Procedures, a Good Manufacturing Practice and Hazard Analysis and Critical Control Points to win official export licences.
The EU embassy in Myanmar and the Fishery Department have been working to teach relevant officials the EU’s standards.Tin Wei, deputy director of the Fishery Department, said: “It’s hard to get export licences to the European Union. But one gains prestige among the global market once you get permits.”
Previously there were 20 seafood processors although one exported Myanmar traditional snacks. Meanwhile, chloramphenicol antibiotic residue was found in its products, which saw the company fined 1 million MMK (1,000 USD) and its licence blocked for six months.
Currently, seafood processors depend mainly on raw products.

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