Author: admin

The readymade garments (RMG) sector in Bangladesh is continuing its positive trend in export earnings, fuelled by value-added products, government policy support and completion of 90 per cent of the factory remediation work set by the Accord and Alliance.

Compared to 2017–18, export earnings in the RMG sector have maintained a steady growth of 15.65 per cent in July–December of FY 2018–19,

amounting to USD 17.08 billion. In 2017–18, the total earnings were USD 14.77 billion.

Talking to The Independent, Abdus Salam Murshedy, president of the Exporters’ Association of Bangladesh, said, “We have completed around 90 per cent of the requirement of factory remediation work of Accord and Alliance, which eventually helps

attract buyers of the US and Europe to buy apparel from us.”

“The Western buyers are coming to Bangladesh with a number of work orders as we have been able to gain their confidence and faith,” he added. He said people of the sector should increase their efficiency to keep up the double-digit growth.

The endeavour for factory remediation enhanced workplace safety to a great level, which eventually helps boost the brand image worldwide, he said.

“We’ve invested around USD 4 billion for ensuring workplace safety and occupational health,” he added.

According to the Export Promotion Bureau (EPB), for July–December, the first six months of FY 2018–19, knitwear exports rose by 13.92 per cent to USD 8.65 billion compared to the previous year, which was USD 7.59 billion. Woven garments exports rose by 17.48 per cent to USD 8.43 billion compared to USD 7.17 billion the previous year.

Explaining the reason behind the 15.65 per cent growth rate in the RMG sector, Bangladesh Garment Manufacturers and Exporters’ Association president Siddiqur Rahman told The Independent, “The four months from October to January will be the peak season for the shipment of apparel. So, future prospects are even higher and brighter for garment shipments.”

He added, “We now have the capacity to produce any quantity of garment items as we have expanded our operations over the years.” However, the Chattogram port needs to perform better to boost exports, said business insiders.

According to the Export Promotion Bureau (EPB), for July–December, the first six months of FY 2018–19, exports rose by 2.18 per cent to USD 3.43 billion compared to the previous year.

For July–December of FY 2018–19, the export of agricultural products like tea, vegetables and tobacco registered a growth of 66.8 per cent and fetched USD 517.64 million.

EPB officials said export of leather and leather products fell significantly, with the sector registering a negative growth rate of 14.18 per cent. “About 65,000 people used to work at the tanneries in Hazaribagh before we shifted all the factories to Savar. As a result, many people have lost their jobs and it hit the export of leather goods,” said tannery owner Shaheen Ahmed.

EPB data also shows that the growth rate of jute and jute goods exports has fallen drastically to 26.66 per cent. This sector fetched USD 421.02 million in the first half of FY 2018–19.

The tax at source in the export-oriented RMG sector was reduced to 0.25 per cent from the existing 0.6 per cent in a bid to enhance the competitive edge of the RMG sector.

The National Board of Revenue (NBR) issued a statutory regulatory order (SRO) on Thursday in this respect, which will be effective from January 1 this year.

With the latest reduction, the tax at source for exports in the RMG sector has been reduced for the second time in the current fiscal year.

Earlier, on September 5 this year, the tax at source for exports in the RMG sector was reduced to 0.6 per cent from 1.0 per cent.

According to the latest survey by Asia Inspection (AI), a Hong Kong-based global inspection and accreditation body, Bangladesh is becoming a more popular apparel sourcing destination for Western retailers because of the ongoing US-China trade war.

The US-China trade war has forced many US fashion companies to look for alternative supply sources beyond China, creating a big opportunity for Bangladeshi apparel exporters.

Scion Industrial Engineering providing all kind of industrial engineering spare parts in Bangladesh.

Source:http://www.theindependentbd.com/post/182179

The Global Economist Forum (GEF) has said the Bangladesh economy will enjoy one of the happiest years in 2019 in respect to economic freedom, which will help achieve above 7.5 GDP growth. FEF, a Special Consultative Status development and policy organisation of the United Nations Economic and Social Council (ECOSOC), has released their worldwide economic prediction for 2019, including Bangladesh.

According to the prediction, Bangladesh exports will be significantly increased due to the US-China trade war. Bangladesh could be able to tap huge amount of foreign direct investment (FDI), especially in the special economic zones.

The revenue collection will face short of target due to poor business gain and slow growth in the private sector. But the public sector, especially power sector, will fetch huge investment, it said.

The power transmission sector could gain investment worth Tk 22,000 crore in 2019. The government debt to the GDP could be increased to 30 percent.

According to GEF President Dr Enayet Karim, the actual balance of trade will be minus Tk 175 billion due to the huge quantity of import against export.

As per the prediction of Dr Mohammad Haider Ali Miah, President of Bangladesh chapter of GEF, the poverty will significantly be reduced and it will stand at 21.8 percent due to equal distribution of resources.

Secretary General of Bangladesh chapter of GEF Dr Mamun-Ur Rashid said, “The inward remittance may not increase due to huge job cut in Saudi Arabia, the main labour market of Bangladesh, but new job markets will be invested and wages would be increased.”

Scion Industrial Engineering providing all kind of industrial engineering spare parts in Bangladesh.

Source:http://www.theindependentbd.com/post/182196

The local toy-makers have gradually occupied 60 per cent of the market, helping to reduce the country’s dependence on imported toys, thanks to an increase in local and foreign investment, production of high-quality toys and government policy support.

Bangladesh Toy Merchants, Manufacturers and Importers’ Association (BTMMIA) president and managing director of Everest Toys Industry Ltd, Shajahan Mozumder, told The Independent that local toy producers had occupied 60–70 per cent of the market. In 2010, only around 25 small manufacturers used to manufacture toys in Bangladesh. But at present, that number had risen to nearly 150.

About quality, he said around 15–20 factories produced high-quality toys. Such manufacturers included the Hakkani Hark Group, Kabir Garden Industries, Aman Plastic Industries, Sabbir Plastic Industries and Sumon Plastic Industries, said Mozumder.

Toys worth Tk 5,000 crore were imported 8–10 years back but the volume had came down to Tk 2,000–3,000 crore at present, added Mozumder.

The size of the local market is worth Tk 7,000 crore; in that, Tk 4,000 crore worth of toys are being manufactured by the local toy-makers and the rest is imported, said BTMMIA president.

Comparing the local toys with the foreign products, he said the quality of the local brands was improving day by day and local manufacturers were taking over the market. “So, our toys will replace the Chinese toys very soon,” he said.

“Currently, our import has been gradually shifting towards raw materials, indicating that we are moving towards enhancing toy manufacturing,” he added.

Replying to a question, he said that three foreign factories, located in Chattagram, Comilla and Lalmonirhat, had started manufacturing high quality toys. They export products to countries such as the USA, European nations, China and Denmark.

These three factories were doing business worth Tk 200–250 crores annually, informed Mozumder.

About employment generation by this sector, he said that around two lakh people were directly employed directly and 20 lakh indirectly in this sector.

Zahid Enterprise, a toy manufacturing company in Bangladesh, has been in the business for many years.

Talking to The Independent, the owner of Zahid Enterprise, Zahidul Haque Zahid, said just six to seven years back, Bangladesh imported nearly 90 per cent of its toy products, but now that figure was down to around 35–40 per cent. The local market, according to him, was growing at the rate of about 15 to 20 per cent per year.

All types of toys—remote-controlled cars, binoculars, plastic dolls and lego—were being currently produced by the local manufacturers. “In our factory, we produce 400–500 types of toys,” he said.

Our yearly production capacity is 8–10 lakh pieces and the turnover is Tk 8–10 crore, said Zahid.

Talking about employment generation, he said huge employment opportunities could be created in this sector because the demand for local and global toys was increasing steadily.

“When I started my business, there were only 15 to 20 employees; now, nearly 200 employees are working for my company, and the number will increase in the near future,” he said.

Zahid also sounded optimistic about the future. “Once, Japan was the sole toy-producing and sourcing country in the world. Then, China occupied the market for many years. Eventually, China started shifting their businesses to high-tech industries. So, there is an ample opportunity for us to capture the global market.”

Pointing to a drawback, he said, “We have still not been able to produce quality moulds. So, this is definitely our biggest limitation, and it needs to be addressed.”

“We need land and more infrastructural support to increase production and export activities,” he added.

“We are also lack some of the latest machines and trained workers as well,” he added. Citing an example, he said that fitting machines and colour machines, which puts colours on toys, are not widely available in our country.”

When asked about the exports, he said we don’t export toys but we produce toys to meet the local demand. But Bangladesh toys are already available in the Netherlands, Spain, Germany, Russia, Japan, Australia, the US, and other countries.

“We have the ability to export our toys abroad but we are unable to do so without the government’s support,” say industry insiders.

When asked about toxic toys that harm the environment, Zahid said, “Plastic toys that are cheap and of low quality are harmful for the environment. But we follow proper regulations and guidelines while making toys.”

By enhancing their capacity, toy manufacturers were keen to enhance their skills with the help of foreign technologies, especially from countries which were good at it, he added.

When asked about the local market size, he said it was worth about Tk. 7,000-8,000 crore, and nearly 6,500 retail shops were selling toys across the country.

About the challenges, he said that 50 per cent of the toys were being locally manufactured but 20 per cent of the toy parts and accessories, such as remote controls, electric and non-electric motors and gear boxes were still being imported.

“So, we should produce more parts and accessories locally in order to reduce import dependency,” he said.

Mozumder pointed to the challenges posed by inadequate infrastructure. “We need land along with infrastructure facilities inside an economic zone to build separate factories for toys, parts and accessories.”

Sounding a note of optimism, he said, the dependency on imported toys, toy parts and moulds is falling, because, despite a small range, the local toy-makers were making toy parts with innovative designs and technical initiatives.

Citing an example, he said, “Once China used to control 90 per cent of the world toy market. In 2010, we imported toys worth around Tk. 5,000 crore from China, but in 2018 this value has already come down to Tk. 2,000 crore. Thus, the reliance on imported toys is diminishing.”

When asked whether Bangladesh exported toys, he said the country had started doing so, though the scale was still very small. At present, only three factories were exporting toy products to European countries.

The most important products of local makers were tricycle baskets, relax baby chair, toy furniture sets, toy guns and dinky cars, he said.

Yeasin Alam, a shopkeeper from ‘Toy World Store’ in New Market, told The Independent, “People are purchasing Chinese toys more than before. But local toy-makers have changed their marketing strategy and are producing quality toys at affordable prices. In the last two to three years, our sales have gone up more than in any preceding period,” he said.

Locally made ‘Lego’ was the highest selling product so far, he said.

Scion Industrial Engineering providing all kind of industrial engineering spare parts in Bangladesh.

Source:http://www.theindependentbd.com/post/182022

Work on a set of infrastructure development projects aimed at increasing the capacity of Mongla Port, the second largest seaport of the country, is likely to begin in the first quarter of this year, reports BSS.

Mongla Port Authority sources said a decision to this effect was made in December last while a technical team from China visited the port.

On October 14, 2017, Bangladesh and China signed a memorandum of understanding (MoU) to develop Mongla Port at a cost of around Taka 3000 crore.

The MoU was signed in presence Prime Minister Sheikh Hasina and Chinese President Xi Jinping.

The projects include construction of four jetties and two yards, a large multistoried garage for car parking, four lanes road, purchasing of 11 survey and tag boats and modern machineries for handling cargoes and containers.

The sources said the government of India earlier provided an assistance of Taka 6,256 crore for the development of Mongla Port as a first class seaport.

Mongla Port has already turned into a profitable and busy port with enhanced foreign ship anchoring, cargo handling and exports and imports in the last nine years.

Talking to BSS, Mongla Port Authority Chairman Commodore AKM Faruk Hasan said capacity of the port will be enhance manifold on completion of the projects.

Scion Industrial Engineering providing all kind of industrial engineering spare parts in Bangladesh.

Source:http://www.theindependentbd.com/post/181913

Myanma Railway under the Ministry of Transportation and Telecommunications is a loss-making government department, U Thant Sin Maung, Union Minister of the ministry, said at the Amyotha Hluttaw in answering the question of U Pe Tin, a law maker from Mon State’s constituency no.6.

U Pe Tin questioned the government if it has a calculated plan to make Myanma Railway generate more income, this way they can compensate the losses they have incurred.

Since Myanma Railway needs to pay back a loan of K126 billion to Paris Club member countries which was borrowed in 1988, its expenses exceed much more than its income, the union minister explained.

“2019-2020 Fiscal Year is very worrying. We need to pay back the loan borrowed before 1988. Since we cannot make anything related to the train, we must pay everything if we have money for the loan. Although Paris Club has dropped its loan to half of what we owe, there is still K126 billion left to payback. This is double the income of Myanma Railway. In addition, we have over 18,000 pensioners and we need to pay over K1 billion in pension every year. Thus, the department is already a loss-making department before it does anything else,’’ he added.

The ministry is trying to convince private investors to come and invest in the railway sector. However, since railway transportation business are very costly and need up to 30 years to see profit, it is very hard to convince investors to make investments in the railway business, the union minister groaned.

“People must have choices to choose whether they will use road transportation, railway, air or waterway. We need to create better choices for the people. In the future, the government will not operate the railway or the road transportation. We will build the environment where private investors can invest and compete with each other,’’ he added.

According to Asia Development Bank’s estimation, the transportation services that Myanma railway provide now services only 10 percent of the transportation in Myanmar, it will drop though to 2 percent if the government does not innovate or upgrade its infrastructure.

Source:https://www.mmbiztoday.com/articles/myanma-railway-loss-making-department-union-minister

White sandy beaches, sunsets that take your breath away, and emerald-green waters surrounding an endless stream of lonely islands are only a part of what makes the Myeik Archipelago a special place.

The Myeik Archipelago features 800 stunning islands in one of the most remote places in the world. I recently took a trip to the region to see for myself. Here is what we found out.

The Basics

Our six day sailing cruise started in the southernmost port town in Myanmar called Kawthaung. This is where we embarked an 85ft (25.9m) yacht called the SY Meta IV, a beautiful teak sailboat operated by Burma Boating. Here we met our fellow guests — two Austrians, and two Swedes — and the yacht’s crew of four. Our captain was from Egypt, and spoke French, English, Arabic, and even Spanish. The rest of the crew consisted of a local Myanmar guide, a Thai cook, and a Thai deckhand.

From Kawthaung we sailed north into the archipelago making stops at various islands along the way, each seemingly more beautiful than the next.

The Sights

The water surrounding the islands was a beautiful green color and clear; it makes you want to dive right in. We definitely took advantage of the good weather and went snorkeling at least once a day, each time in a completely new location. With our heads in the water we saw all kinds of fish and sea creatures including: little clownfish (Finding Nemo) dancing among their protective sea anemones, pufferfish, lionfish, moray eel, and barracuda. It was beautiful to see a large school of fish swimming in uniform all around us, with the rays of sunlight beaming though the water.

While the captain sailed the yacht from one mini paradise to another, we were able to spot flying fish, and dolphins. Our guide, Nia Nia, said: “Sometimes you can see manta rays, and even the majestic whale shark.”

We went to one island called Bat Island, where we saw large fruit bats hanging from the tops of the trees. On another we toured a large mangrove forest by kayak, located on Lanbi Kun Island.

The Experience

Why visit Myanmar’s Myeik Archipelago? Many other countries — from Southeast Asia, the Caribbean, to the Mediterranean — have countless beautiful beaches and islands. Captain Chahab said:

“I’ve been sailing for 11 years, and from what I’ve seen, sailing for days from one empty beach to the next and not seeing another tourist is unusual.”

Indeed, we didn’t see a single person outside of our own group walking or sunbathing on these white-sandy beaches. The captain explained, “Our cruise took us deeper into the archipelago than one of the day excursions from Kawthaung will.” There really was more beaches here than tourists.

As you lose yourself deeper into the island chain, you can’t help but talk about the Moken. Also known as sea gypsies, they traditionally lived a nomadic life on this sea-of-islands. We encountered one family that still does; they rowed their hand carved boat close to the yacht and were looking to trade for a pair of diving goggles.

Later on we visited one of their fishing villages on Lord Loughborough Island. They build simple traditional bamboo homes right above the clear green water.

How traditional are their ways? When visiting the school, the children were very shy to have their picture taken. When I mentioned it, the teacher explained, “The children believe that if they have their picture taken, they might die. Even we have a hard time taking their pictures.” I thought for a second and said, “Well, then let’s test that theory by taking a picture of my wife and see what happens.” After she survived the ordeal, the children were a bit less shy.

After we finished our tour of the village, the captain suggested we buy lobster from the locals for dinner. So four of the gypsy boys took Nai Nai and I to a floating lobster cage in the middle of the island’s small bay, and allowed to select dinner. There is something special about supporting the local community by buying directly from them, and having dinner that literally just came out of the ocean.

Another notable stop was an island with a fresh-water waterfall that emptied right into the sea on the beach. Many of the fishermen come here to bath in its fresh water. In fact, when we visited, a number of boats were anchored on the beach so they could fill large drums with drinking water.

These were just some of the things you might encounter during a visit to the archipelago. We visited between 6 to 8 islands, out of 800. What’s amazing is that you could go back a dozen times and get a different experience for each one. With empty beaches and a traditional way of life, it make you feel like you stepped back in time.

This is a place you go to see beautiful islands and beaches, but it’s what you don’t see that makes it outstanding: modern life and crowds.

Myanmar has many beautiful areas, but Myeik Archipelago stands out as unique. The area has been called many things: untouched, unspoiled, untamed, and the last paradise on earth. I agree with those descriptions, and I’ll add that Myeik’s Archipelago is a special place in the world.

Scion Industrial Engineering providing all king of industrial engineering spare parts in Myanmar.

Source:https://www.mmbiztoday.com/articles/myeik-archipelago-special-place-world

Today’s smartphones can now show people what apps they use most frequently, how much time they spend on them and remind them to take a break. Moreover some mobile applications can have different settings for use by adults and children and limit applications and games by age, because many children use their parents’ phones.

“Nowadays people spend more and more time on their phones. It can be up four to five hours a day for city people. People in the phone industry can even spend longer than that. This is change from even just a few years ago. Many people, both adults and the young, spend less time outdoors being active. Give a phone to a child and they can spend the whole day on it, and this can be a problem, “ said Johansson Zhang, a senior marketing manager for the Huawei Consumer Business Group.

Now smartphone companies are addressing the issue by using technology to try and add a little more balance to the lives of handphone users. They are doing this by incorporating software in phones that monitor screen time and app usage to show users exactly how much time is spent staring at their phone screens.

“The issue of excessive time spent on phones is a concern for Huawei. We want to bring about change to make phones betters but at the same time let people, especially children, lead more balanced lives. Phones are far more than toys, they are important tools and people should know if they are spending too much time on them,” added Zhang .

As technology advances and Myanmar’s communications infrastructure improves rapidly, people are using more smartphones and spending more time on digital screens consuming services and content.

“Our statistics show people in Myanmar spend a lot of time screening digital content as they are now able to conveniently access content and pay for it,” said Allen Gilstrap, CEO of Ongo, a digital payment network.

“The Myanmar government looks to be fully committed to further liberalise the market and aims to tackle the remaining obstacles progressively. By 2020, it targets to achieve that more than 90pc of the population will have telephone access, more than 85pc internet access and more than 50pc high-speed internet access,” Mr Gilstrap said.

“Nowadays, people in Myanmar are able to choose between four telecommunication operators – MPT, Telenor, Ooredoo and My Tel for services. In this digital age, digital literacy and security become more essential in daily life of people.

Digital literacy is growing in Myanmar even as people are using smartphones everywhere, to browse or watch videos or message friends. It is the national progression, people to begin more convenience digital payment for not only online purchases but in-store purchases as well,” Gilstrap added.

Amara Communication Co Ltd CEO Alan Sinfield advises that Myanmar people should work with companies to invest in security and technology.

“We want to help them convert retail outlets to online payment mechanisms. This is all part of digital ecosystem. The more people embrace using electronic payments, the better it will be for the convenience of businesses and consumers,” said Mr Sinfield.

On December 11, KBZ Bank also introduced KBZPay, a digital wallet or purse that is stored in an app on the mobile phone. Aside from being able to store money, the KBZPay app allows customers to make cashless transactions, to send and receive money, and to withdraw physical cash through authorised agents.

Companies like Ongo, Wave Money, True Money, Ok Dollar, and Reddot, are helping to move Myanmar towards digital payments with their services.

“Digital payment in Myanmar is growing rapidly among businesses and consumers. 35 million people have smartphones and this is very empowering. Consumers are smart, when they see something more convenient, they adopt it,” said Mr Gilstrap.

Scion Industrial Engineering providing all king of industrial engineering spare parts in Myanmar.

Source:https://www.mmtimes.com/news/digital-landscape-rapidly-changing.html

The banking sector is expected to make strides forward this year as fiercer competition forces banks in Myanmar to level up.

“This year, the banking environment will be much better than before. There are still many hurdles left to cross to liberalise and strengthen this sector so that it can support the economy. Nevertheless, we have seen good progress over the last two years of reform,” said U Soe Thein, vice chair of the Central Bank of Myanmar (CBM).

Following a CBM decision to level the playing field between local and foreign banks, competition for market share in the sector is expected to intensify, which is a positive development for Myanmar.

Under Notification 6/2018, issued on November 8, 2018, foreign banks are now able to lend to domestic firms in the local currency at the standard lending rate of 13 percent. However, foreign banks are free to set their own interest rates if the loans are in foreign currencies. They will also be permitted to provide the full suite of trade financing services, the CBM said.

This year, foreign banks will be free to expand across the country. There are 13 international banks from China, Japan, Singapore, India, Malaysia and Vietnam with branches in the country currently listed with the CBM, while 49 other banks have representative offices here.

The move is expected to spur local banks to becoming more competitive and eventually help support growth in the Myanmar economy as more firms gain access to funds.

It also arrives at a time when the insurance industry is opening up to foreign providers.

“For banking to develop, the insurance businesses also need to thrive. With the growth of the insurance businesses, other investors will enter the country,” said U Kyaw Ni Khin, chief business officer of Myanmar Apex Bank (MAB).

“These new conditions will enable growth and development in the banking and financial sector this year and beyond, allowing it to become more competitive and develop into a key pillar of support for the economy,” said U Kyaw Ni Khin.

Already, MAB has launched a special wealth banking and rewards programme – MAB Gold Wealth Banking – aimed at high nett worth individuals with the ability to place a minimum fixed deposit of K300 million in anticipation of tighter competition.

With foreign banks now on the scene, the next anticipated move by the CBM is interest rate liberalisation. Currently, the bank lending rate is set at 13pc, with loans approved strictly on the availability of property or land as collateral.

This year, the CBM is expected to issue new directives permitting banks to be more flexible and competitive with their lending terms.

“Currently, the banks are giving out loans to those who have collateral. We are planning allow banks to provide loans without collateral but with higher interest rates to further liberalise the sector and enable it to be more competitive and supportive of the economy,” said U Soe Thein.

Interest rate liberalisation represents an opportunity for the banks to provide more financial support to businesses and will also drive further growth and development in the banking sector, said U Hpay Myint, senior adviser at CB Bank.

“By allowing them to be more flexible in setting interest rates, local banks will be able to take on more or less risk as they deem fit. This is the right step forward for Myanmar,” he said.

Local banks are also preparing to provide financial support based on credit scores issued by Myanmar Credit Bureau Ltd.

“The credit bureau will start operating this year and if it is successfully established, the loan sector will develop quickly,” said the bureau’s chair, U Zaw Lin Aung.

Nevertheless, the sector will continue to come under stricter regulations as the CBM continues its reforms.

Among the directives released by the CBM is notification 7/2017 last November under which all local banks must convert overdraft facilities into term loans. By July 2020, the volume of overdrafts as a percentage of a bank’s loan book should be reduced to 20pc. Meanwhile, each bank’s policy on term loan management must be submitted to the CBM.

Additional disclosures, such as whether the loans are being provided to related parties or not, have also been introduced. The banks are now required to submit a list of loans of more than K5 billion or 10pc of their capital, while details of borrowers who fail to repay on time must also be submitted to the CBM.

Meanwhile, banks that operate braches without permission will be fined between K7 million and K20 million, according to a CBM directive.

So far, local banks have been complying with the stricter regulations and the sector is improving, U Soe Thein said. “The banks have been following the rules on minimum capital requirements and strengthening their loan books. This is a positive situation and the banking and financial sectors will be stronger this year,” said U Soe Thein.

Scion Industrial Engineering providing all king of industrial engineering spare parts in Myanmar.

Source:https://www.mmtimes.com/news/banking-sector-strengthen-support-economy-2019-experts.html

The oil and gas sector is looking exciting this year, with opportunities emerging from an international tender scheduled to take place early this year for the first time since 2014.

In addition to onshore and offshore blocks, the tender is expected to include work in “Improved Petroleum Recovery” blocks at older oil fields in Myanmar.

One senior official from the Ministry of Electricity and Energy (MOEE) told The Myanmar Times that the tender will be launched “as early as possible this year”.

According to the MOEE official, the ministry is now revising the terms and conditions of production sharing contracts (PSC) that will be offered to the winning bidders in the tender exercise. Once the revised terms are ready, they will be submitted to the Cabinet and the President’s Office for approval.

Myanmar is looking to open up more of its offshore, deepwater acreages to investors. Up to 18 onshore and 13 offshore blocks could be offered to both local and foreign investors within the coming months. Last year, Australian oil and gas company Woodside Energy also discovered two gas fields that offer potential.

Myanmar also has 17 PSCs that were awarded as part of the 2014 onshore and offshore bidding rounds, where drilling and seismic works must begin over the next two years, according to contract terms.

Better terms

Yet, investors are exposed to a high level of risk when undertaking exploration and production projects in the country. These have included red tape, unpredictable changes in tax rates and unfavourable PSCs, which are all barriers for potential investors. Previous contracts, for example, stipulate that production would be shared on a 65percent/35pc basis in favour of Myanma Oil and Gas Enterprise.

“Now, the conditions will be eased. It is very costly to develop deepwater blocks, so a 50-50 based PSC will do more to attract international investors,” the MOEE official said.

“Improving the existing PSC terms will be crucial for Myanmar, as Nay Pyi Taw seeks to attract more investment into the oil and gas sector while reducing the growing strain on depleting domestic oil and gas reserves,” according to a January 2 report by Fitch Solutions Macro Research.

“We need to think about both sides if we want to offer good agreements. In my opinion, I want to neither give more nor take less. It must be fair for both sides,” said U Kyaw Kyaw Hlaing, chair of local oil and gas services company Smart Group.

The MOEE is also reviewing unfavourable terms and conditions for investors in the sector. This includes an 8pc special commodity tax on natural gas production. In the past, the MOEE had granted three-year tax exemptions to oil companies once commercial production began.

Will investors come?

Industry insiders are expecting the bulk of investors to come from Asia this year.

There are many things to worry about although arrangements are being made to call tenders for oil and natural gas blocks, said U Kyaw Kyaw Hlaing. “The question remains whether prominent companies will come if we invite them. And, another question is whether western companies will come due to the Rakhine crisis,” he said, pointing out that international oil companies that signed exploration deals in Myanmar in 2014 and 2015, such as Shell, Equinor (formerly Statoil), Reliance Industries, all pulled out of the country in 2017 and 2018.

Due to the current situation, it is expected that few oil and gas giants from western countries will bid in the coming tender, while more ASEAN countries and small companies will bid instead, people in the local oil and gas sector said.

“The government may face challenges depending on whether the PSCs offered are attractive. Even so, I expect few western companies will come. We will have to take into consideration that small and less significant companies will apply, making things less beneficial for Myanmar,” said U Than Tun, adviser of oil and gas consultancy Arc and Partners Co and former director of Myanma Oil and Gas Enterprise.

As a whole though, analysts see promising prospects for the sector this year. “Myanmar is among the few still-underexplored upstream markets in Asia, and interest in developing its below-ground prospects continues to remain high among domestic and international oil and gas firms alike, despite a litany of domestic and external risks,” Fitch reported.

It noted that “the longer-term outlook for gas is relatively more optimistic, due to ongoing negotiations for the development of the MPRL-A6 and AD-1 blocks, in line with shifting regional investment trend towards natural gas , and to ease the g rowing export burden to China and Thailand.”

Scion Industrial Engineering providing all king of industrial engineering spare parts in Myanmar.

source:https://www.mmtimes.com/news/investor-opportunities-rise-upcoming-tender-better-contract-terms.html