Quality Alchemist (品質煉金術師): HKPC Seminar on “Expand Your Operations in Myanmar” 「開拓緬甸」研討會

2019年1月17日星期四

HKPC Seminar on “Expand Your Operations in Myanmar” 「開拓緬甸」研討會

I attended HKPC seminar entitled “Expand Your Operations in Myanmar” on 17^th Jan 2019. Since I had tour Myanmar in Nov 2018, I am interested in knowing more it. In the beginning of seminar, Mr. Gordon Lo (Director, Business Management, HKPC) gave welcome remarks. He said HKPC supported SMEs and Manufacturers to expand and establish business to Asia countries. It is fall of opportunity.

Then all guest speakers took a group photo.

The first speaker was Mrs. Myat Thuzar Than (Consul-General, The Republic of the Union of Myanmar, Consulate General in Hong Kong) and her topic entitled “Investment Opportunities in Myanmar”. She said Myanmar was largest country in SEA and lowest population densities (53 million) abundant a youthful workforce and rich in natural resources.

Then she introduced the connectivity of Myanmar included Myanmar-China Economic Corridor (MCEC), Asian Highways (e.g. East West and Southern Economic Corridor) and Deep-sea ports (e.g. Kyuk-Phyu & Dawei), etc.

After that Ms. Myat Thuzar Than mentioned the investment opportunities such as New Investment Law and Company Law; Set up a new ministry; Standardizing the procedures (SOPs) and Favorable Policies, etc. The incentive policies showed in the following diagram.

Lastly, she introduced three Special Economic Zone (SEZ) in Myanmar named Thilawa, Kyaukphyu and Dawei. The tax holidays in SEZs is for the first five years; 50& income tax relief on revenue from products sold overseas for the next five years (years 5 – 10); and 50% income tax relief on reinvestment obtained from export sales for the following five years; as well as, exemption on customs duty for certain goods (e.g. machinery and vehicles) for five years and a 50% exemption applies for the next five years. The most important is the rights to use of land.

The second speaker was Mr. Mynn M. Huang (Deputy Head of Working Team, BOC(HK), Yangon Branch) and his presentation topic named “Introduction of Bank of China (Hong Kong) Yangon Branch”. He said that ROC established Yangon (Rangoon) Branch since Jan 1939. However, it was temporary suspended during World War II.

In Sep 2015, ROC set up Yangon Representation Office and applying to upgrade as branch currently. The milestones are showed in the following diagram.

Finally, he briefed their services for some customers in Myanmar. For instance, they supported agriculture investment through OBOR to enhance the agriculture productivity.

The third speaker was Ms. Ding Suk Peng (Managing Director of PwC Myanmar) and her topic was “Myanmar’s Tax Regime and Challenges for Manufacturing Sector”. Some key structuring should be considered she said. They were Holding Structure, Investment through acquisition, Financing of investment, Cash repatriation and Exit strategies.

Foreign investors venturing into Myanmar through appropriate legal entity depending on their objectives and it depends on Myanmar Companies Act (MCA), Myanmar Investment Law (MIL) and Special Economic Zones (SEZ) Law. A foreign company is allowed to have 35% stake in a Myanmar company. Some JV examples were discussed.

At the end, she described different type of taxes (>20 taxes) in Myanmar to us. She concluded business were continuously learning and surviving in the constant changing tax landscape.

The forth speaker was Mr. Gary Lee (Executive Director, Kei Lock Fashion Trading Ltd. and Vice Chairman, Hong Kong Myanmar Manufacturers’ Association Ltd.) and his top was “Expanding your Operations in Myanmar 2019”. He shared his practical experience of establishing business in Myanmar. He first briefed Kei Lock which established since 1978. Now, they owned 2 factory in Myanmar.

Then Mr. Gary Lee shared what they do. They set up factories in offshore in China, Myanmar and Bangladesh since 2012 that it could be enjoy lower labor cost, Generalized System of Preferences (GSP) / Tariffs and Diversify.

After that he shared main challenges to running factor in Myanmar such as Inflation, Inefficient banking system, Changing policies (political risk – Rohingya crisis), Immature Union behavior, lack of clean water, power, poor internet, lack of middle management and skilled workers, as well as, very long logistic lead time, etc. Mr. Gary Lee also shared the key items to running factory in Yangon on following diagram.

Lastly, Mr. Lee compared different key elements among China, Vietnam, Cambodia, Bangladesh and Myanmar. Myanmar still had advantages.

The fifth speaker was Ms. Jacqueline Yuen (Economist, HKTDC) and her presentation title was “Myanmar: an alternative production base for Hong Kong companies”. She said attention increasingly focused on lower-income countries with relatively large population recently.

Then she shared the diagram stated overall labor costs of Asia countries (e.g. Vietnam, Cambodia, Laos and Myanmar) which were much below China.

The minimum wage per month comparison table were demonstrated.

Finally, she analyzed Myanmar HR management and reported that 70%-80% in productivity compared with Chinese counterparts (after training) and turnover rate about 10%. Another advantage is special export access due to GSP privileges.

The sixth speaker was Mr. Eliott Suen (Executive Director, Marga Group) and his topic named “Overview of Myanmar Real Estate and Infrastructure”. Firstly, he introduced Marga Group that is an international syndicate which comprises international investors and professionals from HK, Australia, Korea and UK. They specialized in Real Estate and Telecommunications and aimed to become the largest and most reputable overseas corporation in Myanmar.

Firstly, Mr. Eliott Suen analyzed the real estate residential market in Myanmar. (Remark: USD 3,470 psm is not cheap!)

However, the rental fee for luxury apartment was about USD 4-6 per sqf per month.

The seventh speaker was Dr. William Lo (Senior Consultant, Management Consulting, HKPC) and his presentation entitled “Supporting Services towards HK Industry on Expansion of Manufacturing Operations in ASEA Countries”. HKPC would support factory’s setup phrase, operation phrase and government funding.