DBS Group Research June 2013

DBS Asian Insights

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COUNTRY BRIEFING
Myanmar
Asias Last Frontier Market
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12
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Overview
Towards Sustainable Economic Growth
FDI growth
Strategies For Continued Growth
Political reforms
Economic reforms
Growth from within
Advancing reforms
Infrastructure developments

Early Bird Opportunities
Property Boom to Continue on Acute Supply
Shortage
Hotels
Residential
Ofce
Industrial
Opening Up Untapped Oil & Gas Resources
Tapping Myanmars Infrastructure Decit
Telecom Services, Fast Moving Consumer
Goods in Demand
Stocks Awarded Myanmar Premium

Singapore Companies Are Better
Gateways
Yoma Strategic Holdings Interra Resources
Super Group Fraser and Neave
Ezion Holdings Parkson Retail Asia
Yongnam Holdings SingTel Tiong Seng Holdings
Amara Holdings Sin Heng Heavy Machinery
WE Holdings ISDN Holdings
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02
Executive Summary
yanmars growth is fast and sustainable, thanks to the inux of foreign
nancial and human capital. Reforms have also been progressive. Despite
scepticisms and multiple challenges, Myanmars sweeping reforms have
resulted in further easing of sanctions on the country, which in turn is drawing
more aid from international nancial institutions, visitors from across the world as well
as interest to trade and invest in the country. Foreign direct investments have reportedly
jumped by more than 40% to US$1.4 billion and tourist arrivals have surged 54% to 1
million in 2013. Meanwhile, the Asian Development Bank projected that Myanmars GDP
will expand by more than 6% in 2013 and could grow by 7-8% per year over the decade.
There are abundant opportunities in the consumer, tourism, infrastructure, and the oil &
gas sectors, but realising them will take time. Infrastructure development and planning
is underway for roads, railway, airports and power plants. To fast-track development,
foreigners have been invited to bid for mobile networks, airports, and oil & gas exploration.
At the same time, demand for fast moving consumer goods (including mobile phone
services) is poised to grow as the nation marches towards prosperity.
Currently, direct access is limited with scarce pure plays. Singapore companies expanding
into Myanmar are good gateways. Yoma Strategic Holdings is well-positioned to ride on
Myanmars boom. Foreign companies already in or are entering Myanmar also deserve
attention as they offer investors certainty of existing proven business and the opportunity
to prot indirectly from the new Myanmar venture.
Myanmar
Asias Last Frontier Market
DBS Asian Insights
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D8S Croup Pesearch June 20!J
DBS Asian Insights
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Myanmar
Asias Last Frontier Market
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Analysts
TAN Ai Teng
[email protected]
LING Lee Keng
[email protected]
Andy SIM CFA
[email protected]
Ale YEO
[email protected]
Sachin MITTAL
[email protected]
Derek TAN
[email protected]
Cover image: Traditional Burmese
umbrellas from central Myanmar.
Source: AFP
M
Overview
Towards Sustainable Economic Growth
t may be early days in Myanmars transformation, but sustained changes in the country
has strengthened international support and attracted greater foreign direct investments
to kick-start development and generate growth for the country.
Although Myanmar continues to face signicant challenges, the World Bank acknowledged
that the country is rich in natural resources, including large natural gas reserves, and extensive
agricultural potential, particularly in rice production. After decades of international isolation,
Myanmar is already seeing increased trade and investment from the wider international
community after unprecedented reforms.
The World Bank has forecasted Myanmars GDP to grow by 6.4% during the 2012-13
nancial year, compared with 5.5% in the previous year. Separately, the Asian Development
Bank projects Myanmars GDP growth at 6.5% in 2013, rising to 6.7% in 2014. Growth is
expected to be bolstered by the European Unions reinstatement of preferential access for
Myanmars exports and the United States suspension of its ban on imports from Myanmar.
Two large gas elds, Shwe and Zawtika, are expected to come onstream in 2013, which
will more than double gas production and boost exports to China and Thailand. Higher
gas exports, greater access to international markets, and faster economic growth in key
markets such as China will support overall growth in exports. Visitor arrivals are also likely
to post further large gains.
I
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Myanmars GDP to grow
above 6% over the next
two years
1 GDP growth
Source: Source: IMF, ADB estimates
0
10000
20000
30000
40000
50000
US$m
60000
2014F 2013F 2012 2011 2010 2009 2008 2007
Foreign direct investments into Myanmar reached US$794 million over the rst nine
months of the 2012-13 scal year, according to the Myanmar Investment Commission in
a February announcement. Investments were channelled into a variety of industries from
clothing and seed production to IT and electronics engineering. China was reportedly the
largest investor, accounting for nearly half of the current investment commitments.
The easing of economic sanctions is expected to lead to higher level of trade. In 2012,
Myanmars total foreign trade reached US$8.5-13.3 billion, accounting for 27% of the
countrys GDP for the entire year. Key exports are natural gas, agricultural products, gems and
jewellery as well as timber and garments.
Rice export is an area that holds great potential for Myanmar, which was once the worlds
largest exporter under the British colonial rule. With its rich fertile land, all that Myanmar
needs to ramp up production is modern agricultural machinery and better technology. To this
end, the Myanmar Agribusiness Public Corporation (MAPCO) is collaborating with Japanese
conglomerate Mitsui to form a joint venture to set up four rice-milling and processing plants.
According to the US Department of Agriculture, Myanmars total rice exports last year stood
at 600,000 tons, making it the worlds tenth largest supplier. The government hopes to raise
rice exports to 5 million tons within ve years, which would put Myanmar in the league of its
neighbours Vietnam (7.4 million tons) and Thailand (8 million tons).
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Myanmar drew close to
US$800 million in foreign
direct investments for the
rst nine months of the
2012-13 nancial year
Rice exports to rise following
the resumption to Japan
after a 45-year break
FDI growth
2 Foreign direct investments
Source: Myanmar Investment Commission
0
200
400
600
800
1000
US$m
1200
9M12 2011 2010 2009
Financial Yr end March
2008 2007
Strategies For Continued Growth
Since taking ofce in March 2011, President Thein Sein and key ministers in Myanmar
have reformed laws, taken steps to liberalise the tightly controlled state economy, signed
ceasere agreements with the majority of the ethnic groups, enhanced freedom of expression
by scrapping press censorship and allowed the circulation of privately-owned newspapers
in Burma for the rst time in nearly half a decade. Politically, the military-turned-civilian
government has continued to release more political prisoners. Notably, the military-dominated
power has also allowed opposition parties to hold seats in parliament.
To implement a clean government and ush out corruption, the president has also formed
a nine-member anti-graft team and overhauled his administration early this year where six
high ranking ofcials were forced to retire on mismanagement or corruption while 40 others
were transferred to other ministries. The authority further probed and placed the former
minister of Posts and Telecommunications under house arrest while more than 50 ofcials
were investigated over possible links to high level corruption in a proposed nationwide
telecommunications network that is currently in a bidding process.
Externally, Myanmar has hosted many delegations and secured more human and/or nancial
aid to help rebuild the country. As part of its efforts to support Myanmars development,
Singapore recently sent a team over, and President Tony Tan went on a state visit to Myanmar
in April, a rst by Singapore since both countries established diplomatic ties in 1966.
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The new government has
kicked off speedy and
extensive changes
Political reforms
T
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Source: USDA, internet
3 Top rice exporters
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Myanmar
Thailand
India
Vietnam
US
The sweeping reforms in Myanmar have prompted more countries to ease or remove sanctions.
The EU ended political and economic sanctions against the country in April. Meanwhile, the
US lifted the bulk of its sanctions in stages over the past year, permitting companies to invest
and allowing imports from Myanmar. A key step to facilitate business ows eventually is the
clearance of four Myanmar banks to handle transactions for US companies.
In Asia, Japan stands out as the most eager party that is buying into Myanmars growth
prospects. Not only did the Japanese government waive US$3.36 billion in bilateral debt, its
overseas development bank Japan Bank of International Cooperation (JBIC) also provided
nearly US$1 billion in bridging loan to cover an outstanding debt to the World Bank and
the Asian Development Bank so that the latter could resume lending. In addition, Japan
pledged an additional US$220 million in soft loans for infrastructure and human resources
development the rst such lending in 26 years.
China is Myanmars largest investor and its second largest foreign creditor, followed by
Thailand, according to International Enterprise Singapore. Together, these two countries
have invested US$25 billion out of Myanmars ofcial total cumulative foreign investment
of US$42 billion in 2012. The Chinese have mainly invested in energy/natural resources and
infrastructure development projects such as the Nay Pyi Daw International Airport. They are
also currently targeting Myanmars underdeveloped infrastructure and construction sectors
as well as manufacturing due to the availability of cheap labour. Thailands investments, on
the other hand, are mostly in oil and gas, through PTT Exploration and Production (PTTEP),
the overseas arm of state-owned PTT. PTTEP operates the Zawtika gas project in the gulf of
Mottama, and is also a partner in the Yetagun and Yadana offshore gas projects. According
to the Thailand embassy in Myanmar, new Thai investors are showing an interest in consumer
goods manufacturing and agriculture ventures.
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4 Major foreign investors in Myanmar
Source: Myanmar Investment Commission
China
35%
Thailand
24%
Hong Kong
15%
Korea 7%
UK 7%
Singapore 4%
Malaysia
France
On the back of the debt restructuring, the World Bank, in cooperation with other foreign
lenders, has pledged a US$2 million donation to set up a new micronance institution in
Myanmar to help address the signicant nancing demand from small and medium enterprises.
Meanwhile, the Asian Development Bank has resumed lending to Myanmar for the rst time
in 30 years in an attempt to boost its social and economic development.
Revised Foreign Investment Law (FIL) to entice foreigners
After months of wrangling between the cabinet and the new parliament, President Thein
Sein passed a new Foreign Investment Law on Nov 2, 2012. In essence, this new law
sends the important message that the government is committed to welcoming foreign
investors to fast-track the countrys development and growth.
Under the new law, any investment can be up to 100% foreign-owned. Foreigners have
the choice to either set up shop on their own or establish joint ventures with local rms or
government agencies where they are free to agree on the ratio of foreign to local capital.
To promote foreign investment, the new law has extended the tax grace period from
three to ve years and permits repatriation of funds/prots after tax at market exchange
rates. Although Myanmar still prohibits foreign ownership of land, foreigners can now
lease land for as long as 70 years, from 40 previously, giving them a degree of long-term
security. The new Foreign Investment Law also provides guarantees to foreign investors
against expropriation and nationalisation during the permitted term of investment.
There is evidence that the Myanmar government understands the importance of upgrading
its workforce and promoting home-grown industries to maintain growth. As a testament of
the governments commitment to support local workers and develop domestic industries,
employment provisions within the Foreign Investment Law ensure that Myanmar workers are
not left behind.
The new laws designate that only local citizens shall be employed for all unskilled work and
that 25% of employees must be local citizens for the rst two years, rising to 75% for the
fth and sixth year. In addition, foreign employers are required to train local employees to
upgrade their skills. These provisions are crucial in ensuring that low-skilled Myanmar workers
are not left behind in the wake of the countrys economic progress. Furthermore, upgrading
its workforce allows Myanmar to realise its real growth potential and to sustain that growth
in the future.
Myanmar has announced a draft forestry law to completely ban the export of the countrys
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Economic reforms
Growth from within
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Items 1988 2012 Remarks
Basic principles Promote & expand exports Produce goods to substitute imports Build self-sustainability
Extract natural resources requiring
heavy investment
Acquisition of high technology
Focus on businesses beyond
nancial or technical ability of the
state and people
Supports exchange of information
and technology
Exploration of new energy for the
development of renewable energy
sources
Environmental protection and
conservation
Development of banks and nancial
institutions, modernised service
companies
Broader knowledge and know-how
Foreigner
ownerships
Minimum of 35%, maximum of 50% in
13 restricted sectors
Foreign investment ratio is negotiable
between the investor and the local
partner
Local partner Foreigner cannot own full stake in
businesses without any local partner
Not compulsory for all businesses.
However, there remains a ban on
100% foreign ownership of ventures
in certain sectors. Permitted foreign
ownership percentage likely to be
published in the FIL rules
Employment
requirements
Local hiring requirements:
To provide training
No wage discrimination between
local and foreign staff of similar
positions
Unskilled positions - only citizens
Skilled positions - 25% within the
rst two years, 50% within the
next two years, 75% within the
third two years (local staff in skilled
and unskilled positions)
Land use rights 30 + 15 + 15 years 50 + 10 + 10 years Longer term security
Tax incentives 3 years corporate income tax exemption 5 years corporate income tax
exemption + tax relief of up to 50%
on prots of exports + tax exemptions
on imported machineries, materials
for construction and expansion of
business + tax exemption on imported
raw materials for rst 3 years of
commercial production
Restricted sectors Not permitted but no clear denition Restricted sectors include agriculture/
cultivating enterprise which locals
can do, livestock breeding, shing in
Myanmars sea. MIC may nevertheless
approve if proposition is in the
interests of the country
Dispute
resolutions
Disputes may be settled in
accordance to the provisions of the
relevant contract
In a conict between the FIL and
an international treaty ratied by
Myanmar, the international treaty
shall prevail
5 Evolution of Foreign Investment Law 1988 & 2012
Source: Myanmar Investment Commission
raw, unprocessed logs from April 2014. The law, drafted by the Ministry of Environmental
Conservation and Forestry, aims to tackle deforestation and encourage foreign investment in
wood processing mills in Myanmar.
Although Myanmar has as much as 48% forest coverage, it is only earning US$500 per ton of
teak and hardwood compared to competitors like Malaysia that benet by US$20,000 per ton
thanks to its wood-processing sector. Only nished or semi-nished wooden products will be
allowed for export, thereby contributing to inow of foreign investment in nished wooden
product manufacturing sectors as well as production technology, generating more economic
inows and bringing business opportunities to its people.
While the rst two rounds of domestic economic and political reforms have gained Myanmar
some rewards from the international community in the form of lifting sanctions and
restructuring debts, more has to be done to restructure the countrys antiquated economy.
The government has vowed to continue reforms, particularly administrative, in 2013. More
specically, the government announced it is drafting the National Comprehensive Development
Plan which covers the next 20 years and the Comprehensive Development Vision for the next
25 years with the help of Japanese and ASEAN economists. Key goals of Myanmars Fifth
Five-Year Plan (FY2011-2015) include 1) 7.7% average GDP growth, 2) raising industrial and
services share of GDP to 32% and 38% respectively, and reducing agriculture share of GDP to
29%, and 3) grow GDP per capita by 30-40% from 2010.
So far this year, the government has expanded foreign exchange to include the Chinese yuan
and Thai baht instead of just crisp and new US dollars to make it more convenient for Chinese
and Thai travellers and encourage them to spend more while visiting the country.
This year, a number of economic reforms seem imminent:
Condominium Law Anticipated to be issued in three months time. It is expected to include
provisions on foreign ownership rights, and it should be positive for both developers and
foreigners who are currently renting apartments for their stay in Myanmar. Ownership of land
would also facilitate the eventual implementation of housing loans.
Banking sector reforms To improve banking systems and functionality to 1) provide credit,
raise capital for local companies, 2) handle the wave of foreign investment, and 3) to re-align
and re-engage with the global nancial system. Already, Myanmars central bank is considering
local joint ventures with foreign lenders to help overhaul the countrys nancial system. It is
expected that joint ventures for foreign banks will eventually be followed by wholly-owned
subsidiaries and subsequently, full branches.
The huge inux of visitors and the reduction of car import taxes have led to congested
roads and an overburdened infrastructure. In order to tackle a rising population and further
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Banning the export of
raw teakwood helps to
keep value-add within the
country
Advancing reforms
Infrastructure
developments
economic development and growth, the Myanmar government has called for an ambitious
infrastructure development and introduced a new masterplan for Yangon, the economic
heart of the country.
Drawing expertise from urban planners in Singapore, the Yangon City Development Committee
(YCDC), in coordination with the governments Division of Urban Planning, announced plans
to decentralise Yangons central business district (CBD) to avoid over-concentration in the
future by shifting it outwards. The urban planning authority announced that construction will
soon begin on an outer green belt with four new towns surrounding Yangons CBD within a
10- to 15-kilometre radius.
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DALA
HLAING THARYA
MINDAMA
DAGON MYOTHIT
THANLYIN
THILAWA
TWAN TAY
CBD
HLAWGA
CITY CENTRE
GREEN SPOT
GROWTH BELT
TRANSPORT ENHANCEMENT
Source: Yangon City Development Committee
6 Yangons new masterplan
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Other initiatives include upgrading the existing airport and building a new one. The Yangon
City Government anticipates signicant growth in visitor arrivals, which will easily surpass the
current airport capacity of some 3 million air passengers a year. Hence, the Department of
Civil Aviation has sought investors to nance the upgrade of Yangon International Airport to
increase its capacity to 6 million visitors by 2015.
Part of the masterplan also includes the development of Hanthawaddy International Airport
in central Bago region (80 kilometres from Yangon). This airport with a planned capacity of
up to 12 million visitors is targeted to commence construction in July this year and is set to be
completed by 2016.
The government is also calling for the timely completion of the Thilawa Special Economic
Zone. The development situated on the Yangon River is a 51-49 joint cooperation between
Myanmar and Japan (represented by trading giants Mitsubishi, Sumitomo and Marubeni).
Thilawa is intended by President Thein Seins government to be the rst of several specially
designated industrial development zones. However, it was reported that the development
faced land access problems, electricity and water supply shortages, and transport and other
infrastructure impediments.
The rst stage of the Thilawa project is expected to be completed in 2015. The government
also has plans for another special economic zone development that will focus around the
Chinese-built oil and gas terminal on the west coast in Kyaukphyu.
Early Bird Opportunities
Property Boom to Continue on Acute Supply Shortage
Myanmar is short on quality hotels to support its booming tourism. Out of the 8,000 hotel
rooms in Yangon, property consultant Jones Lang LaSalle reported that only 1,500-2,500 are
of international standard. This translates to a maximum of 912,500 room nights against 1
million tourist arrivals last year. As a result, hotel room rates in Yangon have more than tripled
to US$250-300 from US$80 in 2011.
Myanmars tourist arrivals are expected to grow by 30% in 2013 to 1.3 million, and rise
to 2 million by 2015. In view of the supply crunch, the government has been encouraging
developers to build hotels. Hilton will open their rst 300-room hotel in Yangon in 2014 while
French hotel chain Accor is in talks to partner with Max Myanmar to open a Novotel Hotel in
Yangon. In total, Jones Lang LaSalle estimates that the international hotel supply in Yangon
will triple to around 6,240 rooms by 2015. Even then, supply will likely remain tight, providing
room for hoteliers to raise room rates progressively.
Regional airlines are also boosting their services to Myanmar to ride on the tourism boom.
Hotels
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Market watchers expect ample room for tourism growth in Myanmar as it is a country rich
in cultural heritage not unlike its Indochina neighbours Vietnam and Cambodia which saw
visitor arrivals of 6.5 million and 3.5 million respectively.
There is insufcient Grade A ofces in Myanmar to address the surge in business formations.
With no new supply from 1997 until 2010, there is an acute shortage of ofce space with
merely 62,000 sq m of ofce space in Yangon. Today, 86% of the current supply of ofce
space is in Downtown area. Apart from two modern ofce towers, Sakura Tower and
Centrepoint Towers, most ofce units date back to the British colonial period. As such, rents
have skyrocketed from US$20-45/sq m six months ago to US$80/sq m now. Some market
watchers believe rents could even go beyond US$150/sq m as the country stabilises its political
situation and continues to open up the economy.
Already, occupancy rate in Grade A ofces are full with a long waitlist. The Asian Wall Street
Journal reported that new developments are already preleased at current rates. Yoma believes
that most new ofce tower developments would move towards the Inner City area given the
apparent shortage of land for further development in Downtown.
Ofce
Source: Myanmar Ministry of Hotel and Tourisms
7 Number of hotel rooms in Myanmar
Source: Colliers, CBRE, Savills, Cushman & Wakeeld, Silk Road Mgt
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Myanmars residential market also has a lot of catching up to do with population growth.
The real estate market, particularly in Yangon, was buoyant in 2012 due to the continued tight
supply on the back of growing demand. Apartments/condominiums remain the mainstay
accommodation due to affordable pricing. For a city of 5 million, there is a massive supply
shortage. A total of 1,070 condominium units were added in 2011, and another 1,100 units
were added in 2012. Demand is reportedly highest in mid-to-high income sectors in good
locations. Based on an estimated 2% population growth yearly in Yangon and a household
size of 4.87, an additional 25,000 new homes need to be built in the city every year. However,
only about 1,500 units are expected to be delivered in 2013 and just slightly more in 2014.
Residential
9 Yangon population growth
Source: Department of Population, DBS Vickers











4000
1990 1995 2000 2003 2004 2005 2006 2007 2008 2009
4500
5000
5500
6000
6500
7000
7500
10 Housing stock from 2005-2010
Source: Department Human Settlement and
Housing Development, DBS Vickers
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
5000
10000
15000
20000
25000
30000
35000 Housing stock % increase p.a

11 Future housing supply
Source: Yoma, DBS Vickers














0
500
1000
1500
2000
2500
3000
3500
2012 2013 2014
Downtown Inner City Area Outer City Area
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Meanwhile, Myanmars industrial land is hindered by high land prices. We understand that
prices of land in Yangons key industrial areas including Shwe Than Lwin, Hlaing Tharyar, East
Dagon and Dagon Seikkan have increased dramatically in recent months due to high demand.
The high land prices have raised concerns among industrialists who still prefer to set up shop
in countries like Cambodia and Vietnam.
To keep land prices in check, the government has developed several special economic zones
including Thilawa and Dawei. International agencies like Japan International Cooperation
Agency (JICA) have granted aid packages including 17 billion yen for infrastructure projects,
20 billion yen specically for infrastructure development for the Thilawa Special Economic
Zone, and 29 billion yen for power supply infrastructure in Yangon and upgrading the Kyangin
cement plant.
Opening Up Untapped Oil & Gas Resources
Myanmar, one of the oldest oil producers in the world, is believed to have vast oil reserves. The
country exported its rst barrel of oil in 1853. Following the military regimes power seizure, the
industry was nationalised in 1962. From 1962 to 1988, oil exploration and production were
mainly controlled by the Myanmar Oil and Gas Enterprise (MOGE). In 1998, the government
passed a foreign investment legislation to draw foreign technologies and capital. By 2007,
foreign companies were involved in 16 onshore blocks and many more offshore blocks. Today,
Myanmars oil output remains small. The scale of oil reserves is difcult to predict because of
very limited exploration. However, strong bidding interests for recent oil blocks up for bids
highlights strong hopes among oil and gas majors of rich nds in Myanmar.
According to ofcial data, Myanmar exported US$3.5 billion worth of gas, mainly to
neighbouring Thailand in the 2012 scal year compared with US$2.5 billion a year ago and
US$2.4 billion in 2008-2009. Myanmar is believed to be rich in natural gas reserves, which
government ofcials estimate to range between 11 trillion and 23 trillion cubic feet. Currently,
the country produces around 19,600 barrels of crude oil and 1.475 billion cubic feet of natural
gas each day.
Eighteen onshore blocks are up for bids and the pre-qualication list indicates more
interest from Western oil majors. Last year, Myanmar awarded nine onshore blocks to
foreign companies. This year, the Ministry of Energy has invited bids for another 18
onshore blocks in various parts of the country. We understand that the tender will close
on 23 August. The list of 59 pre-qualied companies showed a signicant increase in
interest from the West i.e. companies based in Europe, the US and even Australia. We
believe the easing of sanctions has partly inspired condence in foreign multinational
corporations to initiate investments in Myanmar.
Industrial
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COUNTRY BRIEFING 01
Tapping Myanmars Infrastructure Decit
On Myanmar, we agree with Maung Zarni, a visiting fellow at the Department of International
Development at the London School of Economics, that it is one of the last few remaining
places that have not been penetrated, but the infrastructure is just not there.
In terms of infrastructure development, the governments immediate priorities are in
urban transportation systems, upgrading of national airports and water utilities. The
governments commitment to infrastructure development is clearly reected in their
earnest invitations to foreigners to develop telecom network, extend existing airports and
build new airports in addition to the many road works and yovers.
In view of its favourable geographical location to benet from rising trade, Myanmar is
also actively looking for ways to upgrade existing ports and develop new ones. According
to ofcial statistics from the Myanmar Port Authority, Myanmars ports handled 24 million
tons of imports and exports freight in 2011. Currently, the Port of Yangon handles 90%
of the cargo throughput. We see good potential for the Thilawa port, which we think is
poised to benet from the development of the Thilawa Special Economic Zone.
Telecom Services, Fast Moving Consumer Goods in
Demand
With a young population in excess of 50 million, the once-reclusive state represents
one of the biggest untapped consumer markets in Asia. Myanmar is virgin territory for
businesses, and as the country opens up, foreigners are scouting for new opportunities
including the telecommunications and fast moving consumer goods sectors.
Stocks Awarded Myanmar Premium
Proxies highlighted in our last Myanmar report have all advanced. Super was the best
performer as its share price doubled within eight months. Aussino rallied but gave back
all gains after the Singapore Exchange rejected the planned reverse takeover of Max
Myanmar Energy. Pure play Yoma also generated credible returns for investors. Positive
returns across the board suggest the market is generally upbeat on Myanmar despite
challenges. In fact, a performance analysis showed that companies which have reported
Myanmar developments tend to spike about 3% a week after the announcement and
about 20% in the subsequent three months. It seems that the market is assigning such
stocks a Myanmar premium.

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COUNTRY BRIEFING 01
Avg 6 month daily turn Share price performance since announcement
Company
Price
last
Value
(S$m)
Vol
(m)
Mkt Cap
(S$m) Exposure in Myanmar Ann date
1 day
after
1 week
after
1 month
after
3 months
after
Presence in Myanmar
Yoma 0.97 13.0 16.2 1,166.6 Property/hotel developer 14-Aug-12 1% 3% 5% 40%
Interra Resources 0.53 6.6 13.7 236.4 Oil & gas exploration presence in Myanmar since 1996
Super Group 4.60 2.7 0.7 2,564.7 One instant beverages packaging facility in
Myanmar
presence in Myanmar since 1990s
FNN 8.82 32.1 3.5 12,708.9 Brewery in Myanmar presence in Myanmar since 1995
Ezion 2.25 15.9 8.2 2,166.3 Service rig in Myanmar 22-Feb-12 2% -3% -2% -17%
Parkson Retail
Asia
1.53 0.5 0.4 1,036.3 Formed JV to operate department stores in
Myanmar
05-Nov-12 1% -1% -11% 14%
Sin Heng 0.26 1.5 6.0 117.1 Rental and trading of cranes 14-Mar-12 -3% -3% 28% 2%
Exploration/negotiation stage
Yongnam 0.37 3.1 10.1 468.2 Consortium submitted bidding proposal for
two airport projects in Myanmar (Yangon
International Airport and the Hanthawaddy
International Airport)
29-Apr-13 0% 5% 10% 23%
Tiong Seng 0.28 0.3 1.3 210.7 MOU to set up a precast plant 22-Apr-13 -4% -2% 0% 0%
Tat Hong 1.48 1.9 1.3 928.8 Sign heads of agreement for JV in Myanmar
to carry out rental of cranes
16-May-13 1% 1% 1% 1%
SingTel 3.72 77.6 21.7 59,146.9 Vying for a telecommunications licence 17-Apr-13 3% 3% 10% 2%
Amara 0.63 0.4 0.8 363.5 Inked MOU to develop and operate hotels 04-Apr-13 1% -1% -1% 10%
Tiong Woon 0.38 0.7 1.9 176.5 Incorporate subsidiary in Myanmar to
provide rental services of all kinds of heavy
machineries and provide marine services
30-May-13 1% 4% 4% 4%
ISDN 1.27 5.3 7.9 460.5 MOU to explore coal mining opportunities 02-Apr-13 0% 31% 49% 142%
UPP 0.34 3.4 9.9 284.5 Set up JV for drilling and blasting of rock
and/or crushing of blasted rock materials
03-May-12 0% -10% -20% -30%
MDR 0.02 2.2 127.4 141.2 Set up JV to provide after-sales services of
telecommunication devices to consumers in
Myanmar
26-Nov-12 20% 10% 40% 80%
WE Holdings 0.11 11.3 108.2 77.3 JV to explore business opportunities in
petroleum, oil & gas and related resources
04-Mar-13 1% -62% -33% -38%
12 Myanmar proxies have generally performed
Source: BloombergFinance L.P, DBS Vickers
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COUNTRY BRIEFING 01
Singapore Companies Are Better
Gateways
Currently, Myanmar proxies can be broadly sorted into two categories: those with presence
or are already in the process of initiating businesses in the country, and those that are still
negotiating and awaiting their chances.
Yoma remains the only pure play in Myanmar for equity investors. But in the past six months, more
Singapore companies have ventured into Myanmar to leverage on the opportunities abound.
We believe investors can piggyback on these proxies as they offer the certainty of existing proven
businesses and the opportunity to prot indirectly from the new Myanmar venture.
Yoma Strategic Holdings
With close to 100% of its land bank in Yangon, Yoma Strategic Holdings is a direct proxy
to Myanmars booming real estate sector and is well-positioned to benet from Yangons
severe demand/supply mismatch for quality residential, ofce, hotel/serviced apartment
properties. Our latest channel checks with industry players indicated that selling prices of
Yomas properties have hit new highs recently. Yomas share price performance has continued
to hit new highs in recent trading sessions following our upgrade at end of May. Catalysts
could come from price hikes for its properties, agriculture development, Digicels potential win
and development/sales of its China Shopping Mall.
Interra Resources
Interra Resources has been in Myanmar since 1996. The company is the largest onshore oil
producer in Myanmar with two producing oil elds. It also owns two producing elds and
one exploration site in Indonesia. Myanmar is a key market, having contributed to 86% of
the companys earnings before interest, taxes, depreciation and amortisation in the 2012
scal year. Based on its expanded drilling programme, we see near-term growth from higher
production and further upside would come from exploration assets and bids for new licences.
Super Group
Supers presence in Myanmar is represented by one packaging plant in Yangon in the Myothit
Seik Kan Industrial Zone, Dagon Myothit Seik Kan Township. Established 15 years ago with
their distributor through a 60-40 joint venture, Supers mainstay coffee products have a
presence of over 80% in the Myanmar market with more than 40% market share. The plant
procures bulk non-dairy creamers and coffee powder from Supers factories in China, Malaysia

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DBS Asian Insights
COUNTRY BRIEFING 01
and Singapore to package into nished goods. Annual packaging output is estimated to be
100-150 tons. Myanmar is the second largest revenue contributor in the branded consumer
segment behind Thailand. According to our estimates, Myanmar sales currently contribute
to more than 20% of branded consumer sales. We estimate that Myanmars contribution
will grow at 15-17% per annum, driven by higher volume sales of coffee products and new
product stock keeping units in the form of basic staple food items such as noodles, cereals,
and other hot beverages like tea.
Fraser and Neave
FNN has a 55% stake in Myanmar Brewery Limited, which was established in 1995 and has
grown into a market leader, with an estimated 60-70% market share. We estimate Myanmar
Brewery Limited to account for around 10% of Group PBIT, though this is likely to taper down
as contribution from other business segments, particularly development properties, pick up
in the latter part of the 2013-14 nancial year. We expect the opening up of the Myanmar
market to stoke greater competition. Already, two international brewery groups Carlsberg
A/S and Heineken have announced plans to partner local Myanmar companies and invest
US$50 million and US$60 million respectively to build breweries and distribute their brands
there. This could create pressure on Myanmar Brewery Limited, though in the near term, the
distribution and brand strength could help it to defend its market share.
Ezion Holdings
Ezion secured its rst and only Myanmar-related contract in February 2012. The charter
contract worth US$118 million involves the provision of a service rig to French-based TOTAL
in Myanmar over a three-year period. The rig is scheduled to commence work in the eld
of Yadana by early June 2013. We expect this project to contribute around 5% to Ezions
2013/14 nancial year core earnings. Myanmar is one of the worlds oldest oil producers,
having exported its rst barrel in 1853. However, oil output is fairly small, at around 20,000
barrels/day, accounting for 0.02% of global oil production. Since late 2004, Myanmars
authorities have intensied the opening of blocks to foreign companies, leveraging on their
technology and capital to revive its oil and gas industry. We believe rising oil & gas activities
in Myanmar and successful deployment of the service rig to TOTAL will underpin stronger
demand for Ezions liftboat/service rigs in the region.
Parkson Retail Asia
Parkson Retail Asia opened a new 4,000 sq m store at FMI Centre in Yangon in May 2013. The
store is a 70-30 joint venture with Yoma, which also owns the building. The joint venture has
a tenancy agreement of up to 20 years with rental step ups every three to ve years. Parkson
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DBS Asian Insights
COUNTRY BRIEFING 01
Myanmar has become a platform for various concessionaire brands to enter Myanmar. We
expect breakeven to be immediate as we believe minimum guarantees from concessionaires
will be able to sufciently cover costs. Parkson could be looking to increase its retail area to
12,000 sq m in four years time.
Yongnam Holdings
Yongnam is currently bidding for two airport projects in Myanmar the expansion of
Yangon International Airport and development of the new Hanthawaddy International
Airport. Changi Airport International Group and Japan-based JGC Corporation are partners.
The consortium has been prequalied for both airport projects and has submitted a tender
for Yangon International Airport. Tender for Hanthawaddy International Airport is expected
to close at the end of May. Both projects allow the winning bidder the right to construct,
operate and maintain the airports. Results for the Yangon International Airport bid will
likely be announced in July. If Yongnam consortium wins the tender, we expect Yangon
International Airport to contribute to earnings in the 2015 nancial year.
SingTel
SingTel is vying for a telecommunications licence in Myanmar. The authorities in Myanmar
began a process this year to potentially issue two permits as part of its efforts to liberalise the
tightly controlled sector. SingTel has sent in its expression of interest and is awaiting further
details on the bidding process and terms of the permit. SingTel is also partnering the Al Noor
Group to distribute satellite-based technology and services in Myanmar. Under the pact,
Singapore-based Al Noor, one of the largest importers of mobile phones in Myanmar, will
help SingTel sell satellite phones, broadband internet and broadcasting services in Myanmar.
At this juncture, we do not see much impact on share price as these are very small investments
relative to the entire SingTel group.
Tiong Seng Holdings
Tiong Seng has signed a non-binding Memorandum of Understanding (MOU) with Shwe
Taung Development, one of the most prominent corporations in Myanmar, to explore a
possible joint venture to set up a precast plant in Myanmar. The MOU is timely and comes
on the back of the Myanmar Ministry of Constructions plan to build more than 1 million
houses nationwide over the next 20 years. Residential construction accounts for 51%, or
US$1.5 billion, of Myanmars total construction output. In Yangon alone, the yearly demand
for affordable housing is 200,000 units, but only 20,000 units are supplied every year.
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DBS Asian Insights
COUNTRY BRIEFING 01
Amara Holdings
Amara is expanding its chain of hotels to Myanmar with a proposed joint venture to develop
and operate a business hotel in the Dagon Township of Yangon. It has inked an MOU with
Myanmars Youth Force Hotel and Youth Force Construction to develop hotels and engage
in other real estate projects. The parties plan to establish a joint venture to collaborate on the
development and operation of the hotel as its rst project. The proposed total investment is
estimated to be about US$50 million.
Sin Heng Heavy Machinery
Sin Heng has formed a 50-50 joint venture with Starhigh Asia Pacic in Myanmar. The group
has also incorporated a subsidiary, SH Equipment (Myanmar), for the purpose of undertaking
heavy equipment leasing, rental, distribution and sales in Myanmar.
WE Holdings
WE Holdings is proposing to incorporate a 50-50 joint venture company with Nay Win
Tun, a prominent Myanmar businessman and the chairman of the Ruby Dragon Group of
companies. The Ruby Dragon Group of companies is engaged in mining, manufacturing,
agriculture, food & beverage, trading, and hospitality businesses across Myanmar and has
over 3,000 employees.
ISDN Holdings
ISDN has entered into a non-legally binding MOU with Tun Thwin Mining to explore joint
partnerships in energy opportunities in Myanmar. TTMCL is a Myanmar-based company
engaged in the business of coal mining, processing and supply. TTMCL holds a concession to
a coal mine located in Kalay District and a development permit for a 2 x 270 megawatt coal-
red power plant located at the mouth of the coal mine.
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DBS Asian Insights
COUNTRY BRIEFING 01
Country Prole
Myanmar
Geography
Region Southeast Asia
Area Total: 676,578 sq km
Land: 653,508 sq km
Water: 23,070 sq km
Demographics
Population 55.17 million
Urban population 34%
Languages Burmese (Ofcial)
Minority ethnic groups
have their own languages
Ethic Groups Burman 68%, Shan 9%, Karen 7%,
Rakhine 4%, Chinese 3%, Indian 2%,
Mon 2%, other 5%
Religion Buddhist 89%, Christian 4%
(Baptist 3%, Roman Catholic 1%),
Muslim 4%, Animist 1%, other 2%
Main Cities Yangon (Capital)
Nay Pyi Taw (Administrative capital)
Mandalay
Fiscal Year 1 April - 31 March
Demonym Burmese / Myanma
Currency Kyat (MMK)
Government
Ofcial name Union of Burma*
Government Type Parliamentary government
Economic Indicators (US$) (2012 est.)
GDP $89.23 billion
GDP (PPP): $1,400
GDP - growth rate: 6.2%
GDP by sector Agriculture: 38.8%
Industry: 19.3%
Services: 41.8%
Labour force: 33.41 million
Unemployment rate: 5.4%
Below poverty line: 32.7% (2007 est.)
China
Yangon
Bay of Bengal
Bhutan
Bangladesh
India
Myanmar
Thailand
Laos
Nay Pyi Taw
Mandalay
km
0 100 200
* Since 1989 the military authorities in Burma, and the current parliamentary government, have promoted the name Myanmar as a conventional
name for their state; the US Government has not adopted the name, which is a derivative of the Burmese short-form name Myanma Naingngandaw
23
DBS Asian Insights
COUNTRY BRIEFING 01
Disclaimers and Important Notices
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(the Company). It is based on information obtained
from sources believed to be reliable, but the Company
does not make any representation or warranty, express
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or correctness for any particular purpose. Opinions
expressed are subject to change without notice. Any
recommendation contained herein does not have
regard to the specic investment objectives, nancial
situation and the particular needs of any specic
addressee.
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