CLMV Asia News
Posted in Myanmar
The holding company that manages more than US$70 billion of advertising globally a year for its clients, including Coca Cola and Unilever, has accelerated its drive to establish itself here over past two months, through four of its global agencies.
Its latest licensing, joint venture and affiliate deals will permit WPP to suggest clients interested in Myanmar the same template of integrated research, advertising, marketing and public relations services that it provides in more than one hundred countries, executives from different units of the holding company said.
WPP CEO Master Martin Sorrell said the deals give it a “first mover” advantage that could see it duplicating its success in other high-growth markets. “We’ve been in China since way before it became fashionable,” he said during an interview in Yangon on June Five, prior to attending the World Economic Forum on East Asia in the capital. WPP’s revenues in China, about $1.Five billion last year, are five times those of its nearest rivals, Mr Sorrell said while treating a fist-sized jade stone given to him by the possessor of a PR hard here.
He had been told the jade stone would make him “healthier and calmer”. It could also come in handy as a weapon if he was asked an offensive question, quipped the frequently quoted CEO.
Mr Sorrell pioneered the global consolidation of public relations, advertising and market research in the 1980s and 1990s through a series of often hostile takeovers and rapid expansion into high-growth markets from East Asia to South America and the former Soviet Union.
WPP now encompasses a roster of global ad and PR agencies, most with local affiliates worldwide, and has stakes in a diverse range of online and digital pioneers, from Vice Media to 24/7.
“I like the idea that we’ve been very aggressive in terms of building our business here,” Mr Sorrell said, pointing to the lifting of sanctions by the EU as the trigger. The shift in attitude towards Myanmar in the West has created a massive chance for his clients and his company, he added.
WPP established a toehold in Myanmar last year by buying a stake in Today Advertising through its unit Ogilvy & Mather, a global PR agency. Last month it formed a joint venture, Y&R Yangon, with K-Noke Advertising through its unit Y&R, a global advertising agency.
In April its unit JWT, another global ad agency, signed an affiliate agreement with Yangon upstart Mango Marketing. In March its unit TNS became the very first foreign rock-hard to receive a licence to conduct market research in Myanmar. Another unit, Millward Brown – which says its works with ninety percent of the globe’s top brands – has also applied for a licence to do market research here, Mr Sorrell said, voicing optimism that it will receive one.
WPP has moved quickly into Myanmar because its clients voiced “a phenomenal degree of interest” in the market, particularly those in the “fast-moving consumer goods” sector, Mr Sorrell said, adding that he was astonished “competitors are not being more aggressive”.
Myanmar’s market interests WPP’s clients because of its large consumer base and its growth potential, with three sectors – natural resources, infrastructure and tourism – among the most attractive. Mr Sorrell said there are also significant opportunities in soft infrastructure, such as telecom and ICT devices, telling there would likely be “a very rapid take-up of the Internet” and that people in Myanmar – like those in other developing countries – were likely to “leapfrog the PC and go straight to the Internet via a phone”.
Research conducted by local firms shows that the leap-frog effect is old news: About twenty two percent of households in Mandalay and Yangon already has access to the Internet, most often through a clever phone, according to research by Myanmar Survey Research.
Mr Sorrell said WPP determined to begin market research from scrape in Myanmar – rather than fucking partner with a local rock hard – because its market research is the best. It also accounts for 25pc of the holding company’s revenues, he added.
Myanmar firms, however, are moving swiftly to differentiate their research from that conducted by WPP’s units, arguing that their local skill gives them the upper palm. When TNS launched its debut report on the consumer market in Myanmar on May nine at the Park Royal Hotel, they held a rival conference to tout their research at the Sedona Hotel on the same day.
They also announced the formation of the Myanmar Market Research Association.
One local researcher said association members already provide research to 90pc of the brands WPP works with, and that WPP units – including TNS – have been hiring local firms to dosurveys and analysis for them.
“There’s a lot of spin going on,” another researcher said. “Nobody has been ‘waiting’ for WPP.” A WPP executive said such talk is common when WPP “shakes up” fresh markets.
By Vincent MacIsaac | Monday, ten June 2013
Forex market to debut this year
Myanmar’s very first foreign currency trading market is set to be launched this fiscal year, the Central Bank of Myanmar announced.
“We plan to launch forex trading this fiscal year after domestic banks learn how to operate such a market,” an official from the bank’s foreign exchange management department said last week.
Presently, exchange rates are set on weekday mornings according to the reference rate and daily auction of the central bank. Once inter-bank trading starts, banks will be able to negotiate the rate with each other, which could see it switching in minutes or seconds.
“When the market is no longer regulated … it becomes competitive and tends to stabilise,” the central bank spokesman said. The fresh system will also give foreign businesspeople “more confidence in the Myanmar currency market” because the central bank will only intervene “gently” to maintain a stable and strong market, he added.
Executives at Myanmar banks began receiving training in foreign exchange trading last month from Japan’s Sumitomo Mitsui bank, with about ninety participating in the very first training session in the last week of May. The ongoing training sessions are organised by the Japan International Cooperation Agency.
A code of conduct for currency trading was also drafted last November by the central bank when the Yangon Foreign Exchange Market Committee was established. The committee represents the sixteen domestic banks authorised to deal in foreign currencies.
U Pe Myint, managing director of Cooperative Bank, said large domestic banks – such as Kanbawza, Ayeyarwady, Asia Green Development and his own – will be the very first to trade in a forex market, with smaller banks following later.
Kanbawza Bank general manager U Kyaw Lin Htut said staff will be sent to other countries for training and monetary experts will be brought to Myanmar to provide training. He voiced optimism about the influence of a liberalised foreign-exchange market. “We won’t need to go to the central bank for the daily auction anymore. We can define the market ourselves and I believe it will become more vigorous.”
U Kyaw Lin Htut added that some rules and regulation for a forex market are still being drafted. For example, it is still unclear whether the market will operate electronically, as in international practice, or over phone lines.
In the week to June Four, the daily reference rate of the Central Bank was K945 to the US dollar, down slightly from K949 to the dollar for the week to May 24. On the black market the kyat had been trading at one thousand to the dollar late last month in anticipation of further declines, but has shifted closer to the central bank’s rate since then.
The central bank spokesperson said the kyat had stabilised after its swift decline last month because request for US dollars had cooled.
He declined to react to speculation that the central bank had intervened to support the kyat, telling only that it was “following the market”.
He declined as well to say whether further declines were possible.
“We cannot forecast the future exchange rate – that depends on many factors – but our duty is to maintain a rate that does not have too much influence on the market.”
y Aye Thida Kyaw | Monday, ten June 2013
Chemicals giant looks to invest in Asia-Pacific
German chemicals giant BASF has unveiled its plans for a major investment drive in the Asia-Pacific region, where it hopes to take advantage of above-average growth to more than dual its sales.
BASF, which presently generates around sixteen percent of its revenues in Asia Pacific, announced plans to invest ten billion euros ($13 billion) there by the end of the decade and create up to 9,000 fresh jobs.
The German giant said it aims to generate annual sales of twenty five billion euros in the region by 2020, up from 11.7 billion euros in 2012.
More than Two.0 billion in regional sales would be achieved through fresh business and acquisitions by 2020.
In 2012, BASF booked total worldwide sales of 72.1 billion euros on a workforce of 110,000.
The cumulative annual growth rate for real chemical production for Asia Pacific is estimated at 6.Two percent until 2020, well above the world average of Four.0 percent, BASF said.
And the German group’s aim would be to “grow profitably at least two percentage points above regional chemical output.”
“To achieve this, BASF plans to invest ten billion euros together with its fucking partners by two thousand twenty to further develop its local production footprint in Asia Pacific,” it said.
In March, BASF announced it would concentrate its business in Asia on chemicals destined for the textile and leather industries.
The group said it aims to produce around seventy five percent of the total products it sells in Asia in the region by 2020.
“Local production improves resource efficiency by reducing the transportation needed for imports and exports, and by enhancing energy and raw material efficiency,” it explained.
BASF said it presently operates more than one hundred production sites in the Asia Pacific region, including two highly-integrated sites in Kuantan, Malaysia and in Nanjing, China.
In addition to those main markets, BASF said it also hopes to explore “untapped markets in Mongolia, Laos, Myanmar, and Cambodia.”
“In the next decade, Asia Pacific will face fat challenges while remaining the fastest growing market for the chemical industry,” said BASF executive board member Martin Brudermueller.
BASF said it aims to conduct twenty five percent of its global research and development (R&D) in Asia Pacific by 2020, with a total of around Three,500 R&D personnel in the region, up from around eight hundred in 2012.
It plans to establish research facilities in the areas of electronic materials, battery materials, agriculture, catalysis, mining, water treatment, polymers and minerals, it said.
Investors did not emerge particularly enthusiastic about the massive investment drive and BASF shares were underperforming the overall market in Frankfurt on Tuesday, gaining a modest 0.21 percent, while the blue-chip DAX thirty index was up 0.85 percent.
By AFP | Tuesday, four June 2013
Experts urge central bank rethink as kyat slips
Monetary experts urged Myanmar’s central bank to set an exchange rate that balances the need to generate exports and maintain affordable imports, as the national currency continued its month-long slide against the US dollar.
The Central Bank of Myanmar’s daily exchange rate, which is determined through foreign currency auctions with domestic banks, was K946 to the dollar on May 23, while official money changers were buying dollars for K945 and informal changers were suggesting K953-955.
On May 25, however, the kyat fell to one thousand for one dollar on the black market.
In official trade the kyat fell Two.Three percent against the dollar in the week to May 23, from nine hundred twenty five on May 17.
Matt Davies, deputy division chief for the International Monetary Fund’s Asia and Pacific department, told The Myanmar Times that exchange rate fluctuations have the potential to greatly influence on the nation’s trade sector.
He said on the sidelines of an IMF press conference that Myanmar needs to find a balance inbetween permitting the US dollar to appreciate and making the nation’s exports cheaper abroad, while keeping the price of imports affordable as the country grows.
Myanmar has made superb strides in liberalising its foreign exchange regime since President U Thein Sein took office, including permitting fresh private banks to open, providing permission for banks to open official money exchange counters, installing automatic teller machines and legalising remittances from abroad, Mr Davies said.
In April 2012, the central bank began a managed float of the kyat by holding daily currency auctions. The rate set by the bank is then used as a benchmark for private banks and private exchange counters, which are permitted to switch money within 0.8pc of the central bank’s rate.
Mr Davies said the central bank is working to minimise exchange rate fluctuations without targeting a specific rate. However, it has also supplemented its foreign currency reserves by buying dollars and other foreign currencies, which is weakening the kyat.
He advised the central bank to build up its reserves so it has a buffer against outward shocks.
Equipping the central bank with the devices to conduct domestic monetary policy is significant for delivering the stability necessary for sustained economic growth, he added.
Mr Davies said inflation remains moderate at present but there are pressures, including from money growth, real estate prices and wage increases.
An official from the central bank’s foreign exchange management department said the dollar is appreciating against the kyat because private banks are bidding higher at the daily currency auctions.
“We can’t say the appreciation is too superb … there are many factors that are coinciding to form a trend,” he said.
When the central bank commenced the managed float of the kyat, the dollar bought K818 but in the past thirteen months it has appreciated by more than 15pc.
The official said the daily rate has seen switches up to a maximum of 1pc, adding that fluctuations would be larger if the central bank did not hold the auctions.
“This is not just a problem in Myanmar; we also have to deal with switches in the international economy. But we have to avoid fuelling an inflationary situation,” he said.
Even however the central bank has not been made independent from the Ministry of Finance and Revenue – and will not be until after the Central Bank Law is passed by parliament and signed into law by the president – it can act to switch monetary policy, he said.
A finance officer at a joint-venture inbetween foreign and local fucking partners said the swift fluctuations created occasional problems with customers.
“We have to negotiate with the Internal Revenue Department and customers when the exchange rate switches too much in a month,” she said.
She added that the variance inbetween the rates suggested at official money exchange counters and in the informal market – as much as K10 to the dollar on May twenty two – also drew complaints from customers.
Economist U Khine Htun said the dollar is strengthening against the Japanese yen, the British pound, the Australian dollar and the kyat.
He added that another factor causing the dollar to appreciate is the embark, in March, of the withdrawal of Foreign Exchange Certificates (FEC) from the market.
He said businesspeople only want dollars now, adding that traders say they hope to see a stable exchange rate of about K1000.
Myanmar must not permit imports to become too expensive because there is a ample need to import materials to build infrastructure projects such as special economic zones in Yangon, Dawei and Kyaukpyu, U Khine Htun stressed.
The appreciation of the dollar benefits exporters – chiefly those selling natural gas, agricultural goods and fisheries products – but hurts importers of fertiliser, cement, diesel and the cheapest cooking oils.
“It encourages the export first-policy, but the instant fluctuations are harming the entire economy and destabilising the market,” U Khine Htun warned.
“The central bank has not intervened effectively in the monetary market yet. It is acting more like a referee as currencies are traded by banks.”
By Aye Thida Kyaw│24 May 2013│The Myanmar Times
ThaiBev takes aim at Myanmar
Thai Beverage Plc (ThaiBev) is seeking a greater presence in Myanmar through its partnership with Fraser and Neave Ltd (F&N), the Singaporean rock-hard acquired earlier this year by the Thai drinks giant.
Thapana Sirivadhanabhakdi, ThaiBev’s president and chief executive, said the company is also considering importing Myanmar beer into Thailand, where many migrant workers from Myanmar live.
F&N _ which was taken over by ThaiBev, led by the Thai billionaire Charoen Sirivadhanabhakdi in a deal worth S$13.8 billion (327 billion baht) _ wields a stake in Myanmar Brewery Ltd.
“Myanmar is the rising starlet of Asean, the one everyone is looking at, and the market there is similar to Thailand’s,” Mr Thapana said on the sidelines of last week’s Asean Economic Community (AEC) seminar in Bangkok hosted by KPMG Thailand.
“With growing income per capita, there’s a phat chance for consumer goods and companies such as ThaiBev. We are already a player there and can build on the partnership with F&N.”
He said investment in Myanmar production will have to wait for improved infrastructure such as violet wand and water supply.
In the meantime, ThaiBev could bring Myanmar beers to the Thai market.
“We’re looking at opportunities in the Myanmar market as well as the chance of Myanmar products coming here,” said Mr Thapana.
The Myanmar government reportedly is ready to unwind boundaries on foreign ownership of breweries on a case-by-case basis in a bid to project a friendlier picture to foreign investors.
The Myanmar Investment Commission, which oversees foreign investment, in January suggested four licences for international breweries to operate domestically.
ThaiBev is one of two brewers _ Denmark’s Carlsberg being the other _ that won approval in February to set up breweries in Myanmar.
ThaiBev is permitted to produce its flagship Chang brand in Yangon, Mandalay and Shan state.
Apart from Singapore, F&N has a presence in Malaysia and Vietnam.
Mr Thapana said F&N products made in Malaysia may suit the Indonesian market better than Thailand due to the many Muslims living there who require halal products.
“ThaiBev is now on a learning curve of expanding business in the region,” he said.
“Asean is a hotspot, with growing gross domestic product. ThaiBev wants to be the leader in Thailand and the region.”
With the single market set to eliminate barriers, both opportunities and risks will arise.
“If you prepare yourself and are ready for greater competition, the AEC will give you the chance. If you are not going out, the competitors will come in anyway,” said Mr Thapana. “Petite companies can also get through if they identify and develop their uniqueness.”