Myanmar: Teak prices at auctions in September

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The overall impression in the market is that demand remains as sluggish as last month with no clear direction.

The Indian market is still reeling from the effects of the sharp depreciation of the rupee and this has un-nerved Indian buyers who are taking a wait and see stance even though the rupee has appreciated to 62 to a dollar in the past week.

The uncertainty in the trade over the impending log export ban coupled with the volatile rupee exchange rate is having a big impact on sentiment in the trade and will determine the level of shipments in the coming months.

Corporate governance principles MTE discussed

Timber Trade Journal of September 21 -27 mentioned an email Q&A with Union Minister for Environmental Conservation and Forestry (MOECAF) U Win Tun on the subject of the Myanma Timber Enterprise (MTE) corporatisation. Minister Win Tun explained that, at this point in time, it was envisaged that MTE will remain a 100% state-owned corporation and that there are no immediate plans to transform it into a public company.

Regarding „Corporate Governance‟, the minister mentioned that the principles and guidelines as practised in OECD and non-OECD countries were being examined and that Myanmar needs more experience to adjust to internationally recognised corporate governance standards.

The minister indicated that instead of directly adopting principles and guidelines for corporate governance in OECD countries the situation in Myanmar would be assessed and appropriate principles would be adopted and people would be trained accordingly. He further spoke on the need for „ethical behaviour‟ amongst management but mentioned it would take time to convert this concept into a „culture‟ in the MTE.

The indications are that MTE will be state-owned and the management and the Board of Directors would be personnel representing state interests, professionals and those that have in mind the welfare of the country. Even though a restructuring was in the offing, the minister said, the present officers of the MTE would form the new management but, as in a private company, they would be required to execute the function of MTE in a competent manner to create an atmosphere of efficient commercialisation.

Foreign investment in Myanmar

Myanmar introduced a revised foreign investment law in 2012 and the Mizzima News, quoting local media, reported that Myanmar attracted over US$731 million in foreign investment during a single month bringing investment to the end of August to US$43 billion since 1988.

For the year up to August, China has invested US$14.2 billion, Hong Kong SAR US$6.5 billion, South Korea US$3 billion, Singapore US$2.4 billion dollars, Malaysia US$1.6 billion and Japan US$274 million.

US$150 million to address chronic power shortages

In related news, the World Bank is lending Myanmar almost US$150 million to help alleviate the country's chronic power shortages. In a press release the bank said “the World Bank Group and Myanmar reinforced their commitment to grow the economy, create jobs and reduce poverty through accelerated reforms and a focus on energy infrastructure development”. 

A recent delegation to Myanmar agreed to support a request for urgent upgrading of the electric power capacity and improvement of the telecommunications and banking sectors. The bank said a 106 megawatt plant will provide 5 percent of peak power demand for the entire country and 50 percent of peak demand in Mon state.

The press release says the Bank is providing Myanmar with US$165 million in zero-interest loans for its priority needs. This is in addition to a US$80 million grant for community driven development that will enable villagers to improve schools, clinics, roads and water supply.

The International Finance Corporation, member of the World Bank Group focused on private sector development in emerging markets, has invested US$2 million in ACLEDA Bank Plc to help set up a new microfinance institution in Myanmar to provide loans to more than 200,000 people – mostly micro and small businesses run by women – by 2020.

Teak tender prices

The following prices were recorded for teak log sales during competitive bidding on 27th and 30th September during the MTE tender.

Grade Quantity (Tons) US$ per hoppus ton
4th Quality 10 6366
Sawing Grade-1 21 4401
Sawing Grade-2 84 3064
Sawing Grade-4 290 2670
Sawing Grade-5 140 2497
Sawing Grade-6 122 2197
Sawing Grade-7 145 1615
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