Sugar Deficit Seen by Rabobank as Low Prices Reduce Production

The sugar market will swing to a deficit as sustained low prices curb supply for a second year, according to Rabobank International, which joined Czarnikow Group Ltd. and Kingsman SA in forecasting an end to surpluses.
Global output of raw sugar will fall short of demand by about 900,000 metric tons in the 12 months from October, Rabobank said. That compares with glut of 1.4million tons in 2013-2014, the bank said in an e-mailed quarterly report.
Raw-sugar prices dropped more than 50 percent from a 30-year high in 2011 as world supplies consistently surpassed demand. Global output will lag behind consumption by 500,000 tons in 2014-2015 as production stabilizes, London-based Czarnikow forecast last week. The degree of supply tightening depends on how a forecast EI Nino develops, Rabobank said.
“It is a little early to be certain that the market is passing an inflection point,” the bank said. “If the question is whether we are cycling towards higher prices, our current belief is that we are indeed heading in that direction, slowly, with may be a bump or two on the road still to come.”
An El Nino, which can bring drought to the Asia-Pacific region and heavier-than-usual rains to South American, likely to develop by Australia’s spring, which starts in September, the country’s Bureau of Meteorology said on July 1. There’s at least a 70 percent chance of the event developing this year, it said.
Raw sugar for October delivery closed at 17.07 cents a pound on ICE Futures U.S. in New York on July 11, 4 percent higher this year. The commodity lost 16 percent in 2013, retreating for a third year in the longest run of annual declines since 1992.
Global sugar demand will exceed production by 239,000 tons in the crop year from October 2014 to September 2015, Lausanne, Switzerland Kingsman SA estimated in May.

Source from Myanmar Business Today, 24-30 July,2014

Malaysian Air Drops as Ukraine Attack Follows Flight 370

Malaysian Airline System Bhd. (MAS) shares tumbled the most in nine weeks after the disappearance of Flight 370 contributed to the carrier’s biggest loss since 2011.
The stock lost 13 percent to 19.5 sen as of 9:59 a.m. on July 18 in Kuala Lumpur, extending this year’s drop to 37 percent, while Malaysia Airports Holdings Bhd. (MAHB) fell 4.2 percent. The FTSE Bursa Malaysia KLCI Index retreated 0.4 percent and Malaysia’s ringgit weakened 0.4 percent versus the dollar. The Bloomberg World Airlines Index slipped 0.2 percent, following a 2 percent tumble on July 17 amid speculation the crash will deter fliers.
Malaysian Air’s Flight 17, carrying 298 passengers and crew, was shot down last Thursday over eastern Ukraine in an attack that the government in Kiev blamed on pro-Russian rebels. The carrier, which has lost 4.57 billion ringgit ($1.4 billion) since the start of 2011, had been speeding up an overhaul of its business after the disappearance of Flight 370 spurred the longest search for a missing plane in modern aviation history.
“This is shocking,” Geoffrey Ng, an adviser for strategic investments at Fortress Capital Asset Management Sdn., which oversees about 1 billion ringgit, said in Kuala Lumpur. “Investors will want to sell first and get more information later. This will raise concerns about the safety culture of airlines in general.”
Ukraine Battle-ground
Cathay Pacific Airways Ltd. (293), the biggest international carrier in Asia, dropped 1.4 percent in Hong Kong trading while Air China Ltd declined 1.3 percent. Delta Air Lines Inc., American Airlines Group Inc. (AAL) and United Continental Holdings all retreated more than 3.4 percent in U.S. trading last Thursday.
Ukraine’s state security service said it intercepted phone conversations among militants discussing the missile strike,which knocked Flight 17 from the sky about 30 kilometers (18 miles) from the Russian border. The separatists denied the accusation.
U.S. officials said the weapon probably was a Russian-made model used widely in Eastern Europe. The Boeing Co. (BA) 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine’s civil war.
The jet didn’t make distress call, Malaysian Prime Minister Najib Razak told reporters at the Kuala Lumpur International Airport today. The aircraft’s flight route was declared safe by the International Civil Aviation Organisation, and the International Air Transportation Association has said the airspace the plane was in was not subject to restrictions, Najib said.
Turnaround Struggle
The escalation of Ukraine’s crisis, combined with Israel’s movement of ground forces into the Gaza Strip, fuelled a selloff in global equities yesterday. The MSCI All-Country World Index dropped 0.9 percent, and lost another 0.1 percent today.
Malaysian Air’s major shareholder and sovereign wealth fund, Khazanah Nasional Bhd., said last month it had time to come up with a restructuring plan as the carrier has funds to last about a year.
Asuki Abas, a spokesman for Khazanah, said the fund will “focus its energy on supporting Malaysian Air in emergency efforts.” He declined to comment further.
The Suband Jaya, Malaysia-based carrier last reported an annual profit in 2012. Malaysian Air missed its target to be profitable last year as rising prices for fuel, maintenance and financing wiped out revenue gains. Analysts project losses through 2016 for the airline, according to data compiled by Bloomberg.
Though Road
“Malaysian Air will have a though road ahead to rebuild its image,” Hong Leong Investment Bank Bhd. analysts wrote in a report last Friday. “Consumer sentiment on its safety record will be deeply affected, which has further hampered its hope to turnaround by 2015.”
The vanishing of MH370 which carried mostly Chinese passengers, put the carrier under global scrutiny, jeopardizing its reputation and prompting boycotts in China. It has also hurt the country as a travel destination, with Chinese tourists canceling their visits to the Southeast Asian nation, according to Malaysia’s tourism promotion agency.
“This is beyond unlucky,” Mohshin Aziz, an analyst at Malayan Banking Bhd. in Kuala Lumpur, said in a note to clients. “It will take a very long time to overturn this.”

Source from Myanmar Business Today, 24-30 July,2014

Modi’s Farm Export Curbs may Ease India’s June Inflation

India’s inflation probably eased marginally in June after the new government curbed farm exports, but a growing risk that drought will shrivel summer crops could encourage the central bank to keep interest rates on hold.
Prime Minister Narendra Modi, elected in May amid anger over rising prices, has ordered a crackdown on hoarding to hold down food prices and set limits on the export of staples, such as onions and potatoes.
Presenting his first budget on Thursday, Finance Minister Arun Jaitley vowed to keep the fiscal deficit at 4.1 percent of gross domestic product in this fiscal year, while allocating more funds to ease inflationary pressures.
“The monsoon this year appears more inpredictable,” he told lawmakers, adding that the government would take all steps necessary.
Consumer price inflation INCPIY=ECI probably eased to 7.95 percent last month, down from 8.28 percent in May,while wholesale price in flation INWPI=ECI eased to 5.80 percent, the Reuters poll of economists found.
The government will lease the data on whold sale prices on Monday around 0230 EST. Consumer price data is due at 0800 EST.
Modi faces his first challenge as soaring prices for basic food items, such as milk and potatoes, lifted retail food inflation to 9.4 percent in May, driving wholesale inflation to a five-month high of 6.01 percent.
The government is banking on stocks of food such as rice, wheat and sugar from recent bumper harvests, but has few ways to cap prices of fruits and vegetables that drive food inflation.
“The measures may prove to be inadequate in light of the supply-demand dynamics associated with perishable products, absence of adequate cold storages and inefficiencies in the domestic supply chain,” said Aditi Nayar, an economist at ICRA, the Indian arm of rating agency Moody’s.
Retail inflation has eased to about 8 percent, after staying in near double-digit figures for the past two years, the highest among the BRICS group of emerging economies – Brazil,Russia,India,China and South Africa.
Economic growth has been stuck below 5 percent for two years – the longest slowdown in more than a quarter of a century. The economy is expected to grow slightly above 5 percent in this fiscal year to March 2015.
In 2009 benchmark New York futures swept to a 30-year high after the worst drought in nearly four decades forced India, the world’s top sugar consumer, to buy large quantities of the sweetener from top producer Brazil.
The farm sector accounts for around 14 percent of India’s nearly $2 trillion economy, and two-thirds of its population of 1.2 billion live in rural areas.
Weak investments and industrial performance have hurt economic growth, but figures on Friday showing that industrial output grew 4.7 percent in May on the year bettered expectations for a rise of 3.8 percent.
Output gained just 0.1 percent in the fiscal year that ended in March
Source from Myanmar Business Today, 24-30 July,2014

China Urges Local Governments to Buy More New-Energy Cars

China has told government officials to use more electric and plug-in hybrid cars as part of its drive to cut pollution by putting 5 million such vehicles on the road by 2012.
The measure is the latest in a series of steps that could help Chinese automakers including BYD and SAIC Motor Corp with President Xi Jinping urging government agencies to buy domestic brands.
So-called new-energy vehicles must account for at least 30 percent of all cars or vans purchased annually by central government agencies and some city governments over the three year through 2016, with the proportion set to rise after that, said the National Government Office Administration.
Government agencies will be offered subsidied to buy new-energy vehicles, which the government defines as all-electric vehicles, plug-in electric hybrids and hydrogen electric fuel-cell cars.
Under the new step, those government offices are also required to build charging stations and improve other infrastructure for green vehicles.
The new rules came days after China scrapped a purchase tax for new-energy vehicles, fearing that it had fallen far behind in meeting a target of putting 500,000 new-energy vehicles on the road by next year.
Earlier this year, major Chinese cities including Beijing, Shandhai and Tianjin opened up their markets to electric car makers based in other cities as China moves to reduce intra-country protectionism.
Source from Myanmar Business Today, 24-30 July,2014

Samsung Halts Business with Chinese Supplier Over Child Labour Fears

Samaung Electronics Co Ltda said last Monday it had suspended business with a Chinese supplier it  suspected of employing child labour, less than a week after a U.S watchdog report accused the supplier of using under-aged workers.
The South Korean smartphone maker said it found an “illegal hiring process” at Donguan Shinyang Electronics Co Ltd, which supplies mobile phone covers and parts.
Dongguan Shinyang Electronics could not immediately be reached for comment. South Korean firm Shinyaung Engineering Co Ltd.,which owns all of Dongguan Shinyaung, also could not be immediately reached for comment.
Samsaung added that it had previously found no child worders at the Chinese company in  three audits since 2013. The latest audit ended no June 25.
“The Chinese authorities are also looking into the case,” Samsaung said in a statement on Monday, adding that it would cut all ties with the supplier if the allegations were true.
“If the investigations conclude that the supplier indeed hired children illegally, Samsaung will permanently halt business with the supplier in accordance with its zero-tolerance policy on child labour,” it said.
U.S-based China Labour Watch released a report on Thursday alleging that the Chinese firm used child labour. The U.S watchdog said it had found “at least five child workers” without contracts at the supplier.
Samsaung demands suppliers adopt a hiring process that includes face-to-face interviews and the use of scanners to detect fake IDs, to ensure no child labourers are employed.
But China Labour Watch said that Samsung’s monitoring system was ineffective.
The watchdog accused one of Samsung’s suppliers of using child labour in 2012. Samsung subsequende workers at the facility.
Source from Myanmar Business Today, 24-30 July,2014

UN to help Myanmar Prepare for A Warming Climate

UN agencies have signed an agreement with Myanmar’s government to help the Southeast Asian nation prepare for climate change impacts, including droughts, cyclones and flash floods.
The United Nations Environment Programme (UNEP) and the United Nations Human Settlements Programme (UN-Habitat) will support Myanmar to integrate climate change considerations into policies, and to develop a national strategy to prepare for a warming climate.
“The impacts of climate change are here and now in the present, and are likely to become more severe in the future,” said Yoshinobu Fukasawa, UN-Habitat’s regional director for Asia-Pacific.
“These impacts threaten both the progress towards the Millennium Development Goals Myanmar has made in the last few years and also the rapid economic growth the country is currently experiencing.”
In May 2008, for example, Cyclone Nargis swept across Myanmar, triggering a huge sea surge and killing nearly 140,000 people. It destroyed villages and paddy fields, seriously affecting up to 2.4 million people in Yangon and the Irrawaddy Delta.Scientists expect more intense storms like this, as the planed warms.
The four-year programme will be led by the Ministry of Environmental Conservation and Forestry and implemented by the two UN agencies. The European Union has provided €4 million ($5.45 million) in funding as part of a wider global initiative.
“The momentum of reform and the possibility for rapid growth means that there is a unique opportunity here to encourage a low-carbon development model and ensure climate change adaptation is well-main-streamed,” the delegation of the European Union to Myanmar said in a joint statement on the inking of the agreement in the capital Nay Pyi Taw.
“It is crucial that this growth and development the country is striving for is not undermined and compromised.”
The programme aims to raise awareness among government, civil society, researchers and the private sector about the need to address climate change, to coordinate grassroots planning for climate change, and to pilot activities that will build resilience in coastal and delta regions.
At the signing ceremony, Win Tun, Myanmar’s minister for environmental conversation and forestry, said:”Climate change is one of the most challenging issues our age and there (is) no time to delay the fight against it.”
Source from Myanmar Business Today , 24-30 July, 2014

Japan’s KDDI, Sumitomo Corp Strike Myanmar Telecoms Deal

KDDI and Sumitomo Corp will invest in telecoms infrastructure and jointly operate mobile and broadband services with Myanmar Posts and Telecommunication (MPT), the firms announced.
No.2 Japanese wireless carrier KDDI and trading house Sumitomo said last week that they have reached an agreement with the state-run MPT to jointly undertake telecommunications operations in the Southeast Asian country.
The joint operations will provide “Japanese-quality services of the highest level in the world” in mobile and fixed line communication
services through upgrading of the telecommunications infrastructure, the firms said.
The operations will focus on customer services in call centres and shops to improve customer satisfaction, as well as contribute to the development of Myanmar’s economy and industry and the enhancement of Myanmar’s citizens’ standard of living, KDDI and Sumitomo said.
“Myanmar is experiencing a rapid move towards democracy and the market in mobile phones and fixed line communications is expected to grow dramatically in the future,” said Takashi Tanaka, president of KDDI Corp.
“Taking advantage of the wealth of experience and knowledge that we have built up both inside and outside Japan through our mobile phone operations in Mongolia,MVNO business in the US and other operations, KDDI will provide the same level of Japanese-quality services to Myanmar and contribute to the country’s growth and development.”
MPT will split earnings from the Myanmar operations roughly equally with a Singapore-based joint venture of the Japanese firms that will be formed in August, Sumitomo Executive Vice President Shinichi Sasaki told a news conference.
The firms plan to invest about $2 billion over the next decade to expand service in one of the world’s least-connected countries.
“We’ll be able to reach profitability in a short period of time,” KDDI Senior Vice President Yuzo Ishikawa said.
Kuniharu Nakamura, president and CEO of Sumitomo, said : “Our business record in Myanmar stretches over 60 years….Using the know-how and experience that we have thus cultivated, we will do our part to support the improvement of living standards and industrial development in Myanmar through this joint operation.”
MPT is currently Myanmar’s sole telecoms operator as well as the industry regulator.The government plans to create a new regulator by 2015 and invest a minority share in MPT, which will remain one of four licensed operators. State-backed Yatanarpon, until now primarily an internet service provider, also holds a licence. Norway’s Telenor and Qatar’s Ooredoo won hotly contested bidding for

two new licences in June 2013 and are now building their networks.
Myanmar’s telecoms industry was tightly controlled under decades of military    dictatorship, with the government monopolising the sector  and selling SIM cards for thousands of dollars when they were introduced a decade-and-a-half ago.
As a result, Myanmar had one of the world’s lowest mobile penetration rates. Swedish telecom giant Ericsson said in 2012 that fewer than 4 percent of its 60 billion people were connected.
Source from Myanmar Business Today, 24-30 July,2014

Rubber Farmers Seek Gov’t Help to Ward off Falling Prices

Myanmar’s rubber farmers have requested support from the government after compounding falls in the price of rubber have seen
many struggling to support themselves.
The sharp drop of rubber prices, a cash crop grown in almost all of Myanmar’s regions and states, in the 2013-2014 fiscal year, drove  almost a million farmers and workers at rubber plantations into financial hardship, Daw Mi Myint Than, a member of the parliament, said.
She said neighbouring countries had often helped struggling rubber growers in similar conditions, requesting the government to provide direct support to farmers and guarantee a minimum price for the rubber they produce.
However,deputy minister for agriculture and irrigation, U Ohn Than, said the government was unable to provide loans or set minimum prices for rubber due to scarcity of funds.
The price of rubber changes daily, depending on demand from the global market and large users of raw rubber. Thailand’s rubber exports, however, receive a larger price per tonne, $2,000, whereas Myanmar’s rubber exports only receive $1,500 per tonne, due to lower quality.
U Ohn Than said Myanmar’s rubber exports should therefore improve their production quality if they hope to improve the price they receive.
Factors including slowing global economic growth, lingering effects of Europe’s debt crisis and frequent fluctuations of global oil prices – often as a result of international conflicts – are seen as largely responsible for drops in rubber prices.
Declines in vehicle production in China, one of the world’s largest rubber consuming countries, and large expansions in their rubber production and reserves has seen a fall in rubber imports.
Myanmar has also seen a total expansion of 1.5 million acres in rubber plantation in almostt every staste and region except Kayah, Chin and Magwe, with production increasing 177,125 tonnes in 2013-2014 fiscal year. Mon state produced 10,000 tonnes of rubber in 2013-14 FY in 48,000acres.
Source from Myanmar Business Today, 24-30 July,2014

Government Inspects Manufacturing Business for Licences

Authorities are inspecting manufacturing businesses to uncover unregistered companies as a spread of unregistered small and medium businesses (SME) throughout Myanmar are thought to be undercutting local industrial production.
The Ministry of Industry’s Industrial Supervision unit’s director general U Thein Swe said private industrial businesses are wrong to think registering companies is a time consuming process without commercial benefits.
“There are advantages to being registered such as being eligible for loans and able to employ foreigners. We also share technologies with registered businesses,” he said.
SMEs are currently regulated by Myanmar’s 1990 private industrial law, while an SME Bill is being discussed at the parliament.
U Thein Swe said the government can fine businesses found to be operating without a licence under these regulations. About 50 to 60 unregistered companies are now getting registered every month, he added.
“The law invites businesses to register. If they don’t register we cannot accurately calculate the GDP of the country,” he said. GDP (Gross Domestic Product) is the market value of all officially recognised final goods and services produced in a country. The statistic plays a key role the government’s monitoring of economic

progress and the implementation of development reforms.
But the government’s call for businesses to register isn’t solely based on their own administrative interests.
U Thein Swe said unregistered SMEs face increased land ownership and fraud disputes, which disadvantage local commercial production throughout the domestic sector.
“Registering businesses allows safeguard measures to be put in place, protecting trade and manufacturing licences, and protects weaker industrial sectors from excess foreign investment entering the market,” said a director of Shwe Thundayi cosmetic company.
By making businesses register, the government is attempting to unify industrial efforts and increase national productivity. The Ministry of Industry was restructured in December 2011 by integrating Ministry of Industry no. 1 and 2.
The ministry is also engaging in founding new factories and training facilities to improve or enable the production of transport vehicles, construction and agricultural machineries, and rubber-based and high tech products, officials said.

Private Banks in Myanmar to Raise Intetest Rate

    Two private banks in Myanmar — Kanbawza Bank and Cooperative Bank will raise their interest rates for saving and fixed
deposits starting August 1.
The current interest rate of 8 percent for saving deposits will increase to 8.25 percent, while that for one-month fixed deposit will
rise from 8 percent to 9 percent.
The rates for fixed deposits of three, six and nine months will also rise by 0.75 percent, 0.5 percent and 0.25 percent respectively.
However, the interest rate for fixed deposit of 12 months will remain unchanged at the previous rate of lo percent.
It is expected that all other private banks in the country will follow suit soon, state-run media announced.