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Myanmar

Author(s):
International Monetary Fund
Published Date:
April 1997
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I. Background and Overview

Introduction

1. Since the late 1980s, following almost a quarter century of slow economic development under central planning, the Myanma authorities have taken steps to restructure the economy and increase the role of market forces. Initially, reform measures focussed on stimulating domestic supply through liberalization of the agricultural sector and opening up the foreign investment regime. The reforms have been subsequently extended to opening foreign trade to the private sector as well as legitimizing foreign exchange transactions in the parallel market. In addition, attempts have been made in some structural areas such as the establishment of joint ventures with state enterprises, opening of private commercial banks, simplifying the tariff system, and increasing the scope for private sector activity.

2. However, the reforms so far have been partial and have failed to achieve a fundamental transformation of the economic system. Although there has been a recovery in output mainly due to improved agricultural performance, the economy continues to suffer from the legacy of central planning and macroeconomic imbalances persist. Central to this policy environment has been a reluctance to adjust the official exchange rate which has remained fixed for two decades. Key structural impediments also need to be tackled by comprehensive and mutually-reinforcing reforms, rather than by ad hoc and piecemeal measures as has been the case in recent years. This report reviews the initial reform measures and their results, and assesses the key problems that remain unaddressed. To the extent that data are available, it focuses on developments during 1995/96 (the fiscal year begins on April 1) and the first half of 1996/97.

The partial liberalization efforts

3. The tentative steps toward a market economy adopted since late 1988 were a marked change from those pursued during the previous two decades of economic stagnation under the “Burmese way to socialism,” and consisted of actions in the following areas:

Improving production incentives in the agricultural sector. The Government has gradually liberalized the agricultural sector by allowing farmers to sell most of their output at market prices and by reducing official procurement at below-market prices.

“Open door” foreign investment policy. A liberal foreign investment law was adopted, giving generous fiscal incentives to foreign investors, notably a minimum tax holiday of three years.

Promoting the private sector. The Government has sought to encourage private business by extending fiscal incentives to domestic investors (e.g., the tax relaxation program in 1993). In addition, the Government has encouraged the private sector to engage in export activities by allowing it to retain and trade foreign exchange at the parallel market rate.

Reforming the state enterprise sector. The state enterprises and their supervising ministries have been given limited operating autonomy in certain decisions regarding output and input pricing, investment, and production. They are allowed to reach agreements with private domestic or foreign investors under which they can produce on a consignment basis, lease out their factories, and form joint ventures with these investors. In addition, a limited privatization program for small state enterprises has been initiated, principally with factories and equipment being leased out to domestic entrepreneurs.

Liberalizing exchange and trade policies. While still maintaining the overvalued official exchange rate which applies to virtually all public sector transactions, the Government has taken intermediate measures to effectively depreciate the kyat by shifting transactions to the parallel exchange market. In particular, foreign exchange surrender requirements have been phased out and exporters are allowed to retain foreign exchange for imports of “priority” goods; the market for Foreign Exchange Certificates has been legitimized at levels close to parallel market exchange rates; the tariff structure has been simplified and reduced together with the use of higher customs valuation rate; informal border trade has been legitimized; and foreign currency deposits holdings by residents has been permitted. There is, however, still a government monopoly on exports of several strategic goods and also a licensing scheme for all private importers.

Developing the banking sector. The operation of domestic private commercial banks, some of which can transact in foreign exchange, is now permitted. Many foreign banks have opened representative offices, and banking laws have been revamped to modernize and improve the operations of the two-tier banking system.

Improving the legal and regulatory framework. Several key laws have been adopted: the Central Bank Law and the Financial Institutions Law to improve the framework for the operations of the domestic banking system; the Foreign Investment and Myanmar Citizens’ Laws to grant corporate income tax exemptions to foreign and domestic investors; and several other laws to reduce restrictions on private sector activities in industry and finance.

Economic performance

4. These tentative steps toward a market economy have led to a marked recovery in output, which grew at 8 percent per year during the last four years, with the agricultural sector leading the expansion. The recovery, however, has only been sufficient for per capita income to return to the levels achieved a decade ago. The strong performance of agricultural production has reflected price incentives and marketing improvements following the liberalization of the sector. The increase in rice production also led to an improvement in Myanmar’s external payments situation, especially in 1994/95 when there was a dramatic increase in rice exports. However, these exports declined in 1995/96 as the. Government, with the monopoly on rice exports, retained most local production for domestic price stabilization purposes. The recovery has also extended to production of other major agricultural products such as pulses and beans. In addition, extractive industries, construction, and services have grown rapidly, reflecting recent foreign investment in these sectors.

5. Although there has been a rebound in economic activity, overall macroeconomic stability has not been achieved. High inflation rates (in the range of 20-30 percent per annum) have persisted due to large fiscal imbalances and a lax monetary policy. The budget deficit has remained about 6 percent of GDP in recent years and has been financed almost entirely with credit from the central bank, thus exerting constant pressures on monetary expansion. Although the overall balance of payments deficit has narrowed in recent years, the level of gross foreign reserves has been maintained only through the accumulation of external debt service arrears and occasional import compression.

6. The macroeconomic situation has taken a marked turn for the worse since April 1996. Foreign reserves have plummeted, the value of the kyat on parallel market exchange market depreciated by 40 percent in six months after a long period of broad stability, and inflation has accelerated.

Impediments to growth and stability

7. Overall, the progress on policy reforms has been slow and several essential and interlinked issues have not yet been adequately addressed. Thus, the legacy of central planning continues to hamper development. In particular:

• The overvalued official exchange rate and associated public sector prices have not been linked to market conditions, thus subsidizing inefficient state enterprises that benefit from low input prices, and taxing public sector exporters and private producers subject to official procurement prices. Numerous controls and regulations limiting access to foreign exchange have led to the rapid expansion of informal markets, including for exports and imports. Moreover, the maintenance of a “priority import list” for the use of foreign exchange by private exporters has resulted in serious distortions in trading and production decisions.

• In the agricultural sector, the ban on private exports of paddy and rice and the Government’s continued procurement of part of production have hampered further development of this important sector.

• The revenue-to-GDP ratio has continued to fell, and, despite efforts to contain expenditure, public sector deficits remain large. The tax base has been eroded as much of the increase in economic activity remains untaxed, including in informal markets. Moreover, the existing weak tax administration is unable to cope with the complex tax system with several rates and exemptions. On the expenditure side, military spending has been sustained, while outlays on social services and physical maintenance have been compressed, with detrimental effects on the country’s human and infrastructure capital.

• The public sector deficit has been aggravated by the continued fiscal drain of state enterprises whose financial accounts are integrated with those of the Union Government’s budget, thus preventing the imposition of hard budget constraints. The large, inefficient state enterprise sector still dominates the economy apart from agriculture, and enterprises continue to receive preferential treatment.

• Despite the entry of private banks, the banking system is dominated by a weak state-owned commercial bank and the financial sector remains underdeveloped. In addition, interest rates remain negative in real terms thus discouraging financial savings through official channels and leading to increased currency substitution.

8. Finally, the poor quality of macroeconomic data and extended delays in their compilation have impeded the analysis of economic developments and made it difficult to take appropriate and timely policy actions. Most macroeconomic statistics are distorted by the use of the grossly overvalued exchange rate for public sector transactions and as the basis for official recording. The external accounts also lack sufficient coverage, and there are significant discrepancies between official trade data and data reported in the IMF’s Direction of Trade Statistics. Moreover, as discussed below, Myanmar’s official national income accounts are subject to serious problems, notably: (i) the use of an overvalued official exchange rate for exports, imports and the import content of domestic consumption and investment, and their distorting impact on these aggregates (see Box 3 below); (ii) downward bias in official import data (see Box 8 below); and (iii) the GDP deflators, especially that for consumption which is based on an outdated household expenditure survey without imported products, may be underestimated and hence may result in an upward bias in real GDP growth figures.

II. Real sector

A. Production and Economic Structure

9. After a period of economic stagnation, Myanmar started to implement partial economic reforms towards the end of 1988/89. There has been a strong recovery in output in response to these reforms, with annual economic growth averaging about 8 percent during 1992/93-1995/96. The recovery has been driven by an increase in agricultural production and foreign investment, especially in tourism and extractive industries. Official estimates suggest that the economy grew by 9.8 percent in 1995/96, but this figure may be subject to downward revision because some of the components are likely based on “plan objectives” rather than actual figures.

10. The economic recovery has to be viewed, however, against the background of earlier declines in the country’s standards of living. This had occurred as a result of more than two decades of slow economic growth under the “Burmese way to socialism” that had emphasized centralized planning, state ownership, and autarky. Thus, the output recovery in recent years has helped only to bring real per capita GDP in 1995/96 to its level a decade ago.

11. Agriculture and agro-based industries are the main stay of the Myanma economy and the main source of the recent economic growth. Agriculture along with livestock and fishery accounts for 60 percent of GDP (Table 2), employing more than 64 percent of the work force. The share of the manufacturing and processing sector is about 7 percent of GDP. Forestry and mining industry, despite its significant potential for earning foreign exchange, has accounted for only 1 percent of GDP. Moreover, the private sector accounted for nearly 76 percent of total activity, and produced over 98 percent of agricultural output. By contrast, other sectors such as mining, construction, power, communication and other services were dominated by the state sector (Table 6).

GDP per capita

(1983/84 = 100)

Agriculture

12. During 1992/93-1995/96, annual agricultural output rose by an average of about 8 percent per year. This increase reflects a strong supply response to the Government’s reform measures initiated in late 1988. The two key steps were permitting private trading and liberalizing agricultural prices. The government’s policies on multiple cropping also played a role. As a result, there was a substantial improvement in the agricultural terms of trade (as measured by the ratio of agricultural to nonagricultural GDP deflators, or alternatively, of food to nonfood prices in the Yangon CPI. However, serious distortions and production bottlenecks still exist because the Government continues to procure rice at an extremely low price, hold the monopoly on rice exports, and maintain controls on cropping choice (Box 1).

Agricultural terms of trade

(Index, 1985/86 = 100)

13. Notwithstanding remaining distortions, preliminary data indicate that agricultural output rose strongly by 11.8 percent in 1995/96. Among agricultural crops, paddy is the most important crop amounting to about 13 percent of GDP. Paddy output grew 7.5 percent and other major crops such as pulses and groundnuts showed even stronger performance, increasing by 22.0 percent and 13.8 percent, respectively (Table 8). Favorable climate conditions and steps such as cultivation of summer paddy, double cropping of paddy during monsoon, and triple cropping of paddy in irrigated areas, were major contributing factors to the good performance of the agriculture sector.

Box 1.Agricultural Policy Issues

Myanmar is one of a small number of countries that offer very significant potential for expanded agricultural production with large areas of under-utilized land. Despite a favorable supply response to policy changes initiated since 1988, problems related to procurement of crops, agricultural pricing, and export policies remain as constraints to fuller development of the agricultural sector.

Official procurement and pricing

• A portion of paddy production is still procured on behalf of the Government by the Myanmar Agricultural Produce Trading (MAPT) under the Ministry of Trade of official prices as low as one-sixth of the free market price. In 1995/96, it procured 2.1 million tons of paddy, which was about 10.7 percent of total paddy output (Table 11). The procurement system lowers the average farmgate price received by the farmers relative to the average price paid by private traders. This reduction varies slightly across the three principal paddy growing regions because while the paddy procurement price is fixed across regions, different amounts are procured by each region. The procurement amount is determined per acre, and varies from 5 baskets/acre in one region, where traditional paddy varieties are grown, to 12 baskets/acre in the other two regions in which rainfed high-yielding varieties and irrigated high-yielding varieties are cultivated.

Export policies

• Since private traders are not permitted to export rice, farmers have a tendency to avoid supplying to the state by underreporting harvests and delivering the poorest quality portion of the harvest. This has reduced availability of quality rice for official exports.

Land use policies, fertilizer availability, and other bottlenecks

• Expansion of farm size to exploit greater returns to scale has been limited by land policy. All lands belong to the state and farmers may lease parcels for agricultural purposes. Officially, a household is not permitted to lease more land than it is able to till. The authorities plan to implement new provisions that will relax this limit in the future. Furthermore, various measures are taken in practice to expand holdings, including the hiring of contract laborers who are in fact leaseholders.

• Even though availability of chemical fertilizers has recently improved because of increased domestic production and imports, total supply is still insufficient to meet requirements. Domestic production accounts for less than half of total supply and imports are often limited by overall availability of foreign exchange (Table 15).

• The Government still maintains controls on cropping choice and access of farmers to credit and irrigation is limited.

14. In addition, there have been efforts to increase cultivated farmland that focus on increasing areas under irrigation. As a result, area under cultivation increased by some 27 percent from 10.3 million hectares in 1991/92 to 13.1 million hectares in 1995/96 (Table 9). As the cultivated area of paddy rose rapidly to 6.2 million hectares in 1995/96, paddy production expanded to 19.6 million metric ton in that year, reflecting also an increase in productivity (Table 8) that was linked with a rise in the use of fertilizers (Table 15).

Forestry

15. The forestry sector has been a major source of foreign exchange earnings through exports of teak and other tropical hardwoods. In 1995/96, these exports increased by 13.5 percent to $203.8 million, or about the same level of 1993/94. However, value added of the forestry sector is estimated to have declined at an average annual rate of 5.3 percent during the last four years. The decline was mainly due to the ban on extraction of teak and hardwood in border regions and on extraction of hardwood by private entrepreneurs. This was motivated in part by environment concerns (see Appendix II) and the desire to prevent illegal and indiscriminate logging arising as result of the ban on logging in neighboring Thailand. To increase the value added of the forestry sector, the authorities have encouraged the establishment of joint ventures with foreign partners to manufacture plywood, veneer, and furniture.

Livestock and fisheries

16. After a mediocre performance in previous years, net value added of the livestock and fishery sector rose by 6-7 percent in 1994/95 and 1995/96, because of a significant increase in pigs and poultry production. Although fish production had remained stagnant in the last two years, the quality offish products was upgraded and their exports rose to an average of some $30 million during the last two years, the bulk of which came from exports of prawns. In line with the government’s policy of promoting foreign investment in new industries, seven joint venture fishery companies with foreign investors were recently established and are now under full operation.

Mining

17. Mining in Myanmar is largely controlled by the public sector which accounts for about 59 percent of the value added of mining output, with cooperatives accounting for much of the remainder (Table 6). Myanmar’s most important mineral resources are coal, tin, tungsten, lead, zinc, gold, copper, and precious stones. After a sharp decline caused by political unrest in the late 1980s, annual mining output has rebounded in the 1990s at double-digit rates of growth, owing to a surge in foreign investments and increased participation by domestic entrepreneurs—especially in gold and copper mining. In 1995/96, the mining sector showed a growth rate of some 21 percent with increased production of gold, lead, and zinc.

Energy

18. Myanmar’s energy production includes crude oil, natural gas, coal and hydroelectricity, with the latter two comprising only small portions of total production. After increasing in 1993/94 and 1994/95, production of commercial energy declined by 6 percent in 1995/96, particularly due to the continued decline in crude oil output which dropped 27 percent in 1995/96 (Table 20) because of acute shortages in drilling and well completion equipment. As a result, exports of oil products diminished to 210,000 barrels in 1995/96 (Table 21), which was about one-fourth of the previous year’s volume. In contrast, natural gas output continued to increase by 11.7 percent in 1995/96, still not sufficient to offset the large decline in crude oil production in meeting domestic energy requirements.

19. The distribution of petroleum products is handled by the Myanma Petroleum Products Enterprise (MPPE). Allocation quotas are set by the Government for each industry, with the agriculture, transportation, fisheries, forestry, and export sectors receiving priority (Table 23). As for energy prices, despite a large adjustment in September 1994, they remained substantially below world market prices. Recently, MPPE has decided to make about 10 percent of its gasoline and diesel sales (in physical terms) at “mixed prices”, i.e. including also in the price a component in foreign exchange quoted at the free market rate, which bring them much closer to parallel market prices.

20. Foreign investment in the energy sector has been strongly encouraged in recent years. Production sharing contracts have been signed with several foreign companies (Total, Unocal, Texaco, Arco, and Petroleum Authority of Thailand) involving crude oil and natural gas (Box 2). However, most of these ventures are still at the exploratory or development stage. Actual extraction is expected to start in 1998 at the earliest.

Manufacturing and processing

21. The manufacturing and processing sector—which comprises mostly agro-based industries—also achieved a relatively high growth in recent years, reaching 11.7 percent in 1995/96, albeit from a small base. Despite the shortage of raw materials and spare parts caused by limited foreign exchange availability, the production of light industries rose strongly by 34 percent in 1995/96, compared with only 1 percent in 1994/95, on account of large production increases in textile (55 percent), pharmaceutical products (35 percent), and paper and chemical sector (33 percent). However, low capacity utilization remained a serious problem; it stood at 76 percent for the light industry and 36 percent for the heavy industry in 1995/96 (Table 18).

Tourism

22. Tourism in Myanmar has been one of the fastest growing industries. A separate Ministry for Hotels and Tourism was established in 1992 and a Myanmar Hotels and Tourism Law promulgated in 1993. The tourism industry is also now opened to the private sector. The ministry has recently designated 1996-97 as “Visit Myanmar Year” to promote tourism in Myanmar, particularly from ASEAN countries. The number of visitors to Myanmar before 1988 had been insignificant; by 1995/96 it jumped to 137,320, an average annual increase of 50 percent during the period. However, there were only 69,000 visitors during the first six months of 1996/97, far below the official target. Income from tourists amounted to some $47 million in 1995/96 but reached only $14 million during the first six months of 1996/97. The main cause of these declines had been an international movement to boycott tourism to Myanmar on account of concerns about political and social conditions.

Box 2.Foreign Contracts in Oil and Gas Sector

Foreign investment in oil and natural gas sector has been strongly encouraged in recent years. Most foreign investment has been concentrated in offshore oil and gas under production sharing contract terms. So far, two large contracts for natural gas sales have been concluded. One related to the YBTAGUN field was developed by TEXACO, PREMIER, NIPPON, and the Myanmar Oil and Gas Enterprise (MOGE) to export natural gas to Thailand around mid-1999. The other was for the YADANA oil and natural gas field for which a pipeline to Thailand is presently under construction (see below).

Investment in Oil and Gas

1993/941994/951995/961996/97(Est.)
Onshore
Foreign (mil. US$)13.213.62.34.6
MOGE (mil. Kyats)140.0206.0246.2277.6
Offshore
Foreign (mil. US$)56.448.779.1148.7
MOGE (mil. Kyats)0.00.00.00.0

Yadana Gas Field Project Summary

* Partners: TOTAL (France)-31.2 %, UNOCAL(U.S.)-28.3%, PTTEP(Thailand-25.5%, MOGE(Myanmar)-15%

* Buyer: PTTEP

* Project life: 30 years

* Commencement of delivery: July 1, 1998

* Daily contract quantity: 525 million cubic feet per day for export to Thailand and 125 million cubic feet per day for Myanmar domestic use

Source: Information provided by the Myanma Authorities.

B. Aggregate Demand

23. Official national income accounts by expenditure category (Tables 3, 4, and 5) need to be interpreted cautiously because of serious valuation problems. In particular, the continued use of the overvalued official exchange rate to evaluate all foreign exchange related transactions has led to an underestimation of exports, imports, and the import content of domestic investment and consumption. (See Box 3 for a calculation of exchange rate adjusted GDP). Keeping this caveat in mind, the official data suggest that consumption has been increasing as a share of GDP, while investment has been declining.

Box 3.Sources of Biases in Official GDP Data

Dual exchange rate system

The use of the official rate grossly undervalues exports, imports, and the import content of consumption and investment in the national income accounts, as the kyat’s market value has been about 20-30 time more than the official rate, which has remained at about 6 kyats per dollar.

As shown by the results below, official GDP data have deviated from exchange rate adjusted GDP by 15 percent on average during 1992/93-1995/96. The exchange rate adjusted GDP has been calculated by revaluing foreign exchange components in national accounts based on official estimates. Among aggregate demand components, investment with 58 percent of import content on average tends to be markedly understated using official exchange rates.

Extralegal activities

Some external activities may not be recorded in the official statistics. They include illicit, unrecorded exports of teak, jade, rice, and opiates. In addition, the IMF’s Direction of Trade data suggest that Myanmar’s trade data may be understated.

Calculation of Exchange Rate-adjusted GDP(at current prices, kyat in billion)
1992/931993/941994/951995/96
GDP
Official249.4358.5473.2613.2
Exchange rate adjusted298.9386.2556.6690.9
Consumption
Official217.4318.5416.7543.6
Exchange rate adjusted255.4362.4478.4599.2
Foreign ex. portion (mil. US$)390.7487.6610.5495.9
Local currency portion215.0315.5413.1540.8
Investment
Official33.844.858.573.0
Exchange rate adjusted73.570.5114.9163.5
Foreign ex. portion (mil. US$)408.5284.7557.8807.0
Local currency portion31.343.155.268.4
Net Exports
Official−1.8−3.0−2.0−3.5
Exchange rate adjusted−30.0−46.7−36.7−71.8
Foreign ex. portion (mil. US$)−290.1−485.3−342.9−609.6
Official ex. rate (average, k/dollar)6.126.145.875.70
Parallel ex. rate (average, k/dollar)103.496.3107117.8
Sources: Data provided by the authorities; and staff estimates.
Sources: Data provided by the authorities; and staff estimates.

24. In 1996/97, as real GDP growth is estimated to slow to some 6 percent, demand pressures remain intense on account of a persistent fiscal deficit and lax monetary policy. During the first six months, there was a sharp increase in net credit to the public sector resulting from higher deficit financing. As credit to the private sector also expanded rapidly (albeit from a small base) by 45 percent, 12-month growth of broad money accelerated from 30 percent during 1995/96 to 40 percent as of September 1996. As a result, inflation—after having declined in the early months—rebounded again in the latter part of the year, and there have been a sharp deterioration of the parallel market exchange rate.

C. Prices, Employment, and Wages

Prices

25. Inflation, which averaged about 27 percent in 1991/92-1994/95, slowed to 12.5 percent in 1995/96 (Table 28). This reflected moderate price increases of major food items resulting from a reduction in rice exports and hence improved domestic food supply conditions. In particular, rice exports were reduced from 1 million tons in 1994/95 to 350,000 tons in 1995/96, despite broadly unchanged domestic production of 10-10½ million tons. In addition, there was a slowdown in domestic liquidity expansion linked to a smaller fiscal deficit in 1995/96. This declining inflation trend extended into the early part of 1996/97 when the 12-month inflation rate fell to a low of 7.7 percent in July 1996. However, on account of continued demand pressures in the latter part of the current year, inflation picked up to a 12-month rate of 23 percent in October 1996.

26. There are a number of problems with the official consumer price index. The most serious defect is that the current CPI, which is based on an outdated consumption basket established in 1986, is estimated to significantly understate actual inflation because: (i) the weight assigned to rice—the price of which has sharply increased in recent years—has remained virtually unchanged at a very low level; and (ii) the exclusion of imported products has not reflected their sharp price increases due largely to the depreciation of the parallel market exchange rate. According to official estimates, actual household spending on rice accounts for as much as 40 percent of total spending, while rice has only a 9.8 percent weight in the CPFs basket. In addition, the index tends to give insufficient weight to movements in free market prices as opposed to much lower and more stable official prices (Table 29).

27. Furthermore, the dual pricing system for public sector goods is complex. On the one hand, prices of goods up to the predetermined amount of official procurement are sold to the Government and to other state economic enterprises on a cost-plus basis; these are often significantly below market prices as they fail to cover actual capital consumption at replacement cost and regularly value import content at the overvalued official exchange rate. On the other hand, output over the official procurement targets can be sold at free market prices, sometimes with the required payment being partially in foreign exchange (under the system of “mixed prices”). For some products, therefore, market prices are much higher than official prices. For example, the gap between the free market and official prices for gasoline and other petroleum products can be as much as ten fold. This distorted price mechanism has resulted in inefficient allocation of inputs and given rise to widespread rent-seeking activities.

Employment

28. During the period 1990/91-1995/96, employment rose on average by about 2.5 percent per annum, compared with an annual population growth of 1.9 percent. The bulk of newly created jobs were in the private sector, notably in agriculture, trade, and manufacturing (Table 26). Out of total employment of 17.6 million persons in 1995/96, 64 percent were engaged in the agriculture sector, followed by the trade sector (9.8 percent), and the manufacturing and processing sector (8.4 percent). The private sector, including cooperatives and formers, accounted for over 90 percent of total employment in 1995/96.

Wages

29. Except for the general salary increase in April 1993, there have been no significant changes in wage rates and the minimum wage in the public sector since 1990. The lowest or minimum salary level per month is K 600 and the highest is K 2,500 for public sector employees, which are approximately about $3.5 and $14.7 as converted at the parallel exchange rate. Despite these extremely low levels of wages in the public sector, which fall far short of those in the private sector, there has been no major reduction of public sector employment. Indeed, there are little incentives for public sector employees to quit voluntarily, because of extensive noncash benefits provided to them in addition to salaries, including: (i) the provision of essential staples such as rice, cooking oil, sugar, and soap at official prices which are, on average, more than 50 percent below free market prices; (ii) the provision of consumer goods produced by state economic enterprises at low ex-factory prices; (iii) free bus transportation or car allowances for high-level officials for commuting; (iv) subsidized housing; and (v) bonuses paid to workers of profit-making state enterprises.

III. PUBLIC FINANCE

A. Structure of the Public Sector

30. The public sector in Myanmar consists of the Union Government, local authorities, and 58 state economic enterprises (SEEs), including 7 financial institutions. The Union Government (UG) includes the State Law and Order Restoration Council (SLORC), other central government organizations, and ministries and departments. The local authorities—town and city development committees—govern municipalities and townships.

31. The financial links between the SEEs and the Union Government are important to assess the performance of Myanmar’s public sector, particularly since the introduction of the State Fund Account (SFA) in fiscal year1 1989/90. Under this system, the finances of all SEEs are combined with those of the UG’s administrative departments into the common SFA pool. All SEEs’ revenues flow into this pool and all expenditures are disbursed from it—resulting in effective control of their finances by the UG. They are obliged to contribute net receipts to the budget, initially as a “contribution” that is budgeted at the beginning of each fiscal year and as the residual surplus if any remains at the end of the year. Similarly, they receive a direct subsidy from the budget if a current deficit is accrued at the end of the year. The total net current deficit—as incurred in recent years—by all SEEs is added to the UG’s current expenditure while their total capital expenditure is added to the UG’s capital expenditure to establish the consolidated accounts. Apart from the link through the SFA, SEEs also contribute indirectly to government revenues through payments of commercial and income taxes and customs duties.2

B. Developments in 1992/93-1994/95

32. The financial operations of the UG and SEEs and their consolidated accounts in recent years are summarized in Table 30 and Chart 2. During 1992/93-1994/95, the persistent annual fiscal deficits were caused mainly by a steady decline in the revenue-to-GDP ratio, and the Government responded to this development by containing expenditure. Furthermore, in the absence of external financial assistance, these deficits were almost entirely covered by domestic bank financing. In this period, revenue dropped from 7.9 percent of GDP to 6.8 percent, continuing the declining trend of the last several years. Despite the tight control on current expenditure—mainly by restraining real wages and curbing social sector spending—the overall deficit rose from 5 percent of GDP in 1992/93 to 6.3 percent of GDP in 1994/95. These annual deficits continued to be covered through government sale of treasury bills to the central bank, in addition to the accumulation of arrears on external debt service payments.

CHART 1MYANMAR: REAL SECTOR DEVELOPMENTS, 1990/91–1995/96 1/

Sources: Data are provided by the Myanmar authorities; and staff estimates.

1/ Fiscal years run from April through March.

2/ Yangon consumer price index.

CHART 2MYANMAR: PUBLIC SECTOR OPERATIONS, 1992/93-1996/97

(In percent of GDP)

Source: Data provided by the Myanma authorities.

1/ Includes grants.

2/ Includes unidentified expenditure.

33. Despite the continued growth in economic activity, there has been little buoyancy in the country’s revenue system, reflecting the Government’s tendency to undertax the economy and serious collection deficiencies:

  • • With much of the recent pickup in economic activity associated with the growth of agriculture—accounting for over half of GDP—and that of the informal sector, virtual tax exemption of agriculture3 and booming informal activities have kept them out of the tax net and contributed to the declining trend in the revenue-to-GDP ratio.
  • • The failure of tax yields to keep pace with income growth has also been linked with the overvalued official exchange rate, which tends to seriously limit the tax base, causing the undervaluation of dutiable imports and of the import component base of the commercial tax.4 In addition, customs duties were applied with a large number of rates—23 rates ranging from zero to 500 percent, rendering their collection cumbersome and ineffective. To partly alleviate these difficulties, the tariff structure was reformed in June 1996, and a new customs valuation rate was imposed (see Box 4 below).
  • • The domestic income tax has been inelastic to rising incomes as the Government reduced the tax burden to encourage investment and production, through a large domestic tax relaxation program in 1993 and generous tax holidays to foreign investors.
  • • The policy of setting below-market prices for SEEs’ products has lowered their budgetary contributions.
  • • The complexity of the tax system has complicated administration and depressed revenue performance. Examples include: the low-yielding profit tax currently applied to small domestic companies, the large number of rates applicable to commercial and income taxes, the long list of 65 goods exempt from commercial tax, and low yields collected on stamp duties as well as on the land tax and water rates.

34. On the expenditure side, the Government tried to contain total spending to about 13 percent of GDP between 1992/93 and 1994/95 by limiting both current and capital outlays. The bulk of the adjustment has been borne by social sector spending and public sector wages, while sustaining military spending. Indeed the share of expenditure on social services declined sharply to 1.2 percent of GDP (9 percent of total expenditure) in 1994/95, while military spending was still kept at 3 percent of GDP (23 percent of total expenditure) in that year—although declining from the peak of 3.9 percent of GDP (one third of total expenditure) during the previous year.5 Capital outlays, after having declined to a low of 4.3 percent of GDP in 1993/94, also rose to 5.4 percent of GDP in 1994/95 as the Government accelerated spending on public works and housing construction for low-income groups (Table 30). Although the restrained spending policy helped to limit overall budget deficits, its sustained bias against current expenditures for social services and maintenance and repair has adversely affected the country’s human and infrastructure capital stock (see the discussion of poverty issues in Section III.E.).

C. Recent Fiscal Performance

35. In 1995/96, despite a further decline of the revenue-to-GDP ratio, the Government was able to achieve a slight improvement of the overall deficit by further depressing current outlays and turning the current account balance into a small surplus. Revenue deteriorated to 6.4 percent of GDP, while current expenditure was curtailed sharply to 6 percent of GDP from 7.7 percent of GDP during 1994/95. As capital expenditure rose only slightly by 0.3 percent of GDP to 5.7 percent of GDP in 1995/96, the overall deficit was reduced by more than one percentage point to 5.2 percent of GDP in 1995/96. However, the two fundamental weaknesses still remained: (i) this deficit continued to be financed almost entirely by the banking system and thus aggravating inflationary pressures; and (ii) the expenditure reduction reflected cuts in spending on social services (Table 30).

36. Reflecting an inelastic tax system for the reasons noted above, the continuing decline of total receipts as a share of GDP was due to a fall in tax revenue from 4.3 percent of GDP in 1994/95 to 3.7 percent of GDP in 1995/96. The Government’s response to weakening of fiscal receipts was to depress further current expenditures, especially those related to social sectors which declined to below 1 percent of GDP in 1995/96. Meanwhile, the share of military-related expenditures increased slightly to 3.2 percent of GDP.

37. For 1996/97, however, the overall deficit is projected to rise again to 5.6 percent of GDP on account of a further decline in the revenue-to-GDP ratio to 6 percent while expenditure is expected to remain constant at 11.6 percent of GDP. This deficit is again expected to be financed primarily by credit from the central bank, although external debt service arrears also continue to accumulate. For the first half of 1996/97, net bank credit to the Government rose by K 18 billion; for the whole year, this financing is projected to reach K 42 billion or about 5.3 percent of GDP (equivalent to about 21 percent of broad money at the end of 1995/96), compared with 4.7 percent of GDP in 1995/96.

38. Tax revenues are expected to remain constant at 3.7 percent of GDP in 1996/97 despite significant increases in customs duties and the commercial tax associated with the June 1996 tariff reform and increase in the customs valuation rate to K 100 per dollar (see Box 4). Thus, the decline in total revenue is due to weak nontax revenues. The Government is expected to contain total expenditure by compressing further current expenditure to 5.6 percent of GDP, a reduction of 0.4 percent of GDP compared to the previous year, while allowing capital expenditure to rise slightly by the same amount. Within current expenditure, the transfers needed to cover SEEs’ deficits and military spending are expected to fall relative to GDP.

Box 4.Reform of the Tariff Structure and the New Customs Valuation Exchange Rate

In an attempt to increase revenue from customs duties and simplify the tariff regime, effective June 1, 1996, the authorities (i) changed the customs valuation rate from KY 6 per dollar to KY 100 per dollar; (ii) specified the invoice value of imported goods rather than the value based on administered prices as the base for the tax; and (iii) replaced the old tariff rates, ranging from 0 to 500 percent, with new rates ranging from 0 to 40 percent (See details in Appendix I, Table 1-3).

The new valuation rate combined with reduced tariffs helped increase significantly customs duties and the commercial tax in the first six months of 1996/97. Total amount of customs receipts during this period amounted to kyat 3.8 billion, equivalent to 85 percent of collections for all of 1995/96.

D. State Economic Enterprises (SEEs)

39. The state enterprise sector, which consists of 58 SEEs controlling some 1600 factories, plays an important role in the economy: it accounted for about 24 percent of GDP in 1995/96, and over half of the industrial value added. SEEs employed some 300,000 workers, or about one third of the public sector’s work force. However, as the largest number of SEEs are in trade, industry, and finance rather than in the primary sectors (absorbing the bulk of employment), the state enterprise sector’s share in total employment was relatively small at only about 8 percent. SEEs also accounted for more than half of exports and some 40 percent of imports in 1995/96. As mentioned above, the financial operations of the SEEs are integrated with the Union Government’s budget, which impedes a proper assessment of the impact of fiscal policy and the efficiency of the public enterprise sector. Besides their direct contributions, SEEs also contribute about 40 percent of tax revenues through payments of commercial tax, customs duty, and income tax. In turn, they receive direct subsidies from the Government to cover their current deficits as well as capital expenditures. This accounting is incomplete because it excludes many subsidies received indirectly by SEEs—e.g. through the maintenance of the overvalued official exchange rate—and cross-subsidies through controlled input and output prices. It is, therefore, difficult to ascertain the net financial position of the state enterprise sector and its fiscal drain. Moreover, after the conversion of SEEs’ bank loans into noninterest bearing government equities in 1989, SEEs have not been allowed to borrow from the banking system and instead received cost free annual budget allocations.

40. Since 1989/90, the Government has attempted to restructure the state enterprise sector and initiate a privatization program. Most notably, SEEs are allowed to reach agreements with private domestic or foreign investors, under which they can produce on a consignment basis, lease out their factories, and/or form joint ventures with these investors. The other actions, aimed at liberalizing both output and input prices for the SEEs and increasing their managerial and financial autonomy, include:

  • Output prices: Before the reform, output prices were strictly controlled at levels that are typically unrelated to production costs. The SEEs now operate under a dual pricing system. They can sell, under the new system, at free market prices any surplus of production remaining after government procurement or other state enterprise requirements sold on a cost-plus basis. In view of low capacity utilization, however, it is estimated that only about a quarter of SEE output is sold on the free market.
  • Input prices: Before the reform, all crops used as industrial raw materials were procured by SEEs at low official prices set by the Government without competition from the private sector. In the case of crops not subject to compulsory procurement at official prices, they now have to compete with private traders to purchase crops needed as industrial raw materials. At times this has led SEEs to offer higher prices to commercial farmers than were offered by private traders. Important divergences still exist, however, for some products, e.g. paddy, wheat and sugarcane.
  • Operating autonomy: SEEs are allowed limited autonomy regarding output levels, product mix, employment and wages, marketing and distribution, external trade, and investment, but key decisions continue to be made by supervising ministries. In addition, in 1993 the Government sought to increase financial autonomy by allowing SEEs to establish foreign currency revolving funds. Under this system, SEEs can supplement the initial allocation of foreign exchange from the Government into these funds with their own resources generated by foreign trading activities financed from the revolving funds themselves. They have the authority, with permission from their line ministries, to make use of the revolving funds to procure needed imported products without prior approval by the Ministry of Finance and Revenue.

41. Although the above reform measures have altered many features of the operating environment for SEEs, they have not effectively addressed the underlying major distortions that have constrained the performance of the public enterprise sector. Effectively, price liberalization has been limited and a large share of SEEs’ products are still subject to government procurement or inter-enterprise purchases. Most importantly, the continued use of the overvalued official exchange rate for most external transactions of SEEs also means that their ex-factory prices (used as a basis for cost-plus pricing) continue to be substantially below market prices. Moreover, the lack of financial transparency between SEEs’ operating results and budget transfers has made it difficult to impose hard budget constraints.

42. As a result, although some SEEs have achieved improvements, the aggregate financial results of the sector have deteriorated over recent years. Its overall deficit more than doubled since 1991/92 to the equivalent of 3.8 percent of GDP in 1995/96, accounting for over half of the public sector’s deficit in that year.

43. Slow progress has been made in the privatization program. In view of initial good operating results by some newly established joint ventures with foreign investors or some restructured factories, the line ministries have been reluctant to release more enterprises for privatization. Indeed, although a Privatization Commission and the two related Valuation Committee and Land Analyzing Committee had been operating since January 1995, there was no formal deadline or clear agenda for their work. The line ministries are more interested in forming new producing units and joint ventures to retain or increase their influence. Moreover, the policy emphasis has been also on leasing rather than on outright sales to avoid the rush into fire sales; consequently, the current effort is to redress the SEEs’ balance sheets before proceeding to their eventual offer for bidding. The privatization plan announced in 1995 was to offer 59 companies. At present, most were privatized except for fifteen cinema halls and one canning factory. Thirteen mills and factories were leased out to domestic entrepreneurs. For the near future, plans for sale/leasing are being finalized for the remaining units and a small number of new enterprises, with emphasis again on leasing given the enthusiasm shown by local investors for this form of privatization and lack of local capital to acquire these factories.

E. Poverty Issues

44. Myanmar is among the poorest countries in Asia. As discussed above, per capita income has only recently returned to the level attained a decade ago, and it still remains below its level in 1980. This, together with some other comparative ratios with neighboring Asian countries on fertilizer use, commercial energy use, rural lending per hectare, and exports per capita (Box 5), indicates that the level of development is a major economic policy issue. However, the lack of accurate social data and information, notably an updated nationwide household expenditure survey, prevents a full grasp of poverty problems beyond some indications as discussed below.

45. The country’s present population is around 45 million, of which 75 percent are living in the rural area where farming is the main occupation; about half of the total population is estimated to be actively engaged in agricultural production. The estimated life expectancy of the Myanmar people is 60.4 years. Nearly 25 percent of the population are classified as poor and they are mostly uneducated, underemployed, and landless. Poverty is most severe in the central dry zone, hilly regions, and the border areas. As some rough indicators of the incidence of poverty, the proportion of population without access to health services and safe water was 52 percent and 70 percent respectively. Expenditure for social sectors was less than 1 percent of GDP in 1995/96. However, the literacy rate is about 78 percent—above the average in Asia. Some 85 percent of total education expenditure is allocated for the primary and secondary levels and the rest for the tertiary and higher education.

Box 5:Poverty Issues: Selected Comparative Ratios Between Myanmar and Asian Countries

Fertilizer use:Myanmar (1994/95)13.2kg./ha.
(Per ha. arable land)Indonesia (1992/93)114.7 kg/ha
Commercial energy useMyanmar (1993)39 kg. per capita
(Oil equivalent)Vietnam (1993)77 kg. per capita
Indonesia (1993)321 kg. per capita
Rural lending per hectareMyanmar (1994)$2
Vietnam (1994)$42
Exports per capitaMyanmar (1993)$13
Bangladesh (1993)$20
Vietnam (1993)$43
Pakistan (1993)$54
Sri Lanka (1993)$162
Indonesia (1993)$178
Thailand (1993)$628
Source: “Prospects for Sustainable Growth in Myanmar/Burma” (mimeo.) by David Dapice, Harvard Institute for International Development, September 1995.
Source: “Prospects for Sustainable Growth in Myanmar/Burma” (mimeo.) by David Dapice, Harvard Institute for International Development, September 1995.

46. The key objective of rural reform in recent years has been to boost agricultural productivity and cultivated acreage as mentioned earlier. Facilitated by good weather conditions, agricultural output—after having recorded negative rates of growth before 1991/92—has risen steadily since 1992/93 and helped improve rural employment, farm incomes, and general standards of living. In addition, “food poverty” has not generally been an issue—except during some emergency years with harvest problems. Average food intake is estimated at 114 percent of nutritional requirements, and compared to some of the Asian countries, Myanmar has relatively higher average intake levels in calories per capita.

IV. Money and credit

A. The Financial Sector

47. There have been rapid advances in the financial sector during the 1990s, most notably with the entry of private banks. The banking system, nevertheless, is still dominated by state-owned banks, especially the Myanmar Economic Bank (MEB) which holds about 75 percent of private sector deposits (Box 6). The financial sector remains severely underdeveloped, and financial repression is extensive, albeit on a declining trend. For example, currency in circulation accounts for 70 percent of the domestic money supply.6 Thus, the banking system barely fulfils its core functions, including mobilizing domestic savings in a safe and efficient manner, channeling these savings to their most productive uses, and providing a widely available means of making and receiving payments.

Box 6.The State-Owned Banks

Despite the rapid increase in the number of private banks, the financial sector is still dominated by the following 4 state-owned banks:

  • Myanmar Economic Batik (MEB) is by far the largest bank. Through its extensive branch network, MEB captures about 70 percent of all private domestic currency transactions. The bank also handles the public sector’s accounts, including banking activities of the state economic enterprises. In recent years, MEB is reported to have made a loss of about 1 billion kyats per year. The main reasons for MEB’s financial problems are a number of quasi-fiscal operations. These include (i) large non-interest bearing assets, partly originating from 1989 when the bulk of outstanding credit to state economic enterprises was swapped for government equity, and partly from 1990-93 when a scheme which provided housing loans with zero interest for civil servants was in place, (ii) highly concessional lending to economic cooperatives, and (iii) transaction costs associated with administrating the government’s and the state economic enterprises’ financial accounts.
  • Myanma Foreign Trade Bank (MFTB) handles the bulk of foreign exchange transactions (see Table 39), although it no longer has monopoly in this regard. As deposit rates for foreign exchange accounts have been zero until recently, MFTB has always made large net profits.
  • Myanma Investment and Commercial Bank (MICB) is also a profitable bank. It was established to meet specific needs of exporters, importers, foreign investors, and joint ventures. MICB deals in both domestic and foreign currencies and has emerged as a competitor to MFTB.
  • Myanma Agricultural and Rural Development Bank (MARDB) provides short-term crop loans to farmers through a network of village banks. The village banks collectively guarantee repayments. MARDB is not governed by the financial institutions law, but by the specific MARDB law. However, the intention is to start full banking business in the near future, and to turn MARDB into an independent commercial bank governed by the same regulations as other financial institutions.

48. In line with the initiatives to reform the economy, a new Central Bank Law as well as a Financial Institutions Law were enacted in 1990. The laws opened up the financial sector for private banking initiatives, and thereby facilitated the expansion of private sector activities in the economy. The first private bank started to operate in 1992, and there are now 20 private domestic banks in operation. In addition, 43 foreign banks have been granted licenses to open representative offices in Myanmar, and several joint venture banks are planned to start business in 1997. These advances in the financial sector in recent years partly reflect an increase in demand for financial services associated with the gradual transformation of the economy toward greater market orientation.

49. Despite the large increase in the number of private banks, they have so far shown significant profits. A combination of high growth in private sector activities and negative real interest rates (see below), have led to a strong demand for credit. Still, in light of the economic and political uncertainty, the banks have pursued a cautious strategy and most of the lending has been for short-term financing of working capital. The banks have in general complied with existing regulations (Box 7). Available information suggests that the share of nonperforming loans has been below 1 percent for most banks, and although a few banks have been penalized for liquidity shortfalls, the amounts have been minor. It remains difficult, however, to assess the true health of the banking system in the presence of pervasive price distortions.

B. Monetary Policy Issues

50. The Central Bank lacks autonomy and monetary policy has been dictated primarily by fiscal developments and the need to finance the consolidated budget deficit.7 Thus, monetary policy has attempted to focus on affecting savings and lending within the private sector, mainly by infrequent adjustments of the central bank rate.8 The commercial banks are required, by law, to set the deposit and lending rates within a range of −3 percent to +6 percent of the central bank rate, respectively. After several years of unchanged interest rates, the central bank rate was raised from 11.0 percent to 12.5 percent in January 1995, and further to 15.0 percent in April 1996 (Table 37). Despite these increases, interest rates have remained negative in real terms, and credit to the private sector has continued to expand rapidly (see paragraph 54 below).

Inflation and annual growth in money and public Motor credit

51. The main effect of interest rate increases has been a shift from demand deposits to savings deposits. Hence, growth in quasi-money has outpaced growth in narrow money, and the currency-deposit ratio has fallen from 2.3 in March 1995 to 1.7 in September 1996 (Table 35). This development also reflects the expansion and deepening of the financial sector, including the strong increase in private banking. Moreover, along with the emergence of a more competitive financial sector, confidence in the banking sector has apparently increased, and velocity has fallen over the last two years.

Box 7.Regulatory Framework of the Banking Sector

Along with the rapid increase in private banking, a number of measures have been taken to strengthen the regulatory framework and the supervision of the banks. The supervision department of the central bank, which has 12 officers and about 100 staff, undertakes both off-site and annual on-site inspections of the banks. The regulatory framework includes the following:

  • • A reserve requirement of 5 percent and 10 percent on time deposits and demand deposits, respectively. At least 75 percent of the reserves must be held as non-interest deposits with the central bank, and the rest in cash. In addition, there is a liquidity ratio of 20 percent, i.e., the banks must hold 20 percent of their total liabilities in liquid assets, defined as excess reserves, T-bonds, and deposits with other banks. (Banks are penalized for liquidity shortfalls, amounting to 0.2 percent per day of the total shortfall.)
  • • Nonperforming loans must be classified as “sub-standard”, “doubtful”, or “bad”, when principal or interest payments are overdue 6-12 months, 12-24 months, or above 24 months, respectively.
  • • Banks are required to maintain a general provision of 2 percent of the total stock of outstanding loans. In addition, the banks must set aside 50 percent and 100 percent provisions for any “doubtful” or “bad” loans, respectively.
  • • Banks are not allowed to lend more than 20 percent of their capital plus reserves to a single individual or enterprise.
  • • The banks must inform the Central Bank about their reserve position and liquidity ratio on a weekly basis, and on their capital adequacy ratio on a monthly basis.

52. The Central Bank has also initiated sales of Treasury bonds, with 3-year and 5-year maturities. Along with the rise in the central bank rate in April 1996, interest rates on the T-bonds were raised from 10.0 percent to 13.5 percent for bonds with 3-years maturity, and from 10.5 percent to 14.0 percent for bonds with 5-year maturity. These rates are fixed as there are no official auctions. Typical buyers of the T-bonds are private banks and larger private enterprises. Although sales of T-bonds have increased over the last year, the total outstanding stock is still very small, amounting to about 2.8 billion kyats (Table 38).

C. Recent Monetary Developments

53. The overall financial situation deteriorated during the first half of 1996/97, after showing signs of improvements in 1995/96. Broad money growth, which fell to 29 percent in 1995/96 from 42 percent a year earlier, accelerated again to 39 percent in the twelve months to September 1996 (Table 35). Inflation which had dropped to 12½ percent during 1995/96 from 26½ percent a year earlier, also rebounded and reached 23 percent in October 1996 (12-month rate). The main driving force behind these monetary developments is the financing need of the public sector, as the Central Bank routinely finances virtually the entire fiscal deficit by buying Treasury bills from the government.9 Indeed, following an improvement in the fiscal stance, the 12-month growth rate in credit to the public sector fell to 24 percent in 1995/96 from 28 percent in 1994/95. However, the fiscal situation deteriorated again during the first six months of the financial year 1996/97 (see Section III), and the annual growth rate in credit to the public sector picked up to 37 percent through September 1996.

Nominal and real interest rates

(Central bank rate)

54. The recent financial developments should be seen in light of efforts to improve the fiscal and monetary stance in the early 1990s. Following gradual reductions in the fiscal deficits, annual growth in broad money fell from about 45 percent in 1990/91 to nearly 20 percent in 1993/94. This trend has also led to a reduction in the inflation rate, which came down from about 35 percent to 23 percent during the same period.10 However, at the same time, the nominal interest rate (the central bank rate) was kept unchanged at 11 percent, implying a negative real interest rate. Although a combination of the step-wise increase in the central bank rate in 1995 and 1996 and a slowdown in inflation led to a gradual increase in the real interest rate during 1995, it has remained negative.

55. In line with the increased importance of private sector activities in the economy—such as construction, trade, and manufacturing—there has been an even stronger growth in credit to the private sector during the last few years, albeit from a small base. Credit to the private sector increased by 51 percent during 1995/96, and by another 45 percent during the first six months of 1996/97. This put the share of total domestic credit absorbed by the private sector at 27 percent by September 1996, up from 19 percent in March 1995. In the early 1990s, about half of credit to the private sector was extended to small cooperatives, but virtually all increases in private sector credit have since then been given to private firms, and cooperatives now capture less than 10 percent of private sector credit (Table 36). The strong increase in credit to the private sector is partly explained by developments in the financial sector. Private banks have more than doubled its share of total lending to the private sector over the last two years, and by September 1996, they captured about one third of the private sector market (Table 36).

D. Foreign Currency Developments

56. The state-owned banks, except MARDB, and 8 private banks are allowed to deal in foreign exchange. Since July 1996, the banks are allowed to pay interest on foreign currency deposits, with the rate set at 2.5 percent (regulated by the Central Bank). The banks are also allowed to lend in foreign currency, but no lending has yet occurred. The lending rate has been set at 8.5 percent.

57. Following the depreciation of the kyat in the parallel market, and as a consequence of the negative real interest rate for kyat deposits, there has been a strong growth in foreign currency deposits in recent years (Table 39). This is not revealed in the monetary survey, as foreign currency deposits are evaluated at the official exchange rate. However, when evaluated at the parallel rate, which more accurately reflects the purchasing power of foreign currency deposits, these deposits have increased to over 20 percent of total liquidity by September 1996, which can be compared with an average of 16 percent over the three previous years. The increase in this ratio also reflects, to some extent, the depreciation of the kyat in the parallel market. Nevertheless, in dollar terms, foreign currency deposits increased from an average of $225 million over 1992/93-1994/95, to $325 million by the end of 1995/96, and further to $375 million by the end of September 1996.

V. External sector

A. Overall Developments

58. Myanmar reversed its pursuit of the “Burmese way to socialism”, a highly inward looking development strategy, and started to take steps during the late 1980s to open the economy and increase the role of markets. Steps taken included allowing the private sector to engage in external trade, and to retain part (and from 1990, the whole) of export earnings. In 1988, border trade started to be legitimized, and the Foreign Investment Law was enacted to promote foreign direct investment. The law provides a legal and incentive framework largely comparable with that in many ASEAN countries and China. Finally, to ameliorate the problems associated with the dual exchange rate system with a highly overvalued official rate, foreign exchange certificates (FECs) were introduced in 1993 to legitimize the use of market determined parallel rates for selected purposes such as tourism promotion.

59. Exports and imports grew rapidly after these initial reforms were introduced in the late 1980s. By 1994/95, merchandise exports were more than double the level in 1991/92, and imports grew by nearly 80 percent over the same period. The service accounts have benefitted from large receipts of royalties from oil and gas explorations and land lease payments from foreign hotel operations. Receipts from tourism and private remittances have also increased significantly. As a result, the current account deficit declined in 1994/95 to less than $200 million (4.7 percent of GDP at the parallel market exchange rate) from the average of $360 million in the previous four years. Approved foreign direct investment (FDI) projects have increased rapidly since the enactment of the Foreign Investment Law and amounted to $5 billion so far, of which $1.8 billion has been disbursed. Reflecting these developments, foreign reserves increased from $254 million (2.3 months of imports) in March 1994 to $341 million (2.7 months of imports) a year later.

60. In 1995/96, however, the external situation started to show signs of strain. Exports started to stagnate, the current account deficit widened to about $300 million (or about 6 percent of GDP converted at the parallel market FEC rate), and the balance of payments recorded an overall deficit of $83 million. As a result, foreign reserves declined to $301 million. In 1996/97, this worrisome trend has continued—exports are projected to remain flat at about $900 million, and foreign reserves fell to less than $200 million by August 1996 (although they have risen somewhat since then to $213 million as of October 1996, equivalent to some 1.6 months of imports). Reflecting these developments, the parallel market exchange rate depreciated by 40 percent between April and September of 1996.

61. The developments in 1995/96 and 1996/97 indicate that the external position of Myanmar remains precarious with major policy issues still to be resolved. Arrears on external debt obligations continue to accumulate, and amounted to $1.5 billion at the end of 1995/96. Furthermore, deepening of the reform process has been hampered by the complex trade and foreign exchange regulations which are required to maintain the existing dual exchange rate system. The authorities have also resorted to additional external commercial borrowing to finance the widening trade gap by increasing the use of suppliers’ credit from neighboring countries and borrowing against future oil and gas exports proceeds.

Export Composition 1991/92-1996/97

(In million dollars)

62. Inadequate inter-agency coordination has resulted in long delays in producing final external sector data. Furthermore, there are coverage problems as evidenced by significant discrepancies between official trade data and the IMF Direction of Trade Statistics (Box 8). These discrepancies suggest that official data understate both exports and imports by about 20-25 percent.

Box 8.Discrepancy in Trade Data

Official data on external trade diverge from trade data compiled in the IMF’s Direction of Trade Statistics (DOT). As indicated in the table below, amounts of both exports and imports in the official data are below the levels in the DOT. Discrepancies vary by year, and they have been particularly large in the latest two years.

Myanmar: Comparison of Trade Data—Official and Directions of Trade Statistics(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Directions of Trade Statistics
Exports5977669059641,286
Imports1,0661,1061,3331,7942,337
Trade Deficit−469−340−428−830−1,051
Official Data
Exports431591696917891
Imports8421,0101,3021,4881,522
Trade Deficit−412−420−606−570−631
Difference in Deficit−5780178−260−420
Source: Data provided by the authorities; and the IMF’s Direction of Trade Statistics.
Source: Data provided by the authorities; and the IMF’s Direction of Trade Statistics.

B. Merchandise Trade

63. Exports. Myanmar’s exports rose at an average of 20 percent a year for the last four years. Exports have been dominated by agro-fishery and forestry products, which comprised over 70 percent of total merchandise exports in 1995/96, up from 56 percent in 1992/93. Particularly noteworthy are the nonrice agricultural exports which expanded from $81 million in 1991/92 to $380 million in 1995/96 (growth of 47 percent a year) in response to the limited moves toward liberalization of the agricultural procurement and pricing systems. On the other hand, “other” exports which include manufacturing exports have been stagnant in nominal terms over the same period and have declined as a share of total merchandise exports from 43 percent in 1991/92 to 25 percent in 1995/96.

64. The preliminary figures indicate that the good overall export performance over the last several years was interrupted in 1995/96 as total nominal exports declined by 2 percent relative to the level achieved in 1994/95. A major cause of this decline was a deliberate decision by the authorities to reduce rice exports from one million tons in 1994/95 to 350,000 tons in 1995/96 (or from $198 million to $74 million) to reduce domestic price pressures. Underlying this decisions was the increased rate of domestic inflation that reached 36 percent (12 month basis) by the middle of 1995 as the government ran down the regular buffer stock (by 350,000 tons) and purchased from private dealers 200,000 tons over and above the predetermined amount of public sector procurement.11 While the 1994/95 target of one million ton of rice exports was achieved, the authorities became concerned that the resulting high domestic food prices could pose a potential threat to social stability. The reduction in rice exports in 1995/96 has had the intended outcome of improving domestic food supplies and lowering inflation.

65. To offset the sharp reduction in rice exports in 1995/96, the authorities promoted other exports, including pulses and beans (71 percent increase in values). Hardwood exports also increased with the need for more foreign exchange earnings despite the fact that the authorities had initially curtailed hardwood exports because of environmental concerns. The volume of hardwood exports in 1995/96 was three times as high as in 1994/95, and four times the planned level for the year. Exports, excluding rice, as a result grew by 13 percent in 1995/96 compared with an average of about 15 percent in 1993/94 and 1994/95. For 1996/97, the authorities estimate export growth at 5 percent as they intend to keep rice exports at the 1995/96 level of 350,000 tons (or less) to maintain domestic price stability. They project that growth of non-rice exports will slow down to 5 percent partly because it is expected that India’s demand for pulses and beans, which weakened in 1996, will not recover during the current fiscal year.

Imports

66. In response to liberalization measures, imports of consumption goods expanded rapidly during the late 1980s and early 1990s. More recently, imports of capital goods have grown fast with increased foreign investment; they almost doubled between 1991/92 and 1995/96 in dollar terms, increasing their share in total imports from 28 percent to 36 percent.

67. Public sector imports have been nearly 40 percent of total imports during the 1990s, and this share has risen in the last few years. Initially, recorded private imports increased rapidly after the trade liberalization in 1988/89 from zero to about $800 million in 1993/94. But growth of private imports have since slowed down. In particular, in 1995/96, private imports declined by 3 percent in nominal dollar terms despite rapid GDP growth, suggesting tighter administrative controls on private sector imports to offset the reduced export earnings in the year.

C. Services and Private Transfers

68. In 1995/96, service accounts continued to benefit from the receipts of signature bonuses and land lease payments by foreign investors. Tourism and private transfers grew by 14 percent and 9 percent, respectively, reflecting the robust increase in the number of tourist arrivals and Myanma nationals working abroad. Both these items increased 70-100 percent over the previous two years. Some of this growth also reflects improved reporting of these receipts as the parallel market was legitimized through the introduction of FECs and opening of foreign exchange accounts was made easier. However, service payments have also increased for reasons that are not entirely clear, and the net service accounts turned to slightly negative in 1995/96.

D. Official Grants and Foreign Investments

69. Official grants have increased significantly during the 1990s mostly because of Japan’s debt relief grant program. With this program, Myanmar’s debt service payments to Japan are automatically converted into untied grants. By March 1996, debt service payments amounting to about $470 million have been converted to grants under this program. The annual average debt service obligations to Japan falling due during next several years are projected to be about $180 million.12 Myanmar also receives small grants from UN agencies and neighboring countries.

70. Since the policy change towards an open economy and promulgation of the Foreign Investment Law, approved investment projects have amounted to $5 billion of which an amount of $1.8 billion has been disbursed. Disbursements amounted to an estimated $257 million in 1995/96. Projects approved before the end of 1995/96 were concentrated in oil and gas exploration, accounting for 45 percent of total (primarily by companies from the U.S., U.K., and France) and in hotel construction accounting for 20 percent (primarily by ASEAN countries).

71. FDI approvals have become more diversified in 1996/97. Of the new approvals of $1.8 billion during the first seven months of 1996/97, manufacturing projects have amounted to $669 million (Box 9), more than a third of the total, whereas there had been very little investment approved in the sector prior to 1996/97. Project approvals in the oil and gas and tourism sectors have been much smaller this year.

Box 9.Foreign Investment

Approvals by Sector(In millions of U.S. dollars)
Up to 1995/961996/97 1/Total
Manufacturing194669862
Real Estate251589840
Mining320177497
Industrial Estate12167179
Tourism64884731
Oil and Gas1,435631,498
Transport and Communication12148169
Fisheries2520252
Other4711
Total3,2371,8035,040
By Source Country
Approved up to Oct 1996Disbursements 91/92-95/96
Singapore1,159112
U.K. 2/1,011145
Thailand94660
France466167
Malaysia44611
U.S.A.244220
The Netherlands23868
Source: Myanma Investment Commission.1/ Seven months from April-October 1996.2/ Includes British Virgin Islands and Bermuda.

E. External Debt and Foreign Reserves

72. Myanmar’s medium- and long-term public sector debt stood at $5.4 billion as of March 1996. Bilateral donor loans were 67 percent, and multilateral loans were 22 percent of the total outstanding debt. The remaining 11 percent was commercial loans—largely suppliers’ credits. Debt service arrears are being accumulated on bilateral and private debt. As of March 1996, debt service arrears were $1.5 billion of which 70 percent were owed to bilateral donors-Japan being the largest creditor holding about 90 percent of the bilateral arrears.

73. The authorities’ external debt policy is to service all multilateral loans and then determine which bilateral and private loans should be serviced based on the need for essential imports and reserve objectives. Among bilateral loans, those from U.S. are usually serviced because they are payable in kyat, and Japan because these debt service payments are converted into grants. In the absence of new official development aid, the authorities are increasingly dependent on suppliers’ credit from neighboring countries to finance the essential imports. Indeed, disbursements of suppliers credit, derived from the stock figures, are estimated to be nearly $170 million between March 1995 and March 1996. In addition, a $11 million loan with future oil and gas export proceeds as a collateral was contracted in the second half of 1996.

VI. Exchange and trade system

A. Key Issues

74. Myanmar has taken limited steps to liberalize the exchange and trade system as discussed earlier. The authorities’ current aim is to maintain the official exchange rate for public sector transactions while gradually expanding the range of transactions at the parallel market exchange rate. In this context, two fundamental issues remain to be addressed: (i) the dual foreign exchange system which requires complex rules and regulation to determine who has access to foreign exchange at the overvalued official rate; and (ii) to cope with the chronic foreign exchange shortage (due in part to the overvalued official rate), the government has maintained an intricate system of private import controls, including shipment-by-shipment import licensing and other requirements. These controls could increase the cost of transactions and, together with the overvalued exchange rate, distort resource allocation decisions.

B. Public Sector Imports

75. The allocation of official foreign exchange is determined by the Foreign Exchange Control Board headed by the deputy prime minister based on the availability of foreign exchange through official exports, public sector external borrowing, and official grants.13 These official imports are sold at the prices reflecting the official exchange rate, most often to other public entities, public sector workers or miliary personnel In addition, eight revolving foreign exchange funds were established in December 1992. Various ministries and state enterprises can choose goods to import using the foreign exchange in the revolving funds and sell these imports at the parallel rate. The initial allocation of foreign exchange to these funds were $53 million, and ministries and state enterprises can replenish their funds using part of their export proceeds. During April - October 1996, the revolving funds financed about $90 million of imports. By allowing agencies to use export proceeds to import any goods that could be sold in Myanmar at the parallel market rate, these funds enhance the incentives of the ministries and state enterprises to engage in export activities.

C. Private Sector Trade

76. All private sector imports require an import license for each transaction, and must be financed from importers’ foreign exchange accounts. An importer wishing to import items that are not listed in the government’s priority list, called List A (see Table 57), is required to also import additional goods on the priority list with a value equivalent to 25 percent or 50 percent of the importers’ own imports14. Open general licenses are issued by the Ministry of Trade only to state enterprises or organizations under the Foreign Investment Law that need to import frequently.

77. The private sector is not permitted to export rice, teak, petroleum, natural gas, jade, precious stones, and metals except in special circumstances. Private traders also need special permits from the Ministry of Commerce to export beans and pulses, flour, rattan, and cut flowers. A 5 percent export tax is levied on oil cakes, pulses, and raw hides and skins. All exports are subject to 5 percent commercial tax except for agricultural and marine products, forest products (excluding timber), handicrafts, paintings and sculptures, locally made garments, and finished leather goods.

78. Since 1988/89, exporters had been allowed to retain up to 60 percent of export proceeds. This retention ratio was increased to 100 percent in 1990. For invisible exports and labor income, the retention ratio had been initially 75 percent, and it was raised in 1994 to 100 percent, with income tax of 10 percent.

D. Border Trade

79. Informal trade across the borders between Myanmar and its neighboring countries started to be incorporated into formal trade in 1988, when an agreement was reached with the Yunan Province of China. This agreement was upgraded to the state level in 1994. Subsequently, border trade agreements were signed with Bangladesh, India and Thailand. Recorded border trade quickly grew from low levels to exports of $100 million and imports of $250 million by 1992/93. However, imports have since stagnated and exports declined to $35 million by 1995/96. Although the efforts to convert border trade into “normal” trade are being made, the sharp decline in recorded exports may imply problems of data coverage, especially since a large portion of border import payments are made using proceeds of border exports.

E. Foreign Exchange System and Foreign Exchange Certificates

80. The kyat has remained pegged to the SDR at a fixed rate of K 8.5 per SDR since May 1977. The real effective exchange rate has appreciated 290 percent since 1989 given higher domestic inflation than in trading partner countries (Chart 3). The parallel market exchange rate ranged between K 100-120 per dollar during 1994 and 1995, but depreciated sharply to nearly K 170 per dollar between April and October 1996. As of January 1996, the rate was K 167 per dollar.

CHART 3MYANMAR: EXCHANGE RATE DEVELOPMENTS, 1980-96 1/

(1980=100)

Sources: Data provided by the Myanmar authorities; and staff estimates.

1/ Increase in BEER indicates appreciation.

2/ It is not possible to construct a time-series on the weighted exchange rate owing to the absence of information on the changing structure of the foreign exchange market over time. However, the weighted exchange rate for 1994/95 is estimated at K 77= 1 US $ on the assumption that about 25 percent of and 35 percent of exports are transacted at the official exchange rate.

3/ U.S. dollars per Kyat.

81. Recognizing the problems associated with a highly overvalued official exchange rate, in February 1993 the authorities introduced foreign exchange certificates (FECs) to enhance foreign exchange earnings particularly from foreign visitors15. FECs are issued by the Central Bank of Myanmar in exchange for six designated hard currencies and travelers’ checks at a rate of 1 FEC=US$1. Both residents and foreigners who own legitimate foreign exchange holdings were allowed to obtain FECs. In December 1995, the authorities established FEC exchange centers and allowed market trading of FECs, and in June 1996 the 10 percent service fee charged upon depositing FECs in a foreign currency account was revoked. The FECs are now freely changed into and from kyats at a market determined rate, and are now widely used by both foreign visitors and investors in Myanmar.16 Some 245 million units of FECs have been issued of which 4 million units were in circulation as of September 1996.

82. Foreign currency accounts can be opened by private exporters registered at the Ministry of Commerce or any Myanmar national who has legitimate foreign exchange holdings. In addition, any Myanmar national holding the equivalent of at least $100 in FECs can now open a foreign currency account. With prior approvals, account holders can make payments for personal imports, pay fees for education and medical care or purchase air tickets. Transfers of accounts between foreign exchange account holders are permitted at exchange rates negotiated by those involved. As of July 1, 1996, all banks authorized to conduct foreign banking business were permitted to pay interest (initially 2.5 percent) on foreign currency deposits with the term of six months or longer and of the amount of $1,000 or above.

F. Foreign Investment Environment

83. The Foreign Investment Law defines the principle objectives and permitted investment modes as well as the sectors in which foreign investment is encouraged. The principal objectives of foreign investment include: export promotion; efficient exploitation of natural resources; transfer of advanced technology; and employment creation. Foreign investment can be made in a wholly foreign owned company, or a joint venture with public or private firms. In the case of extractive industries, production sharing arrangements are also permitted. As of November 1995, 30 percent of the dollar amount of approved investments were wholly foreign owned and 51 percent were under production sharing arrangements (mostly in oil and gas exploration). Of the remaining 19 percent, 12 percentage points were joint ventures with public entities and 7 percentage points with domestic private firms. Foreign investment activities are encouraged in five broadly defined areas according to the Foreign Investment Law. In practice, however, the State Enterprise Law lists the sectors in which only state monopolies are allowed to operate, and this defines a negative list for foreign investment. Initially, twelve sectors had been reserved for state monopolies and therefore foreign investors had been excluded from these activities. With the recent amendment of the State Enterprise Law, however, the list for state monopolies was shortened to only three: (i) postal services and telecommunication; (ii) broadcasting; and (iii) electric power generation and distribution. Foreign investors can now invest in any sector other than these three.

84. Foreign investment incentives are also defined in the Foreign Investment Law. They are comparable with those of many neighboring countries. Income tax and customs duties are exempt for three years from the start of operation (and duties are also exempt during construction). Other incentives include: (i) reinvested profits are exempt from income tax; (ii) profits from export activities receive SO percent reduction in income tax; (iii) and loss carry-over and accelerated depreciation are permitted. Foreign investment firms are also given protection from nationalization or expropriation. Finally, capital, profit and wage income (after payments of necessary income and other taxes) of foreign investors under the Foreign Investment Law can be transferred abroad without any specific limit.

APPENDIX I: Myanmar: Principal Features of Myanmar’s Tax System

1. Myanmar’s tax structure comprises 15 taxes and duties divided into four major categories: (i) taxes on domestic production and public consumption which include excise duties, the commercial tax, import license fees, the state lottery, stamp duties, and the transportation tax; (ii) taxes on income and ownership, viz., the income tax and the profit tax; (iii) taxes on international trade in the form of customs duties; and (iv) taxes on the use of state-owned resources, viz., the land tax, the water tax, the tax on extraction of minerals, the tax on extraction of forestry products, the fisheries tax, and the rubber tax. Among these 15 taxes, the Internal Revenue Department collects 5 taxes—viz., the income tax, the profit tax, the commercial tax, the stamp duties and the state lottery, while the Customs Department collects customs duties.

Income and profit taxes

2. The income tax applies to personal incomes as well as enterprise incomes. Under the Income Tax Law, the tax is payable by any person who derives income from salaries, professions, business, property, and capital gains. The taxable income is computed as gross income less a basic allowance, which is equivalent to 20 percent of gross income up to a maximum of K 6,000 less dependency allowances and a life insurance allowance. Depending on the source of income, income tax is paid according to one of the three schedules shown in Table I.1. Persons who earn income in foreign currency are required to pay 10 percent of the total income as tax in foreign currency. While dividend income is exempted from income taxation, the Government can also grant exemption to new business ventures, either foreign or domestic, for three consecutive years. Extension of the exemption can be granted beyond the three-year period on a case-by-case basis.

Table I.1.Myanmar: Income Tax Rates
Taxable Income (in kyats)Rate (in percent)
I. Private sector
1-5,0003
5,001-10,0005
10,001-20,0007
20,001-30,00010
30,001-50,00012
50,001-70,00015
70,001-90,00016
90,001-110,00017
110,001-150,00018
150,001-200,00019
200,001-300,00020
300,001-500,00022
500,001 and above30
II. Professions, Business, and Property
1-5,0005
5,001-10,00010
10,001-20,00011
20,001-30,00012
30,001-40,00014
40,001-50,00015
50,001-80,00016
80,001-110,00017
110,001-150,00018
150,001-200,00019
200,001-300,00020
300,001-400,00022
400,001-1,000,00025
1,000,001-2,000,00035
2,000,001 and above40
III. Cooperative Sector
1-5,0003
5,001-10,0005
10,001-20,0007
20,001-30,00010
30,001-50,00012
50,001-70,00015
70,001-90,00016
90,001-110,00017
110,001-150,00018
150,001-200,00019
200,001-300,00020
300,001-500,00022
500,001 and above30
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.

3. The profit tax applies to incomes not covered under the Income Tax Law such as incomes of unincorporated private businesses. It is paid according to the schedule shown in Table I.2. As this schedule indicates, the minimum level of taxable income is K 10,000. If the taxable income exceeds K 300,000, the tax payable is the sum total of K 146,703 and 50 percent of the excess of income over K 300,000. Moreover, if the income in question is derived from the production of goods or from transport services, the tax payable is reduced by 10 percent; if it is derived from the production and sale of cheroots, the tax due is increased by 10 percent. A person may choose to pay the income tax instead of the profit tax by producing the necessary evidence to a local revenue office.

Table I-2.Myanmar: Profit Tax Rates
Income Level (in kyats)Tax (in kyats)
10,001-12,000360
12,001-14,000540
14,001-16,000756
16,001-18,0001,004
18,001-20,0001,356
20,001-22,0001,680
22,001-24,0002,100
24,001-26,0002,580
26,001-28,0003,060
28,001-30,0003,624
30,001-32,0004,008
32,001-34,0005,136
34,001-36,0005,940
36,001-38,0006,744
38,00140,0007,596
40,001-42,0008,604
42,001-44,0009,696
44,001-46,00010,896
46,001-48,00012,096
48,001-50,00013,296
50,001-55,00015396
55,001-60,00017,727
60,001-65,00020,206
65,001-70,00022,835
70,001-75,00025,614
75,001-80,00028,543
80,001-85,00031,622
85,001-90,00034,851
90,001-95,00038,230
95,001-100,00041,759
100,001-110,00045,444
110,001-120,00050,289
120,001-130,00055,225
130,001-140,00060,250
140,001-150,00065366
150,001-160,00070,571
160,001-170,00057,867
170,001-180,00081,252
180,001-190,00086,728
190,001-200,00092,293
200,001-210,00097,518
210,001-220,000102,791
220,001-230,000108,112
230,001-240,000113,481
240,001-250,000118,898
250,001-260,000124363
260,001-270,000129,876
270,001-280,000135,437
280,001-290,000141,046
290,001-300,000146,703
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.

Commercial tax

4. The commercial tax is intended to be a broad-based sales tax applicable to both imports and domestic products. In the case of imports, the tax is charged on landed costs, and in case of domestic products, it is based on sales receipts. The tax is determined by the seven schedules,17 which provide for 12 different rates (excluding zero) for various goods and services. Schedule 1 lists 65 goods subject to no taxation; Schedule 2 lists 31 goods subject to a 5 percent tax rate; Schedule 3 lists 120 goods subject to a 10 percent tax rate; Schedule 4 lists 88 goods subject to a 20 percent tax rate; Schedule 5 lists 51 goods subject to a 25 percent tax rate; Schedule 6 lists 19 goods (mostly luxury items) subject to very high tax rates varying from 30 to 200 percent; and Schedule 7 lists 5 services subject to tax rates varying from 8 to 30 percent. In addition, all exporters are required to pay a 5 percent tax in foreign currency on their export earnings. It is notable that Schedule 1, listing zero-rated goods, includes major staple foods, other agricultural products and some energy sources—viz., crude petroleum, natural gas, and electric power for industrial use. Moreover, the Government can grant exemption from commercial taxation to equipment imported by new business ventures for up to three consecutive years.

Customs duties

5. Customs duties apply to both exports and imports which enter into normal as well as border trade. Under the old system, there were 23 import tariff rates ranging from zero to 500 percent with the lowest rates applying to the essential consumer goods, raw materials, and capital goods, and the highest rates applying to luxury and other nonessential items. Effective June 1, 1996, these rates are reduced to the range of zero to 40 percent (Table I-3). At the same time, a new customs valuation exchange rate of kyat at 100 per U.S. dollar was introduced in place of the official exchange rate of kyat 6 per U.S. dollar. The system provides for two types of exemptions. While general exemptions cover imports for agricultural development, the diplomatic community, public health, foreign direct investment, and for social nongovernmental organizations, certain categories of vehicles, machinery, medicine, construction materials, and computers have been declared as qualifying for special exemptions. These special exemptions caused a revenue loss of K 460 million during the first six months of 1996/97 compared to about K 293 million in 1995/96. As for export duties, these are levied on a small number of goods at both ad valorem and specific rates. Thus, an ad valorem rate of 5 percent is levied on oil cakes, pulses and beans, and raw hides and skins, while a specific duty of 10 kyats per metric ton is levied on rice.

Table I-3.Myanmar: Commercial Tax Rates
Schedule 1: Goods with no tax
1.Paddy
2.Wheat grain
3.Maize and other cereals
4.Pulses
5.Groundnuts, shelled and unshelled
6.Sessamum
7.Mustard seed, sunflower seed, tamarind seed, cotton seed
8.Oil palm
9.Raw cotton
10.Jute and similar fibers
11.Garlic, onions
12.Potatoes
13.Spices, raw (plants, parts of plants, nuts, etc.)
14.Species prepared
15.Fruits, fresh
16.Vegetables
17.Sugarcane
18.Mulberry leaves
19.Medicinal plants or herbs
20.Animal feed, fresh and dried (farm products only)
21.Thatch, reeds, “dani” and such agricultural products not elsewhere specified
22.Wood, bamboo
23.Live animals
24.Silk cocoons
25.Cane, finished and unfinished
26.Honey and bee wax
27.Lac
28.Coal and coke
29.Bran and pollard of pulses
30.Cake, meal and residue of groundnuts, sessamum, cotton seeds, rice bran, etc.
31.Soapstocks (of oil residue)
32.Bleaching substances (of oil residue)
33.Molasses
34.Cotton ginned
35.Coir yarn
36.Virginia Tobacco, cured
37.Feathers
38.Umbrella cloth
39.Bandages, gauze, other surgical dressing materials, hospital and surgical outfit and sundries
40.X-ray film, plates and other x-ray, surgical and medicinal pharmaceutical apparatus and equipment
41.Insecticides, pesticides, fungicides, etc.
42.Various kinds of gun powder, various kinds of dynamites and accessories thereof used by the civil departments
43.Stamps, all sorts
44.Defense and military stores and equipment
45.Sealing wax and sticks
46.Natural gas
47.Petroleum, crude
48.Text books, exercise and drawing books of various kinds and papers for the production of such books and all sorts of pencils
49.Slates, slate pencils, and chalk
50.Shrimp paste (ngapi)
51.Shrimp and fish sauces (Ngan-pya-ye)
52.Groundnut oil, sessamum oil, sunflower seed oil, rice bran edible oil, other edible oil and oil cakes
53.Flour (coarse and fine)
54.Pulses, split and powdered
55.Rice, broken rice and rice bran
56.Electricity for industrial use
57.Fresh fish, fresh prawn
58.Sterilized and other pasteurized milk
59.Milk powder
60.Milk for the use of infants and invalids
61.Chilli
62.Saffron
63.Ginger
64.Fish paste
65.Ripe tamarind
Schedule 2: Goods with 5 percent tax
1.Jams, all sorts
2.Soya bean paste, soya bean sauce and the like
3.Tea, preserved and dried, excluding black tea
4.Cotton seed oil, rice bran oil, inedible
5.Household medicines and other pharmaceuticals
6.Charcoal
7.Fountain pens and ball-point pens
8.Cotton longyi (coarse)
9.Shirting, cotton, grey, unbleached
10.Drills, cotton
11.Vests
12.Cotton yarn
13.Cotton thread
14.Chipping stone
15.Limestone
16.Road building stone and sand
17.Electrical equipment for educational and instructional purpose
18.Carpenter’s tools and accessories
19.Agricultural tools and accessories
20.Rope of coir, jute, cotton and other kinds of rope
21.Household and laundry soap
22.Hats, all sorts
23.Sporting materials
24.Wheel barrows
25.Made-up track suits for sports
26.Methylated spirit
27.Urea fertilizers
28.Salt
29.Cooking powder
30.Vinegar
31.Noodles (wet or dried) and wheat flour vermicelli
Schedule 3: Goods with 10 percent tax
1.Ice
2.Milk, condensed
3.Malt and malt flour
4.Cheroot
5.Bread, biscuits, and cakes
6.Other food stuff of wheat, not elsewhere specified
7.Food colors
8.Food flavors and essences
9.Turpentine refined
10.Tung oil and turpentine raw
11.Greases, oil, lubricants and other petroleum products not elsewhere specified
12.Baking powder and yeast
13.Dyes and dyestuff
14.Chemicals elements compounds
15.Petroleum coke
16.Chemical and chemical products of petroleum and petroleum coke
17.Parts and accessories for shoes, boots, and slippers
18.Chrome leather, leather sole, leather of sheep and goat
19.Aluminum circles and plates
20.Raw materials and accessories of rubber
21.Plastic raw materials
22.Teak log
23.Hardwood log
24.Poles and posts of teak and hardwood
25.Newspaper, journal, magazine, and other printed books and publications
26.Papers and paperboards
27.Cigarette papers
28.Ink, all sorts
29.Pins, clips, paper fasteners, and other office stationary supplies
30.Silk yarn
31.Ribbons, tapes trimmings of cotton
32.Workmen outfits
33.Gypsum
34.Baryte
35.Graphite
36.While clay, fire clay, and clay powder
37.Soapstone
38.Dolomite stone
39.Red, yellow, and while ochres
40.Bentonite
41.Tarazo stone
42.Washed clay
43.Lead slag
44.Marble
45.Tin concentrates, tungsten concentrates, tin/tungsten/scheelite and mixed ores
46.Refined lead
47.Zinc concentrates
48.Copper mats
49.Nickel speiss
50.Antimonial lead
51.Antimony ores
52.Lead sulphide
53.Saws, all sorts
54.Bottles, all sorts
55.Gunny cloth and gunny bags
56.Packing materials of paper and paperboard
57.All sorts of plastic bag
58.Containers, buckets of iron and steel and metal plated utensils
59.Crown cork
60.Glass tumblers
61.Spectacle, frames, and parts of spectacles
62.Fishing hooks
63.Electricity (excluding industrial use)
64.Unexposed photographic films
65.Artists’ wares
66.Coffee powder, all sorts
67.Tea, black
68.Candles
69.Raw rubber
70.Bicycles, tyres, and tubes
71.Tyres, tubes, and flaps for motorcar and motorcycles
72.Rubber compounds
73.Tyres and tubes not elsewhere specified
74.Lacquerware
75.Cotton longy (fine)
76.Cotton fabrics, colored, dyed and cotton sheeting while bleached or mercerized
77.Cotton blankets
78.Cotton towels
79.Printed cotton fabrics
80.Household linen
81.Cotton mosquito nettings
82.Cotton fabrics, not elsewhere specified, other than cotton lace fabrics
83.Made-up apparel, other than for sports
84.Made-up mosquito nets
85.Lime and line powder
86.Household utensils of brass and other metals
87.Galvanized corrugated iron sheets
88.Agricultural machines equipment and machines tools
89.Weaving, knitting, spinning machine parts and accessories thereof
90.Lamp shades, switches, blocks, parts and accessories thereof
91.Electrical wires, clips, and other internal electrical fittings
92.Industrial sewing machines
93.Road construction machines, road roller, parts and accessories thereof
94.Battery (accumulators)
95.Fire extinguisher
96.Sanitary fixtures and fittings
97.Plastic building material
98.Ball bearings
99.Bicycles
100.Bicycles spare parts and accessories
101.Tractors, other industrial motor trucks, parts and accessories thereof
102.Train locomotives, coaches, spare parts and accessories thereof
103.Sea going ships, other ships, motor boats, schooners, parts and accessories thereof
104.Air-crafts, parts and accessories, thereof
105.Fishing nets
106.Plastic cloth
107.Plastic materials for household and personal use, not elsewhere specified
108.Kerosene stoves, spares and accessories
109.Raincoats
110.Umbrella, all sorts
111.Canvas footwear, cane ball shoes and footwear, all sorts
112.Malted milk preparation
113.Cold milk, ice cream, etc.
114.Parts and accessories for domestic electrical equipment and appliances
115.Sweets
116.Beverages
117.Toilet soaps
118.Domestic sewing machines
119.Sugar
120.Aerated water
Schedule 4: Goods with 20 percent tax
1.Artificial and synthetic stones and diamonds including cut stones, and artificial pearls
2.Household glassware, other than glass vases, bottles, and tumblers
3.Marble products
4.Macaroni
5.Saccharine
6.Chilli sauce and sauces, all sorts
7.Milk cream, butter, ghee, cheese
8.Cigars, pipes, all sorts
9.Naphthalene balls and camphor blocks
10.Paints, pigments, and other coloring and polishing materials
11.Painters’ materials (excluding artists’ wares)
12.Zip and buttons all sorts not elsewhere specified
13.Match flints
14.Hair pins, hair slides, hair clips, hair grips, hair curlers and hair dressing articles
15.Tooth brushes
16.Detergents and cleansing powder
17.Rubber materials for household use
18.Hardwood milled, plywood, and veneers of hardwood
19.Paper board building and constructional goods
20.Paper products, other than packing materials
21.Canvas cloth
22.Linoleum and floor coverings
23.Tarpaulins in rolls and pieces
24.Cement
25.Brick, brick tiles and products, fire bricks
26.Crockery (porcelain)
27.Crockery (enamel plated)
28.Lamps, lanterns, parts and accessories thereof
29.Household porcelain fittings and fixtures
30.Wire nails and nails
31.Razors, razor blades and scissors
32.Locks, padlocks, and keys
33.Fitting and accessories for furniture, boxes and trunks
34.Iron and steel heavy plates, iron and steel plates, coated
35.Iron and steel bolts, nuts, rivets, etc.
36.Iron and steel rods, bars, billets, wire and such constructional goods
37.Building and constructional goods of nonferrous metals
38.Plumbing fixtures and fittings
39.Mixers, mixers’ wares, stone and gravel crusher and such constructional and miscellaneous industrial ware
40.Iron and steel anchors and chains
41.Miscellaneous metallic goods, other than of silver and platinum, not elsewhere specified
42.Electric motors
43.Torches, parts and accessories thereof
44.Electric bulbs and rubes all sorts, other than neon bulbs and tubes for advertising
45.Electrical insulators and porcelains and ceramic telegraphic materials
46.Meter and meter boxes
47.Electric relaying and insulating materials
48.Main electric transmitting equipment and accessories
49.Mining, drilling, excavating machines, parts and accessories thereof
50.Electric generators, transformers, and such electric generating machines, parts and accessories thereof
51.Electric distributing equipment, parts and accessories thereof
52.Telecommunications, wireless, radio communicating equipment, telex, parts and accessories thereof
53.Parts and accessories of radios and electronic communication equipment
54.Gantry, surveying and measuring equipment, and accessories
55.Glass sheets and glass building and constructional goods
56.Concrete and asbestos building and constructional goods
57.Household fittings and fixtures, other than that of porcelain
58.Concrete pipes
59.Boilers, engines, generators, parts and accessories thereof
60.Pontoon, pontoon bridges, parts and accessories thereof
61.Cigarette cases and ashtrays, all sorts
62.Cinematographic films, unexposed
63.Toys, all sorts
64.Vehicles and carriages for children, parts and accessories thereof
65.Silver
66.Printing press requisites and accessories not elsewhere specified
67.Mechanical lighters, all sorts
68.Lorries, trucks and trailers above 1/4 tons
69.Vans and buses
70.Bowsers
71.Cranes and winches cars
72.Motorcar parts and accessories, including frames and parts of chassis
73.Motorcycle parts and accessories
74.Dry cells, all sorts
75.Mother of pearls and shells
76.Asbestos sheets, including roofing
77.Stone and brick tiles other than tarazo tiles
78.Carpets, carpeting, of jute
79.Denatured spirit
80.Artificial cotton and silk fabrics
81.Fabrics of mixed and or blended materials
82.Papers, paper pulp cardboard-making machines, parts and accessories thereof
83.Rice mill, wheat flour mill, other cereal grinding and milling machines, parts and accessories thereof
84.Sugar mills, parts and accessories thereof
85.Saw-milling machines, parts and accessories thereof
86.Machinery, not elsewhere specified, parts and accessories thereof
87.Refrigerators, freezers and ice-boxes
88.Commodities, not elsewhere specified
Schedule 5: Goods with 25 percent tax
1.Tinned provisions
2.Isinglass
3.Cocoa powder
4.Toffee and chocolates
5.Pipe tobaccos
6.Betel chewing preparations
7.Floor polish
8.Cinematographic films, exposed
9.Perfumery and toilet requisites, other than medicated powder
10.Plywood containing teak and of teak
11.Teak conversions
12.Wood floor tiles
13.Leather products other than for industrial use
14.Cotton lace fabrics and cotton lace
15.Blankets, shawls, other than of cotton
16.Artificial leather
17.Longyis, of silk and of artificial and silk mixed
18.Synthetic silk ribbons
19.Fabrics and made-up clothing of fur and wool
20.Silk fabrics
21.Motorcycles, scooters and the like
22.Motorcars, light vans, saloons, sedans, light wagons, estate wagons and coupe
23.Printing press off-set, bookbinding, block-making machines, parts and accessories thereof
24.Oil-milling machines, parts and accessories thereof
25.Cinematographic cameras, projectors, parts and accessories thereof (including carbons)
26.Parts and accessories of all sorts of cameras
27.Binoculars, lens
28.Typewriters, calculating machines, duplicating machines, statistical machines, other office machines, equipment, parts and accessories thereof
29.Watches, clocks, chronometers, parts and accessories thereof
30.Cutlery other than of gold, silver, gold and silver plated
31.Furniture
32.Filing cabinets, racks and similar office equipment of iron or steel
33.Safe and strong boxes
34.Strong room fittings, and cash boxes
35.Tarazo tiles
36.Radio, televisions, video camera, and video tape recorders
37.Electric stoves, electric rice cookers, and microwave stoves
38.Fibre cases, suitcases, and briefcases
39.Electric fans, irons, washing machines, and water coolers
40.Gramophones
41.Gramophone records
42.Air conditioners
43.Ivory, tortoise shell and articles made out of materials of animal origin
44.Billiard equipment and requisites
45.Musical instruments
46.Recorders, cassettes, cassette with radio transistors, and tapes
47.Domestic electrical equipment and appliances not elsewhere specified
48.Match
49.Furnace oil
50.Wax
51.Army rum
Schedule 6: Goods with 30-200 percent tax
1.Cigarette75
2.Kerosene50
3.Motor spirit170
4.Diesel oil90
5.Earth oil180
6.Jet fuel75
7.Rum200
8.Local brandy60
9.Brandy, others200
10.Local malt whisky60
11.Whisky, others200
12.Local gin60
13.Other gin, liqueur and the like200
14.Beer50
15.Wine50
16.Tin-le-phyu (local alcoholic drink)50
17.Country spirit50
18.Pearl30
19.Jade and other precious stone30
Schedule 7: Services with 5-30 percent tax
1.Railways, waterway, airway and road transport business8
2.Entertainment business
a. Film or video exhibitions30
b. Entertainment other than film or video exhibitions15
3.Trading business consisting of purchases and sales of goods5
4.Hotel, lodging10
5.Enterprise for sale of foods and drinks10
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.
Source: Data provided by the Internal Revenue Department, Ministry of Finance and Revenue.

6. The Customs Department has recently put in effect two major changes to improve the administration of duty collection, viz., the introduction of the Harmonized Nomenclature System, which became effective in April 1992, and the introduction of the deferred control system under which the estimated value of imports is used to expedite customs clearance with provision for duty adjustments, if needed, subsequent to the submission of invoices.

Table I-4.Myanmar: New Structure of Customs Duty Rates(Effective June 1, 1996)
Category of GoodsRate (in percent)
Old SystemNew System
Live animals00
Live trees and plants00
Wool50.5
Aircraft, spacecraft, and parts thereof50.5
Oil seeds101
Railway or tramway locomotives and parts thereof101
Chemicals151.5
Machinery and mechanical appliances; parts thereof151.5
Pharmaceutical products202.0
Plastics in primary forms202.0
Nonferrous metal in primary forms252.5
Motor vehicles for the transport of goods303.0
Stationary303.0
Dairy produce353.5
Pneumatic tyres and tubes404.0
Woven fabrics of cotton, unbleached or bleached404.0
Raw hides and skins505.0
Woven fabrics of cotton, dyed parts and accessories of motor vehicles505.0
Woven fabrics of cotton, printed606.0
Glass and glassware757.5
Metal manufactured, other than machinery757.5
Refrigerators and freezers10010.0
Magnetic tape recorders, video recording or reproducing apparatus, parts and accessories thereof10010.0
Furniture for record-decks, record-players, and cassette-players12512.5
Edible vegetables and certain roots and tubers15015.0
Woven fabrics and synthetic filament yarn, artificial filament yarn, synthetic staples fibres, artificial staple fibers15015.0
Televisions receivers and radios15015.0
Sugar confectionery20020.0
Chocolates in blocks, slabs, or bars20020.0
Articles of apparel of man-made fibers, of wood or of silk20020.0
Microphones, loudspeakers, and electric amplifiers20020.0
Beer30030.0
Motor vehicles for the transport of persons, of cylinder capacity not exceeding 2,000 cc30030.0
Wine35035.0
Motor vehicles for the transport of persons, of cylinder capacity exceeding 2,000 cc but not exceeding 3,000 cc40040.0
Compound alcoholic preparations, spirits, whiskeys rum and gin50040.0
Motor vehicles for the transport of persons, of cylinder capacity exceeding 3,000 cc50040.0
Source: Data provided by the Customs Department, Ministry of Finance and Revenue.
Source: Data provided by the Customs Department, Ministry of Finance and Revenue.
APPENDIX II: Myanmar: Environmental Issues

1. Myanmar has not been immune to the problems of environmental pollution, and damage or destruction of natural resource systems that accompany economic growth. For example, drinking water in many cities is polluted and/or in short supply, and the shortages have been aggravated by excessive use of groundwater by industries. In the countryside, excessive use of water and inappropriate use of fertilizers and pesticides in some areas have begun to create environmental problems. Soil is being lost through improper agricultural practices, or overgrazing, especially on marginal lands where cropping has been intensified to levels that are unsustainable. The increasing and often conflicting demand for water for irrigation, industrial, and municipal uses has also become a pressing environmental issue.

2. As the seriousness of environmental issues has become apparent, the Government established the National Commission for Environmental Affairs (NCEA) in 1990 to coordinate efforts in this area. The NCEA was responsible for articulating the Myanmar National Environment Policy. Other contributions of the NCEA include the promotion of public environmental awareness; convening workshops and seminars on environmental issues; and participation in several international environmental conventions and agreements. Myanmar has also started to establish a set of laws to guide environmental policy development; a set of economic incentives to implement the law; and a network for administering, monitoring and enforcing environmental policy. Recently the Government adopted environmental related laws to launch environmental conservation programmes, e.g. the Forest Law (1992), the Wildlife and Wildplants Law (1994), and the Forest Policy and Forestry Action Plan (1995).

3. However, while past piecemeal efforts have contributed somewhat to preserving natural resources, these gains have been mostly offset by the rapid growth of the economy and the population. These problems threaten to swamp Myanmar’s environmental policies and programs, and pose a major challenge for sustainable development in the future.

Recent Policy Measures for Environment
Environmental IssuesRelated PoliesLegislation
Deforestation
  • — Forest Policy
  • — Membership in Convention on Biodivesity & Tropical Timber Agreement
  • — Forest Law (1992)
  • — Wildlife & Wildplants Law (1994)
Land Degradation— Participation in the Decertification Is Under Way— Pesticide Law (1990)
Marine Water Pollution— Membership in Marpol and Law of The Sea
  • — Myanmar Marine Fisheries Law (1990)
  • — the Fishing Rights of the Foreign Fishing Vessels (1989)
  • — the Law Relating to Aquaculture(1989)
  • — Freshwater Fisheries Law (1991)
Loss of Biodiversity
  • — Forest Policy
  • — Membership in Convention in Biodiversity
  • — Forest law (1992)
  • — Wildlife & Wildplants Law (1994)
  • — Forestry Action Plan
Inland Water Pollution— Local Administrative Orders
Atmospheric Air Pollution— Membership in Climate Change Convention, Vienna Convention & Montreal Protocol
Urbanization— Promotion of Satellite Towns & Development of Housing & Human Settlements
Table 1.Myanmar: Real Gross Domestic Product by Sector, 1991/92-1996/97
Prov. Act.Est.Plan
1991/921992/931993/941994/951995/961996/97
(In millions of kyats; at 1985/86 prices)
Commodity producing sectors30,13433,44535,45237,93542,35144,982
Agriculture18,70821,02922,00923,48326,24627,664
Livestock and fishery3,8173,9904,1824,4354,7384,951
Forestry926896905775740759
Mining4925906557509091,034
Manufacturing and processing4,3764,8505,3065,7746,4497,120
Power363475591640668736
Construction1,4521,6151,8042,0782,6012,718
Services8,6959,2259,96310,92211,44112,199
Transportation2,0172,2002,4022,6492,7152,912
Communication421530575692720782
Financial institutions315363503740842964
Social and administrative services3,5743,6783,9444,2004,4154,654
Rentals and other services2,3682,4542,5392,6412,7492,887
Trade11,10412,08712,64913,56814,73615,502
Gross domestic product (at market prices)49,93354,75758,06462,42568,52872,683
(Percentage change)
Commodity producing sectors−1.511.06.07.011.66.2
Agriculture−3.912.44.76.711.85.4
Livestock and fishery5.74.54.86.06.84.5
Forestry−1.7−3.31.0−14.3−4.52.6
Mining11.120.011.014.521.213.8
Manufacturing and processing−4.010.89.48.811.710.4
Power6.831.124.48.24.310.3
Construction17.111.211.715.125.24.5
Services5.16.18.09.64.86.6
Transportation5.89.19.210.32.57.2
Communication16.626.08.520.44.08.6
Financial institutions17.515.138.447.313.714.6
Social and administrative services4.32.97.26.55.15.4
Rentals and other services2.63.63.54.04.15.0
Trade−2.58.94.67.38.65.2
Gross domestic product (at market prices)−0.79.36.07.59.86.1
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 2.Myanmar: Gross Domestic Product by Sector, 1991/92-1996/97
Prov. Act.Est.Plan
1991/921992/931993/941994/951995/961996/97
(In millions of kyats; at current prices)
Commodity producing sectors128,286174,454259,220338,947430,997457,156
Agriculture90,421126,114194,991261,619328,970347,063
Livestock and fishery16,40921,16627,86332,37038,18440,179
Forestry3,0583,6224,1814,3774,6394,791
Mining1,1581,3051,7042,2392,8193,455
Manufacturing and processing13,05917,27824,61829,46541,98846,418
Power3184636521,1681,8502,088
Construction3,8634,5065,2117,70912,54713,162
Services16,87618,48523,58132,58038,97041,446
Transportation4,2244,6716,40012,18515,16616,177
Communication7439321,0151,2361,2861,394
Financial institutions3183675217688991,031
Social and administrative services6,4136,6928,7029,78310,41811,078
Rentals and other services5,1785,8236,9438,60811,20111,766
Trade41,64056,45677,520101,626143,202151,877
Gross domestic product (at market prices)186,802249,395360,321473,153613,169650,479
(In percent of GDP)
Commodity producing sectors68.770.071.971.670.370.3
Agriculture48.450.654.155.353.753.4
Livestock and fishery8.88.57.76.86.26.2
Forestry1.61.51.20.90.80.8
Mining0.60.50.50.50.50.5
Manufacturing and processing7.06.96.86.26.87.1
Power0.20.20.20.30.30.3
Construction2.11.81.41.62.02.0
Services9.07.46.66.96.36.4
Transportation2.31.91.82.52.52.5
Communication0.40.40.30.30.20.2
Financial institutions0.20.10.20.20.10.2
Social and administrative services3.42.72.42.11.71.7
Rentals and other services2.82.31.91.81.81.8
Trade22.322.621.521.523.423.3
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 3.Myanmar: Expenditure on Gross Domestic Product at Current Prices, 1991/92-1996/97
Prov. Act.Est.Plan
1991/921992/931993/941994/951995/961996/97
Consumption160,610217,843319,191417,609544,089579,606
Gross investment28,60333,78644,82558,47173,01674,773
Fixed investment27,57131,18437,46554,59671,72873,518
Public12,45513,45615,67825,78339,62029,001
Private15,11617,72821,78728,81332,10844,517
Change in stocks1,0322,6027,3603,8751,2881,255
Net exports of goods and nonfactor services−2,411−1,775−3,695−2,927−3,936−3,900
Exports2,9263,5904,2285,4055,9456,540
Imports5,3375,3657,9238,3329,88110,440
GDP at market prices186,802249,395360,321473,153613,169650,479
Net factor income from abroad−291−153−429−395−510−277
GNP at market prices186,512249,242359,892472,758612,659650,202
(In percent of GDP)
Memorandum items:
Consumption86.087.288.688.388.789.1
Gross investment15.313.512.412.411.911.5
Fixed investment14.812.510.411.511.711.3
Public6.75.44.45.56.54.5
Private8.17.16.16.15.26.8
Exports1.61.41.21.11.01.0
Imports2.92.22.21.81.61.6
Sources: Data provided by the Myanma authorities.
Sources: Data provided by the Myanma authorities.
Table 4.Myanmar: Expenditure on Gross Domestic Product at Constant 1985/86 Prices, 1991/92-1996/97
Prov. Act.Est.Plan
1991/921992/931993/941994/951995/961996/97
(In millions of kyats; at 1985/86 prices)
Consumption40,31543,54346,79547,97551,79355,280
Gross investment9,5409,66310,47113,02816,14716,549
Fixed investment9,1889,25010,23512,63916,09616,497
Public4,2264,2314,4006,1238,9076,519
Private4,9625,0195,8356,5167,1899,978
Changes in stocks3524132363895152
Gross domestic expenditure49,85553,20557,26661,00367,94071,829
Net exports of goods and nonfactor services781,5517981,422588854
Exports3,9265,3816,2296,5286,5477,150
Imports3,8483,8305,4315,1065,9596,296
GDP at market prices49,93354,75758,06462,42568,52872,683
(Percentage change)
Memorandum items:
Consumption−4.58.07.52.58.06.7
Gross Investment15.81.38.424.423.92.5
Fixed investment3.80.710.623.527.32.5
Public3.00.14.039.245.5−26.8
Private4.41.116.311.710.338.8
Exports−2.837.115.84.80.39.2
Imports−8.6−0.541.8−6.016.75.7
GDP−0.79.36.07.59.86.1
Gross domestic expenditure−1.16.77.66.511.45.7
Sources: Data provided by the Myanma authorities.
Sources: Data provided by the Myanma authorities.
Table 5.Myanmar: Investment and Saving, 1990/91-1995/96
Prov. Act.Est.
1990/911991/921992/931993/941994/951995/96
(In millions of kyats at current prices)
Gross capital formation20,32328,60333,78644,82558,47173,016
Fixed investment22,31827,57131,18437,46554,59671,728
Public10,28912,44513,45615,67825,78339,620
Private12,02915,11617,72821,78728,81332,108
Change in stocks−1,9951,0322,6027,3603,8751,288
National saving17,97126,85933,31443,08657,95871,011
Domestic saving17,45026,63132,72541,84556,45869,542
Net factor income plus net unrequited transfers from abroad5212285891,2411,5001,469
Foreign saving2,3521,7444721,7395132,005
(In percent of GDP)
Gross capital formation13.415.313.512.412.411.9
Fixed investment14.714.812.510.411.511.7
Public6.86.75.44.45.46.5
Private7.98.17.16.06.15.2
National saving11.814.413.412.012.211.6
Domestic saving11.514.313.111.611.911.3
Foreign saving1.50.90.20.50.10.3
Sources: Data provided by the Myanma authorities.
Sources: Data provided by the Myanma authorities.
Table 6.Myanmar: Gross Domestic Product by Form of Ownership, 1995/96 (Est.)(In percent of sectoral output)
StateCooperativesPrivate
Productive sectors13.21.385.5
Agriculture0.21.698.2
Livestock and fishery0.41.398.3
Forestry40.70.958.4
Mining59.00.840.2
Manufacturing and processing27.40.871.8
Power99.90.10.0
Construction85.70.214.1
Services56.41.841.8
Transportation36.21.462.4
Communication100.00.00.0
Financial institutions72.811.815.4
Social and administrative services90.10.49.5
Rentals and other services5.71.992.4
Trade23.02.574.5
Gross domestic product22.51.675.9
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 7.Myanmar: Allocation of Public Capital Expenditure, 1991/92-1996/97
Prov. Act.Est.Budget
1991/921992/931993/941994/951995/961996/97
(In millions of kyats; at current prices)
Productive sectors3,9634,5254,4128,73714,51411,063
Agriculture5338931,1712,8766,7884,351
Livestock and fishery1641368850111154
Forestry142185204177300320
Mining177170183211289432
Manufacturing and processing4846613563046231,092
Power5566735859581,4071,908
Construction1,9071,8071,8254,1614,9962,806
Services7,9848,41710,85516,45724,28017,473
Transportation and communication1,2611,2721,7483,2066,4294,818
Financial institutions165217281472444149
Social services3,0702,9752,1712,9174,8745,458
Other3,4883,9536,6559,86212,5337,048
Trade508514411588826465
Total12,45513,45615,67825,78239,62029,001
(Percentage of total)
Productive sectors31.833.628.233.936.638.1
Agriculture4.36.67.511.217.115.0
Livestock and fishery1.31.00.60.20.30.5
Forestry1.11.41.30.70.71.1
Mining1.41.31.20.80.71.5
Manufacturing and processing3.94.92.31.21.63.7
Power4.55.03.73.73.66.6
Construction15.313.411.616.112.69.7
Services64.162.669.263.861.360.3
Transportation and communication10.19.511.212.416.216.6
Financial institutions1.31.61.81.81.10.5
Social services24.722.113.811.312.318.9
Other28.029.442.438.331.724.3
Trade4.13.82.62.32.11.6
Sources: Data provided by the Myanma authorities; and staff estimates.
Sources: Data provided by the Myanma authorities; and staff estimates.
Table 8.Myanmar: Output and Yield of Major Crops, 1990/91-1996/97
Prov. Act.Prov.Plan
1990/911991/921992/931993/941994/951995/961996/97
(In thousand of metric tons)
Output
Paddy13,96913,20114,83716,76018,19519,56820,865
Wheat12314313910889109111
Maize187191208204284212247
Pulses5527208898701,1091,3531,456
Groundnuts472378433431500569590
Sesame216171237223304351386
Sunflower96879683117161183
Cotton6263684386214324
Jute24223927354347
Sugarcane2,1052,4313,4102,8492,3753,1323,911
Myanma tobacco43535047354242
Virginia tobacco10171123181727
Rubber15151616272829
(In killogram per hectare of harvested area)
Yield
Paddy2,9342,8852,9343,0543,1683,1843,222
Wheat904974953948834940948
Maize1,4951,5401,5181,5341,7061,3171,418
Pulses641663659643687701719
Groundnuts8928088939251,0081,0991,121
Sesame217212239236269354272
Sunflower661655667747652728753
Cotton431410433352484665728
Jute956833816900924913928
Sugarcane (mt per ha)43444545454953
Myanma tobacco1,3271,3581,3151,4451,2431,5461,546
Virginia tobacco4,7454,7904,2394,2565,5725,1135,124
Rubber369373375381526536538
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 9.Myanmar: Sown Area for Major Crops, 1990/91-1996/97
Prov. Act.Prov.Plan
1990/911991/921992/931993/941994/951995/961996/97
(In thousands of hectares)
Paddy4,9454,8305,1335,6745,9266,1956,475
Wheat150154151125109116117
Maize141140156150172168174
Pulses1,0001,2651,4971,5191,7462,0382,104
Groundnuts554510494487507524526
Sesame1,3241,2891,3671,2991,3311,3781,416
Sunflower163146156121199223243
Cotton156172168144205386445
Jute37365533395051
Rubber7776788389102129
Sugarcane9211311799107125131
Myanma tobacco32403832282727
Virginia tobacco2435345
Other1,4541,5151,5941,6141,6821,7191,743
Total10,12710,29011,00711,38512,14313,05513,586
(In percent of total sown area)
Paddy48.846.946.649.848.847.547.7
Pulses9.912.313.613.314.415.615.5
Sesame13.112.512.411.411.010.610.4
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 10.Myanmar: Harvested Acreage Under Major Crops, 1990/91-1995/96(In thousands of hectares)
Prov. ActProv.
1990/911991/921992/931993/941994/951995/96
Paddy4,7604,5755,0565,4875,7436,144
Wheat136147145115107116
Maize125124137133167161
Pulses9351,1571,4291,4321,6932,012
Groundnuts529468484466497517
Sesame9938039929461,132991
Sunflower145132144111179221
Cotton144154157122178322
Jute252747303747
Rubber394041435253
Sugarcane495576645364
Myanma tobacco323938322827
Virginia tobacco243534
Total7,9147,7258,7498,9869,86910,679
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 11.Myanmar: Government Procurement of Major Crops, 1991/92-1996/97 1/
Prov. Act.Prov.Budget
1991/921992/931993/941994/951995/961996/97
(In thousands of metric tons)
Paddy1,5581,6491,9262,0672,0872,087
Wheat71410855
Maize61513373217
Pulses315369174173115
Cotton2399214949
Jute152822313339
Sugarcane6740580459914920
Rubber325446
Virginia tobacco94541111
(Percentage share of officially procured crops in total output)
Paddy11.811.111.511.410.710.0
Wheat4.910.69.39.04.64.5
Maize3.17.26.413.015.16.9
Pulses4.36.09.117.213.98.6
Cotton36.513.520.924.422.915.1
Jute68.271.88.1588.676.783.0
Sugarcane29.20.021.320.429.924.0
Rubber20.012.531.314.814.320.7
Virginia tobacco52.936.421.722.264.740.7
Sources: Data provided by the Myanma authorities.

Procurement by State Economic Enterprises.

Sources: Data provided by the Myanma authorities.

Procurement by State Economic Enterprises.

Table 12.Myanmar: Cooperative Societies’ Procurement of Major Crops, 1990/91-1995/96
Est.
1990/911991/921992/931993/941994/951995/96
(In thousands of metric tons)
Crops
Paddy347536571135.008
Maize seeds (metric tons)9261,3939126663801,548
Groundnut12149534
Sesame111410233
Sunflower (metric tons)8341,1915427644361
Pulses314248381926
(In percent of total output)
Paddy2.54.13.80.10.00.0
Maize seeds0.50.70.40.30.10.7
Groundnut2.53.72.11.20.60.7
Sesame5.18.24.20.91.00.9
Sunflower0.91.40.60.10.00.2
Pulses5.65.85.44.41.71.9
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 13.Myanmar: Production and Utilization of Rice, 1990/91-1995/96(In thousands of metric tons)
Est.
1990/911991/921992/931993/941994/951995/96
Paddy
Production13,96913,20114,83716,75918,19419,567
Seeds, other use and waste1,6751,6671,7902,0302,1672,303
Paddy for milling12,29411,53413,04714,72916,02717,264
Rice
Production7,4837,0217,9428,7959,75610,510
Utilization7,4086,9517,8638,7079,65810,405
Domestic consumption7,2876,7827,6688,4588,6579,405
On-farm consumption3,1503,1583,1933,2193,2503,266
Distribution by Government 1/747635767751833840
Distribution by cooperatives35260964238879178
Distribution by private traders3,0382,3803,0544,1004,4855,121
Government exports1211691952491,0011,000
Changes in stocks 2/7570798898105
Memorandum items:
Procurement of paddy
Government1,5041,5581,6491,9262,0672,087
Cooperative societies3475365711340
Source: Data provided by the Myanma authorities.

Including rice procured as land and water tax.

Calculated as residual; a positive figure represents an increase.

Source: Data provided by the Myanma authorities.

Including rice procured as land and water tax.

Calculated as residual; a positive figure represents an increase.

Table 14.Myanmar: Purchase Prices of Major Agricultural Products, 1990/91-1995/96(Kyats per metric ton)
Est.Est.
1990/911991/921992/931993/941994/951995/96
Paddy
Government2,2972,3202,3083,5533,6963,834
Cooperatives2,4202,4203,4484,4373,1554,625
Private traders2,5643,5644,4249,2509,10610,304
Wheat
Government9,33113,0557,9807,6087,90314,605
Cooperatives9,04310,91110,41611,39718,71818,022
Private traders11,48213,18913,84820,36221,74326,027
Maize
Government2,4057,7916,16211,23411,93014,000
Cooperatives3,6136,6426,8917,95811,03712,353
Joint ventures0010,981000
Private traders6,0287,5738,65013,92416,64917,132
Pulses
Government6,25714,20118,15435,68434,10834,397
Cooperatives11,10312,78413,83718,84633,17731,694
Joint ventures11,35117,98718,61823,99037,37039,033
Private traders8,5749,80511,56717,42327,23430,576
Cotton
Government13,59515,25715,27317,01523,48929,395
Private traders16,40818,32917,76616,73725,51925,519
Jute
Government6,8357,46311,50113,57813,73715,922
Private traders7,34911,22512,22412,86114,69814,698
Sugarcane
Government266266984984984984
Private traders6757309309321,0831,181
Rubber
Government26,99340,00550,89264,18778,114107,487
Joint ventures27,352078,98287,025101,556139,014
Private traders30,87140,41948,00452,92288,20399,228
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 15.Myanmar: Supply and Use of Chemical Fertilizers, 1990/91-1995/96(In thousands of metric tons)
Prov. Act.Prov.
1990/911991/921992/931993/941994/951995/96
Use of fertilizers162166196291316430
By HYV crops 1/144132179261315430
Paddy10999150248298356
Nonpaddy353329131774
Pulses9621111
Maize564230
Groundnuts331009
Sesame and sunflower6741218
Sugarcane132119
Jute844228
Other34126819
By non-HYV crops8110000
Paddy110000
Other7100000
Unspecified use1023173010
Changes in stocks 2/29−22−376−42240
Sources of supply191144193367274670
Domestic production133100111174147300
Urea133100111174147300
Imports584482193127370
Urea10442416256112
Superphosphate200473171135
Muriate potash60110073
Ammonium22000050
Memorandum item:
Use of fertilizer (1976/77 = 100)143147173258280381
Percentage change−1021849936
Source: Data provided by the Myanma authorities.

High-yielding variety crops.

Calculated as residual.

Source: Data provided by the Myanma authorities.

High-yielding variety crops.

Calculated as residual.

Table 16.Myanmar: Prices and Cost of Fertilizers, 1990/91-1996/97(In kyats per metric ton)
Prov. Act.Prov.Plan.
1990/911991/921992/931993/941994/951995/961996/97
Urea
Domestic sales price2,1602,1602,16012,00012,00030,00030,000
Domestic production and distribution cost3,2483,6994,0724,4106,8816,8756,875
Of which: Production1,7281,9362,0682,2804,7394,7394,739
Implicit subsidy1,0881,5391,912−7,590−5,119−23,125−23,125
Triple superphosphate
Domestic sales price3,4005,0005,0008,0008,00020,00020,000
Import and distribution cost3,9753,8073,9714,70818,63429,677
Of which: Import cost 1/2,1231,6801,6702,40716,18527,228
Implicit subsidy575−1,193−4,029−3,292−1,3669,677
Muriate potash
Domestic sales price1,5004,0004,0004,0004,0007,0007,000
Import and distribution cost3,1323,44624,79224,792
Of which: Import cost 1/1,3521,33922,34322,343
Implicit subsidy1,632−55417,79217,792
Compound
Domestic sales price26,000
Import and distribution cost26,811
Of which: import cost 1/24,362
Implicit subsidy811
Source: Data provided by the Myanma authorities.

Valued at official exchange rate.

Source: Data provided by the Myanma authorities.

Valued at official exchange rate.

Table 17.Myanmar: Production and Utilization of Teak and Hardwood, 1990/91-1995/96

(In thousands of cubic tons) 1/

Est.
1990/911991/921992/931993/941994/951995/96
Teak (logs)
Production440362341332272256
Of which:
By foreign companies143102627890
Utilization371300319292216255
Sawmills1321351529688106
Local use142111114
Exports 2/225144166195127135
Of which:
By foreign companies143102627890
Change in stocks69622240561
Hardwood (logs) 3/
Production648653624712512522
Of which:
By foreign companies327258211314340
Utilization627552492626416523
Sawmills227217222240303346
Local use556629101877
Exports 2/34526924137695100
Of which:
By foreign companies327258211314340
Change in stocks211011328696−1
Source: Data provided by the Myanma authorities.

A cubic ton is defined as 12 inches x 12 inches x 50 feet.

Exports of logs only.

These data refer to production of hardwood by the public sector; private sector production is excluded.

Source: Data provided by the Myanma authorities.

A cubic ton is defined as 12 inches x 12 inches x 50 feet.

Exports of logs only.

These data refer to production of hardwood by the public sector; private sector production is excluded.

Table 18.Myanmar: Capacity Utilization Ratios, and Output and Capacity Indices for Selected Industrial Enterprises, 1990/91-1996/97 1/(Percent, ratio, and indices; 1985/86=100)
Est.
1990/911991/921992/931993/941994/951995/961996/97
Ministry of Industry No. 1
Foodstuff industries
Capacity utilization ratio31.850.858.946356.176.475.9
Output index43.747.159.968.971.868.468.8
Capacity index76.467.156.761.264.043.546.7
Textile industries
Capacity utilization ratio32.747.543.346.150.071.570.8
Output index60.153.851.648.649.357.857.2
Capacity index134.382.478.478.178.672.072.0
Jute industries
Capacity utilization ratio35.524.242.1
Output index61.051.268.2
Capacity index73.089.768.7
Ceramic industries
Capacity utilization ratio69.757.255.454.566.281.384.6
Output index105.783.081.392.7112.5114.1118.4
Capacity index91.389.680.088.088.088.088.0
Pharmaceutical and household industries
Capacity utilization ratio35.141.744.740.068.578.078.0
Output index43.531.637.032.653.360.362.8
Capacity index97.598.459.462.962.462.462.4
Metal industries 2/
Capacity utilization ratio25.123.935.7
Output index73.882.260.6
Capacity index99.899.8100.0
General and maintenance industries 2/
Capacity utilization ratio37.229.031.453.970.273.574.9
Output index66.854.941.244.247.159.962.1
Capacity index108.794.479.080.276.276.276.2
Paper and chemical industries
Capacity utilization ratio60.468.972.056.464.977.984.6
Output index67.277.285.983.087.694.7106.0
Capacity index83.784.982.079.083.283.283.2
Average of Ministry of Industry (No. 1)
Capacity utilization ratio37.244.249.751.559.876.478.2
Output index56.854.757.459.768.762.964.7
Capacity index97.283.569.771.072.056.156.8
Ministry of Industry (No. 2)
Myanma Heavy Industries
Capacity utilization ratio20.414.612.722.816.336.239.5
Output index38.828.126.649.132.746.953.0
Capacity index103.5105.0114.4117.3109.270.573.1
Ministry of Energy
Myanma Petrochemical Enterprise
Capacity utilization ratio27.826.426.932.235.150.656.1
Output index71.872.068.682.389.512931435
Capacity index112.7112.7112.7112.7112.7112.7112.7
Average of all industries
Capacity utilization ratio32.635.035.840.542.957359.9
Output index56.353.252.759.963.966.770.6
Capacity index100.491.283.985.784.767.068.0
Source: Data provided by the Myanma authorities.

Capacity indices are calculated as ratios of output indices to capacity utilization ratios.

In 1993/94, Myanmar Metal Industries and Myanmar General Industries were merged into Myanmar General and Maintenance Industries.

Source: Data provided by the Myanma authorities.

Capacity indices are calculated as ratios of output indices to capacity utilization ratios.

In 1993/94, Myanmar Metal Industries and Myanmar General Industries were merged into Myanmar General and Maintenance Industries.

Table 19.Myanmar: Production of Selected Minerals, 1990/91-1995/96(In metric tons unless otherwise stated)
Prov. Act.Prov.
1990/911991/921992/931993/941994/951995/96
Tin concentrate (65 percent)309172387544648492
Tungsten concentrate (65 percent)13157511315295
Tin and tungsten concentrate (65 percent)1539510873111179
Tin, tungsten, and scheelite mixed concentrate1,0031,0251,2821,3001,3241,400
Refined lead1,5552,5261,6311,5472,0684,250
Zinc concentrate3,8203,3932,7891,9393,4756,070
Copper ore (’000 long tons)1,3849179629681,2001,700
Refined silver (’000 ounces)111193116118160260
Coal (’000 long tons)314156715748
Gold (troy ounces)84122,59820,48614,03019,55822,496
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 20.Myanmar: Supply of Primary Energy, 1990/91-1995/96 1/
Est.
1990/911991/921992/931993/941994/951995/96
(In thousands of barrel of crude oil or equivalent)
Commercial primary energy11,18711,08910,48412,18813,620
Crude oil5,3125,4775,3585,2315,0403,701
Natural gas 1/5,6225,3114,7296,4728,0849,028
Coal 2/152201274348363
Hydroelectricity 3/101100123137133130
(Change in percent)
Commercial primary energy−10.4−0.9−5.516.311.7
Crude oil−4.23.1−2.2−2.4−3.7−26.6
Natural gas−15.3−5.5−11.036.924.911.7
Coal−19.932.236.327.04.3—-
Hydroelectricity9.1−1.023.011.4−2.9−2.3
Source: Data provided by the Myanma authorities.

Converted at 1 million cubic feet of natural gas = 167.1 barrels of crude oil.

Converted at 1 long ton of coal = 4.9 barrels of oil.

Converted at 1 million kwh = 80.6 barrels of oil.

Source: Data provided by the Myanma authorities.

Converted at 1 million cubic feet of natural gas = 167.1 barrels of crude oil.

Converted at 1 long ton of coal = 4.9 barrels of oil.

Converted at 1 million kwh = 80.6 barrels of oil.

Table 21.Myanmar: Production, Trade, and Consumption of Oil and Natural Gas, 1990/91-1995/96

(In thousands of barrels) 1/

Est.
1990/911991/921992/931993/941994/951995/96
Total production
(in crude oil equivalent)10,93410,78810,08711,70313,12413,305
Crude oil5,3125,4775,3585,2315,0404,277
Natural gas
(in crude oil equivalent) 2/5,6225,3114,7296,4728,0849,028
Utilization
Domestic consumption 3/10,7979,9849,28410,90212,29112,591
Crude oil5,1754,6734,5554,4304,2073,491
Natural gas (in crude oil equivalent) 2/5,6225,3114,7296,4728,0849,028
Of which:
Electricity generation3,1242,3783,2624,1155,0095,883
Trade
Exports of oil products
(in crude oil equivalent)137804803801833210
Sources: Data provided by the Myanma authorities; and staff estimates.

One barrel = 42 U.S. gallons.

The conversion factor used is 1 million cu. ft. of natural gas = 167.1 barrels of crude oil (1 million BTUs = 1,000 cu. ft. of natural gas).

Including changes in stock.

Sources: Data provided by the Myanma authorities; and staff estimates.

One barrel = 42 U.S. gallons.

The conversion factor used is 1 million cu. ft. of natural gas = 167.1 barrels of crude oil (1 million BTUs = 1,000 cu. ft. of natural gas).

Including changes in stock.

Table 22.Myanmar: Domestic Output of Petroleum Products, 1990/91-1995/96(In millions of gallons)
Est.
1990/911991/921992/931993/941994/951995/96
Gasoline41.641.947.451.558.365.1
Diesel fuel84.692.485.587.8107.1116.6
Furnace oil28.733.936.134.824.027.4
Kerosene0.60.50.30.30.20.2
Aviation fuel8.210.610.311.714.517.6
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 23.Myanmar: Use of Petroleum Products by Industries, 1990/91-1995/96(In thousands of barrels)
Est.
1990/911991/921992/931993/941994/951995/96
Agriculture103110115263576776
Livestock and fishery12011410411154130
Forestry73453742242325
Mining321418255268126130
Manufacturing and processing473648667637484535
Power552742652543345465
Construction135111222246106113
Transportation7277167738371,2431,334
Other2,0172,2082,4502,7223,4043,851
Total4,5215,1125,2755,6696,5807,659
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 24.Myanmar: Official Retail Prices of Major Petroleum Products, 1990-96(In kyats per liter, end of period)
Est.
1990199119921993199419951996
Gasoline
Official3.523.523.523.525.505.505.50
Diesel fuel
Official2.312.312.312.314.404.404.40
Furnace oil
Official1.871.871.871.872.642.642.64
Kerosene
Official2.972.972.972.973.303.303.30
Memorandum items:
Import unit value 1/28.628.727.5
Crude oil21.522.0421.00
Diesel oil24.829.5626.95
Imports (’000 barrels)
Crude oil7655071,1251,4102,4373,5523,900
Diesel oil4501724298641,3772,319
Source: Data provided by the Myanma authorities.

US$ per barrel, c.i.f basis.

Source: Data provided by the Myanma authorities.

US$ per barrel, c.i.f basis.

Table 25.Myanmar: Generation and Consumption of Electricity, 1990/91-1995/96(In millions of kilowatt hours)
Est.
1990/911991/921992/931993/941994/951995/96
Electric generation 1/2,6432,6763,0073,3853,6324,056
Hydroelectricity1,2481,2381,5301,7051,6591,624
Steam282625347967
Gas1,2931,3661,4021,5951,8522,320
Diesel744650514245
Total consumption1,7081,6981,8822,0882,2582,408
Domestic6296727718839831,026
Industrial787727769829863918
Hospitals, offices, schools, etc.214229238263302350
Other 2/7870104113110114
Losses 3/9359781,1251,2971,3741,648
Memorandum items:
Length of electric power lines of MEPE (miles)11,64211,75712,05412,10512,67312,910
Electric generating capacity (megawatts)804810807810837982
Of which: Hydroelectric258260288291299317
Unit sales price (in kyat)0.490.500.500.500.921.19
Unit cost (in kyat)0.460.520.530.550.560.68
Ratio of losses to generation (in percent)35.436.537.438.337.840.6
Source: Data provided by the Myanma authorities.

Units generated by the Myanma Electric Power Enterprise (MEPE) only.

Includes station use.

Includes losses in generation, transmission, and distribution.

Source: Data provided by the Myanma authorities.

Units generated by the Myanma Electric Power Enterprise (MEPE) only.

Includes station use.

Includes losses in generation, transmission, and distribution.

Table 26.Myanmar: Population and Employment, 1990/91-1995/96(In thousands; unless otherwise specified)
Est.Est.
1990/911991/921992/931993/941994/951995/96
Population 1/40,78641,55242,33343,11643,92244,743
Growth rate (in percent)1.91.91.91.91.91.9
Total employment15,73716,00716,46916,81717,23017,587
Growth rate (in percent)3.41.72.92.12.52.1
Agriculture10,31610,52110,78010,97211,11511,272
Livestock and fishery365373380390388388
Forestry186182187189186188
Mining79798387105116
Manufacturing and processing1,1321,1241,1951,2501,4101,481
Construction188283288292327354
Power171717171819
Transportation and communications388394412420431441
Social services558507525531548563
Administration647698713733739776
Trade1,3961,3551,4071,4501,6631,715
Other465474482486300274
Employment by sector15,73716,00716,46916,81717,23017,587
Public sector 2/1,3581,3821,3771,3801,3821,378
Private sector and cooperatives14,37914,62515,09215,43715,84816,209
Percentage share of total91.491.491.691.892.092.2
Memorandum item:
Labor force 3/16,53016,95517,39117,83818,29618,766
Urban3,7003,7953,8923,9924,0944,199
Rural12,83013,16013,49913,84614,20214,567
Source: Data provided by the Myanma authorities.

Data for mid-fiscal year.

Including casual labor.

Estimates based on the Myanmar Labor Force Survey, 1990.

Source: Data provided by the Myanma authorities.

Data for mid-fiscal year.

Including casual labor.

Estimates based on the Myanmar Labor Force Survey, 1990.

Table 27.Myanmar: Employment and Wages in the Public Sector, 1990/91-1995/96
Est.
1990/911991/921992/931993/941994/951995/96
(In thousands)
Number of employees891897874892887892
Union Government550558561582582587
Local bodies18180000
State economic enterprises323321313309305305
(In millions of kyats)
Public sector wage and pension bill8,9649,0239,75612,81814,59414,565
Union Government5,6175,7045,2066,7506,8267,273
Local bodies1501503334
State economic enterprises3,1973,1694,5476,0537,7657,288
Pensions and gratuities7057351,0571,6661,9202,320
Union Government3963977201,2311,4201,781
Local bodies15170000
State economic enterprises294321337435500539
(In kyats)
Annual wage and pension per employee10,84910,87911,16214,37016,45316,328
Union Government10,93910,9299,28011,59911,72912,390
Local bodies9,0159,1256,0005,9175,9177,890
State economic enterprises10,78010,89214,52719,58925,45923,895
Sources: Data provided by Myanma authorities.
Sources: Data provided by Myanma authorities.
Table 28.Myanmar: Yangon Consumer Price Index, 1990/91-1996
19951996
Weights1990/911991/921992/931993/941994/95MarchJuneSept.MarchJuneSept
(1986 = 100; annual average, end of month)
All items100.0233.7301.8369.1493.0603.7673.8734.1744.0758.4808.0884.7
Food and beverages64.9256.8340.6418.7585.1691.9768.8858.5867.2887.1954.31,059.6
Tobacco2.3167.1198.1243.9269.4269.7314.7314.9313.4306.0319.0356.5
Fuel and light8.8221.1281.9353.1411.5669.5761.1764.0777.8767.1806.0843.3
Clothing7.1184.9230.6310.7348.3398.0423.3443.3454.4500.3519.9529.5
House rent3.1142.4198.0220.5256.5315.8359.6383.3417.2398.1420.1423.0
Other13.8189.7209.9230.3273.9367.4430.8428.1436.9436.4437.7463.0
(Year-on-year percentage change)
All items21.929.122.333.522.526.432.624.712.510.118.9
Food and beverages25.432.622.939.718.124.032.428.815.411.222.2
Tobacco9.018.523.110.5−1.317.612.74.2−2.81.313.8
Fuel and light20.927.525.316.659.448.852.21.70.85.58.4
Clothing26.124.734.712.113.418.313.414.818.217.316.5
House rent22.839.011.416.323.232.531.136.410.79.61.4
Other3.710.19.718.943.529.929.426.61.32.26.0
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 29.Myanmar: Indices of Official and Free Market Prices of Selected Goods, 1992-96(December 1986 = 100)
DecemberSeptember 1996
1992199319941995IndexActual Price

(Kyat)
RiceOfficial6836831,1711,1711,17124.00
Free6367508361,1651,38664.98
SugarOfficial34534534553653645.00
Free226250417524509135.55
TowelsOfficial182183
Free356411521686721129.80
Washing SoapOfficial4504504504504509.00
Free22421223627930521.94
MatchesOfficial4414414414414410.75
Free2823083083083082.00
CigarettesOfficial3153153153153158.50
Free26821526827830233.92
CandlesOfficial3103103103103104.50
Free11913212611712521.84
Vest (1/30)Official34734734734734724.80
Free23026028439740255.50
Long ClothOfficial41641641641641632.00
(White)Free30226627832535055.00
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 30.Myanmar: Summary Operations of Union Government and State Economic Enterprises, 1992/93-1996/97
1992/931993/941994/951995/96

Prov.
1996/97

Est
(En billions of kyats)
UNION GOVERNMENT
Receipts19.826.732.339.546.8
Tax revenue12.617.120.422.928.7
SEEs contributions5.06.68.211.111.3
Other nontax revenue1.82.33.04.45.5
Foreign grants0.40.60.61.01.3
Expenditures28.535.848.759.771.9
Current expenditures 1/18.623.628.433.737.8
Wages and salaries5.26.87.18.79.5
Goods and services5.15.67.48.39.9
Maintenance and repairs6.57.78.510.010.5
Contributions0.6121.32.12.4
Interest payments:1.22.32.94.14.2
Domestic0.61.82.43.53.9
External (due)0.60.50.50.60.4
Other0.00.11.20.51.3
Capital expenditures9.812.320.225.934.0
Lending minus repayments0.1−0.10.10.10.1
STATE OWNED ENTERPRISES
Receipts43.152.472.587.295.1
Expenditures46.959.285.899.0113.7
Current 2/43.656.280.490.0100.7
Capital 3/3.33.15.49.013.0
CONSOLIDATED ACCOUNTS
Receipts19.826.732.339.546.8
Tax12.617.120.422.928.7
Nontax6.89.011.215.516.8
Grants0.40.60.61.01.3
Expenditures32.142.861.971.490.4
Current19.127.436.236.543.4
Capital13.015.425.634.947.0
Current Balance0.7−0.7−4.03.03.4
Overall Balance−12.4−16.0−29.7−32.0−43.7
FINANCING13.917.428.429.843.7
Foreign loans (accrual basis, net)−1.0−0.9−0.9−0.7−0.8
Foreign loans (gross)0.50.50.60.80.8
Amortization due−1.5−1.5−1.5−1.5−1.6
Change in external arrears1.81.31.40.51.0
Interest0.40.10.20.10.2
Principal1.41.31.20.40.8
Domestic financing13217.027.930.043.5
Bank12.315.827.328.941.5
Nonbank0.91.20.61.12.0
Treasury bonds2.0
Assets sale0.91.20.61.1
Statistical discrepancy1.51.4−1.3−2.20.0
Memorandum item:
Nominal GDP249.4360.3473.2613.2778.2
(In percent of GDP)
Receipts7.97.46.86.46.0
Of which: tax revenue5.14.84.33.73.7
Total expenditures 1/12.911.913.111.611.6
Current expenditure7.77.67.76.05.6
Current account balance0.3−0.2−0.80.50.4
Capital expenditure5.24.35.45.76.0
Overall balance−5.0−4.4−6.3−5.2−5.6
Of which: bank financing4.94.45.84.75.3
Total military expenditure3.73.93.03.22.7
Military expenditure as percent of total expenditure28.432.423.027.323.2
Social sector spending, excluding pensions1.81.61.20.91.1
Social sector spending as percent of expenditure14.113.19.08.09.4
Sources: Budget Department, Ministry of Finance and Revenue; and staff estimates and projections

Includes unidentified expenditure

Net of state-owned financial institutions surplus.

Net of capital expenditures of financial institutions.

Sources: Budget Department, Ministry of Finance and Revenue; and staff estimates and projections

Includes unidentified expenditure

Net of state-owned financial institutions surplus.

Net of capital expenditures of financial institutions.

Table 31.Myanmar: Revenues of Consolidated Nonfinancial Public Sector, 1991/92-1995/96
1991/921992/931993/941994/951995/96

Prov.
Total revenue and grants18.320.727.832.940.6
Tax revenue10.512.617.020.422.9
Taxes on income2.03.24.77.08.0
Income tax1.02.03.03.74.4
Profit tax1.01.21.73.33.6
Commercial tax3.94.15.36.112
Taxes on property use0.70.9121.00.9
Land tax0000.10.1
Extraction of forestry products0.40.50.70.50.5
Extraction of mineral products00000
Fisheries tax0.30.30.30.40.3
Water tax00000
Customs duties2.62.83.94.04.5
Exercise duties0.10.10.1
Other1.31.51.82.12.4
Import license fee0.20.10.20.20.2
State lottery0.81.11.31.51.5
Motor vehicle tax0.10.10.10.10.1
Stamp duties0.10.30.30.30.5
Nontax revenue7.37.710.211.816.7
Contributions from SEEs3.35.06.68.211.1
Local authorities’s revenue 1/2.4
Other1.62.73.53.65.5
School fees0.20.10.30.20.5
Mech. agriculture department receipts0.10.10.20.61.5
UG capital receipts0.10.91.20.61.1
Other UG receipts0.91.21.61.82.0
Representative bodies receipts0.10.10.10.10.1
Public debt account receipts0.20.20.20.20.2
Foreign grants0.40.40.60.61.0
Source: Ministry of Finance and Revenue.

Starting 1992/93, data exclude larger municipalities.

Source: Ministry of Finance and Revenue.

Starting 1992/93, data exclude larger municipalities.

Table 32.Myanmar: Union Government Current Expenditure, 1991/92-1995/96 1/(In billions of kyats)
1991/921992/931993/941994/951995/96

Prov.
General services2.02.12.52.73.0
SLORC, etc0.40.40.50.60.7
Home1.41.41.71.82.1
Information0.10.20.20.20.2
Foreign affairs0.10.10.10.10.1
Military 2/6.19.113.914.119.5
Economic services2.62.92.94.95.9
Agriculture and forestry1.01.21.52.23.1
Industry0.00.00.00.00.1
Mines0.00.00.00.00.1
Transport and communications0.10.10.10.20.2
Public works and housing1.01.00.61.81.7
Cooperatives0.20.20.20.20.3
Planning and finance0.20.30.30.40.5
Social services5.55.66.87.07.5
Education3.63.64.54.44.6
Health0.70.80.90.91.0
Pension and gratuities1.01.01.21.31.8
Social welfare0.10.10.20.30.2
Interest due 3/0.60.60.50.60.7
Other current expenditure 4/1.71.01.21.52.4
Total18.521.327.830.839.0
Source: Ministry of Finance and Revenue.

On a cash basis, except for interest payments.

All military expenditure is classified as current expenditure.

Interest on domestic debt is incorporated in SEE’s current surplus/deficit.

Includes contributions to international organizations, Reserve Fund, and an unallocated expenditure.

Source: Ministry of Finance and Revenue.

On a cash basis, except for interest payments.

All military expenditure is classified as current expenditure.

Interest on domestic debt is incorporated in SEE’s current surplus/deficit.

Includes contributions to international organizations, Reserve Fund, and an unallocated expenditure.

Table 33.Myanmar: Union Government Capital Expenditure, 1991/92-1995/96 1/(In billions of kyats)
1991/921992/931993/941994/951995/96

Prov.
Representative bodies0.30.10.10.60.5
General services0.90.70.30.40.4
Economic services2.73.03.67.612.8
Agriculture and forestry0.50.81.22.76.5
Transport and communications0.20.20.50.71.5
Public works and housing1.81.81.74.04.6
Planning and finance0.10.10.10.10.1
Social services2.42.41.82.23.4
Education1.21.21.01.22.0
Health1.21.30.80.91.3
Other0.30.30.51.20.2
Total6.66.56.311.817.3
Source: Ministry of Finance and Revenue.

On a cash basis.

Source: Ministry of Finance and Revenue.

On a cash basis.

Table 34.Myanmar: Sectoral Breakdown of SEEs’ Current Surplus and Capital Expenditure, 1991/92-1995/96 1/
1991/921992/931993/941994/951995/96

Prov.
(In millions of kyats)
Agriculture and forestry
Current surplus−454−627−751−1391−2,087
Capital expenditure362557330396713
Fisheries and pearls
Current surplus−93−244−705−10818
Capital expenditure10416867742
Industrial
Current surplus8658491,0892,26732
Capital expenditure297599228226475
Minerals
Current surplus−8−249−11−218−658
Capital expenditure182248186214294
Construction
Current surplus42340−247398213
Capital expenditure735877229440
Power
Current surplus163260272246363
Capital expenditure5566965859581,407
Transport
Current surplus87328876532100
Capital expenditure1,0121,1451,2122,4314,903
Trade council
Current surplus−1,84147−5,132−10,219−12,532
Capital expenditure533496379563797
Other
Current surplus4462953743991,315
Capital expenditure228254309612629
Total SEEs
Current surplus−7699−435−8,094−13,436
Capital expenditure 2/3,3474,22133735,6369,700
Overall balance−3354−3,522−7,608−13,730−23,136
(In percent of GDP)
Memorandum items:
Total SEEs
Current surplus0.3−1.2−1.7−2.2
Capital expenditure1.81.71.01.21.6
Overall balance−1.8−1.4−2.2−2.9−3.8
Source: Data provided by the Myanma authorities.

Current surplus is recorded on a cash basis before payments of interest but after contributions to the Union Government.

Gross capital expenditure excluding capital revenue.

Source: Data provided by the Myanma authorities.

Current surplus is recorded on a cash basis before payments of interest but after contributions to the Union Government.

Gross capital expenditure excluding capital revenue.

Table 35.Myanmar: Monetary Survey, 1991-96
199119911992199219931993199419941995199519961996
Mar.Sep.Mar.Sep.Mar.Sep.Mar.Sep.Mar.Sep.

Prov.
Mar.

Prov.
Sep.

Prov.
(In millions of kyats)
Net foreign assets1,5371,0651,5051,4151,6141,4841,4001,1861,8162,0151,7511,210
Domestic credit64,47468,76481,07188,061102,510109,214118,460130,800151,814167,158195,686235,678
Public sector (net)56,22257,33968,59270,54881,50385,35696,467104,393123,353126,762152,709173,191
Private sector8,25211,42512,47917,51321,00723,85821,99326,40728,46140,39642,97762,487
Cooperatives4,4335,1465,8867,1067,8817,3516,1605,8035,7745,6555,6155,575
Other private sector3,8196,2796,59310,40713,12616,50715,83320,60422,68734,74137,36256,912
Other items (net)−15,005−14,745−15,785−15,234−14,582−14,992−9,913−11,5682,4472,9674,2933,067
Total liquidity51,00655,08466,79174,24289,54295,706109,947120,418156,077172,149201,730239,955
Money38,91840,88252,30757,00970,42872,22184,38188,898119,061122,139145,329168,074
Currency in circulation35,14036,71746,58451,55663,87165,79376,74981,170108,388110,866133,032151,061
Foreign currency deposits6977268209991,3451,0411,0051,1701,6671,9771,9352,224
Other3,0813,4394,9034,4545,2125,3876,6276,5589,0069,29610,36214,789
Quasi-money12,08814,20214,48417,23319,11423,48525,56631,52037,01650,00156,40171,881
(Annual percentage change)
Domestic credit31.224.925.728.126.424.015.619.828.227.828.941.0
Public sector (net)21.318.322.023.018.821.018.422.327.921.423.836.6
Private sector193.773.151.253.368.336.24.710.729.453.051.054.7
Total liquidity45.634.530.934.834.128.922.825.842.043.029.339.4
Money53.836.034.439.434.626.719.823.141.137.422.137.6
Quasi-money24.330.319.821.332.036.333.834.244.858.652.443.8
Memorandum items:
Public sector credit/Domestic credit0.130.170.150.200.200.220.190.200.190.240.220.27
Velocity3.73.53.33.43.33.63.73.93.83.73.53.4
Currency/Deposit ratio2.22.02.32.32.52.22.32.12.31.81.91.7
Source: Central Bank of Myanmar, and staff estimates
Source: Central Bank of Myanmar, and staff estimates
Table 36.Myanmar: Bank Deposits and Loans, 1991/92-1996
1991/921992/931993/941994/951995/96

Prov.
Sept. 1996

Prov.
(In millions of kyats)
Deposits and savings certificate20,20725,67133,19847,68968,69888,894
Demand and time deposits5,7266,6587,82511,21514,28019,530
Savings deposits11,68615,61921,55831,81848,75963,864
Savings certificate 1/2,7953,3943,8154,6565,6595,500
Loans12,47921,00721,99328,46142,97762,487
Cooperatives5,8867,8816,1605,7745,6155,931
Working capital5,7917,8246.1025,7305,5725,886
Term loans955758444345
Private sector6,59313,12615,83322,68737,36256,556
Agriculture7591,2931,4381,5503,3989,724
Other5,83411,83314,39521,13733,96446,832
Of which:
Extended by private banks001,5914,26211,51920,461
(Annual percentage change)
Deposits and savings certificates27.427.029.343.744.143.8
Demand and Time deposits51.416.317.543.327.345.8
Savings deposits24.333.738.047.653.247.7
Savings certificates4.221.412.422.021.56.4
Loans51.268.34.729.451.053.9
Cooperatives32.833.9−21.8−6.3−2.84.9
Private sector72.699.120.643.364.761.8
Agriculture66.870.411.27.8119.213.2
Other73.4102.821.746.860.777.6
Of which:
Extended by private banks167.9170.3195.8
(Share of total deposits, in percent)
Deposits and savings certificates100.0100.0100.0100.0100.0100.0
Demand and time deposits28.325.923.623.520.822.0
Savings deposits57.860.864.966.771.071.8
Savings certificates 1/13.813.211.59.88.26.2
(Share of total loans, in percent)
Loans100.0100.0100.0100.0100.0100.0
Cooperatives47.237.528.020.313.19.5
Private sector52.862.572.079.786.990.5
Agriculture6.16.26.55.47.915.6
Other46.856.365.574.379.074.9
Of which:
Extended by private banks0.00.07.215.026.832.7
Source: Central Bank of Myanmar; and staff estimates.

Twelve-year maturity.

Source: Central Bank of Myanmar; and staff estimates.

Twelve-year maturity.

Table 37.Myanmar: Selected Interest Rates, 1991-96
19911992199319941995Sept.

1996
Central bank rate11.011.011.011.012.515.0
Treasury bills and bonds
Three-month treasury bills4.04.04.04.04.04.0
Three-year treasury bonds10.010.010.010.010.013.5
Five-year treasury bonds10.510.510.510.510.514.0
Deposit rates
Call deposits3.03.03.03.03.03.0
Fixed deposits
Three months8.58.58.58.59.512.0
Six months9.09.09.09.010.012.5
Nine months9.59.59.59.510.513.0
Savings bank accounts
Basic rate8.010.010.010.010.012.0
Savings certificates
Twelve-year maturity10.912.012.012.012.015.0
Lending rates
Cooperatives
Working capital loans 1/15.015.016.516.516.516.5
Term loans12.012.014.514.514.514.5
Paddy loans 2/4.0-8.04.0-8.04.0-8.0
Private sector
Agriculture
To village banks 3/13.013.013.013.013.013.0
To farmers 4/18.018.018.018.018.018.0
Car purchase loans15.015.015.015.015.015.0
House repair and other loans 5/15.015.015.015.015.015.0
Small personal loans36.036.036.036.036.036.0
Trade 6/
Working capital loans15.016.516.516.516.518.0
Term loans12.014.514.514.514.516.5
Source: Central Bank of Myanmar

Overdrafts are charged an additional 0.5 percent.

The extension of special paddy procurement loans was discontinued in 1993.

Lending rate of the Myanmar Agricultural and Rural Development Bank.

Relending rate of village banks.

For government employees, the rate is generally reduced to 5 percent. Moreover, a special scheme of interest-free housing loans for civil servants was in place during 1990-93.

For financing of domestic and foreign trade of joint ventures and private entrepreneurs.

Source: Central Bank of Myanmar

Overdrafts are charged an additional 0.5 percent.

The extension of special paddy procurement loans was discontinued in 1993.

Lending rate of the Myanmar Agricultural and Rural Development Bank.

Relending rate of village banks.

For government employees, the rate is generally reduced to 5 percent. Moreover, a special scheme of interest-free housing loans for civil servants was in place during 1990-93.

For financing of domestic and foreign trade of joint ventures and private entrepreneurs.

Table 38.Myanmar: Government Treasury Bonds, 1993-96(In millions of kyats)
3-Year Bonds 1/5-Year Bonds 2/
Total SalesOutstandingTotal SalesOutstanding
1993-9436.036.06.86.8
1994-9547.083.07.714.5
April 19951.384.31.015.5
May 19955.089.30.115.7
June 19952.491.70.015.7
July 19950.892.50.215.9
August 19951.493.81.117.0
September 1995106.1199.92.919.9
October 19952.6202.50.620.5
November 1995100.7303.21.421.9
December 1995200.9504.10.021.9
January 1996261.1765.341.062.9
February 1996115.4880.60.062.9
March 199626.7907.30.363.2
April 1996160.21,067.43.466.6
May 1996658.41,725.831.698.2
June 1996127.61,853.5100.7198.9
July 1996130.41,983.91.5200.3
August 1996232.62,216.534.5234.9
September 1996312.42,528.92.8237.6
Source: Central Bank of Myanmar.

The 3-year bonds carry an annual interest rate of 10.0 percent up to March 1996, and 13.5 percent thereafter.

The 5-year bonds carry an annual interest rate of 10.5 percent up to March 1996, and 14.0 percent thereafter.

Source: Central Bank of Myanmar.

The 3-year bonds carry an annual interest rate of 10.0 percent up to March 1996, and 13.5 percent thereafter.

The 5-year bonds carry an annual interest rate of 10.5 percent up to March 1996, and 14.0 percent thereafter.

Table 39.Myanmar: Foreign Currency Deposits, and Developments of FEC, 1992/93-1996
1992/931993/941994/951995/96Sept. 1996
(In millions of kyats, at official rate)
Total Liquidity89,542109,947156,077201,730239,955
Domestic currency in circulation and deposits88,197108,942154,410199,795237,731
Foreign currency deposits1,3451,0051,6671,9352,224
MFTB7781,3151,590
MICB226340290
MEB111
Private Banks01154
(In millions of kyats, at parallel rate)
Total liquidity112,377126,976185,956239,781301,789
Domestic currency in circulation and deposits88,197108,942154,410199,795237,731
Foreign currency deposits24,18018,03431,54639,98664,058
(In percent of total liquidity, at parallel rate)
Total liquidity100.0100.0100.0100.0100.0
Domestic currency in circulation and deposits78.585.883.083.378.8
Foreign currency deposits21.514.217.016.721.2
(In millions of FEC)
Total issued FEC0.815.152.0149.2244.9
FEC in circulation0.32.56.79.14.3
Ratio of FEC in circulation/issued FEC0.380.170.130.060.02
Source: Central Bank of Myanmar, and staff estimates.
Source: Central Bank of Myanmar, and staff estimates.
Table 40.Myanmar: Balance of Payments, 1991/92-1996/97(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96

Prel.
1996/97

Est.
Trade balance−412−420−606−570−631−715
Exports, mainly f.o.b.431591696917891932
Imports, mainly f.o.b.−842−1,0101,302−1,488−1,522−1,647
Services (net)−15224154−24−32
Receipts180274247294346385
Payments−195−252−206−240−370−417
Of which: interest due(-95)(-101)(-81)(-110)(-116)(-119)
Private transfers (net)83122273322352360
Current account balance (excl. grants)−344−275−292−195−303−386
Official grants647198107183218
Nonmonetary capital movements94−36−585214980
Long-term capital (net)−150−170−152−113−104−175
Disbursements618189134142136
Repayments due−212−251−241−246−246−310
Foreign direct investment24913896168257258
Other capital (net)−4−4−3−3−4−4
Errors and omissions (net)−46−39−22−8−1120
Overall balance−233−278−273−44−83−88
Monetary movements14−1632−871438
Of which: gross reserves(15)(10)(32)(-87)(39)(38)
Accumulation of arrears2182942411316950
Memorandum items:
Current account balance (percent of merchandise exports)−80−47−42−21−34−41
Gross reserves (end of period)297286254341302263
In months of merchandise imports(4.2)(3-4)(2.3)(2.7)(2.4)(1.9)
Debt-service ratio 1/
Commitment basis514137303033
Cash basis15712192429
Arrears outstanding 2/8091,1031,3441,5991,4561,506
Sources: Data provided by the Myanma authorities; and staff estimates and projections.

In percent of exports of goods and nonfactor services.

Includes valuation adjustments.

Sources: Data provided by the Myanma authorities; and staff estimates and projections.

In percent of exports of goods and nonfactor services.

Includes valuation adjustments.

Table 41.Myanmar: Merchandise Exports, 1991/92 - 1995/96(Value in millions of U.S. dollars; volume in thousand metric tons unless otherwise noted.)
1991/921992/931993/941994/951995/96

Prel.
Total Exports, mainly f.o.b.430.6590.7695.6917.4890.8
Unit value 1/95.182.681.3118.0135.8
Volume 1/139.6220.6263.7239.8202.3
Rice and rice products40.041.043.8197.874.3
Unit value218.5206.2167.8190.0210.0
Volume183.1198.8261.11,041.0353.6
Teak106.4103.6121.3161.8175.2
Unit value619.3537.6551.11,078.71,434.9
Volume (000 cubic tons)171.8192.7220.1150.0122.1
Base metals and ores7.74.54.89.78.4
Unit value235.5203.6191.2178.3469.3
Volume32.722.125.154.417.9
Pulses and beans68.4109.7118.6135.7232.3
Unit value350.4244.2230.6319.4390.4
Volume195.2449.3514.3424.9595.0
Fish and fish products5.67.268.4120.6113.7
Unit value543.7533.32,948.31,247.22,090.1
Volume10.313.523.296.754.4
Hardwood42.052.681.818.328.6
Unit value135.7162.2168.5219.4117.9
Volume (000 cubic tons)309.5324.2485.583.4242.5
Rubber5.411.615.020.832.1
Unit value658.5651.7657.9870.31,035.5
Volume (000 cubic tons)8.217.822.823.931.0
Animal feedstuffs2.24.46.23.52.7
Unit value80.3100.5101.396.276.9
Volume27.443.861.236.435.1
Other152.9256.1235.7249.2223.5
Of which: border trade100.7104.378.875.435.1
Sources: Data provided by the Myanma authorities; and staff estimates and projections.

1985/86 = 100

Sources: Data provided by the Myanma authorities; and staff estimates and projections.

1985/86 = 100

Table 42.Myanmar: Imports by Major Categories, 1991/92-1995/96
1991/921992/931993/941994/951995/96
(In millions of U.S. dollars)
Imports (mainly c.i.f., customs basis)850.5882.81,297.11,414.21,521.7
Capital goods249.9288.0454.6494.6550.7
Construction materials65.697.283.180.1
Machinery75.165.0134.9186.7
Transportation101.7119.0223.3212.3
Other7.56.813.315.5
Intermediate goods243.2185.6348.4314.7380.0
Raw materials165.3125.8297.5262.6
Tools and spare parts77.959.850.451.5
Fuels−−−−0.50.6
Consumer goods357.4409.2494.1604.9591.0
Food26.8100.7137.7201.8
Durable goods35.538.039.057.7
Textiles6.29.227.852.9
Medicines19.32.23.92.9
Other269.6259.1285.7289.6
(Percentage share in total imports)
Memorandum items:
Capital goods29.432.635.035.036.2
Intermediate goods28.621.026.922.225.0
Consumer goods42.046.438.142.838.8
(In millions of U.S. dollars)
Imports (BOP basis)842.31,010.21,301.71,487.81,521.7
Sources: Data provided by the Myanma authorities; and staff estimates.
Sources: Data provided by the Myanma authorities; and staff estimates.
Table 43.Myanmar: Trade Indices, 1991/92-1995/96
1991/921992/931993/941994/951995/96
(Index: 1985/86 = 100)
Exports
Value132.8182.1214.5282.9274.6
Unit value95.182.681.3118.0135.8
Volume139.6220.6263.7239.8202.3
Imports
Value143.7172.4222.1253.9259.7
Unit value 1/138.7140.1140.7146.1156.1
Volume103.6123.0157.9173.8166.3
Terms of trade68.658.957.880.787.0
(Changes in percent)
Exports
Value−9.837.231.931.9−2.9
Unit value1.4−13.245.045.015.1
Volume−11.058.0−9.1−9.1−15.7
Imports
Value−13.119.914.314.32.3
Unit value 1/5.81.03.93.96.9
Volume−17.918.710.110.1−4.3
Terms of trade−4.2−14.1−1.939.77.7
Sources: Data provided by the Myanma authorities; and staff estimates.

On the basis of export unit value indices of trading partners.

Sources: Data provided by the Myanma authorities; and staff estimates.

On the basis of export unit value indices of trading partners.

Table 44.Myanmar: Direction of Trade, 1991/92-1994/95 1/(As percent of total exports and imports)
1991/921992/931993/941994/95
ExportsImportsExportsImportsExportsImportsExportsImports
Industrial countries9.437.39.738.211.835.612.229.6
European Community2.210.82.94.62.95.71.84.0
Of which:
Germany1.15.51.82.11.23.10.41.6
United Kingdom0.11.80.30.90.50.70.50.5
Japan6.521.94.128.64.425.54.823.6
United States0.43.12.04.23.73.55.11.2
Other0.31.50.70.80.80.90.50.8
Asia (except Japan)86.458.879.557.279.061.271.263.7
China15.016.89.317.75.015.95.112.2
Hong Kong7.40.59.00.710.71.75.03.0
Indonesia1.81.00.42.21.74.115.63.9
India1112.816.82.315.03.612.93.7
Korea0.82.50.83.30.93.70.74.7
Malaysia1.37.21.66.12.37.21.99.4
Singapore23.312.416.510.719.410.316.414.6
Thailand19.615.016.413.017.410.910.010.0
Other6.10.68.71.26.63.83.62.2
Africa and Middle East3.50.94.52.15.11.65.70.2
Other0.73.06.32.54.11.610.96.5
Memorandum item:
Asia (including Japan)92.980.783.685.883.486.776.087.3
Source: Data provided by the Myanma authorities.

It should be noted that the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

Source: Data provided by the Myanma authorities.

It should be noted that the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

Table 45.Myanmar: Border Trade Flows, 1991/92-1995/96(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Total flows
Exports100.7104.378.875.435.1
Imports259.9249.9257.7240.0238.6
China
Exports67.854.430.944.524.4
Imports122.0138.4121.7111.2152.0
Thailand
Exports26.140.436.829.72.3
Imports118.4102.6128.6115.266.9
India
Exports1.53.41.70.80.7
Imports19.48.17.011.617.4
Bangladesh
Exports5.36.19.40.47.7
Imports0.10.70.42.02.3
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 46.Myanmar: Services Account, 1991/92-1995/96(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Receipts179.6274.4246.6293.8346.2
Nonfactor services170.4269.0242.1285.5336.2
Transportation and insurance4.03.14.92.73.7
Travel35.4116.6117.9143.7163.7
Government services13.212.615.513.714.2
Other117.7136.7103.8125.4154.5
Factor services
(Investment income)9.35.44.58.310.0
Payments195.0252.1205.9239.9369.2
Nonfactor services100.3151.3125.0130.3254.1
Transportation and insurance24.020.320.520.925.3
Travel9.59.110.213.717.4
Government services19.49.316.711.817.8
Other47.4112.677.683.9193.6
Factor services due94.7100.880.9109.6115.1
Of which:
Actual payment55.630.674.875.4100.6
Net receipts−15.422.340.853.9−23.0
Private transfers, net82.7122.0273.4321.6351.9
Source: Data provided by the Myanma authorities, adjusted for staff estimates of interest due.
Source: Data provided by the Myanma authorities, adjusted for staff estimates of interest due.
Table 47.Myanmar: Use of Official Grants, 1991/92-1995/96(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Total official grants 1/64.471.498.4107.3182.9
By type
For current expenditure 2/48.957.384.286.1156.9
For capital expenditure15.514.114.221.225.8
Source: Data provided by the Myanma authorities.

As shown in the balance of payments table.

The large increase since 1991/92 is associated primarily with debt relief grants from Japan.

Source: Data provided by the Myanma authorities.

As shown in the balance of payments table.

The large increase since 1991/92 is associated primarily with debt relief grants from Japan.

Table 48.Myanmar: Capital Account in the Balance of Payments, 1991/92-1995/96(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Long-term capital (net) 1/93.9−36.1−58.319.6152.9
Loans (net)−150.3−169.8−151.7−145.5−104.0
Disbursements61.480.889.4100.7142.0
Repayments 2/211.7250.6−241.1−246.2−246.0
IMF Trust Fund0.00.00.00.00.0
Direct investment248.6137.596.2167.8256.9
Other capital (net) 1/−4.4−3.8−2.8−2.7−3.6
Source: Data provided by the Myanma authorities.

As shown in the balance of payments table.

Scheduled repayments.

Source: Data provided by the Myanma authorities.

As shown in the balance of payments table.

Scheduled repayments.

Table 49.Myanmar: Approved and Actual Foreign Direct Investment Inflows, 1991/92-1995/96(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 3/
Solely foreign-owned venture0.00.30.00.3238.213.1246.147.6471.965.0
Joint venture5.96.425.919.899.010.265.030.8181.352.7
Other0.0228.477.9128.940.466.71,040.056.815.0205.2
Total5.9235.1103.8149.0377.690.01,351.9135.2668.2322.9
Source: Data provided by the Myanma authorities.

Projects approved by the Myanmar Investment Commission under the provisions of the 1988 Foreign Investment Law, those permits that have been withdrawn or cancelled are adjusted Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the Law is excluded from this Table but included in the authorities’ balance of payment accounts.

Preliminary.

Source: Data provided by the Myanma authorities.

Projects approved by the Myanmar Investment Commission under the provisions of the 1988 Foreign Investment Law, those permits that have been withdrawn or cancelled are adjusted Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the Law is excluded from this Table but included in the authorities’ balance of payment accounts.

Preliminary.

Table 50.Myanmar: Foreign Direct Investment by Industry, 1991/92-1996/97(In millions of U.S. dollars)
1991/921992/931993/941994/951995/961996/97
Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 2/Approved 1/Actual 3/Approved 4/
Agriculture0.00.02.70.00.00.10.00.00.00.00.0
Manufacturing5.90.813.39.518.24.376.313.821.331.3668.9
Oil and gas0.0228.444.5128.719.566.51,039.547.414.8196.562.8
Mining0.03.233.40.420.90.20.59.5155.810.6177.2
Fishery0.00.05.90.07.60.5148.26.713.12.70.0
Hotels and tourism0.02.73.09.4311.418.486.156.679.270.783.6
Transport0.00.01.01.00.00.01.31.00.00.047.9
Real estate0.00.00.00.00.00.00.00.0251/460.3588.5
Industrial estate0.00.00.00.00.00.00.00.012.00.0167.1
Other0.00.00.00.00.00.00.00.01.70.06.6
Total5.9235.1103.8149.0377.690.01,351.9135.9668.2322.91,802.7
Source: Data provided by the Myanma authorities.

Projects approved by the Myanmar Investment Commission under the provisions of the 1988 Foreign Investment Law; those permits that have been withdrawn or cancelled are adjusted, Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the Law is excluded from this Table but included in the authorities’ balance of payment accounts.

Preliminary.

April-October 1996.

Source: Data provided by the Myanma authorities.

Projects approved by the Myanmar Investment Commission under the provisions of the 1988 Foreign Investment Law; those permits that have been withdrawn or cancelled are adjusted, Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the Law is excluded from this Table but included in the authorities’ balance of payment accounts.

Preliminary.

April-October 1996.

Table 51.Myanmar: Foreign Direct Investment by Country, 1991/92-1996/97 1/(In millions of U.S. dollars)
1991/921992/931993/941994/951995/961996/97
Approved 2/Actual 3/Approved 2/Actual 3/Approved 2/Actual 3/Approved 2/Actual 3/Approved 1/Actual 4/Total of accumulated approvals 5/
Australia0.013.22.00.60.0−0.01.00.01.82.839.0
Bangladesh0.00.00.00.00.00.00.00.10.00.03.0
China0.00.00.40.00.70.14.40.10.02.516.0
Canada0.011.90.010.80.00.00.00.03.00.732.5
Denmark0.00.00.00.00.00.00.00.013.40.013.4
France0.00.010.027.10.024.7455.025.00.290.4466.4
Hong Kong0.60.014.33.330.91.56.16.50.05.764.4
Japan0.731.00.55.70.01.00.00.518.70.4183.4
Republic of Korea4.038.00.07.33.12.00.21.80.01.560.6
Macau0.00.02.40.00.00.00.00.00.00.02.4
Malaysia0.00.08.61.445.21.815.81.2157.76.5496.3
The Netherlands0.040.20.025.00.00.03.00.30.02.0237.8
The Philippines0.00.00.00.00.00.06.73.00.03.16.7
Singapore0.03.523.21.2228.86.155.142.0288.053.31,158.9
Sri Lanka0.00.00.00.00.00.01.00.00.00.21.0
Thailand0.60.08.91.041.39.0199.818.010.232.4946.2
United Kingdom0.010.04.013.48.110.5599.820.3160.490.61,011.2
United States0.087.329.552.219.533.44.016.414.830.8243.6
Total5.9235.1103.8149.2377.690.01,351.9135.2668.2322.95,040.1 6/
Source: Data provided by Myanmar authorities.

It should be noted that the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

Projects approved by the Myanmar Investment Commission under the provision of the 1988 Foreign Investment Law; those permits that have been withdrawn or cancelled are adjusted. Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the law is excluded from this table but included in the authorities’ balance of payments accounts.

Preliminary

Accumulated approval amounts as of Oct 31, 1996.

Includes Austria ($71.5 million), Indonesia ($21 million) and Germany ($15 million).

Source: Data provided by Myanmar authorities.

It should be noted that the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states but for which statistical data are maintained and provided internationally on a separate and independent basis.

Projects approved by the Myanmar Investment Commission under the provision of the 1988 Foreign Investment Law; those permits that have been withdrawn or cancelled are adjusted. Exclusive of drawback items.

Investment actually disbursed on projects approved under the Foreign Investment Law. Foreign direct investment on projects not approved under the law is excluded from this table but included in the authorities’ balance of payments accounts.

Preliminary

Accumulated approval amounts as of Oct 31, 1996.

Includes Austria ($71.5 million), Indonesia ($21 million) and Germany ($15 million).

Table 52.Myanmar: International Reserves, 1990/91-1995/96(In millions of U.S. dollars; and of period)
1990/911991/921992/931993/941994/951995/96Nov. 1996
Net international reserves260.3245.9260.3228.2315.3301.6205.9
Assets311.3296.8285.5253.6340.7301.6205.9
Gold12.712.212.112.213.011.911.7
SDRs0.81.30.00.20.10.30.7
IMF position0.00.00.00.00.00.00.0
Foreign exchange297.8283.3273.4241.2327.6289.4193.6
Liabilities51.050.925.225.425.40.00.0
Fund credit0.00.00.00.00.00.00.0
Other51.050.925.225.425.40.00.0
Memorandum item:
Gross reserves (in months of merchandise imports)3.94.23.42.32.62.41.5
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 53.Myanmar: External Medium- and Long-Term Public Debt, and Debt Service Payments, 1990/91-1995/96 1/(In millions of US dollars)
1990/911991/921992/931993/941994/951995/96
Total debt outstanding (end of period)4,7044,8735,3275,4815,6945,318
Concessional loans4,1954,3054,7194,8554,9804,728
Bilateral2,9613,0473,4143,5003,7723,585
Of which: Japan2,4422,7352,9332,730
Germany516473539551
Multilateral1,2341,2581,3061,3551,2081,143
Of which: IDA716749765773780774
AsDB375368355360481346
Nonconcessional loans249252254280283450
Short-term (incl. interest arrears)260317352347
Financial institutions0000138140
Debt service payments (cash basis) 2/708857108225250
Amortization51332733150192
Interest payment195631757558
Debt service payments (due) 2/286306351349356361
Amortization198212251268246246
Interest payments889510181110116
Outstanding debt/exports of goods and nonfactor services7.38.16.25.84.64.4
Sources: Data provided by the Myanma authorities; World Bank Debt Reporting System; and staff estimates.

Data on debt service payments may differ from those implied by commitments and arrears data in the balance of payments.

Medium- and long-term debt, including Trust Fund loans and excluding arrears on principal repayments.

Sources: Data provided by the Myanma authorities; World Bank Debt Reporting System; and staff estimates.

Data on debt service payments may differ from those implied by commitments and arrears data in the balance of payments.

Medium- and long-term debt, including Trust Fund loans and excluding arrears on principal repayments.

Table 54.Myanmar: External Arrears, 1991/92-1995/96 1/(In millions of U.S. dollars)
1991/921992/931993/941994/951995/96
Stocks 2/
Total808.81,103.21,344.11,599.51.456.3
Principal538.4762.6997.41,253.81.135.1
Interest270.4340.6346.7345.7221.1
Bilateral 2/613.1880.21,050.31,198.31,030.3
Principal409.2593.4768.0965.1818.3
Interest203.9286.8282.3233.2211.9
Private creditors 2/195.7223.0293.8401.2426.0
Principal129.2169.2229.4288.8316.8
Interest66.553.864.4112.5109.2
Sources: Data provided by the Myanma authorities; and staff estimates.

End of period. Includes valuation adjustments.

Stock figures and flow figures derived from the balance of payments are not consistent, due mainly to lags in recording payments and valuation adjustments.

Sources: Data provided by the Myanma authorities; and staff estimates.

End of period. Includes valuation adjustments.

Stock figures and flow figures derived from the balance of payments are not consistent, due mainly to lags in recording payments and valuation adjustments.

Table 55.Myanmar: Exports and Imports by Sector, 1990/91-1995/96(En percent of total)
1990/911991/921992/931993/941994/951995/96 1/
Imports100100100100100100
Private sector425157626358
Cooperative sector011110
Public sector584842373642
Exports100100100100100100
Private sector455454605051
Cooperative sector122220
Public sector544344384849
Source: Data provided by the Myanma authorities.

Provisional.

Source: Data provided by the Myanma authorities.

Provisional.

Table 56.Myanmar: List A—Priority Import Items
1.Fertilizer
2.Machinery and spare parts
3.Industrial raw materials
4.Government use
5.Iron rods
6.Cooking oil
7.Medicines and medical equipment
8.Tractors
9.Timber haulage trucks
10.Tires for motor vehicles
11.Construction materials
12.Marine equipment
13.Pesticides
14.Pedigree livestock
15.Quality seeds
16.Animal feeds and additives
Source: Data provided by the Myanma authorities.
Source: Data provided by the Myanma authorities.
Table 57.Myanmar: Economic Activities Open to Foreign Investment 1/
Agriculture:Cultivating, processing, and marketing of food and cash crops.
Livestock and fishing:Breeding, fishing, processing, and marketing activities.
Forestry:Production and marketing of teak products (only as joint ventures with SEEs) and other hardwoods, rattan, etc.
Industry:Food processing, beverages, textiles, garments, linens, personal goods (soaps, detergents, etc.) household goods, leather products, transport equipment, building materials, pulp and paper, chemicals and pharmaceuticals, iron and steel, and agricultural and forestry machinery and equipment.
Services:Construction, transport, and communication, hotels, and tourist services.
Source: Data provided by the Myanma authorities.

Foreign investors have been allowed to engage in activities other than those shown above. Approval is granted on a case-by-case basis, and typically requires establishment of a joint venture with a domestic partner.

Source: Data provided by the Myanma authorities.

Foreign investors have been allowed to engage in activities other than those shown above. Approval is granted on a case-by-case basis, and typically requires establishment of a joint venture with a domestic partner.

Table 58.Myanmar: Activities Defined Under the State Economic Enterprise Law as State Monopoly 1/
1.Postal and telecommunication services
2.Broadcasting
3.Electricity generation and distribution services
Source: Data provided by the Myanma authorities.

Generally closed to foreign investment unless special permission is obtained.

Source: Data provided by the Myanma authorities.

Generally closed to foreign investment unless special permission is obtained.

Bibliography

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1Fiscal year is April-March.
2The SEEs have no independent accounts; their transactions occur through subaccounts in the State Fund Account, and they are not allowed to borrow directly from the banking system (see Section III.D).
3There is, however, an implicit tax on paddy output through the forced procurement of paddy at below-market prices and the existing ban on private rice exports.
4The value of dutiable imports plus the levy of customs duties serve as the base of the commercial tax on imported goods. For a description of the tax system, see Appendix I.
5Official estimates of military expenditure are believed to be underestimated as some spending (especially on military imports) takes place outside the budget. In addition, the official estimates exclude hidden subsidies from other parts of the public sector, including costless or below-cost provision of goods and services such as electricity and petroleum.
6This is much higher than in other countries in Asia. For example, the comparable ratio is 44 percent in Vietnam, 21 percent in India, and less than 10 percent in Thailand and Indonesia.
7State economic enterprises receive credit through the budget at zero interest rate, but are not allowed to borrow from the banking system.
8In addition to the central bank rate, reserve requirements exist as a policy instrument. This instrument has, however, not been used for stabilization purposes, but rather as a prudential tool.
9These 3-months T-bills carry an annual nominal interest rate of 4 percent and are automatically rolled over.
10The adjustment of administered prices had also played a role in pushing up inflation in the early 1990s.
11Twelve baskets of paddy per acre are procured by the public sector at the official price.
12Assuming an exchange rate of ¥110 per dollar.
13An import program of the public sector is prepared jointly by Ministry of National Planning of Economic Development and Ministry of Finance and Revenue.
14If importers import commodities on the non-essential item list (called List B), they have to import goods on List A amounting to 50 percent of their own imports. When importing other (called neutral) goods, the required imports from List A are 25 percent.
15All tourists entering Myanmar are required to exchange a minimum of US$ 300 for 300 units of FECs. Unutilized balance in excess of this minimum can be reconverted into foreign currencies upon the visitors’ departure from Myanmar.
16Prior to the opening of the FEC exchange center in December 1995, FECs could be purchased and sold using only bona fide holdings of foreign currencies, and transactions using kyat were illegal (albeit tolerated).
17See SM/95/270, pp. 90-98.

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