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Chairman's Report

Dr. In Channy, Chairman

Myanmar's Economy

Myanmar's economy continues to show resilience despite the global slowdown and domestic uncertainties. Its economy is estimated to have grown at 6.3 percent in 2018/19, marginally higher than 6.2 percent in 2017/18, supported by better performance in the manufacturing and services sectors. Macroeconomic volatility has increased since the June 2019 Myanmar Economic Monitor, with inflation reaching double digits in July 2019. Economic growth is expected to reach 6.4 percent in 2019/20, helped by growing investment in the transport and telecommunication sectors and government's planned infrastructure spending before the 2020 elections.

Global growth will be weaker than expected in 2019. The global economic growth rate is estimated to be slow at 2.4 percent in 2019 from 3.0 percent in 2018, reflecting a broad-based weakness in advanced economies and major emerging market and developing economies.

Domestic inflationary pressures have increased. Headline inflation increased to double digits in July 2019, largely due to the confluence of supply factors and the recent electricity price increase. Inflation rose from 9.5 percent in June to 10.9 percent (yoy) in July before easing to 10.4 percent in August.

Economic outlook and risks

Myanmar's economic outlook remains stable. Growth in 2019/20 is expected to rise by 0.1 percentage points from 2018/19, driven by improved domestic demand. Investment growth in transport and telecommunication will sustain, as government plans more infrastructure spending in the lead up to the 2020 elections. Construction sector activity is expected to improve in 2019/20, with positive proxy indicators such as building permits and large FDI commitments.

The Industry sector is expected to grow at a faster pace in 2018/19, with growth in manufacturing activities driven by foreign firms' entry. In the medium-term, growth is expected to recover with improved business sentiment, better access to electricity and improved availability of credit particularly for construction, manufacturing and trade activities, also supported by foreign bank participation.

Downside risks to the economic outlook are driven by both domestic weaknesses and external sources. Slowing global and regional growth, especially in China, together with global trade tensions, could also transmit to Myanmar through the trade channel by slowing external demand and inbound foreign investments.

Key Players in the Financial Sector in Myanmar

There are 04 State Owned Banks, 27 Private Banks, 13 Foreign Bank Branches, and 51 Representative Bank Offices, 189 Licensed Microfinance Institutions which including 03 INGOs, 15 NGOs, 53 Foreign Companies and 118 Local Companies. ACLEDA MFI Myanmar Co., Ltd. with its operation network in 07 Branches Offices and 02 Sub-Branches is amongst the 189 Licensed MFIs.

ACLEDA MFI Myanmar Co., Ltd.'s Governance

The Board of Directors met by face-to-face two times in June and September 2019 "Interim Period" and also Seven resolutions by E-mail during this period. Each meeting normally lasts one whole day.

During the Interim Period the Board of Directors approved and endorsed the Shareholder for final approval on the Capital Injection in an amount MMK 6,100,000,000 (Six Billion and One Hundred Million Kyats) from MMK 8,000,000,000 (Eight Billion Kyats) to MMK 14,100,000,000 (Fourteen Billion and One Hundred Million Kyats), Alteration of Company Constitution and Letter Agreement No. 4 that is supplemental to the Subscription, Purchase and Shareholders Agreement (SSA) of ACLEDA MFI Myanmar Co., Ltd.

ACLEDA MFI Myanmar Co., Ltd.'s Achievement in the Fiscal Year

From a performance perspective, we are pleased to report that ACLEDA MFI Myanmar Co., Ltd. has achieved a strong performance; the profit before income tax for the interim period was in equivalent to USD 2,199,175; the loan outstanding was in equivalent to USD 33,768,627 with 94,882 active borrowers and balance saving amount in equivalent to USD 4,944,747.52 with 150,004 saving accounts. The net profit after tax was in equivalent to USD 1,649,262 during the interim period. Our Head Office in Yangon and all our branches are using in-house Information Technology Systems developed by parent company, ACLEDA Bank Plc. In closing, we would like to express our sincere appreciation to our Shareholders and Board of Directors for their confidence in the direction on-going support with encouragement; and our managements and staffs for their efforts that have contributed to more than six years of growth. The Board of Directors remains committed to build ACLEDA MFI Myanmar Co., Ltd. as a leading MFI in the Republic of the Union of Myanmar.

Finally, I would like to express my appreciation to all of Myanmar's relevant competent authorities, the general public, and all of our customers for their continued support and confidence in ACLEDA MFI Myanmar Co., Ltd.

Dr. In Channy
Chairman of the Board of Directors

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