ACLEDA MFI Myanmar Co., Ltd.

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Chairman's Report


Dr. In Channy, Chairman

Myanmar's Economy

Economic growth in Myanmar is expected to moderate to 6.2 percent in 2018/19 from 6.8 percent in 2017/18. Inflation rose to 8.2 percent (year-on-year) in August 2018, the highest level in two years. The current account deficit is projected to narrow further in 2018/2019. In addition, the trade deficit has continued narrowing in the first half of 2018/2019, driven by robust growth in exports and stagnant imports, especially for investment goods imports. Moreover the trade deficit continued narrowing in the first half of 2018/2019, reaching US$300 million in Q2-2018/2019, the lowest level in five years.

FDI flows may slow in 2018/2019 as new FDI approvals have declined. FDI commitments declined more than 50 percent year-on-year in the first half of 2018/19, which could lead to lower FDI flows in 2018/2019. FDI commitments continued declining in the first half of 2018/19 (April to September) to US$1.7 billion from US$4.1 billion in the first half of 2017/2018.

In the medium term, growth is expected to recover gradually to 6.6 percent by 2020/21. Inflationary pressures remain high in the medium term, with inflation projected at 8.5 percent through 2020/21. Consumer price inflation is expected to pick up to 8.8 percent in 2018/19 from 5.5 percent in 2017/18, driven by exchange rate pass-throughs, and food and fuel price increases. Inflationary pressures are projected to elevate in the medium term, with inflation forecast at 8.5 percent through 2020/21, as the government may tend toward a more expansionary fiscal stance as elections near in October 2020.

The current account deficit is forecast to tighten in 2018/19, but gradually expand in the medium term as investment-related imports pick up. In 2018/19, the current account deficit is expected to tighten to 2.5 percent of GDP: export growth will be supported by improved price competitiveness from exchange rate depreciation, and import growth is expected to slow in response to decreased capital imports for investments, due to expectations of a slowdown in industrial and construction activity. Rising fuel imports could counteract this, assuming crude oil prices remain elevated, although this forecast is now subject to considerable uncertainty. In the medium term, the current account deficit is forecast to widen to 3.5 percent of GDP in 2020/21, as capital imports pick up from the expected rebound in investment activity.

The budget deficit is forecast to widen in the medium term to 4.5 percent of GDP, as spending picks up closer to scheduled elections in 2020. The government has programmed a significantly higher budget deficit in 2018/2019, at close to 6.0 percent of GDP, compared to an outturn of 2.7 percent of GDP in 2017/18. The higher deficit target is underpinned by optimistic spending plans, and expected revenue to GDP by 1 percent of GDP, reflecting continuing challenges with tax base erosion, and an increase in expenditure by 2 percent of GDP. However, it is likely, given significant budget execution challenges in the past, that the higher projected budgets will not translate to higher actual spending as a share of GDP. Therefore, the World Bank has projected a fiscal deficit for 2018/19 at a more modest 4.0 percent of GDP. The deficit is expected to widen to 4.5 percent of GDP in 2020/21 leading up to scheduled elections. This is higher than the deficit trends from previous years, and may add to inflationary pressures.

Key Players in the Financial Sector in Myanmar

There are 4 State Owned Banks, 29 Private Banks, 13 Foreign Bank Branches, and 48 Representative Bank Offices. There are also 177 Licensed Microfinance Institutions, which includes 4 INGOs, 22 NGOs, 45 Foreign Companies and 106 Local Companies. ACLEDA MFI Myanmar Co., Ltd. with its operations network encompassing 7 Branches Offices and 2 Sub-Branches, is amongst the 177 Licensed MFIs.

ACLEDA MFI Myanmar Co., Ltd.'s Governance

The Board of Directors met by face-to-face four times in June, September, and December of 2018 and in March of 2019. Thirteen resolutions were also passed by E-mail during the course of 2018/19. Each meeting normally lasts one whole day.

During 2018/19 there was a number of resignations and changes to the governance of the ACLEDA MFI Myanmar Co., Ltd. Mr. Sebastien Nahon, Dr. Joachim Trede and Mrs. Nguyen Thu Ha resigned from the Board of Directors of ACLEDA MFI Myanmar Co., Ltd. and Mr. Vikram Kumar (IFC), Mr. Jeans Bessai (KfW) and Mr. Sebastien Nahon (COFIBRED S.A) resigned as Representatives of Shareholders of ACLEDA MFI Myanmar Co., Ltd. The Board of Directors approved transferring the ordinary shares in ACLEDA MFI Myanmar Co., Ltd. to ACLEDA Bank Plc. and ACLEDA Institute of Business Co., Ltd. Dr. Phon Narin was acknowledged as a new Shareholder Representative of the ACLEDA Institute of Business Co., Ltd. in ACLEDA MFI Myanmar Co., Ltd. Moreover, the Board of Directors approved Ms. Thaung Thaung as the new Company Secretary of ACLEDA MFI Myanmar Co., Ltd., and approved Mrs. Pan Sokline as the new Chief Finance Officer of ACLEDA MFI Myanmar Co., Ltd.

ACLEDA MFI Myanmar Co., Ltd.'s Achievement in year 2018/19

From a performance perspective, we are pleased to report that ACLEDA MFI Myanmar Co., Ltd. has achieved a strong performance in the last fiscal year. Profit before income tax for the year-end 2018/19 was US$2,199,175. Loans outstanding were US$27,670,845 with 80,412 active borrowers. Total deposits were US$3,920,183 with 126,238 savings accounts. In 2018/2019 the net profit after tax was US$1,649,262. Our Head Office in Yangon and all our branches are using in-house Information Technology Systems developed by the parent company, ACLEDA Bank Plc. In closing, I would like to express my sincere appreciation to our Shareholders and Board of Directors for their confidence, their on-going support and encouragement; and to our management and staff for their efforts that have contributed to more than six years of growth. The Board of Directors remains committed to building 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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