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「Myanmar …… Half a year has passed since the coup d’etat」

Hiroyuki Isobe, Certified Real Estate Appraiser (Japan), CRE(USA), FRICE(UK)

Fellow, Japan Valuers Co., Ltd.

. It has been more than six months since the coup suddenly happened on February 1st. For about a year before that, Myanmar had faced difficulties due to COVID‐19 like other ASEAN countries, but Myanmar’s growth rate in 2020 was still +1.7% according to the “World Economic Outlook 2021” released by the World Bank earlier this year. It forecasted +2.0% in 2021 +8% in 2022, which are remarkable numbers within the region. However, at the end of March, the expected growth rate for 2021 was revised to ‐10%, and it was revised downward again to ‐18% at the end of July after considering the rapid increase in the number of Delta strain cases and the number of deaths due to the malfunction of medical institutions.

According to the World Bank, it is likely that about one million people lose their jobs in the future, and the poverty rate, which indicates the percentage of people living on less than $ 1.9 a day, will be more than double compared to 2019 at the beginning of next year. In addition, the shift of the currency (Kyat) to US dollar reference rate to a managed float system is likely to cause a serious impact on overseas transactions due to the double market price and the shortage of the US dollar. The State Administration Council(SAC) has announced that it will launch a provisional government on August 1 and that the Commander‐in‐Chief of the Armed Forces will become prime minister. However, the Myanmar Armed Forces have continued to crack down on civilians by force since the coup, killing a total of 940 civilians and still detaining about 5,500. Economic sanctions and pressure from the international community are also ineffective due to differences in the speculation of each country, and there is serious concern that they will go on the path of isolation and stagnation in the future. It is reported that civilian daily life has gradually settled down, but the bomb incidents occur frequently in big cities such as Yangon and battles also frequently occurs between the armed forces and opposition in rural areas. It is said that the Civil War has begun. By the way, Myanmar has been democratized smoothly and has been regarded as one of the countries with the highest potential in Southeast Asia.  The number of Japanese companies operating in the area exceeds 400 (the number of members of the Japan Chamber of Commerce and Industry in Myanmar), including my small company, and the Thilawa Industrial Park (total development area 2,400ha), which has been developed by the Japanese and Myanmar governments as Myanmar’s first special economic zone. There are more than 100 companies in Thilawa. Large companies, as well as small and medium‐sized ventures, have already made huge investments toward future possibilities.

However, under the current circumstances, it has become indispensable for foreign‐affiliated companies to implement “human rights due diligence” as part of the decision‐making process. New investment is rapidly withering in the absence of a bright future in the short to medium term, whereas many companies need to make urgent decisions regarding the continuation, reduction, or withdrawal of their existing projects. At that time, it can be said that the need for valuation is increasing because understanding the correct asset value is one of the important factors in making an overall judgment.

Considering the original role of valuation as a valuer’s edge, it is nothing but “contributing the decision making through identifying various risks and returns by accurately reading, comprehending, judging, and predicting.” Appraisers are required to speak for the market as it is barely functioning. I am keenly aware of the need to straighten myself and work with even greater tension in my current work in Myanmar.

English translation of our short article prepared in early August for “REAL ESTATE Fund Review” magazine.

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