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Chairman's Report

Dr. IN Channy, Chairman

Myanmar's Economy

Myanmar is on track to post high economic growth in Fiscal Year 2017 (ending March 31, 2018). With the return of normal weather during the year, agriculture is recovering from flooding the previous year. Crop production is benefiting as well from higher demand and strong international prices for agricultural commodities. Industrial growth continues to accelerate with higher investment, both public and private, in garments and other light manufacturing, while services are getting a boost from buoyant tourism and expansion in the nascent telecommunications industry.

On the demand side, investment remains strong on higher inflows of external development assistance for infrastructure and buoyant private capital investment. Strong growth and rising incomes support private consumption. Foreign trade continues to grow at a brisk pace. In the first quarter of Fiscal Year 2017, the US dollar value of merchandise exports grew by 17%, and merchandise imports accelerated even faster, by 22%.

Although annual inflation halved to 3.9% in the first quarter of Fiscal Year 2017 from 7.6% in the fourth quarter of Fiscal Year 2016, inflation for the year as a whole is still forecast at a higher rate because the first quarter decline came largely from a onetime drop in food prices. Slightly higher inflation is still forecast for Fiscal Year 2018. Continued demand pressure from strong growth and rising incomes will keep inflation elevated.

In the budget for Fiscal Year 2017, the government pursued a prudent fiscal policy. In response to a declining ratio of revenue to GDP, it recently passed a new tax law with significant changes to commodity and commercial tax rates. In tandem with prudent management of public expenditures, such revenue reform should help the government contain the fiscal deficit for Fiscal Year 2017 within the budget target, equal to 4.4% of GDP. The government plans to pass an investment law to attract more foreign direct investment and a new company law to allow foreign investors to operate in the stock market. While these initiatives could help achieve steady growth in the near term, inclusive and sustainable development require national peace and stability. An international risk to this outlook is possible volatility in financial markets [1].

Key Players in the Financial Sector in Myanmar

There are four State Owned Banks, 29 Private Banks, 13 Foreign Bank Branches, and 48 Representative Bank Offices, as well as 176 Licensed Microfinance Institutions which includes five INGOs, 22 NGOs, 39 Foreign Companies, three Partnership Firms, and 107 Local Companies. ACLEDA MFI Myanmar Co. Ltd. (AMM) with its operational network in three branch offices and five sub-branches is amongst the 176 Licensed MFIs.

ACLEDA MFI Myanmar Co., Ltd.'s Governance

The Board met face-to-face four times in June, September and December of 2017 and in March of 2018. Eleven resolutions were approved by e-mail during the course of 2017/18. Each meeting normally lasts one whole day.

During 2017/18 there were a number of changes to the governance of the Group. Mr. Sebastien Nahon has been appointed as a Director, and I whole-heartedly welcome him to the Board. In addition, the Board of Directors have approved the appointment of Mr. Min Aung as Company Secretary and approved the resignation of Mr. Vincent Gros as the Representative of our shareholder COFIBRED S.A.

ACLEDA MFI Myanmar Co., Ltd.'s Achievement in year 2017/18

From a performance perspective, we are pleased to report that ACLEDA MFI Myanmar Co., Ltd. has achieved a strong performance. Profit before income tax for the year-end 2017/18 was US$3,024,233; Loans outstanding were US$24,735,217 with 68,564 active borrowers and balance on savings amounted to US$2,360,317 with 98,374 savings accounts. In 2017/18 the net profit after tax was US$2,240,037. Our Head Office in Yangon and all our branches are using in-house Information Technology Systems developed by our parent company, ACLEDA.

In closing, on behalf of the Board of Directors, I would like to express our sincere appreciation to our Shareholders for their confidence, support and encouragement for our on-going activities; and to our management and staff for their efforts that have contributed to more than four years of growth. The Board 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 Myanmar 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

[1]. Page 199-200 of Asian Development Outlook 2017 (https://www.adb.org/sites/default/fi les/publication/365701/ado2017-update.pdf)

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