Assessment of Myanmar Upstream Petroleum Fiscal Regimes in Comparison with Selected Competing Countries: The Investors Perspective

Abstract

This research mainly aims to analyze the attractiveness rank of Myanmar upstream petroleum fiscal regimes compared to other competing countries. Although several empirical studies of petroleum fiscal regimes have been carried out, studies for the combination of decision makers attitudes and quantitative analysis regarding petroleum fiscal regimes are scarce. This thesis investigates the rank of Myanmar petroleum fiscal regime attractiveness both quantitatively and qualitatively with the combination of decision makers attitude. First, this research explores the decision makers attitudes through survey technique for three main areas: country selection for the comparison, indicator preference for the evaluation, and opinions for the effect of fiscal regimes on their investment decision. Descriptive analysis and qualitative method are used for the first part of this study. The results of selection for country and indicator are foundations for the quantitative analysis that will be made in the second part. Second, the comparative analysis is made quantitatively to rank fiscal regimes attractiveness. In the quantitative analysis, the indicators: GT (Government Take), Front Loading Index (FLI) and CS (Composite Score) are used to measure the attractiveness rank. GT is calculated by three ways: Prompt and Intuitive Method, Non Discounted Cash Flow Model (NDCF), and Discounted Cash Flow Model (DCF). The smaller GT, the more attractive fiscal regimes. FLI is selected to reflect the impacts of different time sequence on attractiveness ranks. Consequently, in order to determine the rank of the fiscal terms attractiveness, taking into account both GT and FLI, Composite Score (CS) is used. The decision makers attitude for GT and FLI are considered in CS linear weighting method in ranking the fiscal terms attractiveness. The results of comparative analysis show that the attractiveness rank of Myanmar petroleum fiscal regimes is relatively low, while Cambodia, Indonesia and Australia are the most attractive from the investors standpoint. In the analysis of major findings, royalty and cost recovery affect attractiveness rank of petroleum fiscal regime. On the other hand, the result of qualitative analysis also shows that most of Myanmar fiscal regimes are non-neutral, in particular, royalty regime can hinder investment decision Summing up, this study can contribute to helping investors overseas selection phase as well as policy recommendation for more favorable investment climate in Myanmar petroleum industry