Both KBZ and Max Group say looking for suitable foreign partners
Thingyan is cut short to just 5 days this year, from April 13 to 17
ThaiEXIM to open office in Yangon
H&M Factory seriously damaged in dispute with workers
Grab enters Myanmar market
State of the Union - Peace and national reconciliation were the key points in Aung San Suu Kyi’s State of the Union address, broadcast recently. One the day, which marked the first anniversary of the NLD government taking office, she pledged to try harder to serve the people and to earn “the public’s support, respect and trust.” “The peace process is not easy, but we have a lot of hope,” she said. “Especially these days, hopes are growing for our second session of the 21st Century Panglong conference.” “On the road to peace, sometimes we move forward, or stop for a while or we may even step back a little. But we clearly know our goal and we will move forward to achieve it.” she said her government would stand “together with the people” (the NLD’s new slogan) “for more development, peace and reconciliation in our country based on our diversity.” The government tries its best to be transparent and accountable, while also acknowledging that she is aware of the public’s frustration with them for not reaching their expectations in all areas. “I have said since the beginning that I would try my best,” she said, adding that, “if people think my best effort is not enough for them and if there are any other persons or organizations who can do better than us, we are ready to step back.” Her comments came at the time when people are expressing discontent regarding what they perceive as a lack of progress, while the country’s peace process with ethnic armed groups remains elusive and reports of state security abuses against the Rohingya in the western part of the country has attracted international criticism. She acknowledged support from the international community but asked those outside the county to allow Myanmar to address its own problems. “We value the support, help and sympathy of our friends around the world, in our efforts toward peace and national reconciliation. But we must work ourselves for our country’s responsibilities, because we are the ones who best understand what our country needs.” The government did not accept the United Nations Human Rights Council’s recent decision to undertake a fact-finding mission focused on alleged military abuses in Arakan State. “It does not mean we disrespect the UN,” she said. “It’s just that it does not correspond with our country’s situation.” She highlighted developments to the education and health sectors, to infrastructure, and in maximizing the budget, but did not go into the details of the successes in each ministry, since this information had been outlined by state-run newspapers in recent weeks. Specifically, she pointed to international recognition from the Global Fund regarding Myanmar’s efforts in the fight against tuberculosis, malaria and HIV/AIDS as a major accomplishment. From now on, she said, “we will focus on job creation, infrastructure development in road transport, and access to electricity.”
China – Myanmar Relations - Relations between Myanmar and China have improved during the first year of the NLD government, aided in part by Chinese support for the government’s peace process. China has devoted considerable effort to improving bilateral ties with Myanmar while promoting its official policy of non-interference and support for “persuading for peace and facilitating dialogue,” in the peace process. For its part, the NLD government has opted to try to enlist Beijing’s support for its national priorities, including ethnic reconciliation, rather than continue to “cater to anti-China sentiment” in Myanmar. China’s official policy on the peace process, however, is tempered by a variety of factors, including differences between policy makers in Beijing and provincial interests. Historic, cultural, and economic links between different Chinese interest groups in Yunnan and ethnic armed organizations in Myanmar continue to significantly complicate the bilateral relationship. Thus, the immediate outlook for the evolving ties between the two countries remains a work in progress.
As Myanmar’s largest neighbor, China has been and will remain a critical player in the peace process. China’s positive attitude towards Myanmar’s peace process is based on “its observation that the NLD is inclined to improving relations with China and on the hope that it might induce NLD cooperation and goodwill.” Beijing’s overriding geo-strategic concerns relate to its ability to achieve its goals to build connectivity in the region with initiatives such as its One Belt One Road strategy and Indian Ocean strategy. Though some influential analysts in China favour a “buffer” policy of developing ties with ethnic armed groups in order “to temper the Myanmar government’s treatment of China and Chinese business interests,” this is not the view of China “the nation.”
Beijing’s official approach is, however, complicated by the complexities of historic and current localised relations with armed ethnic organizations along the border in Kachin and Shan states—in particular, the Kachin Independence Army (KIA), the United Wa State Army (UWSA), and the Myanmar National Democratic Alliance Army (MNDAA) also known as the Kokang Army. The policies of the provincial government of Yunnan and the activities of Yunnan business interests in areas controlled by armed groups, including in activities such as logging and mining, are often cited as a “key independent variables” undermining the effectiveness of Beijing’s policy toward Myanmar.
Unofficial and independent Chinese financial support, mainly involving private businesses, for ethnic armed organizations is difficult to assess, though rumors remain rampant. The former Chinese business giant the Yucheng Group, currently under criminal investigation in China for massive internet-based financial fraud, possibly provided support to six ethnic armed groups in northern Myanmar after 2015 when conflict broke out between the MNDAA and the Myanmar Army. Chinese links with the KIA, the UWSA, and the MNDAA are very different and complex, but in all cases, are significant, a fact often overlooked.
The sum of the complex picture is that China does not see an immediate solution to Myanmar’s conflicts. Among the barriers to achieving peace from the Chinese perspective are included a belief that “Burmese chauvinism” is a main barrier to a successful negotiations process. The NLD’s delicate relationship with the Myanmar Army “which perceives the separatist ethnic rebels as a threat to the nation and the battle against them as an inherent mission of the military,” is also seen as a block on progress. Some Chinese doubt whether all ethnic armed groups are genuinely seeking peace, and Chinese attitudes are also coloured by the potential for an increased US presence in the peace process and Myanmar’s border regions. For the foreseeable future China will seek to prepare for different uncertainties and “maximize its flexibility in the process”.
Mission to Investigate Rohingya Abuse - The European Union called on the United Nations to send an international fact-finding mission urgently to Myanmar to investigate allegations of torture, rape and executions by the military against the Rohingya Muslim minority. A UN report last month, based on interviews with survivors in Bangladesh, said the Myanmar Army and police had committed mass killings and gang rapes of Rohingya in a campaign that may amount to crimes against humanity and ethnic cleansing. The EU draft resolution, submitted to the UN Human Rights Council, strengthens language in an earlier draft that stopped short of demanding an international probe into alleged atrocities. The 47-member forum, currently holding a four-week session, is to vote on resolutions from March 23-24. If adopted, the Council would “dispatch urgently an independent international fact-finding mission” to Myanmar to investigate violations “with a view to ensure full accountability for perpetrators and justice for victims.” Some 75,000 people have fled Arakan State to Bangladesh since Myanmar’s military began a security operation last October in response to what it says was an attack by Rohingya insurgents on border posts in which nine police officers were killed. The UN Security Council will be briefed behind closed doors on the situation in Arakan State, at the request of Britain, diplomats said in New York. The EU resolution calls on the government of Aung San Suu Kyi to “fully cooperate with the fact-finding mission, including by making available the findings of the domestic investigations.” Activists say that national efforts have not been credible and have called for an international inquiry. Myanmar has denied almost all allegations of human rights abuses in northern Arakan and says a lawful counterinsurgency campaign is under way. A panel led by former UN chief Kofi Annan said that Myanmar should immediately start allowing Rohingya to return home and ultimately close rundown camps for the displaced.
Old MoUs Under Review - The NLD government is reviewing 60 out of 101 MoUs signed between the previous USDP government and international investors. Of 60 MoUs, four were signed with the Ministry of Transport and Communications, and 56 with the Ministry of Electricity and Energy, said deputy minister for Planning and Finance Maung Maung Win during a recent Lower House session in response to a question from a lawmaker on the issue. Khin Moh Moh Aung asked if the Union government would make public the list of investors and their business models agreed upon between 2011 and 2016, as well as the businesses whose investment exceeds US$500 million. She criticized the government for failing to make public the consultations for dozens of projects, including the Myitsone Dam and the Kyaukphyu Special Economic Zone. She said that land had been confiscated from locals, who did not experience any benefits from the projects, and which lacked accountability. “The previous government did not consult with local people in signing MoUs for megaprojects. And locals have complained about those projects for various reasons” she added. Deputy Minister Maung Maung Win replied that the respective ministries are reviewing 60 MoUs, but did not disclose further details. Projects typically should be implemented within one year of an MoU being signed, said Dr. Win Myo Thu. If a project cannot be implemented within this period, and if it is deemed not to serve the interests of local people, then that project should be canceled, he said. “Frankly speaking, it would be more beneficial to stop such projects. It is easy to terminate projects for which an MOA has not been signed,” he said. Of foreign investments approved by the Myanmar Investment between 2011 and 2016, five foreign companies invested more than US$500 million each. Among them are China’s Upstream Ayeyarwaddy Confluence Basin Hydropower Co. Ltd. (Chipwi); Malaysia’s Tan Chong Motor (Myanmar) Co. Ltd., which operates a Nissan automobile manufacturing plant in Yangon; Singapore’s Mobile and Fixed Line Telecommunications Services, which operates Ooredoo Myanmar Ltd.; Singapore’s Telecommunications Services and Related Activities which operates KDDI Summit Global Myanmar Co. Ltd.; and China Longwin Global Petrochemical Co. Ltd. which would operate an oil refinery that could produce 5 million metric tons of petrol per year and a port to be used for exporting petroleum products. The deputy minister said that details about foreign companies, their businesses and monthly inbound investments are made public on the official website of Directorate of Investment and Companies Administration. From 2011 to 2016 under the previous government, 15 MoUs were signed with the Ministry of Agriculture, Livestock and Irrigation, ten with the Ministry of Transport and Communications, five with the Ministry of Industry, ten with the Ministry of Construction, and 61 with the Ministry of Electricity and Energy, totaling 101.
Foreign Partner? - KBZ Bank says it is willing to sell a stake in its operations to a foreign investor if the law permits. Existing laws do not permit foreign investors to hold stakes in local banks in Myanmar, but changes are being considered this year to the Companies Act that could allow foreigners to take stakes of up to 35 percent in Burmese firms. “In any emerging market, capital is important,” said Nang Kham Noung, an executive director of Myanmar’s largest privately owned bank. “For us, we are open to foreign partnership. However that’s subject to the Central Bank and the regulations,” she said. KBZ Bank has embarked on rapid expansion in Myanmar and is aiming to double the number of its branches in the country to 1,000 by 2020 and grow mobile financial services in rural areas. The bank has also opened representative offices and services abroad, including Singapore and Thailand. It may also consider listing. The bank’s assets stand at US$8 billion after growing at a compound annual rate of 44 percent between 2012 and 2016, according to the report. It has almost 18,000 employees and is seeking to hire more staff, including Burmese who have lived abroad and foreigners, amid rapid changes in the country’s finance sector. Myanmar’s banking system is one of the most underdeveloped in the world, however, starting from a very low
base, the banking sector was one of the fastest growing in the Southeast Asia region, the firm said.
Myanmar’s State-Owned Banks - The government is working with the World Bank on the first audit of state-owned banks in decades, as part of a drive to modernize Myanmar’s financial system and tackle risks to economic growth. Myanmar’s four state banks have assets equivalent to about a fifth of the country’s US$63 billion gross domestic product. “These banks are under-capitalized,” the World Bank said. “So we need to come up with a realistic plan for restructuring, which may include recapitalization that doesn’t put too much strain on the fiscal side of the government.” Without reforms, the government lenders could spiral into a “dire” state as rapidly growing private-sector banks snare a bigger share of deposits and lending, the World Bank said in a recent report. The largest government-run lender in Myanmar is the Myanma Agriculture and Development Bank, which provides credit to more than 2 million farmers. The other three are the Myanma Economic Bank, the Myanma Foreign Trade Bank and the Myanma Investment and Commercial Bank. Assets at private-sector banks climbed 27 percent to 23.3 trillion kyats ($17.2 billion) at the end of June 2016 from the same month a year earlier, according to the World Bank. Assets of state-owned lenders slid 14 percent to 16.5 trillion kyats in the same period. One challenge for analyzing the nation’s banking sector is the quality of government figures. Other challenges at state-owned banks include poor information-technology infrastructure, outdated accounting practices, and a lack of clarity in classification of assets and provisioning for bad loans. Non-existent risk-management systems and weak boards were additional difficulties.
Evading Electricity Bills - The state electricity company operates at a loss, and national institutions that do not pay their bills are not helping. “We are having many problems with government offices, army offices and other facilities that do not feel the need to pay their electricity bills,” Ei Phyusin Htay told the Oxford Business Group. “Another problem is that many users are adjusting the meters in their houses and factories in order to not pay their bills correctly. This is something that law enforcement must deal with and the state utility should take greater steps to eradicate,” she said. In order to ensure a healthy revenue stream to the Myanmar Electric Power Enterprise, the government needs to conduct an analysis of how much revenue is being lost through these two channels and how much revenue is needed, she added. It should then create benchmark costs for electricity and gradually introduce a subsidy and tariff structure that would accommodate different kinds of consumers, she suggested. Addressing Myanmar’s wider national energy needs, Ei Phyusin Htay said the government should conduct an analysis of how much energy can realistically be created from new natural gas sources and other sources by 2020. If there was a shortfall compared to the need, a case could then be made for the otherwise unpopular option of coal-fired energy production.
FibreLink - FibreLink Myanmar is in talks to raise $25 million equity as part of an $860-million investment plan. The company, which received approval in 2015 from the Myanmar Investment Commission to set up telecom infrastructure, intends to raise capital in stages, according to its CEO Garry Stephen. It is looking for interest from financial investors, including funds and high net worth individuals, and strategic investors that operate in the telecoms industry. The company is a wholly-owned subsidiary of Singapore-based FibreLink Myanmar Holdings Pte Ltd, which is owned by Hong Kong-based ECCL Advisory Limited. It received its license to operate a network facilities service (Individual) license in December 2015. As of January 2017, nearly 41 companies have been granted a network facilities service license from the Myanmar Ministry of Transport and Communications.
Summer Electricity for Yangon - The deputy minister for electricity and energy has explained the Union government’s approval of a proposal to spend 30 billion kyat (US$22 million) from the presidential reserve funds to fulfill Yangon’s electricity demand this summer. The Union government has approved the Yangon divisional government’s proposal to buy a 25-megawatt generator that can be operated with diesel or natural gas and moved with a trailer, according to deputy minister Dr. Tun Naing. He added that Yangon consumed more than 40 percent of the country’s total daily production of electricity, about 1,200 megawatts, and the purchase was necessary to meet the growing demand. However, lawmakers will have the final say on the proposal when it is debated in Parliament. USDP lawmaker Thein Tun said 30 billion kyat was a large sum to take from the presidential reserve funds, adding that many rural areas still have to generate their own electricity. “The presidential reserve funds should be used for natural disasters. None of the other states and divisions ask for this huge amount of money, only Yangon,” he added. About 10 villages in his constituency can generate their own electricity, he says, but except for granting permission to do so, the government has not helped bring electricity to these rural areas. NLD lawmaker Myo Zaw Oo has defended the plan, saying the NLD government was also taking appropriate measures to provide electricity in ethnic regions. “Yangon is a commercial hub and has industrial zones. I see no reason to object to the proposal because the electricity demand is so high there,” he said. Two electricity suppliers, including a 300-meter power barge from Turkey, were set to provide Yangon this summer with 300 megawatts each totaling 600 megawatts daily for the city. Earlier this month, however, the ministry said it had no budget for the suppliers.
Culture and Tourism
Thumbs Down for More Dams - On the International Day of Action for Rivers, campaigners in Myanmar rejected plans for large dams in Myanmar’s ethnic minority areas and said local people have the right to decide how to use their resources. More than 16 ethnic civil society organizations from the Burma Rivers Network (BRN) and the Save the Salween Network (SSN) released a joint statement saying that 50 planned dams on the country’s rivers will increase hydropower production from 3,000 to 46,000 megawatts by 2030 and that two-thirds of that power will be exported to neighboring countries. The dams will have a devastating, irreversible impact on Myanmar’s rivers—including the Irrawaddy and the Salween rivers—which are vital arteries for millions of people, nourishing people’s livelihoods, and home to fragile ecosystems, it stated. “Foreign investors should not be building dams in Myanmar’s conflict zones,” Mi Ah Chai, the coordinator of Myanmar Rivers Network, said. “The dams are fueling conflict, human rights abuses and displacement, and destroying local environmental resources,” she added. The groups’ statement will be sent to NLD lawmakers as well as ethnic representatives, she said. Prominent Burmese environmentalist U Win Myo Thu stressed the need for awareness of human-inflicted damage to river ecosystems in a video message posted on Facebook to mark the day. He said many hydropower projects attempted to use the country’s rivers for the sake of a handful of people. “We request that our rivers are used for the sake of the people and in accordance with their desires,” he concluded.
More River Cruises - US-based Rainforest Cruises has announced plans to operate new cruise holidays on the Irrawaddy and Chindwin rivers, a sign of Myanmar’s growing tourism. The cruises spanning from six to 11 days include visits to a royal palace, silk, gold and lacquer workshops, archeological sites, and pagodas and monasteries, according to a statement. The new tours take place on one of four vessels built specifically to navigate Myanmar’s rivers, The Irrawaddy Explorer Cruise boat. The boat features 28 cabins, hardwood floors, sun deck, spa and a “writer’s lounge.” Rainforest Cruises is a leading expedition cruise specialist in the Amazon and Galapagos.
Monsoon Season Tourism - Mild weather and lush green landscapes are among the benefits of visiting Myanmar during the rainy season, tourism promoters are informing potential international visitors. “The main tourist attractions in Myanmar such as Bagan, Mandalay, Northern Shan State, Kalaw and Inle Lake only get a 25 percent chance of rainfall during the rainy season, and even if it rains on these days, it’s usually short,” said the vice chairman of the Myanmar Tourism Federation. In the latest campaign to promote year-round tourism, Myanmar is pushing 10 top reasons to visit the country in monsoon season. The number one reason is the chance to see “fifty shades of green, from paddy fields to forests.” Other lures are that it’s “not too hot in the dry zone, not too cold in the mountains,” and that the rainy season is the top time to experience Myanmar’s impressive fruits and vegetables. A number of leading local travel agents, hotels and airlines are offering packages for low season visitors, including “stay for 3 nights, pay for two,” and free and unlimited luggage allowances on affordable domestic flights. Foreign journalists and tour operators will also be invited to Myanmar to experience the “green season.”