IDG Acumen Analysis
Myanmar Maintains Course For Stable Government Transition
Over the past month, political developments in Myanmar remain on course for a change of government at the beginning of April. In the meantime the old parliament continues to pass significant legislation, such as the new investment law, until the end of its session at the start of February, when the newly elected MPs will take their seats. Aung San Suu Kyi continues to build healthy relations with the outgoing military-affiliated government and the army. The situation remains positive.
On 4 December, Aung San Suu Kyi met with the former military dictator, Than Shwe. It is widely thought that he retains significant influence in governing the country. The meeting lasted a number of hours and comes as a positive development. Than Shwe is quoted as saying, ‘it is the truth that she will become the future leader of the country after winning the election… I will support her with all of my efforts if she works for the development of this country." His grandson also posted a photo of a 5000 kyat bank note signed by Than Shwe in 2009, the current president Thein Sein in 2012 and Suu Kyi in 2015. According to the grandson, the signatures were either made when the person was leader of the country, or on their way to becoming leader. The symbolism is clear, and it is encouraging that it appears to be emanating from the old military elite. Suu Kyi, however, remains ineligible to be president under the constitution. She maintains that she will rule ‘above the president’. It is still unclear who the next president will be, but they are likely to be relatively weak and an internal appointment from within the NLD.
After a meeting between Suu Kyi and President Thein Sein on 2 December (she also met with the head of the armed forces, Min Aung Hlaing, on the same day), an eight member committee was set up to facilitate a smooth transition of power. It consists of five union ministers and 3 members of the NLD’s central executive committee. This is further sign that the transition continues to move ahead at multiple levels.
In the meantime parliament continues to forge ahead with legislation. On 17 December the new investment law was finally passed in a joint sitting of parliament. It effectively combines the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law. As well as adding new human rights protections, the law gives MIC (Myanmar Investment Commission) the authority to delegate investment decisions to regional and divisional committees. The final approval for investment, however, remains at the national level. Parliament also intends to pass a budget for the new parliament, a new Condominium law and special goods law before the end of the session.
While the current parliament looks keen to end on a high note, there have been some recent developments which offer cause for concern. On 21 December a draft bill was circulated among MPs in the upper house, which would strip the president of his voting rights in the 11-member National Defense and Security Council, unless it was deadlocked. The council has extensive powers over defense and security issues. The eleven members are the president, two vice presidents, two parliamentary speakers, the commander-in-chief, vice commander-in-chief, and the ministers for defense, home affairs, border affairs and foreign affairs.
The ministries of defense, border affairs and home affairs remain under direct military control. The latter includes the police force, special branch, immigration, and the General Administration Department (GAD), which staffs all regional and state-level governments and provides administration for the country's multiple districts and townships. The military will also choose one of the vice-presidents. This would therefore place six military appointments in the council to the elected government’s four.
Under the constitution, the council has the power to impose martial law, disband parliament and rule directly, but only if the president declares a state of emergency. This highlights the extent of power the military retains, and the threat that it could still pose to a credible elected government.
However, the draft legislation has not yet been formally submitted to the Bill Committee of the upper house and appears to have been leaked from an internal drafting committee. Indeed, it came as a surprise to many MPs. Furthermore, as one MP commented, parliament is already struggling to complete important work before the end of the session, such as passing the budget for 2016-2017.
This piece of draft legislation is therefore unlikely to pose a significant threat to the transition. It is also not clear where it comes from or who supports it. The current speaker of the house, Shwe Mann, is unlikely to back legislation which undermines the NLD. The former number 3 general under Than Shwe has become a key ally of Suu Kyi over the last couple of years, and remains an important conduit through which she manages relations with the military. Having lost his seat in the elections, his future political career rests with maintaining this relationship and potentially bagging a ministerial role in government.
The draft bill therefore remains an outlier in an encouraging political atmosphere. All other indications and murmurings from within government and the military continue to point towards a staged transition in which the military slowly recedes from political life. A gradual shift in power should be welcomed, in that it provides for stability and retains a governing know-how in moving towards democratic government.
IDG Acumen is a corporate intelligence and political risk consultancy with offices in Yangon, Bangkok and Singapore
Website: www.idg-acumen.com
Email: edward.blakeney@idg-acumen.com
Twitter: IDG Acumen@Acumen_Myanmar
Politics
Meeting With De Facto Leader - At a recent meeting between Aung San Suu Kyi and Myanmar’s ex-dictator Than Shwe, the latter is said to have pledged to support for the pro-democracy leader “as best he can” if she genuinely works for the development of the country. “After winning the election, it’s the reality all have to accept—that Daw Aung San Suu Kyi will be Myanmar’s future leader,” the former senior general was quoted as saying. There was no indication as to what “future leader” might mean, in the context of a political system that bars Suu Kyi from the presidency because her late husband and two sons are foreign nationals. Suu Kyi’s NLD trounced the ruling Union Solidarity and Development Party (USDP) in Myanmar’s Nov. 8 general election and will have the votes needed to select Myanmar’s next president, though the party has not revealed who its candidate might be. The meeting took place at Than Shwe’s residence in Naypyidaw and lasted more than two hours. Suu Kyi was also quoted as saying that she held no grudge that could damage the best interests of the country. “For the success of establishing [a brighter] future for Myanmar, I want to talk to Snr-Gen Than Shwe for all-inclusive collaboration, including with the Tatmadaw,” the meeting’s minutes says. Two days prior to the meeting with Than Shwe, Suu Kyi had had separate meetings with President Thein Sein and Myanmar Army commander-in-chief Snr-Gen Min Aung Hlaing to discuss how to ensure a smooth transfer of power and cooperation with the outgoing government and military establishment.
After Victory in Myanmar, Aung San Suu Kyi Quietly Shapes a Transition - Since her party’s thumping election victory last month,Myanmar’s democracy leader, Aung San Suu Kyi, has said little and made few public appearances. So when she emerged recently in her constituency, she was mobbed by reporters and photographers, eager for some hint about how her party will govern after the new Parliament is seated next month. It was not to be. She had come to pick up trash, an exercise described by her party as bringing change through acts of individual responsibility. “Don’t just take photos,” she scolded as she crouched picking up bits of trash. “Help pick up the garbage.”
During the six weeks since Suu Kyi emerged as the most powerful person in this country of 51 million people, she has kept the country guessing on details of the transfer of power to her democracy movement from the military establishment that has ruled for more than five decades. “She says when things are so complicated in her mind she meditates, and it gives her clarity and gives her simple answers,” said Phyo Min Thein, a member of the party’s budget committee. Nonetheless, behind the scenes, a transition is slowly starting to take shape. Suu Kyi, has met behind closed doors with minority ethnic groups, members of her party andcrucial figures in the military with whom she will have to share power. While the participants have given little public indication of what was said, interviews with senior officials on both sides suggest that she has quietly conveyed a message that she will not rock the boat too much, too soon. Like Nelson Mandela, another former political prisoner and Nobel laureate who came to rule a country that had kept him as a political prisoner, she appears keen on building bridges with her former jailers. “The first intention was to soothe their nerves, that they would not be harmed,” said Win Htein, a senior party member and one of Suu Kyi’s closest advisers. “We just said we didn’t want revenge, that we didn’t have a personal grudge and that we wanted to move forward and talk about the future.” Suu Kyi has told her party that it would be “unwise” to push the military right now, he said. Despite the election landslide, party members still recall the last election they won, in 1990, which the military followed up with the arrest of party leaders and two more decades of dictatorial rule. She has also reassured the bureaucracy, packed with former military officers, telling them they should not fear losing their jobs.
For years she has said that she wants national reconciliation, not revenge, but she has also promised to shake up the system. Her party’s election manifesto calls for a reduction in the number of ministries to “establish a lean and efficient government.” Before the election, she campaigned extensively to change the Constitution, which was written by the military and has a provision barring her from office. Her party now appears to be willing to wait. “We won’t be doing anything that will reduce the power of the army for the time being,” Win Htein said. “We have to convince them that we really aim for national reconciliation.”
Analysts say it is hard to read how that approach has been received by the military. In one of the few public readouts of the meetings she held with the military establishment, the grandson of the dictator Than Shwe wrote on Facebook that “everyone has to accept the truth that Suu Kyi will be the future leader of Myanmar after winning the elections.” Yet possible signs of friction have also emerged. Officials in the outgoing government have expressed annoyance at her alliance with Shwe Mann, a former general who was the No. 3 official in the dictatorship but who has since been purged. Suu Kyi appears to have selected him as a go-between with the military; he has also been discussed by analysts as a possible proxy president. Zaw Htay, former military officer and deputy director general of the office of the president, warned that could be a mistake. “If they use the wrong people as brokers, it could backfire,” he said.
Amid the intrigue, there have also been hints of how Suu Kyi’s party might govern. Mr. Win Htein said the party would look to ethnic minorities to lead some ministries, an effort to build even broader support for her government, and to experts outside the party to run some “important ministries,” like energy. Phyo Min Thein, of the party’s budget committee, said the party would seek to follow through on its promise to decentralize power after years of hierarchical governance.
“Right now the system is top-down,” he said. Suu Kyi’s party, the NLD, is widely seen as top-down, too. With the exception of a few senior members, the party has been largely a one-woman show since she helped found it in 1988. During her years under house arrest, she grew accustomed to confiding in a close-knit group of advisers. Given Myanmar’s crushing problems — drug trafficking, corruption, ethnic insurgencies, poverty and inadequate health and education systems — even some close aides worry that she needs a deeper bench. “It’s a problem,” said Nyan Win, a senior party member who is also Suu Kyi’s lawyer. “She needs a good team. She doesn’t have it yet.” Perhaps owing to her days in confinement, when the military dictatorship sought to destroy the democracy movement, Suu Kyi puts high value on trust and loyalty among her aides, senior party members say. On several occasions, those closest to her have been instructed not to speak with the media. Buttonholed in the halls of Parliament, Tin Mar Aung, a physician whose role has been described as a combination of chief of staff and lady in waiting, was asked for an interview. “Never,” she said.
Mightier Than The Sword? - Since colonial days, Myanmar’s poets have put pen to paper to express the mood of the people, describing their trials and tribulations through verse as the country endured one political upheaval after another. From Thakhin Ko Daw Hmaing, whose prose inspired pro-independence leaders when the country was under British rule, to Min Ko Naing, a prominent activist who emerged from the 1988 student protests, poets have long been central to dissident causes, whether opposing colonial overlords or military dictators. Now, the time has come for poets to go from writing verse to drafting laws. The opposition National League for Democracy won a landslide victory in Myanmar’s historic elections on Nov. 8 and among its 800-odd lawmakers in the new national and state and regional parliaments are 11 well-known bards. Instead of working with words and feelings they will be faced with more mundane tasks such as familiarising themselves with tax legislation and state and regional budgets. It remains to be seen how these poets, who honed their craft vividly describing the struggles of ordinary people under the junta, will acclimatise to their new role as politicians when they take their seats in parliament on Jan. 31.Than Aung, whose pen name is Ani Htet, has reservations about his new job. He won a Lower House seat to represent Ngaputaw Township in Irrawaddy Division, but says he enjoys being a village schoolteacher and a writer. But the state of the country and the needs of the people drove him into politics, he said. “I never dreamt of becoming a member of parliament. I had always thought I was going to spend my life as a simple teacher and poet,” he said. Analysts and losing candidates from the ruling Union Solidarity and Development Party have raised questions over the ability of poets to become good parliamentarians. USDP lawmaker Hla Swe, who lost his Upper House seat to an NLD candidate in Sagaing Division, believes it would take time for poets, with their artistic temperaments, to get used to parliamentary processes such as time limits in tabling motions. Ani Htet said he has already started preparing for life in parliament, studying laws and planning on tabling motions to amend some and enact new ones. First, he said, he wants to tackle laws on education and media. “It’s not easy to be a representative in parliament. I’m trying my best to study and prepare myself so what I do there will benefit the country,” he said.
A Multi-Hyphenated Poet
The NLD’s Kyaw Zin Lin beat Thar Aye, incumbent chief minister of Sagaing Division, for a regional parliamentary seat in Butalin Township. Better known by his nom de plume Zay Linn Mg, the 33-year-old lyricist is also a medical doctor. “I would actually prefer being a political activist rather than a formal parliamentarian because you have the freedom to say what you want. Now I’ll have to be faithful to the party’s policies,” he said. Although slightly chafing at the thought of having to give up his freedoms, he also said he’s ready to take on the new role and already has his eyes on reforming the complex bureaucratic mechanism within the regional parliament so that it becomes more democratic. One of his political dreams, he said, was to get the officials of the powerful General Administrative Department democratically elected, since they play a key role in the country’s wider administrative mechanism down to the township level. Currently, the department is under the Ministry of Home Affairs which, according to the 2008 Constitution, is headed by a military general and controlled by the army chief. “Only the village and ward-level officials are directly elected by the people, but the regional and township level administrative officials are directly appointed by the Ministry of Home Affairs. So we need to change that for better governance,” he said.
Great Expectations
Myanmar’s poets have long portrayed the destitute and downtrodden through their art, and have a good sense of the needs of the people, said female writer Thwe Sagaing. “The poets have always stood with the oppressed. So we are confident that they will be able to work for the public,” she said. Mi Chan Wai, another writer, said the poets-turned-MPs are creative thinkers who will be able to bring new ideas and concepts to otherwise dull parliamentary procedures. “I believe that we will be able to fulfil these expectations as we poets have always fought for the truth,” said Tint Lwin, elected as a lawmaker for the Yangon Division parliament for the NLD. The writer, who writes under the name Maung Lwin Mon, used to make a living working for a state-owned bank, but lost his job for joining demonstrators in the 1988 uprising against military rule. He continued to be involved in politics and was later jailed for his dissident activities. In a poem celebrating Aung San Suu Kyi’s 66th birthday, which fell a few months after the Nov. 2010 elections and her release from house arrest, he called her “mother” and compared her to a rose. “Because of your teachings, us, your sons and daughters, who are easily afraid and bereft of reasoning, are now full of strength and bravery,” he wrote. “We have chosen to be poets and MPs at the same time, we hope we can find the right balance between these two modes of life,” he said.
New Investment Law - After months of deliberation, Myanmar’s new investment law has been approved by a joint sitting of Parliament replacing interim laws passed earlier in the term of President Thein Sein. The law, which combines the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law, alters the mandate of the Myanmar Investment Commission (MIC) and adds some nominal human rights protections to future foreign investment projects, among other changes. “The amendments allow more state and regional involvement in investment. They don’t change the percentage of joint venture companies set out in the Foreign Investment Law,” said Khin Shwe, an outgoing Upper House lawmaker, referring to legal requirements giving local partners a majority stake in joint ventures with foreign firms. Under the changes approved, the Myanmar Investment Commission (MIC) is now authorized to delegate, pending national approval, investment decisions to divisional and state authorities. There will also be more coordination between regional and Union governments on investment decisions. Though the bill is expected to attract more international investors to the country, Hlaing Tharyar Industrial Zone chairman Myat Thin Aung complained that the bill gave preferential treatment to foreign operators, noting that prospective local partners were not given the same five-year tax exemption provisions under the law. “We thought that the Myanmar Citizens Investment Law would provide similar domestic benefits to companies, but that didn’t seem to be the case,” he said. “Thein Sein pledged that tax exemption would be available to small- and medium-size enterprises whose net income is up to 30 million kyats (US$23,010) per year. In reality, this only applies to home industries.”
Is There A Life After For Shwe Mann? - It’s rare in Myanmar for a political leader to leave office of their own accord, rarer still for an ousted leader to return to political life. The country’s first Prime Minister, U Nu, was deposed in a military coup, and his attempts to return to the spotlight during the heady days of 1988 were rebuffed by a new generation of democrats. Now, if recent comments from senior levels of the National League for Democracy (NLD) are to be believed, Shwe Mann is set to break the mold. The influential former Brigadier-General, who was given the honorific title Thura after leading a brutal offensive against Karen insurgents in the 1980s, was number three in the military junta before Myanmar’s transition to a quasi-civilian government in 2010. Tipped by some analysts to be elected the country’s first president, Shwe Mann was eventually passed over in favour of Thein Sein. The relationship between the two men began to deteriorate in 2013, owing to Shwe Mann’s perceived closeness to NLD leader Aung San Suu Kyi. That year, he called for the amendment of Article 59(f), the section of Myanmar’s military-drafted 2008 Constitution which effectively bars Suu Kyi from the presidency, should be amended. He has supported her calls for political dialogue with senior leaders, and allowed the Union Parliament to call an ultimately unsuccessful vote on constitutional reforms promoted by the NLD and democracy activists. Eventually, his decision as chair of the USDP to block the candidacies of scores of government ministers and serving military personnel led to his downfall.
At least two prior attempts to vote him out of the chairmanship in 2015; in August, despite Shwe Mann retaining the support of a majority of party officials, the USDP’s executive committee were called to the party’s Naypyidaw offices and ordered to vote the chair and his allies out of office. With the party purge, observers thought the former chairman’s time in the spotlight was at an end. Among the more cynical, rumours swirled that he would be arrested on trumped up charges when his parliamentary immunity lapsed at the end of January. A long-delayed impeachment bill—defeated resoundingly after USDP lawmakers failed to offer their support—was seen as a transparent means of hastening his departure from public life. Finally, a defeat in his hometown constituency of Phyu in Pegu Division during the November election hardened perceptions of a man at the end of his career. In the weeks after NLD’s landslide victory in the Nov. 8 election, however, Shwe Mann is resurgent. He was the first rival political leader to sit down with Suu Kyi after the poll result, and the pair have met regularly in the time since. It was revealed after the fact that Shwe Mann was responsible for brokering her surprise meeting with Snr-Gen Than Shwe earlier in December, where the former dictator referred to her as the “future leader” of Myanmar and promised his assistance during the political transition. NLD spokesman and central executive committee member Win Htein has said that it is likely that Shwe Mann will play a role in the next government, to be formed by the victorious party at the end of March. “He is smart and brave. Everybody knows he accepted his defeat,” he said. “When you consider the need for inclusiveness from the USDP and ethnic people for establishing a democratic country, Shwe Mann may be included. He is likely to be in.”
His courtship of Suu Kyi, together with his attempts to strengthen the Union Parliament into more than the rubber-stamp legislature predicted by international observers, has put him in good standing with the new order. Mya Aye, a senior member of the 88 Generation Peace and Open Society, said that over the course of his parliamentary career, Shwe Mann had cultivated a mutually beneficial relationship with the NLD, and both had reasons for continuing along their current path of collaboration. “It’s true that the NLD’s electoral success has resurrected him,” he said, adding that the party’s priority on national reconciliation and collaborating with the military would have a bearing on the decisions of its leadership. Khin Zaw Win, the director of Tampadipa Institute think-tank, said that Shwe Mann’s appeal as a potential minister in the next government was strengthened by his conduct in the last five years. He cited the examples of the speaker initiating impeachment proceedings against members of the Constitutional Tribunal who failed to demonstrate legal knowledge, as well as Shwe Mann’s support for constitutional reform. “As a Speaker, U Shwe Mann has a good name among lawmakers. Plus, apart from his five-year experience in the parliament, he knows the military well, as he used to be a general. Daw Aung San Suu Kyi needs that kind of person beside her as an ally,” he said. “So, they will likely to offer him a position. He would be an asset for her.”
Business
YSX Inaugurated - The Yangon Stock Exchange has been officially launched, though actual trading is not expected to begin until March of next year. Six companies will initially be listed on the exchange, being dubbed YSX and located on downtown Yangon’s Sule Pagoda Road in a building formerly occupied by Myawaddy Bank: First Myanmar Investment (FMI); Myanmar Citizens Bank; Myanmar Thilawa SEZ Holdings Public Limited; Myanmar Agribusiness Public Company Limited [Mapco]; First Private Bank; and Great Hor Kham, according to Maung Maung Thein, deputy finance minister. “We’ll start with these six listed companies, but we don’t want to allow them to sell their shares in a hurry. We’re already late to enter the stock market, so it doesn’t really matter if we are a bit later still, we want to be sure operations run smoothly,” Maung Maung Thein said. Trading is expected to begin in March, pending settlement of outstanding issues with the bourse’s underwriters, which will serve as the financial liaisons between listed companies and investors looking to purchase shares. At least 10 underwriters are expected to participate (see below). “These underwriters will play a major role, and as long as they are not ready, shares cannot be traded on the YSX,” Maung Maung Thein said. The stock exchange—developed by the state-owned and US-blacklisted Myanmar Economic Bank with two Japanese partners—is expected to be a major advancement in Myanmar’s financial field, offering a greater degree of stability to what has long been a poorly regulated and volatile investment landscape.
The Myanmar Thilawa SEZ Holdings Public Limited was formed by nine Burmese companies that own 41 percent of a special economic zone (SEZ) set up southeast of Yangon, with the Burmese government owning 10 percent and a consortium of Japanese firms holding the remaining 49 percent stake. The project, like the stock exchange, is intended to jumpstart investment into Myanmar’s economy, one of Southeast Asia’s least developed.
FMI is led by business tycoon Serge Pun, who also chairs Yoma Strategic Holdings, a company listed on Singapore’s stock exchange. Pun’s Burmese conglomerate has a range of interests including real estate, health care, aviation and banking. FMI listed its asking price for shares traded over the counter at a company trading center in Yangon at 19,000 kyats.
The Myanmar Agribusiness Public Company (Mapco) was formed in 2012 “to mobilize public savings and to foster broader investment in agriculture and agro-based industries” in Myanmar, according to the firm’s website. The company is Myanmar’s largest rice exporter.
The two dedicated lenders to earn initial listings on the YSX, First Private Bank and Myanmar Citizens Bank, are longtime players in Myanmar’s financial system, having both been founded in 1991. The latter was one of two companies listed on the over-the-counter trading predecessor to the YSX, the Myanmar Securities Exchange Center, which opened in 1996.
Based in Muse, Shan State, Great Hor Kham is a company believed to have links to current Vice President Sai Mauk Kham. Its business activities are focused on construction projects for government agencies, state enterprises and private entities, as the primary builder or subcontractor. The company is also one of the major investors in the Muse Central Economic Zone along the China-Myanmar border, a major trading hub between the two countries that has been plagued by local residents’ claims of land-grabbing in recent years.
List of 10 Yangon Stock Exchange underwriters
1. AYA Bank’s wholly owned subsidiary, AYA Trust Securities Company
2. Co-operative Bank’s wholly owned subsidiary CB Bank Securities
3. Daiwa Securities and state-owned Myanma Economic Bank’s joint venture subsidiary, Myanmar Securities Exchange Centre
4. Global World Securities, an Asia World affiliated company
5. Green Circle Company, known in Myanmar for its Ve Ve drinks brand, in a joint venture with Hong Kong-based Pins Capital, called Expert Investment Securities
6. Innwa Bank linked Aung Myint Mo Min Securities
7. KBZ Group and Singaporean firm Stirling Coleman Capital’s joint venture company KBZ Stirling Coleman Securities
8. Loi Hein Company and Thai firm KT ZMICO’s joint venture subsidiary KTZ Ruby Hill Securities
9. United Amara Bank’s wholly owned subsidiary Amara Securities
10. Young Investment Group’s wholly owned subsidiary, Union Trust Securities Company
Trade Volume Down - Myanmar’s total trade volume has declined in value for the first time since Thein Sein took control, largely as a result of the long and seemingly inexorable slide of the local currency. For the first eight months of the 2015-16 fiscal year, from April to November, total imports were valued at US$9.8 billion and total exports were $7.2 billion. The figures mark a slight decline against the same period in 2014 imports were $10.1 billion while exports were $7.3 billion, according to the ministry. The kyat has declined significantly against the greenback since November 2014, losing 26 percent of its value in the past 12 months, and is currently trading at around 1300 to the US dollar. The figures suggest a rise in total trade volume of between 10 and 17 percent on the previous year’s figures, even as headline revenues declined. Win Myint, director of the Commerce Ministry’s Department of Trade Promotion, said much of the shortfall was explained by a decline in jade sales to overseas buyers over the current fiscal year. “Total jade export volume is significantly down,” said Win Myint. “A total of $820 million in total jade exports were reported in the current fiscal year to the end of November, a decline from $1.1 billion for the same period last year. Taking into account the kyat’s depreciation, the ministry’s figures suggest a drop in jade export volume of at least 25 percent. A temporary export halt for rice lasted for more than two months in the wake of the flooding crisis, while other agricultural goods saw an export decline across the board. Hnin Oo, senior vice president of the Myanmar Fisheries Federation and fisheries exporter, said that despite the narrowing of the trade deficit over the current fiscal year, he expected the gulf between import and export values to grow wider before the end of March. “Business leaders are still waiting to see what happens when the next government takes office,” he said. He added that local manufacturers in small and medium enterprises were still suffering from structural problems arising from lack of access to finance, lack of infrastructure, and issues with government policies.
Mobile Towers – Consolidation Ahead? - Large regional companies recently entering Myanmar’s mobile phone tower sector may look to acquire smaller tower companies already operating in the market, analysts predict. Malaysia-based Axiata, a major regional telecoms player that failed in a bid to win one of the first two private telecommunications licenses issued by the Burmese government in 2014, has announced major new investment plans in the country. The group’s towers subsidiary Edotco recently bought out Digicel’s 75 percent stake in the Myanmar Tower Company, which has built cell phone masts for Ooredoo. Edotco may spend as much as another US$200 million in Myanmar, and plans to scale up to 5,000 towers, from the Myanmar Tower Company’s 1,250 existing towers. In an update sent out this week, analysts said that Axiata is also one of the foreign companies hoping to team up with a consortium of 11 local firms bidding to win a new mobile phone license being awarded by the government. The other license is held by the former monopoly holder Myanmar Posts and Telecommunications, or MPT, while a military-owned company also operates under the brand MecTel. Another Malaysian conglomerate, OCK Group, also signed a deal last month to build towers for Telenor, helping that company toward a goal of about 9,000 towers in order to expand coverage to 90 percent of the population by 2019, a target written into the private telcos’ contracts. Difficulties in building mobile networks in more remote parts of Myanmar, where the electricity grid is patchy, mean that the costs of building telecoms infrastructure are higher than elsewhere. For example, the analysts say Edotco’s lease rates for towers in Myanmar average between $1,400 and $1,700, compared with just $600 in India. “Whilst ample opportunities remain in the towers market with the impending entrance of a fourth operator and launch of 4G services potentially boosting tenant ratios, it could be headed towards consolidation as Telenor and Ooredoo consider infrastructure sharing to reduce capital expenditure and speed up their network rollout process,” the report said. It pointed out that several other private companies were already leasing towers to the mobile phone companies, including Apollo Towers, Irrawaddy Green Towers, Pan Asia Towers and Myanmar Infrastructure Group. “Smaller tower companies, which have not been re-contracted, could become acquisition targets for larger regional players like Edotco, which can leverage experience and benefit from lower operational costs through scale to meet rollout targets”.
U.S. Eases Restrictions - The United States is temporarily easing trade restrictions on Myanmar by allowing all shipments to go through its ports and airports for six months, in an effort to boost the Southeast Asian country’s opposition party after its landmark election win in November. The policy change, coming after the NLD won a landslide victory last month, applies even to ports and airports controlled by entities on the US sanctions blacklist, the officials said. To bolster Myanmar’s transition to democracy after decades of military rule, US officials began lifting sanctions against the country after a civilian government was formed in 2011. But officials acknowledged that remaining US sanctions against those with ties to Myanmar’s military have had the unintended consequence of halting “many, many dozens” of shipments. Major US banks, such as Citigroup, Bank of America and PNC Financial are still shying away from backing Myanmar trade after discovering that the Asia World port—one of the country’s most important shipping terminals—is controlled by a businessman on America’s sanctions blacklist. Exporters use trade finance from banks to ensure they get paid after shipments arrive, and the banks’ withdrawal has led to a sharp decline in US shipments into Myanmar. “It was beginning to escalate,” said a senior US official. “Not only US banks but also third country exporters and third country financial institutions were beginning to hold up trade going into and out of Myanmar,” he said. Officials cautioned that while the policy shift allows financing of shipments through blacklisted trade hubs, banks are still barred from doing business directly with the banned firms. A second senior administration official said the move would lend a boost to Suu Kyi’s party, and was “potentially the single most important thing that we can do on the economic front immediately to give the NLD some breathing space over the next several months as it forms its government.”
IFC Microfinance Investment - The International Finance Corporation (IFC) has invested $1.2 million in a microfinance company operating in Myanmar that is backed by the Singapore government. The IFC announced its equity investment in Fullerton Finance (Myanmar) Company Limited earlier this month. Fullerton is a joint venture between Fullerton Financial Holdings—a wholly owned subsidiary of the Singaporean government’s Temasek Holdings—and Burmese conglomerate Capital Diamond Star Group. “Established in 2014, Fullerton Myanmar serves MSME (micro, small, and medium enterprises) customers through branches located in the 3 regions of Yangon, Ayerwaddy and Mandalay,” an announcement on the IFC’s website said. “The company runs a dual urban/rural microfinance program through an innovative use of technology in the field to improve productivity and turnaround time. It aims to grow its customer base 20-fold from 10,000 customers to 200,000 customers by 2021.”
Mobile Money - A new mobile money transfer service is set to launch as soon as Myanmar’s Central Bank issues new regulations. The service, Wave Money, is a joint venture between leader private telecommunications provider Telenor of Norway and Yoma Bank, one of the biggest financial institutions in the country and part of Burmese tycoon Serge Pun’s business empire. Expectations are high for the beginning of mobile money services in Myanmar, where until last year mobile phone SIMs were only affordable to a few people. In other countries where few people use formal banking services, mobile money transfer services have been hugely popular for paying for services and transferring money to family members or friends. Wave Money’s website is already live, boasting a service that will enable Telenor users—about 12 million people—to “transfer money anywhere anytime.” “You can transfer money safely through your mobile phone or from one of your trusted neighborhood Wave Shop agents,” it says. “Wave Money offers you instant, safe and convenient way of sending and receiving money, bringing financial inclusion to all.” But the launch of the service will depend on Central Bank approval. Bank deputy governor Set Aung has said new regulations on mobile money are coming “very soon”.
Infrastructure
Kyaukphyu - Myanmar’s government is seeking parliamentary approval to begin the first phase of the Kyaukphyu special economic zone (SEZ) in Arakan State. Myint Thein, deputy minister for Rail Transportation and head of the Kyaukphyu SEZ management committee, outlined the long-mooted project, billed as the country’s western economic gateway, to Lower House lawmakers. The Kyaukphyu SEZ would “be set up on 4,289 acres of land,” Myint Thein informed lawmakers. The project will include an industrial zone, a housing estate and two deep sea ports, on Ramree and Maday islands respectively, according to the deputy minister. Tender bids for development of the zone closed last November, with a total of 12 proposals submitted by one local and 11 international firms. However, the opaque tender and evaluation process has been beset by delays, with no successful bidder yet announced, despite official assurances that the process was nearing completion. Singapore’s CPG Corporation was awarded the US$2.5 million consulting contract for the project in March last year. Ba Shein, an Arakan National Party (ANP) lawmaker, said the government should explain the project’s impact on local residents and ensure they are properly informed. Dual oil and gas pipelines—the latter of which became operational in 2013—which run from Kyaukphyu overland to China’s southwest Yunnan province, attracted the ire of locals over issues including displacement, inadequate compensation and environmental degradation. Myint Thein told the Lower House on Thursday that the management committee had been transparent in their dealings on the project and had heeded public opinion. According to the SEZ management committee, the project’s industrial zone will be built in the first phase of the project in a plot 8.5 km south of Kyaukphyu across five village tracts from February 2016.
More Towers - Malaysia’s OCK Group has confirmed that it will build 920 mobile phone towers for Telenor in Myanmar, investing some $75 million in the process. The group, with local partner King Royal Technologies, has been contracted to build the towers and lease them back to the Norwegian mobile phone operator. “OCK intends to build up to 3,000 telecom towers over five years. With the Telenor contract, OCK is positive in achieving its target,” the company said. OCK signed an initial agreement with Telenor last month, and is one several companies providing towers to the company. Telenor says it will eventually lease about 9,000 towers across Myanmar to meet its contractual target of reaching 90 percent of the population. Fellow Malaysian group Axiata has also entered Myanmar’s towers market through subsidiary Edotco, which recently bought a majority share in Myanmar Tower Company. The firm builds and leases towers to Telenor’s only private rival, Qatar’s Ooredoo.
Culture and Tourism
E-Cinema Tickets - Burmese cinemagoers will soon be able to book movie tickets through their mobile phones, thanks to a team up between a Pakistani start-up and a local firm. Online booking platform Bookme has announced that it will enter Myanmar, in partnership with Yangon-based Lychee Ventures, which currently publishes magazines and guides under the Myanmore brand. Bookme.pk allows mobile internet users to book tickets for movies, events and buses, and the firm has reportedly raised some $4 million in investments. Bookme will begin start by focusing on cinema ticketing. Bookme will offer cinema tickets to two outlets—Mingalar Cinemas and JCGV cinemas, with others to follow. According to its Facebook page, Mingalar Cinemas operates 10 cinemas, including downtown Yangon’s Thamada, Nay Pyi Taw and Shae Saung theaters. JCGV runs theaters in the Junction shopping complexes, including the Junction Maw Tin and Junction Square malls in Yangon. Bookme’s CEO, Faizan Aslam, was quoted as saying that the current boom in mobile phone subscriptions in Myanmar meant there was “tremendous potential” for growth in the online ticketing sector.
Myanmar Maintains Course For Stable Government Transition
Over the past month, political developments in Myanmar remain on course for a change of government at the beginning of April. In the meantime the old parliament continues to pass significant legislation, such as the new investment law, until the end of its session at the start of February, when the newly elected MPs will take their seats. Aung San Suu Kyi continues to build healthy relations with the outgoing military-affiliated government and the army. The situation remains positive.
On 4 December, Aung San Suu Kyi met with the former military dictator, Than Shwe. It is widely thought that he retains significant influence in governing the country. The meeting lasted a number of hours and comes as a positive development. Than Shwe is quoted as saying, ‘it is the truth that she will become the future leader of the country after winning the election… I will support her with all of my efforts if she works for the development of this country." His grandson also posted a photo of a 5000 kyat bank note signed by Than Shwe in 2009, the current president Thein Sein in 2012 and Suu Kyi in 2015. According to the grandson, the signatures were either made when the person was leader of the country, or on their way to becoming leader. The symbolism is clear, and it is encouraging that it appears to be emanating from the old military elite. Suu Kyi, however, remains ineligible to be president under the constitution. She maintains that she will rule ‘above the president’. It is still unclear who the next president will be, but they are likely to be relatively weak and an internal appointment from within the NLD.
After a meeting between Suu Kyi and President Thein Sein on 2 December (she also met with the head of the armed forces, Min Aung Hlaing, on the same day), an eight member committee was set up to facilitate a smooth transition of power. It consists of five union ministers and 3 members of the NLD’s central executive committee. This is further sign that the transition continues to move ahead at multiple levels.
In the meantime parliament continues to forge ahead with legislation. On 17 December the new investment law was finally passed in a joint sitting of parliament. It effectively combines the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law. As well as adding new human rights protections, the law gives MIC (Myanmar Investment Commission) the authority to delegate investment decisions to regional and divisional committees. The final approval for investment, however, remains at the national level. Parliament also intends to pass a budget for the new parliament, a new Condominium law and special goods law before the end of the session.
While the current parliament looks keen to end on a high note, there have been some recent developments which offer cause for concern. On 21 December a draft bill was circulated among MPs in the upper house, which would strip the president of his voting rights in the 11-member National Defense and Security Council, unless it was deadlocked. The council has extensive powers over defense and security issues. The eleven members are the president, two vice presidents, two parliamentary speakers, the commander-in-chief, vice commander-in-chief, and the ministers for defense, home affairs, border affairs and foreign affairs.
The ministries of defense, border affairs and home affairs remain under direct military control. The latter includes the police force, special branch, immigration, and the General Administration Department (GAD), which staffs all regional and state-level governments and provides administration for the country's multiple districts and townships. The military will also choose one of the vice-presidents. This would therefore place six military appointments in the council to the elected government’s four.
Under the constitution, the council has the power to impose martial law, disband parliament and rule directly, but only if the president declares a state of emergency. This highlights the extent of power the military retains, and the threat that it could still pose to a credible elected government.
However, the draft legislation has not yet been formally submitted to the Bill Committee of the upper house and appears to have been leaked from an internal drafting committee. Indeed, it came as a surprise to many MPs. Furthermore, as one MP commented, parliament is already struggling to complete important work before the end of the session, such as passing the budget for 2016-2017.
This piece of draft legislation is therefore unlikely to pose a significant threat to the transition. It is also not clear where it comes from or who supports it. The current speaker of the house, Shwe Mann, is unlikely to back legislation which undermines the NLD. The former number 3 general under Than Shwe has become a key ally of Suu Kyi over the last couple of years, and remains an important conduit through which she manages relations with the military. Having lost his seat in the elections, his future political career rests with maintaining this relationship and potentially bagging a ministerial role in government.
The draft bill therefore remains an outlier in an encouraging political atmosphere. All other indications and murmurings from within government and the military continue to point towards a staged transition in which the military slowly recedes from political life. A gradual shift in power should be welcomed, in that it provides for stability and retains a governing know-how in moving towards democratic government.
IDG Acumen is a corporate intelligence and political risk consultancy with offices in Yangon, Bangkok and Singapore
Website: www.idg-acumen.com
Email: edward.blakeney@idg-acumen.com
Twitter: IDG Acumen@Acumen_Myanmar
Politics
Meeting With De Facto Leader - At a recent meeting between Aung San Suu Kyi and Myanmar’s ex-dictator Than Shwe, the latter is said to have pledged to support for the pro-democracy leader “as best he can” if she genuinely works for the development of the country. “After winning the election, it’s the reality all have to accept—that Daw Aung San Suu Kyi will be Myanmar’s future leader,” the former senior general was quoted as saying. There was no indication as to what “future leader” might mean, in the context of a political system that bars Suu Kyi from the presidency because her late husband and two sons are foreign nationals. Suu Kyi’s NLD trounced the ruling Union Solidarity and Development Party (USDP) in Myanmar’s Nov. 8 general election and will have the votes needed to select Myanmar’s next president, though the party has not revealed who its candidate might be. The meeting took place at Than Shwe’s residence in Naypyidaw and lasted more than two hours. Suu Kyi was also quoted as saying that she held no grudge that could damage the best interests of the country. “For the success of establishing [a brighter] future for Myanmar, I want to talk to Snr-Gen Than Shwe for all-inclusive collaboration, including with the Tatmadaw,” the meeting’s minutes says. Two days prior to the meeting with Than Shwe, Suu Kyi had had separate meetings with President Thein Sein and Myanmar Army commander-in-chief Snr-Gen Min Aung Hlaing to discuss how to ensure a smooth transfer of power and cooperation with the outgoing government and military establishment.
After Victory in Myanmar, Aung San Suu Kyi Quietly Shapes a Transition - Since her party’s thumping election victory last month,Myanmar’s democracy leader, Aung San Suu Kyi, has said little and made few public appearances. So when she emerged recently in her constituency, she was mobbed by reporters and photographers, eager for some hint about how her party will govern after the new Parliament is seated next month. It was not to be. She had come to pick up trash, an exercise described by her party as bringing change through acts of individual responsibility. “Don’t just take photos,” she scolded as she crouched picking up bits of trash. “Help pick up the garbage.”
During the six weeks since Suu Kyi emerged as the most powerful person in this country of 51 million people, she has kept the country guessing on details of the transfer of power to her democracy movement from the military establishment that has ruled for more than five decades. “She says when things are so complicated in her mind she meditates, and it gives her clarity and gives her simple answers,” said Phyo Min Thein, a member of the party’s budget committee. Nonetheless, behind the scenes, a transition is slowly starting to take shape. Suu Kyi, has met behind closed doors with minority ethnic groups, members of her party andcrucial figures in the military with whom she will have to share power. While the participants have given little public indication of what was said, interviews with senior officials on both sides suggest that she has quietly conveyed a message that she will not rock the boat too much, too soon. Like Nelson Mandela, another former political prisoner and Nobel laureate who came to rule a country that had kept him as a political prisoner, she appears keen on building bridges with her former jailers. “The first intention was to soothe their nerves, that they would not be harmed,” said Win Htein, a senior party member and one of Suu Kyi’s closest advisers. “We just said we didn’t want revenge, that we didn’t have a personal grudge and that we wanted to move forward and talk about the future.” Suu Kyi has told her party that it would be “unwise” to push the military right now, he said. Despite the election landslide, party members still recall the last election they won, in 1990, which the military followed up with the arrest of party leaders and two more decades of dictatorial rule. She has also reassured the bureaucracy, packed with former military officers, telling them they should not fear losing their jobs.
For years she has said that she wants national reconciliation, not revenge, but she has also promised to shake up the system. Her party’s election manifesto calls for a reduction in the number of ministries to “establish a lean and efficient government.” Before the election, she campaigned extensively to change the Constitution, which was written by the military and has a provision barring her from office. Her party now appears to be willing to wait. “We won’t be doing anything that will reduce the power of the army for the time being,” Win Htein said. “We have to convince them that we really aim for national reconciliation.”
Analysts say it is hard to read how that approach has been received by the military. In one of the few public readouts of the meetings she held with the military establishment, the grandson of the dictator Than Shwe wrote on Facebook that “everyone has to accept the truth that Suu Kyi will be the future leader of Myanmar after winning the elections.” Yet possible signs of friction have also emerged. Officials in the outgoing government have expressed annoyance at her alliance with Shwe Mann, a former general who was the No. 3 official in the dictatorship but who has since been purged. Suu Kyi appears to have selected him as a go-between with the military; he has also been discussed by analysts as a possible proxy president. Zaw Htay, former military officer and deputy director general of the office of the president, warned that could be a mistake. “If they use the wrong people as brokers, it could backfire,” he said.
Amid the intrigue, there have also been hints of how Suu Kyi’s party might govern. Mr. Win Htein said the party would look to ethnic minorities to lead some ministries, an effort to build even broader support for her government, and to experts outside the party to run some “important ministries,” like energy. Phyo Min Thein, of the party’s budget committee, said the party would seek to follow through on its promise to decentralize power after years of hierarchical governance.
“Right now the system is top-down,” he said. Suu Kyi’s party, the NLD, is widely seen as top-down, too. With the exception of a few senior members, the party has been largely a one-woman show since she helped found it in 1988. During her years under house arrest, she grew accustomed to confiding in a close-knit group of advisers. Given Myanmar’s crushing problems — drug trafficking, corruption, ethnic insurgencies, poverty and inadequate health and education systems — even some close aides worry that she needs a deeper bench. “It’s a problem,” said Nyan Win, a senior party member who is also Suu Kyi’s lawyer. “She needs a good team. She doesn’t have it yet.” Perhaps owing to her days in confinement, when the military dictatorship sought to destroy the democracy movement, Suu Kyi puts high value on trust and loyalty among her aides, senior party members say. On several occasions, those closest to her have been instructed not to speak with the media. Buttonholed in the halls of Parliament, Tin Mar Aung, a physician whose role has been described as a combination of chief of staff and lady in waiting, was asked for an interview. “Never,” she said.
Mightier Than The Sword? - Since colonial days, Myanmar’s poets have put pen to paper to express the mood of the people, describing their trials and tribulations through verse as the country endured one political upheaval after another. From Thakhin Ko Daw Hmaing, whose prose inspired pro-independence leaders when the country was under British rule, to Min Ko Naing, a prominent activist who emerged from the 1988 student protests, poets have long been central to dissident causes, whether opposing colonial overlords or military dictators. Now, the time has come for poets to go from writing verse to drafting laws. The opposition National League for Democracy won a landslide victory in Myanmar’s historic elections on Nov. 8 and among its 800-odd lawmakers in the new national and state and regional parliaments are 11 well-known bards. Instead of working with words and feelings they will be faced with more mundane tasks such as familiarising themselves with tax legislation and state and regional budgets. It remains to be seen how these poets, who honed their craft vividly describing the struggles of ordinary people under the junta, will acclimatise to their new role as politicians when they take their seats in parliament on Jan. 31.Than Aung, whose pen name is Ani Htet, has reservations about his new job. He won a Lower House seat to represent Ngaputaw Township in Irrawaddy Division, but says he enjoys being a village schoolteacher and a writer. But the state of the country and the needs of the people drove him into politics, he said. “I never dreamt of becoming a member of parliament. I had always thought I was going to spend my life as a simple teacher and poet,” he said. Analysts and losing candidates from the ruling Union Solidarity and Development Party have raised questions over the ability of poets to become good parliamentarians. USDP lawmaker Hla Swe, who lost his Upper House seat to an NLD candidate in Sagaing Division, believes it would take time for poets, with their artistic temperaments, to get used to parliamentary processes such as time limits in tabling motions. Ani Htet said he has already started preparing for life in parliament, studying laws and planning on tabling motions to amend some and enact new ones. First, he said, he wants to tackle laws on education and media. “It’s not easy to be a representative in parliament. I’m trying my best to study and prepare myself so what I do there will benefit the country,” he said.
A Multi-Hyphenated Poet
The NLD’s Kyaw Zin Lin beat Thar Aye, incumbent chief minister of Sagaing Division, for a regional parliamentary seat in Butalin Township. Better known by his nom de plume Zay Linn Mg, the 33-year-old lyricist is also a medical doctor. “I would actually prefer being a political activist rather than a formal parliamentarian because you have the freedom to say what you want. Now I’ll have to be faithful to the party’s policies,” he said. Although slightly chafing at the thought of having to give up his freedoms, he also said he’s ready to take on the new role and already has his eyes on reforming the complex bureaucratic mechanism within the regional parliament so that it becomes more democratic. One of his political dreams, he said, was to get the officials of the powerful General Administrative Department democratically elected, since they play a key role in the country’s wider administrative mechanism down to the township level. Currently, the department is under the Ministry of Home Affairs which, according to the 2008 Constitution, is headed by a military general and controlled by the army chief. “Only the village and ward-level officials are directly elected by the people, but the regional and township level administrative officials are directly appointed by the Ministry of Home Affairs. So we need to change that for better governance,” he said.
Great Expectations
Myanmar’s poets have long portrayed the destitute and downtrodden through their art, and have a good sense of the needs of the people, said female writer Thwe Sagaing. “The poets have always stood with the oppressed. So we are confident that they will be able to work for the public,” she said. Mi Chan Wai, another writer, said the poets-turned-MPs are creative thinkers who will be able to bring new ideas and concepts to otherwise dull parliamentary procedures. “I believe that we will be able to fulfil these expectations as we poets have always fought for the truth,” said Tint Lwin, elected as a lawmaker for the Yangon Division parliament for the NLD. The writer, who writes under the name Maung Lwin Mon, used to make a living working for a state-owned bank, but lost his job for joining demonstrators in the 1988 uprising against military rule. He continued to be involved in politics and was later jailed for his dissident activities. In a poem celebrating Aung San Suu Kyi’s 66th birthday, which fell a few months after the Nov. 2010 elections and her release from house arrest, he called her “mother” and compared her to a rose. “Because of your teachings, us, your sons and daughters, who are easily afraid and bereft of reasoning, are now full of strength and bravery,” he wrote. “We have chosen to be poets and MPs at the same time, we hope we can find the right balance between these two modes of life,” he said.
New Investment Law - After months of deliberation, Myanmar’s new investment law has been approved by a joint sitting of Parliament replacing interim laws passed earlier in the term of President Thein Sein. The law, which combines the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law, alters the mandate of the Myanmar Investment Commission (MIC) and adds some nominal human rights protections to future foreign investment projects, among other changes. “The amendments allow more state and regional involvement in investment. They don’t change the percentage of joint venture companies set out in the Foreign Investment Law,” said Khin Shwe, an outgoing Upper House lawmaker, referring to legal requirements giving local partners a majority stake in joint ventures with foreign firms. Under the changes approved, the Myanmar Investment Commission (MIC) is now authorized to delegate, pending national approval, investment decisions to divisional and state authorities. There will also be more coordination between regional and Union governments on investment decisions. Though the bill is expected to attract more international investors to the country, Hlaing Tharyar Industrial Zone chairman Myat Thin Aung complained that the bill gave preferential treatment to foreign operators, noting that prospective local partners were not given the same five-year tax exemption provisions under the law. “We thought that the Myanmar Citizens Investment Law would provide similar domestic benefits to companies, but that didn’t seem to be the case,” he said. “Thein Sein pledged that tax exemption would be available to small- and medium-size enterprises whose net income is up to 30 million kyats (US$23,010) per year. In reality, this only applies to home industries.”
Is There A Life After For Shwe Mann? - It’s rare in Myanmar for a political leader to leave office of their own accord, rarer still for an ousted leader to return to political life. The country’s first Prime Minister, U Nu, was deposed in a military coup, and his attempts to return to the spotlight during the heady days of 1988 were rebuffed by a new generation of democrats. Now, if recent comments from senior levels of the National League for Democracy (NLD) are to be believed, Shwe Mann is set to break the mold. The influential former Brigadier-General, who was given the honorific title Thura after leading a brutal offensive against Karen insurgents in the 1980s, was number three in the military junta before Myanmar’s transition to a quasi-civilian government in 2010. Tipped by some analysts to be elected the country’s first president, Shwe Mann was eventually passed over in favour of Thein Sein. The relationship between the two men began to deteriorate in 2013, owing to Shwe Mann’s perceived closeness to NLD leader Aung San Suu Kyi. That year, he called for the amendment of Article 59(f), the section of Myanmar’s military-drafted 2008 Constitution which effectively bars Suu Kyi from the presidency, should be amended. He has supported her calls for political dialogue with senior leaders, and allowed the Union Parliament to call an ultimately unsuccessful vote on constitutional reforms promoted by the NLD and democracy activists. Eventually, his decision as chair of the USDP to block the candidacies of scores of government ministers and serving military personnel led to his downfall.
At least two prior attempts to vote him out of the chairmanship in 2015; in August, despite Shwe Mann retaining the support of a majority of party officials, the USDP’s executive committee were called to the party’s Naypyidaw offices and ordered to vote the chair and his allies out of office. With the party purge, observers thought the former chairman’s time in the spotlight was at an end. Among the more cynical, rumours swirled that he would be arrested on trumped up charges when his parliamentary immunity lapsed at the end of January. A long-delayed impeachment bill—defeated resoundingly after USDP lawmakers failed to offer their support—was seen as a transparent means of hastening his departure from public life. Finally, a defeat in his hometown constituency of Phyu in Pegu Division during the November election hardened perceptions of a man at the end of his career. In the weeks after NLD’s landslide victory in the Nov. 8 election, however, Shwe Mann is resurgent. He was the first rival political leader to sit down with Suu Kyi after the poll result, and the pair have met regularly in the time since. It was revealed after the fact that Shwe Mann was responsible for brokering her surprise meeting with Snr-Gen Than Shwe earlier in December, where the former dictator referred to her as the “future leader” of Myanmar and promised his assistance during the political transition. NLD spokesman and central executive committee member Win Htein has said that it is likely that Shwe Mann will play a role in the next government, to be formed by the victorious party at the end of March. “He is smart and brave. Everybody knows he accepted his defeat,” he said. “When you consider the need for inclusiveness from the USDP and ethnic people for establishing a democratic country, Shwe Mann may be included. He is likely to be in.”
His courtship of Suu Kyi, together with his attempts to strengthen the Union Parliament into more than the rubber-stamp legislature predicted by international observers, has put him in good standing with the new order. Mya Aye, a senior member of the 88 Generation Peace and Open Society, said that over the course of his parliamentary career, Shwe Mann had cultivated a mutually beneficial relationship with the NLD, and both had reasons for continuing along their current path of collaboration. “It’s true that the NLD’s electoral success has resurrected him,” he said, adding that the party’s priority on national reconciliation and collaborating with the military would have a bearing on the decisions of its leadership. Khin Zaw Win, the director of Tampadipa Institute think-tank, said that Shwe Mann’s appeal as a potential minister in the next government was strengthened by his conduct in the last five years. He cited the examples of the speaker initiating impeachment proceedings against members of the Constitutional Tribunal who failed to demonstrate legal knowledge, as well as Shwe Mann’s support for constitutional reform. “As a Speaker, U Shwe Mann has a good name among lawmakers. Plus, apart from his five-year experience in the parliament, he knows the military well, as he used to be a general. Daw Aung San Suu Kyi needs that kind of person beside her as an ally,” he said. “So, they will likely to offer him a position. He would be an asset for her.”
Business
YSX Inaugurated - The Yangon Stock Exchange has been officially launched, though actual trading is not expected to begin until March of next year. Six companies will initially be listed on the exchange, being dubbed YSX and located on downtown Yangon’s Sule Pagoda Road in a building formerly occupied by Myawaddy Bank: First Myanmar Investment (FMI); Myanmar Citizens Bank; Myanmar Thilawa SEZ Holdings Public Limited; Myanmar Agribusiness Public Company Limited [Mapco]; First Private Bank; and Great Hor Kham, according to Maung Maung Thein, deputy finance minister. “We’ll start with these six listed companies, but we don’t want to allow them to sell their shares in a hurry. We’re already late to enter the stock market, so it doesn’t really matter if we are a bit later still, we want to be sure operations run smoothly,” Maung Maung Thein said. Trading is expected to begin in March, pending settlement of outstanding issues with the bourse’s underwriters, which will serve as the financial liaisons between listed companies and investors looking to purchase shares. At least 10 underwriters are expected to participate (see below). “These underwriters will play a major role, and as long as they are not ready, shares cannot be traded on the YSX,” Maung Maung Thein said. The stock exchange—developed by the state-owned and US-blacklisted Myanmar Economic Bank with two Japanese partners—is expected to be a major advancement in Myanmar’s financial field, offering a greater degree of stability to what has long been a poorly regulated and volatile investment landscape.
The Myanmar Thilawa SEZ Holdings Public Limited was formed by nine Burmese companies that own 41 percent of a special economic zone (SEZ) set up southeast of Yangon, with the Burmese government owning 10 percent and a consortium of Japanese firms holding the remaining 49 percent stake. The project, like the stock exchange, is intended to jumpstart investment into Myanmar’s economy, one of Southeast Asia’s least developed.
FMI is led by business tycoon Serge Pun, who also chairs Yoma Strategic Holdings, a company listed on Singapore’s stock exchange. Pun’s Burmese conglomerate has a range of interests including real estate, health care, aviation and banking. FMI listed its asking price for shares traded over the counter at a company trading center in Yangon at 19,000 kyats.
The Myanmar Agribusiness Public Company (Mapco) was formed in 2012 “to mobilize public savings and to foster broader investment in agriculture and agro-based industries” in Myanmar, according to the firm’s website. The company is Myanmar’s largest rice exporter.
The two dedicated lenders to earn initial listings on the YSX, First Private Bank and Myanmar Citizens Bank, are longtime players in Myanmar’s financial system, having both been founded in 1991. The latter was one of two companies listed on the over-the-counter trading predecessor to the YSX, the Myanmar Securities Exchange Center, which opened in 1996.
Based in Muse, Shan State, Great Hor Kham is a company believed to have links to current Vice President Sai Mauk Kham. Its business activities are focused on construction projects for government agencies, state enterprises and private entities, as the primary builder or subcontractor. The company is also one of the major investors in the Muse Central Economic Zone along the China-Myanmar border, a major trading hub between the two countries that has been plagued by local residents’ claims of land-grabbing in recent years.
List of 10 Yangon Stock Exchange underwriters
1. AYA Bank’s wholly owned subsidiary, AYA Trust Securities Company
2. Co-operative Bank’s wholly owned subsidiary CB Bank Securities
3. Daiwa Securities and state-owned Myanma Economic Bank’s joint venture subsidiary, Myanmar Securities Exchange Centre
4. Global World Securities, an Asia World affiliated company
5. Green Circle Company, known in Myanmar for its Ve Ve drinks brand, in a joint venture with Hong Kong-based Pins Capital, called Expert Investment Securities
6. Innwa Bank linked Aung Myint Mo Min Securities
7. KBZ Group and Singaporean firm Stirling Coleman Capital’s joint venture company KBZ Stirling Coleman Securities
8. Loi Hein Company and Thai firm KT ZMICO’s joint venture subsidiary KTZ Ruby Hill Securities
9. United Amara Bank’s wholly owned subsidiary Amara Securities
10. Young Investment Group’s wholly owned subsidiary, Union Trust Securities Company
Trade Volume Down - Myanmar’s total trade volume has declined in value for the first time since Thein Sein took control, largely as a result of the long and seemingly inexorable slide of the local currency. For the first eight months of the 2015-16 fiscal year, from April to November, total imports were valued at US$9.8 billion and total exports were $7.2 billion. The figures mark a slight decline against the same period in 2014 imports were $10.1 billion while exports were $7.3 billion, according to the ministry. The kyat has declined significantly against the greenback since November 2014, losing 26 percent of its value in the past 12 months, and is currently trading at around 1300 to the US dollar. The figures suggest a rise in total trade volume of between 10 and 17 percent on the previous year’s figures, even as headline revenues declined. Win Myint, director of the Commerce Ministry’s Department of Trade Promotion, said much of the shortfall was explained by a decline in jade sales to overseas buyers over the current fiscal year. “Total jade export volume is significantly down,” said Win Myint. “A total of $820 million in total jade exports were reported in the current fiscal year to the end of November, a decline from $1.1 billion for the same period last year. Taking into account the kyat’s depreciation, the ministry’s figures suggest a drop in jade export volume of at least 25 percent. A temporary export halt for rice lasted for more than two months in the wake of the flooding crisis, while other agricultural goods saw an export decline across the board. Hnin Oo, senior vice president of the Myanmar Fisheries Federation and fisheries exporter, said that despite the narrowing of the trade deficit over the current fiscal year, he expected the gulf between import and export values to grow wider before the end of March. “Business leaders are still waiting to see what happens when the next government takes office,” he said. He added that local manufacturers in small and medium enterprises were still suffering from structural problems arising from lack of access to finance, lack of infrastructure, and issues with government policies.
Mobile Towers – Consolidation Ahead? - Large regional companies recently entering Myanmar’s mobile phone tower sector may look to acquire smaller tower companies already operating in the market, analysts predict. Malaysia-based Axiata, a major regional telecoms player that failed in a bid to win one of the first two private telecommunications licenses issued by the Burmese government in 2014, has announced major new investment plans in the country. The group’s towers subsidiary Edotco recently bought out Digicel’s 75 percent stake in the Myanmar Tower Company, which has built cell phone masts for Ooredoo. Edotco may spend as much as another US$200 million in Myanmar, and plans to scale up to 5,000 towers, from the Myanmar Tower Company’s 1,250 existing towers. In an update sent out this week, analysts said that Axiata is also one of the foreign companies hoping to team up with a consortium of 11 local firms bidding to win a new mobile phone license being awarded by the government. The other license is held by the former monopoly holder Myanmar Posts and Telecommunications, or MPT, while a military-owned company also operates under the brand MecTel. Another Malaysian conglomerate, OCK Group, also signed a deal last month to build towers for Telenor, helping that company toward a goal of about 9,000 towers in order to expand coverage to 90 percent of the population by 2019, a target written into the private telcos’ contracts. Difficulties in building mobile networks in more remote parts of Myanmar, where the electricity grid is patchy, mean that the costs of building telecoms infrastructure are higher than elsewhere. For example, the analysts say Edotco’s lease rates for towers in Myanmar average between $1,400 and $1,700, compared with just $600 in India. “Whilst ample opportunities remain in the towers market with the impending entrance of a fourth operator and launch of 4G services potentially boosting tenant ratios, it could be headed towards consolidation as Telenor and Ooredoo consider infrastructure sharing to reduce capital expenditure and speed up their network rollout process,” the report said. It pointed out that several other private companies were already leasing towers to the mobile phone companies, including Apollo Towers, Irrawaddy Green Towers, Pan Asia Towers and Myanmar Infrastructure Group. “Smaller tower companies, which have not been re-contracted, could become acquisition targets for larger regional players like Edotco, which can leverage experience and benefit from lower operational costs through scale to meet rollout targets”.
U.S. Eases Restrictions - The United States is temporarily easing trade restrictions on Myanmar by allowing all shipments to go through its ports and airports for six months, in an effort to boost the Southeast Asian country’s opposition party after its landmark election win in November. The policy change, coming after the NLD won a landslide victory last month, applies even to ports and airports controlled by entities on the US sanctions blacklist, the officials said. To bolster Myanmar’s transition to democracy after decades of military rule, US officials began lifting sanctions against the country after a civilian government was formed in 2011. But officials acknowledged that remaining US sanctions against those with ties to Myanmar’s military have had the unintended consequence of halting “many, many dozens” of shipments. Major US banks, such as Citigroup, Bank of America and PNC Financial are still shying away from backing Myanmar trade after discovering that the Asia World port—one of the country’s most important shipping terminals—is controlled by a businessman on America’s sanctions blacklist. Exporters use trade finance from banks to ensure they get paid after shipments arrive, and the banks’ withdrawal has led to a sharp decline in US shipments into Myanmar. “It was beginning to escalate,” said a senior US official. “Not only US banks but also third country exporters and third country financial institutions were beginning to hold up trade going into and out of Myanmar,” he said. Officials cautioned that while the policy shift allows financing of shipments through blacklisted trade hubs, banks are still barred from doing business directly with the banned firms. A second senior administration official said the move would lend a boost to Suu Kyi’s party, and was “potentially the single most important thing that we can do on the economic front immediately to give the NLD some breathing space over the next several months as it forms its government.”
IFC Microfinance Investment - The International Finance Corporation (IFC) has invested $1.2 million in a microfinance company operating in Myanmar that is backed by the Singapore government. The IFC announced its equity investment in Fullerton Finance (Myanmar) Company Limited earlier this month. Fullerton is a joint venture between Fullerton Financial Holdings—a wholly owned subsidiary of the Singaporean government’s Temasek Holdings—and Burmese conglomerate Capital Diamond Star Group. “Established in 2014, Fullerton Myanmar serves MSME (micro, small, and medium enterprises) customers through branches located in the 3 regions of Yangon, Ayerwaddy and Mandalay,” an announcement on the IFC’s website said. “The company runs a dual urban/rural microfinance program through an innovative use of technology in the field to improve productivity and turnaround time. It aims to grow its customer base 20-fold from 10,000 customers to 200,000 customers by 2021.”
Mobile Money - A new mobile money transfer service is set to launch as soon as Myanmar’s Central Bank issues new regulations. The service, Wave Money, is a joint venture between leader private telecommunications provider Telenor of Norway and Yoma Bank, one of the biggest financial institutions in the country and part of Burmese tycoon Serge Pun’s business empire. Expectations are high for the beginning of mobile money services in Myanmar, where until last year mobile phone SIMs were only affordable to a few people. In other countries where few people use formal banking services, mobile money transfer services have been hugely popular for paying for services and transferring money to family members or friends. Wave Money’s website is already live, boasting a service that will enable Telenor users—about 12 million people—to “transfer money anywhere anytime.” “You can transfer money safely through your mobile phone or from one of your trusted neighborhood Wave Shop agents,” it says. “Wave Money offers you instant, safe and convenient way of sending and receiving money, bringing financial inclusion to all.” But the launch of the service will depend on Central Bank approval. Bank deputy governor Set Aung has said new regulations on mobile money are coming “very soon”.
Infrastructure
Kyaukphyu - Myanmar’s government is seeking parliamentary approval to begin the first phase of the Kyaukphyu special economic zone (SEZ) in Arakan State. Myint Thein, deputy minister for Rail Transportation and head of the Kyaukphyu SEZ management committee, outlined the long-mooted project, billed as the country’s western economic gateway, to Lower House lawmakers. The Kyaukphyu SEZ would “be set up on 4,289 acres of land,” Myint Thein informed lawmakers. The project will include an industrial zone, a housing estate and two deep sea ports, on Ramree and Maday islands respectively, according to the deputy minister. Tender bids for development of the zone closed last November, with a total of 12 proposals submitted by one local and 11 international firms. However, the opaque tender and evaluation process has been beset by delays, with no successful bidder yet announced, despite official assurances that the process was nearing completion. Singapore’s CPG Corporation was awarded the US$2.5 million consulting contract for the project in March last year. Ba Shein, an Arakan National Party (ANP) lawmaker, said the government should explain the project’s impact on local residents and ensure they are properly informed. Dual oil and gas pipelines—the latter of which became operational in 2013—which run from Kyaukphyu overland to China’s southwest Yunnan province, attracted the ire of locals over issues including displacement, inadequate compensation and environmental degradation. Myint Thein told the Lower House on Thursday that the management committee had been transparent in their dealings on the project and had heeded public opinion. According to the SEZ management committee, the project’s industrial zone will be built in the first phase of the project in a plot 8.5 km south of Kyaukphyu across five village tracts from February 2016.
More Towers - Malaysia’s OCK Group has confirmed that it will build 920 mobile phone towers for Telenor in Myanmar, investing some $75 million in the process. The group, with local partner King Royal Technologies, has been contracted to build the towers and lease them back to the Norwegian mobile phone operator. “OCK intends to build up to 3,000 telecom towers over five years. With the Telenor contract, OCK is positive in achieving its target,” the company said. OCK signed an initial agreement with Telenor last month, and is one several companies providing towers to the company. Telenor says it will eventually lease about 9,000 towers across Myanmar to meet its contractual target of reaching 90 percent of the population. Fellow Malaysian group Axiata has also entered Myanmar’s towers market through subsidiary Edotco, which recently bought a majority share in Myanmar Tower Company. The firm builds and leases towers to Telenor’s only private rival, Qatar’s Ooredoo.
Culture and Tourism
E-Cinema Tickets - Burmese cinemagoers will soon be able to book movie tickets through their mobile phones, thanks to a team up between a Pakistani start-up and a local firm. Online booking platform Bookme has announced that it will enter Myanmar, in partnership with Yangon-based Lychee Ventures, which currently publishes magazines and guides under the Myanmore brand. Bookme.pk allows mobile internet users to book tickets for movies, events and buses, and the firm has reportedly raised some $4 million in investments. Bookme will begin start by focusing on cinema ticketing. Bookme will offer cinema tickets to two outlets—Mingalar Cinemas and JCGV cinemas, with others to follow. According to its Facebook page, Mingalar Cinemas operates 10 cinemas, including downtown Yangon’s Thamada, Nay Pyi Taw and Shae Saung theaters. JCGV runs theaters in the Junction shopping complexes, including the Junction Maw Tin and Junction Square malls in Yangon. Bookme’s CEO, Faizan Aslam, was quoted as saying that the current boom in mobile phone subscriptions in Myanmar meant there was “tremendous potential” for growth in the online ticketing sector.
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