IDG Acumen Analysis
An historic change of government, but not all yet settled
After the opening of a new parliament in Myanmar at the end of February, a new government finally took office on March 30. Myanmar now has its first democratically elected government in over 50 years, after Aung San Suu Kyi’s NLD party won a landslide victory in elections last November.
Suu Kyi remains ineligible to be president under the constitution, which bars anyone with foreign children. On 30 March, a new president was sworn in, Htin Kyaw. He comes from relative obscurity, but is an NLD insider, known to be a loyal confidant of Suu Kyi. His appointment appears to be in keeping with her desire to rule by proxy, ‘above’ the president.
The new cabinet has been whittled down from 36 ministries, with 96 ministers and deputy ministers, under the last government to 21 ministries, with 18 ministers. The number of ministers in the president’s office, for instance, has been reduced from six to one.
Of particular note, the following ministries have been merged: agriculture has now been consolidated to a single Agriculture, Irrigation and Livestock Ministry; the Ministry of Electrical Power and the Ministry of Energy are now the Ministry of Electricity; the Ministry of Mines and the Ministry of Environmental Conservation and Forestry are now the Ministry of Natural Resources and Environmental Conservation; the Ministry of National Planning and Economic Development and the Ministry of Finance are now the Ministry of Planning and Finance.
Ministerial appointments are not exclusively NLD, which is a positive development in creating a broad working coalition in government. The cabinet includes six current NLD MPs, six technocrats, two members of the USDP (the military affiliated party), and the vice chair of the Mon National Party, as minister of the new Ethnic Affairs Ministry.
The majority of appointments appear to be capable and educated individuals. A couple of appointments have, however, already caused controversy and will do little to increase the confidence of the business community. The two proposed ministers of the Ministry of Finance and Planning and the Ministry of Commerce have been found to have masters’ and doctorates qualifications from institutions which are either fake or unaccredited. Despite this, all ministerial nominations were approved on 31 March.
Suu Kyi’s postion in the political architecture of the country also remains a point of contention. She will be minister of four different ministries: education, electricity, foreign and the president’s office.
The position of foreign minister will give Suu Kyi a seat on the National Defence and Security Council. The council has the power to impose martial law, disband parliament and rule directly if the president declares a state of emergency.
Given the significant challenges facing the country, the wisdom of ‘the lady’ taking on a portfolio of four major ministries is questionable.
It is, however, the latest attempt to further enlarge her position in governing the country which is likely to cause the greatest friction with the military establishment. On 31 March, the ‘state counselor law’ was approved for debate by the upper house committee. It has now passed the upper house, and should pass swiftly in the lower house where the NLD also has a majority. The law will create a position of ‘state counselor’ explicitly for Suu Kyi. There is some contention as to what the position actually means with many observers referring to it as an effective prime ministerial position. However the NLD have been keen to stress that it is not, and that the position is temporary until the constitution is amended to allow Suu Kyi to be president. The key point is that while all other government ministers will have to relinquish their ties to parliament, including giving up their seats, she will be able to maintain a link. Her ability to openly consult or influence parliament will have legal sanction – a sort of soft whip.
Military lawmakers have already voiced displeasure at the bill. Brigadier-General Khin Maung Aye said it was not compliant with the 2008 Constitution and would create conflicts of interest for her. “According to Article 232[h] of the 2008 Constitution, the Union ministers shall be responsible to the President. So it clashes with clause 5[b] of the draft bill, which states that the state counselor shall be responsible to the Union Parliament.”
Friction between the NLD and the military offers cause for concern. While a new government has now taken power and the NLD has a majority in both houses, the military retains significant power.
Under the constitution, the ministries of defense, border affairs and home affairs remain under direct military control. The latter includes the police force, special branch 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 also has a majority in the 11-member National Defense and Security Council. It also automatically retains 25% of the seats in both houses.
The military, therefore, remains a serious and committed political force. Foreign political consultants running workshops for new MPs in the capital, Naypyidaw, have been struck by their contrasting impressions of NLD and military MPs. Consultants admit being impressed by the depth of knowledge demonstrated by military MPs, while on the other hand being surprised and concerned at the degree of ignorance shown by many NLD MPs as to how a modern constitutional democracy works on even a basic level.
That military MPs continue to invest energy in pursuing their political goals by constitutional means is positive.
While political uncertainty remains, the success of the transition over the last six months has exceeded all expectations. One might hope that this progress will continue and that the important work of government is not eclipsed by power struggles between Suu Kyi and the military.
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
Handover Blues - A deepening rift has opened between Myanmar’s powerful military and Aung San Suu Kyi, sources say, threatening the democracy leader’s prospects for forming a successful government. With the date fast approaching for Suu Kyi’s National League for Democracy (NLD) to take power, efforts to portray the party and its former foes as working cordially together toward a smooth transfer of power have faltered, according to politicians and officials familiar with the situation. “She believed that she would be able to work with the military, but after the last meeting with the commander-in-chief, she realized that she cannot negotiate with them,” said a senior NLD Upper House lawmaker briefed on the talks. “It’s quite clear that she has moved on from waiting for the military to collaborate.” Talks between the NLD and the military began soon after Suu Kyi’s party won a landslide victory in a historic election on Nov. 8, heralding the country’s first democratically elected government since the military took power in 1962. But Suu Kyi has become frustrated with the intransigence of the military on issues ranging from a constitutional amendment that would allow her to become president to the location of the handover ceremony before the start of the new government on April 1. The military has stressed its belief that it has a vital role to play in politics until the transition to democracy is secure, and worries that changing the Constitution quickly could set a dangerous precedent. Myanmar’s junta handed power to a semi-civilian government made up of ex-generals in 2011, after nearly 50 years of military rule, but the Constitution it drafted left the military with considerable power. The Constitution gives the military three powerful ministries and 25 percent of the seats in parliament that amounts to a veto over any constitutional change. The charter, which leaves the security apparatus and much of the state bureaucracy under military control, will force the NLD government to work with the armed forces. Underscoring the antipathy between the two sides, an official who met Suu Kyi recently said the bickering had extended beyond the Constitution and power-sharing to small details such as car parking slots at the handover ceremony and equipment removed from offices by outgoing government staff. The tensions boiled over in Parliament two weeks ago in a rare show of dissent by military MPs, who stood up to protest against accusations by NLD parliamentarians that the outgoing administration had mishandled public projects. “We were scared when the military MPs suddenly stood up against our MP’s proposal … my heart just dropped when I turned around to check the noise. The situation was really tense,” said Tint Soe, a Lower House NLD lawmaker. The stand-off in Parliament came about a week after the third meeting between Suu Kyi and Min Aung Hlaing, the powerful army chief. “The army came to the negotiating table with a long shopping list of demands that proved unfeasible,” said Win Oo, a former member of the army-backed Union Solidarity and Development Party (USDP), who closely monitors the transition. “The two sides are now in the state of cold war. It’s a political killing field.” The NLD had hoped the military could be persuaded to endorse a constitutional amendment allowing Suu Kyi to become president. But as it became clear late last month that was not going to happen, the Nobel Peace Prize laureate decided to cut short the negotiations and bring forward by a week the process for selecting a proxy president. For some in the NLD, contemplating the end of a long wait to form a government, the wrangling over the transition is a grim portent. “It will be really difficult for her in the future because of the military—it is very clear they don’t want to cooperate,” Tint Soe, the NLD lawmaker said. “It’s such a miserable situation.”
Who is Htin Kyaw? - Now we know the identity of the man who is Myanmar’s next president: Htin Kyaw. You’ve probably never heard of him before — but don’t be surprised. That’s part of the plan. Earlier in the process, Aung San Suu Kyi, the leader of the opposition National League for Democracy (NLD), named Htin Kyaw as the party’s leading candidate. The NLD gained the right to name the president after its landslide victory in last November’s historic election. Even so, Aung San Suu Kyi can’t be president herself. The current constitution, which was designed by the military junta that used to rule the country, blocks her from taking the top job. The generals built in a provision excluding anyone with a foreign spouse or children — a measure that was clearly intended for Suu Kyi, who was once married to a Briton, and whose sons are British citizens. Yet the overwhelming majority of Burmese voters made it very clear that they wanted the Lady, as she’s often called, to lead the country regardless. And Aung San Suu Kyi knows this very well. Before the election she made it known that she had every intention of running the government in the event that her party won. She declared publicly that she would “be above the president” and “make all decisions.” She even went so far as to say that the president would “have no authority,” since she’d really be the one in charge. Her choice of Htin Kyaw, 69, is her way of following through on that vow. Htin Kyaw, though undoubtedly competent enough, is certainly not a huge political personality in his own right. He’s a former high school classmate of Aung San Suu Kyi who graduated from Yangon University with a degree in economics in 1968. He went on to work in the government, but gradually become closer to the pro-democracy opposition, and in 1992 he resigned to go to work at the Lady’s side. He became one of her close personal aides, sometimes even working as her driver. (Burmese social media went crazy when foreign news reports featured this aspect of his past in their headlines about the nomination.) A senior executive in the NLD leader’s charitable foundation, he is widely regarded as humble and polite. Even a number of sources close to the military told me they regard him as a good man. If the NLD can be said to have something like its own aristocracy, Htin Kyaw definitely qualifies as a member. His father, the late Min Thuwun, a highly regarded poet, was elected to parliament back in 1990 (though he never took his seat, since the vote was effectively annulled by the junta). Htin Kyaw’s father-in-law, the late U Lwin, was one of the co-founders of the NLD. Htin Kyaw’s wife, Su Su Lwin, is one of Aung San Suu Kyi’s most trusted political gatekeepers, and currently holds a seat of her own in the lower house of parliament, where she also serves as the chairwoman of the International Relations Committee. The Lady has made it very clear why she decided to choose Htin Kyaw. “The person must be loyal to the party,” she declared in a meeting with the party’s parliamentarians. “We give priority to loyalists.”“We give priority to loyalists.” Given this context, it seems entirely justified to describe Htin Kyaw as a “puppet president” whose primary function will be carrying out the orders of the NLD leader. Aung San Suu Kyi’s emphasis on loyalty has a somewhat ironic ring for those who know the country’s history. In the early years of military rule back in the 1970s, then-dictator General Ne Win also singled out loyalty as the most important condition for public service. His notorious slogan was “Lu gaung, lu daw,” which translates as “good man first, smart man second” (a reversal, it should be noted, of a traditional saying that placed “smartness” first). For the general, “goodness” meant above all “loyalty,” and he filled all key posts in the government accordingly. Competence was subordinated to fidelity to the dictator’s wishes. Corruption and abuse of power proliferated correspondingly. The Lady has applied the same loyalty test to her second key personnel decision. Thanks to the complicated provisions of the constitution, the NLD, by virtue of its majority in the upper house of parliament, also has the right to nominate a candidate to one of two vice-presidential posts. For this position Aung San Suu Kyi has chosen Henry Van Thio, 57. Her pick comes as something of a shock. Van Thio, a representative of the Chin ethnic minority, was a long-serving military officer who only joined the NLD one year ago. He has no record of active involvement in the pro-democracy movement and has played no apparent role in any of the ethnic minority political parties or rebel groups. (Intriguingly, he also happens to be a Christian, which would make him one of the very few religious outsiders at the higher levels of this overwhelmingly Buddhist country.) So why him? The answer is that she clearly wanted an appointee who can credibly claim to represent the ethnic minority groups, but who owes no allegiance to any of the established ethnic parties. He will owe his loyalty entirely to her. Aung San Suu Kyi ran little risk by nominating a relative unknown for the post. The two vice presidents are essentially figureheads in terms of actual power. The one possible exception may arise from their role in the military-dominated National Defense and Security Council, of which both vice presidents are members. The constitution vests enormous power in this body, but until now the military has seen little need to take advantage of it, since the generals already dominated the state. Now that the NLD is taking control of the government (at least nominally), the military may be tempted to start making greater use of the council. Speaking of the generals, they, too, have given primacy to the loyalty factor when making their own vice presidential choice (as assured them by the constitution, which gives certain special prerogatives to the military). They have picked a former top general, Myint Swe. Currently he serves as the chief minister (essentially a governor) of Yangon, Myanmar’s largest city. He is known to be a confidant of the former dictator, Senior General Than Swe, who ruled the country until early 2011, when he stepped down to pave the way for the current political transition. Myint Swe’s nomination shows that the old man still plays an important role behind the scenes.
Pro-democracy activists view Myint Swe’s nomination skeptically. He played a prominent role in the 2007 crackdown on the protest movement led by Buddhist monks (the so-called Saffron Revolution), and more recently he has been at the focus of corruption allegations. None of this seems to have deterred Than Shwe, who appears to have been worried mainly about ensuring that the vice presidential post is filled by someone from his own entourage — someone who can presumably guarantee the future security of his family and his business interests. For Than Shwe, just as for Aung San Suu Kyi, it is loyalty that counts above all — rather more, it would seem, than building and strengthening democratic institutions.
And his Wife, Another “Lady” - The world knows Myanmar for its Noble laureate, Aung San Suu Kyi. “The Lady” is a prominent political figure and leader of the pro-democracy movement who spent years under house arrest. But the people of Myanmar have a new lady in the spotlight now, the country’s incoming first lady, Su Su Lwin. But who is Su Su Lwin? Before her husband, Htin Kyaw, became Myanmar’s president-elect, people knew Su Su Lwin as the chairwoman of the Lower House’s International Relations Committee and head of the education committee in Suu Kyi’s National League for Democracy (NLD). She helped drafted the controversial National Education Bill, which in 2015 resulted in nationwide student protests. But her relationship with Suu Kyi and the NLD goes much deeper than that. Even though the 63-year-old former educator wasn’t a party member when the NLD was founded in the late 1980s, she was no stranger to the party. Her late father U Lwin was a former colonel in the Myanmar Army and a leading figure in the NLD, which he helped found and later served as party treasurer. As U Lwin’s daughter, she witnessed the birth of the NLD. At that time, Su Su Lwin had a post-graduate diploma from Sydney University, a master’s degree in English from the Yangon Institute of Education and had worked for over 10 years at Myanmar’s education research bureau. Suu Kyi took notice of Su Su Lwin’s education background and asked her to teach English to NLD youth members at her home, after all schools and universities across the country were closed following the 1988 pro-democracy uprising. She taught them not only language skills, but also used English novels and short stories to teach them critical thinking. But after less than six months, the class had to stop when Suu Kyi was put under house arrest in July 1989. Suu Kyi’s former personal assistant, Dr. Tin Mar Aung, added “She is always so eager to share what she knows with others”. Su Su Lwin and Dr. Tin Mar Aung worked together at Unicef for about a decade, where they became close friends. She portrayed Su Su Lwin as a caretaker who treated everyone around her like family. They each have an intimate relationship with Suu Kyi and sometimes spent time together at Suu Kyi’s house talking about cooking and books, she said. Before getting involved in politics, Su Su Lwin invested most of her time in the education sector. She worked for Unicef from 1990 to 2005 and later served as a freelance consultant for monastic education programs. She founded a local non-profit organization called Hantha Educators in 2006 that partnered with local influential monks and focused on improving traditional monastic education, early childhood care and development programs. She was concerned about the lack of education opportunities for the poor, especially in Sagaing Division and Arakan State, and the failure of many development programs to reach those most in need. Her organization stressed the importance of child-centered teaching and critical thinking. Su Su Lwin and Htin Kyaw supported Daw Aung San Suu Kyi closely, in their own different ways. They were two of Daw Aung San Suu Kyi’s most trusted confidantes. She married Htin Kyaw in 1973 when she was 21-years-old. According to a 2007 interview with Htin Kyaw in local art magazine “Padauk Pwint Thint,” Su Su Lwin was even more familiar with Htin Kyaw’s father, the prominent Burmese poet Min Thu Wun, because she had translated some of his poems into English. Despite her close relationship with Suu Kyi, she said that she officially became a NLD party member just before the 2012 by-election, when she won a seat along with dozens of fellow party loyalists. She dived into Burmese politics before her husband, and has represented Yangon’s Thone Kwa constituency in Parliament ever since her 2012 victory, winning re-election to the seat last year. While working for Unicef, she was not supposed to show any political affiliation, so she avoided being in the public eye. But as the daughter of U Lwin, she witnessed every change and development of the NLD. It’s remarkable that not only the president-elect, but also the first lady, played historic roles in assisting Daw Aung San Suu Kyi.
Business
UK Visit - UK Export Finance, the British government’s export credit agency, will provide $300 million of insurance and guarantees to help UK firms export to Myanmar. It is hoped that the cover, which was announced during a visit to Yangon by British Transport Minister Lord Tariq Ahmad, will help UK exporters to compete with others looking to exploit growing markets in Myanmar for products like consumer goods and construction materials. UK Export Finance can provide insurance to exporters and guarantees to banks financing exports from the UK. It also makes loans to overseas companies to buy goods from the UK. Lord Ahmad was in Myanmar last week for a visit that included talks with Yangon Mayor Hla Myint about the city’s development, according to a statement. “He met the local and international business community, and development partners engaged in infrastructure development,” it said, adding that the British official also spoke at an event promoting UK company Rolls Royce Plc and at a seminar involving Myanmar’s chamber of commerce. “During the seminar, Lord Ahmad set out the UK’s expertise in the transport infrastructure sector and some of the steps the UK government has made in terms of prioritization and long-term planning.”
Projects Put On Hold - Myanmar’s outgoing government has put 68 controversial projects on hold, the information ministry announced recently, the same day as Lower House MPs voted to approve a motion calling for greater scrutiny of the sale of state properties and other assets during the transition period. The suspended projects include a coal-fired power plant, a hazardous chemical treatment plant and a special economic zone planned for Shan State. Other projects include unfinished buildings and factories contracted to private firms, sites reportedly linked to allegations of land grabbing, and issues over “build-operate-transfer” agreements. The Ministry of Information’s announcement was issued shortly after lawmakers in the Lower House of Parliament on Friday discussed and approved a proposal tabled by the NLD’s Khin San Hlaing urging authorities to review permissions to sell or lease state-owned factories, facilities and projects before a new government takes power on April 1. The proposal also included for discussion the plight of squatters after large-scale evictions were carried out in Yangon last month. Thein Nyunt, a former Lower House lawmaker and chairman of the New National Democracy Party, said there are many projects that government ministries signed off on for the private sector without any transparency. Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, said the administration of President Thein Sein should attend to issues over controversial projects before its term ends. “If not, there will be more problems if the new government pulls out from these controversial projects,” he said. “This is a good time for the current government to say what it’s done in the past, to let all of the people know.”
South Korean Investment Boost - After a delegation from the Daewoo Group of Companies met with Myanmar’s outgoing president recently, there is speculation that the country plans to increase investment in Myanmar. During the meeting between Thein Sein and Daewoo CEO Young-Sang Kim, the topics of discussion included investment in Myanmar’s hotels, energy, mining and steel sectors, as well as efforts to build modern rice mills. Dr. Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry said that Korean businesses are eyeing automobile, oil and gas sectors, as well as other smaller industries. “Korean culture has already been exported to this country, so their brands do not need to be promoted as much,” he said, adding that investors are interested in entering the beauty industry and developing Myanmar’s cosmetic surgery market. Korean garment factories are already operating in the country, so continued engagement with the manufacturing sector will be priority, he added. The Central Bank of Myanmar also approved a license for Korea’s Shinhan Bank in the second round of foreign banks licenses issues this week. Dr. Soe Tun, chairman of the Automobile Dealers Association, said that it seems Japanese and South Korean businesses are now competing in Myanmar’s markets. “Many Japanese business are coming here now, so Korean businesses will follow, no doubt,” he said. “We welcome more Foreign Direct Investment.” According to the figures of the Directorate of Investment and Companies Administration, Korean investment in Myanmar reached US$300 million during the 2014-2015 fiscal year, ranking it the country’s fifth highest investor after China, Singapore, Hong Kong and the UK respectively. Myanmar expects about US$6 billion in foreign investment for the current fiscal year ending on March 31 and has received more than US$5 billion to date.
GE Looking To Expand Too - A company report submitted to the US Embassy in Yangon last month details the expansion of General Electric (GE) into a number of sectors after re-engaging with Myanmar in 2012. GE is working in the health care, aviation leasing and power sectors, said the report, dated Feb. 19, which was submitted under a US government rule that requires any American firm investing more than $500,000 in the country to file submissions. In a recent development, the company said, it will supply gas turbines to a major power generating project. “GE was also recently awarded a contract to supply two state-of-the-art gas turbines to the Myingan Power Project in central Myanmar, which is owned and operated by Singapore-based Sembcorp, operating as an IPP [independent power producer] and selling electricity to MEPE,” the state-run power firm, the filing said. Sembcorp Utilities announced in December that it had signed an agreement with the Burmese government to develop the 225-megawatt plant in Mandalay Division. A 20 percent stake in the project is held by a local firm thought to be owned by a prominent Mandalay businessman with links to the Kokang region bordering China. The World Bank is considering putting $45 million into the project. GE has also sold turbines for a gas-fired power plant in Yangon’s Ahlone Township run by Thailand-based Toyo Thai Power Corp. The US firm will also rehabilitate two gas turbines in Yangon and supply turbines to China Energy Engineering Group, in a World Bank-funded project in Thaton, Mon State. The conglomerate is also providing aircraft to the state-owned Myanmar National Airlines, and equipment to the oil and gas sector. “Overall, GE’s focus has been on supplying safe, efficient and sustainable products and services to meet the substantial infrastructure needs of the Myanmar people,” the report said, noting that the company is taking a careful approach to operating in Myanmar, where concerns over labour and land rights abuses, and over the involvement of armed groups in business, remain. A foundation linked to GE has commissioned a report on the human rights impacts of the extractive industries sector. “GE’s approach to operating in Myanmar has been, and will continue to be, measured, incremental, and informed by due diligence, commensurate with the size, scope and nature of our operations,” it said. “GE’s activities in Myanmar are in compliance with US law and in keeping with the company’s human rights commitments.”
Burmese Uber - Travel company Oway launched “Oway Ride” in January, an application that lets users in Yangon order a car or “limo” with their mobile phone.,” according to the service’s website. The app—which can be downloaded to smartphones on Google’s Play Store or the Apple App Store—has similar functionality to Uber, and the founders hope it can gain the same popularity Uber has found around the world. “One of the many advantages of riding with Oway Ride is that fare is calculated within the app based on the distance and time that rider travels,” the website says. “So, you only have to pay as you go!” According to a report, users are offered the choice of “Standard, Prime or Limo” vehicles. Oway CEO Nay Aung said that the service would initially be available in Yangon only. “With Yangon as the main economic hub city in Myanmar, it is logical to launch here first with a hundreds of cars and then expand the service rapidly into other cities, such as Mandalay and Naypyidaw.”
Top Tax Payers - According to Myanmar’s Internal Revenue Department, KBZ Bank tops the list of corporate tax payers for 2014-15, along with army-owned companies. The department on Friday identified online the names of the country’s top 50 tax-paying companies, saying it would release the rest of a top-1,000 list on its website at a later date. Banks are well-represented on the list, making up five of the top 50 tax-paying companies. KBZ Bank paid 22 billion kyats in taxes for 2014-15, securing the No. 1 spot. This is more than double the figure of the second-place company on the list, Myawaddy Bank, which paid less than 10 billion kyats. The top five was rounded out by Denko Trading Company, Myawaddy Trading Company and Union of Myanmar Economic Holdings Limited (UMEHL) in third, fourth and fifth, respectively. Myawaddy Bank, Myawaddy Trading Company and UMEHL are run by the military.. Founded in the 1990s in Taunggyi, the capital of Shan State, and owned by Aung Ko Win, the KBZ Group of Companies owns one of Myanmar’s largest banks and also has business interests in several other sectors. Crucially, it is not on the US Treasury Department’s blacklist.
YSX Commences Real Trading - Following earlier delays, shares trading at the Yangon Stock Exchange (YSX) debuted one week before a new government comes to power in Myanmar. The YSX officially “launched” in December, but shares since then had only been traded internally through dry-run testing. According to YSX officials, this delay was to ensure smooth operation of the new capital market. Six firms are due to be listed on the YSX initially: 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. However, five of these firms were not yet ready for shares trading when FMI chairman Serge Pun joined Maung Maung Thein, head of the Myanmar Securities and Exchange Commission (SECM), to ring a golden bell signaling the long-awaited start to trading. “Today, only shares for FMI are available,” said Thet Tun Oo, senior executive director of the YSX, adding that shares trading for the other five listed companies would be available at an as yet unknown future date. The floor price for FMI shares began at 26,000 kyats and shares traded at 31,000 kyats by the time trading ended Friday afternoon, with the stock having reached the upper limit of a daily 5,000 kyats floor and ceiling on stock price fluctuation that is in place to prevent volatility on the bourse. Six securities companies—including KBZ Group of Companies, CB Securities, AYA Securities and the Myanmar Securities Exchange Center—have been selected as underwriters and will work with the YSX as liaisons between the listed companies and buyers and sellers. The YSX is Myanmar’s first modern stock exchange. Its backers hope the new capital market will help spur growth in Myanmar’s once-moribund economy.
Infrastructure
Yangon Station Redevelopment - The state agency, Myanma Railways, wants to push ahead with an ambitious plan to redevelop Yangon’s Central Railway Station. An announcement from Myanma Railways says it has received expressions of interest from more than a dozen companies, including two joint ventures with American investors, in a tender to develop the station. The agency’s general manager for Lower Myanmar, Tun Aung Thin, said that the winners of the tender would be selected in May. The project will “launch” in May 2017, the report said. “Fifteen companies including five from Myanmar, two from Singapore, two joint-venture companies with the US, two from Korea and three from China sent an Expression of Interest for the project when Myanma Railways invited the tender for the second time in July last year,” the report said. Myanma Railways wants total investment in the railway station in the city’s downtown, to reach more than $2 billion, presumably coming from the tender winner.
Port Development - Myanmar’s Port Authority has awarded Kaung Myanmar Aung Shipping Co. Ltd. the right to develop a new area for cargo ships to dock on downtown Yangon’s riverside. The company is part of the sprawling KMA Group, which is headed by Burmese tycoon Khin Maung Aye, known to be close to outgoing President Thein Sein. The announcement comes less than two weeks before a new government takes over, and follows a series of other awards made during the long “lame duck” period following USDP’s trouncing in the November elections. The company will build a “modern wharf and supporting facilities” in Seikkan Township, the administrative area that stretches between Strand Road and the Yangon River. “The project which would be implemented with the Build, Operate and Transfer-BOT system is located between the Botahtaung Pagoda and Bo Aung Kyaw jetty.” The firm currently ships out of the Asia World Port Terminal in Ahlone Township. Presidential advisor Khin Maung Aye’s business empire—which reaches into aviation with Golden Myanmar Airways, private health care with Parami General Hospital and finance with CB Bank—has flourished during Thein Sein’s five-year administration. KMA Group’s website also lists interests in mining, real estate, hotels, forestry and agriculture.
Culture and Tourism
Tuborg Lawsuit - The family of the late Burmese composer Myoma Nyein is preparing a lawsuit against Denmark-based Carlsberg Brewery Company for their use of his Burmese song title on their product, Tuborg beer. The Burmese script on the bottles, cans and marketing materials for Tuborg beer reads “Tupo,” a transliteration of the product’s name as well as the title of a famous song written by Myoma Nyein, who came from Mandalay. His relatives claim that the musical reference has been used without their permission and are disappointed that the company has failed to officially apologize and to engage in negotiations after an ultimatum to do so was issued in mid-January this year. Soon after the ultimatum, Carlsberg issued a statement announcing that they would not continue distributing their products using the Burmese phrase, “Tupo,” and would instead use the Danish brand name of Tuborg in Myanmar in the future. Myoma Nyein’s family said that Carlsberg representatives met with them twice after the January ultimatum. During these meetings, the company asked for patience from the family regarding the sale of products that had already made it to market. “They said they needed to sell out all the stock that had already been distributed in the market. The family said that the company has continued using the marketing and advertising materials with the disputed phrase throughout Myanmar. “If Carlsberg truly respected others’ dignity they would have announced officially and publicly in the newspapers the exact time when they would stop production of their products using ‘Tupo.’ The family said the company had requested another meeting with them on January 31, but no one from Carlsberg showed up. “Although we accepted their requests for an extension of ultimatum with respect and understanding, they failed to apologize,” said Zaw Myo Oo, a grandson of the late composer. “We can’t stand it anymore…we are now preparing a lawsuit and will send a legal notice as soon as all documentation is ready.” The family said that the Carlsberg had asked to use their Burmese-scripted Tuborg beer products until the country’s famous April water festival, known as Thingyan—the event celebrated in Myoma Nyein’s ‘Tupo’ song. The family denied the request. “The legal action is not to receive compensation,” Zaw Myo Oo pointed out. “We just want the world to know that Carlsberg, a global company, is taking advantage of the weak rule of law in our country, disrespecting our copyrights and acting very unprofessionally,” he added.
An historic change of government, but not all yet settled
After the opening of a new parliament in Myanmar at the end of February, a new government finally took office on March 30. Myanmar now has its first democratically elected government in over 50 years, after Aung San Suu Kyi’s NLD party won a landslide victory in elections last November.
Suu Kyi remains ineligible to be president under the constitution, which bars anyone with foreign children. On 30 March, a new president was sworn in, Htin Kyaw. He comes from relative obscurity, but is an NLD insider, known to be a loyal confidant of Suu Kyi. His appointment appears to be in keeping with her desire to rule by proxy, ‘above’ the president.
The new cabinet has been whittled down from 36 ministries, with 96 ministers and deputy ministers, under the last government to 21 ministries, with 18 ministers. The number of ministers in the president’s office, for instance, has been reduced from six to one.
Of particular note, the following ministries have been merged: agriculture has now been consolidated to a single Agriculture, Irrigation and Livestock Ministry; the Ministry of Electrical Power and the Ministry of Energy are now the Ministry of Electricity; the Ministry of Mines and the Ministry of Environmental Conservation and Forestry are now the Ministry of Natural Resources and Environmental Conservation; the Ministry of National Planning and Economic Development and the Ministry of Finance are now the Ministry of Planning and Finance.
Ministerial appointments are not exclusively NLD, which is a positive development in creating a broad working coalition in government. The cabinet includes six current NLD MPs, six technocrats, two members of the USDP (the military affiliated party), and the vice chair of the Mon National Party, as minister of the new Ethnic Affairs Ministry.
The majority of appointments appear to be capable and educated individuals. A couple of appointments have, however, already caused controversy and will do little to increase the confidence of the business community. The two proposed ministers of the Ministry of Finance and Planning and the Ministry of Commerce have been found to have masters’ and doctorates qualifications from institutions which are either fake or unaccredited. Despite this, all ministerial nominations were approved on 31 March.
Suu Kyi’s postion in the political architecture of the country also remains a point of contention. She will be minister of four different ministries: education, electricity, foreign and the president’s office.
The position of foreign minister will give Suu Kyi a seat on the National Defence and Security Council. The council has the power to impose martial law, disband parliament and rule directly if the president declares a state of emergency.
Given the significant challenges facing the country, the wisdom of ‘the lady’ taking on a portfolio of four major ministries is questionable.
It is, however, the latest attempt to further enlarge her position in governing the country which is likely to cause the greatest friction with the military establishment. On 31 March, the ‘state counselor law’ was approved for debate by the upper house committee. It has now passed the upper house, and should pass swiftly in the lower house where the NLD also has a majority. The law will create a position of ‘state counselor’ explicitly for Suu Kyi. There is some contention as to what the position actually means with many observers referring to it as an effective prime ministerial position. However the NLD have been keen to stress that it is not, and that the position is temporary until the constitution is amended to allow Suu Kyi to be president. The key point is that while all other government ministers will have to relinquish their ties to parliament, including giving up their seats, she will be able to maintain a link. Her ability to openly consult or influence parliament will have legal sanction – a sort of soft whip.
Military lawmakers have already voiced displeasure at the bill. Brigadier-General Khin Maung Aye said it was not compliant with the 2008 Constitution and would create conflicts of interest for her. “According to Article 232[h] of the 2008 Constitution, the Union ministers shall be responsible to the President. So it clashes with clause 5[b] of the draft bill, which states that the state counselor shall be responsible to the Union Parliament.”
Friction between the NLD and the military offers cause for concern. While a new government has now taken power and the NLD has a majority in both houses, the military retains significant power.
Under the constitution, the ministries of defense, border affairs and home affairs remain under direct military control. The latter includes the police force, special branch 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 also has a majority in the 11-member National Defense and Security Council. It also automatically retains 25% of the seats in both houses.
The military, therefore, remains a serious and committed political force. Foreign political consultants running workshops for new MPs in the capital, Naypyidaw, have been struck by their contrasting impressions of NLD and military MPs. Consultants admit being impressed by the depth of knowledge demonstrated by military MPs, while on the other hand being surprised and concerned at the degree of ignorance shown by many NLD MPs as to how a modern constitutional democracy works on even a basic level.
That military MPs continue to invest energy in pursuing their political goals by constitutional means is positive.
While political uncertainty remains, the success of the transition over the last six months has exceeded all expectations. One might hope that this progress will continue and that the important work of government is not eclipsed by power struggles between Suu Kyi and the military.
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
Handover Blues - A deepening rift has opened between Myanmar’s powerful military and Aung San Suu Kyi, sources say, threatening the democracy leader’s prospects for forming a successful government. With the date fast approaching for Suu Kyi’s National League for Democracy (NLD) to take power, efforts to portray the party and its former foes as working cordially together toward a smooth transfer of power have faltered, according to politicians and officials familiar with the situation. “She believed that she would be able to work with the military, but after the last meeting with the commander-in-chief, she realized that she cannot negotiate with them,” said a senior NLD Upper House lawmaker briefed on the talks. “It’s quite clear that she has moved on from waiting for the military to collaborate.” Talks between the NLD and the military began soon after Suu Kyi’s party won a landslide victory in a historic election on Nov. 8, heralding the country’s first democratically elected government since the military took power in 1962. But Suu Kyi has become frustrated with the intransigence of the military on issues ranging from a constitutional amendment that would allow her to become president to the location of the handover ceremony before the start of the new government on April 1. The military has stressed its belief that it has a vital role to play in politics until the transition to democracy is secure, and worries that changing the Constitution quickly could set a dangerous precedent. Myanmar’s junta handed power to a semi-civilian government made up of ex-generals in 2011, after nearly 50 years of military rule, but the Constitution it drafted left the military with considerable power. The Constitution gives the military three powerful ministries and 25 percent of the seats in parliament that amounts to a veto over any constitutional change. The charter, which leaves the security apparatus and much of the state bureaucracy under military control, will force the NLD government to work with the armed forces. Underscoring the antipathy between the two sides, an official who met Suu Kyi recently said the bickering had extended beyond the Constitution and power-sharing to small details such as car parking slots at the handover ceremony and equipment removed from offices by outgoing government staff. The tensions boiled over in Parliament two weeks ago in a rare show of dissent by military MPs, who stood up to protest against accusations by NLD parliamentarians that the outgoing administration had mishandled public projects. “We were scared when the military MPs suddenly stood up against our MP’s proposal … my heart just dropped when I turned around to check the noise. The situation was really tense,” said Tint Soe, a Lower House NLD lawmaker. The stand-off in Parliament came about a week after the third meeting between Suu Kyi and Min Aung Hlaing, the powerful army chief. “The army came to the negotiating table with a long shopping list of demands that proved unfeasible,” said Win Oo, a former member of the army-backed Union Solidarity and Development Party (USDP), who closely monitors the transition. “The two sides are now in the state of cold war. It’s a political killing field.” The NLD had hoped the military could be persuaded to endorse a constitutional amendment allowing Suu Kyi to become president. But as it became clear late last month that was not going to happen, the Nobel Peace Prize laureate decided to cut short the negotiations and bring forward by a week the process for selecting a proxy president. For some in the NLD, contemplating the end of a long wait to form a government, the wrangling over the transition is a grim portent. “It will be really difficult for her in the future because of the military—it is very clear they don’t want to cooperate,” Tint Soe, the NLD lawmaker said. “It’s such a miserable situation.”
Who is Htin Kyaw? - Now we know the identity of the man who is Myanmar’s next president: Htin Kyaw. You’ve probably never heard of him before — but don’t be surprised. That’s part of the plan. Earlier in the process, Aung San Suu Kyi, the leader of the opposition National League for Democracy (NLD), named Htin Kyaw as the party’s leading candidate. The NLD gained the right to name the president after its landslide victory in last November’s historic election. Even so, Aung San Suu Kyi can’t be president herself. The current constitution, which was designed by the military junta that used to rule the country, blocks her from taking the top job. The generals built in a provision excluding anyone with a foreign spouse or children — a measure that was clearly intended for Suu Kyi, who was once married to a Briton, and whose sons are British citizens. Yet the overwhelming majority of Burmese voters made it very clear that they wanted the Lady, as she’s often called, to lead the country regardless. And Aung San Suu Kyi knows this very well. Before the election she made it known that she had every intention of running the government in the event that her party won. She declared publicly that she would “be above the president” and “make all decisions.” She even went so far as to say that the president would “have no authority,” since she’d really be the one in charge. Her choice of Htin Kyaw, 69, is her way of following through on that vow. Htin Kyaw, though undoubtedly competent enough, is certainly not a huge political personality in his own right. He’s a former high school classmate of Aung San Suu Kyi who graduated from Yangon University with a degree in economics in 1968. He went on to work in the government, but gradually become closer to the pro-democracy opposition, and in 1992 he resigned to go to work at the Lady’s side. He became one of her close personal aides, sometimes even working as her driver. (Burmese social media went crazy when foreign news reports featured this aspect of his past in their headlines about the nomination.) A senior executive in the NLD leader’s charitable foundation, he is widely regarded as humble and polite. Even a number of sources close to the military told me they regard him as a good man. If the NLD can be said to have something like its own aristocracy, Htin Kyaw definitely qualifies as a member. His father, the late Min Thuwun, a highly regarded poet, was elected to parliament back in 1990 (though he never took his seat, since the vote was effectively annulled by the junta). Htin Kyaw’s father-in-law, the late U Lwin, was one of the co-founders of the NLD. Htin Kyaw’s wife, Su Su Lwin, is one of Aung San Suu Kyi’s most trusted political gatekeepers, and currently holds a seat of her own in the lower house of parliament, where she also serves as the chairwoman of the International Relations Committee. The Lady has made it very clear why she decided to choose Htin Kyaw. “The person must be loyal to the party,” she declared in a meeting with the party’s parliamentarians. “We give priority to loyalists.”“We give priority to loyalists.” Given this context, it seems entirely justified to describe Htin Kyaw as a “puppet president” whose primary function will be carrying out the orders of the NLD leader. Aung San Suu Kyi’s emphasis on loyalty has a somewhat ironic ring for those who know the country’s history. In the early years of military rule back in the 1970s, then-dictator General Ne Win also singled out loyalty as the most important condition for public service. His notorious slogan was “Lu gaung, lu daw,” which translates as “good man first, smart man second” (a reversal, it should be noted, of a traditional saying that placed “smartness” first). For the general, “goodness” meant above all “loyalty,” and he filled all key posts in the government accordingly. Competence was subordinated to fidelity to the dictator’s wishes. Corruption and abuse of power proliferated correspondingly. The Lady has applied the same loyalty test to her second key personnel decision. Thanks to the complicated provisions of the constitution, the NLD, by virtue of its majority in the upper house of parliament, also has the right to nominate a candidate to one of two vice-presidential posts. For this position Aung San Suu Kyi has chosen Henry Van Thio, 57. Her pick comes as something of a shock. Van Thio, a representative of the Chin ethnic minority, was a long-serving military officer who only joined the NLD one year ago. He has no record of active involvement in the pro-democracy movement and has played no apparent role in any of the ethnic minority political parties or rebel groups. (Intriguingly, he also happens to be a Christian, which would make him one of the very few religious outsiders at the higher levels of this overwhelmingly Buddhist country.) So why him? The answer is that she clearly wanted an appointee who can credibly claim to represent the ethnic minority groups, but who owes no allegiance to any of the established ethnic parties. He will owe his loyalty entirely to her. Aung San Suu Kyi ran little risk by nominating a relative unknown for the post. The two vice presidents are essentially figureheads in terms of actual power. The one possible exception may arise from their role in the military-dominated National Defense and Security Council, of which both vice presidents are members. The constitution vests enormous power in this body, but until now the military has seen little need to take advantage of it, since the generals already dominated the state. Now that the NLD is taking control of the government (at least nominally), the military may be tempted to start making greater use of the council. Speaking of the generals, they, too, have given primacy to the loyalty factor when making their own vice presidential choice (as assured them by the constitution, which gives certain special prerogatives to the military). They have picked a former top general, Myint Swe. Currently he serves as the chief minister (essentially a governor) of Yangon, Myanmar’s largest city. He is known to be a confidant of the former dictator, Senior General Than Swe, who ruled the country until early 2011, when he stepped down to pave the way for the current political transition. Myint Swe’s nomination shows that the old man still plays an important role behind the scenes.
Pro-democracy activists view Myint Swe’s nomination skeptically. He played a prominent role in the 2007 crackdown on the protest movement led by Buddhist monks (the so-called Saffron Revolution), and more recently he has been at the focus of corruption allegations. None of this seems to have deterred Than Shwe, who appears to have been worried mainly about ensuring that the vice presidential post is filled by someone from his own entourage — someone who can presumably guarantee the future security of his family and his business interests. For Than Shwe, just as for Aung San Suu Kyi, it is loyalty that counts above all — rather more, it would seem, than building and strengthening democratic institutions.
And his Wife, Another “Lady” - The world knows Myanmar for its Noble laureate, Aung San Suu Kyi. “The Lady” is a prominent political figure and leader of the pro-democracy movement who spent years under house arrest. But the people of Myanmar have a new lady in the spotlight now, the country’s incoming first lady, Su Su Lwin. But who is Su Su Lwin? Before her husband, Htin Kyaw, became Myanmar’s president-elect, people knew Su Su Lwin as the chairwoman of the Lower House’s International Relations Committee and head of the education committee in Suu Kyi’s National League for Democracy (NLD). She helped drafted the controversial National Education Bill, which in 2015 resulted in nationwide student protests. But her relationship with Suu Kyi and the NLD goes much deeper than that. Even though the 63-year-old former educator wasn’t a party member when the NLD was founded in the late 1980s, she was no stranger to the party. Her late father U Lwin was a former colonel in the Myanmar Army and a leading figure in the NLD, which he helped found and later served as party treasurer. As U Lwin’s daughter, she witnessed the birth of the NLD. At that time, Su Su Lwin had a post-graduate diploma from Sydney University, a master’s degree in English from the Yangon Institute of Education and had worked for over 10 years at Myanmar’s education research bureau. Suu Kyi took notice of Su Su Lwin’s education background and asked her to teach English to NLD youth members at her home, after all schools and universities across the country were closed following the 1988 pro-democracy uprising. She taught them not only language skills, but also used English novels and short stories to teach them critical thinking. But after less than six months, the class had to stop when Suu Kyi was put under house arrest in July 1989. Suu Kyi’s former personal assistant, Dr. Tin Mar Aung, added “She is always so eager to share what she knows with others”. Su Su Lwin and Dr. Tin Mar Aung worked together at Unicef for about a decade, where they became close friends. She portrayed Su Su Lwin as a caretaker who treated everyone around her like family. They each have an intimate relationship with Suu Kyi and sometimes spent time together at Suu Kyi’s house talking about cooking and books, she said. Before getting involved in politics, Su Su Lwin invested most of her time in the education sector. She worked for Unicef from 1990 to 2005 and later served as a freelance consultant for monastic education programs. She founded a local non-profit organization called Hantha Educators in 2006 that partnered with local influential monks and focused on improving traditional monastic education, early childhood care and development programs. She was concerned about the lack of education opportunities for the poor, especially in Sagaing Division and Arakan State, and the failure of many development programs to reach those most in need. Her organization stressed the importance of child-centered teaching and critical thinking. Su Su Lwin and Htin Kyaw supported Daw Aung San Suu Kyi closely, in their own different ways. They were two of Daw Aung San Suu Kyi’s most trusted confidantes. She married Htin Kyaw in 1973 when she was 21-years-old. According to a 2007 interview with Htin Kyaw in local art magazine “Padauk Pwint Thint,” Su Su Lwin was even more familiar with Htin Kyaw’s father, the prominent Burmese poet Min Thu Wun, because she had translated some of his poems into English. Despite her close relationship with Suu Kyi, she said that she officially became a NLD party member just before the 2012 by-election, when she won a seat along with dozens of fellow party loyalists. She dived into Burmese politics before her husband, and has represented Yangon’s Thone Kwa constituency in Parliament ever since her 2012 victory, winning re-election to the seat last year. While working for Unicef, she was not supposed to show any political affiliation, so she avoided being in the public eye. But as the daughter of U Lwin, she witnessed every change and development of the NLD. It’s remarkable that not only the president-elect, but also the first lady, played historic roles in assisting Daw Aung San Suu Kyi.
Business
UK Visit - UK Export Finance, the British government’s export credit agency, will provide $300 million of insurance and guarantees to help UK firms export to Myanmar. It is hoped that the cover, which was announced during a visit to Yangon by British Transport Minister Lord Tariq Ahmad, will help UK exporters to compete with others looking to exploit growing markets in Myanmar for products like consumer goods and construction materials. UK Export Finance can provide insurance to exporters and guarantees to banks financing exports from the UK. It also makes loans to overseas companies to buy goods from the UK. Lord Ahmad was in Myanmar last week for a visit that included talks with Yangon Mayor Hla Myint about the city’s development, according to a statement. “He met the local and international business community, and development partners engaged in infrastructure development,” it said, adding that the British official also spoke at an event promoting UK company Rolls Royce Plc and at a seminar involving Myanmar’s chamber of commerce. “During the seminar, Lord Ahmad set out the UK’s expertise in the transport infrastructure sector and some of the steps the UK government has made in terms of prioritization and long-term planning.”
Projects Put On Hold - Myanmar’s outgoing government has put 68 controversial projects on hold, the information ministry announced recently, the same day as Lower House MPs voted to approve a motion calling for greater scrutiny of the sale of state properties and other assets during the transition period. The suspended projects include a coal-fired power plant, a hazardous chemical treatment plant and a special economic zone planned for Shan State. Other projects include unfinished buildings and factories contracted to private firms, sites reportedly linked to allegations of land grabbing, and issues over “build-operate-transfer” agreements. The Ministry of Information’s announcement was issued shortly after lawmakers in the Lower House of Parliament on Friday discussed and approved a proposal tabled by the NLD’s Khin San Hlaing urging authorities to review permissions to sell or lease state-owned factories, facilities and projects before a new government takes power on April 1. The proposal also included for discussion the plight of squatters after large-scale evictions were carried out in Yangon last month. Thein Nyunt, a former Lower House lawmaker and chairman of the New National Democracy Party, said there are many projects that government ministries signed off on for the private sector without any transparency. Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, said the administration of President Thein Sein should attend to issues over controversial projects before its term ends. “If not, there will be more problems if the new government pulls out from these controversial projects,” he said. “This is a good time for the current government to say what it’s done in the past, to let all of the people know.”
South Korean Investment Boost - After a delegation from the Daewoo Group of Companies met with Myanmar’s outgoing president recently, there is speculation that the country plans to increase investment in Myanmar. During the meeting between Thein Sein and Daewoo CEO Young-Sang Kim, the topics of discussion included investment in Myanmar’s hotels, energy, mining and steel sectors, as well as efforts to build modern rice mills. Dr. Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry said that Korean businesses are eyeing automobile, oil and gas sectors, as well as other smaller industries. “Korean culture has already been exported to this country, so their brands do not need to be promoted as much,” he said, adding that investors are interested in entering the beauty industry and developing Myanmar’s cosmetic surgery market. Korean garment factories are already operating in the country, so continued engagement with the manufacturing sector will be priority, he added. The Central Bank of Myanmar also approved a license for Korea’s Shinhan Bank in the second round of foreign banks licenses issues this week. Dr. Soe Tun, chairman of the Automobile Dealers Association, said that it seems Japanese and South Korean businesses are now competing in Myanmar’s markets. “Many Japanese business are coming here now, so Korean businesses will follow, no doubt,” he said. “We welcome more Foreign Direct Investment.” According to the figures of the Directorate of Investment and Companies Administration, Korean investment in Myanmar reached US$300 million during the 2014-2015 fiscal year, ranking it the country’s fifth highest investor after China, Singapore, Hong Kong and the UK respectively. Myanmar expects about US$6 billion in foreign investment for the current fiscal year ending on March 31 and has received more than US$5 billion to date.
GE Looking To Expand Too - A company report submitted to the US Embassy in Yangon last month details the expansion of General Electric (GE) into a number of sectors after re-engaging with Myanmar in 2012. GE is working in the health care, aviation leasing and power sectors, said the report, dated Feb. 19, which was submitted under a US government rule that requires any American firm investing more than $500,000 in the country to file submissions. In a recent development, the company said, it will supply gas turbines to a major power generating project. “GE was also recently awarded a contract to supply two state-of-the-art gas turbines to the Myingan Power Project in central Myanmar, which is owned and operated by Singapore-based Sembcorp, operating as an IPP [independent power producer] and selling electricity to MEPE,” the state-run power firm, the filing said. Sembcorp Utilities announced in December that it had signed an agreement with the Burmese government to develop the 225-megawatt plant in Mandalay Division. A 20 percent stake in the project is held by a local firm thought to be owned by a prominent Mandalay businessman with links to the Kokang region bordering China. The World Bank is considering putting $45 million into the project. GE has also sold turbines for a gas-fired power plant in Yangon’s Ahlone Township run by Thailand-based Toyo Thai Power Corp. The US firm will also rehabilitate two gas turbines in Yangon and supply turbines to China Energy Engineering Group, in a World Bank-funded project in Thaton, Mon State. The conglomerate is also providing aircraft to the state-owned Myanmar National Airlines, and equipment to the oil and gas sector. “Overall, GE’s focus has been on supplying safe, efficient and sustainable products and services to meet the substantial infrastructure needs of the Myanmar people,” the report said, noting that the company is taking a careful approach to operating in Myanmar, where concerns over labour and land rights abuses, and over the involvement of armed groups in business, remain. A foundation linked to GE has commissioned a report on the human rights impacts of the extractive industries sector. “GE’s approach to operating in Myanmar has been, and will continue to be, measured, incremental, and informed by due diligence, commensurate with the size, scope and nature of our operations,” it said. “GE’s activities in Myanmar are in compliance with US law and in keeping with the company’s human rights commitments.”
Burmese Uber - Travel company Oway launched “Oway Ride” in January, an application that lets users in Yangon order a car or “limo” with their mobile phone.,” according to the service’s website. The app—which can be downloaded to smartphones on Google’s Play Store or the Apple App Store—has similar functionality to Uber, and the founders hope it can gain the same popularity Uber has found around the world. “One of the many advantages of riding with Oway Ride is that fare is calculated within the app based on the distance and time that rider travels,” the website says. “So, you only have to pay as you go!” According to a report, users are offered the choice of “Standard, Prime or Limo” vehicles. Oway CEO Nay Aung said that the service would initially be available in Yangon only. “With Yangon as the main economic hub city in Myanmar, it is logical to launch here first with a hundreds of cars and then expand the service rapidly into other cities, such as Mandalay and Naypyidaw.”
Top Tax Payers - According to Myanmar’s Internal Revenue Department, KBZ Bank tops the list of corporate tax payers for 2014-15, along with army-owned companies. The department on Friday identified online the names of the country’s top 50 tax-paying companies, saying it would release the rest of a top-1,000 list on its website at a later date. Banks are well-represented on the list, making up five of the top 50 tax-paying companies. KBZ Bank paid 22 billion kyats in taxes for 2014-15, securing the No. 1 spot. This is more than double the figure of the second-place company on the list, Myawaddy Bank, which paid less than 10 billion kyats. The top five was rounded out by Denko Trading Company, Myawaddy Trading Company and Union of Myanmar Economic Holdings Limited (UMEHL) in third, fourth and fifth, respectively. Myawaddy Bank, Myawaddy Trading Company and UMEHL are run by the military.. Founded in the 1990s in Taunggyi, the capital of Shan State, and owned by Aung Ko Win, the KBZ Group of Companies owns one of Myanmar’s largest banks and also has business interests in several other sectors. Crucially, it is not on the US Treasury Department’s blacklist.
YSX Commences Real Trading - Following earlier delays, shares trading at the Yangon Stock Exchange (YSX) debuted one week before a new government comes to power in Myanmar. The YSX officially “launched” in December, but shares since then had only been traded internally through dry-run testing. According to YSX officials, this delay was to ensure smooth operation of the new capital market. Six firms are due to be listed on the YSX initially: 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. However, five of these firms were not yet ready for shares trading when FMI chairman Serge Pun joined Maung Maung Thein, head of the Myanmar Securities and Exchange Commission (SECM), to ring a golden bell signaling the long-awaited start to trading. “Today, only shares for FMI are available,” said Thet Tun Oo, senior executive director of the YSX, adding that shares trading for the other five listed companies would be available at an as yet unknown future date. The floor price for FMI shares began at 26,000 kyats and shares traded at 31,000 kyats by the time trading ended Friday afternoon, with the stock having reached the upper limit of a daily 5,000 kyats floor and ceiling on stock price fluctuation that is in place to prevent volatility on the bourse. Six securities companies—including KBZ Group of Companies, CB Securities, AYA Securities and the Myanmar Securities Exchange Center—have been selected as underwriters and will work with the YSX as liaisons between the listed companies and buyers and sellers. The YSX is Myanmar’s first modern stock exchange. Its backers hope the new capital market will help spur growth in Myanmar’s once-moribund economy.
Infrastructure
Yangon Station Redevelopment - The state agency, Myanma Railways, wants to push ahead with an ambitious plan to redevelop Yangon’s Central Railway Station. An announcement from Myanma Railways says it has received expressions of interest from more than a dozen companies, including two joint ventures with American investors, in a tender to develop the station. The agency’s general manager for Lower Myanmar, Tun Aung Thin, said that the winners of the tender would be selected in May. The project will “launch” in May 2017, the report said. “Fifteen companies including five from Myanmar, two from Singapore, two joint-venture companies with the US, two from Korea and three from China sent an Expression of Interest for the project when Myanma Railways invited the tender for the second time in July last year,” the report said. Myanma Railways wants total investment in the railway station in the city’s downtown, to reach more than $2 billion, presumably coming from the tender winner.
Port Development - Myanmar’s Port Authority has awarded Kaung Myanmar Aung Shipping Co. Ltd. the right to develop a new area for cargo ships to dock on downtown Yangon’s riverside. The company is part of the sprawling KMA Group, which is headed by Burmese tycoon Khin Maung Aye, known to be close to outgoing President Thein Sein. The announcement comes less than two weeks before a new government takes over, and follows a series of other awards made during the long “lame duck” period following USDP’s trouncing in the November elections. The company will build a “modern wharf and supporting facilities” in Seikkan Township, the administrative area that stretches between Strand Road and the Yangon River. “The project which would be implemented with the Build, Operate and Transfer-BOT system is located between the Botahtaung Pagoda and Bo Aung Kyaw jetty.” The firm currently ships out of the Asia World Port Terminal in Ahlone Township. Presidential advisor Khin Maung Aye’s business empire—which reaches into aviation with Golden Myanmar Airways, private health care with Parami General Hospital and finance with CB Bank—has flourished during Thein Sein’s five-year administration. KMA Group’s website also lists interests in mining, real estate, hotels, forestry and agriculture.
Culture and Tourism
Tuborg Lawsuit - The family of the late Burmese composer Myoma Nyein is preparing a lawsuit against Denmark-based Carlsberg Brewery Company for their use of his Burmese song title on their product, Tuborg beer. The Burmese script on the bottles, cans and marketing materials for Tuborg beer reads “Tupo,” a transliteration of the product’s name as well as the title of a famous song written by Myoma Nyein, who came from Mandalay. His relatives claim that the musical reference has been used without their permission and are disappointed that the company has failed to officially apologize and to engage in negotiations after an ultimatum to do so was issued in mid-January this year. Soon after the ultimatum, Carlsberg issued a statement announcing that they would not continue distributing their products using the Burmese phrase, “Tupo,” and would instead use the Danish brand name of Tuborg in Myanmar in the future. Myoma Nyein’s family said that Carlsberg representatives met with them twice after the January ultimatum. During these meetings, the company asked for patience from the family regarding the sale of products that had already made it to market. “They said they needed to sell out all the stock that had already been distributed in the market. The family said that the company has continued using the marketing and advertising materials with the disputed phrase throughout Myanmar. “If Carlsberg truly respected others’ dignity they would have announced officially and publicly in the newspapers the exact time when they would stop production of their products using ‘Tupo.’ The family said the company had requested another meeting with them on January 31, but no one from Carlsberg showed up. “Although we accepted their requests for an extension of ultimatum with respect and understanding, they failed to apologize,” said Zaw Myo Oo, a grandson of the late composer. “We can’t stand it anymore…we are now preparing a lawsuit and will send a legal notice as soon as all documentation is ready.” The family said that the Carlsberg had asked to use their Burmese-scripted Tuborg beer products until the country’s famous April water festival, known as Thingyan—the event celebrated in Myoma Nyein’s ‘Tupo’ song. The family denied the request. “The legal action is not to receive compensation,” Zaw Myo Oo pointed out. “We just want the world to know that Carlsberg, a global company, is taking advantage of the weak rule of law in our country, disrespecting our copyrights and acting very unprofessionally,” he added.
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