Snippets
New Investment Law to be announced in March
Police seize 4.6 methamphetamine tablets from monastery
Kirin to buy 51% of Mandalay Brewery
The price of gold in Myanmar reached a record high of 902,500 kyats per tical—a traditional Burmese measurement of weight equal to 16.33 grams
Initiated by legal firm VDB Loi, the Directorate of Investment and Company Administration (DICA) has implemented a transfer of shares in a company wholly owned by Myanmar citizens and registered as a Myanmar Company to a foreigner, without incorporating a new legal entity.

​Politics
Peace Talk Talks - Aung San Suu Kyi and representatives of the Delegation for Political Negotiation (DPN) will meet in Naypyidaw. The United Nationalities Federal Council (UNFC)—comprised of non-signatories of the nationwide ceasefire agreement (NCA)—said that the agenda will include a discussion of the current political deadlock as well as the nine UNFC demands to be met before the alliance will sign the NCA. The UNFC’s delegation will then meet with the Peace Commission to discuss the details of the meeting. While the UNFC has been trying to meet the Suu Kyi to talk about policies regarding all-inclusivity, active ethnic armed organizations based in the northeast said in a recent statement that Maynmar needed “a new ceasefire agreement to replace the NCA,” which reflects the United Wa State Army (UWSA) chairman Bao Youxiang’s speech at an ethnic summit. The statement said participants agreed that the Wa group would lead the undertaking of a political negotiation team, in order to work with the government without signing the NCA. Two UNFC members groups—the chair of the Kachin Independence Organization/Kachin Independence Army and the Shan State Progressive Party/Shan State Army-North—attended the third ethnic armed group summit host by the UWSA in Panghsang. However, Khu Oo Reh, the secretary of the UNFC, said the statement from the third Panghsang summit does not reflect the UNFC’s views.

On U Ko Ni’s Assassination - Aung San Suu Kyi broke her silence on the assassination of NLD party legal advisor U Ko Ni, calling him a “comrade” of hers and said that losing him was a “deep loss” for the party. The prominent Muslim lawyer U Ko Ni was shot dead in broad daylight by a gunman on Jan. 29 outside Yangon International Airport. Taxi driver U Nay Win was also fatally shot as he tried to apprehend the assassin. U Ko Ni was an expert on Myanmar’s 2008 Constitution, which he referred to as undemocratic, and was very critical of the country’s military. Aung San Suu Kyi made a rare public appearance at the memorial service for U Ko Ni and U Nay Win, organized by the NLD in Yangon. “Losing someone like U Ko Ni is such a deep loss for the NLD,” she said. “The fact that he worked together with the party for many years through his belief is also something that our party is proud of.” “I respect and value him a lot,” she added. She went on to say that U Ko Ni and the taxi driver U Nay Win had the same fundamental attitude and beliefs despite their different backgrounds, referring to the way they refused to accept an injustice. She also urged the packed hall of Yangon’s Royal Rose Restaurant to always remember the contributions the two “martyrs” made to the party and to the country. Such a sense of responsibility by a normal citizen is more valuable than that of a government official, she said. “The attitude that Nay Win had is a good example for our citizens.” she said.

Private Meeting - Aung San Suu Kyi and Snr-Gen Min Aung Hlaing held a private meeting in Naypyitaw. Some senior officials from both sides also attended, but state-run media made no mention of the summit. Snr-Gen Min Aung Hlaing reportedly asked Aung San Suu Kyi and the NLD government to convene a meeting of the National Defense and Security Council (NDSC) as soon as possible. No NDSC meetings have taken place since the NLD government took office one year ago. The 11-member NDSC was created during former President U Thein Sein’s administration and enshrined in the 2008 Constitution. The NDSC is empowered to formulate policy regarding certain military and security issues, including the right to petition the President to declare a nationwide state of emergency. The council members include the president, two vice presidents, speakers of the upper and lower houses, the army’s commander-in-chief, the deputy commander-in-chief, the foreign minister, and the ministers for defense, home affairs, and border affairs. The military controls a 6-5 majority in the council. In January, Aung San Suu Kyi appointed Thaung Tun, a veteran diplomat, as national security advisor. The position is equivalent to a minister-level position. The appointment did not go down well with the top brass of the armed forces, and it was seen as an attempt by the NLD government to circumvent the supreme council. Following the appointment, former information minister Ye Htut wrote an article in Singapore’s Today Online. In the article he said, “Unfortunately, Mr. Thaung Tun’s appointment puts him on a collision course with the all-powerful military.” He continued, “By tradition, internal security has been the sole domain of the Myanmar military, with the commander-in-chief of the Armed Forces serving as the principal advisor to the government on these issues. There are concerns that this could point to a looming clash between military leaders and Ms. Suu Kyi.” If the NDSC were to convene now, the NLD government would control only five of the 11 key positions. These include President Htin Kyaw, Vice President Henry Van Thio, and the house speakers Win Myint and Mahn Win Khaing Than.  Aung San Suu Kyi also gets a seat on the NDSC in her capacity as foreign minister. The former ruling party, the Union Solidarity Development Party (USDP), recently called on the government to convene an NDSC meeting to discuss security and rule-of-law issues that are now facing the country. The USDP has raised questions about accepting Rohingya refugees back into the country, about the formation of the Arakan State Advisory Commission, and about the recent national security advisor appointment. It says that people’s socio-economic security and state security are weakening. The USDP and its allies released a joint statement that said the current government has ignored parliamentary discussions, political parties’ concerns, and good-faith suggestions about the formation of the Kofi Annan-led Arakan State Advisory Commission. “The government failed to consult the NDSC while making an important decision on the formation of the commission,” they said. The recent national security advisor appointment was made by the Union government without consultation as well, they said.

Misinformation Accusations - Government and Tatmadaw-controlled media organizations have misinformed the public about the Myanmar Army’s military offensives, alleged Gen Gun Maw, vice chairman of the Kachin Independence Organization (KIO). Gen Gun Maw said that state-run media have falsely persuaded the public that Myanmar Army attacks against ethnic armed groups are related to those groups not signing the nationwide ceasefire agreement (NCA). “The Myanmar Army says some groups need to sign [the NCA], and some don’t need to,” he said. “But at the same time, they say the reason they are fighting with some groups is because those groups haven’t signed. Actually, all media owned by the government and the Tatmadaw are telling the public that they are in a war against us because we won’t sign the NCA. This is a false narrative; it is the wrong path.” “The Tatmadaw’s offensives against the KIA have been continuous almost every day. They are making ‘total war,’ using all of their manpower and technology except for navy forces,” Gen Gun Maw said during an interview in late January. On Monday, Kachin Independence Army (KIA) sources reported that the Myanmar Army was deploying additional soldiers to Hpakant and Putao townships in northern Kachin State. The Myanmar Army was also blocking roads in Waingmaw Township, preventing food supplies from reaching camps of internally displaced persons, and causing food shortages. The KIA lost four strategic military outposts in Waingmaw Township in December and January, during heavy fighting with the Myanmar Army. Continued offensives by the Myanmar Army will lead to a “loss of trust” and detract from peace negotiations, Gen Gun Maw said. The KIO vice chairman expressed frustration that some groups were invited to engage in political dialogue with the government, but others were not. Gen Gun Maw reiterated that the KIO and Union government must be able to discuss how to build the Union together. He pushed for the 1947 Panglong promises to be discussed at the Union Peace Conference. Otherwise, he said, the term “Panglong” should be deleted from the conference’s title. At the 70th Union Day celebration, Aung San Suu Kyi urged the remaining NCA non-signatories to sign the agreement and join the 21st Century Panglong Peace Conference. But some of the ethnic armed groups have said they will only join the peace conference when they are treated as equals. Gen Gun Maw said the KIO requested “genuine and equal” political dialogue when the NCA was being drafted in 2013-15. “We requested, if we signed the NCA, that we would be included in a joint leadership committee. But our request was not allowed. We requested for all groups to be allowed to sign the NCA, and that was not allowed either,” said Gen Gun Maw. He said the Tatmadaw was reluctant to allow the actively fighting ethnic armed groups to be included in the peace process. The Myanmar Army created different categories for ethnic groups, and it allowed some of the smaller groups—such as the Lahu Democratic Union, the Wa National Organization, and the Arakan National Council, which has no armed forces—to take part in the political dialogue without having signed the NCA. After 17 years of ceasefire, war resumed in June 2011 between the KIA and the Tatmadaw, and more than 100,000 local civilians have been displaced by the renewed conflict. They are in need of food and shelter, particularly during this season of cold weather. Nearly half live in KIA-controlled territory and face regular threats to their lives as they come under intentional or unintentional attacks from the Myanmar Army. Gen Gun Maw urged his people “to understand and to bear the situation” while the KIO works to solve the conflict through political effort.

Sign Of The Times - The Mon State Government will rename a new bridge across the Salween River in Mon State Yamanya Bridge amid “strong opposition” from locals over the government’s decision to name it after Myanmar’s independence hero Bogyoke Aung San, according to the ethnic affairs minister Nai Thet Lwin. “As locals disagree, the name of the bridge was changed to ‘Yamanya’ by the Mon State government,” Union minister for ethnic affairs Nai Thet Lwin said. He added that locals would accept the new name of the bridge linking Moulmein and Chaungzon townships as ‘Yamanya’, which means Mon State in Mon language. Construction of the two-lane, 5,200-foot structure will be completed in March, and has cost an estimated 60 billion kyats (US$44 million). The official opening of the bridge was cancelled because of locals’ opposition regarding the name change. The bridge’s proposed name came to light last week when the Ministry of Construction sent a letter to Aung Naing Oo, deputy speaker of the Mon State parliament, announcing a celebratory opening ceremony for it on Feb. 13. Locals were outraged by the decision, preferring a name celebrating ethnic Mon heritage. “The main disagreement from our ethnic people was, that Gen Aung San has no relation to this bridge, and not even any relation to this area,” deputy speaker of the Mon State parliament Aung Naing Oo said. He accused the NLD of trying to “take political advantage” by invoking Aung San’s name, without considering the views of ethnic minorities. The Mon National Party also issued a statement requesting that the state government designate a name that does not harm ethnic unity, peace and stability in the region, and could contribute to national reconciliation in the country.

Business
FDI On Target - With two months remaining this fiscal year, the volume of foreign direct investment in Myanmar has nearly reached the target of US$6 billion set by the Myanmar Investment Commission. Total foreign investment in Myanmar reached $5.8 billion during the period between April 1, 2016 and Jan. 31, 2017. The commission approved several new investment proposals in January which had previously been held on a waiting list. The current fiscal year ends on March 31, making it likely that the commission will surpass its annual goal of $6 billion in foreign direct investment. “This year, the transport and communications sectors topped the list, more investors went there,” said Than Aung Kyaw, deputy director general of the Directorate of Investment and Company Administration (DICA). According to the DICA figures, investment into the transport and telecom sectors totaled $3 billion during the first 10 months of the 2016-17 fiscal year. The manufacturing sector received another $1 billion, real estate took in $747 million, and the energy sector was targeted with $612 million in foreign investment. Singapore is the top investor in Myanmar development projects, having invested $3.38 billion during the current fiscal year. Vietnam is second with $1.3 billion in investment, and China is third at $462 million. In January, a joint telecom venture involving Vietnam’s Viettel was awarded Myanmar’s fourth telecom license. That project pushed up the investment figures in Myanmar’s communications sector. “Now we need heavy industry to invest here, but so far only small industries are coming. That’s why foreign investment remains low,” said Dr. Maung Maung Lay, vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry. Overall foreign direct investment was expected to decline during the 2016-17 fiscal year, the first year under the NLD government. Investors had questions about stability during the transition from military to civilian rule. The existing lack of infrastructure in Myanmar also posed serious barriers to foreign investors. “We are now worrying about power supplies in the summer. This is something that happens every summer. Why will foreign investors come here when they could go to another country that is able to offer better infrastructure?” said Myat Thin Aung, chairman of Yangon’s Hlaing Tharyar industrial zone.

New Business Data - A wealth of new data about Myanmar’s business sector was made available this week with the publication of the Myanmar Business Survey. The report produced by the Central Statistics Office and the United Nations Development Program sheds light on the characteristics of the private sector in Myanmar and on constraints faced by businesses. Almost 15,000 businesses across the country were surveyed in 2015, making the report the most comprehensive survey of private businesses to date. There is little diversification still in Myanmar’s private sector, the report shows. In the manufacturing sector, the vast majority of businesses produce food products, beverages and tobacco products. In the services arena, more than half of businesses are similarly engaged in food and beverage activities. The economy is dominated by businesses with fewer than 10 workers. The survey also shows that food and beverage services sector has the lowest salaries and the highest amount of hours worked. Jobs in professional, scientific and technical activities earn the highest salaries. Labour productivity remains low in Myanmar compared to other Asian countries, the survey says, with the highest per worker value found in the trade sector, followed by manufacturing. The report said that it was hoped that the data would enhance knowledge of Myanmar’s private business sector and its contribution to economic growth and development. The report could also help with the design of evidence-based policies for improved private sector development, it said.

Thilawa Phase Two - Yangon’s Thilawa Special Economic Zone (SEZ) management committee members said they expect to complete the 250-acre second phase of the project in mid-2018, during a commencement ceremony at the SEZ’s new Zone B recently. The project is a joint venture between Myanmar and Japan; construction work on it began in late 2013. Both governments hold a 10 percent share and nine domestic firms integrated into Myanmar Thilawa SEZ Holdings (MTSH) control 41 percent, and a Japanese private-sector consortium owns 39 percent. Union Minister Than Myint of the Ministry of Commerce said, “Our country is trying to develop Thilawa, Kyaukphyu and Dawei SEZ projects. Among them, Thilawa SEZ project is one of the most successful zones.” The committee designated two phases for the implementation of the Thilawa SEZ and gave an incentive to foreign investors of seven years free from tax for those who would export products abroad. A tax break of five years was given to those who would export products domestically. In 2014, 78 firms from 15 countries came to Myanmar to set up factories in Thilawa. Currently 24 factories, including domestically run ones, are operating there and some foreign companies regularly export products abroad. Total investment in the Thilawa SEZ has already reached more than US$1 billion, said Set Aung, Chairman of Thilawa SEZ’s management committee. Factories producing garments, construction sector-related materials, electronic products, steel materials and cement, motor vehicle parts, pharmaceuticals and medical equipment are located in the SEZ’s Zone A. The investors are from Japan, Singapore, China, South Korea, Thailand, Taiwan, Sweden and the US. Set Aung said that within 18 months, the construction of factories had been 96 percent completed, and that the government had provided 85 percent of the jobs for Thilawa residents in Zone A, but he did not elaborate a total number of labourers. He estimated that Zone B implementation could take at least 18 months as well. “Many international investors already contacted us about making investments here. But the investors could build factories after Zone B’s construction is complete,” said Set Aung, who said he believes that Zone B could offer more than 400,000 jobs to locals. For the second phase of Zone B, the authorities relocated three villages. The government and investors compensated villagers with a total of 27 million kyats for housing and land and 25 million kyats for farmland. Some residents opted for new homes rather than cash. As the farmers gave up their land to investors, some were left without farmland on which to cultivate vegetables and headed to neighbouring townships in search of new jobs. Set Aung highlighted how delivering training to the local community to build their capacity and then provide them with jobs in the SEZ was a “high-priority.” “I don’t really want to be in a situation where we have the SEZs around the corner, but the local community members are without jobs,” he said.

Infrastructure, Culture and Tourism
Mrauk-U Airport Needs More Funds - The Arakan State government has invited private developers to speed up the construction of a new airport at the ancient city of Mrauk-U in northern Arakan State, according to a regional minister. A local construction company, Su Htoo San, began to lay foundations on the project site in 2015. However, the state government planned to spend only 2 billion kyats per year for the project, at which rate the airport would have taken 13 years to complete. In 2016, the Union government cut funding for the Mrauk-U airport to spend money elsewhere and the Arakan State government was unable to step in—construction was suspended. The state government hopes that private investment will speed up construction and plans to offer a deal to private investors under a build-operate-transfer agreement, according to Aung Kyaw Zan, the regional transport minister. “We are now calling on international and local companies to invest and to continue the project,” the regional minister said. The Arakan State government estimated the finished project would cost 26 billion kyats ($18.9 million), according to U Aung Kyaw Zan. The airport compound is located to the south of Mrauk-U, outside of protected cultural heritage zones but close to the famous Koe Thaung temple with its 90,000 Buddha images. With support from private investors, the government hopes to finish airport construction in three to five years. However, not all of the project plans and proposals have been received yet, and the government will need time to complete negotiations with successful bidders. The Mrauk-U airport will make it easier for international tourists to visit the ancient city and encourage private sector development. Local residents are in favour of the airport because they want more tourists to visit with opportunities to earn money for local small businesses, said Khin Than, the founder of Mrauk-U Heritage Trust. She says that many foreign tourists travel to Ngapali and Bagan, but they skip Mrauk-U because it is difficult to travel there. Currently, tourists can only travel to Mrauk-U via Sittwe, continuing to Mrauk-U by bus or boat. “If the airfield is constructed in Mrauk-U, then tourists will be able to reach Mrauk-U in an hour from Yangon.

Expansion for Kawthaung Airport? - The Ministry of Hotels and Tourism has announced that it is eager to expand Kawthaung Airport, in the far south of Maynmar, to be the nation’s next international airport. Minister Ohn Maung said his office and the Tenasserim Division government have discussed the proposed expansion of Kawthaung domestic airport. The minister pointed out that the Mergui Archipelago—the cluster of islands surrounding Myeik—has huge potential to attract tourists if the transportation infrastructure can be built up. “If we want to develop this region, we need to expand Kawthaung Airport so that it can receive direct international flights. We have discussed this idea with the divisional government and the Ministry of Planning too,” Minister Ohn Maung said in the report. However, U Ye Htut Aung, the deputy director general for Myanmar’s civil aviation department, said that his department has not been involved in discussions about expanding Kawthaung Airport. The civil aviation department would need to give its approval before the government could proceed. “We still have no plan to turn Kawthaung into an international airport,” said Ye Htut Aung. Currently, there are only three airports in Myanmar that are permitted to receive international flights: Rangoon, Mandalay, and Naypyidaw. A fourth, Hanthawaddy Airport in Bago Division, is under construction and expected to start operations in 2022. Under the previous government, the civil aviation department planned to expand more than 30 domestic airports, but that plan was never realized. The Mergui Archipelago consists of more than 800 islands spread over 10,000 square miles in the Andaman Sea, off the coast of Myanmar’s southern Tenasserim Division. Kawthaung district is situated next to Thailand’s Ranong Province. The Ministry of Hotels and Tourism plans to promote this region as a major tourist destination in the future. 

Snippets
KBZ and Visa to issue Kyat denominated credit cards
The Myanmar Gold Entrepreneurs Association plans to open a gold exchange market in Yangon this year.
First Private Bank trades on YSX, opening at MMK 39,000
Thailand’s deputy Prime Minister Somkid to lead business delegation in February
CB Bank to double size of ATM network in 2017
NLD legal advisor U Ko Ni assassinated in parking area at Yangon International Airport

​Politics
Precursor to Peace Talks - Aung San Suu Kyi and signatories of the Nationwide Ceasefire Agreement (NCA) met in Naypyidaw to discuss the second round of the Union Peace Conference, also known as the 21st Century Panglong peace conference. Discussions focused on strengthening the cooperation between the two sides to achieve better results at the conference, to be held at the end of February. “The meeting was mainly about how to cooperate for the success of the peace process and to ensure that the second round of 21st Panglong Conference yields the political results we desire,” Col Khun Okkar, of the Pa-O National Liberation Organization (PNLO), said after the meeting. The meetings were held following a request from NCA signatories to meet Aung San Suu Kyi and Myanmar Army Chief Snr-Gen Min Aung Hlaing. Those who signed the NCA in Oct. 2015 include the All Burma Students’ Democratic Front, Karen National Union (KNU), Chin National Front, PNLO, Democratic Karen Benevolent Army, KNU/KNLA Peace Council, the Restoration Council of Shan State/Shan State Army-South, and the Arakan Liberation Party. The delegation was led by Pado Saw Mutu Say Poe of the KNU. The PPST said they came to discuss cooperation, as Aung San Suu Kyi had said during her peace talks with youth in Naypyidaw on Jan. 1 that 2017 would be a “peace year.”

New National Security Advisor - Thaung Tun has been appointed as national security adviser by the National League for Democracy (NLD) government. The new position was created as the government faces ongoing clashes with ethnic armed groups in the country’s north and east while attacks by Muslim militants with international connections sparked a large security operation in western Myanmar’s Arakan State. The new security adviser previously served as Myanmar’s ambassador to the Philippines, Belgium, the Netherlands and the EU as well as director-general for political affairs within the Ministry of Foreign Affairs in the early 2000s. He  will advise the president and the government on internal and external threats “by assessing situations from a strategic point of view,” and he will hold the same status as a Union minister, according to the President’s Office. He is the second person from the former military regime appointed to a high position in the civilian government. Last year Kyaw Tint Swe—a career diplomat and defender of Myanmar’s dire human rights record under military rule—was chosen to head the powerful new Ministry of the State Counselor’s Office under Aung San Suu Kyi.

U Ko Ni Assassination – The government said it is investigating the assassination of prominent Muslim lawyer and NLD legal advisor U Ko Ni. “According to the initial findings, the assassination is likely to destabilize the country. The government is carrying out the investigation to find the truth and necessary security measures are also tightening,” a statement from the President’s Office read. U Ko Ni was shot dead in the head at close range outside Yangon International Airport on Sunday afternoon by a gunman, identified as 53-year-old Kyi Lin, according to a police report. The assailant also shot a taxi driver who was attempting to catch him. It was reported that the detained gunman Kyi Lin was in prison in the 2000s for smuggling ancient Buddha stupas and released in a presidential amnesty in 2014. “We feel deeply sorry for the assassinated U Ko Ni and also U Nay Win who was killed while attempting to catch the shooter” the statement read. The motive remains unknown.

Business
Economic Growth Down - Myanmar is expected to see economic growth of 6.9 percent in 2017, according to the World Bank’s Global Economic Prospects report released earlier this month, down from an earlier estimate. The report said that real-term growth in 2016 was estimated to be 6.5 percent, down 1.3 percentage points from an earlier estimate. Real-term growth in Myanmar declined for three straight years and fell below 7 percent in 2016 for the first time in five years, according to the World Bank. It attributed the falling growth rate to a slow real estate market, slower export expansion and reduced foreign investment. A delay in the start of operations of the reconstituted Myanmar Investment Commission after the new government came to power also contributed to a backlog in foreign investor applications last year.

FDI Target Unlikely To Be Met - Myanmar’s light manufacturing sector will lead the way in foreign direct investment in 2017 although investor concerns over the country’s infrastructure persist. Foreign investors visiting in the last year had questions over energy supply, transport and land issues and heavy industry manufacturers are hesitant to invest according to Dr. Maung Maung Lay, vice chairman of Union of Myanmar Federation of Chambers and Commerce Industry. Many international delegations discussed future investments but did not promise to invest due to weak infrastructure he said. “Power supply was a major issue for investors,” he added, “they told us they couldn’t produce products by candle light so they couldn’t promise investment.” Light manufacturing—particularly cut make pack (CMP) garment factories—requires only cheap labor and factories are available in industrial zones. Investors from the US and EU are also keen to take advantage of the Generalized System of Preferences (GSP) tariff system. Myanmar wants to reach US$6 billion of FDI in the fiscal year ending Mar. 31, 2017 despite FDI reaching just $3.65 billion through Dec.16, according to government body the Myanmar Investment Commission (MIC). Of the total FDI, the transportation and communication sector accounted for $1.9 billion, manufacturing $1 billion, and property $728 million. Local business leaders, however, were less confident that the $6 billion could be reached in the next three months. Dr. Soe Tun, vice chairman of the Myanmar Rice Federation, said, “The target cannot be met as I’ve seen no significant change in the market.” He pointed out that rules and regulations of the Myanmar Investment Law will not be released until April and investors are likely to defer until that time.

Oil Imports Growing - Myanmar’s oil imports are expanding to fuel a fast-growing economy and rebuild rotting infrastructure, creating a small but profitable route for ships from the regional hub of Singapore. Servicing growth that could top 8 percent this year is a fleet of small tankers ferrying gas oil and diesel from Singapore to Myanmar as the country’s sole port, in Yangon, can only handle small vessels. Shipping data shows that around 20 small tankers with a combined capacity of around 220,000 deadweight tons (DWT) are currently shipping refined products into Myanmar, virtually all from Singapore. That is about twice as many vessels as were on that route around a year ago, said one shipper. “Everyone is quite bullish about the Myanmar market,” said Lim Han, executive director and head of chartering at Singapore’s Hong Lam Marine. The firm, which started oil shipments to Myanmar from Singapore six months ago, is one of a handful of small, local shippers now plying the route. Yangon’s port is being expanded to handle ships up to a size of 50,000 DWT, compared with the current fleet of ships sized at 5,000-18,000 DWT. That would put Yangon ahead of ports such as Bangkok and Jakarta’s Tanjong Priok and on a par with Ho Chi Minh City in terms of ability to handle vessels.
Legal Action - Singapore Myanmar Investco (SMI), a company with retail, auto services, and logistics operations in Myanmar, said that it has been told of an intention to make a criminal complaint about the firm to the state courts of Singapore. The complaint is reportedly related to SMI’s divesting 97 percent of its stake in subsidiary telecoms tower firm the Myanmar Infrastructure Group, in a sale to Hong Kong-based Shining Star International Holdings. In a statement, SMI said that the complaint by German lawyers acting for Golden Infrastructure Group (GIG) was in regard to the alleged disregard of the rights of GIG under a joint venture agreement, and “failure to make timely disclosure” of allegations made by GIG. Singapore Myanmar Investco said it “intends to vigorously refute the complaint if GIG were to proceed with lodging the complaint.” Among other businesses, SMI operates a large amount of retail space at the new international terminal of Yangon International Airport.

Rice Exports Down - The rice export volume has declined this fiscal year due to flooding and a slowdown in demand from China, rice traders said. The rice export volume for the 2016-17 fiscal year is expected to reach 1 million tons, less than the 2015-16 export volume of 1.3 million tons. From April-Dec. 2016, 800,000 tons of rice were exported, primarily to China, the EU and West African countries, according to the federation. “We are now talking with the Sri Lankan government to send rice there, as they are facing a shortage due to weather problems,” said a trader. In Myanmar, “monsoon season paddies” are mainly planted between June and August, and harvested beginning in October. “Dry season paddies”—cultivated in smaller quantities due to the lack of irrigation in many areas—are planted largely between November and December and harvested beginning in April. The average price fetched from trading to China is US$376 per ton, while overseas it is about $300 per ton, according to a trader. Flooding last year—caused by torrential rain that peaked in late July and early August—inundated more than 1.3 million acres of rice paddies, out of 20 million acres being cultivated across the country.

Infrastructure
New Power Plant - Singapore-based Sembcorp Industries announced a new agreement this week with the Ministry of Electricity and Energy for its 225MW gas-fired power plant in Mandalay, the Straits Times reported. Under the agreement, Sembcorp Myingyan Power Company will build and operate the power plant for 22 years. The plant will then be transferred to the government of Myanmar. The US$300 million project is set to become one of Myanmar’s largest gas-fired power plants.

Trouble For Kyaukphyu - About 300 people from 25 villages in southern Arakan State’s Kyaukphyu Township have called for a suspension of the controversial Kyaukphyu Special Economic Zone (SEZ) until the government could unveil a compensation scheme for land grabbing, a resettlement plan and SEZ by-laws. The meeting was organized by the Kyaukphyu Rural Development Association’s (KRDA) coordinator Tun Kyi. KRDA released a statement expressing local concerns. Concerns included compensation for land confiscation; environmental impact; effects on farmers and agriculture; job uncertainty; lack of information regarding a relocation plan; social impacts on woman; unclear by-laws; and a general sense that the project would not benefit the Arakanese people. This demand marks ongoing protests regarding the Kyaukphyu SEZ. “Even we [activists] have no idea what is happening with the SEZ now,” said Tun Kyi. The new government said it would begin the project in July but has not yet explained how farmers will be compensated, Tun Kyi added. The previous government and local investors had allotted 3.8 million kyats per acre in Thaing Chaung village to build a water reservoir. Locals stated that the current market value is 30 million kyats per acre. Farmers have repeatedly questioned the government’s transparency, saying that they are trying to avoid similar conflicts in the future. Further negotiations between investors and the newly-elected NLD government will continue.

Culture and Tourism
No More Temple Climbing? - A possible ban on temple climbing in Myanmar’s ancient capital Bagan is rumored as Aung San Suu Kyi denounced the controversial activity during her visit this week, suggesting that alternative viewing platforms be built. She called for the ban to protect cultural heritage in Bagan on a visit to the area. “Viewing sunset and sunrise from the temples can cause damage to the cultural heritage,” the State Counselor commented on Tuesday while visiting the earthquake-affected ancient temples in Bagan. “[It] is not suitable in the long run and should be banned in the future,” she added. Bagan houses stupas, temples and other Buddhist religious buildings constructed from the 9th to 11th centuries—a period in which some 50 Buddhist kings ruled the Bagan Dynasty. There are more than 3,000 stupas and temples in the area. Of these, 120 temples have stucco paintings and 460 have mural paintings that are found to be in need of preservation. Temple climbing is regularly cited as a “must-do” for tourists and local visitors to be able to enjoy the ancient capital’s famed sunrises and sunsets. An attempt by the Ministry of Religious Affairs and Culture last year to prohibit visitors from climbing the steps of stupas and temples in Bagan was met with criticism by the tourism industry, after which temple climbing was allowed at five famous temples— Pyathatgyi, Shwesandaw, South Guni, North Guni and Thitsar Wadi. Myanmar plans to nominate the Bagan Archaeological Zone for UNESCO’s list of culturally significant sites this year for reconsideration in 2018. Bagan’s first attempt came in 1996, but it was rejected due to poor conservation management plans and legal framework. 

Snippets
Unrest continues in Rakhine amidst international condemnation
Malaysia voices strong criticism over Rohingya issue
Inle Lake Zone to start charging entry fee in US$
Ministry of Commerce plans to restrict import of luxury goods
Govt to promote tourism to Myeik Archipelago

​Politics
No Peace Anytime Soon - The struggling Shan State peace process has been thrown into a state of upheaval as the Shan State parliament voted to label three ethnic armed groups as “terrorist organizations,” according to the Kachin Independence Army (KIA). “The peace process and the political situation have been turned backwards here,” they said. “This vote does not highlight a positive way to peace. It emphasizes the negatives, and they shouldn’t do this. The Shan State parliament made their own decision, and they did not listen to voices from the people,” they added. The three ethnic armed groups—the KIA, the Myanmar National Democratic Alliance Army (MNDAA), and the Ta’ang National Liberation Army (TNLA)—have carried out a military offensive against the Myanmar Army in northern Shan State since Nov. 20. A fourth ethnic armed group, the Arakan Army (AA), has also fought in the conflict, but the Myanmar Army refuses to recognize the AA, arguing that the group does not represent the Arakanese people. “It is very clear who has influence in this parliament, which is supposed to represent the Shan ethnic people.” said a TNLA spokesman. The Burmese Army currently controls 34 seats in the Shan State parliament, and the Union Solidarity and Development Party (USDP) controls 33. Together, the two groups have majority control over the parliament. “This only proves how the Myanmar Army does not have genuine intentions for the peace process. It proves they don’t want to have peace in this country. They only want us to follow their own agenda. Now more fighting will come soon” he added.

Those Dam Projects - The Burma Rivers Network (BRN) has called for a halt to hydropower dam projects, special economic zones and natural resource extraction in ethnic areas where conflicts are raging, until the country has reached a federal peace agreement. BRN released a documentary video, “Voices of the Dammed,” recently, compiling the devastating impacts of dam projects along Myanmar’s biggest rivers: the Salween, Irrawaddy, Chindwin, Shweli and the Paung Laung. Findings from BRN’s two-year investigation indicate that both completed and planned dam projects have diminished local people’s livelihoods and security as well as destroyed thousands of homes, historic cultural sites and ecosystems. BRN Representatives will share their concerns with the relevant authorities in Myanmar’s capital of Naypyidaw, said Mi Ah Chai, the coordinator of BRN. In northern Shan State, the local Ta’ang, also known as Palaung, communities near Shweli River’s No.1 dam have reported facing grave human rights violations related to the presence of the Chinese-owned dam, which has a 600-megawatt capacity and was completed in 2008. This included allegations of forced labor by the Burmese military, forced marriages of local women to soldiers, and confiscation of farmland. Locals also claim that the Burmese Army’s Infantry Division 144 continues to launch daily artillery attacks against the ethnic armed groups in the area. “If the French-funded Shweli No. 3 dam goes ahead, this will cause more conflict, human rights abuses and displacement and will threaten the peace process,” said a spokesman. The proposed dam would be even bigger, with a 1,050-megawatt capacity. In Sagaing Division, locals from the area surrounding the 1,200-megawatt Tamanthi dam project on the Chindwin River reportedly received just 5,000 kyats—US$3.77—as compensation after they were forced to relocate in 2007. The India-funded Tamanthi dam project was cancelled under the previous government administration headed by ex-President Thein Sein, but activists fear that the project may be revived after State Counselor Daw Aung San Suu Kyi’s recent visit to India, where bilateral agreements related to power infrastructure and production were signed on Oct. 19. According to BRN, if the suspended Tamanthi project were to be revived, it would contribute to further relocations, as villages housing over 45,000 people would likely be flooded by the reservoir. The BRN urged the government to do a proper review of a number of projects, including the suspended Tamanthi dam on the Chindwin River and the Irrawaddy Myitsone dams on the confluence of May Kha and Malika tributaries. They also recommended a review of six mega dams slated for construction on the Salween River in Shan, Karenni, Karen and Mon states, and those planned on the Shweli and Paung Laung rivers. The organization is also pushing for a review of completed dam projects and a demand that the electricity generated be shared with the local residents.

Wall Them Out - A Union Solidarity and Development Party (USDP) proposal to build a solid wall along Myanmar’s western border was put forward in the Arakan State regional legislature recently. Zaw Zaw Myint, a USDP lawmaker, submitted the proposal and a debate on the issue was held. He recommended that a brick wall 30-40 feet high and five to 10 feet thick be built to separate Myanmar from Bangladesh. Border walls are being suggested as security measures in Western democracies, Zaw Zaw Myint pointed out, as a way to prevent migrants from entering countries illegally. Three Arakan State legislators came out in support of the proposal. On behalf of the Arakan State cabinet, security and border affairs minister Col. Htein Lin suggested that the House Speaker record the proposal and explain how they are protecting the Arakan State border in Maungdaw Township; the area was the site of militant attacks on border police outposts in October, and subsequent Burmese Army clearance operations. Instead of specifying in the proposal that brick be used to construct the wall, Col. Htein Lin recommended that the wording be changed to express a general desire for a better security system. He pointed out that the Arakan State government is currently installing a barbed wire fence in Maungdaw, an initiative introduced under the country’s previous USDP-led government. Wire fencing has been completed on a stretch of around 127 miles. Col. Htein Lin added that border patrol routes would be linked with the main road for 200 miles, and 52 checkpoints are already set up. “I am not objecting to the proposal because our work is in progress. So I would like to keep it as a record,” said Col. Htein Lin.

Business
Construction Industry Blues - Yangon’s construction market faced its hardest year in 2016, as a result of changing government policies during a market cooldown. During 2005 to 2014, high-end condominiums and low-cost apartments sprung up around Yangon and as the market neared its peak in 2013, real estate prices skyrocketed in six downtown commercial areas. In the downtown area, the maximum land price reached US$1,500-2,000 per square foot. Outside downtown Yangon, land prices also shot up but the construction market began to cool off in late 2014, as people’s spending power declined. In the election year, investors took a wait-and-see attitude toward real estate as they awaited the general election results. Consequently, apartment sales across Yangon declined 15 to 20 percent in 2015. In 2016, that trend has worsened, as prices have dropped 25 to 30 percent on the year and new apartment sales have nearly halted. Condominium prices have fallen from 200,000 kyats to 150,000 kyats per square foot in the major areas. Once the new government assumed power, the real estate market hit another speed bump. In May, the Yangon divisional government implemented new policies for reviewing construction sites, and the government suspended more than 200 high-rise construction projects because they did not meet urban planning standards. Over the next two months, government inspections brought the construction market to a standstill. Once inspections were completed in July, the 200-plus projects were permitted to continue. But the divisional government ordered that the intended heights of 12 buildings be reduced, that parking facilities be upgraded, and that safety standards be improved.

Indian Fibre Optic -  Indian’s largest mobile phone operator Bharti Airtel will invest in an international fibre optic cable link between India and Myanmar in order to tap into Myanmar’s rising demand for high-speed data services for the business and consumer markets. The company is investing an undisclosed sum in a 6,500-km route terrestrial fibre-optic cable link to boost internet speeds in Myanmar. The link will be connected to Airtel’s landing stations in Chennai and Mumbai.

Culture and Tourism
Market Stalls Relocated - During its current term, the Yangon divisional government has pledged to upgrade all the markets in the commercial capital and establish centres for hawkers currently working along roadsides. “We’ll upgrade 176 markets within our term because many markets are in Yangon’s downtown area. We need car parking spaces as well as hawker centres for convenience,” said Yangon Division chief minister Phyo Min Thein. In Yangon’s, markets are operated under the supervision of the city’s municipal authority, YCDC (Yangon City Development Committee). The committee recently relocated more than 1,600 street vendors to a newly designated Strand Road night market in the third week of November. The relocation of street vendors was carried out to regulate traffic woes on 11 major downtown streets: Anawrahta, Bogyoke, Mahabandoola, Pansodan, Merchant, Shwedagon Pagoda, Sule Pagoda, Latha, Lanmadaw, Phone Gyi and Strand roads.
Personal Contributions - Individual donors and private organizations can directly contribute to the renovation of more than 200 ancient Bagan temples that suffered minor damage in an August earthquake. With the help of UNESCO, the Ministry of Religious Affairs and Culture will continue to take responsibility for restoring the 36 hardest-hit temples in the ancient city. Re-construction will commence in 2017. After the 6.8-magnitude earthquake hit central Myanmar, 389 temples in Bagan required repairs. In total, 790 temples were damaged throughout the country, including in the townships of Kyaukpadaung, Chauk, Yaynanchaung and Magwe Division in central Myanmar, and in Mrauk-U in Arakan State, said Aung Ko, the minister of Religious Affairs and Culture at the Lower House parliamentary session on Monday. Aung Ko said that the government has been paying close attention to the renovation of the ancient temples. “We will renovate the most-hit temples with the help of UNESCO starting in January 2017, but the individual donors and the private organizations will be given a chance to restore some of the temples which suffered minor damage” he told the lawmakers. The task could take at least five years to complete. Bagan has been one of Myanmar’s primary tourist attractions for years, but it is not yet protected under UNESCO’s World Heritage site list, due to unsatisfactory renovation schemes carried out under the country’s previous military regime. The religious affairs and culture ministry has so far received funds totalling more than 4.6 billion kyats to restore damaged temples. China also pledged US$1 million to the cause.

Where’s Blair’s House? - In the 1990s, Nyo Ko Naing noticed that the handful of foreign tourists who made it to his remote hometown were carrying their own maps and looked like they were searching for something. Someone, it turns out, by the name of George Orwell. Katha was Eric Blair’s last posting in the Imperial Police before he sailed back to England in 1927, adopted the nom de plume Orwell and launched a writing career that would produce powerful novels and commentary. Seven years after leaving the sleepy town on the Irrawaddy River, he immortalized it as the setting of his first novel, the vehemently anti-colonial “Burmese Days,” though he called it not Katha but “Kyauktada.” The British Club, where much of the novel’s scheming, fighting, drinking and sweating takes place, still stands, as do other sites mentioned including a tennis court, a pagoda and a prison. A house believed to have been Orwell’s home in Katha remains in use. Nyo Ko Naing didn’t know much about “Burmese Days” at first, but soon grasped how important it was to the future of the town. He has since become the town’s preservationist, in-house historian, amateur Orwell scholar and literary tour guide, keen to market Katha as a tourist destination. He’s helping to renovate the 19th-century house of the former British commissioner for use as a museum that is expected to open next year.
A 12-hour train ride from Mandalay, Katha is a small, idyllic town in the Sagaing region. The atmosphere is as tranquil as the flowing Irrawaddy. As the sun sets, visitors and families stroll along the promenade as mountains darken in the distance. In the past five years, Myanmar has been modernizing, and Katha is no exception. There are shiny new bank branches and new hotels. Mobile phone shops abound. Many colonial buildings have been left alone, giving the place a timeless feel, though many structures are dilapidated. Both the tennis court and the prison are still in use. The British Club is now a local business cooperative. The Hotel Katha, which opened last year, has seized on the Orwell connection. Built to resemble a red-brick colonial home, it offers brochures at the front desk with maps guiding visitors to key sites from the novel. Guests can read copies of “Burmese Days” and Orwell’s essays in the lobby or dine at the Kyauktada Cafe & Restaurant. Meeting rooms are named “Flory,” ‘‘Elizabeth,” and “Macgregor,” after three of the book’s characters.
Nyo Ko Naing’s most impressive Orwellian work may be tracking down the author’s house, which he had previously confused with the commissioner’s. He used a colonial-era map to pinpoint the residence as a two-story teak home on the main road, not far from the Katha Hotel. In a twist that might amuse Orwell, it is still occupied by a police officer.

Waterfront Park - In an attempt to promote tourism, the Yangon Division government will open a public downtown waterfront area next year, creating another tourist destination in Myanmar’s business hub. Situated on the bank of Hlaing River, also known as the Yangon River, the former capital of Burma boasts a long riverfront, but public access to the area has been very limited due to the presence of walled warehouses, jetties and ports scattered along the banks. During a recent forum organized by the Ministry of Hotels and Tourism in Yangon, the city’s Karen Ethnic Affairs Minister Naw Pan Thinzar Myo revealed that walled waterfront areas along Strand Road from the downtown streets of Pansodan to Sule Pagoda will be open for public use as a pilot project. The area is within close range of the downtown heritage zone where century-old British colonial buildings line the streets. “The wall along the Strand Road will be demolished to allow people to enjoy the beauty of the waterfront,” said the minister. She added that around seven large old warehouses in the area will be renovated and converted into art spaces for public recreation. Yangon Heritage Trust (YHT), an NGO advocating for the protection and restoration of public and historic spaces in Yangon, has been lobbying for the re-development of the waterfront for public use. In their 150-page Yangon Heritage Strategy report published this year, YHT provides a detailed plan for the Yangon riverfront, stressing that all new development along the water be low-rise and that old warehouses be adapted into retail and cultural centres. Moe Moe Lwin of the YHT said she welcomes the government’s plan to redevelop the waterfront as it has been the one of the focuses of the trust’s advocacy. 

Snippets
ASSK pays 5 day visit to Japan but cancels Indonesia visit
SMU in conjunction with Deloitte produce report on KBZ Group
Burmese army fighting in both Rakhine and Shan states
Taiwan’s E-Sun bank opens branch
Serge Pun to buy 50th Street pub?

​Comment
The Myanmar government has faced many ups and downs in recent months and is now at a low. There is growing criticism toward Aung San Suu Kyi’s leadership, her cabinet and her administration’s management of the conflicts in northern Myanmar and in Arakan State.
The renewed conflict in the North needs immediate attention as ethnic leaders want to discuss political issues, but have been confronted with several military offensives in recent months, particularly after the Panglong peace conference at the end of August.
The recent offensive by the “Northern Alliance” in northeastern Shan State—including ethnic armed groups belonging to the Kachin, Kokang, Palaung and Arakanese—is most troubling and could derail ongoing peace meetings being initiated by the government. The strategy is to build up pressure on the government and to raise the issue as one that extends beyond Myanmar, as the target is not just security forces but cross-border trade with China. Three of the armed groups—the Kokang, Palaung and Arakanese—were not invited to the last peace conference.
Last month, Burmese Army Head, Snr-Gen Min Aung Hlaing was in Beijing, where he met President Xi Jinping and agreed to military-to-military engagement and increased cooperation between the two armed forces. The two also discussed the non-state armed groups based in Myanmar’s north. Subsequently, ethnic armed organizations launched the current offensive. A number of ethnic armed forces in the North are under the influence of China and it will undoubtedly play a key role in restoring stability.
China’s strategic interest in Myanmar, as well as its recent decline of influence in the country, is well known. China worries that several of its projects have faced strong opposition, including the controversial Myitsone dam in northern Myanmar, which has been suspended. Any decision on the multibillion dollar hydropower project is on hold.
Meanwhile, several governments and the UN remain focused on issues surrounding the Rohingya Muslims in Arakan State and, with recent militant attacks in Northern Arakan suggesting growing radicalization among the Rohingya population, they have asked the Burmese government to allow an independent investigation into recent reported abuses by security forces in the region. So far there has been limited access to the conflict zone. The government denied the alleged human rights abuses and sceptics insist that the serious allegations require strong verification.
Some fear that the situation in Arakan State will soon be out of control and the army’s presence is needed. Arakanese politicians have a strained relationship with the current government and Aung San Suu Kyi, but are much closer to the army and are in favour of taking strong action against Rohingya Muslims. The official line of both the Burmese Army chief and Aung San Suu Kyi is that the Rohingya Muslims are not one of Myanmar’s ethnic minorities. Much of the country’s Buddhist population feel the same way. The more the issue of the Rohingya is raised to the level of international intervention, the more that the local Arakanese and several nationalist groups will feel a need to call the Burmese Army to step in to the situation directly.
The relationship between Aung San Suu Kyi and Snr-Gen Min Aung Hlaing is not a healthy one, either. According to sources close to the leaders, the trust and confidence between them is weak, and they are said to particularly disagree on how to approach both ethnic conflict in the North and the conflict in Arakan State. Smiles for the media have been soothing to watch, but in reality there is rising tension between the two figures.
One theory is that Aung San Suu Kyi’s leadership is effectively undermined and that she is losing her popularity particularly among some ethnic groups and Burmese intellectuals. Some critics feel that the government is losing control of the country. The other harsh reality is that Aung San Suu Kyi and her cabinet have limited capacity with which to manage the country and to win the trust and confidence of the ethnic groups and the general population. Rising commodity prices and slow economic growth are also of major concern among urban-based residents.
A recent spate of minor bombings in the former capital, Yangon, is a growing sign of instability and has invoked fear and insecurity, as well. There were no casualties in the blasts, but questions have been raised about whether the acts were politically motivated. The last one occurred at the immigration department of the Yangon divisional government office.
Myanmar once again is heading in the wrong direction.

Politics
Financial Reform A Priority - President Htin Kyaw has addressed challenges to Myanmar’s financial sector and announced preparations for reform at a financial commission meeting in Naypyidaw. When the NLD government assumed power in April, budget estimates for the 2016-2017 financial year and the Union Budget Law were amended and Union ministries were reformed, causing financial difficulties. “The nation is preparing to accelerate reforms in the monetary sector,” the President said. President Htin Kyaw addressed the need to revise budget estimates submitted by states and regions for the 2016-2017 fiscal year. Government expenditures have changed and the President urged ministers to postpone spending their budgets, as it would affect other areas of the country. The President added that the government is seeking additional grants and subsidies for the country’s small and medium industries and called for frugal and systematic spending during a time of slow economic growth. Dr. Maung Maung Lay, vice chairman of the UMFCCI, said that the government should address financial sector reform as soon as possible, as economic growth has been sluggish since April. He said a major problem in the country is the growth of informal trading and that if the government cannot prevent increased informal trade, the trade deficit will grow, inflation will increase and economic growth will stagnate.

The Plight Of The Rohingyas - Hundreds of Rohingya Muslims from Arakan State have crossed the border to Bangladesh according to aid workers, seeking shelter from escalating violence in the northwest that has killed at least 86 people and displaced some 30,000. Aid workers in the International Organization for Migration (IOM) camps also reported seeing Rohingyas who said they had recently fled the fighting in Myanmar. The bloodshed is the most serious since hundreds were killed in communal clashes in 2012, and is posing the biggest test yet for the administration of Aung San Suu Kyi. Soldiers have poured into the area along Myanmar’s frontier with Bangladesh, responding to coordinated attacks on three border posts on Oct. 9 that killed nine police officers. Myanmar’s military and the government have rejected allegations by residents and rights groups that soldiers have raped Rohingya women, burnt houses and killed civilians during the military operation in Arakan State. Human Rights Watch said satellite images taken on Nov. 10, 17, and 18 showed 820 destroyed buildings in five villages in northern Arakan State, bringing the total number it says it has documented to 1,250. Myanmar’s government has also rejected previous reports of Rohingya civilians trying to escape to Bangladesh. The Burmese Army has declared an “operations zone” in mainly Muslim northern Arakan State, where it says it is battling Islamist-inspired Rohingya insurgents, and it is not possible for international reporters to enter the area to verify claims. Myanmar’s 1.1 million Rohingya, viewed as illegal immigrants from Bangladesh by many of the country’s majority Buddhists, are denied citizenship and face severe restrictions on their travel. Up to 30,000 people are now estimated to be displaced and thousands more affected by the recent fighting, the UN has said. Humanitarian operations that had been providing food, cash, and nutrition to more than 150,000 people have been suspended for more than 40 days. The UN refugee agency called on the Myanmar government for access to allow it to distribute aid.

Meanwhile in Shan State - China is giving shelter to more than 3,000 people who have fled Myanmar after fighting between the government and rebels, and stray shells have fallen inside Chinese territory causing minor damage but no deaths. Four ethnic armed groups have attacked security forces in the north, dealing a major blow to leader Aung San Suu Kyi’s goal of reaching peace with ethnic minorities. China, alarmed by previous fighting along the border, has put its armed forces on high alert and called for all sides to exercise restraint. Injured people among the 3,000 Burmese citizens have been taken to hospital in the southwestern province of Yunnan, which shares a long border with Myanmar. “The Chinese authority has responded swiftly and handled the situation appropriately,” Pan Xuesong, a spokesman for the Chinese Embassy in Myanmar, said. Stray shells have also fallen in Wanding, an important border crossing, causing some minor damage and a Chinese government building in Wanding had been lightly damaged. Previous fighting along the border pushed thousands of people into China. China was infuriated last year when five Chinese people were killed when the fighting spilled over into Chinese territory.

Business
Tumbling Kyat - Local business leaders have requested the government take action in the currency market to slow down the rising US dollar. The exchange rate has risen continuously since early November, and has reached over 1,300 kyats per dollar. The gap between official and black market rates also widened, with the black market trading at 1,353 kyats per dollar. “We’re afraid to start work these days, because the dollar exchange rate is rising incredibly. If we purchase goods from warehouses, we must pay high prices. We think it’s better to wait and see what will happen,” said Myo Min Aung, vice chairman of the Myanmar Retailer Association. Importers in Myanmar are suffering over the rising dollar, and they’re especially concerned about daily commodity prices. “We can’t sell our products at low prices after we buy them at the higher exchange rate,” said Myo Min Aung. “So commodity prices will stay high even after the dollar rate starts to go down.” Since September, when the dollar rate was 1,215 kyats, it has trended slightly higher. But starting in early November, the rate has risen more dramatically, sometimes by as much as 20 kyats per day. “If foreign currency reserves are too low to inject into the market, then the government should consider issuing USD bonds, and attracting more foreign institutional investors,” said Zaw Lin Htut, chief executive officer of Myanmar Payment Union. Several factors, including an import/export imbalance, internal conflicts, and a drop in gas export earnings, are hurting the Burmese economy right now, he added. “The price of rice is dropping. And due to the oil price drop, our export income is affected. The FDI side also is not growing much, due to internal conflicts,” he said. “Other countries also feel an impact, but they are not as badly affected, because they have more production, and their exports are bigger than imports,” said Zaw Lin Htut.

Criticism From USDP - Union Solidarity and Development Party (USDP) chairman Than Htay has criticized Myanmar’s economic development as “slow” during the last seven months of the NLD party’s administration. The statement came at a meeting at the party’s headquarters in Naypyidaw to discuss the country’s economy. It was attended by USDP leaders, and ministers and deputy ministers from the previous USDP-led government, as well as academics. “How businesses are operating, the commodity prices and the situation regarding the livelihoods of the people indicate how the country’s economy is performing at present,” said Than Htay in his opening address at the meeting. He argued that there has been a significant increase in crime recently due to economic hardship, highlighting it as a serious concern for the country. The party chairman also warned against dependence on outside help. “We should be aware of historical lessons that the tendency to rely on external assistance does not always work in state building,” he said. A total of six papers were submitted and discussed in the meeting. They focused on financial and monetary issues, national project implementation, trade and commodity prices, comparatives studies of foreign investment and citizens’ investment, and statistics and development. The USDP said that the forum aimed to adopt a clear economic policy to address existing challenges and social and economic problems that people are facing. “It is true that businesses are slow under the new government. Some have blamed the legacy of the previous government for it. But it is also partly because of the mismanagement of the new government. And we should welcome a major opposition party trying to address economic problems on its own,” said former Lower House lawmaker Ye Htun.

YSX Blues - Since the Yangon Stock Exchange, a joint venture between Myanmar, Daiwa Institute of Research and the Japan Exchange Group, began trading in March, only 20,000 investors have ventured into the market. Regulators complain that those who do take the plunge rely largely on rumours, herd psychology and even the stars. An account executive with KBZ Stirling Coleman Securities, said one client offered him an astrological chart to help guide his investment decisions. A half-century of harsh military rule in this Southeast Asian country of 55 million brought economic ruin and isolation from the international community. But Myanmar remains a cornucopia of natural resources, and it is welcoming foreign investment as one of Asia’s last economic frontiers. The economic growth is forecast at 8 percent this year, among the fastest in the region. Just a week after trading began on the Yangon exchange, a democratically elected government headed by Aung San Suu Kyi took power. Since then, the United States has lifted nearly all of the economic sanctions it had imposed on the former military regime, freeing up remittances from abroad which experts say may help fuel the market. With the three listed companies mostly trading below their initial price levels, many investors have fared poorly. The first stock to be traded, First Myanmar Investment, is one of the country’s biggest public companies. It made its debut at 40,000 kyats a share but languishes now at about half that price despite having seen its profit soar in the past year. Many investors blindly follow friends and neighbours into the market and when it tumbles they “all go over the cliff together”! KBZ and four other brokerage firms handle trading electronically. That could be one reason for the lack of activity on the trading floor. Traditionally, Burmese have kept their wealth in gold and jewelry. The country’s two-digit lottery is wildly popular with speculators but most people in Yangon’s streets look puzzled  when asked about the stock market. Myanmar is drafting legislation to allow foreign investors into the market and to permit continuous trading, rather than the current two daily auctions. A fourth listing, the First Private Bank, is scheduled before the year’s end, and it anticipates possibly five newcomers on the board during each of the next five years. As the market grows, institutional investors, who so far have kept away, are expected to step in. The hope is that Yangon’s bourse will emulate Vietnam’s highly successful stock markets, rather than the lackluster exchanges of Laos and Cambodia. Myanmar’s exchange has the latest technology. Soon, investors will be able to trade on their mobile telephones. “We could grow very fast but we need government regulators to render proper support and understand the value of capital markets to the country,” said Rudi Rolles, managing director of KBZ in Yangon.

Thilawa Attracts New Investments - Two Thai companies received a green light from the government to invest in the manufacture of fertilizers in the economic zone south of Yangon. The Thai Central Chemical Public Co. will invest US$12.5 million in manufacturing, importing and trading in fertilizers, while the CPP Fertiliser Co. Ltd will invest $10.5 million in the same sector. Japan’s Taiyo Nippon Sanso has secured approval to invest $11.29 million in the manufacturing and wholesale supply of oxygen, nitrogen and argon in the economic zone, and Buhler Myanmar will invest $5.2 m to import and assemble milling machinery for the rice, flour, bean and pulses and feed sectors.

Maybank Loan For MFIL - Malaysia’s Maybank has provided a US$1 million loan to the microfinance operator Myanmar Finance International Limited (MFIL), a joint venture with AIM-listed Myanmar Investments International (MIL). Myanmar Finance Company Limited and MIL own a 37.5 per cent stake each in MFIL. The Norwegian Investment Fund for Developing Countries (Norfund) holds the remainder. As of September, MFIL had six branches in Myanmar and was planning to open another four. It was managing a loan portfolio of $5.1 million for 38,000 borrowers. Norfund’s regional director said, “The loan from Maybank will be an important contribution to MFIL growth and will thereby support the promotion of more financial inclusion in Myanmar.” Maybank began operating in Myanmar in October 2015. It has financed the Yangon International airport, gas pipelines and highway projects, among others.

Japanese Developers For Yangon project - A Japanese consortium is due to start construction of a large commercial complex in Yangon in partnership with local developers. Mitsubishi Estate and Mitsubishi Corp are among the partners in the project that will include condominiums, two office buildings, a hotel and services unit on a 4-hectare site across from Yangon’s Central Railway Station. Set to start by March 2017, the developers are expecting challenges ahead due to the size of the project. ‘‘Just getting the construction materials into the country smoothly is a lot of trouble,’’ said a manager for the project. Rents for the buildings will be set at competitive rates to compete with rival buildings of similar size, Mitsubishi Estate said.

Malaysian Packaging Company Plans Investment
Malaysia-based Daibochi Plastic and Packaging is set to invest $6.8 million in a joint venture with a local company, to cater to a rising market for packaging for consumer goods. An agreement signed with Myanmar Smart Pack Industrial Company Ltd (MSP) will see the new joint venture titled Daibochi Packaging (Myanmar) operate a manufacturing facility with more capacity and increased efficiency. Daibochi will also spend an additional $5.5million on various plant and other improvements, according to managing director Thomas Lim. “We believe that Myanmar is poised to witness a high growth trajectory, propelled by the increasing economic development and anticipated influx of global brands of fast moving consumer goods and food and beverage as the country opens up,’’ he said.

Myanmar PE Funds - Myanmar focused private equity firm Delta Capital Myanmar, has achieved the first close of $30 million for its second fund that is targeting to raise $100 million by mid-2017. Delta Capital’s second vehicle – Myanmar Opportunities Fund II – has seen investment from four leading European family offices, two Asian families as well as its sponsors. Delta Capital Myanmar was formerly known as Pun Murray Myanmar Partners (PMM Partners). Delta Capital Myanmar is hoping to complete the total $100 million fund by May 2017. In addition to Delta Capital, several other Myanmar-centric private equity firms are now raising their funds. Credera Group from Singapore that is aiming to raise $100 million by 2017, plans to make investments in two green field projects in the manufacturing sector, and is also looking at the financial service sectors. Another Myanmar focused firm, Myanmar Investment Group, does not have a specific fund raising but they have already decided a 40 percent stake for a venture investment in building cinemas around Myanmar. The $20 million project is to be handled together with Maze, their local partner.

Infrastructure
Power Projects - US energy development company Quasar Resources is planning to invest up to US$400 million in Myanmar’s power sector over the next five years. The Texas-based company is currently in talks with the government over a 100MW solar power station it hopes to develop in Sagaing Division, with an investment of around $150 million. It also hopes to develop a 64MW hydroelectric power plant in the Upper Saedawgyi region. The project would involve building a new dam, with an investment of up to $150 million. Quasar Resources is also looking to develop at 33MW dual fuel power plant at the Thilawa Special Economic Zone.

Culture and Tourism
UNESCO Bid - The Burmese government plans to submit an entry for the country’s highest mountain area, northern Kachin State’s Hkakabo Razi, to be listed as a UNESCO natural world heritage site in 2018. As a result of collaboration since 2013 between UNESCO and the Ministry of Natural Resources and Environmental Preservation’s department of forestry, seven natural forest sanctuaries are being submitted on the tentative list for inclusion as heritage sites, according to ministry spokesperson Myo Min. The seven locations include the northern mountain forest complex of Hkakabo Razi, the Hukawng Valley Wildlife Sanctuary and the Indawgyi Lake Wildlife Sanctuary in Kachin State. In Chin State, the Natma Taung National Park is being submitted, and in Tenasserim Division, the Tenasserim forest corridor, the Irrawaddy River corridor, and the Myeik Archipelago are also up for consideration. Among these, the government set Hkakabo Razi, at 5,881 meters of elevation, as the first priority and in 2015 began carrying out the necessary assessments and field research for the location to be considered for the honour by UNESCO. A team of both international and domestic experts conducted field visits to the areas to see whether it is in accordance with the UN criteria. To be considered as a natural world heritage site, the respective country has to pledge to protect the natural and cultural legacy of the area in question. The area itself must be determined, standardized and well preserved. Although Myanmar has a number of cultural and religious buildings across the country, the ancient Pyu cities of Halin, Beikthano, and Sri Ksetra currently are the only World Heritage sites in the country. Seven of Myanmar’s natural parks, including three of those to be considered by UNESCO for their heritage value, are on the list of ASEAN heritage parks, which aim to collaborate in protecting ecosystems, preserving the region’s biodiversity and promoting sustainability.

Motorcycles Still A No No - The local government will continue its ban on motorcycles in Yangon for road safety reasons, deputy minister of the Ministry of Transportation and Communication Kyaw Myo told the Lower House of Parliament. Lawmaker Nyan Lin, who represents Yangon’s Shwepyitha Township in the Lower House, asked during the parliamentary session if the government would allow motorcycles in new satellite townships such as Shwepyitha and Hlaingthaya and other areas with less traffic congestion. The deputy minister said the government would not grant motorcycle licenses or allow motorcycle riding in populous suburban townships in Yangon according to the ban introduced in April 1991. In early October, however, Yangon regional government’s minister of electricity, industry, roads, and transportation Nilar Kyaw responded to a question concerning official permission for motorcycle licenses and dealers in the outskirts of Yangon that it was “completing reviews on rules and regulations related to setting territories for motorcycle riding.” Myanmar has an estimated four million registered motorcycles in the country, based on official figures, and many more are imported illegally.

Strand Hotel Reopens - The Strand Hotel in downtown Yangon has reopened after an extensive six-month renovation. Every original detail of the exterior and interior of the heritage hotel has been transformed, including everything from antique bedsteads to teak paneling and the marble flooring. The hotel’s furniture was restored by local craftsmen and its rooms and suites now feature vintage-inspired textiles and original art together with new technology. Italian chef Christian Martena who ran the Sensi restaurant in Bangkok, Thailand, is the new executive chef overseeing The Strand Restaurant and The Strand Cafe. “The Strand Yangon was one of the first luxury colonial outposts in southeast Asia, founded in 1901 by famous hoteliers, the Sarkies brothers. It remains one of the most architecturally beautiful landmarks in the region and this latest project has preserved the heritage at the heart of the hotel,” said Olivier Trinquant, vice president, The Strand Hotel & Cruise. The Strand Cruise is due to launch a series of cruises next year that will feature music, culinary, and photography themes.

Snippets
US Sanctions are finally lifted
Investment Law to be in place by March 2017
Government committee to be formed to manage international investment into Myanmar
Amata hotel group gets US$13.5M convertible loan from IFC
Yoma to spin off its tourism-related business as part of a reverse takeover of SHC Capital Asia

​Politics
Sanctions Lifted - Myanmar’s former dictator Senior General Than Shwe was among those removed from the US Treasury’s blacklist following the lifting of Myanmar sanctions recently. Another 16 senior military officials, including former Vice Senior General Maung Aye, have been removed from the US Treasury’s Office of Foreign Asset’s Specially Designated Nationals and Blocked Persons (SDN) List. Apart from senior military officials, military-related businesses removed from the list include Myanmar Economic Holdings Limited, the Myanmar Economic Corporation, Myawaddy Bank and the Directorate of Defence Industries, which is Myanmar’s state-owned arms and ordnance manufacturer. Five top crony business men, along with their family members and businesses, are no longer under sanctions; they are Tay Za, Khin Shwe, Htay Myint, Zaw Zaw and Stephen Law. President Barack Obama formally announced the lifting of US sanctions on Myanmar  by terminating an emergency order that deemed the policies of the former military government a threat to US national security. The move followed a meeting between Myanmar’s State Counselor Aung San Suu Kyi and Obama in Washington last month, in which she requested the lifting of economic sanctions against her country. More than 50 individuals along with their families and their businesses in hotels, agriculture, construction, banking, and logging were released from sanctions. A key figure is Lt. General Thein Htay, chief of the Directorate of Defence Industries, who was blacklisted in 2013 for alleged arms trading with North Korea. Another three Burmese firms, Soe Min Htike Co. Ltd., Asia Metal Company and Excellence Mineral Manufacturing Company, sanctioned in 2013 for working with North Korea, have been removed from the SDN list. Also among the individuals are family members of Shwe Mann, former Union Solidarity and Development Party chairman and Aung San Suu Kyi’s close ally from the previous Thein Sein government. His wife Khin Lay Thet and son Aung Thet Mann—who is the CEO of Ayer Shwe Wah, a subsidiary of Htoo Trading Company owned by Tay Za—are also no longer sanctioned. Khin Shwe, the president of Zay Gabar Company who was also removed from the list, said it was “a move” by the US government “at the right time”. “Any delay in lifting sanctions could lead to backsliding in the country’s democratic transition as Myanmar is in urgent need of economic development,” he said. “Business people removed from the list can create jobs for thousands of people when international investment comes in,” he added.

Outsiders Urged to Sign NCA - Aung San Suu Kyi has called for ethnic armed groups currently outside of the Nationwide Ceasefire Agreement (NCA) to sign the accord before the next “Panglong” peace conference, scheduled for February. She was speaking during a meeting in Naypyidaw of the Union Peace Dialogue Joint Committee (UPDJC), comprising of government, military and ethnic armed group representatives that is responsible for holding political dialogue over a federal restructuring of the state. At the insistence of the military, signing the NCA is a prerequisite for ethnic armed groups taking part in the political dialogue—a central component of Myanmar’s peace process aimed at ending over 60 years of civil conflict in Myanmar. Suu Kyi, who chairs the Committee, said that she wanted to accelerate the peace process and urged all respective ethnic armed groups not to stall or attempt to buy time. Out of more than 20 ethnic armed groups in Myanmar, only eight signed the NCA in October of last year, the largest being the Karen National Union and the Restoration Council of Shan State. She also recommended that ethnic armed groups engage in more face-to-face trust building with each other. Several of Myanmar’s largest ethnic armed groups, such as the United Wa State Army and the Kachin Independence Organization have not signed the NCA. Other ethnic armed groups such as the Ta’ang National Liberation Army, the Myanmar National Democratic Alliance Army (Kokang) and the Arakan Army—who have engaged in fierce conflict with the Myanmar Army over the last two years—were prevented from signing the NCA.

Business
Myanmar Investment Law - The newly enacted Myanmar Investment Law will be released by the end of March next year at the latest, according to Maung Maung Win, deputy minister of national planning and finance. The law, enacted recently, combines the Myanmar Citizens Investment Law and the Foreign Investment Law. “Normally it takes at least three months to release rules and regulations following a law,” Maung Maung Win Said.  “If there is a delay, we will finish by the end of this fiscal year, at the end of March.” The rules and regulations are now being drawn up by the Directorate of Investment and Companies Administration (DICA) under the Ministry of National Planning and Finance and they are trying to complete them as soon as possible. Aung Naing Oo, director general of DICA and secretary of the Myanmar Investment Commission (MIC) confirmed this. The business community expect that the rules and regulations will include information on which industries to invest in, government incentives, and which areas the government or the MIC will be overseeing. “The MIC will continue to handle some investment but state and divisional governments will also manage some areas,” he said. “It will allow business people to work more easily” but acknowledged that during the new government’s first six months (April to September) foreign direct investment (FDI) significantly declined compared to last year. According to DICA figures, pledged foreign direct investment from April to September this year was US$1.4 billion while the same period of 2015 was $3 billion. “The next six months have the potential to see much more FDI volume,” he said. He added that the government had some development investment plans including: technology in the agricultural sector, new payment cards to be issued by banks, inviting the local business community to invest in health care, and new infrastructure projects. The rules and regulations will provide greater detail on how investors can engage with these sectors, he said. Nyo Myint, senior managing director of KBZ Group, said that business people are waiting for the government’s “dos and don’ts” before investing. “It’s better for us if those rules and regulations come out as soon as possible. I expect that they will attract people to invest in Myanmar,” he said.

KBZ Insurance to List - The KBZ banking group is seeking to list its insurance arm on the Yangon Stock Exchange by the end of next year. The size of the initial public offering has not yet been finalized, but the listed arm could have a market cap. of between US$500 million – $750 million, senior managing director of KBZ group Nyo Myint said. The insurance arm has paid-up capital of $55 million. KBZ plans to list 40 percent of the firm, he said. Trading started on the Yangon Stock Exchange in March this year and so far three companies have been listed. Meanwhile KBZ’s banking arm is seeking a partnership with a financial technology company to boost digital and mobile banking solutions across the country, group executives said.

Thai/Myanmar Money Remittance - Thailand’s True Money is to provide electronic payment services between Thailand and Myanmar. This will allow the company to tap into the potentially lucrative stream of remittances that passes from several million Burmese migrant workers in Thailand to their families. In March this year, the central bank of Thailand eased regulations to allow companies holding payment licences under the law regulating e-payment to act as international money transfer agents using websites and mobile phone apps. True Money will team up with the AGD Bank to develop a payments service capped at 200,000 baht (7.3 million kyats/US$5,730) per day per person. Burmese migrants working in Thailand transfer around 77 billion baht (US$2.2 billion) home annually, with an average of 30,000 baht ($860) worth of transactions per person per year. However, most of this remittance money passes through informal channels, including the hundi system, which involves a network of brokers spread across the two countries, despite the option of using banks since 2012.

Huawei Expands - China’s Huawei has teamed up with information technology and services provider KMD Group to boost its presence in Myanmar’s mobile phone market. Huawei aims to increase its market share in Myanmar where the brand already enjoys a strong position in the  growing mobile phone market. Huawei’s brand power is significantly higher in Myanmar than in its home market, China, according to a report on Myanmar’s consumer market titled “Spotlight on Myanmar,” conducted by WPP and Millward Brown companies. In February this year, a Huawei-backed information technology training center opened in Yangon’s Thanlyin University of Science and Technology. The Huawei Authorized Information and Network Academy (HAINA), one of several set up across the globe, aims to boost human resources in Myanmar’s information technology sector.
Thilawa SEZ Stock Split - Thilawa SEZ Holdings has proposed splitting its shares at a ratio of 1:10 in order to increase its stock’s liquidity and affordability. The number of issued and paid up shares will rise from 3,892,915 to 38,929,150, while the value of shares will change from 10,000 to 1,000 kyats (US$7.85 to $0.78) per share, according to the proposal. A date has not yet been confirmed for the stock split. The company also announced that it has appointed a new chief financial officer, Wei Hua Tan, a former chief financial officer of UAE-based Al Maabar International Investments Company, with interests in real estate and the hospitality sector. He will assume the position earlier held by Tun Tun, who also acts as the executive director and chief financial officer of First Myanmar Investment (FMI).

More TV Channels - The Ministry of Information says that 42 companies have been included in the initial content provider list to work under state-owned Myanmar Radio and Television (MRTV). From among these companies, five will be selected to run their own channels under MRTV, one of four entities granted a broadcasting license by the ministry. Others include the Forever Group, Shwe Thanlwin Co., and Myawaddy TV. MRTV currently has 10 channels. “Five channels will be working under MRTV. There is a third party that will select five companies from among the 42 on the content provider list. The whole procedure is expected to finish within the next three months,” Myo Myint Maung, deputy permanent secretary of the Ministry of Information, said. “We will provide five channels to the private sector. Companies must submit their detailed proposals to the selection committee, who will choose by the end of this year,” he said. Of those companies designated as approved content providers some already have a satellite TV broadcasting service. The Democratic Voice of Myanmar (DVB TV) is one such group—a news organization which long operated in exile from Thailand and Norway. Nyi Lin Seck, former channel director of the 5 Network, part of the Forever Group, said that most companies want to set up entertainment channels, including shopping networks, which could bring in more money than news channels. “In my experience, channels can’t run 3-5 years unless they spend at least US$3 million.” He added that the government should grant licenses to companies with strong capital, who can commit to long-term investment.

First Mobile Financial Services Licence - Myanmar’s Central Bank has granted the  first mobile financial services license to Wave Money, a mobile money-transfer joint venture between Norway’s Telenor, Myanmar’s Yoma Bank and First Myanmar Investment. The Central Bank issued the Regulation on Mobile Financial Services on March 30. Wave Money is now directly regulated by the Central Bank as a non-banking financial institution. In an announcement, Wave Money said the new regulations would help millions of people in Myanmar access financial services via mobile phone operators. Telenor owns 51 percent of Wave Money, with First Myanmar Investment holding 44 percent and Yoma Bank 5 percent. The total investment is around US$17 million. After its first year in Myanmar, 4,000 “Wave shops” have been set up across the country, where users can transfer money via mobile accounts or agents. In April, the Central Bank announced that mobile financial service providers could allow customers to open mobile accounts and deposit and transfer money between them. People-to-people, people-to-government, people-to-business and business-to-business money transfers are now permitted under the Central Bank’s regulations.

Yoma to Spin Off Tourism Business - Yoma Strategic Holdings says that it will be spinning off its tourism-related business as part of a reverse takeover (RTO) of Catalist-listed SHC Capital Asia Ltd. Yoma announced its intention to partner with other players to establish a new tourism platform engaged in various tourism-related businesses focused on Myanmar, and its acquisition of the remaining 25 per cent interest in “Balloons over Bagan” through its 70 per cent-owned subsidiary, Chindwin Holdings Pte Ltd. Its wholly-owned subsidiary, Yoma Strategic Investments Ltd (YSIL), has signed a conditional sale and purchase agreement for the proposed sale of its tourism-related businesses with SHC. These tourism-related businesses comprise the “Balloons over Bagan” business; Pun Hlaing Lodge1, a proposed hotel development in Hlaing Tharyar Township in Yangon, Myanmar, currently under construction; and a parcel of land in Nyaung U in Myanmar intended for the construction of a proposed commercial and tourism-related hospitality development. First Myanmar Investment Company Ltd (FMI), which holds 30 per cent of both “Balloons over Bagan” and Bagan Land is also a party to the agreement and it will participate in the proposed RTO by way of sale of its 30 per cent-interest in these tourism-related businesses to SHC. SHC will also simultaneously acquire additional tourism-related businesses which comprise Hpa-An Lodge, a hotel/lodge business, and Asia Holidays, a Myanmar-based destination management company. Following the proposed RTO, SHC will transform into a Myanmar-focused tourism company. A new CEO, Mr Michel Novatin, an industry veteran with over 40 years of extensive experience in managing luxury hotels, has been identified to lead the management team of this tourism platform. Under the SPA, the transferred businesses and the additional tourism-related businesses will be injected into a target company which is to be subsequently acquired by SHC for S$70.68 million. The said consideration is to be satisfied by the issue and allotment of new consolidated SHC shares at an issue price of S$0.263. YSIL will be issued 167 million SHC shares valued at S$43.94 million, giving it a 53.48 per cent stake in SHC before any proposed compliance placement of SHC. FMI will be issued shares valued at S$11 million.

Infrastructure
Electricity Contract - Electric Power Generation Enterprise (EPGE), a state-owned utility under the Ministry of Electricity and Energy has announced that a consortium led by National Infrastructure Holdings has won a tender to generate 300 megawatts of electricity for five years to prevent the city’s frequent blackouts. The consortium is made up of four companies: National Infrastructure Holdings Co. Ltd., MCM Pacific Pte. Ltd, APR Energy Plc. and ACE Resources Group Pte. Ltd. Registered in Myanmar in 2015, National Infrastructure Holdings has an affiliation with Asia World Co. Ltd., run by Stephen Law. Both Asia World and Stephen Law were blacklisted by the US government from 2008 until earlier this month. National Infrastructure Holdings’ current director Maung Kyay is a close associate of Stephen Law’s. Due to Asia World’s murky background, he is believed to have set up new companies under different names to act as fronts for doing businesses with western companies. This is how National Infrastructure Holdings came in to being in 2015. The following year, in partnership with Dutch energy giant Shell, the Holdings opened a road trial project near Naypyidaw International Airport. Based in Jacksonville, Florida, APR Energy primarily supplies government utilities in developing nations with power plants that can be erected quickly to deal with a country’s short-term lack of supply. The company has been in Myanmar since 2014, deploying gas power modules at a power plant in Kyaukse Township in Mandalay Division. Madeleine Albright, who chairs Albright Capital Management (ACM), has been a shareholder of APR Energy since Aug. 2009 and materially increased that investment in March 2011. ACM was among the members of an investor consortium who acquired APR and took the company private early this year. Myanmar has been facing power shortages, especially during the hot season of March-May, since the late 1990s due to underdeveloped infrastructure, ageing power plants, and insufficient investment. Hydropower stations, one of the country’s main electricity sources, become idle in the hot season as reservoirs dry up. More than half of the country’s population still has no access to electricity but the country is facing annual growth of 400 megawatts in demand as more people are connecting to the national grid.

Culture and Tourism
The Temples in Bagan - Renovation and conservation work to nearly 400 earthquake-hit ancient temples and pagodas in Bagan will start on January 1 of next year. Officials from Bagan’s Department of Archaeology, National Museum and Library, said that with the collaboration of local and international experts, they will carry out repairs and preserve 389 damaged pagodas in the ancient capital. Over 400 pagodas and temples—out of a total of 3,252—across the Bagan plain were damaged when a 6.8 magnitude earthquake struck Myanmar on August 24. Following the quake, an emergency response, initial assessment and a detailed assessment have taken place to check the extent of the damage, including harm to murals, all of which have high historical and cultural heritage value. Aung Aung Kyaw, the director from the department, said the findings of the detailed assessment will be presented at a meeting from Oct. 25-26 where further details and guidelines of the restoration work will be discussed for the next year. “We will work carefully and make sure not to restore the modified parts which caused a burden for the ancient temples,” he said, adding that the work would take two to five years.
Previous reconstructions were part of crude renovation efforts carried out across Bagan under the previous military regime in the 1990s, which have been blamed for preventing Bagan—the site of an ancient Burmese royal capital—from being granted World Heritage Site status by UNESCO. It was these crude reconstructions that reportedly suffered the most damage in the August earthquake. The more than 3,000 temples of Bagan, mostly dating from between the 9th and 13th centuries, when the Kingdom of Pagan ruled over much of lowland Myanmar, are considered Myanmar’s biggest tourist draw. According to the Ministry of Culture and Religious Affairs, the Aug. 24 earthquake damaged a total of 449 temples, including iconic favorites such as Sulamani, Ananda, Htilominlo, Myazedi, Shwesandaw, Lawkananda and Dhamma Yazaka, as well as the murals at Ananda Oakkyaung. Repair and conservation work on 389 of the damaged structures is expected to begin in the new year with the help of UNESCO. According to the Bagan Archaeological Department, 36 temples considered most at risk of further damage will be prioritized, followed by 53 temples in a second-tier risk category. 

Snippets
Aung San Suu Kyi meets with British PM in London and President Obama in USA
USA sanctions to be lifted “soon”
IFC says to increase Myanmar portfolio to US$ 600M by end 2016
Zaw Min Win elected new President of UMFCCI

​Politics
Sanctions To Be Lifted…. - The announcement that most US sanctions against Myanmar will be lifted was the hottest topic among the business community this month. The move, which includes the reinstatement of Myanmar under the US Generalized System of Preferences (GSP) tariff system, is expected to provide a boost to exporters and increase foreign direct investment. A representative from a leading foreign law firm in Yangon said that closer cooperation between Myanmar and the US has the potential to fuel a boom in infrastructure development and consumer spending in this country. To date, American investment in Myanmar has lagged behind many other countries. “As sanctions have eased over the past two years, we have seen a range of multinationals looking to set up Myanmar-specific investment vehicles, or to include Myanmar as part of their wider emerging markets investment strategy. US multinationals have not featured as prominently in these discussions as other economic powers such as China, Thailand and Japan have, in part due to the complex sanctions regime,” said Jo Daniels, Myanmar Managing Partner of Baker & McKenzie. The company was hopeful that easing sanctions would mean that more US investors would begin to see opportunities emerging in Myanmar.
….If Contact With North Korea Is Stopped - Individuals within the Myanmar military may still be cooperating with North Korea although the new civilian government and the military leadership oppose such ties, a senior US official said recently. During Myanmar’s years of international isolation, its then-ruling junta bought defence equipment from North Korea. The United States has been pressing Myanmar to cease those ties as a condition of normalized relations with Washington. Assistant Secretary of State Daniel Russel said President Barack Obama emphasized to Aung San Suu Kyi, during a visit to Washington this month, the importance of rooting out any vestiges of cooperation that may have remained. “We think there are potentially a few residual pockets within the Burmese military, people who might still have some ongoing interactions that are in effect leftovers from five-plus years ago in the era of the military dictatorship,” Russel told a Senate hearing. “But we think as far as the government is concerned and the military leadership is concerned that they are fully on board and this is something they are working to prevent and eradicate,” he said. UN Security Council resolutions forbid arms trading with North Korea—part of the international effort to restrict sources of revenue for the isolated nation’s nuclear and missile programs. During junta rule, Myanmar’s military was a key North Korean customer. Obama announced that he plans to lift the remaining US economic sanctions and restore trade benefits to the former pariah state, following its transition to democratically elected civilian government after decades of military rule. Republican Senator Cory Gardner of Colorado complained at the hearing that Congress had not been consulted adequately before the decision was announced to lift the so-called “national emergency” with regard to Myanmar—the executive order used to authorize the current sanctions. He said Aung San Suu Kyi, who met with lawmakers during her visit, said she still supports sanctions on the military-controlled companies Myanmar Corporation and Myanmar Economic Holdings Ltd., two of the largest businesses in the country. Russel responded that Aung San Suu Kyi had said that it was time to lift all the sanctions—a position she articulated in public. Some human rights activists and congressional aides argue there are alternative legislative authorities the US could use to restrict dealings with those corporations, even after Obama lifts the emergency.

Business
New Investment Law - The new Myanmar Investment Law has been submitted to Parliament and is expected to be approved by October. Ministry of National Planning and Finance Deputy Minister Maung Maung Win put forward the investment draft bill to the Lower House, following an announcement by the US government that economic sanctions against Myanmar would soon be lifted. The bill has been through various drafts, beginning under the previous government. There was a push to submit it to Parliament following Aung San Suu Kyi’s visit to the United States and a call for increased US investment in Myanmar. The new draft bill combines the Myanmar Citizens Investment law—enacted in July 2013 and governing local investment—and the Foreign Investment law—enacted in November 2012 and governing foreign investment—into one law. The draft law reduces the mandate of the Myanmar Investment Commission (MIC) and provides a more tailored approach to tax exemptions, according to the deputy minister. Than Aung Kyaw, deputy director general of the Directorate of Investment and Company Administration (DICA) said that the law had been changed significantly from former versions. “We are trying to approve it soon, as a result of Aung San Suu Kyi’s visit to the United States,” he said. Under the existing investment law, every investment must have the approval of the MIC. Under the draft law, there will be different guidelines needed for MIC approval. The government will directly handle the investment proposals that are deemed strategically important, require a substantial amount of capital, or could potentially have social and environmental impacts, according to the planning and finance ministry. The new bill includes more strategic tax incentives. If the government chooses to promote a certain business or sector, related investors will receive tax incentives, Than Aung Kyaw said. The bill also incentivizes investment in less developed areas. The draft law has been approved by the State Counselor’s Office. Drafted with the help of the International Finance Corporation, it has 23 chapters and 104 clauses, and the definition of terms in the draft law is in line with other international laws.

Thai Interests in Myanmar - The most attractive sectors for Thai investors in Myanmar include infrastructure, information technology, agriculture and related processing, manufacturing and tourism, according to Thai business leaders. A large number of infrastructure projects including roads, ports and postal services are being planned in Myanmar with the aid of foreign assistance, according to Nattawin Pongpetrarat of the Thai Business Association of Myanmar. Due to poor road infrastructure and a shortage of skilled labour, many companies are investing hugely in information and communications technology, promising potential for e-commerce and online services, Nattawin said. Agriculture is one of the top ten contributors to Myanmar’s economy and there was demand for expertise from Thai companies in this sector, he added. With more than 20 daily flights connecting Yangon and Thailand, tourism companies in the neighboring country should consider increasing excursion services for Myanmar-bound tourists, he said. “Thai companies should capitalize on their expertise. If they combine this with local experience, they will prosper,” said Nattawin, who has operated a furniture and garment business in Myanmar for more than 10 years. “The Myanmar economy is very dynamic. Conditions change rapidly and it is necessary to have someone on the ground to point you in the right direction,” he told the Thai audience. Sanan Angubonkul, head of the Thai government’s private-sector team tasked with boosting exports and overseas investment projects, advocated setting up manufacturing operations in Myanmar to supply the local market, as well export markets. “The reinstatement of the United States’ Generalized System of Preferences (GSP) tariff system for Myanmar will benefit exports,” he said.

Banking Reform? - A major shake-up of the banking sector is predicted in a new study. Myanmar’s banking sector will expand eightfold in almost a decade, to around US$247 billion by 2025, according to an analysis titled Myanmar Banking Sector 2025: The Way Forward. Around 120,000 jobs are also likely to be created, it says. However, important obstacles remain to achieving these numbers, and local banks and smaller banks will face many challenges in the coming period. It identifies five vital structural reforms necessary for the banking sector. First, an active interbank market that enables banks to lend to one another instead of going to the Central Bank for funds needs to be urgently developed. “A vibrant interbank market with standard instruments will provide comfort to the banks in their ability to refinance their credit and facilitate the transmission of the Central Bank monetary policy. In short, it is the bedrock of any modern banking system,” according to the report. Second, banks and the regulator must foster access to credit through a range of regulatory adjustments and a change in lending practices, it says. Third, the regulator should take many steps to improve current low trust in the overall banking system. Public disclosure obligations on banks should be strengthened, the report advocates. Fourth, reform of state-owned banks must be expedited. The largest state-owned banks currently operate as commercial banks “without the required capabilities” and do not abide by the same sets of rules and regulations, the report says. Lastly, shoring up the independence of the Central Bank and building its capacities will be critical to steer reforms, the report states. Given the “massive” changes ahead, local banks will have to work hard to seize opportunities and overcome problems. Smaller banks will struggle even more. “Size matters when it comes to banks, smaller ones may not survive what’s to come,” the report warns.

Less New Hotels Needed - The Ministry of Hotels and Tourism will impose restrictions on new hotel projects in several major tourist spots including Yangon. The ministry has started negotiations with divisional and state governments in order to restrict new hotel projects in Yangon and Mandalay as well as Taunggyi, Inle, Kalaw and Yawnghwe in Shan State. New hotels in those areas are unnecessary as occupancy rates in existing hotels are low, Hotels and Tourism minister Ohn Maung said. “At present, there are around five hotels that have more than seven stories in Yawnghwe. Those buildings do not complement the countryside,” said Ohn Maung. Since they came into power in 2012, Myanmar’s previous government was liberal with permission for new hotel projects. As a result, the number of hotels exceeds the number of visitors coming into the country, which calls for a restriction of new hotel projects in the future. Minister Ohn Maung also warned potential investors in the hotel industry not to be deceived by official tourist figures as foreign visitor numbers include those entering the country on other visas and for other reasons. “Next year, we will release the tourist figures in different groups,” he said, promising to give more accurate tourist figures. “If people are convinced to invest in hotels based on those numbers, they are looking for trouble. Only banks will benefit from lending money to them,” he added. According to the Ministry of Hotels and Tourism, there have been 48 hotel projects with foreign investment amounting to over 9,000 rooms in Myanmar. Of the 48 projects, 34 are already in operation, 11 are under construction and three have not yet been started. Ministry statistics said there are 1,373 registered hotels with 53,783 rooms in Myanmar—346 hotels with 16,783 rooms in Yangon, 184 rooms with 7,416 rooms in Mandalay, 88 hotels with 2,729 rooms in Inle, 32 hotels with 888 rooms in Taunggyi, and 38 hotels with 814 rooms in Kalaw. The occupancy rate of these hotels from April to July is 52% in Yangon, 54% in Mandalay, 28% in Inle, 47% in Taunggyi, and 40% in Kalaw.

More Credit Companies - Potential growth in the market for motorbike loans emerged as a factor in two foreign-led ventures announced this week. South Korea’s Shinhan Card Co. launched a microcredit service that will begin offering small-sized loans to clients in Yangon and Pegu, with a plan to later introduce installment financing and leasing. Target customers are likely to include purchasers of motorbikes, according to the report. The move is part of the company’s efforts to enter overseas markets as falling commission fees reduce profitability in the South Korean market. The firm’s sister company, Shinhan Bank, is also preparing to enter the Burmese market. Meanwhile Thai motorcycle leasing company Group Lease PCI plans to buy 71 percent of BG Microfinance Myanmar from the Commercial Credit and Finance PLC of Sri Lanka. The deal will be completed shortly, pending due diligence of BG Microfinance, Group Lease chairman and chief executive officer Mitsuji Konoshita said at a joint briefing. Group Lease aims to book earnings from the Myanmar firm in the fourth quarter, he said.  The firm will inject US$6.8 million into BG Microfinance to expand to 12 branches in Myanmar next year from three at present, he added. BG Microfinance is a subsidiary of Commercial Credit and has operated in Myanmar for more than two years with about 10,000 customers.

Junction City Phase II - The Shwe Taung Group has entered into a conditional agreement with Singapore-listed Keppel Land to develop premium serviced residences and offices at the second phase of the Junction City development on Bogyoke Aung San Road in downtown Yangon. Under the agreement, the real estate arm of conglomerate Keppel Corp will hold 40 percent of the project, for a total investment of $48.6 million. Construction of the second phase of the project, which will include a hotel, a retail and entertainment center and a large car-park, is expected to begin in 2018. “We are confident of the long-term potential of Myanmar, and are committed to participating in and contributing to the growth of the country,” Mr. Ng Ooi Hooi, president of regional investments at Keppel Land, said. Keppel Land first entered Myanmar in 1993, when it broke ground for the Sedona Hotel in Yangon. It also owns and manages the Sedona Hotel in Mandalay. Shwe Taung and Keppel have previously collaborated to develop Junction City Tower, a 23-story office building in the first phase of the multi-purpose project.
Infrastructure
Dawei Redux? - New editions will be created soon of two committees on the proposed Dawei megaproject that have been dormant since late last year, according to a senior Thai official. Activities of the Myanmar Thailand Joint High-Level Committee (JHC) and the Joint Coordinating Committee (JCC), formed to foster development of the long-delayed multi-billion dollar industrial project, stalled before last year’s general election in Myanmar. Porametee Vimolsri, secretary-general to Thailand’s National Economic and Social Development Board (NESDB), said the joint ministerial meeting between the two countries in August had agreed to revitalize the role of the two committees to “rev up the project”. Myanmar’s government is reconsidering loan plans for the construction of a 132-kilometer road from Dawei to Ban Phu Nam Ron in Thailand’s Kanchanaburi Province. Last February the Thai government announced that road construction would be halted following a report by the Japan International Cooperation Agency (JICA) that 15-degree inclines along seven stretches of the road—which passes through mountains—would be unsafe for trucks. The agency proposed the construction of seven tunnels to solve the problem.

Culture and Tourism
What Future For The Secretariat? The Secretariat, a redbrick colonial structure, more than 120 years old, sprawls in 16 acres across an entire city block in Yangon’s Botahtaung Township, is closed for renovation, having being neglected for decades by the state—despite its historical significance as the former seat of the British colonial administration, and of successive governments in independent Myanmar. It was the site of the assassination of Myanmar’s national hero Gen Aung San—the man who negotiated independence from the British—along with eight of his colleagues by a political rival in one of the second-floor rooms on July 19, 1947, a date marked annually as Martyrs’ Day. Its grounds also hosted the ceremony ushering in Myanmar’s independence, held—in line with the dictates of astrologers—at 4:20 am on January 4, 1948. Myanmar’s first parliament was located there. Following the military coup in 1962, public access was severely restricted and the structure was re-branded the Ministers’ Office. It was used to house government offices up until the military junta announced the founding of a new capital, Naypyidaw, in 2005—after which it was abandoned. In 2010, the government undertook some limited renovation efforts and in 2011 announced plans to privatize the site along with other state-owned colonial heritage buildings in Yangon. In 2012, the Anawmar Art Group—a company owned by family members of a former junta general, Tun Kyi—was declared the winner of a government tender for the site. Now, after the installation of the country’s first democratically elected government in more than five decades, there are high hopes that the iconic building will be returned to the public in some form.
However, beyond its aesthetic qualities, architectural significance and history as a former seat of power, it figures chiefly in the minds of the Burmese public as the site of a national tragedy—the gunning down of Gen Aung San and his comrades in 1947. The building was opened to the public for the first time on Martyrs’ Day in 2014, remaining closed for the rest of the year. On Martyrs’ Day this year—for the third time in a row—the public was allowed in for the day. Queues stretched around the block. For the first time, the Yangon Division government put on a commemorative ceremony at the site.
Recently, Yangon Division Chief Minister Phyo Min Thein met with representatives of the Anawmar Art Group and the Yangon Heritage Trust, an organization that lobbies for the preservation of Yangon’s architectural heritage, to discuss the renovation work at the complex. Soe Thwin Tun, Anawmar Art Group director and grandson of former Lt-Gen Tun Kyi, said that, although Anawmar won the tender in 2012, renovation could only get underway after they had finished drawing up a Conservation Management Plan—in collabouration with the Yangon Heritage Trust—in October of last year. He said they now plan to house a historical museum in the room where Gen Aung San was assassinated and in the chamber of the first parliament, to be opened to the public in time for next year’s Martyrs’ Day. “As arts and crafts collectors, we plan to open a museum. But it is not easy to cover the costs of renovating and maintaining the building with only a museum. So, from the outset, we told the government that we needed to include some commercial ventures on the site, to preserve it for the long term,” Soe Thwin Tun said. He said US$50 million had been put toward its renovation. Alongside the museum, the company plans to open a library, to rent out parts of the structure for offices and restaurants, and to use other parts for the performance and exhibition of Myanmar’s traditional arts. “Whether it is nationalized or privatized, our intention is to open the place to the public. We are not developing a hotel or shopping mall” Soe Thwin Tun added.
Last year, the Anawmar Art Group faced a public backlash after the grounds of the Secretariat were used to host the birthday party of Tun Kyi’s daughter, Thi Thi Tun. The organizers later claimed that the private event had been staged in order to raise funds for the renovation. “I was really happy to see thousands of people enter the building on Martyrs’ Day. The place is part of our heritage. It shouldn’t be privatized, but should belong to the public,” said Aung Htoo, a National League for Democracy (NLD) lawmaker. The lawmaker said he would submit a proposal for the return of the Secretariat to the public during the upcoming parliamentary session. Nay Phone Latt, another NLD lawmaker, said that the government should review the contract made between the previous government and the Anawmar Art Group. “The more significant the building is, the more safeguards are required to preserve it,” said Moe Moe Lwin, director and vice-chairman of the Yangon Heritage Trust. “The Secretariat is of high significance not only because of its history but also its location. It sits at the heart of Yangon. Its border of trees and greenery act like a lung for the city,” she said. The Yangon Heritage Trust had lobbied for a Conservation Management Plan (CMP) before partnering with the Anawmar Art Group to develop one. “However, we don’t have a system to monitor whether the company actually follows the CMP. The government should develop one,” Moe Moe Lwin said. She said, that according to the CMP, Anawmar must consult with both the Yangon Heritage Trust and the government if they wish to make structural changes to the Secretariat. Moe Moe Lwin, who is an architect by training, said they had first encouraged the government to manage the project, with the involvement of experts, the family members of those killed on July 19, 1947, businessmen, parliamentarians and civil society. However, she said they would be satisfied so long as the private leaseholder prioritized heritage conservation and accessibility to the public—but income-generating ventures to ensure l

Snippets
Aung San Suu Kyi will chair the government peace negotiation body, the National Reconciliation and Peace Center (NRPC)
Emirates to fly to Yangon daily from August
Bank for Investment and Development of Vietnam (BIDV) has received its banking licence

Politics
High Rise Issues - A Yangon Division parliamentary committee has recommended that the divisional government rescind modification orders delivered earlier this month to eight high-rise construction projects, after the developers petitioned the committee for a review. A high-rise review committee has reviewed more than 200 high-rise building projects in the city since June, to assess their adherence to newly enforced urban planning and safety regulations. Following their recommendations, the Yangon government ordered 12 buildings now under construction to reduce their heights, upgrade their parking facilities and improve their safety standards. Developers from eight out of the 12 affected projects complained, claiming that the modification order stood to cause them grave financial harm, and that they had followed all the official procedures. “We have carried out ground-inspections for every project linked to the complaint, and found them to be in line with Yangon City Development Council regulations established under the previous government,” said Kyaw Zeya, the secretary of the parliamentary committee. “So, we submitted our report to the divisional government last week recommending that action should not be taken against them,” he added. Kyaw Zeya said he understood that the Yangon Division government is trying to tame unruly urban development in the city, but “the new policy for high-rise buildings should be directed at new projects and not at old ones that have already received permission.” The Yangon Division Parliament is currently in recess and will recommence next month. Ye Min Oo, the spokesperson for the high-rise review committee that suggested the initial modification orders, said he had no comment to offer on the new recommendation, stating that it was a matter to be resolved between the divisional government and the parliamentary committee. “Because our committee was formed by the divisional government, we are only accountable to it. If the government orders us to review their recommendation, we can do so.”

NLD Policy Document - The launch of the National League for Democracy (NLD) government’s five-year, 12-part economic policy in Naypyidaw recently contained only broad outlines, leaving some industry leaders frustrated at the lack of detail. Speaking at the launch event, State Counselor Aung San Suu Kyi said that, although the information released was “general,” “detailed policy” would be unveiled later, including for local and international investors. Several of Myanmar’s well-known tycoons were present alongside foreign diplomats, government officials, and members of the Union of Myanmar Federation of Chambers of Commerce and Industry. Suu Kyi acknowledged that “many foreign investors and diplomats” had asked the NLD government about their economic policy, which has yet to be spelled out in any detail in the four months since they assumed office. Minister of National Planning and Finance Kyaw Win said that the 12-part policy would be “people-centered” and would involve a “fair” distribution of natural resources between the states and divisions of Myanmar, in support of “national reconciliation” and the building of a “federal democratic country.” The latter points suggest a tentative link to the peace process with ethnic armed groups. A Union Peace Conference scheduled for late August is hoped to achieve a deal on a federal restructuring of the state, in order to resolve half a century of civil conflict. Other outlines delivered at the launch included better opportunities for youth, support for small and medium businesses, jobs for Burmese returning from residence abroad, support for both agricultural and industrial exports, environmental protection, a stronger tax system, and expanding economic relations with countries both within and beyond ASEAN. Suu Kyi also stressed infrastructural investment as a means of increasing investment in Myanmar and speeding up development. Zaw Zaw, a prominent tycoon and chairman of the Max Group of Companies, spoke at the event about the need for better statistics in Myanmar, including for job, unemployment, birth and morality rates, as an aid to engineering economic growth. Other industry leaders present stressed a more urgent need for policy detail, given the high expectations held by many towards the NLD government. Fifty journalists from both Burmese and international news agencies had turned up to cover the event at the Myanmar International Convention Center 2 in Naypyidaw, but were held up at the security gate. Security guards said they had been told that members of the media were not to be allowed in without “access cards” provided by the Ministry of Information. Only two journalists, bearing these cards, were allowed in, and later shared their coverage with others. Several of the barred journalists expressed their frustration at what they felt was poor event management on behalf of the Ministry of National Planning and Finance.

More Detail - The 12-point document puts national reconciliation as the top priority, based on a “just balancing of sustainable resource mobilisation and allocation across states and regions”.

• The government will work to ensure that natural resource extraction is transparent and sustainable and will extend the Extractive Industries Transparency Initiative remit to include the mining industry and will also weigh up the costs and benefits of economic policies for their impact across the entire country. The government has demonstrated its intention to shake up the troubled mining industry, by announcing that jade and gems mining permits will not be renewed until new laws are in place.
• In the policy’s second point, the government said it would support competition and a vibrant private sector. It aims to practice a market-oriented system in every sector, cut unnecessary red tape, dilute the power of monopolies and expand access to credit.
• The third point develops the National League for Democracy’s promise in its economic manifesto to strengthen public financial management and work on fiscal prudence and macroeconomic stability. This includes making public spending more efficient, improving budget transparency and privatising “appropriate” state-owned enterprises, which are an enormous burden on the budget, though an open and transparent process. The government also plans to tackle smuggling, or “fully account for Myanmar’s foreign exchange earnings”, especially from the sale of natural resources, streamline the tax system to boost public revenues and develop capital and money markets to help finance the growing budget deficit, which is expected to reach K3.76 trillion by the end of this financial year.
• The fourth point refers to infrastructure development, noting that the government is preparing an infrastructure policy, which will focus on producing and distributing power; building and maintaining rural roads and developing better port facilities. Journalists awaited the announcement outside after they were barred from entering without new media passes from the Ministry of Information.Journalists awaited the announcement outside after they were barred from entering without new media passes from the Ministry of Information.
• Fifth, the government will support the agriculture and livestock sectors to promote inclusive growth, enhance food security, increase exports, and boost living standards. Farmers will be given full production freedoms, while the state will support high value-added crops and livestock breeding. Farmers will have more access to credit, land tenure will be strengthened and production chain sectors improved, it said.
• Sixth, the government says it will focus on job creation to reduce domestic poverty and inequality and encourage migrant workers and the displaced to return from overseas. It sees most jobs being created in special economic zones, and by infrastructure development projects, particularly in rural areas.
• In its seventh point the government said it welcomes foreign direct investment. It is preparing a more detailed policy note this but in brief, it will promote responsible business by creating a stable environment where companies feel secure to invest, and improving property rights and the rule of law.
• The eighth point address human capital and commits to developing a skilled workforce to fill jobs created in the manufacturing and services sectors. To support this goal, the state will improve healthcare and academic and vocational education, while enforcing international standards on labour rights.
• The ninth point covers monetary and fiscal stability and the creation of a financial system that can sustainably provide capital to businesses, farmers and households. The underdeveloped financial sector currently excludes large sectors of the economy, but will soon be liberalized to encourage growth, the government said. It will review limitations on bank lending, enable mobile banking, allow foreign insurance companies into Myanmar and aim to get a sovereign credit rating.
• Tenth, the government will reform state-owned enterprises, making them more accountable and responsive to the public, and privatising them where necessary. They will be audited as a prerequisite for their reform or transformation.
• In the eleventh point the government says it will help small and medium enterprises by improving the ease of doing business in Myanmar, increasing access to financial services and developing a more skilled workforce. Myanmar was ranked 167 out of 189 countries in the World Bank’s ease of doing business ranking last year.
• Finally, the government pledged to promote inclusive economic growth and development, “to enable our country to escape poverty and achieve the prosperity our people deserve.” “Democracy, the rule of law, the promotion of human rights, are ends in themselves, and need no economic or other justification,” the policy proposal concludes.

Business
Noticeable by its Absence - American companies are conspicuously absent from the 106 local and foreign direct investment proposals made during the first quarter of the 2016-17 fiscal year, which started in April. Myanmar’s Investment Commission, reconstituted in early June after a period of dormancy brought about by the installation of a new government in April, has so far processed only eight of the 106 proposals. Minister of National Planning and Finance Kyaw Win chairs the commission, with Minister of Commerce Than Myint appointed as vice chairman. Than Aung Kyaw, deputy director general of the Directorate of Investment and Companies Administration (DICA), said that the commission was now making “dramatic” progress through the backlog. According to Investment Commission data, more than US$2 billion worth of investments have been pledged during the first quarter of this fiscal year from April to June. In the first quarter of the 2015-16 fiscal year, 71 projects were approved at a valuation of $2.65 billion. The first quarter of the 2014-2015 fiscal year saw 39 projects approved valued collectively at US$810 million. Out of the 98 proposals awaiting approval, 47 are for foreign direct investment, according to DICA director Min Zaw Oo, who is a member of the proposal assessment team in the Investment Commission. “Most of the proposals are from manufacturing businesses from various different countries,” he said. However, US businesses are not among the foreign investment proposals Myanmar has received under the new government, according to the DICA. The top foreign investors for this opening period are Singapore, followed by China, the Netherlands, Malaysia, Thailand, Hong Kong and India. Maung Maung Lay, vice-chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, said that most of the foreign investment proposals received were for labour-intensive businesses. “But the US does not engage much in labour-intensive business now,” he said. “Their businesses are somewhat hi-tech, and can’t operate in the absence of well-developed infrastructure, for example, a stable electricity supply. And skilled labour is needed to operate hi-tech businesses,” he added. In May, the US government reduced sanctions targeting Myanmar’s financial sector and certain state-owned enterprises involved in mining and timber extraction. The aim was to boost trade between the two countries and enable American investment—even though key economic players with close links to Myanmar’s military remained blacklisted. It appears, however, that American companies and investors continue to approach Myanmar with trepidation—although this could change after the National League for Democracy (NLD) government’s economic policy, currently vague, is properly clarified. “Many US and EU companies investors come here via Singapore, where they are already established,” explained Than Aung Kyaw, deputy director general of the DICA. “Singapore is positioned close to Myanmar and has a reliable banking system. That’s why US investors are not coming here directly.” In 2015, US exports to Myanmar were valued at $227 million and imports at $144 million, according to DICA figures. Since 1988, total approved US investment in Myanmar has been $248 million.
Hitachi Expands Operations - Hitachi is planning to dramatically increase its operations in Myanmar according to Hitachi’s president and chief executive officer, Hiroaki Nakanishi, who visited the capital, Naypyidaw recently. The CEO is meeting with government officials to propose new projects as the company looks to expand its operation to 300 billion yen by 2020. Hitachi, along with fellow Japanese company Mitsubishi Corporation, won a Myanma Railways contract in May last year for upgrades on Myanmar’s dilapidated rail network. The $24 million project, due for completion in June 2017, includes installing systems to coordinate signals along a 140-kilometer stretch of track between Yangon and Pyuntaza, Pegu Division. “On top of the electrification of the rail system, we will present proposals to the government, including a comprehensive plan to develop the transportation infrastructure,” Hiroaki said. Hitachi wants to help improve the government’s database of maps using GPS, which would “provide a launching pad for resource exploration, disaster prevention, flood control and other related operations across a wide spectrum”. Hitachi will also work with Japan Post to help Myanmar Post offer “e-money” services, the Global New Light of Myanmar reported. A recent press release said a unit of the group, Hitachi Solutions, had also won a tender last year to “implement an electronic data interchange system” for Myanmar’s Port Authority. The company also said it would host a Social Innovation Forum in Naypyidaw to boost its sales in the country. “Last year, Hitachi announced plans to expand our business in Myanmar and increase the number of local employees five times—from 200 to 1,000—by 2020,” Hiroaki said. “We are very much on track and I am pleased to share that our employee numbers have more than doubled to over 500 in just one year.”

Interbank Blues - The global interbank market in foreign exchange is worth trillions in US dollar terms. Myanmar has had its own local interbank market since 2013, which the Central Bank set up in the hope that lenders would rely less on daily Central Bank dollar auctions and more on each other for foreign currency needs. US dollar auctions typically meet only a small fraction of the commercial banks’ demand for US dollars, because the Central Bank itself has a limited store of foreign reserves. A World Bank report from May estimated the Central Bank’s foreign exchange reserves were equal to 2.9 months of import cover as of November 2015. Daily auctions in dollar volumes have also declined this year, potentially due to a drop in the Central Bank reserves, and the nascent interbank market has not been able to pick up the slack, the report said.
Myanmar’s interbank market has faced a variety of hurdles since its inception, and the latest – according to private banks – is that the state-owned lenders are not pulling their weight. These public sector banks were allowed to handle foreign currency for years before their privately owned peers, and until recently they held a monopoly on providing foreign currency accounts to state-owned companies or joint ventures. This special treatment has left them with larger dollar holdings than the private banks, who say their state counterparts should sell more of their foreign exchange in the interbank market. The daily volume of dollars exchanged at the interbank market rarely passes US$25 million, according to Central Bank data from the start of October 2015 to April 2016.
Private-sector bankers, say that state-owned banks are overly cautious in holding on to dollars to cover liquidity needs, while officials at state-owned lenders say they do participate in the forex market, but that managing their liquidity and profits are bigger priorities. An official at Myanma Foreign Trade Bank (MFTB) said that his bank’s participation in the interbank market comes second to its focus on making timely payments to its correspondent banks. Domestic banks in Myanmar use correspondent banks to act as intermediaries or conduct business on their behalf in other countries, which avoids having to open a branch abroad. MFTB has agreements with more than 200 correspondent banks, and state-owned lenders are hoping to expand their correspondent networks following an exemption from US sanctions in May. U Khin Pe Oo, deputy general manager of state-owned Myanma Investment and Commercial Bank (MICB), said his bank does sometimes sell currency on the interbank market, depending on how much foreign currency the bank holds. “As a state-owned bank we need to follow monetary policy,” he said. “But we also need to focus on profits, because we receive funds from the government budget based on those profits.” MICB, like other state-owned banks, has to present its balance sheet to the Ministry of Planning and Finance each year, and request funds for the coming year based on profits.
 Banks are required to sell foreign currency if their exposure rises above 30pc of paid-up capital. A private bank bugbear is that state-owned banks are informally exempt from this rule, although U Khin Pe Oo said MICB does observe the requirement. But U Mya Tha, Myanmar Oriental Bank’s chair, said the Central Bank should still scrutinise state-owned banks’ foreign currency exposure and their reluctance to part with dollar holdings. “There are many things that need to be reformed and that the Central Bank needs to discuss with the state banks,” he said. But while the Central Bank allows foreign lenders to participate in the forex market, foreign banks can only lend in dollars, and have no real reason to participate in the interbank market, he added. Although private banks accuse the Central Bank of inaction, the regulator is trying to address the problem, an official said. He said that starting in January 2017 the Central Bank will impose penalties for all banks with foreign currency reserves above the 30pc level, and has plans to deal with banks that are overly long or short a particular currency. The penalties and policy of equal treatment for private and publicly owned banks are enshrined in the new Financial Institutions Law, which was passed in January this year. “All institutions will be treated equally under the new law,” the official said. “We are going to discuss this matter with state banks and other related institutions.” But the official was also frank about the potential difficulties in penalising state-owned banks, which – although regulated by the Central Bank – are also ultimately under the control of the Ministry of Planning and Finance. “All we can do is issue rules, regulations and warnings,” he said. “But we will probably have some difficulties penalising state institutions.”
Some progress has already been made this year in altering state-owned banks’ behaviour. In the first quarter, MFTB and MICB agreed to return large volumes of US dollars back to private banks, following discussions between the then-Ministry of Finance, the Central Bank, and public and private banks. Almost all private banks have foreign currency accounts at MFTB and MICB, because until 2012 only state-owned lenders were allowed to handle foreign currency, and those banks still provide settlement services for private lenders. But over the years the net balance private banks held at MFTB had built up and up, and they demanded the money back. The net balance between private banks and MFTB is now settled weekly through Nostro accounts, which U Mya Than said had been very helpful for private bank liquidity. The Central Bank also now allows private banks to offer a wider range of foreign banking services, to compete better with state-owned lenders, with the specific aim of helping private banks to access foreign currency and, in turn, the interbank forex market. As of March 22 private banks are able to offer state-owned enterprises foreign currency accounts, ending the state banks’ monopoly on SOE clients, although U Mya Than said he was not aware of any SOE opening an account with a private bank. He said state enterprises are far more familiar with the state-owned banks, and the interest rates available at private banks are not much more attractive. “The most we can expect is for government joint ventures to bank with the private sector, because the foreign partners prefer privately owned banks,” he said.

Farmers’ Woes - Myanma Agriculture Development Bank will stick to the government’s loan ceiling for 2016-17 and will not make any additional funds available for farmers, despite earlier suggestions that this might be a possibility. The bank will not issue new loans to cover losses at farms destroyed by flooding. Heavy rain has already caused floods in Ayeyarwady and Sagaing regions and Rakhine and Chin states. MADB, which is one of the only affordable sources of funding for around 2 million farmer households, is struggling to make a profit, despite raising interest rates from 5 percent to 8pc this year. This is partly because thousands of farmers whose crops were destroyed by floods last year were unable to repay their loans on time. The Central Bank of Myanmar approved a K500 billion one-year loan for MADB in May, to help the bank finance as many farmers as possible. This financial year, the bank has lent more than K730 billion in loans for the monsoon paddy. The bank aimed to lend K900 billion in the first 100 days of the new government, but some of the funds have been held back for farmers who are still struggling to repay last year’s loan. A ministry official denied rumours that entire villages have not yet received loans because some farmers in Ayeyarwady defaulted on last year’s debt. “It is not like that. We do not issue new loans to farmers who have not paid back their outstanding loans. Farmers who have repaid their loans can take out new ones,” he said. This year the bank has changed its lending rules, to make it easier for farmers, said Ko Myo Lin Aung, a farmer from Pyinmana township in Nay Pyi Taw. In the past, 10 farmers had to group together to apply for loans – if one failed to repay, the other nine would cover the costs, he said, while this year farmers can apply in groups of three. The bank has raised the size of its loans this year to K150,000 per acre from K100,000 last year, but has maintained its policy of only offering loans to cover the first 10 acres (4 hectares) owned by any one farmer, said U Thein Aung, chair of the Free Farmers Association. “If the farmers who own more than 10 acres could receive loans for their entire acreage, they would be fine. But they have to take out private loans for anything over 10 acres at a very high interest rate. Actually, K150,000 per acre only covers cultivation,” he said. Ayeyarwady, Sagaing, Bago and Magwe regions and Rakhine State are the main rice-growing areas of the country. They are also among the areas at highest risk of further flooding, particularly over the next few weeks as more heavy rain is forecast. U Thein Aung said the main problem for farmers is financing a second crop when the first had been destroyed by floods. Farmers who have to resort to private lenders can be charged up to 30pc interest rates on short-term loans. Last July and August, 12 of Myanmar’s 14 states and regions experienced heavy flooding, damaging and destroying 1.5 million acres of monsoon paddy out of 16 million acres grown nationwide. The government and the Myanmar Rice Federation provided loans for second cultivation costs, stabilised local rice prices and provided food supplies on an emergency basis.

In The Black - Qatar-based telecommunications firm Ooredoo has begun making profits on its operation in Myanmar, it announced, after more than doubling its subscriber base in a year. In half-year results announced this week, the company said it now had more than 8 million customers in the country, and said its data network was already available in locations where more than 85 percent of the population lives. The results say Ooredoo Myanmar made a profit almost $22 million in the first half of 2016, compared to losses of about $83 million in the first half of 2015. Despite the growth in subscribers, Ooredoo is still behind rival Telenor of Norway, which has raced to 16.9 million subscribers, according to quarterly results published this month. Telenor made $72.3 million in the second quarter of 2016, between April and June. But Ooredoo last year vowed to turn its fortunes around with a more mass market approach. Revenues grew by 41 percent year to year, according to the latest results. The company also said it had become the first operator to launch 4G mobile services in May, “confirming its data leadership in Myanmar.”
Fund Raises Money - Singapore-registered private equity fund Golden Rock Capital says it has raised $20 million and has begun investing in business in Myanmar. The fund is targeting $100 million in total funding to make individual investments of ideally between $7 million and $10 million in the country. It has already put money into Myanmar Personal Care, a Singapore-registered entity trading in perfumes. Marvin Yeo, founder of the fund, which has offices in Yangon and Singapore, said that $20 million had been raised so far. Originating partner Thura Soe Paing said that investments would mean firms get management help from the fund. “We are more than a provision of capital, we would like to help the businesses grow through the contacts and connections that we have,” he was quoted saying. “The most important thing is when we come as investors and advisors, we believe in the long term potential of the country we are not here just to make a quick buck.”

Public Hospital Upgrade - Myanmar’s new five-year plan for the health sector includes upgrading all 25-bed hospitals across the country into 50-bed ones, according to Dr. Myint Htwe, minister of health. “We plan to upgrade all 25-bed hospitals into 50-bed facilities and employ 2,000 new doctors within two months,” he told Parliament. However, the minister did not specify a timeline for the upgrades. Lawmakers stated that even the 25-bed hospitals currently lack sufficient beds and staff. “In my township, the ‘25-bed’ hospital is supposed to have four doctors according to the standard organizational structure. But, it only has 16 beds and two doctors. Employees are overstretched. Most locals are ‘grassroots people’ and can’t afford to go to special clinics,” said Aye Naing, a Lower House lawmaker. According to the health minister, the previous government had monitored the rate of hospitalization at government-run hospitals and found it to have gradually increased between 2011 and 2015. The proposed bed upgrades will also mean a workforce increase from 55 to 156 employees at each facility. Myint Htwe explained that the ministry will not go further and upgrade the 25-bed hospitals into 100-bed ones because the smaller hospitals receive only about 13 inpatients and 49 outpatients each day on average. He added that the public does not often complain about the lack of beds, but more often about a shortage of doctors. The minister said the 50-bed hospitals will include pathology, surgery, obstetrics, gynecology, pediatric, osteoporosis, emergency, dental and anesthetic units and his ministry will ensure they are accessible to all. According to the Ministry of Health, there are a total of 1,190 hospitals in Myanmar as of February 2016.

Infrastructure
ADB Report on Transportation - As much as US$60 billion of investment is required by 2030 if Myanmar is to address shortfalls in transportation infrastructure that risk holding the country back from economic growth and reducing poverty, according to the Asian Development Bank (ADB). It has just published a lengthy “policy note” on the transport sector, comprising nine separate reports that include one on “how to reform transport institutions,” others looking at Myanmar’s river transport, urban transport and truck roads, and a guide on “how to improve road user charges”—the latter dealing with the troublesome issue of tolls. The reports derive from reviews on which the ADB assisted the Myanmar government in 2014-15. A press release accompanying the publication cited Bambang Susantono, ADB’s vice-president for knowledge management and sustainable development, saying the country’s “future is full of great potential.” “The new government is ready to make use of its abundant and innate resources to eradicate poverty and ensure growth for everyone,” he said. “This includes providing access to a modern and safe transport system for all.” Detailing some of the findings, it said that some 20 million people in Myanmar currently live in villages without road access during all seasons. The report notes that $45 to $60 billion is required in transport investments by 2030, and these should be coupled with streamlining institutions and strengthening cross-ministerial collabouration.

​Culture and Tourism
New Routes From Thailand - Bangkok Airways is hoping to fly directly from Thailand airports to Bagan and the archipelago gateway of Myeik, according to an industry publication. The carrier is applying to Myanmar’s Department of Civil Aviation for permission for two new flights. One would connect the northern Thai city of Chiang Mai with Nyaung U, close to Bagan, in Mandalay Division, and the other would link Bangkok and Myeik in Tenasserim. Myanmar’s smaller airports are generally only served by domestic airlines, but both destinations are expected to grow as the number of tourists visiting Myanmar increases. Some of the hundreds of islands off Myeik, most of which remain untouched, are currently undergoing development as tourist sites. Bangkok Airways already flies between Bangkok and airports in Yangon, Mandalay and Naypyidaw, and connects Chiang Mai to Yangon and Mandalay.

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. 
 

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.