Saturday, August 22, 2015

The Irrawaddy Magazine

The Irrawaddy Magazine

USDP Sends Message of Unity After Vote Exposes Rift

Posted: 22 Aug 2015 01:31 AM PDT

Left to right: Than Tun, Pike Htwe and Maung Maung Htay, spokepersons for the Union Solidarity and Development Party (USDP), speak to the media during a news conference attheir party headquarters in Naypyidaw on Aug. 13, 2015. (Photo: Reuters)

Left to right: Than Tun, Pike Htwe and Maung Maung Htay, spokepersons for the Union Solidarity and Development Party (USDP), speak to the media during a news conference attheir party headquarters in Naypyidaw on Aug. 13, 2015. (Photo: Reuters)

RANGOON — Burma's ruling party on Saturday appealed for unity, saying its ousted party chief would stay "faithful," after a parliamentary vote exposed a rift in the ruling bloc, amid the biggest political shake-up since the end of military rule.

President Thein Sein last week sacked his ambitious rival Shwe Mann before party headquarters were sealed off with police trucks in the middle of the night, sparking worries about Burma's first free elections in 25 years set for Nov. 8.

The November election, seen as a crucial test of the country's reforms, is expected to be won by opposition leader Aung Suu Kyi's National League for Democracy (NLD), but she is banned from becoming president under the military-drafted Constitution.

Shwe Mann, who has stayed on as the speaker of the Lower House, fought back on Thursday, when his supporters across the political spectrum rejected a controversial bill that could have led to his impeachment.

The vote underscored the former general's sway among rank-and-file lawmakers and exposed divisions in the ruling Union Solidarity and Development Party (USDP), whose regular MPs were angered by the way in which Shwe Mann was removed from the leadership.

"I understand there are some people in our party who prefer Shwe Mann and are disappointed about the way this happened," Tin Naing Thein, the USDP's new secretary general, told reporters at party headquarters in the capital Naypyidaw.

"All of us are colleagues who have worked together for many years," he added. "So even if the leadership changes, I believe we are still united."

Under the recall bill opposed by Shwe Mann and Suu Kyi, lawmakers would lose their seats if 1 percent of constituents signed a petition to recall them and the election commission found the complaint against them justified.

In a rare close vote on Thursday, lawmakers postponed the discussion on the bill until the next session of Parliament, which will come after the November election.

Shwe Mann has openly voiced his presidential ambitions and has forged a close relationship with the charismatic Nobel laureate Suu Kyi. The two last met after Shwe Mann's ouster, right before the reopening of Parliament this week.

Asked whether he was worried about Shwe Mann's next steps, Tin Naing Thein said, "We are not worried about his response at all. We believe that he's a trustworthy person."

"This man will be faithful to his country and his party."

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2015 Election: The Countdown Begins

Posted: 21 Aug 2015 08:21 PM PDT

A young man peers through voter lists at a Yangon polling station. (Photo: Reuters)

A young man peers through voter lists at a Yangon polling station. (Photo: Reuters)

RANGOON — In recent times, general elections in Myanmar have been cursed. The results of the 1990 election were annulled by the previous military regime after the main opposition party, the National League for Democracy (NLD), won in a landslide.

The following national election held in 2010 was rigged to favor the military-backed Union Solidarity and Development Party (USDP), with reports of widespread voting irregularities.

Both elections failed to usher in the much-needed democratic reforms yearned for by the vast majority of Myanmar citizens.

Whether or not the upcoming national election on November 8 will be similarly blighted is still a burning question among Myanmar voters amid their collective electoral trauma.

But major impediments to holding a free, fair and credible vote remain, not least of which is the country's military-drafted 2008 Constitution.

Article 59(f) of the Constitution bars popular opposition leader Daw Aung San Suu Kyi from becoming president, regardless of the electoral outcome in November. The charter also reserves 25 percent of parliamentary seats for military appointees, effectively providing them with a veto over major amendments to the Constitution—which require a 75 percent majority of parliamentary votes.

The military's political role is further cemented by a constitutional provision mandating that the ministers of Defense, Home Affairs and Border Affairs, be army appointees.

Furthermore, the Union Election Commission (UEC), tasked with organizing and overseeing the nationwide poll, is chaired by a former military general who is also a former lawmaker with the ruling USDP.

But despite these undemocratic restrictions, the expectation of a transparent electoral process lingers on for Myanmar people.

One positive of recent times was the handling of the 2012 by-election, broadly considered to be a credible poll, in which the NLD won 43 of the 44 constituencies it contested. The ruling USDP claimed a solitary seat of the 45 constituencies on offer.

However critics contended that President U Thein Sein's government had needed to hold a fair poll, which saw Daw Aung San Suu Kyi win a seat in the legislature, in order to convince skeptics, at home and abroad, that the reform process was genuine.

Nevertheless, the by-election was one small but encouraging step in the country's slow-burning transition to democracy and likely encouraged many political parties to contest the 2015 national election.

The 2012 result was also clear proof of the wide support for Daw Aung San Suu Kyi and the NLD—a serious concern for the ruling party. If this year's election is similarly credible, the NLD and other pro-democracy parties are likely to perform strongly.

With greater numbers in Parliament, the NLD and other ethnic political parties will be able to push for legislative changes that benefit Myanmar's citizens.

It remains difficult, however, to foresee radical changes, particularly to the Constitution, considering the ongoing presence of a military bloc in Parliament. The main, self-ascribed duty of these unelected MPs is to defend the 2008 charter recently described by The Economist as an "army-drafted monstrosity."

With a more diverse Union Parliament expected following the election, the military is perhaps even more unlikely to relinquish its political foothold. Any return to the barracks would take time.

Thus, the post-election period will be as delicate as it will be crucial. If the democratic opposition and ethnic parties win a parliamentary majority, all eyes will turn to the USDP and the military as to whether they accept the result.

Myanmar people don't want to relive the bitter experience of the 1990 election.

Even with a new government formed in 2016, a genuine dialogue between key political and military leaders will be necessary to address the country's myriad challenges.

Until now, the incumbent president U Thein Sein has shown little interest in such a dialogue. Talks held in recent months between the president, the army chief, parliamentary speakers, an ethnic representative and Daw Aung San Suu Kyi, were merely superficial.

Like it or not, the result of the upcoming election will have a direct impact on every individual in Myanmar and on the country's foreign relations.

The result will shape Myanmar's future, though it may not herald the radical political shift that many have fought—and died—for.

Party Lines: Between Hope and Realism

The Irrawaddy's San Yamin Aung speaks with representatives of five political parties about their hopes and plans for the polls.

 

NATIONAL LEAGUE FOR DEMOCRACY (NLD)

DAW NAN KHIN HTWE MYINT, Central Executive Committee member

Founded in 1988, Myanmar's largest opposition party led by Daw Aung San Suu Kyi won more than 80 percent of seats in the 1990 general election—the results of which were annulled by the ruling junta. The NLD boycotted the country's last general election in 2010 but participated in 2012 by-elections, winning 43 of the 44 seats it contested.

Daw Aung San Suu Kyi walks in Warheinkha village during door-to-door visits for a voter education campaign on July 4, 2015. (Photo: Reuters)

Daw Aung San Suu Kyi walks in Warheinkha village during door-to-door visits for a voter education campaign on July 4, 2015. (Photo: Reuters)

EXPECTATIONS

"Everyone wants real change from the 2015 election. To achieve that, I think we all need to support one large democratic force. I hope pro-democracy forces will win in the coming election."

CHALLENGES

"We have found many errors in the voter lists. Even my name didn't appear in the voter list in my constituency. And in some places, the collaboration between the sub-election commissions is weak. As with widespread cheating with advance votes in past elections, it is a risk for us if half of the voter lists include the wrong data."

STRATEGY

"We have been carrying out our voter list verification process including door-to-door visits to voters. We will also pressure the Union Election Commission on gaining access for party representatives to polling stations."

ON THE MILITARY

"If they regard the public as their parents, as they say, they should only fulfill a defense role for the country. There is no way they will reduce their allotment of 25 percent of seats in Parliament [in the near future]."

 

UNION SOLIDARITY AND DEVELOPMENT PARTY (USDP)

U TIN MAUNG OO, Central committee member

Formed in 2010 as the political arm of the former military regime, the USDP won a parliamentary majority in that year's widely discredited general election. The USDP will contest constituencies nationwide in the coming election, with Union Parliament Speaker U Shwe Mann heading the party's Elections Winning Committee.

Members of the USDP campaign for election in 2010. (Photo: Reuters)

Members of the USDP campaign for election in 2010. (Photo: Reuters)

EXPECTATIONS

"The Union Election Commission has released preliminary eligible voter lists and is fixing the flaws. Each party is trying to win and some may merge or form alliances. New parties have also been founded. So this year's election will be the [most] significant election in the country's history.

"People's experiences from 2010 and 2012 are different. In 2010, the public had less interest in political parties. Now the quality of party members, lawmakers and politicians' has increased to some extent. As a consequence, no party will win a landslide victory. It is also more likely that ethnic parties will win in their ethnic states."

CHALLENGES

"Some parties are speaking about constitutional amendments. The main thing in a democracy is to follow the existing rules. The most important thing is the country's stability. Politicians generally use either students, workers or farmers [for political ends]. If some parties or groups use them for their benefit, it won't be good for the country.

"There are many people who don't have a national registration card. There is no specific plan [to address their eligibility to vote]. In my constituency alone, there are thousands [without national registration cards] who aren't eligible. This is the biggest challenge for the election. The UEC is trying their best and I believe the election will be free and fair. But the government needs to make sure all eligible citizens are able to vote."

STRATEGY

"After the winning party forms government, some party policies should form the policies of the executive body. At present, unfortunately, the USDP's policies aren't working in tandem with the government's operations."

ON THE MILITARY

"Let's say representatives of the 14 states and regions and the military are on the same boat heading toward democracy; they can encounter strong waves and other difficulties together on the way to their destination. If we work together, the military will know the difficulties in achieving democracy and they can help us too. But if we leave them out, they won't know the challenges and will not be with us. The more doubts and difficulties that build up, the more potential there is for a coup like in Thailand. So for now, the 25 percent of military lawmakers should continue."

 

NATIONAL DEMOCRATIC FORCE (NDF)

U KHIN MAUNG SWE, Chairman

The NDF is comprised of former leading members of the NLD who disagreed with the party's decision to boycott Myanmar's last general election in 2010. The NDF contested 161 seats in that poll, winning 12 seats in the Union Parliament and four seats in state and regional legislatures. The party plans to field nearly 300 candidates to contest the upcoming national election.

U Khin Maung Swe, left, of the NDF. (Photo: The Irrawaddy)

U Khin Maung Swe, left, of the NDF. (Photo: The Irrawaddy)

EXPECTATIONS

"More pro-democracy forces should win seats in Parliament. If so, changes in the country could happen faster. But it depends on the public's votes. I think it is more likely there will be a coalition government. There is no way for a landslide victory by a major party."

CHALLENGES

"Errors in the voter lists. Also we need to achieve peace in the country before the election to increase the chance of a fair poll. People may cast votes freely but there could still be manipulation by the ruling party—we need to prevent this. Officers at polling stations could also come under pressure… International watchdogs need to be present to monitor the process in as many areas as possible, even if they can't monitor nationwide."

STRATEGY

"The NLD and other CSOs are checking the voter lists. We will urge the government and the electoral body to fix the errors in time. That's all we can do. We don't have the manpower or financial resources to do it ourselves."

ON THE MILITARY

"The role of the military in the Parliament will be the same now, with 25 percent of seats. They may consider voluntarily reducing the number of seats themselves if there was a guarantee of peace before the election. If not, there is no way they would [take this step]."

 

ARAKAN NATIONAL PARTY (ANP)

U AYE THAR AUNG, Party patron

ANP formed in January 2014 following a merger between the Rakhine National Development Party (RNDP) and the Arakan League for Democracy (ALD). The former party won 35 of 44 seats it contested in the 2010 election, which the ALD boycotted. The party plans to contest 63 seats in the coming election, mainly in the regional Rakhine State legislature.

Members of the RNDP and the ALD at a press conference in June 2013. (Photo: The Irrawaddy)

Members of the RNDP and the ALD at a press conference in June 2013. (Photo: The Irrawaddy)

EXPECTATIONS

"I place more emphasis on amending the 2008 Constitution than on the 2015 election. Without major changes to the Constitution, I don't believe there will be changes in the country and internal peace beyond the election. But if candidates from the NLD and ethnic parties win most of the seats in Parliament, we could have more power to make legislation. And the same in regions, if ethnic candidates win in their constituencies and become lawmakers and ministers, I hope they will work for the development of their regions. But we can't expect a real transition since major articles in the Constitution are still not amended."

CHALLENGES

"There were voting irregularities in the 2010 election. I am concerned there will be the same in the 2015 election. It is hard to believe that from 30 to 80 percent of the current voter lists are [inaccurate]. I am also concerned that if the NLD and ethnic parties win a landslide victory, the ruling party won't transfer power and [acknowledge] the new Parliament."

STRATEGY

"Our party only represents one state. So I think to monitor the [broader] challenges, the government and big parties will be vital."

ON THE MILITARY

"After the election, 25 percent of seats will still be reserved for military appointees' in the Lower House, Upper House and the regional parliaments. This is the main barrier to changes in the country and I don't see that they will easily quit by themselves."

 

SHAN NATIONALITIES LEAGUE FOR DEVELOPMENT (SNLD)

U SAI LEIK, Joint-secretary

The SNLD won 23 seats in the annulled 1990 election. It was forcibly disbanded after boycotting the 2010 poll but re-registered in 2012 and plans to contest more than 160 seats in the coming national election.

) Opposition leader Aung San Suu Kyi with Khun Htun Oo of the SNLD and activist AUgn Din in Washington, 2012. (Photo: Reuters)

) Opposition leader Aung San Suu Kyi with Khun Htun Oo of the SNLD and activist AUgn Din in Washington, 2012. (Photo: Reuters)

EXPECTATIONS

"If democratic forces win most seats in the election, we will have hope for constitutional amendments. To have the federal union that ethnics demand and the democracy that the public wants, the main challenge is to change the Constitution.

"I think this year's election is more important than the 2010 election because at that time some parties were excluded and there were many parties, especially ethnic parties, that didn't run for various reasons. But in the 2015 election, I hope almost all ethnic parties will run.

"If the military keeps its seats in Parliament, it won't be a good look internationally. It is important that the democratic forces win a landslide. Only with that can we achieve political dialogue and change the Constitution."

CHALLENGES

"I'm not sure that the election will be free and fair. Even in the preliminary voter lists, there are lots of errors. Although the electoral body is saying they will fix all the errors in time, we can't predict what will happen.

"And the government needs to guarantee they will recognize and implement the results of the election. The ruling party needs to contest the election fairly. I am concerned about that; the attention of the international community, media and public is much needed."

STRATEGY

"We are doing voter education, verifying voter lists to correct errors and are raising awareness among all eligible voters to come to the polling stations and cast votes.

"And we will watch the ruling USDP in accordance with the code of conduct. If they violate it, we will publicly expose them in collaboration with NGOs and the media."

ON THE MILITARY

"Until now, they haven't looked likely to reduce their current 25 percent of seats in Parliament. But I think if the democratic forces and ethnic parties could pledge not to pursue action over past incidents, they may eventually reduce [their representation]."

This article was originally published as the cover story of the August 2015 issue of The Irrawaddy magazine.

 

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Dateline Irrawaddy: “The NLD Needs to Reform Itself”

Posted: 21 Aug 2015 07:38 PM PDT

On this week's edition of Dateline, Kyaw Zwa Moe is joined by Dr Khin Zaw Win, director of the Tanpadipa Institute, and Dr Thaung Tun, director of the Institute for Peace and Social Justice. (Photo: The Irrawaddy)

On this week's edition of Dateline, Kyaw Zwa Moe is joined by Dr Khin Zaw Win, director of the Tanpadipa Institute, and Dr Thaung Tun, director of the Institute for Peace and Social Justice. (Photo: The Irrawaddy)

On this week's edition of Dateline, Irrawaddy editor Kyaw Zwa Moe, Tanpadipa Institute director Dr Khin Zaw Win, and Institute for Peace and Social Justice director Dr Thaung Tun discuss the downfall of Shwe Mann and internal discontent within the National League for Democracy ahead of the November general election.

Kyaw Zwa Moe: Welcome to Dateline Irrawaddy. Thura U Shwe Mann, formerly the chairman of the ruling Union Solidarity and Development Party (USDP), was recently ousted from his post. This week, we'll be discussing how the internal ructions in the ruling USDP will impact upon the political landscape of the country. Dr Khin Zaw Win, director of the Tanpadipa Institute, and Dr Thaung Tun, director of the Institute for Peace and Social Justice, will join me for the discussion. I am Kyaw Zwa Moe, editor of the English edition of The Irrawaddy.

Firstly, Dr Thaung Tun. U Shwe Mann held the most senior post in the ruling party and was ranked third in the previous military regime. He was removed by a faction opposed to him. What immediate political impact it will have as a result, given the election is drawing near and U Shwe Mann is deemed to have close ties with National League for Democracy (NLD) leader Daw Aung San Suu Kyi? What do you think will happen?

Thaung Tun: With regard to the recent happenings within the USDP, usually political parties experience internal rivalries when the election is near. Political parties may either use democratic practice or force to resolve internal rivalry. According to the majority of observers, some force was used [in this case]. From 2012 to 2015, there were lively debates on reforms in Burma within the parliament—at least there were lively debates on charter amendment, though they failed. The parliament did not become a rubber stamp parliament as we had expected before 2010 election. Today, as we see the changes within the USDP, and signs that some of its members have have stalled and some are reversing the reform process, there has risen a question about how the reform process will continue after 2015. So now, the result of the 2015 election, which will determine the representation of political parties in the next parliament, has become very important.

KZM: What about you, Dr Khin Zaw Win? As we have said, U Shwe Mann had close ties with Daw Aung San Suu Kyi. They have held joint press conferences. We also heard that Daw Aung San Suu Kyi has expressed her concern about the things done by U Thein Sein. How much will the purge of Shwe Mann impact upon political parties, especially the NLD?

Khin Zaw Win: These events raised this question and are a cause for concern. Over the past couple of years, it seemed that the two parties could even forge an alliance. To put it into the US's words, Shwe Mann and Daw Aung San Suu Kyi were considered a dream ticket, which would please everyone. But now, this has fallen apart. As far as everyone knows, the USDP and the military do not like U Shwe Mann because he is too close to Daw Aung San Suu Kyi. This would have a role. U Shwe Mann was removed by force. So, this raises the question if the USDP would make a similar move against other parties and leaders. We need great caution here. If [NLD] were to forge an alliance [with U Shwe Mann], it would be good if it turned out to be successful, but they need to consider what to do if such an alliance turns out to be a failure. What will U Shwe Mann do in the immediate future? Although he had to step down from the chairmanship, he still has strength. Will the NLD and other parties use his influence? We have to wait and see.

KZM: What will U Shwe Mann do? In the past, U Shwe Mann was a military leader and was the third highest member of the military regime; he therefore knows how similar cases have been handled. The regime took decisive action in the case of U Khin Nyunt in 2004. Will similar action be taken against him or perhaps worse?

KZW: People have speculated that [the military and USDP] would knock him out. If truth were told, there has been a tradition [of eliminating the potential rivals] in the military. But then, given this political era and that U Shwe Mann is the parliamentary speaker, he will be able to continue engaging in politics if they give him mercy. He is still allowed to contest in Pyu Constituency from USDP. He is now in a transitional period. We will have to wait and see if his case will end in the way of military tradition, or if he will be allowed to continue in politics.

KZM: It seems that the military and the executive arm of the government are very close and have acted hand in glove in this case. In the past, executive power was the responsibility of the military regime and now it is the civilian government. How much difference do you see in their nature? Is it just a semantic change? Is it nominal? What do you think are the similarities in behavior?

TT: We found that the military and the government speak almost with the same voice, with regard to their positions. As a result, there were frictions with the parliament. The USDP's senior lawmakers, including the former USDP chairman, who paved the way for debate on constitutional amendments, were accused of disloyalty. At the sight of these things, I feel seriously concerned for my country. After U Thein Sein government came into power in 2010, I talked with Daw Aung San Suu Kyi and discussed the political parties registration law. Mainly we discussed changing the phrase 'we will uphold the constitution' to 'we will respect the constitution' in the law. The political parties registration law was changed based on the principle that it is not that the Constitution can never be changed, but it can be changed when needed.

Then, the NLD joined parliamentary politics. The proposal to change the Constitution was put forward by the USDP. Taking at look at those proposals, they are very modest. From the point of view of democratic forces, those proposals are unsatisfactory. Those proposals are too modest. But then, the proposals were totally shut down. So, there is a cause for concern. Constitutional amendments are the key to internal peace, national unity, political stability, and political, social and economic development of our country. I am not calling for changing 100 percent of the constitution, but there must be a process, the door must be opened. Only then will people and the country's ethnic minorities have trust in the government.

KZM: Speaking of opening of the door, there are many problems in Burma—ethnic issues, peace, constitutional shortcomings and many social problems. So, ethnic leaders, political leaders, military leaders and government leaders need to hold a dialogue. There was no such dialogue in the past five years. So, is the door still closed by the other side? There were certain ties between Daw Aung San Suu Kyi and U Shwe Mann. Do you see any potential of a similar meeting between [Suu Kyi], President U Thein Sein and Snr-Gen Min Aung Hlaing?

TT: I haven't seen any potential so far. For example, we heard some criticism that Daw Aung San Suu Kyi sought the wrong ally in U Shwe Mann. In fact, what we care about are dialogue partners. The challenges facing Burma must be addressed through dialogue. Here, U Shwe Mann is not the only potential dialogue partner [for Suu Kyi]. Dialogue can also be held with either U Thein Sein or Commander-in-Chief Min Aung Hlaing.

There were proposals for four-party and six-party talks. But, time elapsed and those talks did not happen. Even if Daw Aung San Suu Kyi became president and the NLD won a landslide in post-election period as people had wished, the NLD alone and Daw Aung San Suu Kyi alone won't be able to address the challenges facing Burma. It is imperative that key stakeholders engage in dialogue on the subject of national reconciliation. Given that the door to dialogue was shut in the past one or two years, there will be a cause for serious concern after 2015. If the doors continue to stay shut and economic sanctions still exist—we are facing economic crisis today, the value of the dollar has increased and the value of the kyat has declined and imports have declined, economic reforms and efforts to eradicate poverty are failing and it will be difficult to overcome the consequences and damage from the recent floods. I am particularly concerned that tensions will surface, not only because of political reasons, but also because of economic and social reasons.

KZM: Dr Khin Zaw Win, as Dr Thaung Tun has said, there are several potential dialogue partners, such as U Thein Sein. And there has been criticism that she got too close with U Shwe Mann and he was the wrong ally to pursue. Now, it is merely months away from the election and I think to what extent the election will be fair has now become a much more pressing question. Which policy should Daw Aung San Suu Kyi's party adopt? Recently, there was a controversy over its selection of candidates. The NLD was criticized for leaving out figures such as Dr Nyo Nyo Thin and U Ko Ko Gyi from the 88 Generation. Which policy and approach should the NLD take for the coming election?

KZW: Before I answer that, I want to agree with what Dr Thaung Tun has said. Speaking of the NLD, both local and international supporters have given NLD good advice in all respects and in good faith for a long time. It seems that all this advice has been in vain. Now, the election is months away. There have been lots of complications. The NLD needs to create an environment in which all can participate with inclusiveness. Even if they don't want to participate, the NLD has to invite them. The 88 Generation has proposed to join the NLD, but sadly, the merger did not happen. The NLD needs to reform itself. And it must be urged to reform. Not only the personalities within the NLD, but also outsiders need to urge for reform. Another question is how much the NLD will achieve after the election. If it wins the election, it would be the part of the government and has to prepare to create policies and govern. As it will need to form alliances and coalitions with other parties, it will need to change its outlook and perspectives. The NLD needs to do it urgently. And all need to urge the NLD to do so.

KZM: You mean the NLD and other parties need to be united. Dr Thaung Tun, Dr Khin Zaw Win, thank you for your contributions.

 

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The Irrawaddy Business Roundup (Aug. 22, 2015)

Posted: 21 Aug 2015 07:24 PM PDT

Myanmar National Airlines inaugurated a new route between Rangoon and Singapore this week.

Myanmar National Airlines inaugurated a new route between Rangoon and Singapore this week.

Businesses at Risk From Financial, Cyber Crime in Burma

The conditions in Burma are "ideal for various forms of criminal activity to flourish," London-based analysts BMI Research say in a new report that warns that legitimate businesses face risks from the poorly monitored financial sector and the lack of preparedness for cyber attacks.

The firm's "business crime analysis" made available this week ranked Burma third to last out of 38 countries in Asia in terms of the risk of business crime, with only North Korea and Afghanistan ranked lower.

The report said that violent crime was not common in the country, meaning that the costs of physical security should not be excessive for investors, except for those venturing into conflict-affected regions.

However, the report said, criminal gangs have been allowed to grow rich from smuggling, and few measures are in place to prevent the proceeds being laundered through ostensibly legitimate businesses. The country is also underprepared in terms of cyber security, it said, noting that the number of secure servers available in Burma is among the lowest in the world.

"The absence of government regulation and protection against financial and cyber crime leaves companies highly exposed to theft of data and financial assets as well as processing transactions which involve funds generated through illegal activity," the analysis said.

"Consequently, businesses which are highly exposed to the financial industry or make regular use of the internet for communication or online transactions must provide extensive security measures, including cyber security software, offshore data backup and disaster management systems, and dedicated financial crime teams to investigate and report and suspicious transactions."

State Airline Begins International Expansion

Myanmar National Airlines (MNA) this week inaugurated a new route between Rangoon and Singapore, and plans to add more international flights in coming months.

The return to international service follows a corporatization drive within the company and the purchase of new aircraft, but many have doubts about whether the airline can compete with established international carriers.

According to travel website TTG Asia, the MNA's Rangoon-Singapore service will be running daily by the end of October. Also in that month, the site said, the airline also plans to connect Rangoon with both Hong Kong and Taipei, as it attempts to rebuild a name as a Burma's international flag carrier.

Other Burmese airlines attempting to take advantage of the recent expansion in visitor numbers to the country have found themselves outshone by larger rivals. Airlines based in countries whose airports act as international hubs have the advantage of being able to offer passengers connections with other regional or intercontinental flights.

A Financial Times report on the expansion this week pointed out that Myanmar Airways International, a spin-off from the national airline that is mostly owned by Kanbawza Bank, had to withdraw its Singapore-Rangoon flight as it was unable to fill its aircraft.

However, the Financial Times said, "Some analysts see MNA's strategy less as a commercial proposition than a reflection of government ambitions to create a flagship to promote the country abroad."

The report quote MNA saying that its expansion was "not a question of beating competition."

"Instead, we will deliver a unique Myanmar experience on our flights that no other airline can offer," the airline told the Financial Times. "This will give choice to customers flying to and from Myanmar and, we believe, will drive business to our airline."

IFC Backs Local Private Bank for SME Loans

The World Bank's International Finance Corporation (IFC) has pledged a $7 million loan to Myanmar Oriental Bank Ltd., with the cash to be disbursed to small- and medium-sized enterprises in Burma.

A joint statement from the two institutions on Wednesday said that the convertible loan would help the private lender expand financing for smaller local firms "in urgent need of capital to grow their businesses and create jobs." Half of those companies at present do not have bank accounts, the statement said.

The IFC is a branch of the World Bank Group that lends to the private sector in developing countries with the long-term aim of expanding the capacity of local businesses.

"The loan complements IFC's ongoing advisory support to Myanmar Oriental Bank on strengthening its corporate governance and improving its trade-finance operations," the statement said.

Myanmar Oriental Bank has already received $5 million from the IFC through its Global Trade Finance Program. The bank aims to provide more than $200 million in loans to SMEs by 2019, the statement said.

"IFC will also advise Myanmar Oriental Bank on establishing policies and procedures to identify and manage environmental and social risks associated with the business activities it finances," it said.

Last year the IFC said it expected its investments in Burma to rise to $1 billion within three years, according to Reuters. Investments so far include about $170 million invested in hotel and real estate projects, another SME-lending program carried out through Serge Pun's Yoma Bank and a loan to Cambodian micro finance institution Acleda.

Railway Ministry Requests Extra Funding to Repair Flood Damage

Burma's already dilapidated railway network has suffered almost $3 million of damage from flooding in recent weeks, according to state media.

The Global New Light of Myanmar reported figures from the Ministry of Rail Transportation saying that some rail lines in the north and northwest of the country had already been reopened. Operations were suspended on Mandalay-Myitkyina line for two months, and the line through Hsipaw in northern Shan State has reopened.

The flooding—affecting 12 of the 14 states and regions, but most severely in Arakan State, Chin State, Sagaing Division and Magwe Division—has killed more than 100 people, displaced hundreds of thousands and also damaged roads and bridges.

The ministry reported that repairing the damage to the nation's railways could cost more than 3.8 billion kyat, about $2.95 million at the current exchange rate. "The damage bill stands at more than K1.3 billion in Rakhine State and Sagaing, Magway, Ayeyarwady and Bago regions," the report said. "Temporary train services have cost more than K900 million, according to the ministry."

The report quoted Tin Soe, general manager of Myanmar Railways, saying that the repair works could only be carried out with extra funding from the government. "Depending on the special fund of the government, we will repair the damaged railroad sections," he was quoted saying.

Thai Debt Collector to Enter Burma

A Thai firm that specialized in debt collection has announced plans to enter Burma's microfinance sector, according to the website Deal Street Asia.

The report said that JMT Network Services (JMT), which is listed on Bangkok's Stock Exchange of Thailand, has agreed to form a joint venture in Burma named JP Finance Co Ltd.

"This was approved by the company's board of directors recently," the report said, citing information from online news source Infoquest. It said the company would begin life with capital worth just under $600,000, with the Thai company owning a 70 percent stake.

A number of microfinance institutions built have entered Burma in the past few years, with the intention of using foreign capital to extend small loans to farmers and other low-income Burmese.

The post The Irrawaddy Business Roundup (Aug. 22, 2015) appeared first on The Irrawaddy.
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