The Irrawaddy Magazine

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The Irrawaddy Business Roundup (July 4, 2015) Posted: 03 Jul 2015 07:22 PM PDT A promotion lady holds a new 425 ml (14 oz) Coca-Cola bottle during an event to introduce the new packaging at a shopping mall in Yangon July 27, 2013. (Photo: Reuters) Coca-Cola Disclosure Highlights Transparency Issues A campaign group has urged international investors entering Burma to disclose more information on their partnerships with local firms, after US soft drink brand Coca-Cola's due diligence in the country fell short. Coca-Cola has been praised for in-depth reporting on its activities in Burma, and its third human rights report published on Tuesday under US government rules runs to 17 pages of detail about its activities. The report includes the disclosure that a key shareholder in Coca-Cola's joint-venture partner, Pinya Manufacturing, also holds a stake in a company involved in Burma's notoriously murky jade-mining industry. Coca-Cola said that it only discovered that Daw Shwe Cynn, a shareholder in Coca-Cola Pinya Beverages Myanmar, is also a director and minority shareholder in the jade company, Xie Family Company, after "engaging" with London-based NGO Global Witness. "Our original due diligence was based on the best information available at that time," the report said, adding that company registration documents on Xie Family were only made public late last year. "While the jade mining industry is unrelated to our business, we encouraged and facilitated engagement between Daw Shwe Cynn and Global Witness," Coca-Cola's report added. The campaign group issued a statement on Wednesday highlighting the disclosure, and pointing out that Xie Family has worked as a long-term subcontractor for Myanmar Economic Holdings Ltd (MEHL), a company controlled by the Burmese military. "Xie Family and MEHL have told Global Witness that they have not worked together since 2012," the Global Witness statement said. "But figures from last year's government jade auction show that they jointly marketed jade that sold for over five million euros." In a separate blog post on Global Witness' website, the group said companies operating in Burma and elsewhere should take heed of Coca-Cola's lapse, calling for firms to engage "more robust due diligence" and publicly disclose more information about local partners in order to allow the public to scrutinize their links. "Myanmar has experienced decades of secrecy and severe restrictions of free speech resulting in scarce public information and serious gaps in even the best corporate due diligence," the post said. "To mitigate risk, international companies should publish the names and identifying information of the individuals who own and control their local ventures (also known as their 'ultimate beneficial ownership')." Vicky Bowman, director of the Myanmar Center for Responsible Business, agreed that Pinya and other Burmese companies partnering with international investors should share more information on their corporate governance. But in comments on the Coca-Cola report emailed to The Irrawaddy, Bowman said that the drinks company remained "far ahead of their US and international peers in disclosure of the human rights and business integrity challenges they face in Myanmar." She highlighted work conducted by Coca-Cola on gender equality in its workforce, excessive overtime for employees and the fact that the company is contributing to efforts to address child labor in Burmese teashops—most of which serve Coca-Cola drinks and are staffed by low-paid children. The report, said Bowman, "provides useful advice based on experience, and should be read closely not just by their international food and beverage peers such as Heineken, Carlsberg, Pepsi, Nestlé and Unilever, but by any company doing business in Myanmar including local companies." IMF Issues Warning Over Private-Sector Credit Growth A claim by the International Monetary Fund that rapid growth in bank lending may pose a risk to Burma's economy has been met with skepticism. The institution issued a statement on Wednesday listing the findings of an IMF team that visited the country in late June and met with senior Burmese government and Central Bank officials. Naypyidaw will be glad of one finding—the IMF agreed with the government's estimate for gross domestic product growth—at an impressive 8.5 percent last year. Less welcome, however, the fund also said inflation in Burma was at about 8 percent year-on-year as of May, a trend that has not gone unnoticed among the Burmese public, for whom the recent dive of the kyat is beginning to hurt. The IMF also warned that a stark rise in lending in the private sector could pose risks. The IMF said credit was up 36 percent year-on-year in the last fiscal year, which ended in March. "The economy is facing some downside risks," the statement said. "Persistent dollar strength and low natural gas prices could further weaken Myanmar's fiscal and external positions. Vulnerabilities from rapid credit growth, an expansionary budget, and a widening trade deficit may pose risks to price and external stability." It is unclear why lending to the private sector may have jumped. Burmese enterprises often complain about the difficulties of obtaining credit without fixed collateral such as property. Sean Turnell, an economist at Sydney's Macquarie University, told The Irrawaddy that the IMF's lending figures might not reflect the reality, since many of Burma's private banks are part of large conglomerates, within which they provide loans. "The trouble here is that what the IMF is seeing are simply lending aggregates," Turnell said in an email. "If we added up all the inter-group loans, credit exposures to large and more loosely connected enterprises, and the array of speculators in various sectors, and it might look like growing private sector lending. "But loans to small to medium enterprises (SMEs), farmers—not to mention consumers—remain in very short supply." Singapore's UOB Extends 2 Loans for Rangoon Developments Singapore's United Overseas Bank has signed two loan deals to finance new projects in Burma's biggest city, with the bank backing new car showrooms and a hotel expansion in Rangoon, according to The Straits Times. The Singapore-based newspaper said UOB announced the two deals at the opening of its new branch in Rangoon on Tuesday. The bank is one of nine foreign banks recently granted permission to open branches and offer limited services in country. UOB has already announced the funding of a hotel project through Rangoon Excelsior Company. The bank was now also funding Cycle & Carriage Automobile Myanmar Company—which is owned by a Singapore-listed parent company—to build two car showrooms and a workshop in Rangoon, the report said. UOB has also reportedly given a loan to System-Bilt Myanmar—also owned by a Singapore-based firm—to extend the Summit Parkview Hotel on Ahlone Road. "UOB did not disclose the two loan amounts," the newspaper reported. "The bank earlier this week said that it plans to help its clients invest US$300 million in Myanmar over the next 12 months." Rural Lending Up for Cambodian Micro Finance Institution in Burma Cambodian micro finance institution Acleda's Burmese venture has given out almost $9 million in small loans in Burma, with an increasing proportion of that lending going to rural areas, according to a statement. The recent statement said that Acleda MFI Myanmar said it was a "market leader" in Burma's nascent micro finance sector. "As of the end of March, 2015, ACLEDA MFI increased lending to the lower income business sector with total gross loans outstanding at US$8,846,618 of which US$ 2,673,245 or 34% was disbursed in rural areas," the statement said. In the previous year, the proportion of loans Acleda disbursed to rural areas was just over 12 percent of the total, it said. The MFI, which is funded in part by the World Bank's International Finance Corporation, currently has six offices in Burma, in both Rangoon and Pegu Divisions. The statement said Acleda would "Expand to other regions and townships in 2015/16." Indian Agriculture Storage Firm Sets Up in Burma Indian company StarAgri Warehousing and Collateral Management has reportedly opened up operations in Burma as it hopes to expand trade links between India and Southeast Asia. The company has also set up an office in Singapore, according to a report in India's The Economic Times this week, citing the Mumbai-based company's president for international business, Jimmy John. According to its website, StarAgri is a "post harvest solution" company. "We help farming communities to protect their produce and reduce post harvest losses to increase food availability without placing additional burden on the environment," the site explains. StarAgri has "set up an office in Yangon to participate in India-Myanmar agricultural trade," the newspaper report said, explaining that the company will use Singapore as a hub from which to expand its business. "The company will initially focus on agri product trade from South East Asia and then move on to global network," the report said. The post The Irrawaddy Business Roundup (July 4, 2015) appeared first on The Irrawaddy.

Exploring Shan State’s Forgotten Mines Posted: 03 Jul 2015 07:03 PM PDT Click to view slideshow. NAMTU, Shan State — Just before the rains set in, I set out on the 170-mile journey from Mandalay to Namtu in northern Shan State. My destination: the legendary Bawdwin mine, developed under British rule by Herbert Hoover and others in the early part of the last century, before the former engineer and globetrotter became the 31st president of the United States. The mine became famous before the Second World War as one of the globe's biggest sources of lead as well as an important source of silver and zinc. Today, the Bawdwin mine remains largely forgotten after it was nationalized in 1965 and handed over to the Asia World Company in 2010. I wondered what I would find. In the early morning, the roads were dry and the only green I saw from the windows of my hired van were banyan trees, irrigated maze plantations and the uniforms of soldiers providing security on the road. We passed through Pyin Oo Lwin, Gohtwin, Nawngkhio and Kyaukme before we arrived at around 10 am at the fork in the road in Hsipaw that leads to the near-deserted winding one-lane road to Namtu, 42 miles away. The air was filled with the smell of smoke rising from land being burned off for farming. Occasionally I saw trees in full blossom, natural springs, grazing cattle and road workers on the four-hour journey. At Namtu, I discovered a town that is home to a diverse mix of people. There are many Bamar originally from the central dry zone, Chinese and Gurkhas as well as the local Shan, Kachin and Palaung. Scattered about the town and its environs on either side of the Namtu river (whose name translates as "rotten water" in the Shan language), I found relics of history in all directions. On the western side of the river I found the old train station, with British-built warehouses still standing and a signboard that read, "1,765 feet above sea level." Steam locomotives with wooden coaches manufactured around the time of the First World War by UK firms Keer-Stuart & Co. Ltd and W.G. Bagnall Co. Ltd were stationed at the start of the spectacular winding railroad to Kya Sa Khan, which means Tiger Camp. It was there that Herbert Hoover reportedly found the footprints of a tiger close to the source of what would become a massive mine descending 12 levels and 1,200 feet underground. Once also called the Timber Mine for its walls propped up with local hardwood, today the Bawdwin depths are deserted, and they are only accessible down to the sixth floor, according to engineer and foreman at the site U Tin Tun Aung. Locals told me that an approximately 140-foot-long section of the railway line to Tiger Camp was damaged during last year's rainy season and remains unrepaired. Near the station, up a snaking hill road lined with eucalyptus and frangipani trees, I found a part of the old mine headquarters. In the colonial period this rise was named Bo Gon, or Foreigner Hill. The mine superintendent and foremen lived on the peak, where there was also a hospital and a post office. On another hill close to the station is the deserted refinery that dates back more than 100 years. Here I saw two-foot wide railway tracks, old coaches and wheeled iron containers. It was easy to imagine the bustle of the past, when thousands of workers led busy lives here. But now, silence reigns, and just a handful of male and female guards watch over the refinery on shifts. A female guard showed me a room with a modern-looking Chinese-made iron furnace where silver, gold and lead were extracted. Local sources later told me that state officials sold off five 30 foot high colonial-era furnaces before the mine was privatized. For a while back then, junior officials dug out a type of arsenic compound called "speiss" and sold it to Chinese buyers. "It was like a festival," a local said, as money flowed through the area and gambling and drug abuse spread among local youth. Nearby stood the chimney, which channeled the fumes from the refinery into the open sky, and below this there is a high lava hill. Future Prospects Though Bawdwin mine and the refinery have not functioned since privatization five years ago, some open pit mining continues here and Asia World still has a skeleton staff, doing mainly odd jobs and security. According to workers, the company is investing more in more profitable mines such as the Heinda mine and the Kawlin gold mine in Tanintharyi and Sagaing regions respectively. But a Chinese-run refinery called Myanmar Apex is extracting zinc from the old lava dumps, effectively making money from rubbish. Local workers say that bad-smelling fumes and ash from the chimney may harm their health, but they have to put up with it as the refinery is a source of occasional work. I had the sense that workers from various parts of Myanmar find it hard to leave this area where they recall the golden days and hope for a revival. Some old-timers said they hoped a foreign investor might arrive with expertise as well as respect for labor conditions and the local environment. They might get their wish. Though an expected new mining law is still delayed, there have been recent reports of Australian interest in Bawdwin area deposits. For me, if armed conflicts in the region cease, this place full of atmosphere and lovely scenery seems well-placed to become an attractive tourist draw. This article originally appeared in the July 2015 issue of The Irrawaddy magazine. The post Exploring Shan State's Forgotten Mines appeared first on The Irrawaddy.

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