Monday, July 23, 2018

The Irrawaddy Magazine

The Irrawaddy Magazine

Karenni State Gov’t Disbands Committee for Gen. Aung San Statue

Posted: 23 Jul 2018 07:18 AM PDT

YANGON — The Karenni State government has disbanded a committee tasked with commissioning a statue of General Aung San in the state capital Loikaw, following public objections to the plan. However, the plan to erect a statue of the national independence hero will proceed under the direction of non-state sector groups, the chief minister said.

The abolition of the committee follows a series of unsuccessful meetings to resolve objections to the plan attended by state officials and groups opposing the project. Prior the meetings, officials began legal proceedings against youth activists involved in local protests against the plan.

Chief Minister L Phaung Sho said at a press conference at the state government office on Monday that a new statue committee would be established by community-based organizations, with the state government playing an assistance role.

His comments on Monday represented something of a climb-down from his position at a meeting with opponents of the statue plan on July 16. At that meeting, the chief minister warned that if unrest against the plan continued to grow, he would order the military to stabilize the situation. The comments were reported on social media and drew heavy criticism.

It was agreed at the first meeting between the state government and opponents of the plan on July 7 that the timetable for erecting the statue of Gen. Aung San would be postponed to allow time to gauge public opinion. Yet, tension over the plan increased last week.

At a meeting on July 20, youth groups opposed to the statue project walked out after announcing they had no more trust in the state government and would no longer work with it.

The groups said that during the meetings, the state government only pushed to get support for the statue, rather than negotiating. They also cited its refusal to drop charges against the youth protesters.

Chief Minister L Phaung Sho said on Monday that those community-based organizations that did not walk out of the July 20 meeting had indicated a desire to form their own committee on putting up a statue, and the state government had agreed.

Asked by local media which organizations would be involved in the panel, the chief minister declined to answer and referred the question to the new committee.

A total of 23 youth activists are being sued under articles 19 and 20 of the Peaceful Assembly Law for organizing the protest on July 3. They also face a case of incitement under Article 505 (b) and (c) of the Penal Code for distributing pamphlets opposing the statue ahead of the protest.

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Buddhist Nationalists Warn Latest Ban Could Cause Public Discontent

Posted: 23 Jul 2018 05:51 AM PDT

YANGON—Myanmar's biggest nationalist association warned the government and the country's senior monks that their decision to outlaw the group may cause disunity among the Sangha and lead to a public outcry.

The Buddha Dhamma Prahita Foundation, formerly known as Ma Ba Tha, declared over the weekend that if such instability were to happen, the Ministry of Religious Affairs and Culture and Ma Ha Na (the State Sangha Council that oversees Buddhist monks in the country) must take responsibility.

The statement follows Ma Ha Na's five-point proclamation against the group on Friday that included a ban on the use of the association's name, an order to take down its signposts across the country within a 45-day period and a threat to take legal action against those who fail to abide by the decision.

Friday's announcement was the third such crackdown on the nationalist group by the National League for Democracy administration in three years, as the government tightens its grip over the nationalist movement. In 2017, the government and the Buddhist clerical authority imposed restrictions on the group's predecessor, the Association for the Protection of Race and Religion, better known as Ma Ba Tha, banning it from operating under that name and ordering that Ma Ba Tha signboards be taken down across the country. Prior to that, the association was denounced both by the government and the Buddhist clerical authority in 2016 in a ruling that declared Ma Ba Tha was not a "lawful monks' association" as "it was not formed in accordance with the country's monastic rules."

Following last year's curbs, the association changed its name to the current one, Buddha Dhamma Prahita Foundation, which the government has just banned again.

Founded in 2014—two years after Myanmar experienced religiously motivated riots largely targeting the Muslim minority—and now with sub-chapters across the country, Ma Ba Tha has become virtually synonymous with Buddhist-led nationalism.

Some of its leading members, including U Wirathu, have preached anti-Muslim sermons, claiming that the country's Buddhist foundations are under assault, that the Muslim population is outgrowing the Buddhist one, and that Myanmar needs to be vigilant against fundamentalist influences. The nationalist monk was banned from Facebook early this year due to his fiery posts against Muslims.

Established under the previous U Thein Sein administration, Ma Ba Tha was barely touched by the government during that time despite its incitement based on Buddhist nationalism. The association approached the then president to approve the controversial four-part race and religion protection laws. When the laws, which impose restrictions on interfaith marriage, birth spacing, polygamy and conversion, were passed in 2015, Ma Ba Tha celebrated in a grand scale and praised U Thein Sein.

But the association has faced restrictions on its activities since the NLD came to power in 2016. The new government declared Ma Ba Tha an 'unlawful monk association' three months after it took the power. Despite the announcement attracting criticism from nationalists, the association and its laymen followers have since kept a low profile apart from some small sit-ins in Yangon and Mandalay. Their warnings about public upheaval never eventuated apart from some small sit-ins in Yangon and Mandalay that were largely denounced by the public. When the Arakan Rohingya Salvation Army (ARSA) attacked security outposts in northern Rakhine State last year, the association organized pro-military rallies across the country, claiming that the army was the last institution that could save the country.

In response to the clerical authority's announcement on Friday, the Ma Ba Tha turned Buddha Dhamma Prahita Foundation said it is not a separate sangha association but an NGO made up of monks and laymen that sought to support the state, race and religion.

"We haven't committed any offences as accused so we should not be asked to take down our signposts, and we don't want to as well," said the announcement.

Currently, the foundation is sending forms to its sub-chapters across the country asking them if the association should continue with its campaign "to protect the race and religion" as well as to see if the members agree to follow the ban as the association was formed based on "consensus rule."

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New, Improved Deal on China-Backed Kyaukphyu SEZ Due Soon: Deputy Minister

Posted: 23 Jul 2018 05:14 AM PDT

YANGON — Since the 2015 elections that swept the National League for Democracy (NLD) to power, the government has been negotiating with the China International Trust and Investment Corporation (CITIC) to raise Myanmar’s stake in the Kyaukphyu SEZ in Rakhine State.

The shareholders agreement CITIC struck with the previous government, under President Thein Sein, just before the election gives the Chinese developer an 85 percent stake in the project and Myanmar the rest. Critics of the project have raised concerns that the deal could land Myanmar in a debt trap with China.

The new chairman of the SEZ’s management committee, Deputy Planning and Finance Minister U Set Aung, has gained relevant experience managing Myanmar’s first SEZ in Thilawa, in Yangon Region. He spoke with The Irrawaddy's Nan Lwin about what the ongoing negotiations with CITIC have achieved so far and the government’s ongoing efforts to grow and reform the economy overall.

You have been managing the Thilawa SEZ as chairman. Now you are responsible for the Kyaukphyu SEZ as well. What would you like to say to people who are worried about a debt trap?

I have experience drawing up special economic zone master plans in some ASEAN countries. I have done an SEZ demand survey in seven countries. Based on my experience, I have tried to make the Thilawa SEZ a success. I can’t say it's perfect; there is still more to be done.

There are many reasons and difficulties on both sides that explain why negotiations on the Kyaukphyu Special Economic Zone have been slow. When I took responsibility for the Kyaukphyu SEZ, I decided to start at the beginning. Before we started the official discussion, we compromised based on five principles. First, renegotiation must be flexible and not put any burden on the Myanmar government. Second, the renegotiation process must be based on international standards. Third, if we need to alter the previous agreement, China must agree to the changes. Fourth, to follow the rules and regulations for tender requests for proposals. And fifth, to follow the laws in Myanmar.

After I had agreement to follow all five principles, I started the negotiations with China.

We have already agreed that the Myanmar government will not fall into a debt trap over the Kyaukphyu SEZ. We have agreed to start on a smaller scale and that expansion will be based entirely on demand. It was also agreed that it will be a demand-based rather than a supply-based project. Moreover, we agreed not to expand the project unless we have enough demand. Based on the final agreement, we don't need to worry about the debt trap that people are concerned about.

The Kyaukphyu SEZ is a controversial project. Do you have any concerns since becoming chairman?

Yes, I have concerns too. It is a big responsibility. However, I have been very cautious in the negotiation process, mindful of what happened in other countries and to follow international standards. So far in the negotiations we discussed that the project will absolutely not put a burden on the government.

What have been the main topics and agreements during the discussions?

We have discussed three key agreements. We agreed that the project will start out at the appropriate scale, so the project is no longer $9 billion or $10 billion as agreed by the previous government. The first phase of the project will start small or medium. Moreover, if we need to expand to a second phase or a third phase, we must be operating at full capacity in phase one and we must earn enough to cover all the operating costs of phase one. After we have achieved these two factors, we will allow expansion to a second phase or a third phase. Finally, we also agreed that the loans must be private loans, not government loans, and we won’t take loans as a government and won't give any sovereign guarantees to China.

Can you estimate when the final agreement will be officially announced?  

We have been negotiating the agreement at both formal and informal meetings. There is already what is called a framework agreement. We will sign that framework agreement officially. At that time, we will announce it to the public.

We learned that the NLD government has been demanding that its share in the Kyaukphyu project be increased from 15 percent to 30 percent. Does China agree to that? 

When the [previous] government invited tenders, it announced that the winner would get 85 percent of the shares. So the rest, 15 percent, would be for the government. But now China has agreed to give Myanmar 30 percent of the shares.

I also want to ask you a question in your role as deputy finance and planning minister. The business community says the economy is growing very slowly. Yet according to the World Bank and IMF, GDP and other economic indicators are improving. So why do businesses say the economy is struggling?

Macroeconomic conditions may not be the same as the conditions for individual businesses. In the Burmese language, the meaning of economics looks similar to the meaning of business. Literally, there is a big difference between economic aspects and business aspects. For example, when businesses are doing well, the national economy develops rapidly. As a result, it causes economic overheating and leads to economic instability. In that situation, business is good but the macroeconomics will be unstable. In some situations, some facts [data] are right when we look at them from a business perspective but some facts are wrong when we look at them from an economic perspective.

What reforms is the government pursuing to grow Myanmar’s economy?

Business confidence is the most important factor for economic improvement. To improve business confidence, we need an explicit policy that shows investors a clear-cut vision. We need transparency about what the government will do and which way it is heading to grow the economy.

Now we have drawn up a roughly 250-point action plan that includes a strategic plan to work with related departments in each sector. It has been named the Myanmar Sustainable Development Plan. We will announce the plan as soon as we can.

We need transparency for all national projects, including national budget projects, international loan projects and government-private partnership projects. We have been planning a new system called a project bank or project information bank that will provide project information to the public.

At the same time, we have been preparing a standard operating procedure to deal with complicated rules and regulations that businesses face. I think that as a government we need to focus more on long-term plans than on short-term problem solving to achieve economic development.

Myanmar is strategically situated for China's Belt and Road Initiative. We have learned that the Myanmar-China Economic Corridor MoU will be signed this year. We are very small economically and financially compared with China. What sort of strategic plan should Myanmar prepare for China's Belt and Road Initiative, since we have an ongoing civil war and are not financially strong?

If we take advantage of the Belt and Road Initiative carefully, we will profit with basic infrastructure for our country. But we need to examine the details of each project, whether it is necessary for our country. If we can develop infrastructure projects in cost-efficient ways, the two countries can have a win-win situation. On the other hand, we have been developing infrastructure projects with our allies such as the Asian Development Bank, World Bank, JICA and other agencies.

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MRTI Organizes Second Round of Myanmar Responsible Tourism Awards

Posted: 23 Jul 2018 05:04 AM PDT

The non-profit organization the Myanmar Responsible Tourism Institute (MRTI) has organized the second edition of the Myanmar Responsible Tourism Awards (MRTA), aiming to raise awareness of the tourism industry's potential to generate meaningful social, economic, and environmental benefits.

"MRTA awards aim to shine a spotlight on the achievements of tourism businesses that are inspiring others to safeguard cultural and natural treasures for future generations," said U Nyunt Win Naing, chairman of MRTI, at a press conference that was held on July 20 in Yangon.

"Our ambition is to use tourism to make places better for people to live. This will benefit the industry, as great places to live are great places to visit," he added.

MRTI began giving the awards in 2017 in collaboration with the Business Innovation Facility and incorporating the Product & Package Innovation Competition (PPIC).

The awards have six categories for 2018 including Best Responsible Tourism Accommodation, Best Responsible Tourism Operator, Best Community Involvement in Tourism, Best Responsible Tourism Business Innovation, Best Responsible Tourism Awareness Raising Project and Best Responsible Tourism Product for Empowerment.

Sampan Travel won the Best Responsible Tourism Communication category in 2017 and Ko Thant Sin, coordinator from Sampan Travel, said that the award provided the energy and encouragement to keep working toward sustainability in Myanmar's tourism industry at the press conference in Yangon.

"The winners of MRTA 2017 should be particularly proud of what they have achieved. They have been recognized as leaders in a responsible tourism movement where more is expected each year," said U Nyunt Win Naing.

The application for the competition will be open from Aug. 10 to Sept. 21. After closing submissions, there will be a pre-selection period and the final event will be held in December.

Entry forms and further details are available at www.myanmarresponsibletourismawards.org.

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FDA Bans Artificial Food Dye in Mandalay’s Zay Cho Market

Posted: 23 Jul 2018 04:36 AM PDT

MANDALAY — The Ministry of Health's Food and Drug Administration (FDA) will prohibit all artificial food dye from being sold in Mandalay's famed Zay Cho market.

"We will give FDA certificates to the shops that sell food on Wednesday, and will officially announce Zay Cho market as free from prohibited dye in food," said Dr. Kyaw Kyaw, deputy director of the FDA's Mandalay branch.

According to the FDA's Mandalay branch, the administration's decision came after two years of educating the public about taking action to do so. Efforts to ban artificial food dye in the market began as a joint effort between the local FDA branch and Mandalay's municipal department in March 2016.

“We first educated the vendors. Then we made surprise inspections of the food they were selling. If we found products with artificial dye, we first gave them a warning, and later seized the food. If the vendors ignore the regulation, we will take action under municipal law," said Dr. Kyaw Kyaw.

In many shops in the market, foods like dried chili, bamboo shoots, pickled tea leaves, preserved fruits and fermented fish pastes were found to use chemical and synthetic dyes, which could affect consumer health.

In early 2018, the local FDA gave certificates to 124 out of 386 shops selling food in Zay Cho market.

"We've checked all of the shops and after we give the remaining certificates on Wednesday, we will be able to declare that the market is free of artificial food dye," said Dr. Kyaw Kyaw.

The administration stated that it would continue to carry out surprise checks on the shops and punish any shop selling prohibited products with a fine of 50,000 kyats under the municipal law.

"If the shop continues selling these foods after a fine, we will revoke its certificate and close the shop for at least one month," Dr. Kyaw Kyaw added.

The administration said the declaration of Zay Cho market as free of artificial food dye is a first in Myanmar, where consumers are pushing for safer and healthier food options. It added that it would work to do the same in other markets, as well as in other cities and towns.

"The ban was an effort to increase public awareness of the possible health effects of artificial food dye. By knowing these shops don't sell it, consumers will feel confident that they are buying safe and healthy food," Dr. Kyaw Kyaw said.

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Statue of Gen Aung San Defaced, Damaged in Myitkyina

Posted: 23 Jul 2018 03:57 AM PDT

MON STATE — Police in Myitkyina, the capital of Kachin State, are looking for those responsible for defacing a statue of General Aung San in the town on Sunday night.

Police officer U Myat Moe told The Irrawaddy on Monday, "We are investigating it. The statue of the General belongs to everyone. We will charge [those responsible with] destruction of public property." Those who destroy public property can be charged under Article 6 (1) of the Public Property Protection Act 6, U Myat Moe said.

An as yet unidentified person or people splashed green paint over the face of the statue of Myanmar's national independence hero and also damaged the left and right sides of the pedestal.

The statue is located in a public area, but the perpetrator was able to get beyond its enclosing wall and locked gate under cover of darkness.

The statue was erected in February 2017 by the National League for Democracy-led state government despite opposition from some members of the local ethnic Kachin population.

U Kyaw Oo, an NLD member in Myitkyina who led the campaign to build the statue, told The Irrawaddy that, "The area in which the statue stands is poorly lit. The perpetrator destroyed [part of] the pedestal with a hammer and splashed green paint on the face of Gen Aung San."

He added, "We will open a case. If we don't, others will."

The attacker left some evidence at the scene, including the lid of a can of paint.

"We found the lid of the paint can as evidence. We need to find out which shops sell this type of paint so we can track down a suspect. [The paint vendor] may have CCTV," said the police officer, U Myat Moe.

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AirAsia Launches Low-Fare Route from Yangon to Chiang Mai

Posted: 23 Jul 2018 03:45 AM PDT

YANGON — AirAsia has unveiled a new route from Yangon to Chiang Mai, with flights to the northern Thai destination due to start on Aug. 11. The airline will operate the flight three times a week, on Tuesdays, Thursdays and Saturdays.

"Both Yangon and Chiang Mai are unique and culturally significant tourism destinations known the world over. The addition of low-fare air travel between these two cities will only increase convenience and value for travellers and is sure to boost both tourism and investment," Ms. Maneenuch Kongarchapatar, AirAsia's head of commercial operations (Indochina), said in a statement on Monday.

AirAsia said it was introducing the route with a "promotional fare" starting at only US$35 per trip and would welcome bookings through all ticketing channels.

Bookings can be made starting on Monday through July 29 to travel from Aug. 11 to Oct. 31, 2018, AirAsia said.

The budget airline currently operates three routes to and from Myanmar – once a day from Yangon to Kuala Lumpur; three times a day from Yangon to Bangkok and once a day from Mandalay to Bangkok.

"All of the routes have been well received with load factor averages during the first six months of this year at 86 percent across the board," Ms. Maneenuch said.

Currently Bangkok Air operates a daily return flight from Chiang Mai-Yangon, while Myanmar National Airlines flies three days a week to the same destination on Wednesdays, Fridays and Sundays.

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UN and Myanmar Govt Release Plan to Rehabilitate Rakhine Villages

Posted: 23 Jul 2018 12:55 AM PDT

NAYPYITAW — The Ministry of Labor, Immigration and Population has released a plan to rehabilitate about 30 villages in Buthidaung and Maungdaw townships in troubled Rakhine State.

"We've formed a working group, which will conduct a pilot project to rehabilitate, restore racial harmony and bring about socio-economic development in some 30 villages," the minister for labor, immigration and population U Thein Swe told The Irrawaddy on Friday.

The United Nations Development Program (UNDP) and the United Nations High Commissioner for Refugees (UNHCR) will assist the ministry in the project, said the minister.

The project aims to spur equitable and harmonious development in Muslim, Hindu and ethnic villages. Repatriation will be successful only when there is increased trust between different communities, said the minister.

Some 700,000 Rohingya fled Rakhine for Bangladesh after militant attacks on security outposts in the north of the state in late August triggered a massive military and police crackdown in the area’s Muslim communities.

In November, Myanmar and Bangladesh agreed to start repatriating the refugees on Jan. 22, but the process has been delayed.

A Bangladeshi minister is set to visit Myanmar this week. He will also visit northern Rakhine State and discussions will be held to continue repatriation according to the memorandum of understanding (MoU) signed between the two countries.

"We will design a detailed work plan and implement rehabilitation work according to it. We will designate model villages and start the project there in cooperation with the UNDP and the UNHCR," permanent secretary U Myint Thu of the Foreign Affairs Ministry told The Irrawaddy.

The officials of the UNDP, UNHCR and Myanmar government visited northern Rakhine from Saturday until Monday in order to select villages for the pilot project.

According to the MoU between the two UN agencies and the Myanmar government leaked to Reuters last month, the groups will implement three months and six months programs to facilitate repatriation.

"The parties agreed to keep it confidential. We have no comment regarding the leak. It was not leaked by us," said U Myint Thu.

Translated from Burmese by Thet Ko Ko.

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Paradise Papers Tie Cambodian Army Chief’s Wife to Tropical Tax Haven

Posted: 22 Jul 2018 11:11 PM PDT

YANGON — In April 2006, in a remote corner of Cambodia’s northern Uddor Meanchey Province, not far from Pol Pot’s dusty grave, a company run by the wife of the country’s powerful army chief landed a license to look for coal.

The following year, half way around the world, another company, Uddor Meanchey Mining Holdings, was registered in the Cayman Islands, one of the most notorious tax havens on the planet. Its sole purpose was to own the coal mine and reap the returns. Among its shareholders was the Cambodian army chief’s wife — Noup Sidara.

Her own company, Ratanak Stone Cambodia Development, was by then already exploring for iron at another site that, according to a Global Witness investigation, her husband tended to personally and was believed to own in all but name.

Sidara’s Cayman Islands shares are detailed in the Paradise Papers, a trove of 13.4 million records leaked to German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists. Since hitting headlines around the globe late last year, the Papers have helped shine a light into some of the darker corners of offshore finance, much of it flowing in and out of the Cayman Islands.

The secret sharer

Jutting out of the Caribbean Sea just south of Cuba, the Cayman Islands are an autonomous overseas territory of the United Kingdom, ringed by picture postcard beaches and crystal blue waters. But the sandy, sun-kissed isles are best known for a thriving — and highly secretive — financial services sector that helps the world’s wealthy avoid and evade their taxes back home.

Companies registered in the Cayman Islands pay no corporate or income tax on money earned offshore.

The Tax Justice Network ranked the Caymans third in its financial secrecy index this year, behind only Switzerland and the United States. A 2016 Oxfam report on jurisdictions facilitating “the most extreme forms of corporate tax avoidance” placed the Caymans second to Bermuda. The Guardian newspaper has called the Caymans the most notorious tax haven of them all.

The website of the International Consortium of Investigative Journalists. / ICIJ

“The Cayman Islands has long been one of the most damaging secrecy jurisdictions globally, playing a disproportionately large role in the international trade in financial services, and offering a range of secretive channels including anonymous company ownership,” Alex Cobham, chief executive of the UK-based Tax Justice Network, told The Irrawaddy.

“By allowing unscrupulous individuals and companies to hide their behavior from their regulators at home — including but not limited to tax authorities — secrecy jurisdictions support the evasion and avoidance of legal and social responsibilities — including but not limited to paying taxes.”

Cobham said the corporate restructuring Sidara was involved in had the potential to hide ownership in such a way that could have been used to avoid tax and obscure conflicts of interest.

Doing business offshore is not inherently illegal, and The Irrawaddy has seen no evidence that Sidara broke any laws.

But Nienke Palstra, a campaigner for anti-graft group Global Witness, said tax havens attract money launderers and tax evaders because they don’t require companies to disclose their real owners and don’t routinely share information with tax authorities and law enforcement in other countries — developing countries especially.

“Having an offshore holding company in the Cayman Islands own a Cambodian company, which is doing business in Cambodia, raises the question whether this setup has been created with the explicit purpose of obscuring the real owners of the Cambodian company,” she said.

Ties that bind

The Cambodian Commerce Ministry’s online business register names Sidara as the sole director of Ratanak Stone. But according to Global Witness, her husband — General Pol Saroeun, commander-in-chief of the Royal Cambodian Armed Forces — has given the company’s operations his personal attention and was widely believed to own at least one of its mines himself.

When Global Witness investigators visited Ratanak Stone’s iron mine in Preah Vihear Province in 2005 and 2008, they found more than a dozen soldiers guarding the site. A worker told them that Saroeun himself visited in 2008 and that the soldiers stood to attention and saluted him, as they would on duty.

In a 2009 report on Cambodia’s extractive industries, Global Witness said that on both its visits “mine workers, local officials and military personnel guarding the site all said that the Ratanak Stone mine is owned by General Pol Saroeun.”

Cambodian law prohibits military personnel from managing private companies, serving as directors, using their positions “to exploit any advantage,” or spending working hours “to conduct business for private interest.”

During his visit to the mine in 2008, the general was still a deputy commander of the armed forces. He took the top job the following year.

In a report out last month, Human Rights Watch placed Saroeun at the top of Cambodia's "Dirty Dozen," the 12 military and police officials who have made up "the backbone of an abusive and authoritarian political regime over which an increasingly dictatorial [Prime Minister] Hun Sen rules."

Both before and since Saroeun’s time at the top, the army has repeatedly shot protesters with impunity, violently driven families off land leased to well-connected companies and tapped into the country’s thriving illegal logging trade.

Despite careers spent in modestly paid government jobs, Human Rights Watch added, Saroeun and the rest have amassed unexplained fortunes.

Saroeun has since grown into a power player on the political scene as well. He heads a provincial working group for the ruling Cambodian People’s Party (CPP) and serves on its über-exclusive standing committee, in the rarified company of Hun Sen’s very closes allies. He regularly showers the premier with praise, vilifies the opposition as a fifth column that would plunge the country back into the bloody days of the Khmer Rouge if given the chance, and urges soldiers to take to Facebook to push the story along.

Under Saroeun’s watch, Hun Sen's eldest sons have also marched up the army’s ranks in double time to senior posts.

The army chief is now set to make his political career official. He is running for a National Assembly seat in general elections scheduled for July 29. And with the CPP’s only viable rival, the Cambodia National Rescue Party (CNRP), dissolved by court order last year, his victory is all but assured.

Cobham, with the Tax Justice Network, said the corporate restructuring involving his wife and the Cayman Islands raised two obvious risks for abuse — due in part to Saroeun’s political ties.

First, he said, was “the risk that the secrecy of Cayman companies could be exploited to allow the non-declaration of ownership for purposes of evading or avoiding income and/or capital gains tax, to the extent these existed in Cambodia in the period in question.”

“Second, given the powerful political connections involved, there would have been a clear risk that the secrecy of Cayman companies could be exploited to allow the non-declaration of ownership for purposes of hiding conflicts of interest in respect of government decisions affecting the businesses in question.”

The restructuring itself is not proof that the couple used the setup to avoid tax or hide any conflicts of interest.

“But the intention to create a more opaque, more complex and presumably more expensive ownership structure, with no obvious benefits but clear risks of abuse, must raise questions of judgment,” Cobham said.

A tangled web

The Paradise Papers reveal that Uddor Meanchey Mining was set up in the Cayman Islands to play a key role in what could have been a multimillion dollar project to turn Sidara’s coal mine into the main supplier of a planned power plant that would sell electricity to Cambodia, Thailand and back to the mine to keep it running.

The leaked records, reviewed by The Irrawaddy, include emails and documents ranging from share purchase and transfer agreements to certificates of incorporation, directors resolutions, legal opinions, checklists, client lists and invoices — all prepared by or shared with the offshore law firm Appleby.

According to the records, a joint development agreement setting the project in motion was struck in June 2007. The partners included two Cambodian companies, EuroAsia Power and Rexwell Engineering Cambodia; another Caymans firm, AEI Asia; and Rexwell Engineering Limited, registered in Guernsey, a British crown dependency in the English Channel with its own reputation as a tax haven. Appleby was AEI’s legal counsel.

The plans called for Sidara to transfer the license for her coal mine to EuroAsia Power, which she also held shares in, according to the Cambodian Commerce Ministry’s business register. EuroAsia Power would then dig up and ship the coal to a 2,400-MW power plant to be built, owned and operated by Rexwell Engineering Cambodia near the mine.

The two Cambodian companies would operate as subsidiaries of holding companies set up in the Cayman Islands.

The plan was to have all shares in EuroAsia Power transferred to Uddor Meanchey Mining. All shares in Rexwell Engineering Cambodia would be transferred to another company also registered in the Caymans, Uddor Meanchey Power Holdings. Together, the two offshore companies would own the mine and plant.

The chart illustrates the connections between the main companies involved in Noup Sidara’s offshore venture, including her shares in Uddor Meanchey Mining Holdings, which was registered in the Cayman Islands from 2007 to 2012. Most of the other companies have also since been dissolved. Ratanak Stone Cambodia Development remains registered in Cambodia. / Sources: Paradise Papers; Cambodia Commerce Ministry; Global Witness

Among the directors both Uddor Meanchey holding companies appointed was the affiliate of another Guernsey firm, the Sarnia Management Corporation.

On its website, Sarnia Management offers to help “wealthy individuals and their families with flexible and bespoke approaches to protect and manage their assets” with the aid of “jurisdictions and relationships all around the world.” The 2016 Panama Papers, an earlier leak of offshore financial records, named Sarnia Management as an intermediary for more than 200 offshore companies, many of them registered in Niue, a pebble of an island state in the middle of the Pacific Ocean with — like the Caymans — zero tax on offshore earnings.

The records don’t say how much the project partners expected the coal mine and power plant to cost, let alone earn. But they budgeted nearly $10 million for advisors on the power plant alone.

It appears their grand plans soon fell apart, however. In June 2008, only a year after the joint development agreement was signed, AEI Asia told its partners it would be terminating the deal.

But the two offshore holding companies lived on a while longer. Uddor Meanchey Mining, the one Sidara owned shares in, was dissolved only in 2012, five years after it was registered in the Caymans. Rexwell Engineering Limited was dissolved the same year in Guernsey, and AEI Asia appears to have been wound down as well.

Rexwell Engineering Cambodia and EuroAsia Power no longer appear on the Cambodian Commerce Ministry’s business register.

Past is prologue

Sidara declined to answer questions for this story over the phone. She said she would only speak in person but ignored offers to meet with a reporter in Phnom Penh. Requests for comment sent to the email accounts of four of her companies, including Ratanak Stone, went unanswered.

Reached by phone, Saroeun said the coal and iron mines were both taken over by Chinese companies about 10 years ago and that he knew nothing more about Ratanak Stone’s business operations. When asked about his reported role in the iron mine, and his wife’s shares in a Cayman Islands holding company, he hung up.

Cambodia’s Ministry of Mines and Energy refused to answer any questions about Ratanak Stone’s operations, past or present. “We think it’s not important for us to answer,” a ministry spokesman said.

Appleby’s Cayman Islands office and employees of the firm involved in setting up the two holding companies did not respond to requests for comment. In a public statement reacting to international coverage of the Paradise Papers in October, Appleby said it had investigated the allegations of bad behavior and found no evidence of wrongdoing either by itself or its clients.

But Cambodia has been here before. The Paradise Papers are not the country’s first brush with leaked records tying its elite to offshore companies.

The Panama Papers revealed that in 2007 Cambodia's justice minister, Ang Vong Vathana, bought shares in RCD International Limited, a company registered in the British Virgin Islands earlier that year and dissolved in 2010.

Responding to the revelation in a statement in 2016, the Justice Ministry denied that Vong Vathana had bought the shares and said the minister had never even heard of RCD. It called the information "fake news" and said the minister would take legal action.

There was no investigation into the offshore investment and Vong Vathana — a member of the CPP’s central committee — remains Cambodia’s justice minister, presiding over a court system widely seen to be in thrall to the ruling party.

Cambodian Justice Minister Ang Vong Vathana speaks to lawmakers at the National Assembly in Phnom Penh, Cambodia, in April 2016. / Siv Channa / The Cambodia Daily

But the Panama Papers did spark investigations into thousands of individuals and companies for possible tax avoidance or evasion by other governments around the world, even pushing some leaders and top officials out of office. In Iceland, Prime Minister Sigmundur David Gunnlaugsson resigned soon after the leaks revealed that he and his wife owned a company in the British Virgin Islands set up to hold their investments. In Pakistan, Prime Minister Nawaz Sharif stepped down after the leaks linked his children to offshore companies used to buy up pricy property in London; the country’s anti-graft court recently handed him a 10-year prison sentence for corruption.

The Paradise Papers have also made a mark.

Since the new leaks started making international news in November, the European Parliament has established a special committee to investigate tax avoidance and evasion. In the UK, a parliamentary subcommittee has done the same. India’s top tax authority has asked investigators to review the tax returns of some 700 nationals named in the Papers, from movie starts to ministers.

Palstra, with Global Witness, said Saroeun and Sidara should be due their own investigation, given the general’s possible beneficial ownership of the iron mine, his senior position in the Cambodian regime, and his wife’s business interests in a prominent tax haven.

“All of these factors present greater risk of potential wrongdoing and should be subject to greater scrutiny for that reason,” she said.

“There's clear ground for investigation,” agreed former CNRP lawmaker Mu Sochua, all the more so now that Saroeun was set to take public office. “But it has to be an independent investigation and with expertise.”

In 2010 the Cambodian government set up the Anti-Corruption Unit (ACU) to pursue wayward officials. It holds their sealed asset declarations and has discretion to open them when it suspects wrongdoing. But like most of Cambodia’s state institutions, it has gained a reputation for harassing the government’s critics while giving its allies a pass. Sochua did not expect it to be much help.

“I wouldn't count on [the] ACU picking up this case as it would damage the name of the government,” she said.

Taxing times

Cambodia’s prime minister and his top lieutenants, long accused of running one of the most corrupt regimes in the region, show no sign of going anywhere. Over more than 30 years in power, they have learned to wield the government like a weapon, adding, amending and applying laws as needed to cut the legs off their rivals.

It’s a battle they have mostly fought and won of late not with bullets so much as bureaucracy. And if anything, they’re digging in.

During an unusually tough crackdown on Cambodia’s free press last year, the government accused several independent news outlets of, among other things, dodging their taxes.

More than a dozen radio broadcasters were driven off the air. The Cambodia Daily, after 24 years of tough reporting on the government, published its last issue in September after balking at an unaudited bill for $6.3 million in back taxes it was told to pay in 30 days or have its assets seized (the author was a reporter for the paper at the time). Hun Sen personally labeled the Daily a "thief."

In May, Cambodia’s only other independent English-language daily, the Phnom Penh Post, was sold off to the Malaysian owner of a public relations firm that has done work on Hun Sen’s behalf. The Post reported that a $3.9 million tax bill it owed the government was settled as part of the sale.

The news media purge started about a year out from this month’s general elections, and just as the government was hammering the final nails in the coffin of the ruling party’s main opponent, the CNRP. Acting on a government complaint that the opposition party was plotting a “color revolution” with a helping hand from the United States, the Supreme Court dissolved the CNRP in November. The party and its supporters deny the claim and say the case was politically motivated.

The party’s then-president, Kem Sokha, was arrested in September for alleged treason and remains in jail awaiting trial. Many of the CNRP’s other leaders have fled the country fearing their own arrests.

A supporter of Kem Sokha, former opposition leader and ex-president of the now-dissolved CNRP, scuffles with a policeman near the Appeal Court in Phnom Penh, Cambodia, on March 27. / Reuters

In February, reacting to what it called the government’s escalating “anti-democratic behavior,” the US announced plans to pull a number of aid programs in Cambodia. A National Security Council spokesperson told the Associated Press that the US was targeting agencies it held responsible for the crackdown, including the Tax Department for opening what it called politically motivated investigations into independent news outlets.

Graft is endemic. A perennial laggard on Transparency International’s corruption perceptions index, Cambodia currently ranks 161st out of 180 countries. In all of Asia, only Afghanistan and North Korea do worse.

Inequality also remains stubbornly high. GDP growth is strong, tax revenues are up and poverty rates are down. But most of those who have climbed out of penury have escaped only just; economists warn that even a minor shock could wipe out years of progress.

And in one of the poorest countries in the region, the number of Cambodians worth $30 million or more nearly tripled to 54 in the decade leading up to 2014 and was likely to climb to 84 in another 10 years, according to international property consultancy Knight Frank. It predicted that the number of Cambodians worth at least $100 million would also jump from 16 to 25.

Trade winds of change

Secretive tax havens like the Cayman Islands do more than help the rich squirrel away their wealth. They short-change countries of the tax dollars they use to build roads, schools and hospitals.

Reacting to the Panama Papers, more than 300 economists signed an open letter telling world leaders that tax havens “serve no useful economic purpose” but widen wealth gaps and hurt poor countries the most.

“As the Panama Papers and other recent exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries' ability to collect their fair share of taxes,” they said. “While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170 billion of taxes annually as a result.”

The Tax Justice Network believes it could be even more. Using a method pioneered by the International Monetary Fund, it estimates that tax havens likely contribute to some $200 billion in lost corporate tax revenues by low-income countries and $500 billion worldwide.

Anthony Galliano, CEO of the Cambodian Investment Management Group and an expert on the country’s tax regime, said Cambodians were as likely to set up holding companies in offshore tax havens as anyone else and called them a “pretty normal and sensible structure.”

He said Cambodian-registered companies have to pay tax on profits at Cambodia’s rates whether owned from offshore or not. The advantage of going offshore, he said, is that the holding company can sell the Cambodian business it owns to another offshore company without having to pay any capital gains tax.

Galliano said Cambodia was also now enforcing transfer pricing — a practice transnational businesses can exploit to avoid tax — which should make it hard for local subsidiaries to shift profits offshore, at least in theory.

But their critics want tax havens gone. At the very least, they want their business registers out in the open and to name each company’s ultimate beneficial owners.

Cobham said the UK has done just that with its register and that EU legislation demanding the same of its members was now coming into force. In May the UK Parliament also passed a law requiring its overseas territories — including the Cayman Islands — to establish public registers by 2020.

“The territories are considering a legal challenge,” Cobham said. “But the wider message is clear: This type of anonymous ownership, so often linked to tax abuse and corruption, is living on borrowed time.”

The post Paradise Papers Tie Cambodian Army Chief’s Wife to Tropical Tax Haven appeared first on The Irrawaddy.

Trash Heroes and Scavenger Apps Battle Bali ‘Garbage Emergency’

Posted: 22 Jul 2018 10:36 PM PDT

DENPASAR, Indonesia — Five years ago, tour guide Wayan Aksara noticed that more and more visitors he showed around the Indonesian island of Bali were complaining about garbage on its once-pristine beaches.

Bali’s mounting rubbish problem was also becoming personal for Aksara, who lives near Saba beach — an undeveloped area close to the holiday resort of Sanur, which faces a constant battle with trash washed onto its shores from a nearby river.

“Every time we drove around, our guests … would comment about it not being clean and the large amount of plastic,” said Aksara. “They would say the trash is bad, that tourism here is not sustainable, and ask what we are doing about it.”

Aksara joined — and is now chairman of — Trash Hero Indonesia, a community group with more than 20 chapters across Indonesia and about 12 on Bali. It uses social media to organize weekly garbage-collection events for volunteers.

Aksara, a father of two, also gives talks at schools and community events on how to manage waste better.

Like many parts of Asia, the Indonesian archipelago of more than 17,000 islands has a fast-growing economy and population, and a huge coastline with many densely populated cities.

These factors have created a “perfect storm” for garbage in the surrounding seas, said Susan Ruffo, a managing director at the US-based non-profit group Ocean Conservancy.

Garbage collection services and infrastructure have largely failed to keep pace with rapid development.

Now, as awareness rises, civil society groups like Trash Hero are playing an important role in Bali’s push to keep its famous beaches and temples free of rubbish.

On Saba beach, surrounded by coconut trees and grazing cows, the garbage strewn about includes toothpaste tubes, shoes, plastic bottles, nappies, drinking straws and cigarette packets.

“There is a plastic problem in Bali … We need time but we [have] started already,” Aksara told the Thomson Reuters Foundation. “Big things start from small things.”

No Silver Bullet

Globally, more than 8 million tons of plastics are dumped into the oceans each year, scientists say — about one truckload per minute.

China, Indonesia, Vietnam, the Philippines and Thailand are the top five culprits, said Ocean Conservancy’s Ruffo.

Aside from the impacts on human health and wildlife, Asia-Pacific Economic Cooperation, a 21-nation forum, has put the cost to the region’s tourism, fishing and shipping industries at about $1.3 billion per year.

Stung by criticism, Indonesian President Joko Widodo — who has targeted “10 new Balis” across the archipelago to boost tourism — has been quick to act.

Last year, Luhut Binsar Pandjaitan, Indonesia’s coordinating minister for maritime affairs, launched a national action plan pledging up to $1 billion to cut ocean waste 70 percent by 2025.

In June, local media reported the government had teamed up with Muslim clerics to tell their more than 100 million followers to choose reusable bags over plastic ones.

Jenna Jambeck, a University of Georgia professor who specializes in plastic waste and marine debris, said Indonesia had become a leader on the issue out of a desire “to protect their amazing resources and beautiful country”.

Bali’s most popular tourist beaches are now cleaned of trash at least once a day by local authorities using heavy machinery.

Mass cleanups are organized at least three times a year on Bali and across Indonesia, bringing together tens of thousands of tourists and locals to tidy up communities.

Despite this, the rubbish problem on Bali was so bad late last year that officials declared a “garbage emergency.”

“If you’re finding plastic on the beach, it’s already too late,” said Ocean Conservancy’s Ruffo. “It should never be there in the first place. How do you stop it at source? There is no one fix or silver bullet.”

Recycling Camp

Tracing the origins of the trash on Bali’s beaches is difficult, but experts estimate up to 80 percent comes from the island itself.

Rubbish collected from hotels and villages by informal workers is often dumped in rivers and then carried out to sea before eventually finding its way back to the coastline.

A rise in the use of plastic packaging over the last decade, coupled with increased wealth and consumption, has exacerbated the problem, experts told the Thomson Reuters Foundation.

Bali desperately needs to improve its landfill sites, invest in more recycling facilities, carry out regular trash collections and expand its piped water supply, they added.

Businesses, meanwhile, should redesign products or change materials so they are easier to reuse or recycle, said Jambeck.

Governments also can make a difference by requiring a certain amount of recycled content in products, banning plastic bags or taxing single-use plastics, she added. Based in Bali’s cultural center of Ubud, local company Rumah Kompos has six trucks that collect waste from hotels and private homes. The trash is then separated at the company’s depot to recycle, turn into compost or send to landfill.

A new $1-million recycling facility, funded by the government, will boost Rumah Kompos’ capacity later this year, said manager Supardi Asmorobangun.

The facility will host local children at weekend green camps, with a cinema showing films on climate change and plastic waste, he said.

The company has also begun piloting a free reusable water bottle scheme at schools in Ubud.

“My dream for the next five years is for every village on Bali to do [rubbish] separation,” Asmorobangun said. “We must do it now, not tomorrow.”

Trash Tech

New technologies and Asia’s army of informal rubbish collectors and scavengers are also key tools, experts said.

At Sanur Kaja village in Denpasar, garbage gatherers are reaping the financial rewards of joining a pilot project run by Gringgo Trash Tech, reflected in a row of brand new motorcycles parked near the local authority’s waste collection facility.

The company mapped out Denpasar and began a self-funded project last year using existing waste infrastructure to improve recycling and collection.

Apps and GPS helped create a zoning system in the village of 5,000 residents, enabling garbage gatherers to become better organized and more efficient. As a result, they can collect more rubbish from more households to increase their earnings.

“If these guys stop working, this city will be shut down in less than a week,” said Gringgo co-founder Olivier Pouillon.

Besides improving coordination with the local authority, Gringgo’s app provides the latest prices for recyclable waste.

The system now serves about 60-65 percent of the village, with three times as much rubbish collected, said Pouillon.

“The quickest way to stop the pollution is to track where the waste is going, and that’s exactly what we’ve done,” he said.

The post Trash Heroes and Scavenger Apps Battle Bali ‘Garbage Emergency’ appeared first on The Irrawaddy.

Cambodia Opposition Says it Has Been ‘Cut Off’ in Lead-Up to Election

Posted: 22 Jul 2018 09:33 PM PDT

PHNOM PENH — In June last year, Khoeun Virath was elected as a commune councilor in the capital of Cambodia, but months later his political party was banned and most of its leadership fled into exile — so now he works as a tuk-tuk driver to make ends meet.

Virath’s story is just one example of how a once-thriving opposition has been silenced and pushed underground by long-serving Prime Minister Hun Sen and his allies ahead of a general election set for July 29.

The government denies it has set out to sideline critics.

“We have never banned criticisms but we ban insults and incitements because in an election situation, people need security physically and mentally,” government spokesman Phay Siphan said.

Hun Sen, who has ruled this Southeast Asian nation for over 30 years, has had virtually no opposition since November, when the opposition Cambodia National Rescue Party (CNRP) was dissolved by the Supreme Court at his government’s request. The CNRP was narrowly defeated in a 2013 general election.

Amid condemnation from the international community, CNRP leader Kem Sokha was jailed last year on treason charges and almost 5,000 local authority positions his party had won were handed to members of the ruling Cambodian People’s Party (CPP).

“Inside the country, [CNRP members] are completely cut off from communicating with each other,” 30-year-old Khoeun Virath told Reuters at a cafe in Phnom Penh in what was once his constituency. “There is no leadership structure left.”

Many Cambodians are afraid to speak about the election, fearing their views could land them in trouble. Hun Sen has accused the United States of supporting the CNRP and plotting a “color revolution” to overthrow his government.

“People Are Afraid”

Hoping to expose the election as flawed, opponents of Hun Sen have launched a campaign urging Cambodians not to vote.

“People here are afraid, people don’t want to speak out,” said Khoeun Virath, who said he has been followed by plainclothes police many times.

The government says calls for a poll boycott are illegal and has invited 50,000 observers, including some from China, Myanmar and Singapore, to monitor the election.

Soeung Sen Karuna, 41, an investigator for rights group Adhoc, one of the oldest rights groups in Cambodia, said his organization had been accused of plotting a revolution and was finding it increasingly difficult to work.

“NGOs who work in other sectors are scared of cooperating with us,” he told Reuters at Adhoc’s office in Phnom Penh.

Five members of Adhoc were detained without trial for 14 months before being released on bail last year. They were charged with bribing a witness in a case against the now-jailed opposition leader, Kem Sokha. Supporters of Kem Sokha say the charges are politically motivated.

Another person who knows the lengths to which authorities will go to silence critics is Ma Chetra, 28, who runs the Social Breaking News Facebook page. He said he has been targeted by the government over the page, which hosts news about land-rights protests, forced evictions and other issues the government considers sensitive.

Ma Chetra said he has fled Cambodia several times since 2017 after police sent a photograph of him with a group of activists at Phnom Penh’s international airport. The activists were heading to Indonesia for a workshop on democracy, he said, but police circulated the image with the caption: “A group of youths who went to train to conduct a color revolution.”

The photograph, seen by Reuters, lists the names and some of the mobile phone numbers of those on the trip.

Some of the group have since fled to the United States and France. Others are in Cambodia, but are keeping a low profile.

With less than a week to go before the election, Phnom Penh is festooned with posters urging Cambodians to vote for Hun Sen. But there are none for the small opposition parties, and there are few signs of the excitement that usually precedes an election.

Back at the cafe, Khoeun Virath said the best hope for opponents of Hun Sen is pressure from exiled leaders and the international community. “With diplomatic pressure from abroad there can be a lot of momentum,” he said.

The post Cambodia Opposition Says it Has Been ‘Cut Off’ in Lead-Up to Election appeared first on The Irrawaddy.

Chinese Premier Calls for Severe Punishment in Vaccine Scandal

Posted: 22 Jul 2018 09:26 PM PDT

SHANGHAI — Chinese Premier Li Keqiang has called for an immediate investigation into a scandal over faulty vaccines that he said had crossed a moral line, and urged severe punishment for the companies and people implicated.

The scandal erupted a week ago, after major vaccine maker Changsheng Biotechnology Co was found to have violated standards in making rabies vaccine for humans. There did not appear to be reports, however, of people harmed by the vaccine or having contracted rabies after receiving it.

The case has sparked anger on social media and dealt a blow to China’s drug regulator, which has been struggling to clean up the world’s second-biggest drug industry and promote domestically made vaccines.

In a statement posted on the government’s website late on Sunday, Li said the public deserved a clear explanation.

“We will resolutely crack down on illegal and criminal acts that endanger the safety of peoples’ lives, resolutely punish lawbreakers according to the law, and resolutely and severely criticize dereliction of duty in supervision,” he was quoted as saying.

The Food and Drug Administration said in a statement on Sunday evening that its investigation had found that Changsheng fabricates production records and product inspection records, and arbitrarily changes process parameters and equipment, “serious violations” of the law.

In a stock exchange statement on Sunday, the company said its suspension of rabies vaccine production would have a significant impact on its finances and that some regional disease control agencies had suspended some of its other vaccines.

Changsheng’s shares fell the maximum limit of 10 percent on Friday, to stand at 14.5 yuan ($2.14). They have lost 40 percent of their value since July 13.

An editorial on Monday in the China Daily warned that the case could become a public health crisis if it is not handled “in a reasonable and transparent manner."

“The government needs to act as soon as possible to let the public know it is resolved to address the issue and will punish any wrongdoers without mercy,” it said.

“Those who dare to challenge the bottom line and make substandard or even fake vaccines need to receive the heaviest penalties according to the law.”

Late on Sunday, the state news agency Xinhua ran an editorial calling for strict punishment for any violations, big or small, in the vaccine industry and for regulators to close loopholes and tighten oversight of the industry.

The China Securities News also weighed in, saying that listed companies – like Changsheng Biotechnology – have a duty to the public and to conduct business with integrity.

“Cases like Changsheng Biotechnology, where laws and regulations are ignored and internal controls exist only in name bring a painful price,” it said.

State media have said the listed company made a public apology and recalled all their rabies vaccine available on the market.

The post Chinese Premier Calls for Severe Punishment in Vaccine Scandal appeared first on The Irrawaddy.
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