Daw Mi Mi Khin, owner of the Yadanapon Dynasty Hotel, paid US$100,000 for a Mercedes-Benz C200 she snapped up at the opening ceremony of the luxury car display centre at the Sedona Hotel, Mandalay, on January 8.

“They invited me to participate in the opening ceremony. I went, found the Mercedes C200 and bought it,” she said. “I have wanted to own a Mercedes a very long time and my son likes the car, so we bought it.”

“Before, we only rode in Japanese cars like the Toyota Alphard, which were not brand-new. However, the C200 is brand new,” Daw Mi Mi Khin said.

Brand new cars are something brand new for the people of Myanmar, who for decades were restricted to buying over-priced second-hand cars, usually from Japan.

Under the old system, to buy an imported car one needed a special permit, which was only granted if you could prove you had earned your dollars legitimately.

All this changed in November 2011, when the Ministry of Commerce eased restrictions on imported cars and lowered taxes on them.

With the shift in policy, better quality second-hand cars and brand-new models have started to replace the antiquated, rusted heaps that once dominated Myanmar’s pot-holed roads.

To handle the importation of newer automobiles, the Ministry of Commerce introduced two new types of car import licenses, namely ‘used-car sales centre licenses’ and ‘brand-new car showroom licenses.’

Cycle & Carriage Automobile Myanmar (CCAM) Company Ltd., a joint venture between the Automobile Alliance from Myanmar Company Ltd. and Singapore’s Jardine Cycle & Carriage Group, is one of the companies that have received a “brand-new car showroom license.”

Jardine Cycle & Carriage Group, listed on the Singapore stock market, has secured the distribution rights to Mercedes-Benz passenger cars, Fuso commercial vehicles, EvoBus buses and Mazda passenger cars for Myanmar.

“If you want to ride in luxury, we can provide it,” said Ko Phyo Maung Maung, CCAM manager of the Mercedes-Benz dealership in Yangon and Mandalay.

“If you are young and sporty, we have sports cars. We can offer various cars to fulfill the needs of the young, the old and the middle-aged,” he said, easing into a sales spiel.

CCAM has two showrooms in Mandalay, including a Mercedes-Benz display centre at the posh Sedona Hotel and a Mazda multi-branded car showroom on 35th street.

“There are six classes of Mercedes that we display in Sedona Mandalay, including S500L, E class, A 45 AMG, C 200, GL 500 and E 63 AMG,” Ko Phyo Maung Maung said.

“We don’t call the facility in Sedona [Hotel, Mandalay] a showroom,” he explained. “We call it a display as we take up only a small part of the Sedona Hotel. We can call the Yangon facility a Mercedes Benz showroom as it stands alone in the compound. It also depends on the number of cars we can display. In the Yangon showroom, we can display up to 10 Mercedes. In Mandalay, we can only display at most up to 6 Mercedes.”

The Mercedes-Benz “display” at the Sedona Hotel in Mandalay. Photo: Mark Yang

A bright future

After the decades of tightly controlled automobile imports, there is a lot of built up demand for new cars in Myanmar.

And people with money are now more inclined to spend, thanks to the much brighter prospects for the Myanmar economy in the aftermath of political and economic reforms pushed through in 2012, so car salesmen are understandably bullish about their prospects, especially in the urban centres of Yangon and Mandalay.

“As buyers can buy brand-new cars manufactured in 2014 and 2015 at the same prices they used to pay for second-hand cars before, they are very delighted,” Ko Phyo Maung Maung said. “I think the car market in Mandalay and the whole of Myanmar will be booming in the future.”

But not everyone is convinced that the Myanmar market is ripe for luxury models such as Mercedes Benz.

“There is a regular demand in the Mandalay car market,” said U Ko Ko Aung, managing director of Century International Auto Service Co. Ltd., a second-hand car dealership.

“We find a strong demand for cars that meet the lifestyle requirements of city dwellers. The demand of urban people has changed nowadays. Before, people used to buy cars that were powerful. Now, we find a trend shift. People tend to buy smaller-powered cars these days,” he said.

CCAM’s Ko Phyo Maung Maung acknowledged that Mercedes-Benz are not for everyone, in a country where one in four people live below the national poverty line and a new class of nouveau riche are just beginning to emerge in the urban centres. Myanmar is still ranked as a least developed country, although some places such as Yangon and Mandalay are developing a lot faster than others.

“In Mandalay, people prefer regular cars. They don’t really understand the value of AMG (the high performance division of Mercedes-Benz,) and the prices of Mercedes AMG cars are more expensive than normal Mercedes, almost twice as much. AMG cars cannot capture the Mandalay city market because of such expensive prices,” Ko Phyo Maung Maung said.

“AMG cars are performance cars. Most of the Mercedes buyers in Mandalay do not know them very well,” he said.

“However, there is a small group of Mandalay car buyers that value AMG cars, and the performance of AMG engines. AMG engine power differs from ordinary Mercedes. The torque power of an AMG engine make a significant difference, therefore, the speed of the cars is faster,” Ko Phyo Maung Maung said.

Daw Mi Mi Khin stands with her C200 model. Photo: Mark Yang

Brand-new car showrooms

U Ko Ko Aung said he was pleased with the advent of ‘new car’ showrooms in Mandalay, to satisfy the more affluent segment of the market.

“We welcome new car showrooms,” he said. “Later, we will also open a new car showroom. We will leave our used cars sales centre also open. Used cars have their own market while new cars have theirs.”

“There are rich people in Mandalay who can afford high-quality and international level cars. For those people, there should be new car showrooms. For example, instead of buying a 1998 model Toyota Land Cruiser for US$60,000, such people can now to choose brand-new cars from a wide range of available brands worth US$60,000,” U Ko Ko Aung said.

Prices of Mercedes

Although lower taxes have made imported “brand new” vehicles cheaper than before, Mercedes Benz are far from cheap.

“Mercedes cars start from US$78,000 and go up to over US$500,000,” Ko Phyo Maung Maung said. “S500L would cost US$370,000. SL 63 AMG would have a price of US$520,000. The S600 Maybach, the new exclusive first class model in 2015, would be US$610,000. Prices already include all taxes.”

The different Mercedes-Benz classes aim at different classes of businessmen.

“E class is for middle-aged businessmen,” Ko Phyo Maung Maung explained. “S class is for top businessmen. S class provides more rear seat features. There would be holding tables. You could use your computer on the table and work. . . businessmen could use the S class rear room as his small office and work while he travels or he is away from his office.”

While Mercedes-Benz cars are obviously not for everybody, the healthy sales they have been enjoying at Mandalay’s two showrooms over the past four months indicates that some people in the central city have plenty of cash and are willing to spend it on a prestige product, Ko Phyo Maung Maung noted.

This Article first appeared in the May 21, 2015 edition of Mizzima Weekly.

Mizzima Weekly is available in print in Yangon through Innwa Bookstore and through online subscription at www.mzineplus.com

Earlier this year, the US-ASEAN Business Council published a report that detailed 12 “Practical, Quick and Effective” recommendations for improving the business environment for foreign investors. The recommendations varied from the practical (“make licensing processes clear” and guidelines “for the fair use of” religious symbols and “temple imagery”) to the quaintly non-laissez-faire (a request for state regulation of the advertising industry in order to eliminate the “discriminatory rates” charged to foreigners).

One investment banker who works regularly in Myanmar and has met some of the cabinet ministers (who responded on condition that he wouldn’t be quoted by name) said that while he agreed with many of the recommendations, in the prevailing environment they were variously “not going to happen”, “wishful thinking” and “fantastical”. The recommendation to “fully empower local banks to approve transactions” provoked this reaction from a corporate investigator: “Are you kidding me? The banks can barely function and they’re all money laundering houses.”

The US-ASEAN Business Council’s effort is perhaps symptomatic of a willful effort on the part of foreigners in Myanmar (businessmen, UN agency staff and diplomats) to recognize the genuine but modest reforms of the last four years as much more substantial than they actually are and to assume much greater capacity for further improvement than any evidence on the ground would suggest—a condition that veteran Swedish Myanmar-watcher Bertil Linter describes as “soft-glove Stockholm Syndrome.”

Stockholm Syndrome is a psychological phenomenon in which hostages come to identify with their captors. It is named after an abortive bank robbery in Stockholm in 1973 that metastasized into a six-day hostage crisis.

“Burma’s luckier than most countries in Africa,” a western commercial attaché told me way back in 2004. “Instead of having the Central African Republic and Congo as neighbours, it has China, Thailand and India” (he didn’t regard proximity to Bangladesh as quite such a great advantage). Yet Myanmar’s geographical advantage obscures the fact that in many other respects, the country more closely resembles a messily emergent state in Africa than Asia’s next economic tiger.

Similarly to many African nations, government hard currency revenues are dominated by royalties from foreign-managed extractive industries, chiefly natural gas exports to Thailand and China. In this respect, Myanmar is much luckier than it would have been if its neighbours were the Central African Republic or Congo, neither of which would have offered a viable market for gas. Also similarly to many African countries, the primary beneficiary of state spending is the military. Furthermore, the black economy may be bigger than the reported economy.

Power and the stars are also factors. The electricity supply remains intermittent and limited mostly to cities. As such, commerce is restricted to businesses that don’t require much power and that can run diesel generators during blackouts. Meanwhile, the public education system has long-since collapsed, replaced to some extent by privately-run vocational schools attended by the children of relatively prosperous families. It’s also an open secret that many members of the military elite have a fascination with the supernatural, and engage in occult rituals and consult astrologers.

“When we had visitors come through the embassy, I’d tell them that the SPDC took advice from fortune tellers,” another former Yangon diplomat said, talking about the old days. “My colleagues would complain that I was belittling the government and oversimplifying the situation. But when they arrested Khin Nyunt [in the 18 October 2004 palace coup], they also locked up his personal fortune teller.” (The fortune teller’s name was Bodaw Teinkyar Than Hla. At the time he was arrested, the diplomat commented: “When you raid the cathouse, you take the piano player too.”)

“They’re basically the same people running the country now as then,” the former diplomat noted. “Don’t expect them to behave too differently.”

The diplomat claimed that sources had told him that the decision to move the capital from Yangon to Pyinmana was also due to the advice of fortune tellers. “In late 2003 we heard that half the War Office was moving there, then following Khin Nyunt’s downfall that the whole government was shifting,” he said. In November 2005 the official move started. The new capital didn’t even have an official name till Army Day on 27 March 2006, when it was christened Nay Pyi Taw. “The numerologists had determined that it was the most auspicious date for the announcement,” the former diplomat said.

The relocation of the entire government, including all the significant civil servants, to a wasteland 320 kilometres north of Yangon, presented yet a further barrier between the regime and everyone else, including all the local and foreign businessmen and diplomats. But despite the distance, there has been some progress.

Belatedly recognizing that there wasn’t the financial, technical or management capacity among domestic companies to build out nationwide telecoms networks, the government opened telecoms to foreign operators (not so many years ago, handset SIM cards cost US$5000 apiece on the locally-owned networks). Nay Pyi Taw deserves some praise for recognizing this fact (albeit 15-20 years after all but the most obtuse and war-ravaged jurisdictions in Africa). And the buildout of nationwide cellular networks made viable the “new new thing” in the banking industry—mobile phone banking applications.

At first glance, that might seem a technological leap in line with the sophisticated wireless internet-platformed banking apps available in much of Asia, but the business model being introduced to Myanmar was actually pioneered in Africa 15 years ago for places lacking functional banking environments. Like many countries in Africa, Myanmar’s banking industry doesn’t offer basic services, such as a functional home mortgage market. But then the sector has been something of an enigma since the first private banks started operating in 1992.

The banks grew and apparently prospered despite the fact that both deposit and borrowing rates were capped far below the rate of inflation, which in any normal environment would have made the industry unviable. In Myanmar, a big proportion of banking business involved money laundering, much of it tied to border trade. In February 2003 there was a bank sector collapse, but almost all the existing institutions survived it, most of them retaining their pre-crash managements and shareholders. Where was the regulator?

The Central Bank of Myanmar (CBM) oversees the banking sector. In September 2003 the governor of the CBM at the time, Major-General Hla Tun, told the at the annual IMF-World Bank meeting in Dubai that “NPLs of the banks are at a very manageable level of 2.09 percent.” That’s a level that central bankers in properly regulated markets would be very pleased with. Moreover, CBM statistics put Myanmar’s 2003 GDP growth rate at a healthy 5.1 percent. His statistics indicated the most successful recovery from a banking industry collapse in history—almost too good to be true! But then statistics in Myanmar have long been used to support ideological or public relations arguments rather than to provide a map for understanding and managing the country.

According to an economist who worked in Myanmar before the palace coup against Khin Nyunt, the Office of the Chief of Military Intelligence (OCMI) had a permanent detachment at the CBM. He alleged that one of the detachment’s responsibilities was to massage the national accounts in order to obscure the scale of foreign currency receipts that originated in the black economy. Hence the curiously large position that services receipts played—and continue to play—in the current account balance (statistics for exports of physical goods can be compared against UNCTAD figures for imports declared by the trading partners of Myanmar; unrequited transfers, tourism receipts and other non-physical items can’t).

It’s likely that the genuine reform of the banking industry and the loosening up of the import regime that have taken place over the last five years were enabled in large part by sharply higher gas revenues. Gas exports to Thailand have increased somewhat in volume and risen sharply in price since early 2005 (including the pipeline transportation fee, Thailand paid almost US$12/mmbtu for gas from the Yadana and Yetagun fields in 4Q14 against about half that price in 1Q05). That enabled a previously cash-strapped government to stop printing kyat bank notes in order to cover expenses, causing the currency to stabilize and inflation to ease. Furthermore, detente with the West freed up the IMF and the World Bank to provide technical and financial assistance.

Since Myanmar’s detente with the West, numerous development agencies and even foreign banks have found budgets to hold a series of seminars teaching central bankers and the staff of financial institutions how to identify and deal with money-laundering. One suspects that many of the seminar attendees have much more experience with money laundering than the expert speakers.

Soft-glove Stockholm Syndrome manifests in some unusual manners. When I was in Yangon in April, an expat working for a local bank criticized Aung San Suu Kyi intensely for apparently encouraging garment workers at foreign-owned garment factories to seek higher wages. She went on to claim that garment workers at foreign-owned factories were already paid US400-600/month with overtime included (garment factory wages rarely exceed US$100/month for machinists, even including overtime).

Other foreigners point to the spectacularly high cost of real estate in Yangon (despite the near impossibility of getting a home mortgage) as proof of the strength of the wider economy rather than being indicative of the paucity of viable options for investment in productive industry. It’s easy to forget that before the relaxation of car import rules in 2011, a 1984 Toyota Corolla typically sold for more than US$30,000 (the flood of imports that started in 2011 caused prices to crash and considerable wealth destruction among people who had purchased vehicles as a store of value).

The flood of foreign firms opening offices in Yangon in recent years has caused demand to dramatically exceed supply of another resource—suitably qualified English-fluent clerical and technical staff (the last time this phenomenon manifested was when the country opened up to the outside world for the first time in 1990s). Myanmar trails far behind emerging countries such as Vietnam in the training of human resources and it’s difficult to see how it can correct this failing without a seachange in the government’s attitude toward managing education.

In the absence of a change in attitude, the economy will remain dominated by resource extraction, low-wage industries and (helped by its geographical advantage) tourism.

This Article first appeared in the June 11, 2015 edition of Mizzima Weekly.

Mizzima Weekly is available in print in Yangon through Innwa Bookstore and through online subscription at www.mzineplus.com

Myanmar’s real heroes and villains are well-known amongst the international community. Some stand out and others are largely forgotten and never credited. Heroes like Bogyoke Aung San, the father of an independent Burma and his daughter the international democratic icon, Daw Aung San Suu Kyi. And villains such as General Ne Win, who in 1962 plunged Burma into a socialist programme which saw it slip off the international world map into decades of military dictatorship. And finally, dictator Senior General Than Shwe, who some suspect to be the puppeteer of Myanmar’s current political state.

Less well known is economist U Hla Myint who came from modest beginnings. U Hla Myint who was born in 1920 in Pathein, Burma into a family with little financial means during the period of British Colonial rule. He was noted through his school life as a bright child and was allowed to undergo a test at the age of 14 to begin university studies. He officially enrolled in Rangoon University at the age of 15.

The entire time that U Hla Myint was in university, he achieved top grades despite only being in his midteens. He finished his degree early and continued at university associating with other brilliant minds of the time, the most well-recognised being economist Joseph Schumpeter, a noted Harvard professor. Eventually, in the late 1930s, he went off to study at the London School of Economics.

World War II broke out leaving U Hla Myint stuck in England. All of LSE’s top economists had left to serve under British leader Winston Churchill’s war cabinet creating a brain drain at the school. As London buttoned down under war-time austerity and occasional Luftwaffe bombing raids, U Hla Myint began researching his Ph.D. under Austrian economist, Friedrich Hayek, the well-known defender of classical liberalism who won a Nobel Memorial Prize in Economics in 1974.

After the end of the war and finishing his Ph.D., U Hla Myint returned to Rangoon where he helped to reestablish what was then Rangoon University’s economics department as it had been destroyed during the war. The buildings were reconstructed from the ground up and during the rebuilding, classes usually took place in bamboo huts. Despite the hurdles, the department became known as one of the leading economics departments in the world, living in a golden age economic theoretical development.

U Hla Myint had his eyes on Myanmar’s agriculture sector, stressing the need for an export-orientated mindset, calling for open borders and a cut in international tariffs.

As noted Australian economist Sean Turnell said during a recent lecture on U Hla Myint’s economic achievements, the noted Myanmar economist stressed the importance of export-led growth at a time – 1940s-50s – when conventional economic models stressed industrialization, import substitution, and state-led and protected economic growth. In retrospect, it can be seen he was a visionary.

U Hla Myint was preaching the importance of property rights, incentive-based economics, and economic freedoms well before the ideas were thrown around in the international community. Others would go on to achieve prizes with ideas similar to his own.

After leaving Myanmar in 1962 amidst the turmoil of General Ne Win’s coup d’état which saw his foreign friends deported, U Hla Myint begun his best economic work while serving as Emeritus Professor of Economics at the London School of Economics from 1966 to 1985.

He expressed the importance of an export-oriented development strategy for Myanmar and the Southeast Asia, noting that if you export to the world the market you could enjoy would allow economies of scale production and efficiency. 

Trade was not about earning money, but lifting the economy and productivity, avoiding leaving industrial resources idle. He sought institutional change. He stressed the importance of exporting agricultural products, a process that would lead to other developments that would help transform the broader economy.

“The expansion of peasant exports leading to the development of the market system by drawing the peasant households into the exchange economy, this would be a powerful factor in reducing the marketing and organizational costs of the traditional sector, this will pave the way for further economic development through a greater degree of specialisation and divisional labour,” wrote U Hla Myint at the time.

U Hla Myint returned to Yangon in 2012 to attend an economics event headlined by Joseph Stiglitz, 20012 Nobel Prize winner, entitled, “An Agenda for Equitable and Sustainable Development for Myanmar.” Mr Stiglitz received all the attention.

Even on U Hla Myint’s return, he was to focus on the growth of Myanmar’s agricultural sector and was against centralization saying: “Look it never worked 50 years ago when I was arguing against it 50 years ago. It isn’t going to work now.”

U Hla Myint’s main argument was that there was not the storage capacity and infrastructure for a centralised agricultural system in Myanmar. He stressed that a free market system would allow an expansion of capacity and growth in the economy, as seen in many other countries around the world. 

All information was provided by Sean Turnell during a recent speech in Yangon

This Article first appeared in the July 16, 2015 edition of Mizzima Weekly.

Mizzima Weekly is available in print in Yangon through Innwa Bookstore and through online subscription at www.mzineplus.com

Tak, a western province bordering Myanmar, has been tipped to host the first special economic zone (SEZ) with a well-managed industrial estate and plenty of investment privileges to attract investors.

But after a year of government efforts, the SEZ remains a far-fetched idea and is unlikely to start up within a few years as planned, according to the business sector.

Several hurdles and risks lie ahead, making investors wary of investing in the zone.

Officials are expected to spend several years settling problems and disruptions before securing appropriate land to be developed into the industrial estate. That means more delays in SEZ investment.

The government has set aside 2,000 rai of denuded forest land near the second Thai-Myanmar Friendship Bridge in Mae Sot district for the estate, invoking Section 44 to allow the use of military force to transfer ownership more quickly and easily.

Things have not gone smoothly, though, as hundreds of families, mostly poor farmers who earn their living from the land, have refused to move out and are asking for fairer compensation before doing so.

"It will not be easy, as the issue has reached the National Human Rights Commission of Thailand (NHRC) and they are sending a senior official to investigate," says Paradorn Kanda, a vice-chairman of the Tak Chamber of Commerce.

The case could take years to resolve, potentially scaring off would-be investors.

Niran Pitakwatchara, who heads the NHRC subcommittee overseeing the case, says the commission has found strong evidence of land-grabbing by the government via Section 44.

"We have sent the complaint to the government and are asking it to reconsider the plan, as there are hundreds of families affected by the policy," Mr Niran says. "However, it depends on the government for how long it will take to settle the case. It will be indefinitely long."

Local authorities have played down the case, saying the 2,000 rai for the industrial zone is a minimal portion of the more than 800,000 rai in Tak set to be developed as part of a bigger scheme of trade and import-export zones in the province.

"The industrial zone is just a small part of the project," says Tak governor Somchai Hatayatanti.

The overall plan is for the government and the Board of Investment (BoI) to grant special privileges to new investors in the 800,000-rai area. Existing investors, however, have voiced their own concerns about the privileges.

"They say it is not fair that the government is giving privileges to new investors and doesn't care about the existing businesses at all," says Somsak Kaveerat, chairman of the Tak Chamber of Commerce.

More than 300 existing businesses and investors, some with decades of involvement in Tak, have lobbied for better privileges after driving the economy on their own for so long.

"They are asking for privileges from the government and the authority is mulling over the privileges to be given to them," Mr Somsak says. "However, the privileges will not be as substantial as what the government plans to give to new investors to promote the SEZ."

Local businesses say privileges for existing investors would calm them down and improve the atmosphere, while some observers worry that the bid could backfire by making privileges for new investors seem less attractive.

"The government will try to compromise with existing businesses, but we don't know for sure that unbalanced privileges won't deter new investors from the SEZ," says Banpot Kokiatcharoen, an adviser to the Tak Chamber of Commerce.

His remarks are in line with those of a senior government official who acknowledges that the SEZ project was not initiated by the government, but rather by the National Council for Peace and Order.

"Once the cabinet was formed, not all members of the economic team agreed with the projects," the official said. "In the case of the SEZ in Tak, those who disagreed felt that there was no real advantage for certain businesses to set up operations there."

Even so, the government should continue to develop infrastructure in Tak to promote border trade, the official added.

FOSTERING TRADE PROMOTION: GOING BACK TO BASICS

At a time of no clear blueprint or schedule for Tak's SEZ, existing businesses want the government to get back to basics in fostering border trade and boosting the fragile economy.

"Border trade is the strongest point of Mae Sot and has supported the economy here for decades, which the government may have missed," says Mr Somsak, the Tak chamber chairman. "We are welcoming the basic plan to support infrastructure that could improve the economy more easily and quickly, without relying too much on the SEZ."

With Myanmar newly opening up to foreign investment and tourism, and demand for Thai goods spiralling, the time is right to tap a golden opportunity, he says.

Mae Sot sits just 45 kilometres from Myanmar's economic district of Myawaddy, with its 60,000-plus population and strong purchasing power. Moreover, Mae Sot is a transit point on the way to Yangon, where demand for Thai goods is surging.

"Goods items, of which about 90% are Thai goods, can be transported to Yangon within five or six hours, compared with more than two days before we had the new road," Mr Somsak says, referring to a 1.14-billion-baht project that enhanced logistics from Mae Sot to Myawaddy.

Infrastructure improvements in Tak, including the expansion of Mae Sot airport and better highways to Bangkok, should help boost border trade value from the current 60 billion baht to more than 100 billion in a few years.

"That would be a realistic plan to help support the economy at this time," says Mr Banpot, the Tak chamber adviser. "But it will take a few years to achieve the goal, since the budgets have just come out and it will take a few years for construction."

Charnvit Amatamatucharti, deputy secretary-general of the National Economic and Social Development Board, says the government has done its best to promote SEZs in response to Prime Minister Prayut Chan-o-cha's policy prescriptions.

"The private sector should thus reflect clearly and directly on what its real problems are," he says, noting that SEZs have been proposed by the private sector itself.

"The Thai Chamber of Commerce and the Federation of Thai Industries have backed them in the SEZ committee. Opponents should use the two private organisations to vent their opinions on the plan."

Mr Charnvit says the government has shown flexibility in assigning state land plots after the private sector complained that the plots designated for SEZs were too expensive.

The government has also offered the highest privileges to 13 industrial categories in five provinces, as well as cutting capital requirements for small and medium-sized enterprises in SEZs from 1 million baht to 500,000 baht, he says.

http://www.bangkokpost.com/business/news/658364/industrial-inaction

A husband and wife moving team launched their company in Myanmar this year with the aim of offering a stress-free transfer from old homes to new.

Jackie and Brian Ackerman spent seven years working as electrical engineers in Washington DC before deciding it was time for a radical sea change. 

“It seemed like everything in America was so predictable – we were doing the same thing day in, day out. We came to Southeast Asia on a holiday in 2012 to see if we could lead a different lifestyle. But when we flew to Singapore it was evident from the moment we landed that we weren’t needed there. We also struck out in Ho Chi Minh, Siem Riep and Bangkok,” said Jackie Ackerman, Director of Pathway Moving Services.

While in Cambodia, their local guide mentioned in passing that Myanmar had just opened up and that it might prove an interesting destination to visit. 

“Myanmar wasn’t on our to-do list: we hopped on a flight on the spur of the moment and spent a couple of night at Park Royal Hotel. When we came here, we felt that we could make a difference.”

Neither Jackie or her husband Brian had any experience in the moving industry, but that didn’t deter them from starting up their own venture.

Most expat business owners in Myanmar open bars and restaurants – so why did the inherently stressful moving industry appeal? 

“Brian and I are total introverts. It wouldn’t be in our nature to open a restaurant or bar, or something that required us to mingle – it’s just not in our DNA,” Jackie said. 

The seeds of the idea of a moving business were sown in 2011, when Jackie’s office relocated and she had a chance encounter with a company that stood out from the rest. 

“Mover after mover came into our office and they were really stereotypical – these guys parked their trucks out the front and rolled in like they’d just finished a job.”

But when a man in a suit strode in, sat down and calmly explained the logistics of moving in detail, Jackie was pleasantly surprised.

“He was so professional. It was like an ‘a-ha moment’,” she said.

Her boss opted for a company that gave the cheapest quote and a discount to boot – but it became less of a bargain when an insurance claim had to be lodged for damaged office desks.

“I knew it would be horrible – but the experience keyed me into the industry. And it culminated with the idea of looking for something to do outside the US. You could say the two thought patterns converged.” 

Jackie and Brian, the latter of whom is Pathway’s managing director, met a couple in Washington with decades of experience in the relocations industry and spent the next couple of years gleaning insights from them. 

Jackie and Brian’s first move in Yangon was in March this year. Both admit it’s a tough industry. Fortunately though, Jackie said that expats in Yangon are ready to roll with the punches – such as sudden refusals to allow movers to use the elevators in condos or tricky architectural designs.

“For the most part, people living in Yangon are willing to deal with all sorts of strange things,” Jackie said.

Jackie and Brian’s Myanmar language teacher has equipped them with a moving-related vocabulary, and their director Min Thu Aung, offers limitless supplies of invaluable advice, Jackie said with a grin. 

“We spend a lot of time on the job saying ‘phyay, phyay’ [‘slow, slow’]. We also often ask a single worker to team up with another to carry heavy objects – sometimes they get a little crazy and want to carry heavy things upstairs, which could result in damaging floors or walls – and themselves.” 

Jackie said they convey the importance of protecting owner’s buildings to their team and make sure that belongings are covered in cushioning wrap whenever necessary. 

“Wherever possible, we use dollies to exert less energy: it’s about working smarter and working slower,” Jackie said.

Pathway is marketed as a premium moving service. While cheaper options are certainly available in Yangon, in the long run it can be worth spending more to avoid having to replace the irreplaceable. 

“We really pride ourselves on protecting people’s goods and internalising what matters most to our clients.”

The task can be daunting in Yangon, as elevators aren’t yet par for the course in apartment buildings. 

“We’ve done stairwells with no lighting source – when our guys are in total darkness and we’re speaking two different languages it can be challenging,” she said.

For the most part, Pathway finds its customers by “trolling Yangon Expat Connection” and Brian Ackerman’s SEO skills help to recruit others online via its website. 

“Our strike rate is about 50:50. When people say no [to an inquiry on YEC], it’s usually because of the price. If someone really wants the rock bottom price, where a bunch of guys turn up and move your stuff without caring, it’s hard for us to match that price-wise because we provide a premium service.”

That said, Pathway “says yes to everything. We want to see if we sink or swim and we won’t know unless we try.” 

The heaviest item Pathway has moved was a 200 kilogramme piano, which had to be delicately lifted out of a fourth floor apartment. 

A definite advantage for expats who choose Pathway is having at least one person on the job who speaks English and Myanmar to explain what goes where. Pathway also has an add-on service for packing and unpacking belongings by a team of ginger-fingered ladies.

Moving offices as opposed to homes takes up a quarter of Pathway’s business, while moving locals comprises but a fraction of their overall jobs.

“It’s hard for us to get local business – we haven’t quite figured it out, but perhaps it’s a price point thing,” Jackie said.

As for direct rivals, there’s Asian Tiger and Crown Relocations, although Jackie said they haven’t gone head-to-head with either yet when bidding for jobs.

What makes Pathway unique is that it’s a wholly foreign owned, family-run business.

“I think maybe we’re the one-off that doesn’t necessarily fit under the corporate umbrella,” Jackie said.

For more information about 

Pathway Moving Services – or to get a free quote – visit http://pathwaymoving.com

Hotels, harbours or mines, Myanmar's big-ticket industries are still in the grip of military-linked tycoons, who will remain gatekeepers to the country's opening market whoever wins Sunday's crunch polls.

The globe's fourth fastest-growing economy, according to the World Bank, is a tantalising prospect to international investors but sections of it are firmly off-limits.

These are the realms of the nation's infamous "cronies" -- a business elite who gobbled up state contracts and carved out monopolies under the corrupt former junta, which rewarded loyalists.

"Cronies are the main winners," says Sean Turnell, an expert on Myanmar's economy who has advised Aung San Suu Kyi's National League for Democracy (NLD).

"They dominate in industries in which the government gives them special concessions, and protects them from competition."

One such tycoon is Aye Ne Win, grandson of Myanmar's notorious dictator Ne Win, who like many of the financial elite has risen through entrenched networks of privilege.

Sporting a crisp monogrammed shirt at his villa in Yangon, the magnate insists his family have always operated within the law.

"I have connections so it's easy to make business," he told AFP.

Unlike others, however, his family fell out of favour with the former military regime -- Aye Ne Win and his two brothers were jailed for a decade in 2002 as part of a purge by Than Shwe, Myanmar's last serving general.

But in the years since he and his siblings have staged a comeback, steadily building a vast empire that spans construction, hotels and banking.

"None of our family has ever been restricted from travelling or prohibited from entering anywhere in the world," he said. 

"That's why most of our family's old friends have been willing and offering to support us in doing business (with us)," he added. 

- Detoxifying reputations - 

Yet many of the country's biggest tycoons do remain on a Washington blacklist, forbidding American companies from doing business with them even though most western sanctions have been dropped.

Steven Law is one such businessman. A leaked US diplomatic cable from 2007 described him as a "top crony" to the former regime's generals and the son of a drug lord.  

He owns Asia World, a sprawling conglomerate with stakes in sectors including tourism, shipping and construction. 

The company also benefits from the generals' successors -- in 2013 it won a multi-million dollar government contract to upgrade Yangon's international airport.

The military itself retains a significant hold over business through its Union of Myanmar Economic Holdings, a vast conglomerate that remains under US sanctions with major stakes in gems, brewing, real estate and transport.

But in a sign of the changing times, some tycoons have begun cosying up to Suu Kyi's NLD, which is expected to make sweeping gains if the November 8 elections are free and fair.

ZawZaw -- a US-sanctioned tycoon who owns the Max Myanmar conglomerate and has interests in gems, real estate and tourism -- has made large donations to the party, as has TayZa, the flashy owner of the formerly US-sanctioned Asia Green Development Bank.

The family of another crony, Kyaw Win, head of media giant Skynet, paid nearly $50,000 for a jumper knitted by Suu Kyi at a 2013 fundraiser. 

- Growing competition - 

Whether the tycoons can make an ally of the NLD is yet to be seen.

The party has vowed to double-down on the economy, promising jobs and higher taxes to benefit the poor, while Suu Kyi has made clean government the centrepiece of her campaign.

Aware of the country's evolution, many moguls are trying to detoxify their reputations.

"A few have begun to manage their public image and speak of their support for a new democratic Myanmar," says HtweHtwe Thein, a Myanmar expert at Australia's Curtin University.

Although the cronies still enjoy primacy, business figures say a more competitive environment is slowly emerging. 

"Under the military regime, it was impossible to win against the cronies," KyawKyawHlaing, chairman of the Smart Group told AFP, praising comparatively greater transparency in tender processes now.

But while some "60 percent" of government contracts still lack transparency over how they are awarded, he said, this has not deterred foreign investors.

Since the lifting of outright army rule in 2011, Myanmar has seen a flood of investment and a consumer boom, hitting 8.5 percent growth in the last financial year.

The World Bank says $8 billion of overseas cash poured into Myanmar over this period, more than twice as much as the previous year.

© AFP

Developing countries such as Myanmar will face increasing difficulty expanding their electricity supply using conventional fossil fuels oil, gas and coal, it emerged last week during the global climate change conference in France.

An agreement on curbing global warming could undermine the potential national wealth from hoped for natural gas beneath Myanmar’s territorial waters of the Bay of Bengal, where 20 blocks have been leased to international oil companies for exploration.

If the UN-led conference agrees on tough measures to hold global warming below a 2C increase the commercial viability of hundreds of billions of dollars’ worth of planned investments in fossil fuels in Asia would be undermined, some experts asserted.

It would also undermine bank and institutional investor support for coal-fuelled power plants – the favoured quick fix being sought by countries from the Philippines to India to overcome acute electricity shortages, a special report in the Asia Power Monitor said.

A study by the London-based Carbon Tracker Initiative (CTI) warned that more than US$300 billion worth of fossil fuel investments in Asia is at risk of being wasted if the UN conference agrees on global CO2 limits.

The independent research think tank suggests that plans by numerous companies and countries for oil, gas and coal developments would be rendered obsolete.

Business history is littered with investors who failed to see a transition coming, CTI chief executive Anthony Hobley said in a forward to the study timed to coincide with Paris.

“China, the US, Australia, India and Indonesia have the greatest exposure, accounting for over 90% of unneeded investment. Export markets are in structural decline as China seeks to peak its coal demand and India aims to become more self-sufficient in energy, threatening big exporters like Australia and Indonesia, CTI said.

Australia, Indonesia and Malaysia have the greatest exposure to investment “folly” in natural gas production. Two-thirds of planned new coal bed methane projects and half of the supply in new LNG projects will be unneeded, according to CTI.

“This sounds like bad news for South Asia and Southeast Asia,” the weekly Monitor said. “Coal or gas are the natural resources most favoured to fuel economic growth and to bring basic grid electricity to hundreds of millions of people still living with wood fires and paraffin for cooking and light.”

The CTI disagrees. Technical developments in clean energy, bigger and more efficient storage battery science and a trend to electric cars are the future, according to CTI.

However, this seems to miss the point that all those people from India to the Philippines sat round the wood fire cooking pot are a long, long way from worrying about whether they should buy a petrol-driven car or an electric battery model. It overlooks the fact that although India is making big strides in encouraging the development of renewable power plants – aiming for 40% of total power demand by 2030 – more coal and or gas will still also be necessary.

Myanmar has made small inroads into tapping non-fossil resources to generate electricity, but solar energy-trapping projects are costly, land consuming and probably too sophisticated for the country’s existing underdeveloped infrastructure.

Meanwhile, opposition to hydroelectric projects that involved damming rivers is strong in Myanmar.

Singapore’s state-linked Sembcorp Industries this week signed a US$300 million agreement to build one of the biggest power projects in the country, a 225 megawatt plant to be fuelled by natural gas. Sembcorp will own 80% of the plant, which is not expected to be operational before 2018.

In the near term, Myanmar’s domestically produced gas supply will suffice for such projects, but the CTI believes finding the plant construction finance will become increasingly difficult.

Major international finance institutions and banks are already turning their backs on some fossil fuel projects. One of the world’s biggest planned coal mines, in Australia, has been refused loans by a number of banks which previously supported such developments.

The 60 million tonnes a year mine is planned by India’s Adani Group industrial conglomerate, primarily to fuel new power plants in Myanmar’s neighbour India.

India’s plans for coal fuel growth have met a lot of criticism at the UN conference over the last 10 days, causing anger in New Delhi.

“Why is India in the crosshairs and not, for example, the US, which has one-quarter of the South Asian nation’s population, but more than twice the level of harmful carbon emissions?” asked two leading Indian scientists commenting in Time magazine this week.

Why is China, a slightly more populous country than India which accounts for about 28% of annual global emissions versus India’s 6% not the subject of more criticism in Paris, said Navroz Dubash and Radhika Khosla of the Centre for Policy Research in New Delhi.

“Our review of multiple research studies suggests a virtual consensus that to meet India’s energy needs, coal use will have to increase …[but] significantly, even with added coal, India’s emissions per person in 2030, at about 4 to 5 tonnes per capita, are likely to be less than the current global average of 6.6 tonnes per capita,” Dubash and Khosla said.

“Importantly, the projected increase in India’s emissions is far less than the corresponding figure of 12 tonnes per capita in 2030 for the US and China,” they said.

The devastating floods that have in the past two weeks engulfed India’s southern city of Chennai, formerly called Madras, and Tamil Nadu State have been like manna from heaven for the anti-fossil fuel lobby. The rain storms were caused by climate change, they insist.

That’s as maybe. Chennai sits on the Bay of Bengal, notorious for extreme monsoon season weather. There is little proof that the flooding was actually the result of global warming, natural or man-made, but if it was indeed the latter then it follows that this was most likely caused by the 19^th Century industrialisation of countries now wagging fingers at India and other developing countries for wanting to burn coal, the Monitor suggested.

“Surely compromise is needed on a global compact on fossil fuels consumption to enable developing countries to improve their lot,” the Monitor said. “This might then allow them to bring their electricity supply somewhere closer to that enjoyed in homes in the US, Britain, Germany and Japan full of energy consuming convenience gadgetry. Households in those countries long ago abandoned cooking the evening meal on a wood fire or reading by fume-leaking paraffin lamp.”

This Article first appeared in the December 17, 2015 edition of Mizzima Weekly.

Mizzima Weekly is available in print in Yangon through Innwa Bookstore and through online subscription at www.mzineplus.com

There is a small hut with a thatched roof overlooking the Andaman Sea in Dawei, Tanintharyi Region. Near the hut, there is a milestone engraved with the letters KM 0+000 denoting the beginning of the road.

At present, there is only a wide road and vast fields but the area will soon be a flourishing major economic hub for neighbouring countries including Thailand and Myanmar. It is the site of the Dawei deep-sea port, the largest in the country, with a project area spanning thousands of square kilometres.

Currently, only a few people come to the area and it is just a seaside village. These people take photos to remember their trip and they return to where they came from. It is hard to say how much this area will change over the next five years. But local people and businessmen have high hopes for the mega deep-sea port project which initially took shape as a plan by the Thai and Myanmar governments in 2008.

Local people have experienced both pros and cons of the project since then. They frequently heard rumours of a probable and often imminent relocation of their villages. And they also knew that for its construction their farmlands, plantations and plots would be confiscated.

Compensation for land confiscation

The Dawei Special Economic Zone Management Committee Secretary Khin Maung Cho told Mizzima that they had already paid 29,038 billion kyat as compensation for 7,349.48 acres seized for the construction of the project.

The main agricultural businesses in Dawei are cashew nut and rubber plantations. Compensation was paid based on the size of the crop and location. A local villager, Kyaw Naing, explained that they were paid compensation by dividing each of the plants into three categories, small, medium and large and then compensation was paid at a rate of 100,000 kyats for large, 70,000 kyats for medium and 30,000 kyat for small. Kyaw Naing lived in Pugawzun village, one of the nearest villages to the Dawei SEZ, and he was paid compensation based on this criteria.

But allegations and problems still exist as villagers have alleged unfairness and nepotism in calculating the compensation paid to them after land confiscation.

Another Pugawzun villager, Kyaw Aye, told Mizzima: “Some have accepted the compensation in this village but some have not accepted it yet because there is unfairness in calculating our compensation. We just want fair compensation, we cannot accept compensation a lot less than expected.” He has not yet accepted the compensation paid to him.

Some local villagers who have accepted and received compensation reinvested their money in buying plots in other nearby areas to grow cashew nut plants. But some do not know what to do and their money has been spent on daily needs.

Local villager Ko Moe from Hteingyi village said laughing, “I got 17 million kyats for my 9-acre plot. And then I moved to another village after selling my cashew nut estate. Now my money has been totally spent and none is left.”

New satellite town project

Those whose estates and plantations were seized for the SEZ project received compensation while those whose houses were seized for the project were given new houses in a new satellite town called Bawa.

In Bawa town, the houses for the relocated villagers were divided into three categories large, medium and small all with the same design. Houses there will be provided to the villagers from six villages relocated for the construction of the project.

Khin Maung Cho said, “In the current initial phase of our project, we avoided building in areas near these houses so no one has been relocated at the moment. But these villagers have already agreed to be relocated to their new houses as and when needed.”

Is the project welcome?

Thai-Italian consortium and the Myanmar government signed an agreement on August 5 last year to resume their initial phase of the project. Under this agreement, the initial phase of the project must be 65% complete within three years over a seven-square-kilometre area.

Currently, Thai-Italian consortium is building infrastructure including roads, bridges, the water supply, electricity and housing. The local people are sceptical and have concerns about the success of the project. But despite their scepticism and concerns, they welcome the project being built in their region.

Ko Moe from Hteingyi village said, “We want to see the success of the SEZ project because those whose farmlands and plantations have been lost can work in this SEZ for their livelihood.”

Kyaw Aye who is still refusing the amount of compensation said, “I will not do [anything] to delay this project. I really thank them for building this SEZ project in our area and we are happy and proud of it. Our people have to go to other countries such as Thailand for work as they don’t have a job opportunity here. We wish this mega-project success but we want the compensation and damages we deserve. So I’m still insisting on non-acceptance of compensation they paid.”

Job opportunities

The local people have high hopes for sufficient job opportunities from the project and local development. It is expected, there will be 65,000 job vacancies even in the initial phase. The Dawei SEZ project provides hope for unskilled workers in the local area and high expectations for local businessmen.

Manager Soe Thein of AK Construction Company said, “The entrepreneurs and businessmen in Dawei will benefit much from the Dawei SEZ project when it is successful. If the deep-sea port project is successful, we will get many business contracts from it. Our Dawei city will flourish a lot when the deep-sea port project is completed and running successfully.”

AK Construction is currently building houses on contract and they are watching the progress of the SEZ project and have a business expansion plan.

Thant Zin from Dawei based NGO ‘Dawei Development Association’ (DDA) said that in his opinion this SEZ project would not be beneficial for local workers in the long term.

“We have concerns over this project because industries here are not suitable for local workers. For instance, canning factories, local workers who worked in Thailand illegally have experience in such an industry. They will not have much difficulty when they come back home.  But other industries in this SEZ will be high-tech industries such as petrochemical so workers will need more skills to get employment there,” Thant Zin said.

Labour problems

The local people hope for future employment in the SEZ, but right now they are experiencing labour problems.

One year after the signing of the agreement in 2012 work on the project started. In the initial phase, unskilled workers got jobs but then they were made unemployed when the project was suspended. And then, when the project was restarted, these workers were reappointed in their jobs but they had to refund the compensation paid to them by their employers when they were dismissed. Some had to pay the equivalent of three-month wages. Additionally, some did not have to pay back compensation but they received lower wages than previously.

Concrete mixing worker Kyaw Lin said, “We were told to pay back the compensation we received when the project was suspended. We had no choice but to pay it back as we needed jobs.”

Lei Lei Win who works for Italian-Thai in Myeik complained, “Our Myanmar workers are poorly paid.”

7-year mega project

Dawei SEZ is a 7-year project lasting from 2015 to 2022. The project has two phases, initial and main. The initial phase must be completed by 2018 and it will cost US$350 million or about 450 billion kyat.

The initial phase will have nine projects.

According to the project blueprint, there will be industrial zones, a deep-sea port, small port, schools, markets and hospitals with water and electricity, and a small city with essential infrastructure.

This mega project will help Myanmar trade with Thailand, India and Vietnam.

Along with positive points, there are some questionable issues of environmental and social impacts on the region and the people.

Dawei SEZ management committee secretary Khin Maung Cho said, “We have done an Environmental Impact Assessment (EIA) and a Social Impact Assessment (SIA) and we have already given these reports to the local people. We will conduct these studies again if we need more in future.”

Local resident Thant Zin from Dawei Development Association said, “As an ordinary citizen we are proud of having such a mega SEZ in our local area which will be the largest in Southeast Asia. It has become famous and popular among the people over the last 3-4 years. People came to see the project working with heavy machinery and equipment and a lot of workers. But as time passes, the progress of the execution of this mega project is unsatisfactory. One year you could see a small hut and a flag post in front of it but it would not have changed when you visited it a year later. The situation is unchanged. So the people are losing interest in this project.”

For 16 years, Sharky’s has satisfied Yangonite’s cravings for delectable cheeses, breads, gelato and cured meats, to name but a few of its luxurious offerings. During the decades Myanmar spent as an isolated, pariah state under international sanctions, such items would have been virtually unobtainable. However few would have complained: Myanmar’s population happily consumes more rice than anywhere else in the world and expats and repats were thin on the ground until the country’s reform process began in 2011. Yet the namesake of this foodie institution wasn’t deterred by starting out with a small client base; if anything it was a plus, as mass production has never been part of his game plan.

U Ye Htut Win (aka Sharky) views the world in terms of an 80:20 split – the 80 percent being “the big boys playing the industrialised game and then there’s us, the artisans, who look beyond short-term profits.”

‘Everyone wins’

However Sharky’s is no social enterprise and Sharky makes no apologies for the fact that his wholly organic goods don’t come cheap.

“From the beginning Sharky’s has always been labelled as expensive. That’s how it is – and I take it. But what I say is that at least I know why it’s expensive. I take care of my staff, I treat my animals well – everyone wins. Our profit margins aren’t gigantic. They are healthy – and that’s how it should be because this is a business and we have to pay our bills. Producing food on my terms is costly, but there is a reason why we do things the way we do. ”

Sharky told Mizzima Weekly that when he returned to Myanmar in 1996 after a life lived in many different parts of the world as the son of a diplomat, he was driven by a desire to “prove what can be done in a third world country with a first world vision and concept.”

Focus on local supply

Eighty-five percent of Sharky’s products are locally sourced and the entire supply chain is controlled by Sharky’s to ensure the high quality standards it prides itself on.

Take Sharky’s roast chicken, which differs substantially from its mass produced counterparts.

“People tend to only talk about how a chicken is bred. The slaughter part is gruesome, but you have to think about it,” he said.

Sharky explained that his chickens stop being fed two days prior to being killed: they consume a liquid diet of probiotics to clean out the gut. Even if an intestine is ruptured by mistake, the risk of salmonella is slim. This practice is in stark contrast with mainstream poultry production in Myanmar.

“Because chickens are sold by weight, they are usually stuffed with feed and their stomachs are full of shit,” Sharky said.

That’s not be good for the consumer: nor are the incorrect bleeding techniques that often lead to contamination. Sharky’s drains the animal’s blood by slitting the throat as per halal and kosher methods. Most others don’t bother: a chicken may be struck from behind, causing its lungs to explode. Others die prematurely due to cramped conditions or illness, after which they are sold to market buyers. Sharky explained that any of these factors can result in chicken – a white meat – taking on a pinkish appearance even after it’s been cooked.

“It’s a warning sign that consumers should be aware of,” he said.

Sharky’s takes the extra precaution of dry plucking, as the more common method of a ‘hot water bath’ can lead to skin contamination via dirty water.

“Our methods are time and labour intensive, but in return the risk factors are eliminated,” he said.

Focus on staff and suppliers

The other component in Sharky’s quality control is heavily investing in its 230-strong team of staff, whether it be a pig farmer or a cashier. The average retention rate is 10 years, which is rather extraordinary in the hospitality industry – and in Yangon to boot.

“The reason why [my staff] stay is because I look after them as family members. We provide maternity leave, support for their children’s education and a catering food service from breakfast to dinner. We spend years investing in artisan training. The problems begin with constant turnover: your skill force gets diluted, which means that standard operating procedures aren’t followed. And if you comprise on that, your days are numbered,” he said.

Unsurprisingly, Sharky’s labour costs are double the norm of anyone in the business, he added.

Sharky’s also spends a great deal on top-notch cooking equipment: the most expensive of which is a rotisserie that cost 25,000 Euros and was imported from France. Sharky’s European hand-slicing cutters cost 15,000 Euros apiece.

Preserving Yangon’s architecture

Sharky’s latest investment is a downtown outlet that has delighted many fans – though perhaps no one more than Sharky himself. He discovered the space after being invited by his good friend, the owner of Rangoon Tea House, to provide comments on his newly opened restaurant’s cuisine, which is adjacent to Sharky’s Pansodan Street premises.

The 120-year-old building was originally a high-end department store and boasts high ceilings supported by Scottish beams and Lancashire steel. However during the aggressive nationalisation that occurred during the 1960s, the venue became a Chinese restaurant. Sharky first saw it as dirty and dark, with the Manchester bricks plastered over and a mezzanine design. Yet he immediately realised its potential.

“It was love at first sight,” he said.

He signed a long-term lease two weeks later to prevent the building’s impending demolition. However it took over a year to restore the premises to its former glory and save it from demolition from money-hungry construction companies.

“There was a sign out the front saying it was designated for destruction – the owners wanted to get rid of it and build something new.”

He pointed to a brash bank building opposite the street that was once a beautiful building as an example of the consequences of a collective failure to recognize Yangon’s ‘X-factor’.

Sharky enlisted support from Thant Myint-U of Yangon Heritage Trust and YCDC’s elected township official, who collectively convinced the owners that the building should be preserved.

“We proved that the building was sound and shouldn’t be demolished – and not only that, it should be value-added,” he told Mizzima Weekly.

Companies with vision

He expressed solidarity with Gekko, Union Bar and River Gallery, who “are showing how private enterprises are entering the market with a vision.”

“I believe that for Yangon to compete with other regional cities as a tourist destination, it has to preserve the value it already has.”

His vision is a downtown Yangon that tourists happily linger in – as opposed to what he sees as the current pattern of spending a day in the commercial capital to visit Shwedagon Pagoda before heading off to the more popular destinations of Mandalay, Bagan and Inle Lake.

When asked whether the year-long renovation process spilled into millions of dollars, Sharky declined to comment, saying only that “we spent a lot and it will take years to see the returns.”

‘Living food museum’

Sharky’s is also in the process of setting up a two-acre artisan factory in the outskirts of Yangon, which will cost an estimated US$2-3 million. On a practical level, the factory will improve cost efficiency by centralising the company’s logistics – and at the same time it will serve as a school for future Sharky’s employees.

“McDonalds has its university – Sharky’s will have its own to train and mould our workers. It will be another showpiece of what can be done in a third world country. The factory won’t just be a factory – it will be an atelier, an artisan workshop.”

Sharky plans to sustain the million-dollar factory by making it a destination unto itself – he describes the concept as a “living food museum”. The first phase will feature bread-making and it is scheduled to open to visitors in October.

Sharky has three investment partners: his elder brother Kyaw Htut Win, his sister-in-law Nant Shwe Zin and British expat Jane Brook, who he said was chosen because she was a long-term Sharky’s follower and “understood how we grew and sustained ourselves.”

Investors regularly rock up

While Sharky acknowledges that new investment partners will be necessary down the track – which include future plans to list on the Yangon Stock Exchange – for the moment he is more than content with the current set-up.

“We get offers from investment firms on a monthly basis and I turn most down,” he said with a light-hearted laugh.

“For the moment we don’t want more investors. I want to retain my creative freedom. Once you have new investors it changes the dynamics – they’ll want a profit ratio and to do that they will cut out certain departments that aren’t producing enough revenue.”

‘Fail again and fail better’

Sharky prides himself on being a self-taught butcher, baker and farmer – the only mentor he ever had was a Swiss cheese-maker.

He attributes his success to being curious, obsessed and willing to fail. His advice to the next generation of entrepreneurs is to embrace failure.

“Fail again and fail better. It’s the best teacher. Every entrepreneur has failed in one way or another before achieving something. You have to be a fighter. You have to be a shark.”

Why sharks win

When asked whether he still considers himself a shark, the 56-year-old paused and said: “I am not quite a shark. I am an alpha male; a dominant male – sharks are dominant predators in the sea.”

But really – a predator?

“Yes in one way I am, because you have to be. But nowadays I’m a friendly shark. When I was young I was so ambitious and was competing against all the odds to progress from being a worker to the owner [a feat he achieved and the company he named Sharky’s]. I was a foreigner in Geneva and didn’t master the language like most people. So I used everything I had: attitude, hard work, a little bit of luck and the right mentors. You have to have that fire – without it you won’t succeed.” 

Myanmar has experienced dramatic changes economically and politically over the past few years. As foreign investors rush to set up shop in the newly open market, office space in the country's commercial capital is among the most expensive in the world.

In a country where most people earn about two dollars a day, annual rents in Yangon climbed to as much as US$100 per square metre per month in 2013 -- more expensive than downtown Manhattan and about four times the going rate for the best business addresses in Bangkok.

But last year the property boom came to a halt, office rents slid and residential sales paused. Businesses and consumers alike adopted a wait-and-see approach in the run-up to the Nov 8 elections, and many are still waiting for a clear picture of what a government led by Aung San Suu Kyi will look like.

Antony Picon, managing director of Colliers International in Myanmar, told Asia Focus from Yangon that the slowdown was expected given the election and political restructuring that has followed.

"It wasn't a surprise for us," he said, adding that he was seeing the return of positive upward trend for the market this year.

"People who are already here, both local and foreign investors, are still very active and confident," he said. "They are very bullish and the market is very upbeat. We are very busy with existing investors expanding their projects."

However, those who are not yet in the market are cautious and are still waiting for the post-election dust to settle, he added. "If one is not yet on the ground, he or she tends to be more concerned and that is natural."

Andrew Tan, managing director of Yangon-based Consult-Myanmar Co Ltd, said some sectors were approaching equilibrium after a lot of speculative investments over the past three years.

"The real estate market will see a consolidation this year, especially in the condominium sector and high-quality retail space rents," he said, adding that some properties would be sold at a loss in the short term. Many of these are apartments priced above $500,000 each -- way above the ability of the local market to absorb.

In the office market, supply has started to catch up with demand with the completion of new developments, resulting in a doubling in the amount of available space in the past two years. As a result, the market is now reaching equilibrium.

"We will see greater demand for prime quality offices and tenants will have higher bargaining power," said Mr Tan. "Prices are expected to remain stable, if not lower, but the competition in the high-quality office segment will rise."

BUSINESS HURDLES

The outlook is not as sunny for many completed residential projects in Yangon, a lot of them luxury developments targeting cash-rich local residents and foreign expats, a relatively small market. However, the combination of a weak legal structure, expensive land, lack of liquidity and an undercapitalised banking system has discouraged purchase and ownership.

"At present, the skyrocketing land prices, royalties on ownership title, and high rental rates and room prices inhibit the growth of the real estate market in Myanmar," said Yangon-based NweOo, senior attorney-at-law with Tilleke& Gibbins Myanmar.

"Land prices and ownership are biggest factors driving prices sky-high," said an analyst with one of Myanmar's leading real estate developers who asked not to be identified.

"[Developers] have to acquire the land from private owners which makes the price very high. There is no central registry system that can keep track of owners and transactions are done privately," he explained.

In addition, there is now an oversupply in the market, especially in the residential sector given that high-end buyers represent only 1-2% of the total population.

A recent Colliers International report found that take-up rates during the first half of 2015 were at an all-time low of 49%. Total unsold inventory at the end of last year stood at 6,654 units -- double the figure for all of 2014.

Rules and regulations in the Myanmar real estate market are another big hurdle that confuses both locals and foreigners alike.

However, a ray of hope emerged when the Union parliament, after years of debate, finally passed a new Condominium Law, which took effect on Jan 29 this year. It grants foreigners property ownership in Myanmar for the first time, though it is limited to a maximum of 40% of the space available on the sixth floor and above in a building.

"Observers have predicted that sales of condominium units may increase in the near future. But there will be some issues related to projects under construction and whether they will meet the requirements under the new law," said NweOo.

In any case, said Mr Tan, the passage of the Condominium Law is a good start in bringing clarity to the market.

"The condominium market will pick up in the coming year as [the law] will spur the development of condominium projects outside Yangon, especially along the Chinese and Thai borders that can legally be sold to foreigners and will qualify to be treated as condominiums under the new law," he said.

His hope is that buyers of condominiums will be able to arrange for bank financing, which is also allowed under the new law. Currently most apartment purchases by local people are paid for in cash.

"The law is important as it gives legal status to the property and allows the buyer to arrange for bank financing using the property as collateral," he said.

In addition to providing clarity in terms of ownership, the law is a big step toward more transparency in the market and a stronger legal footing, said Andrew Gulbrandson, head of research and consulting with JLL Thailand, who coordinates the firm's consultancy work in Myanmar.

However, it is not going to change the dynamic of the market overnight.

"There aren't a lot of foreigners who would want to buy a condo in Yangon now. There would be limited foreign demand even with the law being introduced," said Mr Gulbrandson.

Unlike Bangkok, Yangon is not a big, vibrant metropolis like and it faces persistent problems including congestion, poor internet connections and unstable electricity supply. It's not really a desirable place to live unless one has to be there for work, he said.

"It's not a second or third home for wealthy people, like Bangkok," he added

In addition, some high-rise projects in Yangon have been suspended as part of a campaign by elected city officials to ensure compliance with building and zoning regulations.

The 68 Residence, for example, breached the rules for floor-area ratio (FAR) and other regulations for high-rise buildings. The high-rise project located in the heart of Yangon is being developed by a local privately owned company.

The Yangon City Development Committee (YCDC) took office in early 2015 after the first elections in the city in 50 years. It is now trying to suspend most of the high-rise projects in the city of 5 million people because they do not comply with the Zoning Plan.

"Many of these high-rise projects are constructed in the compounds of ministerial and military premises, and in accordance with the approval of relevant authorities other than the approval of the YCDC," explained NweOo.

In the past, officials were reluctant to speak up about egregious violations by developers with military or political connections. But since the election of the YCDC, the public is more aware of the need for issues to be raised, he said.

"A more explicit and transparent zoning law in Yangon and for most cities would also help in the development of the real estate market in Myanmar," added Mr Tan.

In addition, better infrastructure including roads, public transport, car parking, power and water supply will help as Yangon is still operating on infrastructure that was built 50 years ago, he added.

The banking system in Myanmar is another big hurdle. It remains underdeveloped and there is very little in the way of an established mortgage system. The maximum loan term in Myanmar is 12 months with interest rates around 12-13%, so unless you have cash, you are highly unlikely to be able to buy a property.

A top-end condominium in Yangon currently costs around US$4,000 or 140,000 baht per square metre (sq m), comparable to Bangkok prices, while mid-market units cost about half that amount.

Public attitudes toward banks in Myanmar are similar to the lack of trust that prevailed in other Southeast Asian countries half a century ago.

"They have the money stashed in their houses," said Mr Gulbrandson. "This is part of the reason why the banking system is so undercapitalised."

Project finance is another big problem. As was seen in Thailand in the late 1980s and early 1990s, many developers in Myanmar open sales and use the cash from early buyers to fund construction. In some cases they aren't able to sell enough units upfront to finance their projects and they cannot go to the banks for loans, so developments either stall or never get off the ground.

Based on the number of completed projects, the residential market in Yangon may be approaching equilibrium. An oversupply is possible if all of the projects announced by developers actually get built, but that is difficult to predict.

"What will determine how the market will look like over the next year or two, other than the laws and the banking system, is how many developers will actually build the projects that they have announced," said Mr Gulbrandson

RETAIL OPPORTUNITY

One area that continues to show promise is retail space. The retail market in Myanmar for decades had been very sheltered and inefficient with no real competition before 2013. Over the last three years, however, the shopping scene in Yangon has been transformed by the entry of international investors and brands, according to Mr Tan.

For example, the new Myanmar Plaza by HAGL was almost fully rented out before its opening despite having five floors. International brands such as Nike, Skecher, Chopard, Zegna and many more can be found there, he said.

"Although most people in Myanmar still do not have high spending power, they are saving up to enjoy international products and services that offer better quality," he added.

Mr Tan said there had never been a better time to come and do business in Myanmar as the influx of foreign investment and tourists has helped to spur the growth of a middle class in Yangon that aspires to own international brands and seeks international standards of quality and service.

However, Mr Gulbrandson cautioned that the purchasing power of local residents was still limited and foreign brands needed to be aware of what will work in the country.

Looking at the bigger picture, he said that if developers and investors choose the right segments of real estate, there are great opportunities ahead. In his view, the industrial and hospitality sectors are the winners.

"Investors that have made quality investments in the hospitality sector such as hotels and serviced apartments are doing quite well. Big mixed-use projects and industrial developments are seeing a great deal of interest from Thailand, Japan and Korea," he said.

He added that in Myanmar, the standard government lease is usually 50 years, followed by another two 10-year renewals. "The lease length is much more attractive than in Thailand, which has only 30-year leases, even though the [Myanmar] market is more risky," he said.

In his view, residential and retail spaces are not as attractive.

A tenant can only obtain a 12-month lease and that is a risk that retailers or occupiers have to take compared with Thailand, where a 3+3+3 structure -- three consecutive leases of three years each -- is common.

Mr Tan added that mixed-use developments that offer retail space, offices and serviced apartments offer a good opportunity for investors. Given the poor infrastructure in Myanmar, mixed-use developments that bring together complementary, quality services will create a strong attraction for local people and for international businesses.

"This would also mean that many of these developments will have to be pushed out of Yangon City itself as there are not many big plots of empty land left for such a big developments, and even if you can find one the price per square foot may be prohibitive," he said.

http://www.bangkokpost.com/news/asean/888416/yangon-real-estate-challenge

Optimism is abundant as Myanmar’s virtual and physical connectivity burgeons, especially for trailblazer MYPAY. The mobile app will be the first Social Media Payment service provider in Myanmar come August, when it plans to roll-out.

“We don’t want to do the same thing. We want to do something different. Something new. That is, we will use the social media area for payments. Sending money should be as easy as sending a message on Facebook, Viber, or Watsapp,” Tim Scheffmann, CEO of MYPAY, told Mizzima Weekly.

The environment in which MYPAY launches is unprecedented in its pace of change. In 2012, Myanmar’s international bandwidth – indicator of connectivity – was below 15 gigabits per seconds, or 0.3 kbps per capita, placing it on the bottom rung in South Asia. Connection skyrocketed since then, rising from around 10% in 2014 to over 50% by June 2015, according to the Ministry of Communications and Information Technology.

Ericsson’s report of 2015 Quarter 3 placed Myanmar as having the fourth largest net addition of mobile subscribers at 5 million, trailing after population giants USA, China, and India. Since mid-November 2014, 45 Internet Service Providers have applied for licenses, with more than 12 already being issued. There is no limit on the number of licenses being issued. Myanmar expects to launch its own Satellite within five years.

MYPAY is a social media remittance and payments provider for consumers and businesses to make mobile payments. Cash can be deposited from bank accounts or directly by cash to agents at service stations, or “cash points” into mobile wallets, secured by SIM card ID. The money deposited into the mobile wallet then can be sent to and received from friends, family and merchants.

“We are connecting the social media world with the existing financial world,” Scheffmann said, while acknowledging the challenges of the task. The existing financial world in Myanmar is still grappling with the aftermath of its decades of military misrule and economic incompetence.

People have little faith in the country’s financial sector. Many still prefer to store their wealth physically and in close proximity by purchasing gold and other valuables. A mere 4.8 percent of Myanmar people have bank accounts, while its neighbor Thailand has 75 percent with accounts. Some 62 percent of adults in Myanmar have no savings.

To have trust in mobile payments, “people need to experience it and try it out,” said Scheffmann, explaining the interpersonal, low-risk aspect of social media payments. “A transaction between people who know each other takes the hesitation away. People are being introduced to our product by acquaintances, which makes the barrier lower. The amount of transaction can be small when you are just trying it out so it’s not as big of a deal.”

While the paucity of banked population is partly due to people’s skepticism, it also reflects lack of accessibility to financial services for those who need it. The majority of the Myanmar population lives in rural areas, generating livelihood through farming: “People are being financially excluded because for a farmer to travel to the next bank branch it will cost him almost a day. And then he has to line up there and travel back the next day. We can cut this time down to seconds.”

The ease of mobile banking is a win-win game, according to Scheffmann, who said, “Everyone wins. For the customers, it’s very convenient, and the banks get to keep their business.” He believes mobile financial technology (fintech) will foster an enhanced, more equal access to financial resources for all, ultimately creating a more stable economy.

“We are not only enabling financial capital to flow into different areas, where money is needed, we are also helping people not to get into poverty. If a farmer has a problem and he needs to borrow money, he probably needs to borrow from a loan shark. But with this technology he can ask friends and other people who can provide money quickly and this will also help stabilize the economy.”

Neither does the technology need to be confined to peer-to-peer level. It can also be utilized on a multinational level once international financial transaction regulations in Myanmar come into place. On a national level, fintech can contribute to social welfare. He cited an example, “When a farmer is sick, for instance, he cannot ask someone else to do his work for him. Or when natural disaster hits, like last year, people are left with unstable income. Via technology, distribution of funds becomes easier.”

The stage is set for stellar rise of electronic money. However, there is a void to be filled: consumer protection, the law on liability for loss and damage, regulations on transactions, and anti-money laundering measures.

When regulations ensure ethical practice and sensible investment, the potential for growth is immense. Together with Boston Consulting Group, Telenor conducted a study on the correlation between development and mobile penetration, which noted that every 10% of mobile penetration can drive up the GDP by 1.2%. In emerging economies such as Myanmar, the report says, internet availability could lead to a 3 to 5% boost in GDP.

The CEO of MYPAY anticipates the worthwhile outcomes from venturing into uncharted territory. “If I can help not just a family of farmers but stabilize the economy and help 51 million people of Myanmar, that is something worth taking a big risk for,” he said.

There has been much commentary surrounding the development, conception, and now the roll out of the New Silk Road (One Belt One Road) by China. Much of this commentary has focused on whether it will happen and the commercial viability of such an audacious plan. 

In my view, it is already happening and what commentaries miss is that the scope of the New Silk Road extends beyond simply building infrastructure. It is a logistics and transportation network that focuses on those regions promising high economic growth with strategic resources, such as iron, concrete and gas that also links manufacturing with key markets. Furthermore, it does not only connect East and West but joins Asia with Southeast Asia – a market that has 600 million people and is nine times the scale of Central Asia.

Myanmar has a pivotal role to play in this new strategic footprint and has the potential to become the West Coast of China that bypasses the risks associated with trade through the Malacca Straits. Before going on to the reasons why Myanmar will play a key strategic role, we must first get an understanding of what the NewSilk Road is.

A Bit of History – Malacca Straits, a natural competitive advantage or man-made?

The first version of the “Silk Road” was based on developing inland routes, connecting the west with the east. The transportation network that passed through the likes of India and Indochina, enabled China to become a leader in international trade as it was at both the beginning and end point of key transport nodes. These nodes were efficient and linked key trade markets in Asia and Europe. This was also assisted by the poor conditions in hazardous maritime transportation sector of the time. As shipping conditions improved and navigation more trustworthy, the Straits of Malacca became more navigable. Trade routes shifted from the inland regions to the southeast coastal parts of the region, with Singapore taking advantage of this shift.

Singapore has played an important role in assisting shipping and oil &gas exploration expansion in the ASEAN region. Shipping routes, as well as its location to regional oil fields, has enabled Singapore to become an important hub in terms of finance, logistics, and marine transportation to support this sector. Being a small country and being able to leverage its key strategic location, particularly with regards to the Malacca Straits, it could capitalize on available funds for infrastructure development. This has given Singapore a competitive advantage over the likes of Malaysia, Indonesia, and Thailand who did not have access to such funds. But this is all about to change. The Asian Infrastructure Investment Fund and China’s $63bn commitment to the building of the new Silk Road (One Belt, One Road Strategy) will level the playing field in terms of key infrastructure and at the same time question the once strategic importance claimed by the Malacca Straits. This, in turn, will also bring about a change in how and from where the offshore oil &gas sector will receive support services as well as change how they will manage their supply chains.

It would appear that using the Malacca Straits was not always a first option for trading countries and was regarded as a less efficient transport corridor. The debate has gone on for over 400 years, with the first thoughts of bypassing the straits with a canal system, similar to what we have in the Suez Canal, through Southern Thailand being spoken of in 1677. King Narai was the first to explore the possibility of building a waterway connecting Sungkhla and Myanmar, which would jointhe Gulf Of Thailand with the Andaman Sea. This was to be known as the Kra Canal orKra Isthmus Canal, but referred to as the Thai Canal in the One Belt, One Road strategy discussions. Cost and expertise were reasons why this development was put aside historically. The idea was revisited in 1793 by King Chakru and essentially renounced for the same reasons given earlier. The issue of the Malacca Straits came to a head in 1897, and agreement was reached between the Thai and British governments not to proceed with the Thai Canal but to protect the regional dominance of the Port of Singapore. It can be arguedthat the use of the Malacca Straits was based on political expediency and not for optimal efficiency.

Current situation

With 15 to 16 million barrelsper annum passing through the Malacca Straits and the cost of using the Straits being put at approximately US$0.10 per barrel, alongside other issues raised earlier, there is now a renewed look at resurrecting the Thai Canal to supplement and enhance the progress that has been made on delivering the One Belt, One Road strategy.

There have been reports that an MOU has been signed on the 15 May 2015, between China and the Thailand Infrastructure Investment Development Company in Guangzhou. The MOU covers a feasibility study and projects that the cost of the canal would be in the region of US$20billion and take 10 years to construct. Although there has been a denial by both the Chinese and Thai governments, there are a number of indicators that the project is progressing. These include the following:

• The “People’s Daily” reported on May 20th that a senior official has stated that the Thai Canal is considered an important part of the One Belt, One Road Strategy
• Chinese Oil Companies have already activated the key oil &gas pipeline connecting Myanmar with China in Yunnan province
• Precedent has now been set with the commencement of the Nicaragua Canal funded by Chinese private enterprise but also part of the One Belt, One Road strategy (this canal is more expensive and longer and connects the Pacific and Atlantic Oceans)

The canal will connect key ports, special economic zones, and roads between Thailand and Myanmar that are in the process of being developed.

The first Silk Road based on inland routes and to the north enabled China to be the leader in international trade as it carved out key transport nodes. These transport nodes were efficient and linked the key trade markets between the east and Europe. This was partly assisted by the poor conditions in maritime transportation, not just in vessel design but in infrastructure support. This all changed with improvements in the maritime sector and trade routes shifted to the southeast coastal region of the country as shipping grew in stature– with Singapore taking advantage of this shift.

China responded to this shift in shipping and maritime paradigms, clearly demonstrated by their recent achievements in shipping, all of which has set China to re-emerge as the world’s leading trade nation. Some of these achievements include the following:

• Shanghai and Hong Kong are world leading cargo hubs.
• Of the top 10 container ports, 7 are along the Chinese coast.
• China shipyards are more competitive and now lead the likes of Singapore.

Why would China want to go back to inland routes?

With all this progress having taken place, the obvious question is why would China want to re-instate the inland route? I would contend that the answers provided to this question highlight the challenge that will soon confront the likes of Singapore and why countries such as Myanmar can replace Singapore’s current status as being China’s West coast. The reasons for the change include:

• With China losing its low cost advantage in terms of manufacturing, it needs to structurally align its manufacturing to be closer to low cost producers such as Myanmar, Laos, Cambodia, Bangladesh, and Vietnam. Not only do these countries offer a source of low cost labour, it also helps realign the economic disparity created by the maritime road impact on China’s growth over the last decade, during which we have seen population shifts in the region move from rural to urban that has created an economic disparity.
• It returns capital and employment to the impoverished western region and enables the reducing of social tensions that have emerged during the China growth phase.
• Strategically wants to replace maritime trade with inland trade as it will reduce its perceived threat of USA control over sea routes via their allies in Singapore, Japan, and Korea. Consider this in the light of the ongoing territorial disputes in the South China Sea. Arguablythe Silk Road or inland route strengthens China’smaritime position as it enhances trade capability to Europe.
• Reduces the dependency on maritime or sea trade and energy imports.
• It eliminates the security risks, particularly with regard to oil & gas supply, associated with increased piracy and dangers in using the Malacca Straits.

1. Drivers in the region that are specific to oil &gas that shape the thinking

Approximately 17% of the global daily oil production is transported via the Straits of Malacca. This delivers oil from the Middle East to the likes of China, Japan, and South Korea. Issues that are becoming problematic with this trade route include:

• Increasing piracy in the Malacca Straits, hence the push for an adjustment to the Maritime Silk Route to that of the “String of Pearls “route shown in the map above,
• Longer steam times between ports,
• Port and channel congestion – particularly in Singapore.

1. Significant oil &gas exploration activities in the Bay of Bengal and Andaman Sea, particularly in the countries of Myanmar and India that would address Chinese future energy security needs. The Silk Road brings all of these markets closer.

The Importance of the Thai Canal and Myanmar’s role

The canal is central to the String of Pearl route and places Myanmar at the center of oil &gas trade and shipping. Issues that are key considerations for China looking to bypassing the Malacca Straits include: ,

• The Malacca Strait has a significant chokepoint at the Phillip Channel with the canal narrowing down to a width of 2.8km and runs for a length of just over 2km.  When one considers that 200 vessels per day / 60,000 vessels per year pass through the channel, this risk profile presents problems when taking account of potential for collisions, delays and piracy.
• With 25% of world oil trade passing through Malacca, the Thai/Myanmar solution strategically presents an alternative route that reduces the risks associated with the Phillip channel chokepoint.
• Currently 70% of China’s energy (Oil and Gas) imports pass through Malacca, placing their energy security at risk. Myanmar’s role thus reduces the dependency on maritime / sea trade and energy imports via Malacca.

Why is Myanmar an important player

• New road, rail, and air Infrastructure provides the central city of Kunming better access, particularly ocean access, to the likes of Myanmar, India, and Europe. It appears that  Kunming is already replacing Singapore as SE Asia transport hub with Singapore becoming a feeder into the hub as will be China, Myanmar, Laos, and Vietnam. From a Chinese and Kunming perspective, the better access to Dawei and Kyaukpyu in Myanmar draws a major trading partner close, India.
• Deep water port facilities and oil&gas pipeline at Kyaukpyu in Myanmar, connecting Yunnan Province and has already seen the start of shipping direct from China to Kyaukpyu via the Malacca Straits. This has significantly reduced steam time as they can now bypass Singapore, but does not address the security and other issues associated with the Straits.
• China has already invested heavily in oil and gas pipelines that run through Myanmar, as an alternative energy route. The Kyaukphyu / Yunnan Province pipeline is indicative of how China is using infrastructure development within Myanmar to promote energy security.
• Dawei port development with related improved infrastructure linking it with Bangkok, again improving shipping and transport times.
• The opening of the Chongqing rail route, the cheapest of 5 railway routes from China to Europe, with this mode of transport being twice as fast as shipping and is a more effective method of moving hi-tech and automotive parts.
• Myanmar is strategically located between two economic giants – China and India, and offers access to a 2.3 billion consumer base across all its neighboring countries. Additionally, in the domestic market, opportunities abound for investors in the booming automotive, construction, and electronic sectors, with demand being largely met through imports currently. Large multinational companies (MNCs) such as Lafarge and Ball Corporation have invested in the country’s manufacturing sector mainly to cater to local demand.
• With a population of over 50 million and a healthy GDP growth rate of 8.05 percent, according to the International Monetary Fund (IMF), there are significant untapped opportunities in the domestic market, which is gradually transitioning away from being a primarily agriculture based economy. The industrial sector’s share of GDP in Myanmar increased from 11 percent in 2008 to 21 percent in 2014.
• Low labour wages and favorable tax exemptions allow firms to lower their operating costs, reinforcing their competitiveness, especially in the regional market. To highlight the significant benefits, if not all, under the Foreign Investment Law, investors can claim a corporate tax exemption of five years and a custom duty exemption on imported raw material for the first three years of commercial operation.
• Under the Special Economic Zones (SEZ) Law, five to seven years of corporate tax exemption is granted depending on the business type and custom duty exemption is granted for imported raw materials and machinery for the first five years of commercial operation. Timing remains critical and investors are certainly rushing in with the total manufacturing FDI in 2014-15 amounting to $1.5 billion, a third of which comes from investment in Thilawa SEZ.

Challenges for Myanmar to take advantage of these developments

• Infrastructure continues to be a major challenge in the facilitation of upgrades and improvements in the manufacturing sector. Although infrastructure development projects are underway, approximately 70 percent of the roads are still unpaved. Though sea trade handles more than 80 percent of the overall trade, the ports are not able to cater to big vessels above 20,000DWT, requiring manufacturing firms to maintain high inventory. Being a part of the Silk Road and associated infrastructure development will reduce the challenge and improved transportation routes will reduce reliance on holding large inventory costs.
• Myanmar is also in dire need of electrical power, which is essential for commercial and industrial development. Currently, almost all manufacturing companies are using back-up power generators due to the unsteady and low-voltage supply of electricity. There are a number of initiatives currently underway to improve supply and the national power grid, with recent announcements by MOEP that significant projects have been agreed, for example a 230MW solar farm with 11 micro grids to support Chin and Shan States. These developments are aided by funds such as a $400-million financial aid package from the World Bank.
• At this moment there is uncertainty around the "One Road, One Belt" initiative, as no one Country fully understands the purpose of this initiative. Furthermore the initiative is going to require a high level of integration of processes and systems by those countries involved. Cabotage laws / regulations will be key to the success of the maritime leg, and Myanmar can play a leading role in facilitating an alignment of these laws, particularly between China/Thailand and India. Once we have deeper integration along the Silk Road, the cabotage laws will surely come into focus.
• With ongoing reform in the Country, it is well placed to assist China capture new markets, and with China’s history dating back to the sixties, of being involved in Myanmar, places China at a distinct advantage over Western countries. However, the complex conflict within Myanmar, particularly between the center and the periphery , could well prove to be the real challenge. This is highlighted by the center (mainly Burmese) having the seat of power and access to gas  and the periphery (mainly the ethnic states) having control over jade, hydropower and timber resources. This sensitivity was highighted by the recent clashes with the Kokang rebels and the military.

• The infrastructure deficits needed to support not only oil &gas but manufacturing, evident in SE Asia, are being addressed by the Asian Infrastructure Fund through the One Belt, One Road strategic initiative. I would anticipate that the impact of this on the regional oil &gas sector will result in:
  
  • Offshore support services will move from Singapore to Myanmar, Thailand, and India as they will be in closer proximity to new oil &gas fields, particularly in the area of Offshore Supply Base developments,
  • Supply of parts will be more efficient as there will be an integrated transportation service allowing faster  and more efficient supply of parts leading to lower inventory holding costs as new and key markets are made more accessible,
  • Shipping time across the north will be greatly reduced as a result of an integrated transport network, particularly oil supply from the Middle East to China.

With this in mind, I would suggest that providers of field services to offshore operators would need to engage with the Region and start establishing a footprint in countries such as Myanmar, as the landscape in support services is changing. Whilst Singapore may still be the preferred hub at the present time, the dynamics and playing field is about to undergo fundamental change. These changes will assist the oil patch to reduce cost not only by improved supply chain and logistics but by allowing business to develop and commissioned in low cost countries.

In conclusion, the infrastructure deficit currently in Southeast Asia is being addressed by the Asian Infrastructure Fund. This initiative promotes capital and technology investment into the necessary ports and transport routes that will better facilitate trade in the region. Furthermore, the strategic interests of China in terms of securing its energy future, including the new Silk Road and bringing much needed development in rural areas, would see Myanmar as a central and key player. Other beneficiaries of the Silk Road will be the likes of Thailand, Cambodia, and Laos. Myanmar, with its strategic link between China and India, and it’s key location with regards offering a solution to the current chokepoint that is the Malacca Straits, is set to be the biggest beneficiary of thisdevelopment.

Andre Wheeler is CEO of Asia Pacific Connex

Carrying her wages in wads of cash across Myanmar was once a risky, onerous but unavoidable ritual for maid Khin Myint Oo. 

But now she just pings off a text to move the money to her children back home as mobile banking sweeps into a country whose people have for decades been locked out of basic financial services.

Myanmar is spinning through a thrilling economic revival since shedding junta rule in 2011.

But with an embryonic banking system -- an estimated 90 percent of the population still do not have an account -- the country's new civilian leaders are banking on mobile money as a shortcut. 

"People keep money in their homes in a box," explained Khin Myint Oo, who moved to Myanmar's biggest city Yangon to work as a housekeeper and support her children in northeastern Shan state. 

With no bank branches nearby, the family faced two options: long trudges to the nearest teller or shipping stacks of tattered notes by bus.

With just some 1,500 branches in a largely rural country the size of France, experts say it will take years to build enough banks to reach the 51 million population.

Many also have bad memories of 50 years of military rule, when bank runs and currency collapses were frequent and painful.

But change is afoot.

Khin Myint Oo now wires home to her children in a matter of minutes using Wave Money, one of the first mobile banking firms to roll out services.

The company, a tie-up between a telco operator and a private bank, has built a network of 4,000 mum-and-pop shops around the country where clients can deposit and withdraw cash by phone.

Referred to as "human ATMS", these stores are far more accessible and numerous than bank branches. Wave constantly monitors their liquidity and dispatches agents to replenish shops running low on cash.

"The advantage is it now takes very little time to transfer money," Khin Myint Oo said from inside the apartment she cleans for $2 a day -- a sizeable raise from her days as a farmhand. 

- Don't bank on it –

In one of its first moves since taking power in April, the government passed regulations allowing non-banks to enter the e-money market and offer services to the country's oceans of "unbanked".

"In terms of things you could do straight away that would improve people's lives ...this (policy) would float right to the very top," said Sean Turnell, an Australian economist advising the administration.

Mobile money began in Kenya a decade ago and is now used by nearly half the population.

Similar systems have since taken root across Sub-Saharan Africa and in other developing nations, providing millions of people with safe ways to move and manage their money.

Myanmar's promise as a frontier market is beginning to show especially as phone towers are erected.

Just four years ago only 10 percent of the population had a mobile phone -- now it is 60 percent, with most using smartphones.

"Myanmar was always the market that everyone would talk about in mobile money conferences because it was so untouched," said Wave Money CEO Brad Jones.

Yet unleashing the technology's full potential rests on overcoming an age-old obstacle: trust.

During its economic heyday under British colonial rule, Myanmar was home to the highest concentration of foreign-owned banks in Southeast Asia. 

But its fortunes swiftly changed after a military clique grabbed power in 1962 and nationalised all banks, the first of many policies that sunk the nation into poverty.

Faith in the financial system tanked after a flurry of demonetisation decrees in the 1980s wiped out nearly two thirds of the cash in circulation, triggering bank runs and driving many people to convert any savings into gold.

- Gold and gem stones –

"Getting people to trust ephemeral monetary value will be the first challenge. If people have any surplus at all they often buy gold and gem stones," said Turnell.

Changing this behaviour is a crucial step on the path out of poverty.

Physical assets like gold cannot be cashed quickly, forcing the poor to turn to loan sharks in times of need.

Mobile money is Myanmar's best bet at swiftly linking its poor to safer, more regulated financial services, said Paul Luchtenburg from the UN's Capital Development Fund in Yangon.

"If it was only bank-led, it would take a long time because the banks are so busy just getting their house in order," he told AFP.

In Dala, a muddy suburb across the river from Yangon, those who want to save money have two options: take the boat to a bank in the city or bury it in the backyard.

Like much of the country, there are zero banks or ATMs in town.

Yet several shops have started offering mobile banking services.  

"When this service becomes more popular, it will be so much more helpful to people than banks," said ZawZawOo, whose small convenience store is now part of Wave's network of "human ATMs".

Until then, they’ll have to wait for the next ferry.

© AFP

Floating in a balloon above the serene temples of Bagan, you would be forgiven for thinking Myanmar is the perfect tourism destination. But there are challenges to be overcome in terms of tourism infrastructure, accommodation and heritage management if the country it to seek its tourism sector goals.

The overall trend may be on the up. Short-term though, Myanmar may be falling short on its goals.

According to Ministry of Hotel and Tourism's statistics, 3.1 million tourists visited Myanmar for the first nine months of 2016, dropping by 6 percent compared to the same period in 2015. But the Ministry predicted in March that at least six million tourists would travel to Myanmar in 2016. In 2015, there were 4.68 million tourists visiting Myanmar, slightly below that year’s annual goal of 5 million. 

Sule Pagoda is one of most attractive touristic spots in Yangon. Photo: Zhang Deming Tedmond

Diversified hospitality

Myanmar may be in a hurry to welcome visitors but one difficulty is diversity of accommodation, particularly options for backpackers, given certain restrictions on properties that can be used as guesthouses. 

"I gave up my travelling plan because I can't afford a hotel room in Inle Lake," said Oana Maria Ghiorghilas, a backpacker from Spain expecting cheap accommodation. In Inle Lake, the minimum price of hotel per night per room is about 20 dollars.

She thought that it should have different types of hospitality including guesthouses to meet the demands from different tourists. "I can't find a cheaper guesthouse there," she added.

In fact, Myanmar government has banned foreign tourists from living in private homes since August 2013."Actually foreign tourists can live in guesthouses once the guesthouses registered a license from government," said Dr. Aung Myat Kyaw, having served as chairperson for the Myanmar Marketing Committee for nearly five years. "The government wants to formalize the hospitality market and maintain the service quality with licensing system."

But the licensing system does not work as well as expected. Compared to the figure for international standard hotels and local medium-size hotels, registered guesthouses are low in number. 

"If guesthouses registered officially, they have to pay 25 percent profit tax. Some of guesthouses don't want to pay that," Dr. Aung Myat Kyaw said.

Changes to hospitality supply infrastructure, however, has improved since 2011. "There had only four five-star hotels in Yangon five year ago and now tourists can choose hotels, hostels and registered guesthouses," he added.

Improving infrastructure

Traffic jams in Yangon are annoying for both tourists and local people. Photo: Zhang Deming Tedmond

One of the enduring legacies of half a century of military regime mismanagement is the poor state of many of the roads in Myanmar and the uncomfortable journeys many have to make when travelling long distance.

"Those who can afford prices of resorts like my father are not willing to take an over 10-hour bus journey," said tourist visitor Ghiorghilas. "And backpackers like me enjoy a bus journey, but I can't afford a room in a resort."

Some remote resorts have beautiful scenery, but the transportations condition there are poor. Many of them only can be reached by rickety buses and trucks.

"More airport terminals need to be built and upgraded to make tourists travel between different places more conveniently. It is good for tourism development," said Lynn Maw Oo, a junior  tourism management official. 

Upgrading projects for several domestic secondary airports including Heho Airport in Shan State and Nyaung-U in Mandalay Region were proposed in September. "Some of the upgrades are scheduled to be complete by 2018," the Department of Civil Aviation deputy director general  Ye Htut Aung told media.

Other infrastructure sectors also call for improvement."It is important for travelers to get access to the internet," said Yuri Kork, a visiting professor teaching destination management. "They can use Google map when they get lost and can Google information for their travelling." 

Despite a leap in telecommunication development, internet coverage is still unsatisfactory in some tourist destinations outside Yangon. "Current internet coverage will limit tourism development in Myanmar. It needs to be changed," said Mr Kork.

Reform heritages management

The heritages management system in Myanmar is in need of an upgrade, not just to help the tourism industry but also to help with heritage preservation.

Visiting Bagan Archaeological Zone is a “must” for many travelers. Foreign tourists need to pay 20 dollars at the ticket checkpoint to enter this heritage site.

But there is only one ticket checkpoint at the entrance of the site and there are no staff to check for tickets inside the site. "Many tourists detour the check point through other paths to enter the site.They don't pay the entrance fee," said Ghiorghilas. "It is unfair for those who have already paid that money."

Wei Guo, tourist from Singapore thought that income from entrance fees can help Bagan to preserve its heritage. "But it is meaningless if they don't catch the fare evaders," he said.

Bagan Archaeological Zone is not yet recognized by UNESCO as a World Heritage Site, although Myanmar began the application process in 1996. Poor management is cited as one of the main reasons, according to UNESCO. 

On August 2, Myanmar announced that it would continue the application process at the 2018 meeting of the World Heritage Site Committee. Improvements have been made by the government after the announcement. "I saw the new government has done a lot to preserve temples in Bagan especially after the earthquake in August. The way they preserve architecture is changing,"said Dr. Aung Myat Kyaw, on a positive note.

Improvements are in the works.

"Over the next two years we will compile a full list of cultural sites in Bagan. We will also take people’s suggestions," Than Zaw Oo, director of the Myanmar branch of the World Heritage Site Committee told media.

Any shortcomings appear to do little to deter tourists keen to view the vast impressive site by balloon. For many, the flight will be the highlight of their visit to a country getting to grips with rolling out the red carpet for foreign visitors.

JATETAW VILLAGE, Rakhine State - On a recent afternoon, the beach at Jatetaw Village was bustling with fishermen hauling their boats ashore and offloading the catch. Local women carried the fish off in bamboo baskets and laid them out to dry in the sun, after which they would be salted for storage.   

A pungent smell emitted from fish waste strewn about the area filled the air.

One of the women, Htoo Mya San, said the work was tough and unpleasant. “I have so much calluses on my shoulders as I have carried fish baskets for years,” the 23-year-old said. “I hope to go back home some day.” 

Like most workers she came from an impoverished area in the north of the state to Thandwe Township, southern Rakhine, which is a major fishing area with some 2,000 boats and 7,000 fishermen, according to township officials. 

The industry sometimes draws workers from poor communities by offering free housing and an advance on salaries to cover bus tickets to the area.

Htoo Mya San left a village in Kyauktaw Township, while Hla Myint Thein said she from Ywahaung Village, Ponnagyun Township, two months ago.

“I can have daily work here, but there were no regular jobs at my home village,” Hla Myint Thein, 45, said, adding that she was so poor that she had to sell her earrings to afford the bus ticket south.

Though Jajetaw’s fishing business offers some jobs, the work is basic, involving simple wooden boats and manual work, and offers little profit, those working here said. Operations are small, varying from one boat operated by three fishermen, to a few boats owned by a businessman who may employ about two dozen men and a few women. 

Men employed to fish said they were paid around 120,000 kyats (about US$100) per month and women working ashore make around 100,000 kyats. The smallest operations are done by subsistence fishermen, who feed their families with the fish and sell the rest.

FALLING CATCH, RISING DEBTS

Workers are often landless and say they are struggling to get by on their low incomes, which can also vary if the catch has been bad. Subsistence fishermen live hand to mouth and - like everyone in the area - said fishing has suffered from a decline in fish stocks for many years.

“We have to go fishing ever further away, as the fish catch is declining near the coast,” said Tin Maung Hlaing, a local fisherman who has been taking his small boat out to sea for 28 years.

Like many workers and subsistence fishermen here, Tin Maung Hlaing said the falling income from fishing had forced him to borrow money.

“I remain deep in debt,” he said, adding that needed better equipment to increase his catch and income but could not afford to. “I have no sufficient fishing gear, so I have to use a heavy fishing net by hand. I’m now suffering from backache,” he said.

Naing Kwae Aye, a Rakhine Parliament lawmaker for the National League for Democracy from Thandwe Township Constituency 2, said struggling coastal communities in Rakhine have no access to credit and many fishermen fall victim to loan sharks. 

“Some fishermen pawn their property to buy fishing gear. If they do not have property they have to borrow money at 20 percent interest rate per month, then they get trapped in a debt cycle,” he said. 

AN INDUSTRY IN DECLINE

Fishing and aquaculture are traditionally an important source of income in Rakhine State, one of Myanmar’s poorest regions that suffers from low agricultural yields, isolation, environmental degradation and communal conflict in the north. A 2014 Oxfam report on Rakhine’s fisheries estimated that 43 percent of the population gain income from fishing, or a combination of fishing and farming.

While Myanmar and international trawlers operate off the coast, most local communities rely on medium to small-scale fishing operations. The local fishing sector has been beset by a number of problems, most importantly a dramatic decline in catch and a lack of storage technology and transport options so its produce can be sold in Myanmar’s cities or in neighbouring Bangladesh.

The Oxfam report cites a study by the Department of Fisheries and Norwegian researchers that estimates a decline of fisheries in Rakhine of about 65 percent in the last 30 years, though other estimates are even higher.

“The decline of Rakhine fisheries finds its roots in overfishing, lack of enforcement of fishery law and use of illegal fishing gear,” the report said. “Local fishermen usually blame large trawlers, national and international, as well as baby trawlers operated by local medium-scale fishermen.”

The number cold storage facilities have also decreased in recent years due to high cost of electricity, while there has been no improvement in road connections to Yangon. As a result, most of the catch is sold locally at relatively low prices, according to a research paper on small-scale fishermen in Rakhine published in the Journal of Burmese Scholarship last August.

“[T]here is little prospect for the revitalisation of cold storage due to the decline in fishery productions and the outflow of workers from the fishing industry to Yangon and neighbouring countries,” the paper authored by Saw Eh Htoo added.

GOVERNMENT AND NGO HELP

Myint Thein, an officer at Thandwe District’s Fisheries Department, acknowledged the problems, saying shrimp farming had been particularly hard hit. “The salt water shrimp industry in Thandwe District has declined in recent years after it has lost its market, although it was thriving 10 years ago.”

Overfishing through illegal methods, sometimes involving explosives, and the catching of fingerlings was threatening fish stocks, he said, adding that authorities were trying to educate fishermen on these problems and cracking down on illegal fishing.

“We are holding public talks in villages in this area to address the decline of fish breeding… Local fishermen said the size of fish is becoming smaller,” he said, adding that climate change and environmental degradation were also affecting stocks.

Tin Maung Hlaing, the subsistence fisherman, said illegal fishing was common. “Some fishermen are using narrow sieve nets, they catch even tiny fishes,” he said.

Myint Thein said the government had allocated $70,000 for a micro loans program called the Emerald Project for three fishing villages in Thandwe District, including Jajetaw Village. It plans to provide loans of around $220 at between 0.5 to 1.5 percent annual interest to help fishermen expand their operations.

Kyar Oo, the wife of a small fisherman in Jajetaw, said she knew of program but that only fishermen who can show they own a boat, a house or a fishing license are eligible, adding that many poor fishermen lacked property.

“The Fisheries Department has developed a programme, the Emerald Project, to reduce the financial problems of fishermen. But it is not effective to solve our problems,” she said.

International aid NGOs have set up projects in recent years to support impoverished Rakhine communities and address agriculture, fishing and environmental challenges.

Myint Thein said his department was working with XXX NGOs to conduct a survey to determine how to help fishermen and restore fishing stocks, adding that he believed the local fishery industry needs capital and technology so it can set up a production chain that reaches markets outside of Rakhine.

“Only financial support cannot address their problem. They need to understand modern technologies in this industry to create better products,” he said.

Courtesy Myanmar Now

To nurture local talent and help address the increasing demand for skilled communications practitioners, award-winning Public Relations (PR) agency Rice Communications, has launched a certificate course in PR and Communications tailored for Myanmar.

Rice Communications’ Talent Programme is the first PR agency-led training in Myanmar, created and delivered by seasoned practitioners. The launch took place at the Careers in Communications workshop hosted by the Australia-Myanmar Chamber of Commerce at the Park Royal Hotel on May 13.

Speaking at the event, Sonya Madeira, Founder & Managing Partner at Rice Communications, said: “Our amazing team in Yangon proves there is great talent right here. Our Talent Programme is part of a strong commitment to our very own team’s growth, and to make a positive impact in Myanmar by helping deepen the pool of highly skilled, homegrown communications talent.”

Madeira said the agency will invest time and money in providing a market-tailored programme that cover PR fundamentals, industry best practices, on-the-job tips, and insights on current and emerging trends. “Rice is dedicating some SG$100,000 in senior experts’ time, tools and technology, resources and knowledge within the agency as well as our extended network to deliver a high standard of training,” she added.

The programme is open to Myanmar nationals with a keen interest in communications as a career. These include graduates of communications and related degree programs, working professionals in media or agencies (PR, advertising, digital) and those in corporate, government or non-government communications roles.

The programme will be given free of charge to 20 deserving trainees. Registration started at the Careers in Communications workshop, and will continue until May 31. To register, interested applicants can email talent@ricecomms.com.

All registered applicants will be notified of the requirements and selection process via email. Classes will start in mid-July 2017.

The 12-month course consists of full-day classes once a month, quarterly industry-expert workshops, webinars, online consultation, and a suite of project-based learning tools. The sessions would cover such areas as integrated communications planning, content development, media relations, events management, and digital and social media engagement.

The trainees will receive certificates upon completion of the full programme.  Outstanding trainees will also have an opportunity to be selected for a paid internship at one of Rice’s offices.

“Part of Rice’s reach into Myanmar is around capacity building by up-skilling, partnering and facilitating growth and development. We are very much a ‘training agency’, committed to making a difference by transferring skills and knowledge; and along the way, feeding the industry’s and our own talent pipeline in this high-growth market,” said Donna Garcia, Country Manager, Rice Communications-Myanmar.

Headquartered in Singapore, Rice Communications established an office in Yangon in 2014 to cater to the needs of multinational companies and fast-growing local businesses in Myanmar. It counts among its clients global brands such Bosch, Hilton, Dow Chemical, Diebold Nixdorf, Twinings, WWF-Myanmar; and Myanmar companies Premium Distribution, Myanmar Information Technology, S&P, and Myanmar Tourism Federation.

Regional clients include Inmarsat, National Instruments, LinkedIn, Palo Alto Networks, and Subaru.

Careers in Communications

Madeira and Garcia were speakers at the A-MCC Careers in Communications workshop, joining Simon Bruce, Country Manager of MyWorld; Alison Harley, Senior Communications Manager, World Wide Fund for Nature (WWF)- Myanmar; Edwin Briels, PR and Communications Manager, Myanmar Tourism Federation and General Manager of Khiri Travel; and Hnin Nu Hlaing, Senior Expert Marketing Manager, Wave Money.

Jodi Weedon, Chief Executive Officer of A-MCC said, "Australia- Myanmar Chamber of Commerce is always proud to support members in positive initiatives but was particularly proud to join together with Rice Communications to present the Careers in Communications workshop. I believe supporting capacity building programs for young Myanmar people is more relevant and critical than ever before. We need to remind people that there are so many opportunities out there and that a lack of qualifications or training is not a barrier to these opportunities. Specialists hire for great attitude and the training can happen on the job."

The story of Myanmar – a country of some 54 million people and a growing middle class hungry for information, infrastructure, goods and services – presents tremendous opportunities for communications professionals in the media, marketing industries, and in-house roles.

“Working with hundreds of clients in Myanmar, we see that the demand for quality candidates in the communications or marketing category is increasing constantly. With the increasing competition, companies will continue to spend more on marketing and require more people in their marketing teams. If you are looking for an exciting, challenging, rewarding and reliable career choice, this is one of the best options in Myanmar,” said Simon Bruce, Country Manager of MyWorld.

Commenting on the importance of communications and the opportunities for communications and marketing professionals in Myanmar, the panellists have these to say:

“Communication is absolutely essential. We have conservation goals and we are here to help Myanmar keep its incredible biodiversity, your forest, your river, your wildlife. Myanmar has a chance to avoid mistakes other countries have made and develop sustainably, keep your forest and wildlife for future generations. We have to communicate effectively and take something technical into something interesting and understandable,” said Alison Harley, Senior Communications Manager, WWF-Myanmar.

“Being a communication manager or marketing manager, you have potential to develop your career. Telenor runs global innovation projects annually where they invite all staff from offices across the world to compete and propose a development idea. Our idea, which focuses on educating rural people and building a credit bureau, was shortlisted as one of top 10 projects and we are now developing it to help poor people, Myanmar farmers. I believe we can change millions of lives,” said Hnin Nu Hlaing, Senior Expert Marketing Manager, Wave Money.

“Promoting Myanmar as a destination is fulfilling in that we get to showcase the best of the country to the outside world. My job is to tell the story of Myanmar and it’s a great story about beautiful destinations, people and culture. At Khiri, we also people set up business in tourism. Through community-based tourism, we create livelihood opportunities. You know the best Myanmar food is home-cooked? Today we have families cooking and hosting tourists at their homes, earning a living and showing hospitality at the same time,” said Edwin Briels, PR and Communications Manager, Myanmar Tourism Federation and General Manager of Khiri Travel.

About Rice Communications

Established in 2009, Rice is a boutique agency supporting local and multinational clients in Asia-Pacific through its offices in Singapore, Hong Kong, Beijing and Yangon. Rice provides a full suite of Public Relations and Communications to organisations and companies from a wide-range of industries including automotive, banking & finance, food & beverage, healthcare, hospitality & travel, electronics & engineering, enterprise and consumer technology, digital media, power and energy, mining, transportation and logistics, and professional services. For more information, please visit: www.ricecomms.com

It is early days for American car company Ford in Myanmar as it works to expand its sales in the country.

Speaking in response to a question by Mizzima at a press conference last week in Yangon, Ford’s ASEAN Region Chairman Mark Kaufman said Ford would make a full investment when the demand in Myanmar significantly rises.

Mr Kaufman was speaking at the opening ceremony the Ford Car Showroom in Yangon on July 21.

“Currently only 4,000 brand new vehicles are sold each year in the Myanmar car market. In Vietnam this figure is 300,000,” he said, referring to the more developed markets in certain other countries in the ASEAN region.

The brand new cars refer to both complete knockdown imported cars and domestically assembled cars.

Ford’s total revenue for 2016 was US$151 billion.

Myanmar Motor Vehicles Manufacturers and Dealers Association Chairman Dr. Soe Tun said: “Domestically assembled cars are sold more than fully imported cars as they can get Yangon license (registration) and they are cheaper.”

Dr. Soe Tun added that many companies including Nissan, Suzuki, KIA, Lifeng, Grand, Tiger and Ford have assembly plants in Myanmar and are manufacturing brand new vehicles in the country.

He also said other foreign car companies which have sent proposals for assembling cars in Myanmar to the Myanmar Investment Commission (MIC).

Ford on track

Ford entered the Myanmar market through the Thailand-based investment company RMA Group as the first MNC Car Company in 2013 when President Thein Sein was in power and while the country was under sanctions.

Ford is doing manufacturing and assembling of their vehicles only in Myanmar and sales, distribution works are being done by Capital Automotive Limited (CAL), the subsidiary of Capital Diamond Star Group (CDSG) owned by a domestic businessman Dr. Ko Ko Gyi as sole agent of Ford in the country.

After working as sole agent of Ford, CAL sent its proposal to the MIC for assembling of Ford cars in Myanmar and this was granted on January 19, 2016.

This assembling plant operates under the name of Capital Motors Limited.

The assembly plant started its car production in East Dagon Industrial Zone, Yangon Region in March 2017 with an initial investment of US$10 million and is currently producing Ford Everest and Ford Ranger cars with a domestic labour force of 85.

Initial steps

Partners in this business said that this was their first phase of investment in their partnership and they could start this Ford car assembly plant for four years after the beginning of official distribution of Ford commercial and passenger vehicles in October 2013 in the Myanmar market.

Chairman of domestic partner company in this business, Capital Automotive Limited (CAL), Khin Tun said that they took this decision of establishing an assembly plant of Ford only after  Parliament enacted and promulgated the Myanmar Motor Vehicle Law in September 2015.

“After the Motor Vehicle Law was enacted, we mulled over establishing a Ford assembly plant in Myanmar. Ford spent two years to make this decision of investing in Myanmar,” CAL Chairman Khin Tun said.

CAL Chairman Khin Tun added that their company would focus only on the domestic market and their production target from this assembly plant is currently 2,000-3,000 cars per year.

“But the market depends on the economy of the country so that we can’t forecast the exact figure of our sales and production,” Khin Tun added.

The factory price of a Ford Everest and a Ford Ranger assembled in Yangon starts at US$ 30,400 (equivalent to over 40 million kyat).

Ford expresses optimism

Ford’s ASEAN Region Chairman Kaufman said in his optimistic view that the current brand new car demand in Myanmar of about 4,000 per year was appropriate for them and this is their first step of doing business in Myanmar and the domestic brand new car market would flourish more when other car manufacturers entered the Myanmar market.

“And then we will take further steps in our investments,” he said.

Over 90% of the car parts required for the Myanmar-Ford assembly plant is supplied by Ford manufacturing plants in Thailand and Vietnam.

Partner companies said that they would increase their investment based on the market situation.

Chairman of domestic partner company CAL Khin Thu said: “Any company, any brand cannot manufacture more than 6,000 vehicles per year with a manual production line. If the demand is more than 6,000 vehicles per year, it must be changed to a semi-auto production line.”

Chairman Khin Tun said that a semi-auto production line could manufacture up to 30,000-40,000 vehicles per year.

“When the market situation demand in Myanmar to be the hub of vehicle production for the international and global market, Ford will be the investing company in its own name in Myanmar,” Khin Tun added.

Mostly used cars

Showrooms for brand new imported cars started in Yangon following the post-2010 economic reform and economic liberalization but the used car market dominates.

Given the situation of an unstable car import policy and tax rates, about 150,000 vehicles imported into Myanmar are used cars and this number is about 50 times the size of the brand new car market.

Myanmar Motor Vehicle Manufacturers and Dealers Association Chairman Dr. Soe Tun said, “The people cannot buy a brand new car in the market unless their income is high. Myanmar’s economy needs to be good. The income of the people is still low.”

MIC Director Soe Myint Aung told Mizzima that Ford Company would increase their investment year by year depending on the domestic production and market situation and also they would increase the number of cars assembled here by using modern technology and machinery.

“Ford will install semi-auto manufacturing facilities based on the car market situation and they will expand their business here by installing a fully automated assembly line later based on the size of domestic and foreign markets,” he said.

Myanmar needs to engage more proactively with Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) grouping as it is strategically located as a gateway for Act East Policy of India as well as Look West perspective of Thailand. 

This was the central message of the meeting of scholars and policy makers who assembled at the invitation of the Parami Round table on the occasion of 20^th anniversary of BIMSTEC. 

Scholars from India, Myanmar, and Japan attended and presented perspectives on how to ‘reinvigorate’ and ‘reactivate’ BIMSTEC so that the trade, investment and B2B exchange would benefit the over 2.5 billion population of the sub-region.

Identifying the strategic opportunity of the countries on the rim of the Bay of Bengal scholars pointed out the need for the more proactive engagement of the governments as well as strengthening the secretariat of BIMSTEC.

Chairing the panel discussion on this subject, Professor Lau Sim Yee of Reitaku University Japan pointed out that countries need to engage with regional groupings from a perspective of shaping the development discourse, particularly in relation to trade, investment and globalization.  Myanmar thus needs to address some of the challenges from a perspective of its strength as a geographical entity and also its locational advantage.

Identifying the strategic opportunities for Myanmar, chief economist of the Parami Round Table Myo Thant pointed out that Myanmar needs to engage with all regional blocks as it is poised to take-off.

The concept of an “economic corridor” is important as ASEAN and the South Asia region collectively becomes a huge market with people having significant cultural affinities. 

A transparent and inclusive approach for regional cooperation and providing space and scope for sub-national governments in the process of regional cooperation were identified as critical as Myanmar’s border regions and states have significant trade relations with countries like India and Thailand.

The need of the hour is going beyond connectivity projects and addressing soft issues like bottlenecks in trade, investment and people-to-people movement.  The harmonization and ease of customs clearance, use of currencies, reducing transaction costs, integrating logistics are some of the initiatives that can enhance trade.

Vast Bay of Bengal coast becomes a critical asset for the BIMSTEC countries where historical maritime trade and commerce links have brought the countries together.  The use of the Bay of Bengal as a public good for addressing transportation, climate change, fisheries and oil exploration could be some of the ideas that need to be pursued by the governments of the region.

Speaking on the occasion, former Indian Ambassador for Myanmar Mr V S Sheshadri pointed out that trade and investment cooperation from the countries of this region need proactive support from governments.  Stagnat intra-BIMSTEC trade, that is hovering at around 5% - needs to be looked at and efforts towards developing FTAs between BIMSTEC countries can be one way to promote trade.  Trade facilitation needs promotion from all the countries.  Studies on value chain and supply chains need to be conducted in order to understand the dynamics of trade in the region. 

Pointing out the reality that Myanmar’s democratization and openness is a tremendous opportunity,Mr.Kavi Chongkittavorn, editor of Myanmar Times stressed that the Bay of Bengal is a strategic asset for the countries of this sub region.  The near normalization of Thai-Myanmar relations and the historical relationship between India and Myanmar provides a narrative of new and emerging geo-political configuration.  It is in this context that BIMSTEC connectivity projects assume importance as this enables connecting asa Indo-China region with South Asia and Myanmar playinga critical role in this equation.  Synchronizing BIMSTEC connectivity plans with ASEAN connectivity thus becomes important.

It has also been pointed out by scholars that BIMSTEC would also contribute in harnessing the opportunities of trade and investment in Africa with that of the ASEAN sub regional countries as well as South Asian countries.In this regard, the perspective of the Act East Policy, under the leadership of Prime Minister Narendra Modi of India was pointed out as an optimistic scenario for reinvigorating BIMSTEC.

Scholars from Japan and India pointed out the trade and investment opportunities, and the sectoral priorities as well as challenges and barriers for BIMSTEC countries and the role of governments.

It was pointed out that market relations, for example business to business engagements, will often compel governments to address some of the challenges and encourage them to undertake regional cooperation negotiations more seriously. Noting that Myanmar is not fully in the global value chain (GVC) regime of global trade, scholars pointed out the need to develop mechanisms for investment and trade expansion in the region.

Scholars who analysed the opportunities of Myanmar in BIMSTEC at the seminar included Prof. Thoshihiro Kudo and Dr Shinya Imaizumi from Japan and Prof. Ajitava Raychaudhuri, and Prof. Prabir De from India.

In 2015 Myanmar adopted the Small and Medium Enterprises Development Law. It is debatable whether or not a law for SMEs is necessary. More important is for government and Parliament to ensure that all relevant laws and policies recognise the needs of SMEs before they are adopted. However, a Law is now in place, and in addition to the usual creation of Committees and other bodies, it seeks to define what a small or medium-sized enterprise is.

Most official international definitions of SMEs are based on permanent employee numbers. According to the OECD a micro-enterprise has 1-9 employees, a small one 10-49, and a medium-sized one 50-249. This limit of ‘less than 250 employees’ is used by the EU, although some countries set the limit at 200 employees, while the United States considers SMEs to include firms with fewer than 500 employees. Despite national variations, there is a common recognition that number of employees is the simplest indicator of whether a business is an SME. The European Small Business Alliance (ESBA) recently affirmed this as an essential point, in its response to the review which the EU is currently undertaking of its SME definition.

Some SME definitions in other countries also add an additional parameter of turnover or revenue, particularly where being an SME brings eligibility for grants, subsidies or tax incentives. The aim with tax incentives for SMEs is not to help a multimillion dollar jade trading business with only 5 employees. Under EU definitions the turnover of medium-sized enterprises (50-249 employees) should not exceed EUR 50 million; that of small enterprises (10-49 employees) should not exceed EUR 10 million while that of micro firms (less than 10 employees) should not exceed EUR 2 million. One problem with having a turnover definition is that the threshold, unlike employee numbers, needs to be adapted every few years to reflect inflation.

The Myanmar definition in the SMEs Law took these two definitions of employee numbers and revenue, but unfortunately then added two further dimensions: business sector (six categories), and capital investment. The 12 definitions of what is ‘small’ and what is ‘medium’ which were created by this 4D chess can only be depicted in a table.

While this is confusing, it doesn’t end there. The Myanmar Cottage Industry Law of 1991, which was amended in 2011 and renamed the ‘Small-Scale Industry’ Law, defines a cottage or small–scale industry as
having not more than nine workers. Well, that’s unless it makes handicrafts, in which case it needs at least three workers and has no upper limit. This Small Scale Industry Law also introduces another parameter for defining what is small-scale: horsepower. A small-scale business must use between 0.25 and 5 horsepower to qualify as small.

Yes, as the OECD’s 2013 Multidimensional Review of Myanmar noted tactfully, the institutional structure of business in Myanmar is ‘fragmented’.

Does all this matter? It does, because when trying to support the development of SMEs – an objective which is Point 2 of the NLD government’s 12-point Economic Policy - the first rule is Keep It Simple. Having a cat’s cradle of definitions for determining the status of a small or medium sized enterprise fails that rule. A hotel owner with 40 staff should not need to spend time wondering whether she runs a medium-sized service business or a labour-intensive small business.

Furthermore, the more complex the rules, the more cost and difficulty for a small business to follow them, or to access any incentives under them. Additionally, the more complex and confusing the rules and definitions, the greater the potential for corruption, and the risk that the business will be squeezed for tea-money. In some cases, faced with such complexity, the enterprise will opt to stay informal and unregistered, leaving workers without basic protections like contracts, insurance and social security, and the state without tax revenue.

Furthermore, if there are tax breaks and grants on offer, some companies will be tempted to game the system by splitting the business up into smaller companies, staying small. If definitions are based on permanent employees, as they are in Myanmar, companies may keep workers on temporary contracts, which reduces their rights. Thresholds in other countries are based on ‘equivalent full-time employees’ (FTE) rather than the permanent/temporary status of the employee. Such incentives for SMEs can create the so-called ‘bonsai effect’ which prevents improvements in productivity and competitiveness. Artificially restrained, an SME cannot achieve economies of scale, and is not large enough to plug into international production networks, develop overseas markets, pursue international standards, or generate more jobs, and move up the value chain. The EU’s review of its definition is happening, inter alia, to take into account the rapid ‘scale-up’ of successful start-ups. The aim is to ensure that businesses are not disincentivised from growing or taking on more staff because they will immediately lose their SME status and benefits.

Other parts of government also need clear and simple SME definitions too, to create consistency in business regulation, such as labour laws. For example the Payment of Wages Act has a threshold of 100 employees. The Disputes Settlement Law requires Workplace Coordination Committees in businesses of more than 30 employees, which is incidentally a much lower threshold than for Works Councils in Europe, which set the threshold at 50 i.e. a medium-size enterprise.

Further business regulation that will affect SMEs is currently under discussion. Having standardised thresholds across laws, such as small business having less than 50 employees, and exempting them from
onerous requirements that a small business cannot sensibly fulfil would make a lot of sense.

At what size will businesses be required to create Occupational Health and Safety Committees under the forthcoming OSH Law, or appoint an OSH officer? How many employees will a company be required to have before ensuring that a ‘quota’ of employees are people with disabilities, a possibility foreseen under the 2015 Disability Law? Mathematics suggests that if the quota is 2%, as some organisations representing people with disabilities are advocating, it will need to be at least 50, i.e. one employee.

The draft Myanmar Companies Act, currently in Parliament, chose to ignore the twelve types of SME in the SMEs Law when defining a ‘small company’. Instead it simply opted for employee numbers and a revenue cap. A ‘small company’, which has less onerous annual reporting requirements under the draft Companies Law, means a non-subsidiary, non-public company which has no more than 30 employees and an annual revenue of less than 50,000,000 kyats ($37,000). The employee threshold can be adapted. The draft Companies Act does not make any allowances for ‘Medium-sized’.

What Myanmar needs is a simple definition of small and medium-sized enterprise. Basing it on employee numbers, and using definitions of micro <10, small 10-49 and medium 50-249 seems appropriate. Cambodia set its definitions using these employee thresholds, and start-up capital/financial assets excluding land.

Myanmar also needs an effective advocacy body for small businesses. This organisation could identify for government and Parliament where regulations are hampering small businesses to develop and innovate. Most countries have at least two business associations, with one dedicated to the needs of small business. The small companies which Myanmar Centre for Responsible Business meets claim that Myanmar’s thicket of red tape prevents them from doing business responsibly. With laws so complex that it is practically impossible to comply, they tell us short cuts and paying tea money are standard practice.

MCRB believes compliance with the law is a sine qua non for being a responsible business, whatever your size. But we also encourage collective action by business, for example to combat corruption, where cutting red tape and streamlining permitting is central to this. When MCRB hear small businesses complaining about complex and chaotic regulation, we suggest they should join their local Chamber of Commerce and raise a collective voice for regulatory change.

However Myanmar small businesses often tell us that they feel that the Chamber and its constituent associations do not understand or represent the needs of small businesses, or advocate effectively. Indeed, some of them even believe that the Chamber and its member associations even favour the interests of large businesses at the expense of small ones.

An example can be found in the tourism industry, where in principle SMEs are seen as a driver of jobs and growth. However in the accommodation sector, membership of Myanmar Hoteliers Association requires the business to have a license from the Ministry of Hotels and Tourism (MoHT).

Under MoHT Notification 2/2011, the Ministry will only licence guesthouses to host foreigners if they have at least ten rooms, a minimum size of no obvious utility. These guesthouses also need to provide en-suite bathroom in every room, a carpark, CCTV and a security scanner. These are challenging and unnecessary requirements for a small business to implement, requiring significant capital investment.

Furthermore, the process for obtaining a guesthouse licence from MoHT takes longer – at least nine months - and is more expensive than that to obtain a license from the municipality. A municipal licence takes only two to three months, but does not under current rules allow the guesthouse to receive foreigners. A case study published by Myanmar Business Forum in February 2017 documented one process to obtain an MoHT Guesthouse Licence which cost almost 1,000,000 kyats in ‘presents’ and payments for inspection, around four times the total 250,000 kyats required officially for the documentation and licence.

Myanmar regulation in the tourist accommodation sector inhibits innovation by small, local businesses looking to open guesthouses to receive foreign tourists. On top of that, the Myanmar Hoteliers Association
membership rules mean that guesthouses with a municipal licence are not eligible to join the only business association that exists to represent the views of accommodation businesses. Therefore these small accommodation businesses have no channel for their collective voice to be heard to get this red tape removed.

Small businesses, whatever their sector, would probably be better off with a dedicated advocacy body. In 2016, a Myanmar chapter of the International Council of Small Businesses was established https://icsb. org/project/icsb-myanmar/. Perhaps this will be the organisation that can ensure that the voice of small business is heard by government, and can advocate for business regulation to be drafted to help them, rather than hinder. 

But regardless of which business association ultimately becomes the voice of small business, the government and Parliament will only provide an enabling climate for SMEs to flourish, not because of the SME Law, but if it pursues a more transparent, systematic and consultative approach to developing ALL business regulation that takes the needs, experience and frustrations of SMEs into account.

Vicky Bowman is Director Myanmar Centre for Responsible Business

When we arrive at the Border Guard Force checkpoint, security guards look us up and down, then ask if we are coming to the casino. It’s 8pm. We nod and are allowed in.

The 24-hour 999 casino is located on the bank of Kayin State’s Thaung Yin river that separates Myanmar and Thailand, dividing Myawaddy town from Tak province.

Thais come in droves, avoiding gambling laws in their own country. The owner himself is a Thai tycoon. Only Thai baht is accepted, though Myanmar kyat can be exchanged.

In the compound are rows of cars, restaurants, convenience stores and lounges. Inside the main gaming area, well-dressed gamblers focus intently as they try their luck.

Food and drink flow freely, while CCTV cameras keep an eye out for scammers. A blacklist pinned to the wall shows the names of pickpockets, phone thieves and mere freeloaders.

999 is not taxed or regulated. You don’t even need even need an ID to get in. All you need is money. The venue is more crowded at night and a ferry brings people over the river from Thailand. Like any casino in the world, there seems to be a lot of losing and little winning.  I decided to try my luck.

At about 9pm I drank a complimentary orange juice and entered a game in which players guess what animal will appear on a card, either a tiger or a dragon. It costs 20 baht (a little less than $1) to play, which I did twice. 

I lost both times. 

The freewheeling nature of the casino may not last long.

Thant Zin Aung, an MP in Kayin State, confirmed reports of violence around the place. He wants to get rid of casinos like this one, but although he has submitted a proposal to the state parliament, no action has been taken yet. 

If he can’t get rid of them, he suggests at least taxing them. Colonel Saw Chit Thu from the Border Guard Force agreed, saying taxes should be levied to help with state coffers. 

“I want casino business to be official in Myawaddy to generate state revenue,” he said, adding an official permit system could be introduced too.

But there’s a wrinkle. The casino in Myawaddy is a joint-business between the BGF and the Thai owner. 

“We own the land and building that this casino resort is on, and the Thai businessperson put in the equipment and other facilities,” he said.

Right now there is a plan to set up a hotel near the casino. A source familiar with the matter said the authorities will only allow the casinos if hotels are built.

Casinos of this sort are not limited to Kayin State. In Kachin and Shan states they exist too, with Chinese players making up the bulk of clientele.

Courtesy Myanmar Now