Myanmar to double rice exports through policy reforms: WB

June 19-25, 2014
Myanmar Business Today
mmbiztoday.com
mmbiztoday.com June 19-25, 2014| Vol 2, Issue 24MYANMAR’S FIRST BILINGUAL BUSINESS JOURNAL
Myanmar Summary
Inside MBT
Myanmar Can Double Rice
Exports Through Policy Reforms: WB
Report advises Myanmar to rethink its rice export strategy
M
yanmar has
the potential
to more than
double its rice exports by
implementing policy re-
forms, a new World Bank
report said.
In a bid to increase rice
exports, Myanmar has to
diversify and increase its
rice production, open its
rice milling sector to di-
rect foreign investments
and reduce export pro-
cedure costs, thereby al-
leviating rural poverty,
said the report, Myan-
mar: Capitalizing on Rice
Export Opportunities, by
the World Bank and the
Livelihoods and Food Se-
curity Trust Fund (LIFT)
of Myanmar.
“Reforms are required
as a policy environment
conducive to supporting
this refocus of the rice
export sector is essential
if anything is to change,”
said Andrew Kirkwood,
LIFT’s fund director.
Kirkwood said much of
the policy change can be
introduced without cost
May Soe San
“Consistent economic
policies without anti-ex-
port bias, alongside the
to improve farmer access
rates of return for Myan-
mar rice exports, for its
farmers and for the rural
poor.”
Improving agricultural
productivity and promot-
ing rice exports have been
among the top priorities
for the current govern-
ment. Despite its plan
to export four million
tonnes of rice by 2020,
the actual annual rice ex-
port has reached only 1.3
million tonnes over the
past years.
The current rice ex-
port strategy favours the
production of low qual-
ity rice, which is largely
sold to Africa and China,
the report said, adding
that farmers have earned
businesses have skipped
necessary investments. It
warned that the situation
is worsening as the global
demand for low quality
broken rice is shrinking.
“This is now a govern-
ment call to capitalise on
rice export opportuni-
incomes to smallholder
farmers,” said Kanthan
Shankar, the World
Bank’s country manager
for Myanmar.
“Rice production is a
source of livelihoods for
about 70 percent of the
population. Higher and
port improves farm in-
comes and food security
of the rural poor, he said.
Shankar added that in-
creasing rice exports will
spur momentum for in-
clusive growth and pover-
ty reduction in Myanmar
for the next decade.
The report said there
are good market pros-
pects for Myanmar to ac-
commodate more diver-
Myanmar over the next
10-15 years, particularly
in the European Union
and Asian countries, earn
higher incomes, and di-
ent markets.
The obstacles in hitting
these marks are low pro-
ductivity and poor rice
quality at the farm level,
undercapitalised and in-
costly export infrastruc-
ture and procedures, the
report noted.
Opening the rice mills
to direct foreign invest-
ments is, according to the
report, a vital step to take
to increase quality and
volumes of rice export.
Improving infrastructure
and reducing export pro-
cedure costs would also
boost Myanmar’s export
competitiveness, it added.
The World Bank report
SoeZeyaTun/Reuters
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Contd. P 12...
Contd. P 12...
When Investors Turn into
Bullies P-7
US Commerce Secretary Touts
“Closer Ties” with Myanmar
P-10
Myanmar’s Institutional Infra-
structure Constraints and How
to Fill the Gaps P-11

June 19-25, 2014
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Business News in Brief
Property tax to be introduced to deter specula-
tion
Arrangements will be made to levy property taxes on
speculators after studying international practices and
consulting experts, local authorities and businessmen,
Parliament in response to a query. Property prices in
Myanmar have reached record highs after the country
launched sweeping economic reforms in 2012.
MOGE invites tender for consultancy services
State-run Myanma Oil & Gas Enterprise (MOGE),
under the Ministry of Energy, announced that it is in-
terested to establish joint venture or alliance projects
for drilling, seismic acquisition and pipeline construc-
tion and maintenance services with a potential partner
who is reputable and internationally recognised in the
commence around August 1, is to help in legal and tech-
nical assessment as required in JV processes, tender
tion of bidders, JV agreement and contract prepara-
tion, MOGE said. Duration of the assignment will be six
months, but may be extended, MOGE added.
Philippine-based Cebu Air Inc, operator of budget air-
proval of Civil Aeronautics Board (CAB) for a combined
2,520 seat entitlements per week to Yangon, Filipino
media reports. Cebu and Tiger both want 1,260 weekly
seats for the Manila-Yangon route. The Philippines and
Myanmar signed a new air agreement on May 20, up-
dating the pact that was signed in 1979 by increasing
improving trade and investments between the South-
east Asian neighbours. The new agreement allowed the
designated airlines of each country a total of 3,780 seats
between Manila and points in Myanmar.
ing
bile banking services within weeks, bringing the total
number of such providers to four, local media reported,
Innwa Bank and Myawaddy Bank, both owned by the
First Private Bank and CB Bank will be granted permis-
sion for mobile banking.
Myanmar is preparing to set up a credit bureau that
will pave the way for some important steps forward in
they disappeared when the banks that introduced them
collapsed in 2003.
centre
agement centre in Nay Pyi Taw in a bid to help local
emergencies, the European Union said. The EU-funded
centre will be ready for 24-hour service and work to-
gether with the ASEAN Coordination Center for Hu-
manitarian Assistance and other crisis management
centres from member countries of the ASEAN in emer-
gency situations.
ploring opportunities to export its products to Myan-
mar and is understood to have initiated a process to
ink a deal with the neighbouring country, according to
Indian media reports. P Padmanabhan, managing di-
cussion with the Ambassador of Myanmar to India and
he is positive in that regard, Assam Tribune reported.
According to a study, the demand for oil products in
Myanmar is expected to reach 60,000 barrels per day.
Myanmar Summary
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June 19-25, 2014
mmbiztoday.com
3LOCAL BIZ
Myanmar Summary
Myanmar Summary
Myanmar Summary
Thilawa SEZ Construction Permit by July
Htun Htun Minn
C
onstruction permits for
Thilawa Special Econom-
ic Zone will be granted
by July, U Set Aung, chairman
of Thilawa SEZ Management
Committee, said.
Most of the countries seeking
permit are from Asia, he added.
A total of 45 companies from
11 countries have currently
applied for permits for the
394-hectare (960 acres) Class
A area, which went on sale last
month for manufacturing en-
project.
“Majority of the applicant
companies are from Japan, fol-
lowed by Hong Kong. Only one
US company and three Swedish
companies have submitted pro-
posal to lease land,” U Set Aung,
who is also the Vice President of
Central Bank of Myanmar, said.
“Among ASEAN countries,
most proposals came from
Thailand, Singapore and Ma-
laysia. Currently, we are scruti-
nising the applications and we
will grant construction permits
by next month,” he said.
Investors who want to lease
land inside the project area are
allowed to get the land on a 50-
year lease with $70 per square
metre, a source from the Thil-
awa SEZ Public Company said.
Companies need to submit
business and investment plans
to get the land and the board
Committee to Halt Granting
Foreign Bank Licences
May Soe San
T
he Banking and Finan-
cial Development Com-
mittee of the Parliament
will propose to the Central
Bank of Myanmar to halt grant-
ing banking licences to foreign
banks until a modern Financial
Institutions Law is enacted, a
member of the committee said.
have provision to deal with
corruption in banks but My-
anmar’s 1990 Financial Law
doesn’t have such terms. We
have to amend the current law
or enact a new one to make way
for provisions like this,” U Phyo
Min Thein, who is also a Mem-
ber of the Parliament, said.
The committee recently met
with the foreign bank licence is-
suing committee and local bank
representatives and decided to
carry out further steps to having
a modern law, he said.
According to recent reports,
the government is expected to
grant licences to as many as 10
foreign banks to carry out lim-
ited operations in Myanmar.
There are 36 foreign banks who
have opened their representa-
government may grant the li-
cences by the end of September,
a Reuters report said.
banks to advise regarding for-
eign bank licences as no regu-
lations have been issued by the
Central Bank of Myanmar, said
U Pe Myint, managing director
of Cooperative Bank.
Police to Beef Up Security for
Foreign Buyers at Jade Expo
Kyaw Min
M
yanmar Police Force
will arrange special se-
curity for foreign gems
buyers at the upcoming Myan-
ma Gems Emporium at Nay Pyi
Taw, U Kyaw Htay, secretary of
Gems Entrepreneurs Associa-
tion, said.
The authorities will deploy a
special tourist police force unit,
which will also provide health
services and other assistances
to foreign gems buyers, he said.
“We would like to ensure safe-
ty for all the foreign buyers and
we will try to provide every kind
of assistance,” U Kyaw Htay
said.
The 51st Myanma Gems Em-
porium will be held from June
24 to July 6 at Mani Yadana
Hall in the capital city.
A total of 7,500 gem lots will
be displayed at the emporium –
2,100 lots of which are from the
government and the rest will be
displayed by local companies.
will base their decisions de-
pending on the plans, he added.
“We will decide based on the
structure of the factory and
how they are going to use those
lands. There is no time limit for
the construction of the factory.
We will also check their com-
mercial operation plan,” U Set
Aung said.
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SoeZeyaTun/Reuters
SoeZeyaTun/Reuters

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 4
Myanmar Summary
Myanmar Summary
Yusen Logistics Opens
Aye Myat
J
apanese freight forwarder
and logistics services pro-
vider, Yusen Logistics has
Yusen Logistics (Myanmar) Co
Ltd sees Yusen Logistics’ pres-
ence increase to 40 countries
around the world, Yusen said in
a statement.
Hiromitsu Kuramoto, presi-
dent of Yusen Logistics Co Ltd,
said: “With our medium-term
business plan ... Yusen Logis-
tics will continue to push ahead
with our expansion program in
the ASEAN region.
“We are continuing to build
on our established infrastruc-
ture, rolling out networks to
mirror clients’ changing sourc-
ing patterns.”
Hiromitsu said with the grow-
ing importance of logistics in
US to Help Myanmar
Improve Highway Safety
Aung Phyo
T
he United States will
help Myanmar improve
the safety of the Yan-
gon-Mandalay highway where
hundreds of car accident cases
years.
The United States Agency
for International Development
(USAID) and the Ministry of
Construction signed a letter of
agreement recently on this re-
gard.
US architecture and engi-
neering experts will train and
mentor Ministry of Construc-
tion engineers and technicians
in international highway safety
standards as they construct
safety enhancements along a
ten-kilometre section of road.
This demonstration section,
funded in cooperation with the
US Government, will serve as
a model for ongoing improve-
ments implemented by the
Ministry of Construction along
the full length of the highway,
the US Embassy in Yangon said
in a statement.
“As the economy grows, trans-
portation infrastructure will
have to accommodate more
-
bassador Derek Mitchell.
“But this issue is about more
than economic development;
it is about saving lives. I am
pleased the United States will
be able to improve a small sec-
tion of the Yangon-Mandalay
Highway, and work with the
Ministry of Construction to
help address very real concerns
about safety standards.”
The Yangon-Mandalay High-
way, which is the main ground
route from Yangon to Nay Pyi
Taw and runs through the cen-
tre of the country, stretches
386 miles between Yangon,
the country’s commercial cen-
tre, and Mandalay, a city of ap-
proximately one million people.
Three thousand vehicles drive
the highway every day.
Increased speed and a lack of
standard highway safety meas-
ures have resulted in a dispro-
portionately high number of
vehicular fatalities on this road.
to 2014, over 700 highway acci-
dents have claimed the lives of
over 360 victims.
Myanmar, Yusen Logistics’ pro-
vision of valuable logistics ser-
vices will contribute to the de-
velopment of the country.
YusenLogistics
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WaiLinnKyaw

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 5
Myanmar Summary
Ball Corp Becomes First US
Investor in Thilawa SEZ
Phyo Thu
A
merican packaging and
poration is to set up a
one-line beverage can manufac-
turing plant in the Thilawa Spe-
cial Economic Zone (SEZ).
company to invest in the much-
touted Thilawa SEZ, 20 kilome-
tres southeast of Yangon.
Last month Ball announced
that it will open a can plant in
Myanmar, without specifying
the factory location.
A contract agreement was
signed between Ball Corp and
the Myanmar-Japan Thilawa
Development (MJTD) Co Ltd
for the establishment of the
plant. The signing came on the
heels of US Secretary of Com-
merce Penny Pritzker’s Myan-
mar visit earlier this month.
The US Embassy in Yangon
said in a statement that the
plant will employ local work-
contribution” by a US company
to Myanmar’s development.
“The United States believes
that responsible investment
by US companies in this coun-
try can support broad-based
economic development, help
deepen continued political and
economic reforms, and high-
light the highest standards of
corporate social responsibility,”
the statement said.
The one-line plant is expected
to begin production in mid-
2015 with investment in the fac-
tory to the tune of $40 million,
Ball Corp said.
ity to produce beverage cans
for Coca-Cola Pinya Beverages
under a long-term agreement,
as well as other local, regional
and multinational customers, it
said.
During an event highlighting
US investment, including Ball’s
new plant, Pritzker said the Ball
factory opening is “already en-
couraging further engagement
tablished in Myanmar.
“Coca-Cola is one of these
companies. Coca-Cola re-
opened operations here in
2012, began manufacturing lo-
cally one year ago, and has al-
ready committed to buy more
than half of the cans produced
at Ball’s new facility,” she said.
“When our [American] busi-
nesses make investments, they
bring with them the highest
standards, including a commit-
ment to corporate and social re-
sponsibility,” she added.
More than 45 companies from
various countries are in the pro-
cess of setting up manufactur-
ing plants and industries in the
SEZ, state-run media reported.
MJTD was formed by two My-
anmar companies and two Jap-
anese companies, with stakes
split 51 percent for Myanmar
and 49 percent for Japan.
The two Myanmar compa-
nies are Thilawa SEZ Manage-
ment Committee and Myanmar
Thilawa SEZ Holdings Public
Co Ltd (MTSH), while the two
Japanese companies include
MMS Thilawa Development Co
Ltd and Japan International
Cooperation Agency (JICA).
The land lease procedure for
Phase 1 of the Thilawa Class A
Area, which is about 396 hec-
tares (978 acres), started last
month.
The commercial run of the
SEZ is expected in mid-2015.
Japan Gives $75m for
Construction, Rural
Zwe Wai
Tassistance worth $75.7 million for the develop-
some areas of Myanmar.
Three memoranda of understanding (MoUs) were
signed between Deputy Minister for National Planning
and Economic Development Daw Lei Lei Thein and
Japanese Ambassador to Myanmar Tateshi Higuchi in
Nay Pyi Taw recently.
billion ($41.3 million) for the construction of the new
cation projects.
Myanmar Summary
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a'orsm;wGifvQyfppf"mwftm;&&Sda&;twGuftar&duefa':vm 75
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om;rsm;cefYtyfrnfjzpfonf/

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 6
S Korea to Open Polytechnic University
in Myanmar
To provide assistance in agricultural development
Zwe Wai
S
outh Korea and Myanmar
will cooperate in technol-
ogy development by open-
ing a polytechnic university in
the Southeast Asian country.
The government has ap-
proved a draft memorandum
of understanding between My-
anmar and South Korea on this
project, according to Dr Aung
Kyaw Myat, deputy minister for
science and technology.
The South Korea Polytechnic
University and the Ministry of
Science and Technology are
conducting a feasibility study
for further discussions on sub-
jects and curriculums planned.
South Korea has been helping
Myanmar in the development
of a number of sectors includ-
ing agriculture and its mecha-
nisation, irrigation technology,
rural and socio-economic de-
velopment, and public health.
The Korea International Co-
operation Agency (KOICA) is
also providing assistance in
GAP Becomes First US Apparel
Retailer in Myanmar
A
merican clothing
and accessories re-
tailer Gap Inc said
it plans to produce ap-
parel at factories in My-
major US apparel retailer
to enter the impoverished
Southeast Asian nation’s
lucrative garment indus-
try.
The US Embassy in Yan-
gon said products made
at two Yangon factories
would be in Gap stores by
this summer.
“The garment industry
stands poised to become a
exports and opportuni-
ty for the people of this
country,” the US embassy
said in a statement.
The San Francisco-
based retail giant said it
has signed a sourcing deal
with South Korean-owned
factories in Myanmar,
while the two factories
are reportedly producing
vests and jackets for the
company’s Old Navy and
Banana Republic brands.
According to textile in-
garment exports had hit a
high of $850 million in
2001, but plunged after
the US toughened sanc-
tions in 2003 in protest
at the junta’s detention of
Aung San Suu Kyi.
Myanmar’s garment in-
dustry – which employed
approximately 300,000
people in the early 2000s,
according to government
the trade embargo. Be-
fore the embargo, apparel
Kyaw Min
PaulSakuma/AssociatedPress
accounted for nearly 40
percent of Myanmar’s
exports, with about half
going to the US. In 2004,
the US State Department
estimated more than
50,000 garment jobs had
been lost to sanctions.
The Obama administra-
tion started lifting those
sanctions in 2012, after
a new nominally civilian
government in Myanmar
enacted a series of eco-
nomic and political re-
forms.
More than a year ago,
Coca-Cola Co started
producing Coke in My-
anmar, pledging to spend
$200 million here over
-
can companies, including
General Electric and APR
Energy, have embarked
-
ments in Myanmar. In
arm signed a $960 mil-
lion contract to lease 10
Boeing aircraft to carrier
Myanmar Airways, and
in February APR Energy
won a contract to refur-
bish a 100-megawatt
power plant in the coun-
try, an investment valued
at $30 million.
Gap, which sources ap-
parel from roughly 40
countries, didn’t specify
how much it is investing
in the Myanmar project.
Based on the employment
Gap expects to create –
its apparel orders and as
many as 4,000 indirect
jobs in the country – it is
likely one of the largest
US economic commit-
ments to Myanmar since
the end of sanctions, the
Wall Street Journal re-
ported.
Gap said its decision
to source garments from
Myanmar was taken after
a rigorous due diligence
process which saw the
company engaging ex-
tensively with US govern-
and union representatives
and international and lo-
cal NGOs in Myanmar
in order to better under-
stand the opportunities
and challenges of doing
business in the country.
As part of the company’s
commitment to transpar-
ency, Gap said it will vol-
untarily disclose and pub-
lish information about
its practices in Myanmar
consistent with the Unit-
ed States government’s
reporting procedures.
Gap will also operate in
partnership with the US
Agency for International
Development (USAID) on
a project to improve skills
among Myanmar’s largely
female textile industry
workforce.
The company’s partner-
ship with USAID will help
lay the foundation for Gap
Inc to provide growth and
economic opportunities
for women in the country,
the US embassy said.
“By entering Myanmar,
we hope to help acceler-
ate economic and social
growth in the country,
and build on our track
record of improving
working conditions and
building local capacity in
garment factories around
the world,” said Wilma
Wallace, the vice presi-
dent of Gap’s Global Re-
sponsibility division.
The US embassy state-
ment, which was released
following the signing of
the USAID partnership,
added that Gap would
ensure the factories it is
sourcing from meet “in-
ternationally recognised
human rights and labour
standards”. Gap’s ven-
dors in Myanmar will be
bound by the company’s
Code of Vendor Conduct,
it said.
Workers at the South
Korean-owned factories
supplying the Gap prod-
ucts – which Gap says
competitive reasons –
are paid an estimated
average of $110 a month,
with supervisors earning
as much as $1,000, ac-
cording to the Wall Street
Journal.
Gap makes clothing, ac-
cessories, and personal
care products for men,
women, children, and
babies under its Gap, Ba-
nana Republic, Old Navy,
Piperlime, Athleta, and
-
cal year 2013 its net sales
were $16.1 billion from its
stores in about 90 coun-
tries worldwide.
Myanmar Summary
Myanmar Summary
some projects being imple-
mented for the development of
agriculture, encouraging export
of Myanmar’s farm produce to
South Korea.
KOICA is helping Myanmar
establish a Post-harvest Tech-
nology Application Center in
Nay Pyi Taw and provide farm
equipment for killing pests in
fruits and vegetables plants.
KOICA also helped Myanmar
in agricultural mechanisation by
training farmers at Yezin, Nay
Pyi Taw, while upgrading farm-
land in other areas in the capital.
Under a framework agree-
ment, KOICA also extended a
grant aid for 2013 to help My-
anmar in the development of
road network, a national statis-
tical system, capacity building
strategy for conferences, land
reform program for mechanised
farming and forest greening.
South Korean investment in
Myanmar stood at $3.05 billion
in 86 projects as of January, ac-
counting for 6.7 percent of the
total foreign input – placing it
sixth among foreign investor
countries.
Bilateral trade between Myan-
mar and South Korea reached
$1.76 billion in 2013, of which
Myanmar’s export to South Ko-
rea accounted for $554.59 mil-
lion.
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vkyfoGm;rnfjzpfaMumif; od&onf/

June 19-25, 2014
mmbiztoday.com
7
Myanmar Summary
Contd. P 8... Contd. P 8...
LOCAL BIZ
When Investors Turn into Bullies
MySQUAR’s Canadian founder Rita Nguyen tells a warning tale of trust in Myanmar
M
any people have
been reaching
out to me lately
to ask for details on the
“management shakeup”
at MySQUAR and to
date, I’ve been fairly qui-
et about it because I was
hoping to keep things civ-
ilised, despite the hostile
and aggressive manner in
which the other side has
been handling everything.
Now that they have issued
a press release letting
everyone know that I’ve
“stepped down”, it’s time
to set the record straight
because I’m damned if
they tell my story for me.
On May 9, I came back
to Ho Chi Minh City
the MySQUAR board of
directors had removed me
as the CEO with no notice
and no reason given. Dur-
ing the course of that one
hour meeting they had cut
me from all the internal
systems and have since
changed the locks on the
doors. Even worse, they
did the same to my co-
founder but didn’t even
give her the courtesy of
letting her know. Instead,
she found out when one
called her to ask her about
what was going on.
The ensuing weeks have
been highly emotional but
as mentioned, I’ve kept
it pretty quiet until now
simply because I believed
them when they said that
they wanted to handle
this amicably. Instead,
they have spent the past
few weeks adding insult
to injury at every turn in-
Rita Nguyen
cluding kicking us out of
the apartment in Yangon,
sending me veiled threats
(I’ve since resigned from
the board), sending us
threatening (but empty)
letters from lawyers and
as of June 6, bullying our
lawyer into dropping us
est”.
One of the directors
and shareholders of MyS-
QUAR is Piers Pottinger
of Bell Pottinger, a big PR
guess is a client in another
market. Despite the fact
that Piers invested per-
sonally (and only a small
amount) into MySQUAR,
he’s decided to go through
our lawyer’s international
partners to put pressure
on our lawyer to drop
us. I’m not entirely sure
how they do business at
Bell Pottinger but in my
world you pay expenses
and severance when you
engage in further bullying
tactics.
At this point the com-
pany has not paid the out-
standingexpensesthatmy
co-founder and I have in-
curred, the salary that we
had not been paid for the
last two months as well as
anything related to sever-
ance for termination. In
addition to that, we have
found out that they had
removed – or I was lied
to and the investors were
never added – several of
the early investors as le-
gal shareholders in the
company. So not only am
I out tens of thousands of
dollars, so are many of my
friends and family who
believed in me back when
we didn’t have anything
other than an idea and a
pitch deck. In the grand
scheme of things, it’s a
lot of personal money for
my co-founder and I but
little more than a round-
ing error for them. But it’s
been radio silence from
them, other than getting
my lawyer in Singapore to
drop us.
Given Bell Pottinger’s
comfort level working
withgovernmentswithse-
rious human rights viola-
tions, perhaps a complete
disregard of employment
rights is to be expected of
one of the name partners
out what possible reason
they would not only take
my company but do it in
such a disrespectful and
hostile manner. Now I’m
lawyer who is strong and
willing enough to take on
a beast like Bell Pottinger.
For those of you in My-
anmar, Bell Pottinger is
coming to the country
to work with the largest
conglomerate in Myan-
“
Given Bell Pottinger’s
comfort level working
with governments with
serious human rights
violations, perhaps a complete
disregard of employment rights
is to be expected.”
Techcrunch
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June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 8
on American sanctions
list. What’s more scary is
that Piers recently told me
that they were pitching to
jointly represent The Lady
(Daw Aung San Suu Kyi)
as well as one of the other
a very likely presidential
candidate. Given the bru-
tal way they do business,
I fear for this country if
these leaders have com-
panies that work like Bell
Pottinger whispering in
their ears.
-
I was warned over and
over again to not trust
business people in Viet-
nam and yet here I am.
Let’s start at the begin-
ning. A year ago when I
was launching MySQUAR
a friend in Vietnam in-
troduced me to Eric
Schaer, the CEO of Ris-
ing Dragon, an advisory
group who was helping
companies set up in My-
anmar. Given how much
this market was changing
every day, it made sense
for us to enlist the servic-
es of Rising Dragon. The
basic terms were that we
would give Rising Dragon
of equity in return for
them getting us free of-
HCMC as well as handling
out legal incorporation in
Myanmar, Singapore and
Vietnam. The other piece
here is that I would retain
proxy voting rights for the
shares. About a month
later, we also started pay-
ing Rising Dragon a hefty
consulting fee, about 10
percent of our burn rate
to be our acting CFO. In
the ensuing eight months
he has been “helping” us
to raise money has been
a travesty and now he’s
even stolen the company.
spaces and while I have
proof that he was “work-
ing on” the proxy voting
docs, that never hap-
pened either. As the CEO,
this is of course my fault
to stupidly trust him and I
have learned some major
lessons on keeping your
house in order.
Eric has leveraged all
the relationships he got
through his involvement
with MySQUAR to create
his own crony network
and many of the MyS-
QUAR shareholders are
now also shareholders in
Rising Dragon subsidiar-
ies, not to mention that
Eric is also a shareholder
in many of their compa-
nies. Since there’s been
complete radio silence
from all the sharehold-
ers since this happened,
I’m not sure who’s sleep-
ing with whom and how
deep it goes but the share-
holder list is publicly ac-
cessible in ACRA should
anyone be interested.
Any entrepreneurs who
are fundraising in Asia,
I highly recommend you
research your possible in-
vestors and talk to other
entrepreneurs who have
worked with them.
As I mentioned previ-
ously, conveniently, many
of my friends and family
who would most certainly
have not voted against
me are not in ACRA. I’m
not sure why but there is
most certainly a case here
for deeper investigation
especially given the paper
trails I keep.
So where does that leave
me?
I am on the hunt for my
third lawyer now. I can
for the compensation
owed me or I can spend
my time building some-
thing new. With all the
lessons and contacts I’ve
already made, it will take
me far less than a year to
get to where MySQUAR is
today. As an entrepreneur
you learn very quickly
to move on from “sunk
costs” and to not let it col-
our your decisions. From
that angle, I’ve lost a year
and some money, both of
which I can deal with. My
pride was also bruised and
surrounded by amazing
people who have reached
out in an overwhelming
show of support. And of
course there is also the
reputation thing. Let me
reiterate this: there was
absolutely no reason giv-
en and frankly, no reason
that they could have given
for this move other than
greed and a full on land
grab.
I don’t know exactly
what’s next but rest as-
sured you haven’t seen
the last of me. I wasn’t
named on Forbes’ Wom-
en to Watch in Asia list
for nothing. Thankfully
I was raised in a society
where you celebrate and
embrace failure because
this whole thing was full
getting to a place where I
can accept that and move
forward. I hope that by
sharing this story, I can
help some others out
there who may be facing
similar issues. If nothing
else, let this be a warning
tale of trust.
So my journey with
MySQUAR largely comes
to an end but my entre-
preneurial journey is still
in the beginning. For
those of you who have
reached out – thank you.
I could not have made it
through the past month
without your love and
support. For those of you
learning about this for the
shock but this is just the
so many more good things
to come out of Myanmar.
Rita Nguyen is the
founder of MySQUARE,
published this post in her
blog and it has been re-
published here with her
permission. The opinions
and views expressed here
are the author’s own and
Myanmar Business To-
day’s editorial opinion.
“
Given the brutal way they
do business, I fear for
this country if these lead-
ers have companies that
work like Bell-Pottinger whis-
pering in their ears.”
Techcrunch
Panel Deals Blow to Suu Kyi’s Chances of Becoming President
N
obel laureate Aung San
Suu Kyi’s hopes of be-
coming Myanmar’s
president next year have been
dealt a blow when a parliamen-
tary committee voted not to
change a constitutional clause
that bars her from the post, two
of the panel members said.
The committee tasked with
recommending amendments
opted to retain the section that
prevents anyone married to a
foreigner or with children of
foreign citizenship from becom-
ing head of state.
The two sources declined to
why the proposal was rejected
by 26 of the 31 panellists.
Most experts believe the
Aung Hla Tun clause, 59 (f), was written into
the military-drafted 2008 con-
Suu Kyi, who became a global
-
tary rule, most of it from house
arrest.
Her late husband was British,
as are her two sons.
-
tee members voted in favour
of amending the section at the
closed door meeting of the com-
mittee,” said a member who re-
quested anonymity because the
to be secret.
Suu Kyi and her National
League for Democracy (NLD)
party have been pushing for
constitutional change ahead of
next year’s election, mainly to
reduce the political clout of the
military, which ruled Myanmar
for 49 years until a nominally ci-
vilian government led by retired
The committee picked to as-
sess amendments has only
two NLD members on it and is
comprised mainly of lawmak-
ers from the ruling Union Soli-
darity and Development Party
(USDP), which was created
from a social movement of a
similar name set up by the for-
mer junta.
The USDP has 14 people on
the panel and seven members
-
pointed as lawmakers as part of
a 25 percent legislative quota
allocated to the armed forces, a
persecution by the former re-
gime, wants to change.
Myanmar lawmakers are as-
sessing changes to the constitu-
tion ahead of next year’s parlia-
mentary election.
A vote in the bicameral legis-
lature to change the constitu-
tion to allow Suu Kyi to become
president is still possible, al-
though political analysts say it
is extremely unlikely it would
be passed because the military
and its USDP allies dominate
parliament.
Her party, however, said it
was not over yet.
“We can’t say Daw Aung San
Suu Kyi has no chance of be-
coming the president until the
union parliament approves it,”
said spokesman and senior par-
“We need to wait till the com-
-
tions at the parliament.”
Myanmar’s constitution was
crafted by the former junta as
the basis for the country’s grad-
ual transition to democracy.
The semi-civilian government
has surprised the world with
reforms that were unthinkable
under direct army control and
managed to convince Suu Kyi
and the NLD to join parliament.
Reuters
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Myanmar Summary

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 9
Myanmar Summary
A
merican power so-
lutions provider
APR Energy an-
nounced that the com-
pany’s power generation
plant in Myanmar is now
fully operational.
In February, APR
clinched a contract
to build a “fast-track”
100-megawatt power
plant in upper Myanmar,
-
can company to sign a
power generation agree-
ment with the govern-
ment since the lifting of
sanctions in 2013.
Based in Kyaukse, Man-
dalay region, the plant
provides the Myanmar
Electric Power Enterprise
(MEPE) with a guaran-
teed minimum of 82MW
of power and will enable
the provision of electricity
and power to more than
six million people, APR
Energy said in a state-
ment.
The contract, which is
on a rental basis, is ex-
pected to run through to
late 2015.
Clive Turton, manag-
at APR Energy, said: “The
commissioning of our
thermal power generation
plant, one of the largest
in the country, is an im-
establishing adequate re-
liable power generation
capacity in Myanmar.
“We look forward to
playing a continued role
to help Myanmar supply
-
ably to its people and in-
dustries.”
Turton said Myanmar
is a fast growing econo-
my and the country, like
many others in the region,
needs reliable power in
potential.
The project represents
another substantial in-
vestment by a US com-
pany in the infrastructure
said it will “contribute to
the economic and social
progress of Myanmar by
employing local people
and supporting commu-
nity development pro-
grams.”
Fuelled by natural gas
from the Shwe Gas Pro-
ject, the plant features 68
of the newest generation
CAT low-emission mo-
bile gas power modules
Wai Linn Kyaw
“one of the cleanest power
generation solutions” in
Myanmar, APR said.
Penny Pritzker, US Sec-
retary of Commerce, who
was on a visit to Myanmar
recently, said APR pro-
viding power solutions
in Myanmar is “critical,”
particularly as 75 percent
of the country’s popula-
tion lacks access to elec-
tricity.
“The engagement of US
businesses in Myanmar
will help promote inclu-
all of the country’s peo-
ple,” she said.
Turton, in an earlier in-
terview with Myanmar
Business Today, said the
ministry to provide solu-
tions for “further power
needs” and have “more po-
tential projects.”
“We are very keen to
develop our businesses in
the market and we will be
looking forward to mak-
ing a lot of investments in
this country in this par-
ticular sector.”
WaiLinnKyaw
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wnfaqmuf&efpDpOfoGm;rnf[k
od&onf/

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 10
Myanmar Summary
USCommerceSecretaryTouts
“CloserTies”withMyanmar
Penny Pritzker discusses economic engagement, announces first-ever Commercial Service Office in Yangon
Wai Linn Kyaw
T
he US Department of
Commerce Secretary
Penny Pritzker trumpet-
ed the United States’ commit-
ment to closer economic and
commercial ties with Myanmar
during her recent visit to the
Southeast Asian country.
To promote new investment,
Pritzker announced the open-
-
in Yangon, which will support
American businesses to navi-
gate and invest in Myanmar.
Since the opening up of Myan-
mar three years ago, the US has
boosted its engagement with
the country it once denounced
and courted it in a bid to curb
China’s overwhelming domi-
nance in the country and the
Southeast Asian region – Ba-
rack Obama paid a visit in 2012,
trade restrictions eased and
sanctions were lifted, Derek
US ambassador to the country
since 1990 and last year Presi-
dent U Thein Sein became the
the White House in almost 50
years.
“As President Obama said
when he was here in 2012 – the
this country – the United States
values the friendship between
our two nations and we want
to contribute to your success,”
said Pritzker.
“We want to support your
progress and reform.”
She said since Obama’s visit
Myanmar has made reforms
that have helped improve busi-
ness climate in the country.
“Two years ago, the United
States began allowing invest-
years. Shortly thereafter, Presi-
dent Thein Sein signed a law to
help attract more foreign eco-
nomic engagement. As a result,
nearly $250 million in Ameri-
can investment is now here,”
she said.
As of April 30, US companies
have plans to invest $243.6 mil-
lion in Myanmar’s economy,
and US exports have increased
from $9.8 million in 2010 to
$145.7 million in 2013, the US
Embassy in Yangon said in a
statement.
Pritzker said she was in Myan-
mar to talk about how “we can
build on the progress of the last
two years to further strengthen
our trade relationship and en-
courage even stronger ties.”
She said given “the promise
of existing and future reform,”
her department is opening a
in Yangon.
She said the Foreign Commer-
-
cated in US embassies around
the world, help American com-
panies enter overseas markets,
-
ers around the world.
Pritzker said as Myanmar’s
economy continues to grow and
its market continues to open,
more US companies are getting
interested to do business in this
country.
“The US government is en-
couraging American companies
to evaluate the opportunity. Re-
sponsible investment can help
facilitate broad-based economic
growth and economic prosper-
ity for your people,” she said.
Pritzker joined APR Energy to
highlight the signing of a large-
scale turnkey power, one of the
-
ments signed by a US company
in recent years, and joined Ball
Corporation to announce plans
to build an aluminium can fac-
tory outside Yangon.
She said the US has a “funda-
mental interest” in the continu-
ation of reform.
“We have communicated to
your government the need to
build on the progress that has
been made by implementing
measures that increase inclu-
sive economic development,
Reuters
promote government transpar-
ency and accountability, and
safeguard labour rights and hu-
man rights.”
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June 19-25, 2014
mmbiztoday.com
11
Myanmar Summary
Contd. P 12...
Contd. P 12...
LOCAL BIZ
Myanmar’s Institutional Infrastructure
Constraints and How to Fill the Gaps
David DuByne and
Hishamuddin Koh
I
nfrastructure both physical
and institutional are the key
drivers for rapid economic
growth and development in
any country. With the number
of physical infrastructure pro-
jects taking place in Myanmar
involving roads, rail lines, mari-
time ports, airports and inland
waterways; rarely mentioned in
the same breath is institutional
infrastructure which encom-
passes several other segments
of society including human
capital, legal instruments, ad-
ministrative oversight, farmers
last-mile logistics along with
health and education facilities.
Implementation of country-
wide projects to speed Myan-
mar’s overall development to
date have been slow in part due
economic and legal reforms
plus the bottleneck of capital
investors through the coun-
try’s banking system. These are
hurdles institutional investors
experience, but little focus is
paid on micro-level develop-
ment throughout the rural sec-
tor which comprises 70 percent
of the country’s population of
the movement of goods and
services into and out of villages
where local economies stagnate
because of lack of options for
transport, warehousing, pro-
-
etary transactions and crop
yield boosting inputs.
How can a parallel set of insti-
tutional infrastructure designed
in rural locations and what im-
provements in livelihood will it
provide upon completion, not
only for local regions and farm-
ing communities but the coun-
try as a whole?
Major impediments to doing
business in Myanmar cited by
a survey of foreign managers
electric power, poor internet
-
rental rates. Considering that
70 percent of the country has
zero access to grid delivered
electricity in 2014, what other
upgrades or issues might be ad-
dressed to boost output of com-
modities from remote locations
onward to main trunk lines in
order to economically stimulate
pockets of rural populations or-
ganically?
A common example of insti-
tutional infrastructure systems
are the actual trucks that run
collection routes through the
countryside for farmer’s prod-
ucts, not the actual roads. The
only sales point available for
farmers is the single company
vehicle that comes to the vil-
lage. The buyers at this juncture
have monopoly pricing in a take
it or leave it scenario to their
advantage.
If farmers say no to these of-
fers, crops rot and there is zero
value, if they say yes, the price is
substantially below fair market
price, literally pennies on the
dollar. Farmers remain exploit-
ed by those that can bring in
trucks and access the products
at the farm gates.
The solution calls for a com-
bination of several mechanisms
to counter exploitation by trad-
ers and middlemen.
These mechanisms are: i)
Presence of strong and dynamic
farmers organisation capable of
serving the multi-dimensional
needs of rural farmers in pric-
ing and value-adding; ii) Pres-
ence of adequate warehousing,
drying and processing facilities;
iii) Presence of a solid network
of rural roads with adequate
connectivity to major roads,
highways, waterways to move
goods and services from and
to the farm-gates to expedite
transactions; iv) Transporta-
tion facilities for moving farm-
er’s products and inputs at least
cost. v) Functional social servic-
es e.g. clinics, schools, farmers’
educational training centres.
All these factors are institu-
tional infrastructure that com-
pliment physical infrastructure
thereby creating a complete set
of usable infrastructure which
will enable development of ru-
ral Myanmar and the majority
of its population.
One aspect of institutional in-
frastructure that merits atten-
-
ers’ organization which must
meet the following 3A’s criteria
in serving the multi-dimension-
al needs of the farmers: Acces-
sibility – to and from farmers;
Availability – resources both
-
ity – reasonable price of inputs.
In other words any infrastruc-
ture must take into account the
-
tive and realistic.
Farmers’ organisations are
very important institutional in-
struments that will drive rural
development and create pro-
ductivity along with income
contribution in both rural and
national development. First and
foremost, multi-purpose farm-
ers’ organisations that can pro-
vide bargaining power for the
farmers in sales transactions
must top the list. This will pre-
vent small farmers from being
exploited by opportunist mid-
dlemen/traders. In well-organ-
ised and institutionalised farm-
ers associations the farmers are
constantly kept informed on
prices of their produce/prod-
ucts which allows them to react
to market forces and obtain the
best price based on daily spot
rates.
For example in Taiwan, which
multipurpose farmers organisa-
tions, even in the remotest loca-
tions you see farmers with AM/
FM radios slung on tree branch-
es listening to updated price
quotes for farm produce sold
onward to Taipei and abroad.
Standardised pricing to farmers
The Taiwan model of multi-
purpose integrated farmer or-
ganizations has been adopted
in Malaysia and backed by the
Farmers Organisation Act 1973
passed by the Malaysian Par-
liament. This model works and
could be rapidly administered
in Myanmar if the Union Gov-
ernment chooses to do so.
Following quickly behind that
in terms of implementation
would be ways to create higher
selling prices through value-
add processing in the villages.
Something as simple as port-
able expeller presses to crush
seeds and collect oil on site, or
small rice milling machines to
polish rice and sell on to whole-
salers at a higher price point.
reduced logistics costs by trans-
porting only extracted oil, leav-
ing the bulk weight of pressed
oil cake which stays in the vil-
lage to be used as animal feed.
Currently most farming com-
munities are unable to obtain
necessary machineries to pro-
cess and send out higher value
goods in the supply chain. Con-
sider machineries for process-
ing higher value products itself
as agriculture infrastructure.
The trump card would be
modern warehousing facilities
along with training of locals in
proper storage and handling
techniques for their localised
crops. If village Farmers Or-
ganisations have modern ware-
houses this will quickly would
alleviate the “rush sale” “take
it or leave it” sales model for
their products. Goods could
be stored for longer periods of
time until the next buyer comes
along and this in turn will send
the monopolistic collection
trucks back empty unless a fair
price is paid.
“
Implementation of countrywide
projects to speed Myanmar’s
overall development to date
have been slow in part due to
limited financing options, economic
and legal reforms plus the bottleneck
of capital inflows.”
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pD;yGm;a&;? Oya'qdkif&m jyKjyifajymif;vJrI

June 19-25, 2014
mmbiztoday.com
LOCAL BIZ 12
Pricing mechanisms, market
intelligence, united selling/bar-
gaining policies with Farmers’
Organisations in place in ad-
dition to multiple transporters
involved in supply chain deliv-
eries, is what we mean by insti-
tutional infrastructure/frame-
work.
transporters can bring in ferti-
lisers to boost agricultural out-
put. In reality, if you can’t move
people or crops you sure can’t
move income and the economy
stagnates.
In both Taiwan and Malaysia
when Farmers’ Organisations
set collective uniform pricing
communities, the countryside
economy grew organically by it-
self without national economic
growth policies. Simply put,
more money in farmer’s pock-
ets meant more people spent
more money locally, with posi-
businesses.
Repeating patterns
This pattern will repeat itself
in Myanmar when these simple
institutional mechanisms are
put in place. It may take time
for the smallest of roads to be
built or resurfaced by the Un-
ion Government but the pattern
will repeat as has already been
observed across the Irrawaddy
Delta in Township Develop-
ment.
As a success story from the
Delta where villages receiving
more money for their rice after
starting their local rice entre-
preneurs association created
their own road building fund
and re-paved 10km leading
from the main Pathein Highway
road, themselves. This in turn
created a faster economic deliv-
ery device to enter their villages
with the result being a pocket of
economic prosperity based on
self-funded road access, which
came from collective uniform
pricing to buyers and rice mill-
ers.
A short cut to development
is using business models that
have worked over and over
again during the past years of
poverty alleviation case studies.
There is no need to re-invent
the wheel.
Another example of institu-
tional infrastructure would be
training centres focused on ef-
fective education programs
for fertilizer and pesticide us-
age. Regulatory approval for
imported agriculture products
into Myanmar should be prop-
erly labelled for usage in the lo-
cal language. Companies that
follow these procedures should
be granted fast track approval
for products such as hybrid
seed strains, fertilisers and
training on seed selection and
seed storage for higher yield the
following year should be given
priority approval.
Even with a severe shortage
of skilled labour, Myanmar’s
farmers know how to work their
indigenous land and with a few
pointers they could turn the ta-
bles from poverty to prosperity.
When building Special Eco-
nomic Zones (SEZ’s) serious
consideration should be given
the containers will come from
and how and how the localised
infrastructure be aligned to ex-
pedite this movement within
Myanmar.
We have presented you with
some thoughts on the problems
and the solutions facing Myan-
mar’s rural development. With
the current governments dy-
namic policies directed towards
alleviation of rural poverty,
enhancing rural productivity
and boosting agrarian families’
income, the time is opportune
for us to move in a direction to
meet these challenges with re-
alistic and practical approaches
suggested in this paper.
Hishamuddin Koh has 25
years of experience in agricul-
ture and rural development
and is Executive Chairman of
Hisham Koh and Associates
and the Myanmar Planta-
tion Management & Advisory
Co (MPMAC) along with My-
anmar Food Technology. He
can be reached at kohisham@
gmail.com.
David DuByne is Myanmar
Operations Director at One
-
ing on Myanmar’s agricultural
export sector and acts as Chief
Editor for Oilseedcrops.org. He
can be reached at ddubyne@
oneglobalsourcing.com.
“
Farmers’ organisations are
very important institutional
instruments that will drive
rural development and cre-
ate productivity along with income
contribution in both rural and na-
tional development.”
SherpaHossainy
and lower exporting costs
would trigger changes at
farm level, helping to raise
agricultural productivity
and change farm practic-
es, including the choice
of rice varieties, required
to match the evolving de-
mands of importers.
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June 19-25, 2014
mmbiztoday.com
REGIONAL BIZ 13
Myanmar Summary
Contd. P 15...
Contd. P 15...
Trinna Leong
M
alaysia has spent
a total of 27.6
million ringgit
($8.6 million) so far on
the search for the missing
Malaysia Airlines Flight
MH370, authorities said,
-
-
lion ringgit was only the
sum spent by Malaysian
agencies, we do not know
how much other countries
spent,” Department of Civil
Aviation chief Azharuddin
Abdul Rahman told a news
conference, saying he was
unsure of the cost break-
down.
The search for MH370,
which disappeared carry-
ing 239 passengers and
crew on March 8, is al-
ready set to be the most
costly in aviation history
and spending will rise
expands to a wider swathe
Australia. Experts have
suggested the cost of
searching for the missing
jetliner could reach hun-
dreds of millions of dol-
lars.
The search has been
dealt setbacks, most re-
cently when Australian
that wreckage from the
aircraft was not on the
seabed in the area they
acoustic pings thought to
be from the plane’s black
box recorders.
Asked where the new
search area would be,
Azharuddin said he did
not know but that it “will
not be very far away from
where the search is now”.
“The Australian and Ma-
laysian investigators have
done their analysis and are
in the process of exchang-
ing notes with Inmarsat,”
he said, referring to the
analysis of signals from the
plane is the basis for the
current search area.
A Wall Street Journal re-
port on June 8 cited sourc-
es as saying investigators
were revising some of their
basic assumptions about
the plane’s last position.
The search area has al-
ready been extended to
a 60,000 sq km (23,000
sq mile) zone that is be-
ing surveyed by a Chi-
nese vessel. It will then be
searched by a commercial
operator in a mission ex-
pected to start in August
and take up to a year, at a
cost of A$60 million ($55
million) or more.
search operations to bids
-
sia’s deputy defence min-
ister, Abdul Rahim Bakri,
said those costs would be
shared equally by Malay-
sia and Australia. Reuters
Myanmar Summary
Thai Billionaire’s True Corp
Khettiya Jittapong
S
tate-owned China Mobile
Ltd has agreed to buy an
18 percent stake in Thai
telecoms group True Corp for
major corporate deal since the
military coup last month.
True Corp, backed by billion-
aire Dhanin Chearavanont’s
Charoen Pokphand Group, said
it was raising $2 billion through
a rights share issue to boost its
the fund raising, True Corp will
sell 4.4 billion shares to China
Mobile, the world’s biggest car-
rier by subscribers, at 6.45 baht
each, a 13.4 percent discount to
True’s last traded price.
The deal is part of the Thai
group’s long-term plan to se-
cure a foreign partner and un-
derscores Dhanin’s strong po-
litical connections in mainland
China, sources familiar with the
matter said.
In 2013 Dhanin’s CP Group
emerged as a surprise buyer for
global bank HSBC Plc’s $9.4
billion stake in Ping An Insur-
ance Group Co of China Ltd.
-
national to invest in China’s
agri-business in 1979 and it was
tasked with helping to modern-
ise China’s farm sector. It also
operates Lotus super markets
in Shanghai, according to the
company’s website.
“Through the proposed stra-
tegic investment in True Corp,
China Mobile is expected to
access new customers, interna-
tional business opportunities
and new earnings growth driv-
-
cance to the telecom business of
the company,” China Mobile’s
chief executive Li Yue said in a
statement.
The proposed deal comes
less than three weeks since
the military seized power in
Thailand. The two companies
made no mention of the coup
or preceding political crisis,
which weighed on corporate
dealmaking. New mergers and
acquisitions in the country have
slumped by 72 percent by value
from a year ago to $648 mil-
lion by end May, according to
Thomson Reuters data. Reuters
Bloomberg
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t&od&onf/

June 19-25, 2014
mmbiztoday.com
REGIONAL BIZ 14
Myanmar Summary
ChinaSaysVietnam,Philippines’
MinglingonDisputedIsleA‘Farce’
Ben Blanchard
C
hina denounced Vietnam
and the Philippines for
getting together on a dis-
puted island in the South China
Sea to play soccer and volley-
ball, calling it “a clumsy farce”
and demanded both countries
stop causing trouble.
The comments by a foreign
ministry spokeswoman were
-
ering on the Vietnamese-held is-
land of Southwest Cay on June 8.
-
scribed the meeting of soldiers
from the two sides as a chance
to show there can be harmony
despite a web of overlapping
claims to the potentially ener-
gy-rich waters.
“Don’t you think this small
move together by Vietnam and
the Philippines is at most a
clumsy farce?” China’s Foreign
Ministry spokeswoman Hua
“China has irrefutable sover-
eignty over the Spratly Islands
and the seas nearby,” she said.
“We demand that Vietnam and
the Philippines stop any be-
haviour that picks quarrels and
causes trouble ... and not do an-
ything to complicate or magnify
the dispute.”
The gathering underscores the
growing cooperation between
Vietnam and the Philippines,
which have both felt China’s
wrath over the South China Sea,
even though both claim South-
west Cay and other islands.
The Philippines, Malaysia and
Brunei all claim some of the
Spratlys, while China, Taiwan
and Vietnam claim the whole
chain.
China also claims 90 percent
of the 3.5 million sq km (1.35
million sq mile) South China
Sea, its reach depicted on its
maps with a so-called nine-
dash line deep into the mari-
time heart of Southeast Asia.
Diplomats and experts have
described the partnership be-
tween Hanoi and Manila as
part of a web of evolving rela-
tionships across Asia that are
being driven by fear of China
as well as doubts among some,
especially in Japan, over the US
commitment to the region.
Separately, China accused
Vietnam of ramming its ships
more than 1,000 times in a
part of the sea and said while it
wanted good relations with its
neighbour, it would not aban-
don principles to achieve that.
sank on May 26 during a con-
frontation not far from where
China has towed an oil rig,
accompanied by a cordon of
Chinese vessels, 240 km (150
Last week, Vietnam television
broadcast video showed a large
Chinese vessel steaming after
then colliding with one which
capsized.
The dispute is the most seri-
ous deterioration of relations
between the Communist states
and traditional rivals since a
brief war in 1979 following Viet-
nam’s invasion of Cambodia.
Reuters
Philippine Senate Passes Bill
Liberalising Banking Sector
Siegfrid Alegado
T
he Philippine senate has
approved a bill that will
open the country’s re-
stricted banking sector to more
The passage paves the way for
a change in the law ahead of a
goal for economic integration
of the Association of Southeast
Asian Nations bloc of countries
in 2015.
It amends a 20-year old foreign
banking act, permitting foreign
ownership of domestic banks to
rise to 100 percent from 60 per-
cent, a statement posted on the
senate’s website said.
Current limits to the number
of foreign banks operating in
the country will be eliminated, it
said. The existing Republic Act
7721, which liberalised the entry
of foreign lenders in 1994, al-
lowed the entry of only up to 10
banks fully-owned by foreigners
to operate in the country.
The bill provides for the en-
try of “established, reputable
banks” in the country and also
grants Philippine incorporated
subsidiaries of foreign banks
same banking privileges as
homegrown lenders.
A counterpart bill was ap-
proved in the lower chamber of
congress last month. The two
bills will need to be reconciled in
a bicameral conference commit-
tee before it is sent to President
Benigno Aquino for his approval.
“Greater foreign participa-
-
cial sectors is expected to aug-
which the Philippine economy
may have access,” Senator Ser-
gio Osmeña III, who heads the
senate banks committee, said in
the statement.
He said the bill’s passage
would allow the country to
“take advantage of economic in-
tegration of the ASEAN region.”
Reuters
India Likely to Raise Foreign
Investment Limit in Gov’t Debt Soon
Himank Sharma, Rajesh
Kumar Singh & Suvashree
Dey Choudhury
I
ndia will likely raise the
foreign investment limit in
government debt soon, as
almost all the allocation has al-
ready been taken up as overseas
buyers pile into the country’s
-
the government’s thinking.
The current cap is 995.46 bil-
lion rupees ($16.86 billion).
As of June 6, foreign inves-
tors owned 886 billion rupees
worth of government debt, or
89 percent of the full available
allocation, following a surge in
-
about Narendra Modi’s recent
election as prime minister.
Once the limit reaches 90 per-
cent, foreign investors are only
allowed to buy debt under a
more cumbersome auction bid-
ding system.
One of the sources said the gov-
ernment could raise the amount
foreign investors are allowed to
buy by another $5 billion.
-
cide on the matter after consul-
tations with the Reserve Bank of
India and capital markets regu-
lator Securities And Exchange
Board of India, the sources said.
“I expect the government to
take a call on this soon,” said
the process. The sources de-
were not authorised to talk to
the media about the plans.
Foreign investors bought a net
$425.43 million worth of debt
on June 6, their biggest daily
purchase since May 23 and
bringing their total this year to
$8.6 billion.
Under current rules, India al-
lows all types of foreign inves-
tors to buy up to $20 billion of
government debt, although the
dollar amount depends on the
exchange rate.
The total foreign investment
limit for foreign investors is
$30 billion, with the remaining
$10 billion for investors such as
foreign central banks, sovereign
wealth funds, insurance funds
and pension funds.
Investors have been expecting
the government would raise the
allocation for foreign investors
once the 90 percent mark was
reached.
The country last raised the
amount of government debt
that foreign investors can buy
by $5 billion in June last year.
Reuters
Myanmar Summary
Myanmar Summary
JulianAbramWainwright/Bloomberg
Reuters
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onf/

June 19-25, 2014
mmbiztoday.com
REGIONAL BIZ 15
Myanmar Summary
Resume Commercial Whale Hunt
Wai Linn Kyaw
J
apan’s prime minister told
parliament he would boost
-
ing commercial whaling, de-
spite a top UN court’s order that
Tokyo must stop killing whales
in the Antarctic.
Shinzo Abe’s comments put
with anti-whaling groups, who
had hoped the ruling by the
International Court of Justice
(ICJ) would herald the begin-
ning of the end for the mammal
hunt.
“I want to aim for the resump-
tion of commercial whaling by
conducting whaling research in
indispensable for the manage-
ment of whale resources,” Abe
told a parliamentary commis-
sion, AFP reports.
“To that end, I will step up
-
standing from the international
community,” he was quoted as
saying.
Abe said that in contrast to
the foreign perception that
whaling communities merci-
lessly exploit the giant mam-
mals, whaling towns appreciate
the meat and show respect to
the creatures with religious ser-
vices at the end of every hunting
season.
“It it regrettable that this part
of Japanese culture is not un-
derstood,” Abe said.
Japan has hunted whales un-
der a loophole in the 1986 glob-
al moratorium, which allows le-
thal research on the mammals,
but it has made no secret of the
fact that their meat ends up in
-
kets.
The annual hunt in the South-
ern Ocean has proved particular-
ly controversial, with sometimes
violent confrontations between
whalers and protestors.
Australia, backed by New
Zealand, hauled Japan before
the ICJ in 2010 in a bid to stop
the yearly campaign. The court
slammed the hunt, which it said
was a commercial venture mas-
querading as research.
Antarctic season, and said it
would redesign the mission in a
separate hunt in the northwest
in coastal waters which are not
covered by the moratorium.
Since the ICJ ruling, Japanese
e-commerce marketplace Ra-
kuten has told online retailers
they cannot sell whale and dol-
phin meat through its site.
But dealing in whale meat
“does not violate international
or domestic laws in any way”,
said Agriculture, Forestry and
Fisheries Minister Yoshimasa
Hayashi, according to AFP.
Hayashi told the same par-
liamentary committee that Ra-
kuten had made a commercial
decision as a private company,
but that the increasing number
of companies that are refusing
to sell whale meat is “regretta-
ble”.
Inviting people to dine on
whale in his ministry, he said a
“whale week” campaign, which
began on June 9, was part of
know that whaling and eating
whale meat are part of their cul-
ture.
Whales were once a key source
of fuel and food, but Japan’s
consumption of the meat has
considerably diminished in re-
cent decades and it is no longer
a regular part of most people’s
diet.
However, powerful lobbying
forces have ensured the contin-
ued subsidisation of the hunt
with taxpayer money.
Tokyo has always maintained
it was trying to prove whale
populations were big enough to
sustain commercial hunts.
AFP
“The deal is unusual given
the country is having a political
situation like this,” said Min-
tra Ratayapas, an analyst at KK
Trade Securities,
“Some foreign investors voice
concerns about the situation in
Thailand. But for True, it seems
the company thanks to strong
connections with Dhanin.”
True has been grappling with
rising debt as it invests in the
expansion of its network to
compete with market leader
Advanced Info Service and sec-
ond-ranked Total Access Com-
munication.
True is the only Thai mobile
company without a foreign
partner and the new invest-
ment is expected to help with
its planned regional expansion,
a source with knowledge of the
deal said.
Like True, China Mobile has
been struggling in its home
market, reporting in April its
years as it invests heavily to
catch up with rivals in providing
4G mobile broadband services.
China Mobile, which had
$69.4 billion in cash and short-
term investments at the end of
2013, also faces challengers in
the shape of newly-licensed mo-
bile virtual network operators,
who lease capacity from the net-
work operators like China Mo-
bile and sell their own packages
to subscribers.
If successful, the Thai deal
transaction outside of China,
Hong Kong and Taiwan in sev-
en years, according to Thomson
Reuters data.
Thailand’s True Corp is get-
ting the better end of its deal
with China Mobile, Reuters
Brekingviews columnists Una
Galani and Ethan Bilby wrote.
“True reduces its crippling debt
and gains a cash-rich partner to
support its aggressive growth.
For China Mobile, the minority
stake looks a pricey way to push
overseas,” they said. Reuters
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od&onf/
Pact to Halt Forced Labour
Snubbed by Thailand
Stephanie Nebehay
P
erpetrators of forced la-
-
lion people globally, will
be punished in most countries
under a UN treaty clinched last
week, despite being snubbed
by Thailand and nearly all Gulf
countries.
More than half of the estimated
21 million caught up in forced or
compulsory labour are women
and girls and the practice reaps
an estimated $150 billion in il-
domestic services and the sex in-
dustry, among others, the Inter-
national Labour Organisation, a
United Nations agency, said.
The new treaty, a protocol to
the ILO’s Forced Labour Con-
vention of 1930, aims to halt the
practice by requiring countries
ratifying it to identify and release
victims, ensure them access to
compensation and punish perpe-
trators, it said.
“It is a strong indication of the
global community’s commitment
-
ination of forced labour,” David
Garner, president of the annual
International Labour Confer-
ence’s committee on forced la-
Thailand’s new military gov-
ernment was the only govern-
ment to vote against the treaty at
ILO’s annual ministerial confer-
But Bahrain, Brunei, Iran, Ku-
wait, Omar, Qatar, Saudi Arabia
and Yemen were among those
abstaining, they said. The Mid-
dle East is home to an estimated
600,000 people deemed to be
forced labourers, Beate Andrees,
head of the ILO special action
programme to combat forced la-
bour, told Reuters.
Garner said forced labour,
which includes slavery but also
deceptive recruitment practices,
“It’s very large-scale, much of
it very well organised and so-
criminal elements are involved in
it as well.” Reuters
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tjypfay;&efwdkYyg0ifaMumif; od&onf/
Myanmar Summary

June 19-25, 2014
mmbiztoday.com
INTERNATIONAL BIZ 16
N
othing about the
narrow cream-
colored lobby at
160 Aldersgate Street in
-
cial district gives a hint of
its role at the centre of the
That’s because the
building is occupied by
at least, it is also home to
Rowan Companies, one
of the largest operators of
drilling rigs in the world.
In 2012, Rowan, which
has a market value of $4
billion, shifted its legal
and tax base from the
United States to Britain.
But not much else.
“We changed our corpo-
rate structure and we’re
legally domiciled in the
UK but our headquarters
and our management
team remain in the US,”
Suzanne Spera, Rowan’s
Investor Relations Direc-
tor said in a telephone in-
terview from Houston.
“It has been positive.
We take advantage of try-
ing to be competitive with
say the shift helped cut
tax rate to 3.3 percent in
2013 from 34.6 percent in
2008. Spera said Rowan
complies with all UK tax
rules.
A government spokes-
woman for the Treasury
said recent changes to the
tax rules were aimed at
supporting “genuine busi-
ness investment”.
“The UK is not a tax hav-
en. In 2015, our main rate
of corporation tax will be
20 percent, well above the
levels seen in tax havens,”
she said in an emailed
statement.
In the last year around
a dozen major U.S. com-
panies including media
group Liberty Global, ba-
nana group Chiquita and
-
veiled plans to shift their
tax bases overseas outside
the United States.
Historically, when U.S.
companies wanted to cut
their tax bill they usually
reincorporated in Carib-
bean Islands or Switzer-
land.
However, following re-
cent legal changes where-
by Britain largely stopped
seeking to tax corporate
Tom Bergint
countries, including tax
havens, companies are
increasingly choosing the
UK as a corporate base.
President Barack Oba-
ma and Congressional
Democrats have proposed
of so-called “inversions”,
although Congressional
gridlock on tax reform
means new barriers to
overseas moves are un-
likely anytime soon.
of companies which have
moved their tax base to
Britain but government
lawyers said at least seven
had re-based to London –
Aon Plc, CNH Global NV,
Delphi Automotive Plc,
Ensco Plc, Liberty Global
Plc, Noble Corp Plc.
Omnicom had planned to
transfer their tax domicile
to Britain, while retain-
ing US headquarters, but
the takeover deals which
were meant to facilitate
this recently failed.
other company state-
ments from the seven
that relocated showed
that while redomiciling
to London can cut a com-
pany’s tax bill, it usually
involves relocating just a
handful of senior execu-
tives – and sometimes not
even that many.
“The UK has made a
very clear policy decision
to engage in tax competi-
tion for multinationals.
It’s fair to say it’s rivalling
Ireland,” said Stephen
Shay Professor of Law at
Harvard University who
-
sional investigations into
corporate tax reform.
“When I go to tax con-
ferences now, I hear peo-
ple talk about the UK as a
tax haven.”
Bernhard Gilbey, tax
Squires Sanders said tax
competition was common
across countries and that
companies were within
the law and indeed faced
competitive pressure to
structure themselves in
response to such govern-
mental incentives.
The companies said that
while tax was a considera-
tion in their moves, com-
mercial reasons such as
the desire to be closer to
customers was also a fac-
tor.
George Osborne has wel-
comed the trend of US
companies such as insur-
ance group Aon redomi-
ciling to Britain, saying it
-
ment has made the coun-
try a more attractive place
to do business.
In November, Ernst &
Young, one of a number
of tax advisors which ad-
vocated the tax changes
that made Britain a mag-
net for US corporations,
published a survey say-
ing that 60 multinational
companies were eyeing a
move to the UK.
EY said this could create
over 5,000 jobs and bring
in over 1 billion pounds a
year in additional corpo-
ration tax, the UK’s cor-
porate income tax.
Accounts for the com-
to the UK exchequer from
the corporate relocations.
Aon and Liberty Global
– the only two companies
for group UK tax pay-
ments – reported UK cor-
poration tax credits for
2013.
Ensco had a UK tax
charge of $200,000 last
year. That included tax on
-
ating subsidiaries which
have revenues of around
$300 million a year.
Delphi Automotive’s
most senior UK corpo-
rate entity is a partner-
ship, which does not have
to pay tax. The company
declined to say if other
British units paid any cor-
poration tax but said in its
annual report that it had
UK tax assets which could
CNH does not pub-
lish UK tax payments.
Its main UK operating
unit reported a tax credit
in 2012, the last period
for which accounts were
available.
What attracts compa-
nies like Rowan to Britain
is not a headline tax rate
that is half the US level
but the way the UK has
companies’ overseas sub-
sidiaries.
The government intro-
duced the measures in
the 2012 budget to “better
-
nesses operate in a global
economy” and encourage
investment in Britain.
This means companies
the countries where their
employees and custom-
ers are based, into tax ha-
vens, and then bring the
money back to Britain and
pay it out to shareholders
without paying any tax –
something that would not
be possible under US or
German tax law.
the UK can literally be a
nil tax jurisdiction, which
obviously compares very
well with traditional tax
havens,” Kevin Phillips,
International Tax Part-
ner, Baker Tilly said.
The UK is also unusual
in not charging withhold-
ing tax on dividend pay-
ments and, for now at
-
spectability.
“Over the last couple
of years, companies that
have used jurisdictions
like Ireland, the Nether-
lands or Luxemburg have
found themselves at the
wrong end of some poor
publicity for their attitude
to tax,” said Gilbey.
“It looks less likely that
that would be the case if
they put themselves in
the UK because we’re not
generally considered a tax
haven.” Reuters
Myanmar Summary
BritainBecomesHavenforUsCompaniesKeentoCutTaxBillsJasonAlden/Bloomberg
“
Over the last couple of years,
companies that have used jurisdic-
tions like Ireland, the Netherlands
or Luxemburg have found them-
selves at the wrong end of some poor
publicity for their attitude to tax. It looks
less likely that that would be the case if
they put themselves in the UK because
we’re not generally considered a tax
haven.”
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