Acumen: Myanmar B2B Management Magazine

66 ACUMEN www. mya nma r b2bma ga z i ne.
com
July 2013
advertising.pmd 7/9/2013, 9:18 AM 66
ACUMEN 67
66 ACUMEN www. mya nma r b2bma ga z i ne. com
July 2013
ACUMEN 67
July 2013
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July 2013
July 2013
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July 2013
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Editors Note
While foreign investment continues to trickle into Myanmar, the narrative of this
countrys unbridled progress both politically and economically has come into
further question over the past month. To be fair, some truly significant events have
occurred recently that point to a level of progress that even the most hard-nosed
naysayers would have deemed impossible even one year ago. The World Economic
Forum, held in Naypyidaw in early June, served as a coming out party of sorts for
Thein Seins reformist agenda, and provided a frank forum to discuss Myanmars
political and economic future in the company of the worlds business elite. The
issuing of two telecom operator licences on June 27 likewise showed that Myanmars
government is capable of conducting high-level business in a transparent manner,
and the gains Myanmars people should see from improved connectivity will invariably
be profound.
But problems remain. Sectarian tensions show no sign of abating, and there are
precious few signals on display that the government has any intention of doing
anything substantive to promote deep and lasting national reconciliation. A new
press law ratified by the lower house of Parliament threatens to undo many aspects
of the newfound press freedom enjoyed by Myanmars burgeoning media. And foreign
investment to date has been less than the government might have hoped it would be,
owing to investors fears that this country still has a long way to go before investments
can be considered safe in any way.
This issue of ACUMEN looks at these issues in-depth from many different angles.
Our cover story takes a close-up look at the social impact of the two Chinese-funded
pipelines originating on the Rakhine coast, which despite the obvious financial
benefits to the government that it will bring about will do little to benefit the people
directly affected by their development. We look at the pernicious problem of land
speculation one of the biggest factors limiting foreign investment from coming to
Myanmar and discuss the state of Myanmars anaemic capital markets with financial
expert Aung Thura, whose work revolves around demystifying Myanmars confusing
and contradictory financial environment.
As ever in Myanmar, it is difficult to say with any certainty what changes the
next month will bring, for better or for worse, but ACUMEN remains committed to
documenting and analysing these developments as Myanmar continues to undergo
profound and rapid change. A
CEO / Chief Editor
Dr. Htet Zan Linn
Director
Dr. Hein Thu Aung, Tin Tun Kyaw
Executive Editor
Phyo Wai
Editor English Edition
Alex Bookbinder
Editors
Hein Zaw, Khin Win, Su Le` Nandar
Contributors
Myitmakha, Naing Thit, Isaac Malone
Designers
Aung Aung (AN Computer), Thaw Tar Oo
Computer Operator
Zin Wai Wai Shein
Marketing Department
January Khine Mon, Naw Keziah, Yadanar,
Nan Mo, May Hsu Mo Mo
Photographers
Aung Kyaw Moe (New Image), Myitmakha,
Alex Bookbinder, Hein Zaw
Publisher and Copyright
Dr. Htet Zan Linn
Printer
Editorial Board
ACUMEN
myanmarb2b@gmail.com
ceo@myanmarb2bmagazine.com, management@myanmarb2bmagazine.com,
editor@myanmarb2bmagazine.com, marketing@myanmarb2bmagazine.com,
Advisors Advisors Advisors Advisors Advisors
Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet (Senior Advisor, UN Resident Coordinator's Office)
Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein (Ph.D. (Law), LL.M., LL.B., B.A.(Law), ANZIIF (Australia), Pg. Dip in Applied Psychology)
Prof. Maw Than Prof. Maw Than Prof. Maw Than Prof. Maw Than Prof. Maw Than (Rector (Ret), Yangon Institute of Economics Yangon)
Soe Tint Aung Soe Tint Aung Soe Tint Aung Soe Tint Aung Soe Tint Aung (Special Consultant for Advocacy, PSI Myanmar)
Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin (Consultant, Myanmar Climate Change Watch,Tun Lwin Foundation)
Than Lwin Than Lwin Than Lwin Than Lwin Than Lwin (Deputy Governer (Ret), Central Bank of Myanmar)
Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw (Principal, Device Business Management Academy)
Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik (Media Advocacy Advisor, PSI Myanmar)
Office
No. 24/26, 4B-C, Race Course Condo, South Race Course Street, TAMWE TOWNSHIP, YANGON
Tel : (+959) 420033355
~
66
~
77 (Hot Line), (+959) 73045140, 49317457, 73143313, (+951) 8603886, 8603887
Masthead.pmd 7/8/2013, 8:18 PM 1
ACUMEN 11
A particular group in
the country is misus-
ing our noble beliefs
to propagate ex-
tremist acts, which is
fuelling tensions
between different
faiths. This group has
taken advantage of
the changing politi-
cal and economic
situation in our coun-
try, and this has re-
sulted in riots at
home and greater
insecurity for
Myanmar citizens
working abroad.
President U Thein Sein
When problems arise (i.e religious
conflicts), people love to point fin-
gers, claiming that specific groups
are behind specific incidents.
What's certain is this: the govern-
ment and army have no reason to
create these conflicts.
U Ye Htut
Deputy Minister for Information and spokesman for the President's office
If the Speaker asks you if you agree or disagree, you need to reply. I've already warned
you about this on several occasions in the past. If the whole group doesn't want to
answer, the Speaker is within his rights to order all of you to leave the session of Parlia-
ment.
U Khin Aung Myint,
Upper House Speaker, warning military MPs to make it clear if they agree or disagree with proposed legislation .
oices
V
If you're sure that a minister of group of ministers is
guilty of wrongdoing or misconduct, you have every
right to sue them.
U Soe Thein
Minister for the President's Office
Voice of the month.pmd 7/8/2013, 8:27 PM 11
Editors Note
While foreign investment continues to trickle into Myanmar, the narrative of this
countrys unbridled progress both politically and economically has come into
further question over the past month. To be fair, some truly significant events have
occurred recently that point to a level of progress that even the most hard-nosed
naysayers would have deemed impossible even one year ago. The World Economic
Forum, held in Naypyidaw in early June, served as a coming out party of sorts for
Thein Seins reformist agenda, and provided a frank forum to discuss Myanmars
political and economic future in the company of the worlds business elite. The
issuing of two telecom operator licences on June 27 likewise showed that Myanmars
government is capable of conducting high-level business in a transparent manner,
and the gains Myanmars people should see from improved connectivity will invariably
be profound.
But problems remain. Sectarian tensions show no sign of abating, and there are
precious few signals on display that the government has any intention of doing
anything substantive to promote deep and lasting national reconciliation. A new
press law ratified by the lower house of Parliament threatens to undo many aspects
of the newfound press freedom enjoyed by Myanmars burgeoning media. And foreign
investment to date has been less than the government might have hoped it would be,
owing to investors fears that this country still has a long way to go before investments
can be considered safe in any way.
This issue of ACUMEN looks at these issues in-depth from many different angles.
Our cover story takes a close-up look at the social impact of the two Chinese-funded
pipelines originating on the Rakhine coast, which despite the obvious financial
benefits to the government that it will bring about will do little to benefit the people
directly affected by their development. We look at the pernicious problem of land
speculation one of the biggest factors limiting foreign investment from coming to
Myanmar and discuss the state of Myanmars anaemic capital markets with financial
expert Aung Thura, whose work revolves around demystifying Myanmars confusing
and contradictory financial environment.
As ever in Myanmar, it is difficult to say with any certainty what changes the
next month will bring, for better or for worse, but ACUMEN remains committed to
documenting and analysing these developments as Myanmar continues to undergo
profound and rapid change. A
CEO / Chief Editor
Dr. Htet Zan Linn
Director
Dr. Hein Thu Aung, Tin Tun Kyaw
Executive Editor
Phyo Wai
Editor English Edition
Alex Bookbinder
Editors
Hein Zaw, Khin Win, Su Le` Nandar
Contributors
Myitmakha, Naing Thit, Isaac Malone
Designers
Aung Aung (AN Computer), Thaw Tar Oo
Computer Operator
Zin Wai Wai Shein
Marketing Department
January Khine Mon, Naw Keziah, Yadanar,
Nan Mo, May Hsu Mo Mo
Photographers
Aung Kyaw Moe (New Image), Myitmakha,
Alex Bookbinder, Hein Zaw
Publisher and Copyright
Dr. Htet Zan Linn
Printer
Editorial Board
ACUMEN
myanmarb2b@gmail.com
ceo@myanmarb2bmagazine.com, management@myanmarb2bmagazine.com,
editor@myanmarb2bmagazine.com, marketing@myanmarb2bmagazine.com,
Advisors Advisors Advisors Advisors Advisors
Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet Prof. Dr. Aung Tun Thet (Senior Advisor, UN Resident Coordinator's Office)
Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein Dr. Maung Mg Thein (Ph.D. (Law), LL.M., LL.B., B.A.(Law), ANZIIF (Australia), Pg. Dip in Applied Psychology)
Prof. Maw Than Prof. Maw Than Prof. Maw Than Prof. Maw Than Prof. Maw Than (Rector (Ret), Yangon Institute of Economics Yangon)
Soe Tint Aung Soe Tint Aung Soe Tint Aung Soe Tint Aung Soe Tint Aung (Special Consultant for Advocacy, PSI Myanmar)
Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin Dr. Tun Lwin (Consultant, Myanmar Climate Change Watch,Tun Lwin Foundation)
Than Lwin Than Lwin Than Lwin Than Lwin Than Lwin (Deputy Governer (Ret), Central Bank of Myanmar)
Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw (Principal, Device Business Management Academy)
Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik Grace Swe Zin Htaik (Media Advocacy Advisor, PSI Myanmar)
Office
No. 24/26, 4B-C, Race Course Condo, South Race Course Street, TAMWE TOWNSHIP, YANGON
Tel : (+959) 420033355
~
66
~
77 (Hot Line), (+959) 73045140, 49317457, 73143313, (+951) 8603886, 8603887
Masthead.pmd 7/8/2013, 8:18 PM 1
ACUMEN 11
A particular group in
the country is misus-
ing our noble beliefs
to propagate ex-
tremist acts, which is
fuelling tensions
between different
faiths. This group has
taken advantage of
the changing politi-
cal and economic
situation in our coun-
try, and this has re-
sulted in riots at
home and greater
insecurity for
Myanmar citizens
working abroad.
President U Thein Sein
When problems arise (i.e religious
conflicts), people love to point fin-
gers, claiming that specific groups
are behind specific incidents.
What's certain is this: the govern-
ment and army have no reason to
create these conflicts.
U Ye Htut
Deputy Minister for Information and spokesman for the President's office
If the Speaker asks you if you agree or disagree, you need to reply. I've already warned
you about this on several occasions in the past. If the whole group doesn't want to
answer, the Speaker is within his rights to order all of you to leave the session of Parlia-
ment.
U Khin Aung Myint,
Upper House Speaker, warning military MPs to make it clear if they agree or disagree with proposed legislation .
oices
V
If you're sure that a minister of group of ministers is
guilty of wrongdoing or misconduct, you have every
right to sue them.
U Soe Thein
Minister for the President's Office
Voice of the month.pmd 7/8/2013, 8:27 PM 11
July 2013
ACUMEN 67
July 2013
ACUMEN 67
14 ACUMEN www. mya nma r b2bma ga z i ne. c om
August 2013
Cover Story
August 2013
The Dark Side.pmd 7/8/2013, 8:41 PM 14
ACUMEN 15 ACUMEN 15
August 2013
Cover Story
August 2013
ACUMEN 15 ACUMEN 15
August 2013
L
ocated on Ramree Island off the
coast of central Rakhine State,
Kyaukphyu has long been an
important trading town. Named after the
white pebbles that line the shores of the
beaches surrounding its deep water
harbour, the town rose to prominence
during the colonial era, when it served
as a major trade route between Calcutta
and Rangoon.
After decades off the worlds radar,
Kyaukphyu has once again risen to
prominence due to the lucre of the
offshore oil and gas industry primarily
driven by the Shwe natural gas field just
off the coast, Myanmars largest. But local
people have benefited little from the flurry
of development that has overwhelmed
their once sleepy town. Local residents,
both urban and rural, have inadequate
access to electricity, even there are many
natural resources here, said Ko Arakan
Kyaw Kyaw, a local resident. As many
people do not have access to the national
electricity grid, they have to depend on
expensive electricity provided by diesel
generators.
Its standard in Myanmar to have a
backup generator at home if you can
afford one, but as many in Kyaukphyu
have no access to the national grid and
are unable to afford generators, township-
level energy distribution boards have had
to step in. The Ministry of Energys
El ect ri ci t y Suppl y Ent erpri se has
partnered with these local committees to
provide diesel power 17 hours per day
to local residents, but this power comes
at exorbitant prices. Households that use
less than 10 kilowatt-hours per day pay
350 Kyats (US$0.38) per kilowatt-hour,
whereas those that use more than that
are expected to pay 500 kyats (US$0.51)
per ki l owat t -hour. Local energy
di st ri but i on boards al so purchase
electricity from private individuals,
charging end consumers an astronomical
800 kyats (US$0.82) per kilowatt-hour.
The disconnect between the bounty
being produced offshore and their own
lack of power isnt lost on local residents.
Cover Story
A pumping station, part of the Shwe Gas project, awaits its its mid-summer launch in
Kyaukphyu, Rakhine State.
ACUMEN 17
August 2013
L
ocated on Ramree Island off the
coast of central Rakhine State,
Kyaukphyu has long been an
important trading town. Named after the
white pebbles that line the shores of the
beaches surrounding its deep water
harbour, the town rose to prominence
during the colonial era, when it served
as a major trade route between Calcutta
and Rangoon.
After decades off the worlds radar,
Kyaukphyu has once again risen to
prominence due to the lucre of the
offshore oil and gas industry primarily
driven by the Shwe natural gas field just
off the coast, Myanmars largest. But local
people have benefited little from the flurry
of development that has overwhelmed
their once sleepy town. Local residents,
both urban and rural, have inadequate
access to electricity, even there are many
natural resources here, said Ko Arakan
Kyaw Kyaw, a local resident. As many
people do not have access to the national
electricity grid, they have to depend on
expensive electricity provided by diesel
generators.
Its standard in Myanmar to have a
backup generator at home if you can
afford one, but as many in Kyaukphyu
have no access to the national grid and
are unable to afford generators, township-
level energy distribution boards have had
to step in. The Ministry of Energys
El ect ri ci t y Suppl y Ent erpri se has
partnered with these local committees to
provide diesel power 17 hours per day
to local residents, but this power comes
at exorbitant prices. Households that use
less than 10 kilowatt-hours per day pay
350 Kyats (US$0.38) per kilowatt-hour,
whereas those that use more than that
are expected to pay 500 kyats (US$0.51)
per ki l owat t -hour. Local energy
di st ri but i on boards al so purchase
electricity from private individuals,
charging end consumers an astronomical
800 kyats (US$0.82) per kilowatt-hour.
The disconnect between the bounty
being produced offshore and their own
lack of power isnt lost on local residents.
Cover Story
A pumping station, part of the Shwe Gas project, awaits its its mid-summer launch in
Kyaukphyu, Rakhine State.
ACUMEN 17
August 2013
How is electricity so expensive for us?
asked a Kyaukphyu resident who refused
to give his name. Of course, there are a
few people who can afford to pay these
outrageous sums, but most of us live in
poverty when we should be enjoying the
prosperity created by natural resources.
Ko Arakan is incensed by the injustice.
People in Yangon Region pay just 25
kyats per kilowatt-hour for electricity, he
explained. Its absurd that we have to
pay so much. Nobody around here has
access to electricity, even though so much
natural gas is being extracted offshore.
Its all being sold abroad.
Kyaukphyu is a crucial node in
Chinas new energy strategy. Beijing has
invested billions of dollars to construct twin
pipelines from Kyaukphyu all the way to
Yunnan Province in Chinas southwest,
carrying natural gas from the Bay of
Bengal and crude oil extracted further
afield. Strategic planners in Beijing have
come to view Myanmar as China s
California a western conduit to the
Indian Ocean. As roughly 40% of Chinas
oil comes from the west from Africa and
the Middle East the trans-Myanmar
pipeline was constructed to allow oil
shipments to bypass the notoriously
insecure Straits of Malacca and provide
the countrys relatively less-developed
west with a readily accessible source of
fuel oil.
CNPC (China National Petroleum
Corporation), the Chinese state-run firm
behind the pipeline project, started
construction on the pipeline project in
2009. The firm has already constructed
storage facilities with the capacity to hold
300, 000 barrel s of crude, and has
constructed six natural gas processing
stations around Kyaukphyu. These stations
will allow some 12 billion cubic metres of
natural gas per year to be transported
800 or so kilometres between the Rakhine
coast and Kunming, Yunnans largest city.
The crude pipeline, which runs parallel
to the natural gas pipeline, is anticipated
to carry 22 million metric tons of oil
There are a few
people who can
afford to pay these
outrageous sums,
but most of us live
in poverty when
we should be
enjoying the
prosperity created
by natural
resources.
Cover Story
The path of the twin pipelines
across Myanmar, which termi-
nate deep inside Chinas
Yunnan Province.
ACUMEN 19
annually an estimated 7% of Chinas
current annual demand. Both pipelines
are set to come online in mid-2013,
according to official sources at CNPCs local
subsidiary, the Southeast Asia Pipeline
Company.
Daewoo, a maj or part ner i n
developing the gas fields off the coast of
Rakhi ne, cl ai ms t hat nat ural gas
exploitation will provide Myanmar with
US$1.5 billion per year. But locals worry
that they may never see any benefits from
the project.
We hope we l l have regul ar,
affordable electricity and that the pipelines
will provide us with employment, said
Ko Than Win, who lives near the mouth
of the pipelines.
But despite the windfall generated by
the pipeline development, locals have
largely been locked out thus far. In
Minbyin village, some 14 miles east of
Kyaukphyu, the biggest local industry is
oil but it is gathered the old-fashioned
way, from hand-dug wells and employing
rudimentary equipment. This oil is then
sold to refineries that produce gasoline
f or t he domest i c market . Local
landowners charge prospectors a fee
equal to one-seventh of their findings.
Most of the oil pits are able to produce
20 or 25 gallons each, although some are
able to produce a full barrels worth, or
50 gallons, claimed U Than Myint, a local
landowner who derives his income from
artisanal prospectors.
Residents of Minbyin claim it would
be difficult to leave their village to seek
out work else where, despite the dirtiness
of the work they must do to survive and
the low pay that comes with it. The land
where the oil can be found was our
ancestors land long before it was ours,
said U Than Myint. Even if we were
commanded to leave, we really cant
move elsewhere, he elaborated.
When asked, the villagers in Minbyin
seemed largely unaware of the Shwe gas
project and deep-sea port development
under construction a few miles away.
Taking photographs of work sites is
banned, and local peoples access is highly
rest ri ct ed. They [t he consort i um
developing the pipeline] have fenced off
the worksites where the pipelines are
being laid; nobody can go in, claimed Ko
Thein Tun, a local resident. Theyve also
brought in workers from elsewhere and
have barely hired any locals. I think
theyve brought in their own people so
they can do whatever they want, with no
concern for our needs, he explained.
While the pipeline project is ostensibly
a joint venture with Myanmars Ministry
of Energy putting up 49. 1% of the
construction costs and CNPC investing the
August 2013
How is electricity so expensive for us?
asked a Kyaukphyu resident who refused
to give his name. Of course, there are a
few people who can afford to pay these
outrageous sums, but most of us live in
poverty when we should be enjoying the
prosperity created by natural resources.
Ko Arakan is incensed by the injustice.
People in Yangon Region pay just 25
kyats per kilowatt-hour for electricity, he
explained. Its absurd that we have to
pay so much. Nobody around here has
access to electricity, even though so much
natural gas is being extracted offshore.
Its all being sold abroad.
Kyaukphyu is a crucial node in
Chinas new energy strategy. Beijing has
invested billions of dollars to construct twin
pipelines from Kyaukphyu all the way to
Yunnan Province in Chinas southwest,
carrying natural gas from the Bay of
Bengal and crude oil extracted further
afield. Strategic planners in Beijing have
come to view Myanmar as China s
California a western conduit to the
Indian Ocean. As roughly 40% of Chinas
oil comes from the west from Africa and
the Middle East the trans-Myanmar
pipeline was constructed to allow oil
shipments to bypass the notoriously
insecure Straits of Malacca and provide
the countrys relatively less-developed
west with a readily accessible source of
fuel oil.
CNPC (China National Petroleum
Corporation), the Chinese state-run firm
behind the pipeline project, started
construction on the pipeline project in
2009. The firm has already constructed
storage facilities with the capacity to hold
300, 000 barrel s of crude, and has
constructed six natural gas processing
stations around Kyaukphyu. These stations
will allow some 12 billion cubic metres of
natural gas per year to be transported
800 or so kilometres between the Rakhine
coast and Kunming, Yunnans largest city.
The crude pipeline, which runs parallel
to the natural gas pipeline, is anticipated
to carry 22 million metric tons of oil
There are a few
people who can
afford to pay these
outrageous sums,
but most of us live
in poverty when
we should be
enjoying the
prosperity created
by natural
resources.
Cover Story
The path of the twin pipelines
across Myanmar, which termi-
nate deep inside Chinas
Yunnan Province.
ACUMEN 19
annually an estimated 7% of Chinas
current annual demand. Both pipelines
are set to come online in mid-2013,
according to official sources at CNPCs local
subsidiary, the Southeast Asia Pipeline
Company.
Daewoo, a maj or part ner i n
developing the gas fields off the coast of
Rakhi ne, cl ai ms t hat nat ural gas
exploitation will provide Myanmar with
US$1.5 billion per year. But locals worry
that they may never see any benefits from
the project.
We hope we l l have regul ar,
affordable electricity and that the pipelines
will provide us with employment, said
Ko Than Win, who lives near the mouth
of the pipelines.
But despite the windfall generated by
the pipeline development, locals have
largely been locked out thus far. In
Minbyin village, some 14 miles east of
Kyaukphyu, the biggest local industry is
oil but it is gathered the old-fashioned
way, from hand-dug wells and employing
rudimentary equipment. This oil is then
sold to refineries that produce gasoline
f or t he domest i c market . Local
landowners charge prospectors a fee
equal to one-seventh of their findings.
Most of the oil pits are able to produce
20 or 25 gallons each, although some are
able to produce a full barrels worth, or
50 gallons, claimed U Than Myint, a local
landowner who derives his income from
artisanal prospectors.
Residents of Minbyin claim it would
be difficult to leave their village to seek
out work else where, despite the dirtiness
of the work they must do to survive and
the low pay that comes with it. The land
where the oil can be found was our
ancestors land long before it was ours,
said U Than Myint. Even if we were
commanded to leave, we really cant
move elsewhere, he elaborated.
When asked, the villagers in Minbyin
seemed largely unaware of the Shwe gas
project and deep-sea port development
under construction a few miles away.
Taking photographs of work sites is
banned, and local peoples access is highly
rest ri ct ed. They [t he consort i um
developing the pipeline] have fenced off
the worksites where the pipelines are
being laid; nobody can go in, claimed Ko
Thein Tun, a local resident. Theyve also
brought in workers from elsewhere and
have barely hired any locals. I think
theyve brought in their own people so
they can do whatever they want, with no
concern for our needs, he explained.
While the pipeline project is ostensibly
a joint venture with Myanmars Ministry
of Energy putting up 49. 1% of the
construction costs and CNPC investing the
August 2013
Cover Story
ACUMEN 21
rest China stands to benefit more from
the relationship. Despite the projects vast
envi ronmental and soci al i mpacts,
Naypyidaw will only receive just over
US$6 million per year in land rental fees
from its Chinese partners, as well as one
dollar for every barrel of oil that passes
through the pipeline.
Cheng Huan Lai, CNPC s project
manager based in Myanmar, openly
admitted that the company was not
following international best practices,
which entail that pipelines be placed in
trenches at least five meters deep. The
company dug trenches only 1.2 meters
deep in 21 townships along the route of
the pipeline, which he claimed was deep
enough to be safe.
The Shwe Gas Movement, a civil
society organization that has been a
prominent opponent of offshore natural
gas development in Rakhine, has pushed
the government and CNPC to conduct
awareness-raising campaigns in regions
affected by the pipelines, in order to inform
people of possible hazards, including
explosions and leakages. A lack of
transparency on CNPCs part as well as
its admissions of flaunting international
best practices - has also raised questions
as t o whet her proper soci al and
environmental impact assessments were
conducted.
CNPC claims that it has made an effort
to limit the projects environmental impact,
despite the fact that it at the very least
is known to have destroyed a sizeable
area of coral reef off the coast of Ramree
Island. The Shwe Gas Movement has
emphasized that this failure to comply with
international standards has affected
Myanmars development prospects.
We can accept that such projects have
been undertaken to help the country
develop and to create job opportunities
for the people. There would be nothing
controversial about these projects if new
technologies would allow more resources
to be extracted in an environmentally and
socially responsible way, said Dr. Aye
Maung, the l eader of the Rakhi ne
Nationalities Development Party, which
promotes Rakhine causes on the national
level. But these projects need to be
transparent. They need to minimize the
harm to local communities. This is the
responsibility of the government and
company, both.
Ko Arakan Kyaw Kyaw wants
development for his hometown, but only
if it benefits his community. All of us here
want foreign companies to invest in our
state. But they need to be transparent,
he said. It will be better for companies
and the government alike if they were to
treat us with dignity, and show respect
for the envi ronment. Myanmar i s
transforming into a democracy, and those
doing business here need to change with
the times, too. A
There would be
nothing
controversial
about these
projects if new
technologies would
allow more
resources to be
extracted in an
environmentally
and socially
responsible way.
August 2013
Cover Story
ACUMEN 21
rest China stands to benefit more from
the relationship. Despite the projects vast
envi ronmental and soci al i mpacts,
Naypyidaw will only receive just over
US$6 million per year in land rental fees
from its Chinese partners, as well as one
dollar for every barrel of oil that passes
through the pipeline.
Cheng Huan Lai, CNPC s project
manager based in Myanmar, openly
admitted that the company was not
following international best practices,
which entail that pipelines be placed in
trenches at least five meters deep. The
company dug trenches only 1.2 meters
deep in 21 townships along the route of
the pipeline, which he claimed was deep
enough to be safe.
The Shwe Gas Movement, a civil
society organization that has been a
prominent opponent of offshore natural
gas development in Rakhine, has pushed
the government and CNPC to conduct
awareness-raising campaigns in regions
affected by the pipelines, in order to inform
people of possible hazards, including
explosions and leakages. A lack of
transparency on CNPCs part as well as
its admissions of flaunting international
best practices - has also raised questions
as t o whet her proper soci al and
environmental impact assessments were
conducted.
CNPC claims that it has made an effort
to limit the projects environmental impact,
despite the fact that it at the very least
is known to have destroyed a sizeable
area of coral reef off the coast of Ramree
Island. The Shwe Gas Movement has
emphasized that this failure to comply with
international standards has affected
Myanmars development prospects.
We can accept that such projects have
been undertaken to help the country
develop and to create job opportunities
for the people. There would be nothing
controversial about these projects if new
technologies would allow more resources
to be extracted in an environmentally and
socially responsible way, said Dr. Aye
Maung, the l eader of the Rakhi ne
Nationalities Development Party, which
promotes Rakhine causes on the national
level. But these projects need to be
transparent. They need to minimize the
harm to local communities. This is the
responsibility of the government and
company, both.
Ko Arakan Kyaw Kyaw wants
development for his hometown, but only
if it benefits his community. All of us here
want foreign companies to invest in our
state. But they need to be transparent,
he said. It will be better for companies
and the government alike if they were to
treat us with dignity, and show respect
for the envi ronment. Myanmar i s
transforming into a democracy, and those
doing business here need to change with
the times, too. A
There would be
nothing
controversial
about these
projects if new
technologies would
allow more
resources to be
extracted in an
environmentally
and socially
responsible way.
July 2013
July 2013
July 2013
August 2013
Feature
August 2013
Steep Prices , big problems.pmd 7/10/2013, 6:38 PM 24
ACUMEN 25
Yangon skyline from Golden Hill Towers - soelin/Flickr
ACUMEN 25
August 2013
Feature
August 2013
ACUMEN 25
Yangon skyline from Golden Hill Towers - soelin/Flickr
ACUMEN 25
August 2013
Ko Maung Maung has no intention of
going abroad to look for work which,
at age 35, is still a viable option for him.
Instead, he works as a land broker
buying and selling land around Yangon.
Business is good. Investing in land is a
lucrative business, he said. We often turn
profits of more than 50% on each plot we
sell.
He has been in the business since
economic reforms got underway in 2010.
I dont rush into thee investments but
it does pay to be quick. After I find out
that a project is starting, I rush to buy
land in the area, he said.
Things get really lucrative when the
government is interested in his property,
claimed Ko Maung Maung, as he can earn
massive profits, selling land for three times
what he purchased it for in most cases.
He is unapologetic about his line of work.
Lots of rich people are interested in land
speculation, he explained, because you
can make much more money than in other
businesses.
Land prices in Myanmar have broken
worl d records due to pervasi ve
speculation, claim foreign business
interests. And its true: office space in
Yangon now goes for as much as central
London or Manhattan, owing to crushing
demand and limited supply.
U Soe Thane, an influential minster in
the Presidents office, announced that the
government would no longer announce
where it intends to launch projects, as
speculators have historically pounced on
this news and driven up land prices,
wasting the governments money in the
process, he claimed. From now on, if we
say a project will be constructed in the
south, you can assume itll actually be built
in the north, he joked.
But its no laughing matter. In Yangon,
nearly 90% of properties are residential,
with a mere 6% zoned as being for
industrial use. Thats problematic for
people who want to set up factories or
establish offices, as would-be investors find
themselves at the mercy of ruthless
speculators.
Feature
ACUMEN 27
August 2013
Ko Maung Maung has no intention of
going abroad to look for work which,
at age 35, is still a viable option for him.
Instead, he works as a land broker
buying and selling land around Yangon.
Business is good. Investing in land is a
lucrative business, he said. We often turn
profits of more than 50% on each plot we
sell.
He has been in the business since
economic reforms got underway in 2010.
I dont rush into thee investments but
it does pay to be quick. After I find out
that a project is starting, I rush to buy
land in the area, he said.
Things get really lucrative when the
government is interested in his property,
claimed Ko Maung Maung, as he can earn
massive profits, selling land for three times
what he purchased it for in most cases.
He is unapologetic about his line of work.
Lots of rich people are interested in land
speculation, he explained, because you
can make much more money than in other
businesses.
Land prices in Myanmar have broken
worl d records due to pervasi ve
speculation, claim foreign business
interests. And its true: office space in
Yangon now goes for as much as central
London or Manhattan, owing to crushing
demand and limited supply.
U Soe Thane, an influential minster in
the Presidents office, announced that the
government would no longer announce
where it intends to launch projects, as
speculators have historically pounced on
this news and driven up land prices,
wasting the governments money in the
process, he claimed. From now on, if we
say a project will be constructed in the
south, you can assume itll actually be built
in the north, he joked.
But its no laughing matter. In Yangon,
nearly 90% of properties are residential,
with a mere 6% zoned as being for
industrial use. Thats problematic for
people who want to set up factories or
establish offices, as would-be investors find
themselves at the mercy of ruthless
speculators.
Feature
ACUMEN 27
August 2013
There is more empty industrial space
in Yangon than there are factories, and
we dont have a solution for that yet,
claimed U Myint Zaw, vice-chairman of
Myanmar s Chamber of Commerce.
Speculators pay minimal taxes on the
undeveloped property in their possession,
which serves to dissuade construction. If
t he aut hori t i es make sure t hese
speculators pay proper taxes, this will
allow people who really want to build
factories to do so and will drive down
land prices, he explained.
According to Dr. Kyaw Latt, an expert
on industrialization, 40% of Yangons area
should be zoned for industrial use, but
industrial development is hampered by
land speculation that makes building
factories uneconomical.
The Myanmar government , i n
cooperation with the Japan International
Cooperation Agency (JICA) has launched
a Strategic Urban Development Plan for
Greater Yangon. While developing a
There is more
empty industrial
space in Yangon
than there are
factories, and we
dont have a
solution for that
yet.
Feature
ACUMEN 29
mast er pl an f or t he ci t y and i t s
surrounding regions is long overdue, the
announcement of these plans has had the
unintended consequence of attracting
speculators, and land prices have risen
astronomically as a result.
In Dalla Township, a quick ferry ride
across the river from downtown Yangon,
land prices have surged fivefold over the
last year, from roughly two million kyats
per hectareto 12 or 15 million as of mid-
2013, f ol l owi ng t he government s
announcement that it intends to build a
bridge connecting the two sides of the
river.
There is widespread concern that
foreign investors will be put off from
investing in Myanmar due to the countrys
sky-high land prices, and a lack of foreign
capital and know-how may, in turn,
prevent Myanmar from developing.The
Directorate of Investment and Company
Administration, the first stop for foreigners
looking to invest in Myanmar, has
allegedly instructed would-be foreign
buyers to look at purchasing land further
afield in Ayeyarwaddy Division due
to sky-high prices around Yangon.
High prices have also precluded land
from changing hands, as buyers are not
willing to meet the astronomical demands
of speculators. Many of the cronies the
profited from their close links to the
former military regime are set to earn a
windfall, as they were able to amass vast
amounts of land through their personal
relationships with Myanmars former
military rulers. These cronies have come
to dominate the land market, said a
businessman that used to enjoy close ties
with Ne Wins Burma Socialist Programme
Party, who refused to be named. The joke
is that, in areas where foreigners are
allowed to buy land in Thailand, it is much
cheaper than it is in Myanmar. Its absurd
abnormal that Myanmars land prices are
August 2013
There is more empty industrial space
in Yangon than there are factories, and
we dont have a solution for that yet,
claimed U Myint Zaw, vice-chairman of
Myanmar s Chamber of Commerce.
Speculators pay minimal taxes on the
undeveloped property in their possession,
which serves to dissuade construction. If
t he aut hori t i es make sure t hese
speculators pay proper taxes, this will
allow people who really want to build
factories to do so and will drive down
land prices, he explained.
According to Dr. Kyaw Latt, an expert
on industrialization, 40% of Yangons area
should be zoned for industrial use, but
industrial development is hampered by
land speculation that makes building
factories uneconomical.
The Myanmar government , i n
cooperation with the Japan International
Cooperation Agency (JICA) has launched
a Strategic Urban Development Plan for
Greater Yangon. While developing a
There is more
empty industrial
space in Yangon
than there are
factories, and we
dont have a
solution for that
yet.
Feature
ACUMEN 29
mast er pl an f or t he ci t y and i t s
surrounding regions is long overdue, the
announcement of these plans has had the
unintended consequence of attracting
speculators, and land prices have risen
astronomically as a result.
In Dalla Township, a quick ferry ride
across the river from downtown Yangon,
land prices have surged fivefold over the
last year, from roughly two million kyats
per hectareto 12 or 15 million as of mid-
2013, f ol l owi ng t he government s
announcement that it intends to build a
bridge connecting the two sides of the
river.
There is widespread concern that
foreign investors will be put off from
investing in Myanmar due to the countrys
sky-high land prices, and a lack of foreign
capital and know-how may, in turn,
prevent Myanmar from developing.The
Directorate of Investment and Company
Administration, the first stop for foreigners
looking to invest in Myanmar, has
allegedly instructed would-be foreign
buyers to look at purchasing land further
afield in Ayeyarwaddy Division due
to sky-high prices around Yangon.
High prices have also precluded land
from changing hands, as buyers are not
willing to meet the astronomical demands
of speculators. Many of the cronies the
profited from their close links to the
former military regime are set to earn a
windfall, as they were able to amass vast
amounts of land through their personal
relationships with Myanmars former
military rulers. These cronies have come
to dominate the land market, said a
businessman that used to enjoy close ties
with Ne Wins Burma Socialist Programme
Party, who refused to be named. The joke
is that, in areas where foreigners are
allowed to buy land in Thailand, it is much
cheaper than it is in Myanmar. Its absurd
abnormal that Myanmars land prices are
August 2013
Yadanarpon Diamond Plaza, in
Mandalay, exemplifies the rapid
growth of Myanmars real estate
market - even if these gains are
largely speculative in nature.
Feature
ACUMEN 31
so high.
The problem is not limited to
Yangon, say insiders familiar with
the property market. High land
prices have had a knock-on effect
for the prices of apartments, which
have also soared in recent months.
For this reason, U Soe Thane is
loath to disclose future project sites.
Look at Dalla, he laments. Land
prices went through the roof really
quickly, so its important that we
dont give too much away.
Ko Maung Maung notes that
price controls may be an effective
solution to bring prices back down
to earth, but of course this isnt
something hes keen to see happen.
The government can dictate what
it wants, and theres nothing we can
do about it. I guess everything in
life is the result of fate! he laughed. A
These cronies These cronies These cronies These cronies These cronies
have come to have come to have come to have come to have come to
dominate the land dominate the land dominate the land dominate the land dominate the land
market. market. market. market. market.
The joke is that, in The joke is that, in The joke is that, in The joke is that, in The joke is that, in
areas where areas where areas where areas where areas where
foreigners are foreigners are foreigners are foreigners are foreigners are
allowed to buy allowed to buy allowed to buy allowed to buy allowed to buy
land in Thailand, it land in Thailand, it land in Thailand, it land in Thailand, it land in Thailand, it
is much cheaper is much cheaper is much cheaper is much cheaper is much cheaper
than it is in than it is in than it is in than it is in than it is in
Myanmar. Myanmar. Myanmar. Myanmar. Myanmar.
August 2013
Yadanarpon Diamond Plaza, in
Mandalay, exemplifies the rapid
growth of Myanmars real estate
market - even if these gains are
largely speculative in nature.
Feature
ACUMEN 31
so high.
The problem is not limited to
Yangon, say insiders familiar with
the property market. High land
prices have had a knock-on effect
for the prices of apartments, which
have also soared in recent months.
For this reason, U Soe Thane is
loath to disclose future project sites.
Look at Dalla, he laments. Land
prices went through the roof really
quickly, so its important that we
dont give too much away.
Ko Maung Maung notes that
price controls may be an effective
solution to bring prices back down
to earth, but of course this isnt
something hes keen to see happen.
The government can dictate what
it wants, and theres nothing we can
do about it. I guess everything in
life is the result of fate! he laughed. A
These cronies These cronies These cronies These cronies These cronies
have come to have come to have come to have come to have come to
dominate the land dominate the land dominate the land dominate the land dominate the land
market. market. market. market. market.
The joke is that, in The joke is that, in The joke is that, in The joke is that, in The joke is that, in
areas where areas where areas where areas where areas where
foreigners are foreigners are foreigners are foreigners are foreigners are
allowed to buy allowed to buy allowed to buy allowed to buy allowed to buy
land in Thailand, it land in Thailand, it land in Thailand, it land in Thailand, it land in Thailand, it
is much cheaper is much cheaper is much cheaper is much cheaper is much cheaper
than it is in than it is in than it is in than it is in than it is in
Myanmar. Myanmar. Myanmar. Myanmar. Myanmar.
August 2013
Feature
August 2013
Call Me, Maybe.pmd 7/9/2013, 9:56 AM 32
ACUMEN 33 ACUMEN 33
August 2013
Feature
August 2013
ACUMEN 33 ACUMEN 33
August 2013
Feature
ACUMEN 35
M
yanmar has long been the
connectivity basket case of Asia.
Only 10% of the population has
a mobile phone a figure eclipsed even
by war-torn Afghanstan, which, at 50%
mobile penetration, is still on the low end
for the continent. So when the government
announced its intention in January to hand
out two operator licences to foreign
providers, many in Myanmar let out a
collective sigh of relief, anticipating the
day when dropped calls and expensive
service would be a thing of the past.
From an initial list of 22 contenders,
a shortlist of 12 was announced in early
April. The candidates were a diverse array
of companies and consortiums from across
the globe, keen to acquire a slice of
Myanmars untapped market for telecom
servi ces. Two wi nners woul d be
announced on June 27, and the global
telecom industry awaited the results with
baited breath.
Following an extensive vetting
process, carried out by a state-appointed
panel in consultation with by German IT
firm Roland Berger, the two finalists were
announced on schedule on June 27. The
lucky pair were Norways Telenor and
dark-horse candidate Ooredoo, from the
small Persian Gulf emirate of Qatar, both
of whom pledged to have networks
covering at least half of Myanmars
population by early 2014.The tendering
committee chose a joint venture between
Japans Marubeni and France Telecom as
a back-up choice in case one of the two
grantees is unable to fulfil its commitment
to build a network.
The telecoms tendering process has
been considered by outside observers to
be an important litmus test for the trans-
parency of Myanmars economic reforms
to date. The governments telecom mas-
ter plan called for two foreign companies
to establish networks, but maintains the
While phone cards are
readily available on the streets of
Yangon, only 10% of Myanmars popu-
lation currently uses a cell phone.
August 2013
Feature
ACUMEN 35
M
yanmar has long been the
connectivity basket case of Asia.
Only 10% of the population has
a mobile phone a figure eclipsed even
by war-torn Afghanstan, which, at 50%
mobile penetration, is still on the low end
for the continent. So when the government
announced its intention in January to hand
out two operator licences to foreign
providers, many in Myanmar let out a
collective sigh of relief, anticipating the
day when dropped calls and expensive
service would be a thing of the past.
From an initial list of 22 contenders,
a shortlist of 12 was announced in early
April. The candidates were a diverse array
of companies and consortiums from across
the globe, keen to acquire a slice of
Myanmars untapped market for telecom
servi ces. Two wi nners woul d be
announced on June 27, and the global
telecom industry awaited the results with
baited breath.
Following an extensive vetting
process, carried out by a state-appointed
panel in consultation with by German IT
firm Roland Berger, the two finalists were
announced on schedule on June 27. The
lucky pair were Norways Telenor and
dark-horse candidate Ooredoo, from the
small Persian Gulf emirate of Qatar, both
of whom pledged to have networks
covering at least half of Myanmars
population by early 2014.The tendering
committee chose a joint venture between
Japans Marubeni and France Telecom as
a back-up choice in case one of the two
grantees is unable to fulfil its commitment
to build a network.
The telecoms tendering process has
been considered by outside observers to
be an important litmus test for the trans-
parency of Myanmars economic reforms
to date. The governments telecom mas-
ter plan called for two foreign companies
to establish networks, but maintains the
While phone cards are
readily available on the streets of
Yangon, only 10% of Myanmars popu-
lation currently uses a cell phone.
August 2013
Feature
Even in war-torn Afghanistan,
cell penetration has
eclipsed 50% of the population -
imfti/Flickr.
Bidders in the tendering
process, including as Irish-
owned, Jamaica-based Digicel,
made efforts to raise brand
awareness before the June 27
announcement.
Mobile phone shops, like this one in
Yangons Hledan Junction area, have
multiplied since the governement
reduced SIM card prices over the past
year. There will be more to come as
new networks come online.
ACUMEN 37
incumbency of state-run Myanmar Posts
and Telecommunications (MPT) which
is at present Myanmars sole operator
and also granted a licence to Yadanapon
Teleport, a joint venture between MPT
and a number of local companies with
close links to the state.
I think there is a pent-up demand,
basically, in this society for mobile com-
munications, said Telenors president and
chief executive, Jon Frederik Balsaas, in
an interview with CNBC following the
announcement. This is a very important
infrastructure, this is a phenomenal en-
abler to many aspects of private life and
institutional life in the country we be-
lieve mobile has a future here; we know
that it will take time to build it up, but we
know that penetration is sure to grow
rapidly.
According to a recent report by
consulting firm McKinsey and Co. ,
Myanmars telecom sector is likely to
contribute as much as US$6.4 billion to
the countrys GDP by 2030, up from a
paltry US$100 million in 2010. For Telenor
and Ooredoo, the lucre provided by their
share of these anticipated gains is
impossible to deny.
Telenor was widely tipped to be a
top contender for a licence, as the
company has a proven track record in
the region. The company has the largest
market share in neighbouring Bangladesh,
is the number two operator in Thailand
and the third-largest in Malaysia. Although
it has not disclosed the precise terms of
its investment as yet, its proven ability to
build networks in underserved, green-field
markets undoubtedly strengthened its bid.
Ooredoos bid was considered a long
shot by many observers, despite its
August 2013
Feature
Even in war-torn Afghanistan,
cell penetration has
eclipsed 50% of the population -
imfti/Flickr.
Bidders in the tendering
process, including as Irish-
owned, Jamaica-based Digicel,
made efforts to raise brand
awareness before the June 27
announcement.
Mobile phone shops, like this one in
Yangons Hledan Junction area, have
multiplied since the governement
reduced SIM card prices over the past
year. There will be more to come as
new networks come online.
ACUMEN 37
incumbency of state-run Myanmar Posts
and Telecommunications (MPT) which
is at present Myanmars sole operator
and also granted a licence to Yadanapon
Teleport, a joint venture between MPT
and a number of local companies with
close links to the state.
I think there is a pent-up demand,
basically, in this society for mobile com-
munications, said Telenors president and
chief executive, Jon Frederik Balsaas, in
an interview with CNBC following the
announcement. This is a very important
infrastructure, this is a phenomenal en-
abler to many aspects of private life and
institutional life in the country we be-
lieve mobile has a future here; we know
that it will take time to build it up, but we
know that penetration is sure to grow
rapidly.
According to a recent report by
consulting firm McKinsey and Co. ,
Myanmars telecom sector is likely to
contribute as much as US$6.4 billion to
the countrys GDP by 2030, up from a
paltry US$100 million in 2010. For Telenor
and Ooredoo, the lucre provided by their
share of these anticipated gains is
impossible to deny.
Telenor was widely tipped to be a
top contender for a licence, as the
company has a proven track record in
the region. The company has the largest
market share in neighbouring Bangladesh,
is the number two operator in Thailand
and the third-largest in Malaysia. Although
it has not disclosed the precise terms of
its investment as yet, its proven ability to
build networks in underserved, green-field
markets undoubtedly strengthened its bid.
Ooredoos bid was considered a long
shot by many observers, despite its
August 2013
commitment to invest an astronomical
US$15 billion in Myanmar over a 15-year
period. Roland Berger estimated that
potential licensees would need to invest
an estimated US$2 billion to establish a
new network from the ground up. The
high figure promised by Ooredoo has
prompted speculation about its ability to
realise quick returns on its investment,
but how much the company really cares
about this is debatable.
Both Ooredoo and Telenor are
enterprises operated by their respective
state governments, and the Al-Thani
dynasty in charge of Qatar has made
significant moves in recent years to
improve the country s regional and
international status, moving out of the
shadows created by its much larger
neighbours, including Saudi Arabia and
the United Arab Emirates. A major move
into Myanmars telecoms sector despite
the questionable returns the project will
deliver would serve to improve the tiny
emirates international standing, and
bol ster i ts newfound status as an
international power broker in many of the
worlds conflicts a role it has attempted
to play, to varying degrees of success, in
both Afghanistan and Syria.
The past year has seen a wave of
anti-Muslim sentiment envelop Myanmar,
and Ooredoosaffiliations with a Muslim
government was thought by many to
preclude it from getting a licence. To the
governments credit, it appears to have
cast aside political considerations when
making its decision, basing the results on
which companies would be able to best
deliver results. But the transparency of
the tendering process has done little to
placate many of Myanmar s radical
Buddhists, who are incensed that a major
piece of Myanmars new infrastructure will
be in nominally Muslim hands.
At l east one promi nent monk
affiliated with the Buddhist-nationalist 969
movement, Ashin Wimala, has called for
a boycott of Ooredoos services. Despite
a recent publ i c statement by the
presidents office in support of 969-
Feature
ACUMEN 39
Cell phone towers - like this one in California
- are set to become a much more common
sight around Myanmar in the near future -
Gary Lerude/Flickr
August 2013
commitment to invest an astronomical
US$15 billion in Myanmar over a 15-year
period. Roland Berger estimated that
potential licensees would need to invest
an estimated US$2 billion to establish a
new network from the ground up. The
high figure promised by Ooredoo has
prompted speculation about its ability to
realise quick returns on its investment,
but how much the company really cares
about this is debatable.
Both Ooredoo and Telenor are
enterprises operated by their respective
state governments, and the Al-Thani
dynasty in charge of Qatar has made
significant moves in recent years to
improve the country s regional and
international status, moving out of the
shadows created by its much larger
neighbours, including Saudi Arabia and
the United Arab Emirates. A major move
into Myanmars telecoms sector despite
the questionable returns the project will
deliver would serve to improve the tiny
emirates international standing, and
bol ster i ts newfound status as an
international power broker in many of the
worlds conflicts a role it has attempted
to play, to varying degrees of success, in
both Afghanistan and Syria.
The past year has seen a wave of
anti-Muslim sentiment envelop Myanmar,
and Ooredoosaffiliations with a Muslim
government was thought by many to
preclude it from getting a licence. To the
governments credit, it appears to have
cast aside political considerations when
making its decision, basing the results on
which companies would be able to best
deliver results. But the transparency of
the tendering process has done little to
placate many of Myanmar s radical
Buddhists, who are incensed that a major
piece of Myanmars new infrastructure will
be in nominally Muslim hands.
At l east one promi nent monk
affiliated with the Buddhist-nationalist 969
movement, Ashin Wimala, has called for
a boycott of Ooredoos services. Despite
a recent publ i c statement by the
presidents office in support of 969-
Feature
ACUMEN 39
Cell phone towers - like this one in California
- are set to become a much more common
sight around Myanmar in the near future -
Gary Lerude/Flickr
August 2013
affiliated monk Ashin Wirathu, Set Aung,
the minister in charge of the selection
committee, is unrepentant, claiming that
choosing Ooredoo shows just shows how
transparent we are and how unbiased.
The politics of race and religion aside,
the new entrants have other issues to
contend with namely, the fact that
Myanmar has not yet passed a long-
awaited telecommunications bill, and its
proposed contents are still a matter of
dispute. Potential entrants to Myanmars
telecom market have essentially made a
blind investment into a very shaky
regulatory environment where their
property rights may not be secure.
Indeed, a last-minute attempt by the
lower house of parliament to stall the
announcement of the winners speaks to
the vested i nterests of Myanmar s
entrenched corporate classes, which still
have significant sway over the decision-
making process and whose influence has
- admirably been resisted by the
selection committee. But this is not enough
to allay investors fears. The telecom
law needs to come in place before the
final framework for the licence is spelled
out and made clear in this second phase
after we won this first round here,Balsaas
told CNBC.
While largely unenforced nowadays,
restrictive laws limiting freedom of speech
remain on the books, and international
NGO Human Rights Watch (HRW) has
warned would-be entrants to Myanmars
telecom sector to avoid collaborating with
the government to keep tabs on dissidents.
HRW sent a letter to both winners
expressing their concerns following the
announcement, but received no reply from
Ooredoo to alleviate their concerns.
The establishment of new mobile
networks in Myanmar should serve to
greatly improve the countrys economic
performance and the lives of many of its
citizens. How this will play out in practice,
however, remains to be seen. At the very
least, however, Myanmars current mobile
phone users can look forward a future of
greatly improved services as much lower
costs and millions will come to enjoy
the long-overdue benefits of mobile
communications for the first time. A
Feature
On the phone, Hledan Market, Yangon.
sample.pmd 7/8/2013, 9:10 PM 2
August 2013
affiliated monk Ashin Wirathu, Set Aung,
the minister in charge of the selection
committee, is unrepentant, claiming that
choosing Ooredoo shows just shows how
transparent we are and how unbiased.
The politics of race and religion aside,
the new entrants have other issues to
contend with namely, the fact that
Myanmar has not yet passed a long-
awaited telecommunications bill, and its
proposed contents are still a matter of
dispute. Potential entrants to Myanmars
telecom market have essentially made a
blind investment into a very shaky
regulatory environment where their
property rights may not be secure.
Indeed, a last-minute attempt by the
lower house of parliament to stall the
announcement of the winners speaks to
the vested i nterests of Myanmar s
entrenched corporate classes, which still
have significant sway over the decision-
making process and whose influence has
- admirably been resisted by the
selection committee. But this is not enough
to allay investors fears. The telecom
law needs to come in place before the
final framework for the licence is spelled
out and made clear in this second phase
after we won this first round here,Balsaas
told CNBC.
While largely unenforced nowadays,
restrictive laws limiting freedom of speech
remain on the books, and international
NGO Human Rights Watch (HRW) has
warned would-be entrants to Myanmars
telecom sector to avoid collaborating with
the government to keep tabs on dissidents.
HRW sent a letter to both winners
expressing their concerns following the
announcement, but received no reply from
Ooredoo to alleviate their concerns.
The establishment of new mobile
networks in Myanmar should serve to
greatly improve the countrys economic
performance and the lives of many of its
citizens. How this will play out in practice,
however, remains to be seen. At the very
least, however, Myanmars current mobile
phone users can look forward a future of
greatly improved services as much lower
costs and millions will come to enjoy
the long-overdue benefits of mobile
communications for the first time. A
Feature
On the phone, Hledan Market, Yangon.
sample.pmd 7/8/2013, 9:10 PM 2
August 2013
August 2013
Feature
Foreign Investment Long Road.pmd 7/8/2013, 8:12 PM 42
ACUMEN 43 ACUMEN 43
August 2013
August 2013
Feature
ACUMEN 43 ACUMEN 43
August 2013
T
he main talking point from Junes
World Economic Forum, held in
Nay Pyi Taw in June, was Aung
San Suu Kyis admission that she would
like to run for the countrys Presidency
when the elections come around in 2015
for those also not in the know, Elvis
Presley has been found dead at his
Tennessee home.
But there was another point she made,
in front of a packed audience at the
Myanmar International Convention
Centre, which spoke more candidly of the
countrys future. Talking of the increased
interest from foreign companies investing
in Myanmar, Daw Suu said that while
many companies were visiting the country
to assess the current situation, few were
really taking any real action and actually,
there isnt much investment coming in.
She clarified that point a few days later
at a party rally in Pyin Oo Lwin, citing
the countrys lack of rule of law a point
she has been vocal on for some time as
well as the poor infrastructure in a country
that has been practically isolated to the
international community for 50 years as
reasons why international businesses are
not yet ready to pour their money into an
economy which is the poorest in the
ASEAN region.
If there is no rule of law, she said,
it is impossible for a country to develop.
There should be a guarantee that their
investment and businesses will not be
stolen or confiscated if they make an
investment in Myanmar.
A recent Reuters report said that
Myanmar attracted $1.4 billion in foreign
investment in the 2012-2013 fiscal year,
and while that figure was reasonable in
a country that has only recently opened
up to the international community, it is a
long way short of boosting an economy
that, according to a recent report by global
consulting firm McKinsey, needs $170
billion in foreign investment for the first
stage of its economic transition.
While there may appear to be a
perception that foreign investment has
slowed in recent months, many in
Myanmars business community argue that
may not necessarily the case, or that there
might be other reasons at play that
investment is taking longer than some
expected to filter into the country.
Sally Austen, international legal consultant
for Myanmar Legal Servi ces, who
specialises in aiding foreign companies
in moving into Myanmars market says
that while there has seemingly been a
slow increase in action from foreign
investors, that should not come as too
much of a surprise and there might be
other factors at play.
It is worth noting that the process of
establishing an entity and getting a
Myanmar Investment Commission Permit
[required by companies to register in
Myanmars market] can take three to six
months. No capital will come into the
country until this has happened, she said.
Another factor, according to Austen,
may be that international companies,
particularly large multinationals, want to
take more time in their process of moving
into a new market in order to ensure that
Feature
ACUMEN 45
they will see a return on their investment.
The decision making processes of
serious multinationals takes a bit of time,
as it will typically involve intensive
investigation by the relevant business team,
analysis by legal teams and multiple
meetings. This doesnt necessarily indicate
a lack of enthusiasm and our international
companies remain optimistic.
It is a view shared by other analysts in
Myanmars market.
When it comes to new markets or
unexplored territory, big firms are
generally slow movers because they come
from an unambiguous market, said
Michael Nesbitt, editorial manager of
Oxford Business Group, who added that
t he opposi t e was t rue of smal l er
companies who are generally much more
versatile and can adapt quickly, perhaps
explaining why Myanmar is seeing so
many more smaller or medium size
businesses opening up, but slower
progress from the larger companies.
Not that the big boys are not
interested. In recent months, worldwide
brands including Ford Motors, Coca-Cola
and Standard Chartered, have announced
thei r i ntenti on to grab a share of
Myanmars market and interest from
these companies is cause for optimism for
the future of Myanmars growing economy.
An economy that many see as having
huge potential due to its strategic location
between India and China as well as a
large, young and low-cost workforce.
Despite the optimism, issues and
obstacles remain for those interested in
moving into Myanmars market.
The garment industry, fast-moving consumer goods and financial services are all of interest to
foreign companies - but relatively few are actually making investments.
August 2013
T
he main talking point from Junes
World Economic Forum, held in
Nay Pyi Taw in June, was Aung
San Suu Kyis admission that she would
like to run for the countrys Presidency
when the elections come around in 2015
for those also not in the know, Elvis
Presley has been found dead at his
Tennessee home.
But there was another point she made,
in front of a packed audience at the
Myanmar International Convention
Centre, which spoke more candidly of the
countrys future. Talking of the increased
interest from foreign companies investing
in Myanmar, Daw Suu said that while
many companies were visiting the country
to assess the current situation, few were
really taking any real action and actually,
there isnt much investment coming in.
She clarified that point a few days later
at a party rally in Pyin Oo Lwin, citing
the countrys lack of rule of law a point
she has been vocal on for some time as
well as the poor infrastructure in a country
that has been practically isolated to the
international community for 50 years as
reasons why international businesses are
not yet ready to pour their money into an
economy which is the poorest in the
ASEAN region.
If there is no rule of law, she said,
it is impossible for a country to develop.
There should be a guarantee that their
investment and businesses will not be
stolen or confiscated if they make an
investment in Myanmar.
A recent Reuters report said that
Myanmar attracted $1.4 billion in foreign
investment in the 2012-2013 fiscal year,
and while that figure was reasonable in
a country that has only recently opened
up to the international community, it is a
long way short of boosting an economy
that, according to a recent report by global
consulting firm McKinsey, needs $170
billion in foreign investment for the first
stage of its economic transition.
While there may appear to be a
perception that foreign investment has
slowed in recent months, many in
Myanmars business community argue that
may not necessarily the case, or that there
might be other reasons at play that
investment is taking longer than some
expected to filter into the country.
Sally Austen, international legal consultant
for Myanmar Legal Servi ces, who
specialises in aiding foreign companies
in moving into Myanmars market says
that while there has seemingly been a
slow increase in action from foreign
investors, that should not come as too
much of a surprise and there might be
other factors at play.
It is worth noting that the process of
establishing an entity and getting a
Myanmar Investment Commission Permit
[required by companies to register in
Myanmars market] can take three to six
months. No capital will come into the
country until this has happened, she said.
Another factor, according to Austen,
may be that international companies,
particularly large multinationals, want to
take more time in their process of moving
into a new market in order to ensure that
Feature
ACUMEN 45
they will see a return on their investment.
The decision making processes of
serious multinationals takes a bit of time,
as it will typically involve intensive
investigation by the relevant business team,
analysis by legal teams and multiple
meetings. This doesnt necessarily indicate
a lack of enthusiasm and our international
companies remain optimistic.
It is a view shared by other analysts in
Myanmars market.
When it comes to new markets or
unexplored territory, big firms are
generally slow movers because they come
from an unambiguous market, said
Michael Nesbitt, editorial manager of
Oxford Business Group, who added that
t he opposi t e was t rue of smal l er
companies who are generally much more
versatile and can adapt quickly, perhaps
explaining why Myanmar is seeing so
many more smaller or medium size
businesses opening up, but slower
progress from the larger companies.
Not that the big boys are not
interested. In recent months, worldwide
brands including Ford Motors, Coca-Cola
and Standard Chartered, have announced
thei r i ntenti on to grab a share of
Myanmars market and interest from
these companies is cause for optimism for
the future of Myanmars growing economy.
An economy that many see as having
huge potential due to its strategic location
between India and China as well as a
large, young and low-cost workforce.
Despite the optimism, issues and
obstacles remain for those interested in
moving into Myanmars market.
The garment industry, fast-moving consumer goods and financial services are all of interest to
foreign companies - but relatively few are actually making investments.
August 2013
Feature
Myanmars burgeoning property market
- as evidenced by Mandalays booming -
has been criticised by many as being a
bubble, and has served to dissuade
foreign investment.
ACUMEN 47
One major issue for many potential investors is a lack of clarity
around US Sanctions. While the EU announced a permanent
ending of all economic sanctions in April, the US has only
suspended sanctions, in a move that many believe gives the
US government more power should the Myanmar government
decide to backslide on reforms. While that decision has been
supported by many Human Rights groups particularly since
the outbreak of anti-Muslim violence in recent months - there
are those in Americas business community who feel that the
State Departments ambiguous stance is stifling American
companies interested in investing.
Speaking to Voice of America during a US Delegation of
business people, which visited Myanmar in February, Darren
Brookes, Asia Pacific Senior Legal Counsel for Caterpillar
Machinery, said that the sanctions made many businesspeople
cautious about investing.
Right now, we would like to see more reliability or more
stability in the fact that the sanctions have to be lifted, so its not
like you can come in and invest $100 million right away, he
said.
The lack of stability around US sanctions indirectly leads to
other issues too, particularly with regards to accessing money.
While the US Treasury announced in February that it would
authorise transactions with four Myanmar banks namely
Ayeyarwady Bank, Asia Green Development Bank, Myanma
Economic Bank and Commercial Bank in a move that was
aimed at encouraging responsible US investment in Myanmar,
instances remain where transactions to those banks from the
US have been blocked, leaving people without access to their
money.
It is legal for US banking institutions to do business with
certain banks in Myanmar, but we havent seen that translate
into a system that works properly, said Travis W Baker of
Scipio Services, who deal with a number of US investors looking
to invest in Myanmar. US banks are still hesitant to do anything
directly with banks in Myanmar, he said before adding that
there had been instances of transactions from the US to Myanmar
being blocked even if the transaction referenced Myanmar in
the description but was not necessarily heading for the country.
As a result, people have to carry hard currency into the country,
or hope that their landlord or business has a foreign bank
account, but there are always costs to doing business like that,
he said, referring to transfer fees and bank charges.
Even without the rule of law situation, legal issues persist
too. Industries such as banking, finance and insurance, as well
as the much talked about telecommunications sector, are all
expected to introduce new legislations in the coming months,
while the oil & gas sector - an economy that has long attracted
the bulk of Myanmars foreign investment it is still governed
by laws and regulations from almost 100 years ago. These will
need to be updated if serious foreign investment is to flood in. A
August 2013
Feature
Myanmars burgeoning property market
- as evidenced by Mandalays booming -
has been criticised by many as being a
bubble, and has served to dissuade
foreign investment.
ACUMEN 47
One major issue for many potential investors is a lack of clarity
around US Sanctions. While the EU announced a permanent
ending of all economic sanctions in April, the US has only
suspended sanctions, in a move that many believe gives the
US government more power should the Myanmar government
decide to backslide on reforms. While that decision has been
supported by many Human Rights groups particularly since
the outbreak of anti-Muslim violence in recent months - there
are those in Americas business community who feel that the
State Departments ambiguous stance is stifling American
companies interested in investing.
Speaking to Voice of America during a US Delegation of
business people, which visited Myanmar in February, Darren
Brookes, Asia Pacific Senior Legal Counsel for Caterpillar
Machinery, said that the sanctions made many businesspeople
cautious about investing.
Right now, we would like to see more reliability or more
stability in the fact that the sanctions have to be lifted, so its not
like you can come in and invest $100 million right away, he
said.
The lack of stability around US sanctions indirectly leads to
other issues too, particularly with regards to accessing money.
While the US Treasury announced in February that it would
authorise transactions with four Myanmar banks namely
Ayeyarwady Bank, Asia Green Development Bank, Myanma
Economic Bank and Commercial Bank in a move that was
aimed at encouraging responsible US investment in Myanmar,
instances remain where transactions to those banks from the
US have been blocked, leaving people without access to their
money.
It is legal for US banking institutions to do business with
certain banks in Myanmar, but we havent seen that translate
into a system that works properly, said Travis W Baker of
Scipio Services, who deal with a number of US investors looking
to invest in Myanmar. US banks are still hesitant to do anything
directly with banks in Myanmar, he said before adding that
there had been instances of transactions from the US to Myanmar
being blocked even if the transaction referenced Myanmar in
the description but was not necessarily heading for the country.
As a result, people have to carry hard currency into the country,
or hope that their landlord or business has a foreign bank
account, but there are always costs to doing business like that,
he said, referring to transfer fees and bank charges.
Even without the rule of law situation, legal issues persist
too. Industries such as banking, finance and insurance, as well
as the much talked about telecommunications sector, are all
expected to introduce new legislations in the coming months,
while the oil & gas sector - an economy that has long attracted
the bulk of Myanmars foreign investment it is still governed
by laws and regulations from almost 100 years ago. These will
need to be updated if serious foreign investment is to flood in. A
July 2013
July 2013
advertising.pmd 6/6/2013, 6:23 PM 66
July 2013
July 2013
July 2013
July 2013
August 2013
Interview
August 2013
MCC A Franchise Empire.pmd 7/9/2013, 10:15 AM 50
ACUMEN 51 ACUMEN 51
August 2013
Interview
August 2013
ACUMEN 51 ACUMEN 51
August 2013
Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in
the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over
t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook
l i ke? l i ke? l i ke? l i ke? l i ke?
U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : Well first of all, we changed our name
from MCC to the MCC Group to reflect our diversification.
Weve got our hands in a lot of different sectors, and we classify
them into two overarching categories education and ICT
services - for the purposes of attaining ISO certification. Our
training services go under the education banner, such as the
MCC Training Institute. We also started Myanmars first
polytechnic college in Mandalay.
On the ICT side of things, we do software development as
well as business process outsourcing. When we get a contract
to conduct a project from the ground up, we also offer system
integration services. Were actively looking into diversifying into
other industries, and we are considering getting involved in
agriculture, energy, and capital management. Weve taken
tentative steps to get these ventures underway; weve done IT
consulting for many years and are now keen to get into the
financial side of things, as well. We have partnerships with
accounting and law firms, should situations requiring their services
arise.
We have connections with KPMG, as well, in case we attract
interest from foreign clients. This is important for the future of
our business, and is a service we provide in order to increase
the attractiveness of our business. In terms of the energy sector,
we have a venture involved in developing renewables, namely
solar. Weve joined forces with SPCG Public from Thailand to
set up a solar project in Yamaethin Township, Mandalay Region,
which will produce two megawatts and provide power to 27
villages.
On both counts, this is just a start for us. As I mentioned,
were also interested in agriculture. Im not satisfied with how
things are done in Myanmars agricultural sector. To improve
things, weve launched a project with the EERI (Environmental
and Economic Research Institute), in partnership with a firm
from Israel. Were trying to implement a number of techniques
here that have improved crop yields elsewhere in the world.
At this point, the agriculture venture is just research: its not a
commercial venture, as yet, but we hope to turn it into one at
some point.
As many foreign companies are interested in investing in
Myanmars economy, the capital management side of things is
going to be especially important in coming years. Many foreign
financial service providers are coming, and they will need reliable
local partners. As Myanmar has precious few organizations
dedicated to this kind of work, I decided to be among the first
to get into the sector.
At MCC, we take corporate social responsibility seriously,
Interview
ACUMEN 53
as evidenced by our eponymous foundation (the MCC
Foundation) and our work with the EERI. Were launching
another EERI project soon, with Italian government funding.
Were looking to establish the first private university in
Myanmar once laws are changed allowing us to do so. We
hope to establish five faculties, and will award both bachelors
and masters degrees in computer science, engineering,
environmental science/resource management, as well as a loosely
affiliated school of business management.
Weve also moved to establish a joint bachelors degree
program in technology with Rangsit University in Thailand,
and will offer a school of multimedia and creative arts in
conjunction with the governments University of Culture. We
also offer diploma courses on multimedia game development at
five schools around the country.
We have also established an international software
development centre as part of our ICT services side of the
business. This encompasses data centres and supply chain
management services. We hire our own graduates to run the
centre and theyre well positioned to conduct business with
foreign partners. Were working to establish a new cloud
computing architecture for clients in enterprise and the
government.
What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge,
you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does
anything like it. anything like it. anything like it. anything like it. anything like it.
The company was established in 1989, and we launched
our educational franchises in 1990 or 1991 starting in Mandalay.
Over time, we expanded outward to become the largest such
company in Myanmar comprising some 170 franchises around
the country as of 2013.
I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this.
From the outset, we were interested in franchising as a
way to grow the business. Its tough to set up branches in other
regi ons, pri mari l y due to admi ni strati ve and capi tal
constraints.We decided to start franchising after expanding our
business out into a couple of different sectors. We realised that
it would be easier to take a hands-off approach to our franchises,
and in this way it would also be easier to build our brands. We
derive regular income from the franchises, in the form of royalties
and annual fees.
We are able to charge for the ancillary aspects of the
business: we issue the certificates and diplomas, for example,
and franchisees need to purchase our teaching materials and
use our system. The investment is theirs, of course, and they
derive the bulk of the profits, but this sort of arrangement is
mutually beneficial. And the benefits are manifold: by placing
highly-skilled graduates across formerly underserved parts of
the country, we make it easier for our other businesses to grow
August 2013
Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in Dr. Aung Tun Thet : MCC is a well-known entity in
the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over the IT sector, but you ve diversified extensively over
t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook t he years. What does MCC s current busi ness l ook
l i ke? l i ke? l i ke? l i ke? l i ke?
U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : U Tin Win Aung : Well first of all, we changed our name
from MCC to the MCC Group to reflect our diversification.
Weve got our hands in a lot of different sectors, and we classify
them into two overarching categories education and ICT
services - for the purposes of attaining ISO certification. Our
training services go under the education banner, such as the
MCC Training Institute. We also started Myanmars first
polytechnic college in Mandalay.
On the ICT side of things, we do software development as
well as business process outsourcing. When we get a contract
to conduct a project from the ground up, we also offer system
integration services. Were actively looking into diversifying into
other industries, and we are considering getting involved in
agriculture, energy, and capital management. Weve taken
tentative steps to get these ventures underway; weve done IT
consulting for many years and are now keen to get into the
financial side of things, as well. We have partnerships with
accounting and law firms, should situations requiring their services
arise.
We have connections with KPMG, as well, in case we attract
interest from foreign clients. This is important for the future of
our business, and is a service we provide in order to increase
the attractiveness of our business. In terms of the energy sector,
we have a venture involved in developing renewables, namely
solar. Weve joined forces with SPCG Public from Thailand to
set up a solar project in Yamaethin Township, Mandalay Region,
which will produce two megawatts and provide power to 27
villages.
On both counts, this is just a start for us. As I mentioned,
were also interested in agriculture. Im not satisfied with how
things are done in Myanmars agricultural sector. To improve
things, weve launched a project with the EERI (Environmental
and Economic Research Institute), in partnership with a firm
from Israel. Were trying to implement a number of techniques
here that have improved crop yields elsewhere in the world.
At this point, the agriculture venture is just research: its not a
commercial venture, as yet, but we hope to turn it into one at
some point.
As many foreign companies are interested in investing in
Myanmars economy, the capital management side of things is
going to be especially important in coming years. Many foreign
financial service providers are coming, and they will need reliable
local partners. As Myanmar has precious few organizations
dedicated to this kind of work, I decided to be among the first
to get into the sector.
At MCC, we take corporate social responsibility seriously,
Interview
ACUMEN 53
as evidenced by our eponymous foundation (the MCC
Foundation) and our work with the EERI. Were launching
another EERI project soon, with Italian government funding.
Were looking to establish the first private university in
Myanmar once laws are changed allowing us to do so. We
hope to establish five faculties, and will award both bachelors
and masters degrees in computer science, engineering,
environmental science/resource management, as well as a loosely
affiliated school of business management.
Weve also moved to establish a joint bachelors degree
program in technology with Rangsit University in Thailand,
and will offer a school of multimedia and creative arts in
conjunction with the governments University of Culture. We
also offer diploma courses on multimedia game development at
five schools around the country.
We have also established an international software
development centre as part of our ICT services side of the
business. This encompasses data centres and supply chain
management services. We hire our own graduates to run the
centre and theyre well positioned to conduct business with
foreign partners. Were working to establish a new cloud
computing architecture for clients in enterprise and the
government.
What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge, What is your franchising model like? To my knowledge,
you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does you re t he onl y company i n Myanmar t hat does
anything like it. anything like it. anything like it. anything like it. anything like it.
The company was established in 1989, and we launched
our educational franchises in 1990 or 1991 starting in Mandalay.
Over time, we expanded outward to become the largest such
company in Myanmar comprising some 170 franchises around
the country as of 2013.
I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this. I m interested in hearing more about this.
From the outset, we were interested in franchising as a
way to grow the business. Its tough to set up branches in other
regi ons, pri mari l y due to admi ni strati ve and capi tal
constraints.We decided to start franchising after expanding our
business out into a couple of different sectors. We realised that
it would be easier to take a hands-off approach to our franchises,
and in this way it would also be easier to build our brands. We
derive regular income from the franchises, in the form of royalties
and annual fees.
We are able to charge for the ancillary aspects of the
business: we issue the certificates and diplomas, for example,
and franchisees need to purchase our teaching materials and
use our system. The investment is theirs, of course, and they
derive the bulk of the profits, but this sort of arrangement is
mutually beneficial. And the benefits are manifold: by placing
highly-skilled graduates across formerly underserved parts of
the country, we make it easier for our other businesses to grow
August 2013
in the future. We profit from creating human capital, which we
are then able to leverage into building other areas of the business.
In terms of service provision, its much easier to do this on
a franchise basis, as filling a contract for electricity billing in
Taunggyi, for example, would be difficult to carry out from
Yangon. Our teaching services arent the only services we
franchise out. Providing services to local governments is a
specialty of ours, and we are able to do so efficiently due to our
franchise-based business model.
There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o
franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards.
I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant
chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch
to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t
be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s.
What do you think? What do you think? What do you think? What do you think? What do you think?
Weve made push to get ISO certification for our franchises,
starting in Yangon and expanding the initiative to Mandalay.
Much of what we do is standardised our teaching franchisees
use a fixed curriculum, which we prepare for them. While we
are hands-off, its not as though theres no oversight on our part.
We do regular performance reviews on all our staff and
franchisees.
How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees
bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors
general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day
operat i ons? operat i ons? operat i ons? operat i ons? operat i ons?
At first, owners act as managers and many even do their
own teaching, As their business expands, they are likely to
appoint dedicated managers if their business reaches a certain
size. In rural areas, franchises can only be so large, so we see
more of this kind of integration with smaller, rural operations.
Whats really interesting is that franchises have a tendency to
spread organically entrepreneurs from areas without franchises
see their success and then transport the concept back home.
For us, its interesting, because it allows us to grow, without
necessarily making a concerted effort to do so.
What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules?
If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO
certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks?
Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled?
Weve done so in the past. I look at performance; once a
year franchisees have to make a presentation on their successes
at a conference I hold once a year, and franchisees must file
monthly reports. We only inspect intermittently, but will evaluate
their performance once a year, in terms of how much they
make, how much is going on.
If they break the rules, thats really bad copying textbooks,
changing them slightly and publishing it as their own work, for
example. Thats plagiarism. If they can do this, they wont buy
books from us anymore. We can catch this because when they
purchase texts, they lower the number of students they claim
are enrolled, so we can figure out that theyre using other
materials and pocketing the difference. We also had one incident
where a franchisee actually produced his own fake certificates
that dilutes the brand and the quality of education it stands
for. Instant termination, in that case, as stipulated in the contract
we enter into with our franchisees. Well also close franchises if
they dont perform very well, but we classify the viability of our
franchises based on where they are located: rural, urban or
somewhere in between. Depending on classification, their annual
fees are higher or lower, and we hand out favours based on
how well they perform based on how well they do in evaluations.
U Tin Win Aung
Interview
ACUMEN 55
Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps
on providing services without your authorization? on providing services without your authorization? on providing services without your authorization? on providing services without your authorization? on providing services without your authorization?
This can happen, yes. Franchisees have been known to
cut all ties with MCC and carry on themselves without paying
royalties. This has only happened on a few occasions, and they
generally change brand names as a result. Theres a disincentive
to do this, however, as the MCC brand stands for quality, and it
makes business sense to maintain a relationship with home
office for this reason alone. We also provide them with plenty
of tools to succeed in their home communities, and we have
even taken franchisees to conferences held abroad to help them
grow their businesses and expose them to international best
practices. So while a few former franchisees have successfully
gone independent, these have been few and far between, and
there are good reasons for franchisees to avoid doing so.
Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or
ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What
sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does
MCC fit in? MCC fit in? MCC fit in? MCC fit in? MCC fit in?
I used to be actively involved in planning ICT policy with
the Myanmar ICT Association, but I dont do that anymore. I
used to think up solutions for Myanmars ICT problems in
conjunction with my colleague, Ko Thein Oo. We were responsible
for a lot of the work that took place on ICT over the past couple
of decades. Now I dont want to insinuate that the government
didnt do anything on this front: they certainly did. But whats
most important is actually putting these things in place, and
thats what we did. Unfortunately, the Association disintegrated
somewhat over the years, and many of the decisions we wanted
to enact never came to pass.
The government really needs to have a more standardised
way to deal with external consultants. This isnt just the case for
ICT its important across all sectors, but for ICT its particularly
important because of how embryonic ICT development in
Myanmar is at present. To be honest, implementation of ICT
reforms only goes halfway here; theres a lot of incompetence.
We try to point out mistakes to the government, but they dont
like it when we make suggestions. They keep us out of the
decision-making and consulting process. To be honest, a lot of
what happens here is for show there isnt a lot of substance
behind policy decisions, and politicians are more concerned
with appearances than with outcomes. This isnt just a problem
with the government: this is a problem on all levels of society in
this country. For there to be substantive change when it comes
to ICT policy, things really do need to change. There are
government departments that are proactive and responsive,
but these are few and far between, and comprehensive reforms
need to be made.
Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many
of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he
not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government
servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so
specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces
onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The
government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for
ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o
i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government
been so slow to adopt them? been so slow to adopt them? been so slow to adopt them? been so slow to adopt them? been so slow to adopt them?
Sure, the government set up e-Government initiatives long
ago, but this is a repeat, of sorts: they need to start from the
beginning. There were some positive changes after e-
Government initiatives were put in place, which I helped initiate.
It was great; we had almost unlimited access to the prime
ministers office, and we saw our ideas translated into policy.
We had real successes, but it was difficult to make it work in
Prof. Dr. Aung Tun Thet
August 2013
in the future. We profit from creating human capital, which we
are then able to leverage into building other areas of the business.
In terms of service provision, its much easier to do this on
a franchise basis, as filling a contract for electricity billing in
Taunggyi, for example, would be difficult to carry out from
Yangon. Our teaching services arent the only services we
franchise out. Providing services to local governments is a
specialty of ours, and we are able to do so efficiently due to our
franchise-based business model.
There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o There are a l ot of wi l dcards when i t comes t o
franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards. franchising and a big one is maintaining standards.
I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant I spoke wi t h t he CEO of YKKO (a l ocal rest aurant
chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch chain) about this and he claimed he refuses to switch
to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t to a franchise model because he thinks he wouldn t
be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s. be abl e t o cont rol t he qual i t y of YKKO s product s.
What do you think? What do you think? What do you think? What do you think? What do you think?
Weve made push to get ISO certification for our franchises,
starting in Yangon and expanding the initiative to Mandalay.
Much of what we do is standardised our teaching franchisees
use a fixed curriculum, which we prepare for them. While we
are hands-off, its not as though theres no oversight on our part.
We do regular performance reviews on all our staff and
franchisees.
How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees How do most f ranchi ses operat e? Are f ranchi sees
bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors bot h owners and managers, or do owners/i nvest ors
general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day general l y hi re managers t o t ake over day-t o-day
operat i ons? operat i ons? operat i ons? operat i ons? operat i ons?
At first, owners act as managers and many even do their
own teaching, As their business expands, they are likely to
appoint dedicated managers if their business reaches a certain
size. In rural areas, franchises can only be so large, so we see
more of this kind of integration with smaller, rural operations.
Whats really interesting is that franchises have a tendency to
spread organically entrepreneurs from areas without franchises
see their success and then transport the concept back home.
For us, its interesting, because it allows us to grow, without
necessarily making a concerted effort to do so.
What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules? What happens to franchises that dont follow the rules?
If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO If t hey don t f ol l ow t he st i pul at i ons of t he ISO
certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks? certification and/or MCC s own internal benchmarks?
Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled? Can they have their franchises pulled?
Weve done so in the past. I look at performance; once a
year franchisees have to make a presentation on their successes
at a conference I hold once a year, and franchisees must file
monthly reports. We only inspect intermittently, but will evaluate
their performance once a year, in terms of how much they
make, how much is going on.
If they break the rules, thats really bad copying textbooks,
changing them slightly and publishing it as their own work, for
example. Thats plagiarism. If they can do this, they wont buy
books from us anymore. We can catch this because when they
purchase texts, they lower the number of students they claim
are enrolled, so we can figure out that theyre using other
materials and pocketing the difference. We also had one incident
where a franchisee actually produced his own fake certificates
that dilutes the brand and the quality of education it stands
for. Instant termination, in that case, as stipulated in the contract
we enter into with our franchisees. Well also close franchises if
they dont perform very well, but we classify the viability of our
franchises based on where they are located: rural, urban or
somewhere in between. Depending on classification, their annual
fees are higher or lower, and we hand out favours based on
how well they perform based on how well they do in evaluations.
U Tin Win Aung
Interview
ACUMEN 55
Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps Are t here ever i nst ances where a f ranchi see keeps
on providing services without your authorization? on providing services without your authorization? on providing services without your authorization? on providing services without your authorization? on providing services without your authorization?
This can happen, yes. Franchisees have been known to
cut all ties with MCC and carry on themselves without paying
royalties. This has only happened on a few occasions, and they
generally change brand names as a result. Theres a disincentive
to do this, however, as the MCC brand stands for quality, and it
makes business sense to maintain a relationship with home
office for this reason alone. We also provide them with plenty
of tools to succeed in their home communities, and we have
even taken franchisees to conferences held abroad to help them
grow their businesses and expose them to international best
practices. So while a few former franchisees have successfully
gone independent, these have been few and far between, and
there are good reasons for franchisees to avoid doing so.
Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or Let s t urn t he di scussi on t owards t he prospect s f or
ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What ICT devel opment i n Myanmar more general l y. What
sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does sort of strategy is Myanmar pursuing? And how does
MCC fit in? MCC fit in? MCC fit in? MCC fit in? MCC fit in?
I used to be actively involved in planning ICT policy with
the Myanmar ICT Association, but I dont do that anymore. I
used to think up solutions for Myanmars ICT problems in
conjunction with my colleague, Ko Thein Oo. We were responsible
for a lot of the work that took place on ICT over the past couple
of decades. Now I dont want to insinuate that the government
didnt do anything on this front: they certainly did. But whats
most important is actually putting these things in place, and
thats what we did. Unfortunately, the Association disintegrated
somewhat over the years, and many of the decisions we wanted
to enact never came to pass.
The government really needs to have a more standardised
way to deal with external consultants. This isnt just the case for
ICT its important across all sectors, but for ICT its particularly
important because of how embryonic ICT development in
Myanmar is at present. To be honest, implementation of ICT
reforms only goes halfway here; theres a lot of incompetence.
We try to point out mistakes to the government, but they dont
like it when we make suggestions. They keep us out of the
decision-making and consulting process. To be honest, a lot of
what happens here is for show there isnt a lot of substance
behind policy decisions, and politicians are more concerned
with appearances than with outcomes. This isnt just a problem
with the government: this is a problem on all levels of society in
this country. For there to be substantive change when it comes
to ICT policy, things really do need to change. There are
government departments that are proactive and responsive,
but these are few and far between, and comprehensive reforms
need to be made.
Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many Actual l y, thi s i s somethi ng I d l i ke to di scuss. Many
of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he of f i ci al s i n t hi s count ry have begun t o di scuss t he
not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government not i on of e-Government , ways t o t ake government
servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so servi ce provi si on onl i ne. Many peopl e have al so
specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces specul at ed t hat of f eri ng more government servi ces
onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The onl i ne wi l l act as a way t o reduce corrupt i on. The
government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for government has been discussing these initiatives for
ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o ages, but l i t t l e progress has been made as yet t o
i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government i mpl ement t hese syst ems. Why has t he government
been so slow to adopt them? been so slow to adopt them? been so slow to adopt them? been so slow to adopt them? been so slow to adopt them?
Sure, the government set up e-Government initiatives long
ago, but this is a repeat, of sorts: they need to start from the
beginning. There were some positive changes after e-
Government initiatives were put in place, which I helped initiate.
It was great; we had almost unlimited access to the prime
ministers office, and we saw our ideas translated into policy.
We had real successes, but it was difficult to make it work in
Prof. Dr. Aung Tun Thet
August 2013
the end, primarily due to a lack
of know-how on the part of
the people entrusted with
implementing it. To be honest,
Myanmar was not and is not,
in some respects ready for
e-Government, as the
infrastructure required to
implement such a system
simply isnt in place yet. There
needs to be a framework in
place before the government
can effectively provide services
through e-Government-type
systems.
For starters, there needs
to be better data. The
government isnt going to get
anything accomplished unless
the government has decent
data at its disposal which it can
then use to guide policy. Some
of this data could theoretically
be worth millions of dollars
but there s no database
currently in existence for the
government to use. Moreover,
the data in these databases
about publ i c works and
demographic information need
to be constantly updated:
unless the government has
reliable data at its disposal, it
will not be able to make
relevant policy decisions that
are receptive to the needs of
the people. The government
thinks that it can throw money
at the problem, that by building
infrastructure, all things will
sort themselves out.
But this sort of technolog-
ical determinism has its draw-
backs. Infrastructure on its own
is useless without a master
plan: a comprehensive notion
of what youre going to do with
that infrastructure once you
have it in place. What I have
found is that the government
tends to think that all it needs
Interview
August 2013
the end, primarily due to a lack
of know-how on the part of
the people entrusted with
implementing it. To be honest,
Myanmar was not and is not,
in some respects ready for
e-Government, as the
infrastructure required to
implement such a system
simply isnt in place yet. There
needs to be a framework in
place before the government
can effectively provide services
through e-Government-type
systems.
For starters, there needs
to be better data. The
government isnt going to get
anything accomplished unless
the government has decent
data at its disposal which it can
then use to guide policy. Some
of this data could theoretically
be worth millions of dollars
but there s no database
currently in existence for the
government to use. Moreover,
the data in these databases
about publ i c works and
demographic information need
to be constantly updated:
unless the government has
reliable data at its disposal, it
will not be able to make
relevant policy decisions that
are receptive to the needs of
the people. The government
thinks that it can throw money
at the problem, that by building
infrastructure, all things will
sort themselves out.
But this sort of technolog-
ical determinism has its draw-
backs. Infrastructure on its own
is useless without a master
plan: a comprehensive notion
of what youre going to do with
that infrastructure once you
have it in place. What I have
found is that the government
tends to think that all it needs
Interview
ACUMEN 57
to do is put the infrastructure in place and things will sort
themselves out. But this is never the case: unless the govern-
ment has a good idea of what it is going to use the infrastruc-
ture for, it will waste a ton of money building it. Aside from
technical concerns, its important to have proper people in-
volved as well: there are project managers out there that are
inefficient, and then there are the kinds of personalities that
be crushed by foreign competition? Are you going to be crushed by foreign competition? Are you going to be crushed by foreign competition? Are you going to be crushed by foreign competition? Are you going to be crushed by foreign competition? Are you going to
ask for government protection? ask for government protection? ask for government protection? ask for government protection? ask for government protection?
At present, we dont have any government protection in
the IT sector, which is a challenge, but were confident that we
can persevere. The fact of the matter is that we really do need
the technical assistance and capital from abroad: foreign
companies are going to come to us and want a partner to enter
into Myanmars underdeveloped IT market. Honestly, it all comes
down to how well we prepare: the foreign onslaught is inevitable,
so we have to be as prepared as possible. We need to improve
infrastructure, improve HR, and bring expats into the fold. Ive
already hired a couple of foreigners to help us get up to
international standard. Ive also invited chairmen and managing
directors from well-established global firms to consult with us,
in an effort to promote collaboration between our company and
multinationals. I think its important we show them we have
something to offer, and that its in their best interests to partner
with us as opposed to out-competing us entirely.
But whether we partner with international firms or not,
theres a lot that still needs to be done in this country. And
while foreign companies can add much-needed capacity, itll be
up to us to develop these systems ourselves, to develop supply
chains on our own and train people on how to operate in a
newly modernized environment. It will be up to us to develop
all of this, and whether or not we are able to deliver will be up
to us alone. If we are able to create efficient supply chains of our
own, well be able to compete with multinationals directly. I feel
that MCC can be a true player in Myanmar, and have entered
into negotiations with a number of companies to develop strategic
partnerships, including SAP and Oracle. But theyve been honest
with me, and have made it known that we cant be an exclusive
partner for them in Myanmar. That doesnt mean we wont be
able to provide service and installation for their products,
however. Were looking at establishing a cloud computing
architecture at the moment, and then well give the software
away to the government as a loss-leader. We want the
government to understand the value modernizing their systems.
Im also setting up an international software development
centre at the moment, and will hire many MCC graduates to get
it up and running. By 2014, I hope to have four or five hundred
employees, expanding to a thousand or so over the next couple
of years. As we have one graduating class every six months, I
provide graduates with jobs straight away. Were looking to set
up four data centres around the country, at Yatanarpon,
Mandalay, Naypyidaw and Yangon, with the one in Naypyidaw
dedicated for government use and the Mandalay and Yangon
ones dedicated for our own internal use. We arent planning to
rent or sell space to other companies.
Business-to-business links are a new phenomenon in Business-to-business links are a new phenomenon in Business-to-business links are a new phenomenon in Business-to-business links are a new phenomenon in Business-to-business links are a new phenomenon in
Myanmar, where hi st ori cal l y busi ness has been Myanmar, where hi st ori cal l y busi ness has been Myanmar, where hi st ori cal l y busi ness has been Myanmar, where hi st ori cal l y busi ness has been Myanmar, where hi st ori cal l y busi ness has been
will get things accomplished, by hook or by crook.
One of our first major implementation projects was for the
prison system, and we managed to put that in place and its
working rather well, I must say. It wasnt easy to establish it, but
we did it, and it marks the most notable example of an IT-
based solution youll find in the Myanmar government at the
moment. This is a reflection on the vision of the government
officials to allow us to set this up, as well as the managers in
charge of actually putting the systems in place. I hope that this
is just the beginning.
What are t he prospect s f or IT devel opment once What are t he prospect s f or IT devel opment once What are t he prospect s f or IT devel opment once What are t he prospect s f or IT devel opment once What are t he prospect s f or IT devel opment once
foreign investment comes in? Won t the local industry foreign investment comes in? Won t the local industry foreign investment comes in? Won t the local industry foreign investment comes in? Won t the local industry foreign investment comes in? Won t the local industry
At present, we dont have any At present, we dont have any At present, we dont have any At present, we dont have any At present, we dont have any
government protection in the government protection in the government protection in the government protection in the government protection in the
IT sector, which is a challenge, IT sector, which is a challenge, IT sector, which is a challenge, IT sector, which is a challenge, IT sector, which is a challenge,
but were confident that we can but were confident that we can but were confident that we can but were confident that we can but were confident that we can
persevere. The fact of the persevere. The fact of the persevere. The fact of the persevere. The fact of the persevere. The fact of the
matter is that we really do matter is that we really do matter is that we really do matter is that we really do matter is that we really do
need the technical assistance need the technical assistance need the technical assistance need the technical assistance need the technical assistance
and capital from abroad: and capital from abroad: and capital from abroad: and capital from abroad: and capital from abroad:
foreign companies are going to foreign companies are going to foreign companies are going to foreign companies are going to foreign companies are going to
come to us and want a partner come to us and want a partner come to us and want a partner come to us and want a partner come to us and want a partner
to enter into Myanmars to enter into Myanmars to enter into Myanmars to enter into Myanmars to enter into Myanmars
underdeveloped IT market. underdeveloped IT market. underdeveloped IT market. underdeveloped IT market. underdeveloped IT market.
August 2013
conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri -
vat e compani es and t he vat e compani es and t he vat e compani es and t he vat e compani es and t he vat e compani es and t he
government or companies government or companies government or companies government or companies government or companies
and consumers di rect l y. and consumers di rect l y. and consumers di rect l y. and consumers di rect l y. and consumers di rect l y.
What kind of business-to- What kind of business-to- What kind of business-to- What kind of business-to- What kind of business-to-
business links do you have business links do you have business links do you have business links do you have business links do you have
wi th other compani es? wi th other compani es? wi th other compani es? wi th other compani es? wi th other compani es?
MCC has B2B (business-
to-busi ness) l i nks wi th a
Singaporean company, a UK-
based company operating in
Malaysia, and a company from
Thailand. The Thai company
has over two thousand
software engineers. It s a
conglomerate of sorts, as it
bought up a lot of smaller
companies to reach the size it
has attai ned today. It s
inspirational, really: Id like to
mimic that sort of success here
in Myanmar. This is going to
be especially important after
2015, when the AEC (ASEAN
Economic Community) comes
into effect, which will gradually
liberalise Myanmars labour
markets and its access to other
markets in the region. Were
going to be forced to go regional,
so to speak. It is through these
B2B linkages with our regional
counterparts that we are going
to be able to grow and thrive
in Southeast Asias post-2015
busi ness envi ronment.
Working with these other
companies, we were definitely
the junior partners in the
relationship: its now time to
step it up to the next level and
make MCC a player to be
reckoned with in Myanmars
rapidly-emerging economy.
Many thanks for your time. Many thanks for your time. Many thanks for your time. Many thanks for your time. Many thanks for your time.
Thank you very much. A
Interview
July 2013
August 2013
conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri - conduct ed bet ween pri -
vat e compani es and t he vat e compani es and t he vat e compani es and t he vat e compani es and t he vat e compani es and t he
government or companies government or companies government or companies government or companies government or companies
and consumers di rect l y. and consumers di rect l y. and consumers di rect l y. and consumers di rect l y. and consumers di rect l y.
What kind of business-to- What kind of business-to- What kind of business-to- What kind of business-to- What kind of business-to-
business links do you have business links do you have business links do you have business links do you have business links do you have
wi th other compani es? wi th other compani es? wi th other compani es? wi th other compani es? wi th other compani es?
MCC has B2B (business-
to-busi ness) l i nks wi th a
Singaporean company, a UK-
based company operating in
Malaysia, and a company from
Thailand. The Thai company
has over two thousand
software engineers. It s a
conglomerate of sorts, as it
bought up a lot of smaller
companies to reach the size it
has attai ned today. It s
inspirational, really: Id like to
mimic that sort of success here
in Myanmar. This is going to
be especially important after
2015, when the AEC (ASEAN
Economic Community) comes
into effect, which will gradually
liberalise Myanmars labour
markets and its access to other
markets in the region. Were
going to be forced to go regional,
so to speak. It is through these
B2B linkages with our regional
counterparts that we are going
to be able to grow and thrive
in Southeast Asias post-2015
busi ness envi ronment.
Working with these other
companies, we were definitely
the junior partners in the
relationship: its now time to
step it up to the next level and
make MCC a player to be
reckoned with in Myanmars
rapidly-emerging economy.
Many thanks for your time. Many thanks for your time. Many thanks for your time. Many thanks for your time. Many thanks for your time.
Thank you very much. A
Interview
July 2013
August 2013
Interview
August 2013
(From Alex, UML) Dr.Aung Thu Ya.pmd 7/8/2013, 7:36 PM 60
ACUMEN 61 ACUMEN 61
August 2013
Interview
August 2013
ACUMEN 61 ACUMEN 61
August 2013
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar?
What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars
changing economy? changing economy? changing economy? changing economy? changing economy?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: We have been in Myanmar for one-and-a-half
years now. We started operations in January 2012, and before
that I was living in Switzerland, working in banking. The last role
I had was as a trader of equity derivatives, exotic options, and
structured products; these are my primary areas of expertise. I
had an interest in Myanmars capital and financial markets for a
long time, but I couldnt just come back and say, Lets enter financial
markets! I mean, the capital markets arent developed yet, and
you cant just go into the banking sector. I wanted to set up something
independent my own company. I didnt want to join with an
existing bank, and I realised that research was one area where I
could build up a network and reputation in a very short period of
time. We have many foreign investors coming to meet with us,
and have a wide range of domestic contacts. With research, its
also great because theres a steady cash flow, so we get paid to
learn about the Myanmar market ourselves!
Currently, research is really important, because there is very
little information available about Myanmar. Typically, we find that
investors now are in a preliminary phase of their engagement
with Myanmar. They are just coming to check things out, they
want to learn about the Myanmar market, but they are not really
investing yet. So the most demand will be in research, at the
beginning at least. At a later stage, we want to expand to our
consulting business further. In Myanmar, research and consulting
often go hand-in-hand; they arent completely independent. We
do research, and then advise companies on how to proceed based
on the research we conduct. In the long-term, however, I see us
focusing more on capital markets. We have already written one
equity research report [on Serge Puns FMI Co.], and we see
ourselves as filling the role of educators, to inform the people about
the importance of capital market development.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n
Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things
that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: There are various things. For the moment, the
most important aspect is encouraging understanding of capital
markets. Daiwa, a Japanese company, is currently building a stock
exchange in Myanmar, but we feel as though they are focusing too
much on the technical aspects [of establishing a bourse] alone. its
pointless to have a technologically perfect stock exchange if nobody
is using it. People need to be educated. It will be important to talk
to Myanmar companies and ask them if they are interested in
getting listed, or if theyre interested in having an IPO [Initial Public
Offering], but having spoken to many of them we found that many
of these concepts were foreign to them.
Interview
ACUMEN 63
August 2013
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar? : What motivated you to return to Myanmar?
What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars What role do you foresee for Thura Swiss in Myanmars
changing economy? changing economy? changing economy? changing economy? changing economy?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: We have been in Myanmar for one-and-a-half
years now. We started operations in January 2012, and before
that I was living in Switzerland, working in banking. The last role
I had was as a trader of equity derivatives, exotic options, and
structured products; these are my primary areas of expertise. I
had an interest in Myanmars capital and financial markets for a
long time, but I couldnt just come back and say, Lets enter financial
markets! I mean, the capital markets arent developed yet, and
you cant just go into the banking sector. I wanted to set up something
independent my own company. I didnt want to join with an
existing bank, and I realised that research was one area where I
could build up a network and reputation in a very short period of
time. We have many foreign investors coming to meet with us,
and have a wide range of domestic contacts. With research, its
also great because theres a steady cash flow, so we get paid to
learn about the Myanmar market ourselves!
Currently, research is really important, because there is very
little information available about Myanmar. Typically, we find that
investors now are in a preliminary phase of their engagement
with Myanmar. They are just coming to check things out, they
want to learn about the Myanmar market, but they are not really
investing yet. So the most demand will be in research, at the
beginning at least. At a later stage, we want to expand to our
consulting business further. In Myanmar, research and consulting
often go hand-in-hand; they arent completely independent. We
do research, and then advise companies on how to proceed based
on the research we conduct. In the long-term, however, I see us
focusing more on capital markets. We have already written one
equity research report [on Serge Puns FMI Co.], and we see
ourselves as filling the role of educators, to inform the people about
the importance of capital market development.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n : What i s the state of capi tal markets i n
Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things Myanmar now, and what are some fundamental things
that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective? that need to change for them to be effective?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: There are various things. For the moment, the
most important aspect is encouraging understanding of capital
markets. Daiwa, a Japanese company, is currently building a stock
exchange in Myanmar, but we feel as though they are focusing too
much on the technical aspects [of establishing a bourse] alone. its
pointless to have a technologically perfect stock exchange if nobody
is using it. People need to be educated. It will be important to talk
to Myanmar companies and ask them if they are interested in
getting listed, or if theyre interested in having an IPO [Initial Public
Offering], but having spoken to many of them we found that many
of these concepts were foreign to them.
Interview
ACUMEN 63
August 2013
We also ask local companies what their financing
requirements are. A mid-range company - which, for example,
might have a capitalization of US$40 million - may feel it needs
another $20 million. We might say, We can advise you in this
process, but we will only do so if you agree to be transparent with
us. We will not sell your shares unless you are, because our own
reputation is at stake, and we will not work with you unless we
truly believe in your company and can work on a strategy together
to move things forward. Transparency and accountability are our
primary concerns, and are notions we are trying very hard to
promote.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has
been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting
standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you
analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the
i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most
Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency yet, yet, yet, yet, yet,
or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: As we all know, in Myanmar some companies
have two sets of books, maybe three or four sets of books. This
means that transparency can often be a risky proposition for them,
if true information about the nature of their finances were to leak.
Everyone is a bit scared. But I think its up to the government to
promote this, because if they really want capital markets to develop,
people need to be comfortable that things are moving in the right
direction. Even if the past was a bit shady, signals need to be sent
that things are improving. But there is a balance that needs to be
struck. In the past, companies rarely paid appropriate taxes, and
of course this is something that needs to change. But, on the other
hand, if the government becomes keen to pursue companies to
pay back taxes, these companies would have no incentive to become
transparent.
So I propose that the government develop an amnesty
scheme, saying, for example, that within two years [companies]
must attain a certain level of transparency. But if these companies
havent done so within the defined period, this will open them up
to prosecution. In the interests of moving on, however, some of the
problems of the past will need to be forgiven, although there should
still be measures to regain some of lost tax revenue, such as, lets
say, a 10% penalty on the profit companies failed to report in the
past. This gives companies an opportunity to break with the past
and become transparent over time. Its difficult for companies who
have opaque pasts to become transparent without such schemes.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do
this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked
enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a
lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for
transparency. transparency. transparency. transparency. transparency.
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : : : : : I was referring more to the private sector, but for
successful capital markets to emerge you need companies to trust
that they can become transparent, and for the government to
establish a framework that allows them to do so. If a company
doesnt want to become transparent, thats another thing I imagine
that some would be willing to pay appropriate taxes, but they
need to be assured that they will not be prosecuted for what they
did in the past. As far as state-owned enterprises go, they tend to
lose a lot of money, because they have out-dated technology and
are often located in remote areas. Their policies are generally
determined more by political concerns than sound economics, such
as promoting jobs in certain areas. Many of these companies may
simply cease to exist, as they have little intrinsic value.
Military conglomerates will need to reform, as well. The main
Interview
ACUMEN 65
and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry
are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum
capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as
well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that
these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller
companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which
woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest
companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the
resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you
think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately?
Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the
capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for
them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their
access to financing? access to financing? access to financing? access to financing? access to financing?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: Myanmar is a bit odd. In other countries, there is
a clear distinction between private companies and public companies,
and public companies are usually listed. In Myanmar, the situation
is that there are many public companies that are not likely to be
listed once the exchange is established. While these companies
enjoy public status, their shares are not traded on an exchange,
as is standard practice elsewhere in the world.
Over the past year, the government allowed new public
companies to form once again, but without a securities exchange
law in place, public companies function in a very unregulated
manner. Around 60 companies were formed over the past year,
but there are no tough requirements in place in terms of formulating
a prospectus, for example. In other countries, a prospectus is
generally around 300 pages, but here it might be six pages. There
was one company that recently released a detailed and professional
prospectus of around 90 pages, but its not as though there was
anything legally binding that compelled them to do so. They did
this of their own accord, as they saw it as increasing their chances
of attracting investment.
In terms of actually being allowed to sell shares, the process
is pretty simple companies have to submit their prospectuses to
DICA (Directorate of Investment and Company Administration),
and if their applications are approved, they can begin to sell shares.
But because there are basically no formal exchanges, companies
often do so in odd ways. Ive seen companies selling shares from
booths outside of City Mart [a Yangon supermarket].
There are also many public companies that are not true
public companies. Companies are often motivated to go public to
avail themselves of certain advantages; for example, the government
is now hesitant to give contracts to private companies, as they do
not want to be seen as favouring the cronies that have long
dominated Myanmars economy. Forming a public company is a
typical way of circumventing this problem; the public company
will get the contract, which it will then subcontract out to its private
affiliate.
Many public companies are managed like private companies
problem is that, until now, they have received special treatment
from the state and would not have had to pay taxes. From here
on, they will no longer have exclusive access to certain economic
areas. If they do not start to reform, especially with foreign
investment coming in, they might be left behind as foreign
companies will not want to partner with them, as they will perceive
their products to be inferior to those produced by the private sector.
These companies will have to decide whether they want to privatise,
and by doing so reduce their military affiliations. If they do this,
they can be removed from sanctions lists and become viable partners
for international investors.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before,
which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization
August 2013
We also ask local companies what their financing
requirements are. A mid-range company - which, for example,
might have a capitalization of US$40 million - may feel it needs
another $20 million. We might say, We can advise you in this
process, but we will only do so if you agree to be transparent with
us. We will not sell your shares unless you are, because our own
reputation is at stake, and we will not work with you unless we
truly believe in your company and can work on a strategy together
to move things forward. Transparency and accountability are our
primary concerns, and are notions we are trying very hard to
promote.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has : The notion of transparency in Myanmar has
been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting been nonexistent. I take it there are certain accounting
standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you standards, etc, but are they enforceabl e? When you
analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the analyse a company, can you say with certainty that the
i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most i nformati on you re recei vi ng i s rel i abl e? Do most
Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency Myanmar companies make an effort at transparency yet, yet, yet, yet, yet,
or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of? or is this something they are as yet largely unaware of?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: As we all know, in Myanmar some companies
have two sets of books, maybe three or four sets of books. This
means that transparency can often be a risky proposition for them,
if true information about the nature of their finances were to leak.
Everyone is a bit scared. But I think its up to the government to
promote this, because if they really want capital markets to develop,
people need to be comfortable that things are moving in the right
direction. Even if the past was a bit shady, signals need to be sent
that things are improving. But there is a balance that needs to be
struck. In the past, companies rarely paid appropriate taxes, and
of course this is something that needs to change. But, on the other
hand, if the government becomes keen to pursue companies to
pay back taxes, these companies would have no incentive to become
transparent.
So I propose that the government develop an amnesty
scheme, saying, for example, that within two years [companies]
must attain a certain level of transparency. But if these companies
havent done so within the defined period, this will open them up
to prosecution. In the interests of moving on, however, some of the
problems of the past will need to be forgiven, although there should
still be measures to regain some of lost tax revenue, such as, lets
say, a 10% penalty on the profit companies failed to report in the
past. This gives companies an opportunity to break with the past
and become transparent over time. Its difficult for companies who
have opaque pasts to become transparent without such schemes.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do : Do you think theres any political will to do
this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked this? There are state-linked and military-linked
enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a enterprises that are rather secretive and would have a
lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for lot to lose if there were to be a comprehensive push for
transparency. transparency. transparency. transparency. transparency.
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : : : : : I was referring more to the private sector, but for
successful capital markets to emerge you need companies to trust
that they can become transparent, and for the government to
establish a framework that allows them to do so. If a company
doesnt want to become transparent, thats another thing I imagine
that some would be willing to pay appropriate taxes, but they
need to be assured that they will not be prosecuted for what they
did in the past. As far as state-owned enterprises go, they tend to
lose a lot of money, because they have out-dated technology and
are often located in remote areas. Their policies are generally
determined more by political concerns than sound economics, such
as promoting jobs in certain areas. Many of these companies may
simply cease to exist, as they have little intrinsic value.
Military conglomerates will need to reform, as well. The main
Interview
ACUMEN 65
and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry and extending access to finance. The barriers to entry
are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum are hi gh: compani es wi l l need to show a mi ni mum
capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as capitalization of 500 million Kyats (US$5. 3 million) as
well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that well as two years profitability. I would imagine that
these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller these kinds of figures would lock out a lot of smaller
companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which companies that also need access to financing, which
woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest woul d serve to further enri ch Myanmar s bi ggest
companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the companies because they will be the only ones with the
resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you resources to be able to list. First of all, who do you
think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately? think the stock exchange is going to benefit immediately?
Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the Second of all, for companies that are just shy of the
capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for capitalization requirements to list, what can be done for
them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their them? What measures can be taken to improve their
access to financing? access to financing? access to financing? access to financing? access to financing?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: Myanmar is a bit odd. In other countries, there is
a clear distinction between private companies and public companies,
and public companies are usually listed. In Myanmar, the situation
is that there are many public companies that are not likely to be
listed once the exchange is established. While these companies
enjoy public status, their shares are not traded on an exchange,
as is standard practice elsewhere in the world.
Over the past year, the government allowed new public
companies to form once again, but without a securities exchange
law in place, public companies function in a very unregulated
manner. Around 60 companies were formed over the past year,
but there are no tough requirements in place in terms of formulating
a prospectus, for example. In other countries, a prospectus is
generally around 300 pages, but here it might be six pages. There
was one company that recently released a detailed and professional
prospectus of around 90 pages, but its not as though there was
anything legally binding that compelled them to do so. They did
this of their own accord, as they saw it as increasing their chances
of attracting investment.
In terms of actually being allowed to sell shares, the process
is pretty simple companies have to submit their prospectuses to
DICA (Directorate of Investment and Company Administration),
and if their applications are approved, they can begin to sell shares.
But because there are basically no formal exchanges, companies
often do so in odd ways. Ive seen companies selling shares from
booths outside of City Mart [a Yangon supermarket].
There are also many public companies that are not true
public companies. Companies are often motivated to go public to
avail themselves of certain advantages; for example, the government
is now hesitant to give contracts to private companies, as they do
not want to be seen as favouring the cronies that have long
dominated Myanmars economy. Forming a public company is a
typical way of circumventing this problem; the public company
will get the contract, which it will then subcontract out to its private
affiliate.
Many public companies are managed like private companies
problem is that, until now, they have received special treatment
from the state and would not have had to pay taxes. From here
on, they will no longer have exclusive access to certain economic
areas. If they do not start to reform, especially with foreign
investment coming in, they might be left behind as foreign
companies will not want to partner with them, as they will perceive
their products to be inferior to those produced by the private sector.
These companies will have to decide whether they want to privatise,
and by doing so reduce their military affiliations. If they do this,
they can be removed from sanctions lists and become viable partners
for international investors.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before, : We discussed the stock exchange before,
which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization which is a big step forward in terms of modernization
August 2013
in practice. They get capital from the public, but they are not very
transparent. Its a bit tough, because theres no regulation in place.
If one public company were to fail, it could taint the whole well.
Thats my fear: that there will be one big fraud case and people
will lose all trust in capital markets just as they are getting off the
ground. People wont have the sophistication to look at the reasons
for this like a lack of regulation and will come to associate
capital markets with losing money. Thats what I would hate to
see.
This is something we want to be proactive about before 2015
[when the stock exchange is set to go online]. We only anticipate
two or three companies to be listed at first, although Daiwa expects
five to ten companies to list, mostly banks. As mentioned, this
leaves many public companies out. These companies might not
have the capitalization of listed companies, but they often have a
broad shareholder base. These shares cannot be traded, as theres
no secondary market for them. We at Thura Swiss think we can
play a role here by establishing a brokerage platform. Weve already
entered into discussions with a number of local companies that
are willing to work with us.
One major problem is that many of these public companies
trade all their shares through one broker, who unilaterally sets
prices. How can the public know if the prices theyre paying for
shares have any basis in reality?
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with
these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of
these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies.
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: Thats a large part of it, but with our platform well
also bring people together buyers and sellers. In doing so, well
allow market forces to determine the valuation of shares. We
think its important to establish this kind of avenue, because smaller
companies will still need a market.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already
offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to
offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: We are in the last stages of preparing such vehicles.
Typically, these vehicles will be private placements, for regulatory
reasons. Theyll be issued out of the Cayman Islands and well
have various jurisdictions for placements, the first being Switzerland,
but hopefully others including Hong Kong and Singapore later on.
Interview
August 2013
in practice. They get capital from the public, but they are not very
transparent. Its a bit tough, because theres no regulation in place.
If one public company were to fail, it could taint the whole well.
Thats my fear: that there will be one big fraud case and people
will lose all trust in capital markets just as they are getting off the
ground. People wont have the sophistication to look at the reasons
for this like a lack of regulation and will come to associate
capital markets with losing money. Thats what I would hate to
see.
This is something we want to be proactive about before 2015
[when the stock exchange is set to go online]. We only anticipate
two or three companies to be listed at first, although Daiwa expects
five to ten companies to list, mostly banks. As mentioned, this
leaves many public companies out. These companies might not
have the capitalization of listed companies, but they often have a
broad shareholder base. These shares cannot be traded, as theres
no secondary market for them. We at Thura Swiss think we can
play a role here by establishing a brokerage platform. Weve already
entered into discussions with a number of local companies that
are willing to work with us.
One major problem is that many of these public companies
trade all their shares through one broker, who unilaterally sets
prices. How can the public know if the prices theyre paying for
shares have any basis in reality?
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with : I guess thats what youre trying to do with
these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of these equity research reports, is establish the value of
these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies. these otherwise opaque companies.
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: Thats a large part of it, but with our platform well
also bring people together buyers and sellers. In doing so, well
allow market forces to determine the valuation of shares. We
think its important to establish this kind of avenue, because smaller
companies will still need a market.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already : I noticed on your website that you already
offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to offer these sorts of products. Have you actually begun to
offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors? offer these vehicles to either local or foreign investors?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: We are in the last stages of preparing such vehicles.
Typically, these vehicles will be private placements, for regulatory
reasons. Theyll be issued out of the Cayman Islands and well
have various jurisdictions for placements, the first being Switzerland,
but hopefully others including Hong Kong and Singapore later on.
Interview
ACUMEN 67
We already have term sheets ready, and the requirements are
very strict about private placements, so we will need sophisticated
investors. Youll need proof that you have enough funds, so we
dont run into regulatory problems.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : Aside from the private placements you re : Aside from the private placements you re : Aside from the private placements you re : Aside from the private placements you re : Aside from the private placements you re
proposing, what avenues do local companies have at proposing, what avenues do local companies have at proposing, what avenues do local companies have at proposing, what avenues do local companies have at proposing, what avenues do local companies have at
their disposal for accessing international capital markets? their disposal for accessing international capital markets? their disposal for accessing international capital markets? their disposal for accessing international capital markets? their disposal for accessing international capital markets?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : : : : : When the stock exchange goes online, it will be
subject to certain international standards. But we have conflicting
information about whether or not foreigners will have access to
this stock exchange. Will foreigners be able to buy Myanmar stocks?
Were not sure yet. At a forum organized by Daiwa, the Japan
Stock Exchange and the Central Bank
of Myanmar a few months ago,we
heard that it is likely that foreigners
would not be allowed to buy Myanmar
shares on the exchange, in the initial
phase at least. On the other hand, we
hear from private sources that theres
a lobbying going on to allow foreigners
to purchase stock in Myanmar
companies. The governments biggest
concern is that foreigners are going to
buy out Myanmar companies, but other
countries have solutions for this: you
can limit how much stock foreign
interests can own.
On one hand, foreigners can set
up one-hundred-percent foreign-
owned companies here or establish
joint ventures. On the other hand, there
are Myanmar companies that
foreigners cannot buy into. These are
two systems that are not really
compatible; I think it needs to all be
under one framework, where the
government imposes certain restrictions, such as limiting the amount
foreigners can invest on a sector by sector basis, lets say 20% in
banking and 80% for manufacturing. This is much better than a
blanket ban on foreigners buying stock in local companies.
The rules surrounding establishing new ventures are fairly
explicit, but what about existing companies? At the moment,
foreigners cant buy into local companies directly, and would need
to establish a new joint venture, buy out the assets of the existing
company, and transfer them. So its possible for foreigners to
circumvent these ownership restrictions, but its just more
complicated and costly to do so. The government needs to uniformly
allow foreign companies to buy into local companies while
establishing sector-by-sector ownership limits. That, for me, is the
solution.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : The US sti l l mai ntai ns some targeted : The US sti l l mai ntai ns some targeted : The US sti l l mai ntai ns some targeted : The US sti l l mai ntai ns some targeted : The US sti l l mai ntai ns some targeted
sanctions. Do you think sanctions were in any way sanctions. Do you think sanctions were in any way sanctions. Do you think sanctions were in any way sanctions. Do you think sanctions were in any way sanctions. Do you think sanctions were in any way
effective in bringing about political and economic change effective in bringing about political and economic change effective in bringing about political and economic change effective in bringing about political and economic change effective in bringing about political and economic change
to Myanmar? What do you see as being the future for to Myanmar? What do you see as being the future for to Myanmar? What do you see as being the future for to Myanmar? What do you see as being the future for to Myanmar? What do you see as being the future for
sancti ons, and how have i mpacted the abi l i ty of sancti ons, and how have i mpacted the abi l i ty of sancti ons, and how have i mpacted the abi l i ty of sancti ons, and how have i mpacted the abi l i ty of sancti ons, and how have i mpacted the abi l i ty of
Myanmar s economy to normalise? Myanmar s economy to normalise? Myanmar s economy to normalise? Myanmar s economy to normalise? Myanmar s economy to normalise?
Aung Thura: For a long time, we were under the impression that
sanctions had no effect at all on Myanmar, under the previous
government. Of course, Asian countries didnt care about sanctions
so [the former government] was still able to operate. But for the
economy as a whole, sanctions caused a big loss, because Myanmar
had to sell its natural resources significantly under their market
value. But sanctions still didnt affect
the decision-making [of the former
military junta].
With the changes over the
past two years, the prospect of sanc-
tions being lifted has had an effect on
Myanmar. These changes in behav-
iour werent limited to the govern-
ment. Individual businesspeople
wanted to be taken off sanctions lists,
and have tried very hard to re-brand
themselves as being pro-reform. This
is a good thing, I think.
ACUMEN ACUMEN ACUMEN ACUMEN ACUMEN : But how much of it : But how much of it : But how much of it : But how much of it : But how much of it
is genuine? is genuine? is genuine? is genuine? is genuine?
Aung Thura Aung Thura Aung Thura Aung Thura Aung Thura : :: :: As the government
has largely stopped giving out
concessions based on personal
relationships, these businesspeople
would have had to change their ways
regardless. The changes in the country
are a good thing, at least for the smart
people. If theyre smart, theyre in a very good position to start in
the new Myanmar. Theyve already accumulated wealth, and would
be considered the first potential partners for foreign companies.
They dont need the protection of the government anymore. They
know they need to truly compete, as opposed attempting to buy
influence as they did in the past.
Often, these companies could rely on their proximity to power
and special access to markets to be profitable in the pre-reform
era. But this leads companies to be complacent: if you have easy
money coming in, you stop caring about efficiency and being
innovative. If Myanmar companies are smart enough to understand
how they need to change, then the changes can truly be genuine. A
The changes in the
country are a good
thing, at least for the
smart people. If
theyre smart, theyre
in a very good
position to start in the
new Myanmar.
July 2013
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August 2013
Opinion
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Black Hearts in A Blockout Country.pmd 7/9/2013, 10:21 AM 70
ACUMEN 71 ACUMEN 71
August 2013
Opinion
August 2013
ACUMEN 71 ACUMEN 71
August 2013
L
ike a long-lost prodigal son, the world has welcomed
Myanmar back into the fold over the past couple of
years, amid much pomp and fanfare. Countless inter-
national companies have rushed in to secure a slice of
Myanmars much-hyped economic pie, termed the last fron-
tier market, by outside observers. And for better or for worse,
Myanmar is truly a frontier.
In an age that has come to be defined by a dependence on
electrical gadgets of all sorts and access to reliable power, a
certain level of technical sophistication is necessary for a coun-
try to be classified as a modern community. Myanmar passes
this test in some respects but only by the skin of its teeth.
While the opportunities for growth in Myanmar are manifold,
the enthusiasm of companies that arrived here, expecting to
amass quick fortunes, have waned. A key reason for this is
Myanmars unreliable electrical infrastructure, which makes
the country prone to outages in both urban and rural areas,
blackouts which can last for a short time or as long as several
days. Unreliable electricity hinders Myanmars development
prospects to a significant degree, and scares away foreign
investors who might otherwise be interested in doing busi-
ness here. But few seem to realise that the shortcomings of
Myanmars infrastructure pose a minor challenge compared to
another, more pernicious issue that will keep Myanmar on the
lowest rungs of the international development pecking order.
U Goenka, the noted meditation practitioner and industri-
alist, recounts a story about his father, an Indian-born mer-
chant, in his memoirs. Having left a bag full of money at a
hotel where he had spent the previous night, he rushed back
in an attempt to retrieve it and found it exactly as he had left
it, with all of his money present and accounted for. Notable
foreigners that spent time in Myanmar during the colonial era
including George Orwell and Maurice Collis lauded the
honesty, simplicity and honesty of the Myanmar people they
encountered. By the 1970s, however, these glowing assess-
ments of Myanmars character seemed to be on the wane.
The advent of Ne Wins government and the Burmese
Way to Socialism gradually destroyed the Myanmar charac-
ter. The nationalization of all businesses brought about a men-
tality that caused people to regard state property as commu-
nal. Dipping into the treasure pot skimming the coffers for
personal gain became commonplace on all tiers of state-run
enterprises, all the way down to the lowest man on the totem
pole. The lure of the black market was too strong to resist,
and officials got rich quickly by selling off rationed commodi-
ties. Illegal border trade flourished. The biggest ambition of
many during this period was to become a black marketer
and many people became millionaires in the process. In a
sense, Myanmars code of social mores was flipped on its head:
what had once been bad behaviour became commonplace,
even condoned by society. And even worse was to come.
August 2013
Opinion
ACUMEN 73
In 1988 more specifically, the abortive 8888 revolution
justice died. Truth and righteousness went with it. Citizens came
to learn that law and order was meted out at the barrel of a
gun, that he who owns the gun owns the country, and that he
can do as he pleases. In the eyes of Western governments, the
suffering of Myanmars people and the governments grim hu-
man rights record necessitated the imposition of various forms
of sanctions. Myanmars nepotism, cronyism, ethnic conflicts and
rampant corruption led to a situation too dire to simply ignore.
For whatever reason, though, the generals who made off with
millions of dollars of public money over the years are not on
the receiving end of much public outrage nowadays. These
figures who have settled into comfortable lives running pri-
vate businesses, thinking that their ill-gotten gains from their
closeness to centres of power makes them world-class busi-
nessmen operate on a level incomprehensible to most Myanmar
people. The decadence of their lifestyles is hard for the public
to fathom, and they see these cronies as potential employers
that might help improve their standards of living. For these
reasons, people tend not to criticize those with outsized amounts
of economic clout - and this is where the problems start.
Most people in Myanmar some for half of their lives, oth-
ers for as long as they can remember - have seen other people
get rich, by robbing the government and the country. Even on a
village level, there are elders that have become rich by misap-
propriating government land and loans. The managers of petrol
stations who sold off whole tanker-loads of gasoline made money
on the side as illegal lottery brokers, and it has historically
been easy to pay the police to look the other way.
In the past, people seeking employment in Myanmar would
focus on one specific element of their employment: a perspec-
tive employee might ask himself, How much will I be able to
make under the table? Ones actual salary mattered little if it
could be augmented through bribes or illicitly expropriating
state resources.
Decades of mismanagement have created a society where
Myanmars people once enviably honest and simple have
become socialized into a system where becoming rich by dis-
honest means is normal and worthy of emulation. Much ado
has been made about the prospect of crooked companies align-
ing themselves with clean firms to launder their assets, but
more problematic is those that feel that they missed the band-
wagon playing catch-up through crooked means.
Myanmars national character and that of its people suffered
immensely under decades of dictatorship, and it will take a few
generations to sort things out. When compared to the blackouts
that still occur too often across Myanmar, this blackout of the
national character caused by living under military rule is a
much more serious matter. A
ACUMEN 73
August 2013
L
ike a long-lost prodigal son, the world has welcomed
Myanmar back into the fold over the past couple of
years, amid much pomp and fanfare. Countless inter-
national companies have rushed in to secure a slice of
Myanmars much-hyped economic pie, termed the last fron-
tier market, by outside observers. And for better or for worse,
Myanmar is truly a frontier.
In an age that has come to be defined by a dependence on
electrical gadgets of all sorts and access to reliable power, a
certain level of technical sophistication is necessary for a coun-
try to be classified as a modern community. Myanmar passes
this test in some respects but only by the skin of its teeth.
While the opportunities for growth in Myanmar are manifold,
the enthusiasm of companies that arrived here, expecting to
amass quick fortunes, have waned. A key reason for this is
Myanmars unreliable electrical infrastructure, which makes
the country prone to outages in both urban and rural areas,
blackouts which can last for a short time or as long as several
days. Unreliable electricity hinders Myanmars development
prospects to a significant degree, and scares away foreign
investors who might otherwise be interested in doing busi-
ness here. But few seem to realise that the shortcomings of
Myanmars infrastructure pose a minor challenge compared to
another, more pernicious issue that will keep Myanmar on the
lowest rungs of the international development pecking order.
U Goenka, the noted meditation practitioner and industri-
alist, recounts a story about his father, an Indian-born mer-
chant, in his memoirs. Having left a bag full of money at a
hotel where he had spent the previous night, he rushed back
in an attempt to retrieve it and found it exactly as he had left
it, with all of his money present and accounted for. Notable
foreigners that spent time in Myanmar during the colonial era
including George Orwell and Maurice Collis lauded the
honesty, simplicity and honesty of the Myanmar people they
encountered. By the 1970s, however, these glowing assess-
ments of Myanmars character seemed to be on the wane.
The advent of Ne Wins government and the Burmese
Way to Socialism gradually destroyed the Myanmar charac-
ter. The nationalization of all businesses brought about a men-
tality that caused people to regard state property as commu-
nal. Dipping into the treasure pot skimming the coffers for
personal gain became commonplace on all tiers of state-run
enterprises, all the way down to the lowest man on the totem
pole. The lure of the black market was too strong to resist,
and officials got rich quickly by selling off rationed commodi-
ties. Illegal border trade flourished. The biggest ambition of
many during this period was to become a black marketer
and many people became millionaires in the process. In a
sense, Myanmars code of social mores was flipped on its head:
what had once been bad behaviour became commonplace,
even condoned by society. And even worse was to come.
August 2013
Opinion
ACUMEN 73
In 1988 more specifically, the abortive 8888 revolution
justice died. Truth and righteousness went with it. Citizens came
to learn that law and order was meted out at the barrel of a
gun, that he who owns the gun owns the country, and that he
can do as he pleases. In the eyes of Western governments, the
suffering of Myanmars people and the governments grim hu-
man rights record necessitated the imposition of various forms
of sanctions. Myanmars nepotism, cronyism, ethnic conflicts and
rampant corruption led to a situation too dire to simply ignore.
For whatever reason, though, the generals who made off with
millions of dollars of public money over the years are not on
the receiving end of much public outrage nowadays. These
figures who have settled into comfortable lives running pri-
vate businesses, thinking that their ill-gotten gains from their
closeness to centres of power makes them world-class busi-
nessmen operate on a level incomprehensible to most Myanmar
people. The decadence of their lifestyles is hard for the public
to fathom, and they see these cronies as potential employers
that might help improve their standards of living. For these
reasons, people tend not to criticize those with outsized amounts
of economic clout - and this is where the problems start.
Most people in Myanmar some for half of their lives, oth-
ers for as long as they can remember - have seen other people
get rich, by robbing the government and the country. Even on a
village level, there are elders that have become rich by misap-
propriating government land and loans. The managers of petrol
stations who sold off whole tanker-loads of gasoline made money
on the side as illegal lottery brokers, and it has historically
been easy to pay the police to look the other way.
In the past, people seeking employment in Myanmar would
focus on one specific element of their employment: a perspec-
tive employee might ask himself, How much will I be able to
make under the table? Ones actual salary mattered little if it
could be augmented through bribes or illicitly expropriating
state resources.
Decades of mismanagement have created a society where
Myanmars people once enviably honest and simple have
become socialized into a system where becoming rich by dis-
honest means is normal and worthy of emulation. Much ado
has been made about the prospect of crooked companies align-
ing themselves with clean firms to launder their assets, but
more problematic is those that feel that they missed the band-
wagon playing catch-up through crooked means.
Myanmars national character and that of its people suffered
immensely under decades of dictatorship, and it will take a few
generations to sort things out. When compared to the blackouts
that still occur too often across Myanmar, this blackout of the
national character caused by living under military rule is a
much more serious matter. A
ACUMEN 73
July 2013
July 2013
MON CI - 7916 10:50 16:10
TUE CI - 7916 10:50 16:10
BR - 288 11:35 17:20
WED CI - 7916 10:50 16:10
THU CI - 7916 10:50 16:10
FRI CI - 7916 10:50 16:10
BR - 288 11:35 17:20
SAT BR - 288 11:35 17:20
SUN CI - 7916 10:50 16:10
Taipei - Yangon
DAILY CI - 7915 07:00 09:55
MON CI - 7915 07:00 09:50
TUE CI - 7915 07:00 09:50
BR - 287 07:45 10:35
WED CI - 7915 07:00 09:50
THU CI - 7915 07:00 09:50
FRI CI - 7915 07:00 09:50
BR - 287 07:45 10:35
SAT BR - 287 07:45 10:35
SUN CI - 7915 07:00 09:50
Yangon - Kunming
MON MU - 2032 14:40 18:00
TUE CA - 906 14:15 17:35
MU - 2032 14:40 18:00
WED CA - 906 14:15 17:35
MU - 2012 12:20 18:35
THU CA - 906 14:15 17:35
MU - 2032 14:40 18:00
FRI MU - 2032 14:40 18:00
SAT CA - 906 14:15 17:35
MU - 2032 14:40 18:00
SUN CA - 906 14:15 17:35
MU - 2032 14:40 18:00
Kunming - Yangon
MON MU - 2031 13:30 13:55
TUE CA - 905 12:40 13:15
MU - 2031 13:30 13:55
WED CA - 905 12:40 13:15
MU - 2011 08:20 11:30
THU CA - 905 12:40 13:15
MU - 2031 13:30 13:55
FRI MU - 2031 13:30 13:55
SAT CA - 905 12:40 13:15
MU - 2031 13:30 13:55
SUN CA - 905 12:40 13:15
MU - 2031 13:30 13:55
Yangon - Beijing
TUE CA - 906 14:15 21:55
WED CA - 906 14:15 21:55
THU CA - 906 14:15 21:55
SAT CA - 906 14:15 21:55
SUN CA - 906 14:15 21:55
FRI MH - 742 14:45 15:55
SAT 8M - 502 12:50 13:50
SUN MH - 742 14:45 15:55
Yangon - Singapore
DAILY 8M - 231 08:00 12:25
8M - 6232 11:30 16:05
SQ - 997 10:25 14:45
MI - 517 16:40 21:15
3K - 586 11:30 16:05
Y5 - 233 10:10 14:40
MON MI - 509 00:25 05:00
SAT MI - 509 00:25 05:00
Singapore - Yangon
DAILY 8M - 232 13:25 14:50
8M - 6231 09:10 10:40
SQ - 998 07:55 09:20
MI - 518 14:20 15:45
3K - 585 09:10 10:40
Y5 - 234 15:35 17:05
MON 8M - 234 19:15 20:00
TUE 8M - 234 19:15 20:00
FRI MI - 520 22:10 23:35
SUN 8M - 234 19:15 20:00
MI - 520 22:10 23:35
Yangon - Guangzhou
MON CZ - 3056 17:40 22:15
WED CZ - 3056 11:20 15:50
THU 8M - 711 08:40 13:15
FRI CZ - 3056 17:40 22:15
SAT CZ - 3056 11:20 15:50
SUN 8M - 711 08:40 13:15
Guangzhou - Yangon
MON CZ - 3055 14:45 16:35
WED CZ - 3055 08:40 10:30
THU 8M - 712 14:15 15:50
FRI CZ - 3055 14:45 16:35
SAT CZ - 3055 08:40 10:30
SUN 8M - 712 14:15 15:50
Yangon - Phnom Penh
WED 8M - 403 16:50 19:15
SAT 8M - 403 16:50 19:15
Phnom Penh - Yangon
WED 8M - 404 20:15 21:40
SAT 8M - 404 20:15 21:40
Yangon - Taipei
DAILY CI - 7916 10:50 16:15
D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI
Yangon - Bangkok
DAILY TG - 302 14:55 16:50
TG - 304 09:50 11:45
TG - 306 19:45 21:40
PG - 702 10:30 12:25
PG - 704 18:20 20:15
PG - 706 07:15 09:30
MON 8M - 331 16:30 18:15
8M - 335 09:00 10:45
TUE 8M - 335 09:00 10:45
WED 8M - 335 09:00 10:45
THU 8M - 335 09:00 10:45
FRI 8M - 331 16:30 18:15
SAT 8M - 331 16:30 18:15
SUN 8M - 335 09:00 10:45
Bangkok - Yangon
DAILY TG - 303 07:55 08:50
TG - 301 13:00 13:45
TG - 305 17:50 18:45
PG - 701 08:50 09:40
PG - 703 16:45 17:35
PG - 705 20:15 21:30
8M - 332 19:15 20:00
MON 8M - 336 06:15 07:00
TUE 8M - 336 06:15 07:00
Yangon - Don Mueang
DAILY FD - 2752 08:30 10:20
FD - 2754 17:50 19:35
FD - 2756 12:15 14:05
Don Mueang - Yangon
DAILY FD - 2751 07:15 08:00
FD - 2753 16:35 17:20
FD - 2755 11:10 11:45
Yangon - Kuala Lumpur
DAILY AK - 1425 16:45 21:00
AK - 1427 08:30 12:50
8M - 741 12:15 16:30
MON 8M - 501 07:50 11:50
TUE MH - 743 16:55 21:10
WED 8M - 501 07:50 11:50
FRI MH - 743 16:55 21:10
SAT 8M - 501 07:50 11:50
SUN MH - 743 16:55 21:10
Kuala Lumpur - Yangon
DAILY AK - 1424 15:05 16:15
AK - 1426 06:55 08:00
MH - 740 10:05 11:15
MON 8M - 502 12:50 13:50
TUE MH - 742 14:45 15:55
WED 8M - 502 12:50 13:50
International Flight Schedules
August 2013
Information-Flight Schedule.pmd 7/10/2013, 6:35 PM 76
D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI D DD DDA AA AAY YY YYS SS SS FLIGHT FLIGHT FLIGHT FLIGHT FLIGHT DEP DEP DEP DEP DEP ARRI ARRI ARRI ARRI ARRI
Beijing - Yangon
TUE CA - 905 08:05 13:15
WED CA - 905 08:05 13:15
THU CA - 905 08:05 13:15
SAT CA - 905 08:05 13:15
SUN CA - 905 08:05 13:15
Yangon - Chiang Mai
THU W9 - 9607 14:20 16:10
SUN W9 - 9607 14:20 16:10
Chiang Mai - Yangon
THU W9 - 9608 17:20 18:10
SUN W9 - 9608 17:20 18:10
Yangon - Hanoi
MON VN - 956 19:10 21:30
WED VN - 956 19:10 21:30
FRI VN - 956 19:10 21:30
SAT VN - 956 19:10 21:30
SUN VN - 956 19:10 21:30
Hanoi - Yangon
MON VN - 957 16:35 18:10
WED VN - 957 16:35 18:10
FRI VN - 957 16:35 18:10
SAT VN - 957 16:35 18:10
SUN VN - 957 16:35 18:10
Yangon - Ho Chi Minh
TUE VN - 942 14:25 17:10
THU VN - 942 14:25 17:10
SUN VN - 942 14:25 17:10
Ho Chi Minh - Yangon
TUE VN - 943 11:40 13:25
THU VN - 943 11:40 13:25
SUN VN - 943 11:40 13:25
Yangon - Incheon
DAILY KE - 472 23:35 08:05+1
WED OZ - 770 00:35 09:10
SAT OZ - 770 00:35 09:10
SUN OZ - 770 00:35 09:10
Incheon - Yangon
DAILY KE - 471 18:40 22:30
TUE OZ - 769 19:50 23:25
FRI OZ - 769 19:50 23:25
SAT OZ - 769 19:50 23:25
Yangon - Doha
MON QR - 619 08:15 11:15
THU QR - 619 08:15 11:15
FRI QR - 619 08:15 11:15
Doha - Yangon
WED QR - 618 21:05 07:00+1
THU QR - 618 21:05 07:00+1
SUN QR - 618 21:05 07:00+1
Yangon - Narita
MON NH - 914 21:30 06:40+1
WED NH - 914 21:30 06:40+1
SAT NH - 914 21:30 06:40+1
Narita - Yangon
MON NH - 913 10:30 15:30
WED NH - 913 10:30 15:30
SAT NH - 913 10:30 15:30
Yangon - Hong Kong
MON KA - 251 01:10 06:00
TUE KA - 251 01:10 06:00
THU KA - 251 01:10 06:00
SAT KA - 251 01:10 06:00
Hong Kong - Yangon
MON KA - 520 21:45 23:30
WED KA - 520 21:45 23:30
FRI KA - 520 21:45 23:30
SAT KA - 520 21:45 23:30
Yangon - Kolkata
MON AI - 234 14:05 15:05
FRI AI - 234 14:05 15:05
Kolkata - Yangon
MON AI - 227 10:35 13:20
FRI AI - 227 10:35 13:20
Yangon - Gaya
MON 8M - 601 07:00 08:20
WED 8M - 601 07:00 08:20
FRI 8M - 601 07:00 08:20
SAT 8M - 601 07:00 08:20
Gaya - Yangon
MON 8M - 602 09:20 12:30
WED 8M - 602 09:20 12:30
FRI 8M - 602 09:20 12:30
SAT 8M - 602 09:20 12:30
Yangon - Seoul
DAILY KE - 472 23:45 08:05+01:00
THU OZ - 770 00:35 09:10
SUN OZ - 770 00:35 09:10
Seoul - Yangon
DAILY KE - 471 18:40 22:55
THU OZ - 770 19:50 23:25
SUN OZ - 770 19:50 23:25
Yangon - Tokyo
MON NH - 914 21:30 06:40+1
WED NH - 914 21:30 06:40+1
SUN NH - 914 21:30 06:40+1
Tokyo - Yangon
MON NH - 913 10:30 15:30
WED NH - 913 11:10 17:05
SAT NH - 913 11:10 17:05
Mandalay - Gaya
TUE 8M - 603 11:10 12:15
THU 8M - 603 11:10 12:15
SUN 8M - 603 11:10 12:15
Mandalay - Don Mueang
DAILY FD - 2761 12:45 15:00
Don Mueang - Mandalay
DAILY FD - 2760 10:50 12:15
Mandalay - Kunming
DAILY MU - 2030 14:40 17:20
Kunming - Mandalay
DAILY MU - 2029 13:55 13:50
Mandalay - Bangkok
TUE TG - 782 09:30 11:55
FRI TG - 782 09:30 11:55
SAT TG - 782 09:30 11:55
SUN TG - 782 09:30 11:55
Bangkok - Mandalay
TUE TG - 781 07:25 08:50
FRI TG - 781 07:25 08:50
SAT TG - 781 07:25 08:50
SUN TG - 781 07:25 08:50
ACUMEN 77
Information-Flight Schedule.pmd 7/10/2013, 6:36 PM 77
Cartoon.pmd 7/8/2013, 8:07 PM 10

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