MYANMAR CORRUPTION REPORT COLLECTION 2017-2018

1/22/2018 Corruption in Myanmar - Wikipedia

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Corruption in MyanmarCorruption in Myanmar is an extremely serious problem. Owing to failures in regulation and enforcement, corruption flourishes in every sector of governmentand business.[1][2][3] Many foreign businesspeople consider corruption a serious barrier to investment and trade in Myanmar.[4] A U.N. survey in May 2014concluded that corruption is the greatest hindrance for business in Myanmar.[5]

Transparency International's 2016 Corruption Perception Index ranks the country 136th place out of 176 countries.[6]

In the Myanmar Business Survey 2014, corruption was the most frequently identified obstacle to business, especially with respect to obtaining firm registration,

business licenses and permits from government authorities.[7]

It is common in Myanmar to charge illicit payments for government services,[8] to bribe tax collectors to secure a lower tax payment, and to bribe customs officialsto avoid paying customs duties.[9]

Background

Saffron Revolution

Factors

Types of corruption

Petty corruption

Business sectorForeign business and investment

Land

Jade industry

Oil and gas

Logging

Taxation

Contents

https://en.wikipedia.org/wiki/United_Nations



Political corruptionImport, export, and customs officials

Buying property

Police and security forces

Health care and education

NGOs

Judiciary

Lobbying groups

Drugs

Anti-corruption efforts

See also

References

In 2007 the then Burmese government revoked several subsidies for various fuel industries, causing prices to soar throughout the nation. This sparked widespread

protests due to the public's dissatisfaction with the military government. It was noted that the average citizen was displeased with the immense levels of

kleptocracy in the nation, allowing members of the military dictatorship to live in a "state within a state"[10][11] with accumulated wealth far beyond that of thepeople. The government reacted harshly to the protests through violence and arbitrary detentions. While the official death count tallied thirteen killed, it is widely

surmised that the true number far exceeded this figure. The government had even taken steps to censor internet access within the country, though to no avail.[12][13][14][15]

Although the demonstrations were dispersed and suppressed by the military junta, the public would later vote a new government in and wrested power from Than

Shwe by 2011. Nonetheless, elements of the military government retained power.[16][17][18][19]

Myanmar spent five decades under military rule. This period ended in 2011, when a semi-civilian government took power and sought to regenerate the economy

and draw foreign investment. Among its objectives was the reduction of endemic corruption. As of May 2014, however, those reforms were viewed as having had a

minimal effect on corruption.[5]

Background

Saffron Revolution

https://en.wikipedia.org/wiki/Internet_in_Myanmarhttps://en.wikipedia.org/wiki/Than_Shwehttps://en.wikipedia.org/wiki/Reforms_in_Burmahttps://en.wikipedia.org/wiki/Government_of_Myanmar



Every leading official in the former military regime is said to have committed thousands of offenses related to corruption.[20]

Most high-level officials in the civil service were related to military officials.[20]

Since the end of military rule, Myanmar has been implementing economic reforms and developing a free market, but according to

one source its nascent market economy remains bound by myriads of regulations, which make possible rampant corruption that

hinders the functioning of the price mechanism, upon which the proper functioning of the market economy is based.[9] KimNinh of the Asia Foundation said in May 2015 that despite efforts to reduce corruption after military rule, the country's business

environment remained essentially the same, with few new companies emerging since 2011.[5]

An October 2015 article in Wired stated that notwithstanding attempts by the US and other Western countries to promotetransparency, the majority of Myanmar's economy remains in control of a corrupt elite.[21] During the privatization process,according to a report by the U4 Anti-Corruption Resource Centre that was updated in October 2014, numerous state assets were

sold to the military, family members, and associates of senior government officials at fire sale prices.[22]

According to several reports, moreover, the military influenced the results of the 2010 and 2012 elections by means of fraud, restrictions on political participation,

and prohibition of international monitoring.[22]

Some reasons for the high levels of corruption in Myanmar include multiple exchange rates, which enable officials to demand bribes for providing favorable rates;

low civil-service pay rates; and a tradition of nepotism.[20] As there are no competitive selection processes to enter the public sector, notes one report, personalconnections and bribery are maybe more important than qualifications. For instance, it is common practice to select ministers and high-level civil servants from

the military ranks rather than based on expertise.[22]

It has been observed that post-2011 Myanmar has an expanding informal economy, and that such economies are notoriously vulnerable to corruption.[23]

Petty corruption, meaning the extortion of small bribes or gifts in connection with everyday services, is endemic to the everyday life of Myanmar citizens. It is

particularly prevalent when citizens deal with the bureaucracy of the country and engage with low- to mid-level public officials. It is common in application

processes for permits or documents, where bribes or gift-giving end up becoming unavoidable elements of the process, perhaps even becoming culturally

engrained[,] with bribery rather being seen as gift-giving or a kind gesture. Since gifts up to 300,000 Kyat (USD 300) are not legally regarded as corruption, there

are no penalties for this kind of activity, even though it represents a huge cost for the government, undermines trust in state institutions, and violates the principle

of equal treatment of citizens.[9]

Former Burmese Headof State Than Shwe

Factors

Types of corruption

Petty corruption

https://en.wikipedia.org/wiki/State_Peace_and_Development_Councilhttps://en.wikipedia.org/wiki/Free_markethttps://en.wikipedia.org/wiki/Asia_Foundationhttps://en.wikipedia.org/wiki/Anti-Corruption_Resource_Centrehttps://en.wikipedia.org/wiki/Tatmadawhttps://en.wikipedia.org/wiki/Myanmar_general_election,_2010https://en.wikipedia.org/wiki/Myanmar_by-elections,_2012https://en.wikipedia.org/wiki/Kyathttps://en.wikipedia.org/wiki/USDhttps://en.wikipedia.org/wiki/File:Than_Shwe_2010-10-11.jpghttps://en.wikipedia.org/wiki/Than_Shwe



The problem of corruption in Myanmar is particularly severe in the area of business activity, states one source.[9] A firm wishing a construction permit must gothrough an application process involving (on average) 16 procedures, a 159-day wait, and a cost of about 567% of income per capita.[23] A firm wishing to getelectricity must undergo 5 procedures, wait 91 days, and spend over 3000% of income per capita.[23]

In the Myanmar Business Survey 2014, corruption was the most frequently named obstacle to doing business in the country. Myanmar was also near the bottom of

Doing Business 2014's Ease of Doing Business ranking.[4]

According to the Investment Climate Statement 2014, investors may experience corruption when seeking investment permits or when leasing land in

Myanmar.[23] The Enterprise Surveys 2014 reported that 38.9% of businesspeople were expected to give gifts to get an operating licence, while 55.8% wereexpected to give a gift to get an electrical connection, and 30.1% were expected to give gifts to secure a water connection.[23] Persons applying for import andexport licences are also likely to be charged illegal fees.[23]

Without notice or external review, Myanmar's government routinely promulgates new regulations and laws affecting foreign investors.[23]

Daniel Barrins of the Herbert Smith Freehills law firm, a partner of Australia-based Asialink, has said that corruption is denying Myanmars citizens the benefits of

foreign investment. Problems with land ownership, intellectual-property rights, and the rule of law all create difficulties for potential foreign investors, according to

Barrins.[1]

Under the military government which ruled Myanmar until 2011, land was nationalized. According to an October 2015 report in the Wall Street Journal, land inMyanmar remains largely under the control of the military and their allies. In addition, allegations of forced evictions are still common across Myanmar.[24]

The jade trade accounts for 48% of Myanmars official GDP.[21] An October 2015 report by Global Witness noted that Myanmar's jade industry is exploited by thenation's elites; including military leaders, drug traffickers, and business leaders. This was the finding of a year-long investigation entitled Jade: Myanmar's 'Big

State Secret,' which identified that several leading members of the nation's government and economy had siphoned $31 billion USD worth of jade in 2014, a figure

nearly half of Myanmar's economy.[21]

Global Witness estimated that illegal networks in Myanmar had stolen a total $122.8 billion USD worth of jade over the previous decade, and claimed thatMyanmar's jade industry is possibly the greatest natural resource racket in recent history. In addition, the nearly one hundred active jade mining deposits are

located in areas controlled by about 10 to 15 military-connected businessmen, and a result the people living in those areas remain in poverty while a few

businessmen profit greatly.[21][25]

Business sector

Foreign business and investment

Land

Jade industry

https://en.wikipedia.org/wiki/Herbert_Smith_Freehillshttps://en.wikipedia.org/wiki/Asialinkhttps://en.wikipedia.org/wiki/Wall_Street_Journalhttps://en.wikipedia.org/wiki/Jade_trade_in_Myanmar



Myanmar law requires foreign oil and gas exploration firms operating in the country to be partnered with domestic firms. These

arrangements have been criticized for their lack of transparency and accountability.[22]

As of 2006, illegal logging accounted for at least half of the logging in the country. The smuggling of timber across the Chinese

border is a major activity.[22]

Taxes are collected irregularly. Over one third of respondents to a survey said they were expected to give gifts in meetings with tax officials. A medium-sized

company doing business in Myanmar must make 31 separate tax payments annually. On average, this takes 155 hours' work, and involves a tax payment amounting

to 48.9% of annual profits.[8]

In April 2014, a new Union Taxation Law came into effect. It is designed to help eliminate corruption in tax collection.[8]

Political corruption exists at higher levels of government, and comes into play especially when large infrastructural works or other 'mega-projects' are being

negotiated or implemented. Companies pay bribes to avoid trouble or delays, and often establish illicit networks of patronage which can be exploited in future

deals. Companies that establish such networks are often given monopoly control over the markets or sectors they win by 'bidding,' and this monopoly control

stifles competition and growth.[9]

In the World Economic Forum's Global Competitiveness Report 2013-2014, business executives rated the incidence of corrupt diversion of public funds to

companies, individuals, or groups at 2.3 on a 7-point scale (1 being very common and 7 never occurs). They rated the favoritism of government officials towards

well-connected companies and individuals, as reflected in policies and contracts, a score of 2.2 on a 7-point scale (1 meaning always show favouritism and 7

never show favouritism).[26]

Government ministries often fail to report their own expenditures on projects.[9]

Myanmar's import and export regulations are not transparent. According to the Global Enabling Trade 2014, corruption at the border and burdensome procedures

are among the major challenges to importation of goods. Business executives gave the efficiency and transparency of border administration in Myanmar a score of

2.2 on a 7-point scale (1 being non-transparent and 7 transparent). Myanmar ranks 128th out of 138 countries in this regard.[27]

Jade mined in Myanmar

Oil and gas

Logging

Taxation

Political corruption

Import, export, and customs officials

https://en.wikipedia.org/wiki/Illegal_logginghttps://en.wikipedia.org/wiki/File:Mawsitsit_(kosmochlor_jade)_Kachin_State,_Burma.jpg



Businesses must bribe customs officials in order to avoid high import and export taxes. 53.5% of businesses surveyed in 2014 said that they expected to give gifts

to obtain import licences.[27]

On average, exporting a container of goods from Myanmar involves 9 documents, takes 25 days, and costs USD 670. On average, importing a container of goods

into Myanmar involves 9 documents, takes 27 days, and costs USD 660.[27]

Business executives rate the protection of property rights and financial assets at 2.5 on a 7-point scale (1 being very weak and 7 very strong). Registering

property involves an average of 6 procedures, a 113-day wait, and a cost amounting to 7.2% of the property's value.[28]

On the World Economic Forum's 201314 Global Competitiveness Report, business executives scored the reliability of police services to enforce law and order at

3.0 on a 7-point scale (1 being cannot be relied upon at all and 7 being can always be relied upon).[29]

Police officers reportedly often ask victims of crimes to pay substantial amounts to ensure police investigate crimes; in addition, police routinely extort money

from civilians.[29] Police are said to be involved in human trafficking, accepting bribes from drug lords, and to have extorted local businessmen. When a curfewwas imposed following riots that took place in Mandalay in 2004, police extorted bribes from people who wanted to break the curfew.[30]

One reason for police corruption is that police officers were expected for many years to pay for their own investigations, without any reimbursement or

compensation. This policy not only encouraged corruption but also discouraged serious investigation of crimes.[30]

Security forces generally act with impunity in Myanmar. The Human Rights Report 2013 noted that a police escort for a UN rapporteur's convoy stood by while

the convoy was attacked.[29]

The low quality of Myanmars institutions leads to corruption in health care and education.[9]

It is common for international and domestic NGOs to use money intended to help the public to be spent on expensive offices, residences, or other inappropriate

expenses.[9]

Buying property

Police and security forces

Health care and education

NGOs

Judiciary

https://en.wikipedia.org/wiki/Myanmar_Police_Forcehttps://en.wikipedia.org/wiki/Health_care_in_Myanmar



The judiciary is corrupt and subject to government and military influence. Judiciary officials in Myanmar accept bribes for various services, such as providing

access to detainees and rendering a favorable verdict. Judiciary corruption represents a major challenge to businesspeople looking to do business in Myanmar. In

disputes with foreign firms, local businesses can use bribes to secure favorable judgments.[31] On the World Economic Forum's 201314 Global CompetitivenessReport, business executives rate the independence of the judiciary at 2.8 on a 7-point scale (1 being heavily influenced and 7 entirely independent).[31]

Judicial decisions about land and buildings are often affected by government influence, personal relationships, and bribery.[28] It can take years to enforce acontract in the Myanmar courts.[9]

There are many lobbying groups in Myanmar, but they are unregulated, and regularly resort to bribes and concessions to secure favor, which is abetted by the

lack of transparency and accountability in Myanmar.[9]

Myanmar is one of the worlds four major producers of opium and heroin. The government has expanded counter-narcotic efforts, but is reluctant to investigate,

arrest, and prosecute high level international traffickers, according to the CIA.[22]

While Myanmar was still under military control, its Central Bank implemented controls in accordance with the IMFs Anti-Money Laundering/Combating the

Financing of Terrorism (AML/CFT) guidelines. As a result, Myanmar was removed from the international Financial Action Task Forces list of Non-cooperative

Countries and Territories in October 2006.[9]

President Thein Sein has introduced a number of policies intended to reduce corruption in business.[4] A key theme of his inaugural speech on 30 March 2011, wasfighting government corruption. He said that democracy will [be] promoted only hand in hand with good governance. That is why our government responsible for

Myanmars democratic transition will try hard to shape good administrative machinery.We will fight corruption in cooperation with the people as it harms the

image of not only the offenders, but also the nation and the people.[9] Thein Sein has reportedly made significant efforts to minimise corruption in the extractiveindustries in hopes of attracting foreign investment.[32]

In August 2012, an anti-bribery bill was approved. In August 2013, an Anti-Corruption Law was passed.[9]

In April 2013, several senior government officials charged with corruption were compelled to retire or to leave departments working on investment.[9]

The Myanmar Centre for Responsible Business (MCRB) was founded in 2013. Its seeks to promote more responsible business practices in Myanmar. An MCRB

initiative called Transparency in Myanmar Enterprise (TiME) publishes information about anti-corruption, organizational transparency, and concern for human

rights, health, and the environment among the largest businesses in Myanmar. Using criteria laid out by Transparency International the project has produced

Lobbying groups

Drugs

Anti-corruption efforts

https://en.wikipedia.org/wiki/Opium_production_in_Myanmarhttps://en.wikipedia.org/wiki/Central_Bank_of_Myanmarhttps://en.wikipedia.org/wiki/President_of_Myanmarhttps://en.wikipedia.org/wiki/Thein_Sein



rankings of companies according to the above criteria by analyzing information they post online.[9]

Anti-corruption laws were further amended in 2014 to allow for the parliament to establish a committee to investigate allegations of corruption among

government officials.[9] The Anti-Corruption Commission was established in February 2014. It focuses mainly on bribery, which can be punished by fines and upto fifteen years in prison.[9] By December 2014, it had received almost 600 written complaints, but had addressed only three, saying that it could not act withoutdocumented evidence. MP U Ye Tun stated that the commission did not have the authority to take action effectively. An expert in governance and anti-corruption,

stated in December 2014 that the commission would be unlikely to target the government or its ministries, which is where the bulk of corruption in Myanmar takes

place.[1]

A February 2014 report said that the Myanmar Police Force (MPF) had improved its ability to identify and acknowledge corruption. In 2013 the MPF arrested two

senior police officers for involvement in drug smuggling.[30]

In July 2014, Myanmar became an Extractive Industries Transparency Initiative (EITI) candidate country.[4] Myanmar was thereby agreeing to increasetransparency in its extractive industries, notably the logging industry.[32]

The Money Laundering Eradication Law (2015) provides for the recovery of funds tied to illicit or criminal activities. The Anti-Money Laundering Rules, the

establishment of a special police unit for financial crimes, and the passage of Rules Combating the Financing of Terrorism also aid the struggle against corruption.

The Financial Institutions of Myanmar Law and the Foreign Exchange Management Law both criminalize fraud and other crimes committed in financial

institutions. Myanmars Competition Law allows for the prosecution of anti-competitive business activities. Prosecution under these laws, however, is relatively

rare, owing largely to a lack of governmental resources.[33]

In October 2015, Aung San Suu Kyi, the Nobel Peace Prize winner and opposition leader, said in a speech that she had looked to Singapore for advice on

combatting corruption in her own country, due to Singapore's incredibly low levels of corruption.[24]

In Myanmar, Coca-Cola adopted a policy of zero-tolerance for corruption at its facilities and trucking routes. All drivers of Coca-Cola trucks carry an anti-

corruption card stating that they are forbidden to bribe the traffic authorities and that they are required to report any solicitation of bribes to their supervisors. This

procedure initially met with resistance but over time has been respected by police.[34]

Telenor has declared that it is firmly opposed to corruption and that it requires all parties in Myanmar working with Telenor Myanmar to adhere to Telenors

Supplier Conduct Principles.[35]

Crime in Myanmar

Anti-Corruption Commission of Myanmar

See also

https://en.wikipedia.org/wiki/Assembly_of_the_Unionhttps://en.wikipedia.org/wiki/Myanmar_Police_Forcehttps://en.wikipedia.org/wiki/Aung_San_Suu_Kyihttps://en.wikipedia.org/wiki/Nobel_Peace_Prizehttps://en.wikipedia.org/wiki/Singaporehttps://en.wikipedia.org/wiki/Corruption_in_Singaporehttps://en.wikipedia.org/wiki/Coca-Colahttps://en.wikipedia.org/wiki/Telenorhttps://en.wikipedia.org/wiki/Crime_in_Myanmarhttps://en.wikipedia.org/wiki/Anti-Corruption_Commission_of_Myanmar



1. Aung, Nyan Lin (8 Dec 2014). "Myanmar stalls in corruption rankings march" (http://www.mmtimes.com/index.php/business/12444-myanmar-stalls-in-corruption-rankings-march.html). Myanmar Times.

2. "Myanma Corruption Levels" (http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/corruption-levels.aspx). GAN IntegritySolutions. Retrieved 17 July 2015.

3. "Business Corruption in Myanmar" (http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/snapshot.aspx). GAN IntegritySolutions. October 2014. Retrieved 17 July 2015.

4. "Business Corruption in Myanmar" (http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/snapshot.aspx). Business Anti-Corruption Portal.

5. "Corruption the biggest concern for Myanmar businesses: survey" (https://www.reuters.com/article/us-myanmar-corruption-idUSBREA450DS20140506).Reuters. 6 May 2014.

6. "Corruption Perception Index 2016" (https://www.transparency.org/news/feature/corruption_perceptions_index_2016).7. Abe Masato; Margit Molnar (May 2014). "Myanmar Business Survey 2014: Survey Results" (http://www.unescap.org/sites/default/files/MBS_Survey_Results.p

df) (PDF). Hanns Seidel Foundation. OECD and UNESCAP. Retrieved 17 July 2015.8. "Myanmar Tax Administration" (http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/tax-administration.aspx). Business

Anti-Corruption Portal.9. Saw, Khaing Sape (Apr 2015). "Tackling Myanmar's Corruption Challenge" (http://www.isn.ethz.ch/Digital-Library/Publications/Detail/?lng=en&id=190805).

Institute for Security and Development Policy.10. The hardship that sparked Burma's unrest (http://news.bbc.co.uk/1/hi/world/asia-pacific/7023548.stm) BBC News 2 October 200711. Burma leader's lavish lifestyle aired (http://news.bbc.co.uk/1/hi/world/asia-pacific/6109356.stm) BBC, 2 November 200612. "Human Rights Concern" (http://www.amnestyusa.org/all-countries/myanmar-burma/page.do?id=1011205). Archived (https://web.archive.org/web/2009021

7100821/http://www.amnestyusa.org/all-countries/myanmar-burma/page.do?id=1011205) from the original on 17 February 2009. Retrieved 7 April 2009.13. "BBC NEWS | World | Asia-Pacific | Burma leaders double fuel prices" (http://news.bbc.co.uk/2/hi/asia-pacific/6947251.stm). news.bbc.co.uk. Retrieved

16 May 2015.14. UN envoy warns of Myanmar crisis (http://english.aljazeera.net/NR/exeres/4081D23F-F1A4-46AF-BA50-D47FA2B7A4AE.htm) Archived (https://web.archive.o

rg/web/20080228000000/http://english.aljazeera.net/NR/exeres/4081D23F-F1A4-46AF-BA50-D47FA2B7A4AE.htm) 28 February 2008 at the WaybackMachine.

15. [1] (http://fletcher.tufts.edu/forum/archives/pdfs/32-1pdfs/Kyaw.pdf) Challenging the Authoritarian State: Buddhist Monks and Peaceful Protests in Burma.vol.32:1 winter 2008. Retrieved 7 April 2009. Archived (https://www.webcitation.org/5gpOoMHAX?url=http://fletcher.tufts.edu/forum/archives/pdfs/32-1pdfs/Kyaw.pdf) 16 May 2009.

16. Irrawaddy: Burma's junta vows to crack down on human rights activists-Yeni (http://www.burmanet.org/news/2007/04/23/irrawaddy-burma%e2%80%99s-junta-vows-to-crack-down-on-human-rights-activists-yeni/#more-7395) BurmaNet News, 23 April 2007. Retrieved 23 April 2007. Archived (https://web.archive.org/web/20090116013651/http://www.burmanet.org/news/2007/04/23/irrawaddy-burma%e2%80%99s-junta-vows-to-crack-down-on-human-rights-activists-yeni/#more-7395) 16 January 2009 at the Wayback Machine.

17. Jenkins, Graeme; Paris, Natalie (26 September 2007). "Burma troops charge monks with batons" (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/26/wburma526.xml). The Daily Telegraph. London. Retrieved 22 April 2010.

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Investigations Review.34. "Coca-Cola's fight against corruption in Myanmar" (https://www.unglobalcompact.org/take-action/action/case-example/113). United Nations Global Impact.35. "Anti-Corruption" (http://www.telenor.com/media/in-focus/telenor-in-myanmar/sustainable-business-in-myanmar/anti-corruption/). Telenor.

https://en.wikipedia.org/w/index.php?title=Corruption_in_Myanmar&oldid=815666099http://news.bbc.co.uk/2/hi/asia-pacific/7013638.stmhttps://news.yahoo.com/s/ap/20071001/ap_on_re_as/myanmar_dead___missing_1;_ylt=AsArorhaU7exPZMmVHFsc5SROrgFhttps://track.unodc.org/LegalLibrary/LegalResources/Myanmar/Authorities/Myanmar%20-%20Corruption%20in%20Burma%20-%20How%20the%20Causes%20and%20Consequences%20Reflect%20the%20Current%20Situations%20%5bBurma%20Digest%5d.pdfhttps://www.wired.co.uk/news/archive/2015-10/23/jade-trade-burma-corruptionhttp://issuu.com/cmi-norway/docs/349/1?e=1246952/2680739http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/public-services.aspxhttps://blogs.wsj.com/frontiers/2015/10/12/myanmars-suu-kyi-puts-corruption-fight-at-center-of-campaign/http://www.aljazeera.com/indepth/features/2015/10/corruption-myanmar-jade-trade-151022101916842.htmlhttp://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/public-procurement.aspx/http://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/customs-administration.aspxhttp://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/land-administration.aspxhttp://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/police.aspxhttp://www.lowyinterpreter.org/post/2015/02/18/corruption-police-reform-Myanmar.aspxhttp://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/judicial-system.aspxhttp://www.business-anti-corruption.com/country-profiles/east-asia-the-pacific/myanmar/natural-resources.aspxhttp://globalinvestigationsreview.com/insight/chapter/60/myanmar-anti-corruption-compliancehttps://www.unglobalcompact.org/take-action/action/case-example/113http://www.telenor.com/media/in-focus/telenor-in-myanmar/sustainable-business-in-myanmar/anti-corruption/



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1/22/2018 Myanmar Corruption Report

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Snapshot

Myanmar

Myanmar Corruption Report

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Corruption is endemic in Myanmar, presenting companies with highrisks. Many businesspeople rate corruption,a weak rule of law andcomplex and opaque licensing systemsas serious barriers toinvestment and trade in Myanmar. The country suers from highlevels of corruption across all sectors. In November 2015, Myanmarheld its rst national election, ending 50 years of military rule. AungSan Suu Kyi's National League for Democracy (NLD) won a landslide victory, whichis widelyinterpreted as a step towards an opening up of the previously isolated country.While thegovernment is increasingly addressing corruption issues, these remain deeply rooted andpervasive in the public and private sectors.The Anti-Corruption Lawcriminalises active andpassive bribery in the public sector, abuse of oce and attempted corruption. Facilitationpayments are not specically addressed in the law, but should be considered illegal. Gifts areillegal in principle, but there are a number of specic exceptions. The maximum punishment forcorruption is fteen years' imprisonment and a ne.

Last updated:September 2017 GAN Integrity

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Judicial SystemCompanies face a high risk of corruption and political interference in Myanmar's judicialsector.Businesses report very low trust in the independence of the judiciary (GCR 2015-2016).Bribes and irregular payments in exchange for favorable judicial decisions are very common(GCR 2015-2016). Two out of ve citizens believe most or all judges are corrupt (GCB2017).Nevertheless, only a fraction of rms identies the court system as a major constraint (ES2016).Institutional corruption is pervasive in the judiciary and there is an appearance of de factomilitary and government control over the judiciary (HRR 2016).The Supreme Court has taken therst steps in trying to assert its independence during the constitutional review process (BTI2016).However, challenges remain immense; there is a lack of resources and inadequate legaleducation (BTI 2016). The judicial committee in Myanmar's parliament received over 10,000complaints about problemsin the legal sector, primarily alleging corruption (BTI 2016).Enforcinga contract in Myanmar takes almost twice as long as the regional average (DB 2017).

Companies perceive the judiciary to be inecient when it comes to settling disputes andchallenging government regulations (GCR 2015-2016). Myanmar incorporated the1958 NewYork Conventionon the Recognition and Enforcement of Foreign Arbitral Awardsinto itsdomestic legal framework in 2016; allowing companies to seek arbitration in a third country (ICS2017).There is no solid track record of enforcing foreign awards in Myanmar (ICS2017).Myanmar is not a state party to theInternational Centre for the Settlement of InvestmentDisputes(ICSID).

http://reports.weforum.org/global-competitiveness-report-2015-2016/http://gcb.transparency.org/http://enterprisesurveys.org/https://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htmhttps://www.bti-project.org/en/reports/country-reports/http://doingbusiness.org/http://www.newyorkconvention.org/https://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/index.htmhttps://icsid.worldbank.org/



PoliceThe security apparatus in Myanmar presents high corruption risks. Nearly half of citizens believemost or all police ocers are corrupt (GCB 2017). The government does not eectively maintaincontrol over the country's security forces and police forces act with impunity (HRR2016).Business executives do not feel they can rely on the police (GCR 2015-2016). The legalmechanisms that exist to investigate corruption are rarely used and ineective (HRR 2016).About one in seven rms indicate they experience losses due to theft and vandalism (ES 2016).The police frequently require victims to pay substantial bribes to initiate criminal investigationsand the police routinely extorts civilians (HRR 2016).Outside of conict areas, security forcesgenerally respect the rule of law and a number of organizations have signalleda decrease in thepervasive and threatening inuence security forces exert on the population under the newgovernment (HRR 2016).

Public ServicesThere is a very high risk of corruption when dealing with public services in Myanmar.More thana third of businesses expect to give gifts to get an operating license, nearly half expect to givegifts to get a construction permit, and more than a third expect the same when applying for anelectrical connection (ES 2016). About one in seven businesses indicate they expect to give gifts"to get things done" (ES 2016). Corruption risks are also high in the process of seekinginvestment permits (ICS 2017).Around one in ve citizens consider most or all government



ocials corrupt (GCB 2017).Connections to top bureaucrats and bribery are more importantthan personal skills in the selection process for the civil service (BTI 2016).

Business report a heavy burden of government regulations (GCR 2015-2016). There is a lack ofregulatory and legal transparency; in the past, all regulations were subject to change withoutadvance or written notice (ICS 2017). Presently, ministrieshave started to consult the publicbefore issuing new regulations (ICS 2017). The recently passed Myanmar Investment Law whichwent into eect in April 2017 is intended to simplify regulations (ICS 2017).Starting a businesstakes more steps and the costs are signicantly higher than the regional average, but therequired time is signicantly shorter (DB 2017).

Land AdministrationThere is a high risk of corruption in Myanmar's land administration.Nearly half of rms indicatethey expect to give gifts to obtain a construction permit (ES 2016).Foreign investors can enterinto long-term leases with private land lords or relevant government agencies (ICS 2017).Businesses, however, report insucient condence in the government's ability to protectproperty rights in the country (GCR 2015-2016).Investors should be careful when investing inlarge-scale land projects; property rights of large plots are commonly disputed becauseownership rights are often not well-established following half a century of widespread militaryexpropriations and land grabs (ICS 2017). Foreign rms often face complaints from communitiesabout inadequate consultation and compensation (ICS 2017).The government announced a new



National Land Use Policy in 2016 which includes provisions for, among others, improving publicaccess to information about land use management and developing independent disputeresolution mechanisms (ICS 2017).Myanmar has not incorporatedthe principle of non-discrimination into its investment framework; there is no specic legislation that protects againstexpropriation without compensation (ICS 2017). Myanmar's new Investment Law prohibitsnationalization and states that approved foreign investments will not be terminated during theterm of the investment (ICS 2017).

Registering property in Myanmar takes slightly longer than elsewhere in the region (DB 2017).

Tax AdministrationCompanies face a high risk of corruption in the tax administration in Myanmar.Irregularpayments in connection with tax payments are commonly exchanged (GCR 2015-2016).One inve companies indicate they expect to give gifts in meetings with tax ocials (ES 2016). Roughlya third of citizens believe most or all tax ocials are corrupt (GCB 2017).

Businesses make signicantly more payments and spend signicantly more time on paying theirtaxes compared to other places in the region (DB 2017).

Customs Administration



There is a high risk of corruption at the border of Myanmar when importing and exportinggoods(GETR 2014).Irregular payments when importing and exporting are commonplace (GCR2015-2016).A quarter of rms indicate they expect to give gifts in order to get an import license(ES 2016). Bribing customs ocials in order to avoid paying customs duties and avoidingregulations is also common (ISDP 2015).Import and export licensesare awarded on a case-by-case basis, leaving discretionary space to public ocials (BTI 2016). Companies cite burdensomeimport procedures, taris, and corruption at the border as the most problematic factors forimporting (GETR 2014).Trade misinvoicing is ranked as the predominant channel through whichillicit funds are transferred to and from Myanmar; trade misinvoicing makes up 89.2% of totalillicit inows and 59.6% of total illicit outows (GF Integrity 2015). Import under-invoicing wasidentied as the main type of trade misinvoicing. The total of potential tax revenues lost todeliberate trade misinvoicing over the period 1960-2013, isestimated to be between USD 2.9and USD 3.6 billion (GF Integrity 2015).

Trading across borders became more dicult in Myanmar in 2017, due to a high number ofdelays and cost increases for processing of incoming cargo at the port of Yangon (DB 2017).Thetime required to comply with customs regulations is signicantly higher than elsewhere in theregion, while the costs are largely in line with regional averages (DB 2017).

Public Procurement

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There is a moderately high risk of corruption in public procurement in Myanmar. Bribes andirregular payments are often exchanged in the process of awarding public contracts and licenses(GCR 2015-2016).Public funds are frequently diverted, and favoritismoften inuences thedecisions of government ocials (GCR 2015-2016).In Myanmar, open tendering is not thedefault method of procurement (The World Bank 2017). Procurement material such as laws andregulations, notices of calls for tender, tender documents, and award notices are not publiclyaccessible online. There are a few sectors where foreign rms are ineligible to submit bids suchas the defense sector (The World Bank 2017).

The government has started to privatize a number of state-owned enterprises (SOEs), becauseSOEs prove to be costly for the government (ICS 2017). While traditionally SOEs held a large partof the economy, the government has started encouraging more private sector development (ICS2017). The 1989 law on SOEs gives them exclusive right to carry out economic activities in anumber of sectors including banking, teak extraction, and oil and gas, but in practice privatesector development is possible, often in the form of a joint venture (ICS 2017).In a process ofincreased privatization, problems of cronyism and nepotismare highlighted in the awarding ofcontracts, and the process lacks transparency (FP, Oct. 2015).

Natural ResourcesThere is a high risk of encountering corruption in Myanmar's natural resources sector.TheNatural Resource Governance Institute indicates that Myanmar has an environment that enables

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corruption, complicated by poor licensing procedures, low regulatory quality, and littleaccountability (NRGI 2017).Companies should note that Myanmar's natural resource industriesare commonly controlled by state-owned enterprises, but in practice private investment ispossible (ICS 2017).An investigation into allegations that almost USD 100 million in levies fromthe jade trade was misappropriatedunder previous governments is underway (FT, Jun. 2016).The jade trade in Myanmar is characterizedby low levels of transparency and high levels ofcorruption (FT, Jun. 2016).Myanmar's internal conict is also said to have been fuelled by jademining (NRGI 2017).Myanmar is an Extractive Industry Transparency Initiative candidate country(EITI 2017). Myanmar has disclosed some of the legal ownership of the oil, gas, and miningcompanies operating in the country (EITI 2017). EITI estimates that up to eighty percent ofgemstone production goes undeclared and bypasses the formal system (EITI 2017).

The Myanma Timber Enterprise (MTE), a state-owned enterprise, has been widely accused ofengaging in corrupt practices and failing to live up to international standards in the sector(Frontier Myanmar, Mar. 2017). Europe's Environmental Investigation Agency (EIA) has warnedthat MTE's use of subcontractors comes with high risks of corruption and bribery in theallocation of harvesting rights due to a lack of transparency in the required procedures(Myanmar Times, Aug. 2017). Because of the lack of transparency, Denmark has placed aninjunction on all Danish companies preventing them from selling teak imported from Myanmaron European markets (Mongabay, Mar. 2017).There exists a large-scale illicit timber tradebetween China and Myanmar worth hundreds of millions of dollars every year(EIA & EU 2015).

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LegislationMyanmar has a legal anti-corruption framework in place, however - and in spite of renewedeorts to curb corruption - enforcement remains inadequate (BTI 2016). The Penal CodeandtheAnti-Corruption Lawcover most forms of bribery in the public sector,includingactiveandpassive bribery,extortion, attempted corruption andabuse ofoce(Conventus Law 2016). Penalties for these oenses include imprisonmentof up to 15years for public ocials and a ne, imprisonment of up to ten years and a ne for "authorizedpersons", and imprisonment of up to seven years and a ne for others (Conventus Law2016).The Law requires all ocials in the executive, judicial and legislative branches of thegovernment to declare their assets, allowing penalties for those who do not comply.Facilitationpaymentsare not explicitly excluded, so they may be considered bribes (Conventus Law 2016).Guidelines issued in 2016 stipulate that public ocials may accept gifts with a value of up toMMK 25,000 (approximately USD 25), gifts that are given because of a "personal relationship" (anundened term), or gifts with a value of up to MMK 100,000 given on religious holidays(Conventus Law 2016).The Anti-Corruption Law gives a mandate toMyanmar's Anti-CorruptionCommission to addressgraftandbribery. Nonetheless, the Anti-Corruption Commission isprimarily staed by former military ocers and members of the ruling party, raising concernsabout its impartiality (BTI 2016).There is no separatedenition of private corruption inMyanmar's laws, but the denition of bribery contained in the Anti-Corruption Law could beread to include certain high level managers at state-owned enterprises and public-privatepartnerships; there is no practical evidence of this interpretation as of yet (Conventus Law

http://www.burmalibrary.org/docs6/MYANMAR_PENAL_CODE-corr.1.pdfhttp://pwplegal.com/documents/documents/3976d-Anti-Corruption-Law.pdfhttp://www.business-anti-corruption.com/corruption-dictionaryhttp://www.business-anti-corruption.com/corruption-dictionaryhttp://www.business-anti-corruption.com/corruption-dictionaryhttp://www.business-anti-corruption.com/corruption-dictionaryhttp://www.conventuslaw.com/report/anti-corruption-in-myanmar/http://www.business-anti-corruption.com/corruption-dictionaryhttp://www.business-anti-corruption.com/corruption-dictionaryhttp://www.business-anti-corruption.com/corruption-dictionary



2016).Whistleblowers should be protected under the Anti-Corruption Law, but this is untested inpractice (HSF 2015). There is no comprehensive public procurement legal framework; most ofthe regulations are contained in various directives; more informationfrom the World Bank isavailable here. The latest guidance for government organizations stipulates that all projects witha value over MMK 10 million are subject to procurement rules.

Companies should note that due to the recent change in governments and low levels of legalcertainty, laws may not always be interpreted by the government and the courts in a consistentmanner (Conventus Law 2016).Myanmar has ratied theUnited Nations Conventions againstCorruptionbut has not signed theOECD Anti-Bribery Convention.

Civil SocietyPress freedoms have signicantly improved since the country began its transition from militaryrule to a democracy, but the government still maintains tight control over the media sectorthroughthe use of defamation and other laws against critics (FotP 2017). The government hasincreasingly started restricting the freedom of speech online by prosecutingthose who allegedlyinsulted or defamed the military (FotP 2017). The police continues to monitor politicians,journalists, writers, and diplomats (HRR 2016).The press in Myanmar is considered 'not free'(FotP 2017).

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Freedom of assembly is restricted in Myanmar, but the government has recently taken steps toease restrictions (HRR 2016). Civil society groups have increasingly been able to operate openlyand freely discusshuman rights and political issues (HRR 2016). Freedom house classiedMyanmar as "partly free" for the rst time in 2017 (FotP 2017). Civil society organizations (CSOs)have started being able to inuence policy-making processes, criticizethe government, andadvocate for political parties in the last ve years (BTI 2016). CSOs still face a lack oftransparency from government ministries and local authorities are less likely to cooperate withCSOs (BTI 2016).

SourcesWorld Bank:Doing Business 2017.The World Bank: Benchmarking Public Procurement - Myanmar 2017.US Department of State:Investment Climate Statement 2017.Natural Resource Governance Institute: Myanmar 2017.Extractive Industries Transparency Initiative: Myanmar Prole 2017.Transparency International:Global Corruption Barometer 2017.Freedom House:Freedom of the Press 2017.Myanmar Times: "EIA Accuses MTE of Stepping Back from Reform Commitments", 11 August2017.Frontier Myanmar: "Timber Sector Wants MTE to get the Chop", 27 March 2017.

http://www.doingbusiness.org/http://bpp.worldbank.org/data/exploreeconomies/myanmar/2018https://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/#wrapperhttp://resourcegovernanceindex.org/country-profiles/MMR/mininghttps://eiti.org/myanmarhttp://gcb.transparency.org/https://freedomhouse.org/report/freedom-press/freedom-press-2017



Mongabay: "Denmark Prohibits Companies from Selling Myanmar Teak on European UnionMarkets", 20 March 2017.World Bank Group:Enterprise Survey - Myanmar 2016.Conventus Law: Anti-Corruption in Myanmar 2016.World Economic Forum:The Global Competitiveness Report 2015-2016.Bertelsmann Foundation:Transformation Index 2016.US Department of State:Human Rights Report 2016.Financial Times: "Myanmar Probes USD 100 Million Jade Levy Misappropriation Claims", 3June 2016.Herbert Smith Freehills:Guide to anti-corruption regulation in Asia Pacic 2015.

Global Financial Integrity: Flight Capital and Illicit Financial Flows to and from Myanmar:1960-2013, published 2015.ISDP: Tacking Myanmar's Corruption Challenge 2015.Environmental Investigation Agency: Organised Chaos: The illicit overland timer tradebetween China and Myanmar, Sept. 2015.Foreign Policy: "The Great Burmese Fire Sale -Burma's rulers are selling o the country'sassets and it's all going to the same old group of insiders", 29 October 2015.World Economic Forum:Global Enabling Trade Report 2014.

Topics: East Asia & The Pacic

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www.transparency.org

www.cmi.no

Author(sMarie Chne, U4 Helpdesk, Transparency International, [email protected] updated by Maira Martini, Transparency International, [email protected] Reviewed by: Marie Chne, Transparency International, [email protected] and Robin Hodess, Ph.D. Transparency International, [email protected] Date: 23 March 2009 updated in 1 October 2012 Number Number: 349

U4 is a web-based resource centre for development practitioners who wish to effectively address corruption challenges in their work. Expert Answers are produced by the U4 Helpdesk operated by Transparency International as quick responses to operational and policy questions from U4 Partner Agency staff.

Query Can you please give us an overview of the corruption status in Burma?

Purpose We are preparing an analysis of our development cooperation programs in Burma

Content 1. Forms and Extent of Corruption in Burma 2. Anti-Corruption Efforts in Burma 3. Resources

Summary After more than four decades of military rule, political violence and systematic repression of democratic opposition, Burma held its first general elections in 2010, and is passing through major economic and political reforms. Parliamentarian by-elections were held in 2012 with Aung San Suu Kyi party (National League for Democracy) receiving the overwhelmingly majority of votes. Such reforms and the significant and seemingly genuine opening up of the country have encouraged the United States and the European Union to lift trade embargoes against the country. However, the military continues to exercise influence in politics and despite improvements, restriction on media and

civil society organisations, as well as human rights violations continue.

Against this background, Burma continues to face major challenges of endemic corruption, consistently ranking at the bottom of TIS Corruption Perception Index (CPI). Little is known on the specific forms and patterns of corruption in the country, but the scale of the informal and illicit economy suggests strong links between the ruling elite and organised crime activities. In the absence of sound democratic institutions and an effective system of checks and balance, the legal and institutional frameworks against corruption appear, to date, rudimentary and are likely to be misused for political reasons. On a more positive note, the recent elected government has demonstrated willingness to improve the countrys institutional and legal framework as well as the space for political participation.

Overview of corruption in Burma (Myanmar)


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1 Forms and extent of corruption in Burma

Background Burma, officially the Union of Myanmar1, has known more than four decades of military rule after General Ne Wins coup in 1962. The country remained under the tight control of the military led State Peace and Development Council (SPDC) until when the Junta was dissolved as a result of the 2010 general elections. The former Prime Minister Lieutenant General Thein Sein was appointed as President in 2010. Parliamentarian by-elections2 took place in June 2012 and despite several irregularities the National League for Democracy party of the Nobel Prize winner and former political prisoner Aung San Suu Kyi received the majority of votes.

The civilian government has announced several economic reforms as well as the release of political prisoners, the right to form trade unions, and an easing in media censorship. Such economic and political reforms are seen by the President as key for Burmas progress, as according to him, years of military misrule had left Burma far behind its neighbours in terms of development (Freedom House, 2012).

A more open dialogue with the popular opposition leader Aung San Suu Kyi, who has been playing an instrumental role in the countrys struggle for democracy, was launched, and the President has also called on the government to be more accountable to its people and focus its efforts on improving their daily lives. Nevertheless, there are indications that the military continue to dominate politics (Fund for Peace, 2012), and the country still suffers from restrictive government controls, inefficient economic policies, fiscal instability, corruption, rising inflation, human rights violations, and widespread poverty, especially in rural areas.

1 The Union of Burma was renamed Union of Myanmar in 1989 by the military junta. The United Nations endorsed the name while other countries such as the United States, the United Kingdom, Australia and Canada still refer to the country as Burma.

2 Parliamentary by-elections take place when a seat in the Parliament becomes vacant between general elections.

In the past, the governments crackdown against a pro-democracy uprising, including against thousands of monks, triggered a series of international economic and targeted sanctions. The European Union banned investment and trade in Burmese gems, timber, and precious stones, while the United States tightened existing economic sanctions on the regime leaders, their families and supporters, including asset freezing and travels restrictions against designated individuals responsible for human rights abuses and public corruption.

In the first part of 2012, encouraged by the fall of the regime and recent reforms, the United States and the European Union suspended economic sanctions, which provides for many opportunities for investment and growth, but also for new and ever growing forms of corruption.

Extent of Corruption Due to the closed nature of the former military dictatorship there are very few independent sources of data on the state of governance and corruption in Burma.

The available sources and observers agree that rampant corruption pervades all levels of the political and administrative systems. The country has consistently ranked among the world's most corrupt countries in Transparency International Corruption Perceptions Index. In 2011, the country was ranked 180 out of the 183 assessed countries with a score of 1,5 on a 0 (highly corrupt) to 10 (very clean) scale.

The World Banks Worldwide Governance Indicators confirm the countrys poor performance in terms of control of corruption (0,5 on a scale from 0 to 100), regulatory quality (1,4), government effectiveness (2,4), rule of law (4,2) and political stability (13,7) in 2011. Burma has, nevertheless, improved significantly in terms of voice and accountability (from 0.9 in 2010 to 2.3 in 2011) (World Bank, 2011).

Forms of Corruption There is little evidence of the main forms of corruption in the country. Available reports and country profiles state that corruption in Burma is widespread, affecting different sectors in a variety of forms as discussed below.


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Bureaucratic corruption Burma generally lacks regulatory and legal transparency, and there is a broad consensus that corruption in the country is rampant and endemic (Political Risk, 2011; Heritage Foundation, 2012). The US Department of States Investment Climate Statement further declares that rent-seeking activities are supported by a complex and capricious regulatory environment combined with extremely low government salaries.

According to economists and businesspeople, corruption is one of the most serious barriers to investment and commerce in the country as very little can be accomplished without resorting to illegal payments often referred to locally as tea money. The major areas where investors may face corruption are (i) when seeking permission for investment in the country; (ii) in the taxation process; (iii) when applying for import and export licenses; (iv) when negotiating land and real state leases (Political Risk, 2011; Heritage Foundation, 2012).

Cronyism Personal relationships seem to play an import role in the countrys public sector. As there are no competitive selection processes to enter the public sector, personal connections and bribery are maybe more important than qualifications. For instance, it is common practice to select ministers and high-level civil servants from the military ranks rather than based on expertise (Bertelsmann Foundation, 2012).

The privatisation process which took place in 2009-2010 also shows the close relationship between the government, the military and its close friends. There is evidence that numerous state assets were sold to the military, family members, and associates of senior government officials at fire sale prices (Bertelsmann Foundation, 2012). Several experts have also denounced that privatisation could actually enhance conflict of interest and corruption by creating a new generation of businesses whose control of industries is dependent on government connections and other forms of collusion (Currie, 2012).

Political corruption The first democratic general elections after almost fifty years of military rule took place in 2010. Burmas political system is composed of a bicameral legislature, which consists of the 440-seat Peoples Assembly, and the 224-seat Nationalities Assembly, or upper house.

25% of the seats in both houses are reserved for the military and filled through appointment by the commander in chief. The legislature elects the president, though the military members have the right to nominate one of the three candidates, with the other two nominated by the elected members of each chamber (Freedom House, 2012). As a result of the 2010 elections, the former Prime Minister Lieutenant General Thein Sein was appointed as President.

According to several reports, the 2010 elections were, however, marked by fraud and serious restrictions on political participation (Bertelsmann Foundation, 2012; Freedom House, 2012).

In order to guarantee a pro-military government, the regime allegedly made use of advanced votes, which were collected by force in front of the authorities (Freedom House, 2012; Bertelsmann Foundation 2012). Moreover, opposition political parties faced several restrictions3 such as high registration fees, and no access to the state media. Such restrictions made the main opposition party, the National League for Democracy, boycott the elections. Elections monitoring was also restricted, and the government did not allow international organisations to support the process. As a result, the pro-military party USDP (Union Solidarity and Development Party) won almost 80% of the seats up for election (Bertelsmann Foundation, 2012).

The Parliamentary by-election which took place in May 2012 was also marked by fraud and irregularities, in spite of the government efforts to show the international community that democracy was advancing in the country. Independent candidates have reported harassment and several restrictions on their campaign activities. Reports also show irregularities at the pools; many who sought to vote for opposition candidates found that wax coating their ballots prevented them from doing so (Jacobs, 2012). Despite those irregularities, the NLD still overwhelmingly won the by-elections (BBC, 2012).

Sectors most affected by corruption There is no research and data available on sectors most affected by corruption in Burma, probably due to

3 The Political Party Registration Law, announced in March 2010, gave new political parties only 60 days to register, mandated that existing parties re-register, and required parties to expel members currently serving prison terms, Freedom House, 2012.


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the lack of political will for such scrutiny. However, specific forms of corruption derive from the nature of the local economy that suggests strong ties between the current regime and organised crime activities. According to the CIAs World Fact book, official statistics are inaccurate and published statistics on foreign trade greatly understated because of the volume of off-book, the size of the black market, illicit and unrecorded border trade - often estimated to be as large as the official economy (Central Intelligence Agency, 2008).

Burma is a resource-rich country. Agriculture and extractive industries, including natural gas, mining, logging and fishing provide the major portion of national income. The country appears to be plagued by traffic in narcotics, people, wildlife, gems, timber, and other forms of contraband that flow through Burmas permeable borders. Burmas border regions are indeed difficult to control. In some remote regions active in smuggling, continuing ethnic tensions with armed rebel groups hamper government control. Collusion between traffickers and Burmas ruling military junta also allegedly allows organised crime groups to function with virtual impunity (United Stated Department of State, 2008).

Illegal logging A major review conducted for the World Bank in 2006 estimates illegal logging as equal or exceeding the legal harvest rates in Burma by 80 % (Illegal Logging Info, website). This has resulted in major deforestation taking place in the country. Although Burma remains one of the most forested countries in the Asia-Pacific region, the amount of land covered by forest in Burma dropped from 47% in 2005 to 24% in 2008, according to Burmas Natural Resources and Environmental Conservation Committee (UPI, 2012).

Large quantities of timber are being smuggled out of the country across the Chinese borders. A logging ban in Thailand has also resulted in Thai loggers crossing illegally through Burma. The sanctions imposed by the EU and US on the Myanmar military regime were extended in 2007 to prohibit the import of all timber products, but teak products from Myanmar are allegedly still being imported to the UK through other countries such as China or Indonesia (Illegal Logging Info, website).

According to a Global Witness report (2009), imports of logs and sawn wood across the land border from Burma fell by 70% between 2005 and 2009 after the

Chinese government sealed the borders4 in 2006. Nevertheless, illicit trade continues with local authorities often turning a blind eye to smuggling. Chinese companies interviewed by Global Witness also reported that they usually rely on personal relationships and illegal payments to continue importing illegal wood (Global Witness, 2009).

Oil and gas Burma is endowed with oil, gas, hydropower and minerals, which are located mainly in the ethnic minority regions that continue to be areas of conflict. There is no publicly available information on who has the rights for exploiting what resources in what areas, what the terms and conditions are, and on how the revenues are being shared and spent (TrustLaw, 2012). According to Human Rights Watch, Burma continues to earn billions of US dollars in natural gas revenues, little of which is directed into social services such as health care and education (Human Rights Watch, 2012).

According to the Withholding Tax Law enacted on January 1, 2011, state-enterprises and military-owned companies are exempt from taxes. The government requires that foreign companies conducting oil and gas exploration be partnered with at least one domestic energy firm, usually with the state-owned energy firm MOGE (Myanmar Oil and Gas Enterprise), which controls significant portions of key oil and gas projects in the country. According to the opposition leader Aung San Suu Kyi, such joint ventures arrangements lack transparency and accountability.

For instance, Burma has granted Chinese state-owned oil firm oil and gas pipeline concessions, but there is no publicly available information on the terms of those contracts. In addition, since the US and the European Union5 have suspended the economic sanctions, European and American companies are now also allowed to partner with Burmese oil and gas companies.

4 For more information on the agreement between Burma and China please see: Interim Measures to Manage Timber and Minerals Cooperation between Myanmar and Yunnan Province

5 Please see: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/130188.pdf


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U.S. companies investing in Burma are, however, required by the U.S. government to report on their investment activities including: (i) an overview of operations in Burma; (ii) summary of investment-related human rights, labor rights, anti-corruption, and environmental policies and procedures; (iii) acquisition of property/land, including processes to identify land rights and address resettlement practices, if the property is worth more than US$ 500,000 or over 30 acres; (iv) payments to the Government of Burma, sub-national authorities, and state-owned enterprises if the aggregate annual amount exceeds US$10,000; (v) summary of human rights, labor rights, and environmental due diligence conducted by the company (Nolan, 2012).

Recently, Burmas President Thein Sein vowed to join the Extractive Industries Transparency Initiative (EITI), a global standard for governments and companies to voluntarily report how much is paid for extracting natural resources (Extractive Industries Transparency Initiative, 2012). A possible Burmese candidacy to EITI could mean a big push to hold the government to account and increase transparency in the sector.

Land management Land has been a politically and economically sensitive issue in the country for many decades. All land in Burma is owned by the government, and farmers are given land use or tillage rights. The seizure of land has long been practiced in the country, but in recent years its dynamics have changed, from direct seizure by army units and government departments, to seizure by army-owned companies, joint ventures and other economically and politically powerful operations with connections to the military (Asian Legal Resource Centre, 2012).

According to the Asian Centre and other human rights organisations, cases of land grabbing are becoming increasingly common. Many farmers have been forced to move without receiving proper compensation because of major projects, such as the oil and gas pipelines, or smaller projects of firms linked to the military (Asian Legal Resource Centre, 2012).

The problem is aggravated by the countrys lack of rule of law, no protection of property rights, and a weak judiciary, which offer tremendous rent-seeking opportunities for corrupt officials and their business partners (Morrell, 2012).

The new Farmland law enacted in 2012 aimed, among other things, at reducing the prospects of land grabbing. However, the law still opens the door to confiscation of agricultural land on any pretext associated with a state project or the national interest (TrustLaw, 2012).

Drug producing and trafficking In spite of the government recent steps to tackle money laundering (see section below), Burma remains a country at risk of drug money being funnelled into commercial enterprises and infrastructure due to an underdeveloped financial sector and the large volume of informal trade.

According to the United Nations Office in Drugs and Crime (UNODC), nearly all of the worlds illicit opium and heroin production is concentrated in Afghanistan, Burma and Latin America (Mexico and Colombia) (United Nations Office in Drugs and Crime, 2010). Burma is also a primary source of amphetamine-type stimulants in Asia. However, the countrys share of opium production on the global market is declining (United Nations Office in Drugs and Crime, 2010), and although the Burmese Government has expanded its counter-narcotics measures in recent years, production and trafficking of narcotics still remain major issues in the country (Yong-an, 2012).

While the Burmese Government has actively pursued mid-level and independent traffickers, it remains reluctant to investigate, arrest, and prosecute high level international traffickers (Central Intelligence Agency, 2008). The CIA considers that the lack of government will to take on major narco-trafficking groups and lack of serious commitment against money laundering continues to hinder the overall antidrug effort (Central Intelligence Agency, 2008).

Human trafficking The CIA also reports that Burma is a source country for women, children, and men trafficked for the purpose of forced labour and commercial sexual exploitation. Burmese women and children are trafficked to East and Southeast Asia for commercial sexual exploitation, domestic servitude, and forced labour. According to the 2006 US Department of State Human Rights Report, while there are no reliable estimates on the number of Burmese who are trafficked, most observers believe that the number of victims is at least several thousand per year. (United States Department of State, 2007).

Some trafficking victims transit through Burma from Bangladesh to Malaysia, and from China to Thailand


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while internal trafficking occurs primarily from villages to urban centres and economic hubs for labour in industrial zones, agricultural estates, and commercial sexual exploitation.

The CIA report further states that Burma does not fully comply with the minimum standards for the elimination of human trafficking as military and civilian officials remain directly involved in significant acts of forced labour and unlawful conscription of child soldiers (Central Intelligence Agency, 2008). The Burmese Government was placed in Tier 3 in the U.S. Department of States Trafficking in Persons Report (2007) for not fully complying with the Trafficking Victims Protection Acts minimum standards for the elimination of trafficking and not making significant efforts to do so (United States Department of State, 2007).

2 Anti-corruption efforts in Burma

Public Initiatives against corruption There is no in-depth research and analysis on corruption and anti-corruption efforts in the country and very little is known on the state of the anti-corruption legal and institutional framework in Burma. The following section is based on the information that could be compiled within the time frame of this query. More research and resource would be needed to provide a comprehensive assessment of the corruption situation in Burma.

The legal framework The country has a set of anti-corruption laws and since as early as 1948, corruption is officially a crime that can carry a jail term. Most relevant laws and legal instruments against corruption related offences include Burma Penal Code Volume 8, Public Property Protection Volume 2, the Money Laundering Law and the Anti-Drug Law (Burma Lawyers Council, 2005).

There has been hardly any prosecution for office abuse in Burma. However, according to many sources, it was common practice for the ruling generals to misuse anti-corruption laws as a means of ousting political opponents, as when the SPDC arrested then-Prime Minister General Khin Nyunt and many of his colleagues and family members for corruption in 2004 (Bertelsmann Foundation, 2012).

Furthermore, there is no right to information, and public procurement procedures are opaque (Bertelsmann Foundation, 2012). The budget process also lacks transparency, and sources of budget revenues remain undisclosed. In 2012, a budget drafted by the president was submitted for the first time for the approval of the Parliament, as required by the 2008 Constitution, which states: The Union Government shall draft the Union Budget Bill based on the annual Union budget, after coordinating with the Financial Commission, and submit it for approval to the Pyidaungsu Hluttaw (Parliament) in accordance with the provisions of the Constitution.

On one hand, the President and its cronies still enjoy great budgetary autonomy. Transparency and accountability are further hindered by the fact that there has been no independent auditing of state spending.

On the other hand, significant legislative reforms are being undertaken by the government, including the adoption of the Labour Organizations Law and the Peaceful Demonstration Law, as well as the amendment to the Political Party Registration Law. President Thein Sein is also working with parliamentarians affiliated with the National League for Democracy to fight corruption by requiring all government officials to publicly declare their assets (Morrell, 2012). These changes are encouraging, but it remains to be seen how they will be implemented.

Burma is a party to the UN Convention against Transnational Organized Crime and ratified the UN International Convention for the Suppression of the Financing of Terrorism in August 2006. Burma signed the UN Convention on Corruption in December 2005, but has not yet ratified it.

The Institutional Framework There is no fully independent anti-corruption institution in Burma. The SPDC power until recently was not balanced by parliament or any other political institution. In fact, until 2011 there was no formal separation of powers. Besides holding the Executive and legislative powers, the SPDC also exercised control over the Judiciary.

The new Constitution formally guarantees the independence of the judiciary and the separation of powers. In practice, however, the judiciary still faces political interference. For instance, the head of the Supreme Court and other members of the Constitutional Court were still nominated by the President without the consent of the Parliament in


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2011. A March 2012 United Nations report on human rights in Burma also noted that the country lacks an independent, impartial and effective judiciary.

In addition, courts adjudicate cases according to the juntas promulgated decrees. Administrative detention laws allow people to be held without charges, trial or access to legal counsel for up to five years for threatening the states security or sovereignty. The lack of independence of the judiciary allows officeholders to abuse their position without fear of judicial action. (Bertelsmann Foundation, 2012)

The body in charge of corruption offences is the Bureau of Special Investigations that reports to the Ministry of Home Affairs. It addresses financial crime related cases, including cases involving trading, tax evasion and corruption of government officials (Ministry of Home Affairs, website). However, there is no publicly available information on the number or status of such investigations.

Improvements in the area of Money laundering resulted in the removal of the country from the Financial Action Task Forces list of Non-Cooperative Countries and Territories (NCCT) in October 2006. Burma enacted a Control of Money Laundering Law in 2002. It also established the Central Control Board of Money Laundering in 2002 and an investigating Financial Intelligence Unit (FIU) in 2003 whose size was increased to 11 permanent members, plus 20 support staff in 2005. The government also established a Department against Transnational Crime in 2004, staffed by police officers and support personnel from banks, customs, budget, and other relevant government departments.

The 2002 law created reporting requirements to detect suspicious transactions. It set a threshold amount for reporting cash transactions by banks and real estate firms. In 2004, the anti-money laundering regulations were amended to include eleven predicate offenses, including narcotics activities, human trafficking, arms trafficking, cyber-crime, and offenses committed by acts of terrorism, among others. Fraud was also added to the list of predicate offenses. Anti-Money Laundering regulations further expanded in 2006, requiring banks, customs officials and the legal and real estate sectors to file suspicious transaction reports (STRs) and impose severe penalties for noncompliance. In 2007, the Burmese Government amended its Control of Money Laundering Law to expand the list of predicate

offences to all serious crimes to comport with FATFs recommendations (US Department of State, 2008).

Recently, however, according to the Financial Action Task Force, Burma has not made sufficient progress in implementing its action plan, and important anti-money laundering deficiencies remain. The country has until October 2012 to tackle efficiently these deficiencies, including by (i) adequately criminalising terrorist financing; (ii) establishing and implementing adequate procedures to identify and freeze terrorist assets; (iii) further strengthening the extradition framework in relation to terrorist financing; (iv) ensuring a fully operational and effectively functioning Financial Intelligence Unit; (v) enhancing financial transparency; and (vi) strengthening customer due diligence measures. If such measures are not undertaken, Burma may face countermeasures to be decided by the Financial Action Task Force (Financial Action Task Force, 2012).

A national Human Rights Commission (MHRC) was established in 2011. While it is too early to assess its activities, the international community has urged the Government of Burma to take the necessary steps to ensure the commissions independent, credible and effective functioning (United Nations Human Rights, 2012).

The potential for other anti-corruption Initiatives During the past decades, the dictatorship nature of the regime provided little opportunities for public participation and for holding government accountable for its actions and decisions. The 2008 Constitution, which came into effect in January 2011, allows freedom of association and assembly, but only as long as the exercise of these rights does not go against existing security and emergency laws. In spite of recent improvements related to voice and accountability mechanisms, both civil society and the media are still controlled and repressed.

Civil society Civil society development has always been restricted by the absence of civil liberties and very restrictive regulations. In the past five years, political shifts in Burma have created some openings for civil society efforts. As mentioned, freedom of association and assembly is now allowed as long as security and emergency laws are respected.

MYANMAR CORRUPTION REPORT COLLECTION 2017-2018

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