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Editors Note
ACUMEN enters into its second month as the political and economic changes in
Myanmar keep on coming. President U Thein Sein landed a major diplomatic coup
in May, as the United States announced its intention to lift a longstanding ban on
imports from Myanmar coinciding with his visit to Washington, the first such
appearance by a Myanmar head of state since 1966. The steady flow of foreign
interest in Myanmar shows few signs of abating; General Electric announced its
intention to make investments totalling half a billion US dollars over the next few
years. But as ever, the attitude of most would-be foreign investors is still tinged with
caution, a sentiment that has been reinforced by ethnic tensions spilling over into
violence in recent months and corruption allegations leading to the reassignment of
at least one prominent minister, among other occurrences.This issue ofACUMEN takes a look at many of these issues, in the form of
features on the relationship between conflict and economic growth and the pernicious
problem of corruption. We take an in-depth look at the prospects for Myanmar's
garment sector, as well as the issue of extractive industry transparency and the
ASEAN common market that is set to go into effect - at least in part - in 2015. What
is certain about Myanmar today is that the narrative of exuberant growth and
democratic opening popularised in the West has come into question as of late. While
Myanmar's recently-forged economic ties with the outside world are not likely to
recede entirely, lingering governance issues have casted doubt on the prospect of
Myanmar's trajectory to prosperity occurring in a linear fashion.
But in uncertain times, it falls upon the Fourth Estate to tell Myanmar's
story to the world, even if that story is not resoundingly positive on all counts. Thepress is a critical tool for promoting transparency - especially in an environment in
which transparency cannot be taken for granted - and, as we hope has been reflected
in our editorial stance thus far -ACUMEN strives to provide its readership with high-
quality, incisive and critical content every month. Last month was a success - and
hopefully what we've managed to put together this month is even better. A
CEO / Chief EditorDr. Htet Zan Linn
DirectorDr. Hein Thu Aung, Tin Tun Kyaw
Executive EditorPhyo Wai
Editor English EditionAlex Bookbinder
EditorsHein Zaw, Khin Win, Su Le`Nandar
ContributorsDanielle Bernstein, Naing Thit, Vincent MacIsaac
ReporterNang Aye Chan Moe
DesignersAung Aung (AN Computer), Thaw Tar Oo
Computer OperatorZin Wai Wai Shein
Marketing DepartmentJanuary Khine Mon, Naw Keziah, Yadanar,
Nan Mo, May Hsu Mo Mo
Cover PhotoAung Kyaw Moe (New Image)
PhotographersHla Maung Shwe, Aung Kyaw Moe (New Image),
Han Saw, Alex Bookbinder, Christopher Symes,Hein Zaw
Publisher and CopyrightDr. Htet Zan Linn
Printer
Editorial Board
ACUMEN
[email protected], [email protected],
[email protected], [email protected],
AdvisorsAdvisorsAdvisorsAdvisorsAdvisorsProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun Thet (Senior Advisor, UN Resident Coordinator's Office)
Dr. Maung Mg TheinDr. Maung Mg TheinDr. Maung Mg TheinDr. Maung Mg TheinDr. Maung Mg Thein (Ph.D. (Law), LL.M., LL.B., B.A.(Law), ANZIIF (Australia), Pg. Dip in Applied Psychology)
Prof. Maw ThanProf. Maw ThanProf. Maw ThanProf. Maw ThanProf. Maw Than (Rector (Ret), Yangon Institute of Economics Yangon)
Soe Tint AungSoe Tint AungSoe Tint AungSoe Tint AungSoe Tint Aung (Special Consultant for Advocacy, PSI Myanmar)
Dr. Tun LwinDr. Tun LwinDr. Tun LwinDr. Tun LwinDr. Tun Lwin (Consultant, Myanmar Climate Change Watch,Tun Lwin Foundation)
Than LwinThan LwinThan LwinThan LwinThan Lwin (Deputy Governer (Ret), Central Bank of Myanmar)
Tin Zan KyawTin Zan KyawTin Zan KyawTin Zan KyawTin Zan Kyaw (Principal, Device Business Management Academy)
Grace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin Htaik(Media Advocacy Advisor, PSI Myanmar)
OfficeNo. 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
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ACUMEN 11
The transition
process is al-
ways fraught
with danger,
and there are
risks we cannotavoid. But I
know what my
country and my
people are like.
I understand
that they ex-
pect this transi-
tion to democ-racy to be suc-
cessful.
President U Thein Sein
May 22th, 2013 (The Mirror
Newspaper)
We need to identify international partners that are willing
to help Myanmar develop. This is the only way we will be
able to move forward in a meaningful sense.
U Tin Naing Thein
Minister of National Planning and Economic Development
(2013 ckESpfarv (28)&ufxkwfThe Flower News *sme,ftwGJ (9) trSwf(20) yg]EkdifiHwumacs;aiGrsm;xyfrH&&Sd&ef pDrHudef;rsm; taumiftxnfazmfaqmif&Gufoifh}owif;aqmif;yg;rS aumufEkwfcsuf)
]]The Thilawa Special EconomicZone is the first - and most important- SEZ in Myanmar, and will serve tobolster Myanmar-Japanese relations.It will provide Myanmar with job op-portunities, new technologies and aninflux of investment.}}
U Hsat Aung
Chairman
Thilawa SEZ Management Committee
(2013 ckESpfarv 26 &ufxkwfaMu;rkH;owif;pmyg ]oDv0gpDrHudef; jrefrmukrPDukd;ckESifh
*syefukrPDokH;ck yl;aygif;taumiftxnfazmfrnf} owif;rS aumufEkwfcsuf/)
"A TIFA (Trade and Investment Framework Agreement) would make sure that
our countries engage regularly on trade and investment - identifying issues that
are important to us both, looking for opportunities and solving problems. A
TIFA would be an important step in normalizing our bilateral commercial rela-
tionship."
Demetrios J. Marantis, Acting US Trade Representative, in an address at the American Center, Yangon,
April 26, 2013.
oicesV
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News in Brief
14 ACUMEN www.myanmarb2bmagaz ine . com July 2013
News in Brief
14 ACUMEN www.myanmarb2bmagaz ine . com
Multimedia Showcase on Myanmar Launched
go on sale worldwide in December 2013,
according to Editions Didier Millet, the
publishing house behind the project.
The photographers who will be partic-
ipating in [7 days in Myanmar] have been
selected after a careful study of their
photographic backgrounds, said Melisa
Teo, a professional photographer whohas published photos for National Geo-
A press conference held at Yangons
Chatrium Hotel on April 27 th saw the
announcement of the 7 Days in Myan-
mar project, a multimedia showcase
that will be produced by 30 award-win-
ning multimedia journalists and photog-
raphers from Myanmar and abroad. The
organizers expect to produce a photo-book through the project, which is set to
graphic and other outlets. Media relat-
ing to Myanmars natural environment
and cultures will be the projects prima-
ry emphasis. U Aung Thura, a local
photographer selected as a participant
in the project, feels that while the it will
serve as an important platform for local
photographers, the contributions by in-
ternational photographers are important.
To make the world know about the
changes and developments that are tak-
ing place in Myanmar, he said, its goodthat we have photos from international
professionals as well, as theyre better
than what local photographers can pro-
duce. Projects similar to 7 Days in My-
anmar have been launched in other
Southeast Asian countries, including Sin-
gapore, Indonesia and Thailand. The
photography project is being made pos-
sible through the contributions of numer-
ous local and foreign backers, including
Chatrium Hotels, Chevron, Loi Hein
Group, City Mart Holdings and Myan-
mar Brewery, Ltd., along with mediapartners Ignite Marketing and SkyNet.A
Venture to provide much-needed economic information about MyanmarThe Directorate for Investment and Com-
pany Administration, the government
body which oversees foreign investment
in Myanmar, signed a memorandum of
understanding on May 11 with Oxford
Business Group, an international eco-
nomic research and publishing firm, to
produce a comprehensive study on theprospects for foreign investment in
Myanmar. The book issued by the ven-
ture should serve as a reliable source of
information in what has been, up to now,
a highly opaque investment climate for
foreign investors to operate in.
[Myanmars process of economic reform]
has attracted substantial attention from
foreign multinationals, as well as SMEs
(small-and-medium enterprises), said U
Aung Naing Oo, DICAs Director-General.
94 foreign investors came to Myanmar
over the past year, particularly from the
hotel industry and other businesses in
the service sector. The book will make
information gathered through research
undertaken over the past year available
to prospective foreign investors, accord-
ing to Stephanie Harl, Business Director
at Oxford Business Group. Myanmar has
re-entered the global economy at last,
and we are very glad to have the oppor-
tunity to work in this golden land, she
said. According to Oxford Business
Groups research, Myanmars economy
is set to grow at least five percent per
year for the next 20 years. A
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ACUMEN 15
Ford enters Myanmars burgeoning
automobile market
Ford Motor Company, one of the worlds largest auto
manufacturers, has entered into a partnership with local firm
Capital Diamond Star to market and distribute its products in
Myanmar. At a press conference held April 30 at Yangons Inya
Lake Hotel, Ford announced its intention to sell a full range of
cars and trucks in Myanmar by the fourth quarter of 2013. Ford
will strive to provide extensive employment opportunities for
local people and will train new employees in quality-assuranceand customer service practices, claimed David Wester-man, Fords
Export and Growth regional manager for the Asia-Pacific Region.
Ford will provide comprehensive after-sales service through
a nationwide network of dealerships, said U Ko Ko Gyi, the CEO
of Capital Diamond Star. Fords first showroom in the country
will be located on Insein Road, in Northern Yangons Hlaing
Township. Among the most important products for Ford in
Myanmar will be the companys popular line of F-Series pickups,
which are among the best-selling trucks in their class in the United
States. Ford is the first US automaker to have an official presence
in Myanmar, and US Ambassador Derek Mitchell was present at
the historic event. Ford is making its investment in Myanmar on
the recommendation of the US government, said Westerman. A
Parkson FMI, YangonsParkson FMI, YangonsParkson FMI, YangonsParkson FMI, YangonsParkson FMI, Yangonsfirst internationalfirst internationalfirst internationalfirst internationalfirst internationaldepartment store, opensdepartment store, opensdepartment store, opensdepartment store, opensdepartment store, opensfor businessfor businessfor businessfor businessfor business
Malaysias Parkson Asia Retail Ltd.,
which operates a number of high-end
department stores throughout Asia,
inaugurated its first branch in
Myanmar on May 11. The 43,000
square-foot outlet, built in cooperation
with local partner Yoma Strategic
Holdings, is located in Yangons
Pabedan township in between two
hallowed icons of commerce, the
Bogyoke Aung San and Theingyi
Markets. Parkson FMI offers Myanmarshoppers international cosmetics and
perfumes from international brands, as
well as a full range of mens and
womens apparel , jewellery and
household goods. Many of the brands
sold by Parkson FMI, including
Lancme, Gucci, Coach, Lacoste and
Tommy Hilfiger, have never been
officially imported to Myanmar before.
A food court, serving a wide variety
of international cuisines, is located in
the basement of the department store.Through the full suite of services the
facility offers, Parkson FMI fills a new
niche in Myanmar retailing: a
department store which, aside from its
role as a high-end retail outlet, serves
as a destination in its own right. As a
leading department store in Asia,
Parkson strives to satisfy its customers
by providing quality goods, top-notch
service and reasonable prices, said
Tham Tuck Choy, the stores managing
director. A
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Cover Story
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ACUMEN 17ACUMEN 17
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18 ACUMEN www.myanmarb2bmagaz ine . com July 2013
Work model of its own, but steps are being taken to preparefor it, Marshall said. Essentially, what everybody has agreed
is that at this stage it is too early to introduce a Better Work
type scheme here because the legal structures do not exist
for it, he added, citing the absence of a minimum wage law
and a lack of occupational health and safety regulations as
examples.
Laws addressing these concerns are pending, however,
and are expected to be passed during Parliaments next session,
which begins on June 25.
Western garment and footwear brands areconducting due diligence on individual
Myanmar garment factories, the industry as a
whole and the governments political and
economic reform process as they continue to scour the globe for
the latest source of inexpensive - but productive - factories they
can outsource production to.
Officials and industry representatives say that the Western
brands are drawn by the easing of sanctions on imports to key
markets, a new legal framework that establishes basic workers
rights, and nascent efforts to improve working conditions at
factories.
Foreign producers expect that production costs in Myanmar
will fall as access to reliable electricity improves; economicreforms should also serve to drive down the cost of freight,
telecom and conducting financial transactions .
The depreciation of the Kyat - hitting new lows against the
US dollar - also adds to the excitement.
Myanmars high unemployment rate and low wages are
another draw. Of the countrys roughly 60 million people, labour
force participation sits at only 67 percent, according to Dr. Than
Win, Director-General of the Ministry of Labours Department
of Labour Relations. His department has been at the forefront of
revamping labour laws, most of which were drafted before
1950, to bring them into harmony with global standards.
The International Labour Organisation (ILO) has also been
busy. Steve Marshall, its liaison officer, said that several globalbrands had contacted his office as part of their research on
Myanmar. Obviously they are concerned about reputational risk,
he said, adding that they are doing their due diligence, seeking
reports on broader human rights and also specifically on labour
market issues.
Global brands fled Myanmar a decade ago due to widespread
media reports of human rights abuses and the imposition of
sanctions by Western governments, tossing 80,000 garment
workers out of their jobs, according to the Myanmar Garment
Manufacturers Association. Marshall said he would not be
surprised if global brands started sourcing from Myanmar fairly
quickly, but preferred not to name the brands that had contactedhis office because it is a very competitive business.
Aside from the market factors that are making Myanmar
increasingly attractive to global brands, two key developments
are underway that could clean up the countrys image, and
possibly fuel the sort of social justice politicians like to talk about.
Myanmar is rewriting its labour legislation, while the ILO is
working with the Ministry of Labour, industry groups and
workers organisations to lay a foundation for establishing its
Better Work program in the garment industry (sidebar). This
will allow it to monitor factories for compliance with labour
laws and ILO conventions.
Myanmar is a few years away from establishing a Better
In this photo set, workers at various factories in Yangons Hlaing
Thar Yar township produce garments for export. Hlaing Thar
Yar is one of Yangons largest industrial zones, and is an important
site for light manufacturing, dominated by the garment business.
In this photo set, workers at various factories in Yangons Hlaing
Thar Yar township produce garments for export. Hlaing Thar
Yar is one of Yangons largest industrial zones, and is an important
site for light manufacturing, dominated by the garment business.
Cover Story
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ACUMEN 19
Better FactoriesBetter FactoriesBetter FactoriesBetter FactoriesBetter FactoriesThe Better Factories model was initiated in Cambodia in 2001, following a trade agreement between
Washington and Phnom Penh that gave Cambodia better access to American markets in exchange forimproved working conditions in the garment sector. Trade negotiators refer to such agreements as trade
privileges or preferential access, but one buyer for a global brand described it differently. The Americans
were the first to discover their brands could get cheap labor in Cambodia, he said.
Still, the industry now employees about 500,000 Cambodians, and the value of garment exports hit
US$4.61 billion last year - up 9 percent from 2011. Garment exports account for about 80 percent of
Cambodias exports, according to the IMF. Before Better Factories Cambodia, the country had only 90
garment factories employing a total of about 100,000 workers. Last year, the Council for Development of
Cambodia - the equivalent of the Myanmar Investment Commission - approved the building of 12 more
garment factories with a total capital investment of US$499 million. Wages also rose last year from $61 to
$80 a month for a six-day work week. Real wages, including bonuses and overtime, push this up above
$120, in a country where the average teachers salary is roughly $30 per month.
The model has received scathing criticism from US academics and the Clean Clothes Campaign in
Europe over the past year, with both saying its monitoring reports whitewash ongoing problems. The
reports present a synthesis of data from all factories without publicly naming the individual factories that fall
short of compliance.
The programs country director, Jill Tucker, has managed to revamp Better Factories since assuming
her role in late 2011. At the time, the industry had a massive expansion of orders, which led to coerced
overtime and a rash of mass fainting incidents at factories. In early 2012 she told a forum on working
conditions in garment factories that other countries considering setting up such a model should ensure
complete transparency from day one, because Better Factories faced a backlash against attempts to publicly
name individual factories found to be in breach of ILO standards or Cambodian labour law. Following the
collapse of a shoe factory complex in April that killed two workers, however, Tucker has said the ILO
intends to name and shame factories that consistently breach ILO conventions and Cambodian labour law.
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Labour law reform is a prerequisite for attracting Western
brands to Myanmars factories, as they face pressure from unions
and human rights groups in the West to uphold labour standards.
They also fear that their carefully crafted brand images - the
main drivers of their profit margins - will be tarnished by an
association with the sweatshop label.
Legal movesLegal movesLegal movesLegal movesLegal movesDespite its many contradictory and controversial sections,
the 2008 Constitution laid a foundation for a revamp of labour
legislation: section 24 of chapter 1 calls for the enactment oflaws to protect workers rights, and article 3 of section 354
enshrines the right to form associations and organisations.
Since then, two key pieces of legislation have been passed:
The Labour Organization Law of 2011 (promulgated in 2011, it
was not enacted until March 9, 2012), and the Settlement of
Labour Disputes Law, which was enacted on March 28, 2012.
These acts enshrine the right to collective bargaining, allow
unions to form, require employers to recognize them and make
it legal for workers to strike.
Employers are also allowed to lock out staff during disputes,
though limits are placed on both strikes and lockouts. Pending
labour legislation includes four key bills on social security, the
minimum wage, workers compensation, as well as employment
and skills development. The Payment of Wages Act, Factories
Act and Leave and Holidays Act are also set to be amended,
according to Dr. Than Win.Marshall described the process of drafting and fine-tuning
these laws as collaborative and excellent. The labour ministry
is also receiving technical assistance from the European Union,
trade-related agencies of Western governments seeking bilateral
deals with Myanmar, and Western brands seeking to source
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ACUMEN 21
from Myanmar factories.
The ILO is aiming to coordinate this. It is helping develop a
legal framework for the industry, to establish enforcement
mechanisms, and help build more responsive institutions for
factory owners and trade unions alike. A major goal, according
to Marshall, is developing industrial relations that are
cooperative rather than confrontational.
He is betting that this can be achieved by ensuring
constructive social dialogue between factory owners and
workers so that the interests of both sides are taken into account
in the decision-making process. It is a goal he acknowledgeswill be tricky to pull off in a country that has recently emerged
from 50 years of military rule.
This country has basically been an orders-based
environment. Orders were issued, orders were received, orders
were passed on and orders were obeyed, Marshall said. This
applied in all environments, including the workplace.
An internationally-competitive garment sector will require
this attitude to shift, and those working to achieve this are under
no illusions that it will be easy. The timing may be right for a
swift change in social attitudes to occur. Aside from ongoing
political and economic reforms, Myanmar has a demographic
advantage: about half the population is under the age of 25. The
emergence of an independent trade union movement could
also help ensure that the rhetoric of reform is at least partially
realized.
The system of organized labour is actually a very importantpart of the social fabric in the development of a democratic
society, but there will always be disputes between capital and
labour, Marshall said. But what we got to try and do is get
people to understand is that workers need employers as
much as employers need workers. And it is very important
ACUMEN 21
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that they build a relationship in which the respective interests
of both parties are taken into account in the decisions that are
made.
A competitive industry is in the interests of both owners
and workers, said Marshall. An unprofitable company does
not employ staff so we have make sure that companies can
be competitive and maintain profitability, and that is achieved
not on the back of low wages but on its back of high productivity,
high quality, low waste, less rework , he said.
He believes that Myanmars advantage is that it is starting
from scratch, which will allow the formation of effective unions
and industry associations as wells as a collaborative approach
to creating a garment sector that benefits both. I actually believe
[starting from scratch] creates opportunities, which if we are all
clever we could actually use for very useful ends in terms of
developing not just the economy, but as a tool for supporting the
development of society, because what goes on in the work is amicrocosm of what goes on outside, he said. If we can develop
those attitudes [of inclusiveness and collaboration in the
workplace] then you can see them develop more broadly in
society.
Risks?Risks?Risks?Risks?Risks?Although Myanmars garment industry is close to gaining
direct access to Western markets, it does face several hurdles.
Exports of garments are expected to near $1 billion this year,
with the lions share going to Korea, Japan, China and Hong
Kong. It is an open secret that Myanmar garments are already
selling in Western retail shops after being repackaged in China,
but direct access would allow manufacturers here to move up
the value chain and improve their access to high-end markets.
They will face pressure from human rights groups, who
will seek to tie access to markets with changes they want to see
here. US-based Human Rights Watch is the most vocal on this
front, and has called for more reforms before preferential trade
status is given.
If the US moves too fast, it will undermine the ability of the
US government to push for improved respect for labour rights,
Human Rights Watch said in a statement in late April. The
statement did not note, however, that activists in the United
States have accused some of its state governments of turning
prison labor into an industry.
Perhaps the biggest risk facing Myanmars garment industry
is a possible failure of the peace process. The peace process is
absolutely critical, said Marshall. Everything is contingent on
it. He is confident that the desire for peace is universal. Wedeal closely with all the non-state armies [they] are not just
going to roll over and accept everything, but they have a desire
for peace, he said. The government also understands that
having a semi-democratic, semi-developed Myanmar with eight
civil wars going on the outside is not the model they are looking
to achieve.
While the future of Myanmars garment industry may hinge
on stitching together a peace deal, the rebranding that has
already occurred has caught the eye of global brands.
The opportunities are huge, said Marshall. You have to admire
the courage of the people to grab this opportunity.A
Many of Myanmars recent labourreforms have been the result of con-
sultations with the International Labour
Organization, whose Director-General,
Guy Ryder, is pictured here.
- DGEMPL/Flickr
Cover Story
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In his address at Yangon University last November, US President Barack Obamastated his belief that the governments ongoing process of reform will [not] succeedwithout national reconciliation. This statement, and the public forum in which it wasmade, underscores the threat to stability and prosperity posed by Myanmars ongoing
ethnic conflicts, and the increasing attention paid to them in the international arena.
Feature
26 ACUMEN www.myanmarb2bmagaz ine . com July 2013
By Phyo Wai
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ACUMEN 27ACUMEN 27
Since President U Thein Seins government came to power in April 2011, it has had to
balance three difficult, delicate and often contradictory priorities: political and economic
reforms, as well as launching a peace process with Myanmars restive ethnic minorities.
These reforms are interdependent: peace and stability are crucial for democratic norms to
deepen. Democracy and transparency will, in turn, facilitate Myanmars economic development.
As foreign investment is likely to flood into Myanmar in coming years, the absence of
internal peace could prove to be a serious challenge to the staying power of recent reforms.
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Federalism - the solution?Federalism - the solution?Federalism - the solution?Federalism - the solution?Federalism - the solution?
Ever since Myanmar gained independence from Britain in
1948, the country has been beset by civil war. Myanmars myriad
insurgencies are widely considered to comprise the longest-
running civil war in the world, a complicated pattern of internal
conflict that has involved ethnic armies and communist insurgents
over the years. Few pathways to national reconciliation are in
sight.
Myanmars ethnic peoples have long demanded equality,
and have advocated for Myanmar to become a genuinely federal
state granting them a modicum of self-determination under the
law. These demands have been raised by the ethnic leaders
in our talks with them, said U Hla Maung Shwe, an advisor tothe President who is acting as a mediator in the peace processes.
And I think, he said, all these demands are sensible.
These demands have a historical basis in the Panglong
Agreement, the first abortive effort to establish a federal state,
led by martyred nationalist leader Aung San in the late 1940s.
Ethnic leaders claim that successive military regimes have
ignored the spirit of Panglong in their dealings with ethnic
minorities. Armed uprisings, including that by the KIA (Kachin
Independence Army) are, simply,the result of the governments
failure to honour it [Panglong], said Kachin Nationalities Advisory
Committee member NHtung Hka Naw Sam. They [the
government] still insist on [maintaining] a unitary form of
administration.Different ethnic groups conceptualise the notion of a federal
system differently. To us, its a system that ensures peace and
equality, said Mahn Aung Pyi Soe from the Karen-ethnic Phalon-
Sawaw Democratic Party. I believe that a federal system will
allow Myanmar to become a prosperous nation.
Nai Min Kyaw Win, an official from the Mon Democratic
Party, noted that many in Myanmar fear federalism, which raises
the spectre of secession from the Union of Myanmar, he said.
I am in favour of promoting the development of a genuine
Union along federal lines - which I firmly believe will bring
peace.
Aside from Panglong, there have been other dalliances with
federalism in Myanmars political past. In the time of Prime
Minister U Nu, representatives of various indigenous races took
part in a conference on federalism, U Win Tin, a veteran
journalist, former political prisoner and high-ranking member
of the opposition National League for Democracy, toldACUMEN.
The consensus was that some sort of federal system needed
to be established, whereby judicial power would be vested in
the central government and most other powers would be
devolved to the states and divisions. But this did not happen,
as in 1962, General Ne Win used it as pretext for the coup
which toppled U Nu, ushering in direct military rule, he
explained.
To many people in Myanmar, both in the government and
among the general public, the association between federalism
and secession is a deep-seated one. But the reality is morecomplicated. Above all, it is an avenue for self-determination
without secession and most ethnic armed groups have officially
dropped demands for sovereignty as a result.
But federalism is not perfect. Federalism alone is by no
means a cure-all, claims Dr. Sein Sein Thein, an NLD
representative from northern Shan State. Regional governments
working separately from one another just wont work. Myanmar,
sandwiched between its two giant neighbours, is in danger of
being influenced or even engulfed by either of them. The problem
of Chinese influence in Shan State is particularly worrisome.
Federalism is still an issue of national security, she claimed. At
(Left/Upper Right) KachinIndependence Army soldiers
wait in anticpation ofgovernment attacks. Lajaiyang, ,
Kachin State, January 2013 -Christopher Symes/Alex
Bookbinder
Feature
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ACUMEN 29
clash of interests between the government which owns 70
percent of the resources in the state - and the Kachins, who are
reluctant to part with the natural resources on their land withoutreceiving a fair share. This is the essence of the resource curse.
The phenomenon of natural resources fuelling internal conflict
exists in other countries, as well. In Africa, theyre fighting for
diamonds, said U Myo Yan Naung Thein, director of Bayda
Institute. In Myanmar, natural resources such as teak - are
being sold abroad by the government as well as by non-state
armed groups.
Towards a durable peaceTowards a durable peaceTowards a durable peaceTowards a durable peaceTowards a durable peace
To a certain extent, President U Thein Seins government
has made an effort to secure peace in Myanmar once and for
present, ethnic conflicts are still going on. So federalism is not
the solution. Our people are not ready for democratization, as
we are not unified. As the saying goes, if there are two peopletheyll form three groups the inability of Myanmar people get
united towards a common goal is well-documented.
Myanmar is rich in natural resources, including gemstones,
oil, minerals, and forestry products. Armed conflicts across
Myanmar, between various non-state armed groups and the
central government, are rooted in the fact that minorities have
historically benefited little from the bounties of their land.
For example, U Win Tin explained, the people of Rakhine
State should have the right to decide, at least in part, what
happens to revenues from the offshore natural gas projects in
their backyard. Armed clashes in Kachin State are essentially a
(Above) Recently felled timber at the Port of Yangon.
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30 ACUMEN www.myanmarb2bmagaz ine . com July 2013
all. Were trying to bring about peace that will endure for a
long time and make national reconciliation possible. The peace
process takes place on a number of levels: first, both sides meet
at the state level to negotiate a ceasefire, the President said in
a recent statement. Both sides must stay in agreed-upon areas,
and arrangements can be made for a second round of
negotiations at the national level. There will be no political
dialogue at first, but a genuine desire for peace will make these
negotiations run smoothly, he said.
He subsequently explained that Union-level negotiations
are intended to extract promises from non-state armed groups
to accept the Three Main Causes (non-disintegration of the
Union, non-disintegration of national solidarity, perpetuation of
sovereignty), to cooperate on economic development, and theeradication of narcotics. As well, Union-level dialogue is intended
to normalise the status of armed groups by allowing them to
form political parties and participate in national political life.
The constitution allows for the country to have only one armed
forces, which may prove difficult when it comes to disarmament.
At the third stage, all political players in the country the
government, ethnic leaders, political parties and
hluttaw(parliamentary) representatives will sign the
agreement, U Thein Sein said. These three stages constitute
the governments roadmap to eternal peace in the country.
The government will have to tread delicately in its dealings
with ethnic armed groups, says Dr. Aye Maung, the chairman
of the Rakhine Nationalities Development Party and a hluttawrepresentative. Just as a physicians skill is important for curing
a disease, so is the skill of a peacebroker. Effective mediators
need to be trusted by both sides.
Naypyidaw has managed to secure ceasefires with some
armed groups, but in the absence of a political solution, military
conflicts are most likely to continue, according to analysts. These
negotiations can be successful in bringing about ceasefires, but
because armed conflict is just politics by other means, if political
problems persist, the chance that armed conflict will break out
remains a possibility, said Dr. Min Zaw Oo of the Myanmar
Peace Centre, an organisation that has taken an active role in
the peace process. Our country has more than 20 armed groups,
explained U Hla Maung Shwe. In no other country has there
been a government that has tried to settle that sheer number of
insurgencies. But well try our best to achieve peace.
A fledgling democracy in a raging stormA fledgling democracy in a raging stormA fledgling democracy in a raging stormA fledgling democracy in a raging stormA fledgling democracy in a raging stormRecent communal violence in Myanmar of a religious and
racial nature underscores the problems Myanmars reformist
government faces as the country transitions from a dictatorship
to a democracy. Myanmars rapid opening to the outside world
has served to reignite sectarian hatreds. These disturbances
may pose a threat to the countrys prospects for achieving true
democratization, and could hinder economic development.
As there are invariably a handful of hardliners behind this
violence, President U Thein Sein has called for the violence to
end and for Myanmars citizens to help build a democratic state.
When a problems arise, some people try to exacerbate them,
he said. Some work behind the scenes to incite violence, andother actively participate in carrying it out. According to the
President, peace and stability are prerequisites for foreign
investment to come in.
U Aung Minand Maj GenHtein Maungat Karen affairmeeting inPha-An 2013March 29.
- Hla Maung Shwe
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ACUMEN 31
Myanmars economy is like a car with a dead battery.
Pushing the car wont get you anywhere: what you really need
is a new battery from somewhere else, Dr. Aung Tun Thet, a
noted economist and member of the Myanmar Investment
Commission, explained. Thats the role that FDI will play in
Myanmars economy moving forward, and this is the way
Myanmar people should think. Myanmars business leaders
have been wishing a massive inflow of foreign capital for years
and for sanctions to be lifted. To a degree, the international
community has been responsive to these requests in response
to the reforms of the past two years. But trying to open up as
internal conflict rages on is like inviting guests into a homewracked by domestic violence.
To be sure, some foreign investors have already made the
leap into Myanmars untapped economy, especially from
Myanmars neighbouring countries, but most are here just to
test the waters, so to speak, and think strategically about future
investment plans. Foreign investors are not philanthropists: they
are not going to risk large investments in a country where their
security cannot be assured. While theres no way of knowing if
Myanmars dictatorship-turned-democracy will revert back to
its old repressive ways, one thing is certain: if there is no peace
and stability in Myanmar, foreign investors will begin to look
elsewhere.
In February, The Voice Weeklyquoted Union Minister U
Soe Thein claiming the government has made significant
headway when it comes to ending Myanmars insurgencies. By
negotiating ceasefires, entering into constructive dialogue with
armed groups and holding a conference of nationalities in
Myanmar, we believe that we will be able to achieve a
comprehensive peace plan by 2015. His statement underscores
the importance of U Thein Seins efforts throughout his tenure
in office; if the governments efforts succeed, the FDI needed to
jumpstart Myanmars economy may finally be forthcoming. A
When problems arise, some
people try to exacerbate them.
Some work behind the scenes to
incite violence, and others actively
participate in carrying it out.
President U Thein Sein poses with members of the Karen NationalUnions executive committee. - Hla Maung Shwe
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32 ACUMEN www.myanmarb2bmagaz ine . com July 2013
Feature
By Hein Zaw
32 ACUMEN www.myanmarb2bmagaz ine . com July 2013
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ACUMEN 33
Myanmar is gradually
undergoing a process of
profound reform. Some
foreign investors have
already made large-scale
investments, and more are
expected to arrive in short
order. Despite the general
spirit of optimism, corruptionand bribery cases are still
cause for concern. This
problem threatens
Myanmars development
prospects, and should be
addressed as a matter of
utmost urgency.
ACUMEN 33
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34 ACUMEN www.myanmarb2bmagaz ine . com July 2013
Corruption as it is todayCorruption as it is todayCorruption as it is todayCorruption as it is todayCorruption as it is todayOver the first few months of this year, a number of media
reports and articles were released about corruption and brib-
ery. Over 1,000 government employees were reprimanded for
corrupt practices, 16 customs officers were dismissed, and se-
nior officials in the Ministry of Communications came under
investigation. These scandals rightfully provoked public out-
rage. While the governments response might appear to reflect
transparency and openness, these cases represent the tip of
the iceberg, ac-
cording to
some analysts,
who claim that
gove rnmen temployees who
bear the brunt
of the punish-
ment are those
on the lowest
echelons of the
bureaucracy,
and that rela-
tively fewer ac-
tions are taken
against corrup-
tion at the top.
In itsannual Corrup-
tion Perceptions
Index (CPI),
Transparency
International
(TI), a Berlin-
based NGO
that monitors
public and pri-
vate sector cor-
ruption, ranks
Myanmar as the 172ndmost corrupt country in the world, a
score worse than all but Sudan, Afghanistan, North Korea and
Somalia. Within ASEAN, Singapore is ranked as least corrupt
by TI.
Tea money cultureTea money cultureTea money cultureTea money cultureTea money cultureBribery and corruption have become deeply rooted in
Myanmar over many years, and as such have become part of
Myanmar culture. They are seen as acceptable for getting things
done and buying influence. Tea Money, in particular, has
become a common euphemism for bribes used in everyday
language. Daw Khin Aye Than, an economist with 20 years of
teaching experience at foreign universities, isnt convinced that
these cultural traits are going to die out any time soon. Bribery
has become a habit with the people. They consider it a must-do; nobody bothers to question why, she said. This is a long-
running problem, and its grown into a major one, but nobody
can be bothered to stop it.
Building a society that is intolerant of corruption will take
a while, says Dr. Aung Tun Thet, a prominent local economist.
If corruption is only in the blood, you can remove it by taking
the blood out, he said. But its deep in peoples DNA, its
embedded in their genes. The whole genetic engine, so to speak,
needs overhauling. He is not particularly optimistic, either.
Thinking about corruption, its just frustrating, he continued.
People have grievances about so many things and the countrys
administrative machinery is falling apart. Things dont function
very well, which leads people to show little respect for the
law.
Although corruption exists in the private sector as well as
within the government, government departments are likely the
most corrupt institutions in the country. The fact that people
have little faith in public institutions underscores the magnitude
of the social corrosion caused by corruption and bribery.
Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?As the old Myanmar saying goes, one cannot afford to be
moral on an empty stomach. Most people intuitively see a
correlation between corruption and bribery and the relative
Rank Ten Most Corrupt Countries Score
165 Haiti 19
165 Venezuela 19
169 Iraq 18
170 Turkmenistan 17
170 Uzbekistan 17
172 Myanmar 15
173 Sudan 13
174 Afghanistan 8
174 Korea (North) 8
174 Somalia 8
Rank Ten Least Corrupt Countries Score
1 Denmark 90
2 Finland 90
3 New Zealand 90
4 Sweden 88
5 Singapore 87
6 Switzerland 86
7 Australia 85
8 Norway 85
9 Canada 84
10 Netherlands 84
Result of CPI (2012) released by TI
organization
North Korea (left) and Somalia (right)are at the bottom of the CPI -but Myanmar is not far off- EU Aid and Civil Protection/Flickr
Feature
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ACUMEN 35
level of poverty in a country. In this country, making an
adequate living is difficult, said U Toe Hlaing, technical directorat MAGA Manufacturing Company, Ltd. Government employees
find it hard to live without outside income. The majority of
educated people in this country agree, but a comprehensive
analysis of the factors at play still needs to be done.
The backward state of Myanmars economy makes it
difficult for people to earn enough for food, clothing and shelter,
which invariably leads them to resort to corruption and bribery.
But how do things function in other countries? Corruption is a
fact of life everywhere in the world to varying degrees, even
in the United States, the worlds sole economic superpower.But in developed countries, there is generally a healthy system
of checks and balances in place to tackle corruption. There is
a correlation between per capita income and corruption
perceptions: highly advanced and wealthy states, such as
Singapore, Australia, and Switzerland, are in the top 10 in terms
of income and the bottom ten when it comes to corruption.
South Korea, despite the fact that is a prosperous, has always
had its fair share of corruption to contend with. Income levels
5
10
15
20
2
5
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Corruption Perceptions Index (2003-2012) for Myanmar
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36 ACUMEN www.myanmarb2bmagaz ine . com July 2013
and corruption are related to a certain
extent, but low incomes alone cannot
explain the pervasiveness of corruption
in Myanmar. Many government
employees are not corrupt, despite their
low salaries and their exposure to the
structural factors that breed corruption.
Many high-ranking officials, however,
cannot resist the temptations of outside
money.
Power and responsibilityPower and responsibilityPower and responsibilityPower and responsibilityPower and responsibilityThe element of power is crucial to
understanding corruption, said U MinSein, a high court lawyer. Historically,
nobody dared question those in positions
of power and authority. If, for example,
it became known that an official took a
bribe, it would be impossible to report it
to a higher authority, as the next level
up would also be complicit in accepting
bribes. When systemic abuses of power
become normalised, the problem of
bribery thus becomes a cancer that
pervades the entire system.
It is commonly perceived that these
kinds of practices are rampant on allechelons, from top to bottom, including
in law enforcement. This does not
engender much trust towards
government departments across the
board.
The current government has only
been taking action against people
responsible for corrupt practices between
2010 and 2012, said U Than Maung, a
high court lawyer from Sittwe. There
was a lot of corruption going on before
then, as well. Weve had to deal with the
devastating effects of corruption for the
past 20 years now. The ascent to
prominence by the cronies over the
past two decades - businessmen that have
profited off of close ties to the
government - are a case in point. The
people in charge claim that American
sanctions were responsible for
corruption but paradoxically, weve
seen the emergence of millionaires and
billionaires in Myanmar. This indicates
that its impossible to isolate one issue
as being responsible for the problem. Its
a case of so many things being wrong
on all levels.
Tradition exploitedTradition exploitedTradition exploitedTradition exploitedTradition exploitedGiving presents and paying respects
to teachers and elders are cultural
traditions that need to be preserved as
Myanmar modernizes. But over time, the
significance of these traditions has
changed as money has come into the
equation; gift-giving has become
synonymous with buying influence. Put
simply, Myanmars cultural traditions arebeing exploited. Since gift-giving is part
of Myanmar culture, I would have no
problem with my students coming to pay
respects after they graduate, said Daw
Khin Aye Than, the economics professor.
There is no obligation for teachers to
reciprocate by handing out high grades.
These gifts arent bribery: they are part
of traditional Myanmar culture. But there
need to be limits. Expensive gifts, like
cars and jewelry, arent acceptable. These
are, in practice, more than gifts; gifts
should just be small tokens of gratitude.
Effects of corruptionEffects of corruptionEffects of corruptionEffects of corruptionEffects of corruptionCorruption and bribery adversely
affect Myanmars prospects for
modernization and accountability, and
petty corruption affects the functioning
of government offices and how they are
able to deal with the public. But despite
recent steps to improve accountability
and transparency, the public is fed up
with the slow pace of change, says Dr.
Aung Tun Thet. It takes a week for a
document to go from one desk in an office
to the next. Under the new government,
while things have improved, problems
remain. Continued corruption and
bribery may result in a backlash against
recent reforms. Recent disturbances in
Rakhine State, for example, have raised
questions about how the government has
handled citizenship issues. Corruption
disproportionately impacts the poor, as
they are made to pay the same bribes
for the same services as rich people are.
Feature
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ACUMEN 37
Continued corruption can also
tarnish Myanmars image as a reforming
state in the eyes of the international
community. A lack of international faith
and trust in Myanmars reform process
has already held back foreign investment
and international economic engagement.
There will be no investment in a
corruption-ridden country, said Dr. Aung
Tun Thet, because potential investors
are aware that their investments will only
be enjoyed by a handful of people at the
top. This extends to the aid sector as
well: Myanmar receives a paltry amountof foreign aid just eight dollars per
capita.
Good governance, clean government
- these are the buzzwords President U
Thein Sein has employed in his major
policy speeches, and they have struck a
chord with Myanmars population.
Whether or not the rhetoric matches
concrete action remains to be seen.
But the government does, at least
superficially, seem to be committed to
stamping out corruption. On January 8,
a commission to end corruption andbribery was founded, and will be led by
Vice-President Sai Mauk Kham. The
following month, Parliament passed
comprehensive legislation that stipulates
harsh penalties for people found to be
engaging in corrupt practices.
A major point of contention has been
government officials lack of openness
about their personal assets, and on this
count Parliament has not been as
responsive. A motion demanding that
government officials declare their assets
was defeated in Parliament late last year,
which will invariably compromise the
sticking power of recent reforms.
Common wisdom suggests that
corruption in Myanmar reached a zenith
under previous military governments, but
this is not necessarily the case. Things
today are arguably much worse than they
were during the Ne Win regime, when
opportunities for corruption were more
limited. The period of SLORC/SPDC rule
between 1988 and 2010 was arguably
the most corrupt in Myanmars history,
and it is this legacy that the current
government must make a concerted effort
to undo. It is clear that previous military
governments fostered a climate of
corruption, said U Than Maung. Those
governments were not governments for
the people, especially the regime that
immediately preceded the current
government. It is demoralising to see
Myanmar lagging behind while other
countries make tremendous strides
forward.
How to go about reformHow to go about reformHow to go about reformHow to go about reformHow to go about reformAnti-corruption campaigns cannotbe static: rooting out corruption needs to
be an ongoing process. We need an
action plan, Dr. Aung Tun Thet said. In
the past, close relationships between
businesses and government were normal,
and bribing government officials for
contracts was commonplace. These
dealings need to be made transparent in
order to prevent bribery and it is up to
all government departments to be
responsible for their own disclosures.
U Than Maung feels that no matter howgood the legal framework gets, the greed
inherent to human nature will always
reign supreme. Laws dont necessarily
need correcting, but men do, he said.
You cant reform anything when the
people who are entrusted with
maintaining the social contract have no
external checks and balances on their
impunity. All of those responsible law
enforcement officials, businessmen,
parliamentarians, etc., must act in a fair
and just way.
Dignity and humility need to play a
part in stemming corruption, according
to some thinkers, and people in Myanmar
need to start looking at bribes as personal
assaults against their integrity. The media
may also have a role to play in
normalising non-corrupt practices, and
expose corruption when it occurs. First
and foremost, societal attitudes towards
corruption need to change, and this will
only occur if people on an individual
level refuse to pay or accept bribes.A
A lack of internationalfaith and trust in
Myanmars reform
process has already
held back foreign
investment and
international economic
engagement. Therewill be no investment
in a corruption-ridden
country, said Dr. Aung
Tun Thet, because
potential investors are
aware that their
investments will onlybe enjoyed by a
handful of people at
the top.
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ACUMEN 33
Myanmar is gradually
undergoing a process of
profound reform. Some
foreign investors have
already made large-scale
investments, and more are
expected to arrive in short
order. Despite the general
spirit of optimism, corruptionand bribery cases are still
cause for concern. This
problem threatens
Myanmars development
prospects, and should be
addressed as a matter of
utmost urgency.
ACUMEN 33
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34 ACUMEN www.myanmarb2bmagaz ine . com July 2013
Corruption as it is todayCorruption as it is todayCorruption as it is todayCorruption as it is todayCorruption as it is todayOver the first few months of this year, a number of media
reports and articles were released about corruption and brib-
ery. Over 1,000 government employees were reprimanded for
corrupt practices, 16 customs officers were dismissed, and se-
nior officials in the Ministry of Communications came under
investigation. These scandals rightfully provoked public out-
rage. While the governments response might appear to reflect
transparency and openness, these cases represent the tip of
the iceberg, ac-
cording to
some analysts,
who claim that
gove rnmen temployees who
bear the brunt
of the punish-
ment are those
on the lowest
echelons of the
bureaucracy,
and that rela-
tively fewer ac-
tions are taken
against corrup-
tion at the top.
In itsannual Corrup-
tion Perceptions
Index (CPI),
Transparency
International
(TI), a Berlin-
based NGO
that monitors
public and pri-
vate sector cor-
ruption, ranks
Myanmar as the 172ndmost corrupt country in the world, a
score worse than all but Sudan, Afghanistan, North Korea and
Somalia. Within ASEAN, Singapore is ranked as least corrupt
by TI.
Tea money cultureTea money cultureTea money cultureTea money cultureTea money cultureBribery and corruption have become deeply rooted in
Myanmar over many years, and as such have become part of
Myanmar culture. They are seen as acceptable for getting things
done and buying influence. Tea Money, in particular, has
become a common euphemism for bribes used in everyday
language. Daw Khin Aye Than, an economist with 20 years of
teaching experience at foreign universities, isnt convinced that
these cultural traits are going to die out any time soon. Bribery
has become a habit with the people. They consider it a must-do; nobody bothers to question why, she said. This is a long-
running problem, and its grown into a major one, but nobody
can be bothered to stop it.
Building a society that is intolerant of corruption will take
a while, says Dr. Aung Tun Thet, a prominent local economist.
If corruption is only in the blood, you can remove it by taking
the blood out, he said. But its deep in peoples DNA, its
embedded in their genes. The whole genetic engine, so to speak,
needs overhauling. He is not particularly optimistic, either.
Thinking about corruption, its just frustrating, he continued.
People have grievances about so many things and the countrys
administrative machinery is falling apart. Things dont function
very well, which leads people to show little respect for the
law.
Although corruption exists in the private sector as well as
within the government, government departments are likely the
most corrupt institutions in the country. The fact that people
have little faith in public institutions underscores the magnitude
of the social corrosion caused by corruption and bribery.
Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?Is poverty the root cause?As the old Myanmar saying goes, one cannot afford to be
moral on an empty stomach. Most people intuitively see a
correlation between corruption and bribery and the relative
Rank Ten Most Corrupt Countries Score
165 Haiti 19
165 Venezuela 19
169 Iraq 18
170 Turkmenistan 17
170 Uzbekistan 17
172 Myanmar 15
173 Sudan 13
174 Afghanistan 8
174 Korea (North) 8
174 Somalia 8
Rank Ten Least Corrupt Countries Score
1 Denmark 90
2 Finland 90
3 New Zealand 90
4 Sweden 88
5 Singapore 87
6 Switzerland 86
7 Australia 85
8 Norway 85
9 Canada 84
10 Netherlands 84
Result of CPI (2012) released by TI
organization
North Korea (left) and Somalia (right)are at the bottom of the CPI -but Myanmar is not far off- EU Aid and Civil Protection/Flickr
Feature
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ACUMEN 35
level of poverty in a country. In this country, making an
adequate living is difficult, said U Toe Hlaing, technical directorat MAGA Manufacturing Company, Ltd. Government employees
find it hard to live without outside income. The majority of
educated people in this country agree, but a comprehensive
analysis of the factors at play still needs to be done.
The backward state of Myanmars economy makes it
difficult for people to earn enough for food, clothing and shelter,
which invariably leads them to resort to corruption and bribery.
But how do things function in other countries? Corruption is a
fact of life everywhere in the world to varying degrees, even
in the United States, the worlds sole economic superpower.But in developed countries, there is generally a healthy system
of checks and balances in place to tackle corruption. There is
a correlation between per capita income and corruption
perceptions: highly advanced and wealthy states, such as
Singapore, Australia, and Switzerland, are in the top 10 in terms
of income and the bottom ten when it comes to corruption.
South Korea, despite the fact that is a prosperous, has always
had its fair share of corruption to contend with. Income levels
5
10
15
20
2
5
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Corruption Perceptions Index (2003-2012) for Myanmar
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43/85
36 ACUMEN www.myanmarb2bmagaz ine . com July 2013
and corruption are related to a certain
extent, but low incomes alone cannot
explain the pervasiveness of corruption
in Myanmar. Many government
employees are not corrupt, despite their
low salaries and their exposure to the
structural factors that breed corruption.
Many high-ranking officials, however,
cannot resist the temptations of outside
money.
Power and responsibilityPower and responsibilityPower and responsibilityPower and responsibilityPower and responsibilityThe element of power is crucial to
understanding corruption, said U MinSein, a high court lawyer. Historically,
nobody dared question those in positions
of power and authority. If, for example,
it became known that an official took a
bribe, it would be impossible to report it
to a higher authority, as the next level
up would also be complicit in accepting
bribes. When systemic abuses of power
become normalised, the problem of
bribery thus becomes a cancer that
pervades the entire system.
It is commonly perceived that these
kinds of practices are rampant on allechelons, from top to bottom, including
in law enforcement. This does not
engender much trust towards
government departments across the
board.
The current government has only
been taking action against people
responsible for corrupt practices between
2010 and 2012, said U Than Maung, a
high court lawyer from Sittwe. There
was a lot of corruption going on before
then, as well. Weve had to deal with the
devastating effects of corruption for the
past 20 years now. The ascent to
prominence by the cronies over the
past two decades - businessmen that have
profited off of close ties to the
government - are a case in point. The
people in charge claim that American
sanctions were responsible for
corruption but paradoxically, weve
seen the emergence of millionaires and
billionaires in Myanmar. This indicates
that its impossible to isolate one issue
as being responsible for the problem. Its
a case of so many things being wrong
on all levels.
Tradition exploitedTradition exploitedTradition exploitedTradition exploitedTradition exploitedGiving presents and paying respects
to teachers and elders are cultural
traditions that need to be preserved as
Myanmar modernizes. But over time, the
significance of these traditions has
changed as money has come into the
equation; gift-giving has become
synonymous with buying influence. Put
simply, Myanmars cultural traditions arebeing exploited. Since gift-giving is part
of Myanmar culture, I would have no
problem with my students coming to pay
respects after they graduate, said Daw
Khin Aye Than, the economics professor.
There is no obligation for teachers to
reciprocate by handing out high grades.
These gifts arent bribery: they are part
of traditional Myanmar culture. But there
need to be limits. Expensive gifts, like
cars and jewelry, arent acceptable. These
are, in practice, more than gifts; gifts
should just be small tokens of gratitude.
Effects of corruptionEffects of corruptionEffects of corruptionEffects of corruptionEffects of corruptionCorruption and bribery adversely
affect Myanmars prospects for
modernization and accountability, and
petty corruption affects the functioning
of government offices and how they are
able to deal with the public. But despite
recent steps to improve accountability
and transparency, the public is fed up
with the slow pace of change, says Dr.
Aung Tun Thet. It takes a week for a
document to go from one desk in an office
to the next. Under the new government,
while things have improved, problems
remain. Continued corruption and
bribery may result in a backlash against
recent reforms. Recent disturbances in
Rakhine State, for example, have raised
questions about how the government has
handled citizenship issues. Corruption
disproportionately impacts the poor, as
they are made to pay the same bribes
for the same services as rich people are.
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Continued corruption can also
tarnish Myanmars image as a reforming
state in the eyes of the international
community. A lack of international faith
and trust in Myanmars reform process
has already held back foreign investment
and international economic engagement.
There will be no investment in a
corruption-ridden country, said Dr. Aung
Tun Thet, because potential investors
are aware that their investments will only
be enjoyed by a handful of people at the
top. This extends to the aid sector as
well: Myanmar receives a paltry amountof foreign aid just eight dollars per
capita.
Good governance, clean government
- these are the buzzwords President U
Thein Sein has employed in his major
policy speeches, and they have struck a
chord with Myanmars population.
Whether or not the rhetoric matches
concrete action remains to be seen.
But the government does, at least
superficially, seem to be committed to
stamping out corruption. On January 8,
a commission to end corruption andbribery was founded, and will be led by
Vice-President Sai Mauk Kham. The
following month, Parliament passed
comprehensive legislation that stipulates
harsh penalties for people found to be
engaging in corrupt practices.
A major point of contention has been
government officials lack of openness
about their personal assets, and on this
count Parliament has not been as
responsive. A motion demanding that
government officials declare their assets
was defeated in Parliament late last year,
which will invariably compromise the
sticking power of recent reforms.
Common wisdom suggests that
corruption in Myanmar reached a zenith
under previous military governments, but
this is not necessarily the case. Things
today are arguably much worse than they
were during the Ne Win regime, when
opportunities for corruption were more
limited. The period of SLORC/SPDC rule
between 1988 and 2010 was arguably
the most corrupt in Myanmars history,
and it is this legacy that the current
government must make a concerted effort
to undo. It is clear that previous military
governments fostered a climate of
corruption, said U Than Maung. Those
governments were not governments for
the people, especially the regime that
immediately preceded the current
government. It is demoralising to see
Myanmar lagging behind while other
countries make tremendous strides
forward.
How to go about reformHow to go about reformHow to go about reformHow to go about reformHow to go about reformAnti-corruption campaigns cannotbe static: rooting out corruption needs to
be an ongoing process. We need an
action plan, Dr. Aung Tun Thet said. In
the past, close relationships between
businesses and government were normal,
and bribing government officials for
contracts was commonplace. These
dealings need to be made transparent in
order to prevent bribery and it is up to
all government departments to be
responsible for their own disclosures.
U Than Maung feels that no matter howgood the legal framework gets, the greed
inherent to human nature will always
reign supreme. Laws dont necessarily
need correcting, but men do, he said.
You cant reform anything when the
people who are entrusted with
maintaining the social contract have no
external checks and balances on their
impunity. All of those responsible law
enforcement officials, businessmen,
parliamentarians, etc., must act in a fair
and just way.
Dignity and humility need to play a
part in stemming corruption, according
to some thinkers, and people in Myanmar
need to start looking at bribes as personal
assaults against their integrity. The media
may also have a role to play in
normalising non-corrupt practices, and
expose corruption when it occurs. First
and foremost, societal attitudes towards
corruption need to change, and this will
only occur if people on an individual
level refuse to pay or accept bribes.A
A lack of internationalfaith and trust in
Myanmars reform
process has already
held back foreign
investment and
international economic
engagement. Therewill be no investment
in a corruption-ridden
country, said Dr. Aung
Tun Thet, because
potential investors are
aware that their
investments will onlybe enjoyed by a
handful of people at
the top.
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Kaufman is president of Revenue Watch Institute (RWI), an
international watchdog organization that ranks how transparent
countries are about their extractive resource revenues. In RWIs
annual Revenue Governance Index (RGI), Myanmar is currently
ranked 58thout of 58 countries looked at by the study. To date,
23 countries have achieved EITI-compliant status worldwide.
In early May, President Thein Sein appointed U Win Shein
to head a high-level committee to recommend reforms to
Myanmars natural resource sector, replacing former minister
U Soe Thein in that position. The President set the committee a
deadline of December 31 this year to create an EITI work plan
and initiate reforms.
While implementing EITI standards alone cannot solve the
numerous problems plaguing the extraction of natural resourcesin Myanmar today, it certainly can help make a dent in
Myanmars poor RGI performance. Considering Myanmar scored
four out of a possible 100 points on RGIs criteria, however, at
least marginal improvement next year is likely.
At the same time as U Win Shein was in Sydney, the EITI
secretariat approved revised performance standards, requiring
EITIs 39 signatory states to release information about production
volumes, companies holding licenses, license allocations, state-
owned companies, corporate social responsibility payments and
transfers from central to local governments, as well as disclosing
revenue data.
These new, more stringent standards will give the EITIs
mechanisms more teeth, allowing it to address the complexities
of resource allocation in the extractive industries, according to
Kaufman. The EITI has finally recognized that, when it comes
to complex industries, merely disclosing payments is not enough.
By including contracts and licenses, beneficial ownership, state-
owned companies and production information, the new standard
could make EITI more effective in addressing the vast governance
challenges facing resource-rich countries.As the mid-June deadline for 30 licenses to operate in
Myanmars Bay of Bengal waters for oil and gas exploration
approaches, the governments ability to crack down on accepting
or soliciting bribes to award contracts will be under scrutiny.
U Win Shein stated that Myanmar wishes to reenter the
international community, which unambiguously identifies
Panning for gold near Thabeikkyin
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ACUMEN 41
increased international trade as a motivation for improving
transparency. It suggests deeply corrupt industry could
perfunctorily satisfy certain minimum requirements set by a
weak international governing body, in exchange for emergence
from economic isolation. And even if EITI is effective and the
ministers intentions are truly geared towards reform, just how
long is the road ahead for U Win Shein and his committee?
At present, legislation covering Myanmars natural resources
does not define the licensing process, the role of governmentauthorities, or the fiscal system for extractive revenues. Almost
no information is available on the management of the extractive
sector. Myanmar has no freedom of information law, and requires
no environmental or social impact assessments.
According to RWI, one of the biggest obstacles to a
functioning regulatory system is that the ministry of energy and
state-owned Myanmar Oil and Gas Enterprise (MOGE) oversee
the petroleum sector, award contracts, and require foreign
companies to sign a production-sharing contract with them. The
monopoly forces foreign investors to accept the risk that the
government may announce policy changes at any time. An
overhaul of the system is important, as reforms could allow
space for civil society to participate in the regulatory mechanism,
clarify which authorities receive payments from which extractive
companies, and identify which politically connected people are
receiving licenses. EITI have seconded a group of Australian
lawyers to help MOGE reform, but can military or government
owned enterprises get genuinely clean without privatizing?
The joint venture between Union of Myanmar Economic
Holdings (UMEH) and Chinese military-linked company Wanbaoat the Latpadaung copper mine is a case in point, underscoring
how politically-connected companies in Myanmar are currently
accountable to nobody. EITI will report on just how much money
is actually received by which parties, and hold Wanbao
accountable for its stated profit-sharing scheme, which would
see 17% of the spoils go to the government, 13% to UMEH, and
12% to itself. But even with transparent profit reporting, the
project still fails to adhere to international standards with regards
to land grabbing, compensation, and environmental degradation.
Even the opposition-led Letpadaung investigation commission,
headed by Aung San Suu Kyi, decided to allow the project to
Underground shaft ata gold mine near Thabeikkyin
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ACUMEN 43
proceed. Key to the commissions decision was the concernthat cancellation of the contract would deter much-needed
investment in the mining sector and complicate relations
with China. It would be erroneous to believe that accurately
reporting profits gained through projects that are egregious
in the first place solves any problems.
For Myanmars reforming economy, the way the
extractive resource industry develops will be the single
most important factor in determining its success. The
extractive sector accounted for 39 percent of exports in
2010, and the majority of foreign income came from oil
and gas revenues. The International Monetary Fund
estimates gas revenues will increase by 85 percent over
the next three years as the Shwe gas project becomesoperational. Myanmar has an estimated 10 trillion cubic
feet of offshore natural gas reserves, and precious metals,
gems, minerals timber, and hydroelectric power to boot.
Yet despite it all, Myanmar remains one of the least
developed nations in the world.
Resource-rich countries frequently fare worse than their
better-off neighbors on most governance measures, resulting
in corruption, increased poverty rates, and escalating civil
unrest. All of these are problematic factors currently present
in Myanmar. Furthermore, the value of the Myanmar kyat
was, in the very recent past, inflated due to an influx of
foreign currency in the extractive industry sector, another
destabilizing effect extractive industries can have. Non-
renewable resources can create economic prosperity for
generations if managed effectively, but as RWIs Anthony
Richter said, resources and their mismanagement can mean
impunity for those perpetrating human rights abuses.
In short, human rights abuses in countries with
geopolitical or economic significance receive less criticism
than countries without the same trade, energy or strategic
significance, Richter said at the most recent US Helsinki
Commission hearing, and most importantly, where
corruption and mismanagement are present in such
economies, there are often human rights abuses. Wanbao
and UMEH were able to convince the commission thattheir project should go ahead, and even got away with
perpetrating a brutal crackdown on peaceful protesters at
the mine because of their position as political and financial
giants. While measures enshrining transparency are a step
forward, initiatives like EITI will be relatively powerless
when it comes to stopping human rights abuses. A
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Interview
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ACUMEN 47
D
agon Win Aung is one of Myanmars best-known businessmen. As
President of both his own company, Dagon International Limited,
and the Union of Myanmar Federation of Chambers of Commerce
(UMFCCI), he has garnered a reputation as an effective advocate for
Myanmars businesses both at home and abroad. In conversation with our
Dr. Aung Tun Thet, he shared some of his proudest moments in life, as well
as his outlook on the future prospects for Myanmars business community.
Dr. Aung Tun Thet :Dr. Aung Tun Thet :Dr. Aung Tun Thet :Dr. Aung Tun Thet :Dr. Aung Tun Thet : The purpose of Myanmar B2B is to share information
on Myanmars most successful enterpreneurs with its readers. In keeping
with that mission, there are three topics I am keen to discuss with you. First
of all, I want to know: what has allowed you to become as successful as you
are? Second of all, I am interested to hear about your activities today . Last
but not least, I am curious to know what your prognosis for Myanmars
business community looks like as reforms begin to take root.What sets you apart from other businessmen is the fact that you juggle
two important positions simultaneously: that of public figure and advocate,
on top of being a successful businessman. So that others may be able to
emulate your successes, please tell us about the journey that got you to
where you are today.
U Win Aung :U Win Aung :U Win Aung :U Win Aung :U Win Aung : Im descended from merchants; both of my parents were
traders. They came from Padigon, in Pegu Region, and subsequently moved
to Pyay, where they founded a company that produced digestive medicines.
At that point, they enrolled me in St Pauls school in Yangon, which gave
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me the opportunity to receive a good education and move on to
university. When I was still in university, I started my first
business, buying and selling cars. After I got married, I opened
a glass factory, which employed 65 workers. Aside from the
glass factory, I managed two factories I inherited from my father-
in-law, which produced tin cans and wire mesh.
Things were very hard during the socialist era. In 1984, I
started producing paper from recycled materials; I was the first
businessman in the country to do so. Most businessmen were
concerned with heavy industry at the time; the pulp-and-paper
operation was my hobby, in a sense.
In 1989, after the transition to a market economy, I founded
Dagon International Trading Co, Ltd, which serves as thecorporate umbrella for my business ventures to this day. My
first office was located on Sule Pagoda Road in downtown
Yangon, and I only had three employees to start out with. I
should clarify that at this point, I was still managing the businesses
I mentioned earlier. I thought it wise to use my established
ventures to prop up my new business, and seize commercial
opportunities as they presented themselves. I started to do import-
export under the Dagon banner, and at around the same time, I
made my first foray into logging.
Before the first wave of economic liberalization in the late
80s, forestry licences were auctioned off. During the socialistera, only selective felling of mature trees was allowed, a policy
that dated bac
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