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From The Report: Myanmar 2017

Undergoing profound and rapid change, Myanmar is today emerging as one of Asias most sought-after
investment destinations. Its opening to the global economy has come after decades of military rule, during
which a long period of isolation and internal conflict was followed by an era of gradual disengagement
from politics by the army. This retreat took a decisive step forward in November 2015, when the country
held the first openly contested elections in its modern history. The new administration now faces the
daunting task of meeting the expectations of a diverse and dynamic people, conscious of their long and
distinguished histories as well as their current opportunities.

This chapter contains viewpoints from Daw Aung San Suu Kyi, State Counsellor; President U Htin
Kyaw; and Former US President Barak Obama, as well as interviews with Lim Hng Kiang, Singapore
Minister for Trade and Industry; and Mark Garnier, Parliamentary Undersecretary, UK Department for
International Trade.

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its-natural-strengths

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Myanmar opens up for investment
Myanmar opens up for investment

A country undergoing profound and rapid change, Myanmar is today emerging as one of Asias most
sought-after investment destinations. Its opening to the global economy has come after decades of
military rule, during which a long period of isolation and internal conflict was followed by an era of
gradual disengagement from politics by the army.

This retreat took a decisive step forward in November 2015, when the country held the first openly
contested elections in its modern history. These resulted in the victory of the National League for
Democracy (NLD), which has since taken the reins in leading a successful coalition of democratic
interests. Led by Nobel-laureate Daw Aung San Suu Kyi, the NLD now faces the daunting task of
meeting the expectations of a diverse and dynamic people, conscious of their long and distinguished
histories as well as their current opportunities.

Geography

With a total land area of 676,552 sq km, Myanmar known as Burma until 1989 when the name was
changed is the largest country in mainland South-east Asia, around 20% larger than Thailand and twice
the size of Malaysia. Its heartland lies along and around the Ayeyarwady River, which flows from north
to south, starting at the confluence of two other rivers the Nmai and Mali, which themselves carry
Himalayan melt waters from the glaciers of Upper Burma and flow through the northern state of Kachin.

The Ayeyarwady then stretches for a total of 2170 km, eventually emptying into the Andaman Sea via a
major delta system. On its way, the river passes through the countrys Central Basin, an area of plains and
dry forests, which is also watered by the Chindwin River. To this day, the Ayeyarwady remains one of the
countrys most important commercial waterways, while it also constitutes a unique ecosystem and is
home to animals such as the Ayeyarwady dolphin and some 43 different species of fish.

Surrounding the river basin and its tributaries, increasingly high mountain ranges lie in an arc from west
to east, forming natural frontiers and historic barriers to trade. In the north, the Hengduan mountain range
forms a border with western China, while also holding Myanmars highest peak Hkakabo Razi, at some
5881 metres.

To the west lie the Arakan Mountains, which constitute a boundary with India and include the Chin and
Naga Hills. At the southern tip of this range, a coastal area abuts the Myanmar state of Rakhine to the
Bangladeshi division of Chittagong.

Further to the east, the Shan Hills rise, reaching some 2563 metres at their highest, and along with the
Karen Hills, forming a natural frontier with Thailand. These remote and difficult-to-access ranges also
contain within them a border with neighbouring Laos. A further coastal strip of territory runs along the
shores of the Andaman Sea. This is also a mountainous area, consisting of the western slopes of the
Bilauktaung range, a feature running down into the Malay Peninsula.
Main Cities

The largest city in the country is Yangon (formerly Rangoon), which had a population of 7.4m according
to the latest census, in 2014. Located in the Ayeyarwady Delta, the citys history stretches back to the
11th century. It was also the capital of the country until 2006, when that function was transferred to
Naypyidaw. The new capital, located 320 km north of Yangon, had a population of 1.16m in 2014 and
was the countrys third-largest city after Mandalay. The latter had a population of 1.22m that year and lies
in the heart of the country, on the Ayeyarwady, in the Central Basin.

Founded in 1857, Mandalay is still the chief centre of economic and commercial activity in Upper Burma,
although Naypyidaw continues to grow rapidly. Other important urban centres include Mawlamyine in
Mon State, with a population of 451,011, and Taunggyi, the capital of Shan State, which had a population
of 380,665 in 2014. With provisional results of the 2014 census showing the countrys total population
standing at 51.4m, these urban population numbers reveal the largely rural nature of the country, with the
vast majority of Myanmars citizens living in small villages and towns dotted around the countryside.

Myanmar thus shares borders with five countries, while possessing a wide variety of environments, from
coastal plains to wide river valleys and imposing, jungle-covered mountains. These geographical and
geopolitical realties have long shaped the countrys socio-economic and political history.

Climate

Myanmar has a tropical, monsoon climate, although there is considerable variation within the country
itself, stretching as it does from the Andaman Sea to the foothills of the Himalayas.

There are two major monsoons that impact the whole country, however. The first is the north-east
monsoon, which lasts from November to April, while the second is the south-west monsoon, which runs
from May to September or October. The first of these brings cooler, drier weather, while the latter brings
a hotter, wetter season. Indeed, during the south-west monsoon, which comes in off the Indian Ocean,
some three-quarters of the countrys entire annual rainfall descends. Coastal hills and the north and east
get the heaviest deluges, with these running from 2000 mm to 2500 mm per year. Other, more sheltered
areas, get around half of this.

The period before the south-west monsoon and immediately after its beginning are also the hottest.
Between March and June, in the lowland areas in particular, daytime temperatures can reach as high as
40C. In the months following this and into the north-east monsoon, there is a cold, dry period which is
the most popular tourist season. Average monthly temperatures between November and February are
usually between 20C and 24C. In the north, upper central and eastern regions, however, temperatures
are generally lower all year round, given their generally higher altitude. Night time temperatures in these
areas may drop to single digits.

Natural Resources

In addition to its range of landscapes, the country is also blessed with a wide variety of minerals and ores,
while its climate and geography continue to provide it with a large bank of arable land, forestry and
fisheries. These natural resources continue to form the staples of the countrys economic wealth and
also constitute the target of much of its foreign investment.

Myanmars Department of Geological Survey and Mineral Exploration lists some 62 different
commodities as present in the country, to be found at more than 2000 locations. The countrys minerals
portfolio includes precious stones, including the largest deposit of jade in the world, located in Kachin
State. The region of Mogok, in Upper Myanmar, has also been known as the Land of Rubies since the
13th century. The country also possesses significant deposits of lucrative metals, such as tin, copper, gold
and zinc, along with deposits of industrial minerals, such as fire clay, bentonite, feldspar and asbestos (see
Mining chapter).

When it comes to hydrocarbons, the extractive sector has one of the oldest histories on earth, with the first
crude oil exports dating back to the British colonial era in the mid-19th century. The country also has a
deepwater shelf that has been underexplored by oil and gas majors using the latest techniques. Despite
recent falling oil and gas prices, these international giants have continued to survey these offshore blocks,
demonstrating a clear confidence that major new discoveries are likely to be made. In the meantime,
natural gas continues to be a major export product, with offshore gas fields such as Yadana, the countrys
largest, already in production. Recent estimates put the quantity of offshore gas at approximately 10trn cu
feet.

Back on land, the country has large forestry resources, particularly of tropical hardwoods, such as teak,
iron wood and padauk (cherry wood). Deforestation has, however, taken place, with the countrys forest
cover falling from around 70% at independence in 1948 to 47% in 2014 (see Agriculture chapter). The
rate of loss has, however, been declining, with forest cover declining at a slower rate than in regional
peers, such as Vietnam and Indonesia. As forestry remains a major resource for the country, sustainable
management of this reserve is vital for the nations future. Meanwhile, with 2228 km of coastline, several
large estuaries, many offshore islands and major rivers such as the Ayeyarwady, fisheries are also a major
natural resource. The main landing sites are around Yangon, while others may be found along the coast at
Thandwe, Mawlamyine, Myeik and Kawthaung.
On land, the large bank of arable land makes Myanmar the seventh-largest rice producer in the world. In
addition, the countrys farmers produce corn, peas, onions, sugar cane and groundnuts, among other
crops.

Cultivated land currently accounts for approximately 15% of Myanmars entire surface area, with around
18,700 sq km of this irrigated. The country has some 1045.6 cu km of renewable water resources, too,
giving its farmers plenty of water for irrigation and other uses.

Demographics

The most recent census, held in March and April 2014, took place under difficult circumstances. Certain
ethnic groups boycotted the process, while conflict and displacement affected others. The provisional
results were therefore well below previous estimates, which had varied between 60m and 70m in 2012.
The 2014 census also showed more females than males (51.8% to 48.2%), while 29.6% lived in urban
areas. The gender discrepancy is thought likely the result of overseas citizens not being counted. Some
2m Burmese live and work abroad around 70% of them in Thailand and 61% of these are male.
Outward migration has long been a factor in the countrys demographics, with conflict prompting much
displacement into neighbouring countries. Relatively higher wages in Thailand in particular have also
driven many abroad.
The most urbanised region in the 2014 census was Yangon, with some 70.1% of its population living in
urban wards. Yangon was also the most densely populated region overall, containing 14.3% of the entire
population. This was some 11% higher than the population of Yangon at the time of the previous full
census, in 1973, and illustrates the draw of the countrys main urban centre. Indeed, several surrounding
states saw population declines during the period, as urbanisation drew in people from the citys widening
hinterland.

The least populated state, according to the 2014 census, was Kayah on the Thai border, with 0.6% of the
total. The overall population density of the country was 76 persons per sq km.

Earlier demographic surveys also revealed that Myanmar has a relatively low fertility rate among South-
east Asian nations 2.23 in 2011, compared to 3.18 in Cambodia and 4.41 in Laos. This is thought to be
largely due to cultural and economic factors. Celibacy has a higher level of social acceptability among the
countrys majority-Buddhist community, in particular, while economic hardship often means the
postponement of marriage. Around 33.1% of men and women between the ages of 25 and 34 were single,
according to 2012 surveys.

At the same time, 2013 surveys showed that the countrys infant mortality rate has declined considerably
over the past few decades. There were 49 deaths per 1000 live births in 2013, whereas in 1970 the figure
had stood at 116.

Youthful Population

Myanmars population is very youthful. The median age at the 2014 census was 27, and around 55% of
the population is under the age of 30. Those aged 15-29 accounted for approximately 25% of the total,
and the number of dependents per family is also falling.

At the same time, the percentage of literate people is higher than in some neighbouring countries. The
2014 census revealed a literacy rate of 89.5%, compared to 80% in Cambodia and 73% in Laos. This
combination of factors creates a picture of an educated, youthful population with fewer dependants a
profile which bodes well for the countrys short to medium-term economic development.

The countrys current youth bulge is likely the result of previous state policies promoting children
policies which have since lapsed, helping create the now-declining birth rate. Demographically, this too
should stand the country in good stead in the longer term, and ease pressure on employment, as well as on
future education and health budgets.

Religion

Myanmar has a variety of religious groups, with the population overall seeing religious affiliation as an
important part of their lives. The largest religious group is composed of Buddhists, with the 2014 census
showing that 87.9% of the population identified with this affiliation. The majority of these are Therevada
Buddhists followers of the orthodox school of the elder monks that uses the Pali canon, the standard
collection of scriptures in the Therevada Buddhist tradition, as its doctrinal core. This is the school of
Buddhism most common in South and South-east Asia.
Myanmar is widely thought to have the highest proportion of Buddhist monks per head of population in
the world, with the sangha the Buddhist monastic order, including monks, nuns and novices playing a
key role in the countrys recent history and politics. There are two primary orders of monks in the country
the Thudhamma Nikaya (88% of all monks) and more traditional Shwegyin Nikaya. Seven other orders
are also officially recognised.
The sangha were leading movers advocating for reform under the military regime, and the so-called
Saffron Revolution of 2007 included a major role for monks, who led a campaign of non-violent
resistance to the dictatorship. Today, Buddhism remains a key part of everyday life in Myanmar, with the
religions festivals, holidays and rituals built into the countrys very calendar and the seasons themselves.

Among Myanmars other religious groups, the Christian community is the next largest, accounting for
some 6.2% of the population in the 2014 census. Largely introduced by Western missionaries from the
18th century onwards, around four-fifths of Christians are Protestant and the remainder mostly Catholic.
There is also a small Armenian Orthodox community present, centred on Yangon. Most Christians also
belong to minority ethnic groups, such as the Karen, Chin, Lisu and Lahu.

The third-largest religious group are Muslims, at 4.3%, although conflict and political controversies have
cast some doubt on the true size of this minority. One of the largest components of the Muslim
population, the Rohingya, was not counted in the 2014 census, for example, while this group is also not
recognised officially as an ethnic designation.

Islams history in Myanmar stretches back to the 7th century, followed much later by a major wave of
Muslim immigration from British India to the country in the 19th century. The majority of Muslims in
Myanmar follow the Sunni sect of Islam, the main concentrations being the Rohingya and Kamein in
Rakhine State; Indian-descended Muslims in Yangon; the Panthay, or Chinese Burmese Muslims, in the
Shan States and Central Basin area; ethnic Malay Muslims in Kawthaung; and Zerbadi Muslims,
descended from intermarriages between South Asian and Middle Eastern people and local Burmese.

In addition, there are populations of Hindus (0.5%), and those following traditional, tribal animistic
beliefs (0.8%). The latter still have some influence, too, in the day-to-day practices of many of those who
otherwise follow different religious affiliations.

Although religious beliefs are generally practiced in peace in Myanmar, communal violence continues in
certain parts of the country, particularly in Rakhine State, where at least 150,000 Rohingya have been
displaced since 2012 due to conflicts between Buddhist and Muslim communities.

Languages & Ethnic Groups

Myanmars population contains a total of 135 officially recognised ethnic groups. The largest of these is
the Bamar, accounting for approximately 68% of the population. The Bamar speak the Myanmar
language ( formerly known as Burmese), which is itself a member of the Sino-Tibetan group, and live
largely around the Ayeyarwady basin. The dominant religion in this group is Buddhism, and historically
the Bamar have tended to dominate the political, military and economic life of the country.

The second-largest official ethnic group in Myanmar is the Shan, with approximately 9% of the
population belonging to this group. These are related to the Thai, are mainly Therevada Buddhist and
mainly live in the Shan State, a large area bordering Thailand, Laos and China in the countrys north-east.
The Shan speak a variety of languages, some Tibeto-Burman and others Mon-Khmer. They have a long
history of independence, with recent times also seeing armed conflict in Shan state and its neighbours. A
nationwide ceasefire agreement, which was signed in 2015, ended most hostilities, but recently rival Shan
groups have also been in conflict with each other over this agreement.

Third-largest ethnic group is the Karen, at around 7% of the population. The Karen largely reside in
Karen State, in the south-east, with large numbers of them having crossed over into Thailand over the
years due to conflict between Karen separatists and the Myanmar military.

The Karen speak a Sino-Tibetan language, while the majority are also Therevada Buddhist, although
approximately 35% are Christian.

The next largest ethnic group officially is the Rakhine. These constitute around 3.5% of the total
population and live in Rakhine State, alongside the unofficial Rohingya Muslim group. Formerly known
as the Arakanese, they have relatives in neighbouring Bangladesh and India. They are predominantly
Therevada Buddhists and speak the Arakanese language, which is close to Burmese.

There is a significant ethnic Chinese group around 2.5% in Myanmar, while around 2% of the
population belong to the Mon ethnicity. This latter group have a great historical significance in the
country, being credited with bringing Therevada Buddhism to this region, while also being inter-related
with many Thais, including the Thai royal family. They mainly live in Lower Burma. The ethnic Kachin,
meanwhile, constitute around 1.5% of the population, ethnic Indians some 1.3% and Chin around 1%.

Harmony

Bringing harmony to this multi-layered mosaic of religions and ethnic groups is the task now facing the
new government. After years of military rule, establishing a sense of pluralism and inclusion is no easy
task, particularly when many of the countrys diverse groups have a history of conflict with the central,
largely Burmese authorities. Yet there is a great deal of goodwill, both globally and domestically, behind
the new government, while the opportunities the country presents remain immense. For many years,
Myanmars isolation left it as the missing piece of the puzzle for international investors looking at South-
east Asia; its opening up to the wider world thus represents a remarkable moment in the history of this
most remarkable country.

Daw Aung San Suu Kyi, State Counsellor, on the new path ahead: Viewpoint

Daw Aung San Suu Kyi, State Counsellor, on the new path ahead: Viewpoin

iewpoint: Daw Aung San Suu K

In 1948, when Burma became independent, we established a parliamentary democracy. And, at that time,
we could say that we were one of the foremost countries in Asia to have adopted parliamentary
democracy. However, the race is not always to the swift nor the battle to the strong. Time and chance
happen to us all. Time and chance happened to our country and we lost our parliamentary democratic
system.

But with commitment, drive and perseverance we have once again started out on the road to establishing a
parliamentary democracy that truly reflects the will of the Burmese people. We wish to make this
parliament a vibrant one. In my experience, parliamentarians across the world even when divided by
party or ideology are united by a remarkable vibrancy of spirit. Perhaps this vibrancy is invigorated by
an awareness of the great responsibility that their constituents have bestowed upon them, and by a desire
to live up to this responsibility to the best of their ability. Our new government was formed at the end of
March 2016, following the general election in November 2015. To mark six months in office, I would like
to take this opportunity to very briefly outline some of our main areas of work.

The first priority of our new government is to bring about national reconciliation and harmony between
all parts of our society. One month ago, we launched the 21st Century Panglong Union Peace Conference
in Naypyidaw as a step towards establishing a genuine federal democratic union. Building on the work of
the previous administration, we aim to bring an end to the decades of conflict that have blighted our
country since independence and to secure the lasting peace that our people have longed for.

We are under no illusions as to the complexity of the challenge that lies ahead. We have many diverse
ethnic groups and a legacy of mistrust. Yet through political negotiations held in the spirit of cooperation
and compromise, I believe that we can realise the collective aspiration of our people for a peaceful, secure
and prosperous future.

We are also striving to bring harmony and understanding between the different communities in Rakhine
State. The situation in Rakhine is complex and is the subject of close attention and concern outside our
borders, in the ASEAN region and beyond. Since forming the new government, we have taken measures
to begin to address these challenges. I chair the Central Committee for the Implementation of Peace,
Stability and Development in Rakhine: overseeing the tasks of ensuring stability and rule of law,
scrutinising immigration and verifying citizenship, and implementing socio-economic development. We
have also formed an Advisory Commission chaired by diplomat Kofi Annan to help us to identify and
comprehensively address these challenges.

We are working to build understanding, harmony and trust between communities while standing firm
against prejudice, intolerance and extremism. In doing so, we ask for the constructive support of our
regional neighbours. Progress in every field will not be possible overnight, but we are determined to
persevere and to bring about positive change in Rakhine State and other areas of our country affected by
conflict. We are also striving to bring about sustainable economic development for the benefit of all
people in Myanmar. Our country is fortunate to be endowed with varied natural resources, a young
population eager to learn and a location between the largest markets of the world. Yet for reasons of
history, our country has never realised its economic potential.

Today, through the hard work of our government and people, and the support and collaboration of our
friends in this region, we have an unprecedented opportunity to build a better future. We have launched
an economic policy that aims to support national reconciliation, alleviate poverty, develop much-needed
infrastructure, encourage responsible foreign investment and create jobs. We will seek to learn from what
has worked well in other countries as we pursue this approach. The economic development of Myanmar
will, I believe, support the growing prosperity of our region as a whole and contribute to the future
success of those in the ASEAN community.
At the same time, we are pursuing our international obligations in line with our intention to be a
responsible and active member of the world community. Myanmar has recently ratified the UN
Comprehensive Nuclear Test Ban Treaty, and we are currently concluding domestic procedures to enable
more ratifications such as the ASEAN Agreement on Privileges and Immunities; the Protocol to the
ASEAN Charter on Dispute Settlement Mechanisms; and the ASEAN Convention against Trafficking in
Persons, Especially Women and Children. In doing so, the constructive and active cooperation between
our executive and legislative branches has been invaluable.

The continued goodwill and support of the people of the ASEAN region as we pursue all these
endeavours will be a great source of strength and encouragement to us. Today our world is more
connected than ever, and no country or people can or should stand alone. The opportunities and
challenges that we face cannot be realised or overcome without international cooperation. This
cooperation must be across all the pillars of government: executive, judicial and, of course, legislative.
The ASEAN Inter-Parlimentary Assembly, therefore, has a very important role to play. The breadth of
subjects on the Assemblys agenda for the coming days stands as a testament to this. Among the matters
being discussed are strengthening cybersecurity; protecting marine resources; mitigating the impacts of
climate change; supporting small and medium-sized enterprises; and defending against the Zika virus.

All these are issues that affect our citizens directly and where we have a duty to work together, in a spirit
of democratic collaboration, to find effective and progressive solutions.

Before I conclude, I will draw again on my closing remarks from the UN General Assembly that I had the
privilege of attending. Myanmar has known too well the cost of conflict and strife. We have seen how
anger, greed, fear and ignorance can corrupt human nature and a community as a whole. Therefore, I
would appeal to all of you to stand up against anger, hatred, fear and ignorance wherever you may
encounter it, and to instead seek the path of compassion, loving kindness, happiness and the good fortune
of others.

I would like to see our ASEAN community stand as an example to others around the world as a regional
community where giving is truly more valued than receiving, and where fundamental human rights and
human dignity are at the heart of all our policies and actions.

And may I remind all legislatures that there is no higher honour than being an elected representative of
the people: to fulfil our responsibilities to them, to stand for them against the challenges of our world and
to be able to say at the end of our term in office that we have truly done our duty by our people and by
ourselves.

The above excerpt was adapted from a speech delivered by State Counsellor Daw Aung San Suu Kyi in
Naypyidaw, Myanmar at the opening ceremony of the 37th General Assembly of the ASEAN Inter-
Parliamentary Assembly in September 2016.

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President U Htin Kyaw, on the foundations of democracy and connecting diverse people: Viewpoint

President U Htin Kyaw, on the foundations of democracy and connecting diverse people: Viewpoint
Viewpoint: President U Htin Kyaw

Anniversaries offer us opportunities to look back and take stock of our achievements and to chart our way
forward. The Asia-Europe Meeting (ASEM) has evolved from a small group of only 26 partners at the
first summit, which was held in Thailand in 1996, to 53 partners today. Look at this as a reflection of the
ever-growing interest that countries in both regions have in the work of the ASEM mechanism. Through
the help of a growing number of partners and their dedicated efforts, ASEM has been gaining vitality by
bringing Asia and Europe closer together through enhancing connectivity in all dimensions. ASEM has
brought together not only government officials, but also parliamentarians, business communities and
people from both continents. The 11th ASEM forum is indeed a significant event, as it coincides with the
20th anniversary of the establishment of the ASEM. The ASEM has fostered a better and closer
understanding between the two continents, enhanced political dialogue, deepened economic cooperation,
strengthened social and cultural exchanges, and consolidated other multilateral processes.

The two days of the ASEM forum involved a lot of work, combining formal and informal discussions.
During the preliminary session, we reviewed the past 20 years and took stock of the achievements we
have made. New ideas were put on the table as to how we can move forward to achieve more tangible
results. We felt that the three pillars of ASEM should be enhanced, and placed a focus on improved
connectivity between the two regions.

Connectivity has different meanings to different people with different views. Therefore, cooperation on
both hard and soft connectivity in various fields was discussed. We also exchanged views on areas of
common interest as well as other issues that involve cooperation between the two regions in addressing
common challenges of regional and international issues, such as non-traditional security challenges in
particular, the rise of terrorism and violent extremism the 2030 agenda for sustainable development,
poverty reduction and youth development, among others.

Over the years ASEM has created opportunities for broader people-to-people contact, especially through
the activities of the Asia-Europe Foundation, which deserves our continued support. The informal setting
of the ASEM provides us with a useful platform to exchange our views on how we can work together to
address the challenges facing the international community.

As ASEM enters its third decade, we should widen our focus on areas of common interest to include
connectivity, the 2030 agenda for sustainable development, non-traditional security challenges, the rule of
law, drug trafficking, corruption, inclusive growth and disaster risk management. It is natural to see that
countries have varying views and perceptions, and see different goals to uphold sovereignty and promote
the interests of their people. However, this should not be viewed as a hindrance or challenge, but a great
opportunity to address differences among us.

I wish to assure our ASEM partners that we will continue to strive to strengthen cooperation for our
mutual benefit. In this regard, I wish to once again reaffirm our commitment to host the next ASEM
foreign ministers meeting in the second half of 2017, which will also offer ASEM ministers the chance to
witness the exciting democratic transition taking place in our country. I hope that our partnership, through
ASEMs engagement, will contribute to our collective efforts, not only to further advance the interests of
the citizens of the two continents, but also those of the world. I will conclude by reiterating our readiness
to produce fruitful outcomes from this important summit.

Anchor text:
President U Htin Kyaw
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Modernisation and peace-building continue in Myanmar

Modernisation and peace-building continue in Myanmar

With its first written records dating back to the 2nd century BC, and archaeological evidence stretching
back to 11,000 BC, Myanmar has a long and distinguished history. Over the centuries, successive waves
of people have moved across the mountains and plains that now constitute the country, with the Bamar,
who became referred to as the Burmese, founding a powerful empire, centred on Bagan, from the 11th
century onwards. The Mon, the Mongols, the Chinese and the Shan also exercised their influence and
presence over the country during the medieval period. The first Europeans to arrive were Portuguese,
while conflicts with China and Thailand have continued into modern times. Fighting also occurred with
Arakan and Assam, conquered by the Burmese in 1785 and 1817-19, respectively. This brought first
contact with the British Empire.

Three wars with the British followed, during the last of which, in 1885, the country was invaded and
conquered. British rule was turbulent, however, with strikes, protests and confrontations orchestrated by
an increasingly popular Burmese nationalist movement. In 1941, with the outbreak of World War II in the
Pacific, many of these joined the Burmese Independence Army (BIA), under General Aung San. A
Japanese invasion then began in 1942, with the BIA supporting Japan, although when the tide of war
turned in 1945, the reconstituted BIA, the Burmese National Army, rose up and turned on the Japanese.
After the war, the country moved rapidly to independence, which was achieved in 1948.

Birth Pains

The new nation was, however, deeply troubled. General Aung San was assassinated just before
independence, and communist and non-communist groups began fighting each other. Ethnic conflicts
between Shan, Burmese, Chin and Kachin also broke out. In 1962 General Ne Win led a military coup
and declared the creation of a socialist state run by the Union Revolutionary Council. Conflict, however,
continued, with the Kachin Independence Organisation and the Shan State Army fighting the largely
Burmese military. In 1978 fighting broke out too in Arakan, causing many Muslim Rohingya to flee to
neighbouring Bangladesh.

A major anti-government uprising broke out in 1988, which was crushed, with General Saw Maung
taking over. In 1989 he changed the countrys name to Myanmar, and held an election the following year.
This was won by the National League for Democracy (NLD), led by Daw Aung San Suu Kyi, Aung Sans
daughter. The military, however, refused to accept the result, putting NLD leaders under house arrest.

In 1992 General Than Shwe took over, while political and ethnic conflicts continued. In 2003 the military
announced a roadmap to democracy and in 2005 moved the capital away from Yangon to Naypyidaw.
A new wave of protests began in 2007, and in 2008 the government announced a referendum on a new
constitution and elections for 2010.
That year also saw Cyclone Nargis hit the country, with the catastrophe and the governments much-
criticised response further alienating the military regime. In 2010, as and the pace of reform quickened,
Daw Aung San Suu Kyi was released from house arrest, and two years later by-elections gave her and the
NLD seats in the military-dominated parliament installed in 2010. In 2011 former General Thein Sein
became president and in 2013, the government pledged to adopt a federal system.

New Page

In 2015 fresh, nationwide elections delivered a resounding majority for the NLD. A ceasefire with eight
out of 14 armed groups in the country was also signed that year, although fighting has since continued in
the eastern Shan States. Meanwhile, in Arakan, ethnic and religious conflict continued in 2014 and 2015.
In August-September 2016 a new peace conference was held, named Panglong II after the Panglong
conference of 1947, which united opposition to British rule promising a new agenda for cooperation
between warring factions and the national government.

Head Of State

Under the 2008 constitution, which remains in force, the president is the head of state and the head of the
government, with this post currently held by the NLDs U Htin Kyaw. Daw Aung San Su Kyi is barred
from holding the post under a constitutional provision stating that presidents cannot have foreign spouses;
her husband is British.

The president is elected by the bicameral legislature, the Assembly of the Union (Pyidaungsu Hluttaw).
This chooses among three candidates, one of each put forward by the three committees of the electoral
college. These committees are constituted by deputies from the House of Nationalities, the House of
Representatives and the military. The president appoints the Cabinet, made up of ministers, although the
2008 constitution stipulates that the military, the Tatamdaw, rather than the president, appoints the
defence, interior and border security portfolios. Other cabinet ministers appointed from the Assembly
must resign their seats there, paving the way for by-elections. The new government has also cut the
number of ministers from 36 to 22.

Legislative Powers

The House of Representatives, or Pyithu Hluttaw, consists of 440 members, 330 of whom are elected,
with the remainder appointed by the military. The elected seats are on a township basis, with each
electing one representative for a five-year term according to a first-past-the-post system. Members of the
influential Buddhist clergy, or Sangha, are not allowed to vote.

As of late 2016 the NLD held 255 of the 330 elected seats, with the Union Solidarity and Development
Party (USDP) the militarys preference holding 30 seats. The Arakan National Party (ANP) had 12
seats, as did the Shan Nationalities Democratic Party. Thirteen seats are held by other parties, mainly
ethnically based outfits, with one independent and seven seats suspended due to conflict.

The upper, House of Nationalities (Amyotha Hluttaw) has 224 members, with 168 directly elected and 56
appointed by the military. Currently, the NLD has 135 of the elected seats, while the USDP holds 11, the
ANP 10, and the rest are held by smaller, largely ethnic-based parties.
Judicial Process

The Supreme Court of the Union is the highest judicial body, with the legal hierarchy then descending to
the High Courts of the Regions and States. The latter hear and determine civil cases, while also acting as
appellate courts in criminal cases determined at lower courts of the first instance. District Courts then
come under the High Courts, along with Courts of the Self-Administered Division or Zone, where such
administrative entities exist. These lower courts hear original criminal and civil cases, provided the
subject matter does not exceed MMK500m ($406,000). Beneath this level are the township courts, which
can hear criminal cases where a punishment of not more than seven years in prison is possible, and civil
cases up to a limit of MMK100m ($81,200) in damages.

Local Government

Myanmar has seven states and seven regions, along with the six self-administered zones and one self-
administered division. Each of these has its own local government, headed by a chief minister, with a
state or regional Hluttaw as the local legislative body. These are elected in the same fashion as the
national Hluttaw, with seats either elected or military-appointed. States and regions are constitutionally
equivalent, with the main difference being that states are primarily for non-Bamar ethnicities, while
regions form subdivisions within the majority Bamar ethnic areas.

The self-administered zones and the one division are run by Leading Bodies. These are led by a
chairperson and constitute both the legislature and executive arms. They are made up of the deputies
elected to the House of Nations for the zone or division, plus military appointees.

The capital, Naypyidaw, has its own local authority, constituted directly under the national president.
Day-to-day business there is conducted by a council, led by a chairperson.

Meanwhile, the smallest administrative unit in rural areas is the village, with a Village Tract being a
group of several of these. Urban wards are at a similar level to villages, with these village tracts and
towns then grouped together to form townships. Collections of these in turn form districts, with groups of
districts forming states or regions. At these lower levels, there is currently a mix of elected officials and
those positions that are appointed by the General Administration Department of the Ministry of Home
Affairs.

Outlook

The 2015 general election gave a great deal of hope to many that Myanmar had made a decisive break
with its authoritarian past. Indeed, the country now not only has its first, democratically elected
government, but also its first civilian president. Working now as state counsellor, Daw Aung San Suu Kyi
also gives Myanmar a globally recognised and respected leader, able to command a great deal of goodwill
worldwide.

At the same time, however, the country still faces great challenges. Fighting still continues in parts of the
country, despite recent advances in peace-building, with inter-ethnic and religious violence still present in
certain areas. In addition, the government also has to balance expectations of rapid change with the
continuing power and presence of the Tatamdaw throughout the country and its institutions. Building
capacity is therefore a major task, and the need for a new outlook within and attitude towards the role of
state institutions widely seen as vital if the country is to become more open and its officials more
accountable. Nonetheless, Myanmar today is a place undergoing rapid change, and there is a solid
determination among its people and leaders alike to help their country establish an important place at the
global political and economic table.

http://www.oxfordbusinessgroup.com/overview/new-era-first-democratically-elected-government-50-
years-now-place-modernisation-and-peace-building

Undergoing profound and rapid change, Myanmar is today emerging as one of Asias most sought-after
investment destinations. Its opening to the global economy has come after decades of military rule, during
which a long period of isolation and internal conflict was followed by an era of gradual disengagement
from politics by the army. This retreat took a decisive step forward in November 2015, when the country
held the first openly contested elections in its modern history. The new administration now faces the
daunting task of meeting the expectations of a diverse and dynamic people, conscious of their long and
distinguished histories as well as their current opportunities.

This chapter contains viewpoints from Daw Aung San Suu Kyi, State Counsellor; President U Htin
Kyaw; and Former US President Barak Obama, as well as interviews with Lim Hng Kiang, Singapore
Minister for Trade and Industry; and Mark Garnier, Parliamentary Undersecretary, UK Department for
International Trade.

Lim Hng Kiang, Singapore Minister for Trade and Industry (Trade), on the countrys role in promoting
business in ASEAN: Interview

Lim Hng Kiang, Singapore Minister for Trade and Industry (Trade), on the countrys role in
promoting business in ASEAN: Interview

Interview: Lim Hng Kiang

How can Singapore strengthen its investments in the ASEAN Economic Community (AEC)?

LIM HNG KIANG: Singapore is committed to and is a substantial stakeholder in the AEC. In 2015
Singapore continued to maintain its position as the highest contributor of intra-ASEAN foreign direct
investment (FDI) flows, at 67.3% of total intra-ASEAN FDI. Singapore is also the second-highest
recipient of intra-ASEAN FDI at 15.4%, all which signal high investment.

Paramount to ensuring positive investment trends between Singapore and ASEAN is maintaining our
long-standing reputation as a trusted regional business centre. This allows us to continue playing a key
role in facilitating investment flows in the region by encouraging potential financiers and corporations to
choose Singapore as their conduit for expanding their footprint into the rest of ASEAN. Singapore
continues to maintain investment-friendly public policies to encourage industry development. This
includes streamlining processes for the business establishment, as well as ensuring a strong and
transparent legal framework. According to the World Banks Doing Business 2016 report, Singapore
was ranked as the easiest country worldwide to do business in for the 11th consecutive year.

Furthermore, a sound regional investment regime in ASEAN will complement Singapores position as a
reliable regional investment centre and help our businesses expand across the region. In this regard,
ASEANs work in facilitating investments does not stop with the establishment of the AEC. Singapore
continues to work with our counterparts to strengthen investment flows in the region and improve the ease
of doing business under the AEC Blueprint 2025. Such efforts include initiatives to provide greater
transparency in investment-related policies, as well as regulations to create better resources and
knowledge to help our business institutions internationalise across the ASEAN region.

In what ways can ASEAN members benefit from Singapores strong financial sector?

LIM: Singapore is well positioned to serve the financing, investment and risk management needs of
ASEAN companies. Many global institutions are represented in Singapore, offering a wide range of
financing and Treasury management services, complemented by our strong asset management
capabilities. We also have an expansive insurance ecosystem comprising top global reinsurers, speciality
players, modelling firms, innovation labs and a growing arrangement of insurance research institutes, all
with the ability to provide large reinsurance programmes and customised risk management solutions. The
government is committed to supporting the recently established AEC.

Consolidating regional financial sectors is a key pillar of ASEAN economic integration as it supports the
regions growth, while promoting inclusion. I would like to highlight two areas where ASEAN members
can access Singapores financial centre and support their economic development.

The first is addressing the protection gap in ASEAN with a strong insurance system. Asia remains
underinsured, with a penetration rate of 1-3%. This is less than half the global average. However, in Asian
countries, damage from natural catastrophes over the last 30 years has made up almost half of the worlds
estimated economic losses. Less than 5% of these losses were insured, compared with a rate of 40% in
developed countries.

The second is bridging the infrastructure financing gap in ASEAN. According to estimates by the Asian
Development Bank, ASEAN would need about $60bn per year to meet its basic infrastructure needs.
While governments and development institutions will continue to be important sources of financing, the
role of the private sector is becoming increasingly significant due to the large funding gap.

Mark Garnier, Parliamentary Undersecretary, UK Department for International Trade, on UK interest in

Myanmar: Interview

Mark Garnier, Parliamentary Undersecretary, UK Department for International Trade, on UK

interest in Myanmar: Interview

nterview: Mark Garnier

How would you characterise the level of UK trade and investment in Myanmar?

MARK GARNIER: Theres great potential. I think UK companies understand the level of expansion and
growth here. They are going to become even more enthusiastic than they already are. It is pleasing to see
so much interest shown by UK companies in Myanmar, as evidenced by the very large turnout of over
200 UK businesses at the Trade and Industry Conference. Ive also just been with a group of Myanmar
businesspeople. We were talking about the opportunities across infrastructure, health care and many other
sectors, and it is clear that there is a world of opportunity here which matches really well with UK
expertise. It seems to me that theres an enormous amount of commonality between what the Myanmar
people are looking for and what the British can offer. There is no better time for UK companies to take
these opportunities and develop partnerships.

Those that have been doing business in South-east Asia and parts of the Asia-Pacific region for a number
of years are more in tune with what is going on there. They have a much better idea of what the market
potential is for their businesses. However, UK-based businesses are much less knowledgeable about
Myanmar as a potential export and foreign direct investment market. That is why conferences such as the
one that took place in London, bringing together a delegation of more than 70 Myanmar government and
business representatives and more than 200 UK business representatives, are so important.

How do opportunities in Myanmar compare to other countries throughout the region?

GARNIER: There are huge opportunities throughout all sectors. However, Myanmar is still a frontier
market. Therefore, most of these opportunities come with a developmental need attached to the
commercial opportunity. So comparing opportunities in Myanmar to South-east Asian neighbours like
Thailand, Vietnam or Indonesia is like comparing apples with pears. However, UK companies have a
distinct advantage in Myanmar in that, historically, UK business principles and the quality of products
and services are held in the highest regard. There is definite belief both locally and internationally that the
new government is pushing through greater transparency measures, particularly on economic policy. I
believe that this will encourage more UK companies to look seriously at doing business in Myanmar.

GARNIER: There has been some positive news. During State Counsellor Daw Aung San Suu Kyis visit
to the US in September 2016, President Barack Obama announced the lifting of Executive Order-based
economic and financial sanctions on Myanmar: a landmark move that will bring to an end 20 years of
sanctions. The process of lifting sanctions has now been completed. This included the removal of all
individuals and entities on the Specially Designated Nationals and Blocked Persons list. This removal of
the last structural obstacles to trade is another important step in the normalisation of Myanmars global
trade relationship. The decision sends a powerful signal to the Western business community that
Myanmar is open for business. For UK businesses which have greater exposure to the US market and a
robust approach to adhering to sanctions lifting sanctions is an opportunity. We need to focus on
helping them to build their understanding and presence now if they are to benefit down the line. There are
many international companies doing business in Myanmar. I think now that the sanctions are lifted, we
will see more UK companies taking a keener interest in Myanmar, too, and considering their options for
investment or trade.

Myanmar prepares to join ASEAN Economic Community

Myanmar Prepares for Leadership of the ASEAN Economic Community

Myanmars leadership as ASEAN chair in 2014 will be critical to the success of the ASEAN Economic
Community (AEC) by 2015. This key message emerged from the U.S.-supported workshop last week,
which brought together around 70 participants from the Government and the private sector to discuss the
Chairmanship of the ASEAN Economic Ministers next year. The discussion explored the benefits of the
AEC and reviewed the progress of the implementation of the AEC by both ASEAN and Myanmar.
The ASEAN Economic Community presents the best opportunity for the ASEAN Member States to
compete intensively for markets outside the region while presenting a more favorable environment to
encourage domestic and foreign investment at home, said U.S. Ambassador to Myanmar Derek J.
Mitchell at the opening of the event. The AEC will enable ASEAN firms to gain economies of scale that
would be impossible in a single country in the region.

U.S. Ambassador to ASEAN David L. Carden added that, I have every confidence Myanmar will be a
leading contributor to ASEAN integration, including economic integration. We are pleased to see the
Government and private sector are focused on the road ahead and that other ASEAN Member States are
showing strong support.

As the Government prepares to assume the ASEAN chair for the first time, ASEAN Member States will
collectively be monitoring the necessary obligations to implement the Blueprint for the ASEAN
Economic Community.

This is the right time for us to have this very important discussion on how to involve Myanmar in the
AEC and the global community, said Dr. Khin San Yee, Deputy Minister, Ministry for National
Planning and Economic Development. Our discussions over the next two days give us a great
opportunity to take stock, identify priorities and plan ahead for our role as chair to lead ASEAN in
achieving its 2015 target.

The workshop presented the AEC scorecard that captures not only the AEC implementation by ASEAN
as a region to date, but also a more detailed scorecard on the performance of Myanmar. The scorecard
highlighted areas where Myanmar will need to accelerate AEC preparation and areas where technical
assistance from Dialogue Partners could be provided.

There is much to be done if ASEAN is to achieve the 2015 AEC target, said Ms. Anna Robeniol of the
ASEAN Secretariat. Under the AEC we are moving towards the creation of a collective wealth that will
benefit all of us. But there is no free lunch. There is a need for each and every Member State to be
responsible and committed.

In addition to the AEC scorecard, the workshop featured an exchange of views between the government
and the private sector on the status of preparations for the AEC. Private sector participants were made up
of representatives from the Union of Myanmar Federation of Chambers of Commerce and Industry,
which represents over 18,000 businesses and associations.

U.S.-supported study suggest that the successful implementation of the AEC will result in an increase in
ASEAN real incomes by 5.3%, as well as growth in exports of up to 43% in many manufacturing
sectors. Myanmar stands to be one of the greatest beneficiaries of the AEC, with an estimated 4.4%
increase in national income and a 66% increase in exports.

The workshop was organised by the U.S. Government-funded ASEAN-U.S. Technical Assistance and
Training Facility.

Former US President Barack Obama, on the lifting of sanctions and economic cooperation: Viewpoint
Former US President Barack Obama, on the lifting of sanctions and economic cooperation:
Viewpoint

Viewpoint: Barack Obama

When I was first elected in 2008, Daw Aung San Suu Kyi was still under house arrest. And because in
part of advocacy by the US and others in the international community, but more importantly, because of
the courage and strength and resilience of the Myanmar people what we have seen over the last several
years is a transition to democratic elections; a representative legislature that still has significant
constraints from the previous military government, but is giving a voice to the hopes and dreams of a new
generation of Myanmar people. And as a consequence, now Daw Aung San Suu Kyi as state counsellor
and foreign minister, is in a position with her government to begin shaping a remarkable social, political
and economic transformation.

In part because of the progress that weve seen over the last several months, I indicated, after consulting
with Daw Aung San Suu Kyi, that the US is now prepared to lift economic sanctions that we have
imposed on Myanmar for quite some time. It is the right thing to do in order to ensure that the people of
Myanmar see rewards from a new way of doing business and a new government.

At the same time, were also going to be restoring the generalised system of preferences, which provides
very important commercial and trading advantages for economically disadvantaged countries as they
enter into the global economy. And if you combine those two efforts, I think this will give the US, our
businesses and our non-profit institutions a greater incentive to invest and participate in what we hope
will be an increasingly democratic and prosperous partner for us in the region.

In addition to the political transition thats taken place and the economic reforms that are being initiated,
Daw Aung San Suu Kyi has also helped to convene a peace conference so that the various ethnic groups
and armed conflicts that have plagued this country for far too long can begin to be resolved. Theres a
process of beginning to reach out and address some of the ethnic minorities, including in Rakhine State,
that historically feel discrimination. And so theres a broader process of transformation, reconciliation and
hope that has emerged in a country that for decades was burdened by a military dictatorship and closed
off from the world.

And I can tell you that when I visited the country as the first US president ever to travel there, I could see
the enormous potential that was about to be unleashed, and nobody represented that potential better than
Daw Aung San Suu Kyi.

So we are extremely hopeful about the future. We are hopeful about building on the friendship and
partnership that weve already established, not just with the new government but, more importantly, with
the Myanmar people.

I would encourage Americans who have the opportunity at some point to travel to Myanmar to do so. It is
a beautiful country with a rich culture and wonderful people. And I think, if Im not mistaken, theres a
very welcoming tourist industry that has been developing in recent years.

We look forward to partnering with the country on a whole range of issues. And congratulations on the
progress thats been made. It is not yet complete, and I think Daw Aung San Suu Kyi is the first one to
indicate that a lot of work remains to be done in Myanmar, but its certainly on the right track. And if you
would have predicted five years ago that Daw Aung San Suu Kyi would now be here sitting as the newly
elected representative of her country, many people would have been sceptical. But this is a positive news
story in an era in which so often we see countries going in the opposite direction.

The above excerpt was adapted from a speech that was delivered by former President Obama during
State Counsellor Daw Aung San Suu Kyis visit to the White House in September 2016.

New Myanmar government plans to focus on democratic and market reforms

New Myanmar government plans to focus on democratic and market reforms

https://www.oxfordbusinessgroup.com/analysis/one-year-new-government%E2%80%99s-plans-focus-
democratic-and-market-reforms

With the historic general election in November 2015 followed by the new governments official takeover
in March 2016, Myanmar turned a key corner in its modern history. Unsurprisingly, this event also
brought with it a wave of expectations for major and rapid change, with government ministries also
outlining a series of 100-day plans, which gave an insight into many of the new administrations priority
areas for the year ahead, while also highlighting many of its most important challenges.

New Leader

On March 30, 2016, the new government, led by President U Htin Kyaw, finally assumed office, four
months after the National League for Democracy (NLD) won a landslide in the countrys first openly
contested general elections. The NLD leader, Aung San Suu Kyi, was barred from the top job under
constitutional provisions denying the post to anyone with a foreign spouse, but instead, she took on the
positions of state counsellor, foreign minister and minister of the presidents office.

The NLD had run its campaign on a platform of democracy, prosperity and peace, with its initial months
in office facing daunting tasks on all these fronts. Nevertheless, the government quickly took the
initiative. On the peace front, the government moved to convene Panglong II, a conference named after a
pre-independence gathering of groups in opposition to British rule. Panglong I had led to a united front in
the liberation of the country, with Daw Aung San Suu Kyi suggesting that a similar, second struggle for
national independence was also now necessary.

Held in late August-September 2016, Panglong II brought together numerous ethnic groups with military
and governmental representatives, with its biggest achievement being that of bringing in from the cold
several of the groups that had refused to sign ceasefire agreements the year before. Yet three key guerrilla
groups did not attend, some of which are still engaged in fighting with the military. The conference ended
early, and many key issues will now be handled by bi-annual summits.

Ministerial Plans

On the prosperity front, many government ministries issued 100-day plans soon after their new ministers
took office, outlining their development targets. Several of the plans came from ministries that had
themselves recently been amalgamated from previous bodies. The new government trimmed the number
of ministries from 36 to 22.

One of these new, amalgamated ministries is the Ministry of Transport and Communications (MTC),
which brought together the Ministry of Railway Transportation, the Ministry of Transport and the
Ministry of Communications and Information Technology. The MTC lost no time in announcing that it
was developing a new national transport policy, with the Yangon-Mandalay corridor its priority. In this,
the ministry will be working with the Ministry of Construction on highway development, while also
focusing on the Yangon-Mandalay railway network.

At the same time, the MTC intends to give a boost to Myanmar National Airlines, with a programme of
maintenance and repair of its ATR aircraft fleet, while there are plans for a river port at Mandalay.

Another major restructuring was initiated at the Ministry of Electricity and Energy (MEE), which now
consists of four departments, five state-owned enterprises and two corporations. The MEE indicated it
was pursuing a policy of boosting power production, while also building new power transmission lines.

The Ministry of Industry (MoI), meanwhile, also announced in its 100-day plan that it would be focusing
on developing the small and medium-sized business sector. It is also looking at boosting its training and
education role, while launching a series of industrial ventures that it deems in the national interest.

Reforms & New Laws

Perhaps the most crucial reform on the economic front is the new Myanmar Investment Law. Enacted by
President U Htin Kyaw in October 2016, it is due to come into force in April 2017 and replaces the 2012
Foreign Investment Law and 2013 Myanmar Citizen Investment Law. The aim of the legislation is to
equalise treatment of foreign and domestic investors, while also simplifying procedures (see Trade &
Investment chapter). The move dovetails with efforts by the government to attract more business from the
US and Europe. Both had been mainstays of the international sanctions regime against military rule, with
the sanctions being gradually eased as democratic reforms were rolled out.
Sanctions

In October 2016 then-US President Barack Obama announced that US sanctions were being terminated,
with the US Department of the Treasury issuing formal notice to that effect. The EU had lifted most of its
sanctions against Myanmar in 2013, but retained embargoes on armaments and equipment that could be
used for internal repression. Sanctions on such items were renewed for one year in April 2016. Myanmar
also enjoys membership of the EUs Generalised System of Preference, which gives goods quota- and
duty-free access to that market.

A new Companies Law, prepared with the assistance of the Asian Development Bank and the Directorate
of Investment and Company Administration, was also progressing through parliamentary committees in
late 2016, with the expectation that it too would be enacted in 2017.

The progress of these reforms won praise from the IMF in an October 2016 statement, which also
mentioned the passing of the Financial Institutions Law (FIL) and continued improvements in revenue
administration. FIL was passed by Parliament in January 2016, and boosts the levels of required paid-up
capital for banks, along with their reserve requirements.

Meanwhile, in education, reform is also under way. In December 2016 the Ministry of Education
announced that consultations would be held with stakeholders, such as the countrys student unions, over
a revision of the National Education Law. This had been introduced in 2014 and revised in 2015, but was
still plagued by controversy. The hope is that further consultation and discussion will lead to a more
widely accepted new law in 2017.

Regulatory Change

On the democracy front, the government moved rapidly to strike down a number of laws that it saw as
harmful to the countrys democratic system, while also passing a law to allow Daw Aung San Suu Kyi to
take on the new role of state counsellor. The new regulations included revoking laws such as the 1975
Protecting the State from Harm Law, and the State and Peoples Council laws of 1974. Later in 2016 the
Union Parliament both houses of the bicameral legislature sitting together also voted to repeal the
Emergency Provisions Act, a relic of repressive legislation going back to 1950 that allowed detention
without charge and a low standard of evidence for convictions, which could result in the death penalty.
The new parliament has also passed new laws on regional and state assemblies (the Region Hluttaw or
State Hluttaw Election Law) and on the national assembly, or Ayotha Hluttaw.

The NLDs programme of reform has not been without its challenges, however. Ongoing ethno-religious
conflict in Rakhine State has been one area of great difficulty and sensitivity. A controversial commission
of inquiry sent by the government to investigate the violence there, headed by the former UN Secretary
General Kofi Annan, is due to report in late 2017. Meanwhile, a military crackdown in the state came in
October 2016, after a surge in radical Islamist violence. The state remains one of the biggest challenges
for Daw Aung San Suu Kyis administration, as does the violence in Shan State, which saw an upsurge in
late 2016 after a break down in talks between four local militias and the government.

One other challenge is reform of the justice system. There has been some progress, however, with
Myanmar showing some improvement in the World Justice Projects Rule of Law report in 2016. The
country rose from a score of 0.42 out of 1.00 to 0.43, year-on-year.
Yet for all the challenges, much has already been achieved and in difficult circumstances. The
government, riding a wave of popularity that gave it a landslide at the ballot box in November 2015, has
largely stuck to its agenda of democratic and market reform. Working hard on the domestic peace
process, it has also begun clearing the way for a more open investment environment. In the year ahead
these overall policy directions look likely to continue. There is plenty to do in year two of NLD
government, then, with much at stake for Myanmar and the region.

Myanmar drafting new development strategy for agriculture sector

faced with weak investment inflows and growth rates well behind that of GDP, Myanmars agriculture
industry is being targeted by the government and international agencies for an overhaul aimed at lifting
productivity and returns.

In late April the Ministry of Agriculture, Livestock and Irrigation (MALI) announced it was in the
process of drafting a development strategy for the sector.

The main targets of the blueprint are to improve sectoral monitoring, increase production and raise the
sectors competitiveness, officials said.

Authorities hope to accomplish these goals by establishing stronger links between the public and private
sector via 42 programmes and 263 plans of action.

Being developed with input from the Asian Development Bank, the UN Food and Agricultural
Organisation, and Livelihoods and Food Security Trust Fund, the MALI expects to finalise and publish
the new strategy in July, with extensive consultations with stakeholders to be held both this month and
next.

Cooling growth

The new strategy is being developed at a time when agriculture is failing to keep up with the rest of the
economy.

The sector expanded by an estimated 4.3% in 2016, according to data issued by the World Bank in mid-
April. While this represented an improvement on the 3.4% growth posted in 2015 and 2.8% a year earlier,
the sector continues to lag behind the broader economy, with GDP expansion hitting 6.5% last year.
This gap is forecast to persist in the medium term, with the World Bank estimating in its Sustaining
Resilience report published last month that Myanmars agriculture sector will expand by around 5.4%
every year through to 2019, compared to broader economic growth of 7%.

Easing credit drought

Even in its draft stage, the MALI strategy has identified some key areas where improvements need to be
made to help bridge the growth gap. One of these involves improving access to credit among the nations
farmers an issue cited by other observers as restricting capacity development in the sector.
An Article IV Consultation released by the IMF in early February, for example, highlighted that improved
access to credit was called for in the sector given the lower than expected growth recorded last year.
According to the international lender, there was scope for carefully sequenced loosening of controls on
lending interest rates, supported by appropriate supervision.

Investment shortfall

At the same time farmers have struggled to obtain appropriate financing, their industry is also
having difficulty attracting significant levels of investment when compared with other leading sectors.
Although agriculture is the countrys leading employer and contributor to the economy accounting for
some 24% of GDP it is has not drawn levels of investment that are commensurate with this high input.

Domestic investors directed MMK13.19trn ($9.7bn) into more than 1240 registered enterprises in the 12
months ending March 31, with the agriculture and livestock segment only drawing 0.38% of the total.
Even with the fisheries segment factored in, this only rose to 0.91%.

By contrast, the real estate sector attracted MMK2.76trn ($2bn) of domestic investments, just under 21%
of the total, according to data issued by the Directorate of Investment and Company Administration in
April, with manufacturing and transport drawing MMK2.4trn ($1.7bn) and MMK2.3trn ($1.6bn),
respectively.

Furthermore, of the 20m ha of agricultural land available in Myanmar, only 20% is farmed using
machinery. This has contributed to the slow growth, with the government pushing for the sectors
restructuring and mechanisation as a result.

The country is not able to fully leverage its capacity because it does not have the best machinery, nor the
best quality seeds, and undertakes limited research and development." Sunil Seth, president of the
Overseas Agro Traders Association of Myanmar and TATA group head in Myanmar, told OBG.

If not tackled fast, Myanmar could lose ground to competitors in African markets, such as Mozambique,
Sudan and Tanzania, which can produce the same crops at a lower cost than Myanmar, according to Seth.

U Aung Zaw Oo, chairman of agricultural group Aung Naing Thitsar, also spoke of shortcomings that
limited forward momentum in the industry. There is no proper infrastructure in rural areas, whether that
be storage facilities or transportation. he told OBG.

New law lifts investment potential

To help tackle these challenges, agriculture has been identified by the Myanmar Investment Commission
as one of 20 key sectors for investment prioritisation, with a new investment law introduced in April
aimed at easing the route to investment for overseas companies.

Unlike previous investment acts, the new legislation covers both overseas and domestic firms. Along with
income tax exemptions for investors buying into targeted sectors such as agriculture and agribusiness,
there is also support for firms operating out of special economic zones being established by the state.
The fact that the new law has reduced the corporate income tax exemption from five to three years in
major cities and increased it to seven years in less-well-developed areas could also help attract investors
into the agriculture sector, which is largely based in rural regions.

https://www.oxfordbusinessgroup.com/news/myanmar-drafting-new-development-strategy-agriculture-
sector

Myanmar pushes through with investment reforms

Reforms to legislation governing investment in Myanmar, including streamlined procedures and

strengthened investor rights, aim to reverse a downward trend in foreign direct investment (FDI) seen in
the previous fiscal year.
Figures released in early April by the Directorate of Investment and Company Administration (DICA)
reveal that Myanmar attracted $6.6bn worth of FDI in FY 2016/17 which ended on March 31 marking
the first decline in international inflows since FY 2012/13.

While the most recent full-fiscal-year FDI total was higher than the $6bn initially forecast, it was also
around 30% lower than the previous 12-month figure.

This decrease took place against a noticeable shift in the sector make up of Myanmars FDI portfolio,
with the energy industrys contribution falling from 50% of foreign inflows in FY 2015/16 to 36% in the
last fiscal year.

Many other sectors, however, saw their contributions rise, including the transport and communications
industry, which achieved $3.08bn of FDI in FY 2016/17, an increase of 60%, bringing its contribution to
the total from 20% to 46%.

Streamlining processes, levelling playing fields

To reverse the overall decline in FDI inflows, Myanmar is implementing a series of reforms to foreign
and domestic investment legislation. Foremost of these initiatives is the new Myanmar Investment Law
(MIL), ratified last October and progressively coming into force.
The MIL serves to bring investment law under one regulatory roof, combining the Myanmar Citizen
Investment Law and the Myanmar Foreign Investment Law.
The new law extends automatic investment protection to both citizens and foreign investors, covering a
broad swath of asset classes, including shares and property. It also introduces a new investment
application scheme, known as the Myanmar Investment Commission (MIC) Endorsement.

The MIC Endorsement is aimed at streamlining the approval processes for investments and providing a
speedier recourse to investment benefits that were not available under the previous laws.

These include tax breaks for approved investments, opportunities for subsidies, and Customs duties
exemptions for approved imports and re-exports.
MIC Permits will still be required, as under the previous investment law, for businesses seeking to invest
in strategic sectors, capital-intensive investments, projects set to have a substantial environmental impact,
and those that will use state-owned land or buildings.

According to Charles Schneider, senior operations officer of the International Finance Corporation of the
World Bank, the MIL will not only contribute to levelling the playing field for all investors, but will also
reinforce aspects that foreign and local investors seek.

Myanmar is putting in place a clear framework for the protection of investors by incorporating
international rules in national law, such as the ASEAN Comprehensive Investment Agreement, as well as
other principles of international law, rights to access to land and transfer of funds, Schneider told OBG.

Foundations laid, more building to be done

Though the main foundations of legislative reform have been laid, it will take time for the supportive
structure to be erected, according to a recent report released by consultancy PwC.

While the MIL was approved in October, the by-laws have yet to be issued, PwC said, meaning there will
be a transition period when some elements of the old investment regulatory regime will continue to
apply.

This measured timeframe was confirmed by U Kyaw Win, minister of planning and finance, in mid-
March, when discussing the reforms and the expansion of investment avenues.
An attractive investment environment has taken shape, he told a seminar in Yangon. We assure you
that the government will be supporting both domestic and foreign investors in their endeavours: 2018 and
2019 will be when Myanmar will truly sprint ahead economically.

Some doors ajar, not wide open

While the MIL will open new doors to foreign investors and level the playing field, it will not benefit all
investors in the same way, according to some stakeholders.

For example, some investors, while no longer obligated to secure MIC Permits, may still be subject to
further permit requirements under policies implemented by other line ministries or agencies. These
bodies, unlike the MIC, may not have formalised or streamlined their respective investment approval
process and requirements.

Thus, where under the previous investment law approvals were more centralised (through the issuance of
an MIC Permit), the MIL may have unintentionally created a situation where investors will be faced with
more rather than less licensing requirements, according to Pedro Bernardo, a foreign consultant attorney
at law firm Kelvin Chia Yangon.

In this sense, those companies that seek to operate in certain sectors, including possibly strategic
sectors or seeking to invest in big projects, such as power, mining and telecommunications, may be
presented with more challenges to entry when the MIL is actually implemented on the ground, Bernardo
told OBG
Looking forward, in order for an investor to get their investment licences more quickly, the primary
challenge will be to streamline procedures not only at the MIC level but also within line ministries and
agencies to which licensing power is granted, he said.

More reforms in the pipeline

Expected to be ratified later this year, Myanmar is also in the process of finalising reforms to the
Companies Act, which covers the rules and regulations surrounding business operating environments.

Under the proposed reforms, lawmakers will work to ensure that regulations for companies are brought in
line with international standards. In doing so, the aim is to reinforce investor rights, ease restrictions on
foreigners buying shares in local companies and allow domestic firms to benefit from FDI.

Once ratified, the new act will put foreign investors on a more level footing with Myanmar citizens,
giving them the opportunity to buy into the domestic economy and reinforcing their confidence in their
legal rights.

https://www.oxfordbusinessgroup.com/news/myanmar-pushes-through-investment-reforms

Modernisation fuels new lending in Myanmars banking sector

Foreign banks may be granted greater access to Myanmars domestic financial market as a way of
servicing local demand for trade financing.

At the end of February the Central Bank of Myanmar (CBM) announced it was considering expanding the
range of services that foreign lenders in the country can offer by allowing them to provide trade-only
accounts to importers and exporters, which local banks are unable to do so.

Of the 24 domestic banks, nine are involved in trade financing; however, the level of credit they can
extend is often inadequate to meet demand due to a lack of capital.

International banks are currently restricted to providing financial services to foreign corporations and
domestic lenders; however, giving them a mandate to support Myanmar traders could help facilitate
higher levels of trade and therefore tax revenue.
The CBM is committed to opening up Myanmars financial sector further through a staggered process,
U Win Thaw, director general of its foreign exchange management department, told media last month,
while giving local lenders the chance to develop and keep pace with reforms.

Opening doors

Last year the government granted new licences to four overseas banks: Vietnams Bank for Investment
and Development, E Sun Commercial Bank of Taiwan, Koreas Shinhan Bank and State Bank of India.
This took the total number of foreign lenders authorised to operate in Myanmar to 13.
The entrance of these foreign institutions increased the number of banks in the marketplace by one-third
and added around MMK1.6trn ($1.2bn) in combined regulatory capital to the system, tripling the previous
total.

U Kyaw Kyaw Maung, governor of the CBM, spoke of the possibility of opening up the sector further, as
foreign lenders have helped advance modernisation efforts.
The entry of foreign banks provides an unprecedented opportunity to develop a modern banking sector
through the introduction of new financial products and risk management techniques, he told OBG last
year. Lending by foreign banks could become an important source of funding for the private sector.

According to Daniel Tan, general manager of the Yangon branch of Oversea-Chinese Banking
Corporation, it is important for the banking sector to broaden the range of financial services it offers,
especially with regard to lending, as currently most companies looking to borrow from local banks need
to provide collateral.

Unlike in other countries, unsecured lending is difficult, as is lending against most forms of moveable
property such as stock or receivables, he told OBG. This greatly limits the amount of money that
Myanmar companies can borrow.

Balancing act

However, as Myanmars banking sector expands to meet the increased demand from local businesses,
lenders could be exposed to higher levels of risk.

In its latest review of the countrys economy, conducted in February, the IMF warned that accelerating
levels of credit growth, which reached 32.3% in FY 2015/16, could leave the banking sector vulnerable.

Forecasting private credit to rise by 27.7% in FY 2016/17 and by 23.6% in 2017/18, the fund supports a
cautious approach to fiscal policy to cope with these rapid increases.

The World Bank also sounded a note of caution about bank lending in its Myanmar Economic Monitor,
December 2016 report, emphasising a high concentration of credit across a narrow band of sectors.
According to the banks calculations, over the past three years, the wholesale and retail trade has soaked
up 43% of all credit extended. Over the same period, lending to the agriculture, manufacturing and
construction sectors accounted for 30% of the total.

The World Bank also observed a sharp rise in non-performing loans (NPLs) on the books of domestic
banks. Using CBM data, the report said NPLs had more than doubled over 2016 to represent 3.6% of total
loans. It added that the actual ratio might be higher still, as the current criteria for assessment are outdated
and inconsistent with best practices in more developed nations.

Rising to challenges

In the face of these headwinds, the government has stepped up efforts to continue bringing domestic
institutions in line with international standards of transparency and corporate governance.
Earlier this month, for example, the state started an audit of Myanmars four state-owned banks the first
in decades. One of the primary aims of the endeavour, which is being undertaken in partnership with the
World Bank, is to identify options for the restructuring of the sector as part of the drive towards
modernisation.

In another move forward, an 18-member body known as the Private Sector Development Committee was
formed in October 2016 with a remit to guide and coordinate policies to improve transparency and
regulation in the financial sector

https://www.oxfordbusinessgroup.com/news/modernisation-fuels-new-lending-myanmar%E2%80%99s-
banking-sector

OBG talks to Daw Ei Phyusin Htay, Managing Director, Barons Group

What is the ideal energy mix for Myanmar?

DAW EI PHYUSIN HTAY: We have a tremendous amount of capacity in hydroelectric power, and we
are expecting 2000-2500 MW in generation from gas in five years time. Another option is solar, but
integrating solar power into the energy grid is not very feasible given the grids current condition. To
accomplish this, we need substantial investment in strengthening the electrical grid. Once the grid is
stable, there is a government objective to have 200 MW of solar power per year, as per the Myanmar
Energy Master Plan. However, I think this is a bit ambitious; 50 MW per year is more feasible at this
time.
What direction do you think the government should take on electricity subsidies and tariffs?
EI PHYUSIN HTAY: The current subsidies greatly benefit companies connected to the grid. This isnt
good for the generation business. As a result, the state utility is not a financially healthy off-taker, and we
need to change this in order to reduce risk. We need to ensure a healthy revenue stream to the power
company.
We are having many problems with government offices, army offices and other facilities that do not feel
the need to pay their electricity bills. This is the first thing that needs to be addressed. Another problem is
that many users are adjusting the meters in their houses and factories in order to not pay their bills
correctly. This is something that law enforcement must deal with and the state utility should take greater
steps to eradicate.

The government needs to put together an analysis on how much revenue is being lost via these two
channels and create a financial model for how much revenue is needed to cover generation and
transmission costs. With these indicators, we can come up with a benchmark KWh cost for electricity,
and a subsidy and tariff structure that will accommodate the various segments of consumers. Low-income
people should have a subsidized rate, industries should have an incentivised rate and so on.

We dont need to change the consumer tariff nationwide all at once. We can start with a high-consuming
commercial area like Yangon in a pilot phase to find optimal solutions for the broader country.

Thermal power has been on the governments list of objectives, targeting an increase from the current
2500 MW to 30,000 MW by 2030. Is this realistic and what factors will drive success in this regard?
EI PHYUSIN HTAY: I think this amount of generation it is too ambitious. This opinion is simply a
summation of all the memoranda of understanding that have been signed it does not add up. However, I
appreciate that the government has looked to the future and estimated electricity demand up to 2030. By
2020 the target is around 20,000 MW, but I think it will be closer to 14,000 MW. After that, you can do
another demand-side study to determine the next target.
All you need to hit 14,000 MW is one large, coal-fired power plant, but it is not a popular option and it
will be very difficult to convince institutional investors to come on board. What needs to happen is a
study to find out how much electricity we can realistically expect to be produced from gas and other
options by 2020. If you take the expected demand and the fact that all the generation inputs dont add up
to it without coal, you have a very good case to go to investors and environmental activists and tell them
we need a coal power plant.

With the wealth of discoveries being made in gas fields in Myanmar, where do you think the revenue
generated from this should go?
EI PHYUSIN HTAY: If we can make additional discoveries and ensure a steady production line of gas,
we can export it to countries like China, Japan or Thailand. For domestic production, there needs to be a
blueprint for which industries can use the gas. Difficult questions will need to be asked should cement
plants be able to use gas? Should manufacturing facilities? We also need to focus on the value-added
domestic processing of liquefied natural gas that can then be sold for additional revenues.
https://www.oxfordbusinessgroup.com/views/obg-talks-daw-ei-phyusin-htay

Fourth operator enters Myanmars telecoms sector

The entrance of a new operator in Myanmars telecoms sector has brought a wave of new investment and
heightened competition to an already crowded market, promising expanded service options and lower
pricing for consumers. In mid-January the telecoms regulator, the Ministry of Transport and
Communications, formally issued the countrys fourth nationwide telecommunications licence (NTL) to
the consortium Myanmar National Tele & Communications.

Ownership is split among Viettel, operated by Vietnams military, with a 49% stake; a local consortium
of 11 local companies called Myanmar National Telecom Holding Public, with 23%; and domestic firm
Star High, with 28%.

New to the neighbourhood

The new provider which has been allocated the 900-MHz and 2100-MHz bands will operate under the
name Mytel and begin services some time in 2018, after making investments of more than $2bn in
equipment, services and infrastructure.

Among Myanmars four mobile service providers with NTLs, the leader by number of subscribers is
Myanmar Posts and Telecommunications (MPT) with 21m, followed by Norways Telenor (18m) and
Qatars Ooredoo (9m), according to figures released by international media in November. A shadow
operator backed by the military, MecTel, also operates in the market under a special, non-NTL licence,
and had roughly 3.8m subscribers as of mid-2015.

The conditions for Mytel according to the agreement approved by the government a 15-year licence
with the option for a 10-year extension are broadly similar to those granted to the two other private
operators, Telenor and Ooredoo.
One notable difference was the price: the licensing fee levied was reportedly $300m, well below the
$500m charged to Telenor and less than a third of the $1bn paid by Ooredoo.

Analysts interpreted the lower fee as a reflection of the maturity of Myanmars busy telecoms market;
however, it could also be acting as a discount of sorts, reflecting the high level of investment Mytel will
need to be competitive.

Tapping rural areas

Despite having three established service providers, Myanmars telecoms market still offers opportunities
for growth.
With mobile penetration rates approaching 70% of the population, the remaining 30% are an obvious
clientele for Mytel to target, and the company has identified the rural slice of the market as a key part of
its growth strategy, according to Zaw Min Oo, its chief external relations officer.

About 70% of the population is rural, he told local press in January. We are targeting them. We saw
that people used the internet more than we expected. We are viewing it as an opportunity.

Perhaps larger still is the opportunity presented by rising demand for data and internet services among
both individual and corporate clients. Since 2014 internet usage has swelled from just 2m registered
subscribers to nearly 40m in 2016, according to estimates from the Posts and Telecommunications
Department.
Such rapid growth has been driven by many factors, including greater market competition, which has
caused a steep drop in the price of internet and mobile phone subscriptions, and a far stronger
infrastructure backbone, which has extended the reach of services to more people.
Indeed, SIM cards were once priced in excess of $1500, but can now be bought at thousands of locations
for less than MMK1500 ($1.09).

One selling point for the new network will be its commitment to boosting internet speeds for mobile
handset users to 3 Mbps double the present rate. Officials have also signalled plans to strengthen
internet and voice connectivity for international services by linking into the Asia-Africa-Europe 1
submarine cable.

This commitment to boost the speed of data and communications services could enhance competition
further, spurring the other operators to ramp up investment and lower subscription costs, or innovate
tariffs and plans to maintain market share in a highly price-sensitive environment.

Opportunities down the line

The entry of Mytel, and the exigency of investing heavily and rapidly in order to meet its 2018 service
launch date, should create new opportunities for technical and infrastructure suppliers.

Mytel has said it intends to provide coverage to at least 95% of Myanmars population and attract 5m
subscribers by 2020, a goal that will require extensive infrastructure investment, especially in the rural
areas being targeted. As a result, demand for handsets that are 3G and 4G capable will also be strong,
driving increased sales for phone manufacturers and retailers alike.