Acumen Magazine December 2013

adv.pmd 11/25/2013, 2:49 PM11

adv.pmd 11/22/2013, 4:13 PM12

adv.pmd 11/22/2013, 4:14 PM13

adv.pmd 11/22/2013, 4:13 PM12

adv.pmd 11/22/2013, 4:13 PM13

adv.pmd 11/22/2013, 4:15 PM11

adv.pmd 11/22/2013, 4:16 PM11

adv.pmd 11/22/2013, 4:20 PM11

adv.pmd 11/22/2013, 4:21 PM12

adv.pmd 11/22/2013, 4:21 PM13

CEO / Chief EditorDr. Htet Zan Linn

DirectorDr. Hein Thu Aung, Tin Tun Kyaw

Executive EditorPhyo Wai

EditorsHein Zaw, Khin Win, Khaing Minn Nyo

ContributorsHein Zaw, Myitmakha, Dr.Tin Maung Kyi, Naing

Thit, Jacob Andrew Clere,Su Swezin Aung

CoverGipsy Rocker

DesignersAung Aung (AN Computer), Thaw Tar Oo

Computer OperatorZin Wai Wai Shein

Marketing DepartmentJanuary Khine Mon, Naw Keziah, Yadanar,

Nan Mo, May Hsu Mo Mo

PhotographersAung Kyaw Moe (New Image),

Hein Zaw, Gipsy Rocker,Myint Thein Oo (Shweli)

Publisher and CopyrightDr. Htet Zan Linn

Printer

Editorial BoardACUMEN

[email protected]

[email protected], [email protected],

[email protected], [email protected],

AdvisorsAdvisorsAdvisorsAdvisorsAdvisorsProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun ThetProf. Dr. Aung Tun Thet (President's Economic Advisor)

Prof. Maw ThanProf. Maw ThanProf. Maw ThanProf. Maw ThanProf. Maw Than (Rector (Ret), Yangon Institute of Economics Yangon)

Soe Tint AungSoe Tint AungSoe Tint AungSoe Tint AungSoe Tint Aung (Special Consultant for Advocacy, PSI Myanmar)

Dr. Tun LwinDr. Tun LwinDr. Tun LwinDr. Tun LwinDr. Tun Lwin (Consultant, Myanmar Climate Change Watch,Tun Lwin Foundation)

Than LwinThan LwinThan LwinThan LwinThan Lwin (Deputy Governor (Ret), Central Bank of Myanmar)

Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw Tin Zan Kyaw (Principal, Device Business Management Academy)

Grace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin HtaikGrace Swe Zin Htaik (Media Advocacy Advisor, PSI Myanmar)

OfficeNo. 24/26, 4B-C, Race Course Condo, South Race Course Street, Tamwe Township, Yangon.

Tel : (+959) 420033355 ~ 66 ~ 77 (Hot Line), (+959) 73045140, 49317457, 73143313, (+951) 8603886, 8603887

Editors Note

We are very proud to inform you that we are organizing a unique forum inearly March in Yangon at which world-renowned author, professor and mar-keting guru Dr. Philip Kotler will give lectures and interact with people fromdifferent strata here. After trying for more than a year, I was able to meet withDr. Kotler a few months ago. Fortunately, he was very interested in the idea ofholding a forum in Myanmar. Myanmar Marketing Forum 2014Myanmar Marketing Forum 2014Myanmar Marketing Forum 2014Myanmar Marketing Forum 2014Myanmar Marketing Forum 2014 will bea full-day event, the first ever appearance by Dr. Kotler in Myanmar. I am surethis event will create enormous opportunities for those in the business commu-nity. Our main job to link businesses together and we have already receivednumerous calls of interest and many offers to participate. The forum will be awin-win situation for which we are exerting our best efforts. This week wehave chosen Myanmar agriculture as our lead business story. Author Hein Zawargues at length why investment is so low in this main sector of the country.There are many investors from different parts of the world, but mostly inextractive industries, which reminds us of the need to review the situationrealistically from both economic and political perspectives. No investor willthrow money in if there are no returns, only risks. But investors are normallycourageous enough to take risks if the rewards are big and possible. We needto consider why investors are just trying to invest in extractive industries andnot in a sector which will benefit Myanmar more in terms of technology, fi-nance, job opportunities and expertise. One of the reasons seems to be thatpeople are selfish by nature. It is their right to choose to make investments inwhatever they like. But the onus is on us to check why agriculture cannotattract attention from outsider investors. In this December edition, we have alsopicked a story about how newly imported vehicles are affecting the day-to-daylives of people. We have bought about 200,000 cars in the past two years. Mostof them are in Yangon, making the traffic terrible for so many people. Thereare other good articles and we do hope you will enjoy reading them. Yourfeedback would be highly appreciated. Once again, the team of ACUMEN wouldlike to convey the message that our aim is to promote the development of thisnation of 60 million people. Myanmar will definitely be busier in the nextcouple of years and we should be taking all opportunities for our economicdevelopment. A

Masthead.pmd 11/25/2013, 2:51 PM1

ACUMEN 11

oicesVDuring 88 Crisis, Wedid not have enough

food. We imported foodfrom China via Mu Se

way to survive. We haveto be gratful for that

help.

U Aung Min

Minister of the President's Office of Myanmar

"Fighting in jungle ispractically difficult tolegislate for nationwideceasefire, choosing betterwords and sitting atNyipyidaw office."

U Phone Myint Aung

Parlimantary Representative

In future, we needhuman resourceassistance to standby ourselves. Thetrade andinvestment; whichcan guarantee forsharingtechnology forbusinessdevelopment, forjob opportunitiesto escape frompoverty arewarmlywelcomed.

U Wana Mg Lwin

Minister of Foreign Affairs

The increase electricity cost willeffect to public and local business.The goverment elected by people isought to explain its reasons and givemore time for preperation to thepublic.

At present, the peaceprocess is in step ofpreperation. Politicaltalks are really neededto hold. I hope thatnationwide peace signwill happen before endof the year. Withoutceasefire agreement andpeace agreement, it isdifficult to handle thecountry issues. Iassume that both sidesneed to go throughpolitical talks. Toestabilish a peacefulsociety, we have toforgive all the hatredand grudge rooted fromthe past.

Martti Ahtisaari

Former President

Republic of Finland

U Than MaungAdvocateKelvin Chia Law Firm

Voices.pmd 11/22/2013, 4:11 PM11

Photo Feature

adv.pmd 11/22/2013, 6:29 PM12

adv.pmd 11/22/2013, 6:30 PM13

News in Brief

14 ACUMEN w w w. my a n m a r b 2 b m a g a z i n e. c o m December 2013

Redlink company has extended itsWimax internet network by installingmore towers in Mandalay and Bagan,according to the compnay's Vice-Presi-dent U Thein Than Toe.

The more network in Myanmar, thebetter the service would be. That is why,we are extending the network and alsowe have plans to extend new servicecenters. We care for customer service."he added.

Redlink company have plans to pro-vide 40 microwave towers in Yangon,now we have installed 20 towers." Wehope that the network would improve.The network can be available even in-side the apartments," he added.

At present, we have installed over45 towers across Myanmar. When westarted in 2008, it was just five towers.Year by year, the number of towers isincreased and now it is over 45. At theend of this year, it would be over 50"said Deputy General Manager U MyoMyint Nyunt.

The company is ready to provide Wifiservice in public during Sea Games sea-son. A

Myanmar first sculpture village was es-tablished at Sei-my-gone (10 mile) nearBago in 2012 October and will be com-pletely in early next year.

The main reason of the project is toIn cooperation with Danish CarlsbergBeer Group and Myanmar Golden Star

Myanmar FirstSculpture Village

Danish Carlsberg: Madein Myanmar

attract interest from foreigners on Myan-mar sculpture. Now, foreigners from Chi-na, Japan and South Korea started to comeand buy the sculptures. The total quantityof sculptures we have finished is nearly7000 including human and animal figu-rines" according to U Thant Zin fromKaung Myanmar Aung Company.

The area of the village is 50 acreswith 22 buildings. The raw materials used

is the wood remained during Nargis and15 local sculptor groups have createdthose sculptures.In the village, the resort includes swim-ming pool, rest room, golf course for lo-cals and foreigners. The village is now20 percent finished and the buildingsalone will cost about Kyats two billion,"he added. A

Breweries Co., Ltd. Myanmar CarlsbergBrewery Plant Co., Ltd. held a ceremonyof laying foundation for beer factory inBago Industrial Zone in October.

We have good history with Myan-mar since 1993. We came back to Myan-mar. Now we are doing a research to fitin well with the taste of Myanmar con-sumer. Not only beer product, we haveplan to produce other products accord-ing to demand of Myanmar consumer.Carlsberg is international brand, so wesee great potential in Myanmar," said MrDaniel Sjogren, Managing Director ofMyanmar Carlsberg Co., Ltd.

Mr. Mikale Winther, Denmark Am-bassador of Myanmar, said, We are verystrong in development assistance, our cor-porates give assistance to Myanmar toreduce poverty to help economic devel-opment, health, education and also de-mocracy. It's a business come here notonly to make money, but also benefit forthe people and the development of thecountry. We look after the environment,we use a lot of measures to reduce theenergy consumption even make thingsto help the environment. I actually be-lieve that the country will have a goodgovernance that will facilitate economicdevelopment so that poverty can be re-duced and so Myanmar people can en-joy a better life."

U Nyan Win, Chief Minister of BagoRegion also attended the ceremony. A

Myanmar Floating Hotelto be launched

Myanmar first floating hotel will belaunched in Botahtaung habour nearYangon in December, according to Myan-mar Port Authority.

Hla Hla Pa Pa Co., Ltd. , a Myanmarcompany, was permitted to implement theproject. The company bought a engineless2,000 tonne vessel from Finland for theproject. The vessel was renovated into 104double rooms, and two dining rooms andbars.

Myanmar has involved foreign and

Redlink extendsmicrowave tower for

internet network

News in Brief.pmd 11/22/2013, 4:07 PM14

ACUMEN 15

local investors to build floating hotels bythe Botahtaung jetty.

The Yangon Port Development has al-ready expanded as a Botahtaung portarea. The land area of the port was ex-tended towards the Yangon River in Julylast year. A local company, Pearl Myay,has worked on the port expansionproject. A

Myanmar, Thailand, India: Trilateral Highway Plan

Japan's $51 million help to modernize Myanmar banking system

In 23rd ASEAN Summit in Brunei, India,Myanmar and Thailand are in the pro-cess of discussing the project of TrilateralHighway".

In the summit, Thailand Prime Minis-ter Yingluck Shinawatra, Myanmar Pres-ident U Thein Sein and Japan Prime Min-ister Shinzo Abe discussed Japan's pri-vate sector to join in the project. The totalestimate project cost will be US$66 billion.The idea of the highway - from Moreh inManipur to Mae Sot in Thailand, via My-anmar - was conceived at the trilateralministerial meeting on transport linkagesin Yangon in April 2002. The project andthe transport corridor will connect these

countries (Cambodia, Laos, Vietnam andMyanmar) with the North-Eastern part ofIndia. A

Mr. Mikio Numata, Ambassador of Japanto Myanmar and Dr. Khin San Yee, Dep-uty Minister for National Planning andEconomic Development of Myanmar,signed an agreement of grant aid to My-anmar Banking System in October, ac-cording to Japanese Embassy in Yangon.In the project, three facts are includes:modernization of financial sector, partic-ularly strengthening of the operationalcapacity of Central Bank of Myanmar(CBM) to deal with rapid expansion ofeconomic activities followed by democra-tization and economic reform as well asto prepare for joining the ASEAN eco-nomic community; fund settlement andgovernment bond settlement require hugemanual work at CBM even with the cur-rent transaction volume, and thus thereare concerns that it will exceed the max-imum capacity as the transaction increaseswith the expansion of economic activi-ties; settlement of current account andgovernment bond will be automated, andit is expected that the volume of transac-tion at CBM will increase reliability ofCBM operation.

Central Bank of Myanmar needs todevelop in stability of exchange rate and

cyber security" according to economistDr. Aung Ko Ko.

Japan International CooperationAgency (JICA) said that the technological

activities will be provided by Fujitsu Com-pany, KDDI cooperation and Daieiwa Re-search Company. The project will startin December and finished in 2016. A


News in Brief


Myanmar Business toMalaysia GM Klang

Wholesale

Myanmar business investors are invitedto invest in GM Klang Wholesale, Mr .DatoLim Seng Kok, General Director of GMKlang Wholesale said.

Myanmar got invited to invest in theGM Klang Wholesale, as well as Laos, Viet-nam, and Cambodia," he added.

Myanmar is now practicing marketeconomy and some businesses came toMalaysia. In the coming year, Myanmar isexpected more investment," he said.

GM Klang Wholesale City is strategi-cally located in Bandar Botanic Klang, anew central business district in Klang Val-ley, closely to seaports, airports, major high-ways, and Coastal Ring Road. It is hugemarket by thousand of Asia investors.

GM Kland will provide service of all

According to Deputy Minister for Financeand Revenue, Dr. Maung Mg Thein, to

implement Myanmar Stock ExchangeMarket, Myanmar is facing five big chal-lenges: to organize skillful members forStock Exchange Commission, to buildstrong Stock Exchange, to have infra-structure, information and technology, toprovide capacity building training for com-mission members and staffs, to educatelisted public companies.

Nowadays, to implement stock ex-change market, there are just only fivepublic companies which are ready forstock exchange market. Actually, 80 pub-lic companies are needed at least," U SoeThein, Executive Director of Myanmar Se-curities Exchange Co., Ltd. said.

The Parliament has approved the Se-

Five Big Challenges for Myanmar Stock Exchange

procedure steps of Malaysia in registra-tion. The delegate from GM Klang is avail-iable to come and explain all the policy toMyanmar investors, according to compa-ny website.

The market is opened in 2012 Octo-ber and it is a huge market that all brandsare available with over 15,000 shops. Mostinvestors are from Chin, India, Pakistan,Philippine, and Thailand. A

curities Exchange Certificate TransactionLaw on June 31 and currently waiting topass the by-laws to form associated or-ganisations concerned with stock ex-change.

In the transaction law, it didn't men-tion about foreign companies to includein the exchange market.

Foreign companies still have difficul-ty to play in Myanmar stock exchangemarket because of the Myanmar Compa-nies Act which was affected in 1914.

Now the Parliament is revising toamend the Myanmar Companies Act andwill try to announce before 2015" said UAung Naing Oo, Director General of De-partment of Investment and CompaniesAdministration. A


adv.pmd 11/22/2013, 4:16 PM11

18 ACUMEN w w w. my a n m a r b 2 b m a g a z i n e. c o m December 201318 ACUMEN w w w. my a n m a r b 2 b m a g a z i n e. c o m December 2013

Cover Story

Agriculture.pmd 11/22/2013, 3:46 PM18

ACUMEN 19ACUMEN 19


Slackening SectorSlackening SectorSlackening SectorSlackening SectorSlackening SectorAgriculture sector has numerous

challenges while it is the mainstay ofMyanmars economy contributing 60percent of the countrys GDP. While muchpolitical support needs to be givenurgently, theres not enough official effortfor improvement. The sector fails to attractmuch foreign investment as it should. Interms of foreign investment volume it isfar less than the extractive industries suchas energy, mining, oil and gas sectors.Though there have been more and betterrelations between the West and the newgovernment, no western investors haveso far expressed interest in Myanmarsagriculture. And some Asian countrieshave expressed their interest but are notmaking any investment in growing cropsand are rather interested in buildingfactories like rice mills and rice-steamingplants. Dr. Soe Tun, the Chairman ofFarmers Association and joint secretarygeneral of Myanmars Rice Federation,said, Asian interest is only in setting upfactories. Theres no talk yet aboutinvesting in paddy planting.

Theres also a downward trend inthe number of local companies doingbusiness with the farmers for theexpressed common good, as is indicated


Old-fashioned agricultureOld-fashioned agricultureOld-fashioned agricultureOld-fashioned agricultureOld-fashioned agricultureA country with more than 30 million

acres of land under cultivation, one of themain agriculture countries in ASEAN,Myanmar grows more rice as its maincrop. Paddy takes up about 50 percent ofthe total area, oil crop and pulses andbeans about 20 percent. Due to the inabilityto employ modern farming methods andlack of other requisites, Myanmarsagricultural sector has been conspicuouslylagging behind Thailand and Vietnam.Around 1940 Myanmar ranked as thetopmost rice-exporting country in theworld but this golden era had graduallydeclined until 1960s during socialist-economy era when it could only exportless than two million tonnes. It was onlyafter the new government took office thatMyanmars rice export began to climb upto 1.5 million mark.

Pulses and beans, which aregenerally less in demand on the localmarket, were exported in 2012-2013, upto 1.4 million tonnes of them. But suchfarm products as edible oil, coffee andsugar have to be imported from abroadhaving to spend in millions of dollars.Paddy is grown mainly in good-rainfallregions such as Ayeyawaddy, Bago andYangon that are often referred to as

by the fact of about 60 rice-specialitycompanies dwindling to a mere 2 or 3.And they might have their own justifiablereasons. In fact, farmers who have beenpaddy growers since their investors dayshave themselves been apparentlydisappointed with their jobs. A man, afarmer for about 30 years, said Its beenall the same with my family every year.We havent become any richer. Weredoing this farmers job for lack of materialresources. Though admittedly thisagriculture sector gives jobs to 68 percentof Myanmars population, it cannot raisethe living standard of these people. Theiraverage yearly income of about US$200or 300 just do not meet the basic needs offood, clothing and shelter. Thats why therehas been an increase in the number offarmers who, after selling off their paddyfields move to towns and cities, some ofthem going overseas for better jobopportunities. And those few who stay putsticking to cultivation can manage to livea fairly decent life by combining paddygrowing business with some other kindsof job such as small scale trading business,whereas the rest of them remain just asmiserable as ever, struggling hard to getout of debt burden.

Contented by nature, they would be happy with what little mother nature has given them.

Cover Story


ACUMEN 21

Myanmars rice bowls. As Myanmarsagriculture relies heavily on the amountof rainfall the rainy season average is 9times that of hot season average. ThoughMyanmar has several useful rivers suchas Ayeyawaddy, Thanlwin, Chindwin andSittaung; using them for irrigation accountsfor only six percent of the countrys totalland areas. Thats why some say thatMyanmar is allowing its precious fresh-water resources to drain away down intothe sea. Though the official estimate placesthe irrigated land at over 13 million acresthe actual figures are less than thatnumbers. Some of the over 200 dams aresaid to be not of much use to the maincrop areas.

Myanmar, a tropical monsooncountry, has three seasons: summer, rainyseason and winter. In the rainy seasonthe Rakhine, Bago and Ayeyawaddy andother coastal areas receives an amplerainfall of 120-200 inches, whereasMandalay and similar central Myanmarget a scanty 20-40 inches consequently,in the rainy season the flow water woulddevastate the paddy fields, whereaspaddy fields in central Myanmar do notget enough water. The global climatechange has effected the Myanmar farmerscreating uncertainty about what the

weather would be at a particular time.Yet another problem is the yearlyinundation of paddy fields in theAyeyawaddy and Bago regions.

Weak assuranceWeak assuranceWeak assuranceWeak assuranceWeak assuranceOne of the factors that hinder the

development of Myanmars agriculturalsector is the continuous use of traditionalways of land cultivation as well as thefact of most farmers being too poor andignorant of modern farming methodswhen it rains they would simply startsowing and then they would fertilize thefields with a scanty amount of manurethey have been accustomed to for years.Contented by nature, they would be happywith what little mother nature has giventhem. When asked about their way ofgrowing paddy, they would say, Wevebeen doing this way since childhood. Wejust do as we already know. A governmentagricultural employee said It takes a lotof talking to persuade them to use theseeds weve provided to them. Somefarmers just cant wear themselves awayfrom the old-fashioned ways.

Lack of insufficient support by thegovernment is also to blame for this stateof things. Thereve been frequent mediareports on the state-level officials making

Kirk Siang/Flickr Eric Brochu/Flickr

Theres no marketassurance for theirproducts andMyanmar still lacksa crop insurancescheme like the onesin most developedcountries. Thoughfor 10 years therehave been a freemarket in place ofdirect purchase bythe government,farmers remain injust the same plightas ever due to lack ofcrop assurance.



an inspection tour of model paddy fieldsbut it is impossible for a few hundredgovernment employees to do a thoroughpersonal study of thousands of paddyfields, as a farmer of Kawa township,Bago region said, Not a single governmentemployee has ever come to help us. Noone has ever bothered to know howmany acres of land have been plantedwith paddy. All they do is a guesswork.

Theres no market assurance fortheir products and Myanmar still lacks acrop insurance scheme like the ones inmost developed countries. Though for 10years there have been a free market inplace of direct purchase by thegovernment, farmers remain in just thesame plight as ever due to lack of cropassurance.

The price of paddy and other cropswould often plummet a month or two afterthe harvest and then soar high whenthere is not a single grain in hands.Poverty-ridden they have but to go withthe hard old way as a 60-year old paddygrower said Harvest time is a time forus to clear up our debts. Money lenderswant to get the money back. So, wevegot to sell our paddy at whatever pricethey offer. We cant negotiate.

Paddy price at the harvest time isabout K300,000 per one hundred basketsa price that cant earn the farmers as muchprofit as they should, when input andoutput are taken into account. Summercrops can have a yield of 100 baskets per

acre but rain crops are less than 40-50baskets. With such a small profit, Myanmarfarmers have a hard time struggling toget out of debt. Formerly the governmentsloan to farmers was just K10,000 per acre,but this year it is K100,000. The interestrate being still so high, farmers do notever have enough money for the basicneeds of their families much less forrecouping paddy planting costs. Eventhose farmers who are comparativelywell-off would not take risk in a situationwhere paddy prices and other crop prices

are unpredictable; pulses and beans whichare so heavily dependent on Indiasdemand are ever more unpredictable interms of price.

Investment still far awayInvestment still far awayInvestment still far awayInvestment still far awayInvestment still far awayThough amply blessed with water

and arable land resources, it seemsMyanmar cannot attract enough foreigninvestment in the agriculture sector.Foreign investment in this sector to dateis US$163 million (0.48 percent) by 9companies. In the schedule of investment

Cover Story


ACUMEN 23

Annual Rates of Agricultural Growth in Myanmar, 1985/86 to 2009/10 Area Production

Cerealspaddy, GOM 2% 3%paddy, USDA n.a. 1%maize 3% 6%

Oilseeds 3% 6%Pulses 7% 9%Horiticulture

onion 5% 7%garlic 4% 7%chillie 3% 6%beetle leaves 8% 8%potatoes 3% 5%vegetables 6% n.a.fruits 4% n.a.

Poultry meat n.a. 6%Source : Annex Table C11.

allowed by the Directorate of Investmentand Company Administration, DICA,theres only $192 million (0.44 percent)by 12 companies. In domestic investmentit is $547.90 million (0.12 percent). TheseDICA figures are only for the whole ofagriculture sector from which one cansafely guess how much it could be in theinvestment allowed for the paddysegment. A majority of farmers are hopingfor a kind of joint-venture with foreigninvestors.

Said one of them I think itll be ofmore profitable to us and the investingcompanies working together. What thefarmers want to get from foreign investorsis technology and the capital.

According to Dr. Soe Tun, theagriculture sector though potentially highlyprofitable is a highly risky sector. One ofthe officials of a loan company said, Since2008-2009 when loan to farmers startedthere have been cases of debt wrrittenoff due to the farmer inability to pay back.That explains why theres been a gradualdecrease in the member of agriculturalloan companies.

Not enough inputNot enough inputNot enough inputNot enough inputNot enough inputIn a combined report presented by

the Michigan State University and theMyanmar Development Resource Instituteit is said that Myanmar spends only $0.06on research for a product worth $100compared with its neighbouring countrieswhich spends $0.41 Myanmar still has toimport high-quality seeds from abroad, it

does not have the technology to producethem locally. The research the ministryconcerned did with the help of foreignexports did not produce any practicalresults. One of the persons deeplyinvolved in agriculture said, InternationalInsti tute of Rice Research of thePhil ippines had worked with theMyanmar counterparts here for some 37

Factors of production such as farming machines and energy fuel should be made available at cheap prices,because mechanized farming will play an important role in the countrys future developments.



years. But all they managed to do wasresearch papers and hold seminars. Whatis needed is practice of research findings.Expenditure on agricultural research isonly 0.13 percent of the entire Ministry ofAgriculture and Irrigations budget.

Myanmars agriculture has two otherproblems to deal with: land seizure andshortage of labour. What amounts to themonopolization of land by the military andmoneyed people has reduced somefarmlands to grasslands or simply fenced-off empty compounds. The years 2012 and2013 saw a series of land ownershipproblems. A refined agronomist said,Some people have come to think thatthey have the right to do whatever theylike to the countrys land for their owngood as well as for the good of their kithand kin to the detriment of the toilingfarmers. These agriculture problems willremain difficult to solve. The shortage oflabour due to thousands of farmer workersleaving the country for countries such asMalaysia, Thailand, Singapore, andrecently to South Korea and UAE hasadversely affected Myanmars agriculture,for example by raising labour charges.Factors of production such as farmingmachines and energy fuel should be madeavailable at cheap prices, becausemechanized farming will play animportant role in the countrys futuredevelopments.

Some ways to changeSome ways to changeSome ways to changeSome ways to changeSome ways to changeThe success of the governments

projects of reduction of poverty rests agreat deal on the countrys agriculturaldevelopment. Though there is an explicitlystated policy in this regard, there seemsto be not enough attention paid to theagricultural sector.

In carrying out reforms, short-termand long-term strategies should beadopted. First farmers will have to becoaxed into the domain of modernmethods of farming and also into theculture of exchanging ideas and viewswith government agencies concerned. Onthe governments side there still remains

I think itll be of more profitable to us and the investing compa-nies working together.I think itll be of more profitable to us and the investing compa-nies working together.

Cover Story


ACUMEN 25

Myint Thein Oo (Shweli)



a lot more to do for the farmers. TheMyanmar farmers association is only arecently formed organization with abouttwo-hundred thousand members of whomonly a few hundreds have so far receivedfarming related training. Useful data andinformation can be effectively disseminatedthrough TV channels. To help relieve thestrain on the farmers family budget loanshould be extended to them at a lowerrate of interest. It s now time the

government started a crop insurancescheme; rice farmers are eagerly waitingfor it.

In Myanmars agriculture specialattention should be paid to internationalstandard research and development forbetter-quality crop and higher yield.International co-operation should besought in this field of R&D.

Anomalies in global climate coupledwith the growing world population in

likely to make agriculture all the moreimportant in future. Now that Myanmaris back in contact with the global market,it can expect more opportunities foreconomic growth, but that can happenonly when it switches over to the modernforming method. At the moment peopleare hoping for changes in Myanmarsagriculture. A

Myint Thein Oo (Shweli)

The interest rate being still so high, farmers do not ever have enough money for the basic needs of theirfamilies much less for recouping paddy planting costs.

Cover Story


adv.pmd 11/22/2013, 4:16 PM11


Feature


Asean Tiger-Jacob.pmd 11/22/2013, 3:52 PM28

ACUMEN 29ACUMEN 29


Cash. Bricks and bags and bucketsof cash. These bills have been thelifeblood of commerce in Myanmarfor decades running. Ask yourself, howunsafe does a country's financial systemhave to be for a business person to preferto stuff their mattress with kyat notes,rather than keeping it in a bank? Such isMyanmar in 2013 - but not for long. Fi-nance in Myanmar is changing faster thanfashion. The last season's options for busi-ness loans and transactions are quicklybeing outshone by this season's line-up.SWIFT, Visa, MasterCard, Western Union,ATMs and mobile phone SIMs. The op-tions for new approaches in transactingyour business dealings are bountiful.

How did we get here? Where will itlead? Advertising a Myanmar gold rush"has a certain feeling of fleeting tran-sienceand snake-oil salesmanship. To be sure,Myanmar has had a few bumps alongthe road in its path to devel-opment".This column is the first in a three-partseries that will introduce readers to thepresent financial context. Too often I en-counter major international investors andcorporate executives who fly into and outof this country without the slightestgrounding in Myanmar's storied financialhistory. For instance, the 2003 bankingcrisis. 10 years is not ancient history but ifyou speak with the portfolio prospectorsand carpetbaggers you might be led tobelieve otherwise. Serious investors oughtto understand why there was a bankingcrisis and what calamities happened asa result. They ought to know what thedemonetizations" were and they shouldbe mindful of the money laundering mala-dies that tarnished the reputations of sev-eral tycoons.

So we begin.Before you think this is just another

business column, you should understandthat finance and private enterprise areabout more than money. Myanmar's long-broken financial system is directly corre-lated with decades of poor economic per-formance and concomitant human mor-bidity. Fixing access to finance in


Myanmar - a process that has been un-derway in various stages since 1988 - isa necessary condition for long-term, sus-tainable economic growth in Myanmar.Recent reforms are immensely encour-aging, but let us first review how we gothere.

Under British rule, Myanmar was asource of raw commodities. Teak, oil,pulses, gems, rice - the British thirst forexports could seemingly not be slaked.As such, all early development" effortswere aimed at improving systems to in-crease the export of those commodities.This had its positives (linkages to foreignmarkets) and its negatives (endemic rac-ism). Scholars will surely argue over thesethings for decades to come. But it is truethat development" as a goal with loftiernotions than merely product exports wasan objective first pursued under U Nu,Burma's first democratically elected prime

minister. Prime Minister U Nu was to bethe only elected leader Myanmar wouldhave until the present era. Under U Nu'sgovernance, prospects for the countryseemed quite bright. Major infrastructuredevelopments were planned and begun.Reconciliation with the ethnic statesseemed possible, for an instant. However,even in the tropics seasons change. Eth-nic chaos crept in, and democracy wasabandoned in favor of unity. General NeWin and his cohort seized power in acoup d'tat in 1962.

I do not want to focus on Ne Win, buthe must be mentioned. His Burmese WayTo Socialism" - an official economic strat-egy which forced the nationalization ofall major industries and financial institu-tions, was an economically ruinous policyof epic proportions. Myanmar went fromamong the wealthiest nations in Asia tothe poorest. In many other contexts, a

Feature

The Myanmar Kyat currency is exchanged forUS dollars in Yangon, Myanmar.


ACUMEN 31

leader like Ne Win would have beenousted by a dissatisfied populace, but whathe lacked in economic acumen he pos-sessed in cruelty and military cunning.All democratic expression was shut-out,even going so far as to dynamite the Stu-dent Union building of the University ofRangoon. The Student Union had been asymbol of free and democratic expres-sion and public gathering. Blowing it upsent a very clear signal that such senti-ments would no longer be tolerated. NeWin held ultimate power in one positionor another until the events of 1988. After1988, General Than Shwe became the newstrongman of Burma, officially rebrandingthe country as Myanmar." (Incidentally,both 'Myanmar' and 'Burma' reference theBamar ethnic group and mean the samething, etymologically land of the swift andstrong ones.")

Despite not being universally loved,

Senior General Than Shwe'sjunta embarked on a shift toindustrial privatiza-tion,opening the country to ma-jor private industry and fi-nance for the first time sincethe early '60s. (Ne Win hadmade some minor moves to-wards privatization, begin-ning in the mid-1970s, butthey were limited in scopeand focused on agriculturalproduction.) So, while thenation was disheartened bythe arrest of Daw Aung SanSuu Kyi and the de-legiti-mization of the elections of1990, some things changed.

The first private banksince 1962 began operatingin 1992. Several othersstarted shortly thereafter,

CB Bank ATM in Yangon, Myanmar



many of them had ownership and invest-ments entangled with newly re-arrang-ing and forming military conglomerates.For a few years it seemed as thoughMyanmar might be able to emulate whatwas happening in Vietnam during thesame time period. Vietnam had also shedits socialist mantle and embraced marketreforms under its doi moi approach. In-ternational interest in the region was high,but the legal and regulatory environmentwas far from clear in Myanmar. Invest-ments flowed into other Southeast Asiannations where the frameworks and fu-ture seemed a bit more defined.

Nevertheless, domestic entrepreneursdid not need to wait for international in-vestors to pursue the opportunities theywere seeing right in front of them. In thisnewly loosened market economy, busi-ness opportunities proliferated. Construc-tion boomed. Private banks blossomed(too much of that blossoming coincidedwith the blossoming of poppies in ShanState). Loans were granted - a lot of loans,in fact. Far too many. There was a loanscrisis in 1996 that provoked the currentrigid regulations on loans to SMEs. Dur-ing the '96 loans crisis, non-performingloans reached as high as 50 per cent Allthat irrational exuberance produced aregulatory backlash that explains theplight of SMEs to obtain loans in the cur-rent environment.

The loans crisis aside, public appe-tite for financial products still could not be

Those who think that ATMs only justmade it to Myanmar might be surprisedto learn that Mayflower Bank launchedMyanmar's first ATM in 1997.Yes, 1997.

Feature


ACUMEN 33

met by the fledgling banks on the '90s.Entities referred to as general servicecompanies" (GSCs) arose and began craft-ing Ponzi-esque schemes. The (GSCs)were creatures of Myanmar's restrictedfinancial environment in the late'90s andearly '00s. They were not actual, regis-tered banks and they flaunted the lawsgoverning financial institutions, despite ef-fectively providing money lending servicessimilar to banks. You could buy shares"and received guaranteed dividends. Itseemed too good to be true. It was toogood to be true.

Around this same time, those intrepidinternational corporates who had movedinto Myanmar in the early '90s - Pepsi,Standard Chartered, Levi-Strauss, etc. -all had to pull back out. Starting around1997, the United States, Europe and Ja-pan began to target increasingly restric-tive sanctions against the junta and itsaffiliates. This had the effect of chokingthe brief, nascent economic growth thecountry had experienced during the pre-vious handful of years. Undeterred, Chi-nese and Thai businessmen were all tohappy to fill that economic vacuum andkept some of the foreign investment mo-mentum going.

Those who think that ATMs only justmade it to Myanmar might be surprisedto learn that Mayflower Bank launchedMyanmar's first ATM in 1997. Yes, 1997.Asia Wealth Bank (AWB) was evenworking on developing inter-net bank-ing around the same time. It was all verypromising. What happened? Just as thefuture of banking in Myanmar seemed tobe heading into exciting new frontiers,the entire industry realized it was builton pillars of sand.

So what happened in 2003? Like anygood banking crisis, rumors played amajor role in provoking a bank run. Sev-eral of the GSCs went bankrupt. The col-lapse of the GSCs began in 2002 andshook public confidence in Myanmar's fi-nancial sector. In a country with decadesof financial instability behind it, rumorsthat the current boom was a fiction were

all too easy tobelieve. Rumorsspread in early2003 that therewas a crisis atAWB, Myan-mar's largestprivate bank atthe time. As ear-ly as February6, 2003, longqueues wereforming towithdraw de-posits. The gov-ernment beganissuing officialstatements onFebruary 9aimed at restor-

ing confidenceby remindingdepositors thatAWB operatesunder the su-pervision of theGovernment ofMyanmar andits Central Bank- such state-ments did notrestore confi-dence. Thebank run continued and spread to otherbanks. Limits on maximum weekly with-drawals were soon initiated, followed bymore stringent limits. By February 24, themaximum weekly withdrawal amountwas equivalent to about $100. The Cen-tral Bank provided some liquidity assis-tance for banks suffering from the crisis,but orders were also given for loan termsto be immediately redrawn. In many cas-es, borrowers were required to repay 20to 50 percent of the amount of loans re-ceived before the end of March.

It would take a full year before bankswould return to normal operations. How-ever, the regulatory backlash to the crisiswas severe. The capital adequacy ratiowas replaced by an equity to deposit"

regulation requiring banks to restrict de-posits to no more the 7-times the bank'spaid-up capital. Also, the main crisis-af-fected banks of AWB, Mayflower Bankand Universal Bank ultimately did not sur-vive. Money laundering allegations shut-tered whatever chance they might havehad at resurgence. KBZ, Ayeyarwady,AGDB and CB rose from the ashes to be-come the new dominant players inMyanmar's private banking sector.

Check out part two of this series inthe next issue of Acumen where we willexamine the current players and forcesin Myanmar's increasingly dynamic finan-cial environment - from microfinance toretail banks to investment funds.. A


34 ACUMEN w w w. my a n m a r b 2 b m a g a z i n e. c o m December 201334 ACUMEN w w w. my a n m a r b 2 b m a g a z i n e. c o m December 2013

Feature

Gas Pie Story.pmd 11/22/2013, 3:57 PM34

ACUMEN 35ACUMEN 35



As China has started enjoying natural gasfrom Rakhine State being sent via the gaspipeline that had been constructed forthree years, lives of residents along thepipeline have changed.A farmer who had been working on tenacres of farmland in Kho-mone Village ofKyaukme District in North Shan State wasable to send his children to school whilehe grew his farmland four years ago.

But now he is concerned about hisuncertain future following the pipelineconstruction.

He received K1 million for two-acreland as a compensation for having to letthe pipelines cross on his farmland. Buthe said it's unfair to be given just a com-pensation of K1 million as the soil in hisfarmland was severely damaged by thepipelines.He can earn the amount he received in ayear growing crops on two-acre farmlandwhere the pipelines have been placed intrenches.

That fertile soil has been damagedso much so that it can no longer be usedas farmland. He can earn about K800,000every year if crops are grown in this soil.But now he has lost his annual incomefrom crops as the soil were damaged.

Soil damage has reduced my fam-ily income directly. Besides, there are nobig trees in our surroundings as theywere cut down owing to the pipelineproject. The deforestation due to the pipe-line has impacted hugely to the environ-ment. As a result, weather conditions areunfavourable for agriculture that we de-pend on," the farmer said.

He has no idea how to make a liv-ing for his family in the coming years dueto soil damage even though it has beensaid he has received K1 million as a com-pensation for two acres, he continued.

As the reserve forest, farmlands andthe orchards have been removed in 21townships along the pipelines fromRakhine State to the border betweenMyanmar and China, perennials cannotbe grown any more in the damaged soilwhere the pipelines have been placed in

trenches.Although the Chinese firm has pro-

vided compensation money to the affectedlocals living along the pipelines, they arefacing difficulty in growing crops and itwill have to take about 50 years to re-cover from the damaged soil, said a farmerfrom Kho-mone Village of Kyaukme Dis-trict.

Perennial crops can't be grown inthe pipeline areas. As they [the Chinesecompany] have dug trenches to place thepipelines, soil were damaged. Now I can'tgrow crops in the right season and I can'tafford to do anything since land repaircosts too much in terms of money as wellas time. I think I can grow crops onlyafter recovering from the damaged soil,"said U Myint Han, a farmer of Kho-moneVillage.

In addition to many hardships bornof inability to grow crops on account ofthe damaged soil, communities along theroute of the pipelines are suffering fromunfair compensation for farmland dam-age, environmental impact and irrespon-sible attitude towards potential explosionsand leakages, said a resident of Mandalay.

We have difficulty in making a liv-ing. We can't grow crops and besides wehave not received a decent compensa-tion for our damaged farmland. We havereported on our hardships not only to theChinese firm but also to the local authori-ties. However, none of them has givenmuch attention for the grievances," heexplained.

It is reported that Shwe Gas Pipe-line was constructed in 2009 after sign-ing MOU as a joint venture betweenMyanmar Oil and Gas Enterprise underthe Ministry of Energy and China NationalPetroleum Corporation (CNPC), the Chi-nese state-run firm and completed in June2013, crossing through 800 kilometerswithin Rakhine State, Magway Region,Mandalay Region and Shan State and 12billion cubic meters of natural gas per yearwill be transported from Kyaukphyu ofRakhine State to Kunming, the capital cityof Yunnan Province in China.

Many farm-lands, orchids,mangroves and for-ests in Kapaing Vil-lage, LakekhamawVillage and Lar-akyun Village inKyaukphyu Town-ship and four vil-lages of Taung-philar Village Tractin Ann Townshipand Rakhine Statehave been affectedby placing thepipelines, accord-ing to somes envi-ronmentalists.We've found thatmany acres of man-grove have beendestroyed by theKyaukphyu-Kun-ming natural gaspipeline. No re-placement hasbeen found so far.And some of theforests on the Yomountain range inAnn Townshipalong the pipelinehave severely beendamaged. As thecompany's heavybulldozers havemoved the earth on the mountain to placethe pipelines, many forests have beendestroyed. Such environmental damagehas affected local residents depending onenvironment to make a living," said UMaung Maung Thein Pe, chair of Yetkh-ita Environmental Conservation Associa-tion.

The company in collaboration withthe government has confiscated farmlandson the grounds of the pipeline projectsand they have made local residents re-ceive unfair compensation for losing farm-lands. Everyone knows whether it is fairto do so or not. We've not known whether


Feature


ACUMEN 37

or not the authorities concerned haveaccepted bribes there. But it's no need tosay how the persons concerned havebecome prosperous although local peopleturned into farmers without farmlandbecause of the pipeline projects. We'd liketo request not only the authorities con-cerned but also domestic companies andforeign firms not to confiscate farmlandsas there are plans to build industrial zonesand now towns. We willingly welcomethe projects for local development," saidU Tun Lwin, chairman of the Committeeof Watch Group for the Natural Gas Pipe-line in Kyaukphyu.Shwe Gas Pipeline Project will likely pro-

vide Myanmar with about US$ 1.8 billion,the first $900 million of which comes fromthe gas pipeline and the other $900mil-lion from the crude oil pipeline per yearand accordingly, Myanmar will earn $29billion by thirty-year delivery of naturalgas from Rakhine offshore's Shwe GasProject, according to figure released byShwe Gas Movement, a civil society group.

Natural resources should be utilizedas tools for immediate development ofhuman resources and the government canuse those earnings from the gas pipelineprojects for national development process,said Dr Nay Zin Latt, an advisor of Presi-dent U Thein Sein.

Well, let's think about how long itwill take to conduct capacity building fora soul. If one wants to earn a doctorate,one needs to have passed the tenth stan-dard first and go on trying to get a de-gree and work hard to gain a masterdegree and then finally one has to try toachieve PhD. How long will it take to passthis process? Of course, one has to spendmany times on passing it. Had we lookedon such process without utilizing naturalresources as tools for human resource de-velopment, we would have wasted somany times. That's why we need not onlyextract natural resources but also to buildup human capacity at the same time," he

ACUMEN 37



explained.In addition, the prices of land plots

along the Mandalay-Muse highway havedramatically gone up, according to mainreal estate agents in North Shan State.

Land has been in demand as soonas the pipeline project commences. Buy-ers offered exorbitant prices we've neverheard for the land plots. Farmers havewillingly sold their land because of goodprice. Now they want to buy those landplots back, they can't afford," said a prop-erty agent of Kyaukme.

The prices of land plots along the

Mandalay-Lashio highway that have in-creased about five of six times since thestart of the pipeline project in 2008-2009have reached more than two figure mil-lion per land plot in 2011-2012, real es-tate agents say.Land prices have risen not only alongthe Mandalay-Muse highway but alsoaround the border area close to China,said a real estate agent in Muse.

Chinese buyers come here to pur-chase land plots and they offer pricesranging from two figure million up tothree figure million for them," he said.

Although local residents are delighted

that they [the Chinese company] havesupported in education and health sec-tors for the rural areas along the route ofthe pipelines, the affected locals along theroute of the pipelines have been facingdifficulty in making a living as they havenot given aids in economic sector for them,said U Myint Han, an affected farmer inKyaukme District.

They have provided us with schoolbuildings and health care centers in somerural areas, but have not supported eco-nomic development here," he said.

It is said that local residents areworried about po-tential hazards inthe future becauseforeign-based ShweGas Movement, acivil society organi-zation pointed outthat the Chinesecompany dugtrenches only abouttwo meters deep in21 townships alongthe route claiming itwas deep enough tobe safe instead ofdigging them fivemeters deep re-quired under inter-national standards.

C h i n e s estate-run media saythat Chinese people

are enjoying full energy through gastransported on the gas pipeline fromKyaukphyu of Rakhine State while localresidents in Rakhine State western partof Myanmar are calling for adequate elec-tricity power.

Chinese communities in many townsincluding Kunming in Yunnan are pro-vided with electric power generated bygas transported on the gas pipeline fromKyaukphyu.

They (the authorities concerned andthe Chinese company) promised us to pro-vide 20 per cent of 200 million cubic feetearmarked for Myanmar. So far, we don't

have electric power. We've known nei-ther when the gas turbines will arrivehere nor how gas will be allocated to thecompany and local residents. That localsin Kyaukphyu enjoy electricity paying K35per kilowatt-hour means the first kilowatt-hour not all. Locals have to pay K460 theremaining kilowatt-hours. I think 20 percent will be mostly used for special eco-nomic zone in Kyaukphyu," said a resi-dent from Kyaukphyu.

Kyaukphyu's local residents are stilldepending on the electric power gener-ated by diesel engines paying K450 perkilowatt-hour and have not heard thatcharges for electricity will be reduced, hesaid.

Although natural resources such asoil and natural gas have been extractedby the governments along the history to

sell them to the neighbouring countries,they are not able to fulfill the needs ofelectricity for local residents in RakhineState, said another resident in Kyaukphyu.

We have to give a lot from our state,but we've got only a little back. Local peoplealong the route of the pipelines not onlyin Rakhine State but also in central partof Myanmar and Shan State have manydifficulties due to the pipelines. We haveprotested against the pipeline projectssince the start of the projects because thecompany has failed to have transparencyand to give proper compensation for thefarmlands along the pipelines," he said.

Gas delivery has been launched inAugust 2013 via the gas pipeline fromMyanmar to China and some of gas fromsub-terminals that have been installed inKyaukphyu of Rakhine State,Yenangyaung of Magway Region,Taungtha of Mandalay will be used forlocal residents living in those townships,according to the government.

Gas will be shared with local peoplein some townships along the route of thepipelines and 20 million cubic feet forKyaukphyu Township, 23 million cubicfeet for Yenangyaung Township and 75million for Taungtha Township will beused, according to the government. A

Feature


adv.pmd 11/22/2013, 4:17 PM11


Feature


Are car Story.pmd 11/22/2013, 3:50 PM40

ACUMEN 41ACUMEN 41


U Yin Maung, about 45, is disappointed tosee a long queue of vehicles under theHledan flyover and he think he will haveto spend about half hour to pass throughthe Hledan stoplight due to such trafficjam.

He could go to his off ice inShwegondai Tower located inShwegondai Township from KamaryutTownship where he live in about 20 min-utes before and but he have to lose nearlyone hour or more than 40 minutes to goto his office on such occasion when manyroads are heavily congested, he groanedwith disappointment.

There is increasing of new modelcars day by day. We have to spend toomuch times on the road because of muchtraffic congestion. It is no longer easy forus to go by car to one place to another,"he added.

Before 2011, there were a few peoplewho could have own cars in Myanmarbecause vehicles worth around K100 mil-lion each were beyond the reach of ordi-nary people and however, the car mar-ket nearly dead has changed owing tothe government's release of policy on carimportation in September 2011 after UThein Sein government has taken power.Despite such a release of car importationduring 2011, the prices of vehicles arestill high in comparison with those in glo-bal car market, analysts point out.

No matter how some people criticize,the prices of Toyota Caldinas have dra-matically slumped from around K90 mil-lion - K1 billion before up to around K20million after releasing policies on car im-portation, the market sources say.

If you came to see Hanthawaddy CarTrading Compound several years ago, youmight found dealings in cars were de-pressed. It was not easy to sell even acar at that time. If one broker had sold acar, he enjoyed much brokerage. He wasso happy as if he won the government'slottery," said Ko Zaw, an veteran brokerwho has had a 20-year experience in cardealings.

As almost everybody can import au-tomobiles at present, those who want to


import new model cars have more op-portunities now than the previous years,said U Zaw Moe Kyaw, a car dealer.

Having seen the arrivals of tens ofthousands of imported cars after releas-ing policies on car importation, he is think-ing of venturing into car importation of-fering a Japan motorcar company to co-operate with him in doing so, he said.

I've offered a Japan company formaking a joint venture in importing carsmade in Japan and it is too early to re-veal the name of Japan Car Company. Iintend to open showrooms in bothYangon and Mandalay. Besides, I wantto run car service centers that can offerthe best service, but I can't find the suit-able places yet as there are many carshowrooms that have already opened inmany strategic points around Yangon.Japanese businessman fears whether ourbusiness is OK because of high prices ofland rental here," he added.

In spite of unprecedented range ofnew model vehicles flooding into thecountry, there need still many car ser-vice center that can offer ex-cellent service for thosenew model automo-biles imported andhe has thus de-cided to setup thecar ser-

vice centers in association with Japaneseexperts, he said.The majority of imported cars inMyanmar are Probox, AD Van andHonda Fit, all of which are worth aroundK10 million, say the sources of car im-porters.

Myanmar government has earnednearly K500 billion of revenues from morethan 153,000 cars that have been im-ported within 18 months between 25 Oc-tober 2011 and 6 April 2013, according toannouncement of Customs Department.

However, there are many unlicensedvehicles that are being smuggled into thecountry from the border areas and thoseunlicensed cars can hurt the domestic carmarket, car dealers say.

Some smugglers import vehiclesthrough the illegal routes and thenthey plot to get licenses fortheir smuggled automo-biles. The ar-

Feature


rivals of many unlicensed cars harm allof us, car importers, dealers and brokerslegally doing business," said U Zaw MoeKyaw.

Some of the foreign companies thatare interested in investing in car busi-ness come to take the entry of unlicensedvehicles smuggled from the border areasinto the country into consideration, he said.

Japan companies have been think-ing of investing in Myanmar since 2011.Having seen unlicensed cars entering thedomestic market, some of them hesitateto do so," he added.The majority of those unlicensed automo-biles may

ACUMEN 43

come from China and they are beingsmuggled through the illegal inland routesinto the country, said a man of MotorcarsImporters & Sellers Association.

It is reported that action is takenagainst both those who have smuggledunlicensed cars into the country and thosewho have issued fake licenses for thesmuggled cars by the government depart-ments such as Road Transport Adminis-tration Department and Directorate ofTrade.It is heard that as the import of the partlydamaged cars can hurt not only the do-

mestic car market but also the

state's revenues, the companies that havebroken the rules and regulations such asOn Time Authorized Agency, Cherry Cus-toms Clearing Agency, Grade One Import& Export Agency, Safe Mover Import &Export Agency and Alliance Freight For-warding Agency.

Punishment is putting a ban on theimport of cars just for one year. Lawbreak-ers do not care such kind of punishment.If their names are banned to import ve-hicles, the other names can be used forimporting cars. Those lawbreakers shouldbe severely punished," said Ko Nyan LinAung from Farmer Auto Car Showroom.

In the market, there is a wideninggap of prices between the legally

imported automobiles andthe partly damaged

vehicles im-p o r t e d



breaking the rules and regulations andunlicensed cars smuggled through the il-legal inland routes and although a legallyimported Land Cruiser sells for aroundK50 million, the same type of that car in-cluded in the kind of the latter is sold forjust around K7 million, it is said.

Motorcar licenses are issued for thoseunlicensed vehicles in the branches ofRoad Transport Administration Depart-ment in each of States and Regions andsuch measures encourages the lawbreak-ers who have been smuggling unlicensedcars, the market sources say.

On the other hand, a person whowants to import a car need to submit alegal document known as slip stating thatthe car is being imported to replace aformer one and as such a slip costsaround K12 million in the market, it ishard for a person without an old car or aslip to import a car through the legal chan-nel, the car dealer sources say.

Road Transport Administration De-partment has announced that it receivesold cars for substitution scheme depend-ing on serial alphabets in Myanmar thatit has issued so far, it will receive them

both Myingyan and Insein. The old carsare so much that they cannot be put intothe blasting furnaces," said a high rank-ing official of Road Transport Adminis-tration Department in Myinthar.

Road Transport Administration De-partment has received US$97.35 of reg-istration fees for issuing licenses for 27,971cars from the time of permit to importcars up to 14 June 2012, according toannouncement of Ministry of RailwaysTransportation.

The prices of cars in the market inMyanmar are 15 percent to 30 percenthigher than those all over the world, ana-lysts on the car markets say.

The car ownership condition hasincreased from two persons in one thou-sand people before 2010 to twenty in onethousand in 2013, point out CIA WorldFact Book, a watching website posted byCIA.

Accordingly, opportunities concern-ing rules and regulations imposed for carimporters and car prices may meet theinternational standards, say the sourcesof analysts on the car markets. A

relying on span of cars from the start 2014instead of serial alphabets.

There are few old cars here. Thenhow do they [the authorities concerned]go on? They should practice the systemas some foreign countries do. No slip isneeded to import cars there. They im-pose tariff and other taxes on vehiclesdepending on type of car, manufactureddate and model. If this system is adoptedin our country, there will not be partlydamaged cars and unlicensed carssmuggled in the market," said Ko Kyargyi,a broker of Yangon.

The figures of Customs Departmentare quoted as saying that among the im-ported cars, 90 percent is imported forhousehold use, 1.5 percent for buses andcoaches and 10 percent for trucks say thesources of Motorcars Importers & SellersAssociation.

No matter how much we do, ourgovernment departments are alwaysblamed for something. They say we de-lay receiving old cars. I want them to comeand see here. There are rarely spaceswhere so many old vehicles are placedin the compound of blasting furnaces in

Feature


adv.pmd 11/22/2013, 4:18 PM11


Interview

First, could you please tell me how you started andFirst, could you please tell me how you started andFirst, could you please tell me how you started andFirst, could you please tell me how you started andFirst, could you please tell me how you started and

what you are doing now?what you are doing now?what you are doing now?what you are doing now?what you are doing now?I noticed the coffee plants when I went to Pyin Oo Lwin

and Thipaw as a tour guide many years ago. I went to Francein 2001 and soon afterwards, I got a job in a French chocolatecompany. The company wanted other products that are simi-lar to their existing one. As chocolate and coffee are related, I

told them quality coffee is available in Myanmar. I can say thisis the start of Ananda Coffee in Myanmar. Then I started thebusiness of buying coffee beans from Pyin Oo Lwin through theMinistry of Agriculture and Irrigation. What we are doing nowis producing coffee by growing it by ourselves. We also buycoffee from the farmers if required. We process it by ourselves.We grow cocoa and produce chocolate first in Myanmar. We

The custom of coffee drinking has become deeply-rooted in the world and

Myanmar is no exception. Coffee market has grown rapidly with people's lifestyle

changing towards more international tastes in this country with changing economic

systems. Although Myanmar has favourable land, water and climate for coffee

plants, the area under coffee is still low which means there are opportunities for

those who want to grow coffee. Daw Soe Amy Kyaw, Managing Director of

Ananda Coffee Production and Distribution Company shares her experiences

with the ACUMEN which would be of benefit to those who are interested to

grow coffee.


Anada or A coffee which reaches france.pmd 11/22/2013, 3:48 PM46

ACUMEN 47

have opened a coffee shop called Ananda Coffee Shop'. It's ourpresent business.

When you did it , the government made connectionsWhen you did it , the government made connectionsWhen you did it , the government made connectionsWhen you did it , the government made connectionsWhen you did it , the government made connections

between you and French and European businessper-between you and French and European businessper-between you and French and European businessper-between you and French and European businessper-between you and French and European businessper-

sons, didn't it? Were you successful then?sons, didn't it? Were you successful then?sons, didn't it? Were you successful then?sons, didn't it? Were you successful then?sons, didn't it? Were you successful then?We were very successful. The government gave a lot of

supports.

We find the coffee shop in the pamphlet too. It isWe find the coffee shop in the pamphlet too. It isWe find the coffee shop in the pamphlet too. It isWe find the coffee shop in the pamphlet too. It isWe find the coffee shop in the pamphlet too. It is

mentioned as No.1 in France since 1999' .Then howmentioned as No.1 in France since 1999' .Then howmentioned as No.1 in France since 1999' .Then howmentioned as No.1 in France since 1999' .Then howmentioned as No.1 in France since 1999' .Then how

much coffee did they accept?much coffee did they accept?much coffee did they accept?much coffee did they accept?much coffee did they accept?European magazines wrote cover stories about our

coffee at that time. And our Myanmar coffee was awarded aprize as the sixth in the top ten coffees of the world. We metwith both radio and television for coverage of our success incoffee business. The media said they recorded it in their historyfor getting pure coffee from Myanmar. It all happened in France.

I've heard Ananda reaches even firms like Starbucks.I've heard Ananda reaches even firms like Starbucks.I've heard Ananda reaches even firms like Starbucks.I've heard Ananda reaches even firms like Starbucks.I've heard Ananda reaches even firms like Starbucks.

So could you please tell me about it?So could you please tell me about it?So could you please tell me about it?So could you please tell me about it?So could you please tell me about it?We distributed Myanmar coffee to European countries such

as France and Germany before sanctions were imposed. Wedistributed coffee to America through a friend of ours as hewanted it. That's why it reached Starbuck.

What happened to your market after the sanctions? IWhat happened to your market after the sanctions? IWhat happened to your market after the sanctions? IWhat happened to your market after the sanctions? IWhat happened to your market after the sanctions? I

think many changes took place.think many changes took place.think many changes took place.think many changes took place.think many changes took place.Of course, there were many changes. We also lost a great

deal. We lost all our customers. But the one that stood firmlybeside us was Cafe Buddy which runs coffee bars which arethe oldest and the best in the world. It is in Rue Satonore inParis in France. It has joined hands with us undauntedly dis-regarding sanctions. It was very satisfying.

How are you distributing in the local market?How are you distributing in the local market?How are you distributing in the local market?How are you distributing in the local market?How are you distributing in the local market?Regarding local markets, we are mainly distributing only

to such high level markets as hotels, international restaurants,coffee bars and well-known super markets.

Coffee mix has a market here as many people beginCoffee mix has a market here as many people beginCoffee mix has a market here as many people beginCoffee mix has a market here as many people beginCoffee mix has a market here as many people begin

to drink i t . There are also a variety of local andto drink i t . There are also a variety of local andto drink i t . There are also a variety of local andto drink i t . There are also a variety of local andto drink i t . There are also a variety of local and

foreign brands. Then don't you have difficulties whenforeign brands. Then don't you have difficulties whenforeign brands. Then don't you have difficulties whenforeign brands. Then don't you have difficulties whenforeign brands. Then don't you have difficulties when

you produce only pure coffee mainly targeting onlyyou produce only pure coffee mainly targeting onlyyou produce only pure coffee mainly targeting onlyyou produce only pure coffee mainly targeting onlyyou produce only pure coffee mainly targeting only

high level markets without producing coffee mix?high level markets without producing coffee mix?high level markets without producing coffee mix?high level markets without producing coffee mix?high level markets without producing coffee mix?Our line of business is only pure coffee of Myanmar. As it is

coffee mix, it is different from production of pure coffee. Wedon't try to enter that market as it is a different line. Our mis-sion and vision are very different from theirs.

What kinds of competition are there in the pure cof-What kinds of competition are there in the pure cof-What kinds of competition are there in the pure cof-What kinds of competition are there in the pure cof-What kinds of competition are there in the pure cof-

fee market now?fee market now?fee market now?fee market now?fee market now?Of course, there is competition there. In some places, cus-

tomers are taken by someone at a time and then taken byanother later alternatively. One has to struggle for oneself asthere is competition. One of our advantages is that our businessfocuses more on quality than on quantity. These high level mar-kets like only our coffee. Tourism industry is now open. Asforeigners have coffee drinking culture, they like to drink onlypure coffee.

As local production is small , how about the marketAs local production is small , how about the marketAs local production is small , how about the marketAs local production is small , how about the marketAs local production is small , how about the market

penetration of foreign products or brands?penetration of foreign products or brands?penetration of foreign products or brands?penetration of foreign products or brands?penetration of foreign products or brands?There are imports. How did they enter? They provided

coffee machines. When there were sanctions previously, exportwas difficult. We ourselves provided coffee machines. We hadto face many problems including the machines that broke down.So we stopped giving machines and ran by controlling qualityand service. Now we often find foreign companies using ourpolicy. We often hear or notice how much coffee they have tobuy and how many machines they have to provide when theybuy coffee. It is also heard some have stopped doing it. It's thepolicy we followed.

ACUMEN 47



Regarding quality, things are really going towards aRegarding quality, things are really going towards aRegarding quality, things are really going towards aRegarding quality, things are really going towards aRegarding quality, things are really going towards a

high level. Exportation is also being carried out. Whathigh level. Exportation is also being carried out. Whathigh level. Exportation is also being carried out. Whathigh level. Exportation is also being carried out. Whathigh level. Exportation is also being carried out. What

are the important things regarding quality?are the important things regarding quality?are the important things regarding quality?are the important things regarding quality?are the important things regarding quality?When coffee is grown, it should be classified. The names of

two kinds of coffee are Arabica and Robusta. The next to themis Cartimore. Arabica is popular all over the world. Especiallyforeigners like it very much. Its taste is also very good. Robustacomes second. It's very rich in caffeine. It is better to produceespresso by combining Robusta and Arabica. Arabica is harm-less whatever amount it is drunk. So we mainly grow Arabica.We also planted shade trees among the coffee trees systemati-cally. In plucking, we have to pluck only cherry red fruits. Thequality begins there. If the plucked fruits don't meet the re-quired quality, it affects the quality of the product. To get therequired quality, great care must be taken in plucking the fruits.Other green and yellow fruits must not be plucked together.And only when drying process is performed step by step sys-tematically, will we get coffee product of required quality. Greatcare must be taken when plucking is done. Storing of fruits alsoneed to be systematic. We have to store raw coffee beans if wewant to distribute them fresh to the customers. For the localmarket, we have to roast them depending on the order. But weexport only raw coffee beans. We control the quality in this way.

We have the knowledge that production of AnandaWe have the knowledge that production of AnandaWe have the knowledge that production of AnandaWe have the knowledge that production of AnandaWe have the knowledge that production of Ananda

coffee is a dry process. Could you please explain acoffee is a dry process. Could you please explain acoffee is a dry process. Could you please explain acoffee is a dry process. Could you please explain acoffee is a dry process. Could you please explain a

little about that process?little about that process?little about that process?little about that process?little about that process?In a wet process, wet beans are crushed after harvest.

After being crushed, they are fermented until all the mucus onthe surface is cleared. Then they are washed again with waterand dried. When the cover of the beans changes into silvercolour, we can start using the coffee. We carry out stripping theraw coffee beans by the machine, stripping them one by onewith hands and peeling them until the colour of jade appears.

As you not only grow coffee but also buy it from theAs you not only grow coffee but also buy it from theAs you not only grow coffee but also buy it from theAs you not only grow coffee but also buy it from theAs you not only grow coffee but also buy it from the

farmers, what are the differences in terms of profitfarmers, what are the differences in terms of profitfarmers, what are the differences in terms of profitfarmers, what are the differences in terms of profitfarmers, what are the differences in terms of profit

and quality?and quality?and quality?and quality?and quality?In self-planting we can choose the variety and quality of

coffee for the convenience of all. We have chances to give sys-tematic treatment. In plucking the fruits, we can tell our work-ers to do systematically in the type we like, using the formulawe like. It's one of the points. Then in drying too, we can do stepby step systematically by the process we are accomplished at.That's why we get the benefit of very good quality. If we buy coffeefrom the farmers, we give them methods. We share them withthem. We buy coffee with care from the farmers who grow it by

Daw Soe Amy KyawManaging DirectorAnanda Coffee Productionand Distribution Co., Ltd.

Daw Soe Amy KyawManaging DirectorAnanda Coffee Productionand Distribution Co., Ltd.

Interview


ACUMEN 49

the methods we give to them. And we do processing ourselves.

What is the area of Myanmar's cof fee plantat ion?What is the area of Myanmar's cof fee plantat ion?What is the area of Myanmar's cof fee plantat ion?What is the area of Myanmar's cof fee plantat ion?What is the area of Myanmar's cof fee plantat ion?

How many businesspersons are mainly taking partHow many businesspersons are mainly taking partHow many businesspersons are mainly taking partHow many businesspersons are mainly taking partHow many businesspersons are mainly taking part

in coffee growing? And in which regions coffee isin coffee growing? And in which regions coffee isin coffee growing? And in which regions coffee isin coffee growing? And in which regions coffee isin coffee growing? And in which regions coffee is

mainly grown? Could you please tell me a little aboutmainly grown? Could you please tell me a little aboutmainly grown? Could you please tell me a little aboutmainly grown? Could you please tell me a little aboutmainly grown? Could you please tell me a little about

it?it?it?it?it?In Myanmar, coffee can be grown in Pyin Oo Lwin,

Naungcho, Taunggyi and Thantaung. Robusta is grown on alarge scale in Thantaung. But it is not very widely known. Ma-jor plantations are in Pyin Oo Lwin and Naungcho. The num-ber of farmers who grow more than ten acres is around 80.There are also farmers who grow coffee on their own farm ona manageable scale. Present total coffee plantation area is about18,000 acres. The number of acres where fruits can actually beplucked is only about 5,400 acres. It's still a small number.

What are the altitude and the temperature best forWhat are the altitude and the temperature best forWhat are the altitude and the temperature best forWhat are the altitude and the temperature best forWhat are the altitude and the temperature best for

growing coffee?growing coffee?growing coffee?growing coffee?growing coffee?More than 3,000 feet above sea level is the best.

I t is heard that there are disputes between coffeeIt is heard that there are disputes between coffeeIt is heard that there are disputes between coffeeIt is heard that there are disputes between coffeeIt is heard that there are disputes between coffee

growing businesspersons and local people on landgrowing businesspersons and local people on landgrowing businesspersons and local people on landgrowing businesspersons and local people on landgrowing businesspersons and local people on land

ownership. There are also notifications urging thoseownership. There are also notifications urging thoseownership. There are also notifications urging thoseownership. There are also notifications urging thoseownership. There are also notifications urging those

who have reclaimed land for coffee plantation to growwho have reclaimed land for coffee plantation to growwho have reclaimed land for coffee plantation to growwho have reclaimed land for coffee plantation to growwho have reclaimed land for coffee plantation to grow

coffee in time in 2014. Could you please discuss thesecoffee in time in 2014. Could you please discuss thesecoffee in time in 2014. Could you please discuss thesecoffee in time in 2014. Could you please discuss thesecoffee in time in 2014. Could you please discuss these

problems a little?problems a little?problems a little?problems a little?problems a little?It started with a plan of the State to reclaim 100,000 acres

of land to grow coffee. As I was distributing Myanmar coffeewith Ananda brand at that time, departmental officials urgedme to take some land and grow coffee. They also provided mewith necessary assistance. They also held meetings in a largescale and invited people who wanted to grow coffee to come. Istill remember a lot of people who wanted to grow coffee at-tended the meetings at the Ministry of Agriculture and Irriga-tion in Yangon. One of the questions the participants of themeeting raised was whether ownership of the land was guar-anteed if they went there. The businesspersons had concernsabout making investments in distant places. The plots of landwere those reclaimed from uncultivated virgin land. As the or-der to grow 100,000 acres of coffee had been issued and theyalso guaranteed the ownership, we started the business. Whenwe actually went there, we had to reclaim the land ourselvesby actually clearing the forests together with other fellow farm-ers. We had to build roads by pooling our own money. Wehad to work holding mattocks and investing huge amounts of



money in the desolate places. Then when coffee was grown,shade trees were put in. We had to take about three years tocultivate such shade trees. Only then we were able to growcoffee plants. As we also had to wait for the growth of coffeeplants for three or four years, it took about seven years toreach the stage of coffee production. There were also somedifficulties caused by the land. We had to plant shade treesagain and again when they die. Coffee plants also died and wehad to substitute them too. It took a very long time. There arefarmers who discarded infertile land and made planting onlyon fertile land. About two years ago after passing a decade,some people who we didn't recognized came with one or twolocal villagers and claimed the land telling us to leave. Whenwe first went there a decade ago, we went with doubts as towhether there was real security for us and whether the landwas really fertile there. At that time, departmental personnelthemselves came to the field and showed us the maps. Wecarried out the farming only after obtaining documents madeby village authorities and native farmers from nearby villagesthat the land was really virgin and uncultivated. Land owner-ship problems of today sound like a popular style. I think they

think they will get something whenever they claim somethingby giving some reason.

Then are there protection and settlements providedThen are there protection and settlements providedThen are there protection and settlements providedThen are there protection and settlements providedThen are there protection and settlements provided

and made by the departments?and made by the departments?and made by the departments?and made by the departments?and made by the departments? There are neither protection nor settlements that theyhave provided or made. We have to pay attention to our self-protection and to settle disputes in accordance with the laws.We are poised to solve the problems ourselves as nobody takesresponsibility. At last we are in a situation where all are grow-ing the plants in competition with others.

I f we are compared to the countries in the regionIf we are compared to the countries in the regionIf we are compared to the countries in the regionIf we are compared to the countries in the regionIf we are compared to the countries in the region

particularly ASEAN countries, what is the position ofparticularly ASEAN countries, what is the position ofparticularly ASEAN countries, what is the position ofparticularly ASEAN countries, what is the position ofparticularly ASEAN countries, what is the position of

coffee planting of our country? In which countriescoffee planting of our country? In which countriescoffee planting of our country? In which countriescoffee planting of our country? In which countriescoffee planting of our country? In which countries

coffee is grown most? What is our posit ion in thecoffee is grown most? What is our posit ion in thecoffee is grown most? What is our posit ion in thecoffee is grown most? What is our posit ion in thecoffee is grown most? What is our posit ion in the

competition with them? Could you please tell me aboutcompetition with them? Could you please tell me aboutcompetition with them? Could you please tell me aboutcompetition with them? Could you please tell me aboutcompetition with them? Could you please tell me about

it?it?it?it?it?Vietnam produces coffee most. The kind of coffee they pro-

duce is Robusta. It is available at a cheap price but the taste isnot very good. The quality of Indonesian coffee is good but it is

Interview


ACUMEN 51

sometimes banned as it is suspected of carrying bacteria orviruses. The quality of Myanmar coffee is good but the volume ofproduction is still very small. It is not widely known in theASEAN region and in the world. So our Ananda Coffee is mak-ing efforts by giving more priority to quality than to quantity. Weare also working hard to promote Myanmar coffee.

Next, as you are producing chocolate, are you happyNext, as you are producing chocolate, are you happyNext, as you are producing chocolate, are you happyNext, as you are producing chocolate, are you happyNext, as you are producing chocolate, are you happy

with your quality? Which technology do you use? Andwith your quality? Which technology do you use? Andwith your quality? Which technology do you use? Andwith your quality? Which technology do you use? Andwith your quality? Which technology do you use? And

planting conditions?planting conditions?planting conditions?planting conditions?planting conditions?I'm very satisfied that I can do a business which no one

else in Myanmar has done before. I'm also very happy as I amallowed to do so. The technology is from France and it's anancient traditional method which doesn't contain any chemical.We make it with cocoa powder from cocoa beans which wegrow ourselves. We will go on trying to get better and to im-prove the quality.

How are you doing with the chocolate market?How are you doing with the chocolate market?How are you doing with the chocolate market?How are you doing with the chocolate market?How are you doing with the chocolate market?There are demands from two hotels. But we are still sell-

ing it only at our store. We have arrangements to send it to the

hotels. We are making efforts. There are also demands fromplaces such as Inlay and Mandalay. We have to buy moulds forthe blocks they have demanded. As for orders, they are in-creasing a great deal.

The last one is the dream of Ananda. What is yourThe last one is the dream of Ananda. What is yourThe last one is the dream of Ananda. What is yourThe last one is the dream of Ananda. What is yourThe last one is the dream of Ananda. What is your

idea for the future regarding both chocolate and cof-idea for the future regarding both chocolate and cof-idea for the future regarding both chocolate and cof-idea for the future regarding both chocolate and cof-idea for the future regarding both chocolate and cof-

fee? What is the trend of

Acumen Magazine December 2013

Documents

Transcript of Acumen Magazine December 2013