Category Archives: Finance

Investors Spooked by Myanmar Crisis as Economy Braces for Free Fall

People sit on the ground while waiting for hours to withdraw cash from ATMs at the CB Bank branch at Myanmar Plaza in Yangon, Myanmar, May 11, 2021. Credit: AP Photo

The February coup has rapidly unwound a decade of economic progress, while foreign investors are headed for the exits.

The precipitous collapse of the Myanmar kyat, which has lost more than 60 percent of its value in recent weeks, is the latest sign of the plight facing the country’s economy, which has already been pushed to the verge of total collapse. High inflation, rising food prices, and an acute cash shortage have plunged the population into economic desperation. The Asian Development Bank and the World Bank estimate that Myanmar’s GDP shrank by 18 percent in the fiscal year to September 30, the worst in Myanmar’s recent history.

Eight months after the February coup, an increasing number of foreign businesses have now jumped ship. The latest example is the closure of the $45 million Kempinski Hotel in Myanmar’s capital Naypyidaw, which hosted President Barack Obama during his state visit in 2014. The Geneva-headquartered international luxury hotel chain revealed this month that the flagship hotel would cease operations starting October 13.

Also this month, British American Tobacco announced that it would leave the Myanmar market at the end of 2021, with business sources in Yangon attributing its departure to commercial decisions. Having begun operating in the country in 2013, with a $50 million investment, BAT’s exit from Myanmar after less than a decade reflects the extent to which the business environment has deteriorated in just a few months.

The junta has continued its bloody crackdown against civilians all over the country as the generals have yet to consolidate their grip. Fighting continues to surge in the heartlands and the border regions, including Chin State – a hotbed of anti-military resistance – where the junta has reportedly imposed internet blackouts across large portions of the state.

“Many companies came into Myanmar not for the immediate return but for the fact that there was a brighter future ahead of them… but now that’s gone,” said a Japanese investor, who came into the country in 2015, lured by the prospect of profiting from Asia’s “last frontier market.”

“Big problems keep popping up every few months and it’s really devastating for business. It’s very difficult to plan in such an unstable environment,” the investor added. “We were quite confident in making investments in Myanmar in the past but now with such uncertainty it’s bringing too high [of a] risk to make investments.”

In the economic powerhouse Yangon, the regime has sought to create a façade of normality by inviting foreign business groups for an in-person meeting. On September 24, the military-appointed Minister of Investment Aung Naing Oo chaired a meeting organized by the disgraced national business lobby, the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The Diplomat confirmed this confidential meeting with an internal memo from a major Asian business group as well as multiple diplomatic and business sources briefed on the matter.

Despite initial pushback from the foreign and local business community against the junta, the generals could find comfort that some foreign business groups said nothing about the crisis and had no problem meeting and greeting a minister appointed by the military.ADVERTISEMENT

AustCham Myanmar, China Enterprises Chamber of Commerce in Myanmar (CECCM), the Myanmar-Hong Kong Chamber of Commerce and Industry (MHKCCI), the India-Myanmar Chamber of Commerce (IMCC), the Thai Business Association of Myanmar, the Korea Chamber of Commerce in Myanmar (KoCham), and Israeli and Malaysian business groups joined the meeting, multiple sources confirmed to The Diplomat. In contrast, business groups from the United States, United Kingdom, Japan, and European countries did not attend.

In a rare break from the usual practice, Myanmar state media did not disclose this particular meeting, a move that indicates that the State Administration Council (SAC) is aware of the potential huge backlash facing the attendees. There is also little transparency from these chambers to their members and public about their policy of engagement and their justifications for it.

Business sources in Yangon pointed out that among the attendees, AustCham Myanmar is the only entity that had spoken out against the regime earlier. For the rest, critics say their silence over the coup and ensuing crisis, while quietly meeting with the junta, amounts to active support of the military authorities.

AustCham chair Chris Hughes said the business organization has been “very clear” about its position and that its “statements on the political situation have been more direct and concrete than most other chambers.”

“Our views haven’t changed and we decided that it would be appropriate to make these same comments at this regular meeting of foreign chambers that the UMFCCI organizes, and that was attended by the relevant Minister, so that these influential parties knew where we stood and could see that we were sincere about working for change,” he said.

“We certainly weren’t signaling that the political and business situation was acceptable and that we were back to business as usual, and no one present was in any doubt about where we stood,” he added.

The presence of KoCham at the September 24 meeting was a particular source of embarrassment for the South Korean government, which last month became the first foreign government to allow the parallel National Unity Government (NUG) to set up an official representative office abroad. While KoCham representative Jerry Kim told The Diplomat it did not consult the embassy over the decision to attend the meeting, the issue is bound to taint the tenure of outgoing South Korean Ambassador Lee Sang-hwa, who didn’t respond to a request for comment and who is known to be reluctant to engage with journalists since the coup.

But other chambers have more explicit government connections: The CECCM is chaired by senior state-owned Bank of China representative Liu Ying while the Hong Kong Trade Development Council’s official Shirley Ng is MHKCCI’s secretary-general. These chambers as well as Indian, Israeli, Malaysian, and Thai business groups, have either not responded to the Diplomat’s request for comments or declined to comment.

The September 24 meeting has drawn the ire of Myanmar activists and protesters.

“Foreign chambers joining this meet-and-greet with the military junta are effectively legitimizing an unlawful, terrorist entity. The military junta is courting business in an attempt to entrench rule and increase revenue to finance its campaign of terror,” said Yadanar Maung, spokesperson for the activist group Justice for Myanmar. “Foreign chambers must stand for human rights and responsible business, but these chambers engaging with SAC are doing the opposite. This also reflects a failure of the government policies of the respective chambers, none of which have imposed targeted sanctions since the military’s illegal coup.”ADVERTISEMENT

She branded it “deplorable” for the Australian, Chinese, Hong Kong, South Korean, Indian, and Thai chambers to “have members with enduring business ties to the Myanmar military and its conglomerates, who have ignored the findings of the U.N. Fact-Finding Mission and stand complicit in the military’s crimes.”

“For instance, IMCC chairman Sunil Seth is an Adani Ports executive, responsible for paying military conglomerate Myanmar Economic Corporation $90 million to lease land for a port, while the Myanmar-Hong Kong Chamber of Commerce and Industry includes board members from VPower and Shangri-La, which hold respective land leases with MEHL and the Myanmar army,” Maung told The Diplomat.

“Meeting with the SAC – even if it is for a ‘meet-and-greet’ – will be seen as a political act, and that comes with significant risks,” said Jared Bissinger, a development economist and independent consultant specializing in Myanmar. “Could Myanmar consumers promote a boycott against companies that met with the SAC? How will foreign buyers react? Businesses and business organizations should probably spend their time on better things than networking with the military government.”

Rights groups have criticized the move as an affront to human rights, with some warning of a public backlash. Some of the companies who lead these chambers are regional firms, such as law firm VDB Loi and Siam Cement Group.

“It’s really outrageous and unacceptable that these various chambers of commerce think that offering succor to the junta would be in any way acceptable at this critical time,” said Phil Robertson of the U.S.-based organization Human Rights Watch. “Foreign companies need to recognize that the Burmese people are not blind, and they will hold companies responsible for their uncritical engagement with the Myanmar military junta. For companies trying to sell goods or services in Myanmar, domestic consumer boycotts are the biggest threat.”

One of the Asian business leaders whose chamber attended the meeting acknowledged the criticisms and said “the least” the attendees could do to “mitigate the damage done” is to be transparent about their motives and the meeting. “AustCham at least has an explanation and raised their concerns over the military’s atrocities and actions,” the business figure said. “The rest are simply a disgrace.”

Since the military takeover, anti-coup protesters across the country have called for a boycott of products from military-linked or military-run companies. Among the most prominent of the latter are Myanma Economic Holdings Limited (MEHL) and Myanmar Economic Corporation, which are run by the Myanmar military and boast diverse portfolios that span the banking, property, construction, mining, and food and beverages sectors, among many more. Shortly after the coup, a successful boycott was launched against Myanmar Beer, a joint venture between MEHL and the Japanese beer giant Kirin, which saw its sales fall by half in May amid boycotts, which eventually forced Kirin to write off $193 million for the joint venture in August.

The Tatmadaw’s telecom company, Mytel, a partnership with the Vietnamese defense ministry, has also been the target of a boycott, while its telecom towers have come under attacks by civilian militias known as People’s Defense Forces. One industry source estimate suggests more than 100 Mytel towers have been damaged over recent weeks.

Unlike the foreign attendees, the UMFCCI is no stranger to public backlash. Two days after the coup, the business body met with the military chief, Senior General Min Aung Hlaing. It then issued a memo forcing its own striking staff to return to work, which got leaked to the public, prompting protesters to launch a boycott campaign against the chamber and its associated companies. The UMFCCI denies the accusation that it forced striking staff to return to work.

However, the UMFCCI has continued its engagement with the junta by holding regular meetings with Investment Minister Aung Naing Oo. It also provided feedback to the junta’s Myanmar Economic Recovery Plan (MERP), released in September, which aims to revitalize the economy following the impacts of COVID-19. Its business leaders have never sought to explain or justify to the public their continued engagement with the SAC.

The Diplomat also spoke to Tin Tun Naing, the NUG’s Minister of Planning, Finance, and Investment about the meeting and the junta’s actions. Tin Tun Naing said that the SAC is “an unlawful body which has brought nothing but pain and hardship to Myanmar,” offering as a thinly-veiled swipe at the foreign chambers that met with Aung Naing Oo. “Whatever benefits them [the junta] is detrimental to our people,” he added.

In late July, the NUG Finance Ministry published a framework for investment in which it said it would not “recognize or honor investment agreements or approvals” made with the military regime since the coup. Those who had invested in the country over the past decade, though, would be treated differently.

“We also note that not all investments are the same. It is one thing to open a garment factory but quite another to set up an energy business or to get into extractive industries,” Tin Tun Naing told the Diplomat. “Garment factors bring jobs to people who are otherwise vulnerable to exploitation. Oil and gas or extractive industries bring revenue to the junta with which they line their own pockets or to buy weapons to oppress our people.”

The minister recently told Yangon-based media outlet Frontier Myanmar that the NUG was opposed to a campaign launched by Myanmar Labor Alliance to pressure and persuade brands to stop sourcing from Myanmar and for all investors to exit the country. The Alliance includes the Confederation of Trade Unions Myanmar (CTUM) and Industrial Workers’ Federation of Myanmar (IWFM). These campaigners justified their call for comprehensive economic sanctions and a garment brand boycott by saying these moves are needed to “break down the military.”

The NUG has requested the EU not to suspend Myanmar’s access to European markets through its Everything But Arms program, Frontier Myanmar said, citing official sources in both the EU and NUG.

In addition to boycott movements on the ground, military-linked companies and supporters of the regime are already facing sanctions by foreign governments. On September 2, the U.K. government slapped sanctions on Htoo Group, whose owner Tay Za is notorious for being an arms dealer and having close ties to former dictator Than Shwe. Tay Za is known in Yangon’s business community for spending millions of dollars in Singapore’s casinos, notably the Marina Bay Sands.

“Through his extensive links with the former and current junta regimes and has provided support for serious human rights violations in his role in assisting the military to procure arms,” the U.K. Foreign Office said in announcing the move. It froze all of Htoo’s UK assets and banned Tay Za from entering the country. Htoo Group days later said that “it does not agree with the stated grounds for the sanctions.”

A Myanmar-based corporate executive from Hong Kong told the Diplomat that the U.K.’s sanction against Tay Za indicates that the international community would penalize or “clip the wings” of business supporters of the military. “The message from the British government is clear: ‘we don’t want to work with irresponsible businesses.’ Past practices of sanctioning prominent businessmen who seem to be doing the junta’s bidding may be resurrected. Multilaterals, donors, and responsible investors may also stay away from business groups such as the Indian chamber and the UMFCCI.”

Robertson of Human Rights Watch, as well as Yangon-based executives, expect pressure for international sanctions to continue building in the West.

Myanmar is now heading toward a full-blown banking and currency crisis, with the kyat inflating from around 1,300 to the U.S. dollar pre-coup to nearly 2,800 at its peak in mid-September, a a loss of more than 60 percent.

The junta’s restrictions on cash withdrawals and attempted heavy monitoring of cash flows, coupled with the growing economic desperation of the public, have prompted massive withdrawals of cash from bank accounts. Efforts by the Myanmar Central Bank to intervene, such as by selling dollars into the market or instructing exporters to repatriate dollar profits within a month, are not a long-term solution, business people say, as confidence in the system has collapsed resulting in the record depreciation of the kyat.

Multiple Yangon-based senior corporate executives, who all requested anonymity for security reasons, noted that the depreciation of the kyat is not temporary and said business confidence is now so low that some investors who were hunkering down have started to reconsider their positions.

Several multinational companies have either suspended their operations or left Myanmar since the February coup as security conditions and business operations have worsened. So far Norway’s telecom giant Telenor, Germany’s wholesale firm Metro, and British American Tobacco have decided to call it a day, among others.

“I’m not sure what magical economic cure the military can do to fix the economy as a whole,” one executive said. “[Drafting a] policy is one thing but the practical disruption of the realities is another.

“Right now the people’s appetite to do business in Myanmar and confidence here has changed. Even if the policies are supposed to be the same as the National League for Democracy [NLD] administration, the realities of doing business here are just now totally different,” he added.

The regime’s proposed Myanmar Economic Relief Plan and budget plan have not effectively responded to the crises either. The MERP is primarily copied from the ousted administration’s economic plan, minus the reforms. The budget plan, meanwhile, committed over 15 percent of the budget to defense spending, the highest among all categories.

The MERP focuses on salvaging plummeting business confidence by streamlining business regulations, digitizing government services, and reducing taxes. It also seeks to revive the tourism industry and stabilize the banking sector, in addition to supporting agriculture, livestock, and fisheries. But it omits the state-owned enterprises and structural reforms put forward by the ousted NLD government, and does not mention the political and economic turmoil that has engulfed Myanmar as a result of the coup.

“With businesses and the economy affected severely by the COVID-19 pandemic, the Myanmar Economic Recovery Plan of the State Administration Council aims to revive the affected businesses, attract international and local investors, and have firms be able to restart their operations,” reads the still-confidential document, a copy of which was seen by The Diplomat.

Industry sources point to the similarities between MERP and the plans formulated by the ousted administration. Tin Tun Naing said the generals “have plagiarized while stripping elements of reform from the original [document]. It just shows both their lack of ideas and scruples.”

Branding MERP as being “detached from reality,” the NUG finance minister said, “It fails to recognize the root causes of the country’s economic calamity. The COVID-19 pandemic has been devastating, but it was the military’s reckless coup and its consequences that destroyed Myanmar’s economy.”

“This so-called MERP fails to recognize, let alone address, the issues of post-coup economic paralysis, precariousness of the banking sector, acute cash shortage, the plummeting kyat against the dollar, lack of public and investor confidence, and of course increasing risk of conflict as people in some areas have had to resort to arms to defend themselves against the junta forces,” Tin Tun Naing commented.

Myanmar political analyst Khine Win echoed the same view. “The military regime cannot salvage the economy no matter with any sort of business or investment policy layout because at the end of the day it’s a political problem and a large amount of damage has been done to the people’s trust,” he said.

It’s unclear, however, if the junta is aware of the scale of the economic calamity brought on by its seizure of power eight months ago. Junta chief Min Aung Hlaing appeared in person for the opening of Myanmar’s first underpass in Yangon earlier this month and spoke dreamily about manufacturing electric cars and building a subway system in Naypyidaw. As a senior diplomat in Yangon remarked, “The generals know nothing about the economy.”

By John Liu and Dominic Oo

Myanmar faces falling currency, dollar crunch as economy worsens

A pause in development assistance has led to a foreign exchange crunch in Myanmar [File: SeongJoon Cho/Bloomberg]

Myanmar is battling a plunging local currency amid an unprecedented dollar shortage, driving up the cost of imports and worsening the economy’s struggle with dual challenges of the pandemic and post-coup financial isolation.

The kyat has tumbled about 50% since the military seized power in February that triggered a freeze on parts of Myanmar’s foreign reserves held in the U.S. and suspension of multilateral aids — both key sources of foreign currency supplies. Restrictions on cash withdrawals have fueled worries about the safety of money in banks, prompting people to seek more widely used currencies such as the U.S or Singaporean dollars or Thai baht, analysts said.

The Central Bank of Myanmar’s efforts to quell the rush for dollars, including stepping up foreign currency supplies and ordering exporters to repatriate earnings within 30 days, have failed to stem the kyat’s slide. The currency may plunge further to 2,400 to a U.S. dollar by the end of this year and 3,200 by end-2022, according to Jason Yek, senior Asia country risk analyst at Fitch Solutions.

The currency sell-off is the latest crisis to hit the country that’s still grappling with street protests following the ouster of the civilian government led by Aung San Suu Kyi. Nationwide Covid restrictions and a civil disobedience movement by Suu Kyi’s followers have hit normal economic activities, shrinking exports of everything from textiles to agricultural commodities, another source of foreign exchange.

“It is really hard to predict when this financial crisis will end,” said Khine Win, a public policy analyst focusing on economic governance in Myanmar. “Only the restoration of democracy and a legitimate government will unlock the international assistance Myanmar needs to address this crisis, but it’s really hard to see that happening.”

The plunging currency is already taking its toll on Myanmar’s economy, with some businesses shutting down as they are unable to cope with rising costs of imports and raw materials. The economy is estimated to have contracted 18.7% in the fiscal year ended on Sept. 30, according to the ASEAN+3 Macroeconomic Research Office. While the official exchange rate for a dollar was at 1,965 kyat last week, local money managers were quoting 2,200-2,300 kyat, Fitch Solutions’ Yek said.

Though the central bank doesn’t divulge its foreign reserve levels, the recent slide in kyat suggests that “it has likely fallen to a precariously low level” after trying to prop up the currency for months, Yek said.

The currency volatility is expected to ease soon due to recent steps taken by the authorities and higher export earnings seen in November and December, Win Thaw, a deputy governor at the Central Bank of Myanmar, said Monday.

Myanmar’s reserves dwindled after the U.S. froze $1 billion held in the New York Federal Reserve days after the coup, while the World Bank and the International Monetary Fund suspended funding for projects. To preserve the foreign currencies onshore, authorities last month suspended imports of passenger cars and amended the forex law last week.

But putting more controls will further undermine investor confidence in Myanmar and exporters will find ways to keep hard currency offshore, said Vicky Bowman, director of Myanmar Center for Responsible Business.

“The fundamental cause for forex crunch is the collapse in investor confidence in Myanmar and the suspension of development assistance since February,” Bowman said. “Without a political solution which leads to the resumption of lending and restores confidence in the country, it will be difficult for the kyat to recover.”

Foreign direct investment into Myanmar had dwindled with multinational companies becoming increasingly wary of doing business with the military regime and some heading for the exit. Reversing that trend will be key to reversing the kyat’s fortunes.

“We don’t see any FDI coming in and the trend for kyat depreciation may prolong as long as the military remains in power,” Khine Win said. “This could drag more middle class people below the poverty line.”

By Khine Lin Kyaw and Lilian Karunungan

Report Details Controversial Purchases of Myanmar’s Military

Myanmar Army personnel receive a Thai delegation to the capital Naypyidaw in October 2010.

Some of the army’s purchases could well be in violation of a European arms embargo.

Myanmar’s military continues to attempt to acquire European-made equipment in apparent violation of European Union sanctions and embargoes, according to a new report.

An investigation by the Organized Crime and Corruption Reporting Project (OCCRP), published on December 8, reveals that the Tatmadaw, as the country’s military is known, has recently sought to procure equipment made by European companies, as well as Airbus planes from Jordan’s air force.

The report by Jared Ferrie and Timothy McLaughlin, based on leaked military budget documents obtained by Justice For Myanmar, a local activist group, notes that many of these attempted purchases have come since the military’s began to escalate its attacks on the Muslim Rohingya in Rakhine State in 2016. The following August, the army launched a massive “clearance operation” in which it torched villages, shot civilians, and drove more than 700,000 people over the border into Bangladesh.

These violent attacks led the European Union to extend a long-standing arms embargo against Myanmar in 2018. The embargo also prohibits the sale of “dual use” products, which have both civilian and military applications, and restricts the export of any equipment for “monitoring communications.”

The OCCPR report cites arms data from EU reports showing that British companies exported equipment to Myanmar in 2017, while Spanish firms did so in 2015. The purchases are described in such broad terms that it is unclear whether or not they violate EU sanctions, but the leaked budget documents reveal further intended purchases that would likely do so.

Separate documents obtained by Justice For Myanmar show that a Myanmar company, run by a British passport-holder and former airline executive, is facilitating the Tatmadaw’s purchase of two Airbus CASA C295 military transport planes from the Jordanian Air Force. Under the terms of the proposed $38.6 million deal, which is set to be closed this year, the Myanmar company – Aero Sofi Co. Ltd. – will also offers training for pilots at an Airbus facility in Spain.

While mostly used for transport, the CASA C295 aircraft can also be outfitted to deploy paratroopers or serve as a gunships. In a statement released to coincide with the OCCPR’s report, Justice Myanmar claimed that the deal “could cause immense harm to ethnic communities and inflame the brutal civil war raging in Arakan, Kachin, and Shan States.”

While Jordan does not have sanctions against Myanmar, the alleged deal offers an interesting insight into how the Tatmadaw veils its military purchases via the use of intermediaries. It also jars with the publicly stated views of Jordon’s Queen Rania, who has publicly denounced the Myanmar military’s “unimaginable acts of violence” in Rakhine State. “Children have been orphaned, women brutalized, family members butchered, villages burned to the ground,” she said during a visit to a refugee camp in Cox’s Bazar, Bangladesh. “This is something that is unacceptable.”ADVERTISEMENT

In addition to these reported acquisitions, OCCPR details a list of miscellaneous Tatmadaw purchases – everything from ammunition and sewing machines to German-made communications software – that may violate the EU’s ban on the export of “dual use” items. The budget documents cite products made by companies in other parts of the world, including radio equipment from Australia, television broadcast equipment from Canada, and bulldozers from the United States.

The report provides further evidence of the military’s continuing centrality to Myanmar’s political economy, nearly a decade after it relinquished its formal hold on power. During the previous half-century of direct military rule, the Tatmadaw succeeded in insinuating itself into the every sector of the country’s economy, from beer to mining.

A recent United Nations investigation into the Tatmadaw’s two large military-owned conglomerates – Myanmar Economic Holdings Limited (MEHL) and the Myanmar Economic Corporation – found that they had 120 subsidiaries – and that was just what the authors of the report could confirm.

The military also retains a privileged perch in Myanmar’s political system, care of the constitution that it forced through a bogus referendum in 2008. This ropes off a quarter of the seats in parliament for military-appointed candidates, giving the Tatmadaw a de facto veto over any constitutional amendments, as well as control of three crucial national security-related ministries. As a result, the government led by State Counselor Aung San Suu Kyi and the National League for Democracy, which won a thundering re-election in polls last month, has been unable to exercise civilian control over the army.

The military’s economic predominance has given it myriad ways of acquiring weapons and other goods through a complex network of intermediaries, which are beholden neither to Myanmar’s civilian government nor the nations that maintain arms embargoes against the country. Another example cited by OCCPR is the case of a helicopter drone acquired from the Austrian firm Schiebel, which the company claims to have sold to an unnamed buyer for the purposes of “monitoring and mapping in mining and road construction.” In 2018, the device later surfaced in videos produced by Myanmar’s navy.

As the authors write, “The Tatmadaw’s broad economic influence, and the difficulty of navigating Myanmar’s bureaucracy, means foreign firms can find themselves dealing with military-linked companies even after conducting due diligence checks.” The report shows how imposing sanctions is easy enough, but enforcing them requires constant vigilance.


Mitsubishi Corp. wins $663m train car contract in Myanmar

Japanese trading house Mitsubishi Corp. will deliver new train cars that will shorten journeys on the Yangon Circular Railway and between Yangon and Mandalay. (Photo courtesy of the company)

Japan firm to deliver 246 cars for Yangon Circular and Mandalay routes

Mitsubishi Corp. has signed two contracts with Myanmar’s state-run railway, Myanma Railways, to deliver new rolling stock, the Japanese trading house said Tuesday.

The total cost of the two projects is approximately 69 billion yen ($663 million), which will be covered by an international yen loan agreement between the governments of Japan and Myanmar. The projects are part of the Japanese government’s railway infrastructure export drive.

Mitsubishi will deliver 66 cars for the Yangon Circular Railway, which runs in a loop in Myanmar’s largest city, and 180 cars for the Yangon-Mandalay Railway, which connects Yangon, Naypyitaw and Mandalay.

The new cars will shorten travel time on the 46-km Yangon Circular Railway from about 170 minutes to 110 minutes, and on the 620-km Yangon-Mandalay Railway from about 15 hours to around eight hours.

Construcciones y Auxiliar de Ferrocarriles, Spain’s leading rail car manufacturer, better known as CAF, will manufacture the train cars using Japanese equipment for part of its electrical systems and deliver the cars from 2023 to 2025.

Myanmar has been overhauling its national rail system, neglected during decades of military rule, starting with two major arteries pivotal to economic revitalization.

Work started in February 2018 to upgrade the Yangon Circular Railway. In addition to cutting travel time, the overhaul aims to boost service frequency by 40%.

The project has fueled development along the line in anticipation of a jump in commuters.

The redevelopment will extend to government-owned tracts surrounding Yangon Central Railway Station, the main stop on the loop. Along with a new domed transport hub next to the existing station, the site will house high-rise office buildings and shopping spaces. 

The country also envisions establishing urban subcenters along the Yangon Circular Railway. 

Meanwhile the improvement of the 60-year-old line between Yangon and Mandalay, the country’s second-largest city, would be a boon to the northern Mandalay region, home to the country’s main producers of agricultural products and natural resources. The line also runs through Myanmar’s capital, Naypyitaw.


Japan: Cancel Financial Grant to Myanmar Police

Myanmar border guard police officers walk along a path in Tin May village in northern Rakhine State, Myanmar, July 14, 2017. © 2017 AP Photo

End Assistance to All Military-Controlled Entities

(Tokyo) – The Japanese government should immediately cancel plans to donate money to purchase vehicles and communications equipment for the Myanmar police force, Human Rights Watch said today. The police force, which operates under the auspices of the military, outside the control of the civilian government, has a well-documented record of serious human rights violations.

On July 2, 2020, Japan’s Foreign Ministry announced a grant of 100 million yen (US$930,000) to the Myanmar police for the purpose of purchasing vehicles and wireless equipment for “protecting dignitaries.” The Foreign Ministry claimed the donations would “strengthen the Myanmar police’s ability to carry out public security measures,” create “social stability,” and contribute to Myanmar’s “socio-economic development.”

“It’s inexplicable that the Japanese government would try to curry favor with Myanmar’s abusive security apparatus by providing financial assistance to the police,” said Brad Adams, Asia director. “Instead of supporting Myanmar’s police, Japan should be helping the victims of rights abuses and ethnic cleansing by working with other donor governments to hold the security forces accountable.”

Myanmar’s police acted as a pillar of repression during Myanmar’s 50 years of military rule, arbitrarily arresting dissidents and student activists, engaging in widespread torture, and creating a climate of fear in the country, Human Rights Watch said. The police remain abusive and unconstrained, in large part because the military-drafted constitution maintains military control of the police. The police operate under the authority of the Home Ministry, which is led by a minister who the constitution mandates must be a serving military officer, and operates under the de facto control of the military.

In recent years, the police have engaged in joint operations with the military, carrying out atrocities, including crimes against humanity, against ethnic Rohingya in Rakhine State in 2012, 2016, and 2017. The Myanmar police force, Border Guard Police, and security police battalions accompanied the military in so-called clearance operations that resulted in mass killings, rape, and arson. Police involvement was documented during the deadliest incidents in August and September 2017, including the massacres at Tula Toli and Gu Dar Pyin, where hundreds of Rohingya were killed.

Police took part in widespread rape, including gang rape, of Rohingya women and girls, as well as killing children while their mothers were being attacked. A woman from Zay Di Pyin, Rathedaung Township told the United Nations-backed Fact-Finding Mission on Myanmar: “I don’t know how many policemen raped me, it was not my priority. The only thing I can remember is that they were trying to take my children. They dragged my son from under the bed. I was screaming to protect my children. I have not seen my son again.” In several villages, security forces abducted women and girls and took them to police and military compounds where they were gang raped.

In Rakhine State, the Myanmar police operate the majority of checkpoints, which play a central role in the severe violation of Rohingya freedom of movement in the state. Police enforce an extensive system of extortion, as well as physical harassment at checkpoints, that sustains the Rohingya’s arbitrary confinement to villages and detention camps. Human Rights Watch and other groups have documented torture by police, including the Border Guard Police, against Rohingya who have been arbitrarily detained.

Myanmar police have responded to criticism and protests with arbitrary arrests and excessive and unnecessary force. In 2017, a Reuters investigation into the massacre of 10 Rohingya in Inn Din village prompted Myanmar police to entrap and arrest 2 of the news agency’s reporters. Security police officers told Reuters they took part in raids in the village on orders from the military.

In January 2018, police shot and killed seven ethnic Rakhine protesters among a crowd that had converged at a local government building in Mrauk U after authorities shut down an event.

The police have also been implicated in excessive use of force elsewhere in the country. In April 2020, a video showed police beating a man in Mandalay for violating curfew orders during the Covid-19 pandemic. In February 2019, police fired rubber bullets and a water cannon at ethnic Karenni youth protesting the installation of a statue honoring Myanmar’s independence leader, General Aung San. At least 20 protesters were injured as they attempted to move beyond police barricades.

In response to Human Rights Watch’s inquiry of whether the Japanese government has conducted human rights due diligence to make sure that the aid won’t be used for further human rights violations, the Japanese Foreign Ministry said it has “confirmed with the Myanmar government that this aid be used and maintained for said purposes in an appropriate, effective, and exclusionary manner.” The Foreign Ministry also stated Japan’s embassy in Myanmar will monitor whether the equipment is being used appropriately.

The Japanese government should suspend all aid to the Myanmar police until systematic reforms are carried out and the police are put under civilian control. Japan should also halt aid to all military-controlled entities and ministries, including the Home Ministry.

“The Japanese government should realize that giving shiny new equipment to Myanmar’s police won’t make them less abusive,” Adams said. “By conferring undeserved legitimacy on the Myanmar police, they are signaling to Myanmar’s people that their suffering is of little concern.”


Afghanistan and Myanmar drown in China’s loans; Afghanistan rejects loan

China’s embarrassment Photograph:( AFP )

Coronavirus may not have been the only virus that China is responsible for. Carried through its Belt and Road Initiative (BRI), China has successfully spread the virus of debt too.

Touted as the greatest plan in modern history to revive global trade, the BRI has been the biggest vehicle for China’s chequebook diplomacy.

The loans have crippled many poor economies and now, some of them are waking up to this fact — for instance Afghanista and Myanmar.. 

China claims to have signed agreements with 138 countries. Estimates say the BRI projects will cost over a trillion dollars.

China is running this lending operation for access and power.

While many countries are already drowning in Chinese debt without realizing it, Afghanistan and Myanmar have taken the first step by rejecting Chinese loans.

China’s renewed push in Afghanistan is a curious case. At first, China wanted nothing to do with this country as ridden by violence, it made no business sense.

However, Beijing sensed an opportunity as soon as Trump said he wanted to exit Afghanistan. Ever since, China has been trying to take CPEC into Afghanistan.

But Kabul sees the pitfalls. Afghanistan’s national debt stand at over 1.3 billion dollars, and China wants to give more loans to Kabul. President Ashraf Ghani has declined the loan.

In Myanmar, the auditor general has cautioned the government against Chinese loans.

Myanmar is already busy paying back loans taken during decades of misgovernance under the military junta. But, Myanmar is firmly in China’s grip. So, saying no to chinese loans won’t be easy…

China is Myanmar’s largest lender, and its biggest trading partner.

Myanmar’s current national debt stands at 10 billion dollars — 40 percent of this debt is already owed to China.

From 1988 to 2010, China gave out massive loans to Myanmar. These loans have been coming due since 2018, and Myanmar is paying back around 500 million dollars per year, including principal and four percent interest rate.

This is a classic example of China’s preadatory lending.

The auditor general has pointed out that loans from China come at higher interest rates compared to loans from financial institutions like the world bank or the IMF. He said, “I would like to remind government ministries to be more restrained in using Chinese loans.”

However, will the government listen?

In January, Chinese President Xi Jinping and Myanmar leader Aung San Suu Kyi agreed to speed up projects under the BRI. This resulted in 33 agreements, from mega power projects to railways.

Myanmar has already suffered once, it must not repeat the mistake again.

China’s gameplan

Chinese financial institutions lend money for BRI projects. Construction contracts are awarded to mostly Chinese firms.

A Chinese company receives much of the proceeds of the loan and then projects tend to suffer delays or cancellations. There are corruption concerns, and the host country ends up with a massive pile of debt.

Edited By:  Palki Sharma


Myanmar Factories Face ‘Irreversible’ Harm If Shutdown Extended

Shirts sit at a textile embroidery machine at a factory in Yangon, Myanmar in 2018.  Photographer: Taylor Weidman/Bloomberg

The majority of Myanmar’s 60,000 registered factories face “irreversible damage” if shutdown measures prompted by the Covid-19 pandemic are extended beyond May 15, according to the head of the nation’s largest manufacturing trade group.

“Many factories in Myanmar have been unproductive since early April and they may collapse if they are not able to operate after May 15,” Aung Thein, president of the Myanmar Industries Association, said in a telephone interview Friday.

He was responding to speculation that the government is mulling an extension to lockdown, stay-at-home and business-closure measures. Myanmar had 176 confirmed cases of the coronavirus and six deaths as of Friday morning.

Myanmar’s de facto leader Aung San Suu Kyi said at a panel later on Friday that she is concerned about the potential for an outbreak among laborers similar to what happened in Singapore.

“Some factories have hundreds of workers so it will become a very big problem if one of them gets infected,” Suu Kyi said, adding that Myanmar doesn’t have the resources to deal with an outbreak similar to Singapore’s.

But the trade-group president business leaders and other stakeholders should be consulted by the government before anything is finalized.

“If we remain unproductive for three months, then many factories may completely shut down and no one can heal this economy,” Aung Thein said.

By Khine Lin Kyaw



India’s Exim Bank under its Market Outreach Programme has evinced interest to invest in the healthcare sector of Myanmar. Post its liberalisation, interest from the global sphere in Myanmar’s investment landscape has revitalised, making the country more engaged and interested in the buzzing economic prospects offered by the word outside.

To fiscally benefit and support Myanmar’s health segment, a delegation from India’s Exim bank reached Myanmar early February as part of the bank’s Market Outreach Programme. This programme was undertaken to help the people of Myanmar receive better medical facilities in their own country. India has been well equipped in treating health problems owing to its advanced medical expertise and knowledge. This arrangement aims to provide affordable and efficient medical attention to the ailing people of Myanmar and prevent the urgency to travel to countries abroad for an expensive medical treatment leading to outflow of foreign capital from the reserves of the country.

Along with it, the opportunity to finance Indian investment in Myanmar was reckoned tantamount to Government of India’s Act East Policy. The delegation, on studying various sectors in the region perceived healthcare domain as the most significant segment in need of private sector investments. The Market Outreach Programme was carried out by the Exim Bank at Hotel Sule Shangrila, in association with the Ministry of Commerce and Industry.

The delegation to Myanmar was led by the Deputy Managing Director of Exim Bank of India Mr. Debashish Mallick. Members from Indian private sector hospitals, medical equipment and devices manufacturers, pathology labs, and hospital management companies were part of the delegation.

South Korea to swell financing service in Myanmar

To escalate the financial service, particularly, with the drive to boost the farming equipment business in Myanmar, South Korean financial firm: Nong Hyup Financial Group is all set to help this South Asian country in achieving the same. It intends to move ahead by roping in its subsidiary- Nong Hyup Finance Myanmar, established in 2016. Also, a joint task force has been formed to aid in business planning; dedicated to the purpose of distributing farming equipment in Myanmar.

With the initial capital of $3 million, the subsidiary- Nong Hyup Finance Myanmar, managed an elevation in its capital generation; about $8 million. The Korean financial group intends to swell the subsidiary’s business prospects by aiming to enhance its customer pool; from 28,000 to 50,000 by supplementing more outlets to its present base of nine branches.

The project is slated to activate its operations in the month of July with Myanmar’s HTOO Group and the Nong Hyup Group of South Korea —  both the financial groups being the major business frontiers of their respective countries. The groups plan to provide their expertise and explore additional areas of cooperation, extending to banking and insurance.

With more than 20 affiliates in the domain of agriculture, aviation, food, construction and distribution, Myanmar’s HTOO Group business ventures are massive, and the aforementioned South Korean financial institution is an essential part of the National Agricultural Cooperative Federation.

World Bank appoints Ellen Goldstein as the new director of Myanmar, Cambodia and LAO PDR.

Miss Ellen Goldstein

Miss Ellen Goldstein has been appointed as the new director of Myanmar, Cambodia and Lao PDR by the World Bank. Miss Goldstein’s efforts in promoting peace, prosperity and ending extreme poverty would require her to foster partnerships and deepen relationships with client countries while strengthening economic reforms, to fulfill the roles and responsibilities of her position.

Miss Goldstein is a dual Master degree holder in International Economics and Development Studies from Princeton University, and in International Health and Population Dynamics from John Hopkin’s University.

She has held several meritorious positions prior to this recent appointment. These include – Director for the Western Balkans and Central Asia Region, Director for Bangladesh and Nepal. She has been associated with the World Bank for more than 30 years and has discharged key responsibilities.

Map of Myanmar

With Myanmar liberalizing its economy, welcoming global resources and aggressively connecting with global networks, the World Bank, in placing a Director in Yangon for the first time, has exhibited its deep, engaging interest in Myanmar’s transition to a market-oriented economy.

Miss Goldstein remarked, “I am honored to have been appointed to represent the World Bank in Myanmar, Cambodia and Lao PDR, and look forward to better understanding their unique histories and development paths.”
“Most recently, Myanmar, Cambodia and Lao PDR have seen the fastest economic growth in East Asia. Through our partnership strategy in each country, the World Bank will continue to support inclusive growth that benefits the poor,” stated Miss Goldstein.

With the US $ 2.17 committed by the World Bank in supporting more than 40 active projects in these countries, the World Bank’s inclusive growth mission to benefit the impoverished by providing access to health, nutrition and education facilities, is an integral part of these projects.