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Page 16 Page 9 Page 10 Myanmar Insider This Month’s Insider News on Business, Luxury, Real Estate, Lifestyle & Leisure Volume 1 • Issue 4 • March 2014 1200 KYATS INSIDe insider

Most Valuable Luxury Brands p.3 The judges have spoken: top market research and advertising agency specialist Millward Brown unveiled BrandZ Top 100 Most Valuable Global Brands 2013. Categories on the list include Technology, Fast Food, Telecoms, Tobacco, Credit Card, Retail, Cars, Global Banks, Luxury, Oil and Gas and Apparel, among others. The list is topped by technology giant Apple with an estimated brand value of US$185 billion, closely followed by Google (US$113.69 billion) and IBM (US$112.5 billion).

Estate Management. Protecting your Real Estate Investment p.8 Peter Crowhurst is the Head of Real Estate Asset Management for Yoma Strategic Holdings Ltd and is based in Yangon. He has made a career in hospitality & real estate investment management for over 25 years. government insider A Privileged One on One Myanmar and Naga p.11 with His ExcellencyCover story, P.4 Nagaland chief minister Neiphiu Rio has met several Naga leaders and policymakers there in an effort to boost the economic development of the Naga inhabited areas during his official visit to Myanmar. U Htay Aung

www.myanmarinsider.com www.facebook.com/TheMyanmarInsider www.twitter.com/MyanmarInsider Insider Info 2 www.myanmarinsider.com The Myanmar Insider www.myanmarinsider.com The Myanmar Insider Volume 1 • Issue 4 • March 2014

Welcome back to what we really do feel is another great issue of the Myanmar Insider - dare I say, an Editor in Chief Art Director even betterSUBSCRIBE issue than the last one? Indeed, I willTODAY dare to say so, because I am certain that the next issue Victor Jeffery Timmy Wong will be even better. And then the next… Email: [email protected] Creative Design & ANDThe response SAVE from the community UP in Myanmar TO has 10%been overwhelming; the number of readers that DEPUTY Editor Layout have stepped forward and asked to contribute to our fledgling yet groundbreaking publication has been Daw Khin Thu Zar Aung Global Integrated Media (HK) Ltd most unexpected, as has the response from the country’s increasingly-sophisticated private sector. www.globalintmedia.com Sub Editors With another impressive mix of articles, as well as our online Facebook/Twitter accounts that provide Kyaw Zaw Shwe Advertising Manager you with daily national and international news and ForEx rates, there’s really no excuse for being left out of the loop anymore. AsianYES! I want to subscribe to AsianTigers Tigers Investor Report Mark Wayne Myo Lin 0973224726 Staff Writers [email protected] As always, happy reading. Naw Thee Zun Vic Jeffery 1. I WOULD LIKE TO SUBSCRIBE FOR Charles Greene Advertising Executives 6 months* SAVE 10% Isaac Malone Travis *Based on cover price for your country. 09448537776 12 Months* Columnists [email protected] Free Postage & Shipping. Jeremy Kloiser-Jones Harry Hein Htet Zaw Seamus Donoghue 09421157842 2. SUBSCRIBER’S DETAILS: [email protected] Myanmar’s Contributors Jack Dixon Traffic Manager FIRST MIDDLE LAST Nathalie Johnston Cristy Villarosa Lisa Wong Anthony Parker Digital Manager ADDRESS Myint Thandar Kyan Arnel Mojica Best Shwe Sin Hnin Business Read Aung Ko Ko Chit Market Research Malcolm Macpherson Manager Peter Ctowhurst Aung Soe San TELEPHONE FAX Simon Harrall Richard Bowles Circulation Kelvin Lim Dorman Thuta EMAIL Mae Anacay 0943207314 Steve Vickers [email protected] Jacob Clere 3. I WISH TO PAY BY: Jaime Casanova Publisher Art Villasanta Dr Tin Maung Thu Other major credit cards Rick Chase VISA MASTER CARD Bruce Curran Yangon Office 15-B, Dharma Zedi Road ACCOUNT NO.: Media Director Dagon Township Stephen Jeffery Yangon Tel:(+951) 526 165 Photo Editor Email: [email protected] th EXP. DATE / ISSUING BANK Alistair Kleine www.myanmarinsider.com 13 Issue Free! Asian Tigers Investor Report Co.: Suite 8156, 3905 Two Exchange Square, 8 Connaught Place, Central Hong Kong Production Manager Registration No: 04771 Subscribe this month for 12 issues and Sam Nguyen receive the 13th one free. Or Register Online at www.asiantir.com/subscriptions Get more information on this issue online www.facebook.com/TheMyanmarInsider www.twitter.com/MyanmarInsider www.myanmarinsider.com Free website advertising links to your home page

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Asian Tigers November.indb 3 10/26/2009 8:11:01 PM INSIDER LUXURY 3 www.myanmarinsider.com Shanghai out buys New York Most Valuable By Lisa Wong

ome on, New York, move over! Shanghai Luxury Brands has now overtaken the Big Apple as the global centre of wealthy consumers who Cpurchase high fashion and luxury labels, with the Chinese metropolis’ most fashionable residents By Mae Anacay far outspending their New York counterparts. The judges have spoken: top market research and advertising agency According to a Milan based study amongst luxury shoppers by digital direct marketing specialist Millward Brown unveiled BrandZ Top 100 Most Valuable firm ContactLab, Shanghai’s shopaholics spent an average of US$1,000 on their last purchase - double that of the average New Yorker. In addition, four out of five Shanghai residents said they Global Brands 2013. Categories on the list include Technology, Fast purchased at least one luxury item over the past 12 months. Food, Telecoms, Tobacco, Credit Card, Retail, Cars, Global Banks, On top of that, 91 percent of luxury shoppers surveyed in Shanghai said they plan on Luxury, Oil and Gas and Apparel, among others. The list is topped spending a similar amount in the next six months, whereas only 77 percent of such New Yorkers by technology giant Apple with an estimated brand value of US$185 said they would be splurging on high end goods. Moreover, Shanghai’s fashion conscious plan to shell out, on average, 66 percent more on luxury items than their New Yorker counterparts. billion, closely followed by Google (US$113.69 billion) and IBM These numbers aren’t so surprising, considering that Morgan Stanley estimated Chinese (US$112.5 billion). travelers will top the list of luxury spenders by 2015, thanks to their expanding middle class. But, luxury sales still aren’t what they used to be. The state run newspaper Global Times cited his year, four luxury brands are included on the list. The a report from China’s Ministry of Commerce that said, in the first four days of the Spring race for luxury brands is once again headed by French Festival holiday, marked by the beginning of the Lunar New Year, consumer market sales for fashion house Louis Vuitton (LV), which is valued at an luxury goods took a hit. Sales of luxury items like expensive alcohol, rare seafood and leather Testimated of US$22.7 billion. LV ranked 29th this year, dropping goods, which are often exchanged as gifts to coworkers or friends during the holiday, fell eight places from last year’s list after decreasing its brand value sharply. In one pocket of malls in Fuzhou, the capital of the eastern coastal province of Fujian, by 12 percent from 2012’s rankings. It is followed by Hermès, luxury alcoholic beverage sales fell by 70 percent compared to the year prior during the first another French brand, with an estimated value of US$19.13 four days of the holiday. billion, which is unchanged from the previous year. With no vast The slowdown in luxury purchasing is attributed largely to the central government’s year old improvement on its brand value, it is unsurprising that Hermès austerity drive. At the beginning of his presidency, Xi Jinping cut back on unnecessary spending found itself in 40th place, dropping eight places on the list. on luxury items and services that are typically the province of senior Chinese officials. With A new comer in the top luxury brands market is the Italian luxury spending now somewhat taboo at home, many Chinese have just resorted to spending brand Gucci, which is considered one of the fastest growing brands their wealth while overseas. With more and more Chinese heading overseas for schooling, on the list. It increased by 48 percent from its US$8.6 billion business or holidays, their money is still often spent on luxury items. In fact, in New York, many 2012 value, bringing in a staggering US$12.73 billion for 2013. of the upscale stores that dot Fifth Avenue are employing Chinese speaking people on sales floors. This impressive performance puts Gucci at 68th on the BrandZ Separately, the ContactLab survey unearthed some other interesting differences between luxury Top 100 list, a new entry for the company. shoppers in Shanghai and New York. “Fashion buying in China is closely linked to the display of Another Italian fashion label, Prada, is considered to be the one’s own spending capacity, while the New York consumers show greater affection for brands”. most promising luxury brand of the year, as it jumped 63 percent in brand value in 2013, making it the fastest growing brand on the Top 100 list. This means an increase from US$5.7 billion to US$9.45 billion, an astounding feat that left many fashion Prada aficionados wondering if Gucci and Prada’s success is a sign of what is becoming known as “Italian supremacy” in the fashion industry. Despite this growth, Prada is secure in its position, as it plans to focus on promoting its sub-brand Miu Miu for 2014. If you’re looking for what’s in and what’s hot, make sure to update your wardrobe with Louis Vuitton, Hermès, Gucci and Prada tags this year. Aside from these four brands, other luxury brands to watch out for 2014 include Rolex, Chanel, Cartier, Burberry, Fendi and Coach.

Hermes government insider 4 www.myanmarinsider.com A Privileged One on One with His Excellency U Htay Aung By Charlie Greene

the tourism sector, development of the financial services sector and, finally, development of trade and investments. We would target the development needs in our country, based upon these seven objectives. Since tourism is in one of the seven, our Ministry tries our best to develop this sector.

MI: What are the main policies that your Ministry have changed or adapted to accommodate Myanmar’s new trends and its opening up to international markets and for foreigners to feel welcome in Myanmar, be it for business or pleasure? HA: I look at this from Myanmar’s internal perspective; the objective would be provision of job opportunities for locals, to increase their income and raise their standard of living. While improving the sector, we would get the necessary assistance and protection for our heritage and environment. From the visitor’s perspective, they would be expected to show mutual respect for our culture and history. In short, our overall motto would be “responsible tourism”. We would create, amend and remove policies with reference to this. Initially, our policies were aimed towards provision of good care and service for visitors. Later on it changed towards increasing the number of visitors and to increase the days of their stay in Myanmar. And of course, we would like to increase their spending here, too. These fundamentals are driving our policies.

MI: The booming tourism industries, hotel room availability and infrastructure access to tourism spots have been hot issues. What were the initial challenges and how did your Excellency overcome these challenges? HA: Due to the changes in our country that started in 2011, tourism became the first avenue of interest from the rest of the world. In the past, all the news that people outside of Myanmar received was all the bad news. Then, when our key leaders meet up with all the leaders from across the world, the whole world’s attention automatically shifted to Myanmar, resulting in increase arrivals of tourists. That is when the occupancy rates of the hotels began to rise, especially in the months of October to March, starting in 2011. Previously, most of the holiday makers here were on packaged tours arranged by tour agencies. They got reasonably cheap rates from the hotels. Up until 2011, hotels were chasing the tour agencies to sign contract with them. Then when the occupancy rates started to Name: His Excellency U Htay Aung tourism. I obtained my master of tourism from MI: Do you think the Government reform process go up, the hotels reduced their reliance on the Age: 62 George Washington University, USA. so far is meeting the expectations of local and tour agencies. There were many walk in customers Government Agency: Ministry of Hotels and foreign enterprises, citizens, government agencies venturing solo in Myanmar, or business persons Tourism MI: How would you summarise the changes that and NGOs? coming via internet bookings plus delegation after Job Title: Union Minister the Myanmar Ministry has been implementing HA: It would be really difficult to fulfill all their delegation coming in and filling up the vacancies. so far? expectations and needs. We are the very first Due to that, there were some cases where the hotels Myanmar Insider: How did you start your career HA: The fundamental changes were started by government that started the reforms and we try did not honour their agreements with the tour as a civil servant and how did you end up in this the present government, the President and his our best to meet those expectations. In order to do agencies, based on the previously agreed prices. position as Union Minister of Hotel and Tourism? team. There have been political, economic and that, our President has prioritised seven objectives The Ministry has to set up education efforts to U Htay Aung: Well, it was my choice and social, administrative and private sector reforms. during our national planning. They are generating encourage understanding and finding an amicable thereafter, I was selected to manage or lead different Hotel and tourism falls under economic and sufficient electricity and power supply, provision of resolution among industry members. We also had areas. Becoming a minister is also selection. I private sector reforms. Our Ministry participated clean water to all the 60,000 villages in the whole to implement a price ceiling for a while to ensure was selected to lead the Ministry by the present in the change process and, as we speak, we are still country, development of the agricultural sector, the tourist accommodation remained affordable, government. My education has also been in implementing these changes. creating job opportunities for all, development of especially in superior and deluxe room categories. government insider 5 www.myanmarinsider.com

you look at their visitors, the duration of stay is to transform and speed up the development of extremely short. Then the income earned from Myanmar? tourists may not be that significant. Our target HA: We are making everything easy to do, in is 7 million visitors by 2020. We believe we can general. E.g., a hotel licence or tour operator achieve our 3 million visitors target in 2014. Last licence. We make it a one stop application and year there were a little over 900,000 visitors by we set standards on approval times. In 2010, there air and another 1 million+ entered through our were only about 15,000 hotel rooms in the whole land borders. We are also starting air linkages country. Currently it is 35,000. It is significant with foreign countries, such as Japan, Germany. improvement within a couple of years. Local With that we expect to get more longer staying hoteliers have benefited. We speed things up in passengers. approvals, permits, etc. We are also starting to introduce systems, such as e-government, but it has MI: What are your plans for the next five years? been slow due to our own capacity and efficiency HA: One of the targets is education; educating the constraints. Only if we are fast and efficient, the public and everyone involved in the industry about private sector will benefit. They will, in turn, get the tourism sector. We reinforced the message things done faster, and everyone benefits. The Ministry of Hotels and Tourism Building of responsible tourism. We also highlighted the message of tripartite between community, the MI: What advice would you give to someone That issue was somewhat resolved in 2013. Prior MI: Currently, things like the hotel building private sector and the public sector. The “Three Ps”: looking to start up or invest in a hotel business to 2011, hotels rented out their rooms as offices frenzy seem to be taking care of the infrastructure private, public and people. We published the basic in Myanmar? [because] the occupancy rates were very low at hardware. What are the soft skills training guide for every tourist - dos and don’ts for visitors. HA: I believe the hotel business is quite a good that time. Now, the offices are almost all gone programmes or initiatives that you have got to In order to achieve sustainable development, investment. Based on my knowledge, there is no and the hotels reconstructed the offices back into develop the software for? we needed a master plan for the tourism sector. hotelier in Myanmar, who has returned their hotel proper rooms. That is one way the supply has HA: Human capital is very important in this We have completed the plan for the years 2013 licence to us. So I would still encourage investors increased. Secondly, Myanmar hoteliers learned industry, not just in terms of sheer numbers, but to 2020. We have completed strategic plans for to go into the sector. We assist them though to improve their standards along the way. More also in terms of quality/skill set of labour. We the period. We have significant help from the coordination with other ministries and regional tourist class hotels sprouted as a result. We now had our own training schools in the past and we governments of Germany and Norway and from governments in getting the relevant approvals have a fine balance between supply and demand. are starting new setups through foreign aid. In Asian Development Bank in drawing up of this and land acquisitions. The main caution is not In addition, many hotels are coming up this year. addition, we also have association of tour agencies master plan. There are six specific areas in the to be greedy. For example, some expanded their Even in Yangon alone, about an extra 1,000 rooms here. We even included some foreign experts master plan: 1. We have to review our organisations territories illegally, some even reroute the waterways are expected this year. there and we are on track to develop the industry. and policies and improve tourism planning and to be nearer to water, some clear the large rocks at management practices. 2. Product development. sea just for better views. All these things should MI: Are we ready for the ASEAN Summit MI: Hotel accommodation is relatively expensive 3. Destination planning and development. 4. be avoided. Eventually, they will get into trouble Meetings to be held this year? in Myanmar, compared to our ASEAN neighbors. People’s skill set and quality development. 5. with the regulations. HA: Yes, we are ready. We have more than 4,000 How do you plan to address this issue? Connectivity. 6. Nation branding. Last year, in hotel rooms in Nay Pyi Taw. In addition, high HA: If we look at our closest neighbor you will connection with World Economic Forum, we MI: What are your plans to promote Myanmar quality guest houses for VIP guests have also been realise that there is excess capacity in terms of the featured Myanmar attractions on CNA, BBC, as a visitor friendly and affordable destination, as built. The first ministerial meeting for ASEAN number of hotels. We have to look at the carrying as well as CNN. We received significant positive well as for the visibility of the Ministry of Hotels foreign ministers was held in Bagan successfully capacity needs. However, due to greed, so many feedback. If you look at the Wanderlust travel and Tourism ? about a month ago. people build hotels without considering that. It’s site, based on the traveller’s ratings, Myanmar HA: We have publications and brochures, such as a not that we are the only country with expensive is now the top tourist destination. We have a 98 responsible tourism policy, visitors’ dos and don’ts, MI: From a country development standpoint, hotel accommodation; London accommodation percent satisfaction level from travellers. We need policy on community involvement in tourism. We what do you feel are the biggest challenges facing costs are also very high. In some regions of India, to continue this consistency. have also set up Myanmar Tourism Master Plan. the Myanmar Travel and Tour industry in the next it is also very high. We also have 38 implementation points for the one to three years? MI: If you could make one major change to any master plan, but we cannot do it all alone. We HA: The tourism business has been growing MI: So far, tourists and visitors to Myanmar feel government policy, what would it be? need development partners from foreign countries. constantly. We have to be mindful of the service very safe with insignificant incidences of theft, HA: From a tourism perspective, we need stability They are also keen to participate, so slowly but levels. Tourism is a service intensive business, robbery, etc. How do you plan to maintain this? within the country. The tourism sector will increase surely, Myanmar will continue to improve as an involving human capital. We currently have HA: Of course, we do have our own share of these leaps and bounds if the country is peaceful and attractive tourist destination, as it becomes more significant soft skills training needs. Yangon incidences. Overall, there are many countries who stable. well known. Private hoteliers and tour operators University started offering BA in Tourism courses; are significantly worse off than us. The increase, also participated regularly in travel fairs overseas. now they are having a second intake. In addition or rather publicity, is purely due to the increase in MI: In your capacity as the Minister of Hotels More and more people are now showing interests there are vocational schools offering tourism related tourist numbers. We have started a tourism police and Tourism, how do you see your agency helping to visit Myanmar because of all this. short courses. The second challenge would be force in the places of visitors’ interest to counter infrastructure. With the development of new this threat. There is also help forthcoming from infrastructure, including telecommunications, the residents of the region, as well as the members this issue can be improved. of the industry. In essence, the tourists really appreciated that everyone tried to assist during an MI: What is the current supply and demand incident and they were genuinely thankful to us. situation for hotel accommodation? What plans do you have to address that? MI: How do you see Myanmar’s inbound tourism HA: In the whole country, there are about 950 sector comparing to its Asian neighbours in the hotels, making up nearly 35,000 rooms. I believe short and long term future? it is sufficient for the current demand. There will HA: If you look at the tourism sector within be more upcoming hotels, especially by local ASEAN, in Singapore, they have 16 to 17 million entrepreneurs. We are also trying to expedite visitors every year; 25 million in Malaysia, 24 approvals and cut red tape within our Ministry. million in Thailand, 7 million in Vietnam, 5 As long as the relevant regional governments million in Cambodia and 3 million in Laos. We have no objections, we will approve the hotel are really a late starter in the industry, even though projects with ease. We need to take note that our growth right now is well above anyone else. approvals are also required from other ministries, We now have a great opportunity to overtake our too; e.g., in the Bagan area, you are required neighbours. Some of the countries are landlocked; to obtain approval for your project from the there will be a plateau in visitor numbers for Ministry of Culture, in Inlay, you are required them eventually. Some countries are just city to get it from the Ministry of Forestry and states and simply too small. You may see many Environmental Conservation. visitors coming to such a small place, but if business insider 6 www.myanmarinsider.com

Trading in Gems By Charlie Greene

would like to pass something of her interest to her. AKW: I would not have changed anything. I do Another reason is from a strategic perspective: if not have any regrets at all. It was my own choice you want to grow faster, you must do something not to practice as a doctor and enter the jewellery that deals with mass population, and everyone on business. I have dedicated my life to this business. earth needs a property to live in. I am satisfied with my life as my decision and my life are the same. I am doing what I loved since I MI: Do you see any of your main business interests was young. I tried my best not to waste any time. having to change or adapt to Myanmar’s new trends and its opening up to international markets? MI: How do you feel that foreign companies now AKW: When I started, we were purely in the retail entering into business here will affect the local jewellery business. I long recognised that the business workforce, and do you feel that they will bring is dynamic and change will eventually come. If new opportunities to existing local businesses? Name: Dr Aung Kyaw Win shop. I initially wanted to open in Bogyoke Market. we cannot create new products or services, we AKW: It will certainly affect the local workforce. Age: 47 My wife’s sound advice was Chinatown, where the cannot achieve a leadership position. In addition There are many graduates in Myanmar out Main Companies: Golden Palace Gold and shop will not be restricted by opening hours of the to expanding up the supply chain, we brought there, but there was a skills mismatch. The Jewellery, Forever Gems by Golden Palace, Jewel market and we can have longer business hours. I in experts from Thailand, brought our factory quality is not there. Due to that, foreigners can Collection Manufacturing Co Ltd., Lush by must also acknowledge the input of my late mother up to international standards and upgraded the get a job easily in Myanmar; even semi skilled Victoria Gems (Singapore) in naming the shop “Golden Palace”; she advised me plant and equipment. In fact, our factory was foreigners. Of course, foreign companies can Profession: Medical doctor to look forward to the very long term and choose ISO9001 certified in 2008 and we have also been train locals and bridge the skills gap between a name that will withstand the test of time, as well awarded recently ISO14001 the Environment foreign managers and local graduates. This gap The Myanmar Insider: When did you start your as reflect the services that we provide. In terms of and International Health and Safety Award. We, has to be narrowed to increase the employment first business in Myanmar, and is it still operational changes since then, the core of the business has not including our senior staff, go to international of locals. One good point for Myanmar is that today? If so, how has the business model changed changed, driven by my love of jewellery. At the same jewellery shows regularly to learn about latest trends its people are very easy to train and willing to from when you first started? time, I realised that I cannot purely do trading if I in jewellery. The jewellery market was already very learn. In terms of the effects on local businesses, Dr Aung Kyaw Win: I was born into a family of want to grow bigger; we ended up expanding up competitive, even before Myanmar opened up. it depends. There are both pros and cons: entrepreneurs. My parents are major traders involved the supply chain in addition to opening new shops Consumer tastes and preferences are changing all foreign companies definitely need good local in trading of beans and pulses. I was youngest in the and adding brands to serve up market. the time, we have to constantly engage suppliers partners, through mergers, acquisitions or JVs. family and closest to my mother. My mother loved and yet, we are the market leader in Myanmar. We Local companies need to be prepared for that. jewellery since she was young and consequently I MI: What made you decide to diversify your have the biggest international standard jewellery Competition cannot be denied. To protect also ending up liking jewellery and gem stones. business interests? store in the country with nearly 400 staff. We have local companies from foreign competition will When the schools and universities were closed after AKW: One or two years ago, our country started a retail presence in key cities of Yangon, Mandalay, just further isolate them, and not encourage 1988 demonstrations, I did not want to waste time really opening up. I bought some land at the corner Lashio and Taungyi. We know that we are the them to improve to compete. We have tried and I asked my parents help to open a shop for me of Kabaraye Pagoda Road and Sayar San Road. I leader because Chinatown (in Yangon) is the top isolationism for the past 50 to 60 years and it in Bogyoke Market (formerly Scott Market). The intend to develop the land into a high end condo retail business area in the country, and if you are certainly did not work out! shop was named “Pearl Jewellery”. When the schools plus service apartments. For the jewellery business, top in Chinatown, you are the top in the country. reopened around 1992, I handed the shop over to I have become a retailer, a wholesaler and a top When we opened our second shop in Chinatown, MI: From a business standpoint, what do you feel my eldest sister. 1993 was the year I met my wife, manufacturer. For long term, I would like to enter we sold 8,000 pieces a day for ten consecutive days are the biggest challenges facing you in the next who was also a student at the same medical school. into infrastructure, as Myanmar still needs a lot and people were queuing in front of the shop from one to three years? She was from the city of Mogoat, the gems mining of infrastructure and will continue to need even early morning until midnight. AKW: One, technological changes and the need city. We had similar interests in jewellery and we more, if the country heads in the right direction, to constantly upgrade. Two, changes in customer discussed about opening another jewellery shop. as it is now. I want to be a developer. One reason MI: With the benefit of hindsight, would you lifestyles and fast changing tastes of consumers. 1994 was the turning point for me, where I got is for my only daughter, who is 14. She is keen have done anything differently when you started Three, how to continually differentiate ourselves married, graduated and started my own very first on architecture and creative at the same time, so I your first business, and if so, why? in the market. And four, foreign competition business insider 7 www.myanmarinsider.com and rivalry. Having said all these challenges, the idea. By the way, we do not normally discuss foundation of the jewellery business is trust based. work at home. So, every jewellery business has to earn it. MI: In her interview with a local magazine, your MI: Hypothetically, if you were entering into wife has expressed political aspirations. What are business for the first time in Myanmar, what type your thoughts on that? of business would you consider as having the most AKW: My wife reads and studies a lot. She wants growth potential? to serve the community through her knowledge. AKW: Well, it depends much on the financial With change taking place in the country, she resources available. If you have access to capital and wants to be a change agent. She is now the joint your finances are good, infrastructure or hospitality secretary at UMFCCI, as she wanted to affect businesses would be good. If you have limited changes in government policies and participate finances to start with, I prefer media, tourism and in the discussions. For myself, I do not have any IT businesses, as they are still in their infancy and political aspirations. the industry has much to grow. MI: Last but not least, what do your believe are MI: How do you see Myanmar comparing with its critical factors to be successful in the gems business? Asian neighbours in the short and long term future? AKW: Know your customer, i.e., their tastes and AKW: It depends on the policies at the top preferences. Build trust; trust is embodied on the and the leadership of the country. A country way you approach, the way you practice and your leader is the key; just simply look at Singapore. commitments. Keep in touch with customers; we A country with no natural resources. Lee used IT and communication tools to reach out Kuan Yew leads them well and you can see the to many of our customers and to the young and effects simply. If the country just once has a affluent group. As the Burmese proverb says, “Yay bad leader (don’t even talk about a successive See Chaung Twin, Thaung Ma Tin Kyan Ke Yan!”, generation of bad leaders), it would affect the which means “You don’t want to be left grounded country for the next 30 to 40 years, badly. in a flowing stream”. Myanmar has plenty of natural resources. We need to simply stop selling our natural resources in raw form and start value adding. That would be a start to compete with our neighbours in the future. Your finance team has what it MI: If you could make one major change in the takes to help your business grow! country for any of your business ventures, what would it be? AKW: I just wanted better implementation of government policies. The policies passed down from the top are great, but implementation has been slow. The top is changing, but at the operational level, there seems to be no change at all. A good example would be the land grabbing issues; the good policies were there, the investigative committee was there, the action was there, but there seems to be slow implementation across the board and, as a result, no solution in sight. In that sense, I would like Corporate Training central government to have more reference power, Internationally recognized finance courses as a role model, in addition to possessing real power to implement change. Short courses and seminars

MI: What advice would you give to someone looking to start a business and invest in Myanmar? AKW: I guess they would have to do an environmental analysis, PESTLE in management books. They will also need to understand culture and practices of the local population and examine the communication skills required of the business finance All your finance staff can now experience training by World class and trainability factors. Last but not least, they have lecturers and tutors, without leaving Myanmar, at IMA Institute of to clearly understand the rules and regulations in Accounting and Finance. place relating to their business.

MI: You are the owner and MD of Forever Gems We bring many years of corporate training in ASEAN and around the and your wife is also part owner. How do you region; MNCs, global banks, regional governments and government manage to separate business and home life? How owned organizations have confidently sent their finance staff to IMA do you sort out differences and ensure that business for their training needs. arguments aren’t taken home? AKW: It’s about knowing each others strengths and weaknesses and trusting the other half in Finance teams of many corporate and government departments in her area of strength. I know sales, marketing and Myanmar have already improved their skill sets with IMA. communications better, so my wife only plays a supporting role in that area. My wife is better Now is the time for your finance team to add more value to your business! with HR, admin, internal audits, etc, so she leads the way in those areas. If we have different ideas or ways of doing things, we discuss it privately Contacts: 15B Dhama Zedi Road, San Chaung • Tel. 095 133 056 / 094 200 111 84 • [email protected] and we would normally evaluate and take a better insider investing 8 www.myanmarinsider.com Estate Management. Protecting your Real Estate Investment By Peter Crowhurst

Peter Crowhurst is the Head of Real Estate Asset items are not carried out, then the building Management for Yoma Strategic Holdings Ltd and, not least its market value, drops very and is based in Yangon. He has made a career in quickly, particularly if your apartment is on a hospitality & real estate investment management high floor and the lift is not working properly. for over 25 years. The monthly estate management fees that you are charged go towards the operation of the • Fire fighting equipment Buying an apartment to live in or invest building and some maintenance; however, they In place, in date and operational? for rental income is likely to be one of the are unlikely to be sufficient when the time comes Are there regular checks? largest personal investments you will make for more substantial upkeep of the building. • Down spouts, drains • Clear fire escapes during your lifetime. The property manager needs to take steps to Need to be cleared to prevent flooding. For emergency access only and not store Apartment buildings, when new, look establish a sinking fund. This fund is not used • Boundary fences rooms good, which combined with a fancy brochure for daily operation, but to build a reserve for Should be painted at least every two • Machine space presents a very nice promise, however, can that future capital maintenance that includes, for years, not only looks good but stops rust. Kept clear promise be kept, the building maintained, and example, painting of buildings, repairs and the • Leaking air conditioning Not used for storage still look good ten years later? It is important replacement of capital equipment in the future. Unsightly and creates damp patches • Underground car parks to ascertain what plans are in place for estate If the manager is smart, then this money is If a centralised system then it needs to be Are they well lit? management or, in the case of a second hand placed into an interest bearing account. chemical dosed to prevent the build up of Access routes should be clean and clear unit, what management arrangements are in When looking for an apartment to buy, bacteria in the system (legionella to name Lots not being used for storage place? whether it be new or second hand, you should just one). Abandoned cars are not a good sign Estate management has two main take a good look at the apartment, but also Ducted air conditioning grills need to be • Store rooms functions: firstly, the daily management of take a good look around the public area of the cleaned. Where possible, the developer should the building and the land that it occupies property, ask questions on the status of the • Window frames place store rooms that can be rented by which includes security, cleaning, landscape finances of the building and how and who is Do they sit nicely into the frame? So they residents. and general maintenance; secondly, there is running the property. work properly? the ongoing maintenance of the property that This list, whilst not a fully inclusive list, • Public area doors, corridors The estate manager is the guardian and includes support facilities, such as mechanical provides pointers on what to look for: Regularly maintained and painted can, collectively, help maintain the value of the systems, lifts, air conditioning and maintenance • Exposed concrete Lifts - is the operation certificate visible? apartment. Whilst there are fees involved they of the structure (including walls, windows and When not protected will eventually rot Are all of the lights working properly? are very small in comparison to the investment communal space). You may think that this with the internal reinforcements rusting Attentive and helpful security and made. Your investment will be serving your none of my business, however, if these vital away. building manager family for generations to come.

board, respecting shareholder rights and being domestic public - the purchase of shares in transparent about governance structures, ownership domestic companies is still off limits for foreign and financial performance - supported by sufficient investors. This process is quite straightforward and BAGAN disclosure. stock sales usually take place at the company’s own But why should companies care about corporate office. Currently, fairly limited information needs CAPITAL governance? What’s in it for them? to be given to prospective investors. However, In a 2010 study of emerging market investors this need not be the case. and their attitude to corporate governance conducted Myanmar public companies could improve Good Corporate Governance by the IFC, 100 percent of survey respondents their ability to raise funds from the public today, mentioned being willing to pay a premium for as well as better demonstrate their suitability Means Happy Investors good governance in an emerging economy. Some for an eventual stock market listing, by putting were prepared to pay up to a 40 percent premium in place good corporate governance structures By Jeremy Kloiser-Jones, CEO, Bagan Capital for a company that had good corporate governance and procedures - and telling investors about it. compared to one that lacked good governance. This It is best to get in front of these developments. suggests that a company could potentially raise But, corporate governance is not just about his month, I would like to talk briefly equity fund or foreign listings of companies that its market capitalisation from US$100 million to ticking boxes. Mistakes can still happen. There about a topic close to my heart: corporate have significant (or complete) Myanmar exposure. US$140 million without any improvement in its are many cases in developed markets that pride governance. Having been deeply involved Yoma Strategic Holding’s back door listing on fundamental business; by simply incorporating themselves on having high standards of regulation Twith the capital markets for the majority of my the Singapore Stock Exchange has turned out to proper governance mechanisms. These numbers in this area, of major corporate cases - often professional career, I am watching with interest the be a true success story for a Myanmar company are substantial. ending in bankruptcy - where there was a failure discussions and developments relating to the new raising money externally. To a lesser extent, Interra There are lessons here; not only for the courting of corporate culture to uphold not only the Myanmar Stock Exchange. There have been many Resources, listed on the same exchange, is a company of foreign investors, but lessons that could equally word, but also the spirit, of corporate governance articles discussing suitability for listing, without with significant, although not total, exposure to apply to local investors. There are currently dozens regulation. One can include Enron, numerous saying what this means. Most would think first Myanmar. There is yet to be a primary listing on any of registered public companies in Myanmar, and the financial institutions in the recent financial crisis, about accounting and financial data, but reliability stock exchange of a pure play Myanmar business. number is growing. I use the term “public” here in its and Olympus, etc. The most important aspect of these numbers is generally a result of focusing Aside from other areas, such as ensuring that legal sense, as distinguished from private companies of good corporate governance is having a strong on good corporate governance. businesses have their accounts in order and that, for and having the ability to raise funds from the public. corporate governance culture. Clearly, there is foreign investor appetite for promoter, personal assets are appropriately cordoned This does not mean “public” in the colloquial use Should any readers be interested in knowing exposure to Myanmar’s economic growth, but there off from corporate assets, stock exchanges (and of the term that often refers to a listed company. more about the above issues, please drop me are currently few ways to increase this. Until the new investors) wish to see proper governance structures. Although clearly becoming a public company is a line. Myanmar Stock Exchange comes to life sometime There are numerous iterations of what always a condition for becoming a listed company. during or after 2015, the only way to gain exposure constitutes good corporate governance, but the key It is possible for Myanmar public companies For more information, please contact Jeremy on to Myanmar equities will be through a private principles include having a capable and responsible to raise funds by issuing shares to the general [email protected]. Insider investing 9 www.myanmarinsider.com

By Malcolm Macpherson

hen I first downloaded the with mobile operators who have typically Chinese JV partners to engage the highly under US$300,000 worth of long term debt, Skype Mobile app, I had a purchased the right to operate the fixed line coveted mobile space serving the world's as opposed to over US$29 million worth of thought that was undoubtedly from the government. largest population. As such, the company is equity and a market capitalisation of over sharedW by many in the same situation: if Of course, many people of today’s world able to go top down by engaging operators US$176 million. you can make calls via wireless internet, are serial text messagers and may be scratching and partner with organic local applications Share growth, however, has been somewhat then is the traditional function of the phone their heads at the idea that SMS is dying out, that have proven themselves on the ground. stagnant over the past year. The company, rendered obsolete? Many of us, of course, so it is perhaps a logical next step to point out How has this ambitious technology which currently trades as OTC, is, according soon discovered that Skype was far too that these developments are not happening in driven strategy translated? As of June 30, 2012 to management, in serious negotiations to data intensive to replace the native phone the North American mobile market, which is a was the first period in which the company graduate to a bigger exchange by the middle functions without high quality and stable more mature industry than in the areas in which recorded operating revenue (US$5.2 million of the year. Perhaps this move will allow the WiFi. However, in the long term, the broader One Horizon operates: namely China, the equivalent) although it was still operating at a company to experience greater share growth off question posed by “Voice over Internet Philippines, and soon to be Russia, according net loss. However, by the end of the year, it was its promising story and solid numbers. In any Protocol” (VoIP) technology, which allows to management. As smartphone penetration running a US$4.6 million net operating gain, event, One Horizon has the technology and conversations over internet rather than radio is not quite as widespread as in developed and as of the most recent quarterly period the overall capacity to become a major global tower channels, remains. markets - China is in the process of retrofitting of September 30, 2013, recorded US$5.27 player in a relatively young sector and profit The effect of "Over the Top" (OTT) feature phone factories to accommodate newer million in net operating revenue. The shares from development in one of the fastest growing applications that build on mobile networks smartphone demand - patterns of mobile currently trade at 13.7 times earnings, below regions in the world. It certainly warrants a to bypass native functions has already been development are actually responding more the industry average ratio of 16.2 and has look from small cap investors. felt in the SMS space. Messaging apps on quickly to changes in technology. phones cost carriers $26.3 billion in 2013, One Horizon, whose customers include according to Ovum Consulting. Not only many high level operators in Asia, are at are carriers losing out on revenue, they the forefront of many such changes with are essentially paying for the capacity and its software coded entirely in house. In bandwidth that allows such undercutting. addition, its proprietary voice application Such developments have led some emerging has innovative features, such as bandwidth market telecoms to stop offering SMS adjustment, in which the quality (and thereby services altogether. the data usage) of the call is changeable on How will mobile operators protect their the fly. The application is especially useful turf? One Horizon Group, headquartered in to migrant populations and travellers, who London, has devised a solution. The company's have to call outside the local area and are proprietary "SmartPacket" technology is ten faced with either expensive calling cards, times more efficient than traditional Session prohibitively expensive out of country Initiated Protocol (SIP) systems, such as minute rates, or existing VoIP applications Skype, which were initially designed for static that struggle to maintain signal clarity on Ethernet connections. By approaching and the go. working with carriers directly, One Horizon The strategy so far has manifested itself allows carriers to monetise their data channel in the aforementioned partnerships with and prevent cannibalisation. The process, tier one and tier two carriers, which include which, as mentioned, is ten times more some of the fastest growing companies in the efficient than peer VoIP services because it world in the emerging market telecom space. uses fixed line infrastructure, is a natural fit In addition, One Horizon has leveraged two

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Mingun Museum of Contemporary Art

Artist Profile - Phyoe Kyi By Nathalie Johnston ne of a handful of artists creating generation of Myanmar artists to come, whose superb digital artworks in a tech lives will surely be consumed by the global challenged Myanmar, Phyoe Kyi technology wave arriving in the country. Obelieves that “various kinds of works may It is not only his expertise in digital work, change according to the development of but his willingness to experiment with more information technology”. What to expect unfamiliar mediums. Once Upon A Time There from young artists throughout Myanmar is Was Nothing is a performance art homage difficult to say. In the mean time, Phyoe Kyi to the past, or perhaps a push to accept its continues to inspire with his keen sense of the truth and what it can teach us. Since 2004, contemporary in Myanmar art. he has realised the art piece four times, in Formerly a painter at the University four different locations (Mingun and Yangon of Arts and Culture, he soon abandoned in Myanmar, Fukuoka in Japan and, most the medium. It could not contain all that recently, in Berlin, Germany). The essential he wanted to achieve. In an interview, he elements of the performance entail Phyoe described his introduction to the digital world Kyi dressing as an ancient Burmese king who of art in five processes; five life determining walks about, blowing bubbles and posing for moments in a young boy's artistic life. pictures. Once Upon A Time implies a fairy The first process describes a small boy Conflict in Confluence tale, but one that is never perfect. Through drawing vigorously by candlelight and, as the his costume and movements, he questions the light fades, his coloured pencils emulate the four and five see the boy become a man, and An artist’s influences are not easily way we look at what has been before us. hues of the yellow flame. When he wakes up reinvent his life in colour. He also experiments described, but Phyoe Kyi's short story takes The diversity of Phyoe Kyi's last decade in the morning, he is sad because the colours with other mediums, such as performance. memories of life and colour, to a living artist's of work goes even deeper, with brilliantly seem “out of place”. The second process Finally, he uses a phone camcorder to create process of discovery for the seemingly endless colourful screen prints, impressive sculptures introduces electrical lighting in the boy's an animated short film. Years later, he would opportunities the digital medium has to offer. made of paper from his native Shan State home, and he is happy because he “feels free design a museum - the Mingun Museum Though he admits there are challenges to digital and an endless collaborative effort to interact to draw until midnight”. In process three, of Contemporary Art. A fictional, digital work, like the threat of copyright infringement with spaces and the people in them. His he meets digital art at a friend's house, who wonderland, it holds artworks designed by or the difficulty in marketing the work, he childhood is a recurring theme, especially the “paints” on a monitor screen. In the same week Phyoe Kyi. It is revolutionary in its scale and continues to favour it over all others and uses relationship with his family. His self portraits he goes to purchase a computer. Processes approach to art making in Myanmar. it whenever possible - paving the way for a send the viewer two opposing messages: one being that childhood is about innocence and

Once upon a time freedom; the other that he was somehow there was nothing neither free nor innocent, but longs for childhood nonetheless. Of course, one could say that, since Phyoe Kyi is from Myanmar, his work relates to the volatile country in which he grew up. He has indeed approached the traumas of social isolationism, as well as increasing environmental damage. Perhaps more interesting is his being from Shan State, which also sets him apart from the rest. Without simplifying too much Phyoe Kyi's intentions or inspirations, it is best to say that he clings to a human message. It is about family and inspiration, our pasts in opposition with our futures, and creating situations in order to rehabilitate ourselves through expression. A friend described Phyoe Kyi's beliefs about art as such: “He believes art is easy, and should be easy... that everyone can make art.” Insider investing 11 www.myanmarinsider.com Border Trade

yanmar’s border trade Myanmar’s largest border trade point, reached US$4.01 billion Muse, accounted for nearly US$3.12 billion during the first 10 of the total border trade during the period. Mmonths of the 2013-2014 fiscal year. Official statistics show that Myanmar’s The country’s border trade in the April- foreign trade came at US$15.27 billion as January period was through 14 points with of September last year, with exports hitting four neighbouring countries which are US$7.43 billion and imports reaching China, Thailand, Bangladesh and India. US$7.84 billion.

Beijing’s Black Market

Another Beijing resident, Zhang Cheng, By Lisa Wong has been entering lotteries for the past two years, License Plates but to no avail. Most recently, there was a lottery magine taking out a loan for a new car, but then in which 2 million participants vied for about having to take another loan - twice as large - to 25,000 plates. buy a license plate on the black market. That’s “The government is depriving us of our rights Iprecisely what is happening in Beijing, where a to enjoy a better life. Instead of restricting car government clampdown on license plates has fueled plates, they should build more roads and improve skyrocketing prices for plates on the black market. infrastructure”, Zhang, who is now seeking to In a bid to rein in its pollution and traffic jams, rent a plate, said. officials in the Chinese capital in 2011 instituted a Zhang is not alone. The practice of renting license plate lottery that awarded plates to one in or buying car plates is now so widespread that it ten people who apply. This year, Beijing cut the new has become impossible to police, said Yang Lisha, plate allocation by 40 percent to just 150,000, which a Beijing based lawyer. means only one in 150 applicants will get a plate. The hot demand has caused a surge in prices. Such impossible odds have created a thriving Just six months ago, a car plate could be bought black market where plates can draw an asking for around RMB120,000, but this year’s cut in price as high as $33,000 - almost double the price allocation prompted an increase to RMB200,000 a of China’s best selling car, the Ford Focus. Even piece, according to a manager at Beijing Sunshine though it is technically illegal to buy, sell or rent “I participated in every lottery over the past rented a car plate for RMB5,000 (US$830) a year. Aomei Asset Management Co., a company that says plates, desperate drivers in Beijing have found few two years but have never won. I’m desperate”, said “I live on the outskirts but work in downtown. it buys and sells car plates on its website. Several other options. Han Kuilong, an office worker who last month Life is very inconvenient without a car”. other car plate dealers corroborated the figures. insider business 12 www.myanmarinsider.com Myanmar and Naga By Shwe Sin Hnin

agaland chief minister Neiphiu Speaker of Parliament and other dignitaries Rio has met several Naga leaders and officials and visited Nay Pyi Taw, the and policymakers there in an effort capital of Myanmar, and other places, Nto boost the economic development of the including Mandalay, Yangon and Monya. Naga inhabited areas during his official visit The Chief Minister has been meeting the to Myanmar. government officials for faster development The chief minister began his five day and better trade opportunities in the Naga official visit on February 5th. inhabited areas. Rio, who was accompanied by several Nagaland has opened four international top officials of the state government, met trade centres along the Indo-Myanmar border, chief ministers of Sagaing division Thar Aye but so far it has remained a white elephant. and Mandalay division Ye Myint and other Several Naga organisations and Naga top officials of the Myanmar government. policymakers in Myanmar have appreciated Sources said the Naga officials met several the Nagaland government’s concern and top leaders of the Myanmar government and initiatives for the development in the Naga exchanged views on development in Sagaing areas. division where Nagas live. Nagas in Myanmar said they were at “We got calls from people in the interior a “crossroad” with the country adopting a Naga areas in Myanmar,” a source said. democratic system of government recently The Naga officials met the Chief Minister, and that the Nagas have been inevitably made the Union Border Affairs Minister, the to get involved in this transition. US Export-Import Bank opens to Myanmar By Myint Thandar Kyan

not terms”, said an official from the Export- Import Bank, who requested anonymity in line with agency policy. Myanmar has undertaken sweeping reforms since former general Thein Sein became president in 2011, with the release of political prisoners, easing of censorship and a revamp of an antiquated exchange rate system. President Barack Obama’s administration has heralded Myanmar’s changes as a success for diplomatic outreach, but critics say the United States has overlooked human rights violations. he US Export-Import Bank says it The Export-Import Bank’s decision will start offering credit for trade “is very much a reflection of [Myanmar’s] with Myanmar, hoping to support creditworthiness and it’s not connected to Tbusinesses against competitors in a market any particular event”, she said. that has boomed since democratic reforms. Foreign investors have been flocking Officials say they hope to boost US to Myanmar, which has a large untapped exports and jobs by providing similar terms consumer market, ample natural resources as credit agencies from European and Asian (including gas and oil), and a strategic location nations, whose governments have gone even bordering China and India. further in ending barriers to trade with the The Export-Import Bank is no stranger once pariah state. to the country. One of its first projects after “Hopefully, with this announcement, its creation in 1934 was to provide US$22 we can level the playing field and we can million to build the Burma Road to supply compete on the basis of price and quality, China during its war with Japan. insider BUSINESS 13 www.myanmarinsider.com Major Developments for Myanmar Airways International

IOSA Myanmar’s International Operational Safety Audit (IOSA) recently registered Myanmar Airways International (MAI), which has had a 100 percent safety record since 1993 and, since 2013, has been flying the Yangon-Seoul-Yangon route since a code share agreement was made between MAI, Korean Airport, Korea, successfully landed at Yangon MOU (MOU) agreement on February 14, 2014, at the Air and Asiana Airlines. International Airport, and by the end of the MAI recently announced a tie up with MAI Head Office in Yangon. According to the On February the 21st, 2014, the very first year, Korea-Yangon daily scheduled flights are Japanese firm Hama Inc. Co., Ltd. and signed MOU, MAI is now a functioning joint venture MAI chartered flight from Pusan International set to be taking off on a regular basis. the official Memorandum of Understanding with Hama Inc. and operates as Myanmar Airways International Japan Co., Ltd. in Japan. Simultaneously, this agreement allows for the expansion of the Japan-Myanmar daily scheduled flights and chartered flights. MAI is currently the only international airline that offers direct flights to Cambodian destinations, such as Siem Reap and Phnom Penh, destinations which can now be added to the travel itineraries of Japanese travellers who might wish to visit Cambodia, as well as Myanmar. As with any airline, safety is the top priority, and MAI have recently teamed up with world renowned Air France Industries with regards to obtaining the latest instruction on safety issues and technical support services.

“Modern Comforts and Gentle Traditions” Operating with Airbus A320 (capacity of 180 seats) and A319 (capacity of 120 seats) aircraft, MAI covers various international destinations, such as Bangkok, Singapore, Kuala Lumpur, Guangzhou, Gaya, Phnom Penh and Siem Reap. MAI is currently considered to be a private airline, despite the fact that only 80 percent is privately owned, with the state owning the other 20 percent. INSIDER BUSINESS 14 www.myanmarinsider.com Pinching Pennies, Losing Pounds The High (Opportunity) Cost of Low Price By Jacob Clere

erviced offices get a bad rap. They are So, do the maths and conservatively these days rely on the logic of specialisation, would not be possible if they were operating perceived as “expensive”. In terms of estimate your time per day. Even for a shouldn’t office management be allocated to out of different offices. For instance, some S sticker price, this can certainly appear professional with a modest salary, wasting professional office managers? This can be business centres offer messenger services. This true, but what does sticker price actually tell five to ten hours a week on common office particularly useful in an environment like is something that can be a big time saver, us? Oftentimes, something that appears quite dilemmas can easily add up to thousands of Yangon. but it is also an activity that would often be cheap is, in fact, cheap. That is to say, it is the dollars per month in wasted opportunity costs I confess. I spent my first 3 months in uneconomic for a business to engage by itself dictionary definition of cheap, which means for you alone and, of course, it’s likely not Myanmar blindly searching for a decent on a fulltime basis. “inexpensive because of inferior quality”. just you but wasted time for your colleagues place to make colour photocopies. My In Yangon, the serviced office market has The truth is, one must consider the and staff, as well. embarrassment was only outdone by my seen a few new entrants over the last year. “opportunity cost” of an office. Opportunity This wasted time will take many forms, but frustration. Place after place presented issue Responding to complaints about the lack of cost is a powerful economic concept, and all forms can be similarly headache inducing: after issue. Language, of course, was the biggest short term leases for Grade A office space, a few it’s particularly useful when considering the hours searching for a reliable neighbourhood problem. After that was quality, followed by companies piled into this market. Everyone headaches associated with searching for an office copy shop, calling your landlord to fix a toilet problems with consistency. When I finally seems to know Sakura - a prominent location in Yangon these days. A multinational company or door or your leaky ceiling, extra time found a copy shop that I liked, electricity was and one of Myanmar’s tallest buildings. UBC representative in Myanmar should not pinch spent in traffic for the “cheaper” uptown an issue. I needed 250 colour photocopies for and Centrepoint are not quite serviced offices, pennies if it means losing dollars. If your time is location, leaving to go to a hotel when your an important event the following day, but the but they offer Grade A accommodations with valuable (and if you’re a foreign executive officer electricity fails, and any number of other power was out at my preferred copy shop and some services provided. for a multinational corporation your time is common inconveniences. When you decide I had to seek out yet another place. Hintha Business Centres in the central definitely - even quantifiably - valuable) then to run your office yourself... well, you have to Business centres are also designed to business district of downtown is an example it does not make sense to spend that valuable spend a lot of your time concerning yourself maximise the value of shared spaces. In a a fully serviced, professional office facility time scouring the streets of Yangon for a print with the mundane mélange of additional business centre, a client has access to their with options ranging from individual “hot shop or trying to evaluate which mediocre office stress. (Compounded severely in Yangon own office, as well as access to shared spaces, desk” space to a private office suitable for a internet router is better than the next. It also by issues related to traffic, electricity and such as a lounge area, kitchen and pantry area, staff of a dozen. Hintha’s primary approach is doesn’t make sense to be working up in Hledan communications). a coffee machine, a reception and conference to offer comprehensive professional services when half your meetings are downtown and At a business and serviced office centre, and meeting rooms. When several businesses and short term leasing options. This ability you are attending events at the Traders and your office is yours to experience, not to share facility space and service costs, they are to “plug & play” allows clients the flexibility the Strand Hotel on a weekly basis. manage. Indeed, just as most things in life able to engage in new types of business that to start working immediately. insider BUSINESS 15 www.myanmarinsider.com

With high ceilings, a spacious lounge and one of the fastest internet connections in Myanmar, Hintha Business Centre in downtown offers a premier professional office option in Yangon. Snapshot of some of the serviced offices and coworking spaces in Yangon:

All of this is to say nothing of Yangon’s burgeoning coworking scene. Project Hub Yangon was one of the earlier pioneers of Business Centre or Co-working Space Short Description coworking in Myanmar. With a comfortable atmosphere easily suitable for a dozen or more individuals in a collegial, activities and Hintha Business Centres •◘••Fully serviced professional office space in projects focused atmosphere, Project Hub Yangon’s central business district. Clients: has created something that jibes with those multinationals, corporate reps, SMEs, NGOs seeking collaboration and creativity. and attorneys. Serv-Smart, another serviced office centre, offers a budget friendly alternative for Project Hub Yangon Coworking space for startups, NGOs and companies who value their pocketbook more individuals. Creative/collaborative. than a window or a convenient location. With a half a dozen offices, it offers a surprisingly nice kitchen and pantry area, given its small Serv-Smart Offices Uptown serviced office space. Quite small size. With a reception desk and one meeting but good for companies on a tight budget. room, Serv-Smart technically lives up to its promise of full services. Sakura Tower Partially serviced office space in one of Therefore, evaluate more than merely the Yangon’s more prestigious locations. accounting ledger mathematics and sticker price as you setup your next Yangon office. Union Business Centre Partially serviced office space for companies A backup generator is immensely expensive. seeking large offices. Internet hookups, building renovations, security guards, cleaners, YCDC signage fees - the expenses here are many and most Centrepoint Tower Partially serviced office space for companies are not readily apparent. Ask yourself: “What seeking large offices. did I come to Myanmar to do?” I suspect it was not to engage in office management International Business Centre Not actually a business centre. More of a drudgery. Consider a business centre approach functions hall for events. and reorient your focus back to your business development strategy. insider BUSINESS 16 www.myanmarinsider.com Mandalay’s Ko-Thwe Rubies … A Gem of an Industry

By Malcolm Macpherson

t seems that nothing unpleasant can be was introduced almost 50 years ago. It was the heard about Myanmar nowadays. Formerly conduct of these gem shows, officially dubbed known as Burma, this exotic Southeast Asian the “Myanmar Gem Trade and Pearl Emporium”, Icountry was once a jewel in the British Empire which has earned for Myanmar international - a fascinatingly exotic land that was the world’s renown as “Ruby Land”. largest exporter of rice, a global supplier of oil, Needless to say, Myanmar’s previous a nation rich with natural and labour resources, military rulers depended on sales of precious producing 75 percent of the world’s teak, and stones to fund their regime; they had to release the wealthiest realm in this corner of the earth. their stranglehold on the industry to ensure Today, it is being called “Asia’s last frontier”. a continuous inflow of funds. In the early One rare, shining glow the colour of ko-thwe 1980s, the government started taking great (pigeon’s blood) is Myanmar’s ruby industry. strides towards enhancing gem and jewellery Supplying 90 percent of world demand, rubies sales by opening up its activities through prized for their purity and hue comprise the purchases of gems and jewellery from private biggest earner in the country’s total sales of dealers or owners at acceptable prices. Then, it precious stones, which include sapphires, encouraged privatisation by allowing private pearls and jades. One of the country’s most owners to exhibit their gems for sale at the viable industries that also includes agricultural annual emporiums, and those who attained goods, textiles, wood products, construction substantial sales success were permitted to open materials, metals, oil and natural gas, the trade foreign currency accounts with the banks. Also, in precious stones continues to flourish. In fact, it started quality inspections of private shops several years ago, during the annual gem show and allowed those who passed to sell their traditionally held in Yangon, a total of 2,380 gem items in foreign currencies. Finally, gem trading merchants, including 1,484 of 423 companies centres were licensed to openly sell jewellery from 16 countries and regions, coughed up with 15 percent tax paid to the government. US$101 million in gem purchases, which at Private trading and export of gems has thus the time broke the record held since the show become simple and legal for the first time in insider BUSINESS 17 www.myanmarinsider.com over 30 years. To drive the gem mining industry name a few. Just as Mandalay is legendary, so towards greater growth, Myanmar enacted the is Mogok’s ko-thwe ruby. “New Gemstone Law” in 1995, which allowed Gemological circles all around the world local entrepreneurs to mine, produce, transport choose Myanmar as the one exotic country and sell finished gemstone and manufactured with the world’s choicest coloured gemstones, jewellery at home and abroad. Since 2000, the “Burmese” rubies are the standard by which any government has undertaken joint ventures with ruby is judged, as the case is with top quality ten private companies in the mining of gems sapphires, spinels, peridots and jadeite jades. and jade on a profit sharing basis. Mogok rubies are readily regarded as being in a Myanmar has three famous gem lands well class of their own. As one gemologist described known for producing the country’s nine gems - it, “The best Mogok stones actually glow red ruby, diamond, cat’s eye, emerald, topaz, pearl, and appear as though Mother Nature brushed sapphire, coral and a variety of garnet tinged a broad swath of fluorescent red paint across with yellow. One is at Mongshu in Shan State the face of the stone. This is the carbuncle of and another at Phakant in Kachin State. But, the ancients, a term derived from the glowing the temple of the very rare ko-thwe rubies is embers of a fire… The colour most coveted at Mogok, a most scenic area consisting of today is that akin to a red traffic signal or heavily petrified hills rising to a height of 2,347 stoplight. It is a glowing red colour, due to metres above sea level. Mogok is within the the strong red fluorescence of Burmese rubies, district hosting the nation’s second largest city and is unequalled elsewhere in the world of - Mandalay - Upper Myanmar’s economic hub gemstones… It must be stressed that the true Old Problems Tiffany and Cartier are among US and European and the centre of Burmese culture, the fabled pigeon’s blood red is extremely rare, more a Be that as it may, Mogok’s ko-thwe rubies, jewellery companies that refused to import city that inspired classic poetry by Rudyard colour of the mind than the material world. alongside Myanmar’s prized coloured gemstones, Myanmar gems based on reports of deplorable Kipling, books and essays by George Orwell One Burmese trader expressed it best when he had faced the threat of trade disruption from working conditions in the mines, while Human and songs by Frank Sinatra, the Beatles’ George said: “Asking to see the pigeon’s blood is like international powers. The US had branded Rights Watch supported a complete ban on Harrison, Robbie Williams and the Eagles, to asking to see the face of God.” Myanmar an “outpost of tyranny”, lambasted the purchase of Burmese gems based on these the ruling military junta for its “extremely poor reports and because nearly all of the profits went human rights record”, and accused the military to the ruling junta. of murder, rape and other torture. Three of its There is hope, though, at the end of long, presidents shunned Myanmar’s dictatorship, dark Myanmar tunnel. Myanmar leaders and then President Bush signed a law in 2003 showed willingness to open diplomatic talks banning the import of Myanmar products. with the US to resolve the issues brought up On the other hand, some gem dealer members by Americans, especially in regard to political of the International Coloured Gemstone prisoners and human rights. It will be such a Association criticised the US sanctions as waste to stop the treasures of Myanmar drawing “depriving Myanmar’s citizens of economic to them the businessmen of modern times, as it growth needed to fuel an eventual democracy”, did the merchants of Venice centuries ago. To called the policy “duplicitous because it punishes let this gem of an industry reach full potential Myanmar while the US runs trade deficits with will require the further opening up of the more repressive regimes, such as China’s.” economy, a vital factor in the development of Meanwhile, neighbours in the Association of Myanmar in the years to come. Then, the world Southeast Asian Nations have advised Myanmar can truly cherish the magical experience of once it risks putting the group’s cohesion on the more treading the open road to enchanting line if political reforms aren’t made. Bulgari, Mandalay.

Manufacturing could Two dozen new hotels Baker & McKenzie start at Thilawa by granted licenses opens Myanmar office Business mid 2015 Myanmar’s government has announced The world’s second largest law firm Baker Manufacturing operations could get that 24 new hotels have been granted licenses & McKenzie has opened its first office in underway at the Thilawa Special Economic Zone to begin operations in Myanmar, looking to Myanmar to serve the increasing number of News in as early as next year. provide a sufficient amount of hotel rooms as foreign companies looking to move into the About 40 foreign manufacturers have the country continues to attract record numbers. previously isolated nation. Brief expressed interest in setting up operations at the The announcement, made by the Ministry The office, which will be the company’s Thilawa project, which is located close to Yangon of Hotels and Tourism, said that the new hotels 16th in the Asia Pacific region, will be headed By Isaac Malone and is being developed with Japanese assistance. would provide almost 1,000 rooms around the by Chris Hughes, a former Sydney based partner, Set Aung, chairman of the Thilawa country, but has not yet revealed the hotels’ and will be made up of seven lawyers, five of committee, said that potential investors were locations. which are from Myanmar. US firm to bring involved in industries including garments, food, Myanmar attracted 2 million foreign visitors electronic appliances, toiletries and car parts. in 2013, the first time it has recorded such Maersk to open power to 6 million numbers. people in Myanmar Aeon to begin Myanmar operations State run entities to Maersk Line, the world’s largest shipping US based energy firm APR Energy has Myanmar operations line, will begin operations within Myanmar signed a contract with the Myanmar government Japan’s biggest supermarket chain, Aeon, finance themselves after it was announced that the company had to provide energy to 6 million people in a will become the first major Japanese retailer to The country’s state owned enterprises will been granted a permanent license. country where less than 30 percent of the begin operations in Myanmar. no longer be funded by the government and will “We are pleased to be granted a permanent population has regular electricity. The Japanese group is expected to open a be held accountable for their own expenses and business license to operate our own agency The company announced that it will representative office within the next few months, funding as of the start of the 2013-2014 fiscal in Myanmar. Since the EU and the US eased manufacture a natural gas fuelled power plant with plans to open a shopping mall in Yangon. year, according to Minister for Finance U Win sanctions in 2012, we have experienced a surge generating between 82 and 100 megawatts, and Aeon already has operations China, Shein, who was speaking during a parliamentary in interest in sourcing goods to and from work will begin on the project later this year. Malaysia, Thailand and Vietnam. session in the capital Nay Pyi Taw. Myanmar”, the company said in a statement. insider BUSINESS 18 www.myanmarinsider.com Special Economic Zones By Aung Ko Ko Chit optimism. When Myanmar signed a The Myanmar arm owns 51 Memorandum of Understanding with percent of the project - 41 by nine Japan in 2012 regarding the project, Myanmar companies and 10 percent the move was met with scepticism by the government - with the other that both countries could provide the 49 percent owned by a consortium necessary funds and infrastructure for of Japanese companies. the project to go ahead - particularly Thein Sein’s government has found as Myanmar continues to struggle common ground with Japan over the to update its infrastructure to last two years, with Japanese companies international standards and implement gaining key contracts as the country laws that will make the country a truly opens up, particularly in the area of attractive place to invest for foreign infrastructure development. investors. Japanese giants including Toyota, Announcements in recent months Marubeni, Toshiba and Panasonic are suggest that things could be moving deepening their footprint in Myanmar ahead as planned. In January, the - in a range of industries - while JICA Myanmar government implemented is involved in key infrastructure a Special Economic Zone law, which developments in the country, most allows for tax exemptions for up notably an urban development plan to seven years for foreign and local for greater Yangon. investors, and is expected to allow Meanwhile, some criticisms companies interested in investing in have begun to be levied at Japanese the projects to bypass unnecessary companies involved in projects in bureaucracy - one major issue for Myanmar. Some of the companies potential foreign investors in Myanmar. involved in the Thilawa project have While other areas are being spoken Myanmar’s Port Authority will been accused of side stepping issues like about around the country, three key also upgrade Thilawa Port later this land grabbing and compensation, while SEZs are currently being implemented year to make way for a deep sea port. JICA and other Japanese agencies are within Myanmar. In Rakhine State, Yoma Strategic Holdings, owned seen in some circles to be reluctant to work has begun on the Kyauk Phyu by local behemoth Serge Pun, has communicate with local communities SEZ, and in the south of the country, already opened Star City, a 135 acre and the media. Dawei in the Thanintharyi Region, residential housing estate located close Despite that, Japanese companies could be key to growing Myanmar’s to the Thilawa site which offers 9,000 are clearly in a strong position in economy in the future. The third SEZ residential units. Myanmar at the moment. While is that of Thilawa. It was also revealed recently Japanese companies still lie 10th in total In the early days of the reforms, that the Myanmar consortium of foreign investment figures, in the 2012- Dawei was seen as the most important the project, Myanmar Thilawa SEZ 2013 fiscal, Japanese foreign investment SEZ in the country, but that has been Holdings Public Ltd, will sell 2.145 in Myanmar leapt tenfold to US$54 beset by major issues from the initial million shares at K10,000, in order to million and, if the two governments can investors and it is now the Thilawa raise an expected US$21 million for a maintain close ties, then it is likely that SEZ, located a few hundred miles up project that is expected to fall in the other key contracts will be rewarded to the coast from Dawei - and just 20 billion dollar figure. Japanese companies. kilometres from Yangon - that looks likely to be the first major project to go live, with a start date for Phase 1 possible as early as 2015. Note that it’s had issues of its own to overcome, though. Residents displaced by the project have complained of land grabbing and inadequate compensation by ike many things in Myanmar, Those countries, and many others, the project’s developers. In January, the rumour mill has spun have pumped much needed foreign dozens of the displaced families sent an wildly as to why the current investment into a previously stagnant open letter to the Japan International Lgovernment decided to implement economy, something that has been Cooperation Agency (JICA), which the much publicised economic reforms aided by the government encouraging is involved in the project, to tell of that have made the country the new foreign investment by implementing their issues with the displacement that darling of Southeast Asia. new laws and inviting business has left many without any livelihood Whether it was concern over a delegations from the world over. in an area where many of the local too close relationship with China or One area that is seen as particularly population are employed in the a genuine desire to improve the lives key in proving the country can attract agricultural sector and practically lost of its country’s citizens, it is clear future foreign investment is in the area all their assets overnight. that, whatever its initial intentions, of Special Economic Zones. There have been other reports of the government has seen the benefits In its simplest form, a Special land grabbing, unpaid compensation of forging closer ties with economic Economic Zone (SEZ) is a geographic and a surge in land prices at both powerhouses like the US, the EU and area that makes laws and practices Thilawa and Dawei, an issue intensified even Japan, all who see huge potential favourable to the production and by the previous government’s lack of in Myanmar’s strategic location on the export of products, in turn creating record keeping and complications cusp of Southeast Asia, as well as rich new jobs, usually in the dozens of regarding land ownership. natural resources and an abundant - thousands, and pushing the economy However, at least on an economic and cheap - workforce. further forward. level, Thilawa is seeing much insider BUSINESS 19 www.myanmarinsider.com What’s Happening with the Myitsone Dam By Naw Thee Zun

Power to the People

Percentage of population without access to electricity

he stalled US$3.6 billion Myitsone declined, just saying “Questions about the Cambodia 60% Dam saga has left the area in a state project should only be asked to the president”. of limbo. The dam’s developer is the state owned Myanmar 51 TLocal residents are still in a determined China Power Investment, and they believe the mood to have the project completely shut down dam would greatly improve the quality of life in a bid to save their local environment, but the by bringing hydropower to the nation and at Philippines 30 dams Chinese developers are equally determined the same time bring in US$54 billion in tax to have their project restarted. They reportedly payments. Last December, the company made Indonesia 27 lost US$50 million while the project was closed a statement in its CSR report saying that the down last year. The project, started in 2011, project would not cause major environmental Laos 22 is still only five percent completed and the damage. It would also create in the region of continued delays are causing a great deal of 40,000 local jobs. Vietnam 4 tension between the two governments. Local residents are quoted as saying that the It is also fuelling a hot tempered power play dam would take away fertile farming lands in this Thailand 1 between President Thein Sein and opposition predominantly agricultural community. Also, at leader Aung San Suu Kyi. The government is least 90 percent of the electricity produced would Malaysia 1 adamant that the project will not be restarted, be channeled to China’s Yunan state. but also refuses to totally cancel it. This has China Power Investment’s managing director, Singapore 0 prompted the opposition leader to accuse Mr Li Guanghua, was quoted as saying, “We have the government of being negligent in its worked on hydropower projects in 12 countries… Source: International Energy Agency responsibilities to the nation and “not being but have never faced anything like we have in brave enough” to make a decision on the project. Myanmar. Without electricity, there can be no When asked her own views on the project, she development or international investment.” No More Privacy By Simon Harrall

Simon Harrall is Managing Director of Global Fiduciary Solutions Limited in Hong Kong

hursday the 13th February will go This new Auto Information Exchange down in history as the day that the EU Agreement (AIEA) is quite odd, given that and the Organisation for Economic Canada, Hong Kong, the US and the UK only TCooperation and Development (OECD) just reinforced their privacy laws. Don’t you find struck a deal to openly report to each other that quite contrary? on your worldwide assets, including all bank To understand this, we have Mr. Snowden accounts, investments, trusts and pensions, to thank, after his revelations of the nefarious etc. The privacy and data protection laws will activities of certain “national security agencies”, be waived in almost all cases, in which you will so the strengthening of privacy laws is perhaps have no say, by the way. just a political action. However, the ability to This landmark agreement goes in front of breach these privacy laws has at the same time the G20 finance ministers in September of this been waived. year for their further agreement and ratification. How, though, will this new international If the G20 agrees, then the global nonG20 snooping agreement be implemented? The countries, such as Hong Kong, will concur and answer is in the agreement. All 11 pages of it. comply, as is normal in these matters. It simply says that if a country’s financial What this means is that, for example, Inland regulator asks a bank or financial institution Revenue in the UK do not need your permission (even a trust) what value and what precisely is handed over without your permission. No This last bit is a natural extension of the to see what’s in your overseas bank accounts, owned by you, that institution will be obliged questions allowed about that bit, and that’s s/b AIEA, it would seem. trusts, companies, etc. by law to hand over the information to the the whole intent of this new s/b AIEA. When does the s/b AIEA come into force? We have already seen something similar local regulator. If I was a betting man, and I am, I would Possibly at the end of 2015. It’s going to be a with the onset of FATCA (Foreign Accounts Tax Then what happens is that the regulator take a wild guess at what’s going to happen next, tough task administratively, but be certain that Compliance Agreements), where information will store that information on a database, so which possibly will be the implementation of a it’s going to happen. should be reported to Inland Revenue in some that if a foreign government simply requested US style global taxation strategy coming from The “Under The Mattress Banking cases, but not necessarily on all assets. that information, then it can and will be readily the OECD countries and the G20. Corporation” may be launched soon after this. insider BUSINESS 20 www.myanmarinsider.com The Future of Food and the Business Solution to Malnutrition in Myanmar By Rick Chase Background In Myanmar, the future of food is soy. For Myanmar to achieve food security, it must strategically develop soya bean agriculture with improved inputs, and for Myanmar to become dairy independent, it must intentionally develop its soy dairy industry with new technology and infrastructure. To find sustainable solutions to protein malnutrition, it must judiciously seize the current opportunity to develop its distribution of soy products and encourage market expansion of value added products. Soy is a super food that has been cultivated Current Market Conditions since the dawn of civilisation. Indeed, it is In spite of all of soy’s potential for the indicative of a civilised society. Soy food products Myanmar economy, environment and nutrition, are consumed all around the world and, from the soy industry is struggling in Myanmar. In fact, culture to culture, it is contextualised to create the entire supply chain is embattled by low yields, indigenous recipes, products and flavours. As global and regional market forces, low investment, such, it is a global and ubiquitous food second foreign competition, substandard inputs and only to rice in terms of its universality, and first in farming methodologies, lack of education, terms of imaginative uses and versatility. Soy can governmental indifference, disinformation and be made into everything from automobile parts a lack of consumer awareness, among other to nutritious dairy products, from wholesome things. If any interventions exist at all from My experience in the Myanmar soy industry clear and univocal was that Myanmar must snacks and health foods to meat alternatives for NGOs or foreign investors, they are unfortunately over the past several years has also revealed that strengthen its soy industry through investment vegetarians. It is used to fuel cars and to both inadequate, incidental and/or haphazard, despite there is great cause for optimism for the future of and technological input, as well as through treat and prevent malnutrition related diseases, the many needs and opportunities in this sector. the soy industry and that Myanmar might become education and marketing. Every single stakeholder such as heart disease, diabetes and certain cancers. Indeed, nutritional and agricultural the ASEAN Brazil of soy production. The latest along the value chain and in the academic forum No other food on earth can claim such efficacy interventions that do occur on the part of NGOs statistics show that 316,000 hectares are being believed that it can be done and that it can to human needs with the added benefit of being and humanitarian organisations are generally used to cultivate soya bean in Myanmar, up from be exceedingly successful and beneficial to the ethical and environmentally beneficial. When focused in the area of carbohydrates production about 114,000 hectares in 2000 to 2001. This is nation as a whole. land once used to sustain cows is converted to and consumption, but the issue of malnutrition phenomenal growth with minimal investment and soy cultivation, protein yields increase nearly in Myanmar is related more to a lack of protein incentives. Current yields are at about 16 bushels tenfold. Moreover, food, such as beef, which once than a lack of carbohydrates; rice and fruits and per acre and harvest losses are as high as 45 percent MAP OF MYANMAR contributed more greenhouse causing emissions vegetables are in large supply. due to a lack of technology and other inputs, but than automobiles, is replaced with food whose Moreover, programmes that focus on protein with an intentional investment strategy, better cultivation is actually removes carbon and requires nutrition are usually focused on livestock and fish. inputs, training and other incentives, Myanmar nearly ten times less water, as well as other inputs. To provide the amount of protein needed by the could rapidly transform itself from a net importer majority of Myanmar’s population of 60 million, of value added soy foods to a net exporter, not simply increasing the meat supply will prove to only of high quality raw soya bean, but also a be unsustainable. The input to output ratio are diversity of innovative value added products, as poor. Most of what a cow or pig consumes is well as a bustling domestic consumer of all things to sustain itself and livestock require land that soy. The Myanmar ministry of agriculture is could be used to cultivate soy (refer to pie chart) showing signs of a growing interest in developing and they produce waste that can contaminate its soy cultivation and there was great support the water supply. from our contacts for this research. Also, many of Myanmar’s Buddhists are Moreover, growers are showing tremendous vegetarians, at least for the period of Lent from resilience to market forces and deep desire to April to September. Soy is the best vegetable improve their yields through improved inputs. source of protein (and better than most meats) Growers associations and middlemen are tenacious for providing all the essential amino acids required in their desire to improve their ability to compete SOYBEAN DISTRIBUTION for human health (refer to chart). with Thai and Chinese growers and to develop IN MYANMAR (2000-2001) new markets and uses for soy. Entrepreneurs History of Soy in Myanmar across the country are researching and innovating Although the scope of our current research and trying out new products (such as the made in did not extend to the origin of soya bean Myanmar Vitagoat soy milk processing machine) agriculture and consumption in Myanmar, it Food Percent of protein and markets for domestic use. Our assertion is is probable that soya bean has been cultivated that, if even a small portion of the investment that in Myanmar for nearly as long as it has been in is put into rice were put into the soy industry, we Rice 80% China, thus making soya a truly native crop to could create an agricultural and market revolution Myanmar. It is not unrealistic to assume that the Wheat 12% that will positively and significantly impact GDP food of the original settlers to Myanmar (who and create food security, sustainability, livelihoods originated from the Yellow River and Mongolia) Legumes 23% and environmental benefits. including the Karens, the Shans, the Kachins and the Pa’o people, was similar to that of the Soy 40% Major Stakeholders Chinese people who had been cultivating soya Over the past several years, I have interviewed Milk 4% beans since as early as 2000BC. Soy is a staple people from the ministry of agriculture, educators in the diet of Shans and Pa’o and can be found Chicken 20% at the University of Agriculture, food processing in just about every Shan dish. New value added engineers, growers associations in four states Meat 18% soy products are constantly appearing on the and divisions (including Shan and Irrawaddy), grocery shelves and research is being conducted Eggs 13% growers, middlemen, merchants, NGOs and into other uses for soy in Myanmar. consumers. One thing we discovered that was insider BUSINESS 21 www.myanmarinsider.com Project Finance: the importance of a CRD By Jaime Casanova, Legal Adviser DFDL Myanmar

t is not the first, nor the second, nor the third transaction in Myanmar that I have been involved where document registration related Imatters have come up and one of the parties who is involved in such transaction does not see the importance of ensuring that any such documents are properly registered with the relevant authorities, or does not want to go through the hassle that such registration implies. And, in all honesty, their position is quite understandable from a business standpoint - the process is burdensome and many may end up exhausted walking down that road, notwithstanding the fact that substantial delays derive from undergoing such an exercise and this may exasperate even the most patient businessman who just wants to see the transactions materialised and finished. Yet, its importance is extreme, if not essential. To put the matter in perspective, Section 109 of the Myanmar Companies Act, 1914 (“MC Act”) provides that “every mortgage or charge created by a company and being either: (i) a mortgage or charge for the purpose of securing any issue of debentures; (ii) a mortgage or charge on uncalled share capital of the company; (iii) a mortgage or charge on any immovable property wherever situated or any interest therein; (iv) a mortgage or charge on any book debts of the company; (v) a mortgage or charge, not being a pledge on any movable property of the company except stock-in-trade, or (vi) a floating charge on the undertaking or property of the company, shall be void against the liquidator and any creditor of the company unless the prescribed particulars of the mortgage or charge, together with the instrument by which the mortgage or charge is created or evidenced (…) are filed with the Registrar for registration within 21 days after the date of its creation (….)”. At first sight, it would appear that compliance considering that Myanmar is still in its early and (ii) transfer of any immovable property by There is, however, one more hurdle to be with Section 109 of the MC Act would exist upon stages of development and that sometimes there any foreigner or a company owned by a foreigner crossed. Section 112 of the MC Act provides the filing of the required documentation with is a gap between the letter of the law and the by way of sale, purchase, gift, acceptance of a gift, that “the Registrar shall keep, with respect to each the Registrar of the Companies Registration current practice, it is understandable that the mortgage, acceptance of a mortgage, exchange company, a register in the prescribed form of all Office (CRO), but unfortunately that impression Registrar of the CRO would not want to put or transfer, and acceptance of a transfer by any mortgages and charges created by the company is not completely accurate and the creation of him- or herself at an unnecessary risk. Yet, it is other means. A foreign lender or borrower is, after the commencement of this Act and requiring securities over movable and immovable properties our obligation, as attorneys to our clients, to seek therefore, in principle, prohibited to take or registration under section 109, and shall, no requires at least one or two more twits. Indeed, as their maximum protection and to safeguard, as make secured loans by way of transfer or sale payment of the prescribed fee, enter in the register, provided in Section 109 of the MC Act, the act much as possible, that any such security may be and mortgage of immovable property. with respect to every such mortgage or charge, of filing is not sufficient, per se, and applicants enforceable down the line. Thus, obtaining such However, if the project can be embedded the date of creation, the amount secured by it, should seek registration of every mortgage or registration ends up being the key document under any of the categories that are promoted by short particulars of the property mortgaged or charge. Undeniably, Section 109 of the MC to a somewhat long process, which typically the Myanmar Government under the Foreign charged, and the names of the mortgagees or Act should be read together with Section 114 requires liaising with the relevant authorities in Investment Law, 2012 (FIL), and many of the persons entitled to the charge”, which would be of the MC Act. order to get the deal through - and, even when projects that require financing could well be, the “open to inspection by any person on payment Section 114 of the MC Act provides that doing, as with many things in life, there is never said restriction on immovable property may be of the prescribed fee”. Unfortunately, such a “the Registrar shall give a certificate under his a guarantee of success. easier to overcome. Certainly, under Section 64 register is not fully “operating” as of the date hand of the registration of any mortgage or charge Having said that, it cannot be forgotten that of the Rules to the FIL, mortgages may be allowed of this writing, and there is no clear date as registered in pursuance of section 109, stating the the ability of foreign companies in Myanmar to provided that prior consent has been obtained from to when such a scenario may change. As with amount thereby secured, and the certificate shall secure immovable property, or foreign banks the Myanmar Investment Commission (MIC), almost everything in Myanmar, it could be a be conclusive evidence that the requirements of located outside Myanmar to take security of which, in turn, will scrutinise the request and matter of days or, most likely, it could be a section 109 to 112 as to registration have been immovable property for their loans or credit decide thereupon. Thus, based on the particulars matter of months, or even years - but it will complied with” and, as it may be inferred, this facilities, is limited. There is a law entitled The of each specific case, before proceeding straight to happen eventually. Fortunately, some of us is the step where many problems arise. Indeed, Transfer of Immovable Property Restriction the Registrar of the CRO, it may be necessary to are currently working on this issue. Until Section 114 of the MC Act requires the Registrar Law, 1987, under which the following acts liaise with MIC and obtain their prior approval. then, if required, it is extremely necessary and of the CRO to provide a certificate that would are prohibited: (i) transfer of any immovable Fortunately, an approval from MIC should help prudent to include the relevant representations, directly identify him or her, and would evidence property by any person to a foreigner or a to expedite the registration of a mortgage over warranties, covenants and undertakings in that the mortgage or charge has been registered company owned by a foreigner by way of sale, immovable property by the Registrar of the CRO, the relevant sale and purchase agreements in and is compliant with the laws of Myanmar - purchase, gift, acceptance of a gift, mortgage, so it may end up being beneficial in the big scheme regards to existence or inexistence of mortgages, such certificate being the so called certificate of acceptance of a mortgage, exchange or transfer, of the project finance. Yet, once again, there is or charges, over the assets of a company. Be registration document (CRD). In this context, and acceptance of a transfer by any other means, never a guarantee of success. advised. insider travel 22 www.myanmarinsider.com MYANMAR’S RAILWAY - CONNECTING A NATION Part One of Two Part one of a two part feature By Malcolm Macpherson

Yangon Central Railway Station Sagaing Hill viewed from across the Ayeyarwady River

An Unusual Tourist Attraction and heavy equipment to the oil fields up river at year old temples and stupas stretch across a Looking out from a carriage window while Chauk and Yenangyaung. 42 square kilometre plain. King Anawratha travelling by train in Myanmar can be compared unified the regions that would later constitute to watching a constant street theatre, providing Kyaukpadaung Diversion modern Myanmar under Theravāda Buddhism views of every form and style of life, some of Leaving Pyay, the line continues northwards (the oldest surviving form and the closest to the which have remained unchanged for many years. through the river port town of Aunglan on the earliest traditions of Buddhism, which today Amongst these glimpses of a bygone era that has Ayeyarwady, afterwards calling at Kyaukpadaung, is still followed by 90 percent of Myanmar’s disappeared in most countries is the spectacle of which is the main access point for Mount Popa, total population), making Bagan his central working steam locomotives; belching smoke, with an extinct volcano a short distance from Taung powerbase. From the 9th to the 13th centuries, hissing pistons beating out a rhythm as they push Kalat, a sheer sided piece of volcanic rock that it is estimated that 13,000 Buddhist temples, the huge driving wheels, these mechanical beasts rises 737 metres above sea level. The Buddhist pagodas and stupas stood on the Bagan plains; Dusk settling over passenger carriages in the sidings at Yangon Central Station driven by fire and steam still hold a fascination monastery at its summit can be reached by Marco Polo described Bagan as “…a gilded city to many. climbing a stairway consisting of 777 steps alive with tinkling bells and the swishing sound he state owned Myanmar Railways (MR) The sight of steam locomotives in a working carved out of the rock. Due to the volcanic of monks robes.” In 1287, this golden age came first came into being in 1896, when environment, although not yet extinct, is ash, the soil is extremely fertile, resulting in the to a close when the Kingdom was invaded and the British consolidated and combined becoming an ever increasing rarity throughout surrounding area providing an ideal habitat for sacked by the Mongols, the monasteries were Tall previous private railway construction and the world. In Myanmar there remain some 40 the proliferation of flowering plants, trees, shrubs plundered, and its population was reduced to ownership into a single entity to form a state steam locomotives still in service, most of which and herbs; prominent amongst this fauna are the size of a village that remained amongst the owned public undertaking, which from 1928 are employed hauling freight. Despite the age of Macaque monkeys, whose presence has become an ruins of a once large city. until 1989 was known as Burma Railways until these locomotives, the MR engine works in the additional tourist attraction, and Taung Kalat is Approximately 2,200 temples and other the name was changed to the present Myanmar Yangon suburb of Insein keeps them running. now a designated nature reserve and national park. religious buildings survived the Mongol onslaught Railways. The network consists of a 1-metre gauge The engineers at these works are experts in their Mount Popa is a solitary conical peak 1,518 and remain today, albeit in various states of railway with main lines generally running north trade; if a part on these ageing locomotives is metres above sea level, the inside contains a 610 disrepair; some of the larger temples are still to south and branch lines from east to west. broken beyond repair, their skill is such that they metre wide caldera that drops to a depth of 914 well maintained, but a lot of the lesser religious will fabricate a replacement in the workshop. metres so that the mountain, when viewed from buildings are overgrown with vegetation and have Myanmar Railways Gateway Repair and maintenance is an ongoing different directions, appears to take different become tumbledown relics. However, all sites are Located in downtown Yangon sits Myanmar’s operation, and with three to four of these forms, giving the illusion of having more than one considered sacred. The shape and construction of largest railway station, Yangon Central; an locomotives being completely overhauled each peak. Although Mount Popa is a tourist attraction, each is highly significant in Buddhism, with all imposing building that is the gateway to the year, the future use of steam does not appear to with numerous temples and religious relics, it components having a spiritual meaning. Being Myanmar Railways network that currently be under immediate threat, enabling the country is a significant place for Myanmarese pilgrims, home to the largest and densest concentration consists of over 5,400 kilometres of track. The to continue providing a somewhat unusual tourist many of whom walk the 16 kilometres from of Buddhist temples, pagodas, stupas, relics and first Yangon Central Railway Station, built by the attraction, much to the pleasure of the many Kyaukpadaung to climb the mountain every year, ruins in the world today, many of which date British in 1877, was destroyed in 1943 during steam enthusiasts who come from all over the particularly during lunar festivals and in April to the 11th and 12th centuries, Bagan remains WWII. The present structure was completed in world. There are specialist companies in Myanmar for the Myanmar New Year (Thingyan) festival. unique. 1954; its prominent feature is its indigenous who arrange tours to visit the Insein engine works There are many Myanmarese myths about the From Bagan, the train travels to the multi tiered roofs (known as pyatthat). The station and also negotiate with MR for the charter of mountain stemming from ancient times, when Ayeyarwady River port of Myingyan, an has been a designated landmark building since steam locomotives for hauling special excursion it was believed that victory would be guaranteed important cotton trading centre with cotton 1996. It was designed by prominent Myanmarese trains for transporting these tourist groups from to any army that assembled on its slopes. Today, ginning and spinning mill operations. It is architect and engineer Sithu U Tin, who was Yangon to various destinations across the country. by linking the cultural identification of life and also the head of a branch line that travels renowned for fusing features of Myanmarese and prosperity with the mountain, that belief is east, eventually connecting to Thazi, south Western elements. Yangon’s High School No.2 Out of Yangon translated to one of good luck and happiness, of Mandalay. This branch line passes through Dagon and Yangon City Hall are good examples The British first introduced rail transport which can be achieved by such a visit. This Meiktila, which, due to its central strategic of his work where he has used this design process. to Myanmar in 1877, with the opening of 262 exemplifies that Myanmarese people strongly position, has a military air base that is home Running through the station is a double kilometres of track running northwest from retain ancient traditions in their daily life; they to the Myanmar Air Force Central Command, track circular railway that encompasses Yangon. Yangon to Pyay, a town on the Ayeyarwady travel great distances to assure their good luck and also the Myanmar Aerospace Engineering Operated by MR, the system comprises of a (Irrawaddy) River, which was established by for the coming years by visiting Mount Popa, University, making the city the country’s 39-station loop system covering 45.9 kilometres, the British Irrawaddy Flotilla Company (IFC) which hosts an immense festival on its summit aeronautical engineering centre. After Myingyan, which takes approximately 3 hours to complete. as a transhipment point for cargo, mail and during the annual Thingyan water festival that the journey ends upon the train’s arrival in The circular railway has 200 carriages and its passengers (especially British soldiers) between celebrates the Myanmar New Year. Mandalay. Although this route that began in trains circle the city 22 times a day, connecting Upper and Lower Burma. The IFC grew into the Yangon along the first railway track laid in satellite towns and suburban areas to the central largest fleet of river boats in the world, with over Bagan Myanmar, it was another line out of Yangon part of Yangon; between 100,000 to 150,000 600 vessels carrying some 9-million passengers a The train journey continues to Bagan on that started seven years later that would be the tickets are sold daily. year, and was indispensable for carrying supplies the banks of the Ayeyarwady River, where 800 first to reach Mandalay. insider travel 23 www.myanmarinsider.com

The old Ava Bridge -– the rail link across the Ayeyarwady River between Sagaing and Mandalay Taung Kalat Monastery – Mandalay Region

Yangon to Mandalay in the northeast. En route, some 68 kilometres out of Mandalay and endangered wildlife. The Ministry of Forestry, which manages the In 1884, a 267 kilometre line was opened, running alongside and situated in the Shan Highlands, is Pyin Oo Lwin; established as site, collaborates with the UK based Botanic Gardens Conservation the Sittaung River from Yangon to Taungoo via Bago. Taungoo is a hill station during colonial times, it became Myanmar’s summer International to conserve the indigenous orchids in their natural habitat. known for its Areca Palms that grow throughout the city. It also capital, 1,070 metres above sea level, its pleasant climate provides a Not surprisingly, Pyin Oo Lwin is the centre of the country’s has its own circular railway that serves its various outlying districts. welcome escape from Yangon’s heat and high humidity during the flower production; chrysanthemum, aster and gladiolus are grown During WWII the British Royal Air Force built an airfield north country’s hot season. and transported to every corner of Myanmar throughout the year. of the city that served as a base for training and support of the Despite the march of time, with British rule in Myanmar having The town and surrounding areas are one of the country’s major supply 1st American Volunteer Group nicknamed the “Flying Tigers”. ended 66 years ago, the town has retained a curious anglicised air; sources for a large variety of high quality vegetables, deciduous fruits On the 6th of November, 2005, the city of Yangon lost its emphasised by the numerous red brick English style half timbered and strawberries. It also has well established local industries specialising status as Myanmar’s capital city when it was moved approximately houses standing in gardens of flowering coloured blooms the year in producing damson wine, together with fruit preserves and jams, and 320 kilometres north to an area west of Pyinmana. The name of round. Pyin Oo Lwin is situated in a land of rich red soil, rolling hills has recently become the main centre of Myanmar’s rapidly growing the nation’s new capital, Naypyidaw, was officially announced with oak trees and pine woods, roads lined with eucalyptus trees and coffee industry, processing coffee beans for country wide distribution on the 27th of March, 2006, which is Myanmar’s Armed Forces walls covered in bougainvillea. and a growing export market. Day. The move was necessitated by the old capital having become In the town centre stands a clock tower erected in commemoration When George Orwell first visited Pyin Oo Lwin in the 1920s, too congested and crowded with little room for future expansion of the Silver Jubilee of Britain’s King George V (in 1934). It contains arriving by train from Mandalay he wrote “…you step into a different of government offices, and which resulted in this railway track a four faced clock made by an English company established in 1844, hemisphere. Suddenly you are breathing cool sweet air that might be receiving an extension when the station of Naypyidaw was opened which is still producing and maintaining similar large time pieces today. that of the countryside in England, and all around you are green grass, in 2009. Today, the new capital is one of the world’s fastest growing Before the striking of each hour, the clock chimes 16 notes, the sound bracken, fir-trees, and hill-women with pink cheeks selling baskets of cities and is presently Myanmar’s third largest behind Yangon and of which is said to resemble the 20 note chime of the clock tower at strawberries.” Today, the town still exudes a similar charm, and even Mandalay, which are now commonly and respectively referred to the north end of the Houses of Parliament in London, commonly though Orwell’s words were written over 80 years ago, they remain as the nation’s commercial and cultural cites. referred to as “Big Ben”. Another feature of Pyin Oo Lwin is its unique an apt description in part until this day. taxi service provided by small enclosed horse drawn carriages known Another British writer, Norman Lewis, deserving of far greater Mandalay as gharries; originally imported from India during the days of colonial public recognition than he received, was an influential journalist and In 1885, after further annexation of the country by the rule, these brightly painted vehicles, resembling miniature 19th century prolific author who, although having written 15 excellent novels, is best British, the line from Taungoo was extended to Mandalay in 1889. stagecoaches, offer an alternative means of local transport that adds known for his travel writing. Fellow British writer, Graham Greene, Mandalay, the second largest city in Myanmar, was the country’s to the overall leisurely pace and ambience of the town. who in his day enjoyed both serious worldwide literary acclaim and royal capital during the reign of Thibaw Min, who became the last Pyin Oo Lwin has a thriving Eurasian community, comprising widespread popularity, described Lewis as one of the best writers of king of the Konbaung Dynasty and the last monarch in Myanmar’s mainly of Anglo Myanmarese and Anglo Indians, with approximately the 20th century. Lewis travelled around Myanmar at the beginning history to date. Located 716 kilometres north of Yangon on the 10,000 Indian and 8,000 Gurkha inhabitants who settled there during of the 1950s, compiling volumes about his experiences and, despite east bank of the Ayeyarwady River, Mandalay is the economic, the time of British rule when they established various military schools this being a time when the country was undergoing massive internal commercial, medical and educational hub of Upper Myanmar, open to all ethnicities. The Gurkhas, who have a proud tradition for upheaval and unrest, he documented the overwhelming friendliness and is considered the centre of Myanmarese culture. Mandalay’s distinguished military service, were an effective part of the British and kindness shown to him by the Myanmarese people, describing railway station is one of the country’s largest; in addition to being Army (and remain so today) that was fighting in Myanmar during Pyin Oo Lwin as, “a simple blueprint for Utopia.” His book, Golden the terminus of the main line from Yangon, it is also the starting WWII, after which, most of them then joined Myanmar’s military Earth, became an overnight bestseller, and, although published point for many branch lines serving some remote and unique once the country had gained its independence from Britain. in 1952, it is still considered one of the finest travel books about destinations. The town’s military connections continue to this day, being home Myanmar ever written. Amongst native English speakers, the name Mandalay to the country’s most prestigious military academy, the Defence Services invariably invokes memories of Rudyard Kipling’s famous poem Academy, which has a reputation for producing many of Myanmar’s Gokteik Viaduct and Lashio of that name, which immortalised both the mighty Ayeyarwady top military officers, and the Defence Services Institute, the military’s Continuing by train from Pyin Oo Lwin on the scenic trip to (Irrawaddy) River, The Road to Mandalay, and the IFC, The premier technological establishment; one of the country’s most selective Lashio, and some 100 kilometres out of Mandalay, the line passes over Old Flotilla, with its’ huge fleet of paddle steamers regularly universities, its graduates are commissioned as Engineering Officers the Gokteik Viaduct, which, when completed in 1900, was the largest traversing the river, taking British troops between Mandalay and into one of the three branches of the Myanmar Armed Forces. railway trestle bridge in the world, stretching 689 metres from end to Yangon (Rangoon as it was then), on a 700 kilometre trip each Pyin Oo Lwin’s Sericulture Research Centre, in addition to end. It is also Myanmar’s highest bridge; at its tallest point it stands way, which, with the railway following the path of the Sittaung rearing silkworms, specialises in reeling silk from the cocoons and 102 metres above the floor of the gorge that it spans and provides River, remained relevant and useful well into the 20th century. In conducts intensive planting and harvesting of mulberry trees, the train passengers with stunning views of the surrounding countryside. addition to Kipling, Mandalay has other connections with British leaves of which are used for feeding the silk worms, and handmade The line terminates at Lashio, in Shan State, 286 kilometres northeast literature; it was one of the places where Eric Arthur Blair, who paper is produced from the trees’ bark. The town has a large research of Mandalay; this large sprawling market town straggles up a gently would go on to achieve fame writing under his pen name George centre for indigenous medicinal plants and has one of the country’s sloping valley that is ringed by small peaked ridges, abrupt hillocks Orwell, was stationed when serving in the Indian Imperial Police, few pharmaceutical production facilities. and terraced vegetable plots. and John Masters, who, after retiring from the military with the The National Botanical Gardens, now renamed the National Lashio played a pivotal role in WWII. It was the starting point rank of Lieutenant Colonel, became a best selling author. In Kandawgyi Gardens, is another unique feature of Pyin Oo Lwin. of the old Burma Road, which was a critical route for war supplies addition to his novels, he also wrote an autobiographical trilogy, Established in 1915, the gardens (originally modelled after Kew into China for Chiang Kai-Shek’s Kuomintang army before the town the second part of which, entitled The Road Past Mandalay, dealt Gardens in London) are surrounded by a protected forest area. The fell to the invading Japanese in 1942; it was finally liberated by the with his experiences in Myanmar during WWII while serving in immaculately landscaped gardens cover some 176 hectares containing Allies in 1945. The historic Burma Road forms part of the present the British Army. 514 species of indigenous trees and 74 foreign species, 80 species of day highway, rebuilt and upgraded for heavy traffic that links Lashio bamboo, 75 species of crotons (flowering shrubs), plus 300 species with the border town of Muse, which is the entry point into China Pyin Oo Lwin of indigenous orchids, rose species and 6 species of land lily. The 28 through Yunnan Province. The year 1903 saw the completion of one of Mandalay’s many hectare lake attracts a variety of waterfowl and the protected forest (Don’t forget to check back in next month for part two of this two branch lines; this one provided a link from Mandalay to Lashio area surrounding the gardens is home to numerous species of birds part feature) insider BUSINESS 24 www.myanmarinsider.com Myanmar: A Gold Rush in the Making? By Art Villasanta

he gold glinting in investors’ eyes is, of Europeans are making their presence felt, too. ranking tenth among foreign investors. Japanese Since being set free by the military course, the wide range of opportunities Norwegian multinational telecommunications multinationals Mitsubishi, Mitsui & Company administration in November of 2010, Ms. Suu to make money in an underdeveloped company Telenor and Qatari firm Ooredoo and Sumitomo are expanding their presence Kyi has been on a spate of visits to Myanmar’s Tcountry that has been shut off from the rest of (formerly Qatar Telecom) will begin building in Yangon, the country’s former capital and neighbours. She has chosen not to visit China, the world since the 1960s by a repressive military Myanmar’s first nationwide mobile network. largest city. which seems to indicate her frosty relations with junta. Whatever the real reasons for relaxing its European oil major Royal Dutch Shell and In January of 2014, Singapore became the Chinese. grip on power, the junta in 2010 allowed for the Norwegian oil and gas giant Statoil are among Myanmar’s largest foreign investor, said DICA. It is also unclear if the Chinese would ever democratisation of the political process and the the more than 60 firms that bid in November Singapore’s recent investments have largely been invite her to visit China given her perceived implementation of reforms to boost Myanmar’s 2013 for the right to develop 19 deepwater in energy, hotels and tourism and agriculture. pro western attitudes and lingering Chinese economic development. offshore fields Hong Kong, South Korea and Japan were the suspicions she will steer Myanmar towards the It’s these reforms that triggered the mad rush next largest investors in January. Their investments US if she becomes President. among western and eastern businessmen intending The East Leads focused mainly on the garments, manufacturing Observers, however, feel the Chinese have to stake their business claims in Myanmar’s vastly Impressive as this list of top western and communication sectors, among others. Some no choice but to deal with her if she becomes underdeveloped markets. Foreign investments companies is, it’s Asia that dominates investments 43 percent of total investments in January went President. Without a rapprochement with Ms. in Myanmar jumped a massive 6,500% from in Myanmar. The Directorate of Investment to the energy sector. Suu Kyi, China stands to lose the influence she US$300 million in the fiscal year 2009-2010 and Company Administration (DICA), which Prof. Aung Tun Thet, Economic Adviser has traditionally wielded over Myanmar’s leaders. to US$20 billion in 2010-2011. oversees foreign investments in Myanmar, to President Thein Sein and a member of the Such was the grip China had on Myanmar’s The economy is expected to grow 6.5 percent in reported that China, Hong Kong and South Korea President’s National Economic and Social administration and on the current government the fiscal year 2013-2014 (ending March 31, 2014) were the top three investors in existing enterprises Advisory Council, recently said that western that some Asian countries accused Myanmar of and is projected by western analysts to improve as of October 2013. The trio accounted for 94 investments were still “very small” and were being a Chinese puppet state. anywhere from 6.8 percent to 7.8 percent in 2014- percent (US$150.5 billion) of total investments much slower than expected since the President This perception is one Ms. Suu Kyi most 2015. Myanmar’s President Thein Sein is even more (US$160.4 million). took office in March 2011. He noted that likely wants to alter if she becomes President. bullish about his country’s growth this fiscal year: he China’s investments alone came to excessive western caution increases the risk of The uncertainty, as to her assuming power, expects growth to hit 9.1 percent. If achieved, this US$141.11 billion, or 42 percent of the total. the west losing out to Asian firms, especially to stems from the immense influence still wielded improvement should make Myanmar Asia’s fastest Behind China were Hong Kong (US$6.37 billion) China, which accounts for over 40 percent of by the military. growing economy in 2014. and South Korea (US$2.97 billion). The United investments. Contrary to public perception, some of the Foreign direct investments (FDIs) are on track Kingdom, in fifth place, had investments of generals that ruled Myanmar for five decades have for a record year. FDI hit US$1.8 billion in the first US$2.51 billion and was the top western investor. Anti Chinese Sentiment not slowly faded away. They’ve morphed into the five months of fiscal year 2013-14, according to The UK and France were the only western China’s investing dominance is even more next best thing. They’ve become businessmen. the government. This compares with the US$2.7 countries in the top ten. The absence of the US surprising in view of persistent anti Chinese It’s the stranglehold on the economy wielded billion for 2012-13, which was a 42 percent higher seems to confirm analyst’s observations that US sentiment among the Myanmarese. by these generals that makes the US government than 2011-12. companies remain in a “wait and see” mode. The rise to power of pro democracy icon wary of Myanmar. A number of these generals The government targets a ten percent rise US firms are being held back by uncertainties Aung San Suu Kyi presents a real risk that and their cronies are on the US list of “Specially in FDIs for 2014-2015 to some US$3 billion. in Myanmar’s dicey political situation and a lack China will be sidelined in favour of non Chinese Designated Nationals,” or SDNs. Presidential Economic Adviser Zaw Oo expects these of real economic progress before the general investors, especially since she will almost certainly The US government has blocked the assets investments to boost the drive to grow agriculture elections scheduled for 2015. want to contest the presidency in 2015. of these SDNs and US persons are generally and tourism. About three quarters of Myanmar’s While Japanese investments did not rank Ms. Suu Kyi, however, has downplayed prohibited from dealing with them. These workforce is in agriculture; a key reason the among the top ten, a recent survey by the Japan her anti Chinese sentiments, saying she does individuals are off limits as business partners government is prioritising agricultural development. External Trade Organisation showed that over 80 not “…want to choose between China and the for US firms. percent of Japanese firms considering investments west, because both will be necessary for the As the new economic elite, however, these The West Invests in Asia-Oceania see Myanmar as a country in development of Myanmar.” generals and their cronies tend to dominate the Over a dozen US Fortune 500 companies are which they want to open up shop in the next Her antipathy towards China is reciprocated growing economy. There is also the lingering opening or have opened up shop in Myanmar. two years. by the Chinese who have, thus far, refused to fear the army could stage a coup if any civilian Among these are Coca-Cola, Ford, MasterCard, Japanese investments in Myanmar came deal directly with her or her political party, the government were to seriously jeopardise its Visa, Caterpillar and General Electric. to US$292.4 million in November 2013, National League for Democracy (NLD). interests. insider travel 25 www.myanmarinsider.com Three days in Yangon By Anthony Parker My wife could find a place to shop if she landed on the moon, so I wasn’t surprised when she told me that we were off to an old two story building downtown that is full of jade, rubies, pearls and a host of other items of jewellery that had her beaming with delight. We both love markets; spending several hours turning over a wealth of small antique items at hundreds of different stalls can be fascinating. Bogyoke Aung San Market (formerly Scott Market), is a sprawling enclosure built in 1926 and is the place to buy the sarong-like longyi, which is still worn by the vast majority of the male population. For ethnic textiles, head upstairs to Yoyamay. As well as the gemstones we found, there are also some really old items, such as antique coins, guns, plates and pictures - so much to look at. We had a ball. Luckily, we always travel very light and leave enough room in our luggage to fill them up for our return journey. Needless to say, and thankfully for me, the prices at the market were of very good value - leading to one happy wife. The Strand Cafée When the tropical sun goes down, 19th Street, between Bogyoke Aung San Market Maha Bandoola and Anawrahta Roads, still sizzles. Mounds of Street, as the food there was great and it was a good place to meet grill ready raw meat and fresh seafood, arrayed on outdoor tables people. So off we went for a mid afternoon late lunch, and sure Just a few short months ago a semi along this lively pedestrian stretch, lie ready to meet their fiery enough it was full of the local expat crowd. The Yangon expat retired British journalist friend of mine fate. A grilled fish runs to about K5,000. Are you the squeamish community is growing by the week and it wont be too long before and his Filipina wife, who both reside type when it comes to street food? Then you’re in luck. There’s more places like this are springing up everywhere. in Manila, asked me what life is like in enough cheap draft beer and cocktails at places like Ko San Bar Another good place to dine at is one of the first old shop Yangon. for a second happy hour. Other local dinner options featuring houses to be restored for public use; the Monsoon Restaurant My simple answer with a smile was, Burmese specialties from salads to curries, like Taing Yin Thar & Bar captures an updated rattan and fan vibe. Take a window “Come and see for yourself, you’ll love Myanmar National Restaurant or Khine Khine Kyaw, are a taxi table and enjoy the iced coffee, juices and try a panAsian lunch it”. ride away to an area near Inya Lake, a more residential area of of beef Thai green curry for just K7,000 and Vietnamese spring And they did… town where once posh villas peek from behind mildew streaked rolls at K5,000. Then sit back and enjoy Yangon as the street life -Vic Jeffery walls and lush foliage. Dinner at either place will cost between unrolls outside. K10,000 and K15,000. Before leaving, stroll past the many stands selling coconut ot so long ago it was almost impossible to find out any I have always liked to explore outside my hotel in search and banana offerings (which are meant to appease mischievous information about Myanmar and even more difficult of breakfast, and we came across a delightful little French style Burmese folk spirits called “nats”) and down to the riverfront to visit the country, especially as a foreign journalist. restaurant that served wonderful coffee and homemade fresh to watch ferries cross the tidal Yangon River waters as ships NI was intrigued by different books that I had read about baguettes filled with tomatoes and salami. The alfresco terrace glide toward inland ports. the old capital city, and recalled my mother’s uncle telling me was a great place to sit, dine and watch Yangon come to life. The It was our last night in the city and our flight was leaving at stories when I was very young of his military exploits in Burma. city certainly has a real charm to it. 10am the next morning. We simply had to have dinner in what One of my mother’s prized possessions was an old ivory statue The spiritual heart of Myanmar, the Shwedagon Pagoda’s bell is widely regarded as one of Asia’s best known old heritage hotels, of Burmese elephants walking across a bridge that her uncle had shaped stupa, rises in golden splendor above Yangon. Give the The Strand. The hotel is the epitome of British colonialism and brought home with him. tourist trail a miss by taking in the colourful pagoda neighbourhood architecture and just oozes luxury in this wonderful old city. I looked into the procedure of obtaining a visa, which is first, beginning with a bowl of mohinga noodles - Burma’s breakfast Deep cushioned winged armchairs adorn the spacious lobby now quite simple, and decided to take my wife off for a short - at the deli like Myaung Mya-Daw Cho on Yay Tar Shay Old area; an art gallery can be found through one of the many large trip to Yangon via Singapore. There are no direct flights yet from Street for about K500. Then, wander through shops brimming doors, along with several shops selling high end artifacts. The Manila, so it’s either a transit stop in Bangkok, Kuala Lumpur or with Buddhist religious items, papier mâché toys and herbal Strand Bar, which was the first stop off point for many Brits after Singapore. The latter proved better for us, as the flight leaves early health remedies before climbing up vertiginous steps to the their long and arduous journey from England many moons ago, in the morning; a couple of hours walking around Singapore’s Shwedagon Pagoda’s eastern entrance. It’s a wonderful way to is still a wonderful place for a cocktail. We reserved a table for Changi Airport (easily Asia’s best) and arriving in Yangon just spend the morning. dinner in the hotels magnificent Strand Café; the lobster and before 4pm local time was ideal. A young French man that we spoke to at a restaurant in steaks were grilled to perfection, the selection of pastries were Although there are over 200 hotels in Yangon, if you like a Chinatown last night told us to visit an English style pub on 50th equal to anything found in Paris, and the service, impeccable. little bit of modern luxury and comfort, the choice at the moment is still rather limited to not many more than half a dozen. Seeing as I am well past the backpacking era of my life, I plumped for the Traders Hotel, situated in downtown Yangon and just a 30 minute taxi drive from the airport. I was told by my old friend, the editor of this journal, that traffic in Yangon was equally as bad as in Manila, so I wasn’t surprised at the jams. What did surprise me is that no taxis had a meter; it’s a case of negotiating a fare with the driver beforehand, which is fine if you know your way around town and have some idea of what the fare should be. Luckily enough, they all appeared to be very helpful and quite honest - its about K7,000 from the airport to the downtown area. Most fares around town only cost just K2,000-3,000, so it’s pretty reasonable. The city in general still bares the scars of four decades of being closed to the outside world. Its many buildings, although architecturally magnificent and mostly left over from the days of being a British colony, suffer from a lack of renovation and preservation. The people swarm around in busy groups and, generally speaking, are very pleasant. One thing lacking, for me anyway, is the general ability to converse in English. 50th Street Pub Restaurant insider TRAVEL 26 www.myanmarinsider.com

Many of the temples in the town share managed by Angsana Hotels and Resorts (part Regal Luang Prabang a similarity in design with those in northern of the Banyan Tree Group), so guests expect and Thailand, as the two regions were once part of receive the best in terms of facilities and services. the same kingdom. The low sweeping roof lines While retaining the residence’s architectural By Anthony Parker and intricate design set Luang Prabang temples integrity, splashes of colour have been incorporated apart from many others in the region. into the interiors. Bright orange is the colour of choice and the stunning orange perspex wall in Waterways each bathroom introduces contemporary style Floundering in the shallows of the Mekong, in rooms protected for their heritage qualities. various teak-hulled boats from China, Thailand The Angsana Spa is real luxury with treatments and upriver Laos unload their cargo and await offered in air conditioned, tented pavilions in a fresh consignment before heading either back the Maison’s tropical gardens. upstream or further downstream. This important waterway, known locally as the Mae Kong or Dining “mother river” continues to give life and renew it. Many travellers come to Luang Prabang to The 4,880 km long river is still used in ceremonies simply chill out. For such people, taking time that follow cremation in which the ashes of the over coffee, visiting souvenir shops and dining deceased are returned to its waters to be carried are as important as seeing the sights. into the next life. For visitors, the river is the Luang Prabang’s cuisine is distinctive and route to discovering other attractions in the different from other Lao food. Again, it has region, such as the Pak Ou Caves. more in common with northern Thailand than Two hours upstream, the two cavernous anywhere else. Rich in vegetables, the soups limestone chambers of Pak Ou are located in a and curries are a healthy choice for diners. steep cliff face that rises from where the Mekong Although the growth in tourism has and the Nam Ou Rivers come together. The brought with it a more universal selection craggy mountain scenery is impressive and the of restaurants serving various international strenuous climb to see dozens of Buddha images cuisines, the local food is what attracts most enshrined here is worth the effort. Tour boats visitors. The delicious cooking of Malee often stop at the former pottery village of Ban Khevalat at her unassuming restaurant on Xian Hai, which is now better known for distilling Thanon Phu Vao offers the chance to sample the infamous rice whisky that is so popular with some excellent local food. locals. Twenty minutes upstream from Luang The restaurant in the ultra chic Apsara Prabang is the potter’s village of Bahn Chan, serves an excellent selection of local and western the production centre for the jars that hold the favourites. Each evening they serve Asian and strong elixir. Western set meals which offer the best value in designer surroundings. Elephant Blanc Palaces in the Maison Souvannaphoun Hotel has a Good accommodation is abundant in Luang delightful open-sided poolside setting. Both Prabang and is quite cheap for the high standards the Lao and Western dishes are excellent and Wat Xieng Thong Luang Prabang offered. Budget accommodation can be obtained the surroundings are very refined - try Keng or travellers, historians and archaeologists, During the cooler months from November to for as low as US$10 in some good guesthouses Som Pa (sour fish soup) with its subtle lemon the Peoples’ Democratic Republic of Lao February the climate is pleasant and the mornings in the historic parts of the town. grass flavour. (Lao PDR or Laos) remains one of the are crisp and cool. Rise early and witness the Move up a little more upmarket and there In the not too distant past, Luang Fregion’s most fascinating destinations. Its former age-old tradition of scores of Buddhist monks, are some unique boutique properties. A popular Prabang nodded off by nine in the evening, royal capital of Luang Prabang, located at the resplendent in their orange robes, collecting choice with design-conscious travellers is The but today, with the influx of cafés, bars and confluence of the Khan and Mekong Rivers, is alms from the faithful. Climb the stairs to the Apsara, described as the chicest place in town. restaurants, there’s no need to retire so early, the most alluring destination in the country. The top of Phu Si, a small hill in the town centre, The Apsara offers a handful of spacious rooms although most people are expected to be architecture of its historic heart is a unique blend for panoramic views of Luang Prabang’s golden decorated with local hill tribe textiles, four in bed before midnight. Clustered around of local and European styles and fortunately much chedis (shimmering temple roofs), the Mekong poster beds and period furniture. Corridors Thanon Sisvangvong and pushed up against the of it has been retained. French colonial influences River and mountains covered in mist. and rooms feature purple glass Buddhas and Mekong, Luang Prabang’s bars and restaurants and the local cultural heritage combine to offer colourful hanging lights. The downstairs bar, offer alfresco dining in the pleasantly balmy a very stylish town with complex traditions and Temple Town restaurant and lounge are some of the town’s climate. contemporary sophistication. The town has over 30 ancient temples, with most desirable outlets. The royal city of Luang Prabang may have the most magnificent being Wat Xieng Thong. The Five minutes cycle away; Maison awoken from its slumber, but it still offers the World Heritage oldest structure in the temple compound dates Souvannaphoum was once the official residence opportunity to get a glimpse of a part of South East With its ancient Buddhist temples and back to 1560 and there are numerous displays of of Prince Souvanna Phouma. The minute you Asia that has changed little over time. Whether continued adherence to local traditions, Luang colourful mosaics, detailed architectural features step onto the property, you know it’s anything you like to travel in style or prefer the simple Prabang became the centre of Lao culture. and beautiful gold-stenciled artwork. but ordinary. The 24-room boutique hotel is pleasures, Luang Prabang is well worth visiting. Acknowledging its importance to the world, the town was designated a UNESCO World Heritage Site in 1995. Parts of the old town have since benefited from a detailed restorative effort to protect the urban streetscape. The World Heritage protection has worked for and against Luang Prabang. It is now no longer a sleepy backwater visited by just a handful of travellers enjoying the pleasure of being one of just a few visitors in a foreign land. Yet, despite it now being a popular destination for many travellers in Indochina, the recent influx of tourists, the opening of dozens of restaurants and bars, internet cafés and smart boutique hotels, Luang Prabang has managed to retain much of its grace and charm. One of the great attractions of the old town is that it’s easy to explore on foot or by bicycle. Xieng Thong Luang Prabang Mekong River at Luang Prabang Mosaics Wat Xieng Thong Luang Prabang insider TRAVEL 27 www.myanmarinsider.com Ngwe Saung - Myanmar’s Beach Destination of Tomorrow? By Naw Thee Zun

Seashells on a beach near Ngwe Saung

Stunning views, unique to myanmar

ith Thailand just next door, it is hardly surprising that many Yangon dwelling expats look eastwards when considering their next beach holiday. WEven with the ongoing tensions in the city that have shutdown parliament and split the country almost entirely down the middle, Thailand, with its world class beach destinations, beautiful weather and reasonable prices, continues to attract an impressive number of foreign tourists (while Thailand’s tourism figures were likely to have dropped in 2013, in 2012, over 20 million foreign visitors arrived in Thailand, compared to 2 million in Myanmar). However, Myanmar is developing beach destinations of our own. While accommodation and activity options remain limited at Myanmar’s beach destinations, that simplicity is all part of the charm. After all, why else would you go on a beach holiday? While the resort laden Ngapali Beach in Rakhine State and A beach front to rival the world’s best isolated beaches of the Mergui archipelago are highly celebrated, it is Ngwe Saung, five hours west of Yangon, that attracts visitors due to are mixed. At the beach’s northern end lie two pagodas that sit atop those days in the early 20th century, there are a few sites worth seeing its simplistic and calm lifestyle - and of course its location close, in a couple of large rocks. in the town. relative terms, to the former capital. It’s not much, admittedly, but some of the larger hotels that are There’s a scenic waterfront at Pathein that hosts a number of Some groups hire a minivan to travel to and from the beach, but opening in the area (even the high end hotels have been constructed Buddhist temples, the most popular of which is the Shwemokhtaw those without the numbers required for a van will be reliant either tastefully and, as of yet, there are no ugly resorts ruining the Pagoda, which, according to legend, was built by King Asoka of on private taxis or public bus. The former normally costs around shoreline) are beginning to offer fishing trips and cooking courses India in 305BC. After many renovations it is now said to house over K150,000 each way (shared between four, it works out quite well) that include a shopping trip to the local market, and most of the six kilograms of solid gold, as well as hundreds of diamonds, rubies and the latter leaves from the Hlaing Tharyar Bus Terminal in the hotels offer motorbikes for hire for US$10 a day that can get you to and other precious stones. west of Yangon, with buses leaving at 6.30am and 7.30am and Chaung Thar in little over an hour. Pathein is also home to the Pathein umbrella, the attractive, arriving sometime around midday, which costs roughly K9,000. Hardly surprisingly for such an underdeveloped destination, intricately designed parasols; visitors to the town are able to visit the With coconut trees lining the beach and basic huts sitting nightlife is relatively limited. In the main town itself, there are a factories where these are made using traditional techniques. Other a few hundred yards back amongst the foliage, life is simple in number of basic restaurants serving up local seafood with some gems industries in the area include pottery and the weaving of colourful Ngwe Saung. While Ngapali is seeing a surge in high end resorts to be found, while a popular daytime trip involves the 45 minute baskets, and there are factories producing these items that can be and Chaung Thar, just a few dozen miles to the north, is a lively journey to nearby Pathein. visited. destination, life trundles by slowly here. During the country’s colonial days, Pathein was one of the most Nearby Pathein is an Elephant camp where visitors can witness Along the beach itself, life doesn’t get much more strenuous prosperous cities in what was then Burma. This was mainly due to the country’s few remaining working elephants, who are said to be than a quick dip in the ocean or a pleasant stroll along the practically the thriving rice industry in the area surrounding the town (at the looked after and well trained. The camp also acts as a fundraiser untouched beach. During low tide, it is possible to walk to Lovers’ time, Burma was the leading rice exporter in the region) but suffered for many of the families working in the elephant trade, which has Island, a lush green retreat that lies a few hundred metres off the due to the poor management of the rice industry during the socialist struggled to survive with the influx of new technologies arriving in beach where it is possible to do some snorkelling, although reviews era. While much of Pathein has fallen into relative disrepair since the country. insider TRAVEL 28 www.myanmarinsider.com 5 Things - Some Upcoming Tourist Destinations

By Naw Thee Zun The Mergui Archipelago

efore the country began its current spate of reforms, foreign visitors to Myanmar were relatively few and far between - at least when compared with the current Bnumbers of arrivals. Pre-2011, the country was an extremely difficult place to travel to and around and, as such, visitors would mostly stick to the “Big Four” popular destinations - the vibrant streetlife of Yangon, the majestic temples of Bagan, the history and culture of Mandalay and the calm tranquillity of Inle Lake. Even today, most visitors see only these sites during the visits, but as more information becomes available about the country and it becomes an easier place to travel within, more and more tourist destinations are opening up, looking to attract visitors who are often looking for something different from the well worn path.

Shan State, which is said to be one of the most scenic of the Options for activities remain fairly basic, but with the country’s 14 states and regions. majority of islands being in close proximity, there are great Hsipaw’s main selling point, however, is the journey in by options for exploring by boat or snorkelling, while there train. The trundling train from Mandalay crosses the surreal is potential for Mergui to emerge as a world class diving Gotheik Viaduct, a 700 metre long viaduct that was built by destination. the British in 1900 and is one of the world’s most famous train There are popular dive sites at Shark Cave and Black journeys (it even got a mention in Paul Theroux’s legendary The Rock and creatures known to dwell there include bull sharks, Great Railway Bazaar book). manta rays and a great variety of others. Hpa An

Hpa An Sitting on the eastern edge of the Thanlwin River is this picturesque town with its bustling teashops, beer stations and restaurants. Located 280 kilometres from Yangon, the main drawing point for most visitors to the town is the beautiful scenery on the outskirts and the impressive array of caves that are located in the town’s vicinity, including Yathaypan, Kawfun and Kaw Ka Tawng. The most famous, however, is the large pagoda filled Saddar Cave, which also includes a number of Buddha images. Mount Zwekabin, located 16 kilometres outside the town, offers incredible views across the beautiful Karen State. The walk takes between three and four hours and the best views are offered to the early risers. Mrauk U temples Pyay - The Irrawaddy River Hpa An’s emergence as a tourist destination has been helped by the opening of the border between Myanmar and Thailand at Mrauk U The area is also home to the Moken people, sometimes Myawaddy and makes a useful stopping point - to the likewise Mrauk U (usually pronounced “Myow Oo”) was once a known as “sea gypsies”, who live a nomadic, sea based life nearby Mawlamyine - on the way from the border to Yangon. thriving city that was part of the mighty Arakan Kingdom. and have become masters of free diving. During its heyday in around the 15th century, it would regularly attract traders from as far afield as Portugal and the Netherlands. Pyay (Prome) Evidence of this popular age continues to remain today, Pyay (named Prome by the British) was established in its although in a slightly more dilapidated form, with impressive current form by the British Irrawaddy Flotilla Company in the 19th sculptures dotting the area (in fact, Mrauk U is sometimes century due to its location on the eastern bank of the Irrawaddy referred to as more impressive and quieter than Bagan - itself, River, making it a key trade point between what was then Upper seen to be quieter and more impressive than Angkor Wat in and Lower Burma. Cambodia - but lacks tourism infrastructure and can be quite However, there is a much more ancient history surrounding the difficult to reach compared to Bagan). town. The original town was located eight kilometres from what is The temples are roughly split into four groups, northern, now Pyay, and was named Sri Ksetra. It was a thriving town and southern, eastern and western, and it is the northern section once capital of the Pyay Kingdom that stretched across much of Highland town of Hsipaw that offers the most impressive; by far the most popular is the what is current day Myanmar. Shittaung Pagoda, which was built by King Min Bin in 1535. The remains of Sri Ksetra can still be seen today (and it is reported Hsipaw Others include Andaw, Ratanabon Zedi and Mahabodhi Shwegu. that it will soon apply for UNESCO Heritage Status) and makes Hsipaw (sometimes pronounced “Teepaw”) is a charming Options for exploring the area include hiring a bicycle for an interesting day trip for visitors. The ancient walled city, an 18 town located close to the Chinese border, not far from the or a jeep, the latter of which costs around K25,000 per day, square mile area, was the largest walled city in the region at the time. bustling border trade town of Lashio. including a non English speaking driver. Many of the city’s timings are heavily debated, but it is mentioned The town itself is relatively quiet and the majority of activities in recordings of seventh century Chinese pilgrims. are based outside the city’s limits, with hiking a popular option. The Mergui Archipelago However, when the delta area around the town increased in Walking guides are easy to find once you arrive in the city, but This more than 800 strong group of islands on the popularity, the Pyay people abandoned the city and moved elsewhere. one good hiking option is Namhsan, known as the “Tea Capital” Andaman Sea is being tipped as one of Myanmar’s hottest In the modern town, one of the best views comes from a spot of Myanmar, which is also home to the Palaung people. up and coming destinations, due to its practically untouched known as Custom Hills, where dozens of Buddha images have been To the north is a collection of pagodas known as “Little beaches and proximity to Thailand - although infrastructure carved into the wall overlooking the Irrawaddy and, as it takes almost Bagan”, offering beautiful views across the town and surrounding remains an issue. an hour to get there by boat, it is usually a quiet spot to enjoy the view. insider info 29 www.myanmarinsider.com

efficiency to deliver 2CO reduction. However, as higher reduction targets are implemented, the cost of reducing emissions becomes progressively prohibitive. Political commitments notwithstanding, the diverging Climate Change dynamics of national interests may have been underestimated, if not ignored. During the preparatory meeting in Barcelona, Regaining Entrepreneurial Impetus Spain, The Climate Group presented their findings on the impact on long term GDP and employment growth, based on a number of policy scenarios. For example, the European Union By Jack Dixon (EU) going it alone would gain the most in additional GDP and employment growth (i.e. compared to no action). What stops the European Union from going unilateral, however, is the potential pain inflicted on other countries, such as the United States, Japan, China, India and Mexico. In contrast, global coordinated action benefits all countries - with China gaining the most. The rub in this analysis, however, is in the significant degrees of error. Thus, while directionally, the results give policy makers some guidance, the pain for inaction is insufficient for countries to take urgent actions. Thus, we are in a stalemate - while the benefits of coordinated actions appear attractive, inaction does not inflict harm, thereby allowing countries the luxury to take a “wait and see” stance. In fact, this is the position most countries took giving rise to a paradox - apparently strong political and consumer support failing to translate into policy actions. Combine this with the heavy commitment for the early movers; rational decision makers are bound to keep their options onferences come and go with a whimper, the supporters while eclipsed by the United States, remains in the company of open. That is, while there appears to be a consensus on the virtues and detractors in agreement about disappointing results. prosperous nations. Coal ceded its predominance to technology of a cleaner environment, investors cannot put their faith on an But, clearly ambitions must be raised significantly if we and fuels that did not exist in 1865. outcome that is so uncertain and so far off in time and benefits. Care to hold the world to 2 °C variation in global temperature.

While many fail to agree global targets for carbon dioxide (CO2) Copenhagen Accord An alternative approach - taxation and technology emissions, I see this as an opportunity to regain entrepreneurial The Copenhagen Accord is a non-binding letter of intent choices impetus in the approaches to address climate change. Science to avert the catastrophic consequences of climate change. The Erik Rasmussen, founder of the Copenhagen Climate Council, remains divided on technologies and the effectiveness of mitigation signatories agreed to take note of the following: a) to recognise may have identified a way for entrepreneurs to regain the impetus. measures. As a result, business that seeks to commit funding to a 2 0C threshold for global temperature variation by 2050; b) Over the past two decades, the accelerating growth in renewable climate change investments - bearing any returns and risks - are a review in 2015 for possible downward revision of the target energy was because of a combination of generous public support looking for guidance that is of relevance to their decisions. to 1.5 0C; and c) to create a US$30 billion Copenhagen Green and subsidies, where technological innovation quickens its pace Unfortunately, such clarity from science is unlikely to be available Climate Fund. with greater deployment. Thus, Rasmussen observes that “reducing - not now or in the foreseeable future. Such is the degree of The Fund attracted most attention with donor countries the emissions that will now have been so linked to our economic uncertainty that technologies that may prove effective in the offering to increase the size to US$100 billion by 2020. The Fund growth and betterment will be an enormous, unprecedented next few years have yet to be developed. seeks to assist the most vulnerable developing countries to adapt global challenge, but will also provide significant opportunities and mitigate the effects of climate change. To monitor progress, for sustainable growth, green jobs, development and innovation”. In the face of this uncertainty, what are the recipient countries undertake to communicate efforts every two While the vision identifies the attractive opportunities, options for business? years on implementing measures to limit CO2 emissions. the remedies proposed are less visionary. The six point agenda I do not see this uncertainty as an excuse for business not Supporters of the Accord point out that Copenhagen was a proposed by business leaders can be summarised as follows: More to take action. In fact, I see in the various strands of renewable major step forward, in spite of its disappointing results. In the first incentives (i.e. subsidies, price support) to increase deployment energy technologies (RETs) cause for optimism that a CO2 free place, the United States is fully engaged - which is in contrast to its of low emissions technology; more funding for communities future is within our grasp. However, the route to this future disinterested (if not hostile) stance in the past. With the inclusion to adapt and mitigate; and performance based monitoring of may not rely on governments agreeing to implement global CO2 of China, India, Brazil and other South America countries, any emissions reduction by business. reduction targets, provide generous cash and subsidies, or create post-Kyoto Protocol (i.e. included only 30 percent of polluters) Subsidies and support for specific renewable energy national champions out of known RETs. The solutions are likely agreement potentially includes all the major polluters in the world. technologies, under a rapidly changing technological environment, to be local and driven by entrepreneurial prowess, rather than represent a high risk strategy. Our ability to predict which bureaucratic diktat. Why the 2 0C solution… and its consequences? technologies will win - and deliver over the course of the next

Global climate debates are distracted from their economic The framing of the Accord on reducing CO2 emissions to limit decade - is limited by existing science. In itself, science’s ability merits by neo-Malthusian views on resource scarcity. For me, the temperature variation to 2 0C is part of the problem. Science is to predict technological changes that can meet future emissions aberration of a failed conference gives space for entrepreneurial divided on the impact of temperature variation, much less on a reduction more effectively than present technologies is doubtful. impetus to reassert itself. We only need to be reminded of Stanley precise estimate for 2050. For reasons unknown, political debate Jevons’ 1865 paper on The Coal Question. Jevons argued that zeroed in on 2 0C as an objective. For people accustomed to seasonal What gives entrepreneurial impetus to “green” British industrial pre-eminence was doomed to decline, given temperature swings, a 2 0C variation is no big deal. However, to opportunities? that coal could only be mined at ever greater depths and spiraling sustain such a range over a long term average temperature, the In my doctoral research at Cranfield, England, I came to costs that would “cripple industries dependent on it”. He boldly costs can be horrendously expensive. the view that getting the price of competing technologies to declared that “it is useless to think of substituting any other kind To achieve the 2 0C target, existing technologies would rely RETs is where we need to start. Specifically, coal, oil and gas of fuel for coal”. Since 1865, British industrial pre-eminence, on energy conservation and innovation in power generation emit CO2, with power generation and transport accounting for insider info 30 www.myanmarinsider.com

significant parts of emissions. However, CO2 emissions are treated An impossible dream? Banning Chlorofluorocarbons (CFCs) energy conservation investments, given continued uncertainty as externalities, because there is no easy way of pricing them. As spurred the development of a viable alternative - not the subsidies on benefits that vary with power tariffs, costs, demands and a result, the politically expedient approach is to subsidise RETs, to develop replacement technologies. So, how much in taxation capex (Dixit and Pindyck, 1994) - what Jaffe and Stavins refer rather than price CO2 emissions in oil, coal and gas. do we need to add to hydrocarbon based technologies? as the “energy paradox”. This approach results in pricing distortions that favour coal, This is answered by comparing the “levelised” costs of 2. RETs declining capex and subsidies pose a dilemma on the oil and gas. With society paying for its CO2, hydrocarbon based energy, a method of estimating the comparable costs of different merits of an “early movers” advantage that delays investments, power technologies and transport are favoured because they technologies. At an oil price of US$60/bbl, onshore wind operated unless generous subsidies (or threat of their removal) encourage are seen, mistakenly, as the cost effective alternative. To realise in areas with high wind availability can compete with gas. an earlier exercise of investment options.

Rasmussen’s visionary aspiration, pricing CO2 forms the critical Compared to coal, on a fully taxed basis (i.e. CO2 emissions), mechanics to exercise technology choices between RETs and onshore wind is more competitive. Interestingly, hydro, geothermal Government subsidies, however, when used with supportive hydrocarbon technologies. and nuclear, all non CO2 emitting power generation technologies, transformational strategies by firms, facilitates technology diffusion. While future RETs evolution is uncertain, backing are more cost competitive than gas and coal. The carbon tax (or Spain and Germany’s transformation as global leaders are attributed technological champions with subsidies based on what is known cost) needed to achieve RETs grid parity is less than the marginal to supportive regulation that firms use as a backdrop for developing today can be shortsighted. This is, in fact, the equivalent of cost of carbon. their capabilities for RETs. In contrast, the UK’s uptake of renewal Jevon’s Malthusian stance. That is, by subsidising known RETs Contrary to the anti-tax arguments, RETs, such as wind energy by utilities was less enthusiastic, in spite of a similarly explicitly, government is making a choice as to which technology power, can compete effectively by applying indicative prices for supportive package of incentives. will deliver the results in a decade. Unfortunately, just like Jevon’s CO2 emissions associated with coal, oil and gas. Taxation has the Far from a need for global consensus to turn into a legally coal argument, a number of known RETs could be replaced virtues of being transparent, certain - and hits the wallet were it binding agreement, governments can play constructive roles by by more advanced and cost effective technologies that are yet matters. For large scale users of hydrocarbon based energy, taxing adapting policies that facilitates technology development and unknown today. CO2 represents an effective way of encouraging the search for deployment. When one talks of aid and support, the mechanics

For this reason, I propose we start with what we aim to alternative technologies and ways of generating CO2 free energy. for delivering such intervention is the local government –-not a achieve with policy interventions. Now, we just need to find an agile politician to sell this globally binding agreement. There is sufficient political consensus that clean environment proposition to their constituencies. After all, the conferences failure may prove to be the is what we as a society prefer to have. Whether we believe this entrepreneurs’ gain. With local governments pursuing policies as part of a crusade for global salvation, or plain and simple Public/private cooperation that matter to them, working with the private sector, we may business opportunity, we can agree on this premise. In effect, Official consensus is inclined to “socialise” funding through yet accelerate achieving a carbon-free future by applying the what we want is a clean environment (as an objective) with subsidies and in the guise of employment creation. Deploying wide discipline of the market as opposed to “socialising” investments, reducing CO2 emissions as the means to achieve this. Seen in ranging tools - subsidies, portfolio standards, feed in tariffs, green as governments are inclined to do. this context, the 2 0C solution may indeed appear to confuse the certificates, incentives and taxation - governments have mixed means with the objective. records in delivering on their CO2 reductions under the RETs To achieve this carbon-free future, we know what power and deployment. In fact, poor policy hinders rather than facilities transport technologies contribute to CO2 emissions. Hence, by adaptation. Examine for instance: penalising through taxation and appropriate CO2 pricing, the US periodic setting portfolio standards for RETs led to a appropriate costs of CO2 emissions become internalised. In boom/bust cycle in investments, given that regulatory uncertainly the process, with hydrocarbon technologies no longer looking hinders commitments by firms looking for certainty. as “cheap”, innovations to replace them with RETs are given impetus. This is where the entrepreneurs come in to lend a 1. Demand, costs and capex remain uncertain, notwithstanding hand in translating technological innovations into commercial the US government’s ability to regulate power tariffs. US opportunities. tax incentives, applied from 1978 to 1985 failed to increase Will Google enter China? By Richard Bowles

Google At Davos, Eric Schmidt, the current chairman of Google, discussed how Google might be entering China, regardless of whether or not the Chinese government wants them to. Google have stated that they could utilise encryption technology to get around strict censorship rules that are in place in countries like China and North Korea. The mere fact the option is being discussed means there is at least a slim chance of the concept becoming a reality. In coming years, companies like Google might be able to enter into the Chinese market under what might be considered more “normal” circumstances. Under the Shanghai Free Trade Zone project, Chinese authorities said that the Zone will eventually have “open internet services”, implying that Google would be available for Chinese internet users. Progress towards this end, however, seems to be removing rather slowly. . While the concept might seem like a pipe dream, the chances of Google entering China over the next five to ten years are seen as high.

Baidu Following on from a magnificent rally, it may well be the As of this writing, Baidu is dominating the Chinese search right time to start taking profits on Baidu. The risk and reward engine market with more than 63 percent of the share. If, as payoff is far from as favourable as it was when Baidu was trading expected, however, Google enter the China market, it is widely at half the forward PE ratio that it is now trading at. Based accepted that Baidu would go on to lose a considerable portion of on valuation, Baidu is no longer considered to be attractive, so its current share. Moreover, it is likely that the market will begin the possibility that Google could enter China could well be a discounting the impact of such a venture before it actually starts. major obstacle for Baidu shares. insider info 31 www.myanmarinsider.com The Poverty of Wealth By Bruce Curran

“Is there anyone so wise as to learn by the experience of others?” - Voltaire

he continuing Asian economic boom all looks good in the media, and Asia is generally presented with its red carpet laid out well into the future. Meanwhile, Europe Tfalters under the collapse of Greece, and the USA tries to trick the world with spin about its boundless strength and world leadership qualities. It’s all jargon in the end. The Western world may be suffering economically, but by and large they are a conscientious lot and play a big role with social welfare foundations by supporting their populations. Austerity measures, when applied by governments, are traditionally unpopular, and the violence and activities in Greece were evidence for all to see.

Asia Wealth China, India and Russia in particularly are seen to be flying, However, go to the edges of these cities, go to the country Today, the Philippines is a prime example. Decades ago, the and all of Asia seems to be hanging on to their coat tails and side, go to the farm lands, the nondeveloped areas and you see a Philippines could feed itself from its own rice crops. 30 years turning towards growth. In China, the success of capitalist different picture, which is often not a pretty one. ago, it had the same population numbers as the UK - around 60 wealth, carefully engineered by communism, is heralded as the million people. Today, the UK population is pretty much still perfect formula. Asian Poverty 60 million, while the Philippines has increased some 50 percent Beijing is undoubtedly booming, but rapid growth The individual, by and large, is driven by personal gain and to an estimated 92,000,000. The imports of rice are up to 20 has brought with it big changes that are pitiful to behold. greed. Profit and growth are heralded as the benefits of this state percent of its own production now, and with climate change and Household waste levels have soared and the city is struggling to of affairs. All over Asia there are pockets of such individuals, all, there is an increasing strain on the social fabric to survive and limit and contain the pollution that it creates. The millions of basking in the sunlight of a perceived success. In the shadows provide for the people. The International Rice Institute at Los new private cars on the pristine roads of the capital are snarled lurks another beast - the friend of poverty - the family who have Baños, close to the capital Manila, has created ways of massively into traffic jams that run for miles from one end to the other. no access to the “boom”. A strange magnetic effect takes place increasing rice yields, but this is not enough, and these yield And this is only the beginning. Give the city five more years and at the edge of every city. The country folk think the city has all increases are now slowing down. All in all the poor are indeed the traffic will be intolerable. The Chinese think, like the old the answers, and on every street corner is a job and a way to getting poorer. west, that a private car is the outward expression of success. In earn money. This perception is wide spread and contributes to Worldwide there are an estimated 159 births every minute, Hong Kong, where there are more Rolls Royces per capita than the situation, which often leads to misery. which translates to 83,570,400 each and every year! Food and in any other place on earth, many people live in tiny highrise energy issues are burgeoning in conjunction with the trappings matchboxes with their whole families on top of each other, but “East meets West” of wealth - materialism. As of May 2012, the human population drive around in a Mercedes Benz. The USA, despite its massive wealth, and its impoverished of the world was estimated by the United States Census Bureau It is all to do with “face” in the end, referring to that claim to use, annually, 40 percent of the world’s resources, still to be 7.144 billion. Leading food expert indicate that the earth intangible element whereby you give an impression of soaring has appalling poverty, illiteracy, hunger and other socio-economic could support perhaps 16 billion people, but throw in the current high and mighty, avoiding the reality that is too lean and issues within its own borders. Can Asia learn from this failure and trends towards rampant materialism, and surely the world will mean to reveal to others. In Asia, “face” is paramount, and all fight the good fight for the good of the people? spin off its axis and resign. The fact remains that it is not a lack of these essentially western inventions like the TV, the telephone, George Orwell noted, in his most famous book, Animal food that is keeping a ludicrous percentage of the world hungry, and the motorcar have a side to them that is quite honestly Farm, that “we are all equal, but some are more equal than but the distribution of food, which comes back to the greed I nonsensical. others”. Herein lies the quandary: can social vulnerability mentioned earlier. Take the size of a Ford Expedition, with its massive levels be soothed by social responsibility, or will greed (fuelled by Other grand statistics boast of annual economic growth, of fuel consumption relative to a more practically sized car, corruption) continue to take centre stage? skyscrapers galore, neon signs flashing and all those trappings and you have a gas burner par excellence to deplete our global that portray a canvas of Asia’s perceived success… but it all leads resources even faster. Well, not literally, but you know what I Novelties Wear Off to the poverty of wealth in the end. mean. Some parts of Asia are still in their economic infancy and There again, take a Ford Expedition, hollow it out and you boisterously flashing new found wealth like a kid with a new have the perfect shell for a family of four to live in. This is no gadget at school. Once the excitement has died down, will they joke, and not directed against Ford or anyone else, but it just be able to chew on their cud and milk the needs of the greater defines the kind of spaces that a lot of the urban poor live in population who are not party to the mainstream changes? This in Asia. population live their lives offstage, blinkered in an ancient routine The largest car market in the world is China, and the Ford where “every man takes the limits of his field of vision for the Motor Company has a considerable presence in the country. limits of the world” (Arthur Schopenauer). Only those who can What about pollution? What about carbon footprints? And break this mould will see the light of the new economic dawn. It what about saving the planet?? Toyota, Hyundai, Honda, Tata may look like a simple formula, but can Asia make the grade and and many other Asian car companies are jumping on the band not be dragged down by the excessive obsession - nurtured in the wagon. West - with materialism? The better educated are indeed getting richer, and getting there quicker than those before them. The old cliché rears its ugly head Population Rotation again - “The rich get richer and the poor get poorer.” How many There are other ingredients that will infect the new found thousands of dollar millionaires are there now in China? What about wealth. Remarkably, many moons ago, China saw the perceived billionaires? Current figures indicate that there are over 100 dollar dangers of a rapidly increasing population and closed the doors to billionaires in China, which is second only to the US. couples having more than one child. In many other parts of Asia, When one travels to the gleaning new airports all over Asia and the pendulum is at the other end of the spectrum, and large families stays in classy hotels in booming cities, it seems like there is no end are the norm. Population growth, whether governments like it or to the development and the wealth. not, is a major issue. Not least is the ability to feed its people. insider BUSINESS 32 www.myanmarinsider.com The Alamanda Inn By Charlie Greene

It’s not just the atmosphere that makes Alamanda such a blue cheese with potato slices, mushrooms with cream, as well good choice, as the food is impressive both in terms of its range as the more basic lemon and sugar, but where the Alamanda and its quality. Starter options include Croque Monsieur (K3,000) Inn really excels, particularly for dinner, is in its beef and and a range of hot and cold tartines (priced between K2,500 and fish dishes - again, a personal favourite is the Steak Tartare. K3,000), but, as a personal choice, their salads are an excellent The restaurant also offers some small hotel rooms for a starter with the Cretoise Salad (K6,500) - including marinated quite reasonable price and is a beautiful place to spend the peppers, eggplant, feta cheese and black olives - the standout dish. day, either to have some lunch or for business meetings in Hardly surprisingly given the French theme, the baguettes the evening. Give it a try. and crepes are enjoyable, too, with options of the latter including Inya Myain Road, Bahan Township, Yangon

Steak Tartare

t’s probably not an unfair stereotype to say that, generally speaking, the French are pretty particular when it comes to food, and that is heightened all the more when it is their own Icuisine they are consuming. With that in mind, there are few stronger recommendations for a French restaurant in Yangon than one that is popular among the city’s French residents. The Alamanda Inn, a peaceful and well designed restaurant bar nestled into leafy Golden Valley, wins that accolade. The setting itself couldn’t be much further from Europe and feels much more like something from Bali than the centre of Paris. With its calm atmosphere and large thatched covering that offers almost total respite from the heat - and sometimes the rain - Alamanda is one of few options in Yangon that offers a break from the city without the unnatural hum of air conditioning. Crepes with ice cream

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