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BURMA HUMAN RIGHTS REPORT OCT 95 (6 (r)
Subject: BURMA HUMAN RIGHTS REPORT OCT 95 (6.44-6.58)
/* posted Sat 9 Mar 6:00am 1996 by DRUNOO@xxxxxxxxxxxx
in igc:soc.culture.burma */
/* -----------" BURMA HUMAN RIGHTS REPORT, OCT 95 (6.44-6.58) "---------- */
CHAPTER SIX: (6.44 - 6.58)
*************************
The Parliament of the Commonwealth of Australia
Joint Standing Committee of Foreign Affairs, Defence and Trade
A REPORT ON HUMAN RIGHTS AND THE LACK OF PROGRESS TOWARDS DEMOCRACY
IN BURMA (MYANMAR) October 1995
CHAPTER SIX: ENGAGEMENT OF ISOLATION (6.44 - 6.58)
--------------------------------------------------
Trade and Investment
6.44 The Country Economic Brief for Myanmar produced by the Australian
Department of Foreign Affairs and Trade warns that statistics in relation
to Burma need to be treated with caution. They are neither precise nor
complete and should be seen as guide only. They rely on the official
exchange rage of 6 kyat to $US1 which is considerably different from the
unofficial rate of 80 kyat to $US1 - 120 Kyat to $US1. According to the
World Bank, Burma's total external debt in 1993 was $US5.5 billion, half of
which, $US3 billion, was owed to Japan and $US700 million to Germany. The
weak foreign exchange position made it difficult for Burma to service its
debt [34].
6.45 Assessing trade statistics presented particular difficulties because
of the overvalued exchange rate and because a substantial part of Burma's
trade is unrecorded, especially in relation to illegal cross-border trade.
Nevertheless the terms of trade appeared to be deteriorating. Since 1985-86
the terms of trade declined by 47.6 per cent. The trade deficit had
expanded from $US616 million in 1993-94 to $US724 million in 1994-95.
Table 6.2: Trade Deficit 1994-95
------------------------------------
Year Amount
------------------------------------
1993-94 $US616 million
------------------------------------
1994-95 $US724 million
------------------------------------
Source: DFAT Country Economic Brief, Myanmar, August 1995. P.14.
6.46 In 1994-95 exports grew strongly at 12.9 percent: agricultural and
forest products, seafood minerals and gems. The private sector accounted
for over 50 per cent of these exports. Imports, mainly consumer goods,
increased by 15 per cent although the rate in increase in imports was
slower than in 1993-94. Most exports go to Singapore, Thailand, India, Hong
Kong, China and Japan. Most imports come from Japan, China and Thailand.
There is also a very large unrecorded trade with both Thailand and China.
Table 6.3 Balance of Trade 1995-95
[ Chart unreproducible in this format -- uneoo]
Source: DFAT Country Economic Brief for Myanmar, August 1995.
6.47 Although overall figures are still relatively low, the extent of
'engagement' with Burma in trade and investment has been increasing since
economic reforms were carried out in 1988. The Government introduced a
Foreign Investment Law in 1989-90 which gave tax exemptions and tax relief,
rights to repatriation of profits, guarantees against nationalisation and
the right to wholly foreign-owned ventures. To obtain these benefits there
is a minimum foreign capital requirement of $US100,000 [35]. According to
the most recent statistics released by the Government of Burma, Burma
received $2.9 billion in foreign investment by 151 companies from 18
countries.
6.48 The United Kingdom is the largest single investor, followed by France,
Thailand, Singapore, the UNited States of America and Japan. Most of the
paid in capital was in the oil and gas exploration sector. many companies
which paid in capital in this sector no longer operate in Burma. According
to the DFAT Country Brief this accounts for one third of the paid in
capital. Hotels and tourism accounts for the next largest sector,
accounting for $US 568.44 million.
6.49 Investment is still inhibited by the difficulty of repatriating
profits and the continuing controls on foreign exchange.
Table 6.4: Total Investment in Burma
--------------------------------------
Year Amount
--------------------------------------
1989 $618 million
--------------------------------------
1994 $1.2 billion
--------------------------------------
1995 $2.9 billion
--------------------------------------
Source: Figures released by the Government of
Burma Investment Commission, August 1995.
Table 6.5: Major Investment by Country to 1994-95
Country Investment
-----------------------------
United Kingdom $632 million
France $465 million
Singapore $456 million
Thailand $418 million
United States $241 million
-----------------------------
Source: Fibures released by the Government of Burma
Investment commission, August 1995.
6.50 The industrial sector is relatively undeveloped, accounting for 9.36
per cent of GDP and employing only 8.19 per cent of the work force. Most
activities are small scale, equipment is outdated and in poor condition.
Most manufacturing is related to the processing natural resources. Larger
industrial concerns are State Economic Enterprises, mostly unprofitable but
responsible for the Government's foreign exchange revenue. A program of
privatisation has begun. Energy shortages remain severe.
Table 6.6: Investment by Sector 1994-95
Sector Amount
------------------------------------
Oil and Gas $1.4 billion
------------------------------------
Hotel and Tourism $603 million
------------------------------------
Fisheries $252 million
------------------------------------
Mining $182 million
------------------------------------
Manufacturing $175 million
------------------------------------
Source: Figures released by the Government of Burma Investment Commission,
August 1995.
6.51 In early 1995 a number of ovetures were being made by companies
involved in tourism. In January, the London based shipping and tourism
group, Eastern and Oriental Express Ltd., signed $35 million package to
operate luxury cruises on the Irrawaddy River. The Government of Burma
claimed that by the end of 1994, the Ministry of Hotels and Tourism had
issued 195 licences to hoteliers and 247 travel agencies had registered for
operation in Burma.
6.52 Examples of other investments taken up in 1994-95 are:
* a 300 million baht ($12 million) loand made by Thailand to Burma
to repair the road linking the Thai-Burmese border and the
Chinese-Burmese border;
* a $500 million contract with a Singapore conglomerate, Singapore
Technologies Industrial Corp, controlled by the Singapore
Government, to build an international airport in Mandalay;
* a$500,000 multimedia project being developed by the Australian
company, Pacific Advanced Media. It comprises CD-ROMs entitled
Explore Myanmar INteractive, to boost trade and investment in
Burma;
* an investment and economic cooperation agreement signed between
Mitsubishi Corp. and the Burmese military authorities in March
1995;
* a joint venture agreement signed between the Australian company,
Pacific Earth Exploration Company and the Burmese Mining Ministry
to exploit Burma's onshore gold reserves.
6.53 Since the release of Aung San Suu Kyi, invesetment in some quarters
appears to have accelerated. Many regional countries seem to be taking her
release as a green light to increased investment. On 7 August 1995, the
Bank of Tokyo announced the reopening of a representative office in Rangoon
to survey political, economic and financial conditions in Burma, support
Japnese investment and gather information on possible economic cooperation.
It appears the Japnese Government is considering a review of official aid
to Burma for the first time since 1988. Daiwa Securities Co. is negotiating
to assist in the setting up of a stock exchange for Burma [36].
6.54 However, problems associated with investment in Burma remain. Those
who would counsel restraint stress the need for substantial political
change as a prerequisite for a more stable, transparent and accountable
economic regime. They cite an estimated inflation rate of 35 percent for
1994-95, up from 22 per cent in 1993-94, a decline in real incomes, bank
losses on all loans which are lent at 18 per cent and a greatly overvalued
exchange rate - the dollar will buy 20 times as many kyats on the black
market as at the official rate. These statistics, they say, reflect an
economic system distorted by massive military spending which consumes up to
half the national budget [37], severely dilapidated infrastructure and
corruption which complicates business arrangements, creates uncertainty and
increases costs in unpredictable ways. Such a system, say the critics, is
unable to plan for long-term national development and squanders resources
for quick turn-around profit. As well, critics argue that the security
situation, despite the ceasefires, is fragile and the maintenance of
security is achieved with quite unacceptable levels of brutality.
6.55 Illustrative of some of these problems is the experience of Thai
logging firms in the last year. They reported 100 million baht losses in
the concession areas opposite Mae HOng Son. The companies have claimed
breach of contract and the falsification of documents by Burmese officials.
The argument revolves around which route the companies will use for the
export of the logs [38]. There have been other significant tensions between
Burma and Thailand. In August 1995 cross border trade also fell when
Burmese authorities closed a major border checkpoint. Burmese merchants
were forbidden to cross into the Thai trading town of Mae Sot with the
reported result that about 100,000 workers - truck drivers and porters were
made jobless. The cause of the road closure was believed to be the Burmese
army offensive against the Mong Tai army of Khun Sa.
6.56 Mr Peter Church for the ASEAN Focus Group, although generally
supportive of a constructive engagement policy, told the Committee that he
saw a number of risks in doing business in Burma. First he noted that while
there were the rudiments of English law it was not a society governed by
the rule of law. Politics overlayed all of it. The bureaucracy swung with
the sentiments of the Generals rather tahn according to the laws of the
country. He cited the recent example of the cessation of approvals for the
setting up of companies on the basis of one general's statement. Second,
arranging appointments with government officials was difficult. The
tendency to be closed and negative, a result of authoritarianism and long
isolation, was strong. Lastly, and most seriously, he saw the exchange rate
as a great obstacle. Mr Church relayed the typical Government response to
concern about investors being able to get their money out of Burma as 'This
will be taken care of in time. There are many ways to get your money out
legally.' However he noted that:
Despite all of those assurances, they have not taken major
decisions in that regard. I think there are major problems if they
go to the real rate in terms of inflation. It would cripple the
poor in the country who already have a difficult time. ... The
Foreign Exchange Certificates (FECs) work but to a very small
degree. Most of the people we talk to have kyat and they have to
convert them to white dollars. That means either buying some item
in Myanmar, which is then exported and sold outside, or finding
some Burmese who is exporting and who can give them the dollars
from outside in exchange for their buying his goods inside [39].
6.57 The DFAT Country Economic Brief lists similar problems. They cited:
(i) a highly overvalued official exchange rate;
(ii) rigid customs and other formalities;
(iii) excessive red tape often requiring the trivial decisions are
taken at the top;
(iv) poor coordination and cooperation between separate
ministeries;
(v) corruption amongst officials;
(vi) poor communications infrastructure; and
(vii) rudimentary banking services.
6.58 All this, according to the brief, can make business operations in
Burma very expensive, a slow process and requiring 'careful and imaginative
planning' to overcome the exchange rate problems. Some companies, they
warned, have found themselves in complicated trade in areas outside their
expertise.
Footnotes:
---------
[34] DFAT, Country Economic Brief for Myanmar, August 1995, pp.14-15.
[35] Exhibit No 17, ASEAN Focus Group, The Myanmar Business Guide, p. 47.
[36] AFP news item, 7 August 1995.
[37] Estimates presented to the Committee have varied between 35 and 50 per
cent. AusAID quoted the UNDP Human Development Report which shows that
SLORC spent 222% of the combined health and education budget on military
expenditure in 1990/91. AusAID Submission, p. S505.
[38] Report in the Bangkok Post, 4 March 1995.
[39] Evidence, 2 June 1995, pp. 235-236.
------------------------------------------------------------------------
Above materials are reproduction from the findings of Human Rights
Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence
and Trade of the Parliament of Australia, published in October 1995.
Anyone wishing to inquire about the book may contact Ms Margaret
Swieringa, Secretary, Human Rights Sub-Committee, Parliament House,
Canberra A.C.T. 2600, AUSTRALIA.
Best regards, U Ne Oo.
ENDS(6.44-6.58)\