Home Insider Goverment Insider A privileged one to one with his Excellency U Soe Thane (...

A privileged one to one with his Excellency U Soe Thane ( Part II )

Part 2 and the concluding part of an exten- sive interview with His Excellency U Soe Thane, part 1 appeared in the May issue of Myanmar Insider.


MI: As one of the key reformist min- isters within the present government, what are the challenges faced by Pres- ident’s office when considering what policies that suit Myanmar’s future best?

We have to use our judgment and ex- perience to implement strategies that work quickly. The President’s office portfolio is mainly advisory. So not many challenges there per se, I don’t give advice on all mat- ters. I focus mainly on economic develop- ment concerns. Even though I am just the coordinating minister, I have to push the re- spective ministries to move forward quickly.

Our current mindset seems to be stuck at activity based. Programs were started, opening ceremonies were held, and that seemed to be the end. These were activities not results. It has got to change to result based. I want to know the outcome, not all these activities. Even the ministers have to be reminded very frequently to change to- wards results based leadership.

The main challenge that I am facing now is capacity constraint. If people have ca- pacity, they know what to do based on their experience and skill set. We experience capacity shortage in every layer of our administration.

Our constitution was based on that of Indonesia. Not India, not Thailand. Ours was essentially based upon a combination of Indonesia and US constitutions.

There are also significant capacity shortage among the general population and workers. Of course, we cannot just get dis- appointed and give up. We need to push and push to move forward.

I remember these words by US As- sistant Secretary of State, Kurt Campbell, during one of our meetings: “Democracy is not an easy system to accomplish; it would be a long journey. It is fragile and you have to be careful.” He continued “your main prob- lem will be managing expectations. When Myanmar people think of democracy, they straight away think of America and get their expectations up to US standards. It took us more than 100 years to reach that standard. The capacity of your government is well be- low fulfilling these expectations at present. This expectations gap is an issue and you need to narrow the gap.” All his words have rung true today. That is the main challenge I am facing now.

MI: What are the main policies your Excellency expects to be implemented in the near future to enhance Myan- mar competitiveness in the region?

AEC (ASEAN Economic Community) is coming in 2015. We need to prepare for that. The main path to prepare for would be to cooperate with foreign investors through joint ventures or other setups. That’s the only way to get the technical knowhow and the required financial investment capital. Only then, will our products improve on quality with an affordable price tag.

We are pushing the private sector to understand this and not push backwards by asking for protectionism. A number of large business organizations are asking for protec- tionism. Protectionism would not help pre- pare us for 2015, only cooperation, partner- ships and regional connectivity.

Local businesses can be assured that we are not going to be gung ho about letting in foreign investments and investors. Our aim has always been sustainable and all in- clusive growth, always targeting responsible investments that respect human rights.

MI: With the benefit of hindsight, would you have done anything differ- ently when you started your position with as the Chairman of MIC (Myan- mar Investment Commission), and why?

When the new government came into power, they couldn’t find an appropriately qualified person to head the MIC. Eventually the President asked me and I obliged to be the chairman for a year.

I managed to complete the new FDI (Foreign Direct Investment) law during my tenure.

Previously, the MIC was headed all by civil servants. During my term, I changed its composition to have equal participation: five from government, five civilian experts and one attorney general. The five from govern- ment are ministers. Each person carries just one vote.

After my tenure of slightly more than one year, I passed the chairmanship to Min- ister U Win Shien. People had thought that I would stay in MIC for a very long time, like previous chairmen. In the history of Myan- mar, the very first MIC with civilian partici- pation happened under my term.

MI: How do you feel about foreign companies now entering into business here will affect the local workforce, and do you feel that they will bring new opportunities to existing local businesses?

Previously, the only foreign compa- nies here were only from our north. Now that Myanmar has opened up, we have expanded our circle of friends to include Korea, Japan, Singapore and the West. With that expan- sion, we began to understand the concept of  responsible investment. Previously, we did not understand the concept.

The truth is until a couple of years ago, the concept of corporate social responsibility did not exist within the government. With the current batch of responsible investors, there will be better news for the workers and our country.

During my tenure at MIC, I drove hard to reach the minimum wage to US$3 per day. I understood that this depends on the nature of investment. Even now I am pushing hard to reach $3.5 to $4 per day for this year. It is possible, especially for foreign companies, whose market is larger than just the local market.

As long as we have foreign companies who follow rules and best systems, workers will learn to adapt to better systems. With the country opening up, workers will be ex- posed to better working conditions, better conditions of employment and getting better support from NGOs and global labor organi- zations.

MI: From a country development standpoint, what do you feel are the biggest challenges facing the current government in the next 1-3 years?

I believe we will move ahead in terms of economic development. Our geographical position already yields us significant poten- tial. We are also resource rich. We also have plenty of labor, putting us in a good demo- graphic position. We have made good prog- ress compared to two years ago.

I cannot forecast too much on politics. Politics is very fragile. If you look at us 70 years ago fighting for independence, every- one in the country regarded the fight for in- dependence as their first, second and third priorities. If everyone moves like that, not at- tacking one another, then the country would move forward very quickly. For the present, if we move with the objectives of peace, de- mocracy and people welfare as top priorities, then political stability would not be an issue. I cannot speak of the situation if people for- get these and focus on attacking individual credibility and characters.

MI: What sort of quality and respon- sible investors should our government target to attract? What are the key factors for consideration?

We cannot be too greedy and set too many restrictions. We have to look at our- selves and understand our own situation at present. Our existing condition is an agricul- tural based economy. We want to encourage investments into this sector, to create added value, rather than just selling raw materials. The second priority would be labour inten- sive industry to bring about mass employ- ment with low skills requirements and little energy consumption. These two would be granted easy approval and given assistance by government. In the case of e.g., mining, we will scrutinize thoroughly as it has significant impact on the environment.

We are also pushing hard for infrastructure development at present, to in- crease power and electricity supply, build roads and bridges and improve ICT facili- ties. Once these developments take off, we will start pushing for knowledge based in- dustry investments. Currently heavy indus- tries have to be put on hold as we have power shortages.

We are also taking in investments relating to electricity and power generation, but I am not sure how long they will continue, as the supply is dependent on our natural gas availability.

We will try to assist them as much as we can. We have an investment office set up in Yangon and we will reply to them within a week if we approve and we will complete the formal procedures within 90 days of their in- vestment application. We are also trying to make the investment office a separate stat- utory entity/board, just like Board of Invest- ment (BOI) in Thailand.

There is another initiative that our government is trying to do. Since Myanmar is rich in many natural resources, we have started discussions to join EITI, the Ex- tractive Industries Transparency Initiative. We are now ready to apply for candidacy. Once we are certified, we will publish the statistics on production, taxes we received

on production, etc., for the benefit of general public.

MI: For local enterprises, what sort of changes do you hope to see them adopting to be able to compete or co- operate wi

With regard to ICT, now everyone can own a mobile phone as the prices are becoming more affordable. Previously one mobile phone line cost about $2,000 and only the rich could afford mobile phones. Now work- ers and farmers own phones. This is an im- provement.

MI: Will Myanmar practice “protec- tionism” to favor local enterprises while they prepare themselves to com- pete with the influx of foreigners?

We are pursuing the policy of provid- ing a level playing ground. It comes from AEC requirement to make the whole of ASE- AN market a level playing ground for ASEAN nations.

MI: With the Government welcoming foreign investors, almost every inves- tor is facing the issue of skilled labor shortage. What is being done to ad- dress this?

For the current industries we are welcoming such as low cost manufacturers, the government is providing training for workers. Since these factories have low skills re- quirements, the staff can be quickly trained and go to work almost immediately.

For other slightly more advanced manufacturing, such as automobiles, we can still train people to work in these factories,th foreign investors?

We already provide mechanisms to ease joint ventures and partnerships. For local businesses, instead of viewing from a protectionist perspective, they should con- sider ways of joining forces to create win-win situations.

We are in an era of globalization. If we look at Singapore, Malaysia, Thailand, Vietnam, etc., they all grew very fast due to foreign investments and partnerships with foreign entities. In my view, investments will yield better returns through partnerships and cooperation. The higher the level of technology and knowhow, the more difficult it will be to do it alone.

Currently, we have quite substantial growth in the areas of tourism and air trans- portation. Previously, there was not even a single plane to come and land at Yangon Airport. Now it’s operating 24 hours a day. Previously, visitor numbers to Myanmar were well below a million per year. Now it’s 3 million.

With regard to ICT, now everyone can own a mobile phone as the prices are becom- ing more affordable. Previously one mobile phone line cost about $2,000 and only the rich could afford mobile phones. Now work- ers and farmers own phones. This is an im- provement.

MI: Will Myanmar practice “protec- tionism” to favor local enterprises while they prepare themselves to com- pete with the influx of foreigners?

We are pursuing the policy of provid- ing a level playing ground. It comes from AEC requirement to make the whole of ASE- AN market a level playing ground for ASEAN nations.

MI: With the Government welcoming foreign investors, almost every inves- tor is facing the issue of skilled labor shortage. What is being done to ad- dress this?

For the current industries we are wel- coming such as low cost manufacturers, the government is providing training for work- ers. Since these factories have low skills re- quirements, the staff can be quickly trained and go to work almost immediately.

For other slightly more advanced manufacturing, such as automobiles, we can still train people to work in these factories,as we still have capabilities in these sectors.

However, it is in the services sector that we are facing difficulties, such as bank- ing, financial services, legal, etc. The experts in these areas require years of training and they cannot be created en masse within a year or so. We have close to nil capacity e.g., in arbitration. So we ended up hiring consul- tants.

We are engaging consultants in sectors such as telecom, energy, power supply, cen- tral bank, finance ministry, census for immi- gration ministry, etc.

In addition, we are inviting all Myan- mar talents to come home. In America alone, there are about 380,000 people of Myanmar origin living there.

One of the factors causing the delay of talented people coming back is the PR (Per- manent Resident) Law. It has been submit- ted to congress but not finalized yet. Once the PR law is there, a Myanmar person does not have to give up the US passport that he/ she is holding to come back and contribute here. With this initiative, we will have re- solved a portion of the talent issue.

Companies such as Ooredoo and Tele- nor in Myanmar are also working with the limited talent here. Of course, due to this limitation, the staff tends to have much high- er wages. I am sure you guys are also earn- ing better working for Myanmar Insider, compared to others. This is part and parcel of democracy. In capitalist democracy, com- panies are free to pay more and choose the best staff with the highest caliber and capac- ity. What boss in the world wants to employ untalented staff! The staff in return has to try harder and go for both personal and profes- sional improvement. Of course, in the social- ist economy, the government will employ all people. In a democracy, it is not the govern- ment’s duty to employ people. We will create an environment that will enable people to find gainful employment.

MI: There any many well qualified Myanmar people who are presently residing overseas. What are the plans to attract them back to Myanmar?

As mentioned previously, we have already submitted the PR (Permanent Res- ident) law for enactment. Once the law is there, all will find it easier to come and work officially here. If you are educated, talented or have money to invest, you will stand a favorable chance of becoming a PR. We will give PR status for 3-5 years, where the PRs can travel freely in and out of the country.

MI: Regarding education, what is the immediate plans to restore the glory days of Myanmar education standard back in the early 50’s and improve the employability of Myanmar citizens?

We are currently undertaking educa- tion sector reforms. There are two specific parts to this. One is that of basic education and the other being higher education.

We are changing teaching techniques and methods for basic education. We now provide free education up to the middle school (8th standard). From next year on- wards, we will also provide free education up to the high school level (10th standard).

We are also decentralizing the con- trols, moving the decisions on teacher move- ments from centrally controlled to being controlled by respective states or divisions. We have been improving student teach- er ratios too. Previously in primary school, there were only two teachers per elementary school. Now we provide five.

For higher education, we intend to form a university council to manage all the universities including their tie ups with foreign higher educational institutions and managing their own budgets. The govern- ment will continue to provide some level of funding.

MI: Some investors are adopting a wait and see attitude; investors are looking for long term stability af- ter 2015. What are your Excellency’sthoughts o n the political stability of Myanmar post 2015?

I don’t blame the investors for adopt- ing a wait and see. After all, it is their mon- ey. Of course, if you are investing one or two million, the decision can be quite fast. If you are investing a billion, however, investors will take their time based on their own ex- periences. Personally, I am not in favor of waiting due to political reasons. I am sure you will realize that we need economic devel- opment here. With economic development, there will be a tendency to favor political stability.

Economic development is always re- lated to political stability. If we have low unemployment levels here and general in- crease in wages, there will surely be political stability. The poorer we are the more politi- cally unstable we will become. So my advice would be not to wait and see. Otherwise you will be late.

Politics is the same. Even after 2015, there will be the 2020 elections. If you wait

until such and such is in power, you will get no work done. The people who are keen to work will not wait for you. Nor will the coun- try which is poised for growth. The large markets of India and China will not wait for you. AEC will not wait either. If you come now, if you produce now, you will get profits faster. If you want to wait, you can. Others will come in and take up the opportunities. There are many people coming to see us to invest.

Even though people are saying 2015, it is the end of 2015 or rather the beginning of 2016 that the elections are needed to be held. There could be changes from now till then; in terms of stability, mindsets or other things. The situation can become better or worse.

It is not just this time. Democratic governments change one after another. Are we going to wait for 2020 too? As long as there are rules and regulations in place, we just have to invest according to these rules.

MI: How severely are the minority and ethnic issues impacting Myan- mar’s future development?

It has a lot of impact. That’s why we started the peace process. Now we have cease fire agreements with majority of the armed groups. It contributes significantly towards the country development. Everyone can travel freely without fear of being cap- tured or killed.

We normally follow the peace process with political dialogue. The results of the political dialogue are extremely useful for regional development.

Almost all the ethnic groups have asked for equality. I see this as equity. The solution is the development of the country. If the country becomes richer, we can all share the fruits. If the country is poor, everyone will remain poor, regardless of what ethnici- ty you belong to.

The next issue is power sharing. Once the peace agreement is in place, they will have more legitimacy in governing their own regions, as the government recognizes them as official representative of their people.

For resource sharing, it is also the same thing. With development, there would be more revenue sources for government to share. If you look at the national budget for the current fiscal year, you would notice we are distributing a lot more resources to the regions than previously.

MI: What advice would you give to someone looking to start up a busi- ness and invest in Myanmar?

I invite them to come to Myanmar. Our situation and potential is very good now. The talk is that who is going to be elected as President in the 2015 year end elections. Whoever wins is not important, what is im- portant is that who is elected must be able to contribute to the betterment of the nation. So if you are waiting for 2015, I think you are waiting for one thing that is not important, e.g., Coca Cola is here, GE? is here. We have agreements and contracts with them. Who- ever is going to take over after 2015 has to honor these legitimate contracts and agreements.

Carlsberg from Denmark, Telenor from Norway, and Ooredoo from Qatar they are all here already. The previous govern- ment has laid gas and oil pipelines with the Chinese. There is no way that we are going or able to remove these investments. These previous investments also brought revenues to government. The issue then becomes knowing how much money is received and making it transparent to the public.

For Myit Sone, it is slightly different due to environmental impacts and related environmental issues. For as long as you do the best for CSR?, etc., there is nothing to worry about. That’s why investors must come now. You will get into better positions the earlier you come.

MI: How do you see Myanmar comparing with its Asian neighbors in the short and long term future?

If the next two governments can con- tinue the path that we are currently follow- ing and they also are capable, we will become a rich country occupied by rich people, with- in ten to fifteen years.

If you are changing or renovating a house, you can do it within a day. If you are changing a country of 60 million population, we have moved very fast ever since we took power. No one is sleeping or lying down.

We cannot really move like a city state capital Singapore, where the population is only 5 million.

MI: If you could make one major change in government policy rightnow, what would it be?

I do not foresee any major change right now. Our current four pillars of reforms are quite comprehensive. The main issue is to implement them successfully.

MI: What is the message that you would like the world to hear from the present government?

We are trying to become a democrat- ic country and at the same time, become a responsible member of the global commu- nity. The world also recognizes our efforts. Unlike previously, Myanmar people receive better treatment overseas. More people are willing to shake our hands. This is something we could be really proud of, on behalf of our country.

Previously when foreigners heard of Myanmar, they turned away from us. Now they run to us to greet us. We are finally get- ting back to where we belong.

We are not resting on our laurels. There are still so many things to do and we are still pushing hard. That’s why all the world organizations and countries give us recognition.

If you look back over the past two and half years of current administration, you would be hard pressed to find a world leader who has not visited Myanmar during this period.

Since we gained independence, we have nev- er had such interest in us until now. We are now a much welcomed participant on the world stage.