T he US Export-Import Bank says it will start offering credit for trade with Myanmar, hoping to support businesses against competitors in a market that has boomed since democratic reforms.

Officials say they hope to boost US exports and jobs by providing similar terms as credit agencies from European and Asian nations, whose governments have gone even further in ending barriers to trade with the once pariah state.

“Hopefully, with this announcement, we can level the playing field and we can compete on the basis of price and quality, 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.

The Export-Import Bank’s decision “is very much a reflection of [Myanmar’s] creditworthiness and it’s not connected to any particular event”, she said.

Foreign investors have been flocking to Myanmar, which has a large untapped consumer market, ample natural resources (including gas and oil), and a strategic location bordering China and India.

The Export-Import Bank is no stranger to the country. One of its first projects after its creation in 1934 was to provide US$22 million to build the Burma Road to supply China during its war with Japan.

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.

The chief minister began his five day official visit on February 5th.

Rio, who was accompanied by several top officials of the state government, met chief ministers of Sagaing division Thar Aye and Mandalay division Ye Myint and other top officials of the Myanmar government.

Sources said the Naga officials met several top leaders of the Myanmar government and exchanged views on development in Sagaing division where Nagas live.

“We got calls from people in the interior Naga areas in Myanmar,” a source said. The Naga officials met the Chief Minister, the Union Border Affairs Minister, the speaker of Parliament and other dignitaries and officials and visited Nay Pyi Taw, the capital of Myanmar, and other places, including Mandalay, Yangon and Monya. The Chief Minister has been meeting the government officials for faster development and better trade opportunities in the Naga inhabited areas.

Nagaland has opened four international trade centres along the Indo-Myanmar border, but so far it has remained a white elephant. Several Naga organisations and Naga policymakers in Myanmar have appreciated the Nagaland government’s concern and initiatives for the development in the Naga areas.

Nagas in Myanmar said they were at a “crossroad” with the country adopting a democratic system of government recently and that the Nagas have been inevitably made to get involved in this transition.

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 Air and Asiana Airlines.

On February the 21st, 2014, the very first MAI chartered flight from Pusan International Airport, Korea, successfully landed at Yangon International Airport, and by the end of the year, Korea-Yangon daily scheduled flights are set to be taking off on a regular basis.

MOU

MAI recently announced a tie up with Japanese firm Hama Inc. Co., Ltd. and signed the official Memorandum of Understanding (MOU) agreement on February 14, 2014, at the MAI Head Office in Yangon. According to the MOU, MAI is now a functioning joint venture 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.

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 since the dawn of civilisation. Indeed, it is indicative of a civilised society. Soy food products are consumed all around the world and, from culture to culture, it is contextualised to create indigenous recipes, products and flavours. As such, it is a global and ubiquitous food second only to rice in terms of its universality, and first in terms of imaginative uses and versatility. Soy can be made into everything from automobile parts to nutritious dairy products, from wholesome snacks and health foods to meat alternatives for vegetarians. It is used to fuel cars and to both treat and prevent malnutrition related diseases, such as heart disease, diabetes and certain cancers. No other food on earth can claim such efficacy to human needs with the added benefit of being ethical and environmentally beneficial. When land once used to sustain cows is converted to soy cultivation, protein yields increase nearly tenfold. Moreover, food, such as beef, which once contributed more greenhouse causing emissions than automobiles, is replaced with food whose cultivation is actually removes carbon and requires nearly ten times less water, as well as other inputs.

History of Soy in Myanmar

Although the scope of our current research did not extend to the origin of soya bean agriculture and consumption in Myanmar, it is probable that soya bean has been cultivated in Myanmar for nearly as long as it has been in China, thus making soya a truly native crop to Myanmar. It is not unrealistic to assume that the food of the original settlers to Myanmar (who originated from the Yellow River and Mongolia) including the Karens, the Shans, the Kachins and the Pa’o people, was similar to that of the Chinese people who had been cultivating soya beans since as early as 2000BC. Soy is a staple in the diet of Shans and Pa’o and can be found in just about every Shan dish. New value added soy products are constantly appearing on the grocery shelves and research is being conducted into other uses for soy in Myanmar.

Current Market Conditions

In spite of all of soy’s potential for the Myanmar economy, environment and nutrition, the soy industry is struggling in Myanmar. In fact, the entire supply chain is embattled by low yields, global and regional market forces, low investment, foreign competition, substandard inputs and farming methodologies, lack of education, governmental indifference, disinformation and a lack of consumer awareness, among other things. If any interventions exist at all from NGOs or foreign investors, they are unfortunately inadequate, incidental and/or haphazard, despite the many needs and opportunities in this sector.

Indeed, nutritional and agricultural interventions that do occur on the part of NGOs and humanitarian organisations are generally focused in the area of carbohydrates production and consumption, but the issue of malnutrition in Myanmar is related more to a lack of protein than a lack of carbohydrates; rice and fruits and vegetables are in large supply.

Moreover, programmes that focus on protein nutrition are usually focused on livestock and fish. To provide the amount of protein needed by the majority of Myanmar’s population of 60 million, simply increasing the meat supply will prove to be unsustainable. The input to output ratio are poor. Most of what a cow or pig consumes is to sustain itself and livestock require land that could be used to cultivate soy (refer to pie chart) and they produce waste that can contaminate the water supply.

Also, many of Myanmar’s Buddhists are vegetarians, at least for the period of Lent from April to September. Soy is the best vegetable source of protein (and better than most meats) for providing all the essential amino acids required for human health (refer to chart).

My experience in the Myanmar soy industry over the past several years has also revealed that there is great cause for optimism for the future of the soy industry and that Myanmar might become the ASEAN Brazil of soy production. The latest statistics show that 316,000 hectares are being used to cultivate soya bean in Myanmar, up from about 114,000 hectares in 2000 to 2001. This is phenomenal growth with minimal investment and incentives. Current yields are at about 16 bushels per acre and harvest losses are as high as 45 percent due to a lack of technology and other inputs, but with an intentional investment strategy, better inputs, training and other incentives, Myanmar could rapidly transform itself from a net importer of value added soy foods to a net exporter, not only of high quality raw soya bean, but also a diversity of innovative value added products, as well as a bustling domestic consumer of all things soy. The Myanmar ministry of agriculture is showing signs of a growing interest in developing its soy cultivation and there was great support from our contacts for this research.

Moreover, growers are showing tremendous resilience to market forces and deep desire to improve their yields through improved inputs. Growers associations and middlemen are tenacious in their desire to improve their ability to compete with Thai and Chinese growers and to develop new markets and uses for soy. Entrepreneurs across the country are researching and innovating and trying out new products (such as the made in Myanmar Vitagoat soy milk processing machine) and markets for domestic use. Our assertion is that, if even a small portion of the investment that is put into rice were put into the soy industry, we could create an agricultural and market revolution that will positively and significantly impact GDP and create food security, sustainability, livelihoods and environmental benefits.

Major Stakeholders

Over the past several years, I have interviewed people from the ministry of agriculture, educators at the University of Agriculture, food processing engineers, growers associations in four states and divisions (including Shan and Irrawaddy), growers, middlemen, merchants, NGOs and consumers. One thing we discovered that was clear and univocal was that Myanmar must strengthen its soy industry through investment and technological input, as well as through education and marketing. Every single stakeholder along the value chain and in the academic forum believed that it can be done and that it can be exceedingly successful and beneficial to the nation as a whole.

Thursday the 13th February will go down in history as the day that the EU and the Organisation for Economic Cooperation and Development (OECD) struck a deal to openly report to each other on your worldwide assets, including all bank accounts, investments, trusts and pensions, etc. The privacy and data protection laws will be waived in almost all cases, in which you will have no say, by the way.

This landmark agreement goes in front of the G20 finance ministers in September of this year for their further agreement and ratification.

If the G20 agrees, then the global nonG20 countries, such as Hong Kong, will concur and comply, as is normal in these matters.

What this means is that, for example, Inland Revenue in the UK do not need your permission to see what’s in your overseas bank accounts, trusts, companies, etc.

We have already seen something similar with the onset of FATCA (Foreign Accounts Tax Compliance Agreements), where information should be reported to Inland Revenue in some cases, but not necessarily on all assets.

This new Auto Information Exchange Agreement (AIEA) is quite odd, given that Canada, Hong Kong, the US and the UK only just reinforced their privacy laws. Don’t you find that quite contrary?

To understand this, we have Mr. Snowden to thank, after his revelations of the nefarious activities of certain “national security agencies”, so the strengthening of privacy laws is perhaps just a political action. However, the ability to breach these privacy laws has at the same time been waived.

How, though, will this new international snooping agreement be implemented? The answer is in the agreement. All 11 pages of it.

It simply says that if a country’s financial regulator asks a bank or financial institution (even a trust) what value and what precisely is owned by you, that institution will be obliged by law to hand over the information to the local regulator.

Then what happens is that the regulator will store that information on a database, so that if a foreign government simply requested that information, then it can and will be readily handed over without your permission. No questions allowed about that bit, and that’s the whole intent of this new s/b AIEA.

If I was a betting man, and I am, I would take a wild guess at what’s going to happen next, which possibly will be the implementation of a US style global taxation strategy coming from the OECD countries and the G20.

This last bit is a natural extension of the s/b AIEA, it would seem.

When does the s/b AIEA come into force? Possibly at the end of 2015. It’s going to be a tough task administratively, but be certain that it’s going to happen.

The “Under The Mattress Banking Corporation” may be launched soon after this.

The stalled US$3.6 billion Myitsone Dam saga has left the area in a state of limbo.

Local residents are still in a determined mood to have the project completely shut down in a bid to save their local environment, but the dams Chinese developers are equally determined to have their project restarted. They reportedly lost US$50 million while the project was closed down last year. The project, started in 2011, is still only five percent completed and the continued delays are causing a great deal of tension between the two governments.

It is also fuelling a hot tempered power play between President Thein Sein and opposition leader Aung San Suu Kyi. The government is adamant that the project will not be restarted, but also refuses to totally cancel it. This has prompted the opposition leader to accuse the government of being negligent in its responsibilities to the nation and “not being brave enough” to make a decision on the project. When asked her own views on the project, she  declined, just saying “Questions about the project should only be asked to the president”.

The dam’s developer is the state owned China Power Investment, and they believe the dam would greatly improve the quality of life by bringing hydropower to the nation and at the same time bring in US$54 billion in tax payments. Last December, the company made a statement in its CSR report saying that the project would not cause major environmental damage. It would also create in the region of 40,000 local jobs.

Local residents are quoted as saying that the dam would take away fertile farming lands in this predominantly agricultural community. Also, at least 90 percent of the electricity produced would be channeled to China’s Yunan state.

China Power Investment’s managing director, Mr Li Guanghua, was quoted as saying, “We have worked on hydropower projects in 12 countries… but have never faced anything like we have in Myanmar. Without electricity, there can be no development or international investment.”

Like many things in Myanmar, the rumour mill has spun wildly as to why the current government decided to implement the much publicised economic reforms that have made the country the new darling of Southeast Asia.

Whether it was concern over a too close relationship with China or a genuine desire to improve the lives of its country’s citizens, it is clear that, whatever its initial intentions, the government has seen the benefits of forging closer ties with economic powerhouses like the US, the EU and even Japan, all who see huge potential in Myanmar’s strategic location on the cusp of Southeast Asia, as well as rich natural resources and an abundant – and cheap – workforce.

Those countries, and many others, have pumped much needed foreign investment into a previously stagnant economy, something that has been aided by the government encouraging foreign investment by implementing new laws and inviting business delegations from the world over.

One area that is seen as particularly key in proving the country can attract future foreign investment is in the area of Special Economic Zones.

In its simplest form, a Special Economic Zone (SEZ) is a geographic area that makes laws and practices favourable to the production and export of products, in turn creating new jobs, usually in the dozens of thousands, and pushing the economy further forward.

While other areas are being spoken about around the country, three key SEZs are currently being implemented within Myanmar. In Rakhine State, work has begun on the Kyauk Phyu SEZ, and in the south of the country, Dawei in the Thanintharyi Region, could be key to growing Myanmar’s economy in the future. The third SEZ is that of Thilawa.

In the early days of the reforms, Dawei was seen as the most important SEZ in the country, but that has been beset by major issues from the initial investors and it is now the Thilawa SEZ, located a few hundred miles up the coast from Dawei – and just 20 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 the project’s developers. In January, dozens of the displaced families sent an open letter to the Japan International Cooperation Agency (JICA), which is involved in the project, to tell of their issues with the displacement that has left many without any livelihood in an area where many of the local population are employed in the agricultural sector and practically lost all their assets overnight.

There have been other reports of land grabbing, unpaid compensation and a surge in land prices at both Thilawa and Dawei, an issue intensified by the previous government’s lack of record keeping and complications regarding land ownership.

However, at least on an economic level, Thilawa is seeing much optimism. When Myanmar signed a Memorandum of Understanding with Japan in 2012 regarding the project, the move was met with scepticism that both countries could provide the necessary funds and infrastructure for the project to go ahead – particularly as Myanmar continues to struggle to update its infrastructure to international standards and implement laws that will make the country a truly attractive place to invest for foreign investors.

Announcements in recent months suggest that things could be moving ahead as planned. In January, the Myanmar government implemented a Special Economic Zone law, which allows for tax exemptions for up to seven years for foreign and local investors, and is expected to allow companies interested in investing in the projects to bypass unnecessary bureaucracy – one major issue for potential foreign investors in Myanmar.

Myanmar’s Port Authority will also upgrade Thilawa Port later this year to make way for a deep sea port. Yoma Strategic Holdings, owned by local behemoth Serge Pun, has already opened Star City, a 135 acre residential housing estate located close to the Thilawa site which offers 9,000 residential units.

It was also revealed recently that the Myanmar consortium of the project, Myanmar Thilawa SEZ Holdings Public Ltd, will sell 2.145 million shares at K10,000, in order to raise an expected US$21 million for a project that is expected to fall in the billion dollar figure.

The Myanmar arm owns 51 percent of the project – 41 by nine Myanmar companies and 10 percent by the government – with the other 49 percent owned by a consortium of Japanese companies.

Thein Sein’s government has found common ground with Japan over the last two years, with Japanese companies gaining key contracts as the country opens up, particularly in the area of infrastructure development.

Japanese giants including Toyota, Marubeni, Toshiba and Panasonic are deepening their footprint in Myanmar – in a range of industries – while JICA is involved in key infrastructure developments in the country, most notably an urban development plan for greater Yangon.

Meanwhile, some criticisms have begun to be levied at Japanese companies involved in projects in Myanmar. Some of the companies involved in the Thilawa project have been accused of side stepping issues like land grabbing and compensation, while JICA and other Japanese agencies are seen in some circles to be reluctant to communicate with local communities and the media.

Despite that, Japanese companies are clearly in a strong position in Myanmar at the moment. While Japanese companies still lie 10th in total foreign investment figures, in the 2012-2013 fiscal, Japanese foreign investment in Myanmar leapt tenfold to US$54 million and, if the two governments can maintain close ties, then it is likely that other key contracts will be rewarded to Japanese companies.

It seems that nothing unpleasant can be heard about Myanmar nowadays. Formerly known as Burma, this exotic Southeast Asian country was once a jewel in the British Empire – a fascinatingly exotic land that was the world’s largest exporter of rice, a global supplier of oil, a nation rich with natural and labour resources, producing 75 percent of the world’s teak, and the wealthiest realm in this corner of the earth. Today, it is being called “Asia’s last frontier”.

One rare, shining glow the colour of ko-thwe (pigeon’s blood) is Myanmar’s ruby industry. Supplying 90 percent of world demand, rubies prized for their purity and hue comprise the biggest earner in the country’s total sales of precious stones, which include sapphires, pearls and jades. One of the country’s most viable industries that also includes agricultural goods, textiles, wood products, construction materials, metals, oil and natural gas, the trade in precious stones continues to flourish. In fact, several years ago, during the annual gem show traditionally held in Yangon, a total of 2,380 gem merchants, including 1,484 of 423 companies from 16 countries and regions, coughed up US$101 million in gem purchases, which at the time broke the record held since the show was introduced almost 50 years ago. It was the conduct of these gem shows, officially dubbed the “Myanmar Gem Trade and Pearl Emporium”, which has earned for Myanmar international renown as “Ruby Land”.

Needless to say, Myanmar’s previous military rulers depended on sales of precious stones to fund their regime; they had to release their stranglehold on the industry to ensure a continuous inflow of funds. In the early 1980s, the government started taking great strides towards enhancing gem and jewellery sales by opening up its activities through purchases of gems and jewellery from private dealers or owners at acceptable prices. Then, it encouraged privatisation by allowing private owners to exhibit their gems for sale at the annual emporiums, and those who attained substantial sales success were permitted to open foreign currency accounts with the banks. Also, it started quality inspections of private shops and allowed those who passed to sell their items in foreign currencies. Finally, gem trading centres were licensed to openly sell jewellery with 15 percent tax paid to the government. Private trading and export of gems has thus become simple and legal for the first time in over 30 years. To drive the gem mining industry towards greater growth, Myanmar enacted the “New Gemstone Law” in 1995, which allowed local entrepreneurs to mine, produce, transport and sell finished gemstone and manufactured jewellery at home and abroad. Since 2000, the government has undertaken joint ventures with ten private companies in the mining of gems and jade on a profit sharing basis.

Myanmar has three famous gem lands well known for producing the country’s nine gems – ruby, diamond, cat’s eye, emerald, topaz, pearl, sapphire, coral and a variety of garnet tinged with yellow. One is at Mongshu in Shan State and another at Phakant in Kachin State. But, the temple of the very rare ko-thwe rubies is at Mogok, a most scenic area consisting of heavily petrified hills rising to a height of 2,347 metres above sea level. Mogok is within the district hosting the nation’s second largest city – Mandalay – Upper Myanmar’s economic hub and the centre of Burmese culture, the fabled city that inspired classic poetry by Rudyard Kipling, books and essays by George Orwell and songs by Frank Sinatra, the Beatles’ George Harrison, Robbie Williams and the Eagles, to name a few. Just as Mandalay is legendary, so is Mogok’s ko-thwe ruby.

Gemological circles all around the world choose Myanmar as the one exotic country with the world’s choicest coloured gemstones, “Burmese” rubies are the standard by which any ruby is judged, as the case is with top quality sapphires, spinels, peridots and jadeite jades. Mogok rubies are readily regarded as being in a class of their own. As one gemologist described it, “The best Mogok stones actually glow red and appear as though Mother Nature brushed a broad swath of fluorescent red paint across the face of the stone. This is the carbuncle of the ancients, a term derived from the glowing embers of a fire… The colour most coveted today is that akin to a red traffic signal or stoplight. It is a glowing red colour, due to the strong red fluorescence of Burmese rubies, and is unequalled elsewhere in the world of gemstones… It must be stressed that the true pigeon’s blood red is extremely rare, more a colour of the mind than the material world. One Burmese trader expressed it best when he said: “Asking to see the pigeon’s blood is like asking to see the face of God.”

Old Problems

Be that as it may, Mogok’s ko-thwe rubies, alongside Myanmar’s prized coloured gemstones, had faced the threat of trade disruption from international powers. The US had branded Myanmar an “outpost of tyranny”, lambasted the ruling military junta for its “extremely poor human rights record”, and accused the military of murder, rape and other torture. Three of its presidents shunned Myanmar’s dictatorship, and then President Bush signed a law in 2003 banning the import of Myanmar products. On the other hand, some gem dealer members of the International Coloured Gemstone Association criticised the US sanctions as “depriving Myanmar’s citizens of economic growth needed to fuel an eventual democracy”, called the policy “duplicitous because it punishes Myanmar while the US runs trade deficits with more repressive regimes, such as China’s.” Meanwhile, neighbours in the Association of Southeast Asian Nations have advised Myanmar it risks putting the group’s cohesion on the line if political reforms aren’t made. Bulgari,

Tiffany and Cartier are among US and European jewellery companies that refused to import Myanmar gems based on reports of deplorable working conditions in the mines, while Human Rights Watch supported a complete ban on the purchase of Burmese gems based on these reports and because nearly all of the profits went to the ruling junta.

There is hope, though, at the end of long, dark Myanmar tunnel. Myanmar leaders showed willingness to open diplomatic talks with the US to resolve the issues brought up by Americans, especially in regard to political prisoners and human rights. It will be such a waste to stop the treasures of Myanmar drawing to them the businessmen of modern times, as it did the merchants of Venice centuries ago. To let this gem of an industry reach full potential will require the further opening up of the economy, a vital factor in the development of Myanmar in the years to come. Then, the world can truly cherish the magical experience of once more treading the open road to enchanting Mandalay.