BurmaNet News: November 13, 1994

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************************** BurmaNet ************************** 
"Appropriate Information Technologies, Practical Strategies"
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BurmaNet News: Sunday, November 13, 1994
Issue #62

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Contents:

1 BKK POST: LETTERS: BELIEVE IT OR NOT!
2 BKK POST: CAN SLEEPING BEAUTY BE AWAKENED UNDER SLORC?
3 NATION: MUSLIMS BACK TO BURMA
4 NATION: UK ENVOY IN RANGOON
5 BKK POST: BURMESE BLASTED ON FISHING
6 NATION: MALAYSIA NO TO U.S. BASE

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BKK POST: LETTERS: BELIEVE IT OR NOT! 
Sunday, November 13, 1994

SIR: Believe it, or not! Information received from usually reliable
sources said that the SLORC (State Law and Order Restoration
Council) and Daw Aung San Suu Kyi, after a series of "cordial and
frank" talks, will issue a statement defining their initial
agreement with the lattAs of now, it has been confidentially
reported that agreement has b een reached on some basic points in
the democratisation and national reconciliation process.

The statement will also say that further discussions will have to
be made with other pro-democracy forces and ethnic representatives.

The SLORC is said to believe that if Daw Aung San Suu Kyi is
agreeable to the negotiating terms with the SLORC, it may also be
acceptable in principles to the others.

We understand that Daw Aung San Suu Kyi has been demanding freedom
of communications with the pro-democracy and ethnic representatives
including NCGUB (National Coalition Government of the Union of
Burma).

The undersigned feels that without freedom of communication and
detailed discussion with Daw Aung San Suu Kyi, the NCGUB and
pro-democracy ethnic leaders would not accept any statement issued
by the SLORC as agreement of its contents by Daw Aung San Suu Kyi.

It may be remembered that she had insisted on the presence of a
United Nations representative and that of a media representative
(Philip Shenon, New York Times) when she met with US Congressman
Bill Richardson earlier this year.

It will be worthwhile to wait and see also whether the SLORC is
willing to abandon the idea of the sham National Convention.

Yan Oung

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NATION: MUSLIMS BACK TO BURMA 
Sunday, November 13, 1994

More than 100,000 Burmese Muslim refugees have returned home over
the past two years, leaving more than 150,000 still crammed into 16
camps in Bangladesh, officials said. They said the number of
repatriations since September 1992 now topped 100,000 with 1,513
refugees this week sailing across the Naf river under the
supervision of the local Bangladeshi officials and representatives
of the UN High Commissioner for Refugees.

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NATION: UK ENVOY IN RANGOON 
Sunday, November 13, 1994

The most senior British official to travel to Burma in over six
years said he was optimistic his visit would help lead to the
normalisation of relations between Burma and Western governments.
David Dain, an assistanecretary of state in the British Foreign
Office, met leaders of Burma's military government.

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BKK POST: CAN SLEEPING BEAUTY BE AWAKENED UNDER SLORC? 
Sunday, Nveber 13, 1994

WANT to bet $250,000 on the prospects of Burma becoming a
prosperous, market-driven economy? That investment opportunity is
being offered by the new Myanmar Fund, which wants to raise $100
million for business ventures in Burma.

The fund, organised in Hong Kong, is seeking listing on the stock
exchange of Dublin in Ireland. Kerry Securities, distributor of the
fund, is certainly bullish.

Its research report -- entitled "Asias Sleeping Beauty Awakens"
--proclaims that ample land, low-cost labour and abundant natural
resources give Burma the potential "to claim a place alongside the
Little Dragons of East Asia".

Promoters of the fund present a good case for putting money into a
country that is opening the door to foreign investors: Heres
another nation, like China and Vietnam, shaking off its socialist
system and ending decades of self-imposed economic isolation.

Burma is the new frontier, finally ready for development. Garment
and paper factories can employ people for $15 a month, one-tenth
the cost of labour in Thailand and one-half that of Vietnam. Then
theres Burma's other great unrealised source of wealth: 75 per cent
of the worlds teak, untapped fishing ground, enough oil for its
domestic needs, plus natural gas that could be exported.

Moreover, according to the sponsors of the fund, Burma's need to
modernise just about everything presents other business
opportunities. Upgrading the telephone system to have one phone per
29 people would require and estimated $1.7 billion. Burma has
revamped its regulations to allow private corporations to fill such
gaps.

Already, majority control of Myanmar Airways International has
shifted to a business group based in Singapore and the airlines
sole plane, a leased Boeing 757, is operated by Royal Brunei
Airlines.

Tourism is another prospective growth industry for Burma, which has
a rich history dating back to the 5th century BC, unspoiled beaches
along its coast, tropical rain forests -- and shortages of hotels.

The upbeat report by Kerry Securities strikes a gentle note of
caution in pointing out that Burma faces "conflicting views on its
political development."

It explains that "political disturbances" returned the military to
power in 1988 as the State Law and Order Restoration Council
(SLORC). SLORC, which permitted free multi-party elections in May
1990, has "not yet recognised the results which gave an
overwhelming majority to opponents led by Aung San Suu Kyi", who
has been under house arrest since mid-1989.

Better days lie ahead, concludes the report: A possible
accommodation with Suu Kyi and her allies "would drastically
improve the countrys foreign image and open it up more quickly to
larger scale foreign aid and investment".

Quite apart from politics, a number of international companies have
not found Burma to be a profitable paradise for foreign investors.

Miriam Marshall Segal, an American who is the regimes most ardent
cheerleader, has acknowledged losing money for the past three or
four years on a seafood processing venture. Ms Segal sold her
business this year. Peregrine, a Hong Kong investment banking group
that earlier acquired a 24% interest in her company MMAI, owns all
of it now.

Another American investor, Amoco, has withdrawn from a planned %51
million oil and gas project because it turned out to be
economically unattractive. And a major US telecommunications
suppliers, seeing slim prospects of earnings, recently refused even
to consider building a cellular phone network in Mandalay.

Amid such wariness by other companies, why is the Kerry group eager
to invest $100 million in Burma?

For one thing, businessmen can differ in assessing markets. Judging
from its own reports, the Myanmar Funds sponsors figure that the
regime in Rangoon urgently needs international investment to
develop the economy and thereby gain political stability.

As the Kerry analysis puts it: "This philosophy has been
successively applied to other East Asian nations and, given Burma's
natural advantages, should prove equally successful."

Another reason for optimism is that the funds advisers are deeply
involved in Burma. AS often happens in Asian business, the people
involved in this effort are more important than the institutions.

The idea for the fund, in fact, originated with an Overseas Chinese
family from Burma that runs the Ho Group in Thailand. Halpin Ho, a
director of the fund, also is a director of Irrawaddy Advisers Ltd,
a company based in Rangoon and Hong Kong that helps investors put
together ventures in Burma.

The fund is designed to provide capital for some of the projects
that it advises and, says a draft prospectus, "offers institutional
investors a vehicle by which they may participate in the opening of
the Myanmar economy". The fund may put $20 million into a business
park that the Ho family is organising in Burma.

The other important player in the fund is Robert Kuok Hok Nien, a
Malaysian Chinese tycoon who is a major investor in China.

In countries that lack clear business regulations and the rule of
law, such as China, Kuok and other investors rely on cultivating
personal relations with officials. This is not to suggest
questionable practices, but simply the way business is conducted in
evolving economies.

Kuoks Shangri-La Hotels has announced plans to build a 700-room
Shangri-La in Rangoon at an eventual cost of $150 million. And he
controls the financial group that is launchinmar Fund.

Is Burma a reasonable business risk? No matter the opportunities in
a particular country, businessmen obviously invest to make a
profit. They are confident of a return when the business laws are
transparent and consistent, especially those that affect
repatriation of dividends and eventually their invested capital.

Inevitably, investment flows most readily to places where the
government has proven its credibility by operating efficiently and
honouring its commitments. There lies a problem that makes many
investors nervous.

An analysis by Jardine Fleming Thanakom Securities, a brokerage
firm in Bangkok, rates Burma's prospects for investment as possible
"a more solid bet in Southeast Asia" than Vietnam -- if Burma "can
reform its unpopular military government".

The regime in Rangoon has done a better job of talking about
economic reforms than actually carrying them out.

The Asian Development Bank says in its report, Asian Development
Outlook 1994, that the government in Burma has expressed its
intention of liberalising the economy and giving a bigger role to
the private sector, but "significant progress along those lines has
yet to be made". The state still retains a monopoly in key
industries and resources, adds the ADB report, "and the economy
remains highly regulated".

An International Monetary Fund staff report last year credits Burma
with merely making a "tentative start to market-oriented policies"
and shying away from major reforms that are sorely needed.
Fundamentally, the government has failed to come to grips with an
unrealistic exchange rate and state corporations hooked on
borrowing.

Evidently, Rangoon closes the gap by printing more currency and
fuelling inflation conservatively estimated at 30% last year, but
probably much higher. As the Fund staffers note, statistics from
Burma are one of its least reliable products.

Among those squishy statistics are Burma's claim to have gained
$900 million in foreign investment, a figure compiled by adding up
every contract and tentative agreement.

The amount of capital flowing in, of course, is considerably
smaller. Some investors, such as Amoco, have departed, and others
including the proposed Shangri-La Hotel will be built in phases
over some years.

Much of the outside money goes into extracting natural resources,
which creates a limited number of jobs -- and only until the timber
and natural gas are depleted.

As seen from close-up by a observer who knows the country
intimately, Burma has an economy in gridlock and a society under
strain. So says economist Khin Maung Kyi, a senior fellow in the
Department of Business Policy at the National University of
Singapore and former professor at universities in Burma and
Malaysia.

In Southeast Asian Affairs 1994, Professor Khin Maung Kyi states
that for all the talk of reform, the basic fundamentals have not
changed and productivity of various sectors of the economy remains
stagnant.

Describing "the unintended consequences of inflation", he says
moonlighting by government employees has become very common.

"Worse still, for government officials who provide service or grant
permits to the public, asking for or taking payments to the public,
asking for or taking payments for services rendered in their normal
course of duty is done with nonchalant impunity." [Foreign
investors cannot expect to escape this kind of corruption.]

By no means an indiscriminate critic, the Burmese economist
acknowledges that investment laws and other government regulations
provide "a reasonably attractive package for foreign investors". He
adds: "It is not the lack of incentives but the absence of a basic
price mechanism and a social framework that most likely dissuades
foreign investors."

Retaining a highly unrealistic exchange rate of 6 kyat to $1
undermines efforts to introduce a market economy. Among other
things, foreign investors can find that repatriating their money is
devilishly difficult.

Explains Professor Khin Maung Kyi: "Under the present exchange
rate, any deal that does not earn direct dollar revenue will be
very unprofitable in terms of foreign currency. The capital brought
in is undervalued at the official exchange rate, while profits made
will not be allowed to be repatriated at the same official exchange
rate."

Investors can get six kyats for every dollar they bring in, but pay
over 100 kyats to obtain dollars to take out. Those restrictions
make extracting and exporting natural resources more attractive
than other sorts of ventures.

And Burma naturally needs political stability to attract private
investors and aid donors. Warns Professor Khin Maung Kyi: "The
seeming quietness or the acquiescence under extreme social and
physical control should not be equated with stability under normal
circumstances."

His observations, in fact, bring to mind angry complaints from
ordinary citizens in Mandalay, where The New York Times reported
(July 17( that tens of thousands of labourers are being forced by
the Burmese government to work without pay to restore ancient
palaces and other projects intended to attract tourists.

Burma's government seems to lack any coherent economic strategy.
Nor do its leaders appear to have learned much from the "miracle
economies" of neighbours in East Asia, where governments set
priorities for development and then got out of the way of private
businessmen.

The main government role elsewhere has been to provide stability
through honest and efficient administration. And none of the
successful East Asian economies has moved forward simply by selling
natural resources and cheap labour.

Clearly, there are two contrasting visions of Burma's prospects for
steady economic progress. One view shuns dealing with a regime that
lacks both competence and legitimacy. Much as Burma needs outside
investment, its government could make better use of its own limited
funds.

As investment banker Michael Dobbs-Higginson, a former chairman of
Merrill Lynch Asia Pacific points out in his book, Asia Pacific Its
Role in the New World Disorder (Mandarin Paperbacks, 1994): Burmas
new leaders "no doubt appreciate that the armed forces collective
cost each year of around 50% of the countrys national budget cannot
be tolerated much longer. And that a large part of those resources
need to be redirected to rebuilding the countrys infrastructure and
giving people something more than the miserable conditions they
suffer under now."

The other vision is reflected in a move by the Hong Kong investment
house Peregrine, which has agreed to form an investment company in
Burma with the Union of Myanmar Economic Holdings Ltd, an
organisationhat manages the retirement funds of military personnel.

Peregrine sees this new joint investment venture as operating along
the lines of the potent China International Trust & Investment Corp
in China and perhaps eventually being listed on a stock exchange in
Asia. The unspoken premise here is that the future lies in doing
business with the generals and their troops.

That premise, however, is highly questionable -- given the economic
performance of Burma's military rulers. Their management record
over some three decades is extraordinary, having transformed a
reasonably prosperous nation into a poorhouse.

The present generation of generals and colonels has spent five
years on supposed reforms without making the fundamental changes
needed to create n a market economy.

The regime lacks the most crucial element for modernising any
nation -- the support of its people. The economically successful
countries in Asia, regardless of their form of government, moved
forward by building consensus at home.

Burma has enormous economic potential, but its government
leadership has proven itself to be inept, unpopular, coercive and
unreliable in honouring commitments. Prudent investors, of course,
must weigh that downside risk.

************************************************************** 
BKK POST: BURMESE BLASTED ON FISHING 
Sunday, November 13, 1994 Phuket

FISHERIES Department chief Plaodprasob Suraswadi yesterday accused
Burmese authorities of showing insincerity in fishing cooperation
with Thailand, claiming they had not abided by agreements reached
at earlier negotiations.

Mr Plodprasob said that during those talks the Burmese agreed with
his departments proposals to help screen and select Thai operators
for fishing in Burma's territorial waters to end problems of
illegal fishing by unscrupulous trawlermen.

"We told them we knew weai fishermen were good or bad and that we
would like to take charge of picking the good ones to fish in Burma
-- and they agreed,": he said.

A committee made up of members of the Overseas Fisheries
Association and Thai Fisheries Association then selected a number
of Thai fishing firms to operate in Burma and presented the list to
the Burmese authorities.

However, Mr Plodprasob said Burma instead appointed a few Thai
broker companies, which earlier faced complaints from Burma about
their business ethics, to arrange for Thai fishermen to operate in
Burmese waters.

He said those fishermen were not protected by Burmese authorities
while fishing in Burma's territorial waters.

Mr Plodprasob insisted the Burmese authorities must be held
responsible for damage to Thai vessels.

He said the Fisheries Department would issue licences to operate
abroad to only a few fishing companies which had about 40 to 50
trawlers each and good records.

************************************************************** 
NATION: MALAYSIA NO TO U.S. BASE 
Sunday, November 13, 1994

Malaysia joined Thailand and Indonesia in rejecting a United States
plan for a new military bas in Southeast Asia, following the
withdrawal of American troops from Subic Bay. He said he saw no
need for such a base, as he saw no threat from anybody, including
China and Japan.

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NEWS SOURCES REGULARLY COVERED/ABBREVIATIONS USED BY BURMANET:

 AP: ASSOCIATED PRESS
 AFP: AGENCE FRANCE-PRESSE
 AW: ASIAWEEK
 AWSJ: ASIAN WALL STREET JOURNAL
 Bt.: THAI BAHT; 25 Bt.=US$1 (APPROX), 
 BBC: BRITISH BROADCASTING CORPORATION
 BI: BURMA ISSUES
 BIG: BURMA INFORMATION GROUP
 BKK POST: BANGKOK POST (DAILY NEWSPAPER, BANGKOK)
 BRC-CM: BURMESE RELIEF CENTER-CHIANG MAI
 BRC-J: BURMESE RELIEF CENTER-JAPAN
 CPPSM: C'TEE FOR PUBLICITY OF THE PEOPLE'S STRUGGLE IN MONLAND 
 FEER: FAR EASTERN ECONOMIC REVIEW
 JIR: JANE'S INTELLIGENCE REVIEW
 KHRG: KAREN HUMAN RIGHTS GROUP
 Kt. BURMESE KYAT; 150 KYAT=US$1 BLACK MARKET
                   100 KYAT=US$1 SEMI-OFFICIAL
                   6 KYAT=US$1 OFFICIAL
 MOA: MIRROR OF ARAKAN
 NATION: THE NATION (DAILY NEWSPAPER, BANGKOK)
 NLM: NEW LIGHT OF MYANMAR (DAILY STATE-OWNED NEWSPAPER, RANGOON)
 S.C.B.:SOC.CULTURE.BURMA NEWSGROUP 
 S.C.T.:SOC.CULTURE.THAI NEWSGROUP
 SEASIA-L: S.E.ASIA BITNET MAILING LIST
 USG: UNITED STATES GOVERNMENT
 XNA: XINHUA NEWS AGENCY 
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