Central bank to strike new exchange rate for the kyat

Myanmar's central bank plans to set the country's new exchange rate at around 820 kyat per US$1 (30.8 baht), close to its black market level, as the nation pushes ahead with economic reforms, two officials with private Myanmar banks said yesterday.

The change would be a shock for government institutions and state-owned enterprises that have been using the official exchange rate of 6.4 kyat per dollar, the central bank has said. But broader economic waves are unlikely since an exchange rate of around 800 is widely in use.

The bank officials said on the sidelines of an industry event in Kuala Lumpur, where they were speaking, that the new "managed float" system would have a trading band of plus or minus 2%.

"We are now in the auction process, and there is a plan to manage the float of the currency at 820 kyat, plus or minus 2%, to one US dollar," Aung Kyaw Myo, an official of Kanbawza Bank Ltd, said.

The central bank had been expected to set the currency around that level as it moves to unify the country's dual exchange rate in the coming weeks _ Myanmar's boldest economic reform yet as it emerges from decades of isolation.

The government is calculating its national budget for the year from April 1 using an exchange rate of 800 kyat per dollar, a central bank official said last week.

The currency reform is a major step in ending market distortions caused by the dual system and improving transparency as foreign investors pour into the Southeast Asian country following bold economic and political reforms in recent months.

But it could also cause some disruptions and anxiety in a country where memories of economic mismanagement are fresh.

The sudden cancellation of certain banknote denominations by the late dictator General Ne Win in 1987 led to many people's savings being wiped out and helped trigger a pro-democracy uprising the following year.

The kyat's unofficial rate, used in most transactions, has jumped from more than 1,000 per dollar in 2009 as foreign money has flowed into the timber, energy and gem sectors. That has hurt many Myanmar people, from farmers and manufacturers to traders and employees of foreign firms paid in dollars.

"This market-driven reform will boost foreign investment interest," said Douglas Clayton, chief executive of Leopard Capital, a private equity fund focused on emerging Asian markets.

"In terms of growing pains, there could be some imbalances in supply and demand but that will not be unusual in such a transition."

K K Hlaing, a businessman in Myanmar's commercial capital Yangon, said he expected there would be little disruption from the new exchange rate as it was already widely used in business transactions.

"The government is simply formalising the unofficial exchange rates in anticipation for investment," he said.

"There isn't going to be any sudden economic shock with this as the people have been going about their business using the 800-820 kyat range." REUTERS

Ref: BangkokPost

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Posted in: 05. MYANMAR

Govt Withdraws 39 Polling Stations in Kachin State

An election official prepares ballots for voters at a polling station for the 2010 General Election. (Photo: Reuters)

More than 50,000 people are set to lose their by-election vote after 39 out of 110 polling stations in Phakant region of Kachin State are withdrawn due to security concerns.

Bauk Ja, an ethnic Kachin election candidate representing National Democratic Force (NDF) in the April 1 ballot, said that the Union Election Commission made the decision because of renewed fighting between the Kachin Independence Army (KIA) and government troops.

All 110 polling stations were operational in the region during the 2010 General Elections which were held during a 17-year ceasefire between the government and KIA. 

Three candidates—representing the National League for Democracy (NLD), NDF and Union Solidarity and Development Party (USDA)—will be contesting one seat in the Burmese Parliament's Lower House for Phakant constituency.

“More than 10 villages will not have the chance to vote. The main reason is the matter of security,” said Bauk Ja. 

There are now only 95,137 eligible voters in Phakant region, all of whom must visit one of the remaining 71 polling stations in order to cast their ballot.

This compares with around 150,000 eligible voters in the same region in 2010, meaning the decision to withdraw 39 polling stations has rid more than 50,000 people of their right to participate in the democratic process, said Bauk Ja.

The prominent Kachin activist also stood as an NDF candidate for Hpakant constituency in the 2010 General Elections. 

Next month's by-elections will be held in the three Kachin State townships of Bhamo, Mogaung and Phakant. Some villages involved are located in areas controlled by the KIA. 

Fighting between the Burmese government and KIA broke out in June 2011, causing more than 60,000 Kachin civilians, including many women and children, to flee their homes and become refugees near the Chinese border.

No ceasefire agreement has been reached between the two adversaries despite representatives from Naypyidaw's peace negotiation team and leaders of the KIA’s political wing, the Kachin Independence Organization, meeting several times for talks. 

In fact, hostilities appear to be heating up once again with resumed fighting reported on Monday—just after the latest round of negotiations in the Chinese border town of Ruili.

Ref: Irrawaddy

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Posted in: 05. MYANMAR

Burma Announces Wage Increase for Govt Workers

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Workers are seen near Burma's new Parliament building when it was still under construction on March 27, 2010. (Photo: Reuters / Soe Zeya Tun)

The Burmese government has announced that it will increase the salaries of all public sector employees starting from April 1, when the country will hold important parliamentary by-elections. 

According to an evening broadcast on state-run television, the Ministry of Finance announced that all government workers, including members of the armed forces, will receive a monthly cost-of-living allowance of 30,000 kyat (US $38) beginning next month. Public servants currently earn an average of around 50,000 kyat ($63) per month.

In addition to this bonus, daily wages of state employees working eight hours a day will increase from 1,100 to 2,100 kyat ($1.40-2.70), according to the announcement.

The increase will come into effect on the same day that the opposition National League for Democracy, led by Aung San Suu Kyi, will compete with the ruling military-backed Union Solidarity and Development Party (USDP) in by-elections seen as a key test of Burma's ongoing reforms. 

The timing of the news has raised questions about whether the government is misusing its power to win support for the USDP.

Earlier this month, President Thein Sein said in a nationally televised speech that he was against a proposal to raise the monthly salaries of state employees by no less than 100,000 kyat ($125) in an effort to tackle corruption.

He said that the proposal, which had the unanimous backing of Parliament, would be too costly and would also fuel inflation.

“Since our government is elected by the people, we must also take into account the other 96.7 percent of the population,” he said in the speech, referring to the fact that state employees make up an estimated 3.3 percent of the population.

Thein Sein's cabinet also disapproved of the arguments of Lower House Speaker Thura Shwe Mann and MPs who called for the suspension and cancellation of state industrial projects, including  Naypyidaw development project, to implement the proposed salary increase.

Government workers said they welcomed the news, but worried that it would bring about a simultaneous increase in commodity prices.

“The increased wages will ease my life a little bit, but that will make no difference if the prices go up. I just heard that the price of rice has already increased today,” said Nyunt Nyunt Win, a government primary school teacher in Insein Township in Rangoon. 

 By BA KAUNG / THE IRRAWADDY

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Posted in: 05. MYANMAR

Burma Loses Sea Dispute with Bangladesh

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Burma's claim to waters around Bay of Bengal has been rejected by UN. (Photo: Irrawaddy)

DHAKA, Bangladesh—Bangladesh's foreign ministry said Wednesday that the UN's International Tribunal on the Law of the Sea has recognized the South Asian nation's claims to a full 200-mile (320-kilometer) Exclusive Economic Zone in the Bay of Bengal.

The verdict issued Wednesday in Hamburg, Germany, settled a long-standing dispute between Bangladesh and neighboring Burma.

Bangladesh, angry over Burma's claim of rights to the disputed sea area, filed the case with the tribunal in 2009.

Naypyidaw had claimed that its maritime boundary cut directly across the Bangladesh coastline, severely limiting the latter's maritime jurisdiction to a narrow wedge of sea extending about 130 miles (200 kilometers).

Burma, which shares a 170-mile (275-kilometer) of land border with Bangladesh, also claimed that the tribunal lacked jurisdiction to award continental shelf rights beyond 200 miles (321 kilometers) from either state's coast.

But the tribunal rejected both of these arguments.

“The judgment is final and without appeal,” Bangladesh's foreign ministry said in a statement.

The verdict is seen as an opportunity for energy-starved Bangladesh, which is seeking new sources of gas amid a forecast that its current reserves will run out by 2014-15.

Last year, Burma signed a production-sharing contract with US energy giant ConocoPhillips to explore for gas in the virtually unexplored deep waters of the Bay of Bengal, but its area of exploration was limited because of the maritime dispute with Myanmar and India.

In 2008, Burma escorted South Korean gas exploration company Daewoo International Corp. into waters also claimed by Bangladesh. Both countries deployed their navies and ended the standoff with top-level diplomacy.

A similar case is pending with the tribunal over disputed waters with India. The verdict of that case is expected in 2014.

By JULHAS ALAM / AP WRITER

Ref: Irrawaddy

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Posted in: 04. WORLD

KNU's 'Papillon' Gets Life Sentence

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Mahn Nyein Maung (PHOTO: The Irrawaddy)

Former underground activist and Karen National Union (KNU) leader Mahn Nyein Maung was sentenced to life imprisonment plus three years by a special court in Insein Prison in Rangoon. 

“Mahn Nyein Maung got a life sentence after being found guilty of participating in acts of war against the country and the ruling government, and an additional three years for having connections to an illegal organization. The sentences are to be served consecutively,” said his lawyer Kyee Myint.

“It seems to me that he has been mentally affected by all this,” his lawyer said. “He should see a psychologist and needs medical attention.”

David Takapaw, the vice-president of the KNU, urged the government to release the Karen veteran. He said such a move would help create trust between the two parties [the KNU and the Burmese government], and could play a part in affecting the process of peace and national reconciliation. 

“The government promised they would release Mahn Nyein Maung to create trust,” he said. “If not, it will be impossible to reconcile.

“We will wait and see whether they release him in a presidential amnesty,” said Takapaw.

He added that, in the meantime, the KNU would file an appeal against the court decision.

According to the KNU vice-president, a promise was made by government negotiator and Railways Minister Aung Min that Mahn Nyein Maung would be released after sentencing through a presidential amnesty.

During ceasefire discussions in the second week of January, Aung Min said President Thein Sein would make this gesture as a sign of goodwill and a step toward making a peace deal with the Karen rebels, said Takapaw.

Mahn Nyein Maung is a prominent KNU leader and a central committee member of the United Nationalities Federal Council ethnic armed alliance. 

He was arrested in July 2011 by Chinese immigration officials in Kunming, the capital of Yunnan Province, after being denied entry to Thailand where he was living in exile. He was then deported from China to Burma where he was taken into custody.

He was originally sentenced to one year imprisonment for breaking immigration laws and possessing a fake passport—later reduced to six months when the prison term had already been served.

Mahn Nyein Maung is a former underground activist who conducted operations on behalf of the KNU inside Burma. In 1960, he was arrested and was sent to the Coco Islands, an infamous detention center for political prisoners located some 300 km off the Burmese mainland in the Indian Ocean.

Mahn Nyein Maung and two other political prisoners, Mahn Aung Kyi and Aung Ngwe, managed to escape from the island in 1970 by floating across the water clutching driftwood. However, they were rearrested when they reached the Burmese mainland. It is the only known escape from the prison, located on what is commonly referred to as “Burma's Devil's Island.” 

Due to his extraordinary escape, Mahn Nyein Maung is frequently likened to the famous French prisoner Henri Charrière, nicknamed “Papillon” [butterfly], who escaped a penal colony in French Guyana. Like Charrière, Mahn Nyein Maung wrote a book about his experiences inside prison and his subsequent escape.

 By ZARNI MANN/ THE IRRAWADDY

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Posted in: 05. MYANMAR

New Labor Law Will Prevent Worker Disputes: ILO

 

Workers at a garment factory at Rangoon's Hlaing Tar Yar Industrial Zone. (Photo: Reuters)

A new labor organization law that gives Burmese workers the right to free association, create trade unions and strike will help minimize industrial action, claims the International Labour Organization (ILO).

Steve Marshall, Rangoon liaison officer for the ILO, told The Irrawaddy that the law would hopefully prevent strikes and labor disputes. The legislation came into effect on Friday and gives Burmese workers the right to walk out for the first time since 1962.

“It is a concept which is about social dialogue, creation of relationships between employees and employers,” said Marshall. “It is not purely about strikes, which should be the last tool in their relationships—an action of last resort.”

Application and understanding of the law would, according to Marshall, be “critical.”

“The critical thing will be getting to understand the law and how it can be best used,” he said. “There has actually got to be some cultural and behavioral change in the context of a lengthy history.” There were previously few formal regulations governing labor relations in Burma.

Last month workers at Chinese-owned Tai Yi slipper factory in Rangoon's Hlaing Tharyar Industrial Zone (3) went on strike over pay, eventually accepting an arbitration court decision that saw workers gain a minimum wage of 51,000 kyat (US $63.8) per month excluding additional overtime fees.

The new legislation was announced in state media on Saturday with a notification signed by President Thein Sein. Marshall said the ruling “creates a completely new environment for all parties, from employers to the government and workers.”

The law allows workers to strike provided those in the private sector give three days prior notice, and those in the state sector give 14 days. Workers in certain essential services will be barred from walking out if the strike is deemed to threaten lives. Employers wishing to conduct a lock out of workers would have to give 14 days notice in all sectors.

Registration of unions is expected to occur steadily, with Marshall noting that, “even before the law passed or came into force, quite a number, probably somewhere between eight and 15 groups, submitted papers for registration.” Those wishing to start a labor organization would have to register with an official appointed by the president. Any group must contain a minimum of 30 people.

Ministers have previously expressed hope that the new legislation would also help the economy with greater regulation and rule of law, especially in labor-intensive manufacturing.

The ILO has helped with the drafting of the legislation—one of two remits the United Nations body has in the country, the other being investigating forced labor.

“All the evidence shows that forced labor is reducing,” said Marshall. “However, the number of complaints we receive is increasing. Because people understand the law and feel more secure, I would envisage the same in freedom of association. Quietly it will develop.”

Unions would not be able to fund political parties, as occurs in many countries, with the law stipulating that union funds can only be spent on “social welfare, education, sports, health, training courses related to skill and beneficial matters related for the workers.”

The regulations governing the law are still not widely available, but were created with ILO consultation. The legislation, however, passed through both Houses of Parliament—allegedly with some MPs in the ruling Union Solidarity and Development Party objecting to the inclusion of farmers on the bill. Two-thirds of the Burmese population currently work in agriculture.

All freedom of association was abolished in 1962 when former junta chief Gen Ne Win abolished parliamentary democracy in the country. In subsequent years, however, student unions have been instrumental in expressing opposition to the government. 

July 7, 1962, is seen by many as the birth of populist movements in post-coup Burma when 100 protesting students were gunned down by the military on the Rangoon University campus. The following day the student union building was blown up by the regime.

By JOSEPH ALLCHIN 

Ref: Irrawaddy

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Posted in: 04. WORLD

China Urges Burma to Restart Myitsone Project

Burmese living in Malaysia display placards in protest against Myitsone dam project outside Burma’s embassy in Kuala Lumpur on Sept. 22, 2012. (Photo: Reuters)

BEIJING—Chinese officials have urged Burma’s government to restart a Chinese-backed multibillion-dollar power dam project that was suspended apparently without notice last year.

China was caught off-guard by September's suspension of the US $3.6 billion Myitsone dam, which was being built by a Chinese company in Burma. The project had drawn protests from ethnic and environmental groups, and the suspension marked a significant about-face in Burma’s domestic politics.

The officials, speaking on the sidelines of China's annual legislative session, said the dam would produce badly needed electricity for Burma and raise living standards, the official China Daily reported on Sunday.

It quoted a former head of the National Energy Administration, Zhang Guobao, as saying the dam is a good project that will bring local residents a better life.

It also quoted Lu Qizhou, president of China Power Investment Co., which is providing the financing for the project, as saying the company will do all it can to avoid negative environmental impacts from its projects.

"Myanmar is our friendly neighbor ... we hope to restart the project as quickly as possible," Lu said.

Both Lu and Zhang are members of the Chinese People's Consultative Committee, an advisory body to the annual National People's Congress being held in Beijing.

China and resource-rich Burma have historic ties, but the suspension of the dam project came as an apparent surprise to Beijing, which has long provided key diplomatic and economic support for Burma.

Burma's President Thein Sein announced the suspension of the project on Sept. 30, drawing sharp criticism from the Chinese company behind the project but praise from activists who say it would displace many villagers and upset the ecology of the Irrawaddy River. It also would submerge a culturally important site in the ethnic Kachin heartland.

The dam has also been criticized because about 90 percent of the electricity it would generate would be exported to China, while the vast majority of Burma’s citizens have no power.

Beijing has poured billions of dollars of investment into Burma to operate mines, extract timber and build oil and gas pipelines. China has also been a staunch supporter of the country's politically isolated government.

China Power Investment Corp., which has threatened legal action over the move, is a state-owned company, and its website says it operates under the leadership of the State Council, which is China's Cabinet.

Ref: Irrawaddy

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Posted in: 05. MYANMAR