Businesses at Risk From Financial, Cyber Crime in Burma
The conditions in Burma are “ideal for various forms of criminal activity to flourish,” London-based analysts BMI Research say in a new report that warns that legitimate businesses face risks from the poorly monitored financial sector and the lack of preparedness for cyber attacks.
The firm’s “business crime analysis” made available this week ranked Burma third to last out of 38 countries in Asia in terms of the risk of business crime, with only North Korea and Afghanistan ranked lower.
The report said that violent crime was not common in the country, meaning that the costs of physical security should not be excessive for investors, except for those venturing into conflict-affected regions.
However, the report said, criminal gangs have been allowed to grow rich from smuggling, and few measures are in place to prevent the proceeds being laundered through ostensibly legitimate businesses. The country is also underprepared in terms of cyber security, it said, noting that the number of secure servers available in Burma is among the lowest in the world.
“The absence of government regulation and protection against financial and cyber crime leaves companies highly exposed to theft of data and financial assets as well as processing transactions which involve funds generated through illegal activity,” the analysis said.
“Consequently, businesses which are highly exposed to the financial industry or make regular use of the internet for communication or online transactions must provide extensive security measures, including cyber security software, offshore data backup and disaster management systems, and dedicated financial crime teams to investigate and report and suspicious transactions.”
State Airline Begins International Expansion
Myanmar National Airlines (MNA) this week inaugurated a new route between Rangoon and Singapore, and plans to add more international flights in coming months.
The return to international service follows a corporatization drive within the company and the purchase of new aircraft, but many have doubts about whether the airline can compete with established international carriers.
According to travel website TTG Asia, the MNA’s Rangoon-Singapore service will be running daily by the end of October. Also in that month, the site said, the airline also plans to connect Rangoon with both Hong Kong and Taipei, as it attempts to rebuild a name as a Burma’s international flag carrier.
Other Burmese airlines attempting to take advantage of the recent expansion in visitor numbers to the country have found themselves outshone by larger rivals. Airlines based in countries whose airports act as international hubs have the advantage of being able to offer passengers connections with other regional or intercontinental flights.
A Financial Times report on the expansion this week pointed out that Myanmar Airways International, a spin-off from the national airline that is mostly owned by Kanbawza Bank, had to withdraw its Singapore-Rangoon flight as it was unable to fill its aircraft.
However, the Financial Times said, “Some analysts see MNA’s strategy less as a commercial proposition than a reflection of government ambitions to create a flagship to promote the country abroad.”
The report quote MNA saying that its expansion was “not a question of beating competition.”
“Instead, we will deliver a unique Myanmar experience on our flights that no other airline can offer,” the airline told the Financial Times. “This will give choice to customers flying to and from Myanmar and, we believe, will drive business to our airline.”
IFC Backs Local Private Bank for SME Loans
The World Bank’s International Finance Corporation (IFC) has pledged a $7 million loan to Myanmar Oriental Bank Ltd., with the cash to be disbursed to small- and medium-sized enterprises in Burma.
A joint statement from the two institutions on Wednesday said that the convertible loan would help the private lender expand financing for smaller local firms “in urgent need of capital to grow their businesses and create jobs.” Half of those companies at present do not have bank accounts, the statement said.
The IFC is a branch of the World Bank Group that lends to the private sector in developing countries with the long-term aim of expanding the capacity of local businesses.
“The loan complements IFC’s ongoing advisory support to Myanmar Oriental Bank on strengthening its corporate governance and improving its trade-finance operations,” the statement said.
Myanmar Oriental Bank has already received $5 million from the IFC through its Global Trade Finance Program. The bank aims to provide more than $200 million in loans to SMEs by 2019, the statement said.
“IFC will also advise Myanmar Oriental Bank on establishing policies and procedures to identify and manage environmental and social risks associated with the business activities it finances,” it said.
Last year the IFC said it expected its investments in Burma to rise to $1 billion within three years, according to Reuters. Investments so far include about $170 million invested in hotel and real estate projects, another SME-lending program carried out through Serge Pun’s Yoma Bank and a loan to Cambodian micro finance institution Acleda.
Railway Ministry Requests Extra Funding to Repair Flood Damage
Burma’s already dilapidated railway network has suffered almost $3 million of damage from flooding in recent weeks, according to state media.
The Global New Light of Myanmar reported figures from the Ministry of Rail Transportation saying that some rail lines in the north and northwest of the country had already been reopened. Operations were suspended on Mandalay-Myitkyina line for two months, and the line through Hsipaw in northern Shan State has reopened.
The flooding—affecting 12 of the 14 states and regions, but most severely in Arakan State, Chin State, Sagaing Division and Magwe Division—has killed more than 100 people, displaced hundreds of thousands and also damaged roads and bridges.
The ministry reported that repairing the damage to the nation’s railways could cost more than 3.8 billion kyat, about $2.95 million at the current exchange rate. “The damage bill stands at more than K1.3 billion in Rakhine State and Sagaing, Magway, Ayeyarwady and Bago regions,” the report said. “Temporary train services have cost more than K900 million, according to the ministry.”
The report quoted Tin Soe, general manager of Myanmar Railways, saying that the repair works could only be carried out with extra funding from the government. “Depending on the special fund of the government, we will repair the damaged railroad sections,” he was quoted saying.
Thai Debt Collector to Enter Burma
A Thai firm that specialized in debt collection has announced plans to enter Burma’s microfinance sector, according to the website Deal Street Asia.
The report said that JMT Network Services (JMT), which is listed on Bangkok’s Stock Exchange of Thailand, has agreed to form a joint venture in Burma named JP Finance Co Ltd.
“This was approved by the company’s board of directors recently,” the report said, citing information from online news source Infoquest. It said the company would begin life with capital worth just under $600,000, with the Thai company owning a 70 percent stake.
A number of microfinance institutions built have entered Burma in the past few years, with the intention of using foreign capital to extend small loans to farmers and other low-income Burmese.