Global Witness Says Burma’s Biggest Bank a Major Player in Jade Trade
UK-based advocacy organization Global Witness said it believes that Burma’s largest private bank, Kanbawza Bank (KBZ), plays a larger role in the country’s murky jade trade than it publicly discloses. The organization said it unearthed links between a major jade-mining company and the bank’s recently established insurance arm, IKBZ.
Global Witness on Oct. 23 published a lengthy report based on more than a year of investigations into the jade trade. The report gives a glimpse into the scale of profits being made from the jade industry by players including Burma’s former dictator, Sen-Gen Than Shwe, the Burmese military and a number of well-connected tycoons.
But the report also contains information about the links between KBZ Group, which is owned by tycoon Aung Ko Win and his family, and the extraction of jade from the Hpakant region of conflict-torn Kachin State. The bank has in the past won plaudits for its transparency efforts and as one of the country’s top taxpayers.
“KBZ has a dedicated jade mining subsidiary, but in meetings and correspondence with Global Witness has stressed that it plays only a small part in the industry,” the Global Witness report said. “According to a leading economic analyst, KBZ’s bank is now around three times larger than its nearest private sector rival. What is it doing that its competitors are not? Does jade provide part of the answer and, if so, where and whom is it coming from?”
While the report does not accuse KBZ of wrongdoing, it sets out numerous links to one of the most significant jade-mining groups, Ever Winner. A network of 12 linked firms, Ever Winner made sales at Burma’s official jade emporiums of more than $120 million in 2013 and $190 million the following year.
The Global Witness report claims that the man at the top of the Ever Winner group, Aike Htwe, is closely tied to KBZ boss Aung Ko Win. Further, the group establishes a link between Aike Htwe and IKBZ, an ambitious venture that the group hopes will become a major player in Burma’s nascent private insurance industry.
“KBZ denies that Aung Ko Win is a beneficial owner of Ever Winner but confirms what company records show: that Aike Htwe’s daughters are directors and shareholders of its new insurance company, IKBZ,” it said.
“IKBZ’s other directors and shareholders are Aung Ko Win, his wife and their two daughters. KBZ says that Aike Htwe is not a beneficial owner of the insurer. However Aike Htwe’s daughter informed Global Witness that he is, in fact, an investor in IKBZ.”
According to Global Witness, KBZ advisors have indicated that a review may take place of the group’s mining interests, suggesting that more disclosure about its links to the jade industry may be forthcoming. “Global Witness believes that if KBZ wants to live up to its rhetoric on transparency it needs to go much further and faster, however,” it added.
In a response reported in the Myanmar Times newspaper, KBZ Group senior managing director Nyo Myint defended the company, insisting that KBZ had always been clear that jade was a “prime legal source of income.”
“This is not a secret, since from the beginning we publicised where our business comes from,” he said, according to the Myanmar Times.
“We regard the [Global Witness] report as being for the good of the country. KBZ will continue to collaborate with Global Witness to upgrade the standard of the mining industry in Myanmar,” he added.
Burma No Longer the World’s Worst for Starting a Business: World Bank
The World Bank has recognized the Burmese government’s efforts to reform the system of setting up a business in the country. In the bank’s latest edition of its annual ranking on the ease of doing business, it said the country climbed to 160th, up from last place out of 189 countries, on the measure.
The ranking is contained within the report Doing Business 2016: Measuring Regulatory Quality and Efficiency, which ranks countries by how easy it is for companies to conduct business there. Overall, Burma was ranked 167 out of 189 countries, a climb of 10 places on the previous year.
That improvement included modest rises in the rankings on “dealing with construction permits” and “getting electricity,” but was largely accounted for by reforms to the way in which businesses are established in Burma.
The World Bank said in an accompanying statement that governments across the Asia-Pacific region were improving their procedures for starting businesses, but highlighted the particular improvement by Burma.
“The highest number of reforms recorded in the past year was in the area of Starting a Business,” it said. “Myanmar made the most improvement globally by eliminating the minimum capital requirement for local companies and by streamlining incorporation procedures, helping small enterprises save valuable time and resources.”
The report said that the Directorate of Investment and Company Administration was now completing most of the processes required to set up a company within one day, and that many of the charges that previously made setting up a business expensive had been dropped.
However, Burma remains one of the worst countries in the world in a number of the fields included in the rankings. The country actually dropped in the rankings in terms of “getting credit” (now 174th place), while it continues to struggle with “protecting minority investors” (184th), “enforcing contracts” (187th) and “resolving insolvency” (162nd), according to the rankings.
Makro Could Come to Burma Under Thai Operator
Cash-and-carry chain Makro could soon enter the Burmese market, according to a report citing interest in a move from the brand’s Thai operator, Siam Macro Plc.
The Bangkok Post said the company, which is part of the sprawling Thai conglomerate Charoen Pokphan (CP) Group, had already conducted a feasibility study on the Burmese market, citing CEO Suchada Ithijarukul.
“Siam Makro is studying Myanmar consumer behaviour and foreign investment laws. If the regulations are clear, it is ready to open its first store immediately,” the report said, adding that Siam Makro had also met with the Thai ambassador to Burma for advice.
The report said Makro was looking to capitalize on the changes in Burma’s retail landscape since the government initiated liberalizing reforms. It quoted Suchada saying that the company would look for success in Burma with its “various store types,” and said that increasing numbers of foreign visitors to the country would also be a boon for the retailer.
“The boom of tourism in Myanmar is also an opportunity for Makro,” she was quoted saying.
Burmese App Raises $200,000 in Seed Funding
Burmese mobile application Momolay has reportedly raised $200,000 in seed funding as it tries to establish itself as a news and entertainment platform to compete with Facebook among Burmese mobile users.
The website Tech in Asia interviewed Momolay founder Lin Myat, who said the app had been downloaded almost 340,000 times on Android devices since its launch in February. The app claims more than 100,000 active monthly users.
“Momolay is basically a 9Gag and Buzzfeed hybrid,” Tech in Asia said, referring respectively to a user-generated content platform and the news website infamous for its “listicles.” “[Momolay’s] mission: to provide a source of entertainment and social news other than Facebook.”
According to Lin Myat, Momolay has recently raised $200,000 in seed funding from Singapore-based investors that will go toward growing its team and building partnerships with other content publishers. “The funding the company raised brings its valuation to US$1.2 million, and gives it a year of runway to get to the next growth stage,” Tech in Asia said.
Lin Myat told the website that his team was working on a way to monetize its early success.
“We are now experimenting on how we can best find revenue for our partnered publishers and ourselves,” he was quoted saying. “We currently don’t have much revenue apart from a few hundreds dollars a month we get from Facebook native ads.”
Sri Lankan Bank Opens Representative Office in Rangoon
Colombo-based Sampath Bank earlier this month opened a representative office in Rangoon, its first foray outside of Sri Lanka, according to a statement.
The new office was opened on Oct. 7 in the Novotel Hotel Max after the bank obtained a license from Burma’s central bank.
While the representative office does not allow Sampath Bank to conduct lending activity in Burma, it is the first step toward entering the country’s banking sector. Nine other foreign banks have already been granted with licenses giving them permission to conduct some banking operations in the country, and others still have expressed interest in joining them if more licenses are issued.
Sampath Bank’s statement said the firm wanted to benefit from rising interest in Burma’s natural resources by bringing its experience from working in a similar market.
“Myanmar is a country blessed with Jade and Gems together with oil and many other natural resources….,” the statement said.
“In keeping with the vision of Sampath Bank, the Bank carefully selected a country in which the conditions are somewhat similar to Sri Lanka, but has a vast potential to develop in the industry of Banking with mutual benefits to both Sri Lanka and Myanmar. Sampath Bank identifies Myanmar as a location of great potential with which it could share the experiences of high tech banking pioneered by the national bank for the last 28 years.”
