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Burmanet News Aug. 29, 1995 (r)


------------------------- BurmaNet ---------------------------
"Appropriate Information Technologies, Practical Strategies"

Noted in Passing:
"We hope to get a windfall from the campaign."
Hotel and Tourism Minister Lieutenant-General Kyaw Ba on 	Visit Myanmar Year  (quoted in: Bkk Post: Burma Vows to Visa, 	Forex Flexibility for Tourists)

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The NCGUB is a government-in-exile, formed by representatives
of the people that won the election in 1990.

Burma Issues is a Bangkok-based non-governmental organization
that documents human rights conditions in Burma and maintains
an archive of Burma-related documents. Views expressed in The
BurmaNet News do not necessarily reflect those of either NCGUB
or Burma Issues.

August 29, 1995
Report: Nicolas Copp of Coudert Brothers Bangkok

ARE YOU thinking about investment in Burma? Burmese law allows
for a variety of foreign investment vehicles but most will
require certain government permits. It is therefore essential for
a foreign investor to have a grasp of the procedures and
requirements for entry to Burma when formulating an investment
strategy that work.

A foreign investor intending to establish a legal presence in
Burma is generally permitted to either establish a branch office
or incorporate a separate limited liability company.

Other forms of legal presence such as a representative office,
bank branch of commission agency may also be established by a
foreign investor. The Burmese government has also recently been
inviting foreign participations in build- operate-transfer
structural projects and interest in the "privatisation" of the
state sector.

Most foreign investors entering Burma prefer to incorporate a
limited liability company rather than to establish a branch
office. This is because the potential consolidated tax treatment
of branch earnings and unlimited liability of the parent company
for branch office activities in Burma are generally perceived as
unacceptable risks.

A Burmese company with foreign invested capital may either be
incorporated as a wholly foreign-owned subsidiary or as a joint
venture  company in which the foreign party must own at least  35
per cent of the share capital. Most foreign investors,
particularly in construction, decide to establish a joint venture
with the local partners' contribution in the form of land.
Incorporation is a relatively simple process that takes about one
month to complete, although preliminary negotiations may take a
long time.

Once incorporated, the company must then be registered and issued
a permit to trade from the Companies' Registry. This requirement
also applies to a company with an investment licence issued by
the Myanmar Investment Commission.

Opinions vary as to whether a company with an investment licence
is, in practice, any better off than a company or branch without
an investment licence and subject to the ordinary fiscal and
administrative regime of the Companies Act.

Whatever the view taken, as an application for a Permit to Trade
is a relatively less complicated and time-consuming process than
an application to the commission for an investment licence, an
investor should consider whether it is possible to structure
investment in stages and apply for each licence as required.

Ideally, the first stage of an entry strategy in Burma would be
to apply for a Permit to Trade then, once business develops and
working relationships within the commission are established, the
company can apply for an investment licence. This step-by-step
approach enhances the likelihood that a licence will be issued
without loopholes and may be effectively implemented.

Foreign investors also need to be aware of the financing and
capital structure requirements of Burmese law, as early tax
planning and methods to realise profits abroad are crucial to the
success of any investment in Burma.

In practice, the most significant problem an investor in Burma
faces is that kyats are not freely convertible to US dollars and
that the official exchange rate of six kyats per dollar is about
20 times more expensive than the black market rate of 100 kyats
per dollar. Rarely are surplus dollars for sale in Burma from
which profits may be realised.

Counter-trade and other unusual arrangements have evolved between
the government and businesses for changing kyat earnings to
dollars, but these remain more of a stumbling block than a
solution to many investment appraisals in Burma.

It is vitally important, therefore, for a foreign company to earn
or be sufficiently capitalised with dollars to fund its dollar
expenditures. Unfortunately, equity capital is usually required
to be paid-up in dollars and converted at the official exchange
rate which is an expensive way to capitalise a business in Burma.
In exceptional circumstances, special permission may be obtained
to invoice domestic sales in dollars but most businesses have a
significant dollar cash flow problem.

The capital structure of a Burmese company should be
debt-oriented as interest payments on loan capital are deductible
expense and equity capital is an asset that cannot be freely
transferred or repatriated upon dissolution of the company. In
practice, working-and fixed capital requirements are often funded
by offshore loan facilities drawn down by the company when
required, but the repatriation of an account balance is severely
restricted and subject to approvals.

In conclusion, although Burmese authorities have recently relaxed
foreign investment laws the perceived lack of long-term political
stability and even short term policy objectives have kept
investors cautious. Once the decision to invest has been taken,
it is vitally important to understand both the legal and
practical as pects of making such an investment.

Copyright Coudert Brothers 1995.

August 29, 1995

BURMESE Deputy Minister for Home Affairs Col Tin Hlaing  was a
Delhi last week to co-chair the Burma-India border meeting.
Issues discussed include security, peace and development along
the border, border trade, sports and cultural exchange programmes
and eradication of drug trafficking.

August 29, 1995

SOUTH Korean conglomerate Hyundai is seeking investment
opportunities in Burma. Hyundai Corp vice-president Chung Il
Chung, held talks with Burmese National Planning and Economic
Development Minister Brig-Gen David Abel in Burma recently.
Hyundai is interested in oil and gas exploration mining and power
generation in Burma.

August 29, 1995

THAILAND will not take any part in the Burmese government's
suppression of opium warlord Khun Sa, a move the kingdom
considers as its neighbour's own internal affair, Foreign
Minister M.R. Kasem S. Kasemsri said yesterday.

He denied that there had been any official request from the
Burmese government for Thailand to help suppress Khun Sa.

M.R. Kasem was responding to a Reuters report on Monday which
quoted Burma's deputy director of the Directorate of Defence
Services Intelligence, Col Kyaw Win, as saying Burmese
authorities had asked Thailand and the US to be able "to get to
him (Khun Sa) from the Thai side. If they are seriously
interested in eradicating the (drug) problem, then they must help
us to finish him."

He said the request could be seen in two ways: the Burmese
authorities don't want Thailand to help Khun Sa's forces or,
Burma wants Thailand to help in the suppression drive.

"The Thai government and Army do not support Khun Sa; it is
widely known that he has problems with the international
community regarding narcotics trafficking but we will not
interfere because it is Burma's internal affair," he said.

M.R. Kasem reiterated Thailand's position, saying if Khun Sa's
forces flee onto Thai territory they will be disarmed and sent
back to Burma; the Thai authorities will not detain them on
charges - of illegal entry.

"Sending disarmed Khun Sa fighters back to the Burmese government
might be regarded as interfering in their domestic affairs," said
the minister *hen asked if the Thai authorities would return the
warlord's men to the Burmese authorities.

August 29, 1995

BURMA has not asked the government to arrest and deport drug
warlord Khun Sa or members of his Mong Tai Army in the event they
evade Burmese suppression by escaping into Thailand, Foreign
Minister Kasem S Kasemsri said yesterday.

It was still unclear if Khun Sa and his troops would be returned
to Burma if they fled to Thailand and were arrested,  Kasem said.

He said it would clearly be intervening in other country's
internal affairs if Bangkok did so."Burma has never asked this 
government to arrest him," Kasem said.
During the term of the previous Chuan government, Burma was
infuriated over reports that the Thai authorities did not deport
MTA soldiers who had escaped to a Thai border province. They were
disarmed and freed.

Kasem reiterated that it is not Thai policy to shelter
anti-Burmese government forces.

Supreme Command spokesman Vice Adm Kraichit Sirisombat said
yesterday he believed Defence Minister Gen Chavalit Yongchaiyudh
would be able to resolve all problems in the Thai-Burmese
relationship when he visits Burma between September 1-2.

Kraichit said the Burmese junta ordered the closure of the
Thai-Burmese border checkpoints and suspended the construction of
the near-completed bridge across the Moei River out of suspicion
Thailand had aided and abetted anti-Rangoon armed ethnic groups.

Kraichit said the murders early this month of at least two
Burmese fishermen by their Thai crew-mates was a crime which
would not affect ties between the two  countries.

August 29, 1995  (AP-Dow Jones)

TOKYO _ Japan's Mitsui & Co has started an exclusive contract to
supply about 10,000 barrels per day (b/d) of crude oil to Burma
from August, a Mitsui spokesman said yesterday.

Under an agreement signed in June but only disclosed now, Mitsui
will supply a total of 4 million barrels, or 0.55 million metric
tons, of crude oil in a one-year contract running from August
1995 to July 1996 to the government's Tanlin refinery in suburban
Rangoon, the spokesman added.

He said Mitsui won the US$70-million contract through
international bidding carried out in June by the government-owned
MPE Burma Petrochemical Enterprise.

Although Burma has several promising oil fields, their
development has been far behind that of other countries because
the unstable political situation there has deterred foreign
investment capital, the spokesman said.

"We heard that Burma's oil production currently amounts to 12,000
to 15,000 barrels a day. but the country still needs to import at
least 10,000 barrels a day to meet domestic demand," the
spokesman noted.

With the recent release of opposition leader Aung San Suu Kyi
after six years of house arrest, there are hopes of political
reform and, eventually, accelerated foreign investment in Burma.

However, development of the country's oilfields is still likely
to fall behind growing demand for oil, which should spur rapid
growth in demand for oil imports in the next few years, the
Mitsui spokesman predicted.

Burma imported 2.7 million barrels of crude in the year ended
July 1995, and will raise that figure by 48 per cent5 to 4.0
million barrels for the year ending July 1996, the spokesman

Since Burma's government will likely continue making exclusive
contracts to secure stable oil imports, Mitsui will attempt to
renew the contract for the next years, the spokesman said.

Mitsui is currently conducting feasibility studies on four
projects in Burma, including one for natural gas for use in
petrochemicals production.


August 29, 1995    by Rajan Moses    (Rangoon, Reuters)

BURMA has vowed to be more flexible with its rules on the
issuance of visas to tourists and on foreign-exchange regulations
in the run-up to and during its heavily touted "Visit Burma Year"
in 1996.

Hotel and Tourism Minister Lieutenant-General Kyaw Ba told
Reuters in an interview late last week these relaxations would be
part of government efforts to attract more tourists and earn more
dollars for one of the poorest countries in the world.

Burma was isolated by much of the Western world and cut off from
multilateral economic assistance in 1988 when the military
brutally suppressed a pro-democracy uprising.

The military's ruling State and Law and Order Restoration Council
(SLORC) hopes to revive tourist interest in Burma, which has a
rich cultural and architectural heritage dating back centuries,
through the Visit Burma campaign.

"Actually, October 1, 1996, is the official start date for the
Visit Burma Year and so we have time to prepare the country to
meet more tourist demands," Kyaw Ba said.

Getting a visa to visit Burma has in the past been a trying
experience for some due to excessive bureaucracy and security

"We have instructed all our embassies to issue tourist visas
within 24 hours to promote tourism," the minister said. "However,
on arrival visas for tourists may not be possible because drug
dealers or criminals may try to enter the country that way"

The official exchange rate is six kyats (pronounced chat) to one
US dollar. But tourists can either exchange US dollars for
foreign-exchange certificates (FEC) at a rate of 100 kyats to one
US dollar or get up to 110 kyats on the black market.

"We are going to be more relaxed on the issue of exchanging
foreign money for kyats by tourists when they are here," Kyaw Ba
said, meaning that unofficial money exchanges would not be
severely policed and punished.

"We hope to get a windfall from the campaign," he added.

Burma has drawn up elaborate plans to make Visit Burma Year a
success. It has targeted 500,000 tourist arrivals during the
campaign, begun the building of new hotels to beat a room
shortage and started work on a new airport in Mandalay.

Last year, 100,000 tourists visited Burma, according to industry

Kyaw Ba said up to $778 million in foreign investments for the
building of hotels had been signed, mainly with interests from
Singapore, Malaysia, Thailand and Hong Kong.

In the capital of Rangoon there are 16 hotel projects under way
along with five in the outskirts of the city.

The minister said he expected the total number of hotel and
guest-house rooms in Rangoon to rise to 5,000 by the time the
projects were completed by early or mid-1996 from about 2,000

Mandalay, Burma's second largest city, would have 2,000 rooms by
next year, he added. The minister also agreed that room rates in
Rangoon and other Burmese towns were now relatively high because
of a shortage but would come down as the supply of rooms
increased by next year.

For example, a small hotel with very basic amenities and no
frills in Rangoon charges about $45 a night.

Japanese, Taiwan, Thai, Malaysian and Singaporean tourists were
expected to top the visitors' list, he added.

The minister expected an international-standard runway capable of
accommodating big airplanes to be ready for the planned Mandalay
airport by the end of next year. A make-shift terminal would be
set up to process tourists.