The BurmaNet News, July 12, 1997

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------------------------ BurmaNet ------------------------     
"Appropriate Information Technologies, Practical Strategies"     
----------------------------------------------------------     
 
The BurmaNet News: July 12, 1997        
Issue #771

HEADLINES:        
==========   
BURMA SOLIDARITY GROUP MALAYSIA: PRESS STATEMENT
BKK POST: GAINT STONE UP FOR SALE
NLM: TIN OO URGES VIGILANCE 
NLM: MINISTER ANTICIPATES CLOSER BILATERAL TIES 
REUTER: BURMA DEADLOCKED TWO YEARS AFTER RELEASE
TODAY MAGAZINE: INVESTMENT IN MYANMAR
----------------------------------------------------------------- 

ALTSEAN: ACTIVISTS URGE ASEAN: REVIEW MEMBERSHIP DECISION
July 11, 1997

ALTSEAN-BURMA
A L T E R N A T I V E    A S E A N   N E T W O R K   O N   B U R M A
tel: 66 2 275 1811, 66 2 693 4515       fax: 66 2 693 4515
<altsean@xxxxxxxxxx>
c/o FORUM-ASIA 109 SUTHISARNWINICHAI RD SAMSENNOK  HUAYKWANG  BANGKOK 10320
THAILAND

For immediate release: July 11 1997

MEDIA RELEASE
ACTIVISTS URGE ASEAN: REVIEW MEMBERSHIP DECISION

Bangkok, Fri: A network of Asean-based supporters of human rights and
democracy today urged Asean to reconsider its decision to proceed with
admitting Burma as a full member at its July Summit.

The Alternative Asean Network on Burma (ALTSEAN-BURMA) said that Asean, in
the interests of logic, consistency and dialogue, should also delay Burma's
admittance until peace was restored to the country. Yesterday, Asean Foreign
Ministers decided to delay Cambodia's entry and to admit Laos and Burma at
the Summit later this month.

ALTSEAN-BURMA Coordinator Debbie Stothard said: "We applaud Asean's call for
dialogue in Burma which was made earlier this month, however Asean needs to
back it up with a clear signal to ensure that Burma's military junta will
take it seriously.

"A delay in Burma's membership will give Burma's Slorc regime some time to
seriously consider and positively respond to Asean's call for dialogue.

"The Cambodian crisis is an ominous reminder to us all that membership
should not be taken lightly and intending members should prove their sincere
commitment to peaceful resolution of conflicts.

"In many ways, the situation in Burma parallels Cambodia. War continues to
rage in parts of the country. A total of more than 200,000 refugees are
gathered on its borders with Thailand, Bangladesh and India. Forced
relocations and forced labour is rampant. The overwhelming rate of drug
production and HIV/AIDS infection under the irresponsible administration of
the Slorc continues to pose a threat to this region.

"If Asean is willing to recognise the elected representatives of Cambodia,
logically, it should do the same for Burma.

"What Burma's democracy movement and ethnic nationalities ask for is
tripartite dialogue. This extremely reasonable request is enthusiastically
supported by Asean-based activists and the international community.

"Asean should not squander the opportunity to facilitate this essential
process." emphasised Ms Stothard.

ENDS

For more information, please contact:
Bangkok tel. (66 2) 275 1811 or (66 2 692 4515)

**************************************

BURMA SOLIDARITY GROUP MALAYSIA: PRESS STATEMENT
July 11, 1997

ASEAN's double standards over Cambodia and Burma

The ASEAN Foreign Ministers' decision yesterday to postpone Cambodia's ASEAN
membership but to admit Burma on July 24 as scheduled confirms, yet once
again, ASEAN's hypocrisy and double standards.

In the first place, the Foreign Ministers' decision has exposed finally and
firmly that ASEAN's so-called commitment to the principle of
non-interference in the internal affairs of another state is an utter myth.
It shows that ASEAN has never been honest or principled about this matter.

When it is convenient, as in the case of Cambodia, ASEAN is prepared to
intervene and interfere in the affairs of another country through
diplomatic, political and economic pressure.

When it is not convenient, as in the case of Burma under the military junta,
the SLORC, ASEAN does nothing to embarass or jeopardise the illegal and
illegitimate regime there.

Malaysia's Foreign Minister Datuk Abdullah Ahmad Badawi has called on the
Cambodian government under Hun Sen to ensure that the National Assembly and
other democratic institutions in that country are not dissolved. We support
this call.

However, how sad and unfortunate that Datuk Abdullah Ahmad Badawi has not
used the occasion to call on the SLORC generals to hand over peacefully
power to the National League for Democracy (NLD) under the leadership of
Aung San Suu Kyi, in accordance with the democratic verdict of the Burmese
people as expressed through the general election on 27 May 1990.

The Foreign Ministers of ASEAN are not unaware that the SLORC military
gangsters have repeatedly rejected their ever-so-gentle suggestions to
conduct a dialogue with the NLD and other legitimate Burmese groups. This is
a direct slap on the collective face of ASEAN;  it is yet another reminder
that ASEAN's  so-called policy of `constructive engagement' is nothing but a
fig leaf which has failed miserably to conceal the illegalities and
indecencies of the SLORC military junta.

If what Hun Sen did in Cambodia a few days ago is a coup, then the SLORC
junta's continued refusal to hand over power to representatives duly elected
by the Burmese people was and is a coup. There can be no doubt on this
whatsoever.

The question is: Why the double standards by ASEAN?

We had before warned that ASEAN's condoning the SLORC's coup in Burma could
and would encourage coups in other parts of Southeast Asia and even in ASEAN
itself. Events of the past few days in Cambodia have validated our dire warning.

We very much regret that the ASEAN Foreign Ministers had failed yesterday to
take a principled stand against the SLORC military junta in Burma by also
postponing Burma's membership. The is a terrible shame, and it is utterly
unfair to the people of Burma.

It increasingly appears that after 30 years, ASEAN  is nothing but an
association of political hypocrisy and diplomatic cowardice, repeatedly
betraying its own founding principles in vulgar pursuit of opportunism, and
tying itself up in knots of contradictions.

Fan Yew Teng
Co-ordinator 
Burma Solidarity Group Malaysia.

****************************************

BKK POST: GAINT STONE UP FOR SALE
July 11, 1997
Cheewin Sattha, Mae Hong Son

Former drug warlord Khun Sa wants to sell his last treasure, a jade stone
weighing 200 tonnes, according to a source close to him.

Khun Sa, who has been residing in a military camp in Rangoon since his
capitulation to the Burmese government in January 1996, had asked his son,
Chao Cham Huang, to handle the sale of the largest, precious stone in the world.

Among the potential buyers are businessmen from Taiwan and the Middle East.

The former Mong Tai Army leader has kept his treasure in a secret place in
central Shan State, said the source, adding that the stone was a product of
Mongkut mine situated in the same state.

After his surrender to the Burmese government, Khun Sa is reported to have
washed his hands of drugs.

According to the source, he has invested jointly in the hotel business with
high-ranking military officers. His 200-room five-star hotel is expected to
open this year.

****************************************************

NLM: TIN OO URGES VIGILANCE TO AVERT ATTEMPTS TO DESTROY NATION 
July 5, 1997 [abridged]

Yangon, 4 July - Secretary-2 of the State Law and Order Restoration
Council, Chief of Bureau of Special Operations, Chief of Staff (Army)
Lt-Gen Tin Oo met officers and other ranks of the Tatmadaw (Army, Navy, Air)
of the Ministry of Defence and elaborated on the political situation
prevailing in the country, what should be known about activities of internal
and external destructive elements and the salient points which
Tatmadawmen must observe, at the Ministry of Defence this morning.
He said preventive measures must be taken in accord with the law
against the outbreak of violations, disturbances and anarchic acts and some
West powers have been resorting to various unfair means in favour of their
puppets to gain power and said above-ground destructive elements have
established contacts with underground insurgents and become involved in
subversive acts.
There have been many crimes committed by above-ground destructive
groups against the State and the people, the Secretary-2 said and added
some people asked why action has not been taken against them.
The Secretary-2 went on to say that the State Law and Order
Restoration Council has been watching with magnanimity whether they will
change their activities, and pointed out it is found that the above-ground
puppet organization of the West bloc has been making preparations for
resorting to various means to gain power.
He spoke of various means employed by the terrorists to cause the
disintegration of the Union, and declared that the State Law and Order
Restoration Council will prevent any act detrimental to the interests of
the State in accord with the law.

Even KNU which remains in the jungle had prepared to exchange arms for
peace, but some West bloc organizations flattered and incited them to mar
peace and tranquillity he stated and added KNU turning a blind eye on the
peace within reach, issued Metharawhta declaration to continue to oppose
the State Law and Order Restoration Council and seize power through armed
struggle.
The declaration is the policy drawn by the agents of the West bloc and
also gained support of above-ground puppet destructive groups he stated and
called on Tatmadawmen to prevent all attempts of the above-and under-ground
destructionists to cause disintegration of the Union.
He also urged all to try to equip themselves with ten strengths and
five basic qualities and to uphold 12 fine traditions and to forge unity in
the Tatmadaw on the basis of the motto which says "Only if the Tatmadaw is
strong will the nation be strong" in accord with the guidance of Senior
General Than Shwe, Chairman of the State Law and Order Restoration Council
and Commander-in-Chief of Defence Services.

********************************************

NLM: MINISTER ANTICIPATES CLOSER BILATERAL TIES WITH SINGAPORE 
July 6, 1997 [abridged]

Yangon, 5 July - The conclusion of the Certificate in Food Preparation
Course organized by the Ministry of Hotels and Tourism in collaboration
with Singapore Tourist Promotion Board took place at Kandawgyi Palace Hotel
here this afternoon.
It was attended by Minister for Hotels and Tourism Lt-Gen Kyaw Ba,
Deputy Minister Brig-Gen Tin Aye, Ambassador of Singapore Brig- Gen Patrick
Choy Choong Tow, directors-general and managing directors under the
ministry, officials of STPB and Singapore Hotel Association Training and
Education Centre, course instructors and trainees.
Minister Lt-Gen Kyaw Ba delivered an address.
He said:
As Myanmar is joining ASEAN very soon, the existing relationship
between Myanmar and Singapore will be closer and there will be more
cooperation in the region. And with more cooperation and activities in
regional tourism, our Ministry of Hotels and Tourism and the Singapore
Embassy in Myanmar will surely have to work closer.
Being our good neighbour and friends, may I take the liberty of the
occasion and explain the sincerity of our government. Since our government
is well aware that tourism is the fastest foreign earning generator and has
multiplier effect that support businesses ranging from hotels, tour
operators, restaurants to ground transportation and retail shops, the
encouragement is fully given to accelerate the development of this
industry. By doing so we believe that our economy will be stronger and our
people will have a better life.
Saboteurs [subhead]
However, we have some undesirable elements trying to sabotage the
efforts of the government in order to gain political power. They have been
making propaganda that our government does not care for the majority and
that by investing in Myanmar and by tourists visiting Myanmar, the military
government under which people are ill treated will last forever.
But because of the instigation made by the earlier mentioned
power-craving group, Myanmar government is misunderstood. The economic
sanction imposed by the USA is one outcome. The sanction does not only stop
the coming of new investors, but also makes one or two companies from USA to
withdraw their business.
It is clear that for the benefit of gaining power, the destructive
elements have created antagonistic outlook which includes the boycotting of
Visit Myanmar Year. At the time when we celebrated the opening of Visit
Myanmar Year 1996 in November 1996, there were many reservations at the
hotels in all parts of the country for their forth coming visit to Myanmar.
However, in December the destructive elements supported by the CIA created
problems like bomb explosion and student demonstrations. Due to these
unpleasant events, foreign visitors began to cancel their reservations
which damaged the smooth flow of the hotel and tourism industry. The sad
news is that with the decrease in number of guests in the hotel, some
hotels had to reduce the number of staff and people face difficulties as
they lost their jobs. Therefore, the work of these unscrupulous elements is
surely not in favour of patriotism but to gain power and to fulfill their
desire.
Clear Understanding [subhead]
However, I believe our good neighbour countries have clear
understanding about our government and there are many investors still
working together with us who are willing to help develop our country. I
have no doubt Singapore is always here with us.
Confidence [subhead]
Only by proving that you are better than before will you make your
teacher proud of you and we who organized the course for you will be happy.
This is the right way for you to fulfill the obligation you owe to the two
governments concerned, for your prosperity. In another way, we may say that
your good performance is an enhancement of the goodwill cooperation of the
two countries and the perpetuation of the everlasting friendly relationship.

********************************************

REUTER: BURMA DEADLOCKED TWO YEARS AFTER SUU KYI'S 
RELEASE
July 8, 1997
 By Deborah Charles

 BANGKOK - When Burmese opposition leader Aung San Suu Kyi was 
freed from six years of house arrest in 1995, she greeted the world with 
optimism and with calls for dialogue between the ruling generals and her 
pro-democracy movement.

 But two years on, the Nobel Peace laureate is a virtual prisoner in her own 
house and has seen her family only a handful of times. Hopes of dialogue 
with the military appear little more than a pipedream, diplomats said on 
Tuesday.

 ``There was a bit of a moment of hope at first,'' said one Rangoon-based 
diplomat. ``But not now.''

 ``After her release things were a bit happy for a while; she could give 
weekend talks and hold meetings. The first year was not so bad, but the 
second year was very bad.''

 Suu Kyi, who won the 1991 Nobel prize for her non-violent campaign to 
bring democracy to Burma, was released from six years of house arrest on 
July 10, 1995.

 The day after her release an upbeat Suu Kyi told a news conference the 
government needed dialogue with the democracy movement or face ``utter 
devastation.'' She made similar comments to supporters in weekend rallies 
outside her residence.

 She urged all nations to be tough on Burma until it improved its human 
rights record and recognised the democracy movement. While she was 
under house arrest, her National League for Democracy (NLD) party won a 
landslide victory in a 1990 election but the result was never recognised by 
the governing State Law and Order Restoration Council (SLORC).

 ``When she was released, everybody expected something to happen,'' said 
another Rangoon-based diplomat, referring to the political situation in 
Burma.

 ``But up until now nothing has changed. And almost every day now the 
Burmese newspapers carry negative articles against her and the NLD. It's 
not getting any better.''

 A senior Burmese official summed up the government's attitude, which 
appears to be toughening, towards Suu Kyi.

 ``Since her day of release the NLD party has got itself into a lot of mess 
and now is even in a more serious situation,'' he told Reuters from 
Rangoon.

 Over the past year, Suu Kyi and her party have faced several crackdowns 
by the government which on various occasions has rounded up thousands 
of NLD supporters and party members and detained them for varying 
lengths of time.

 The NLD has been unable to function as a normal political party because 
the government has also banned most large gatherings of the party and 
blocked off access to Suu Kyi's house which serves as her party 
eadquarters.

 In an effort to marginalise Suu Kyi the authorities have cut off her phone 
line and closely monitored her visitors and movements.

 Suu Kyi's husband, British academic Michael Aris, and her two sons have 
only been permitted to visit Burma a few times since 1995. She does not 
visit them for fear she will not be able to return.

 SLORC officials have refused to negotiate with Suu Kyi, saying she 
missed her opportunity when she pulled her party out of a National 
Convention which is drafting guidelines for a new constitution.

 Suu Kyi withdrew NLD representatives from the mostly hand-picked 
convention in November 1995, saying it did not represent the will of the 
people.

 The government recently stepped up its accusations that the NLD is 
involved in terrorist activities.

 Top generals have made several statements lately warning it would take 
action against ``destructive elements'' such as Suu Kyi and the NLD if they 
did not mend their ways.

 ``Her instigation of civil unrest and and encouragement of terrorism is 
something that adversely affects the nation's stability and development,'' 
the Burmese official said. ``It could be said that she wasted no energy and 
time during these last two years.''

*************************************************

TODAY MAGAZINE: INVESTMENT IN MYANMAR
June 1-16, Vol 4
by  James Finch and David Schmahman

An Updated Look At Whether Investors In Southeast Asia Should Enter 
Myanmar

I. INTRODUCTION

Myanmar is on many companies' short list as a place to consider for 
expansion sometime in the future.  And there are real political reasons why 
it may be prudent for some to take their time.  Investment in Myanmar is 
not for the faint of heart or the thinly capitalized. Those who have invested 
in Myanmar, however, have noticed quite a number of changes in the legal 
environment and environment climate in recent months.  What follows is 
an update on several basic questions which a foreign investor must ask to 
determine if the timing is right to enter Myanmar. Notwithstanding the 
timing issue, certain things about Myanmar are certain.  Myanmar is the 
largest country in mainland Southeast Asia with abundant natural 
resources and a motivated and educated population.  The thirty years of 
self-imposed isolation that kept it from fulfilling its potential have ended 
and investment is now encouraged even as the logistics of it are, still being 
ironed out. Consider, for instance, that 
-	Myanmars population of 43 million is 85% literate, and that two 
thirds of the population -still earns its, living in agriculture. Despite these 
facts, only 12% of Myanmar's cultivable land is being farmed. 
-	Myanmar has a continental shelf of 230,000 square kilometers but 
the fishing industry extracts barely half its sustainable stock. Myamnar has 
80% of the world's teak forests, and huge reserves of oil, gas, coal, tin, 
tungsten, lead, zinc, iron, copper, gold, and a variety of precious stones, 
that  await extraction.
-	The question is therefore not whether Myanmar will become a 
major center of economic activity but when, and who will be best 
positioned to participate when this happens.

II.  TEN QUESTIONS ABOUT INVESTING IN MYANMAR

	The Myanmar investment regimen and legal system may seem
impenetrable to the uninitiated, but they are not.  Similarly the business 
choices any venture encounters -whether and how to incorporate, when and 
in what form to import capital, expertise, or equipment, in what 
circumstances one should consider involving a local partner, or how 
Myanmar's old British company law interacts with its new foreign 
investment structures are not as perplexing as they seem.
	We have tried to distill what we have learned - often the hard way 
- into ten questions and answers which are, designed at the time of this 
writing - to do two things: First, alert the reader to the basic consideration 
of doing business in Myanmar.  Second, decide if now is the time to invest.

They follow:

1. ARE CERTAIN KINDS OF ECONOMIC ACTIVITIES  STILL OFF-
LIMIT TO FOREIGN INVESTMENT ?

	One of the first acts of the new regime (the State Law and Order 
Restoration Council or SLORC) in 1988 was to promulgate a Foreign 
Investment Law which permitted foreign investment 'in accordance with 
[certain] basic principles.' These principles emphasize self-reliance, orderly 
economic development that includes the country's regions as well as its 
hubs, the acquisition of expertise and technology, and the exploration of 
natural resources.
	Investment in Myanmar by foreigners must be shown to comport 
with these objectives and, consistent with them, certain items are off-limits 
except with special dispensation.  "Restricted activities include the 
harvesting and sale abroad of teak, exploration for and extraction of oil and 
gas, pearls, jade, precious stones and metals, fish and prawn breeding, post 
and telegraphs, air transport, Banking and insurance, broadcasting, 
electricity generation, and the manufacture of defense-related  products. 
These areas, presumably, are those in which the, government wishes to 
retain control, emphasize self sufficiency, or drive a harder bargain with 
potential investor given the scale of potential profits.
	There is significant foreign involvement already in the energy 
field by several major energy companies.  Agreements with the government 
on investment in other "restricted' are-as, usually in the form of joint 
ventures with the government, are similarly available, but the chances of 
success are greatly improved if one has prior intelligence as to what the 
government's objectives and concerns are.  A prudent investor must take 
care to anticipate and meet these concerns as they pertain to the particular 
kind of economic activity that the investor contemplates, and these can be 
learned by doing one's homework, in exploratory meetings with 
government officials, and by eyeing what others have done in analogous 
circumstances.

2. WHAT BUSINESS STRUCTURES ARE SUITABLE  FOR 
INVESTMENT IN MYANMAR?

There is a fairly complex regulatory scheme in place that creates a series of 
roadmaps for potential investors depending on what specific business 
activities they contemplate and the level of investment they propose.  In 
very general terms an investor's choices, and the consequences of each 
choice, are as follows:

Appointment of a Business Representative - This is the least expensive and 
least regulated way in which to establish at present in Myanmar. The cost 
to a foreign investor is basically the cost of the appointment letter and the 
registration fees with the Ministry of Trade, but there are obvious 
limitations  too.  The investor may not have foreign employees, the scope 
of the business is basically limited to having a sales agent in the country, 
and there are no investment or tax incentives.

Establishment of a Branch Office -This approach requires the investor to 
obtain a permit to trade, a process that requires a fair amount of 
paperwork, has certain levels of mandatory importation of foreign capital, 
and takes several months to shepherd through the regulatory process.  An 
application for a permit to trade may be submitted through the Company 
Registration Office and is valid for two years from the date of issue, 
although it is renewable.

The advantages of registering a branch office are that an investor can hire 
foreign employees and gain brand name exposure in the country and, of 
course, the level of business that can be conducted is significantly greater 
than that which can be conducted by a business representative.  One 
disadvantage is that the head office of the branch may be liable for the 
branch's debts.

The minimum, capital requirements for establishment of a branch office 
are as follows.  A manufacturing company must import the hard currency 
equivalent of Ks. 1,000,000, a trading company Ks. 500,000, and a service 
company Ks. 300,000, all at the official rate.  Only half that amount, 
however, needs to be brought into the country before, the business 
commences operations.  Imported capital can be used to pay incorporation 
expenses, rent, salaries and the like, and can also be in the form of capital 
equipment.  Once actually imported, the hard currency may be converted to 
kyat at the unofficial rate to the dollar.  Consideration should be given to 
meeting this requirement by the importation of machinery or equipment.

Unlike a 100% foreign owned local subsidiary, which would be taxed at a 
30% corporate rate, a branch office would be taxed at non-resident rate of 
at least 35%. Incorporation of a 100% Foreign Owned Local Subsidiary - 
Unlike several other Southeast Asian countries, Myanmar allows 1000/o 
ownership of local companies.  As with a branch office, a permit to trade is 
required along with its requirement that certain amount of capital be 
imported, depending on whether the local entity is to engage in 
manufacturing, trading or services.  The company would also be subject, 
both in the requirements for its incorporation and once established, to 
various requirements- of the Myanmar Companies Act of 1914, a corporate 
code that would be, familiar to lawyers in many former British colonies.

The company memorandum and articles of association must describe its 
business objectives and these basically are limited to trading, 
manufacturing and construction services, insurance, banking and finance, 
and hotels and tourism, as defined by the Companies Registration Office.  
Standard forms for these documents are available and should be used 
whenever possible since this makes translation and acceptance by officials 
far easier.  In naming a local company the Myanmar Investment 
Commission prefers to have the word "Myanmar" appear in the company's 
name, and if it does so appear, it must be the first word in the name.

Local companies are, as stated above, subject to a 30% tax and must 
comply with the various provisions of the Myanmar Companies Act.

Incorporation of a Joint Venture

Company - A joint venture with a local person or company need not be 
incorporated.  The basic requirements pertaining to a permit to trade and 
compliance with the Myanmar Companies Act apply to investors wishing 
to enter the Myanmar market with a local partner and incorporate.  If the 
foreign party wishes to incorporate with a government entity as a joint 
venture the permit to trade requirement is not applicable.  Likewise, with a 
government partner, the company would be formed tinder the Myanmar 
Special Companies Act rather than Myanmar Companies Act.  Since it is 
not yet resolved whether the exchange rate on purchasing further shares 
would be the official or the market rate, an investor should try to get that 
portion of the company's capital which he wants at the outset and not try to 
resolve, this later.

There are, of course, certain advantages to entering a joint venture with a 
local entity, including local knowledge the local joint venturer may have, 
reduced start up time, and perhaps the local joint venturer's local contacts.

Myanmar Foreign Investment Law (MFIL) (more details 
inhttp://www.myanmar.com/)-The Myanmar Government has adopted an 
investment scheme that provides incentives for certain larger favoured 
investments (over US$500,000 for manufacturing concerns are 
US$300,000 for service companies) and which imposes a correspondingly 
more complicated paperwork process on those who wish to take advantage 
of it.  An investment under the MFIL can be 100% foreign owned, a joint 
venture between a foreigner and a citizen, a joint venture between the 
government and a foreigner or even a sole proprietorship or partnership.  If 
the investment is a joint venture, at least 35% of the equity capital must be 
contributed by the foreign partner. 

Incentives under the MFIL include a three-year tax holiday, guarantees 
against nationalization, and a variety of other tax benefits and exemptions 
depending on the circumstances of the investment, often subject to 
negotiation.

3. HOW EASY IS IT TO GET BASIC THINGS, LIKE OPENING BANK 
ACCOUNTS, DONE?

Not very.  Banks in Myanmar are for the most part not computerized, 
transactions that can be done abroad at an ATM may take a morning, and 
basic banking services may prove to be unavailable just when you need 
them (wire transfers, for instance.)

As discussed above, when an investor forms a local company the investor 
will be required to bring in a certain amount of cash in the first year.  
Usually, half has to come in before the company is allowed to open its 
doors, and officials will not grant long term visas or allow the company to 
rent property, hire employees, or open a bank account., until the money 
comes in.  Once the money comes in it will be placed in a sundry account 
and not released to the company's own account without negotiation, 
paperwork and patience.  A company commencing operations in Myanmar 
should count on at least three weeks before money shipped in to Myanmar 
becomes available.

Other matters one takes for granted elsewhere such as reliable electricity, 
Internet access, and adequate telephone lines are not automatically 
available even in Yangon, but patience and creativity do prevail in the end.

4. SHOULD WE TAKE ON A LOCAL PARTNER?

This may be the most important decision an investor in Myanmar will 
make.  We have heard and participated in the debate dozens of times, and 
the outcome differs.  A local partner may know the environment, have 
contacts and local experience, and know the ropes.  As mentioned above, 
moreover, investments in certain industries must be with a government 
partner.

But then there is the cultural divide, the inscrutability of mannerisms, 
loyalties, and objectives.  Our contribution to the debate each company will 
have on this score is as follows.  Myanmar is a traditional society.  There is 
no substitute in Myanmar for developing long-standing personal 
relationships.  If a company's operations in Myanmar are significant 
enough for management to be concerned about them, somebody at a 
management level must be based in Myanmar regardless of whether a local 
joint venture, partner is brought on board.  It is folly, almost invariably,
for 
foreign investors to fly in, set up structures, get the business going, and 
then turn it over to a local partner for management without frequent, 
consistent, and well structured supervision.

Foreign management must expect to socialize with Myanmar business 
counterparts, participate. in local activities, and make efforts to develop a 
variety of personal relationships.

5. HOW ENFORCEABLE ARE LEGAL COMMITMENTS IN 
MYANMAR COURTS ?

To a great extent Myanmar's legal system was shaped by Britain during the 
colonial period and many facets of its basic business law will be familiar to 
investors from common law jurisdictions.  Indeed, since Burma as it was 
then known was administered with India, when much of the common law 
was codified in India the codification was similarly adapted in Burma and 
eventually compiled into the 13 volumes of the Burma Code.  After 
independence the Burmese Parliament supplemented and amended parts of 
the Code, and from the early 1960s until 1988 a socialist regime decreed 
further changes.

The most important additions to the law, however, are the recent legal 
reforms contained in the post- 1988 decrees of the State Law and Order 
Restoration Councils.  It is these decrees that are of primary interest. to 
foreign investors and the government has shown every inclination to take 
them seriously, to have them taken very seriously, and to have all parties 
rely on their force, intent, and the binding nature of the reciprocal 
commitments they create.

6. WILL  THINGS CHANGE ONCE MYANMAR BECOMES A 
MEMBER OF ASEAN ?

For sure, and for the better.  When Vietnam became a member of ASEAN 
a variety of economic reforms, particularly in the trade area, were made 
without much fanfare even though Vietnam had long resisted pressure 
from western nations to make the same changes.  Some observers noted 
that the explanation for this was that as a member of ASEAN Vietnam 
could make the changes and save face - they were required to do so by an 
Asian organization which they had voluntarily joined.

Myanmar is stated for membership in ASEAN later this year.  At some 
point in every developing country's history it "opens up" in way that 
Myanmar has not yet done.  It is our view that ASEAN membership will be 
the predicate event to a variety of economic changes in Myanmar, and as a 
result, Myanmar will become more sought, after, more competitive, and 
therefore more, rather than less, difficult to enter as an investor.

It is our view that the race to success will most probably go to those with 
the oldest, best researched, and most resilient local relationships.

7. HOW MANY LAYERS OF DEPARTMENTAL HIERARCHY MUST 
ONE DEAL WITH IN EMBARKING ON A BUSINESS VENTURE IN 
MYANMAR?

Potential investors need only to deal with the government in obtaining 
their basic permits and approvals, but that said it is not as simple as it 
sounds. There is a fair amount of discretion built into the various approval 
processes, and levels of officialdom sometimes substitute for levels of 
government in other environments.  There is not, in short, "a one stop 
shop" facility for foreign investors in Myanmar as there is in some other 
countries.  While often, when MFIL approvals have been obtained, other 
approvals follow fairly easily, this is not always the case and is certainly 
not guaranteed.  Under the MFIL process, however, because of the level of 
detail required in one's submission to the Myanmar Investment 
Commission, it is often true that the required permits and  licenses,-are 
expedited licenses an investors entire business plan has already, by 
definition  been approved at the highest levels.

The Myanmar Investment Commission, which administers and approves
applications tinder the MFIL, takes the position that the MFIL is the 
supreme law and preempts other requirements such as earlier laws that 
require official registration and stamp duties to be paid upon certain 
documents.  Since there is really no way to determine whether the MFIL 
will, in fact, be treated as preempting the registration and stamp duty 
requirements, an investor should  and can first determine whether these 
apply to a particular deal and, if they do, get the government to waive 
them. There are, of course, a variety of other  licenses and permits that are 
required, depending on the specific business activities contemplated. 
Trading companies, for instance, after obtaining their permits to trade and 
being daily incorporated, still need to obtain export and import licenses 
and comply with the various registration requirements of the 
Export/Import Department of the Ministry of Commerce.

8. HOW EXPENSIVE IS LABOR IN MYANMAR, AND HOW 
ONEROUS IS COMPLIANCE WITH  MYANMAR  LABOR  LAWS?

Labor rates are low in Myanmar, and labor laws are less favourable to the 
worker than those in most other developing countries.  There are no legal 
requirements for termination pay for laid-off workers, for instance, 
although  private enterprises having more than five employees must 
contribute 3% of each employee's wages to a social security fund for that 
employee, and must register to do so with the township department in 
which the employee lives. On occasion this can be a bureaucratic process 
with attendant frustrations, but it is, like compliance with most Myanmar 
paperwork, manageable and always simpler the second time.

9. TO WHAT TAXES WILL OUR ENTERPRISE BE SUBJECT ?

An overview of the taxes a foreign enterprise and individual might 
Encounter  in Myanmar is presented below:

-	Residents (those who are in Myanmar for more. than 182 days in 
a tax year)- taxed at progressive marginal rates from 5% to '.10% for 
income over 500,000 kyats.  Residents working for companies which have 
MFIL  benefits may he granted a flat 10% tax rate.
-	Companies incorporated in Myanmar: taxed at a flat rate of 30%, 
with certain deductions that may serve to decrease taxable income.  
Companies which have MFIL, I-)benefits usually receive a three-year tax 
holiday and numerous other tax benefits.
-	Non-resident individuals and foreign country  branches-. taxed at 
either 35% or on a progressive scale of from 5% to 40%, whichever is 
higher.
-	Myanmar citizens: taxed at a flat 1O% of income earned in 
foreign currency, and at progressive rates for kyat income.

-	Miscellaneous taxes:
-	Commercial or turnover tax.  Essential items are exempted from 
this.  It is paid on imports and a wide variety of local goods and services.
-	Service taxes (hotels and restaurants, for instance) are subject to a 
10% commercial tax,
-	Import duties;
-	Export taxes (maximum 5%);
-	Capital gains tax.  This is 20% for residents and 40% for
non-resident foreigners, unless the non-resident foreigner is
operating under the MFIL in which case the capital gain rate is 30%.
-	Withholding taxes.  For example, interest paid abroad is
subject to 15% withholding when paid by resident foreigners and
citizens, and 20% when paid by non-resident foreigners.
-	Payment for work done by a foreign contractor is subject to a
2.5% withholding rate when paid by resident foreigners and citizens,
and 3% by non-resident foreigners,

10. WILL OUR INTELLECTUAL PROPERTY BE PROTECTED IN 
MYANMAR ?

There has never been specific trademark legislation in Myanmar, although 
a draft law is presently under consideration.  A prudent investor should not 
rely on its being enacted immediately.  Most companies protect their 
trademarks by filing a declaration of ownership with the Registrar of  
Deeds in Yangon  and placing a cautionary notice in the local newspaper, 
the New Light of Myanmar. This is not a true registration, however, and 
would be considered only to be evidence of a mark's use and ownership.  
While technically this evidence could be used in a common law 'passing off 
' action against an infringer, it would be an imprudent investor indeed who 
acted in complete reliance on the certainty of prompt and effective legal 
redress in a Myanmar court.

That being said, the following is also true.  Our experience is that the 
brazen infringement of trademarks is rare, and that once their ownership 
has been established to official satisfaction further infringement can 
sometimes be discouraged by other means.  We would advise extreme 
caution, however, in the unrestricted transfer of proprietary technologies.

II. CONCLUSION.

If there is a common thread running through our discussion it is that 
business  in Myanmar cannot be done by remote control.  For the serious 
investor nothing will substitute for exploratory visits and introductions to 
and meetings with local businessmen, professionals, and government 
officials. The development of such relationships, as well as a sensitivity to 
the subtleties and undercurrents of Myanmar life and to "how things are 
always done" in Yangon, is not only important to anyone considering 
doing business in the country but so important as to render it foolhardy 
even to consider a business enterprise in Myanmar without first having 
done it.

And even if one does not plan to invest in Myanmar in the near future, the 
far-sighted investor will consider whether now is not the time to begin the 
process of building this type of knowledge base and relationship.  All else 
aside, Yangon may be one of the most pleasant cities in Asia in to do such 
research.
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1. James Finch is a partner in the law firm of Rtissin & Vecchi,
International Legal Counselors, LLP and is its resident partner in Yangon, 
Myamnar.
2. David Schmahman is a partner in the Boston, Massachusetts law 
firm of Nutter, McClennen & Fish, LLP.

The authors have collaborated on numerous matters relating to Myanmar.

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