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Prime Minister Khin Nyunt, formerly the third ranking member of the regime as Secretary No 1 of the State Peace and Development Council, and head of the powerful Military Intelligence Service, was removed from office on 19 October and replaced by Lieutenant General Soe Win. This follows a recent cabinet reshuffle, which saw the replacement of the foreign minister and his deputy. Khin Nyunt is under house arrest accused of corruption, and some senior intelligence officials are also reported to have been arrested.
It is clear that his more pragmatic approach to Myanmar's problems, including his seven point road map for political reform was at odds with the hardline exemplified by Senior General Than Shwe and Army commander General Maung Aye, both resolutely opposed to any compromise with the opposition and to any political role for Aung San Suu Kyi. A settlement of accounts between the Army and the Intelligence service over competing business interests may have been an additional factor.
The change therefore rules out any movement towards national reconciliation for the time being, or dialogue with the National League for Democracy and the release of its detained leader Aung San Suu Kyi. The pressure of sanctions imposed by the European Union and the United States is largely ineffective so long as Myanmar can count on political and economic support from China and other neighbours for whom Myanmar's natural resources are a major attraction. To take one example, Thailand is contracting to increase its natural gas imports and is interested in the development of new dams on the Salween River to supply electricity to Thailand. The Thai Exim bank has recently provided a US$96 million soft loan for various projects in Myanmar. Foreign investment, mainly from regional countries, regained some ground in 2003 after a sharp decline in the immediately previous years.
The Asia-Europe Meeting (ASEM) in Hanoi (8-9 October) produced no breakthrough on Myanmar, and on balance may have encouraged the regime in its hardline stance against concessions. Despite earlier threats that European countries would boycott the meeting if Myanmar were to attend, a compromise was eventually reached, to allow the meeting to go ahead, in return for restricting the level of Myanmar representation to Foreign Minister. Although some ASEAN countries are concerned about the lack of progress towards democracy, the final communiqué merely urged all parties to ensure a successful outcome of the national reconciliation process and looked forward to the early lifting of restrictions on political parties. It failed to mention Aung San Suu Kyi or call for her release.
After the ASEM meeting, EU Foreign Ministers agreed on 11 October to tighten sanctions on Myanmar, since Myanmar had failed to improve its human rights record and had not released Aung San Suu Kyi from house arrest. An extension of the bans on visas for senior officers, and on loans or investment in state-owned enterprises and other companies will not bother the regime much, since France, concerned about the effect on its companies engaged in Myanmar, particularly in the oil industry, watered down the measures to exclude companies with existing investments. The National League for Democracy has predictably criticised the new measures as ineffective, and the latest developments in Myanmar are likely to stimulate pressure for stronger measures.
WATCHPOINT: Will there be further upheavals in the Myanmar regime?
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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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