The Myanmar Investment Commission should ensure transparency of all investment by Myanmar citizens because corruption, bribery, tax evasion, arms and drugs trafficking, and money laundering are widespread in the country, investors and legal advisors say.
Investigations into the sources of funding, for example, could remove
the doubts that recently prompted the chairman of privately owned Asia
Green Development Bank, Than Yi, to insist that AGD has no links to arms
or drugs trafficking. Than Yi made the comments on February 24, while
announcing that the privately owned bank would sell shares to the
public. AGD received approval from the Directorate of Investment and
Company Administration on February 18 to become a public bank, Than Yi
said.He stressed that United States sanctions against AGD had been eased
because the bank had no links to arms or drugs trafficking. It complied
with the central bank’s rules and regulations as well as international
banking standards, he said. The chairman’s strong denial of any link to
the arms and drugs trades, however, brought these shadowy businesses
back to the fore and people began asking once more: which businesses in
Myanmar are connected to these illegal enterprises.
The opium trade
The government has been eliminating opium since 1992. It has seized
at least 2.1 trillion kyats worth of opium and destroyed the contraband
79 times, deputy minister for home affairs Kyaw Kyaw Tun told the
“Myanmar Opium Cultivation Survey
Conference 2012” in Nay Pyi Taw.According to a United Nations report
Myanmar is the second-largest poppy grower in the world, after
Afghanistan, with about 51,000 hectares of poppy under cultivation. In
Southeast Asia, Laos had 6,800 hectares and Thailand 209 hectares last
year, the UN report said. Where does the money from this illegal crop
go? It is frequently alleged that the funds are laundered through
businesses here. Some even speculate that business people with ties to
the government are involved in poppy cultivation.
Bumper investment
Myanmar businesspeople invested at least 12 trillion kyats in the
country during the first two years of the current government’s term,
according to official figures. The surge in investment can be seen by
comparing the about 1.6 trillion kyats invested in 2007-2008 to the 10
trillion kyats invested in 2009-2010, the year before the new government
was appointed. Since then, a total of about 24 trillion kyats has been
invested with approval of the Myanmar Investment Commission. This
amount does not include funds spent on purchasing state-owned
properties, factories, gas stations and others, which some analysts say
exceeds the official investment figure. The Myanmar Investment
Commission is the body that can approve or deny businesses, both
domestic and foreign, the right to invest in accordance with the Foreign
Investment Law and the Myanmar Citizen Investment Law. It also has the
right to grant
tax exemption or relief to investors for imports used for their
businesses. This tax exemption and tax relief has spurred a surge of
investment in Myanmar’s economy by businesses that pay tax and those
that do not. At the same time the MIC has been handing out licenses for cigarette and alcoholic beverages so quickly that questions have been raised about whether there is sufficient oversight.
Financial tracking
Foreign investment is fuelling the country’s development and foreign
companies and corporations pay tax globally, but many people are asking
whether funds invested by Myanmar nationals are taxed or if the
investment itself is a way of evading or avoiding paying tax. Does the
MIC investigate the finances of domestic investors?Businesses that
regularly pay taxes and operate legally may faces losses and even
failure in Myanmar because they face competition from businesses that
evade taxes and generate a large capital base from illegal activities,
some businesspeople warn. They say that some domestic conglomerates
invest in Myanmar with the capital generated from illegal businesses and
that some of these companies also avoid tax by “investing” in line with
the Myanmar Citizen Investment Law. If this is accurate, businesses
that pay tax may be unable to compete. The MIC must scrutinise
investments that come from Singapore and identify the source of the
companies’ capital, business people say.According to the Myanmar Citizen
Investment Law, the commission does not need to scrutinise all
investors, only those believed to be linked to illegal businesses.
Business people have also urged the MIC to avoid the perception of
favouritism, pointing out that eyebrows were raised when it permitted
one investor sole proprietorship of three beer and beverage brands as
well as tax exemption.
Dirty money and the law
Myanmar has a fine legal framework for dealing with all sorts of
dishonest income, like bribery and corruption, tax evasion, arm sales
and opium trafficking.The Control of Money Laundering Law was enacted on
June 17, 2002 to cover money and property obtained illegally. According
to the sub-section 5 (a), “illegal” means “converting, transferring,
concealing, obliterating or disguising of money or property obtained
from committing the money laundering offence”. The Control of Money
Laundering Law can be applied to offences committed under the Narcotic
Drugs and Psychotropic Substances Law, human trafficking, undertakings
of a financial institution without the license issued by the Central
Bank of Myanmar, illegal trafficking in arms and ammunitions, and
transnational trading of timbers.This law was enacted by the military
junta. It has been so little used that only very few people know its
existence.
Pho Phyu, a lawyer at Purple Equity Law Firm, said the law has been
little used because it was passed by the junta and the current economic
model of an economy monopolized by cronies has fuelled corruption. “The
role of this law is fading because the government is corrupt and its
officials take bribes. They are involved in the monopolization of the
economy by the cronies,” Pho Phyu said. “Officials from some ministries
misuse public property. Ministers and officials are corrupt, take bribes
and receive support from cronies. Therefore, the public itself has to
push for enforcement of this law. The public has to sue ministers and
officials for abuse of power, corruption and any other unacceptable
actions so that the Control of Money Laundering Law will be enforced,”
he said.
Clean governance
One objective of the Control of Money Laundering Law is to prevent
interference in executive, economic and social sectors of the state,
using money and property obtained by illegal means. Legal experts say
that it is an essential objective for the country especially under its
current circumstances.In January, President Thein Sein formed a
nine-member committee to eliminate bribery and corruption in the
country, appointing Vice President Sai Mauk Kham as its chair. Still,
citizens continue to complain about bribery.Soe Tint Yi, a member of the
Lawyers Network, said bribery is an integral part of money laundering.
“From the beginning, bribing officials was used to turn dirty money into
clean money. Officials who take bribes do not want to enforce the
Control of Money Laundering Law. We assume that the law is not enforced
[by authorities] to favour cronies and privileged businessmen,” Soe Tint
Yi said.
Seizing dirty money
The Control of Money Laundering Law instructs the government to form
the Central Control Board on Money Laundering to tackle the crime. The
Central Control Board can formulate policies to control illegally
obtained money and property and take legal action in coordination with
governmental departments and relevant organisations. It has the power to
pass an order to confiscate money and property obtained by illegal
means.
Penalties for abusers
The Control of Money Laundering Law’s stipulates that anyone
convicted of converting, transferring, concealing, obliterating or
disguising money and property while violating the Narcotic Drugs and
Psychotropic Substances Law faces at least 10 years in prison. There is
no maximum prison term for such crimes.Likewise, anyone convicted of
converting, transferring, concealing, obliterating or disguising money
and property obtained by committing corruption, illegal trafficking in
arms, ammunition and explosives, theft and smuggling teaks, and such
offences shall, faces up to 10 years in prison and a fine.Moreover, any
member of an investigative panel convicted of taking bribes or
concealing or disguising illegal money and properties faces three to
seven years in prison and a fine.
source: Eleven Myanmar
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