Page 2 of
2 Law
without order in Myanmar By Kim
Jolliffe
Without trust in the courts and
government, Myanmar's asset holders are
particularly conservative when it comes to
investing in business or even depositing money in
commercial or government banks. As a result, vast
amounts of wealth are hoarded in property, stashes
of US dollars, jewelry and other valuables, a
misallocation of resources that has stifled growth
and created market pricing distortions.
Foreign investors and companies have been
equally apprehensive about entering Myanmar's
unpredictable economy, with the legal system often
cited as a significant deterrent.
"Both
local and foreign companies try to stay away from the
courts," said Romain
Caillaud, managing director for Myanmar of the
corporate advisory firm Vriens & Partners.
Jared Bissinger, a consultant at the same company
that has surveyed Myanmar's private sector said
"many firms try to avoid the legal system as a
means of settling commercial disputes and instead
try to work these out bilaterally ... [An]
independent judiciary is definitely one of the
business environment factors that firms consider,
so it would affect the decision making of foreign
investors."
Of all the areas of needed
legislative reform, those pertaining to the
economy have generated the most discussion in the
new parliament. In June, the government announced
delays to the implementation of separate foreign
investment and Special Economic Zone laws, both of
which are expected to encourage new waves of FDI.
The laws have been criticized by some lawmakers
and civil society groups for potentially opening
the way to foreign capital exploitation.
They have argued that new laws are needed
not only to create a more attractive business
environment, but must also protect the country
from unscrupulous foreign firms, especially in the
areas of natural resources, land, and
agro-business.
The draft foreign
investment law will essentially allow foreign
investors to buy, sell and collateralize leases
for land similar to the system employed in
Thailand and Vietnam. It also offers income tax
exemption of services and goods for five years for
new foreign enterprises and a year exempt of all
taxes on profits.
While the latter two
provisions have sparked fears of exploitative
companies entering the country to make a quick
buck without providing sustainable employment or
technological and managerial transfers, the former
one on land leases some believe could threaten the
livelihoods of farmers, which make up an estimated
90% of Myanmar's 53 million population.
In
conjunction with the so-called Vacant, Fallow and
Virgin Lands Management Law, subsistence and small
holding farmers are at great risk of losing rights
to their lands, many used by local communities for
generations. The land law passed in March this
year legitimizes state acquisition of land deemed
as "vacant" by the government for agribusiness and
other purposes.
Similar land legislation
that has been in place since the colonial era has
allowed for the state to seize hundreds of
thousands of acres in Kachin and Shan States
alone. These seized lands have often been handed
over to foreign agribusiness firms, many owned by
Chinese investors. Many of these lands were not
only in use by local farmers before they were
taken over by the state, they were also where the
agrarians and their families lived.
Jilted justice More democratic
laws and legislation will ultimately depend on
their fair and effective implementation by
law-abiding police and impartial courts, experts
say. In Myanmar, both the police and courts have
for decades been kept intentionally weak and under
the control of successive military rulers.
According to M Zaw Bowm, the former police
official who spent 10 years in the force, "The
military government never trusted the police force
so they put a lot of military men in [powerful
positions] to control it."
"Our main job
was to watch the opposition... [The government]
has no real plan for building a good police force.
This is due to improper training and as a result
of the military government's oppression. The
police are taught all the legal codes and they
usually understand them but they do not prioritize
respecting the law - they generally only look out
for themselves, only for their survival, their
income and their wealth. They want a lot."
He claims that the police and courts would
often work together in taking bribes to clear
someone for almost any crime short of murder. "A
lot of bribes come in from rape cases,
especially," he said. "If someone is raped, then
we [would] arrest him. But if the culprit pays a
price, then he will be let go."
Some,
however, believe the country is ready to turn the
page on its corrupt past. "Corruption is the
cancer of the society," said Min Sein, who at the
same time believes there are many signs that
reform is taking root. "The stand taken by the
President in particular and the cabinet as a whole
is that 'no one is above the law' and [so] the
courts are being urged to pass judgments according
to the law."
"The main challenge that the
police and the courts will face," Min Sein said,
"will be to overcome the remnants of the belief in
some people that authority and/or money can solve
everything and that the law can be ignored."
Unlike other members of the former corrupt
junta, Thein Sein is believed to have stayed
comparatively clean. In contrast, Upper House
Speaker Thura Shwe Mann, in many respects
Myanmar's second most influential government
figure, has long been criticized for giving
preferential official treatment to his son Aung
Thet Mann's private company, Ayer Shwe Wah.
Nonetheless, Thura Shwe Mann has been vocal on the
need to curb corruption. He is currently
spearheading new anti-graft legislation and has
called in parliament for a significant raise in
servicemen's salaries. According to M Zaw
Bowm, pay raises hold the key to stamping out
corruption in the police force. "Bribery took
place because the police force had a very low
budget. A lot of police stations, needed repairs
that we could not afford and there is no regular
system for salaries ... Starting salaries were
about 15,000 kyat (US$17) every six days or
sometimes 10 days or two weeks, but you need over
100,000 kyat per month just for food and living
costs in Yangon ... and we get no public
healthcare or anything like that ... If there is
no improvement of salaries and no economic change
and then they make a new law, they will just have
to put everyone in jail."
Rebuilding
Myanmar's courts and law enforcement agencies will
be an arduous task, one where external assistance
and support is being welcomed. As Suu Kyi said
during her recent speech in London, while the
military will not allow civil society or the
opposition to work with them directly, she
believes they "could do a lot of work with regard
to the courts of justice and the police forces",
adding that "the international community could
help by offering proper training for the police
officers."
According to U Min Sein,
capacity building is the most pressing need to
help Myanmar's lawyers and the courts deal with
the anticipated influx of international investors
and corporations now that US and EU sanctions have
been eased. "The key area that needs to be
strengthened would be to train the judges in
company law and international commercial
practices," he said. "We have been under closed
doors for a long time and these things have been
outside of the scope of the judicial system."
Kim Jolliffe is a research and
analysis consultant focusing on politics, security
and humanitarian issues in Myanmar.
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