[Premium] Chairman’s Note (02/2016) – Myanmar: Navigating through the New Leadership Transition

February 2016 |
A number of our corporate members have asked my views about Myanmar. I have been there recently and met privately with advisors of the present government as well as from the National League of Democracy, and senior management of leading foreign and Myanmar companies. These were private and informal meetings but there are some points that I thought to share with you.

Please note that I am sharing these views with more candour than I would publicly, as you are our SIIA corporate member. I would therefore appreciate you keeping this to yourself or limiting the circulation to only your senior colleagues.

As you know, the recent general elections were overwhelmingly in favor of the National League of Democracy, led by Daw Aung San Suu Kyi (ASSK). They were expected to win but the size of their victory surprised not only the ruling, military backed government but even most of the NLD. The military have respected the result but are constitutionally guaranteed to retain the ministries of Defence, Border Affairs, and Home Affairs, as well as 25 per cent of all Parliamentary seats. There are also Constitutional obstacles to ASSK becoming President, although she has said that she will be “above the president”. The new Parliament is already sitting but the military backed government continues for the present. On 17 March, the names of three candidates will be submitted to the parliament and the voting process to select Myanmar’s next President will start. The person with the largest number of votes from the parliament will take the presidency and must take office by 1 April after the current president steps down officially on 31 March. The remaining two candidates be Myanmar’s vice presidents.

My brief visit was during this transition period, and many things are still being decided. Business interest, however, continues and I would like to share three points briefly and immediately with you.

1. Aung Sang Suu Kyi as President is not Impossible: For a long time, the military has refused to amend or suspend the Constitutional provision Article 59 (f) that prevents ASSK from being President. Some hard line military elements continue to hold to this view. However, there are some signs that a bargain might be possible between ASSK and the military commander-in-chief, Senior General Min Aung Hlaing. Rumours abound about the military asking for the Chief Ministership of some key states especially the troubled but resource rich states of Rakhine and Kachin, and also in key cities such as Yangon. If no bargain is agreed, the NLD will nominate a President who is amenable to ASSK’s de facto leadership and she might take the role of Foreign Minister while still leading the party.

2. Midnight Deals: Some companies have stopped trying to push through deals, preferring to wait for the new government to be appointed. However, the administration of President Thein Sein has been trying to clear pending approvals and the Myanmar Investment Commission has been ramping up work noticeably. New licences have been granted in the banking and also airline industry. In some cases, these “midnight deals” are simply to clear the pipeline. However, it is not clear if the incoming NLD administration will honour all of these agreements. The NLD economics committee has promised continuity generally but only said they will respect agreements that have been made in a transparent and fair process. It is not clear who will steer the economic agencies after the NLD assume power. But the present assumption is that most if not all of the current ministers and advisors will be replaced. Even the leadership of the Central Bank may change.

3. Myanmar Corporate Partners: In many cases, foreign investors have entered Myanmar in partnership with local partners that have good standing and networks with the government. With the change of government, many of these Myanmar corporates are themselves searching to open up ties with the NLD and at present, few have close contacts. On their part, the NLD have promised “change” and ASSK is trying to ensure that MPs and ministers to be appointed keep discipline and should not be compromised by being too close to any business.

The situation is fast moving and there is much speculation. Things should be clearer after 17 March when the vice-presidential candidates are announced, one of whom would become the president. The SIIA and I plan to update our knowledge on the situation and I hope that, in the meantime, the above may be of some use.

Best regards,
Simon Tay