Corruption in Myanmar

In 2007 the then Burmese government revoked several subsidies for various fuel industries, causing prices to soar throughout the nation. This sparked widespread protests due to the public's dissatisfaction with the military government. It was noted that the average citizen was displeased with the immense levels of kleptocracy in the nation, allowing members of the military dictatorship to live in a "state within a state"[12][13] with accumulated wealth far beyond that of the people. The government reacted harshly to the protests through violence and arbitrary detentions. While the official death count tallied thirteen killed, it is widely surmised that the true number far exceeded this figure. The government had even taken steps to censor internet access within the country, though to no avail.[14] [15][16][17]

Although the demonstrations were dispersed and suppressed by the military junta, the public would later vote a new government in and wrested power from Than Shwe by 2011. Nonetheless, elements of the military government retained power.[18][19][20][21]

Former Burmese Head of State Than Shwe

Myanmar spent five decades under military rule. This period ended in 2011, when a semi-civilian government took power and sought to regenerate the economy and draw foreign investment. Among its objectives was the reduction of endemic corruption. As of May 2014, however, those reforms were viewed as having had a minimal effect on corruption.[5]

Every leading official in the former military regime is said to have "committed thousands of offenses related to corruption."[22] Most high-level officials in the civil service were related to military officials.[22]

Since the end of military rule, Myanmar has been implementing economic reforms and developing a free market, but according to one source "its nascent market economy remains bound by myriads of regulations," which make possible rampant corruption that "hinders the functioning of the price mechanism, upon which the proper functioning of the market economy is based."[11] Kim Ninh of the Asia Foundation said in May 2015 that despite efforts to reduce corruption after military rule, the country's business environment remained essentially the same, with few new companies emerging since 2011.[5]

An October 2015 article in Wired stated that notwithstanding attempts by the US and other Western countries to promote transparency, the majority of Myanmar's economy remains in control of a corrupt elite.[23] During the privatization process, according to a report by the U4 Anti-Corruption Resource Centre that was updated in October 2014, "numerous state assets were sold to the military, family members, and associates of senior government officials at fire sale prices."[24]

According to several reports, moreover, the military influenced the results of the 2010 and 2012 elections by means of fraud, restrictions on political participation, and prohibition of international monitoring.[24]

Petty corruption, meaning the extortion of small bribes or "gifts" in connection with everyday services, is "endemic to the everyday life of Myanmar citizens. It is particularly prevalent when citizens deal with the bureaucracy of the country and engage with low- to mid-level public officials." It is common "in application processes for permits or documents, where bribes or gift-giving end up becoming unavoidable elements of the process, perhaps even becoming culturally engrained[,] with bribery rather being seen as gift-giving or a kind gesture." Since gifts up to 300,000 Kyat (US$300) are not legally regarded as corruption, there are no penalties for this kind of activity, even though it "represents a huge cost for the government, undermines trust in state institutions, and violates the principle of equal treatment of citizens."[11]

"The problem of corruption in Myanmar is particularly severe in the area of business activity," states one source.[11] A firm wishing a construction permit must go through an application process involving (on average) 16 procedures, a 159-day wait, and a cost of about 567% of income per capita.[25] A firm wishing to get electricity must undergo 5 procedures, wait 91 days, and spend over 3000% of income per capita.[25]

In the Myanmar Business Survey 2014, corruption was the most frequently named obstacle to doing business in the country. In 2014's Ease of Doing Business ranking, Myanmar was also ranked very low.[4]

According to the Investment Climate Statement 2014, "investors may experience corruption when seeking investment permits or when leasing land in Myanmar."[25] The Enterprise Surveys 2014 reported that 38.9% of businesspeople were "expected to give gifts to get an operating licence," while 55.8% were expected "to give a gift to get an electrical connection," and 30.1% were "expected to give gifts to secure a water connection."[25] Persons applying for import and export licences are also likely to be charged illegal fees.[25]

Without notice or external review, Myanmar's government routinely promulgates new regulations and laws affecting foreign investors.[25]

Daniel Barrins of the Herbert Smith Freehills law firm, a partner of Australia-based Asialink, has said that corruption is denying Myanmar's citizens the benefits of foreign investment. Problems with land ownership, intellectual-property rights, and the rule of law all create difficulties for potential foreign investors, according to Barrins.[1]

Under the military government which ruled Myanmar until 2011, land was nationalized. According to an October 2015 report in The Wall Street Journal, land in Myanmar remains largely under the control of the military and their allies. In addition, allegations of forced evictions are still common across Myanmar.[26]

Jade mined in Myanmar

The jade trade accounts for 48% of Myanmar's official GDP.[23] An October 2015 report by Global Witness noted that Myanmar's jade industry is exploited by the nation's elites; including military leaders, drug traffickers, and business leaders. This was the finding of a year-long investigation entitled "Jade: Myanmar's 'Big State Secret,'" which identified that several leading members of the nation's government and economy had siphoned US$31 billion worth of jade in 2014, a figure nearly half of Myanmar's economy.[23]

Global Witness estimated that illegal networks in Myanmar had stolen a total US$122.8 billion worth of jade over the previous decade, and claimed that Myanmar's jade industry is possibly the greatest natural resource racket in recent history. In addition, the nearly one hundred active jade mining deposits are located in areas controlled by about 10 to 15 military-connected businessmen, and a result the people living in those areas remain in poverty while a few businessmen profit greatly.[23][27]

Myanmar law requires foreign oil and gas exploration firms operating in the country to be partnered with domestic firms. These arrangements have been criticized for their lack of transparency and accountability.[24]

As of 2006, illegal logging accounted for at least half of the logging in the country. The smuggling of timber across the Chinese border is a major activity.[24]

Taxes are collected irregularly. Over one third of respondents to a survey said they were expected to give gifts in meetings with tax officials. A medium-sized company doing business in Myanmar must make 31 separate tax payments annually. On average, this takes 155 hours' work, and involves a tax payment amounting to 48.9% of annual profits.[10]

In April 2014, a new Union Taxation Law came into effect. It is designed to help eliminate corruption in tax collection.[10]

Political corruption exists at higher levels of government, and comes into play especially "when large infrastructural works or other 'mega-projects' are being negotiated or implemented." Companies pay bribes "to avoid trouble or delays," and often "establish illicit networks of patronage which can be exploited in future deals." Companies that establish such networks "are often given monopoly control over the markets or sectors they win by 'bidding,'" and this monopoly control stifles competition and growth.[11]

In the World Economic Forum's Global Competitiveness Report 2013–2014, business executives rated the incidence of corrupt diversion of public funds to companies, individuals, or groups at 2.3 on a 7-point scale (1 being "very common" and 7 "never occurs"). They rated the favoritism of government officials towards well-connected companies and individuals, as reflected in policies and contracts, a score of 2.2 on a 7-point scale (1 meaning "always show favouritism" and 7 "never show favouritism").[28]

Government ministries often fail to report their own expenditures on projects.[11]

Myanmar's import and export regulations are not transparent. According to the Global Enabling Trade 2014, corruption at the border and burdensome procedures are among the major challenges to importation of goods. Business executives gave the efficiency and transparency of border administration in Myanmar a score of 2.2 on a 7-point scale (1 being "non-transparent" and 7 "transparent"). Myanmar ranks 128th out of 138 countries in this regard.[29]

Businesses must bribe customs officials in order to avoid high import and export taxes. 53.5% of businesses surveyed in 2014 said that they expected to give "gifts" to obtain import licences.[29]

On average, exporting a container of goods from Myanmar involves 9 documents, takes 25 days, and costs US$670. On average, importing a container of goods into Myanmar involves 9 documents, takes 27 days, and costs US$660.[29]

Business executives rate the protection of property rights and financial assets at 2.5 on a 7-point scale (1 being "very weak" and 7 "very strong"). Registering property involves an average of 6 procedures, a 113-day wait, and a cost amounting to 7.2% of the property's value.[30]

On the World Economic Forum's 2013–14 Global Competitiveness Report, business executives scored the reliability of police services to enforce law and order at 3.0 on a 7-point scale (1 being "cannot be relied upon at all" and 7 being "can always be relied upon").[31]

Police officers "reportedly often ask victims of crimes to pay substantial amounts to ensure police investigate crimes; in addition, police routinely extort money from civilians."[31] Police are said to be involved in human trafficking, accepting bribes from drug lords, and to have extorted local businessmen. When a curfew was imposed following riots that took place in Mandalay in 2004, police extorted bribes from people who wanted to break the curfew.[32]

One reason for police corruption is that police officers were expected for many years to pay for their own investigations, without any reimbursement or compensation. This policy not only encouraged corruption but also discouraged serious investigation of crimes.[32]

Security forces "generally act with impunity in Myanmar." The Human Rights Report 2013 noted that a police escort for a UN rapporteur's convoy "stood by" while the convoy was attacked.[31]

The low quality of Myanmar's institutions leads to corruption in health care and education.[11]

It is common for international and domestic NGOs to use money intended to help the public to be spent on expensive offices, residences, or other inappropriate expenses.[11]

The judiciary is corrupt and subject to government and military influence. Judiciary officials in Myanmar accept bribes for various services, such as providing access to detainees and rendering a favorable verdict. Judiciary corruption "represents a major challenge to businesspeople looking to do business in Myanmar." In disputes with foreign firms, local businesses can use bribes to secure favorable judgments.[33] On the World Economic Forum's 2013–14 Global Competitiveness Report, business executives rate the independence of the judiciary at 2.8 on a 7-point scale (1 being "heavily influenced" and 7 "entirely independent").[33]

Judicial decisions about land and buildings are often affected by government influence, personal relationships, and bribery.[30] It can take years to enforce a contract in the Myanmar courts.[11]

There are many lobbying groups in Myanmar, but they are unregulated, and "regularly resort to bribes and concessions to secure favor," which is "abetted by the lack of transparency and accountability in Myanmar."[11]

Myanmar is one of the world's four major producers of opium and heroin. The government has expanded counter-narcotic efforts, but is "reluctant to investigate, arrest, and prosecute high level international traffickers," according to the CIA.[24]