------------------------ BurmaNet ------------------------ "Appropriate Information Technologies, Practical Strategies" ---------------------------------------------------------- The BurmaNet News: July 8, 1997 Issue #767 HEADLINES: ========== REUTER: ASEAN DUE TO MAKE JOINT STATEMENT JAPAN TIMES: JAPAN TO JOIN EU ACTION AGAINST MASS. LAW BORDER SOURCE: SITUATION UPDATE BKK POST: CHETTHA FIRM ON REFUGEE POLICY BKK POST: CAMP BIRTHS RAISE ALARM PRESS RELEASE: NATIONAL EDUCATION ASSOCIATION THE NATION: IDLE BURMESE STUDENTS DREAM BURMA DEBATE: WAITING FOR WINDFALLS WON'T HELP BURMA DEBATE: FOREIGN EXCHANGE CERTIFICATES BKK POST: UK CLOTHING FIRM CUTS BURMESE TIES REUTER: SLORC SAYS YADANA GAS PIPELINE ON SCHEDULE THE NATION: THAI-BURMESE PIPELINE MAY COST FAR MORE TT: INTERNATIONAL STUDENTS TO PROTEST ASEAN DECISION ANNOUNCEMENT: NEW ENGLAND BURMA ROUNDTABLE / JULY ----------------------------------------------------------------- REUTER: ASEAN DUE TO MAKE JOINT STATEMENT ON CAMBODIA July 7, 1997 JAKARTA- The seven members of the Association of Southeast Asian Nations (ASEAN) were consulting on Monday and were expected to issue a joint statement on Cambodia, Indonesian Foreign Ministry spokesman Ghaffar Fadyl said. ``We are now in consultations and very soon we will issue a joint foreign ministers' statement on the Cambodian issue,'' he told Reuters. Indonesian Foreign Minister Ali Alatas earlier said there was a need for a quick meeting of ASEAN foreign ministers to discuss the situation in Cambodia, which many fear is teetering on the edge of civil war. Cambodia, together with Laos and Burma, was due to be admitted to ASEAN at an annual foreign ministerial meeting being held in Kuala Lumpur at the end of this month. ASEAN groups Indonesia, Malaysia, Singapore, Thailand, Vietnam, Brunei and the Philippines. Cambodia's Second Prime Minister Hun Sen appeared firmly in charge of the capital Phnom Penh and the surrounding area on Monday after ousting forces loyal to his rival Prince Norodom Ranariddh in two days of fighting. But Ranariddh vowed from France that he would lead resistance from inside and outside Cambodia. ***************************** JAPAN TIMES: JAPAN TO JOIN EU ACTION AGAINST MASSACHUSETTS LAW July 5, 19997 Japan will join the European Union as early as next week in filing a complaint with the World Trade Organization about a Massachusetts law that denies state contracts to companies doing business in Myanmar, government sources said July 4. "We have so far waited for the United States to reconsider the Massachusetts law, but we cannot wait for so long," one of the sources said. "We will make a final decision, probably next week, to take the case to the WTO unless we receive a firm commitment from the U.S. by then to abolish the law." Last month, the 15-nation EU requested "bilateral consultations" with the U.S. in the first stage of the WTO's dispute-settlement procedures. The EU can request establishment of a neutral panel to rule on the dispute if the consultations fail to resolve the case within 60 days of the complaint being filed. Since the EU lodged the complaint, Japan has been considering whether it should take the same step or join bilateral consultations between the EU and the U.S. as an "interested third party," the sources said. Participation in the bilateral consultations as an interested third party would require U.S. approval, the sources said. In addition, the status would not grant Japan the right to request establishment of a WTO dispute-settlement panel to deal with the case, the sources added. Since Massachusetts' Myanmar sanctions law, which was signed by Gov. William Weld last summer, took effect in January, both Japan and the EU have complained to Washington that the law violates a WTO agreement on government procurement practices. The accord covers not only central governments but also local governments registered in the commitments made by WTO members. WTO replaced the General Agreement on Tariffs and Trade in January 1995 as a more powerful watchdog on international commerce. The U.S. agreed to put Massachusetts and some other states under the WTO government-procurement accord. After Tokyo and Brussels complained to the U.S. over the Myanmar sanctions law, a group of legislators from Massachusetts sent letters to the two capitals in February warning against interfering in the internal affairs of their state. *********************************************** BORDER SOURCE: SITUATION UPDATE July 7, 1997 REFUGEES ARRIVING AT KANCHANABURI, RATCHABURI, AND PROVINCES TO THE SOUTH KANCHANABURI PROVINCE Ban Don Yang This camp, composed of Tavoyan and Karen residents from the former Thu Ka population, is now reduced in size because approximately 100 Tavoyans fled the camp. Border sources cite the unreasonable demands of Thai militia guards at the camp as the reason for the refugee group’s flight. Thai demands included the supply of young women to ‘cook’ for the guard post. These young women were at risk of being sexually exploited. Certain Tavoyan leaders were also beaten by the guards. The group that fled the site is now in hiding. The Karen group at the nearby site of Htee Wah Doh (near Halockanee, on the Burma side of the border), has still not received permission to enter the Don Yang camp. This group is very vulnerable as they are in a position between the Mon camp and SLORC troops. RATCHABURI PROVINCE Tham Hin The population here is reportedly 7,612, with the camp divided into three sections corresponding to the three original camps. The residents are still under plastic sheeting and no school has yet been built. The 9th Division has not yet given permission to build the school, claiming that the camp needs to be consolidated and made secure before building can begin. NGOs are prepared to fund the building and arrange for supplies, as soon as permission is given. Medical NGOs have been asked to build a crematorium. The refugees are not allowed to bury their dead as is their custom. The committee has been told of 12 camp rules. A notice board will be erected on the site, in Thai and Karen language, explaining the rules. The rules cover every aspect of camp life, including defining the outer limit of the camp boundary where the refugees are allowed to roam, rules for visitors, when refugees are allowed to bathe at the stream, and disciplinary action to be taken against those who break the rules. No new refugees have been allowed to enter the camp since the beginning of June, the date set by the 9th Division as the limit for refugees arriving from Burma. Due to this policy of denying camp entry, there are still some 34 families (174 individuals) sitting at the border near Meh Pya Kee, behind the old Bo Wi site. NGOs cannot officially access these people to help. So far only minimal assistance has been provided through private donations to buy rice and plastic sheeting. Within the last few days fighting broke out near the Tenasserim River directly west of the point where the refugees are staying. If the fighting were to spread toward the border this group would be in danger. PRACHUAB KHIRI KHAN PROVINCE Huay Satu As reported in the last update report, this group of refugees have now been allowed access to NGO assistance for food and medicine. Attempts are now underway to stockpile rice for the rainy season when the site will be totally cut off. The population is around 1,200. The site remains unstable with SLORC troops said to be only one day away at Te Keh. Under pressure from the 9th Division of Prachuab province, many of the able-bodied men have returned to the Burma-side of the border, leaving some women, elderly and sick behind on the Thai side. If the SLORC troops threaten them on the Burma side, then they would apparently have permission to cross back over to Thailand. The Karen refugees’ leaders have made it clear in writing that it was not their own decision to return to the Burma side, but that they were asked to do so by the authorities. The Mergui Tavoy United Front families have, as previously reported, moved back to the Burma side of the border. CHUMPHON PROVINCE The situation remains stable, much as reported previously. ******************************************** BKK POST: CHETTHA FIRM ON REFUGEE POLICY July 4, 1997 Sermsuk Kasitipradit Army Commander-in-Chief Chettha Thanajaro has assured American Refugee Committee chairman Anthony Kozlowski that no refugees on the Burmese border will be forcibly repatriated. Mr Kozlowski called on the commander at army headquarters to thank him for the army's supporting role and assistance given to Karen refugees seeking shelter in Thailand after Burma's onslaught against the Karen National Union. "Mr Kozlowski says he deeply appreciated the country's generosity in providing-humanitarian aid to refugees from Vietnam, Laos, Cambodia and Burma during the past decades," said an army officer. The officer said Mr Kozlowski had voiced support during the meeting to Gen Chettha's proposal to relocate Karen refugee camps 10 kilometres deep inside Thailand, agreeing that such a move could help provide safety for the refugees. Gen Chettha said earlier that unless Karen refugees located at the border area were moved deep inside Thailand it would be difficult for the army to maintain security along the Thai-Burma border. He briefed Mr Kozlowski on the army's stance in sending Karen refugees back to Burma. "The army commander has explained that Thailand is ready to take back the refugees if their life is endangered when they return to Burma," said the officer. Gen Chettha has urged Mr Kozlowski to help correct misunderstanding with other non-government organisations which might harbour misconceptions concerning Thailand's policy on Karen refugees. In late February Amnesty International and several non-government organisations strongly criticised Thailand over reports that it forcibly repatriated Karen refugees seeking shelter in Kanchanaburi. The army had totally denied the allegation. "The army commander is optimistic that the ARC can help correct such a misunderstanding, as the government has no forced repatriation policy," said the officer. Mr Kozlowski reportedly urged Gen Chettha to help negotiate with Burma so that the ARC can provide humanitarian aid to refugees staying along Burma's border area. *********************************************** BKK POST: CAMP BIRTHS RAISE ALARM July 7, 1997 Aphaluck Bhatiasevi Ratchaburi Officials complain of lack of contraceptives The rapidly increasing number of Karen refugees living in Ratchaburi's Suan Phung district is worrying Thai health chiefs. They say that the inadequate provision of contraceptives means hundreds of children are being born, placing an additional strain on already hard-pressed medical workers. The refugee population in Baan Tham Hin refugee camp has increased from 2,500 in March to the present 7,444. The district's public health chief Preecha Tuankrua said there were now more than 300 pregnant women in the camp. "We have to do something to control the fertility rate among Karen refugees, otherwise we will have to bear the burden of the increasing population," he said. The authorities are now planning to provide contraceptives, as before May 16 only 100 people had been helped. In addition, one-third of the population of the camp in Suan Phung are children aged under 12. Although local health authorities have been working with the refugees, non-governmental organisations such as Medicin Sans Frontier (MSF) have been mainly responsible for dealing with illnesses in the camp. More seriously ill patients who cannot be handled by the NGOs are referred to the district hospital. Karen camp doctor, Dr Sunny Ramond, said 100 to 200 patients a day were treated for minor illnesses. He used to work at Htee Hta Hospital in Burma, about 30 kilometres from the Kanchanaburi border, before fleeing from Burmese troops. The doctor said the most common diseases in the camp were malaria, diarrhoea and respiratory infections, and most children were suffering from malnutrition. The district health centre said that between March and May there were 11,945 refugee visits to the local hospital and 821 people were vaccinated. Suan Phung Hospital director, Dr Chatchai Thuntham, said more than five hospital employees were helping the NGOs in the camp. Dr Chatchai said although DDT had been sprayed in the area and mosquito nets had been provided to all the tents at Baan Tham Hin camp, there was still a high incidence of malaria. Of blood tests performed on 340 people in the camp, 36 had malaria. Health officials have also provided clean water and toilets. Currently 20 families are sharing one toilet. Dr Chatchai also urged senior administrators at ministry level to do something to protect officials who have to travel more than 30 kilometres to the camp each day. "We have problems with a shortage of vehicles and medical equipment. We have only one pick-up truck which is used as an ambulance," he said. Deputy Health Minister Sora-at Klinpratum, who recently visited Baan Tham Hin camp promised that the refugees would be given shelter until Burma's internal problems were sorted out. He said the fact that the camp had been shifted further into Thailand indicated the authority's commitment to protecting the refugees. Baan Tham Hin camp is about 11 kilometres from the border and south of Ratchaburi. *************************************** PRESS RELEASE: NATIONAL EDUCATION ASSOCIATION July 2, 1997 From: Burma-UN Service Office NATIONAL EDUCATION ASSOCIATION SUPPORTS US SANCTIONS UPON MILITARY REGIME OF BURMA Atlanta, Georgia, July 2 --- The Peace and Justice Caucus of the National Education Association (NEA), the largest teachers' Union in the US, organized a briefing on the "Suppression of Educational Freedom and Rights of the Children in Burma" at its annual convention attended by state and local Association leaders and elected representatives of their locals all across the US. In his presentation to the briefing, Dr. Thaung Htun, Representative of the National Coalition Government of the Union of Burma (NCGUB) for UN Affairs, said, "the Military regime in Burma believes that academic freedom poses a severe threat to its illegitimate rule and has persistently practiced the policy of closing down of schools and universities at the first sign of protests and has used the pretext of educational reform as a mean of preventing dissent and extending control." Dr. Htun then informed the Convention that "all the Universities have not been reopened yet since They were closed after the last students protests in December last year. Without giving any reason, all schools including primary schools have not been reopened yet even though June is the season of reopening schools for the new academic year and this practice has been seriously damaging to the education of the new generation". With regard to the situation of Burmese Children, Dr. Htun pointed out that the "National Programme of Action proposed by UNICEF in 1993 has not been translated into sectoral policy and programs at the national and subnational level with adequate budget allocation. The disparity of budget allocation between the defense and social sectors has directly effected the lives of Burma's children. The infant motility rate has increased from 67/1,000 live births in 1989 to 82/1,000 in 1993. Malnutrition of children under 3 accounts for 36.7%-40%. Child labor, child prostitution, child soldiers and refugee children in armed conflict -- all need to be urgently addressed." Then, Mr. Chuck Reinhardt, a delegate from New York/ New Jersy, introduced a resolution that supports economic sanction upon the military regime of Burma enforced by the Clinton Administration. The resolution was adopted by consensus. In its rationale to the resolution, NEA said, "The military regime in Burma continues to violate children's rights, despite the fact that it has been a party to the Convention on the "Rights of the Child" since 1991. According to the Human Rights Watch Report, "Children's Rights and the Rule of Law", children in Burma are used as porters to carry supplies for the army and unpaid laborers on government construction projects. Many Burmese girls are trafficked into Thailand, forced to work in brothels, often in slave-like conditions." ****************************************** THE NATION: IDLE BURMESE STUDENTS DREAM OF LIGHTER PURSUITS July 7, 1997 Aung Zaw The periodic closures of education institutions by the government have driven some Burmese youths to give up on school, reports Aung Zaw. Burmese female models are attractive. So says Tin Zar Maw, 20, a student of botany at Hlaing College. Although she is not so certain about their male counterparts. "I think they are short," she said. "When they take to the stage they look ridiculous." A few months ago, Tin Zar joined a well-known modelling agency in Yankin township set up by the famous model Tin Moe Lwin. The training will take three months. "I'm going to learn about the catwalk and how to dress up," said Tin Zar, her excitement obvious and understandable. Burma has been gripped by fashion fever since French designer Pierre Cardin visited the country a few years ago. A visible result on the street is the replacement of Burma's traditional longyi with Western-style skirts and pants. A Rangoon resident admitted that the modelling business is mushrooming in the capital. "For the rich and the middle class, this is like a new fad." Burma's famous movie star, Soe Thu, has set up his own modelling agency, Thunder Shower Group. But to enter this lucrative business, potential models have to pay a high sum. New trainees are expected to dole out about 15,000 kyat as enrolment fees _ approximately five times the average monthly salary in Burma. But for those who do not have the money, there is an air of uncertainty among Burmese youth today. Burma's youth are not sure about their future as the State Law and Order Restoration Council (Slorc) government periodically shuts down schools and colleges. Recently, the Education Ministry postponed the opening of schools and universities indefinitely. The reason, analysts believe, is that military officials hope to avoid any incidents that could complicate the country's July induction into the Association of Southeast Asian Nations. In December, colleges and universities were immediately shut down after a spate of student unrest. And since the 1988 democracy uprising, schools in Burma have been shut down a number of times. "I'm not interested to go back to school," says Win Kyaw from Botataung College in Rangoon. "They will reopen [the schools] but only for a few weeks. There will be exams and they will shut them down again." Now Win Kyaw works at a hotel as a receptionist. But even when schools reopen the authorities are planning to decentralise the student population. It is reported that authorities are building more colleges and universities in Rangoon and Pyi aimed at dispersing the students. According to a former student activist now in exile, this is a "divide and conquer" method. Whatever the case, some activists and politically-active students aren't happy to see the emergence of Burma's "modem youth". "I think Burmese youth now enjoy going to movies, fashion shows and concerts," complained a former student leader Moe Thee Zun. "They are not active in politics anymore." But Tin Maung, a writer in Rangoon, thinks otherwise. He said, "This [modelling] is becoming a market - I don't see anything wrong with it. Like all young people around the world, they [Burmese youth] want to try new things and enjoy them. "And while they don't discuss politics all the time, they know what is wrong and right," he added. But seasoned analysts in Rangoon suggested that many Burmese youth now are more eager to do business than to continue their studies. "They have shown no interest in education. Part of the reason is that schools have been shut down very often. It is sad," says a former university lecturer. Meanwhile, Tin Zar and her friends are on the stage learning the catwalk and trying on high heels. "We see it [modelling business] as an opportunity to make money in the feature,' she says. That's how glossy advertisements by modelling agencies put it. In February at the Inya Lake Hotel, hundreds of girls turned out to enlist in John Lwin's three month modelling course. John Lwin, better known simply as John, is a trainer employed by Living Colour modelling agency - a business set up by powerful generals' sons and movie stars. John, a Burmese, lives in Singapore. His aim is to introduce Burmese models to the international modelling world where he believes many unknown talents and beautiful young Burmese models can make it big on the international scene. Last year, he held a successful fashions show at the Yuzana Garden. He later established the International modelling Agency. But modelling is not an option for all young Burmese. Since the schools were shut down in December, many students have been forced to find odd jobs. Maung Maung Swe, a first-year zoology student, enjoys working at a foreign company where his monthly salary is 3,000 kyat plus bonus. Myint Myint Win who graduated from Rangoon University now sells soft drinks. Htay Htay, 18, who has just completed her matriculation, sells cigarettes at tea shops. Like Htay Htay, many young Burmese women are employed by cigarette companies; to distribute and advertise their cigarettes at tea and coffee shops. She doesn't like her job but she has no other choice, she says. Others find it more difficult to survive. As the gap between rich and poor widens, prostitution in Burma is increasing. In Rangoon and Mandalay, the nightlife is flourishing. Foreign guests at the well-known hotels in Rangoon are offered photo catalogues of young Burmese women between the age of 16 and 20. The price is US$200 per night. "This [prostitution] is going to be a big business. Both foreigners and local businessmen like to try Burma's untouched resources," said a Rangoon resident. (TN) ***************************************************** BURMA DEBATE: WAITING FOR WINDFALLS WON'T HELP CREDITORS by Louis Kraar March/June 1997 MONEY MATTERS "Drug traffickers have become the leading investors in Burma's new market economy and leading lights in Burma's new political order. Drug money is so pervasive in the Burmese economy that it taints legitimate investment. Since 1988, some 15 percent of foreign investment in Burma and over half of that in Singapore has been tied to the family of narco- trafficker, Lo Hsing Han." — Robert S. Gelbard, U.S. Assistant Secretary for International Narcotics and Law Enforcement Affairs February 28, 1997 With little visible means of support, Burma's sick economy bumps along. Hotels are rising in Rangoon with more rooms than can be filled with tourists, while shops sell imported liquor and other luxury goods. Part of this frothy activity is evidently fueled by repatriated profits from the drug trade, but the military regime also taps another source of funds -- OPM, Other People's Money. This hoard helps the State Law and Order Restoration Council (known by the initials SLORC) muddle through, even though it cannot repay over $6 billion in other known international debts. China, for instance, provides substantial undisclosed credits for purchases of weapons. Other imports are being financed by Burma's neighbors and the foreign oil companies that are its most significant outside investors, Total of France and UNOCAL of the U.S. SLORC has a strong appetite for money, but little means of repaying loans. The chances of its new creditors getting repaid soon, in fact, are bleak. Like most activities of the secretive regime, its pinched financial condition is shrouded in opaque government accounts and misleading government statements. SLORC's newspaper mouthpiece, The New Light of Myanmar (September 13, 1995) claimed that Burma "will earn about $40,000 a day" -- equivalent to $164 million a year from anticipated exports of natural gas to Thailand. General David Abel, Minister for National Planning and Economic Development, claims the economy is growing briskly, but the U.S. Embassy in Rangoon reports that the legal economy provided an average income last fiscal year of only $113 per person -- "far lower than was observed even in the world's poorest countries." Penetrating the mysteries of Burma's financial condition requires looking beyond its own accounts to those of reputable international organizations. The Burmese government publishes nothing about its external debts, which can be seen more clearly in the World Bank's annual World Debt Tables published in 1996 and the International Monetary Fund's staff report of January, 1997. External loans to Burma have steadily increased from a low of $61 million in 1991 to $134 million in 1994, according to the IMF. Moreover, Burma can no longer obtain the easy credit from development loans with 20-year terms and effect interest rates of almost zero. Instead, Burma is getting tougher seven-year loans at near - market interest rates, apparently from government export-financing agencies of such major trading partners as China, Taiwan, Thailand, Malaysia, and Singapore. The World Bank tables show that the Burmese government accumulated $450 million of accumulated export credit through 1994. Concludes an analyst who has studied the data: "It seems that trade credits from the governments of Asian trading partners are Burma's main financiers." Burma has gained some debt relief from the Japanese government's Overseas Development Assistance. In the process, Tokyo conveniently ignored the charter of its own aid agency, which stipulates that loans should not be granted to governments with excessive defense spending. SLORC spends nearly half of its government outlays on Burma's bloated military, while restraining investment in education and health. Nonetheless Burma got the debt relief, which is put into an account that its government can use for imports. Burma's apparent policy is to make some interest payments only on debt owed to multilateral financial institutions. In 1994, the latest year for which figures are available, the Burmese government paid $173 million in external debt service. About $125 million of that nominal payment went to the Japanese and came back as debt relief from which Burma can import goods. The remaining $48 million just covered obligations to the Asian Development Bank and the World Bank. This suggests that trade creditors from neighboring Asian countries will have to wait their turn to be paid back, some day. How Asian creditors justify such loans to their own legislatures is an intriguing question that no one in the region seems to be asking, at least aloud. Thailand, however, is beginning to worry about how its private traders with Burma will be paid. On a visit to Rangoon in May, Thai Prime Minister Chavalit Yongchaiyndh urged Burmese officials to protect Thai traders from foreign exchange risks. Those business people have complained about the risks inherent in having to deal with dual exchange rates: an official rate of 6 kyat per dollar and the more realistic rate of 170 kyat per dollar. Bangkok wants Burma to ease foreign exchange risks by moving toward a genuinely convertible currency. Supposedly Burma will obtain plenty of cash once the offshore Yadana natural gas field starts exports to Thailand. Foreign investors and creditors are having a tough time now, but are being told to just hang on for another year or so. They probably must wait a lot longer than that. Even the start of gas flowing through the pipeline will not generate enough hard currency earnings to bail out Burma. Exactly how much hard currency the pipeline will deliver to Burma and when are far from clear, but many observers cite $400 million a year as the eventual net effect of the Yadana project on Burma's balance of payments. That figure, however, is not money that SLORC can bank on. It may include the import-substitution effects from an electric-generator and urea fertilizer facility that are yet to be worked out and financed, much less built. SLORC, in fact, has already mortgaged much of its immediate earnings from the gas pipeline. Burma borrowed $7 million from UNOCAL in order to finance imports of urea fertilizer and must repay the American company, with interest. Likewise, Thailand has reportedly supplied millions of dollars worth of oil against Burma's future earnings. In addition the state-owned Myanmar Oil and Gas Enterprise reportedly has an option to buy 10% to 15% of the Yadana consortium's equity, and may pay for that investment from the Burmese government's first three years of receipts from a production-sharing agreement on the natural gas. Consequently Burma may not gain anything close to $400 million a year until beyond the year 2001, and that sum would still be far from enough to cover its chronic balance of payments deficit. It totaled an estimated $575 million last fiscal year ending in March. The largest and fastest growing factor in that current account deficit is a merchandise trade deficit. Burma, of course, could severely restrict imports for five years until the Yadana windfall starts, but the government has limited ability to do that. So far SLORC simply ignores the balance of payments problem, hiding it in understated official statistics. Says one informed observer,"The SLORC appears to lack either the will or the political legitimacy to sustain an austerity campaign." Not since the days of Indonesia's Sukarno regime in the 1960s has Southeast Asia seen such a profligate government with little capacity for rational economic management. No windfalls from either a gas pipeline or narcodollars can bail out Burma. Louis Kraar is a senior editor of Fortune magazine. The views expressed here are those of the author. *************************************************** BURMA DEBATE: FOREIGN EXCHANGE CERTIFICATES -- WHO REALLY BENEFITS? March/June 1997 By Kyi May Kaung Visitors to Burma notice that everyone, even trishaw peddlers, want to be paid in U.S. dollars -- or coupons called FECs, or Foreign Exchange Certificates. After all, the local currency known as kyat is hyper-inflated and loses value almost daily. As one Burmese told the author, the successful mohinga [soup with noodles] seller down the street "buys gold every evening because she's afraid of the money." The FECs are an attempt by the ruling State Law and Order Restoration Council (SLORC) to overcome that lack of confidence in the currency -- and provide a linchpin for a supposedly"open -market economy" as a medium of exchange and a store of value. Like much in the Burmese economy, these paper certificates are merely a gimmick and not a solution for a chronic shortage of foreign exchange and a glut of kyats. In short, FECs are supported by little more than the government's ability to keep printing them and getting people to accept them as a proxy for U.S. dollars This paper game started with economic reform in February 1993, when the regime allowed exporters to set up foreign-currency accounts in Burmese banks and use them to buy foreign goods as well as scarce local commodities. The aim was to create an exchange rate determined by the market, rather than using an official rate that greatly overvalues the kyat. To carry out this reform, the government began issuing FECs, which trade at 160 or 170 kyat per dollar vs. the official rate of about six kyat per dollar. According to an official source, the reason behind establishing the FECs was to promote tourism and to allow Burmese citizens to hold some sort of foreign exchange. Each FEC note bears the claim that it is equivalent to a certain number of dollars, but that's not exactly true. The certificates are convertible only into local currency, not dollars. Private ownership of foreign currency, in fact, largely remains illegal. Instead, SLORC promises that once the certificates are deposited into a dollar-denominated bank account, they can be used to import foreign goods and services. The few who are able to benefit from this scheme can import luxury cars or electric power generators that come in handy in a capital city with frequent blackouts. The elite who live in Rangoon and rent private homes to foreigners can deposit that money into foreign exchange accounts and -- with government permission -- buy such scarce goods as cement with FECs. They cannot use the foreign exchange to travel abroad or pass it on to someone else. In short, the FECs simply represent private freedom to import -- once the holder gets government approval. As SLORC's foreign exchange reserves have dried up, it has become increasingly difficult to cash in FECs. Indeed last August Burma's foreign exchange reserves fell to less than $200 million, just enough to cover one month of the country's merchandise imports. In response to the shortage of hard currency, the government simply printed more kyat and used them to buy more dollars from local private business people at the market exchange rate. The FECs, on the other hand, has traded at parity with the US dollar - - therefore holding its value far better than the local currency. Holders of the certificates, however, have to wait much longer to get permission to use them for imports. How long can the regime sustain the value of paper certificates that are increasingly hard to use for imports? Many observers believe that SLORC has created a bubble that will burst eventually. No one knows exactly how many FECs have been issued. Late last year the official word in Rangoon was that FECs made up nearly three percent of the currency that circulated at the market exchange rate. There are unofficial reports that SLORC may have printed more than twenty times as much of those paper certificates. Whatever exact numbers, Burma is in the paradoxical position of using FECs -- a currency backed only by the freedom to import—while restricting the freedom to import. Does this make economic sense? Kyi May Kaung holds a Ph.D. in Political Science from the University of Pennsylvania. She is a writer and poet and is currently a broadcaster at Radio Free Asia in Washington D.C. ************************************** BKK POST: UK CLOTHING FIRM CUTS BURMESE TIES July 5, 1997 AFP London - British High Street clothes retailer Burton has ordered its suppliers to stop using factories in Burma after a report connected the factories with the Burmese military, the BBC said on Thursday. The Newsnight programme, using hidden cameras, uncovered evidence that workers in factories making clothes destined for the West earned $2 a day, but had to give $1 a day back to the Burmese army.(BP) ************************************************** REUTER: SLORC SAYS SEES YADANA GAS PIPELINE ON SCHEDULE July 4, 1997 [abridged] BANGKOK, July 4 (Reuter) - Burma said on Friday that a project to lay a pipeline to transport natural gas from the offshore Yadana field overland to Thailand would be completed by the end of May or the beginning of June 1998, as scheduled. ``Everything is going well and so far 95 percent of the total works on the Burmese side is completed. I'm certain that supply could start from July 1 next year with no delay,'' said visiting Burmese Energy Minister Khin Maung Thein. Many in the industry had feared that the controversial pipeline project might be delayed because a section of it passes through a southern area controlled by Burmese Karen and Mon guerrillas fighting for autonomy from the military government. ************************************************* THE NATION: THAI-BURMESE PIPELINE MAY COST FAR MORE July 7, 1997 THE cost of the controversial Thai-Burmese gas pipeline project could increase by between Bt4 billion and Bt5 billion if the baht-settles at Bt30 to the US dollar, said Piti Yimprasert, president of PIT Gas. Piti said the baht depreciation has severely affected many PTT projects. It will eat into the returns of the projects and increase project costs. Higher costs incurred because of missed project deadlines have not yet been calculated, he said. The baht depreciation is also projected to increase the cost of PTT's third submarine pipeline project by between 10 and 20 per cent. (TN) *************************************************** THAILAND TIMES: INTERNATIONAL STUDENTS TO PROTEST ASEAN DECISION July 7, 1997 BANGKOK: The Student Federation of Thailand (SFT) and representatives from universities in neighboring countries will join a three-day hunger strike in the next two weeks in protest against ASEAN' s decision to admit Burma as a member of the regional grouping. Aphatsara Pongpanit, secretary-general of the SFT, said yesterday that the SFT and other Thai organizations will stage the protest outside Government House while Burmese students living in the country may gather in front of the Malaysian Embassy between the 23rd-25th of this month, the same dates that ASEAN holds its annual meeting in Kuala Lumpur. She added that students in Australia, Malaysia and New Zealand will also join the protest in their countries at the, same time. The SFT, the Committee of Natural Resource Environment Conservation of 16 Institutes and the Student Organization of Thammasat University yesterday distributed leaflets to the public at Victory Monument and Mah Boonkrong Center denouncing ASEAN's decision to admit Burma to its fold. Moreover, these organizations have combined to organize an anti-SLORC campaign week starting tomorrow in order to provide information and exchange opinions in connection with ASEAN's action with the Thammasat University, she said. SLORC is an acronym for the State Law and Order Restoration Council which rules Burma. She added that several interesting discussions such as "ASEAN: Burma, Progress or Crisis?" and "Human Right situation in ASEAN" will be on the agenda. ************************************************* ANNOUNCEMENT: NEW ENGLAND BURMA ROUNDTABLE / JULY From: Simon Billenness NEW ENGLAND BURMA ROUNDTABLE: ACTION ALERT July 7, 1997 JAPAN TO JOIN EUROPEAN WTO SUIT AGAINST MASSASCHUSETTS BURMA LAW [Please see BurmaNet News Issue 764 - Announcement: EC to take Massachusetts Law to WTO! for actions taken by residents of Massachusetts, the United States and those living outside of the US] July 2, 1997 1. July Roundtable Meeting June Roundtable Meeting: Tuesday, July 8, 7pm Unitarian Universalist Service Committee, 130 Prospect Street, Cambridge. Take the Redline to Central Square T stop, or the Number 1 bus. The UUSC office is on the corner of Prospect and Harvard streets, a 2-block walk from Central Square. Use the buzzer outside the front door to gain entry into the building; take the elevator to the first floor. Agenda: Chris Cox, Boston Herald reporter and author of Chasing the Dragon, a book about the drug trade in Burma will be the featured speaker. T-SHIRTS The T-shirts sold by Burmese students to benefit their democracy organization sold like...sticky rice! However, the 100% cotton, M, L and XL shirts ($12 apiece, plus mailing) may be available soon. Call 617-388-0038 for sales and information. Send us your news and we’ll publish it here for all to admire and emulate! Simon Billenness * for the New England Burma Roundtable * Franklin Research & Development 711 Atlantic Avenue, Boston, MA 02111 (617) 423-6655 x 225 (617) 482-6179 fax sbillenness@frdc.com *****************************************