Daily News- February 21 - 2003- Friday
  • Kyat Strengthens; Border Trade Hit
  • Burma's Suu Kyi could face jail after found guilty in tussle with brother
  • US says no dialogue invite from Burma
  • Burma mired in worst financial crisis : Riot police deployedin Rangoon
  • Myanmar central bank intervenes in effort to halt bank crisis
  • Banking scare in Burma traced to drugs
  • Aung San Suu Kyi in stand-off with court, refused to pay a fine


    • Kyat Strengthens; Border Trade Hit

    By Naw Seng and Tony Broadmoor
    Source : The Irrawaddy

    February 20, 2003—The continued freeze on private bank accounts in Burma has temporarily strengthened the country’s currency, the kyat, as businesses are struggling to obtain hard cash to pay workers and other expenses, according to diplomatic sources in Rangoon.

    Border trade has also been hit hard by the closure of the twenty private banks two weeks ago, forcing merchants to sell slow in order to generate cash flows.

    The kyat has gained more than 20 percent this week against the US dollar as individuals who were able to withdraw their money three weeks ago are holding on to it now, as it remains unclear when they will receive another chance to access their funds. Today the kyat was trading at 900 to the dollar up from 1,100.

    "You have a situation now where actually the kyat is valuable because the banks are running out of money," said a Rangoon-based diplomat today. "The demand now is for kyat. So it’s really getting difficult to unload dollars, which obviously has never been the case. It won’t last but it is certainly a good indication of what people are thinking."

    Businessmen at major border passes are also now facing a shortfall in the stake needed to run their operations. "I have to sell goods at a low price in China in order to meet the whole business demand," said a Burmese businessman in Rulili, China. "I have only 13 million kyat in hand, but I need 80 million."

    A broker in Ruili today said the kyat had also gained ground against the Chinese yuan, which has caused the bulk of large companies to halt operations.

    Sales have also been affected along the Thai-Burma border as the kyat also rose against the baht. "No one dares to transfer their money," said a man in the Thai border town of Mae Sot. "The [border] market has been in turmoil."

    Sources that have met with small to mid size businesses said most have enough reserves to get through this week and next, but anything beyond that was doubtful. They say regaining bank reserves will require a combination of factors. Reeling in loans as well as a pronouncement by the government guaranteeing the depositors money might help to ease unrest.

    "If they [the private banks] can reestablish enough liquidity so that they can give people some money on demand then it may ease people’s mind a little bit," said the diplomat. "But if they’re not able to and the crunch continues through the end of the week, when it’s pay day, it could be ugly, people could be unhappy."

    As the banks continue to hang on, analysts are questioning how a protracted closure might affect some of the larger businesses in Burma, who receive payment in foreign currency before having to exchange it for kyat.

    "The larger companies like the airlines that take in revenue in foreign exchange and have kyat expenses for example," said the diplomat. "And they can’t change their foreign exchange into kyat, what happens then?"

    Commodity prices have also been rising in some areas since the bank closure, while the price of gold has dropped. The latest financial unrest in Burma was spurned by the bankruptcies of 16 general service enterprises nearly three weeks ago.

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    Burma's Suu Kyi could face jail after found guilty in tussle with brother

    Rangoon (AP) - Opposition leader Aung San Suu Kyi faced a possible jail term Friday after being found guilty in a domestic dispute.

    Suu Kyi, one of the world's most famous political prisoners when detained by Burma's military junta in 1989-95, went to court in Rangoon early Friday to face charges for a physical confrontation she had with her elder brother Aung San Oo, said members of her National League for Democracy party, speaking on condition of anonymity.

    The court found her guilty of a charge amounting to disorderly conduct for which the punishment is a small fine or seven days in jail, they said.

    Few other details of the case were immediately available. She was driven away in an official vehicle.

    Suu Kyi's party won a general election in 1990 while she was under house arrest, but the military refused to recognize the result. In 1991 she won the Nobel Peace Prize for her nonviolent efforts to promote democracy.

    The opposition leader has been embroiled for several years in a dispute with her brother about the family property in Rangoon, where she has lived since 1988.

    Aung San Oo originally filed a lawsuit in November 2000 against his sister seeking half-ownership of the 2-acre (0.8- hectare) property.

    The property was given by the government to their mother after her husband, independence hero Gen. Aung San, was assassinated in July 1947. The mother died in Dec. 1988.

    The two-story lakefront villa at No. 54 University Avenue was Suu Kyi's prison from 1989 to 1995, when she was held under house arrest without trial on national security charges. She faced a second period of house arrest for 19 months until May last year.

    Aung San Oo, an engineer, is an American citizen living in San Diego, California. He is estranged from his sister and believed to disagree with her political views.

    According to Burma's Buddhist inheritance law, children of Buddhist parents have the right to inherit property left by their parents. But a 1987 law forbids foreigners from owning or transferring property without a special waiver by the government.

    Aung San Oo's original suit was thrown out on a technicality, but he refiled it and it is still before the court.

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    US says no dialogue invite from Burma

    WASHINGTON, Feb 20 (AFP) - The United States said Thursday it had received no proposal from Burma for a dialogue, after the military-ruled state called on Washington to "open its heart" and enter constructive talks.

    The call from Rangoon came five days after a senior US official said Washington was losing patience with the junta and examining what extra sanctions it could impose in the absence of a promised dialogue with the democratic opposition.

    "We saw the statement, but the fact is the Burmese have not raised a proposal with us on what they called a constructive dialogue," said State Department spokesman Richard Boucher.

    "At this point we're not really prepared and in a position to comment on the idea.

    "We would, of course, welcome concrete steps by Burma to move toward democracy and greater respect for human rights.

    "The critical dialogue is the one between the regime and Aung Sung Suu Kyi and the National League for Democracy."

    The rulers of Burma earlier rejected US scepticism over the progress of its political reform process and slammed the sanctions warning.

    The junta said it "noted with disappointment" remarks made last week by Lorne Craner, US assistant secretary of state for human rights, democracy and labor.

    "Our patience for positive change is beginning to run out and we, along with the UK and others, are considering all options, including further sanctions," Craner said Saturday.

    The United States currently maintains an investment ban, travel restrictions for Burmese officials and an arms embargo on Burma, among other sanctions.

    The junta responded by condemning sanctions for failing to solve the country's problems.

    "Sanctions, by definition, impede economic growth, and deprive the Myanmar people of job opportunities. Sanctions, especially against a developing country, directly hurt healthcare and education," it said in the statement.

    "Sanctions, in short, do not solve problems; they only make them worse."

    "The government therefore invites the United States to join us in open, constructive dialogue toward humanitarian, economic and political development in Myanmar," the statement said.

    "We urge the United States to roll up its sleeves and join with us to bring a better life to the people."

    Washington is a staunch critic of Burma, and a strong supporter of democracy leader Aung San Suu Kyi, whose National League for Democracy party won a landslide election victory in 1990, which has never been recognised by the military.

    The Nobel peace laureate -- who was released from house arrest in May -- has been engaged in UN-brokered talks with the junta since October 2000, but they are yet to progress beyond a confidence-building stage.

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    Burma mired in worst financial crisis : Riot police deployedin Rangoon

    Source : The Business Times(Singapore)

    Bangkok, Feb. 21 - Riot police are out in force in Rangoon as the country's worst financial crisis continues to spiral out of control even as the central bank pulls out all the stops to stem a bank run.

    The heightened security measures followed a massive run on local banks on Feb 6, sparked by the collapse of several non-banking financial companies (that accepted deposits to finance their businesses in real estate, construction, trading, and manufacturing), and the sacking of the finance minister, diplomats and analysts said.

    To staunch the haemorrhaging, the central bank has imposed a ceiling on withdrawals, suspended cheque transactions and fund transfers, and starved companies of funds as working capital.

    The crisis was sparked by the huge losses suffered by the country's largest commercial bank, Asia Wealth Bank (AWB), on its deals in China, making depositors nervous, and contributing to the run, analysts said. As well, moves by AWB, and the Myanmar Eastern Bank to seek permission from the government to sell their shares to the public unsettled depositors.

    AWB said in a statement: 'The present situation is created as savers are withdrawing their deposits in a short time, resulting in most private banks, including the Asia Wealth Bank, encountering a serious shortage of cash.'

    The government panicked and rushed to print money, which exacerbated the situation by sapping confidence in the kyat. It is believed that 19 trucks carried newly printed 1,000 kyat notes from Wazi, in central Burma where the government prints its notes, to Rangoon.

    These moves took place amid fears that the government may be forced to demonetise the currency in which the people have lost all confidence.

    The country's top banks such as AWB, Myanmar Mayflower Bank, Yoma Bank, Kanbawza Bank, First Private Bank and Myanmar Oriental Bank are in a parlous state. The 20 banks there had combined kyat deposits equivalent to about US$946.61 million as at March 2001, up by US$386.23 million from March 2000. But this is believed to have plunged by about 20 per cent during the crisis.

    Meanwhile, frightened people in Rangoon, Moulmein, Mandalay and in border areas rushed to the banks early this month after the ruling military junta said that a number of non-banking financial institutions, which had attracted huge deposits with interest rates of up to 50 per cent, were illegal. The announcement caused many of them to fold overnight.

    Depositors were already jittery following the removal of the minister of finance and revenue, Khin Maung Thein, on Feb 1 for his involvement in foreign exchange transactions, and for his role in destabilising the financial markets.

    Then on Feb 6, the run on the banks began in earnest following rumours that the 20 private commercial banks would collapse, too.

    Soe Aung, a Burmese director of external affairs at the Network for Democracy and Development, based along the Thai-Burmese border, told BT: 'The banking system is about to collapse.

    The financial instability was brought about due to political factors as well.

    'The finance minister was fired for his involvement in foreign exchange dealings. This sent the message that the government was unstable and sparked a rush on the banks.'

    Businessmen in Rangoon are concerned that the new finance minister, Hla Tun, who is an army officer with no skills in finance and banking, may worsen the situation.

    'Maj-Gen Hla Tun is like the other ministers who do not have necessary experience in the portfolios to which they are appointed. This indicates that incompetency in government has made the country one of the poorest in the world,' Mr Soe Aung said.

    The Myanmar central bank has banned money transfers and imposed a ceiling of 500,000 kyats a week on withdrawals, sparking a full-blown run on deposits. One US dollar is equivalent to 6.5 kyats at the official exchange rate, while it is one to over 1,500 in the black market.

    Subsequently, the central bank tightened withdrawals to 100,000 kyats a week, which is less than US$100. AWB is said to have paid out 80 billion kyats of its deposits of 260 billion kyats during the run.

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    Myanmar central bank intervenes in effort to halt bank crisis

    Source : The Star(Malaysia)

    Rangoon (AP) - Burma's central bank has injected huge amounts of local currency notes into three major private financial institutions in an attempt to halt a crisis that has led to runs on the country's 20 private banks.

    The central bank has loaned 25 billion kyat in credit to the Asia Wealth Bank, the Kanbawza Bank and the Yoma Bank, and "loans to other banks will follow,'' a bank official said on condition of anonymity.

    The amount is worth about US$4.16 billion at the official exchange rate or US$22.7 billion at the widely used black market rate.

    A spate of panic withdrawals started last week amid rumors that banks were on the brink of bankruptcy.

    The collapse of about a dozen companies that had illegally sold shares to the public, offering greater returns than the interest given by banks, is generally believed to be one of the factors that sparked the panic.

    A media blackout has been imposed on coverage of the crisis.

    Private bank officials have told customers that the bank runs were "due to sudden and simultaneous withdrawals surpassing deposits,'' and gave assurances that it was a temporary problem.

    Customers who have received worn notes from the banks in recent days said they were given crisp new 1,000 kyat notes on Friday.

    On Feb. 10, Central Bank Chairman Kyaw Kyaw Maung attempted to quash rumors that several banks were heading into bankruptcy. Crowds have been gathering at banks since then, and withdrawals have risen.

    On Monday, the central bank ordered a ban on money transfers and limits on withdrawals from the 20 private banks. Local businesses have said the restrictions have made it difficult to carry out trade.

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    Banking scare in Burma traced to drugs

    Source : Shan Herald Agency News

    According to a drug control officer in eastern Shan State, the ongoing financial panic that had put the whole banking system in Burma to a standstill began when a key drug operator was arrested last late year.

    Through the "exchange of information process" that was established between Burma and its neighboring countries, Yang Kya Haw, a Kokang Chinese, and 12 of his associates were arrested in Tachilek, opposite Chiangrai, together with 5.1 million speed pills during the 4-8 October 2002 operation, said the officer who requested his identity be withheld.

    Yang later escaped from Kengtung, 160 miles north of Tachilek, where he was detained. The questionable circumstances of his flight had led to a witch hunt that cost many officials, including judges in Kengtung, their jobs and their future, he disclosed. "The next inevitable step was the examination of his assets in the banks," he continued, "and the result was the discovery of his huge funds in the Asia Wealth Bank."

    AWB is said to be the largest private bank in Burma. Its vice chairman, Aik Htun, is reputed to be close to Gen Khin Nyunt and prominent figures in the drug trade.

    "What puzzles me is that why the government is hesitant to announce the seizure of Yang's money," he wondered. "It could have prevented the current hysteria."

    The sudden depletion of funds in the AWB caused by the seizure had brought about frantic withdrawals by other customers, according to him.

    The officer's information, however, could not be confirmed.

    The Burmese economy has become totally dependent on the drug trade, and economic collapse would likely follow any attempt to wipe it out, wrote Burma expert Bertil Lintner in The Golden Triangle Opium Trade: An Overview.

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    Aung San Suu Kyi in stand-off with court, refused to pay a fine

    Rangoon, Feb 21 (AFP) - Burma's democracy leader Aung San Suu Kyi was in a stand-off Friday in a Rangoon court, refusing to pay a fine after it found her guilty of wrongfully restraining her cousin earlier this year.

    "Aung San Suu Kyi was today fined 500 kyat (50 US cents at blackmarket rates) in lieu of seven days in jail for unlawfully preventing her cousin from entering their compound," Aung San Suu Kyi's lawyer Nyan Win told a press conference at Bahan township court.

    "Aung San Suu Kyi is presently at the court refusing to pay the fine, saying it was an unfair judgement. She said she would rather go to jail than pay the fine, which resulted from an unfair trial."

    Last May, Aung San Suu Kyi filed a complaint against her cousin Ko Soe Aung at the court for physically assaulting her, the lawyer said.

    Two months later Ko Soe Aung filed a complaint against her for wrongfully preventing him from entering the compound where they both lived, the lawyer added.

    "Ko Soe Aung was also fined today 1,000 kyat in lieu of one month in jail," the lawyer said.

    Aung Shwe, chairman of her National League for Democracy party called verdict ''politically motivated.''

    The government said in a statement that the ''lenient'' sentence was suspended until a higher court could review the decision.

    Suu Kyi sued her cousin in May for allegedly punching her in the face during a dispute over changes Soe Aung made to the property while the opposition leader was serving 19 months of house arrest, party officials said.

    The court has been hearing both cases since July and delivered its verdicts Friday.

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