A tangled web of cronyism and corruption awaits foreign telecom
companies investing in the development of Burma’s mobile telephone
network, an international business risks report warns.
The state-controlled Myanmar Post and Telecommunications (MPT), which
will oversee the development, “appears to have preferential
arrangements” with a clutch of Burmese businesses linked either to
current influential politicians or the former military regime, said
Maplecroft, a UK-based research and strategic forecasting company.
It named Burmese firms Red Link Communications, owned by the two sons
of Shwe Mann, speaker of the Union Parliament; Forever Group, whose
chief executive Winn Maw is an adviser to the Information Ministry; and
SkyNet, owned by Shwe Than Lwin Company, which had strong links with the
former military regime and also has partnerships with the Information
Ministry, notably in a broadcasting venture.
Red Link is a phone networking services business. SkyNet operates
satellite television services, especially international football
matches.
“Such vested interests preclude the existence of a level playing
field, and, as a result, investors are forced to partner with local
businesses heavily engaged in corrupt business practices,” said
Maplecroft’s report “Risks Await Entrants into Myanmar’s Telecoms
Market,” seen by The Irrawaddy this week.
It described the MPT as “one of the most corrupt institutions in Myanmar.”
The main licenses to develop Burma’s mobile telephone infrastructure
were awarded in June to Ooredoo of Qatar and Norway’s Telenor from a
bidding list of 11 shortlisted companies. Telenor is majority-owned by
the Norwegian government.
They have been set a target date of 2016 to expand Burma’s mobile
telephone network to reach 80 percent of the estimated 55 million
population. At present only 5 percent of Burmese have access to a phone,
mobile or fixed, MPT has said.
However, official figures do not include a “sizeable black market in SIM cards and internet services,” said the report.
“Investors working with business conglomerates owned or backed by the
military in [Burma] are at particularly severe risk of association with
illegal or unethical practices,” says the report.
“Companies may find that their vendors or sub-contractors in [Burma]
are controlled by the military-owned Myanmar Economic Corporation (MEC)
or the Union of Myanmar Economic Holdings Limited (UMEHL). Both
conglomerates are notorious for corruption, unethical business
practices, use of forced labour and other human rights abuses.”
“A parallel cause for concern is the announcement in late July 2013
that MPT would award a telecom license to MEC. The entry of MEC is
likely to skew the telecoms market, given that [it] could benefit unduly
in terms of access to infrastructure and speedy government approvals,”
said Maplecroft.
Telenor Myanmar began an employee recruitment program in August, with
some reports saying the company could provide jobs for up to 3,000
Burmese. However, two thirds of jobs would be for service and sales
vendors who “will be employed by partner companies,” the firm said.
“Telenor Myanmar is adopting a multi-phased approach that is aligned
with its business plan and that will enable the company to recruit
resources in a way that matches its business milestones,” a company
statement said in August.
The first phase of recruitment running until the end of September
will “focus on the company’s immediate need for experienced,
management-level candidates to build up a strong leadership team that
will be responsible for developing strategies and managing the company’s
commercial launch and roll-out”.
Many of the senior management now with Telenor Myanmar in Rangoon
have been sent from the Norwegian firm’s subsidiary, DTAC, Thailand’s
second-biggest mobile phone network provider based in Bangkok.
They include Prathet Tankuranun, appointed chief technology officer
for Telenor Myanmar; Sharad Mehrotra appointed chief marketing officer;
and Tipayarat Kaewsringarm as head of personnel, Bangkok’s The Nation
newspaper reported.
Ooredoo said in mid-August it was still assembling a senior management team in Burma.
Both Telenor and MPT have signed equipment supply agreements with a
controversial Chinese electronic equipment maker, Huawei Technologies.
“Huawei has repeatedly come under fire in Western countries over
suspicions of links to the Chinese government and being involved in
espionage,” the International Business Times reported in August.
“Last fall, the US House Intelligence Committee issued an extensive
report discouraging American companies from buying Huawei equipment.
Last year, Australia banned the Chinese company from bidding for its
national broadband fiber network because of security concerns.”
There is no direct evidence of Huawei being controlled by the Chinese
government, but it has periodically been given state financial support
and has expanded enormously to become the world’s biggest
telecommunications equipment maker after overtaking Ericsson of Sweden
in 2012 in terms of turnover and production.
Huawei describes itself as a collective owned by its workforce of 140,000 worldwide.
There have been reports, though not confirmed, that Ooredoo is negotiating with Huawei.
Senior management at Telenor Myanmar and Ooredoo could not be reached to comment on the Maplecroft risks report.
In August, Ooredoo’s senior manager in Burma, Ross Cormack, said his
company intended to work to demonstrate a “strong commitment to
corporate responsibility.
“We will work hard to make a difference in all of the communities
across [Burma] and to care for the wellbeing of our customers,” Cormack
said.
Ooredoo has pledged US$60 million in “corporate responsible
investment” in Burma over the next ten years in education and health
care.
source: The Irrawaddy
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