Wednesday, July 22, 2009

Tycoons close to junta to disburse agri loans

Burma's new banking system
"Cronies' Agricultural Investments
we lend you the money,
we own your land
a new development instructed by Junta"
-- Jeg's quote
Rangoon (Mizzima) – The Burmese military junta has instructed 25 companies owned by top business tycoons, close to the regime, to disburse agricultural loans to farmers.

Businessmen, known to be cronies of the junta’s generals, dealing in rice have been asked to provide agricultural loans of Kyat 50,000 [approximately USD 50] to 100,000 per acre to farmers in Irrawaddy and Pegu Division at 2 per cent of interest rates per month.

According to the Myanmar Rice Producers’ Association, top businessmen like Zaw Zaw of Max Company, Chit Khaing of Aden Construction Works, Khin Shwe of Zay Kabar Company are leading the consortium of companies, businessmen and farmers in providing the loan.

A businessman, who is a partner of Gold Delta Company specializing in rice, led by Aden Chin Khaing said that they were assigned to provide production costs, technology and farm implements to rice producers on behalf of the junta.

“Of these 25 companies, some are owned and run by a single person. Some are in partnership with two or three companies,” he added.

“Gold Delta comprises 21 companies. Almost 30 local businessmen and farmers from Dahnuphyu are among them. We will start our business with a total paid up capital of Kyat 10 billion,” he said.

But some companies such as Htoo Trading and ‘Union of Myanmar Federation of Chamber of Commerce and Industry’ (UMFCCI) Chairman Win Myint are into the business as sole traders with their own capital, the businessman said.

Htoo Trading Co. Project Director Ye Min Oo said that their company has invested Kyat 3 billion in the business. Local businessmen from Bogale invested Kyat 2 billion in the business and will provide agricultural loan of Kyat 50,000 per acre.

Gold Delta Co. headed by ‘Aden’ Chit Khaing invested Kyat 10 billion and will provide loans of Kyat 100,000 per acre to the farmers in about 500 villages.

Following the foot-step, several other businessmen have began setting up companies with names such as Kyaiklat Rice Producing Co. owned by Dagon International Co. in Kyaiklat Township, Irrawaddy Agricultural Development Co. owned by ‘Yuzana’ Htay Myint in Pyapon Township, Max Myanmar Co. owned by Zaw Zaw in Yekyi and Ah Thote Townships, Shwe Nagar Min Co. owned by Win Myint in Myaungmya Township, a company owned by Wady in Maubin.

But a few businessmen in Burma views the new initiative as the junta’s effort to soothe the anger of farmers, who have accused the government of failing to provide assistance, and to allow a few businessmen, whom the junta has selected as candidates for the 2010 election, to be able to campaign for the election.

Most of the businessmen involved in the consortium are blacklisted in the US and EU economic sanctions against Burma. US have announced the names of over 100 businessmen, whom they called are providing financial lifeline to the junta, under the list.

In the wake of the brutal crackdown against peaceful demonstrators in the 2007 September saffron revolution led by monks, where scores of protesters were killed and thousands of activists arrested, the US and EU imposed targeted sanctions against State owned enterprises, the top echelon of the junta, protégés of the junta and their business networks.

Following the devastating Cyclone Nargis, which destroyed paddy fields and inundated many more with sea water, farmers find low yields in their work. While some farmers have welcomed the loan programme, many worried that they might be asked to payback with their paddy products at a reduced price.

Farmers said, they have bitter experiences in the past, where they took loans from businessmen, local army units and even local authorities in exchange for their paddy products. But they were forced to give their products at a much lesser rate then in the market.

In some cases, famers who are unable to repay their loans and do not have a good yield of paddy, they are forced to surrender their land for the loan they have taken.

Farmers from Thakan village tract on Bogale-Pyapon highway said that some of the farmers in their areas dare not take loans even at cheap interest rates.

But a project director at ‘Htoo’ Trading Co. told Mizzima, “The businessmen are doing this because they have been directed by the State. We don’t expect any economic benefits from the farmers. Two per cent interest rate is nothing for us.” (JEG's: of course 2% is nothing to cronies as they are taking the land which is worth a lot more)

Sources at the Ministry of Economics and Commerce said the government have instructed the companies dealing in rice, that they could export rice only after deducting the amount allotted for sales in the region.

A former executive committee member of the UMFCCI told Mizzima, “We are doing this mainly because of pressure from seniors [junta’s high officials]. We have no intention of extracting profit from the farmers. Our main concern is free export of rice. In this country, authorities, if we follow their instructions usually give us other business opportunities.”

He said, besides, farmers would be thankful to the businessmen for providing loans and could gain their support, which could serve as a campaign for the upcoming 2010 election. (JEG's: elections campaign aha?...)

Sources at the Myanmar Rice Traders Association said Burma set the target of rice export at maximum 1.5 million tons for the this fiscal year - April 1, 2009 to March 31, 2010. Burma was able to export over 658,000 tons of rice in the 2008-09 fiscal year.

While Burma’s export quality rice contains about 25 per cent of broken rice, it cost about USD 320 per ton in the export market. Over 80 per cent of Burma’s exports in rice goes to African countries.

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