SlideShare a Scribd company logo
1 of 8
Download to read offline
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
1
Asia Pacific
Bulletin
Issue 2 / November 2015
Regional news
India: Hungry for gold
Myanmar’s tech start ups
The Trans-Pacific Partnership
Infighting in Japan’s criminal mafia

S-RM
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
Regional news
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
1
Japan
In October, Japan’s Prime Minister, Shinzo Abe,
visited the USS Ronald Reagan during Japan’s
Maritime Self-Defence Force Fleet Review
exercise. This was the first time a Japanese
prime minister had visited a US aircraft carri-
er, and signifies the Japanese government’s
commitment to a more activist defence police.
While unpopular domestically, the reinterpreta-
tion of Japan’s constitution to make it easier for
Japanese troops to fight in overseas conflicts
has been welcomed by the US and other allied
countries, as it will enable Japanese participa-
tion in foreign combat operations. China and
South Korea expressed disappointment after
Abe did not issue a fresh apology at a war an-
niversary speech in August, and in October,
South Korea issued a statement criticising the
visit of two Japanese ministers to the contro-
versial Yasukuni Shrine in Tokyo, where a num-
ber of Japanese war criminals are honoured.
Pacific Islands
Concerns are growing about climate migration,
specifically relating to the impact of rising sea
levels on low lying atoll-island nations. Tuvalu, a
former British colony comprised of nine islands,
has been particularly affected by environmental
disasters; with no point in the country higher
than 4.5 metres above sea level, even minor
changes in sea levels could force thousands
of people to emigrate. Kiribati, another former
British colony located near the International
Date Line, is widely considered to be in signif-
icant danger of disappearing altogether, with
some environmental analysts predicting it will
be completely submerged by 2040. Talks about
a cohesive regional migration strategy are likely
to be a high priority for all countries in the re-
gion over the coming years.
Indonesia
A year into his administration, support for Indo-
nesia’s president, Joko ‘Jokowi’ Widodo, has
plummeted, with 54 percent of respondents in
34 provinces dissatisfied with his performance
according to a recent survey. Jokowi came to
office with the pledge of improving the liveli-
hood of all Indonesians. With economic growth
in the second quarter at 4.67 percent - the
slowest in six years - and an unresolved air
pollution crisis affecting the west of the coun-
try, Jokowi’s first year is seen as disappointing
by many Indonesians. Internationally, human
rights groups and foreign governments have
been angered by Jokowi’s continuation of ex-
ecutions for drug offences and zero tolerance
stance towards peaceful political protestors in
Papua and the Moluccas.
Malaysia
The United Malays National Organisation
(UMNO) will hold its annual general assembly
over three days in early December. It will be
important as a symbolic battleground for a na-
tion that has become increasingly divided over
ethnic and racial lines in the wake of the 1MDB
scandal, in which it has been alleged that the
Prime Minister, Najib Razak, embezzled around
$700 million of state funds. Najib Razak is the
president of UMNO, the largest political party
in Malaysia, whose guiding ideology is to rep-
resent and protect indigenous Malay culture.
The 1MDB scandal has led to protests by both
pro-government Malay “red shirts” and the
Bersih movement, which has had support from
a larger number of ethnic Chinese.
Mongolia
China’s slowdown is having particularly visible
effects in Mongolia, which counts China as its
largest trading partner. In 2014, a staggering 88
percent of Mongolia’s exports ended up in Chi-
na, most of which are commodities, including
coal. Falling revenue from these products has
worsened the prospects of Mongolia’s already
weak economy and has forced the government
to consider austerity measures. In October
the Mongolian finance minister announced
planned public sector job losses and salary
cuts, in addition to the possible sale of shares
in state-owned companies. Previous govern-
ments have made efforts to reduce Mongolia’s
reliance on mining commodities, but to no avail.
Taiwan
On 7 November Chinese president, Xi Jinping,
and Taiwanese president, Ma Jing-yeou, were
pictured shaking hands after a historic meeting
– the first time that the presidents of China and
Taiwan have met in over six decades. Ma leads
the nationalist Kuomintang (KMT) Party in Tai-
wan, and since taking office in 2008 he has
been pushing policies to strengthen Taiwan’s
diplomatic and economic relations with China,
but opposition politicians in Taiwan favour inde-
pendence from Beijing’s rule. Some believe Xi
agreed to engage in talks in order to sway the
vote in favour of the KMT in Taiwan’s January
2016 presidential election. However, in 2014 lo-
cal elections the KMT suffered a heavy defeat,
showing signs that the Taiwanese public may
reject closer ties with China.
Nepal
In September 2015, Dr Ram Baran Yadav, the
president of Nepal, adopted the country’s first
democratic constitution. The constitution,
which took seven years to complete, was met
with extensive public opposition in the weeks
prior to and post its adoption, with protests
reportedly resulting in the deaths of approx-
imately 40 to 45 citizens. The main criticism
of the constitution is its federal structure that
divides Nepal into seven provinces. Minority
communities, such as the Madehsi groups in
southern Nepal, feel that federal division of Ne-
pal will further marginalise them, resulting in
inadequate political representation. Opposition
groups have also included Nepalese Hindus,
who staged demonstrations demanding that
the constitution establish Nepal as a Hindu na-
tion. This demand was not met, and the consti-
tution that has been adopted is secular.
India
In late October 2015, the third India-Africa Fo-
rum Summit was held in New Delhi. Senior of-
ficials from 54 African countries attended, with
41 African countries represented by their heads
of state. India is trying to position itself as an
alternative trade partner to China, with a “Make
in India” initiative aimed at reviving its manufac-
turing sector. The India-Africa Forum Summit
was launched in 2008 and since then two-way
annual trade has doubled to $72 billion. India is
also keen to agree contracts for extract of natu-
ral resources with several African countries: In-
dia’s state-run Oil and Natural Gas Company is
looking to buy $12 billion in foreign assets over
the next three years, and India is also in talks
with South Africa to buy coal mines to supply
its steel industry.
Myanmar
On 8 November, Myanmar held its first demo-
cratic general election in 25 years. The election
followed a series of reforms introduced by the
government and the opening up of the country
to foreign investments. Though official results
have yet to be officially announced, the coun-
try’s largest opposition, the National League
for Democracy (NLD), led by Aung San Suu
Kyi, has so far won over 80 percent of the vote.
These results set Suu Kyi on course to form the
next government and end more than half a cen-
tury of military rule in Myanmar. However, Suu
Kyi is blocked from assuming the presidency by
a clause in the constitution concerning foreign
citizenship of family members. Parliament will
choose the next president of Myanmar in early
2016. ♦
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
2
To decrease costly gold imports, the Indian
government is promoting financial schemes
to lure locals away from buying physical gold
and is simultaneously looking to increase its
domestic supply of the precious metal
With an average economic growth rate of
7.2 percent over the past five years, India’s
demand for gold has risen significantly. India is
the world’s largest consumer of this precious
metal, and whilst India was once a prominent
players in gold mining production during the
1850s, rising costs and dwindling resources
mean that most of India’s gold mines closed
in the twentieth century. Importing between
800 and 1,000 tonnes of gold annually, large
gold imports today account for almost a third
of India’s trade deficit. As a result, the Modi
government is exploring various options to
decrease this deficit, including implementing
financial schemes to lure Indians away from
buying physical gold and increasing the
country’s domestic supply through the revival
of the local mining industry.
Though gold is viewed as an attractive metal
around the world, India’s appetite for it is
insatiable. Despite fluctuating gold prices,
many Indians reportedly consider gold to be a
sound investment and form of financial security
as it can be resold during difficult economic
times. It is also viewed as a status symbol and
is frequently displayed at weddings and social
events. Numerous temples house millions of
US dollars’ worth of gold, as wealthy Hindus
regularly donate gold jewellery, coins, bars,
and ornaments to temples. An estimated 3,000
tonnes, more than two thirds of the gold held
in the US bullion depository at Fort Knox, is
currently stored in India’s temples.
Successive governments have attempted
to curb India’s appetite for gold. Recently, in
September 2015, the Modi administration
introduced a gold monetisation scheme (GMS)
and sovereign bond financial plan to reduce
the consumption of this precious metal. These
initiatives form part of the government’s plan
to recycle gold for productive use, ween
INDIAN ECONOMY
Hungry for gold
By MANDIRA BAGWANDEEN
To decrease costly gold imports, the Indian government is trying to stop locals
buying physical gold whilst also increasing the country’s domestic supply
people away from investing in physical gold,
and reduce costly imports. The GMS, which
is essentially a fixed deposit scheme, allows
individuals and temples to open a ‘gold savings
account’ through which they can deposit their
physical gold assets and earn interest on the
assessed value of their bullion or jewellery. The
sovereign gold bond (SGB), on the other hand,
targets those individuals who purchase gold
bars as an investment asset. It is estimated
that Indians buy 300 tonnes of gold bars every
year. The objective of the SGB is therefore
to dematerialise the gold so that investors
are indifferent as to whether their assets are
held as physical gold or bonds simply linked
to the gold price. Ultimately, the bonds have
the same benefits as gold, can be used as
collateral for loans, and can be sold or traded
on stock exchanges in a dematerialised form.
While there has been significant hype over this
gold monetisation plan, the failure of a similar
scheme in 1999 due, in part to low financial
interest rates, raises doubts as to whether it
will be successful.
Aside from financial schemes, the government
also plans to increase the country’s domestic
supply of gold. The Ministry of Mines wants
to revive India’s mining industry to reduce its
gold import bill as India currently produces less
than two tonnes of gold per year and reportedly
has only one working mine. According to
the government, within a few months, an
estimated 80 old mining tenements will be
auctioned off to local and foreign companies
that can renovate the old mines and provide
the necessary equipment for them to operate
safely again. In addition to auctioning off
old mines, the Ministry of Mines is pushing
to revive the Kolar Gold Fields (KGF) in the
southern state of Karnataka. The KGF, once a
hub of gold mining activity, was closed in 2001
due to increasing losses and depleting reserves.
However, the government is now looking to re-
work Kolar’s hills as a state assessment has
indicated that an estimated £2.5 billion ($3.9
billion) worth of gold is believed to be housed
in the region. Because reopening one of the
world’s most famous gold mining districts after
15 years would require a substantial amount
of investment, there is much uncertainty as to
whether the abandoned and neglected mines
can actually be revived. Indeed, the reopening
has been touted by numerous governments
several times but has failed given legal hurdles
over ownership.
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
3
In light of these concerns, coupled with the
mining sector’s reputation for not only having
tedious license and permit processes but
for extensive fraud and corruption, there are
doubts as to whether India will be able to
successfully revive its gold mining industry.
Furthermore, while the gold monetisation plan
In October, trade ministers from 12 Pacific Rim
countries agreed to the largest trade accord
in history, the Trans-Pacific Partnership (TPP).
The combined economies of its members (the
US, Japan, Malaysia, Vietnam, Singapore, Bru-
nei, Australia, New Zealand, Canada, Mexico,
Chile, and Peru) account for around 40 percent
of the world economy. However, with a trade
agreement as encompassing in scope, and
with objectives as ambitious as the TPP, it is
inevitable that issues regarding implementation
and enforcement will arise. Furthermore, with
a deal attempting to represent the competing
interests of 12 countries, it is inevitable that not
all members will derive equal benefit.
Countries whose primary exports consist of
goods and services in the automotive, agri-
culture, clothing and textiles, and electronics
sectors are expected to receive significant
benefit from the TPP. As a result, the US, Ja-
pan, Vietnam, Australia and New Zealand are
touted as the primary beneficiaries of the deal.
Whilst many suggest that US farmers and Jap-
anese car manufacturers stand to receive the
most benefit from the deal, regional research
institutes have indicated that Vietnam is set to
prove the biggest “winner” of the TPP. Current-
ly, the US remains Vietnam’s largest market for
its primary export, clothing and footwear, with
imports of these goods currently taxed be-
tween 17 and 32 percent by the US authorities.
Therefore, a tariff-free access to the US textile
market, would result in significant commercial
gains in Vietnam, with experts anticipating
income gains of 14 percent and an export in-
crease of 32 percent.
Non-TPP members are expected to experience
challenges. The main concern stems from the
possibility that trade may be diverted away
from non-TPP members, given the reduced
trade tariffs enjoyed by TPP members. In the
case of South Korea, shares in Hyundai Motor
Company and Kia Motors Corporation, both
South Korea-based car manufacturers, fell by
five percent following the TPP agreement an-
nouncement. The drop in share price is widely
attributed to concerns over Japan’s new com-
petitive advantage over South Korea within the
US automobile market, in the form of reduced
export tax. Furthermore, countries such as
Bangladesh, Cambodia, Pakistan, Sri Lanka
and India are expected to experience increased
competition from Vietnam with regards to tex-
tile exports to the US.
The US government has made much of the pro-
gressive and enforceable nature of the TPP’s
proposed labour-related guidelines, anti-corrup-
tion measures and limitations on state-owned
enterprises (SOEs). On labour, TPP-members
are required to meet labour standards as set
out in the International Labor Organization’s
PAN-PACIFIC COMMERCE
The Trans-Pacific
Partnership
By ASHLEIGH SOMAROO
It will be difficult to get national approval for the Trans-Pacific Partnership
agreement, and even harder to enforce the fine print.
is promoted as a way for Indians to be savvy
with their gold assets, possessing physical gold
is traditionally ingrained in Indian society. Thus,
unless interest rates are very attractive, it may
prove to be challenging to encourage Indian’s
to part with their gold assets and ultimately
decrease the trade deficit. ♦
(ILO) Declaration on Fundamental Principles
and Rights at Work. US officials have repeated-
ly stressed that these proposed standards on
labour are enforceable. TPP members are also
required to accede to or ratify the UN Conven-
tion Against Corruption. Additionally, members
are required to adopt legislation and regulation
which criminalise bribery and deter potential
conflicts of interest. Lastly, the TPP includes
provisions to reduce the leverage wielded by
SOEs when competing for public procurement
contracts. Specifically, the US government has
stated that the TPP will include the “first-ever
disciplines to ensure that SOEs compete on a
commercial basis”.
These provisions are widely regarded as ambi-
tious. For instance, enforcing ILO standards on
countries such as Vietnam and Brunei would
require a legislative overhaul given the issues
of worker exploitation and widespread use of
child labour in these countries. Furthermore,
this provision may prove challenging for mem-
bers who rely on cheap labour to attract for-
eign investment. On the issue of corruption,
the majority of TPP members do not have
effective anti-corruption measures in place,
particularly in Mexico, Peru and Vietnam. With
regards to limitations on SOEs, the TPP is un-
clear on its proposed mechanisms to curb un-
fair advantage maintained by SOEs. Countries
such as Malaysia, which rely on the use of its
state-funded trade initiatives and SOEs such
as Petronas, a state-owned energy company,
have stated that their SOEs would be “exempt-
ed” from the TPP. Other member countries
have yet to agree.
Official US documentation on the TPP has re-
peatedly emphasised that these provision will
be “enforceable”, especially provisions relating
to labour and corruption, but no clear indication
has been provided on how contraventions of
these provisions will be settled. The invest-
ment chapter of the TPP includes a provision
for the use of a private arbitration system to
settle disputes between companies and mem-
ber states in the event that a contravention of
the TPP results in losses. However, discus-
sions have not started on the composition or
location of this private arbitration system. This
may prove challenging for members as repre-
sentatives have to pass the TPP through their
respective legislatives. This will prove particu-
larly difficult, due to TPP’s apparent implica-
tions on national sovereignty. ♦
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
4
JAPANESE LAW AND SOCIETY
Infighting in Japan’s
criminal mafia
2015 should have been a good year for Japan’s
largest crime syndicate, the Yamaguchi-gumi.
With an estimated yearly revenue of $6.6 bil-
lion, mostly generated from drug trafficking,
the gang is the second wealthiest group of its
kind worldwide (the richest – the Russian Solnt-
sevskaya Bratva – is thought to make roughly
$8.5 billion a year). On the centenary of its
foundation however, infighting at a senior level
looks set to rip the Yamaguchi-gumi apart.
The term ‘yakuza’ is several hundred years old,
and denotes both gangsters and the groups
they belong to. It is believed to be derived from
the Japanese for ‘eight nine three’, the losing
hand in Japanese card game oicho-kabu, a ref-
erence to the gambling sector which remains
a cornerstone of organised criminal activity in
Japan. Unlike their counterparts in China, the
yakuza operate semi-openly, and are immedi-
ately identifiable by their pompadour hairstyles,
tinted-glass black Mercedes and full body tat-
toos – or irezumi – which are administered us-
ing non-electrical handheld tools.
Members are generally feared and shunned by
the wider Japanese society, and while the Rob-
in Hood-image they promote was bolstered
by high profile aid efforts following the Kobe
Earthquake in 1995 and the Tohoku Earthquake
in 2011, most Japanese citizens avoid unnec-
essary interaction with the yakuza; it is com-
mon for instance for public baths not to allow
entrance to anyone with tattoos in attempts to
limit contact with criminals.
These explicit demonstrations of identity and
the yakuza obsession with tradition are per-
haps attempts to conceal short histories with
uninspiring lineages. The relative peace of the
Tokugawa Period (1603 – 1868) left the samu-
rai classes largely unable to use their fighting
skills to generate revenue. While upper-level
samurai were granted bureaucratic and military
positions for local feudal lords, masterless sam-
urai – or ‘ronin’ – were forced to rely on other
means to make a living, like banditry and the
running of protection rackets. It wasn’t until the
Taisho Period (1912 – 1926) that many of the
gangs around today were formed, when the
demand for blue-collar workers transformed
the architecture of Japanese labour structures
and small fraternities of workers and bosses
began to develop. By the mid-20th Century,
well-established rival gangs had emerged,
each with elaborate rituals, rigid hierarchies
and strictly enforced rules, like ‘yubitsume’, the
requirement to cut off one’s finger to atone for
wrong doing. By the 21st Century, the Yama-
guchi-gumi accounted for 50% of all yakuza in
Japan, far outweighing rival gangs the Sumi-
yoshi-kai and the Inagawa-kai, and at the start
of 2015 it seemed very unlikely the empire
could crumble.
The current squabble revolves around Shinobu
Tsukasa, the Yamaguchi-gumi’s kingpin since
2005, who has been accused of giving pref-
erential treatment to the Kodo-kai, a disliked
Yamaguchi affiliate he founded in 1984, whose
persistent refusal to cooperate with police is
reportedly at least partially responsible for the
recent government anti-yakuza drive. Perhaps
even more offensive to Yamaguchi’s conserv-
ative clique, Tsukasa supposedly planned to
move the gang’s headquarters from Kobe –
where it has been based since 1915 – to Na-
goya, a city 215 kilometres east where Tsukasa
started his yakuza career in 1962.
More than 3,000 members have defected to
the newly-formed Kobe Yamaguchi-gumi un-
der the leadership of Kunio Inoue, a former sen-
ior figure in the Yamaguchi-gumi, best known
for having been the target of a grenade attack in
2010. Inoue has accused Tsukasa of “extreme
egoism”, and has claimed the principal reason
for the defection was to honour the wishes of
former Yamaguchi-gumi leaders.
The split has sparked national fears of sword
fights, drive-by shootings and pitch battles on
the streets of Kobe – exacerbated by the myste-
rious fatal shooting of a Yamaguchi boss in late
October – and with good reason. From 1985
to 1989 the Yamaguchi-gumi entered a conflict
with the Ichiwa-kai, a breakaway yakuza gang
formed after a succession crisis following the
deaths of two Yamaguchi bosses in the early
1980s. On 26 January 1985, Hiroshi Yamamoto
– who had been beaten to the position of ku-
micho by Masahisa Takenaka – sent a hit squad
to assassinate his rival at Takenaka’s girlfriend’s
home in Osaka. The killing ignited the Yama-
Ichi War, in which 36 yakuza members were
killed in over 200 gun battles. The conflict was
resolved through negotiations arbitrated by the
Inagawa-kai, a neutral Tokyo-based gang, and
the Ichiwa-kai was ultimately disbanded.
By SAM NALLEN-COPLEY
On the centenary of its foundation, infighting is threatening the existence of
Japan’s most notorious crime syndicate.
source Photo via Flickr, user Sushicam
Things have changed since the ‘boom’ years
of the 1980s however, and lessons have been
learned; samurai ethics and blood oaths may
still feature in Yamaguchi propaganda – acces-
sible to all via their website, which includes a
poetry page – but the organised crime world
essentially revolves around money, and war
isn’t cheap.
In 2004, Japan’s Supreme Court ruled that
organised crime syndicates’ leaders were li-
able for damages incurred by any members
of their organisations. These laws were intro-
duced after a court ordered Yoshiori Watanabe,
Tsukasa’s predecessor, to pay 80 million yen
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
5
MYANMAR ECONOMIC DEVELOPMENT
Myanmar’s mobile
tech start-ups
The rapid development of Myanmar’s tele-
communications sector is arguably one of the
most significant modernising influences to
penetrate the nation’s economy since liberali-
sation began in 2010. Telenor, the Norwegian
telecommunications giant, has raced ahead of
competitors to take the largest chunk of the
market. Less than a year after setting up shop
in August 2014, the company had lured more
than 10 million subscribers out of a total nation-
al population of around 55 million. By the most
recent estimates, only around 30 percent of
Myanmar’s population have access to a mobile
phone. It is easy to see that this ‘blue ocean’ of
untapped market space, coupled with a track
record of exponential growth, heralds a poten-
tially rich future for the mobile tech industry in
Myanmar.
After decades of severely restricted internet
access, locals have bypassed agonisingly slow
dial-up connections and been catapulted into
an age of mobile browsing at the touch of a
button. As mobile usage grows, so will a de-
mand for innovative software and localised
By ANNA BEARE
Small start-ups are big in Myanmar’s mobile tech industry
mobile app content. However, due to the
risks involved, only a slow trickle of interna-
tional tech start-ups are attempting to fill this
market void. MySQUAR, which is developing
Myanmar’s first local language social media
and entertainment apps, recently raised £1.67
million after listing on the London AIM stock ex-
change. Rocket Internet, a large German-head-
quartered internet company, has helped to
launch several e-commerce platforms in the
country, including automobile trading and prop-
erty listing platforms. It is hard to name many
more heavyweight international contenders in
the industry. Furthermore, the sector can be
difficult to penetrate. The chief executive of
MYSQUAR has made it clear that the company
doesn’t expect to break even until 2018, and its
flagship MyChat app will inevitably face stiff
competition from WhatsApp, which is owned
by Facebook. Many of Rocket Internet’s online
platforms are also competing with locally-de-
veloped equivalents.
There are signs that a future is emerging for
local entrepreneurs in the mobile tech arena.
Myanmar is home to a host of nascent soft-
ware development companies, such as Rebbiz,
which operates several online classifieds por-
tals such as Myanmar Cars DB, NEX, which
has developed various localised mobile apps
including a Burmese language keyboard, and
Code2Lab, which has developed SmartSales,
a tablet-based system designed to streamline
the restaurant billing and ordering process.
Many of these start-ups have sourced fund-
ing regionally. In November 2014, NEX won a
$150,000 investment from a Singapore-based
angel investor. Rebbiz relies on funding from
Frontier Digital Ventures, a Malaysia-based in-
vestor in online classifieds businesses.
It may be that many bigger mulitnational inves-
($740,000) in damages following the kill-
ing of an off-duty police officer by Yama-
guchi-gumi members. In 2008, Tadamasa
Goto, a senior Yamaguchi figure, was held
responsible for the murder of a real-estate
agent carried out by his men, and was
forced to pay 110 million yen ($1.4 million)
in damages.
In October 2011, Tokyo enacted a local
governmental anti-yakuza measure which
prohibits company owners from knowingly
conducting business with organised criminal
gangs, with penalties ranging from the com-
pany’s name being revealed to the public to
heavy fining and prison time.
The full effects of this have not yet been
felt, and the long term implications could be
disastrous for yakuza groups, many of which
have traditionally relied heavily on an racket-
eering method known as soukaiya to extort
money out of executives from Mitsubishi,
Nikko Securities and other well-known cor-
porations. Soukaiya usually entails the black-
mailing of executives with threats to reveal
embarrassing – and often fictional – com-
pany secrets. The potential shame of being
outed by the government for paying soukai-
ya fees however may outweigh the threat
from claims by gangsters, who are known to
make money through dishonesty.
There is nothing stopping Japan’s parlia-
ment going even further, and if criminal syn-
dicate members step up the violence, the
Japanese authorities are likely to respond
with force, fining more heavily or even clos-
ing down headquarters and arresting boss-
es for the crimes of their foot soldiers. This
would mean the end for all organised crimi-
nal groups in Japan, the worst case scenario
for Yamaguchi members on both sides of
the divide.
Memories of the Yama-Ichi war and tales
of Tsukasa’s exploits, who served 13 years
in prison for murdering a rival with a sam-
urai sword, will certainly feature in Japan’s
broadsheets in the coming weeks, but the
yakuza themselves – if they are to survive
– will have to fight with snide remarks, os-
tentatious usage of the gang emblem and
acerbic poems in their self-published mag-
azines. ♦
S-RM: ASIA PACIFIC BULLETIN
NOVEMBER 2015
6
tors do not have the risk appetite for a market
which is still young and fraught with challeng-
es. Running a business from Myanmar can be
extremely frustrating. Mobile usage may be
growing, but technical infrastructure is still very
underdeveloped. Locally-operated start-ups
face daily setbacks, such as frequent black-
outs and intermittent broadband connections.
The price of rent is also often prohibitively high
for early stage start-ups, and there is a distinct
lack of skilled IT specialists and software de-
velopers. Once trained, practitioners often
flock overseas in search of higher pay. Anoth-
er reason for reticence may be the problems
associated with adapting technologies to suit
local conditions in Myanmar. For example, the
most widely used method for coding the Bur-
mese script is not compatible with Unicode,
the international text encoding standard. This
means that many local language websites are
not easily searchable via Google, and locally
developed mobile apps aren’t compatible with
mainstream app stores. Access to finance can
also be a barrier to the growth of mobile e-com-
merce. The majority of the Burmese population
is underbanked, which is an obvious hindrance
to the development of online payment facilities.
Nevertheless, many hardy start-ups are tackling
these obstacles head on. MYSQUAR has been
encouraging local mobile phone technicians to
upload its MyChat app onto new phones when
they install the Burmese text code, which isn’t a
default preinstalled language on most phones.
MyChat predicts that it will have 1 million ac-
tive users by the end of 2015. Companies such
as NEX bolster their income by seeking clients
outside of Myanmar, in places such as Singa-
pore, where they can offer competitive prices
for their website and app building services due
to relatively lower labour costs.
The uncertainty generated by November’s elec-
tions and a challenging business environment
have cast a shadow over investment prospects
in Myanmar as a whole in 2015. The success of
mobile tech start-ups, most of which are in the
early stages, also remains to be seen. But the
growth of the mobile tech industry is inevitable.
If the somewhat ambitious government figures
are to be believed, then mobile penetration is
expected to reach 85-90 percent of the popu-
lation by 2016, from the current 30 percent. It
may be worth playing the long game. ♦
S-RM combines business intelligence and risk consulting, helping our clients to understand
the risks to their business and to develop the best means of mitigation.
S-RM’s Business Intelligence division gathers, analyses and assesses information to
inform our clients and help them to manage risks efficiently. Specialist regional teams
combine expert open-source analytical skills with ground truth from our consulting teams
and local contacts to provide clear, actionable intelligence to clients, quickly and objectively.
Business Intelligence advises clients worldwide on integrity risks (e.g. AML, ABC), disputes
and litigation, and changing political and business environments. Business Intelligence’s core
services are integrity due diligence, investigations, and political and country risk reporting.
S-RM’s Risk Consulting division enables organisations to understand and mitigate their
security and operational risks. Our solutions are agile, innovative and tailored to our client’s
specific needs. Our aim is to reduce uncertainty and to deliver a commercial advantage.
Risk Consulting’s in-house specialists have a deep understanding of operational risk, cyber
security and the offshore operating environment. Our core services are consultancy services,
security risk management and cyber risk management.
ASIA PACIFIC
S-RM has a strong Asia Pacific team, and our analysts have spent several years living
and working in the region, including in China, India, Japan, Pakistan, Sri Lanka, Malaysia,
Indonesia and Papau New Guinea. We have in-house language capabilities in Chinese and
Japanese, and our close network of associates provides us with expertise in the full range of
Asian languages and a local footprint in more than a dozen countries in the region. We work
with a range of clients across Asia, including multinational companies, law firms, banks, and
private-equity firms, and we are committed to support growth and investment across the
continent for the long term.
S-RM: About us
Contact
S-RM
1 Swan Lane
London
EC4R 3TN
+44 (0)203 763 9595
www.s-rm.co.uk
Contributors:
Mandira Bagwandeen, Analyst
Ashleigh Somaro, Analyst
Sam Nallen-Copley, Analyst
Anna Beare, Analyst
Editor:
Rachel McLaughlin, Associate Director
r.mclaughlin@s-rm.co.uk
Important Notice
This document was prepared by S-RM.
While this information has been prepared in
good faith, no representation or warranty,
express or implied, is or will be made and no
responsibility or liability is or will be accepted
by S-RM, or by any of its respective officers,
employees or agents in relation to the
accuracy or completeness of this document
and any such liability is expressly disclaimed.
In particular, but without limitation, no
representation or warranty is given as to
the reasonableness of future suggestions
contained in this document.
© Salamanca Risk Management Ltd 2015
The material in this bulletin was up-to-date at
the point of publication (4 November 2015)

More Related Content

What's hot

thailandcrisispaper
thailandcrisispaperthailandcrisispaper
thailandcrisispaper
Connor Rice
 
Law and order big challenge for pakistan
Law and order big challenge for pakistanLaw and order big challenge for pakistan
Law and order big challenge for pakistan
saleem khan
 
Economy of South Korea and Economy of China assignment from International Dev...
Economy of South Korea and Economy of China assignment from International Dev...Economy of South Korea and Economy of China assignment from International Dev...
Economy of South Korea and Economy of China assignment from International Dev...
Md. Moazzem Hossain
 
General pervaz musharraf 1
General pervaz musharraf 1General pervaz musharraf 1
General pervaz musharraf 1
Ahmad Aqeel Rana
 

What's hot (20)

National Security & National Interests – Implications
National Security & National Interests – ImplicationsNational Security & National Interests – Implications
National Security & National Interests – Implications
 
Political System.doc
Political System.docPolitical System.doc
Political System.doc
 
Solving the china puzzle
Solving the china puzzleSolving the china puzzle
Solving the china puzzle
 
Indian economy
Indian economyIndian economy
Indian economy
 
thailandcrisispaper
thailandcrisispaperthailandcrisispaper
thailandcrisispaper
 
Burma
BurmaBurma
Burma
 
Burma
BurmaBurma
Burma
 
Law and order big challenge for pakistan
Law and order big challenge for pakistanLaw and order big challenge for pakistan
Law and order big challenge for pakistan
 
Peru china relations
Peru china relations Peru china relations
Peru china relations
 
The Future of India's Foreign Policy: A Conversation with Yashwant Sinha
The Future of India's Foreign Policy: A Conversation with Yashwant SinhaThe Future of India's Foreign Policy: A Conversation with Yashwant Sinha
The Future of India's Foreign Policy: A Conversation with Yashwant Sinha
 
Impact of Inflation and GDP Of India And the United States on Its Foreign Exc...
Impact of Inflation and GDP Of India And the United States on Its Foreign Exc...Impact of Inflation and GDP Of India And the United States on Its Foreign Exc...
Impact of Inflation and GDP Of India And the United States on Its Foreign Exc...
 
Economy of South Korea and Economy of China assignment from International Dev...
Economy of South Korea and Economy of China assignment from International Dev...Economy of South Korea and Economy of China assignment from International Dev...
Economy of South Korea and Economy of China assignment from International Dev...
 
Devaluation
DevaluationDevaluation
Devaluation
 
International business
International businessInternational business
International business
 
India china trade relation
India china trade relationIndia china trade relation
India china trade relation
 
Economy of India
Economy of IndiaEconomy of India
Economy of India
 
General pervaz musharraf 1
General pervaz musharraf 1General pervaz musharraf 1
General pervaz musharraf 1
 
Pakistani Nuclear Foreign Policy; Past, Present, and Future
Pakistani Nuclear Foreign Policy; Past, Present, and FuturePakistani Nuclear Foreign Policy; Past, Present, and Future
Pakistani Nuclear Foreign Policy; Past, Present, and Future
 
External challenges to pakistan
External challenges to pakistanExternal challenges to pakistan
External challenges to pakistan
 
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
INDIAN ECONOMY ON THE EVE OF INDEPENDENCEINDIAN ECONOMY ON THE EVE OF INDEPENDENCE
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
 

Similar to asia-pacific-november-bulletin

Analysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docxAnalysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docx
SHIVA101531
 
Analysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docxAnalysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docx
daniahendric
 
Chinese Economic Activities
Chinese Economic ActivitiesChinese Economic Activities
Chinese Economic Activities
nabaz4u
 
Indiachinarelationsnew 110203184235-phpapp01
Indiachinarelationsnew 110203184235-phpapp01Indiachinarelationsnew 110203184235-phpapp01
Indiachinarelationsnew 110203184235-phpapp01
Namdeo Jadhav
 

Similar to asia-pacific-november-bulletin (20)

INDIA: TREADING ITS PATH TOWARDS A WOULD BE GREAT POWER STATUS
INDIA: TREADING ITS PATH TOWARDS A WOULD BE GREAT POWER STATUSINDIA: TREADING ITS PATH TOWARDS A WOULD BE GREAT POWER STATUS
INDIA: TREADING ITS PATH TOWARDS A WOULD BE GREAT POWER STATUS
 
Indo-china relations
Indo-china relationsIndo-china relations
Indo-china relations
 
Gyanm general awareness november 2014 issue
Gyanm general awareness november 2014 issueGyanm general awareness november 2014 issue
Gyanm general awareness november 2014 issue
 
India relation with china
India relation with chinaIndia relation with china
India relation with china
 
Deja vu in myanmar
Deja vu in myanmarDeja vu in myanmar
Deja vu in myanmar
 
Gyanm general awareness_issue_october_2015
Gyanm general awareness_issue_october_2015Gyanm general awareness_issue_october_2015
Gyanm general awareness_issue_october_2015
 
India's Foreign Trade
India's Foreign TradeIndia's Foreign Trade
India's Foreign Trade
 
Analysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docxAnalysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docx
 
Analysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docxAnalysis of South KoreaSouth Korea is a country that is located.docx
Analysis of South KoreaSouth Korea is a country that is located.docx
 
India foreign policy_(2)_(4)
India foreign policy_(2)_(4)India foreign policy_(2)_(4)
India foreign policy_(2)_(4)
 
South korea
South korea   South korea
South korea
 
World Geography India U.S.
World Geography India U.S.World Geography India U.S.
World Geography India U.S.
 
Role of India and China in Global Economy
Role of India and China in Global EconomyRole of India and China in Global Economy
Role of India and China in Global Economy
 
Chinese Economic Activities
Chinese Economic ActivitiesChinese Economic Activities
Chinese Economic Activities
 
Nuclear Debate: Stabilising Economy, Securing Ecologically Sustainable Enegr...
Nuclear Debate: Stabilising Economy, Securing  Ecologically Sustainable Enegr...Nuclear Debate: Stabilising Economy, Securing  Ecologically Sustainable Enegr...
Nuclear Debate: Stabilising Economy, Securing Ecologically Sustainable Enegr...
 
NCYM 2017 report by VSTPS
NCYM 2017 report by VSTPSNCYM 2017 report by VSTPS
NCYM 2017 report by VSTPS
 
20 whychinais indina--212-218
20 whychinais indina--212-21820 whychinais indina--212-218
20 whychinais indina--212-218
 
Indiachinarelationsnew 110203184235-phpapp01
Indiachinarelationsnew 110203184235-phpapp01Indiachinarelationsnew 110203184235-phpapp01
Indiachinarelationsnew 110203184235-phpapp01
 
Weekly news
Weekly newsWeekly news
Weekly news
 
21 01-2022 (Daily News Analysis)
21 01-2022 (Daily News Analysis)21 01-2022 (Daily News Analysis)
21 01-2022 (Daily News Analysis)
 

asia-pacific-november-bulletin

  • 1. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 1 Asia Pacific Bulletin Issue 2 / November 2015 Regional news India: Hungry for gold Myanmar’s tech start ups The Trans-Pacific Partnership Infighting in Japan’s criminal mafia S-RM
  • 2. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 Regional news
  • 3. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 1 Japan In October, Japan’s Prime Minister, Shinzo Abe, visited the USS Ronald Reagan during Japan’s Maritime Self-Defence Force Fleet Review exercise. This was the first time a Japanese prime minister had visited a US aircraft carri- er, and signifies the Japanese government’s commitment to a more activist defence police. While unpopular domestically, the reinterpreta- tion of Japan’s constitution to make it easier for Japanese troops to fight in overseas conflicts has been welcomed by the US and other allied countries, as it will enable Japanese participa- tion in foreign combat operations. China and South Korea expressed disappointment after Abe did not issue a fresh apology at a war an- niversary speech in August, and in October, South Korea issued a statement criticising the visit of two Japanese ministers to the contro- versial Yasukuni Shrine in Tokyo, where a num- ber of Japanese war criminals are honoured. Pacific Islands Concerns are growing about climate migration, specifically relating to the impact of rising sea levels on low lying atoll-island nations. Tuvalu, a former British colony comprised of nine islands, has been particularly affected by environmental disasters; with no point in the country higher than 4.5 metres above sea level, even minor changes in sea levels could force thousands of people to emigrate. Kiribati, another former British colony located near the International Date Line, is widely considered to be in signif- icant danger of disappearing altogether, with some environmental analysts predicting it will be completely submerged by 2040. Talks about a cohesive regional migration strategy are likely to be a high priority for all countries in the re- gion over the coming years. Indonesia A year into his administration, support for Indo- nesia’s president, Joko ‘Jokowi’ Widodo, has plummeted, with 54 percent of respondents in 34 provinces dissatisfied with his performance according to a recent survey. Jokowi came to office with the pledge of improving the liveli- hood of all Indonesians. With economic growth in the second quarter at 4.67 percent - the slowest in six years - and an unresolved air pollution crisis affecting the west of the coun- try, Jokowi’s first year is seen as disappointing by many Indonesians. Internationally, human rights groups and foreign governments have been angered by Jokowi’s continuation of ex- ecutions for drug offences and zero tolerance stance towards peaceful political protestors in Papua and the Moluccas. Malaysia The United Malays National Organisation (UMNO) will hold its annual general assembly over three days in early December. It will be important as a symbolic battleground for a na- tion that has become increasingly divided over ethnic and racial lines in the wake of the 1MDB scandal, in which it has been alleged that the Prime Minister, Najib Razak, embezzled around $700 million of state funds. Najib Razak is the president of UMNO, the largest political party in Malaysia, whose guiding ideology is to rep- resent and protect indigenous Malay culture. The 1MDB scandal has led to protests by both pro-government Malay “red shirts” and the Bersih movement, which has had support from a larger number of ethnic Chinese. Mongolia China’s slowdown is having particularly visible effects in Mongolia, which counts China as its largest trading partner. In 2014, a staggering 88 percent of Mongolia’s exports ended up in Chi- na, most of which are commodities, including coal. Falling revenue from these products has worsened the prospects of Mongolia’s already weak economy and has forced the government to consider austerity measures. In October the Mongolian finance minister announced planned public sector job losses and salary cuts, in addition to the possible sale of shares in state-owned companies. Previous govern- ments have made efforts to reduce Mongolia’s reliance on mining commodities, but to no avail. Taiwan On 7 November Chinese president, Xi Jinping, and Taiwanese president, Ma Jing-yeou, were pictured shaking hands after a historic meeting – the first time that the presidents of China and Taiwan have met in over six decades. Ma leads the nationalist Kuomintang (KMT) Party in Tai- wan, and since taking office in 2008 he has been pushing policies to strengthen Taiwan’s diplomatic and economic relations with China, but opposition politicians in Taiwan favour inde- pendence from Beijing’s rule. Some believe Xi agreed to engage in talks in order to sway the vote in favour of the KMT in Taiwan’s January 2016 presidential election. However, in 2014 lo- cal elections the KMT suffered a heavy defeat, showing signs that the Taiwanese public may reject closer ties with China. Nepal In September 2015, Dr Ram Baran Yadav, the president of Nepal, adopted the country’s first democratic constitution. The constitution, which took seven years to complete, was met with extensive public opposition in the weeks prior to and post its adoption, with protests reportedly resulting in the deaths of approx- imately 40 to 45 citizens. The main criticism of the constitution is its federal structure that divides Nepal into seven provinces. Minority communities, such as the Madehsi groups in southern Nepal, feel that federal division of Ne- pal will further marginalise them, resulting in inadequate political representation. Opposition groups have also included Nepalese Hindus, who staged demonstrations demanding that the constitution establish Nepal as a Hindu na- tion. This demand was not met, and the consti- tution that has been adopted is secular. India In late October 2015, the third India-Africa Fo- rum Summit was held in New Delhi. Senior of- ficials from 54 African countries attended, with 41 African countries represented by their heads of state. India is trying to position itself as an alternative trade partner to China, with a “Make in India” initiative aimed at reviving its manufac- turing sector. The India-Africa Forum Summit was launched in 2008 and since then two-way annual trade has doubled to $72 billion. India is also keen to agree contracts for extract of natu- ral resources with several African countries: In- dia’s state-run Oil and Natural Gas Company is looking to buy $12 billion in foreign assets over the next three years, and India is also in talks with South Africa to buy coal mines to supply its steel industry. Myanmar On 8 November, Myanmar held its first demo- cratic general election in 25 years. The election followed a series of reforms introduced by the government and the opening up of the country to foreign investments. Though official results have yet to be officially announced, the coun- try’s largest opposition, the National League for Democracy (NLD), led by Aung San Suu Kyi, has so far won over 80 percent of the vote. These results set Suu Kyi on course to form the next government and end more than half a cen- tury of military rule in Myanmar. However, Suu Kyi is blocked from assuming the presidency by a clause in the constitution concerning foreign citizenship of family members. Parliament will choose the next president of Myanmar in early 2016. ♦
  • 4. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 2 To decrease costly gold imports, the Indian government is promoting financial schemes to lure locals away from buying physical gold and is simultaneously looking to increase its domestic supply of the precious metal With an average economic growth rate of 7.2 percent over the past five years, India’s demand for gold has risen significantly. India is the world’s largest consumer of this precious metal, and whilst India was once a prominent players in gold mining production during the 1850s, rising costs and dwindling resources mean that most of India’s gold mines closed in the twentieth century. Importing between 800 and 1,000 tonnes of gold annually, large gold imports today account for almost a third of India’s trade deficit. As a result, the Modi government is exploring various options to decrease this deficit, including implementing financial schemes to lure Indians away from buying physical gold and increasing the country’s domestic supply through the revival of the local mining industry. Though gold is viewed as an attractive metal around the world, India’s appetite for it is insatiable. Despite fluctuating gold prices, many Indians reportedly consider gold to be a sound investment and form of financial security as it can be resold during difficult economic times. It is also viewed as a status symbol and is frequently displayed at weddings and social events. Numerous temples house millions of US dollars’ worth of gold, as wealthy Hindus regularly donate gold jewellery, coins, bars, and ornaments to temples. An estimated 3,000 tonnes, more than two thirds of the gold held in the US bullion depository at Fort Knox, is currently stored in India’s temples. Successive governments have attempted to curb India’s appetite for gold. Recently, in September 2015, the Modi administration introduced a gold monetisation scheme (GMS) and sovereign bond financial plan to reduce the consumption of this precious metal. These initiatives form part of the government’s plan to recycle gold for productive use, ween INDIAN ECONOMY Hungry for gold By MANDIRA BAGWANDEEN To decrease costly gold imports, the Indian government is trying to stop locals buying physical gold whilst also increasing the country’s domestic supply people away from investing in physical gold, and reduce costly imports. The GMS, which is essentially a fixed deposit scheme, allows individuals and temples to open a ‘gold savings account’ through which they can deposit their physical gold assets and earn interest on the assessed value of their bullion or jewellery. The sovereign gold bond (SGB), on the other hand, targets those individuals who purchase gold bars as an investment asset. It is estimated that Indians buy 300 tonnes of gold bars every year. The objective of the SGB is therefore to dematerialise the gold so that investors are indifferent as to whether their assets are held as physical gold or bonds simply linked to the gold price. Ultimately, the bonds have the same benefits as gold, can be used as collateral for loans, and can be sold or traded on stock exchanges in a dematerialised form. While there has been significant hype over this gold monetisation plan, the failure of a similar scheme in 1999 due, in part to low financial interest rates, raises doubts as to whether it will be successful. Aside from financial schemes, the government also plans to increase the country’s domestic supply of gold. The Ministry of Mines wants to revive India’s mining industry to reduce its gold import bill as India currently produces less than two tonnes of gold per year and reportedly has only one working mine. According to the government, within a few months, an estimated 80 old mining tenements will be auctioned off to local and foreign companies that can renovate the old mines and provide the necessary equipment for them to operate safely again. In addition to auctioning off old mines, the Ministry of Mines is pushing to revive the Kolar Gold Fields (KGF) in the southern state of Karnataka. The KGF, once a hub of gold mining activity, was closed in 2001 due to increasing losses and depleting reserves. However, the government is now looking to re- work Kolar’s hills as a state assessment has indicated that an estimated £2.5 billion ($3.9 billion) worth of gold is believed to be housed in the region. Because reopening one of the world’s most famous gold mining districts after 15 years would require a substantial amount of investment, there is much uncertainty as to whether the abandoned and neglected mines can actually be revived. Indeed, the reopening has been touted by numerous governments several times but has failed given legal hurdles over ownership.
  • 5. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 3 In light of these concerns, coupled with the mining sector’s reputation for not only having tedious license and permit processes but for extensive fraud and corruption, there are doubts as to whether India will be able to successfully revive its gold mining industry. Furthermore, while the gold monetisation plan In October, trade ministers from 12 Pacific Rim countries agreed to the largest trade accord in history, the Trans-Pacific Partnership (TPP). The combined economies of its members (the US, Japan, Malaysia, Vietnam, Singapore, Bru- nei, Australia, New Zealand, Canada, Mexico, Chile, and Peru) account for around 40 percent of the world economy. However, with a trade agreement as encompassing in scope, and with objectives as ambitious as the TPP, it is inevitable that issues regarding implementation and enforcement will arise. Furthermore, with a deal attempting to represent the competing interests of 12 countries, it is inevitable that not all members will derive equal benefit. Countries whose primary exports consist of goods and services in the automotive, agri- culture, clothing and textiles, and electronics sectors are expected to receive significant benefit from the TPP. As a result, the US, Ja- pan, Vietnam, Australia and New Zealand are touted as the primary beneficiaries of the deal. Whilst many suggest that US farmers and Jap- anese car manufacturers stand to receive the most benefit from the deal, regional research institutes have indicated that Vietnam is set to prove the biggest “winner” of the TPP. Current- ly, the US remains Vietnam’s largest market for its primary export, clothing and footwear, with imports of these goods currently taxed be- tween 17 and 32 percent by the US authorities. Therefore, a tariff-free access to the US textile market, would result in significant commercial gains in Vietnam, with experts anticipating income gains of 14 percent and an export in- crease of 32 percent. Non-TPP members are expected to experience challenges. The main concern stems from the possibility that trade may be diverted away from non-TPP members, given the reduced trade tariffs enjoyed by TPP members. In the case of South Korea, shares in Hyundai Motor Company and Kia Motors Corporation, both South Korea-based car manufacturers, fell by five percent following the TPP agreement an- nouncement. The drop in share price is widely attributed to concerns over Japan’s new com- petitive advantage over South Korea within the US automobile market, in the form of reduced export tax. Furthermore, countries such as Bangladesh, Cambodia, Pakistan, Sri Lanka and India are expected to experience increased competition from Vietnam with regards to tex- tile exports to the US. The US government has made much of the pro- gressive and enforceable nature of the TPP’s proposed labour-related guidelines, anti-corrup- tion measures and limitations on state-owned enterprises (SOEs). On labour, TPP-members are required to meet labour standards as set out in the International Labor Organization’s PAN-PACIFIC COMMERCE The Trans-Pacific Partnership By ASHLEIGH SOMAROO It will be difficult to get national approval for the Trans-Pacific Partnership agreement, and even harder to enforce the fine print. is promoted as a way for Indians to be savvy with their gold assets, possessing physical gold is traditionally ingrained in Indian society. Thus, unless interest rates are very attractive, it may prove to be challenging to encourage Indian’s to part with their gold assets and ultimately decrease the trade deficit. ♦ (ILO) Declaration on Fundamental Principles and Rights at Work. US officials have repeated- ly stressed that these proposed standards on labour are enforceable. TPP members are also required to accede to or ratify the UN Conven- tion Against Corruption. Additionally, members are required to adopt legislation and regulation which criminalise bribery and deter potential conflicts of interest. Lastly, the TPP includes provisions to reduce the leverage wielded by SOEs when competing for public procurement contracts. Specifically, the US government has stated that the TPP will include the “first-ever disciplines to ensure that SOEs compete on a commercial basis”. These provisions are widely regarded as ambi- tious. For instance, enforcing ILO standards on countries such as Vietnam and Brunei would require a legislative overhaul given the issues of worker exploitation and widespread use of child labour in these countries. Furthermore, this provision may prove challenging for mem- bers who rely on cheap labour to attract for- eign investment. On the issue of corruption, the majority of TPP members do not have effective anti-corruption measures in place, particularly in Mexico, Peru and Vietnam. With regards to limitations on SOEs, the TPP is un- clear on its proposed mechanisms to curb un- fair advantage maintained by SOEs. Countries such as Malaysia, which rely on the use of its state-funded trade initiatives and SOEs such as Petronas, a state-owned energy company, have stated that their SOEs would be “exempt- ed” from the TPP. Other member countries have yet to agree. Official US documentation on the TPP has re- peatedly emphasised that these provision will be “enforceable”, especially provisions relating to labour and corruption, but no clear indication has been provided on how contraventions of these provisions will be settled. The invest- ment chapter of the TPP includes a provision for the use of a private arbitration system to settle disputes between companies and mem- ber states in the event that a contravention of the TPP results in losses. However, discus- sions have not started on the composition or location of this private arbitration system. This may prove challenging for members as repre- sentatives have to pass the TPP through their respective legislatives. This will prove particu- larly difficult, due to TPP’s apparent implica- tions on national sovereignty. ♦
  • 6. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 4 JAPANESE LAW AND SOCIETY Infighting in Japan’s criminal mafia 2015 should have been a good year for Japan’s largest crime syndicate, the Yamaguchi-gumi. With an estimated yearly revenue of $6.6 bil- lion, mostly generated from drug trafficking, the gang is the second wealthiest group of its kind worldwide (the richest – the Russian Solnt- sevskaya Bratva – is thought to make roughly $8.5 billion a year). On the centenary of its foundation however, infighting at a senior level looks set to rip the Yamaguchi-gumi apart. The term ‘yakuza’ is several hundred years old, and denotes both gangsters and the groups they belong to. It is believed to be derived from the Japanese for ‘eight nine three’, the losing hand in Japanese card game oicho-kabu, a ref- erence to the gambling sector which remains a cornerstone of organised criminal activity in Japan. Unlike their counterparts in China, the yakuza operate semi-openly, and are immedi- ately identifiable by their pompadour hairstyles, tinted-glass black Mercedes and full body tat- toos – or irezumi – which are administered us- ing non-electrical handheld tools. Members are generally feared and shunned by the wider Japanese society, and while the Rob- in Hood-image they promote was bolstered by high profile aid efforts following the Kobe Earthquake in 1995 and the Tohoku Earthquake in 2011, most Japanese citizens avoid unnec- essary interaction with the yakuza; it is com- mon for instance for public baths not to allow entrance to anyone with tattoos in attempts to limit contact with criminals. These explicit demonstrations of identity and the yakuza obsession with tradition are per- haps attempts to conceal short histories with uninspiring lineages. The relative peace of the Tokugawa Period (1603 – 1868) left the samu- rai classes largely unable to use their fighting skills to generate revenue. While upper-level samurai were granted bureaucratic and military positions for local feudal lords, masterless sam- urai – or ‘ronin’ – were forced to rely on other means to make a living, like banditry and the running of protection rackets. It wasn’t until the Taisho Period (1912 – 1926) that many of the gangs around today were formed, when the demand for blue-collar workers transformed the architecture of Japanese labour structures and small fraternities of workers and bosses began to develop. By the mid-20th Century, well-established rival gangs had emerged, each with elaborate rituals, rigid hierarchies and strictly enforced rules, like ‘yubitsume’, the requirement to cut off one’s finger to atone for wrong doing. By the 21st Century, the Yama- guchi-gumi accounted for 50% of all yakuza in Japan, far outweighing rival gangs the Sumi- yoshi-kai and the Inagawa-kai, and at the start of 2015 it seemed very unlikely the empire could crumble. The current squabble revolves around Shinobu Tsukasa, the Yamaguchi-gumi’s kingpin since 2005, who has been accused of giving pref- erential treatment to the Kodo-kai, a disliked Yamaguchi affiliate he founded in 1984, whose persistent refusal to cooperate with police is reportedly at least partially responsible for the recent government anti-yakuza drive. Perhaps even more offensive to Yamaguchi’s conserv- ative clique, Tsukasa supposedly planned to move the gang’s headquarters from Kobe – where it has been based since 1915 – to Na- goya, a city 215 kilometres east where Tsukasa started his yakuza career in 1962. More than 3,000 members have defected to the newly-formed Kobe Yamaguchi-gumi un- der the leadership of Kunio Inoue, a former sen- ior figure in the Yamaguchi-gumi, best known for having been the target of a grenade attack in 2010. Inoue has accused Tsukasa of “extreme egoism”, and has claimed the principal reason for the defection was to honour the wishes of former Yamaguchi-gumi leaders. The split has sparked national fears of sword fights, drive-by shootings and pitch battles on the streets of Kobe – exacerbated by the myste- rious fatal shooting of a Yamaguchi boss in late October – and with good reason. From 1985 to 1989 the Yamaguchi-gumi entered a conflict with the Ichiwa-kai, a breakaway yakuza gang formed after a succession crisis following the deaths of two Yamaguchi bosses in the early 1980s. On 26 January 1985, Hiroshi Yamamoto – who had been beaten to the position of ku- micho by Masahisa Takenaka – sent a hit squad to assassinate his rival at Takenaka’s girlfriend’s home in Osaka. The killing ignited the Yama- Ichi War, in which 36 yakuza members were killed in over 200 gun battles. The conflict was resolved through negotiations arbitrated by the Inagawa-kai, a neutral Tokyo-based gang, and the Ichiwa-kai was ultimately disbanded. By SAM NALLEN-COPLEY On the centenary of its foundation, infighting is threatening the existence of Japan’s most notorious crime syndicate. source Photo via Flickr, user Sushicam Things have changed since the ‘boom’ years of the 1980s however, and lessons have been learned; samurai ethics and blood oaths may still feature in Yamaguchi propaganda – acces- sible to all via their website, which includes a poetry page – but the organised crime world essentially revolves around money, and war isn’t cheap. In 2004, Japan’s Supreme Court ruled that organised crime syndicates’ leaders were li- able for damages incurred by any members of their organisations. These laws were intro- duced after a court ordered Yoshiori Watanabe, Tsukasa’s predecessor, to pay 80 million yen
  • 7. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 5 MYANMAR ECONOMIC DEVELOPMENT Myanmar’s mobile tech start-ups The rapid development of Myanmar’s tele- communications sector is arguably one of the most significant modernising influences to penetrate the nation’s economy since liberali- sation began in 2010. Telenor, the Norwegian telecommunications giant, has raced ahead of competitors to take the largest chunk of the market. Less than a year after setting up shop in August 2014, the company had lured more than 10 million subscribers out of a total nation- al population of around 55 million. By the most recent estimates, only around 30 percent of Myanmar’s population have access to a mobile phone. It is easy to see that this ‘blue ocean’ of untapped market space, coupled with a track record of exponential growth, heralds a poten- tially rich future for the mobile tech industry in Myanmar. After decades of severely restricted internet access, locals have bypassed agonisingly slow dial-up connections and been catapulted into an age of mobile browsing at the touch of a button. As mobile usage grows, so will a de- mand for innovative software and localised By ANNA BEARE Small start-ups are big in Myanmar’s mobile tech industry mobile app content. However, due to the risks involved, only a slow trickle of interna- tional tech start-ups are attempting to fill this market void. MySQUAR, which is developing Myanmar’s first local language social media and entertainment apps, recently raised £1.67 million after listing on the London AIM stock ex- change. Rocket Internet, a large German-head- quartered internet company, has helped to launch several e-commerce platforms in the country, including automobile trading and prop- erty listing platforms. It is hard to name many more heavyweight international contenders in the industry. Furthermore, the sector can be difficult to penetrate. The chief executive of MYSQUAR has made it clear that the company doesn’t expect to break even until 2018, and its flagship MyChat app will inevitably face stiff competition from WhatsApp, which is owned by Facebook. Many of Rocket Internet’s online platforms are also competing with locally-de- veloped equivalents. There are signs that a future is emerging for local entrepreneurs in the mobile tech arena. Myanmar is home to a host of nascent soft- ware development companies, such as Rebbiz, which operates several online classifieds por- tals such as Myanmar Cars DB, NEX, which has developed various localised mobile apps including a Burmese language keyboard, and Code2Lab, which has developed SmartSales, a tablet-based system designed to streamline the restaurant billing and ordering process. Many of these start-ups have sourced fund- ing regionally. In November 2014, NEX won a $150,000 investment from a Singapore-based angel investor. Rebbiz relies on funding from Frontier Digital Ventures, a Malaysia-based in- vestor in online classifieds businesses. It may be that many bigger mulitnational inves- ($740,000) in damages following the kill- ing of an off-duty police officer by Yama- guchi-gumi members. In 2008, Tadamasa Goto, a senior Yamaguchi figure, was held responsible for the murder of a real-estate agent carried out by his men, and was forced to pay 110 million yen ($1.4 million) in damages. In October 2011, Tokyo enacted a local governmental anti-yakuza measure which prohibits company owners from knowingly conducting business with organised criminal gangs, with penalties ranging from the com- pany’s name being revealed to the public to heavy fining and prison time. The full effects of this have not yet been felt, and the long term implications could be disastrous for yakuza groups, many of which have traditionally relied heavily on an racket- eering method known as soukaiya to extort money out of executives from Mitsubishi, Nikko Securities and other well-known cor- porations. Soukaiya usually entails the black- mailing of executives with threats to reveal embarrassing – and often fictional – com- pany secrets. The potential shame of being outed by the government for paying soukai- ya fees however may outweigh the threat from claims by gangsters, who are known to make money through dishonesty. There is nothing stopping Japan’s parlia- ment going even further, and if criminal syn- dicate members step up the violence, the Japanese authorities are likely to respond with force, fining more heavily or even clos- ing down headquarters and arresting boss- es for the crimes of their foot soldiers. This would mean the end for all organised crimi- nal groups in Japan, the worst case scenario for Yamaguchi members on both sides of the divide. Memories of the Yama-Ichi war and tales of Tsukasa’s exploits, who served 13 years in prison for murdering a rival with a sam- urai sword, will certainly feature in Japan’s broadsheets in the coming weeks, but the yakuza themselves – if they are to survive – will have to fight with snide remarks, os- tentatious usage of the gang emblem and acerbic poems in their self-published mag- azines. ♦
  • 8. S-RM: ASIA PACIFIC BULLETIN NOVEMBER 2015 6 tors do not have the risk appetite for a market which is still young and fraught with challeng- es. Running a business from Myanmar can be extremely frustrating. Mobile usage may be growing, but technical infrastructure is still very underdeveloped. Locally-operated start-ups face daily setbacks, such as frequent black- outs and intermittent broadband connections. The price of rent is also often prohibitively high for early stage start-ups, and there is a distinct lack of skilled IT specialists and software de- velopers. Once trained, practitioners often flock overseas in search of higher pay. Anoth- er reason for reticence may be the problems associated with adapting technologies to suit local conditions in Myanmar. For example, the most widely used method for coding the Bur- mese script is not compatible with Unicode, the international text encoding standard. This means that many local language websites are not easily searchable via Google, and locally developed mobile apps aren’t compatible with mainstream app stores. Access to finance can also be a barrier to the growth of mobile e-com- merce. The majority of the Burmese population is underbanked, which is an obvious hindrance to the development of online payment facilities. Nevertheless, many hardy start-ups are tackling these obstacles head on. MYSQUAR has been encouraging local mobile phone technicians to upload its MyChat app onto new phones when they install the Burmese text code, which isn’t a default preinstalled language on most phones. MyChat predicts that it will have 1 million ac- tive users by the end of 2015. Companies such as NEX bolster their income by seeking clients outside of Myanmar, in places such as Singa- pore, where they can offer competitive prices for their website and app building services due to relatively lower labour costs. The uncertainty generated by November’s elec- tions and a challenging business environment have cast a shadow over investment prospects in Myanmar as a whole in 2015. The success of mobile tech start-ups, most of which are in the early stages, also remains to be seen. But the growth of the mobile tech industry is inevitable. If the somewhat ambitious government figures are to be believed, then mobile penetration is expected to reach 85-90 percent of the popu- lation by 2016, from the current 30 percent. It may be worth playing the long game. ♦ S-RM combines business intelligence and risk consulting, helping our clients to understand the risks to their business and to develop the best means of mitigation. S-RM’s Business Intelligence division gathers, analyses and assesses information to inform our clients and help them to manage risks efficiently. Specialist regional teams combine expert open-source analytical skills with ground truth from our consulting teams and local contacts to provide clear, actionable intelligence to clients, quickly and objectively. Business Intelligence advises clients worldwide on integrity risks (e.g. AML, ABC), disputes and litigation, and changing political and business environments. Business Intelligence’s core services are integrity due diligence, investigations, and political and country risk reporting. S-RM’s Risk Consulting division enables organisations to understand and mitigate their security and operational risks. Our solutions are agile, innovative and tailored to our client’s specific needs. Our aim is to reduce uncertainty and to deliver a commercial advantage. Risk Consulting’s in-house specialists have a deep understanding of operational risk, cyber security and the offshore operating environment. Our core services are consultancy services, security risk management and cyber risk management. ASIA PACIFIC S-RM has a strong Asia Pacific team, and our analysts have spent several years living and working in the region, including in China, India, Japan, Pakistan, Sri Lanka, Malaysia, Indonesia and Papau New Guinea. We have in-house language capabilities in Chinese and Japanese, and our close network of associates provides us with expertise in the full range of Asian languages and a local footprint in more than a dozen countries in the region. We work with a range of clients across Asia, including multinational companies, law firms, banks, and private-equity firms, and we are committed to support growth and investment across the continent for the long term. S-RM: About us Contact S-RM 1 Swan Lane London EC4R 3TN +44 (0)203 763 9595 www.s-rm.co.uk Contributors: Mandira Bagwandeen, Analyst Ashleigh Somaro, Analyst Sam Nallen-Copley, Analyst Anna Beare, Analyst Editor: Rachel McLaughlin, Associate Director r.mclaughlin@s-rm.co.uk Important Notice This document was prepared by S-RM. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by S-RM, or by any of its respective officers, employees or agents in relation to the accuracy or completeness of this document and any such liability is expressly disclaimed. In particular, but without limitation, no representation or warranty is given as to the reasonableness of future suggestions contained in this document. © Salamanca Risk Management Ltd 2015 The material in this bulletin was up-to-date at the point of publication (4 November 2015)