BURMA-SINGAPORE TRADE AND INVESTMENT -- MORE THAN

C O N F I D E N T I A L SECTION 01 OF 04 SINGAPORE 001890

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/15/2017
TAGS: ECON ETRD EINV ETTC PREL ASEAN EFIN BU SN
SUBJECT: BURMA-SINGAPORE TRADE AND INVESTMENT -- MORE THAN
MEETS THE EYE

REF: A. SINGAPORE 1851

B. SINGAPORE 1812

C. SINGAPORE 1795

D. RANGOON 645

Classified By: Charge d'Affaires, a.i. Daniel Shields; reasons 1.4(b) a
nd (d)


1. (C) SUMMARY: For Burma, Singapore is a major trading
partner and source of investment and foreign exchange.
Two-way trade in goods is declining, but Singapore remains an
important investor in Burma for tourism, airlines, food
processing, and infrastructure. Asia World, one of Burma's
largest companies (and with links to one of Burma's chief
drug lords),is connected to much of Singapore's investment
in Burma, according to media reports. Singapore's stringent
bank secrecy laws make it difficult to gauge its financial
ties to Burma. Many assume the Burmese junta parks much of
its money here, though the GOS strongly denies accusations of
money laundering. END SUMMARY.


2. (C) COMMENT: Fed up with the regime's thuggishness,
insularity, and incompetence, Singapore has been taking a
much stronger line on Burma since the violent crackdown (refs
A-C). As ASEAN chair, it has been a driver of the
organization's tougher diplomatic stance. While GOS
officials have concluded the current situation in Burma is
untenable, they do not see sanctions as the answer, however.
"We (ASEAN) can't do what the big powers can do in terms of
trade embargo or freezing of bank accounts," Foreign Minister
Yeo concluded in an October 2 interview. Singapore is keen
to promote itself as a regional financial services center,
and its stringent bank secrecy laws play a role. The GOS is
therefore unlikely to take action against Burmese financial
assets in the absence of UN-mandated sanctions. However,
Singapore-based financial institutions will pay attention to
Treasury's September 27 designation of fourteen senior
Burmese officials. Past experience with DPRK and Iran issues
suggest that some bank compliance officers here may reassess
their respective policies on Burmese banking relationships,
even in the absence of official pressure. END COMMENT.

A Longstanding Trade Relationship
--------------


3. (U) Singapore's trade links with Burma long predate
Singapore's independence in 1965. Private trading companies
traditionally dominated commerce between the two former
British colonies, selling timber, agricultural commodities
(Burma was Singapore's largest supplier of rice up until the
1970s),and precious stones. Singapore once enjoyed a
thriving business -- both legal and illegal -- with Burmese
businessmen, who ferried goods along the Malacca Strait by
small boats that docked at Singapore's Pasir Panjang port,
then a general cargo wharf. This trade reportedly shifted
north to Malaysia in the 1980s, in particular to Penang,
after Singapore closed the wharf to conventional cargo in
favor of containerized shipping. Currently, most Singapore
businesses rely on third parties, including foreign nationals
and offshore companies in Hong Kong, the Bahamas, and the
British Virgin Islands, to process trade transactions with
Burma. Contacts have noted that some of their Burma-based
partners do not use the formal banking system.

Declining Two-Way Trade
--------------


4. (U) Two-way trade in goods between Singapore and Burma
totaled S$1 billion (US$ 667 million) in 2006 but has been
declining gradually since at least 2004, according to IE
Singapore, the government's trade promotion arm. Burma is
Singapore's 35th largest trading partner; GOB and other
sources list Singapore as either Burma's third or fourth
largest trading partner. Singapore runs consistently large
trade surpluses, averaging two-thirds to three-quarters of
total trade. Its main imports from Burma include seafood,
timber, tobacco, and garments. More recently, Singapore
began purchasing sand from Burma for use in various land
reclamation projects after Indonesia banned sand exports to
Singapore. Singapore's primary exports to Burma include
engineering equipment, mineral fuel oils and related
products, electrical machinery, and plastics.

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5. (C) According to an unconfirmed press report, Singapore
has provided military equipment -- guns, rockets, armored
personnel carriers, and grenade launchers, as well as crowd
control equipment, sophisticated telecom monitoring devices,
and computers and networking equipment -- for Burma's defense
ministry and army. The same report suggested that former
Singapore Technologies subsidiaries are involved in selling
arms to Burma (the GOS dismantled Singapore Technologies in
2004). Although we could not locate any publicly available
information citing business activities between these ST
companies -- ST Electronics, ST Aerospace, ST Engineering or
ST Marine -- and Burma, a source at ST Kinetics (ST
Engineering's transportation arm) confirmed that it sells
unspecified equipment to Burma through a dealer in Thailand.


How Much Foreign Direct Investment (FDI)?
--------------


6. (SBU) Singapore's accumulated FDI in Burma was S$742
million (US$495 million) in 2005 (latest available figures),
a 20-percent decrease since 2001, according to the Department
of Statistics. Government-linked corporation (GLC) Keppel
Land maintains a multi-million investment in the Sedona
hotels in Rangoon and Mandalay. Other Singapore companies
have invested in tourism, airlines, resorts, breweries, and
infrastructure. Some GLCs have divested or delayed
investment since the late 1990s due to political
uncertainties and the difficult business operating
environment. They include SembCorp, SingTel, Intraco
Trading, and the Comfort Group (see partial list below of
Singapore companies with investments in Burma). Minister
Mentor Lee Kuan Yew admitted in an October 10 interview that
he had advised Singapore companies to open hotels in Burma,
but claimed that now "their hotels are empty" thanks to the
economic mismanagement of Burma's "rather dumb generals."


7. (C) According to an unconfirmed press report, one of
Burma's largest companies, Asia World, is linked with much of
Singapore's investment in Burma. Asia World is reportedly
owned by Stephen Law, son of Burmese drug lord Lo Hsing Han.
It is rumored that Law established Asia World largely to
launder his father's drug money in Singapore and Hong Kong.
Law, together with his Singaporean spouse, Cecilia Ng,
reportedly also control Kokang Singapore, a Singapore-based
trading company.


8. (U) Cumulative Burmese investment in Singapore as of 2005
was comparatively little at S$14.6 million (US$9.7 million),
almost all of it invested in wholesale and retail operations
and restaurants. Yoma Strategic Holdings, listed since
August 2006, is the only Burmese company on the Singapore
Stock Exchange. Yoma is engaged in property development and
construction and is controlled by Burma-born, ethnic-Chinese
tycoon Serge Pun, who also heads Burma's largest private
commercial bank, Yoma Bank.


9. (U) Respective FDI in both countries is probably higher.
Singapore's Department of Statistics does not disclose
Burmese investment in Singapore related to finance, real
estate or transport and storage due to the need to "avoid
disclosure of data of individual companies." It similarly
blocks data regarding Singapore investment in Burma related
to manufacturing, real estate, and professional, technical
and administrative activities.

Remittances Provide Foreign Exchange
--------------


10. (U) Singapore serves as a source of foreign exchange for
Burma, in part from remittances. Estimates of the number of
Burmese nationals residing in Singapore vary widely, from
50,000 (press reports) to 100,000 (Embassy contact). Most of
the Burmese here are students, business people, and "foreign
guest workers", i.e., domestic staff and laborers. (Note:
The Monetary Authority of Singapore (MAS) does not release
data on remittances by country nor maintain restrictions on
transfers to Burma. End note.) The Burmese community tends
to congregate around the Peninsula Plaza shopping center,
also known as Burma Mall. Many of the shop owners and
restaurateurs are permanent residents of Burmese origin, most

SINGAPORE 00001890 003 OF 004


of them ethnic Chinese. Singapore is also home to a sizeable
ethnic Indian Burmese community that settled here in the
1960s and 70s.

Bank Secrecy: A Junta's Best Friend
--------------


11. (C) Singapore's stringent bank secrecy laws make it
difficult to gauge its financial ties with Burma. However,
Singapore's position as a major regional financial center
presumably makes it an attractive destination for Burmese
wealth, including laundered money. Unconfirmed foreign press
reports suggest that much of the money parked in Singapore is
derived from Burma's booming drug trade and other illicit
activities. However, an MAS spokesperson declared the
reports "completely baseless," and Prime Minister Lee Hsien
Loong told CNN that "our rules against (money laundering) are
as strict as any other financial center." Despite
Singapore's strong diplomatic stance on Burma of late,
Foreign Minister George Yeo has publicly expressed doubts
about imposing sanctions or seizing Burmese assets
unilaterally or through ASEAN. However, precedent with Iran
and North Korea suggests the government would strictly
enforce UN-mandated sanctions and that banks might review
banking relationships with Burma on their own initiative in
response to increasing international pressure. (Note: MAS
is taking steps to strengthen its ability to track and combat
money laundering. Banks, other financial institutions, and
non-financial institutions are required to file suspicious
transaction reports and, since July 1, must collect
originator information for cross-border wire transfers. The
Ministry of Home Affairs is in the process of establishing
reporting requirements for cash couriers -- the primary
vehicle for moving drug money in Southeast Asia -- that it
expects to implement in the coming year. End note.)

Singapore Companies in Burma
--------------


12. (U) Following is a partial list of Singapore companies
with investments in Burma based on official 2003 data from
International Enterprise Singapore (latest available) and
company sources:

Government-linked Companies Activities
--------------
Keppel Corp
- Straits Greenfield Hotel ownership and
- Wiseland Investment Myanmar Operations
- Double Peak Holdings Investments

Publicly-Listed Companies**
--------------
Allgreen Properties Trading (building
materials)

Berger International Manufacturing (paints)

Fraser & Neave Ltd. Brewery

Hotel Plaza Ltd Hotel ownership

Viz Branz Ltd. Food and beverage


TT International Ltd. Trading

Yoma Strategic Investments Property, construction
and piling services

** traded on the Singapore Exchange (SGX)

Privately-held Companies
--------------

Ace Pressureweld Trading (Equipment,
steel products)

Asia Paint (Singapore) Manufacturing/Trading
(Paints, Solvents)

Swee Hong Exim Trading (Computers)

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Lam Choo Chee & Sons Trading (LD/VCD systems)

Krislite Private Ltd. Manufacturing/Trading
(Street Lighting)

SMC Food 21 Private Ltd. Manufacturing (Food)

Texcamp Investments Manufacturing (Textiles)

GATT Private Ltd. Manufacturing (Dairy)

Hin Hin Trading Manuf. (Lubricants)

Inko Brothers Hardware Rep. Office (Valves)

Kawei International Rep. Office (Food products)

Kian Ngiap Sewing Machine Rep. Office (Sewing)

Kuok Group Hotels

Kwang Joo (Private) Ltd. Trading (Ag. Commod.)

L D Waxson Singapore Rep. Office (Skin Care)

Legend International Development Office (Machinery)

Majuko Enterprise Trade Office (Agric.)

Masda Chemical (Private) Ltd. Trading Office
(Chemicals, Flavors)

Maya Manufacturing & Trading Manufacturing
(Mosquito Coils)

P L International Seafood Processing

Panimex Trading Private Ltd. Trading (Agricultural)

Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
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