The last coup ever in Turkey?

The events of 15th July 2016 in Turkey with the attempted coup could go down in history as one of the most pivotal moments in Turkish history.

On the 16th of July, acting army chief of staff, General Umit Dunar announced that,  “the time of military coups and juntas is over,” and he could well be right.

It is worthwhile understanding the implications of the Turkish events for history has shown that when the Ottomans sneeze, Europe gets a cold and the Middle East falls into a catatonic shock and paralysis.

Modern Turkey has had a history of coups led by the military and often it has been due to the underlying philosophical and ideological conflicts between Kemalism (the secular principles enshrined by Mustafa Kemal Atatürk) and Sunni Islamism.

President Recep Tayyip Erdogan and his Justice and Development Party (AKP) are now back in full control of matters in Turkey following this very serious development in Turkey.

The fate of the former Egyptian president, Mohamed Morsi, and the Muslim Brotherhood (the ideological partners of the AKP)  who lost power in a coup in Egypt before being sentenced to death must have always weighed heavily on President Erdogan’s mind.

In a very prescient article by Gonul Tul for the Foreign Affairs magazine in May 2016, the risk that the empowering of the military generals by Erdogan to fight Kurdish separatists was raised and the danger that the “President was riding a tiger that is…wilder and more vengeful.”

At the heart of the matter is that the military with its strong Kemalist and secular traditions was always going to be viewed as a threat by the religiously-motivated AKP. However, 14 years of a more religious and conservative rule by the AKP would almost certainly have had the effect of changing the ideological mindset of the Turkish people as well as some of the military. Despite this, the military still refused to let graduates of religious schools enter military academies for fear of diluting the secular principles the modern Turkish state was founded on.

The latest failed coup attempt will no doubt see a mass changes in personnel and policies in the military which will have the impact of shifting some of the ideology underpinning the Turkish military.

In the longer term, the broader question is whether this could see the slow shift and tilt of modern Turkey away from very strict secular traditions towards Sunni Islamic traditions? Could a more Islamic Turkey, centred round more inclusive and tolerant beliefs be a bulwark against the extremist and fanatical Islamic terrorist ideology that is consuming the world in hate and anger?

The present Turkish government (under an Islamic leadership) signed a reconciliation agreement with Israel in June 2016 and seek to work with Israel to bring peace to the region. This is a much welcomed development in  world beset with too much hate and difference.

What happens next in Turkey remains to be seen, but Turkey could well establish some precedence within the Islamic world and be more than a physical bridge between the Muslim and Western worlds but go beyond this and be a spiritual and ideological bridge between both worlds. Watch this space.

 

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Economic updates from Myanmar: Brief impressions

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Always good to be back in Yangon. So many developments and changes in such a short span of time. I always enjoy coming to Myanmar. I am always treated to the very best of Burmese hospitality and the resilience and entrepreneurial qualities of the Myanmarese continue leaving a deep impression on me.

A few observations from Myanmar on the economic front:

  • Hotels – When I first used to come to Myanmar – I was paying about US$70 for a good room at well-known hotels like the Traders, Chatrium or Park Royal. Room rates now start at US$200 for any of these hotels! And they are all running at above 95% occupancy rates!

 

  • Traffic – The cost of car ownership has gone down dramatically. In the past, to purchase a car required a permit which cost an exorbitant amount (for instance, it used to cost about US$350,000 to buy a Toyota Land Cruiser). However the permit system has changed and now you can purchase any cars manufactured from 2007 onwards. The cost of a Toyota Land Cruiser is now about US$25,000. This has led to newer cars on the roads, but more pertinently, the number of the cars have increased dramatically with no corresponding increase in the roads and traffic infrastructure, leading to snarling traffic jams which were previously unheard of before.

 

  • Capital market development – It is expected that Myanmar will have a stock exchange by 2015. This development is being supported by the Tokyo Stock Exchange and Daiwa Securities Group. This will lead to significant demand for qualified professionals in the finance sector to support the stock exchange and capital market development. Myanmar previously set up a Myanmar Securities Exchange – back in 1996 but trading volumes were extremely low and there was little or no technical or IT infrastructure available for an efficient and effective functioning capital market. However this new development will be significant given the resource and technical assistance provided by the Japanese. With development and effective governance, we can expect the Myanmar Stock Exchange to rival Malaysia’s BURSA, Indonesia’s IDX and Singapore’s exchange by 2030.

 

  • Currency exchange rate – Up until last year, the Myanmar Central Bank had fixed the exchange rate at 6 kyats to the US Dollar. However, the black market rate at the time was about 700 to 800 kyats to the dollar. The Myanmar Central Bank has now implemented a managed floating system – where the official rate is around 850 kyats to the dollar. This has been a signficant development in helping with the modernisation of the Burmese economy and one that will support further investment into the country.

 

  • Adoption of International Financial Reporting Standards – Myanmar has now formally adopted IFRS and have converted them in their entirety to the Myanmar Financial Reporting Standards. This has been instrumental in providing greater clarity and transparency to financial statements being prepared in the country. This will drive further investment into the country as investors have a better view of the financial positions and performance of the firms they are investing in or keen on acquiring.

 

  • Passing of the Investment Law – Myanmar also passed the Foreign Investment Law in November 2012. Some provisions in the law allow for overseas firms to fully own ventures and offers tax breaks and lengthy land leases, amongst other things. However, the bye-laws and regulations to support the Foreign Investment Law have not yet been passed and are still being deliberated by the Myanmar Parliament. However, under the law, details of bye-laws and regulations should come out within 3 months of the law being passed in Parliament so we should expect further developments by March 2013.

 

  • Tax reforms – The government has also announced a slew of tax law and regulatory changes. There is a plan to widen the tax base but also to make it easier for local residents to calculate the tax. The tax-exempt status will also change for citizens at the lower end of the income spectrum. A progressive tax system is in place and is likely to continue.

 

  • Increased foreign investment and donor funding – Myanmar has also benefited from the increased inward investment into the country from multinational firms. Of the accounting firms, PwC, EY and KPMG all have presence now in Myanmar. Coca-Cola has entered into a JV agreement with a local partner. Other MNCs are also increasing their branding and presence in the country. The Asian Development Bank (ADB) and the World Bank (WB) have also approved loans and grants to support Myanmar’s continued economic and social development.

 

  • ASEAN Economic Community (AEC) – There is also a strong support by the Myanmar government and businesses to support the AEC 2015 vision of greater economic integration by all of the members of ASEAN. This requires further development in terms of capacity and capability – and one that will benefit a broad section of the Myanmarese.

 

Exciting times for Myanmar. However, the key thing to address will be to ensure that the economic progress is one that benefits a broad base of the Myanmar population and not one that only serves to widen the income gap between the top earners and the rest of the country. Ignoring the potential consequences of this will only set back Myanmar’s development down the road. It will also be important to ensure that there is continued focus on education and social development. Environmental sustainability also remains crucial. It is easy to ignore the impact of industrial and economic development on the natural environemnt but doing so will again lead to severe consequences for Myanmar in the long run.

However, that said, I am confident that in the years to come, Myanmar will again take leadership within South East Asia both economically and politically like they did back in the day up to the 1960s!