A Burmese court granted bail Tuesday to an Australian newspaper boss, who said he would continue to fight a prosecution that some have suggested stems from a power struggle.

Ross Dunkley, co-founder of the Myanmar Times, the country’s only newspaper with foreign investment, is on trial in Kamaryut Township court on charges of assaulting a 29-year-old woman and breaching immigration rules.

He was arrested in the military-dominated country on 12 February and held in Rang0on’s notorious Insein prison until he was bailed Tuesday for 10 million kyat ($US11,800).

“I’ll be staying in the country and will continue to fight the case. I just can’t believe there is a case,” Dunkley told AFP after his release.

“There is no witness, there is no evidence. I have no intention to let this go on.”

The woman Dunkley is accused of assaulting, Khine Sar Win, has previously asked for her complaint to be withdrawn, saying she was pregnant and unable to travel to court, but her request was rejected.

Shortly after Dunkley’s arrest, a business partner in Cambodia, David Armstrong, suggested the newspaper editor was the victim of a dispute at his company.

His arrest “coincides with tense and protracted discussions” between foreign and domestic investors in the paper, Armstrong said in a statement.

Dunkley co-founded the Myanmar Times in 2000 with local partner Sonny Swe, the son of an influential member of the junta’s military intelligence service.

But Sonny Swe was jailed in 2005 and his 51 per cent stake in the paper’s publisher Myanmar Consolidated Media (MCM) handed to Tin Tun Oo, who is thought to be close to the regime’s information minister.

Since his jailing, Dunkley has been replaced by Tin Tun Oo as chief executive of MCM, which is 49-percent controlled by the Australian and his foreign partners.

Tin Tun Oo paid half of Dunkley’s bail sum on Tuesday, having told AFP earlier this month that there was no business dispute.

The next hearing is on 4 April.