Burma Redux: Global Justice and the Quest for Political Reform in Myanmar (16 page)

Economic malaise

By the end of the BSPP years the Burmese economy was close to collapse, giving SLORC little option but to build on the partial agricultural reforms implemented in 1987. Prompted especially by Japan, which long saw economic development as the trigger for political change, it opted for further market opening both internally and externally.
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Broadly, this comprised fresh liberalization of the dominant rural sector, a raft of additional internal reforms, some privatization of state-owned enterprises and some encouragement of domestic and foreign investment.
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As much local capital had long been held by the military, the junta and its close associates quickly became leading players in the fragile and distorted national economy. Foreign capital also started to flow into the country, and joint ventures were formed with state agencies such as the Union of Myanmar Economic Holdings, Myanmar Economic Corporation, and Myanma Oil and Gas Enterprise.
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Two decades on, however, the economy remained mired in corruption and inefficiency, and the country was into its third decade on the UN’s LDC list. Further privatization in the run-up to the 2010 general election saw more state firms sold to military leaders and associates at fire-sale prices.

On the domestic front, the rice sector that remains the base of the rural economy was no longer viewed as the foundation for broad-based modernization, but rather as a critical tool for regime maintenance. Ikuko Okamoto notes that ever since the late 1980s the principal policy thrust has thus been “stable supply of rice at a low price,” designed to deliver political security.
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For this reason, a lifting of the ban on private export of agricultural produce in 1988 did not extend to rice. Indeed, compulsory procurement was partially revived in 1989, though at reduced volumes. When further reform followed in April 2003, it freed up the domestic market but retained regulation of the export trade. The overall effect was to reanimate private milling and trading, such that by the late 1990s, a decade on from the initial reforms, some 30–40 percent of all yield was traded in the market. Furthermore, total production increased by roughly 50 percent over the same time span, and nearly doubled from the late 1980s to the mid-2000s.
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By and large, the regime succeeded in its core aim of ensuring a stable supply of rice throughout the country, and though prices fluctuated a great deal they stayed broadly within the realm of affordability. Prices of other basic foodstuffs were also kept at low levels.
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In the early years of SLORC control, chaotic entrepreneurship on the part of senior officials and military commanders was common. Ministries might get involved in almost any business, and frequently did. While much activity was cleaned up in 1997 with the shift to the SPDC, there was still extensive corruption.
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Always the junta had elements of kleptocracy, and the more open economic system created after 1988 was one of the most extreme forms of crony capitalism found anywhere in the world.
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Indeed, as the period unfolded, the predatory nature of the ruling elite was revealed in manifold ways, from deals with opium kingpin Khun Sa to routine appearances of junta family members and associates at the fancier clubs and hotels in Yangon. Rarely were the perks of power more flagrantly displayed than in the infamous July 2006 wedding of Than Shwe’s youngest daughter, Thandar Shwe, and Major Zaw Phyo Win, Deputy Director of the Ministry of Commerce. Filmed on bootleg video and widely circulated, the gold-encrusted ceremony fully encapsulated the vulgar opulence and rapacious extravagance of the military hierarchy.
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At the same time, there was always quasi-official authorization for illegal business.
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For many years a grave problem was narcotics production in parts of Shan State controlled either by the
tatmadaw
, or by ethnic militias such as the United Wa State Army formed through mutiny in the CPB.
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Although kickbacks tended to flow into the pockets of military personnel at all levels, central and regional commanders were especially favored.
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Less visible, but undeniably important, was the tentative emergence of small and medium enterprises in, for instance, the fisheries sector.
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On the side of inward investment, Myanmar witnessed some high-profile cases in the late 1980s and early 1990s. However, almost all mobile western capital left within a few years, driven out by consumer boycotts of major brands and a generally difficult business environment.
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Tourism was also affected by activist campaigns, though it is not unusual for political violence to drive people away.
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A Visit Myanmar Year 1996 was a failure, and in 2010 international visitor arrivals were put at only 311,000 against 16 million for neighboring Thailand.
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Formal sanctions, imposed late in the day and only ever partial, served mainly to confirm individual and corporate decisions taken years previously. By the end of the period, the major western investors were in resource extraction, and even they were few in number.
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Less visible Asian investment, sometimes illegal, was harder to document. Approved foreign direct investment as of March 2006 shows that Thailand was by far the largest investor with a 55 percent stake. However, the extent of Chinese inward investment, put at 1.5 percent of the approved total, was clearly understated.
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China and Thailand were also the two major trading partners.
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The signing on November 2, 2010, days before the general election, of a $10 billion Thai deal to create a vast industrial complex at Dawei, deep in the south of Myanmar, looked set to transform investment patterns, stimulate local economic development, and even have broad political impacts.
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In January 2011, this strategic initiative was formalized in a Dawei Special Economic Zone Law, patterned on Shenzhen in southern China and the first of its kind in Myanmar.

Underpinning some of this activity was ongoing infrastructural investment. From the start, the junta built part of its claim to legitimacy on economic growth stimulated by road, bridge, dam, hydropower, school, hospital, communication and other projects. On many days, the only real domestic news was infrastructure improvement reported at length in state media. Undoubtedly there was some achievement here.
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At the same time, though, development was often used as one more excuse to confiscate land, displace farmers, impose taxes, and enrich military commanders and their associates.
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Furthermore, the planning agenda was set at very high levels of government, and allowed for little or no grassroots input. As a result, priorities were skewed and projects to develop rural areas and dam major rivers had strongly negative impacts on local communities. In the late junta years, a rash of reports documented alleged abuse, and collectively built a case against military expansionism and control of contested territory. Graphic titles included
Valley of Darkness
(2007),
Turning Treasure into Tears
(2007),
Development by Decree
(2007),
In the Balance
(2007),
Damming the Irrawaddy
(2007),
Biofuel by Decree
(2008),
Drowning the Green Ghosts of Kayanland
(2008),
Laid Waste
(2009),
Robbing the Future
(2009),
Roots and Resilience
(2009),
Resisting the Flood
(2009),
Tyrants, Tycoons and Tigers
(2010) and
Poison Clouds
(2011).
⁸⁰

An additional problem with much economic activity was exploitation. At the extreme, forced labor took place, and was monitored by the International Labour Organization.
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In rural areas USDA officials might require village households each to supply one member for manual work. If a road was being built, nearby township authorities would be asked to assist. Mark Duffield notes that “In this way 150 people can be taken out of a village for a week at a time to work on the road.”
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Those unable to comply had either to nominate someone else or pay a fine. Sometimes both penalties were applied.
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Also pervasive was environmental degradation, no more than marginally relieved by the adoption of a National Environmental Policy in 1994, a Myanmar Agenda 21 blueprint in 1997, and a National Sustainable Development Strategy in 2009.
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The important forestry sector, once managed as well as anywhere in the world, was in crisis with illegal logging in Kachin and Shan States a key factor.
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The mining industry also generated grave concern about working conditions and environmental damage.
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At What Price?
, a 2004 report on rampant gold mining in Kachin State, noted many harmful impacts: “Pollution, degradation and destruction of large tracts of land, extremes of wealth and poverty, disturbance of communities, violence, gambling, prostitution and spread of disease.”
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Much the same could be said of gem and jade mining in ethnic nationality areas. Some quality stones were later auctioned at emporia organized roughly twice a year in Yangon by state-run Myanmar Gems Enterprise. Lesser products were sold directly by brokers in mining and border towns.
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Corruption was easy and endemic.

At the end of more than two decades of government by junta it was difficult to assess the state of the economy, not least because systematic data were scarce and unreliable. Official statistics recorded robust development. Annual GDP growth was put at between 6 and 14 percent for the decade from 1993 to 2003, when a classic bank run prefigured a shift into recession.
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In January 2011,
The Economist
placed Myanmar at number three on a list of the world’s fastest-growing economies, with average annual growth of 10.3 percent from 2001 to 2010.
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However, aggregate claims of roughly 10 percent growth per annum over a 20-year period cannot be taken seriously. While nobody denies that the starting point was extremely low, the notion that the economy has expanded seven-fold since the early 1990s is impossible to square with other data or grassroots experience. Across the entire period, for instance, the structure of the economy changed little. Consistently from 1990 to 2004, agriculture accounted for 55–60 percent of GDP, and manufacturing for only 7–9 percent. By comparison, other regional states such as Cambodia, Laos and Vietnam witnessed a significant shift from agriculture to manufacturing.
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Unless Myanmar’s agricultural sector was performing miraculously, its economy was not a regional leader.

More plausibly, Sean Turnell, Wylie Bradford and Alison Vicary put annual growth at 3 percent per annum, driven above all by the booming gas trade. In 2006–07, this was worth nearly 40 percent of exports by value, and forecast to bring in $2–4 billion annually for the next 20–30 years.
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However, they noted that gas delivered scant benefit to ordinary people, and much of the revenue stream was in any case diverted into private accounts through a devious multiple exchange rate system. Beyond extraction, the economy was “essentially stagnant.”
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The core remained a collapsing agricultural sector, though a rare positive story was pulse and bean exports, successful “largely as a consequence of the absence of state intervention.”
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The team cited a 2009 GDP estimate of $280 per capita at market exchange rates, with at least 70 percent spent on food.
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This was less than half the UN’s 2008 figure of $578 per capita within a GDP of roughly $29 billion.
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Given the fragility of all statistics, little more than extreme poverty can be read into either calculation. For many, remittances totaling more than $300 million per year in the late 2000s were critical.
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