| ECONOMY
Burma is a land of immense economic potential, rich in natural
resources and with an educational tradition still strong despite years
of government neglect. During British colonial rule from the 1820s to
1948, infrastructure was built to tap Burma's vast agricultural and
mineral wealth, and the country became one of the world's leading rice
exporters. A period of steady growth under a democratic government
followed independence, but the military-dominated regime installed after
an army coup in 1962 crippled economic growth by pursuing the
isolationist "Burmese Way to Socialism" for over a quarter
century.
Increasingly desperate economic conditions and years of repression
sparked massive pro-democracy demonstrations in 1988. The army crushed
the uprising and took direct power as the State Law and Order
Restoration Council (SLORC), pledging economic reforms and free
elections. In November 1997, the SLORC renamed itself the State Peace
and Development Council in hopes of improving its international profile.
By any name, the generals have allowed neither democracy nor a true
market economy. Army-run companies dominate most trade and industry.
Massive forced labor is common, and environmentally damaging policies
are pursued for quick profits benefiting only the junta.
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Economic liberalization is bringing some changes. Long-sleepy Rangoon
now bustles with construction, consumer goods, and even traffic jams.
But this superficial development touches few people. For the majority of
Burmese, who are small farmers in rural areas, there is virtually no
benefit. There is only a thin patina of prosperity, and little
development is directed towards building long-term productive capacities.
Severe inflation is driving down buying power and living standards for
most people.
Today, military spending soaks up at least 40% of Burma's estimated
public sector spending, and the junta continues to expand its army
despite an absence of external enemies. The Burmese currency, the kyat,
is overvalued by over 8,000%. Officially pegged at six to the U.S.
dollar, it was worth about 500 per dollar on the open market in early
2001. Urban inflation has run as high as forty percent per year. The
projected government deficit is dangerously high. State enterprises,
especially those controlled by the military, dominate local and joint
venture investments. The Union of Myanmar Economic Holdings Company (UMEH)
is run by the Defense Ministry's Directorate of Procurement and engaged
in almost all joint ventures with foreign companies. The U.S. State
Department's 1999 "Country Commercial Guide" for Burma
estimates that narcotics may be the country's leading monetary export,
and drug profit laundering is believed to seriously influence the
economy. Local investment in hotels and real estate is linked to
families of major heroin traders. These narco-traffickers are allies of
the junta and exercise increasing influence in Burma's economic affairs.
This financial and economic mismanagement distorts the local economy,
raising doubts about long-term progress. Political instability and the
absence of the rule of law is another serious concern. Western consumer
boycotts, and a lack of international finance (including International
Monetary Fund and World Bank loans, export credits, and investment
protection insurance), blocked due to continuing human rights abuses,
compound lingering uncertainties over the regime's commitment to free
markets. The 1997 US ban on new investment in Burma and the 1997 Asian
economic crisis together sharply reduced capital inflows. While official
figures show over $10 billion in foreign investment approved since 1988,
probably only about fifteen to twenty percent of that has reached the
country through 2000, mostly in the petroleum sector.
While city dwellers face fierce inflation and widespread unemployment,
the junta's agricultural policies are also creating grave problems.
Farmers are forced to double and treble crop rice. They must then sell a
quota of their harvest to the state at far below market prices. The
regime exports the rice at world market prices and pockets the
difference. These policies not only penalize farmers and distort the
market economy, but they are also environmentally very dangerous.
Growing additional rice crops and using harsh fertilizers will
eventually destroy soil fertility, damage water supply, and open rice
lands to pestilence traditionally avoided by crop rotation.
Overall, the Burmese junta shows little concern for the environmental
impact of its policies: Clearcutting of valuable hardwoods is wiping out
rainforests and destroying the habitat of ethnic minority people as well
as endangered animals. Commercial overfishing has stolen the traditional
livelihoods of thousands of fishing families. There has been no
independent assessment of the environmental impact of the exploitation
of natural gas in the Gulf of Martaban and of the construction of a
natural gas pipeline across southeastern Burma by the U.S. company
UNOCAL and France's TOTAL.
Economic "development" is proceeding without public input,
reliable economic data, or official accountability. Thousands of people
have been expelled from their homes to make way for infrastructure
projects. Many more have been conscripted as laborers on road and
railway construction in the gas pipeline region and other projects. To
flee such abuse, or simply to seek even basic employment, hundreds of
thousands of Burmese are today refugees and illegal immigrants in
neighboring countries and much farther afield. Democratic rule and
respect for human rights will not necessarily guarantee the best path to
sustainable development. But public debate on the country's priorities
would assure that the devastation of Burma's environment and the
exploitation of its peoples will not continue unchallenged.
FOR FURTHER INFORMATION:
Burma Project, Open Society Institute
400 West 59th Street, 4th floor
New York, NY 10019 USA
tel: (212) 548-0632 fax: (212) 548-4655
e-mail: burma@sorosny.org;
http://burmaproject.org
Burma Desk, U.S. Department of State
EAP/BCLTV, Room 5210
2201 C Street, NW
Washington, DC 20520 USA
tel: (202) 647-3132 fax: (202) 647-3069
http://www.state.gov
The World Bank
1818 H Street, NW
Washington, DC 20433 USA
tel: (202) 458-1939 fax: (202) 477-8094
PUBLICATIONS:
Burma Debate. vol. 4, no. 2 (March/June 1997).
Collignon, Stephan. The Burmese Economy and the Withdrawal
of European Trade Preferences. Brussels: European Institute
for Asian Studies, March 1997.
Economist Intelligence Unit. Country Report: Myanmar
(Burma). London: Economist Intelligence Unit, February 2001.
Khin Maung Kyi. Will Forever Flow the Ayerwaddy?
Singapore: Southeast Asian Affairs, 1994.
Khin Maung Kyi, Ronald Finlay, and R.M. Sundrum (ed.). Economic
Development of Burma: A Vision and a Strategy. Singapore:
Singapore University Press, 2000.
Ministry of National Planning and Economic Development: The
Union of Myanmar. Review of the Financial, Economic and Social
Conditions. Rangoon: Ministry of National Planning and
Economic Development: The Union of Myanmar, 1998.
Mya Maung. The Burma Road to Poverty. New York: Praeger, 1991.
Mya Than and Myeit Than (ed.). Financial Resources For
Development In Myanmar: Lessons from Asia. Singapore:
Institute of Southeast Asian Studies, 2000.
Research Group for the Economic Development of Burma. Economic
Development of Burma: A Vision and a Strategy. Singapore:
Singapore University Press, May 1998.
U.S. Embassy. Country Commercial Guide FY 1999: Burma Report.
Rangoon: U.S. Embassy, 1998.
U.S. Embassy. Foreign Economic Trends Report: Burma 1996.
Rangoon: U.S. Embassy, 1996.
World Bank. Myanmar: Policies for Sustaining Economic Reform.
New York: World Bank, 1995.
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Burma:
Country in Crisis was prepared by Open
Society Institute's Burma project
Content:
Republished
with permission from Open
Society Institute
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