Economic slowdown prods Myanmar toward reform
Economic slowdown prods Myanmar toward reform
By Edward Tang
YANGON: Naing, a street vendor, makes a living selling odds
and ends in the Myanmar capital. His "shop", a floor mat about
1.2 meter by 1.8 meter, is found on the pavement along Maha
Bandoola Garden Street in the heart of Yangon.
Hundreds of vendors have made this busy stretch of road their
business address. Like Naing, they eke out a living selling
simple items like pens, pencils, combs and toothbrushes.
They earn an average of 1,000 kyat a day or about US$1.50
(S$2.75), hardly enough to cope with surging inflation of 40
percent in the city.
Naing had heard vaguely that the military government has been
holding secret talks with opposition leader Aung San Suu Kyi, who
has been under house arrest since September, to hammer out a
power-sharing deal.
He said: "We don't know what is happening. Both sides have not
disclosed details of the meetings. We hope it's for real this
time because we don't want to be disappointed again."
The talks are important for Naing and the bulk of the 52
million Myanmar population, many living below the poverty line --
a reality which is not officially recognized.
A breakthrough in the political stalemate will bring back much
needed foreign investment and development aid to the country.
A rapidly declining economy is believed to be main reason
behind the move by the State Peace and Development Council (SPDC)
-- the name of the Myanmar government -- to open dialog with Ms
Suu Kyi, who leads the opposition party, National League for
Democracy (NLD).
Dominated by generals, the SPDC launched a major crackdown on
student dissidents in 1988 and seized power after canceling the
results of a general election won by the NLD in 1990.
More than 100 opposition politicians were thrown into prison,
and many are still languishing there despite recent releases. An
international economic embargo led mainly by Western nations
failed to dislodge the SPDC from its hardline position.
Following strong economic growth of around 8 percent in the
early 1990s, the Myanmar economy has slowed down to 5 percent in
recent years, according to official estimates.
The real figure is believed to be lower but, in the absence of
reliable data, even international organizations like the Asian
Development Bank (ADB) are hard-pressed to come up with accurate
assessments of just how bad the state of the economy is.
The economic slowdown has been attributed to bad weather
conditions which have affected agricultural output, shortage of
foreign exchange to buy fertilizers and pesticides, and the 1997
regional financial crisis which halted foreign investments in the
country.
Agriculture is the most important economic sector, accounting
for almost half of the nation's gross domestic product and
providing 60 percent of jobs in the country.
Major exports such as beans and pulses, seafood and forest
products have dipped due to poor planning and drop in overseas
demand.
Tourism, a major revenue earner, is another casualty of the
country's political problems.
Bodo Becker, general manager of the Singaporean-owned, five-
star Sedona Hotel, told The Straits Times: "Each time the foreign
media reports about instability in the country, hotel occupancy
drops."
Hotels in Yangon are believed to be suffering from occupancy
rates of as low as 35 percent.
The owner of a local travel agency said business had gone from
"bad to worse" in recent years. "It has not been easy. I have not
seen a good day in the last 12 years," he said.
Tight government controls like the ban on Internet cafes and
compulsory purchase of US$200 of foreign-exchange certificates
for incoming tourists have made Cambodia, Laos and Vietnam more
attractive destinations, he said.
Bearing the brunt of the economic pressure is the kyat. The
local currency has plunged to 650 units to the U.S. dollar from
350 kyat just six months ago. The current rate is more than 100
times the official exchange rate of 6 kyat to the U.S. dollar.
The rapid decline is reportedly due to the injection of kyat
supply into the financial system by the central bank and the drop
in trade with Thailand since the closure of border checkpoints
after a tiff between the two neighbors in February. Border trade
accounts for 30 percent of Myanmar's total exports.
The weakened kyat has led to soaring inflation in the city and
the consumer price index in Yangon shot up to 49 percent,
according to the ADB.
The huge distortion between the official and black-market
rates poses a big headache for businessmen who have to source for
hard currency to settle transactions. It is also a major
deterrent to foreign investors.
The government knows that dismantling the two-tier exchange-
rate system would cause the collapse of the economy and give the
opposition fresh political ammunition. But to do nothing would be
like sitting on a powder keg.
A Yangon-based analyst said: "The SPDC has been in power for
over 12 years but it has not been able to drive the economy
forward despite opening its doors to foreigners."
Hence, the move to initiate reconciliation talks with Suu Kyi.
Spearheaded by Lt. Gen. Khin Nyunt, the powerful military
intelligence chief who holds the appointment of Secretary 1 in
the SPDC, the talks, which began in October, have been shrouded
in secrecy.
Both sides have pledged not to divulge details of the dialog
and to cease attacking each other publicly, fueling speculation
that the talks have reached a substantive stage.
According to a source, the key issues to be discussed include
the formation of a coalition government, fresh elections and
amnesty for the SPDC.
One speculation is that the SPDC would retain command over the
defense, interior and foreign ministries but relinquish control
of economic portfolios to the NLD.
The government would also release more political prisoners and
set a date for a general election, which could be as soon as two
years from now.
In return, the NLD would agree to forgo their 1990 election
victory and cooperate in drafting a new constitution that
protects the interests of the military.
Significantly, Suu Kyi has refused to meet foreign
diplomats,including the British ambassador, a strong supporter of
the opposition leader, since the talks began.
But the vow of silence was broken last week by Foreign
Minister Win Aung amid rumors that the talks have been stalled
because some generals were concerned that their interests would
be hurt by the political rapprochement with the NLD.
"The process is not stalled. We are not doing it for the media
nor is it a public relations stunt," the minister told a press
conference after an informal meeting of ASEAN foreign ministers
in the Myanmar capital.
"This is for the sake of the people of Myanmar -- 52 million
people. We don't play games. If we played games, we might have
played a long time ago," he added.
But he said no time frame has been set.
"There is no set time for the dialog or peace process in
Northern Ireland or Sri Lanka or in the Middle East," he
commented.
"This is not a process where you can start a countdown. It is
a process that is timeless."
His remarks failed to lift the veil of secrecy covering the
talks, except that they confirm the dialog has indeed entered a
"complex and delicate" stage.
But the process was not "irreversible", said an Asian
diplomat. "It is at a very sensitive stage. A lot of vested
interests could be hurt," he said.
It is believed that UN Special Envoy Razali Ismail, who played
a role in getting the two sides to talk, has been barred from
Yangon, sparking fears that the dialog was unraveling.
Asked for his comments, Win Aung replied: "He will be invited
to visit at an appropriate time."
On the whole, the SPDC has already reaped early rewards from
its political initiative. The Japanese government last month
announced a US$29-million aid package to Myanmar to build a
hydroelectric dam -- a move aimed at encouraging the SPDC to keep
the dialog alive.
But dangling the carrot at this sensitive stage is seen as
premature and may even undermine Suu Kyi's bargaining position.
In recent weeks, analysts have tempered their expectations of
the talks.
As one former Myanmar ambassador, who was dismissed in 1988
for supporting the democracy movement, said: "I don't expect any
positive results. This government cannot be trusted."
Despite the massive economic problems it faces, the SPDC was
not in a hurry to give up power, he said.
"Don't forget they are soldiers. They are used to giving, not
taking, orders," he said.
The writer is the Thailand Correspondent of The Straits Times.
He was in Myanmar recently to cover an informal meeting of ASEAN
foreign ministers.
-- The Straits Times/Asia News Network