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