Out-of-step Myanmar faces ASEAN pressure to change

Out-of-step Myanmar faces ASEAN pressure to change

Dominic Whiting, Reuters, Yangon

Myanmar's military rulers, marching completely out of step with
regional efforts to boost trade and investment, could soon face
pressure from Southeast Asian allies to embrace political change,
diplomats say.

Myanmar has been a troublesome partner in the Association of
Southeast Asian Nations (ASEAN) ever since it joined in 1997, and
its generals went a stage further last week by announcing a ban
on all foreign trading firms, most of which are from ASEAN
states.

The move, which Yangon said was aimed at protecting local
businesses, has raised hackles in ASEAN, which is trying to
ensure sustained growth by liberalizing trade and investment.

Thailand's Foreign Minister Surakiart Sathirathai brought up
the issue with his counterpart Win Aung on Saturday and Thai
officials said ASEAN would try to persuade Myanmar to reverse the
decision.

They said Win Aung had replied that foreign trading firms
would have to enter joint ventures with Myanmar companies if they
wanted to continue operating.

Although ASEAN is still far from a collection of model open
economies and sticks to a policy of non-interference in the
affairs of member states, Myanmar's increasingly introspective
line is testing its patience, diplomats in Yangon say.

"A number of the firms are from ASEAN, especially Singapore,"
said one. "It's going to be taken as a very unfriendly
act...another in a long string of insults to investors and
traders."

"It hurts ASEAN's investments -- they don't have a lot of
spare money -- and ASEAN's reputation."

Foreign businesses in Myanmar already face pressure from human
rights groups who say their presence props up the military
regime, and are hampered by offbeat economic policies which blend
mysticism and communist-style central planning.

"People have been pulling out for five years," said a Western
diplomat. "You can make money on deals -- gems, petrochemicals,
teak or drugs -- but fixed investment isn't worth it."

Foreign business people in Yangon warn the ban will cause
imports of essentials such as medicines to dry up. Exports of
Myanmar's main agricultural produce, grains and pulses, will also
suffer and jobs will inevitably be lost, they say.

Myanmar is already slipping down the ranks of the world's
poorest countries, but its ruling generals deny anything is
wrong. They say frequent day-long power cuts are due to newly
prosperous people buying electrical appliances. A slumping
currency and near hyperinflation are blamed on speculators.

Shunned by the West, the generals value the legitimacy ASEAN
membership confers, and clearly revelled in their role as hosts
to a weekend meeting of the group's finance ministers, even if
their uniforms and medals looked curiously out of place among the
sober business suits of visiting delegates.

Escorted to the meeting by scores of machinegun-wielding
soldiers, military intelligence chief Lt. Gen. Khin Nyunt told
ministers Myanmar's economy was "vibrant" and should grow by more
than 6 percent annually in the next five years.

But countries like Malaysia, Singapore and Thailand, which
invested heavily when Myanmar began opening its economy in the
early 1990s, are starting to see it as a burden which not only
offers poor returns, but hurts ASEAN's ties with Western
countries pressing for change.

"These countries have bigger fish to fry," said the Western
diplomat. "Their relations with other countries -- the EU, Japan
and United States -- are very important."

Western diplomats predict that as ASEAN patience with Myanmar
wears thin, key members will start to put pressure on the regime
to press ahead with political change.

The junta has been engaged for the last 18 months in United
Nations-brokered talks with Nobel laureate Aung San Suu Kyi and
her National League for Democracy (NLD), which swept democratic
elections in 1990 by a landslide but was never allowed to rule.

Although the junta has released more than 250 political
prisoners since the talks started and eased some restrictions on
the NLD, progress has been painfully slow. Suu Kyi herself
remains under house arrest and up to 1,600 political prisoners
still languish in jail.

Diplomats say Malaysian Prime Minister Mahathir Mohamad is
perhaps the only figure who could persuade Myanmar's generals to
move forward in the talks.

He is thought to have much influence among Myanmar's top brass
and is the main backer of compatriot and UN envoy Razali Ismail,
who is due to visit Yangon again on April 23.

Diplomats say Mahathir could quietly encourage change without
it appearing to be imposed from outside. "He's the elder
statesman of ASEAN and he's combative as far as ASEAN's relations
with the West are concerned," one said.

"And Malaysia should be an attractive model for them, as in
many ways are China and Vietnam. The models there mean you
preserve national unity and get development as well."