Commodity Prices, Cronyism Threaten Burma’s Economy: UN
Noeleen Heyzer, United Nations under-secretary general, says that Burma is facing a huge opportunity. (Photo: UN)
BANGKOK—Burma’s economic prospects could be undermined by volatile commodity prices, according to the United Nations, which says that reliance on the now-lucrative oil and gas sectors could hinder fiscal modernization.
Western companies appear eager to tap into Burma’s natural resources as US and EU sanctions are relaxed or suspended in the wake of a succession of recent reforms such as the freeing of political prisoners and the holding of free and fair by-elections on April 1.
But although the United Nations Economic and Social Commission for Asia-Pacific (UN-ESCAP) predicts 6.2 percent economic growth for Burma in 2012, the region remains vulnerable to fluctuating prices of commodities such as oil and the ongoing debt crisis in Europe.
Demand for primary resources from large “emerging” economies such as China and India has pushed oil and gas prices upwards. This means extra revenues for the Burmese government and, given the recent ending of the country’s dual exchange rate system, possibly a more transparent disclosure of the nation’s energy earnings.
But in an April research note on Burma’s economy, the US-based Carnegie Endowment for International Peace warned that “it is critical that these net earnings are transferred to the budget and used for social and infrastructure development, especially in regions with ethnic minorities.”
Otherwise, Burma could fall victim to the so-called “resource curse” with “commodity boom countries falling back in terms of overall modernization and diversification of their economies,” according to UN-ESCAP.
To counter this, Burma needs a stronger non-resource sector and “investments in education, health, rural development and infrastructure,” says UN-ESCAP. Around 75 percent of the Burmese population does not have access to electricity, despite the country’s huge oil, gas and hydropower resources.
Other prospective threats to Burma’s economy include increased inflation on the back of an investment surge, and an increase of speculative capital flowing in and out of the country. Inflation in Burma could hit 6.2 percent (the same as the projected growth rate) during 2012, warns UN-ESCAP, hitting the millions of Burmese who live on US $1-2 a day.
Nonetheless, the lifting of sanctions and apparent emergence of a more business-friendly administration represents “a tremendous opportunity for Myanmar,” said Noeleen Heyzer, United Nations Under-Secretary General and Executive Secretary of UN-ESCAP.
However, she cautioned that Burma’s re-emergence into the global economy is at a very early stage and that concerns regarding nepotism and cronyism remain. “There needs to be support for new small and medium enterprises so that growth is not driven by monopolies and families,” she said, speaking at the launch the 2012 Economic and Social Survey of Asia and the Pacific in Bangkok on Thursday.
Despite a 26 percent increase in tourist numbers and the drafting of a new foreign investment law, Burma’s economy “still suffers from restrictive measures, such as licensing, which pose barriers to manufacturing and agriculture.”
The recent relaxation of some US sanctions and the one-year suspension of EU restrictions will also free-up donor countries to expand aid programs in Burma. “There will be an inflow of development aid but I predict that private sector investment will be a driver of growth,” cautioned Noeleen Heyzer.
Rapid aid inflows have a poor track record in Asia, according to the Asia Foundation. “When international assistance scales up rapidly in a place unaccustomed and unprepared for large-scale aid, problems are likely to follow,” it said in a note published on Wednesday titled How Can International Assistance to Burma Avoid Mistakes of the Past?
“In post-tsunami Aceh and Sri Lanka, and post-transition Timor-Leste, large-scale aid often created perverse incentives that led to poor program quality and wasted resources.”
In Burma’s case, political and economic transition could be undermined if donors neglect the country’s ethnic minority borderlands, where on-off fighting has taken place in some regions since the late 1940s.
While the longest-standing ethnic militia, the Karen National Union, has signed a ceasefire with the Naypyidaw administration, fighting continues in Burma’s far north between government troops and the Kachin Independence Organisation.
Kachin NGOs complain that donors and aid agencies are neglecting the more than 70,000 civilians left homeless by the fighting, and the Asia Foundation writes that “neglecting the remote conflict areas could lead to a renewed cycle of armed resistance and military suppression, putting the whole transition at risk.”
True laissez-faire for Burma now.Just about anyone can come in and do anything they want like Yuzana is in the north or Zaw Zaw is in Irrawaddy and Tavoy and pay little or no tax in the most corrupt system.
It will certainly be an experiment in haphazardly regulated destruction of a vast virgin land.
The Americans are acting like a kitten wishing to eat a frog. Desirous but hesitant. Unfamiliar, opaque. True to a degree for the EU/ Australia.But the Asians typically would act like the dog gulping down the frog. Likewise they will then have to bring it out. By then the frog is dead.
“There needs to be support for new small and medium enterprises so that growth is not driven by monopolies and families,” she said RIGHTLY as well.
Yes, foreign investments and other monetary assistance (IMF and others) in Burma should not FALL INTO THE HANDS of the former and active military officers and their CRONIES and FAMILIES MONOPOLIZING BUSINESSES and ECONOMY of Burma today.
Specifically, Tay Za, Khin Shwe, Steven Law, Zaw Zaw and families of Than Shwe, Maung Aye, Aung Thaung, Shwe Mann and the lot at Naypyidaw have ROBBED and STOLEN the country’s natural RESOURCES and LANDS and SPLIT the LOOT with Than Shwe, Tin Aung Myint Oo, Maung Aye and amongst other military officers.
Tin Aung Myint Oo and Steven Law (son of drug warlord Khun Sa) have their STAKES in Myitsone Dam Project with the Chinese communists next door.
Thein Sein ordered the Myitsone Dam Project HALTED some months back.
And Min Aung Hlaing continued attacks on KIA despite Thein Sein’s orders to HALT the HOSTILITIES in Kachin State until today.
Lifting sanctions and kick starting the country’s economy at this time and juncture when/where the country’s president has NO AUTHORITY OVER THE MILITARY, A PROXY of the Chinese communists – Min Aung Hlaing (C-in-C Burma Army) was China’s PICK since day one and head of the National Defense and Security Council, above the president, parliament and the LAW as well – and BENT on FINISHING OFF the KIA for China’s projects to meet their deadline (2013) would HOLD NO WATER for that matter trust me.
Thein Sein’s STALLING TACTIC (forming a peace committee headed by him) is JUST to LURE FOREIGN INVESTMENTS and other international businesses into Burma while there are NO PROPER LAWS/MECHANISMS and specifically RELEVANT ECONOMIC POLICIES for EQUAL DISTRIBUTION of BUSINESS and WEALTH are in place for the people of Burma other than to FATTEN THE WALLETS of the CRONIES and FAMILIES of the military generals.
As long as the monk murderer (Than Shwe) is STILL ALIVE and KICKING ASS, LIFTING SANCTIONS or INVESTING IN BURMA would only SERVE THE INTERESTS of the lot at Naypyidaw, their CRONIES and their FAMILIES as well lest all would-be investors/bankers forget.
Untill and unless cronism, nepotism and familism exist in Burma it endanger to invest. at such the rulke of law is not yet practice and stll killing peoples in the north so how can say that there is peace. So what you invest is still in their hand pickup companies hand.
The law said there must be one Myanmar company shall have to join with foreigners, that mean that Myanmart company is belong to their families not ordinary citizens. Taht is why Burma has to go long way to eliminate croniosm, nepotism and familism of Elite.
Burma is still a feudal oligarchy based on rampant corruption, patronage and nepotism. Many Asian countries are like that. It would be very difficult to establish democracy, human rights, law and order and all that idealistic stuff that Suu Kyi likes to talk about. Talk is cheap. Burma needs a “French Revolution” of sorts, but I’m afraid that would never happen. This economic “opening up” is not going to be of any benefit to the 99%. They don’t even have electricity!
Burma belongs to the people of Burma. Croneyism and corruption for years resulted in profits (and mansions, cars, long-term obscene and insane waste) for some – and death and dispossession for many. No excuses.
Sound government (especially after REAL elections in 2015) and rule of law in the meantime, combined with ABSOLUTE press freedom, and international scrutiny, will put Burma well on the way to recovery.
At the moment those who held the country absurdly to ransom and got very fat from the ghastly proceeds of murder and poverty and mismanagement are still making their play for power. ALL DEALS and INVESTMENTS need scrutiny and public/NLD overseer.
Meanwhile, HEALTH and EDUCATION are global priorities – that the whole world can assist with.And I don’t mean tokenism in exchange for more deals!
Back off China. It is not your time here to exploit. You had your chance and blew it: BIG-TIME! China needs to look at its internal corruption and brutality on all levels.
Those false promises is much like fake names you painted a picture for me but there was no frame.
Corrupt generals like Aung Thaung are still in the government. There is no way soon to see clean government in Burma.
President Thein Sein has seen Singapore as a model when his mentor the Senior General once asked Mr Lee Kuan Yew about what Singapore had after selling the whole country to foreigners?I think the emperor was probably right in this one.
President Thein Sein and ms Aung San Suu Kyi should be careful when they want to copy successful economic models,Singapore is probably not the best choice although they can learn some useful things from Singapore.