"What the year 1358 has in store of

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Subject: "What the year 1358 has in store of Myanmar" Asia Times

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Asia Times
April 17, 1996

WHAT THE YEAR 1358 HAS IN STORE FOR
MYANMAR

Stephen Brookes 

As Myanmar dries out from the water festival that ushered in
the new year today it's perhaps an opportune time to assess the
state of the nation and offer a few predictions about what the
new year - 1358, in the tradition al Myanmar calendar - may
hold in store.

Despite persistent weaknesses in the economy, even its critics
admit that Myanmar is entering the new year on a strong
footing. The country is riding on a wave of political stability
and sustained economic growth that it hasn't known in
decades and which shows no signs of abating.

Cease-fire agreements were signed last year with most of the
ethnic separatist groups, and the ruling State Law and Order
Restoration Council (SLORC) is  rapidly shedding the
isolationism that marked most of the past three decades and is
moving rapidly toward an open market economy.

The international investment community is swarming over
Myanmar in search of opportunities and gross domestic
product grew at an estimated 9.8 percent rate in the fiscal year
just ended -- a staggering rate for a country that only a decade
ago was mired in a dead - end "Burmese Path to Socialism".

The sense of dynamic economic development  is palatable
everywhere, as new office buildings, hotels, shopping centers
and apartment blocks redefine the skylines of Yangon and
Mandalay.  

Consumer goods unheard of a few years ago are now widely
available. The value of approved foreign investment reached
more than US$3 billion by last December, and both imports
and exports rose last year more than 50 percent in dollar
terms.

New infrastructure projects, including highways, airports and
telecommunications lines, are enhancing the pace of growth,
and the reopening of the border with Thailand earlier this year
- after being closed for much of 1995 -- is likely to boost
Myanmar's external trade levels even higher.

The rapid growth is not without its problems, of course --
annual inflation is still estimated at more than 21 percent,
though this is down from the levels of previous years when
inflation reached close to 40 percent. 

The dual exchange rate for the kyat -- which trades at a
market rate 20 times higher than the official rate - still causes
trade distortions. The banking sector is liberalizing, though
still hamstrung by state - mandated interest rates. And the
privatization program is proceeding more slowly than it
might. 

Nevertheless, economic opportunities spreading through the
economy, jobs are being created in the expanding private
sector and an entire new generation of entrepreneurs is
emerging. 

On the political front, the SLORC insists it is moving toward
multiparty democracy and the national constitutional
convention has approved five of the 15 chapters under debate. 
There are reports that the convention has been moved onto a
"fast track" schedule, and may be completed this year,
opening the way to elections in the future.  

The main opposition group, the National League for
Democracy led by Aung San Suu Kyi, has been increasingly
sidelined in the political life of the country since withdrawing
from the constitutional convention last November and appears
to be losing support.

Since her release from house detention, Suu Kyi has rarely
left her lakeside Yangon villa, where she delivers pro -
democracy speeches to her supporters, criticizes the
government's human rights record and economic policies and
issues calls to the foreign business community to refrain from
investing in Myanmar.

While Suu Kyi's rhetoric plays well in the West, however, it
appears to be less effective at home.  "I admire her integrity
and her principles, as many people do," said one local
businessman, a former supporter of Suu Kyi's National
League for Democracy.  "But to be honest, she's just not
relevant any more.  People here want the foreign investors to
come in.  They want the jobs.  They're excited about the
changes.  They want the IMF to help us develop.  I don't
think Suu Kyi really understands that.  She's just not in touch
with what's going on in the country now.  She's still living in
1988."

Despite her pleas that investors stay away (she argues that
Myanmar can't have sustainable growth without democracy),
large numbers of them have been exploring investment
opportunities.  And her widely- publicized remark last
summer that the SLORC must choose between "dialogue or
utter devastation" has proved to be as empty as it was
dramatic.  There has been no dialogue, and the country is
booming.

The failure of her tactics has made her seem increasingly
impotent and irrelevant to the changes going on in Myanmar,
say political analysts here, and her decision to pull the NLD
out of the country's constitutional convention last year only
weakened her further.

Rapidly losing both influence and supporters, with no
coherent economic strategy to offer, the future of the NLD is
one of the key political questions the country faces in the
coming year.

Against this political and economic backdrop, it's interesting
to make a few predictions for 1358:

Prediction One: Myanmar'[s economy will continue to grow
rapidly.  Despite the remaining distortions in the economy,
gross domestic product can be expected to expand at a rate of
more than seven percent annually, due to continued capital
inflows, mobilization of domestic savings, confidence in
political stability, increased opportunities for entrepreneurs,
continued privatization of state - owned enterprises, improved
infrastructure, the likelihood of increased foreign aid, and
other factors.

Agriculture, which makes up 55 percent of GDP, is being
aided by government sponsored irrigation and fertilization
programs, and is expected to continue the spectacular growth
it has enjoyed for the past several years.

And one of the key obstacles to industrial expansion -- the
inadequate energy supply -- should be helped by new supplies
of natural gas coming on line and the installation of gas
turbine engines.

Prediction Two: Foreign investment may level out, but
domestic investment will increase.  Businessmen are still
scared of missing out on Myanmar's spectacular growth, but
as more realistic expectations set in, foreign investment may
slow from its frenetic pace of past years.  Much of the recent
investment has been in the hotel sector, and that may slow as
investors assess occupancy rates during Visit Myanmar Year
1996.

Domestic investment is expected to increase, however, as
more opportunities become available.  Myanmar's first stock
market will be opening this year, the banking sector is slowly
being liberalized, and the huge amount of domestic savings
that is now in the underground banking sector is starting to
move back into the mainstream economy as savers regain
confidence in the economy.

Prediction Three: International aid will not flow in on a major
scale.  Myanmar is deeply in arrears on its foreign debt, for
which it may receive help from individual countries.  Japan,
for example, recently agreed on the extension of debt - relief
grants.

However, while a number of countries, including Japan and
South Korea, would like to see the IMF resume loans to
Myanmar (specifically to provide the balance - of - payments
support that would allow a smooth devaluation of the kyat),
Washington is likely to continue to veto such aid.  But as the
SLORC moves to meet more of the IMF economic criteria for
loans, Washington will face increasing isolation.

Prediction Four: Aung San Suu Kyi will go on the offensive. 
Yangon is rife with rumors that the NLD, frustrated over
increasing irrelevance, is planning a dramatic confrontation
with the government.  One possibility is that Suu Kyi and her
supporters would deliberately get themselves arrested in an
act of civil disobedience, thereby refocusing the attention of
the world press on themselves and possibly inspiring a
national popular response.

Few think a strategy is realistic, however.  "Suu Kyi thinks
that the country is ripe for revolution, that people will rise up
against the government."  says one diplomat in Yangon.  "But
it isn't -- that's just wishful thinking on her part.  And the
SLORC isn't stupid.  They know that arresting her would
only strengthen her position.  They would arrest her
supporters and leave her alone."

Prediction Five: Some personnel changes in the government
are possible.  Many of the members of the ruling SLORC are
over the usual mandatory military retirement age of 60 and
may retire this year.  A number of military officials have been
promoted in the past year, creating seven new Ministers
Without Portfolio.

Prediction Six: The policy of forced labor may be gradually
abandoned.  The government has been defending its use of
forced labor in road building and other projects in recent
months, but may decide that the negative international
publicity isn't worth the price of free labor.  It's already
started to give out new road projects to private companies.

Prediction Seven: The United States will become increasingly
isolated.  Despite the likelihood of more student protests on
college campuses and the posturing of some Congressmen and
Senators, the Clinton administration is unlikely to risk
abandoning its fence - sitting policy during the election year. 
Moreover, the US business community is said to be
increasingly hostile toward legislation that would forbid
American companies from investing in Myanmar.

Prediction Eight: Myanmar will move closer to Asean.  In
fact, Myanmar may join the AEAN Regional Forum this
year, as part of its desire to become more involved in regional
security and political issues.  In contrast tot he position taken
by the United States, ASEAN has expressed a desire for
"constructive engagement" with Myanmar.  With the US and
Europe still opposing the SLORC's politics, Myanmar's
future looks increasingly closely involved with its Asian
neighbors.

Stephen Brooks is an Asia Times correspondent based in
Yangon.
 

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