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Burma's bumpy ride toward a free market
By Thomas Crampton
International Herald Tribune
March 25, 1998
 
New rice policies sow anger and confusion
PEGU, Burma- In the future, San Thaung hopes everything in Burma goes the
way of beans. San Thaung, a lifelong rice farmer, started growing lentils
about five years ago, after the government announced that beans could be
sold for export. He has expanded his crop every year instead of planting
more of the rice that he was being forced to sell at a discount to the
government.
 
In the midst of the rice harvest in November, however, the government
announced a new policy: All rice sales would be voluntary, taking place on
the open market. The move was intended to make the government more popular
among the rural population and push the economy toward a free-market
system. It ended in failure when farmers withheld their rice from the
markets because the harvest was poor and kept what they had for their
families.
 
Though it was badly communicated and hastily executed, the liberalization
of rice sales offers a look at the military government's faltering efforts
to move Burma away from a socialist-style command economy.
 
When Burma dismantled a segment of the state-planned system of agriculture
in 1988 after the current military government took over, bean exports
quintupled in less than a decade. In opening up the rice market in a
similar manner, government planners hopes the fertile Irrawaddy River
delta could be harnessed to lift the nation out of poverty in an
agriculture-based economic boom, along the lines of what happened in
Thailand.
 
Instead, policy flip-flops have left farmers angry and bewildered and some
of them afraid they may go hungry this year. "This year, the
rice-collection, system was different in every region." San Thaug said
recently in his fields near Pegu, northeast of Rangoon. "We still had to
sell a quota of rice to the government here, but I met some farmers from
Rangoon who said they did not have to sell any quota at all."
 
For years, Burma farmers had been required to sell 12 baskets of rice per
acre at a discount to help feed the country's civil servants and soldiers.
 
Even during the most bountiful harvests from the 14 acres (nearly 6
hectares) that he rents, San Thaung has had difficulty meeting the quota
and still keeping enough rice to feed his family.
 
"This year it was even worse because of flooding," he said, so when given
the option not to sell their rice, most farmers did not.
 
The result was rice shortages. Some analysts estimate that the government
managed to buy less than one-third of the rice it needed before being
forced to abandon the open-market system.
 
"If the authority hear me say this, they will be angry, but the fact is
that we were told we did not have to sell rice," one of San Thaung's
neighbor said. "But then in January, they threatened to send me to jail if
I did not bring baskets of rice to the government depot."
 
Government officials acknowledge there were difficulties with the new
method but say they are determined to press on with reforms.
 
"Whenever you introduce a new system, people are reluctant to do and do
not want to do it," said Brigadier General Maung Maung, a cabinet
minister.
 
More than 60% of the country's population is involved in agriculture, so
any changes of policy regarding crops have far-reaching political
consequences.
 
Another cabinet minister, General David Abel, said the government was
determined to stick to reforms of rice sales.
 
At present, rice is considered a strategic crop with only limited internal
trade allowed and no exports, apart from shipments sold by government.
These restrictions and the quota system have led to declining output.
 
Burma was the world's largest rice exporter in the years after World War
II, but the country is expected to export almost no rice this year.
 
A measure of government's determination to get the state out of the
economy, analysts said, will come over the next few weeks as the planned
liquidation of unprofitable government joint ventures take place.
 
Founded in the 1990s to help develop various sectors of the economy,
including construction, marine products and office supplies, the companies
began as entities 50% owned by the government.
 
Because little interest have been shown in buying out the government's
remaining shares in the failing companies, it was recently announced that
the companies would have their assets auctioned off this month.
 
"If these companies really are liquidated, it will mean some more of the
government's tentacles in the economy have been hacked off," a foreign
investor based in Rangoon said. "This would really be a boost for the
private sector."
 
Burma Info (CCN)
New Delhi.