Updated News Article on Burma

[moe@xxxxxxxxxxxxx]

Isolated Myanmar Gets a Dose of Asian Turmoil --- Growth Declines;
Currency Collapses 
Wall Street Journal; New York; Dec 28, 1998; By Barry Wain; 

Edition: 
          Eastern edition
Start Page: 
          A11
ISSN: 
          00999660

Abstract:
YANGON, Myanmar -- When Myanmar, formerly known as Burma, joined the
Association of Southeast Asian Nations in 1997, it expected an influx of
foreign
investors and tourists. Instead, it got a dose of the economic turmoil that
has
devastated much of the rest of Asia.

The economy is in a "poor state," according to an Australian Embassy report.
Meanwhile, Stuart P. Larkin, an independent analyst based in Yangon --
formerly
Rangoon -- is pessimistic about the medium-term outlook, predicting higher
inflation and unemployment and a further decline in the kyat.

Myanmar has been shunned by much of the international community since the
military suppressed a democracy movement and seized power in 1988. The
West and Japan stopped most aid in 1990, after Aung San Suu Kyi's National
League for Democracy, which swept the general election, wasn't allowed to take
office.

Full Text:
Copyright Dow Jones & Company Inc Dec 28, 1998


YANGON, Myanmar -- When Myanmar, formerly known as Burma, joined the
Association of Southeast Asian Nations in 1997, it expected an influx of
foreign investors
and tourists. Instead, it got a dose of the economic turmoil that has
devastated much of the
rest of Asia.

While the country's backwardness insulates it against the worst of the
contagion, it still has
been hit hard. Growth has slowed, the nation's currency, the kyat, has
collapsed and
foreign investment has plummeted.

Power cuts have reduced factory output, gasoline rationing has been
reintroduced, and the
cost of living has soared. Foreign-exchange reserves remain critically low,
despite extreme
measures to conserve them.

The economy is in a "poor state," according to an Australian Embassy report.
Meanwhile,
Stuart P. Larkin, an independent analyst based in Yangon -- formerly Rangoon
-- is
pessimistic about the medium-term outlook, predicting higher inflation and
unemployment
and a further decline in the kyat.

"The regional economic crisis will continue to affect the economy for
another one to two
years," he says.

Myanmar has been shunned by much of the international community since the
military
suppressed a democracy movement and seized power in 1988. The West and Japan
stopped most aid in 1990, after Aung San Suu Kyi's National League for

Democracy,
which swept the general election, wasn't allowed to take office.

Ms. Aung San Suu Kyi, a Nobel Peace laureate with an influential following
abroad,
opposes economic and commercial engagement with Myanmar. The country relies
heavily
on China for aid and arms.

Yangon can't obtain funds from international lending agencies to rebuild its
dilapidated
infrastructure. The U.S. last year banned all fresh investment, and it
continues to block
assistance by the International Monetary Fund, the World Bank and the Asian
Development Bank.

The ruling State Law and Order Restoration Council dissolved itself in
November 1997,
sacked 14 ministers while retaining the four top leaders and started
investigating some of
the ousted officers and senior bureaucrats for corruption. The replacement
State Peace
and Development Council, or SPDC, announced a renewed focus on economic
development.

But the SPDC hasn't been able to persuade most countries that it intends to
restore
democracy and hasn't made much headway in Myanmar's transformation from
central
planning to a market-oriented economy. While the regime began the transition
10 years
ago, critics say its approach is half-hearted and piecemeal.

The government continues to control the currency and to dominate the nonfarm
economy,
operating companies that account for about 25% of gross domestic product.
Despite tax
and other privileges, state-owned enterprises generally are inefficient and
their collective
losses shave an estimated two percentage points off economic growth.

Only a few of the 69 state enterprises scheduled for privatization in 1995
have changed
hands, largely because private capital is scarce and some ministers have
maneuvered to
retain control.

Statistics in Myanmar are notoriously unreliable, not least because the
parallel, or black,
economy is estimated to be as large as the recorded one. While that causes
headaches for
economists, it enables many people to survive through undeclared border
trade, the
smuggling of jade and other precious stones and timber, barter and drug
trafficking.

The government's decision to abandon socialism initially sparked frantic
building in Yangon
and the appearance of consumer goods and cars. But critics say it brought
little lasting
benefit to the majority of people. The IMF says real incomes for the year to
March 31,
1996, were no higher than they were a decade earlier. The government
couldn't afford its
ambitious infrastructure-spending spree, so it printed money to plug the
holes in the
budget, fueling inflation.

The absence of stock and capital markets in Myanmar and the lack of free
convertibility of
its currency has shielded the country from the full impact of the regional
meltdown. But
officials say foreign direct investment fell more than 53% to $771 million
in the past fiscal
year from a year earlier because of the dislocation.

The government still contends economic output grew 6% last year and should
hit 6.5% this
year, but the IMF reckons it expanded only 4% last year and will slow to a
"grim" 2.5% in
the medium term, unless there is "a significant policy overhaul."


Credit: Staff Reporter of The Wall Street Journal