2 January 2015edge review

Balloons over Bagan at dawn (Taro Taylor/Flickr).

Economic concerns dominate, even in a year that will cement or destroy Myanmar’s civilianised political order

Before the onset of reforms in Myanmar three years ago, the walled-off mega-mansions of Yangon’s Golden Valley neighbourhood, a secluded oasis for Myanmar’s military and business elite, were the only homes in the city with access to reliable, 24-hour electricity.

Today, there are more cars on the streets and better restaurant options, but little else in Golden Valley has changed. Power supply has improved markedly in other districts of Yangon, but nationwide just 30 per cent of the country has access to electricity at all.

Most of Myanmar’s rural poor have not meaningfully benefitted from reforms so far, although that’s not to say their lot won’t improve as infrastructure improvements continue. But it will be a long time before they can dream of the services enjoyed by the denizens of Golden Valley.

But electricity is just one of the uncertainties of life in Myanmar. Aside from extractive industries, telecoms, construction and some light manufacturing, foreign investors have largely taken a wait-and-see approach to Myanmar’s opaque and unpredictable operating environment.

Despite optimism about Myanmar’s growth prospects, this should be no surprise. After three years of reforms, Myanmar still suffers from severe infrastructure bottlenecks, scant legal protections, and endemic corruption. In the World Bank’s latest ease-of-doing-business rankings, Myanmar is 177th in the world, sandwiched between those economic titans Mauritania and the Republic of the Congo.

A cursory glance at the interests of the power brokers in Naypyidaw makes it readily apparent why there is no political will to address the pervasive controls and protectionism that still define Myanmar’s economy.

Shwe Mann, the speaker of Myanmar’s parliament and a former general, serves as a perfect case in point. His son, Aung Thet Mann, is an owner of RedLink communications, Myanmar’s only private Internet service provider, which uses outdated WiMax technology to deliver rock-bottom speeds at dizzying prices.

Aung Thet Mann also has business links with Tay Za, Myanmar’s richest man, who holds an exclusive import licence for Russian military aircraft as part of his expansive portfolio.

Shwe Mann’s other son, Toe Naing Mann, is married to the daughter of notorious tycoon Zaykabar Khin Shwe, who remains subject to targeted American sanctions due to his unrepentant land-grabbing.

But the lure of foreign capital has prompted big family-led conglomerates to clarify their opaque practices – to a degree – in the interest of addressing the concerns of potential foreign partners. The US Treasury, which maintains a list of Myanmar entities against which targeted sanctions are in place, for its part launched a consultation process to facilitate de-listing if these entities can prove they are not complicit in human rights violations or maintain links with North Korea.

A new stock exchange, expected to open in October, will also require large companies to open their books to unprecedented scrutiny, although experts estimate that five companies or less will make initial public offerings.

But these pull factors can only go so far. It is widely believed that a significant proportion of the oil and gas revenues obtained by the government are diverted away from national coffers, despite improving transparency on the part of Myanmar Oil and Gas Enterprise (MOGE), the state-owned oil company.

The military – which has a command structure constitutionally protected from civilian oversight – also has vast economic holdings of its own, including mines, banking, heavy industry, transportation and the country’s sole brewery. Although the proportion of the budget allocated to defence is in the public domain, the military’s actual assets remain shrouded in mystery, a fact unlikely to change in the foreseeable future.

Yet the single largest commercial potential flashpoint in 2015 will be land issues. Two land management laws, passed in 2011 and 2012, have faced severe criticism for the limited protections they afford to farmers. Although farmers now have property rights they did not in the recent past, the plague of land grabbing that got underway in the 1990s continues unabated.

Myanmar’s twin investment laws – one for local entities, one for foreigners – are set to be harmonized early next year, although a draft release has likewise been panned by civil society for not stipulating protections or recourse avenues for Myanmar’s poorest.

The intensification of foreign investment and aid in Myanmar over the past two years has proven to be a double-edged sword. The vast, shadowy patronage networks that control Myanmar’s economy – cultivated under the old military regime – show no signs of breaking up.

Even if the National League for Democracy (NLD), the party of opposition leader Aung San Suu Kyi, were to decisively sweep this year’s polls, the political and economic clout of the “deep state” will remain Myanmar’s true seat of power, much as it has been since the end of the socialist era in 1988.

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