Business; FEATURE-Stagnant Myanmar economy frozen in time

Thursday, December 23, 2004

 

Business News, YANGON, After a conspiratorial glance over the shoulder to make sure he is not overheard, Hakim, a Myanmar Muslim, leans over his beer to deliver a whispered verdict on his country's military government.

 

"Saddam Hussein -- he great big bastard. In my country, the same," he tells Reuters in the bowels of a grimy Yangon bar.

 

However, unlike many in the former Burma, Hakim's gripe against the ruling generals is economic, not political.

 

As a 37-year-old trying to support a family of four, he curses the junta's mismanagement of the economy more than its contempt for the results of 1990 elections it lost by a landslide, or its detention of democracy icon Aung San Suu Kyi.

 

Hakim estimates that he and the thousands like him eking out a living as second-hand salesmen on the streets of the capital earn around $30 a month -- placing the once wealthy former British colony on a par with war-ravaged Cambodia.

 

Decades of poor policies, U.S. and European sanctions and, more recently, the purge of Prime Minister Khin Nyunt and his network of business interests have left the economy way behind those of prospering neighbours such as Thailand, analysts say.

 

For Hakim, the solution has been to work abroad, mainly in Singapore, where he can earn more than $600 a month as a labourer.

 

But in one of the most closed countries in the world, even that is no longer an option.

 

"The government keeps your passport," he says. "When you want to go abroad, you have to apply months in advance. Then they take 10 percent of your contract as a fee for getting your documents."

 

FROZEN IN TIME

 

The IMF forecasts that Myanmar's economy will grow by 3.6 percent this year and 3.3 percent in 2005.

 

Officially, the economy has grown at a galloping 10 percent over the past few years and will expand by 8.5 percent in 2004, according to a spokesman for Thai Prime Minister Thaksin Shinawatra who met his Myanmar counterpart last month.

 

Yet the junta's state media rail against western governments, saying sanctions are causing economic hardship and sabotaging progress towards democracy.

 

"It is just pushing the people of Myanmar into hardship, away from democracy, to impose sanctions with intent to spoil the democratic revolution being launched by the military government," Myanma Ahlin, an official newspaper, said earlier this month.

 

Few, except possibly a handful of Yangon's reclusive generals, set any stall by the official figures.

 

In its take on the economy, the Asian Development Bank said "indicators suggest that it is well below potential", noting key factors such as a fall in electricity production between 2000 and 2002, and a drop in use of fertiliser, crude oil and natural gas.

 

Burma Economic Watch, an analysis by Sydney's Macquarie University, says none of the official data makes any sense unless you also believe that "Burma has discovered a hitherto unknown recipe for generating rapid growth ... that a country with the characteristics of a growth disaster is in fact a growth titan."

 

On the ground, Myanmar's economy has become frozen in time.

 

Only 100 km (60 miles) from the capital, ponies and traps or ox carts are the mode of private transport available to most of the southeast Asian nation's 53 million people.

 

In the leafy capital, where commerce is conducted mainly on the pavement, new cars are a luxury open only to top military brass.

 

Ordinary people make do with ageing Datsuns, Toyotas or Nissans held together by bits of wire and running on a mixture of love and subsidised petrol, which is rationed to two gallons per person per day. Few can afford the black market prices.

 

Taxi drivers delving under the bonnet of jalopies broken down at traffic lights are an all-too common sight, but with no new vehicles entering the country even these rust-buckets have a second-hand value of $18,000 or more, one car owner said.

 

After a 2003 banking crisis, which sparked a liquidity squeeze and a surge in the price of "solid" savings instruments such as gold, few businessmen trust the financial sector.

 

Their faith in the Myanmar currency, the kyat (pronounced "chat"), is little stronger.

 

"Oh, we have many problems with the kyat," said Azam, a gem trader in Yangon's central market, waving his arms around above his head to illustrate the currency's erratic shifts.

 

The official exchange rate is six kyat to the dollar. On the black market, it can be anywhere from 900 to 1,000, depending on the latest counterfeiting or policy rumour sweeping across town.

 

Corruption and government meddling in the private sector is also a problem, Azam says, noting an annual $1,200 "government registration" fee required for stalls inside the market.

 

The garment industry, a major employer around the capital, has also been dealt a body blow by U.S. sanctions, with even Washington admitting that at least 40,000 women lost their jobs shortly after they were imposed in mid-2003.

 

NO WAY OUT?

 

One rare bright spot has been the discovery in recent years of sizeable oil and natural gas reserves off the Myanmar coast.

 

South Korea and India in particular are pouring investment into the sector, which produced 350 trillion cubic feet of natural gas and 7 million barrels of crude oil in the 2003-04 fiscal year, according to official figures.

 

However, Suu Kyi's opposition National League for Democracy (NLD) fears the government is relying on future windfalls from fossil fuels as a panacea for all its economic woes.

 

"They are just short-sighted. They are thinking we are a rich country. The future is very dim," said NLD secretary U Lwin.

 

One Asian diplomat estimated that Myanmar needed a minimum of $6 billion in reconstruction aid and loans from the likes of the World Bank and International Monetary Fund to drag its economy into the late 20th century.

 

Getting it into the 21st century will take much longer.

 

Automatic cash machines are still the stuff of dreams, as are credit cards and text-messaging on mobile phones.

 

The Internet is making slow inroads for those patient enough to deal with the power cuts and 28k telephone lines. Just don't try accessing Hotmail, Yahoo Mail or anything to do with the words "Myanmar" or "Suu Kyi" -- they are all blocked.

 

 

SOURCE: http://www.keralanext.com/news/index.asp?id=80475&pg=1