Slow and Steady Approach Needed for Myanmar Reforms

Burma’s economic transition has thus far centered on the low hanging fruit of tourism and garment manufacturing. But the possibility that the jobs created will be reserved for a tiny minority of well-educated Burmese, and will serve the interests of oligarchs and strongmen, is very real.

Posted on 09/7/14
By David Baulk and Chiang Mai | Via East Asia Forum
Customers making deposit at a bank in Yangon. Despite promising economic potential, the country's currency remains far from stable. (Photo by Axel Drainville, Creative Commons License)
Customers making deposit at a bank in Yangon. Despite promising economic potential, the country’s currency remains far from stable. (Photo by Axel Drainville, Creative Commons License)

Even the most implacable sceptic would accept that looking at Burma today gives greater cause for optimism than was the case five years ago. Compromises which were once unthinkable have commendably been reached in recent years. But progress has also given rise to a Panglossian narrative about the increasingly liberal rulers’ prioritization of social welfare and ‘inclusivity’. As a result, advocates of a cautious slow-and-steady approach to reform have been drowned out by those propounding a model of trickle-down economic development.

 

This seems counterintuitive in a country which remains largely an unknown entity. Burma’s economy is pressed by the needs for economic diversification and strengthening of its regulatory environment. But it is not clear whether a singular focus on these economic issues will lead to dramatic improvements in social welfare over the long term. Moreover, there is a very real risk that an emphasis on rapid economic growth over social welfare could exacerbate cleavages between ethnic regions — driven by competing claims on the country’s natural resource dividend and burgeoning wealth inequality — further destabilizing the reform process.The potential for natural resource exploitation to fuel further conflict is clear, not least in border regions where the brutalization of civilian populations has continued unabated since President Thein Sein took office in 2011. As the auctioning off of some of Burma’s most valuable assets proceeds apace, the reluctance of businesses to embrace transparency does not bode well for those arguing that accountability goes hand in hand with foreign investment. Nonetheless, this investment will be central to the diversification of Burma’s economy in the future — itself vital if the country’s oligarchs are to have their monopolies challenged.

 

Solutions to these issues need to take into account Burma’s singular political economy. But the country’s economic transition has thus far centered on the low hanging fruit of tourism and garment manufacturing. It is argued that focusing on these areas will create jobs, bring welcome foreign capital into the economy and let potential investors get to know the lay of the land.

 

Policies that advance this agenda are not challenged and can be implemented rapidly as a result. This in part explains the ease with which institutions have been able to proceed with the creation of luxury hotels and fund ‘urban renewal projects’. But the possibility that the jobs created will be reserved for a tiny minority of well-educated Burmese, and will serve the interests of oligarchs and strongmen, is very real. Yet it is the creation of these jobs that is supposed to underscore a more sustainable and equitable recalibration of Burma’s economy in the future.

 

The limited scrutiny of this growth paradigm does not augur well for those who are concerned that Burma’s transition is nurturing an authoritarian plutocracy in the guise of a market democracy. The international community’s silence on the administration’s backsliding on its amnesty for political prisoners, complicity in crimes against humanity in Arakan state, and the violence visited on ethnic nationality populations by the military is demonstrative of its willingness to sideline human rights abuses in the name of economic growth. If the international community is serious about safeguarding the former, the pace of engagement with Burma’s ruling elite must be made conditional on roadmaps that redefine and reward concrete progress over time.

 

One of the most pressing issues to be resolved is the country’s ongoing civil war. Rather than finding ways to circumvent security issues, human rights abuses and regulatory loopholes, the leverage of the international business and aid communities must be put to use here. A good start would be withholding investment from areas of ongoing conflict as long as military spending remains high and reports of human rights abuse continue to surface.

 

The experience of other governments who have faced a potential ‘resource curse’ should also be drawn upon and considered independently. Without establishing a resource sharing agreement between national and sub-national governments, the likelihood is that the fruits of Burma’s resource endowment will be appropriated by a tiny elite — all the while reporting improved economic health at the national level.

 

There must also be demonstrable improvements in the regulatory environment. Local governments need time to develop more effective systems of taxation, build cultures of accountability and nurture trust with citizens at a broader level. The argument that foreign investment drives up standards does not obviate the need for local institutions to mature and to develop the skills of the locals who staff them. The advanced industrial economies of the world took generations to build this institutional infrastructure; why do we imagine that this can unfold in Burma over the course of a few years?

 

As things stand, the international community’s efforts to build bridges with Naypyidaw at the expense of grassroots civil society organizations is resulting in a parochial understanding of the issues facing the country. Governments, businesses and aid organizations retort that the immediate focus must be establishing trust at the highest levels of government to affect any change. There is some truth in this, but it should not obscure the fact that without actively building relationships with grassroots organizations there is a risk of both legitimizing, and building a more efficient, authoritarian regime whose record speaks for itself.

 

How will rewarding rapid economic reform while ignoring egregious human rights abuses play out? Only time will tell.

 

David Baulk holds an MSc in Development Studies from the School of Oriental and African Studies, London, and is a former researcher for Burma Campaign UK. He now works for a Burmese women’s rights organisation in Chiang Mai, Thailand.

A longer version of this article is available here, at Democratic Voice of Burma.

This article first appeared in the East Asia Forum.

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