Myanmar won’t turn over a new leaf under Thein Sein

Just a few months ago Myanmar was everybody’s darling in the international business community, with multinationals, large manufacturers and global service companies endlessly entering and leaving the country, heading to Yangon, the perceived new epicenter of growth in Southeast Asia, to poke into every corner of the languishing economy to find out what could be done to get this country back on its feet and have some nice profit at the same time.

By Arno Maierbrugger

Almost everybody had a splendid forecast for economic growth in the formerly junta-ruled nation, which after one year of some sort of opening to democracy has next to nothing to offer in terms of basic facilities for its population, let alone a functioning infrastructure, banking system or telephone network.

But the problem is: No foreign investor, maybe apart from a few Chinese triads, understands this country and can assess what is really happening and what kind of power plays this “opening up of the economy” did really trigger within the saturated Myanmar military nomenklatura that has made every effort to make their ends meet over the past 50 years, to put it that way.

However, the Asian Development Bank, the World Bank, the CIA, the ASEAN Secretariat, the United Nations, large regional Asian banks and influential international financial institutions pointed in their forecasts at an annual growth potential between 6 and 8 per cent over the next decade and longer, joining the chorus of economists of the “last gold mine” ready to be exploited in East Asia.

Sobering up

But after the pink cloud of apparently overdrawn expectations thinned out over Yangon and Naypyidaw at the end of August 2012 , things suddenly, and unexpectedly, started to turn sour.

The first issue of greater concern was that the eagerly awaited new investment law, which, in contrast to the repeated pledges by Myanmar’s President Thein Sein to have it ready and signed into law first by July and then by September 2012 at the latest, did not materialise.

Investors were beginning to feel unconfident. Conferences had to be postponed, memorandums of understanding went on hold, and the entire investor community was standing baffled at the sidelines.

After many more promises to have the law ready “soon” and then in “a matter of days”, it went back to parliament twice and only came into force on November 2 as a law that leaves the decision power on how to regulate individual investment projects more or less to the Myanmar Investment Commission.

Empty phrases

Thein Sein gave his first ever interview to BBC on September 30, 2012 , where everybody with just a thin political apprehension could see that he is still an apparatchik of the junta – and this is why the military won’t let him sign the law into force before their benefices are secured. He was not able to give an international audience a direction of where his country is going, he was speaking in empty phrases reminiscent of Erich Honecker’s helpless speeches before the communist German Democratic Republic fell apart in 1989/90. This is not the sort of lingo to be used in modern politics anymore – unless you want your country to be vaporised.

BBC moderator Stephen Sackur put it in a nutshell: “Thein Sein is an unlikely champion of reform.”

He definitely is no champion of reform. From October onwards, Myanmar has been inundated with bad news which caused the international community and potential investors to ask themselves whether any further engagement in the country should be considered under the existing government. And exactly this government has no recipe for how to deal with the issues in front of a global audience that is watching Myanmar and becomes increasingly anxious.

* Violence is now continuing for many weeks in western Myanmar between Rohingya Muslims and Myanmar Buddhists, with more than 150 people dead and 30,000 Rohingyas on the run but with nowhere to go. The conflict is being handled differently by concerned parties. Myanmar’s government,  in an aim to revive its old autarchy, says in can handle the issue alone and refuses to tolerate any interference – which is a very bad signal to the outer world at the present time. ASEAN Secretary-General Dr Surin Pitsuwan, himself a Muslim, has called for the 10-member bloc to intervene, so far with no response [a sign what can be expected of the political unity of ASEAN in the years to come], and Myanmar’s democratic icon Aung San Suu Kyi has kept silent so far. No one wants to invest in a country where large ethnic conflicts are unsolved, and its not only about the Rohingya, but also the Karen and the Shan people, decade-old conflicts about which is little known in the Western world. Thailand, of which Dr Pitsuwan was foreign minister in the years 1992 to 2001, was evidently supporting Burmese Karan and Shan rebel fighters in the 1990s. Maybe this is why Pitsuwan’s voice in the Rohingya case has been widely ignored in ASEAN.

* Other shocking news came from the UN Office of Drugs and Crime on November 1, 2012. Myanmar, all the while one of the largest narcotics and opium producers in the world, has apparently allowed drug lords to increase the size of opium fields by 17 per cent in the past year 2011 – the first year of democracy – despite claims by the government of successful drug eradication to meet a goal of an “opium-free country” by 2014. A downright lie: Myanmar drug gangs will harvest and process 690 tonnes of opium in 2012, the UN report said, up 13 per cent from 610 tonnes in 2011. That would produce 69 tonnes of heroin, which is exported to the world, mostly through Thailand and China. That’s another hint that the Myanmar government is far from having the country under control, or even wants to have it under control. Gary Lewis, UNODC representative for Southeast Asia, said that the situation was “very complex”. In areas where opium was grown, there was “a toxic combination of guns, money and drugs,” he said. And the business is still controlled by the fat cats of the “former” military regime. Since 1996 the United Wa State Army in Shan State has become one of the world’s largest and most powerful drug traffickers with the support of Myanmar army units stationed in border areas. Interestingly enough, Thein Sein was the commander of the Golden Triangle region in the northern Shan state from 1997 to 2001, said to have been very close to rebel leaders and drug lords, according to Colonel Sai Htoo, Assistant Secretary-General #2 of the Shan State Progress Party, in an interview with the Bangkok Post published on February 12, 2012.

* With most of its northern regions being more or less tribally ruled or simply anarchic, it is no wonder that Myanmar also has problems with wood log smuggling. According to ASEAN statistics, Myanmar is able to produce nearly 283,000 cubic metres of teak and 1.98 million cubic metres of hardwood annually from about 16.32 million hectares of forest area, earning about $522 million as per world market prices. Up to 90 per cent of this amount is illegally felled, says environmental group Global Witness, and smuggled using “bribery, false papers, transportation at night and avoiding checkpoints” to get around the restrictions on sending the wood across the border. The profit goes straight into the coffers of the backers in the military. The Myanmar government in a weak reaction has now said that it will suspend its wood log export in 2014 in a bid to eradicate wood log smuggling and conserve its forests.

There will be more bad news from Myanmar coming in the near future, and investors are well advised to remodel their investment strategies in the country. Myanmar clearly has a long way to go before it wipes out the effects of 50-plus years of harsh military dictatorship. With Thein Sein it will most likely not happen. Let’s see if he keeps his word that he would accept Aung San Suu Kyi as president if the people vote for her in the next election in 2015 – which is still three years from now.