News / Asia

Burma’s Path to Privatization Keeps Armed Forces in Economic Control

A woman sells produce at a vegetable wholesale market in Yangon (file photo – 25 Apr 2010)
A woman sells produce at a vegetable wholesale market in Yangon (file photo – 25 Apr 2010)

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Ron Corben

Burma’s military is pressing on with the privatization of state assets as part of economic reforms. Many critics say the program simply transfers assets to the military government’s allies and maintains its economic control.

Burma’s is one of Asia’s poorest countries, and the military government dominates the economy.

But the government is moving forward with economic reforms, including the sale of up to 90 percent of state assets.

While details are sketchy, media reports in Rangoon say more than 400 state-owned assets, including airports, buildings, gasoline stations and land close to the main port have been sold.

Douglas Clayton, managing director of the investment fund Leopard Capital, based in Cambodia, says privatization is a step toward greater efficiency.

"Putting an economy into private assets is likely to lead to a better-managed economy,” Clayton said. “It’s a step toward modernizing Burma and no matter how it is done the outcome is likely to be no worse than it is now and possibly much better. There will be many beneficiaries of a liberalized economy, so there will be more impetus for further reform."

But some Burma experts say privatization is part of the military’s effort to maintain its hold on power. They say most of the assets have gone to business people tied to the military, in an effort to build support before last year’s elections.

Parties close to the military won about 80 percent of the elected seats in November’s elections, the first in 20 years. The constitution additionally sets aside 25 percent of the total seats for the military. The parliament opens next week.

"That whole fire sale of assets that they had prior to the election was to shore up support of some of the big entrepreneurs,” says Alison Vicary, an economist from Australia’s Macquarie University. “The airport, for example, was given to those entrepreneurs that have been aligned with the regime for years. So obviously the regime has some idea that these guys need to be kept onside. How to manage that into the future is another issue."

Some Burma experts note that the buyers of state assets include military-run corporations such as Union of Myanmar Economic Holdings, which controls the army’s pension fund, and the Myanmar Economic Corporation, which oversees funds from the sale of state-owned enterprises.

"The wave of privatization that has taken place – has been a move to transform public assets into personal property of the military regime and their cronies including the leaders of the Union Solidarity and Development Party which is the biggest party backing the regime," said Debbie Stothardt, the spokeswoman for rights group Alternative ASEAN Network.

Bertil Lintner, an author and commentator on Burma, agrees the sell-off leaves much of the economy under military control. But he says it may open the way for private investment.

"People will say look at all these new opportunities here,” said Lintner. “Privately owned companies and organizations – a restructured economy and so on; but also the economy is so bad that they have to do something."

Peter Gallo, who is with the anti-money laundering consulting firm Pacific Risk in Hong, warns that foreign investors must proceed carefully in Burma, despite the privatization. The United States, the European Union and other governments have imposed economic sanctions against the government to push for political reform.

"The big practical issues really are the rule of law and human rights situation,” Gallo said. “You can have any kind of government you like; doesn’t matter whether it’s allegedly democratically elected or not but if there is flagrant abuse of human rights in the country and that is well known – the international condemnation is going to continue."

Several large Burmese corporations, such as the Union of Myanmar Economic Holdings, are on the U.S. sanctions blacklist.

Rights activist Stothardt says the reforms do little to improve life for most Burmese.

"Most people in Burma lack access to clean water basic electricity, to basic health and education,” Stothardt said. “So this whole move to privatize all the assets of the country is mainly to turn public assets into the personal property of military leaders and their cronies, and it’s still not going to improve the situation for the ordinary Burmese person."

Burmese officials and some regional political analysts say that Western sanctions are responsible for the country’s poverty. The Association of Southeast Asian Nations, of which Burma is a member, wants the sanctions lifted.

ASEAN leaders say the elections and the release of opposition leader Aung San Suu Kyi from detention show Burma is making progress on political reforms. As a result, ASEAN says, the sanctions should go.

But rights groups say the changes fall far short for true reform, especially since Burma’s military holds more than 2,000 political prisoners and maintains a tight grip on the economy.

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