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Little Hope Seen for Burma's Economy

Burma's pro democracy leader Aung San Suu Kyi addresses her supporters from her house compound after her release from house arrest in Yangon, 13 Nov. 2010
Burma's pro democracy leader Aung San Suu Kyi addresses her supporters from her house compound after her release from house arrest in Yangon, 13 Nov. 2010

Burma, one of the poorest nations in East Asia, may be entering a new phase of development after recent elections and the release of Nobel laureate Aung San Suu Kyi from detention. Regional political analysts fear little will change for most in the country.

Economic forecast

Burma's central bank governor recently gave the World Bank a rosy picture of the country's economy, saying it would grow about 12 percent this year, driven by exports of natural gas and farm produce.

The Asian Development Bank, however, forecasts a more limited expansion in 2010 of 5 percent.

Experts on Burma, however, say neither assessment would do much to improve the lives of most Burmese.

Poverty and despair

Alison Vicary, an economist from Australia's Macquarie University, says Burma faces widespread difficulties.

"Oh I'd say it was a mess," Vicary said. "The continued kind of reports that we've had … that people have of difficulty of putting food on the table. I think that kind of captures it. Anecdotally I would say that things are gradually just across time, actually getting worse and worse for ordinary people."

Burma is one of Asia's poorest countries, and there are estimates that nearly a third of the population lives in extreme poverty.

Burdensome Taxation

A Macquarie University study found Burma's taxation system was onerous, often included forced labor, the forced purchasing of goods and confiscation of land. Poor road and port infrastructure also hampers development.

Hopes have risen among some economists and regional analysts that elections held November 7th, the first in 20 years, may lead to more openness in the economy, which the military government dominates.

But Debbie Stothard, the spokeswoman for the rights group the Alternative ASEAN Network, expects little change.

"It's a crisis situation for many parts of rural Burma where people are actually unable to grow food to feed themselves because of land confiscation, because of over-taxation by the authorities and just simply the lack of opportunities," Stothard said. "Most people felt very cynical and unhappy about the Burmese elections. The elections brought more taxes."

Corruption rampant

Burma's government is considered highly corrupt. And many governments, including the United States, have imposed economic sanctions on the government because of its human rights abuses.

But that has not stopped some foreign investors. Thailand is Burma's leading investor, particularly in natural gas and oil.

China also is major investor and trade partner, especially in the energy sector.

Burma's other main exports are timber and precious stones, which draw investors from Hong Kong, South Korea, Singapore and India.

Bertil Lintner, an author who has written extensively about Burma, says despite the investment, the economy remains weak because of government mismanagement.

"There is virtually no capital investment in the country, there's no investment in manufacturing or anything that could really produce substantial economic growth," Lintner said.

Over the past year, the government sold off millions of dollars of assets, including ports and transportation systems, to businesses and military officers close to the top leaders.

Stothard at the Alternative ASEAN Network says that likely added the people's burdens.

"It's actually concentrating ownership of the main economic opportunities of the country," Stothard added. "So that's going to mean for most people in Burma prices will increase and their opportunities to make money will decrease."

Economic and political reform

But some Burma experts say the sales could dilute the military's economic power and help create an entrepreneurial class.

The government's decision to free opposition leader Aung San Suu Kyi from years of detention this month has opened discussion about whether economic sanctions should be eased. Aung San Suu Kyi has indicated she is considering the idea, after years of endorsing sanctions.

Critics say that as long as countries such as China and India ignore sanctions, they only impoverish ordinary people and enrich the leadership.

But author Lintner says the sanctions need to stay until the military makes more reforms.

"Sanctions would not be removed without any concessions on the part of the government," said Lintner. "That was the whole purpose of introducing sanctions in the first place. Now unless there are some significant changes in the present policies of the regime, I cannot see that she would advocate the removal of sanctions. Sanctions are there for a purpose – that is the political pressure point."

Uncertainty looms large

Because of the uncertainties over how the newly elected government will handle the economy, and over sanctions, potential investors are expected remain wary of Burma. And, Burma scholars say, it is likely the country will continue to lag behind in a region that has powered ahead economically.