Burma: Risk in The Golden Land
Successful political and economic reform mean great opportunities — can the risks be averted?

City of Bagan


Two years ago this month, Burma’s current government took office amid broad international condemnation for the rigged election — replete with fraud and intimidation — that put it there. Despite this inauspicious start, Burma politics have opened in the last year and a half, and the country’s economy has liberalized more quickly than any other on earth.

In many respects, it’s as though the global economy has discovered a new planet, one that is geostrategically located, not to mention rich with natural resources, a young labor force, and a population of roughly 60 million consumers. Uncovering and developing Burma’s vast potential will be expensive and dangerous, requiring an appetite for risk, though structural advantages do set Burma apart from its smaller Southeast Asian neighbors such as Laos and Cambodia. The International Monetary Fund optimistically calls Burma Asia’s “final frontier.”

Burmese president Thein Sein’s government deserves credit for the country’s ambitious political and economic liberalization program, but there is still a non-negligible risk that Burma’s reform process will fall apart, or serious risk that it will stall. Last week, the Paris Club of donor nations wrote down $6 billion of the $11 billion owed by Burma for development projects dating back to the 1980s, and the multilateral financial institutions and regional development banks received payment from Japan to clear arrears, a prerequisite to new lending. As a result, there will be plenty of opportunities for businesses to capitalize on projects funded by lending programs from international institutions, bilateral subsidized loans, and foreign aid. While the risks from endemic corruption and an erratic, unskilled bureaucracy are real, Burma faces even greater risks from three longstanding tensions. Ethnic conflict, the military’s remaining influence, and the country’s strategic position between spheres of influence could threaten to constrain growth, disrupt stability, and shut the door on political freedom.

Most of the memorable moments in Burmese politics have been tragedies. Nationwide uprisings led by students in 1974 and 1988 and monks in 2007 were violently crushed by the military. Special Branch Police and the notorious Military Intelligence division had eyes everywhere; no social space was safe. Hushed conversations about politics or the economy became too risky for public spaces, and for private spaces with friends or even family who might not be trustworthy. If Burma had a national character at this time, it was paranoia. Inadvertently, however, this repression has helped to consolidate the ethnically, geographically, and socioeconomically diverse opposition under a single pro-democracy mantle.

“The movement,” as it is known among sympathizers, refers to a group of political dissidents, underground civil-society organizations, and ethnic militias that has been informally led by Aung San Suu Kyi and the National League for Democracy (NLD). The alliance includes ethnic leaders, student organizers, monks, and even former officers of the Tatmadaw, Burma’s armed forces, who felt the military had betrayed its mandate. The movement’s survival has relied first and foremost on cooperation, with ethnic groups’ semi-sovereign territories providing a safe place from which to stage nonviolent resistance.

Authoritarian rule also suffocated the economy. Ne Win’s Burmese Socialist Program Party (BSPP) undertook a sweeping nationalization program in the 1970s. Careless money printing under the state-controlled Central Bank of Myanmar led to skyrocketing inflation and rendered the currency valueless on multiple occasions between 1962 and the managed float of the Burmese kyat last year. The BSPP, which was trumpeted as the Buddhist interpretation of socialism, also introduced centrally planned agricultural policies that told farmers what to plant and when, ignoring local expertise about planting cycles and destroying the land. Over the last two decades, in an equally brash move, Than Shwe’s military junta “privatized” most industries, or rather, gifted them to friends, creating a class of overnight millionaires out of military officers, drug traffickers, arms dealers, and other unsavory types. Five decades of autocracy transformed the leading Southeast Asian economy in 1948 into an 18th-century subsistence-farming wasteland.

Further, the business communities of the world’s advanced industrial economies were frustrated by lack of access and wasted opportunity. Sealed off by sanctions and aware of reputational risks following the revelation that international companies had benefited from forced labor in Burma, most of the developed world abstained from investing.

Meanwhile, by the late 1990s, Chinese military and business leaders had aggressively moved into Burma’s markets to satisfy their domestic industrial needs. Building roads into resource-rich regions, pipelines for oil and gas, and dams to provide electricity, Chinese fortune-builders became a commanding presence, and their dominance began competing with local Burmese military commercial interests.