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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2552

Burma must fight against Kleptocracy

By - Zin Linn

Burma or Myanmar has set out on decisive developmental reforms since it planned the new mission towards a democratic nation. After the government took office in March 2011, reform procedures took place in all chapters especially in political and economic arenas.

Foreign direct investment in Myanmar or Burma had risen to $2.7 billion in 2012/13 from $1.9 billion in 2011/12, the World Bank said on 6 November, in its first report since resuming operations in Myanmar in January, in keeping with Reuters. Myanmar's economy is set to grow an estimated 6.8 percent next year, placing it among Southeast Asia's fastest growing economies, although rising inflation threatens the poor, the World Bank said. The World Bank said it was most concerned about inflation, which rose to 7.3 percent in August, fuelled by higher costs for housing and food, particularly rice.

Within a three-year period, the President U Thein Sein’s government prioritized economic and political transformation so as to make nationwide improvement. Although the ongoing peacemaking activities by the government are behind schedule due to various reasons, it resulted in top recognition, winning more trust of the international community. Important improvements in this progression consist of settlements with political parties and ceasefire with the ethnic armed groups. Among those improvements, the release of Daw Aung San Suu Kyi from house arrest and the release of political prisoners were also included.

Moreover, re-registration of Daw Aung San Suu Kyi’s National League for Democracy as a legal political party and allowing contesting in by-elections-held on April 1, 2012 was also remarkable. In addition, the government started softening of media censorship and restrictions along with the Internet communications. Besides, it’s also notable to create peacemaking process in conflict-affected ethnic areas.

Myanmar began adjust its monetary system on 1 April 2012. It created a managed floating rate for its national currency, the Kyat, with the intention of unifying the multiple exchange rates in time for the Southeast Asian games which it will host in December 2013.

A new foreign investment law was passed that offers a straight five-year tax exemption, with an extension of three years if certain measures are met. The law also specifies terms of using land, legal structures and incentives for foreign companies. This law was endorsed in order to gain foreign direct investment (FDI) which had been restricted as a result of previous international economic sanctions.

International governments, crediting Myanmar for successfully holding by-elections on 1 April, have suspended most sanctions. Without appropriate laws the government has made floating the currency and a new foreign investment law priority for attracting more investment.

These two steps begin to address the difficulties of conducting business in Myanmar. But major problems still exist, including: no reliable electronic banking system, no up-to-date Internet connectivity, no 24-hour electricity supply and no intellectual property rights.

Currently all economic transactions are controlled by the military, their cronies and drug-lords. The defense services set up two military-managed economic enterprises, the Union of Myanmar Economic Holding Limited (UMEHL) in 1990 and the Myanmar Economic Corporation (MEC) in 1993. Both privileged enterprises are still exploiting the country’s key economic sectors with no benefits flowing to the citizens.

In a few words, the country’s significant natural resources and heavy industries including import, export and service sectors are monopolized by the UMEHL, MEC and their cronies. There is no level playing field in the economy and business in Myanmar. It is an open secret that military-managed business firms and crony enterprises are corrupted in various ways including tax evasions. The nation’s precious natural resources have been exploited by such corrupt or kleptocratic authorities and the vast majority of citizens have been living in dire poverty for decades.

In the face of much talk about needed economic reforms, President U Thein Sein has kept away from speaking about the corruption and unethical conduct of UMEHL and MEC. The most important point that President U Thein Sein has overlooked is this existence of officially embedded corruption and how to take action on this corruption and tax evasions committed by the kleptocratic authorities.

Due to the international community’s re-engagement with Myanmar, the country got a chance to clear its external debt arrears in January 2013. Myanmar’s triumph to date is recognized as a nation with a common goal in favor of modern, developed and democratic nation as well as comprehensive participation of the people in the country’s political affairs.

However, there are condemnations towards government because of crony capitalism characterized by decades of corruption, ethnic conflict, human rights abuses, environmental degradation and little overall improvement in the lives of citizens.

Any economic growth was fruitless, for example, by spending 25 percent of GDP on the military with less than one percent on education. The entire blueprint of unfair development projects has been condemned in a number of reports from civil-based-organizations. Development plans turn out to be just another excuse to confiscate land, displace communities and enrich military elite and their cronies. Many evidences come out to point the finger at foreign investors who have been collaborated as accomplices in breeching fresh rights abuses such as unlawful land grabbing.

In March this year, the parliamentary ‘Farmland Investigation Commission’ submitted its findings on land confiscation to the parliament. The report says that the military have taken almost 250,000 acres of land from villagers. The commission said that they had spoken to military leaders about the confiscation, and they acknowledged the army will return seized farmlands that are far-flung from army-bases.

Moreover, the military authorities are also trying to provide compensation for farmers. But, most farmers refused to accept compensation since it was just like a token and did not meet the update price. In such a matter, the government needs to release an urgent order to close down land-confiscation in a manner of helping poor farmers.

It is gravely essential to do comprehensive investigations throughout the country, proper legislation to address the issue, guarantees for adequate compensation and consultation with the local communities concerning any future development projects.

However, President U Thein Sein should not fail to keep in mind that existing reform process needs an undeniable diplomatic setting. With ongoing battles and land confiscation in several ethnic areas, the country is not prepared to receive International Development Aid as donors have to abide by their moral values.

Therefore, the President should have a preference to control the military officials keeping away from unlawful land grabbing with the purpose of economic benefits. The Myanmar’s economy had been misused during dark decades of military rule by kleptocratic generals who turned one of Southeast Asia's most hopeful countries into a down-and-out status.

- Asian Tribune -

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