Myanmar has a widely underestimated array of
home-grown business families who are likely to provide the foundation of the
country's future capitalist class - and a bulwark against any attack on the
core privileges of the military-linked elite.
In the excitement over
the opening of the "biggest emerging market opportunity since China",
commentaries have portrayed Myanmar in words and images akin to those used in
describing America's 19th century Wild West.
The Economist
Intelligence Unit recently espied "vast untapped natural resources and
land". The International Monetary Fund says the country could be "the
next economic frontier in Asia". Local pundits agree: "Myanmar is the
last resourceful investment destination in the Southeast Asian region,"
said Thinn Htut Thidar, a Yangon-based consultant.
There is undoubtedly
truth in these words but they overlook the local tycoons, often disparaged as
cronies of the regime, as well as myriad lesser entrepreneurs, whose businesses
fill out the space left by the military's own large economic presence.
Considering these
well-established homegrown commercial interests, the "untrodden
fields" talk is in many ways overdone and misleading. An Asia Society
"Task Force" that advised Washington in 2009 on who to deal with if
Myanmar opened up, for example, did not mention the indigenous business sector.
Myanmar's official
statistics place its per capita economy on a level with a sub-Saharan basket
case. Yet anyone who has been stuck in the traffic jams of shiny four-wheel
drives in the commercial center of Yangon knows there is something amiss in
this statistic, which largely fails to measure the country's huge informal and
illicit economies.
"Most business
families have tried to keep a low profile and to hide their wealth for obvious
reasons. The clever ones made money even in the [eccentric late strongman] Ne
Win era. Ultimately even the military knew it has to keep the economy ticking
over somehow. These families - big and small - they will all now try to emerge
strongly," argued one European banker.
"I would put down
money that the families who were able to cope with the generals are going to be
the best at managing the coming boom. The result might not be pretty but it
will be effective," he said.
Some, perhaps many, of
these tycoons will stumble and fall, and many newcomers and returnees will also
likely emerge. But in the years it takes Myanmar to reach its version of
democracy there will be time for the owner class to consolidate its gains and
arrange political protection.
An important test will
come in 2015 when a general election is due, although the military will still
have a guaranteed 25% appointed representation in parliament.
Thomas Carothers of the
Carnegie Endowment for International Peace think-tank recently pointed out that
Brazil's emergence from a much shorter period of authoritarian rule took two
"long and turgid" decades.
"More than 10 years
elapsed from the opening of political reform in 1974 until a civilian president
took power through credible elections," Carothers noted. "It was
almost another 10 years after that until the system really worked through many
of the toxic legacies of previous authoritarianism."
Myanmar's reformist
President Thein Sein has talked about re-examining certain "crony"
contracts, but this isn't expected to tilt the commercial balance any time soon
away from military-linked enterprises. Investment vehicles like Myanmar
Economic Holdings, which owns three dozen businesses and several joint ventures
with foreign firms, is believed to be 70% owned by serving and retired military
officers.
Five years ago, one of
the leaked American diplomatic cables argued that true reform would only come
when the entire economy was turned over.
"The generals'
economic power cannot be separated from their political power. Over the last
forty-five years, the regime has built an elaborate system of patronage where
the generals and their military-owned enterprises dominate every profitable
natural resource industry and profit-making enterprise."
The cable added that
"True economic reform would require the dismantlement of this elaborate
structure, threatening their powerbase."
The International Crisis
Group (ICG), a non-governmental organization that has advocated for the removal
of Western economic sanctions against Myanmar, reported recently that popular
expectations are running high and that "in order to bolster the broader
reform effort, it is vital to provide quick wins to the population"
especially in the most deprived areas.
At the same time, the
government is already close to being overwhelmed by the foreign in-rush:
"So many offers of assistance are coming, we have no time and capacity to
handle them. The risk of burn-out is real, and in some ways, things are moving
too fast," said one official quoted by ICG.
Military-entrepreneur
complex
So who is going to supply
the "quick wins"? A certain mystery still hovers over the decision of
the military establishment to risk easing its repressive hold on the country
when it was neither broke nor under dire internal political pressure. Indeed,
there were a number of countries edging closer diplomatically without promises
of sweeping reforms.
Part of the answer may be
found in the military-entrepreneur complex. It has been obvious to all but the
dimmest general that vastly greater profits were to be had if the economy was
permitted to engage more with the global marketplace. The ensuing growth would
also enable a revamped military-entrepreneur class to nail down a long-term
existence behind the screen of economic progress and political transformation.
This was actually been
tried before in Myanmar, albeit in a limited way, something that has been
overlooked in most recent commentaries on the country's unprecedented opening.
Myanmar actually
"opened" its markets 20 years ago, when it also set up grandiose
vehicles like Myanmar Economic Holdings. Then, the idea was to move away from
the decades of eccentric pseudo-socialism under former dictator Ne Win.
That early attempt to
take a "modern" authoritarian growth path prompted a host of mostly
Asian corporations to scramble for opportunities in the 1990s. The initiative
largely fizzled away because of the military's suffocating grip and the lack of
both international institutional lending and proper legal security for
investments.
Some cynics think the
recent political theater is merely the military's recalibrated attempt to
create a business boom without inviting social unrest. If a
military-entrepreneur complex were able to prosper, then even a lively
democratic facade would be acceptable to the military, in this view.
"The generals own
the country and have survived in spite of sanctions and [international]
condemnations. What they crave is what they cannot buy or be gained by
oppression - legitimacy," said a former Western diplomat in Yangon and
keen observer of the Myanmar military.
"I liken all of this
to a Mafioso who wants to become a legitimate businessman by laundering his
money, sending his kids to Ivy League schools and so on, and letting others do
the dirty work so he can make claims of plausible deniability while he
continues to reap the profits," he said.
Myanmar's uniformed rulers
have frequently proven abrasive patrons, even of their favored
quasi-capitalists. Yet the linkages of profit, protection, friendship and
family are myriad, if not always transparently obvious.
So the most likely
replacement for President Thein Sein, if he retires in 2015, is the speaker of
the lower house, Shwe Mann, who has been linked to the showiest of the regime's
entrepreneur favorites, Tay Za. Shwe Mann's three sons are also reportedly
heavily involved in crony enterprises.
Critics have frequently
railed about "toadies" vying for privilege in the debilitating
Myanmar version of India's "License Raj". Yet this maneuvering is in
line with the defining characteristic of so many successful Southeast Asian
business families: the ability to connect the ruling elite with economic
opportunity.
Leading businessmen have
complained bitterly behind closed doors about the bottomless incompetence of
Myanmar's military leaders, even as they paid kickbacks and sought to
ingratiate themselves with them.
One prominent Western
academic has long contended privately that the arrival of opposition icon Aung
San Suu Kyi on the political scene in 1988 froze the "natural"
emergence of political factions backed by various military and corporate
cliques, such as seen historically elsewhere in the region.
Suu Kyi's National League
for Democracy still enjoys massive popularity but has been, in difficult
circumstances, notoriously lacking in aggressive energy. It would be remarkable
if, like the bureaucracy, it were not overwhelmed by the upcoming challenges
caused by rapid political and economic opening.
Jennifer Quigley,
advocacy director of the US Campaign for Burma (as the country is still
referred to in some quarters), recently told Inter Press Service that she feared
the current eagerness by investors to exploit Myanmar's riches risks letting
the regime renege on moves towards democracy.
"If we go in and
allow foreign investment, there won't be any motivation for the government
towards political resolution," Quigley said.
The reality, however, is
likely to be that business becomes politics in a way seen across developing
Asia. And the military appears to be gearing up for this scenario.
About two years ago, the
outgoing military regime sold off a swathe of state assets - from colonial-era
buildings, to ports and cinemas - in sales that seemed designed to favor itself
and its cronies just before the big political opening. Reports of military-linked
land grabbing have also become more frequent with economic opening.
When the International
Monetary Fund visited five years ago, one disgruntled local businessman told
them that if they really wanted to catch the attention of the notoriously superstitious
generals they should bring an astrologer along next time. The IMF can save its
money, for military leaders are now firmly focused on the economy and
multilateral lender advice on how to spark growth - and in the process enrich
themselves and their crony capitalists.
William Barnes
Asia Times
Business & Investment Opportunities
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