Campaigning parties ignore Myanmar’s economic plight

Tens of thousands of people are going hungry under lockdown in Yangon and yet one week before the general elections neither the ruling party nor opposition are addressing their needs to try and win their votes.

Instead Daw Aung San Suu Kyi’s government hands out special car import permits to senior bureaucrats and military personnel while projecting its pro-business credentials, and leading opposition parties struggle to come up with coherent economic policies even while the ruling National League for Democracy faces a business backlash over its handling of the economy.

Cleaning up an economy mismanaged by decades of military dictatorship is no mean feat, and in 2016 Daw Aung San Suu Kyi and her team faced the unenviable task of advancing reforms after many low-hanging fruits had been picked by her predecessor. The powerful nexus between armed conflict and illicit trade, and – more recently – COVID-19’s economic calamity, has made her mission all the more challenging.

“The Myanmar bureaucracy was not set up to provide public services for Myanmar’s citizens. For more than 50 years, it was designed to control public finances and serve special interests,” commented Andrew Bauer, an economist who used to advise the Myanmar government. “No new party or government can be expected to turn around such a large ship in a few years.”

Senior opposition politicians, in interviews with The Myanmar Times, have attacked the NLD’s handling of the economy, its energy record and approach to sensitive Chinese projects.

U Ko Ko Gyi, leader of the People’s Party, and Daw Thet Thet Khine, who founded the People’s Pioneer Party, have accused the NLD of using special car import licences to woo votes in Nay Pyi Taw.

The permits constitute “a form of bribe”, said U Ko Ko Gyi, while Daw Thet Thet Khine labelled the decision “totally unethical.”

But on the campaign trail few have offered alternative programmes for government to address rampant inequality, revenue sharing, the role of the state and welfare system and overdue tax reforms.

No one is making the case for the immediate needs of those hit by the lockdown measures either, although U Ko Ko Gyi warned that social unrest could happen if livelihood woes worsen after the elections

In Myanmar’s biggest city Yangon, tens of thousands of squatters and vulnerable groups are estimated to be starving as a result of the stay-at-home orders, according to U Thet Swe Win from Synergy Center for Social Harmony and Myanmar Cultural Research.

Poverty and suicide rates are rising because of COVID-19 restrictions, he told The Myanmar Times. “I have personally met with a suicide surviver… a flower vendor tried to hang himself while nobody was at home as he had no money. But he was saved by the community.”

The most vulnerable people, especially those earning K2000 per day, are in a dire situation because the government’s one-off K30,000 per household cash transfer programme is insufficient.

U Thet Swe Win argued that the government does not recognise the emergency and has not shown a willingness to resolve their woes.

He referred to the example of social welfare minister U Win Myat Aye, an NLD member, claiming that people are not starving. “The government’s way of thinking and doing needs to be factual.”

Myanmar’s largest opposition, the military-backed Union Solidarity and Development Party (USDP), considers the economy a major weakness of the incumbents but offers little policy details of its own.

In a September interview, USDP vice chair U Hla Tun called on voters to compare U Thein Sein and the NLD administrations on “economy, stability, rule of law, and peace.”

The USDP deputy leader said that a looming recession, made worse by the pandemic, is one of the top three challenges for Myanmar. The IMF estimates that Myanmar’s GDP will grow by 2 percent this year.

The USDP’s hope of drawing the votes of businesspeople who are disgruntled with the NLD is likely dashed by Daw Thet Thet Khine’s star hires. The pro-military party is not active in economic messaging because policy heavyweights have left the party.

Architects behind U Thein Sein’s economic reform, the president’s chief economic adviser U Myint and business adviser U Zaw Oo, are helping the People’s Pioneer Party to draft policies. For Yangon’s corporate leaders, Daw Thet Thet Khine’s departure from the NLD was a loss for Daw Aung San Suu Kyi who, they argue, could have deployed her strength in economics.

The NLD-led government has been busy promoting its “pro-business” credentials in state media and business events, even though economic reform is not among the top three priorities in its manifesto.

Investment minister U Thaung Tun, a member of Suu Kyi’s cabinet, in an exclusive interview highlighted that Myanmar has been able to secure record foreign direct investment approvals over the past 12 months, even amid bleak predictions for the world economy.

U Thaung Tun also emphasised progress in securing power project proposals, changes to the tendering process of Yangon’s “New City” project, plan to set up a new Mon State Special Economic Zone, and an imminent economic recovery programme.

The government has also raised electricity tariffs, narrowing the budget deficit in contributing to Southeast Asia’s most subsidised power supply, and brought the powerful General Administration Department under civilian oversight. It has also renegotiated the price tag and stake ratio of the China-backed deep-sea port and SEZ in central Rakhine, considered among the most strategically significant projects for Beijing’s Belt and Road grand plan.

Despite the obstacles facing Daw Aung San Suu Kyi, Andrew Bauer said the NLD has not made a serious attempt to reform the most important bureaucratic rules and procedures. Instead, it has largely continued “the policies of the past.”

The NLD government’s Myanmar Sustainable Development Plan, 2018-30, is a good framework for opening the country and spurring economic growth. However, there is no mechanism for implementing the plan and the government has not followed through on most of the actions in the plan,” the senior economist told The Myanmar Times.

Broken energy record

Daw Thet Thet Khine’s criticisms of the NLD’s record in power generation are in line with industry’s objections. The government has failed to increase non-rental power generation even though, pre-COVID-19, demand was growing by 15-19% per year.Poll officials stood down amid allegations of irregularities in Myanmar

The Ministry of Electricity and Energy has not struck power purchase agreements on any major energy project proposals under the entire NLD term, including hydropower proposals backed by western and Japanese multinationals and three LNG-to-power projects, totalling almost 3000 megawatts, made public in January 2018.

The NLD had more than four years to develop solar but they took no action until a few months ago, belatedly hurrying through 30 project tenders.

Daw Thet Thet Khine called the solar initiative “a kind of corruption” and argued for public procurement reform to improve the process and raise transparency.

The NLD-led cabinet justified the decision based on uncertainty surrounding COVID-19 and the urgency to develop power before next March. But this raises further questions. The pressing need to generate added electricity is already purportedly addressed by the 2019 emergency power tender, another controversial tender under the NLD all won by Chinese firms. Energy minister U Win Khaing has not responded to multiple requests for comment.

The public backlash against China-backed business does not end here. Yangon Chief Minister U Phyo Min Thein bought thousands of public buses from two Chinese firms without an open tender. Above all, Daw Aung San Suu Kyi has come under fire for her ambiguity over the future of the Myitsone dam project by refusing to disclose contract details as she had pledged to do when in opposition.

In the eyes of the Arakan National Party, the Shan Nationalities of Democracy and Kachin parties, the NLD handles controversial deals with Chinese investors, such as the Myitkyina Economic Zone, in the same opaque and top-down approach as under the military junta. The perception that Chinese projects are implemented primarily to the benefit of Nay Pyi Taw and not local communities has fuelled ethnic grievances towards the ruling party.

Supporters of Daw Aung San Suu Kyi often point to GDP growth, hovering at around 6pc before coronavirus, as proof that economic prospects are in the NLD’s safe hands. The party opened up various markets and implemented new Investment and Companies Laws, two major pieces of business legislation, and introduced higher requirements on corporate transparency.

“Our macroeconomy is going well on paper, but on the ground the micro-economy is worse,” responded U Ko Ko Gyi.

Daw Aung San Suu Kyi spent the first 15 months in government “neglecting” the economy because of her focus on national reconciliation and peace talks, he said, adding that it was not until last year that the administration scrambled to woo investors starting with the Investment Myanmar Summit in Nay Pyi Taw.

The government needs to consult the business community when drafting policies and understand the difficulties they are facing, he added. “We need to listen more on what [the business people’s] difficulties are, what they wish for.”

Such criticisms resonate well in Yangon’s corporate community. Poorly implemented policies such as change of the fiscal year and massive delays in insurance licensing give businesses a headache.
Daw Aung San Suu Kyi’s has been widely credited for the progress in the fight against corruption, taking down cabinet colleagues and charging senior politicians.

Fellow party member, Daw Lei Lei Maw, who used to head the Tanintharyi government, was sentenced to prison for 30 years on charges of corruption. The NLD, however, has not dismantled the military cartel.

Both U Ko Ko Gyi and Daw Thet Thet Khine argued for structural reforms to address pervasive small bribes given to facilitate services in the vast bureaucracy.

The fundamental problem is because civil servants are not sufficiently paid to make ends meet for their households, U Ko Ko Gyi explained. This has prevented talents from joining the public sector and incentivised small bribes.

The People’s Party leader argued for a higher pay for state employees and mid-level civil servants should be trained to enhance their skills. “Now, one person owns many houses and this widens the gap between the rich and the poor too much.

Source : Myanmar Times

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