"Myanmar's curse is the stench of t

[brelief@xxxxxxx]

Subject: "Myanmar's curse is the stench of the junta's illegitimacy"

--=====================_825746236==_
Content-Type: text/plain; charset="us-ascii"



--=====================_825746236==_
Content-Type: text/plain; charset="us-ascii"

Spotlight on Myanmar
Edited by Harry Maurer

BUSINESS WEEK
March 4, 1996

(Letters "Readers' Report" to
1221 Ave. of the Americas
39th Floor, NY 10020
Fax: 212-512-3930
e-mail Internet.bwreader@xxxxxxx)


THE ECONOMIC LEASH GETS LOOSER

The Government Employee Cooperative store in Yangon boasts
an Aiwa showroom. But shoppers mainly browse in the
spacious, neon-lit store, which has been open since July, 1994,
~d '`Most people can't afford to buy," laments Than Aung'
director of Panavision Electronic Center; which imports Aiwa
goods. 

No wonder. This largely rural nation of 40 million, called
Burma until 1989, is one of the world's poorest; average per
capita income is just over $200. Such destitution stems largely
from three decades of a military dictatorship steeped in
socialism. True, the 21 - general junta in power since 1988 has
gradually moved to open the economy, and the results include
165 foreign projects ranging from a $10 million Daewoo Corp.
joint venture that assembles washing machines in Yangon to
major natural - gas finds offshore. But so far, the opening is
only partial, and a key goal seems to be to enrich the elite.

The generals, who call themselves the State Law and Order
Restoration Council, do battle with market forces at the expense
of the private sector and the masses.  A quarter of all imports
enter at the official exchange rate of about 6 kyats to the dollar,
as opposed to the street rate of 125, thus keeping privileged
officials and officers in cheap gasoline and the state sector in
subsidized inputs.  Rigged land -  lease laws --  one - year terms if
the local partner is private vs. 30 - year terms with a government
partner ensure that foreign companies court state enterprises.
Some 70% of the 165 foreign - backed
projects approved involve state companies. The military's private
Myanmar Economic Holdings has 10 joint ventures with
foreigners' including a supermarket and duty - free shop with
separate Singapore partners.  The state monopolizes exports of
rice, teak, pearls, and most minerals.  "It's not a real market
economy. It's only open to some," says opposition leader Aung
San Suu Ky, who won the Nobel peace prize in 1991.

POPPING UP.  Still, the junta is a vast improvement on the
astrology - driven policies of General Ne Win, who emptied the
shelves by nationalizing and isolating the economy during his 28 -
year
rule  which began in 1962. In 1988, Myanmar legalized private
businesses, and it now chases foreign investment.   1996 has been
dubbed Visit Myanmar Year.  Luxury hotels are popping up,
including an Australian run, Thai - owned Sofitel in Yangon.
"The stores are full," exults the junta's senior economic adviser,
Set Maung.   Fifteen private local banks have blossomed to
challenge the four money - losing state banks, and 32 foreign
banks have opened representative offices.  After averaging 4%
from fiscal 1990 - 94, gross domestic product growth shot to
6.8% in the year ended last March 31.

But sustained and balanced private - sector growth is another
matter. Banks are hampered by interest rates fixed below inflation
of 22.5% in fiscal 1995. The state prints money mainly to fund
military spending, which exploded from 30% of the budget to
50% two years later. And despite the vaunted opening, Myanmar
has approved only $8.08 billion in foreign projects since 1988, so
investors aren't exactly beating down the door.

 ... BUT FREEDOM IS FAR OFF

>From an investment point of view, Myanmar's curse is the stench
of the junta's illegitimacy. Soldiers massacred hundreds of
demonstrators in 1988 after Ne Win's retirement. The junta ig-
nored 1990 elections swept by Suu Ky's National League for
Democracy. This led world lending agencies to bar support. U.S.
garment makers such as Levi Strauss and Co. stopped buying
Myanmar - made items because of threatened consumer boycotts.
A natural - gas consortium led by France's Total is under attack
because of allegations --  denied by the government -- of forced
labor and relocations along a gas pipeline to Thailand.

Suu Kyi's July release from house arrest is trumpeted as a
breakthrough, though other political prisoners remain in jail.
Certainly, more foreign executives are scouting. "We have Japan-
ese businessmen coming here in large groups," reports Si Si Win
of the Myanmar Investment Commission.

Meanwhile, the junta is rewriting the constitution to enshrine a
military role in government.  So it may be a long time before
most people can afford a stereo from the Aiwa showroom.

by Michael Collins in Yangon

--=====================_825746236==_--