Myanmar Economy Poor

[RANGOONP@xxxxxxx]

ANALYSIS-Myanmar economy poor, but no unrest seen

By David Brunnstrom
BANGKOK, Aug 21 (Reuters) - Myanmar's economy is ailing and 
 many of its people are suffering hardships, but few analysts expect the sort
of widespread social unrest that could bring down the military government --
at least not for now. 

Despite rosy official government figures, economic growth has slowed in the
past two years due to mismanagement and infrastructure inadequacies and the
slowdown has been exacerbated by Asia's financial crisis. 

The government now has to wrestle with a host of problems, including soaring
inflation, a plummeting currency and foreign reserves so low there is
insufficient money to buy spare parts for power generation, resulting in
widepread power cuts. 

Yangon-based diplomats said recent independent estimates put foreign reserves
as low as two weeks of exports -- perhaps $100 million or less. 

Diplomats and economists in the country estimate Myanmar's inflation is at
least 50 percent for domestic goods and more than a 100 percent for imports,
while the market rate for the kyat has fallen from around 100 to the dollar
two years ago to as low as 420 in recent days. 

Rice prices have soared along with those of other staples such as cooking oil,
they said. 

``I think right now a lot of people are wondering where their next meal is
coming from,'' said a Yangon-based diplomat. 

However, another commented: ``If the question is 'at what point does this lead
to public unrest?', then I think you can overplay it. People here have been
used to suffering a lot and it would take some sort of trigger, some sort of
really bad judgment by the government to produce that.'' 

Ten years ago chronic economic difficulties following a quarter century of
socialist mismangement led to a nationwide uprising for democracy in Myanmar,
then called Burma. 

The trigger that turned widespread discontent into open mass revolt then was a
government decision to take banknotes out of circulation without compensation.

The military crushed the uprising and took direct control in September 1988,
killing several thousand people according to most independent estimates. It
has since sought to justify its tight grip on power by pledging economic
progress. 

In recent months, the National League for Democracy (NLD), the main opposition
group to emerge from the uprising, has stepped up the pace of its campaign for
political change. 

The party's charismatic leader Aung San Suu Kyi has staged widely publicised
passive protests that have highlighted both a lack of basic freedoms as well
as its demand for the convening of a parliament of members elected in polls
eight years ago. 

The NLD won the poll by a landslide but the military ignored the result.
Diplomats consider it highly unlikely it will heed the opposition demands now,
despite the economic problems. 

However, an economist in Yangon said mounting economic woes could be
troublesome as government backers were not immune. 

``For any government of this nature, this kind of situation will not
immediately threaten them,'' he said. ``But when your access to revenue starts
to dwindle your capacity to keep your own constituency happy becomes less and
less.'' 

Mynamar's economy is commodity-based and reliant on exports of rice, pulses
and prawns. The sources said the rice crop had been hit by floods for two
years and by drought this year. 

The economist estimated drought would result in a 20-25 percent crop loss in
the central growing region and the first diplomat said this would leave no
rice surplus for export. 

The sources said the government had apparently already taken advances on up to
five years' revenue from another much touted foreign exchange earner -- a gas
pipeline to Thailand from the Gulf of Martaban. 

Myanmar remains the world's leading opium producer and the sources said income
from narcotics remained a fallback despite the stated government policy of
eradicating the problem. 

``It has taken some intiatives to solve the narcotics problem,'' the economist
said. ``How much is for show and how much is for real, we don't know, but it
seems there are some unexplained sources of income that keep them going.'' 

While few expect radical political changes any time soon, some say the
economic crunch could prompt gradual shifts and perhaps more willingness to
compromise with the opposition. 

``I think the government has started to feel the pinch and there is the
possibility that that will make it a little more pragmatic,'' the first
diplomat said.