Economy and Economic Policy, State Law and Order Restoration Council
- / State Peace and Development Council Era(1988- )The Burma Socialist Programme Party Extraordinary Congress, held in July 1988, determined that the socialist economic policy that had been in force since 1962 would be scrapped. In November 1988, after the State Law and Order Restoration Council (SLORC) assumed power, it decreed a Union of Burma [Myanmar] Foreign Investment Law, which allowed foreign companies to establish branches, wholly owned subsidiaries, and joint ventures with domestic firms in Burma. Cross-border trade with China was also legalized. By the mid-1990s, private foreign investment, particularly from neighboring countries (such as Singapore, Malaysia, and Thailand) and Western countries (such as the United States and France), was substantial, and Chinese businesspeople wielded considerable economic influence, especially in Kachin and Shan States and Mandalay. Military-owned conglomerates, such as Union of Myanmar Economic Holdings, Ltd. and the Myanmar Economic Corporation, played a dominant role in the postsocialist economy.Privately owned banks were permitted to exist for the first time since 1962, and some of these new financial institutions allegedly have links to drug-dealing warlord armies in the border areas. The extent to which the postsocialist economy is dependent on infusions of cash from the production and export of opium and other drugs is a matter of intense speculation. Drug exports earn groups, such as the United Wa State Army, hundreds of millions of U.S. dollars in revenues, some of which is apparently used for construction of condominiums, luxury hotels, and other projects in Rangoon (Yangon), Mandalay, and other central Burma cities.Although the SLORC/SPDC hoped to emulate the successes of postsocialist China and Vietnam and transform Burma into a newly industrializing economy, Burma's foreign investment was in steep decline by the late 1990s because of a complicated system of exchange rates for its currency, the kyat, lack of the rule of law in business dealings, widespread corruption, poor infrastructure, and Western sanctions. The Asian financial crisis of 1997 also had an impact. Despite its oft-stated commitment to liberalizing agricultural trade, the state continues to procure rice harvests from farmers at artificially low prices at the beginning of the 21st century, causing considerable rural hardship (in 2003, the SPDC decreed an end to state procurement; it is unclear whether this has actually happened). There is little evidence that the State Peace and Development Council listens to the advice of qualified economic planners, and policy decisions are made on an unpredictable, ad hoc basis. SPDC chairman Than Shwe apparently wishes to return Burma to a modified form of economic autarky, such as existed before 1988, while, before his purge in October 2004, Prime Minister Khin Nyunt wanted continued economic internationalization. Close economic ties with Asian countries are likely to intensify, especially in the face of stiffening Western sanctions.For ordinary Burmese people, conditions are probably harsher than they were under socialism, because of periodic shortages of necessities, high rates of inflation, and deteriorating health services. Malnutrition is widespread among poorer people in both urban and rural areas, and many children cannot afford to attend school. For lack of other opportunities, many poor women enter the sex industry, not only in Rangoon but also in provincial towns. The constant need to give bribes to military and government officials imposes great hardship, not only for businesspeople but also for ordinary citizens. An affluent few with the right connections and access to hard currency have been able to prosper, and Southern California-style "gated communities" with luxury housing have sprung up on the outskirts of Rangoon. As gaps between rich and poor widen, the economy of postsocialist Burma, like that of post-Soviet Russia, is in a state of chaotic transition, and it is unclear whether it will be able to achieve stability and sustained growth.
Historical Dictionary of Burma (Myanmar). Donald M. Seekins . 2014.
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