Burma/Myanmar: What Everyone Needs to Know (17 page)

Ironically, the movement away from socialism occurred in the waning days of the BSPP, and by November 1988 a new foreign investment law was promulgated. Outside investors were very interested in Myanmar, especially its on-shore oil reserves. Ten foreign firms quickly bid to secure exploration rights in central Myanmar.

This was followed by a broad infusion of foreign investment and the opening of indigenous banks to provide capital to local investors. This surge of interest concentrated at first on mineral exploration, especially oil and gas. Subsequently, the low-wage, literate, and controlled labor market proved attractive to foreign investors who sought sites for the establishment of textile and garment factories, often to circumvent quotas on their own countries. Many investors had joint ventures with government ministries or organizations. Most of these investors were from Asia, with the exception of the largest one, an amalgam of French, U.S., and Thai companies brought together to exploit natural gas found offshore and to build a pipeline to Thailand. By the end of 2008, the Burmese authorities cumulatively listed 422 foreign investment projects totaling some US$15 billion over the previous twenty years, although unauthorized Chinese investment in small business activities would likely push the total higher.

One attraction of Myanmar to foreign investment has been a forcibly controlled labor force, where strikes are prevented and demonstrations curtailed. A literate, productive, docile, and inexpensive labor force has attracted labor-intensive industries, and workers have responded because of the lack of alternative employment.
Corvée
labor has been used by the state, much against ILO regulations, resulting in past threats to exclude Myanmar from that group.

Human rights advocates effectively lobbied to shame some foreign investors from working in Myanmar, claiming that they
were effectively supporting the military. Aung San Suu Kyi was against foreign investment, tourism, and even humanitarian assistance for a period, although her views on humanitarian support changed. Criticism of the regime grew, and in 1997 the United States imposed sanctions on all new investment beyond those initiated after the coup of 1988 that stopped military and economic assistance. Restrictions were also imposed by the European Union. The United States followed with further, more stringent sanctions in 2003, prompting many foreign businesses to refuse to invest or to pull out. The United States passed additional sanctions in 2008. One of the probable motivations behind Myanmar joining ASEAN in July 1997 was the prospect of greater investment from those states; ironically, the month that Myanmar joined was the month the Asian financial crisis of 1997 started in Thailand, and this effectively prevented the investment that Myanmar had sought.

By the late 2000s, new foreign investment had dropped. In monetary terms, foreign investment has been heavily concentrated in the extractive industries—oil, gas, minerals, timber. Foreign investment in Vietnam, which opened to the outside business community at about the same time, was booming. Although the Vietnam internal market is about 50 percent larger than the Burmese one, that seems to be an unlikely explanation. Obviously, part of this has to do with sanctions and the opprobrium effectively directed against that government. Other causes are also at work.

Myanmar is rated as one of the most corrupt countries in the world, according to Transparency International, which places it at the bottom along with Somalia. To do any business, whether one is a foreigner or a citizen, one needs if not a Burmese partner then at least a Burmese protector. Rent-seeking and corruption are endemic in a society where wages are low and inflation is high, and a system of patron–client relationships is critical in such a political culture. Yet the established patron of today may become the outcast of tomorrow. Furthermore, law is essentially irrelevant—whereas “policy”
is important: today’s policies may also be tomorrow’s crimes. Further, seemingly on a whim or at least without consultation, regulations change. Businesses need predictability, and this is sorely lacking in contemporary Myanmar society. Rarely does the military allow the repatriation of profits, which are usually invested in Burmese raw materials for export.

The indigenous Burman private sector, deprived of capital and subject to the whims of political leadership, flounders. Yet one type of individual succeeds. This is the Chinese entrepreneur, sometimes a legal resident or a Sino-Burman, or sometimes an illegal migrant who has acquired Burmese identity papers. These individuals have access to capital through traditional clan and linguistic associations and are not dependent on the formal banking system. They transfer funds internally and externally through secure but informal mechanisms. If present trends are not reversed, they will become the new Burmese middle class, and the specter of ethnic foreigners holding the reins of the Burmese economy could exact xenophobic reactions.

As one Burma/Myanmar specialist put it, the military in Myanmar is a state within a state. The
tatmadaw
’s view of their position in society confirms this. General Saw Maung said, “It is in accord with the ‘law of nature’ that the indigenous people [have] love and respect for the
tatmadaw
.” As the military has asserted, “Only if the Armed Force is strong, will the Nation be strong.” The
tatmadaw
is, according to its slogans, the “mother and father” of the people. Their earlier exhortation was “don’t look over the shoulder of your mother at your aunt” (don’t rely on foreigners). It is virtually a self-contained community of some 400,000 (figures vary) active-duty members, and when families are included, it totals some 2 million people, or some 4 percent of the population. A large (but unknown) number relate economically to the military in a type of dependency. If one considers the retired military and their families, who also
play important roles in Burmese society, the number is greatly magnified. All in all, not an inconsiderable percentage of the population is in some manner dependent on the present military role and rule.

Until 1988, the army was reasonably well administered, and corruption was not a major problem. The expansion of the military since that time (the
tatmadaw
totaled 198,681 in 1988), however, has led to looser control and the recruitment of less desirable elements. Organizationally, there are said to be 504 battalions of 826 men each, up from 168 battalions in 1988. There are ten light infantry divisions. The provision of more sophisticated arms from China (estimated at more than US$3 billion) and elsewhere will require high budgetary maintenance allocations and greater training requirements.

The military’s role in the power structure and administration has been explained a number of times. But the ancillary functions and its influence are less well understood. The government has built up institutions run by or under the influence of the military in all fields. Military training institutions are producing not only officers for the present administration but also a future elite cadre who will staff ostensibly civilian institutions. The
tatmadaw
also runs its own schools for dependents, and the best health care in that disease-prone state is in military-run hospitals. Businesses and manufacturing are frequently run directly by military conglomerates, which also have extensive joint ventures with foreign firms. Every substantial enterprise needs someone in the military establishment to ensure that the economic gears turn smoothly. There also said to be monasteries that the military favor that are under their influence. The military encourages private contributions to such institutions as well as other good works. They then donate such material under military auspices in an attempt to garner the karmic credit that such giving provides.

These are the direct or quasi-direct elements of the state within a state. The ancillary elements of this substate, if you will, are the tentacles that reach out administratively into
civilian life. These include the Union Solidarity and Development Association (USDA; the membership of which has been reported at over 24.6 million, perhaps two-thirds of the adult population) explicitly established to serve military needs, the cooperative movement, the Maternal and Child Welfare Association, the firefighters association, and the Myanmar War Veterans’ Association (which operates twenty-six businesses worth over K.9.6 billion). A significant number of other groups all serve the
tatmadaw
’s political purpose of control, whatever other functions they may perform. The USDA may be the intellectual descendant of the National Solidarity Associations that the military formed in the Caretaker period (1958–1960). One may assume that the membership in many of these groups is not completely voluntary—not physically coerced but socially and often professionally necessary. Social pressures and administrative requirements regarding membership come into play when acceptance or advancement is at stake.

Many families in opposition to military rule want their sons to join the
tatmadaw
, as it is the prime avenue to social mobility and economic success. At the local level, the military situation has become more complex. Local units have been encouraged to fend for themselves by growing their own food, which often leads to confiscating land for this purpose. As the military has built its own exclusive structure of controlled and supporting institutions, it is more than likely that the inclusiveness of this control, and the arrogance that seems to have gone with it, has resulted in broad resentment among those who have not been so favored.

In some circles, Myanmar has been called a narco-state, one in which the incomes from narcotics production, distribution, and sales are critical factors in regime continuance. This
pejorative characterization is not justified by facts. No government, including that of the United States, has charged that the Burmese administration directly receives funds from the narcotics trade.

This, however, is only a partial description. Opium production and its transformation into heroin have been important factors in contemporary Burma/Myanmar. A large number of ethnic minorities in the hill areas of northern Myanmar have relied on its production. The name Golden Triangle refers to the opium-growing areas where Burma/Myanmar, Thailand, and Laos come together. That local officials, including local military, engage in its production or tax its distribution is clear. The government freely admits that the drug lords have been able to cease their activities and retire in comfort in the country and use their funds for more legitimate economic projects (and thus more wealth). The United States calls this money laundering; the Burmese call it development projects. The government passed a money-laundering law, with strong encouragement from the United States, but implementation seems to have been lacking.

We need not go back to the opium war between Britain and China in the nineteenth century to understand the nature of the opium problem. The British encouraged (or at least legally tolerated) the growing of opium in the Shan State. Shan leaders taxed its use. It was finally declared illegal during the military Caretaker Government. The Kuomintang troops in Burma fostered its expansion. Opium production swelled from some estimated 250 tons per year to over ten times that amount in 1989 (although alternative estimates abound), producing heroin essentially to feed the Western markets. It was the cash crop for hundreds of thousands of hill dwellers who otherwise existed on subsistence agriculture. These farm families did not grow wealthy; most remained poor. The middle men and dealers were the beneficiaries. The sale of opium and its ultimate product, heroin, provided the means by which to fund ethnic armies and, following the cessation of Chinese support, the Burma Communist Party.

The Shwedagon Pagoda in Yangon. (Photo © Mark Van Overmeire, courtesy of Shutterstock)

Than Shwe salutes during the 63rd Armed Forces Day in administrative capital Naypyidaw on March 27, 2008. (KHIN MAUNG WIN/AFP/Getty Images)