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Burma 2011: Asian friends will fill junta pockets
Irrawaddy - December 30, 2010
William Boot, Bangkok – The New Year seems likely to bring more foreign trade, more tourists and more lopsided development for Burma, with much of the financial benefits filling the bank accounts of junta leaders and their business cronies.
These are the predictions of a number of expert observers who have been looking into their crystal balls at what 2011 offers the military run country.
The first quarter of 2011 will see continuing hesitation from both the United States and the European Union on the future of economic sanctions following the November elections and freeing from house arrest of Aung San Suu Kyi, while Asian neighbors will step up a business-as-usual policy.
China and Thailand will remain the biggest foreign investors, with an intensification of gas, oil and hydroelectric dam projects.
Probably the biggest single new business development will be the start of a major port-industrial complex in and around Tavoy (Dawei) on Burma's deep southeast coast. The Thai-led multibillion dollar project will likely see additional investment commitments from South Korean and Japanese firms.
"The new political facade of an elected parliament and the privatization of some state-owned enterprises to military-friendly business tycoons will bring a veneer of change for the better, but the wealth will remain largely in the same hands," said a trade official at a Western embassy in Bangkok, speaking on condition of anonymity.
This view is supported by long-time Burma analyst Sean Turnell, a professor of economics at Macquarie University in Sydney, Australia and editor of Burma Economics Watch.
"There will be the same old carve up of the gas revenues, and other 'rents' to be distributed to the regime and its cronies, whatever the political hats they may be wearing these days," Turnell predicted for The Irrawaddy.
"I expect more Chinese dominance of the economy, some upswing in tourism, but overall, and in the absence of great change, more slippage of Burma into the economic backwater it has become this past 50 years," he said.
The Economist Intelligence Unit's (EIU) January assessment of Burma in 2011 is: "Recent political developments are not expected to have any immediate impact on the economy."
The latest EIU report predicts that the new government is likely to continue to run a substantial fiscal deficit in 2011-12 and maintain a highly overvalued official exchange rate, with the central bank too ready to print money to finance the government deficit.
"Although it is possible that technocrats may be appointed to important positions in a new cabinet, there is unlikely to be any immediate improvement" in government, said the EIU.
While policy toward the Burmese regime in Washington, most European capitals and Australia will remain primarily hostile, the Naypyidaw government will get the support of "important allies" in Asia, notably China, India and Asean, said the EIU assessment.
China will continue with its construction of oil and gas pipelines from the Bay of Bengal into its southwest Yunnan province, as well as completion of a deep-draft port on Burma's central coast specifically to transship crude oil from Africa and the Middle East.
Thailand's state-owned PTTEP oil and gas explorer will invest further in its major new gas find at Block M-9 in the Gulf of Martaban, assessed as holding at least 50 billion cubic meters. Most of the gas will be piped to Thailand when production starts after 2013.
Thai state funds will also be invested in a new 160 kilometer road planned to begin in the first half of 2011, connecting Thailand's border town of Kanchanaburi with the Burmese coast town of Tavoy.
The Thai construction giant Italian-Thai Development Company reached an agreement in November with the state Myanmar Port Authority to build a large port at Tavoy.
Thai, Japanese, Chinese and South Korean firms have expressed interest in developing an industrial estate there with refining, petrochemicals manufacture and steel making backed by a 600 megawatt power station.
"Tavoy could become a major development in the coming years if Thailand can maintain good relations with the Burmese authorities, but I doubt if much will happen in 2011 beyond work on the connecting road," forecast Collin Reynolds, an energy industries consultant in Bangkok.
Turnell thinks there is a possibility of discontent in 2011 among some senior army officers following the political-economic carve up connected with the November elections.
"One issue will be the potential discontent within the ruling clique: the 'new' military officers without the revenues supplied to their predecessors by the now privatized assets and enterprises. And on the flip side the disappointed former officers now without their uniforms, in parliament or elsewhere, but who were not compensated for their loss of the economic privileges an officer's cap bestowed."
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