Private sector reforms have accelerated in Myanmar, but not without a heavy dose of cronyism, as the military junta strengthens control over major assets and the business elite before ceding power to a civilian government.
About 300 state assets — from real estate, gas stations and toll roads to ports, shipping companies and an airline — have been privatized, mostly this year, in highly opaque sales.
As top military brass swap fatigues for civilian clothes ahead of elections on Nov. 7, the sales put valuable assets under their control through holding companies, or in the hands of their allies, turning the ex-military elite into the financial powerbrokers of a new era of civilian rule in the former Burma.
“The military is broadening its base of supporters by creating economic opportunities for loyal figures,” said Jacob Ramsay, senior analyst for Southeast Asia and the Pacific at British-based security consultants Control Risks.
“To keep some of these senior members of the military who aren’t quite in the top tier happy, they are offering the transition to civilian positions within the national legislature and sweetening it with access to money-making opportunities,” he said.
Ramsay points to 1960s Indonesia as a model for the Myanmar regime, when former president Suharto laid the foundations of what would become Southeast Asia’s biggest economy, while retaining his tight grip on power.
Myanmar, one of the poorest countries in Asia, was once the world’s largest rice exporter and is rich in resources timber, gems, oil and natural gas, but has suffered from decades of isolation and control by the military.
“Everybody’s sure one of a handful of cronies close to top leaders will be the winner [from the privatizations]. Most of us just play supporting roles in the bidding,” said a Yangon-based businessman, who asked that his identity be withheld.
Experts say the fact that a regime with one of the world’s worst records of economic mismanagement oversaw the privatization boom itself, rather than wait for post-election parliamentary checks and balances, was indicative of its real intentions.
“They’re just liquidating all state-owned assets by transferring them to their cronies with intent to make money and hand over an empty country to the next government if it fails to turn out in their favor,” said a university economist in Yangon, who declined to be identified so he could speak candidly.
However, there is little chance the first elections in two decades will be unfavorable to the junta.
Two parties believed to be proxies for the regime are contesting most of the 1,163 seats up for grabs, compared with the biggest of the pro-democracy parties, which is fielding just 166 candidates. The military will also retain control of key ministries and will be granted 25 percent of the seats in two national and 14 regional legislatures.
Critics say pro-junta parties will benefit from large donations from private companies run by the regime’s allies.
Sean Turnell, an expert on Myanmar’s economy at Sydney’s Macquarie University, sees little hope for competition in the business sector as the junta and its allies spread the wealth among themselves.
“Whatever the motivation, Burma’s current round of privatizations ... are close to a textbook example of institutional expropriation by Burma’s existing political and economic elite,” he wrote in a recent study. “[This] will likely be the real story of this latest unfortunate turn for Burma’s economy.”