Signs of economic recovery surface in Myanmar

By James East, Straits Times, 1 September 2000

Statistics are scarce, but Yangon watchers cite rather unusual signs like brisk cement sales and a thriving nightlife as evidence of an upturn

BANGKOK—The best two economic indicators of a potential upturn in Myanmar's international trade are the nightly goings-on in hotel bars and cement bag sales.

When business is brisk the prostitutes are out in force and cement sales rise.

Despite official denials that Myanmar has a sex industry, the word on the street is that bars of certain hotels are starting to hum.

In a country where official statistics are hard to come by and even harder to confirm, such evidence may be the best that Myanmar watchers can hope for.

After three years of recession, declining trade figures and economic sanctions imposed by the West, Myanmar now may be looking at a brighter economic future.

But such signs of increased international interest will not be welcomed by Aung San Suu Kyi, the leader of the opposition National League for Democracy who is currently in a roadside stand-off with the government just outside Yangon.

She has consistently called for sanctions and for tourists to stay away, a line backed by the US which has banned new investments in the country.

But trade figures released by Singapore's Trade Development Board are among the first to indicate a recovery, of sorts.

They show a 7 per cent growth in bilateral trade in January to July this year, over the same period last year. Trade is now worth S$551 million.

But getting to grips with Myanmar's investment and trade figures is difficult, a fact acknowledged by the country's former deputy planning and economy minister Zaw Tun, who was sacked following a July speech in which he attacked the military government for covering up the terrible state of the nation's economy.

Singapore businessmen say they have noticed what appears to be a growth in interest.

“There are more trading companies but not more investment,” said one, who asked not to be named.

Infrastructure projects were still not on Singaporean firms' radar screens.

Of the 100 or so trading firms, most were involved in the seafood and agricultural export trade.

International business advisers based in Yangon say Myanmar is potentially a good place to invest, but half the battle was in overcoming “misinformation” about the country.

They blame previous pull-outs by companies on the Asian meltdown rather than on domestic political reasons.

One adviser said: “The past 18 months have seen a significant slowdown in new investments in Myanmar. While new investments again seem to be starting now, it is too early to tell whether there is a shift in the companies investing in Myanmar.”

However, she said Chinese companies were using soft loans tied to construction projects, property development and light manufacturing to establish a growing presence.

Cement sales are also up.

The government has just teamed up with a Chinese company to build a plant near Mandalay with a production capacity of 400 tonnes per day. Exports from Thailand are also rising.

Next year, thanks to a new commercial navigation agreement, Chinese ships will be able to ply the Mekong river, boosting Myanmar's trade prospects.

And plans to hook Thailand with a north-south highway running from China via Myanmar is almost certain to accelerate as Asian economies recover.

Asean countries have not been deterred from trading with Myanmar, but strict financial policies of the military government—including continued control of foreign exchange dealing—led to Toyota Motor and seasoning manufacturer Ajinomoto pulling out this year after the government banned imports of vital raw materials and automobiles.

“The main complaint of foreign investors in Myanmar is the non-convertible kyat,” said the business adviser.

Others blame a lack of financial management experience among the military generals.

Despite this, Myanmar remains desperate to attract foreign businesses.

In an interview with the Yangon-based Myanmar Times, Foreign Minister WinAung said: “Our foreign policy is very clear, we want to create friendship with every country including with those big powers in the West who are now criticising us.”

But given the criticism in the West of Myanmar's human rights record, those governments appear unlikely to change their stance any time soon—a move which gives firms from China and neighbouring countries greater trade and commercial opportunities.