Fri 30 Mar 2007
Filed under: Business / Trade,News
Deciphering Burma’s highly unrealistic economic data is problematic but beneath all the phony numbers, after years of almost non-existent growth, the economy is finally picking up.
When the current financial year ends tomorrow, Burma will almost certainly have recorded its most profitable year in terms of foreign exchange earnings and taxation revenue since the beginning of military rule 45 years ago. There is just one problem-almost none of these gains seem to be reaching the average Burmese citizen.
An interim report by the Asian Development Bank released this week said that during the previous 2005 fiscal year, Burma saw gains in agriculture, energy and mining. Predictions from the Economist Intelligence Unit suggest that Burma’s GDP growth would be expected to increase steadily from about 3.5 percent in 2006 to four percent in 2008. This is slow by booming East Asian standards, but compared to 2003 when the banking crisis prompted negative growth of more than two percent, the economy has certainly rebounded.
The driving force behind the turnaround is not difficult to ascertain. In March alone, The New Light of Myanmar reported that Burma’s Ministry of Energy held at least eight meetings with foreign officials from Thailand, Singapore, India, Malaysia, Russia and South Korea. Three of these meetings concluded in new oil and gas deals.
As ADB said this week â€œHigh gas prices will continue to buffer [Burma's] . . . external accounts and exploration for more gas and oil is under way.â€
In the 2005 fiscal year, EIU says that energy sales accounted for 37 percent of Burma’s export revenue, a percentage that is understood to be climbing every year; the main reason the junta surpassed US $1 billion in foreign exchange reserves around September 2006 for the first time ever.
Similarly, taxation revenue has risen even more sharply as the government has begun to enforce its own tax legislation. The authorities claimed nearly nine times more tax in the 2005 fiscal year compared to 2001, netting 450 billion kyat in the previous fiscal year, if we are to believe Burmese government statistics.
From the beginning of the 2007 fiscal year on April 1, Burma expects to reach 2.38 trillion kyat in GDP and is kicking things off by permitting all 1500 private firms in Rangoon’s industrial zones to run 24 hours a day, The Myanmar Times reported in its latest issue.
As ever in Burma though, this only tells half the story.
If the junta’s aim of reaching above ten percent growth year-on-year from 2006-2010 is unrealistic, as economic institutions like ADB have suggested, then any tangible benefits for the general populace seem even less likely.
Banks haven’t been able to lend money since the crisis in February 2003 and the kyat has reached successive all-time lows since then as the junta has tried to print its way out of the ensuing monetary mess.
Meanwhile, the junta’s increases in taxation revenue have partly come from foreign organisations and their employees, but also from small Burmese businesses that are finding their profits increasingly squeezed. All of these factors are detrimental to the economic wellbeing of small businesses and the average Burmese.
Add to that double-digit inflation and the subsequent threats by the military that businesses increasing prices may be punished in some cases and you have a general population feeling the economic strain, says a Rangoon-based business editor, requesting anonymity â€œThe trickling down effect [of increased GDP], if there is any, is totally invisible on the ground level.â€
The prices of the main commodities-rice, gold and oil-are at, or approaching, all time highs, the editor said, adding that most townships Rangoon are â€œstill in the dark for most of the day and the night.â€ Indeed, Burma’s nearly 55 million people-including recent demonstrators in Rangoon-are surely asking themselves where the profits from energy, gas, agriculture and tax are going.
A large slice has clearly gone to the building of the capital Naypyidaw, which has also been funded, it is thought, by soft loans from foreign countries including China and Thailand.
The junta may have convinced itself it is building a â€œmodern and developed nationâ€ but invariably the figures lie, or at least do not to tell the whole truth. As ever, the government has failed the true gauge of progress in Burma in that the average person remains as impoverished as ever, with few opportunities for economic relief.