capitalist class emerges in
Myanmar By William Barnes
BANGKOK - Myanmar has a widely
underestimated array of home-grown business
families who are likely to provide the foundation
of the country's future capitalist class - and a
bulwark against any attack on the core privileges
of the military-linked elite.
excitement over the opening of the "biggest
emerging market opportunity since China",
commentaries have portrayed Myanmar in words and
images akin to those used in describing America's
19th century Wild West.
Intelligence Unit recently espied "vast untapped
natural resources and land". The International
says the country could
be "the next economic frontier in Asia". Local
pundits agree: "Myanmar is the last resourceful
investment destination in the Southeast Asian
region," said Thinn Htut Thidar, a Yangon-based
There is undoubtedly truth in
these words but they overlook the local tycoons,
often disparaged as cronies of the regime, as well
as myriad lesser entrepreneurs, whose businesses
fill out the space left by the military's own
large economic presence.
well-established homegrown commercial interests,
the "untrodden fields" talk is in many ways
overdone and misleading. An Asia Society "Task
Force" that advised Washington in 2009 on who to
deal with if Myanmar opened up, for example, did
not mention the indigenous business sector.
Myanmar's official statistics place its
per capita economy on a level with a sub-Saharan
basket case. Yet anyone who has been stuck in the
traffic jams of shiny four-wheel drives in the
commercial center of Yangon knows there is
something amiss in this statistic, which largely
fails to measure the country's huge informal and
"Most business families
have tried to keep a low profile and to hide their
wealth for obvious reasons. The clever ones made
money even in the [eccentric late strongman] Ne
Win era. Ultimately even the military knew it has
to keep the economy ticking over somehow. These
families - big and small - they will all now try
to emerge strongly," argued one European banker.
"I would put down money that the families
who were able to cope with the generals are going
to be the best at managing the coming boom. The
result might not be pretty but it will be
effective," he said.
Some, perhaps many,
of these tycoons will stumble and fall, and many
newcomers and returnees will also likely emerge.
But in the years it takes Myanmar to reach its
version of democracy there will be time for the
owner class to consolidate its gains and arrange
An important test
will come in 2015 when a general election is due,
although the military will still have a guaranteed
25% appointed representation in parliament.
Thomas Carothers of the Carnegie Endowment
for International Peace think-tank recently
pointed out that Brazil's emergence from a much
shorter period of authoritarian rule took two
"long and turgid" decades.
"More than 10
years elapsed from the opening of political reform
in 1974 until a civilian president took power
through credible elections," Carothers noted. "It
was almost another 10 years after that until the
system really worked through many of the toxic
legacies of previous authoritarianism."
Myanmar's reformist President Thein Sein
has talked about re-examining certain "crony"
contracts, but this isn't expected to tilt the
commercial balance any time soon away from
military-linked enterprises. Investment vehicles
like Myanmar Economic Holdings, which owns three
dozen businesses and several joint ventures with
foreign firms, is believed to be 70% owned by
serving and retired military officers.
Five years ago, one of the leaked American
diplomatic cables argued that true reform would
only come when the entire economy was turned over.
"The generals' economic power cannot be
separated from their political power. Over the
last forty-five years, the regime has built an
elaborate system of patronage where the generals
and their military-owned enterprises dominate
every profitable natural resource industry and
The cable added
that "True economic reform would require the
dismantlement of this elaborate structure,
threatening their powerbase."
International Crisis Group (ICG), a
non-governmental organization that has advocated
for the removal of Western economic sanctions
against Myanmar, reported recently that popular
expectations are running high and that "in order
to bolster the broader reform effort, it is vital
to provide quick wins to the population"
especially in the most deprived areas.
the same time, the government is already close to
being overwhelmed by the foreign in-rush: "So many
offers of assistance are coming, we have no time
and capacity to handle them. The risk of burn-out
is real, and in some ways, things are moving too
fast," said one official quoted by ICG.
Military-entrepreneur complex So
who is going to supply the "quick wins"? A certain
mystery still hovers over the decision of the
military establishment to risk easing its
repressive hold on the country when it was neither
broke nor under dire internal political pressure.
Indeed, there were a number of countries edging
closer diplomatically without promises of sweeping
Part of the answer may be found
in the military-entrepreneur complex. It has been
obvious to all but the dimmest general that vastly
greater profits were to be had if the economy was
permitted to engage more with the global
marketplace. The ensuing growth would also enable
a revamped military-entrepreneur class to nail
down a long-term existence behind the screen of
economic progress and political transformation.
This was actually been tried before in
Myanmar, albeit in a limited way, something that
has been overlooked in most recent commentaries on
the country's unprecedented opening.
Myanmar actually "opened" its markets 20
years ago, when it also set up grandiose vehicles
like Myanmar Economic Holdings. Then, the idea was
to move away from the decades of eccentric
pseudo-socialism under former dictator Ne Win.
That early attempt to take a "modern"
authoritarian growth path prompted a host of
mostly Asian corporations to scramble for
opportunities in the 1990s. The initiative largely
fizzled away because of the military's suffocating
grip and the lack of both international
institutional lending and proper legal security
Some cynics think the
recent political theater is merely the military's
recalibrated attempt to create a business boom
without inviting social unrest. If a
military-entrepreneur complex were able to
prosper, then even a lively democratic facade
would be acceptable to the military, in this view.
"The generals own the country and have
survived in spite of sanctions and [international]
condemnations. What they crave is what they cannot
buy or be gained by oppression - legitimacy," said
a former Western diplomat in Yangon and keen
observer of the Myanmar military.
all of this to a Mafioso who wants to become a
legitimate businessman by laundering his money,
sending his kids to Ivy League schools and so on,
and letting others do the dirty work so he can
make claims of plausible deniability while he
continues to reap the profits," he said.
Myanmar's uniformed rulers have frequently
proven abrasive patrons, even of their favored
quasi-capitalists. Yet the linkages of profit,
protection, friendship and family are myriad, if
not always transparently obvious.
most likely replacement for President Thein Sein,
if he retires in 2015, is the speaker of the lower
house, Shwe Mann, who has been linked to the
showiest of the regime's entrepreneur favorites,
Tay Za. Shwe Mann's three sons are also reportedly
heavily involved in crony enterprises.
Critics have frequently railed about
"toadies" vying for privilege in the debilitating
Myanmar version of India's "License Raj". Yet this
maneuvering is in line with the defining
characteristic of so many successful Southeast
Asian business families: the ability to connect
the ruling elite with economic opportunity.
Leading businessmen have complained
bitterly behind closed doors about the bottomless
incompetence of Myanmar's military leaders, even
as they paid kickbacks and sought to ingratiate
themselves with them.
Western academic has long contended privately that
the arrival of opposition icon Aung San Suu Kyi on
the political scene in 1988 froze the "natural"
emergence of political factions backed by various
military and corporate cliques, such as seen
historically elsewhere in the region.
Kyi's National League for Democracy still enjoys
massive popularity but has been, in difficult
circumstances, notoriously lacking in aggressive
energy. It would be remarkable if, like the
bureaucracy, it were not overwhelmed by the
upcoming challenges caused by rapid political and
advocacy director of the US Campaign for Burma (as
the country is still referred to in some
quarters), recently told Inter Press Service that
she feared the current eagerness by investors to
exploit Myanmar's riches risks letting the regime
renege on moves towards democracy.
go in and allow foreign investment, there won't be
any motivation for the government towards
political resolution," Quigley said.
reality, however, is likely to be that business
becomes politics in a way seen across developing
Asia. And the military appears to be gearing up
for this scenario.
About two years ago,
the outgoing military regime sold off a swathe of
state assets - from colonial-era buildings, to
ports and cinemas - in sales that seemed designed
to favor itself and its cronies just before the
big political opening. Reports of military-linked
land grabbing have also become more frequent with
When the International
Monetary Fund visited five years ago, one
disgruntled local businessman told them that if
they really wanted to catch the attention of the
notoriously superstitious generals they should
bring an astrologer along next time. The IMF can
save its money, for military leaders are now
firmly focused on the economy and multilateral
lender advice on how to spark growth - and in the
process enrich themselves and their crony
William Barnes is a
veteran Bangkok-based journalist.
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