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BBC-East Asia Today.May 26th 1999

Junta or Regional Crisis Responsible for Economic Downfall?

Burma's Economics Minister, General David Abel, has announced that inward
investment from East Asia plunged seventy per cent last year, because of the
economic crisis. This is seriously bad news, as ASEAN investors account for
sixty per cent of Burma's foreign direct investment. But critics point out
investors are put off by corruption and the unrealistic price of the kyat -
set at sixty times more than its street value. But what do these economic
figures mean for ordinary people? The BBC's Matt Frei was in Burma last

Matt Frei: When you talk to people you do get the impression that life is
getting a lot tougher. For instance, it is very difficult to get a job if
you haven't got one already. Then it's difficult to make money. Although you
can buy food, you can buy virtually nothing else. This great promise of
foreign investment, of a booming economy, simply hasn't come true. What you
see all over Rangoon - which struck me a lot - is so many new hotels and
office buildings being built, or having been completed, that are simply
empty. Noone is staying in these places, foreigns are not coming to Rangoon
to invest money, those jobs that were promised by the government have not
been create. Therefore, although Burma may not have felt the efffects of the
Asian economic crisis to the extent that Indonesia did because it's never
had very far to fall, the point is that it's been bypassed by any Asian
prosperity of the last decade, almost completely.

Christopher Gunness: Given that people can only really get hold of food, has
that given rise to a thriving black market?

Matt Frei: Absolutely right. You can feel it as an ordinary visitor to the
country that the black market rate being offered to you by almost everyone
on the streets for your US dollars is astronomically higher than the
official exchange rate. That is always a good indicator of how important the
black market is. There is an unofficial black economy in Burma obviously for
things like consumer durables, electronics goods, spare parts for cars and
things like that which you see in various street markets around the city. So
that's where the economy has become a sort of scavanger economy - totally

removed from the vision that the Burmese military regime had for the kind of
country that Burma should be. Also totally removed from what Burma should be
in terms of its natural and human resources. Let's not forget that in 1948
Burma was considered the most prosperous, the most educated and the most
promising of all of South East Asia's nations. That is now totally the
reverse. Burma has become a complete economic basket case.

Christopher Gunness: David Able is blaming the economic crisis for the lack
of foreign investment in Burma. But you've been talking to businessmen. To
what extent are businessmen in East Asia simply frustrated with the
bureaucracy and the lack of economic infrastructure and to what extent,
therefore, is that the reason why there isn't foreign investment in Burma?

Matt Frei: I think the reason why there isn't foreign investment in Burma
has nothing to do with the economic crisis in Asia whatsoever. I think the
reason why western businessmen are not going to Burma is that investing in
Burma is a risky business - politically because you might be branded as a
poria company if you do that, sanctions are afterall imposed. Also the legal
structure in Burma - the whole culture of bribery and corruption is so
complex and such a turn off to many businessmen that you really need to have
a whole department that can invest in trying to find its way through the
thicket of Burmese bureaucracy in order to make any money there. People
simply aren't prepared to do that.