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There has been no improvement in the internal political situation, and repression has if anything intensified. Aung San Suu Kyi remains under house arrest, extended in May for a further year. The United Nations Under-Secretary General for Political Affairs was able to see her during a visit to Yangon in May, but neither he nor other recent high-level ASEAN visitors received any positive response on the question of her release.
Despite the growing frustration of several ASEAN members including Malaysia, Thailand, Indonesia and the Philippines over the failure of the Myanmar regime to move on its road map to democratisation, and hints that it was becoming increasingly difficult to defend Myanmar, the ASEAN Foreign Ministers meeting in July produced only a mild expression of concern at the pace of the national reconciliation process and a call for the early release of those under detention (without mention of Aung San Suu Kyi). ASEAN seems to be resigned to its lack of leverage and is looking to action in the United Nations to stimulate progress in Myanmar. However, in a statement marking the 39th anniversary of ASEAN's foundation, the Malaysian Prime Minister warned that the Myanmar issue had led to much debate about the policy of non-interference in members' affairs and the principle might need to be reviewed and updated in the context of drafting the organisation's new charter. There has been speculation that this could lead to a new provision for the suspension or expulsion of a member.
The economy in Myanmar continues to stagger along, with accelerating inflation given new impetus by the April pay rises for the military and government workers. The last poor rice harvest resulted in a price rise of over 20 per cent despite government attempts to control the trade, and other basic commodities have risen similarly. A drive to maximise revenue saw electricity prices raised by 1000 per cent from 1 May and the imposition of a 10 to 12 per cent income tax on the new military and civil service salaries. The same aim seems to lie behind the recent crackdown on corruption in the Customs department, and the arrest of many officers, up to, and including, the Director General. The investigation was prompted by an obvious mismatch of customs revenue and the reported volume of trade.
According to official statistics, Myanmar had a trade surplus of $1.6 billion in 2005, with exports of $3.55 billion, and imports of $1.9 billion. However these figures are unreliable, since much cross-border trade is not recorded or is understated.
The only positive element in the economy is the strong demand for natural gas, which is Myanmar's biggest export item. Thailand is now the main buyer, taking 20 per cent of its gas from Myanmar, but India and China are also anxious to secure supplies from new offshore fields in the Bay of Bengal. A bid to secure Thai exploration rights and production from these blocks was one of the reasons for the Thai Prime Minister's unheralded visit to General Than Shwe in the new capital near Pyinmana at the beginning of August. Thailand is also collaborating with China on the development of hydropower plants on the Salween River. While these three neighbours want access to Myanmar's energy resources, the regime can afford to ignore other external pressures.
WATCHPOINT: Will growing frustration within ASEAN eventually lead to Myanmar's suspension? What impact will current developments have on ASEAN's policy of non-interference in members' affairs?
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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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