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One year after Aung San Suu Kyi’s release from house arrest, there is still no progress towards democratisation. Though the regime has made cosmetic gestures like permitting a visit by Amnesty International, agreeing to allow an International Labour Organisation (ILO) facilitator to address the question of forced labour, and recently releasing a handful of political detainees, it has failed to embark on any substantive negotiations with the National League for Democracy (NLD). Aung San Suu Kyi, who has called repeatedly for dialogue, has pointedly expressed her frustration, and her doubt that the State Peace and Development Council (SPDC) is seriously interested in national reconciliation. The latest news (1 June) suggests that the regime, annoyed by Aung San Suu Kyi’s more outspoken criticism and the extent of popular enthusiasm for her shown during her tour of northern Myanmar - despite official intimidation and harassment - has decided on another clamp down on the opposition. Using the excuse of a clash between her supporters and pro-government opponents which left four dead, the authorities have taken Aung San Suu Kyi into 'protective custody' – ostensibly for her safety. A number of NLD officials have also been detained, and the NLD’s Yangon headquarters and other offices round the country have been closed - again. It remains to be seen whether and when she will be freed, and whether the UN special envoy Razali will be able to visit Yangon in June as earlier agreed by the SPDC after some months delay.
In the past six months, Senior General Than Shwe has made a round of visits to Bangladesh, China, Vietnam, Thailand and Laos. The regime’s strategy is evidently to develop relations with its immediate neighbours, while doing the bare minimum to counter criticism and threats of increased sanctions from the United States and European Union.
It seems unlikely that reliance on neighbouring countries alone can provide the resources the country needs. The continuing banking crisis is yet another deterrent to foreign investment, already hit by sanctions and concerns about economic management. For 2002, investment inflow amounted to only US$49.2 million, the major item being a Malaysian oil and gas venture worth US$44 million. This represented a further decline of 16 per cent from the previous low registered in 2001. Singapore is the largest investor in Myanmar to date with a cumulative total of US$1.57 billion, but Singapore companies in Myanmar are watching the present economic environment with concern, and at least one major trading firm has reportedly decided to close its operations. Wholly owned foreign trading companies in Myanmar have been refused import and export permits since March 2002.
Foreign trade shows a similar decline. In the first ten months of 2002, its value fell by over 11 per cent compared with 2001. However, severe import restrictions and draconian measures to increase purchases of rice and other crops for export produced the first trade surplus in recent years, amounting to about US$680 million.
In a surprising reversal of a long-standing policy, on 23 April the government announced the end of the state monopoly of the rice trade. Farmers previously required to sell a proportion of their crop to the government at an artificially low price would be free to sell on the domestic market. Surplus production could be exported, subject to a 10 per cent export tax, and half the proceeds paid to the government. The government evidently hopes that the new market-oriented system will stimulate greater production, but it will face the problem of pacifying government employees and military personnel who depend on heavily subsidized rice.
WATCHPOINT: Will the UN Special Envoy be able to persuade the Myanmar leadership to restart the stalled reconciliation process?
About our company:
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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