Business as Usual
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“As a consequence, many cultivators no longer employ productivity-enhancing inputs such as fertilizer, while similarly adopting planting and harvesting methods that likewise minimize costs even as they diminish output.”
To get Burma’s huge farming community back on its feet and in a condition to pursue export markets—especially for rice—would cost between $400 million and $1 billion, according to Turnell and several other assessors, including the United Nations Development Program and the Harvard Kennedy School.
Although these are hefty sums, they represent less than six months of Burma’s gas export earnings, said Turnell.
The EIU concurs on agriculture, saying the sector “will continue to struggle to grow rapidly because of a lack of investment and poor access to important inputs and equipment.”
In the wider economy, the outlook is also “fairly bleak,” said the EIU.
“Consumer spending is constrained by low average incomes and a lack of confidence, owing to price instability and the weak free-market exchange rate,” said the EIU report, adding that “a strong rise in consumer spending is not expected while average household incomes remain so low.”
Burma’s economy is likely to accelerate in the 2010-11 financial year, but mainly due to investment in energy projects, especially by Chinese investors.
Excluding these sectors, the domestic economy will “remain sluggish,” the EIU said. “Manufacturing will continue to be troubled, reflecting the lack of access to inputs and capital for investment, while weak external demand will compound the difficulties facing export-orientated manufacturing firms.”
Rising levels of unchecked Chinese immigrant labor coupled with China’s yuan currency taking over in northern states bordering China are dangerous elements of Burma’s black economy, said the USIP study, which estimates that more than 1 million Chinese are now living in the country.
“These developments could undermine macroeconomic stability,” said the report.
The USIP puts forward a 10-point plan for a post-election government to try to get Burma’s economy back on its feet.
A South Asia specialist at the independent Institute of International Affairs in London, Marie Lall, is slightly more upbeat about Burma’s prospects after the election.
“I don’t think we’ll see much change economically in the first year or possibly even the first couple of years after the election, but I do believe that once the power structures start to change and the states and divisions start to have a little more autonomy, there will also be economic change on the ground,” she told The Irrawaddy.
“I suspect this will be visible first in the ethnic minority states if the ethnic minority parties come to power locally.”
Lall, who wrote a paper for the Institute—also known as Chatham House—late last year, added: “I think cross border trade with India and China will continue to increase and will continue to be liberalized, possibly at a faster rate after the election.”
She said the relationship between the central authority and the leaderships of the ethnic populations after the election will be key to an improvement in the country’s political and economic condition.
“Western governments need to re-examine their stance towards Burma, especially in light of the 2010 elections, intended to create a civilian administration and parliamentary system, while perpetuating military control. An understanding of the ethnic conflicts, the political significance of the cease-fires and the economic and political seesawing between ethnic minority groups and the army is essential to understand Burma’s political future,” she wrote in her paper, “Ethnic Conflict and the 2010 Elections in Burma.”
But the EIU foresees a risk of new instability in the wake of the election, both within the military leadership and in the wider population.
It says an expected post-election reshuffle of positions, including appointments to the new posts of president and vice president, “could prove destabilizing.”
“Perhaps the biggest threat to the junta’s long-term grip on power is internal strife,” according to the report.
“Underlying pressures, not least those stemming from economic hardship, could build and eventually prompt sporadic shows of public defiance,” said the EIU.
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