Waiting for an Industrial Revolution
covering burma and southeast asia
Friday, January 28, 2022


Waiting for an Industrial Revolution

By Min Zin AUG, 2003 - VOLUME 11 NO.7

(Page 2 of 3)

Experts cite unnecessary government expenditure on public works projects like bridges, roads and buildings as the cause of a widening budget deficit and unbalanced growth. "Many infrastructure projects are for political and security purposes, not for enhancing business," notes an economics lecturer at Rangoon University. Consequently the government has been unable to support local entrepreneurs and private industries. In fact, the Myanmar Industrial Development Bank is the only financial institution established to assist private industry. But as Burma’s private banking crisis continues, factory owners have increasingly found themselves without needed capital. "We can’t withdraw our own money from the banks and pay wages to our employees, much less ask for bigger loans to expand our operations," explains Myo Thein, the owner of a Mandalay confectionery factory employing 16 workers. "All the money that I’ve invested in my business is from what I inherited from my parents," he adds. The bulk of private manufacturing firms are small- and medium-sized light industrial operations. Using labor-intensive methods, they provide products for the domestic market. "There is considerable domestic purchasing power," the business journal editor explains. "Burma’s industry is not able to meet domestic demands for soap and medicine." Shortages of capital and the lack of foreign currency are two obstacles to the development of industry. Low production standards are also affecting industrial growth and the development of new export markets. The owner of an electrical equipment factory in Rangoon explains: "We don’t have any processes for quality standards on our products. Because we produce cable wires for the domestic market, we don’t have to worry about meeting standards." The factory owner knows that shoddy wires can be dangerous for customers, but he argues that testing procedures at the government’s Electric Inspection Department are obsolete. "For some products, they don’t even have testing equipment. We could never export our products," he adds. Lack of technology is a significant factor in Burma’s stunted industrial growth. Observers point out that Burma’s technological level is poised at the mechanical stage, and that the country has yet to enter the electronic age. Dr Nu Nu Yin, a specialist on business and industrial economics, conducted a survey of 132 manufacturing firms in Burma in 1997. She cites low-level technology, insufficient machinery, shortages of spare parts and neglect of maintenance procedures as reasons for poor rates of production. Inefficiency is further compounded by the regime’s failure to nurture human resources through education, training and basic research. The government’s solution has been to establish 18 industrial zones across the country, and provide those areas with the infrastructure that factories need. But tenants say the zones are a failure. Drainage and sewerage systems are inadequate, transportation is slow, telecommunications are antiquated, and there is not enough water or gas. Factory owners say the biggest problem is constant power shortages. A Rangoon plastic manufacturer describes his frustration at running a machine for extruding plastic. "When the power is cut off suddenly, the machine stops and we lose everything—money, time, raw material—and we waste labor." He says that while the government claims to be providing enough electricity for the whole country, capacities are far too low for heavy machinery. Given such obstacles, the industrial zones have succeeded only in enriching property developers and those close to Burma’s military rulers. "By exerting their connections, some of the relatives of military leaders and their cronies have bought land in industrial zones at special prices and then sold them to make a profit," explains an industrialist and member of the Myanmar Industries Association. When money is involved, there are always double standards in Burma. Intended for local and private use, the industrial zones are like wastelands. But the sites for joint venture projects and foreign companies have been touted as "international-standard industrial parks." "Since foreign investors pay dollars to rent the land, these sites have relatively better infrastructure," says the business journal editor. And in their book Economic Development of Burma—A Vision and A Strategy, a group of Burmese economists suggest that locally-owned industry has floundered because it does not enjoy the same privileges as foreign investors, despite the local potential for foundries and workshops. But even some foreign investors are crying foul. In particular, they complain about renewable leases that last only one year. "This worries us since the lease could be stopped within the 12-month period.

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