World Bank Assistance to Burma

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INFORMATION OFFICE
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Tel: (202) 393 7342 (202) 393 4312, Fax: (202) 393 7343


NO RESUMPTION OF WORLD BANK ASSISTANCE TO BURMA; 
THE REASONS WHY ! 


Throughout its seven years of iron-fisted rule, the 
military-run State Law and Order Restoration Council (SLORC) 
has been claiming economic successes and putting up a 
pretense that all is well.   Yet, today, the SLORC finance 
minister and his delegation are touring the globe, knocking 
on the doors of international financial institutions to seek 
loans and assistance.

When a financial crisis hit Burma in 1988 there was  only 
around US$12 million in foreign currency reserves left in  
SLORC's coffers.   The most logical option left was for  
SLORC to work with the pro-democracy  forces to save the 
country.  But at this critical juncture an inflow of foreign 
investment seeking quick returns from Burma's natural 
resources was obtained. SLORC was thus saved from financial 
disaster. This enabled SLORC to resort to a violent 
suppression of the people and avoid negotiating with the 
democratic forces.

A situation not unlike the one in 1988 has arisen again 
today.   Even though it has succeeded in attracting short-
term, fast money-making investors to Burma,  SLORC has 
failed to lure long-term investments in the manufacturing 
sector.  The present pattern of foreign investments in Burma 
are all aimed at making quick returns.  Major investors lack 
the confidence to start labor-intensive and long-term 
investment in the manufacturing sector because 
infrastructures in the transport, communications and energy 
industries are still very poor, the value of  kyat against 
foreign currencies remains unrealistic, business rules and 
regulations are inconsistent, and corruption and nepotism 
remain widespread within the military bureaucratic 
machinery.

SLORC needs massive loans from the World Bank and the other 
institutions if it is to bring on infrastructural 
development and devalue the Burmese currency without adverse 
consequences.   The World Bank suspended loans to Burma in 
1988 due to the outcry from the international community that 
had witnessed the brutal and bloody suppression of the 
democracy movement by the Burmese Army.

SLORC faces an uphill task in trying to build a durable 
power base.  It expects to achieve that goal through tough 
political control and brutal suppression of dissent and by 
consolidating a financial base through foreign investment, 
international economic and development assistance, and 
financial aid.

SLORC has frequently pointed to its "economic reforms" as an 
indicator that it is moving toward a free market economy and 
that the World Bank should take that as a cue to extend it 
loans.   The following facts, however, should  be taken into 
serious consideration if Burma is to become a recipient of 
World Bank assistance:

  No structural changes have been made in the economy 
permitting it to develop into a true market economy.
 
  Budget disparity remains uncorrected, with the bulk of 
the budget going to defense expenditures.
 
  Political reforms essential for long-term sustainable 
economic development have yet to be undertaken. 
 
  Labour practices under SLORC grossly violate 
internationally recognized labor conventions.
 
  Restrictions imposed on academic freedom and the 
suppression of intellectuals have resulted in the decline 
of human resources.

Resuming loans to SLORC under these conditions will be 
premature as it will only strengthen the power base of the 
Burmese military and will not contribute to long-term 
sustainable development that benefits the people.  



STRUCTURAL CHANGES TO DEVELOP A TRUE MARKET ECONOMY

SLORC claims that the country is being developed through a 
market-oriented economic policy.   The fact, however, is 
that the country is only partially opened to foreign 
investors to operate mostly in the form of joint ventures 
with the State (military).  Most state-owned enterprises and 
co-operatives that existed under the previous Burma 
Socialist Program government remain under the control of 
SLORC today.

SLORC's claim of privatization means the transferring of a 
few factories to ex-military officers and their relatives.  
There has not been any real attempt to privatize key 
enterprises, develop private entrepreneurs or to undertake 
economic liberalization.   The state sector today retains 
direct control over the export of 23 important commodities, 
including rice, still the country's major earner of foreign 
exchange.  SLORC intends to revive a military command 
economy behind the facade of an "open-door" economic policy.   
One glaring example of this is the Myanmar Economic Holdings 
Company Limited established by the Defense Ministry.  This 
enterprise is involved in all major business contracts and 
deals.

Another underlying problem associated with investment in 
Burma is the repatriation of profit earned in Burmese kyat.  
Because of  strict controls by the SLORC's Foreign Exchange 
Bank,  foreign investors are forced to comply with a 
bartering system.  They are made to buy local products and 
export them as a means of channeling their profits out of 
Burma.   Given the situation, business deals in Burma have 
unnecessarily become complicated and risky.

In addition, under the new Private Investment Law, only a 
few selected private companies associated with the military 
can function and are making profit.  Entrepreneurs "without 
connection" have to go through corrupt officials at 
different levels and bureaucratic red tape before anything 
can get done.


BUDGET DISPARITY

SLORC has only concentrated on building up the military and 
modernizing its weaponry. In seven years of  SLORC rule, the 
army has grown from 180,000 in 1988 to 350,000 today.  
US$1.4 billion worth of fighter jets, tanks, patrol boats, 
anti-aircraft missiles, artillery pieces and other arms and 
ammunitions were purchased from China.  Naval bases and 
radar stations are being constructed on Coco Island and 
Zadetgyi Island while M21 and M22 machine-gun factories are 
being constructed in upper Burma with China's assistance.  
According to a UNICEF report in 1994, SLORC's defense budget 
increased from 22% of total expenditure in 1980, to 39% in 
1993.  In the same period, the health sector budget 
increased from 2% to 3% while the budget allocated for 
education fell from 2% to 1%.

Furthermore the regime has stated its intention to increase 
the size of the armed forces to 500, 000 in the near future, 
with continued upgrading of technical equipment. The cost of 
this expansion will be enormous relative to the meager 
resources of the economy. This is the over-riding reason for 
their desperate attempts to obtain World Bank assistance and 
the foreign private investment that they will expect as a 
consequence. 

Many social problems have arisen because of that situation.  
The malnutrition rate has soared in the country, with many 
cases being detected even in the capital, Rangoon.  Yet no 
effort has been made until today to correct the problem.  

Hospitals only have medical staff and nothing else much.  
Due to shortage of medical supplies, patients being 
hospitalized are asked to bring in bandages, medicines and 
whatever they might need during their treatment.

Children with preventable diseases are dying because of the 
lack of effective primary health care programs.  Child and 
maternal mortality rates are increasing.

In the education sector, the drop-out rate at schools from 
primary level up is on the rise.   Young children and 
students cannot finish their education because they are 
compelled to go out and work to supplement the family 
income.

The educational standard has declined as experienced 
teachers leave the academic life for jobs that would help 
them cope with increasing expenses.

Other alarming problems that remain neglected by the SLORC 
are drug addiction, AIDS, refugees,  war victims and 
environmental destruction.


POLITICAL REFORMS

In his report, "An Agenda for Development," the UN 
Secretary-General stated that  "Democracy and development 
are linked in fundamental ways. They are linked because 
democracy provides the only long-term basis for managing 
competing ethnic, religious, and cultural interests in a way 
that minimizes the risk of violent internal conflict. They 
are linked because democracy is inherently attached to the 
question of governance, which has an impact on all aspects 
of development efforts."

Democracy as good governance needs to be restored if  long-
term economic development is to be sustained in Burma, and 
the opportunity is available to  SLORC if it has the interests 
of the country at heart.  Democratic forces led by Daw Aung 
San Suu Kyi as well as  ethnic leaders have offered to work 
for national reconciliation and the early restoration of 
democracy through political dialogue.  International opinion 
also supports political dialogue as reflected in 
resolutions adopted by consensus at the UN 
General Assembly.

SLORC has so far not shown any willingness to comply with 
international and internal public opinion. It is  bent on 
legitimizing the leadership role of the military in the 
country's future political life through its sham national 
convention.

Without democratic reforms, economic progress will 
ultimately achieve nothing more than disembodied growth, a 
source of greater inequity and eventually, social unrest. 
The widening gap between haves and have-nots under SLORC's 
rule is leading to social chaos and total devastation of the 
country.


LABOR PRACTICES VIOLATE INTERNATIONAL LABOR CONVENTIONS

A creative and energetic labor force is another vital 
requisite for economic development, and hence, conditions 
conducive to the emergence of that labor force must be 
created. Workers must be able enjoy trade union rights and 
labor practices that conform to internationally recognized 
labor conventions will have to be developed.

The labor situation in Burma has worsened as SLORC has 
resorted to the use of forced labor in the implementation of 
infrastructure development projects.  The practice  directly 
violates ILO Convention 29 on forced labor. 

At the ILO Conference in  July, 1995, the ILO Committee of 
Experts urged SLORC to urgently repeal the offensive legal 
provisions under the Village Act and  Township Act and to 
bring them into line with the letter and spirit of 
Convention No. 29; to terminate forced labor practices on 
the ground, to provide for and exemplary penalties against 
those extracting forced labor.

It also called on SLORC to adopt measures to guarantee that 
in law and in practice, workers and employers have the right 
to join organizations of their own choice and without 
previous authorization outside the existing structure, and 
that such organizations have the right to join federations 
and confederations and to affiliate without impediment. So 
far, SLORC has not made any effort to reform labor laws and 
practices.


HUMAN RESOURCE DEVELOPMENT

The development of human resources is vital if a skilled 
labor force is to emerge in Burma.   SLORC cares little 
about this and often acts against the development of human 
resources to protect its political power.

Whenever a political movement led by students arises in 
university campuses, the military responds with brute force, 
killing, arresting and torturing members of the movement and 
closing down universities for an unlimited period.

After the 1988 massacre, thousands of students and 
intellectuals ended up in prisons or in exile. Thousands of 
students were dismissed from their institutes of learning 
while thousands of teaching staff were dismissed from their 
jobs for their involvement in the democracy movement. The 
1988 incidents alone had seen a great loss of human 
resources that is bound to have an impact on the development 
of Burma in the future.

When universities were reopened in 1991, teachers and 
professors were made to wear military uniforms and to take 
refresher courses.  SLORC policies and security measures and 
surveillance methods to control possible student activities 
were taught to the teachers. Universities in Burma today 
resemble concentration camps with military informers 
watching day to day activities. 

Students' unions and educational workers' unions  that re-
emerged on the eve of the Democracy Summer of 1988 have been 
outlawed since the military coup of 1988.

Since 1988, there has been an exodus of qualified teachers, 
and the educational standard in universities has declined 
noticeably.  The situation has been made worse by the 
establishment of new regional colleges and the introduction 
of  a "long-distance learning system" for higher education 
designed to avoid the concentration of students in major 
cities.

The departure for foreign countries of other professionals, 
such as doctors, engineers and economists is also depleting 
human resources. Restrictions on the freedom of academic 
expression; freedom of association of professional 
organizations; and the lack of research facilities and 
seminars, exchange programs, further studies, and free 
access to information on advanced technology have also 
hindered the emergence of a new generation of intellectuals.


CONCLUSION

Without correcting the underlying socioeconomic and 
political problems that hamper greater popular participation 
in politics and development, any financial assistance that 
goes to SLORC today will go to waste as in the popular 
Burmese saying, "Thae dae yay thun" -- Pouring water in the 
sand.

The objective of the SLORC regime is emphatically not 
economic development. They are not fools. They know that 
genuine economic development leading to a vibrant private 
sector and a growing middle class will undermine their 
monopoly of power which is based only on force. It is quite 
unlike the situation in Singapore or even Indonesia where 
civil servants and technocrats are able to freely use their 
expertise in the service of the country. The Burmese 
military lack the self-confidence to share power with any 
other groups, such as civil servants or entrepreneurs. The 
xenophobic and inward-looking  "Burmese Way to Socialism" 
represents their true ideology. The talk of market-
orientation and " open door " policies is merely a tactical 
ploy necessitated by the disastrous failure of their 
original program. It would be a tragedy if the international 
institutions and donor community fail to realize this. Their 
good intentions will only further pave the road to hell for 
the Burmese people.


Oct 13, 1995.