AFP-Myanmar hammered by Asian conta

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Subject: AFP-Myanmar hammered by Asian contagion: government

Myanmar-economy,lead
   Myanmar hammered by Asian contagion: government
   ATTENTION - RECASTS with details ///

   YANGON, May 26 (AFP) - Critical foreign investment in Myanmar by
Southeast
Asian neighbours plunged 70 percent last year as the country was ensnared by
the regional financial meltdown, a minister said Wednesday.
   An investment drought resulting from the crisis has cut off the flow of
desperately needed foreign funds, said Brigadier General David Abel,
economics
minister in the military government.
   "ASEAN investors accounted for almost 60 percent of FDI (foreign direct
investment) prior to the crisis. Their investment fell by 70 percent in the
calender year 1998," he said.
   ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam.
   Abel said Myanmar was spared the "initial crisis shock" in 1997 by virtue
of its underdeveloped capital markets, tight foreign exchange controls and
non-convertible, non tradable local currency, the kyat.
   "However as the crisis deepened and turned into an economic turmoil,
Myanmar was impacted by the "contagion" effect," he said at the start of the
56th Association of Southeast Asian Nations Chambers of Commerce and
Industry
council meeting here.
   Abel said Myanmar's gross domestic product growth rate fell from 6.4
percent in 1996 to 5.7 percent in 1997 to 5.6 percent in 1998.
   He attributed most of the decline not to the crisis but the El Nino
weather
phenomenon which severely affected Myanmar's agriculture-dominated economy.
   The junta has set a 6.2 percent growth target for 1999, despite the
economic turmoil in the region.
   Foreign observers usually cast doubt on the military government's
protestations of economic health.
   Many believe the economy has been reduced to "crisis point" by the
combination of the investment drought and international sanctions imposed to
punish perceived human rights abuses.
   Others say that even if official figures are taken at face value, 5.6
percent growth in an economy as underdeveloped as Myanmar's is hardly

impressive.
   Critics point out that the kyat is effectively almost worthless, given
its

official rate of around six to the dollar, compared to its street value of
around 330.
   Myanmar joined the ASEAN in July 1997 and has been dismayed to see its
hoped for investment windfall stillborn.
   Its economy labours under international sanctions imposed to punish what
foreign critics say are flagrant human rights abuses and the suppression of
the democratic opposition of Nobel laureate Aung San Suu Kyi.
   The investment drought means there is little cash for desperately-needed
spending on the creaking infrastructure, including the archaic electricity
grid which means daily power cuts in much of the country.
   kmt-col/akp