BEW News

June 2001


Sanctions

* USA
In May a group of Senators led by Jesse Helms (Republican, North Carolina) and Tom Harkin (Democrat, Iowa) introduced legislation banning all imports from Burma. The legislation was in response to the ILO call (below) and to the strong advocacy of US unions and human rights groups. For it to become law, the legislation must be passed by both houses of the US Congress, and gain the approval of President George Bush

On April 5 a bipartisan group of 35 US Senators sent a letter to President Bush urging him to maintain the sanctions imposed by the US in 1997 against new investment by American firms in Burma.

In December 2000 the state of Massachusetts’ passed a bill requiring that its pension fund divest from companies doing business in Burma. The local governments of Los Angeles and Minneapolis passed similar laws earlier in the year. Of interest is the fact that these are measures relating to capital and not just trade - long the subject of selective purchasing laws in the US and many other countries.

*ILO
In November 2000 the governing body of the International Labour Organisation (ILO) called on its members to review their relations with Burma because of its persistent and egregious use of forced labour. This move from the ILO is most significant, legally and morally preparing the way for far more effective international measures against the regime than have hitherto been considered.

The follow-up to this decision is currently being discussed (June/July) at the annual meeting of the ILO. Burma’s military regime is attempting to stop the ILO from placing the issue of forced labour in Burma on to the agenda of the annual session of the Economic and Social Council of the UN.

* The European Union
On 8 April 2001 the European Union (EU) announced that it was renewing the sanctions it imposes on Burma for a further six months. These sanctions include an arms embargo, a visa ban on members of the regime and a suspension of humanitarian aid to Burma. The EU declared that the human rights situation in Burma remained ‘extremely serious’ and that while it welcomed initial contacts between the regime and the democratic opposition, noted that ‘no substantial progress’ had yet been made.

After announcing in May that 49 LDCs, including Burma, would enjoy tariff and quota-free access to the EU market, the European General Affairs Council clarified this later in the month to the effect that Burma was definitely not included because of its human rights violations. [1]



Burma's Economy in Brief

* Foreign investment in Burma continues to decline. According to China’s Xinhua News Agency (June 4), foreign investment in Burma totalled a mere $4.03 million in the first two months of 2001, a 53 percent fall from the previous year. Most of the investment ($US3.53 million) came from Singapore, with a small amount ($US0.5 million) coming from Canada. This slide in foreign investment began following the Asian economic crash of 1997, but seems to be driven now by the poor prospects Burma offers international investors.

* The Kyat continues its plummet, currently exchanging at a rate of around 750 to the US$1, but reaching an all-time low of close to 900 in May [2]. This is a dramatic drop with one US$ giving about 500 Kyat as recently as April. Meanwhile, the military is reported to be buying US$ on the black markets as foreign reserves continue to decline, exacerbated by the semi-closure of border trade with Thailand. Several border passes were closed after SPDC soldiers attacked the town of Chaing Rai in Thailand in May.

* Prices of Thai consumer goods imported into Burma rose sharply in the wake of clashes on the Thai-Burma border and the collapse in the Kyat. These factors have also exacerbated the shortage of pharmaceutical products [3]. Prices of all goods in Burma have been rising rapidly in recent weeks. The price of a standard sack of rice that sold for 2,400 Kyat in May is reportedly now selling for more than 4,000 Kyat. Meanwhile, the price of petrol on the blackmarket rose by 300 percent in June.

* The increase in world oil prices that began in 2000 is likely to provide a significant brake on Burma’s economic growth potential in 2001. The provision of electricity in Burma is notoriously unreliable, even in the major cities, and many factories, farms and individual homes rely on diesel generators for their energy supplies. In an attempt to deal with increases in world oil prices and a plummeting exchange rate, the SPDC decreased the weekly petrol ration from 3 to 2 gallons in late April 2001.

* Central government tax revenue continued its secular fall throughout 2000. This does not augur well for Burma’s already chronically large budget deficit [4].

* Notwithstanding the general despair that surrounds Burma’s economy, the head of Burma’s military junta, General Than Shwe, forecast economic growth for Burma this financial year of an extraordinarily robust 11.3 percent. It would be difficult to find an independent observer of Burma’s economy who would be willing to forecast growth of half this amount (Reuters, June 28).

* As shall be examined in detail in BEW’s In Focus section, there has been a dramatic increase in Burma’s exports of apparel into the US and the EU. Apparel imports from Burma into the US have undergone a 372 percent increase in three years – from $US85.6 million in 1997, to $US403.7 million in 2000.

* In an effort to calm recent tensions, in June Thai Prime Minister Thaksin Shinawatra announced an offer to extend certain trade privileges to Burma that are currently available to Cambodia and Laos. At the same time Thailand’s army chief, General Surayud Chulanont, announced that Thailand may lift the ban on items classified as ‘strategic’ once border checkpoints between the two countries are re-opened. Such items could include vehicles and spare parts, fuel, medicines, rice and other foodstuffs (Bangkok Post, June 22).

* In March the Economist Intelligence Unit ranked Burma number two (behind Iraq) in its annual list of the most-risky countries in which to invest.

IT Revolution and Nuclear Power in Burma

* In November 2000 the regime announced the formation of an ‘e-task-force’ to develop the country’s information technology sector. The task-force will have its work cut out for it, given that long jail terms are routinely handed out for non-authorised possession of items such as modems and fax machines, and given that all e-mail traffic must pass through a monitored server. Of course, there are the power and infrastructure shortages and the reality that very few people in Burma have a sufficient income to even consider a telephone, much less going online.

* On a similar note, in March Secretary One of the SPDC, Lt.General Khin Nyunt, laid the foundation stone of Rangoon’s first Information and Technology Park. Burma currently has 25 ‘IT’ companies that have ‘some’ access to the internet. All of these have links to members of the SPDC, their families or friends (The Irrawaddy, May 2001).

* A delegation led by Burma’s Deputy Minister for Science and Technology, Hlaing Win, visited India in February seeking India’s assistance in developing an IT sector in Burma.

* In November 2000, reports from Russia said that a Burmese delegation was visiting the country to discuss the building of a nuclear reactor in Burma. The reports said that the reactor was sought for ‘research’ purposes, and that Burmese scientists and engineers would train in Russia.

Japan

* In December 2000 Japan and Burma held a second meeting to discuss future Japanese economic assistance. This meeting followed an earlier one in November between a delegation of Japanese business figures (led by former Japanese Prime Minister, Ryutaro Hashimoto) and members of the junta. Chief amongst the issues discussed were ways to realign Burma’s official exchange rate to a more realistic valuation. Though Japanese assistance is offered on the basis that a degree of political reform takes place, Japan is easier on the regime than are countries in the West. It should not surprise if economic assistance from Japan soon resumes on the basis of the flimsiest of window dressings. In April Japan announced that it would provide $US28 million in aid for repairs to the Baluchaung hydro-electric plant in Karenni State (The Irrawaddy, May 2001).

* In recent times Japan has also sought to deflect or dilute criticisms of Burma’s regime in multilateral forums. It voted against the ILO resolutions on forced labour and refused to co-sponsor the Burma resolution adopted by the UN Commission on Human Rights in 2000.


China

* Consistent with the regime’s efforts to promote the use of liquefied petroleum gas (LPG) in Burma, in November 2000 a deal was signed between Burma’s state-owned Petrochemical Enterprise and China’s National Import and Export Corporation to build two new LPG refineries.

* In December 2000 the regime signed an agreement with China that will designate Burma as a destination to which Chinese tourists are allowed to independently travel. The regime places much hope in the agreement, given that consumer boycotts continue to keep the number of tourists from the West at low levels. The EIU reports (February 2001) that tourist arrivals in Burma fell by 20% in the year-ended June 2000, to a mere 62,000.

Thailand

* In March 2001 Thailand paid US$300 million for contracted gas supplies from Burma. The Petroleum Authority of Thailand also announced that it is in the process of negotiations with Burma to buy an extra 10-15% over contracted volumes for future supplies (The Irrawaddy, March-April 2001).


Notes

[1] Asia Times, " Myanmar barred from EU initiative," May 12, 2001.


[2] BBC News World Service "Burmese Economy Under Siege" 4 May 2001


[3] The Irrawaddy, March-April 2001.

[4] Economist Intelligence Unit (EIU), February 2001.