YANGON --
As Myanmar's fledgling democratic government starts tackling the
sticky issue of privatization, Aung San Suu Kyi will have to deal skillfully with
expected resistance from the military and other vested interests to achieve
this crucial step in revitalizing the country.
The
government created a committee on privatization of state-run enterprises May 4
to examine measures such as using public-private partnerships to develop and
operate infrastructure as well as selling inefficient state-owned factories.
Those
privatization steps are essential for the government's efforts to deliver on
Suu Kyi's election promise that her party will boost administrative and fiscal
transparency and build a healthy market economy. The committee's members
include Suu Kyi, who serves as state counselor and foreign minister, as well as
13 other ministerial-level officials such as the minister for electric power
and energy and the minister for industry.
Dilapidated
economy
All
industries in Myanmar were nationalized upon the establishment of a socialist
regime in 1962. The military junta that seized power in 1988 gradually
privatized the economy, but state-owned enterprises still dominate in areas
such as natural resources and heavy industries.
While
precise numbers are hard to come by, the country is believed to have roughly 50
public corporations and over 500 state-owned factories belonging to various
ministries and agencies. Many are in poor shape due to the lack of capital
investment amid the economic stagnation under military rule.
"Factories
that belong to another era are continuing to churn out subpar products nobody
wants," a person familiar with the matter said.
Factories
controlled by the Industry Ministry are said to be particularly bad, with most
of them running losses and relying on the government to plug the hole. This is
why privatization of inefficient state enterprises is a major goal of the
committee as it seeks to boost the competitiveness of domestic industries.
Hotbed
of collusion
But a
lack of transparency at state-owned enterprises is an even bigger problem than
inefficiency. Myanmar's government already was poor at disclosing fiscal
information, but assessing the government's fiscal health became even tougher
after state-owned enterprises were allowed to manage their surplus funds in
their own bank accounts in fiscal 2012.
Myanmar
Oil and Gas Enterprise, which falls under the Electric Power and Energy
Ministry, has hit a jackpot through offshore gas field joint ventures with
foreign companies in the Andaman Sea and elsewhere that began in the 1990s.
Some nongovernmental organizations say MOGE transferred $14 billion to its own
bank accounts, which are outside the scope of government audits, in fiscal 2013
alone.
Jade
mining in the northern states of Kachin and Shan is estimated to generate over
$30 billion in trade a year. This lucrative industry has been monopolized by a
joint venture between a public enterprise belonging to the Natural Resources
and Environmental Conservation Ministry and a business closely linked to the
old junta. It is believed that the joint venture places much of its earnings
out of the government's reach, accumulated as internal reserves in the
venture's bank accounts.
Facing
a powerful opponent
Cutting
into such vested interests via privatization and channeling some
resource-related profits into government coffers likely are at least part of
the motive in creating the privatization committee. But such moves are
certain to encounter fierce resistance. The military, which continues to meddle
in politics, and its auxiliary organizations are deeply involved in mining of
jade and other mineral resources.
When a
lawmaker noted the murky world of mineral resources development in parliament
in February, military representatives, who occupy a quarter of the parliamentary
seats, stood up and objected to the comment. If the government led by Suu Kyi
continues to push privatization, it eventually will clash with military
interests.
The
selection of Myint Swe, a former high-ranking military officer now serving as
Myanmar's vice president, as the committee's chairman suggests Suu Kyi wishes
to avoid a conflict with the military. But a failure to cut into vested
interests likely will disappoint government supporters. Suu Kyi, as the de
facto head of the democratic Myanmar, must make the most of her leadership and
political skills to gain ground in this challenge.
Motokazu
Matsui
No comments:
Post a Comment