Privatization? What Privatization? -BY IRRAWADDY

COMMENTARY
Privatization? What Privatization?
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By YENI Saturday, February 27, 2010

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Residents of Mogok, the center of Burma's gems industry, have been in a panic recently. Since last week, earth-movers and other heavy equipment have begun appearing in the town's residential neighborhoods.

This follows an earlier survey of the area carried out by local officials, the Ministry of Mines and two private companies—Htoo Trading Co, Ltd, owned by junta crony Tay Za, and Ruby Dragon Jade & Gems Co, Ltd, which counts a number of high-ranking generals among its shareholders.

“We are very worried now that our houses and land will be confiscated,” said one man living in Mogok, located some 200 km northeast of Mandalay in the “Valley of Rubies”—a land famous since ancient times for its gemstones, especially its rare pigeon's blood rubies and blue sapphires.

This is “privatization,” Burmese-stye, in action. And it is going on all over the country these days, as the ruling junta counts down to the election that will, at least nominally, end their total control of one of the world's most resource-rich yet woefully underdeveloped economies.

What is happening in Mogok—where the generals and their close associates are laying claim to anything worth owning—is also taking place everywhere else. From gas stations to hydropower plants, cinemas to telecommunications companies, factories and warehouses to airlines—everything is up for grabs.

This would be welcome news if it were a sign that the regime is finally getting around to the economic reforms it has been promising for the past two decades. Unfortunately, however, that isn't the case. What we are actually witnessing is the formal transfer of the nation's wealth into the hands of an entrenched elite who, until now, have been able to simply take whatever they want without having to worry about rival claims.

After the election, things won't be quite that simple. Although the ruling generals and their “business partners” will continue to hold a commanding position in the economy, when the new Constitution comes into effect, it will mean that, at least in theory, others will also have the right to possess property. That is why they are preemptively buying up everything in sight, before they find themselves actually having to pay a fair price for properties and concessions that they can now get virtually for nothing.

In its recent round of sell-offs, the regime has not invited public tendering or released information about the proceeds from the sales or how non-state ownership will work. Whereas privatization that takes place under more transparent circumstances usually benefits the public, resulting in lower prices, improved quality, more choices, less corruption, less red tape and quicker delivery, in the case of Burma, the country's people will once again be the biggest losers.

Since 1989, the ruling junta has periodically sold off state-owned properties as part of its so-called “open-door” economic policy. But instead of undoing the damage done by former dictator Ne Win's “Burmese way of socialism,” the regime has merely replaced it with crony capitalism.

Of course, Burma is not alone in practicing this particularly pernicious approach to economic development; nor are well-connected Burmese tycoons the only ones bargain hunting in the country.



While Surin Pitsuwan, the secretary-general of the the Association of Southeast Asian Nations and former foreign minister of Thailand, was defending the 10-member regional bloc's position on Burma's upcoming election on BBC's Hardtalk recently, a group of Thailand-based investors were visiting the country. A few weeks earlier, a similar delegation from Vietnam was also looking at investment opportunities in Burma.

But even if the Burmese regime's disregard for economic transparency and accountability is hardly unique, there's no denying that the country's standards are among the worst in the world.

According to the “2010 Index of Economic Freedom,” a report prepared by the Heritage Foundation and The Wall Street Journal, Burma ranks 174th out of 179 countries in the world in terms of economic freedom.

The report identifies a number of factors contributing to Burma's low ranking, including government interference in economic activities; structural problems such as fiscal deficits; continuing losses by state-owned enterprises; and underdeveloped legal and regulatory frameworks and poor government service. On property rights in Burma, the report states succinctly: “Private real property and intellectual property are not protected.”

What Burma needs now is not self-serving “reforms” by the country's current rulers, but a return to the rule of law under a democratically elected government. But since the coming election is not likely to deliver real change, the people of Mogok—like the rest of the country's population—can do no more than stand back and watch as the generals take away what little they have left.

Yeni is news editor of the Irrawaddy magazine. He can be reached at yeni@irrawaddy.org.


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