Union of Burma
Pyidaungzu Myanma Naingngandaw
COUNTRY OVERVIEW
LOCATION AND SIZE.
Situated between Indian and Thailand, Burma is a southeast Asian nation. From the borders of India and China in the north, the country extends into the Andaman Sea and the Bay of Bengal in the south. The country also shares borders with Laos and Bangladesh. Slightly smaller than the state of Texas, Burma has an area of 678,500 square kilometers (261,969 square miles). Its land borders are 5,876 kilometers (3,651 miles) long and its coastline, home to many excellent natural harbors, is 1,930 kilometers (1,199 miles) long. Burma's capital, Rangoon (also known as Yangon), is in the south. Mandalay, Moulmein, Pegu, Bassein, Taunggyi, Sittwe, and Myanwa are the other most important cities in the country.
POPULATION.
The population of Burma, according to July 2000 estimates, was 41,734,853. A high mortality rate caused by AIDS is factored into this estimate; it is estimated that at least 1 million people are infected with HIV, the virus that causes AIDS. This high mortality rate from AIDS has slowed population growth to a projected rate of growth of 0.64 percent. The country registered a birth rate of 20.61 per 1000 population and a death rate of 12.35 per 1000; consequently, the population of Burma in 2015 is expected to be 45,925,967.
In the past, the government of Burma sought to restrict emigration (people leaving the country) and immigration (people settling there from outside the country). Burmese authorities negotiated with India to reduce the number of people of Indian origin in the country. As a result, Burma repatriated about 100,000 people to India between 1963 and 1965. Thousands of Burmese also fled to neighboring countries to escape military repression and armed conflicts in the ethnic minority areas.
Ethnic diversity is an interesting feature of the Burmese population. Burmans, an ethnic group related to the Tibetans, constitute the majority at 68 percent of the population. Shan (9 percent), Karen (7 percent), Rakhine (4 percent), Chinese (3 percent), Mon (2 percent), Indian (2 percent), and other ethnic groups account for the rest of the population mix. Buddhism is the major religion, with 89 percent of the population; there are minorities of Christians and Muslims. A majority of the people, 65 percent, are between the ages of 15 and 64. Only 5 percent of the population is older than 65, while 30 percent of the population is under 14 years of age. This is in sharp contrast to Japan, west European countries, and the United States where the number of older people in the population is much higher. The density of population is about 65.2 per square kilometer (169 per square mile). With agriculture as the most important occupation, a majority of the people live in the rural areas and only an estimated 27.3 percent (1999) reside in cities.
OVERVIEW OF ECONOMY
Despite many attempts to industrialize and modernize, Burma remains an essentially agricultural economy. Attempts in the 1990s to encourage foreign investments,revitalize the economy, and promote the tourism industry as a source of income and employment have been only moderately successful. Agriculture remains the most dominant sector of the economy, generating 59 percent of the gross domestic product (GDP) in 1997 and employing more than 65 percent of the workforce in 1999.
Only 10,680 square kilometers (4,123 square miles) of the country's arable land was irrigated in 1993. Agriculture, for the most part, depends on the monsoon rains. Periodic droughts are a major problem. Similarly, natural disasters such as cyclones, earthquakes, floods, and landslides, especially during the long monsoon season, can have an adverse impact on agricultural production.
Until it became independent in 1948, Burma was a British colony. The colonial authorities promoted agriculture by encouraging the settlement of people in the delta regions. Roads, bridges, and ports were built to facilitate the movement of agricultural products. This development led to an internal migration from the dry northern regions to south of the country. The delta produced large quantities of rice. The British were not interested in encouraging industries in Burma. Foreign domination of the economy was complete.
During the 1950s, the capital of Rangoon was one of the commercial centers of Southeast Asia. At the time, the World Bank estimated that Burma would become one of the most prosperous countries of the region. But independence, democracy, and a free market economy failed to produce political stability or economic prosperity. In 1962, a military takeover of the government led to socialism and central economic planning. Foreign businesspeopleespecially those from India, China, and Pakistanwere expelled and foreign investment in Burma stopped. The new rulers adopted a "Burmese road to socialism"a policy of state socialism and isolationism (a policy of keeping foreign influence and involvement to a minimum so that a country can develop on its own). Economic conditions did not improve under the harsh rule of the generals; rather, they worsened. In 1987, the United Nations declared the country a "Least Developed Nation."
Many people in Burma remained antagonistic toward the military rule and the state-controlled economy. This opposition finally led to mass protests and violence in March 1988, which the government sought to suppress. The army chief of staff took control of the government, abandoned the 3-decade-old period of state socialism, and freed the market from most of the state controls.
Burma now has a mixed economy with a private, state, and a joint private-state sector. Agriculture, light industries, and other businesses are in the private sector . Heavy industries that require huge capital investment are in the state sector. The economic reforms of the last decade sought to promote joint ventures between private Burmese and foreign firms. Therefore, foreign investments were once again encouraged with modest success. The state sector continues to be inefficient, and attempts to privatize at least a portion of it remain on the books. External debt amounts to 10 percent of the GDP, and imports exceed exports by 2 to 1, causing a serious trade imbalance.
Burma is a top producer of illicit drugs and contributes 80 percent of all Southeast Asian production ofopium. Most of the heroin available in the United States originates from Burma. The trafficking in drugs is illegal; thus, an accurate assessment of its contribution to the economy is impossible to gauge. A parallel black market , perhaps bigger than the state's economy, continues to pose problems for the authorities.
During the 1998-99 fiscal year , Burma received an estimated US$99 million in economic aid. In 1995, the figure was about US$157 million. Economic sanctions imposed by the United States, the European Community, and other nations have contributed to this decline. These sanctions are in response to continued political repression and human rights violations by the military regime. In 1990, the opposition National League for Democracy (NLD) had won a clear victory in the elections, but the generals refused to transfer power to the duly-elected representatives of the people. Moreover, the leaders of the NLD were harassed, detained, tortured, and even murdered by the regime.
Politically and economically, Burma remains a pariah (outcast) nation. Except for its membership in the Association of Southeast Asian Nations (ASEAN), the country is not befriended by most nations. In May 2000, U.S. president Bill Clinton imposed new sanctions on the military junta (a group of military personnel who overthrow a government) making it difficult for the Burmese authorities to get foreign loans, economic assistance, and foreign investments. Many American companies such as Apple Computer, Oshkosh B'Gosh, Eddie Bauer, Reebok, Levi Strauss, Pepsi Cola, and Liz Claiborne have withdrawn from the country. Therefore, the attempts of the military junta to revitalize the economy have been only partly successful.
Despite the introduction of banking and trade regulations in the late 1990s, Burma failed to achieve fiscal or monetary stability. Inflation continues to be high. Although poor and undeveloped, Burma is rich in natural resources. Nevertheless, the decline of the agricultural sector, regional economic crises, international sanctions, and shortages of electricity have all contributed to a slowdown in the economy since 1997.
POLITICS, GOVERNMENT, AND TAXATION
Burma fought for independence from Great Britain in the late 1940s under the Anti-Fascist People's Freedom League led by Aung San, U Nu, and Ne Win. The independence movement was a pro-Burman, anti-British, and anti-foreign movement that emphasized Burmese values, symbols, and experiences. This movement had very strong socialist leanings in response to Chinese and Indian domination of the Burmese economy during the British rule. In 1948, the country became independent under the leadership of U Nu because his political opponents had already killed Aung San, the father of Burmese nationalism. In 1962 the army, under the leadership of Ne Win, overthrew the democratic government and set up the Burmese Socialist Party, nationalized schools, banks, and factories, and followed a policy of socialist central planning and international isolationism. Later on, the party of the generals changed its name to the Burma Socialist Program Party. In 1974, all political parties were abolished.
In September of 1988, amid massive demonstrations against the government, a new regime seized power in a military coup. Calling themselves the State Law and Order Restoration Council (SLORC), the new regime also changed the name of the country from Burma to Myanmar, something that opposition groups still object to. Following the anti-government protests, riots, and bloodshed in 1988, the opposition parties coalesced into the National League for Democracy (NLD) under the leadership Aung San Suu Kyi, the daughter of the martyred national hero, Aung San.
Responding to nationwide protests, the SLORC allowed national elections in May of 1990. The NLD dominated the elections, winning 80 percent of the seats in the National Assembly, but the ruling SLORC refused to concede power and imprisoned NLD leader Aung San Suu Kyi. Since that time the SLORC has exercised complete control over all branches of government. The National Assembly elected in 1990 has in fact never convened, the judicial system is bankrupt, and all executive positions are held by military representatives of the SLORC.
In 1997 the ruling SLORC was reorganized as the State Peace and Development Council (SPDC) amid a shakeup that saw several high officials dismissed for corruption. Five top generals, including Secretary Khin Nyunt, consolidated their power but showed no signs of ceding control of the government to the opposition, most of which was banned from any official forms of organization. Like the SLORC, the SPDC is primarily concerned with cracking down on opposition and not on improving the economic fortunes of the country.
The government's mounting deficit financing, resulting mostly from declining tax revenue and escalating military expenditures, has had a negative impact on the economy. The regime's policies led to the growth in the money supply and accelerated inflation. Mounting foreign debt and depleting foreign exchange reserves also affected the health of the economy. Military expenditures increased while the funding for health and education declined. The government's oppressive attitude towards the opposition has caused international censure, prompting foreign firms to pull out or cut back on their activities. Because of foreign economic sanctions, Burma is unableto get assistance from other countries or loans from international funding sources.
The country's tax base shrank in the last years of the 20th century, due to the government's inability to collect taxes because of a corrupt bureaucracy and a black market perhaps as large as the legitimate market. The sources of government revenue include general sales and value-added taxes , income from state enterprises, taxes on international trade, fees, and grants from donor nations and international agencies. The government also collects customs at its border posts, but most of the border trade is unrecorded.
The judicial system that Burma inherited from its British colonial masters was abolished in 1974. The new constitution calls for a council of People's Justices. In addition, there are lower courts at the state, town, village and ward level. The courts settle both civil and criminal cases. The armed forcescontrolling most aspects of the country's politics and governmentalso exert influence over Burma's judicial system.
INFRASTRUCTURE, POWER, AND COMMUNICATIONS
In most developing countries of the world including Burma, inadequate infrastructure roads, bridges, canals, railways, ports and communication facilities impedes economic growth. Burma's long coastline is home to many excellent natural harbors such as Bassein, Bhamo, Mandalay, Rangoon, and Tavoy. The government has taken steps to develop new ports and maintain the existing ones, although all the ports are not used to their maximum capacity. A salient geographic feature of Burma is its many rivers, especially the Irrawaddy. The country's waterways remain the most important traditional mode of transportation to many remote areas of the country. Of more than 12,800 kilometers (7,954 miles) of waterways, 3200 kilometers (1,988 miles) are navigable by large commercial vessels.
Since the economic liberalization in 1989, the government started many public works programs. Early in the 1990s the government used forced rural labor to work on these projects. However, due to international criticism, the government began to engage the armed forces on these construction projects starting in mid-1990s. These projects did not bring about major improvement in the infrastructure needs of the country. The result has been that economic expansion was made difficult because in the absence of adequate transportation facilities, distribution of goods and services has been extremely difficult and costly.
In 1996, Burma had a total of 28,200 kilometers (17,523 miles) of roads, of which only 3,440 kilometers (2,138 miles) were paved. Although the government attempted to improve many major roadways during the final years of the 20th century, most remain in poor repair and are not passable during the monsoon season. A major effort in this regard was to reconstruct the Old Burma Road from Mandalay to the borders of China. As of late 2000, the work on the project was still incomplete.
Rail services remain poor despite attempts in the 1990s to renovate the existing lines, add new ones, and upgrade railway services on the main routes. Burma has a total of 3,991 kilometers (2,480 miles) of railways, over 320 locomotives, and more than 4,000 rail cars. The recent efforts include upgrading Rangoon-Mandalay rail line and beginning a new 162-kilometer Ye-Dawai Rail track project. In the 1995-96 fiscal year the railways carried 53,400,000 passengers and 3,280,000 tons of freight.
Burma has 80 airports and 1 heliport. Only 10 airports have paved runways. Both the private sector and the state sector are active in air transportation. The Department of Civil Aviation is responsible for the airports and the state-run airline. Air Mandalay, Myanma Airways, and Myanma Airways International are the chief airlines of the country. Burma's chief airports at Rangoon, Mandalay, and Bago were upgraded in the late
| Communications | |||||||||
| Country | Newspapers | Radios | TV Sets a | Cable subscribers a | Mobile Phones a | Fax Machines a | Personal Computers a | Internet Hosts b | Internet Users b |
| 1996 | 1997 | 1998 | 1998 | 1998 | 1998 | 1998 | 1999 | 1999 | |
| Burma | 10 | 95 | 7 | N/A | 0 | 0.1 | N/A | 0.00 | 1 |
| United States | 215 | 2,146 | 847 | 244.3 | 256 | 78.4 | 458.6 | 1,508.77 | 74,100 |
| China | N/A | 333 | 272 | 40.0 | 19 | 1.6 | 8.9 | 0.50 | 8,900 |
| Thailand | 63 | 232 | 236 | 10.1 | 32 | 2.5 | 21.6 | 4.49 | 800 |
| aData are from International Telecommunication Union, World Telecommunication Development Report 1999 and are per 1,000 people. | |||||||||
| bData are from the Internet Software Consortium (http://www.isc.org) and are per 10,000 people. | |||||||||
| SOURCE: World Bank. World Development Indicators 2000. | |||||||||
1990s. During the 1995-96 fiscal year state-run airlines carried a total of 719,000 domestic passengers and 138,000 international passengers.
Light transportation such as buses and cars are a private sector activity in Burma. As of March 31, 1996, Burma had 151,934 passenger cars, 42,828 trucks, 15,639 buses, 88,521 motorcycles, and another 6,611 registered vehicles.
Also during 1996, state-owned maritime vessels carried 24,491,000 passengers and 3,158,000 tons of freight. These numbers show an increase over the same period of the previous fiscal year.
Industrial production and expansion are limited due to inadequate production and intermittent supply of electric power. Electricity production of 4.38 billion kilowatt-hours (kWh) in 1998 was far below demand. Around 38 percent of the electricity is generated by hydroelectric projects while the remaining 62 percent comes from fossil fuels. Chronic shortages and frequent disruptions of supply exist. Therefore, state and private enterprises operate far below their capacity. Moreover, very often they have to depend on their own diesel-run power generators to meet their electrical needs.
As of 1995, there were 158,000 main telephone lines. In 1997, there were 500 exchanges with a capacity to reach 320 of the 324 townships in the nation. The number of mobile cellular phones was only 2,007 in 1995. Although the telephone system is capable of providing basic services, it is inefficient and outdated. Attempts in the 1990s to upgrade the system yielded only minimal results. Cellular and wireless phones function more efficiently than the traditional lines. The switching system is incapable of meeting current demands, and people have to wait for a long time for a telephone connection to their homes and factories. International service powered by a satellite earth station is relatively good.
The 2 television stations in Burma service 260,000(1997) television sets. TV Burma is able to transmit 82 percent of its broadcasts to 267 of the 324 townships in the country with the help of 120 TV relay stations. These are in addition to Burma's 2 AM, 3 FM, and 3 shortwave radio stations. In 1997 the country had a total of 4.2 million radio sets. Radio and television stations are state-owned and operated. In 1996, there were 5 newspapers with an estimated circulation of 449,000, a significant decline from 1994 circulation figures.
There are about 50,000 computers in all of Burma. Public access to the Internet is prohibited for fear that it could encourage and widen political dissent and protest. Unauthorized ownership of modems is punishable by up to 15 years in jail. E-mail is restricted to foreigners and businesspeople with close ties to the administration. Private e-mail providers are prohibited, and only the Ministry of Post and Telegraph is allowed to provide e-mail service.
Improvements in the infrastructure were partly funded by deficit spending. In the absence of adequate funds, the government is unable to fully develop the country's transportation and communication systems and facilities. This situation had a negative impact on modernization and economic growth of the country for many decades.
ECONOMIC SECTORS
Agriculture, industries, energy and tourism are the main sectors of the Burma economy. Agriculture, however, is the dominant sector and accounts for almost 60 percent of the GDP. The heavy industries are owned and operated by the state. Agriculture is mostly a private activity, although rice exports are a state monopoly . Recent government initiatives to improve agricultural production failed because drought and flooding diminished in rice production. The cultivation of pulses and beans, however, has increased significantly.
Industrial manufacturing is still undeveloped. Government attempts to privatize some industries have stalled, even though government-owned concerns continue to lose large sums of money. Foreign investments, although encouraged, have failed to generate enough international interest due to sanctions and boycotts protesting the military regime's human rights violations. All told, industry contributed just 11 percent of GDP in 1997.
The energy sector grew considerably during the late 1990s. The exploration and discovery of petroleum andnatural gas deposits continued during this period. The construction of the Yadna gas pipeline to Thailand was a major development and is expected to be a major source of revenue. The lack of sufficient electrical power contributes to the country's poor economic growth.
Following the military crackdown on the pro-democracy movement in 1988, there was a sharp decline in the number of foreign tourists visiting the country. Early in the 1990s the government placed great emphasis on tourism development. The government's attempt to turn tourism into a "cash cow" has not materialized, although the number of people visiting Burma has certainly increased in the last several years.
Realizing the difficulties on the road to rapid industrialization, the government of Burma, while not giving up on industrialization, is hoping to make the agricultural sector the centerpiece of its plans for economic revitalization of the country. This sector, however, has seen declining financial returns. Burma is caught in a vicious circle of inflation, deficit financing, unemployment, and poverty. In an age of increasing international interdependence, Burma cannot expect to develop without the cooperation of the international community.
AGRICULTURE
Agriculture, which includes crop production, hunting, fishing, and forestry, is the mainstay of the Burma economy. This sector is responsible for much of the income and employment in the country. About 60 percent of the GDP comes from agriculture, and as much as 65 percent of the labor force is employed in this sector alone. Burma produces enough food to feed its entire population. In the absence of purchasing power, however, many people go hungry. Further, about a third of the rural households do not have any land or livestock. Only half of the arable 45 million acres is under cultivation.
Rice is the most important agricultural commodity of Burma. Rice production increased from 5,200,000 metric tons in 1950 to 16,760,000 metric tons in 1993. The crop is cultivated along the river valleys, coastal areas, and in the Irrawaddy River delta. A wide variety of crops are cultivated in the northern dry zone. Rubber and other commercially useful products are cultivated in the Irrawaddy and Tenasserim regions. Agricultural products form the bulk of the export trade and include rice, teak, prawns, beans and pulses, and opiates.
Burma's agriculture is heavily dependent on the monsoon rains. While some areas suffer from too much rain, other regions receive too little. Government efforts in the 1990s increased the amount of irrigated land to 2.2 million acres. Many agricultural products like tobacco, sugar, groundnut, sunflower, maize, jute and wheat, however, have not reached their pre-1985 production levels. This reduction is offset by higher production in rice, pulses and beans. Rice production increased due to supportive government policies as well as favorable market forces. According to Asian Development Bank estimates, however, real annual growth in agriculture declined from 5.0 percent in 1996-97 to 3.7 percent in 1997-98 and to 2.8 in the 1998-99 fiscal years. Further, per-acre yield of the crops has not increased because of inadequate application of fertilizers and pesticides. One factor that helped to improve production was the removal of government controls over the agricultural sector.
Deforestation has been a major concern in Burma. The slash-and-burn method of agriculture is destroying the forests of the country, causing soil erosion and depletion of fertility. Periodic droughts, floods, landslides, and cyclones sometimes have devastating effect on agriculture. For example, flooding in Pegu and Irrawaddy during the 1997-98 growing season did considerable damage to rice production. Consequently, Burma exported only 28.4 thousand metric tons of rice in the 1997-98 season as opposed to 93.1 thousand metric tons in the previous year.
The heavy reliance on monsoons is a major handicap for Burmese agriculture. The authorities have recently renovated dams and reservoirs, built new ones, pumped water from rivers and streams and taken other measures to improve irrigation. More remains to be done in this regard. Another impediment to agricultural improvement is the inability of farmers to secure adequate loans to enhance cultivation. Private lenders charge exorbitant rates, and there are not enough banking institutions to serve people in the rural areas. As a result, farmersare not able to buy fertilizers and pesticides for their crops. Financial services need to be improved to make funds available to the cultivators.
The economic liberalization policies of the military junta have transformed the agricultural sector. Under the new economic system, the government distributed land among the landless, improved irrigation facilities, and increased the floor price of paddy that the government procures from the farmers. Some private activity in the export sector has been allowed since economic liberalization began in 1989. Consequently, the share of the agricultural sector in the GDP has gone up.
LIVESTOCK
. Burmese farmers raise a variety of animals including cattle, water buffalo, goats, sheep, chickens, and pigs. Oxen and water buffalo serve as draught animals in agriculture and for rural transportation. The GDP share of the livestock has increased slightly during the past decade. Most of the cattle are raised in the dry zone in the north.
FORESTRY
. Burma is rich in forests and woodland. While its neighbors, India, China and Thailand, have already depleted their forests, Burma is still regarded as the "last frontier of biodiversity in Asia." (Biodiversity refers to ecosystems that are rich, varied, and largely unpolluted or tampered with by human development.) Most of the timbers, especially teakwood, consumed in these Asian countries come from Burma, although most of these exports are illegal. In their search for precious foreign exchange, the military junta is engaged in indiscriminate destruction of forests. Deforestation increases erosion and landslides and threatens the lives of many already endangered species in the rain forests.
Burma is the leading supplier of teak in the international market. In addition to hardwoods, Burma also produces large quantities of bamboo in the delta regions and in the areas of heavy rainfall. Elephants and water buffalo play a key role in hauling teak and other hardwoods.
FISHING
. Burma is blessed with some of the world's most bountiful fishing grounds that extend from the Bay of Bengal to the Gulf of Martaban. Fish, often dried and salted, is part of Burmese cooking and is the most important source of protein in the diet. The government took many steps to encourage deep-sea fishing although the people prefer fresh-water fish. There has been a steady increase in the catch since the 1980s. Since 1989, Thai companies have been given permission to fish in the Burma waters. They use a modernized trawler fleet to harvest fish. The government also encourages fresh-water fish farms with a view to increasing fish production. Moreover, the Tenasserim area is home to some of world's finest pearls. As a result, the export value of fish and fish products alone has gone up from 159.4 million kyats in 1995-1996 to 227.8 million in 1996-97.
INDUSTRY
Primarily an agricultural country, Burma has always lagged behind in industrial production. The colonial authorities discouraged industrialization and encouraged only the production of raw materials, although there were some industrial developments towards the end of the colonial period.
World War II caused serious damage to the country's infant industries. It took a long time for production to catch up to pre-war levels, and in 1952, the government established the Industrial Development Corporation to stimulate industrial production. The country's effort to industrialize without foreign assistance was successful to a certain extent in areas such as petroleum and natural gas production. In the 1960s, under military rule, many industries were nationalized. Since the 1970s, there has been a steady growth in industrial production. In 1988, the government liberalized the economy, abandoned state socialism, and encouraged foreign investment.
Much of the industrial sector, especially heavy industries, is controlled by the government, although the share of private enterprise in this area is steadily growing. Industry accounts for only about 11 percent of the GDP and employs only 10 percent of the total labor force. Most of the industries center around agricultural processing, textiles, footwear, wood and wood products, copper, tin, tungsten, iron, construction materials, petroleum and natural gas, pharmaceuticals, and fertilizers. Cars and television sets are also assembled in the country. In 1999, the annual rate of growth of industries was estimated at 4 percent. The heavy losses of the public sector factories and industries are in part responsible for slow industrial growth.
Pegu is the seat of most industrial activity. In addition, the government has opened 17 special industrial zones all over the country, 5 of which are in the Rangoon area. Foreign investment is encouraged in 2 of the zones. While these zones are not fully developed, several factories and plants manufacturing clothing, consumer goods , and iron and steel materials are already operating there.
MINING
. Although their GDP contribution is not very significant, mineral products are important in earning foreign exchange. Burma has large amounts of mineral deposits. They include tin, zinc, copper, tungsten, lead, silver, gold, iron and antimony. Coal, natural gas, and crude oil are also extracted. Jade, rubies, sapphires, and gold are also found in Burma. Should the country ever open to foreign investment there may be significant opportunities for development in this sector.
OIL AND NATURAL GAS
. Burma's petroleum industry dates back to pre-independence days. During 1963-1964,the government took complete control of petroleum exploration, extraction, and purification. Petroleum is found in the Irrawaddy basin, the delta region, and at offshore sites. Burma is self-sufficient in oil.
The discovery of natural gas reserves in the Gulf of Martaban added to Burma's energy reserve. In 1986 the country produced 32,600 million cubic feet of natural gas. Burma also has large deposits of natural gas in the Andaman off-shore fields. In its efforts to facilitate the growth of its energy sector, the government built the Yadana natural gas pipeline, connecting natural gas stores off the Andaman Islands and Thailand, with the help of Unocal and Total, 2 international petroleum companies. According to government estimates, the energy sector grew approximately 88 percent in 1998. Government projections showed a 77 percent growth for the year 1999.
SERVICES
With just 30 percent of GDP and 25 percent of the workforce, the services sector is not a dominant part of the economy as it often is in developed countries.
TOURISM.
Like the cash-strapped countries of Jamaica and Cuba, Burma is also actively promoting itself as an island paradise to increase tourism. Both the government and private enterprises are heavily engaged in the tourism industry. In order to attract tourists, the country has improved roads, built international standard hotels, and other facilities. In 1988, roughly 40,000 foreigners visited the country, although following the suppression of the democracy movement that same year, tourism decreased. Between 1993 and 1996, tourism once again revived. The government proclaimed 1996 as "Visit Burma Year" and hoped to attract 500,000 tourists. However, only 180,000 people showed up. In the 1997-98 fiscal year 191,000 tourists visited the country. Both the government and the private sector, having invested heavily in new tourist facilities, were disappointed.
Nevertheless, Burmathe land of Buddhist pagodashas great tourism potential. Rangoon, Mandalay, Pagan, Pegu, and Tawnggys, with their palaces and shrines and pagodas, are the centers of tourism. However, the tense political situation, human rights violations, and boycotts by the international community have deterred many people from visiting. Tourism, so far, makes up only a small percentage of the GDP.
FINANCE.
During the post-independence days, most financial institutions were private. In 1964, the military junta nationalized all of the country's 24 banks. In their place, the government created 4 state banks. In 1990, the financial sector was revamped under the provisions of the Central Bank of Myanmar Law. Since then the financial institutions are the Central Bank of Myanmar, the Myanmar Agricultural and Rural Development Bank, the Myanma Economic Bank, the Myanma Foreign Trade Bank, the Myanma Industrial and Commercial Bank, the Myanma Small Loans Enterprise, and Myanmar Insurance. The 1990 law also allowed for both private and foreign banks. As a result, by February 1996, 16 private banks were formed, most of them in Rangoon. During the same period, more than 20 foreign banks opened branches or offices in Myanmar.
The banking sector is still underdeveloped. The people have yet to maintain regular banking habits. The inflation rate is so high that the real rate of interest does not encourage deposits. But without deposits, banks cannot provide credit. In contrast, during the 1970s, when the interest rate was raised, people deposited more money in the banks.
The Burma Securities Exchange was founded in 1996 as a joint venture between Japan's Daiwa Institute of Research and Myanma Economic Bank. The financial sector contributes only a small percentage of the GDP.
INTERNATIONAL TRADE
Historically, most of Burma's export-import trade was with Asian countries. In 1999, more than 80 percent of the country's export-import trade was with Asian nations, including about half with ASEAN countries. Japan, Singapore, Malaysia, and China are its major trading partners. Singapore is the single most important partner both in terms of imports and exports, providing 31 percent of imports and taking 10 percent of exports. There has been a decline in trade with Europe and the United States since the 1988 military crackdown on the democracy movement. Burma's export-import trade with the United States constitutes about 5 percent of the total foreign trade.
The country's exports are mostly agricultural products. They include pulses and beans, teak, prawns, rubber, rice and other agricultural products. There is a large black market that smuggles live animals, gems, minerals, teak, and rice into the neighboring countries. Burma
| Trade (expressed in billions of US$): Burma | ||
| Exports | Imports | |
| 1975 | .173 | .197 |
| 1980 | .472 | .353 |
| 1985 | .303 | .283 |
| 1990 | .325 | .270 |
| 1995 | .846 | 1.335 |
| 1998 | 1.067 | 2.666 |
| SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999. | ||
also conducts brisk trade in narcotics. During the 1997-98 fiscal year, imports included raw materials, transport equipment, construction materials, and food items. While priority was given to the importation of materials needed for the Yadana natural gas pipeline, the government took measures to control importation of non-essential goods.
In 1998 the country exported $1.2 billion in goods and services while importing $2.5 billion, reflecting a steady increase of imports over exports during the 1993-98 period. In fact, the trade imbalance has been a chronic problem for the country for well over 2 decades. During the 1965-75 period, rice exports fell, and Burma cut back on imports. During the 1976-80 period, although exports increased, there was a corresponding increase in imports. By the mid-1980s, exports declined, but imports continued to soar. The adverse balance of payment situation continues to plague Burma.
This imbalance has a negative impact on the economy as a whole, forcing Burma to spend its precious foreign exchange reserves. To compensate for this situation, the government has printed currency to buy foreign exchange, thereby accelerating the inflationary tendencies of the economy. This inflation has wiped out many of the gains the country made as a result of economic liberalization in the 1990s. Making matters worse, the government had to buy foreign exchange from foreign sources at commercial rates. Consequently, Burma was unable to service its debt payment, prompting the World Bank to sever ties with the country. The net effect for Burma's people is that their purchasing power and standard of living declined.
The regime, while continuing to increase military spending, was forced to cut back on education, health, and other essential services. Growing international concern about human rights abuses and the regime's inability to tackle narcotics trafficking have led many countries, including the United States, and international financial institutions, to refuse aid or loans to the country. The government's use of forced labor has also led to boycotts of Burmese goods.
MONEY
Adverse balance of payments, decreasing tax revenues, high defense spending, and deficit financing all have led to the printing of more currency and price inflation. The official exchange rate of the kyat to dollar, however, remains unchanged. There are 4 different rates for currency exchange: the official exchange rate, the customs rate, the official market rate, and the black market rate. Officially, US$1 equals 6.73 kyats, whereas in the black market the dollar may fetch 375 or more kyats.
| Exchange rates: Burma | |
| kyats per US$1 | |
| Jan 2001 | 6.5972 |
| 2000 | 6.5167 |
| 1999 | 6.2858 |
| 1998 | 6.3432 |
| 1997 | 6.2418 |
| 1996 | 5.9176 |
| SOURCE: CIA World Factbook 2001 [ONLINE]. | |
The Asian currency crisis of 1997 added to Burma's currency woes. The sharp decline in the Thai bhat had a negative impact on the kyat. During the 1997-98 fiscal year, according to U.S. embassy estimates, the kyat lost 54 percent of its value. Between April and December 1997, the kyat declined from 167/dollar to 257/dollar. In 1997 and 1998, when the kyat fell, the government intervened to prop up the value of the kyat and took strong measures to keep foreign exchange from leaving the country. It put a monthly cap of $50,000 on remittances , cut the number of banks allowed to handle foreign exchange transactions, and placed stiff controls on trade.
The Asian economic crisis prompted foreign investors to either withhold investments or stay out of the Burmese market. Crises in the neighboring countries, Burma's principal trading partners, cost the country its export markets. The resultant ballooning of the trade deficit prompted the country to expand its money supply and draw down on foreign exchange reserves. According to the U.S. State Department Commercial Guide for 1999, the country was "virtually bankrupt."
POVERTY AND WEALTH
Like most countries of the world, Burma has extremes of wealth and poverty. Once prosperous, Burma was, in 2001, one of the poorest countries of the world.
| GDP per Capita (US$) | |||||
| Country | 1996 | 1997 | 1998 | 1999 | 2000 |
| Burma | 1,120 | 1,190 | 1,200 | 1,200 | 1,500 |
| United States | 28,600 | 30,200 | 31,500 | 33,900 | 36,200 |
| China | 2,800 | 3,460 | 3,600 | 3,800 | 3,600 |
| Thailand 7,700 | 7,700 | 8,800 | 6,100 | 6,400 | 6,700 |
| Data are estimates. | |||||
| SOURCE: Handbook of the Nations, 17th,18th,19th and 20th editions for 1996, 1997, 1998 and 1999 data; CIA World Factbook 2001 [Online] for 2000 data. | |||||
Most people live in the 40,000-odd villages of the country, while the majority of the urban population resides in the capital city of Rangoon. Among the population engaged in agriculture, 37 percent of the people do not have any land or livestock. Poverty and misery have increased in the past 3 decades. In 1997 the CIA World Factbook estimated that 23 percent of the Burmese population had incomes that placed them below the poverty line.
The economic crisis of 1997 added to the problem. Inflation as of 1999 was at an all-time high of 50 percent on domestic goods and 104 percent on imported items. The government's policies have not helped to diminish inflation, which has eroded the purchasing power of Burma's citizens. The gap between rich and poor and rural and urban areas has increased. According to the International Monetary Fund (IMF), per capita income registered only a minimal increase in the 1990s. Many poor people are forced to send their children to work. Many women reportedly are sent to work in Thailand. The number of street children has also increased, and malnutrition among children is widespread. Sanitary conditions are far from satisfactory. Malaria, diarrhea, dysentery, tuberculosis, and more recently HIV/AIDS (due to drugs and prostitution) are the major health hazards of the country.
In the countryside, a bullock cart (a 2-wheeled cart drawn by 2 castrated bulls) is the most popular means of transportation. Most farmers own a pair of oxen or water buffalo, a hoe, and a bullock cart for agricultural purposes. The rural houses (actually huts without running water or toilets) are made of bamboo. One portion is used for cooking and the other for sleeping. In the major towns and cities, there are houses made of brick and concrete. They are usually small and overcrowded.
The government's socio-economic policies have not helped the people. Large outlays of money have been spent on the military, while only meager funds have gone to education and health issues. The numbers of children who do not attend school or who have dropped out reportedly increased in the 1990s. According to World Bank estimates, only 46.9 percent of the secondary school-age children were enrolled in schools during 1995. Education beyond the primary age is not compulsory. Burmese authorities boast a literacy rate of 83 percent, though independent observers have suggested that the rate may be as low as 30 percent. Most universities have been closed since December 1996.
Health care in the rural areas was marginal until the 1960s. The government has opened more rural health centers and directed more doctors to the rural areas. As a result, the doctor-patient ratio has decreased considerably, from 1 per 15,560 to 1 per 3,578 in 1986. Health care is provided free of charge.
WORKING CONDITIONS
The Burmese labor force is estimated to be 19.7 million strong and consists of people between the ages of 15 and 59. About 65 percent of the labor force is employed in the agriculture sector. Of the remaining 35 percent, 10 percent is employed in the industrial sector while the remaining 25 percent is employed in a variety of service sectors. The official government unemployment rate for the fiscal year 1997-98 was reported as 7.1 percent.
One serious concern about the Burma labor situation is the reported use of forced labor on public works projects. In November 2000, the International Labor Organization (ILO) concluded that Burmese authorities had not discontinued the practice and advised member nations to review their relations with Burma. In response, Burmese authorities said that they would stop cooperating with the ILO. The government has maintained that the ILO action represented an effort by its member states to exert improper influence on Burma's internal affairs.
According to U.S. sources in Rangoon, the government lessened its dependence on forced labor. Instead, it was using military personnel on some of these projects. Military authorities, however, continue to force civilians to work for them. Many women and children, for instance, have to work as porters for the army.
There are reports of the continued prevalence of child labor in the country. Legally, children must be 13 or above before they can be employed. This and the compulsory education law, however, are not fully enforced. Consequently, a large number of children never enroll in school and many do not complete the primary school course. Therefore, children are frequently employed in many areas, especially in the arts and crafts industries.
Since the military takeover in 1962, the authorities have consistently denied the people their freedom of speech, press, assembly, and association. Also in 1964, the government abolished all trade union organizations. Substituting for independent unions are government-sponsored Regional Workers Councils. In 1985, there were 1.8 million members. Coordinating the work of the regional councils is the central workers organization in Rangoon, formed in 1968. The Central Arbitration Board is given the responsibility to settle major labor disputes but is inactive. Minor labor concerns are addressed by the township level agencies. One labor organization, the Federation of Trade Unions-Burma (FTUB), is an anti-government group that was formed in 1991 by Burmese living in exile.
Working conditions were set forth in a 1964 law called The Law on Fundamental Workers' Rights and the Factories Act of 1951. An abundance of labor and the failure of the government to protect the workers have ledto substandard working conditions. The public sector employees follow a 5-day, 35-hour workweek. Employees in the private sector and state enterprises have a 6-day, 44-hour workweek. The law provides for overtime pay. However, these laws cover only a small percentage of the workers. Moreover, the workers are not allowed to organize in unions and bargain collectively. In the public sector industries, the government sets the wages and benefits. The joint sector companies are discouraged from paying their employees more than their counterparts in the public sector.
As of March 2000, all institutions of higher education, with the exception of a military academy and a medical school affiliated with the army, were closed. The middle class is frustrated that their children are not able to get an education. Many Burmese of all classes have fled the country for fear of oppression. Thousands of Burmese refugees remain in camps in Thailand and Bangladesh.
COUNTRY HISTORY AND ECONOMIC DEVELOPMENT
1044. Pagan empire is founded on the banks of Irrawaddy.
1824. First Anglo-Burmese war leads to Burmese defeat and loss of territory.
1886. Burma is defeated in the Second Anglo-Burmese war, and Britain annexes the remainder of the country's territory.
1941-45. Japanese forces invade Burma and occupy much of the country during World War II.
1948. Burma becomes an independent, democratic country with a free market economy.
1962. The military under General Ne Win overthrows democracy, establishing the "Burmese way to socialism" and nationalizing banks and other private industries.
1974. The government establishes a new constitution and announces the formation of the Socialist Republic of the Union of Burma.
1988. Amid widespread protests and riots, a military junta headed by Generals Ne Win and Saw Maung replaces the civilian president with a new government called the State Law and Order Restoration Council (SLORC). The SLORC renames the nation the Union of Myanmar, dropping the name "Burma," and liberalizes the economy.
1990. Elections are held, and the opposition National League for Democracy wins a clear majority. The SLORC refuses to cede power and opposition leaders are jailed.
1997. The Asian economic crisis damages Burma's economy.
2000. The International Labor Organization concludes that Burma is in violation of rules regarding forced labor and advises member nations to review their relations with Burma.
FUTURE TRENDS
Burma is a resource-rich, naturally beautiful, and culturally significant country. Its potential for growth and prosperity is tremendous. Yet Burma can never reach its potential until the military regime negotiates with the opposition and transfers power to the elected representatives of the people. The regime, however, has been trying to eradicate the opposition. Most international observers agree that the government must end human rights violations, release political prisoners, establish sound monetary policies , increase the tax base and revenue, enhance the infrastructure, and further liberalize the public sector if the country has any hopes of taking its place in international commerce. Despite announcing plans for such improvements, however, the ruling SPDC seems most concerned with retaining its grip on power through violence and intimidation of internal opposition and disengagement with the international community. In the absence of a change in this program, economic stagnation, poverty, disease, and illiteracy will remain Burma's most notable features.
DEPENDENCIES
Burma (Myanmar) has no territories or colonies.
BIBLIOGRAPHY
"Amnesty International Report 2000-Country Reports, Myanmar." Amnesty International. <http://www.web.amnesty.org/web/ar2000web.nsf/ebbd3384655495f2802568f500615e2f/3a9085ff93e50f80802568f200552950!OpenDocument>. Accessed December 2000.
Cady, John Frank. Southeast Asia: Its Historical Development. New York: McGraw Hill, 1964.
Cady, John Frank. The United States and Burma. Cambridge, MA: Harvard University Press, 1976.
Soe, Maung Maung. "Economic Reforms and Agricultural Development in Myanmar." ASEAN Economic Bulletin. Vol. 15, No. 1, April 1998.
U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed July 2001.
U.S. Department of State. Country Commercial Guides FY 1999: Burma. <http://www.state.gov/www/about_state/business/com_guides/1999/eastasia/burma99.html>. Accessed December 2000.
George Thadathil
CAPITAL:
Rangoon (Yangon).
MONETARY UNIT:
Kyat (Kt). One kyat is equal to 100 pyas. There are coins of 1, 5, 10, 25 and 50 pyas and 1 kyat, and notes of 1, 5, 10, 15, 20, 40, 90, 100, 200, 500, and 1,000 kyat.
CHIEF EXPORTS:
Pulses and beans, prawns, fish, rice, teak, and opiates.
CHIEF IMPORTS:
Machinery, transport equipment, construction materials, and food products.
GROSS DOMESTIC PRODUCT:
US$59.4 billion (purchasing power parity, 1999 est.).
BALANCE OF TRADE:
Exports: US$1.2 billion (1998). Imports: US$2.5 billion (1998).
Travelling is my life
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