January 16, 2012
Foreign businesses are swarming to join the Burma investment party as military rule appears to wither, but there are already warning signs of many sore heads in the morning.The danger for over-eager investors stems from Burma’s lack of the rule of law or experience of anything other than one-party corrupt cronyism for more than two generations.
The reformed regime, if that is what it proves to be, has already shown that – in its enthusiasm to establish populist credentials and tell the world it now listens to the people – it is willing to junk contracts with foreign investors without any formality or notification.
It’s all very ironic.
Hotels in the commercial cap-ital, Rangoon, are full to bursting with investment thrusters anticipating an end to decades of international sanctions as opposition leader Aung San Suu Kyi has given her blessing to a nominally civilian government that replaced half a century of military rule last year.
Expectations that barriers to deals for Burma’s largely untapped mineral, oil and gas reserves as well as the industrial and consumer potential of its 62 million people have been fuelled by the visits to the country of United States Secretary of State Hillary Clinton in November and British Foreign Secretary William Hague a week ago.
In both cases, these were the first such visits in over 50 years and signalled at least preliminary acceptance in key capitals that the new Burmese president, Thein Sein, is genuine in his determination to reform and open up a political system that has been run by repressive and brutal military regimes since 1962.
There was much skepticism that real change was in the offing after heavily stage-managed elections in March last year which the regime, which calls the country Myanmar, billed as a return to civilian rule.
But the new constitution reserves key powers for the military. Many candidates were newly resigned officers, and Suu Kyi’s National League for Democracy (NLD) was unable to field candidates.
Domestic and international skepticism began to crumble at the end of September last year when President Thein Sein announced the indefinite suspension of construction of the highly controversial $3.5-bil-lion Myintsone hydroelectric dam being built by the Chinese Power Investment Corp.
Thein Sein garnered much applause from civil rights and environmental organizations both inside and outside Burma when he cited “the will of the people” for his decision.
The momentum has continued with the release last week of 651 political prisoners – one of the preconditions for a lifting of sanctions by the Americans and Europeans – and a peace treaty with Karen rebels in eastern Burma.
The Karen and other ethnic minorities have been fighting for greater autonomy since the military takeover in 1962. The government already has a peace deal with the Shan and says it expects similar agreements with the Kachin, Mon, Chin and Kayah within three years or so.
Last week, Suu Kyi announced that she will be a candidate for parliament in 48 byelections to be held in April, and that the NLD, now a registered political party, will field candidates.
The byelections so soon after the general election are a result of parliamentarians being appointed to the cabinet and, under the new constitution, having to vacate their seats.
Significantly, this first real election in Burma for over two decades will come just before the European Union reviews its sanctions against the country.
But even as Suu Kyi con-firmed she and the NLD will participate in the new political process, she and the visiting British foreign secretary warned that the reforms are incomplete and that effective legal and administrative structures to guarantee the rule of law and continued democracy are not yet in place.
There was a thundering confirmation of this deficit last week and a sharp warning to all those trailblazers bellied up to the bar in Rangoon’s delightful, 111-year-old Strand Hotel.
Again citing “the will of the people,” the government in the person of Energy Minister Khin Maung Soe announced cancellation of a multi-billion-dollar project to construct a 4,000-megawatt coal-fired power station designed to pro-vide energy for the $58-billion Dawei port development.
As well as the substantial port and container terminal facilities planned for the Dawei project, it includes a special economic zone for manufacturing, an oil refinery, steel plant, petrochemical plant and fertilizer production plant.
Japanese companies and the Tokyo government are heavily involved in the development, which is part of their $38-bil-lion, 33-infrastructure project program for southeast Asian development.
Announcement of the cancellation of the Dawei plant – to be replaced, apparently, by a 400-megawatt plant – came just two days before the arrival of Japan’s trade and industry minister, Yukio Edano, at the head of a large business delegation.
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