Economic Development during the Era of U Nu

The Attempt to Create a Welfare State

The constitution of Burma provided for the creation of socialism. Among other things the State was declared the owner of all land. The State was given the power to nationalize any branch of the economy as long as it was done through legal procedure and with compensation to the owners. Even before independence a Ministry of National Planning was set up and a Two-Year Economic Development Plan formulated. U Nu announced at that time (1948) that he would: Nationalize monopolizing capitalist undertakings and... administer the resulting national undertakings by partnership between the state and the workers. The Burmese government nationalized the major inland water transportation company, Irrawaddy Flotilla on June 1st, 1948. The Burmese government continued the British initiated control of the purchase and marketing of rice in Burma. In October of 1948 the Burmese legislature passed the Land Nationalization Act and U Nu asserted that collective farming was the ultimate objective of this legislation. Already, before independence, land rents were limited through the Rent Standardization Act of 1947. The Land Nationalization Act of 1948 allowed the State to take possession of all land that was not being tilled by the owner. This was a popular step because approximately two-thirds of the rice land was owned by non-resident landlords many of whom were Indian money lenders who acquired the land through foreclosure for debts owed by Burmese farmers. The Land Nationalization Act limited the size of land holdings to 50 acres. In addition to the Land Nationalization Act of 1948 the following legislation concerning agriculture was passed during 1948: The Agricultural Bank Act The Agricultural Laborers' Minimum Wage Act The Tenancy Disposal Act The Agriculturalists Debt Relief Act In 1952 U Nu promised that someday every family would own a house and an automobile and have an income $175 to $200 per month. In August of 1952 he also convened the Pyidawtha (Happy Land) Conference at which further elements of the proposed welfare state were announced. Also announced were an eight-year plan for industrial development and a five-year plan for agricultural development. The plans really were not well thought out and

the government did not have the funds to implement them. Almost forty percent of the funding came from creating money. This of course led to further problems with inflation. The Eight-Year Plan was a failure both in the sense of having failed to achieve its targets and also in that it diverted resources away from achievable goals. By the mid-1950s Burma's rice exports were still one third less than those of 1938-39. Timber exports were less than one fourth of those of the average of the period 1937 to 1941. Mineral exports were less than four percent of the average of those of that same 1937 1941 period. Eventually the EightYear Plan was abandoned and a Four-Year Plan formulated. The failed attempts at socialism in Burma are rather typical of the experience of underdeveloped countries in the post-World War II era. What was presented as planned economic development was little more than formulation of goals, in effect wish-lists. Often the targets specified in the plans were unattainable, but even in the case of attainable targets there was the problem that implementation of programs was sorely lacking. The leadership wanted to formulate schemes but left the implementation of those schemes in limbo. One element of the failure is that the leadership wanted to simultaneously recover from the war, consolidate central administrative control, develop economically and, on top of these very difficult tasks, create a welfare state. As U Nu expressed it in 1952 the objective of the Burmese government was: To exploit the immense natural wealth of the country to benefit the citizens totally and create conditions of contentment and happiness. On top of the usual problems of an underdeveloped country Burma had the special problems associated with the fact that World War II rolled over it twice. The British destroyed the major oil wells to keep their production out of the hands of the Japanese. The major mines for tungsten, tin, lead and silver had likewise been destroyed. In capturing the country both the Japanese and the British bombed the cities and their facilities extensively. Source: http://www.sjsu.edu/faculty/watkins/burma.htm

Activists Worry About Investor Interest in Burma

Burma is under pressure to implement broad economic reforms as the country still catches up with recently significant political change. This has brought both excitement and concern over reviving an economy that was once a commercial hub for Southeast Asia. Reforms under President Thein Sein have largely ended the political and economic isolation that left Burma as one of the poorest nations in Southeast Asia.

But as investors and businesses look for opportunities, there remain significant hurdles for the political, legal and economic reforms necessary for growing businesses. Sean Turnell, a Macquarie University economist in Australia and recent visitor to Burma, says many restrictions in business, some dating back to the British colonial era, remain in place. "A lot of the old restrictions on the economy - a lot of that stuff hasn't been touched yet which I think is remarkable in that it's very much against the trend particularly in Asia - the trend is economics first and politics a begrudging second," Turnell noted. Government ministers have set out an ambitious reform agenda including a new investment law, greater government transparency, plans for infrastructure development, and the creation of industrial zones. There are also new labor laws, new tax codes as well as currency reforms. But Turnell says the changes may not be coming fast enough for President Thein Sein. "I think the President in particular seems to be a little bit frustrated that the reforms have not been to the extent that might be expected," added Turnell. "In other words on that score I think we're likely to see many more soon along that front." Burmese opposition leader Aung San Suu Kyi has cautioned investors about the significant changes still needed inside Burma. She told entrepreneurs in Bangkok at the World Economic Forum that jobs are the country's biggest need, calling the unemployment rate a "time bomb." The caution is echoed by some activist groups. Debbie Stothard is spokesperson for rights group, Alternative ASEAN Network. "That there's such a push for business and investment in Burma I think Aung San Suu Kyi's remarks were a reality check and a wakeup call to the business community and the world at large that they have to think through their situation and the impact on the local population," said Stothard. An upbeat mood for the outlook of Burma, also known as Myanmar, was held by Association of South East Asian Nations (ASEAN) Secretary General Surin Pitsuwan, during the recent World Economic Forum. "We do hope to have helped push the process along and for us now the two issues are extremely important; national reconciliation within the Myanmese body politic led by Daw Aung San Suu Kyi and President Thein Sein. We hope that this national reconciliation is going

to go forward, is to bring peace and unity and reconciliation to Myanmar," said Secretary General Surin Pitsuwan. Some foreign businesses who operate in developing countries have dismissed the caution as overblown. Joseph Stiglitz, an economics professor at Columbia University and recipient of the 2001 Nobel Peace Prize for Economics, believes Suu Kyi is being unduly pessimistic over the outlook for Burma and investors will push ahead. "When we look at the judicial processes we will feel - we wish they were better, but I think that these will be an awareness of the desire and need to attract investors so I thought she was excessively pessimistic maybe about this," said Stiglitz. Enthusiasm from foreign investors has led to concerns among some analysts that rapid economic growth could impede further political reforms. Former Thai Senator Kraisak Choonhavan is a leading Burma rights advocate. "The survival of the struggle in Burma for democratization and freedom has come to a slow how would I say - slow death," said Kraisak Choonhavan. "The entire effort now on all Western Countries and other countries are in the quick grab on the resources of Burma and investment spots, sort of like wagon trains, like a gold rush". But others in Burma such as well-known comedian, Zarganar, who spent 11 years as a political prisoner, believe the country has entered a new era. "This is very important time of our country - how can I say - this is the dawn of our country we have to go to the day," said Zarganar. "We don't want to go back to the dark. The three "D's" era - now we are standing in the dawn we have to go to the day. We don't want to go back to the dark." The political reforms and investor interest in Burma's natural resources, young labor force and proximity to India and China have already led the International Monetary Fund (IMF) to raise its forecast for Burma's economy to six per cent in 2012. Source: http://www.voanews.com/content/investor-interest-in-burma-brings-worry-fromactivists/1204907.html

Burma Profile
1962 - U Nu's faction ousted in military coup led by Gen Ne Win, who abolishes the federal system and inaugurates "the Burmese Way to Socialism" - nationalising the economy, forming a single-party state with the Socialist Programme Party as the sole political party, and banning independent newspapers.

1982 - Law designating people of non-indigenous background as "associate citizens" in effect bars such people from public office. Riots and repression 1987 - Currency devaluation wipes out many people's savings and triggers anti-government riots. 2001 November - Chinese President Jiang Zemin visits, issues statement supporting government, reportedly urges economic reform. Conflicting signals 2007 April - Burma and North Korea restore diplomatic ties, 24 years after Rangoon broke them off, accusing North Korean agents of staging a deadly bomb attack against the visiting South Korean president. 2008 December - Government signs deal with consortium of four foreign firms to pipe natural gas into neighbouring China, despite protests from human rights groups. 2009 May - The EU extends the 2006 sanctions for another year, but adds that they can be reviewed in the event of moves towards democracy. UN and aid agencies say hundreds of thousands in the Irrawaddy Delta still need assistance a year after Cyclone Nargis. The UN says Burma now allows it to bring in all the staff it needs. 2009 September - US Secretary of State Hillary Clinton announces plans for engagement with military rulers. 2009 October - Aung San Suu Kyi begins talks with Burma's military leaders and is allowed to meet Western diplomats. 2011 September - President Thein Sein suspends construction of controversial Chinesefunded Myitsone hydroelectric dam, in move seen as showing greater openness to public opinion. 2011 December - US Secretary of State Hillary Clinton visits, meets Aung San Suu Kyi and holds talks with President Thein Sein. US offers to improve relations if democratic reforms continue. 2012 May - Manmohan Singh pays first official visit by an Indian prime minister since 1987. He signs 12 agreements to strengthen trade and diplomatic ties, specifically providing for border area development and an Indian credit line. Source: http://www.bbc.co.uk/news/world-asia-pacific-12992883

Myanmar's year of hopeful change

Revision of laws: Even before these speeches, a commission had been established to review
existing laws. Over the previous months, committees had reviewed hundreds of laws, taking advice from international organisations such as the International Labour Organisation (ILO) and the United Nations Office for the Coordination of Humanitarian Affairs, as well as from local non-governmental organisations. Major reform came in October, when new legislation was passed allowing labour unions. The ILO said the new labour law met international standards. Workers in Myanmar will have more rights than they have enjoyed since 1962.

Foreign reactions: The inception of the new government has caused a burst of regional
engagement, with China, India and fellow ASEAN countries. Beijing and New Delhi are at pains to work with the new government. Meanwhile, some Western countries have acknowledged that a process of change has started, even if they have not gone further. Despite high-level visits from the United States, including three by special envoy Derek Mitchell since September 2011, there is no movement yet to remove sanctions, as opinion in Congress still opposes this. While the United Kingdom wants proof of 'genuine and substantive change', Germany has increased its engagement. A high-profile tourism boycott of the country was largely lifted after the NLD changed its policy and said it would welcome individual travellers. Generally, however, activists abroad who have long campaigned for reform maintain that what has happened so far is still neither sufficient nor credible. Within Myanmar, however, many are surprised both at the speed and at the extent of the reforms. They see international support for the process as essential so that it does not stall, and so that hardliners do not regain the upper hand in the absence of Western recognition for what has already been achieved. Harn Yawnghwe is director of the Euro Burma Office and son of the first president of Myanmar, Sao Shwe Thaik. He recently visited his country after almost 50 years in exile and said upon his return: 'They have decided to change. It's not what we called for, but there are changes. Even if they are pretending to change, we should push them so the change becomes irreversible.' Source: http://www.iiss.org/publications/strategic-comments/past-issues/volume-172011/november/myanmars-year-of-hopeful-change/