Myanmar’s Way Forward: Land, Labor and Capital Reforms

While economic reforms in Myanmar arrived more slowly than political reforms, foreign governments and investors are nipping at the government’s heals to gain access to the newest market in Asia. However, the Myanmar government must consider the implications of a more liberalized economy for the wellbeing of its vulnerable population.  Political reforms were necessary in order to gain legitimacy from the international community, stimulate foreign investment and have sanctions eased or removed.  Myanmar’s recent transformation from an almost pariah state that relied heavily on China’s financial support and backing in international arenas such as the United Nations to a state that the US now sees as a pet project for a democratic, market movement has affected more than the top government officials, military brass and opposition leaders.  Economic, labor and land reform will significantly alter processes of production and consumption in Myanmar given the country’s reliance on agriculture, lack of infrastructure and new foreign influences.   

Since military rule began in 1962, Myanmar (then Burma) has become one of the most impoverished and closed states in Asia.  Myanmar has had historical economic ties with several of its neighbors. But, to enable a wider field of influence and investment the government has begun implementing reforms on foreign investment. They have set the goal of reducing state control over education, energy, forestry, health care, finance and telecommunications sectors.

Over the past year, Myanmar has experienced an economic and political reemergence, with only (and it’s a big only) ethnic violence and abuses by the army in several regions still plaguing the government.  Additionally, strides have been made in correcting the problem of forced labor in Myanmar, leading to removal of trade barriers by the European Union.  The EU also reinstated the Generalised System of Preferences halted in 1997 due to national labor standards.  Over the summer American companies were allowed to start investing in the country. In step with President Obama’s visit to the region, the US government just last week began allowing the importation of products made in Myanmar excluding jadeite and rubies.  The removal of Western sanctions and continuous visits by business delegations to Myanmar over the past year gave Naypyidaw a renewed spirit toward achieving economic security.

Land reform in Myanmar will, according to Center for Strategic and International Studies Deputy Director Murray Hiebert “determine the role of farmers in the country’s reform process and lay the foundation for new realities between the government and the rural poor.” (2012)  With more than two-thirds of the population relying directly or indirectly on agriculture, how the government handles new legal frameworks (through Farmland Law and the Vacant, Fallow, and Virgin Land Management Law) will either give confidence to locals or to foreign investors seeking security for land use.  Currently the government of Myanmar is the “ultimate owner of all land,” and so is able to dictate land usage.  During military rule, the state confiscated land with meager or no compensation to farmers; new laws may now facilitate this expulsion of farmers and those who rely on subsistence agriculture, creating a landless working class simultaneously privatizing land and creating an easily exploitable labor force.

The US and other Western states see Myanmar as a country they can help build and shape in their image, while taking advantage of both lack of domestic private competition and the presence of government officials with ties to industries.  With foreign funding, new industry in Myanmar will create new consumers as well as producers.  The way people in Myanmar produce and exchange goods will change; and some industries will no longer be competitive due to cheaper imports and foreign-owned factories.  If Myanmar’s majority rural population is driven away from rural areas and subsistence agriculture, then it is likely that they will have to quickly convert to other sectors, for example, manufacturing textiles and finished goods.  We are yet to see if Myanmar will find a niche in particular industries.

The inability to freely sell precious gems, purchase weapons and halt the opium trade still haunt the leaders of Myanmar during the reform process.  Furthermore, human rights violations by the military, ethnic clashes and minority rights and concerns continue to hamper economic advancement.  Before Myanmar can become a fledgling capitalist economy – or even a controlled capitalist economy like several of its neighbors – there will likely be a protracted period of painful reforms.  The privatization of land and resources is not likely to be any more equitable than it has been under military rule over the past five decades. In their public appearance on November 19 in Rangoon, US President Barack Obama and Myanmar President Thein Sein warned against lingering in the past; rather, “We need to look forward to the future.” Hopefully the people of Myanmar will be able to define their own sense of progress and avoid some of the problems faced by their neighbors and eager business partners.   


US and China Outline New Year Policies Affecting Home and Abroad

The New Year has started with immediate action in the Asia-Pacific region and Sino-US relations. On January 1, Chinese President Hu Jintao published a highly charged article in the Communist Party journal Seeking Truth about culture and the threats China faces. On January 6, President Barack Obama stood alongside military leaders to launch his administration’s new defense strategy “Sustaining US Global Leadership: Priorities for 21st Century Defense”. Both events were media spectacles spurring speculation and hype among pundits. Across multiple fronts, the US and China are in a stage of ‘transition’, with the current administrations both facing potential (in US) and real (in China) leadership changes at the end of 2012. The contents of Hu’s essay and the Obama administration’s defense strategy demonstrate the leaders’ mutual need to shore up domestic support and enthusiasm.

For some in the US, Hu Jintao’s essay declared a new ‘culture war’ directed at America, harkening back to Mao Zedong. Hu wrote in the essay and speech: “We must clearly see that international hostile forces are intensifying the strategic plot of Westernizing and dividing China, and ideological and cultural fields are the focal areas of their long-term infiltration.” The Wall Street Journal argued that “Hu Jintao has launched another culture-rectification campaign with goals that Mao would recognize: step up ideological struggle and fight back against Western encroachments.” In a response to US reactions, the Chinese Culture Minister quickly replied by clarifying that 2012’s proposed ‘culture work’ does not mean it will “engage in so-called Great Leap Forward”. Instead, China’s plan is to perpetuate soft power and to promote internal and international stability.

I agree more with Damien Ma’s interpretation in The Atlantic that the ‘culture war’ is not meant as an implicit threat to the US. Rather, it is “part of a battle to sustain the confidence of its own people – via nationalist, Confucian tenets, wealth, cultural renaissance or whatever substitute that can be dreamed up — or risk the consequences. The war is, and has always been, about defining the soul of the modern Chinese nation.” Furthermore, the warnings are a call to the Communist Party to remain relevant to China’s populace. The forthcoming political transition at the end of this year and the Chinese population’s growing benefits from economic and technological development led to a fear of waning power and influence. Building on nationalist sentiments and stirring up the public by flexing its diplomatic muscle is one way for Hu’s Administration to calm its nerves.

Meanwhile in the US, the Budget Control Act of 2011 mandated that the Pentagon budget be trimmed by “by about $487 billion in the next decade, a roughly 8 percent decrease.”* The recent Defense Strategy Review is an attempt to redefine America’s strategic interests and goals, and to focus on priority areas for future funding. As the US reaches the last year of President Obama’s first term, withdraws military forces from Iraq and deals with a continuing government budget and wider economic crisis, the country faces a point of ‘transition’ which makes the time ripe for this discussion. By surrounding himself with top Pentagon officials, President Obama tried to strengthen his stance against an unwieldy Congress and direct an image of authority in an election year. The need to reduce the budget was evident on every page of the report, with the key being “Whenever possible, we willdevelop innovative, low-cost, and small-footprint approaches to achieve our securityobjectives”. (p. 3)

Interestingly, at no point in President Obama’s defense policy launch did he mention China. The Defense Strategy Review, on the other hand, warned that China’s emergence could affect the economy and security of the US in a number of ways depending on the path taken. Additionally, China’s military power growth “must be accompanied by greater clarity of its strategic intentions in order to avoid causing friction in the region.” In a menacing tone, the Review said the US would “continue to make the necessary investments to ensure that we maintain regional access and the ability to operate freely in keeping with our treaty obligations and with international law.” (p. 2)

As you can see, budget reductions are a priority, but they do not stand in the way of military readiness and competitiveness. In an effort to sound practical, the Review argued for a reduction in the “cost of doing business”, to which many Americans would agree. However military personnel have sacrificed much over the last decade and will bear the burden of budget cuts: “As DoD takes steps to reduce its manpower costs, to include reductions in the growth of compensation and health care costs, we will keep faith with those who serve.” (p. 7) Cutting health care benefits from veterans has not been as controversial as one may think in Congress however unpopular it may be to the American public; hopefully, this move is not foreshadowing irrational motives sparked by China’s emergence.

As Presidents Obama and Hu pit tough rhetoric against each other to hold or challenge the balance of power, they also seek to prove dominance to their domestic populations. Competing party and government politics have been the main driver of their warnings and stern tones. Economically, China and the US are so interdependent that the leaders’ domestic pandering should not affect their strategic relationship; the US in particular finished 2011 with a negative stance toward China, causing international headaches. But both powers share the mutual interest of stability, and while the US has less concern for other states’ sovereignty than China, the Obama Administration should prevent domestic issues and government in-fighting from leading to a dampened bilateral relationship.

Last year was, and no doubt 2012 will also be, a busy year for Sino-US relations and multilateral cooperation in the Asia-Pacific. On January 7, US Assistant Secretary of State Kurt Campbell arrived in Tokyo to discuss the situation on the Korean Peninsula and said “Even while the United States is making an adjustment in its global military posture, we are intent on maintaining a very strong, enduring military presence in the Asian-Pacific region”. China, likewise, intends to increase its diplomatic efforts this year and boost cooperation in the Asia-Pacific in issues of mutual interest; China’s government is anticipating high-level meetings such as the “Seoul Nuclear Summit, the BRICS Summit in India, the Asia-Europe Meeting in Laos, and the East Asia Summit in Cambodia”. During these meetings, China plans to “enhance strategic coordination and mutual understanding with Asian countries”. With both China and the US boosting diplomatic efforts in the Asia-Pacific, the hope is that eventually the two powers will forge a more cooperative and mutual partnership together instead of solely other neighbors.