Myanmar readies to take a great leap forward

Myanmar readies to take a great leap forward

Larry Jagan,

Myanmar government is about to take dramatic steps to boost economic development and improve government efficiency. Several significant cabinet changes are in the pipeline, detailed economic strategies are being finalized and a shake-up in the bureaucracy is already underway. These planned changes in ministerial personnel are aimed at strengthening the government’s leadership in the area of economic development, especially in the power sector.

August is going to be a very significant time for the government as it rolls out executive changes and lays out its detailed strategic plans for the future, according to government insiders. While the plans will strengthen the government’s leadership in the economy – something the local business community has been very vocal in complaining about – it will reinforce liberal economic practice and liberalization, with the central aim of boosting the role of business and attracting investment – both foreign and local.

One of the key failures of the government to date, according to sources close to the top leadership, has been the lack of coordination between ministries involved in the economy, a lack of a coherent direction and an inability to communicate the government’s policies and plans to the nation, especially businesses. The appointment of the former deputy governor of the Central Bank of Myanmar to a newly created extra deputy minister of planning and finance, Winston Set Aung is meant to rectify these gaps and weaknesses in government economic policy and implementation.

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This will be Set Aung’s primary task in the coming weeks, according to senior government sources. “Coordinate, consult and communicate the government’s evolving, economic policies,” a senior government official told the author on condition of anonymity. It is understood he will have one foot in the president’s office and the other in the ministry to strengthen his influence, especially within the bureaucracy.

He is a close confidante of Professor Sean Turnell – the Australian advisor to the ministry and a keen advocate of liberal and transparent economic policies. Sources close to the top, believe this duo will be unstoppable and will generate the policies and ensure their implementation. Set Aung also played a crucial role in the Thein Sein’s government – as deputy commerce minister – and was the architect of the previous government’s policies of creating special economic zones – especially the creation of the Thiliwa SEZ, on the out skirts of Yangon: a joint venture with the Japanese government. The two others, Dawei in southern Myanmar – in collaboration with Thailand — and Kyauk Phyu in the west of the country, which is a venture with China taking a lead role: and the MOU is expected to be signed in the coming weeks.

Set Aung also has the advantage of having been appointed to the National Economic Coordination Committee, which was meant to have provided a coordination role to date. It has largely failed in that, though it was an important talking shop at the very top of the government. Now the newly created deputy minister may be able to use that as leverage to ensure all ministries involved in the economy are singing from the same hymn sheet.

The business community has been quick to welcome his appointment, though many are cautious and skeptical that he will have the necessary room to manoeuvre. There is little doubt that the Lady – having appointed him – will support him. But he will have to produce results quickly to justify the faith that the government has been in him. A tall order but one, which many expect him to fulfill, and the business community will enthusiastically welcome anything with promises to kick-start the economy. He is particularly open to foreign businesses and donors, and international financial organizations, as he has had practical experience of working inside them in the past.

Of course, he is not without his detractors, and there will be substantial resistance within the bureaucracy, as many there see him as an upstart and too pro-Western. So apart from high expectations, he will have to tread carefully on the tight rope with the bureaucrats. He of course has a significant advantage over other ministers in that he has intimate knowledge of the bureaucracy as deputy commerce minister and deputy central bank governor, so they will find it hard to put anything over him.

While this may be the key Cabinet change that will launch the government’s fight back campaign, it is by no means the only one. The Minister of Electricity and Energy Pe Zin Tun has officially resigned – ostensibly for ill health – and replaced by the Construction Minister, Win Khaing. He will oversee both ministries for the time being – with a deputy minister to be appointed to solely look after electricity, according to senior government sources. According to government insiders, the previous minister pre-empted being shoved out – which many senior National League for Democracy (NLD) officials believe was on the cards.

But according to insiders this change of the guard at the electricity and energy ministry is highly significant, as it indicates that Aung San Suu Kyi understands that for general development, building a prosperous business sector and placating the growing concerns of electors – especially in the urban centres of Yangon and Mandalay, improving the provision of electricity is pivotal.

And there is an enormous workload facing the incoming minister. Apart from the future of the controversial Chinese-backed Myitsone Dam, there are three other Chinese proposals on the table from Chinese state-owned companies have proposing separate plans to plug Myanmar’s national power grid into Yunnan’s electricity network, according to Myanmar consultants working with these Chinese companies. Rural Yunnan already supplies surplus power to the more developed eastern China, as well as Vietnam and Laos.

But apart from hydroelectric generation, Myanmar is also considering coal fired furnace power stations, and other options of importing LNG – especially from Singapore and Thailand. These issues need to be speedily resolved, and electricity generation boosted as quickly as possible, for there are fears of sever shortages early next year, after the rainy season subsidies. And apart from environmental issues, there are the critical concerns of local communities facing disruption and resettlement.

No doubt these are the two most important positions in the Cabinet reshuffle, but insiders suggest there will be others: though they believe the lady is reluctant to have a major reshuffle – because of loyalty to the ministers was how an insider put it to me, though she regards most of them are useless, he added. But of course, her other overarching concern is maintain stability – and not to prematurely alienate the bureaucracy.

Others — expected to be removed — are the ministers for commerce, industry, tourism and ethnic affairs. But senior government and party officials are unaware of who is in line to replace them, though some suggested it could be that the deputy ministers will be promoted. There may also be extra deputy ministers assigned, according to another government source. Aung San Suu Kyi is playing her cards close to her chest, said a senior NLD source. “She doesn’t like to be second guessed,” he said.

But there is no doubt that the primary purpose for these Cabinet changes and the expected policy announcements, is to get the economy back on track.

Last week the State Counselor’s office issued a statement to mark a year since her administration announced its economic plan — a thin three-page document – roundly condemned for its lack of specifics. “The government’s long-term economic plan will take time,” the planning and finance minister, Kyaw Win said in the statement, ‘but [it] will bring prosperity in which all can share.”