Myanmar elections will ‘not loosen military’s grip on business’

Myanmar elections will ‘not loosen military’s grip on business’
Myanmar military high ranking officers attend the 67th Armed Forces Day in Naypyitaw, Myanmar, 27 March 2012. Photo: Nyein Chan Naing/EPA

The outcome of Myanmar’s forthcoming national elections will do nothing to reduce the military’s business control over natural resources, but the return of a USDP-led government should ensure a continuing pro-business outlook from Nay Pyi Taw, a study said.
The opposition National League for Democracy (NLD) is expected to do well in the November elections, but “serious concerns remain as to whether the country’s transition from military rule is merely cosmetic,” international business risk assessors Verisk Maplecroft said.
“The ruling Union Solidarity and Development Party’s (USDP) alliance with the military means that it need only win 10% of seats in both houses of parliament to threaten the NLD’s ability to hold an outright majority,” the study said. 
“In the eventuality that neither the USDP nor the NLD manage to hold an outright majority in either house of parliament, the two national parties will have to compete for support from regional ethnic parties to form a coalition.”
The military continues to wield considerable influence over legislation and control of government agencies, Verisk Maplecroft said.
A continuation of dominance by the USDP will most likely see further reforms intended to attract foreign investment in the development of infrastructure and key sectors such as energy, finance, manufacturing and agriculture, international business risk assessors Verisk Maplecroft said.
However, this could cause some uncertainty over the next 24 months. 
“The reform process is incomplete and much work remains to be done to bring the economy in line with regional and international standards,” Verisk Maplecroft’s senior analyst for Asia Ryan Aherin told Mizzima Weekly.
The election outcome study last week comes amid reports that key elements of Myanmar’s economy face problems from two sources beyond the country’s control: low global oil prices and China’s economic slowdown.
“The high hopes surrounding Myanmar’s energy potential appeared to have been premature, with reports that foreign oil companies are making disappointing progress with the blocks they have committed to in recent years,” the Asia Oil & Gas Monitor said on September 16.
“The plunge in oil prices that started in summer 2014 has seen a number of exploration projects offshore Myanmar crawl along at a much slower pace than originally expected.”
Meanwhile, China’s own economic problems could have a knock-on effect in Myanmar, an analyst writing in the US website new magazine World Politics Review.
Cumulative Chinese foreign direct investment in Myanmar is more than US$14 billion, with much of that going into the energy and mining sectors, Paul Shortell wrote. “Today, however, slackening demand and collapsing credit in the world’s second-largest economy have increased concerns over Myanmar’s resource-dependent economy,” he said.
This fact was underlined by what is happening with Myanmar’s gas exports. Not only has the price fallen on the back of sliding oil prices, China National Petroleum Corporation admits that its US$1 billion pipeline through the country is operating at less than half capacity due to falling demand in China.
The pipeline, intended to ferry gas from the offshore Shwe field in the Bay of Bengal, has an annual capacity of 12 billion meters.
Myanmar is earning US$4 million per day less for gas today than at the beginning of 2014, Myanmar Oil & Gas Enterprise (MOGE) said last week.
Although the MOGE recently completed contracts with a number of foreign oil companies to explore and possibly develop 20 offshore oil and gas blocks, the Verisk Maplecroft assessment said Myanmar’s military domination of the country’s natural resources is continuing “often through an opaque system of front companies”.
“[The military] has benefited from the conclusion of a raft of lucrative business deals with foreign investors,” Aherin told Mizzima. “The election is unlikely to fundamentally alter the situation.”
A continuation of the USDP government after the elections will most likely mean further regulatory reforms to attract investment in the development of infrastructure and key sectors such as energy, finance, manufacturing and agriculture, Aherin said.
Even so, the military will continue to hold considerable influence over legislation and control of government agencies, Verisk Maplecroft said.
China’s influence in Myanmar, however, has loosened following Nay Pyi Taw’s blocking of a major hydroelectric dam planned by Chinese companies, plus the collapse of plans for a railway to link southwest China with the Bay of Bengal.
However, Myanmar remains very much part of Beijing’s plans for commercial interconnectivity via ASEAN, the 10-country Association of Southeast Asian Nations.
Beijing hosted the ASEAN countries at a four-day expo in Nanning from September 18-21 and sought to promote its plans for a new Silk Road trade route, or rather several routes by land through Central Asia and Southeast Asia and by sea in the ASEAN region.
Nanning is capital of China’s southwest Guangxi province, one of the destinations originally intended to receive Myanmar’s Shwe gas.
Myanmar was represented at the expo by Vice President Sai Mauk Kham who said the so-called Silk Roads will “help facilitate communication and cooperation among ASEAN members, and contribute to the development of infrastructure and integration of the AEC,” the Chinese news agency Xinhua quoted him to say.
AEC is the ASEAN Economic Community, a more open cross-border trading agreement scheduled to begin in December.
This Article first appeared in the October 1, 2015 edition of Mizzima Weekly.
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