(Business Commentary) – For starters, here’s a little primer—Under Burma’s Socialist economic system, making a profit was seen as illegal or immoral, and entrepreneurs were generally regarded as smugglers. The government pressured private traders, claiming they exploited ignorant people.
Profit-making concepts were taboo even at government business schools. Economic professors taught future businessmen to stay away from the government’s monopolistic business areas so that state enterprises might succeed. But, in practice those who competed against state-owned enterprises benefited because of the poor management, operation and marketing of state firms.
One Myanmar professor wrote a paper for his doctorate degree saying that the black market that fulfilled the everyday needs of people leads to the destruction of the government mechanism. When SLORC took over state power, new entrepreneurs accumulated their wealth under the Socialist era. They did so partially by getting the access and rights to extract natural resources such as timber and minerals. As the new military government created private businessmen, these two groups, military and merchants, mingled with each other for mutual interest.Government agencies held about three months import value for foreign exchange reserves in 1988. But in 2011 more than 5 billion US dollars or the equivalent to seven months imports remains in the state coffers. The external value of the Myanmar kyat is strengthening against the US dollar.
The government is now in a strong position in terms of the foreign exchange reserve. Government officials who had low pay can now enjoy the fruit of a fledgling market economy by getting their hands greasy with bribes.Their family members establish private enterprises and win access to limited resources, privileges and the all-important internal network.
Initially, government officials were less clever and suffered from manipulation by private businessmen. Later, some family members directly engaged in business. This new business community developed into the infamous cronies who were able to influence and benefit from government decisions and regulations.
The mingling of army and business is now evident in the changing behaviour of both sides. Entrepreneurs enjoy VIP treatment and red carpet welcomes like a military official.
Most of the large businesses in Burma are operated by family members of influential people. The accumulation of great wealth is evident when they bid for privatized state assets and estates.
Officers at non-governmental business organizations are appointed by ministers and higher authorities. These people can monopolize a market, delivering poor service at relatively high prices. One famous economist made a bold remark—because of the efforts of cronies and corrupt officials, no real economic improvement can occur.
So far under the new government, these problems have only received lip service. The new president made some tepid comments on anti-corruption and anti-monopolistic behaviour in his first speech.
Under the old administration, business deals could be made by agreement between local military officials. Under the new government, old senior officials are finding it difficult to initiate new ways of doing business because they always act under the directions of a superior.
Pity the reporters and editors at state newspapers. They are now finding it difficult to fill space in their publications. Formerly, they could publish lots of news reports about state visits by senior military officials who were directing ‘this or that’, and there was no need for investigative reporting and news about events and hardship at the grass-roots level. News on the private sector usually appeared in weekly journals or as advertisements in state daily newspapers.
Uncertainty is still in the air while the new government and administration is finding its feet.
Will they do business as usual by using who they know, not what they know?
One certainty is that everybody, including ordinary people, is waiting for the right moment to enter business on a fair playing field, something they have been denied for more than twenty years.
The question is will business schools be able to teach a modern approach to business—or does the business curriculum need to add a course on how to become a crony?
