Myanmar

Politics:

• Analysis

  Myanmar politics: Quick View - Deadly religious riots break out in central

  Event

  A dispute at a gold shop in the central Burmese town of Meiktila escalated into religious rioting between Muslims and Buddhists on March 20th and 21st, reportedly killing at least 20 people. The authorities have declared a state of emergency.

  Analysis

  Sectarian tensions have been a source of concern in Myanmar since a brutal conflict in western Rakhine state between minority Rohingya Muslims and local Buddhists last year killed over 160 people and displaced around 120,000 others. The rivalries between the majority Buddhist Burmans and other minorities, such as Christian Kachins and Karens, have been a potential tinder box ever since independence from the UK in 1947. Indeed, the Burmese military regularly cited the need to keep the country together as justification for a half-century of military rule that only ended in 2011.

  However, it is the tension between Buddhists and minority Muslims that carries the greatest potential to flare up and spread, as the riots in Meikhtila show. Local officials said the violence began after a dispute between a Muslim-owned gold shop and Buddhist customers. That set off a chain reaction of violence, culminating in the burning of a mosque. Among the dead was a Buddhist monk, triggering fears of further rioting elsewhere.

  While the situation in Meiktila appears to have calmed after a second night of curfew, it underscores the speed with which communal violence can break out. In the past, the potential for such conflict might have been dampened by the presence of a brutal military government. One of the greatest tests for Myanmar's young democracy is whether it too can keep the country's ethnic tensions in check, or whether these communal fissures, as in the case of last year's Rakhine State riots, will lead to a much more serious confrontation that could slow the reform process and damage relations with the Muslim world.

  March 22, 2013

• Background

  Myanmar: Constitution and institutions

  Work on a new constitution continues

  In 1988 the junta suspended the 1974 constitution and abolished all state institutions, including parliament and the civilian courts. The junta claimed (after the event) that the 1990 election had been held in order to elect representatives to the NC. The NC first met in January 1993. However, of its 702 members only 106 (15%) were elected representatives, the rest being appointed by the junta. In November 1995 the NLD was expelled from the convention for protesting against the restrictions on debate. The convention was closed the following year.

  In 2003 the junta unveiled its road map for political reform, starting with completion of a draft constitution. The NC was reconvened for short sessions in 2004, although the SPDC imposed tight restrictions on debate, and the NLD continued to boycott the convention. In September 2007 the NC finally finished drawing up guidelines for a new constitution, and the junta promised to prepare a draft. The new constitution is expected to leave considerable power in the hands of the military, with 25% of seats in any future parliament set aside for the military, which would also be granted the right to make appointments to government posts such as the ministers of defence and home affairs. Under the constitution, Aung San Suu Kyi is also likely to be prevented from holding a position in government owing to the fact that she is a widow of a foreigner.

  The SPDC controls the government

  The 12-member SPDC includes the heads of all branches of the armed forces as well as the heads of the four Bureaux of Special Operations (who oversee the regional military commanders). The SPDC is headed by Senior General Than Shwe, who is also commander-in-chief of the armed forces. Deputy Senior General Maung Aye holds the post of vice-chairman (and is also commander-in-chief of the army). Other leading SPDC members include General Thura Shwe Mann (joint chief-of-staff of the armed forces), and Lieutenant-General Thein Sein, who is thought to have taken on the post of prime minister on a permanent basis following the death in early October 2007 of General Soe Win. Lieutenant-General Thein Sein's replacement in the post of secretary-1 of the SPDC is Lieutenant-General Tin Aung Myint Oo. The SPDC meets several times a year to set key policies.

  The junta also has a government with a full cabinet and prime minister. In theory, this forms a second tier behind the SPDC. In reality, however, all major decisions are taken by the SPDC. All government appointments are made by the junta, and the vast majority of government ministers hold military positions.

  The opaque nature of the SPDC and its government, combined with widespread cronyism and corruption, has severely undermined the effectiveness of policymaking. Periodic clean-ups tend to target those who have fallen out of favour with the regime, leaving in place many other corrupt officials.

  The judiciary is not independent

  Civilian courts were fully reinstated in 1992, but many judges still have military backgrounds. The regime's opponents are regularly denied proper legal representation, and cases are often heard in secret. Jail terms for pro-democracy activists are severe; even peaceful anti-junta activities by Myanmar citizens regularly attract jail terms of up to 20 years. Conditions in the jails are harsh.

  October 19, 2007

• Structure

  Myanmar: Political structure

  Official name

  Republic of the Union of Myanmar

  Form of state

  Under its 2008 constitution Myanmar has a multiparty democratic system, but institutions of power are dominated by the military and its leading clique

  The executive

  A new executive, headed by a president, was formally installed in March 2011, when the State Peace and Development Council (the military junta that had held power since 1988) ceased to exist

  National legislature

  There are two national legislative chambers, the 440-seat Pyithu Hluttaw (People's Assembly, the lower house) and the 224-seat Amyotha Hluttaw (Nationalities Assembly, the upper house). In both assemblies 25% of seats are reserved for appointees representing the military, while the other members are directly elected

  Head of state

  The president, chosen by the Presidential Electoral College, which comprises three committees-one formed of members of the upper house, one made up of members of the lower house and one consisting of military appointees. Thein Sein was chosen as president in February 2011 alongside two vice-presidents, Tin Aung Myint Oo and Sai Mauk Kham. The resignation of Tin Aung Myint Oo was announced in July 2012 and his replacement, Nyan Tan, was sworn in a month later

  National elections

  Elections were held in November 2010 for both houses of parliament. The military-aligned Union Solidarity and Development Party (USDP) won an overwhelming victory in the polls; the main opposition party, the National League for Democracy (NLD), chose not to participate. The next general election is due to be held in late 2015

  National government

  A cabinet is appointed by the president and is subject to approval by the national legislative bodies

  Main political parties

  USDP, NLD, National Democratic Force, National Unity Party, Shan Nationalities Democratic Party, Rakhine Nationalities Development Party, other ethnically based parties

  Key ministers

  Agriculture & irrigation: Myint Hlaing

  Border affairs: Major-General Thein Htay

  Commerce: Win Myint

  Construction: Khin Maung Myint

  Defence: Major-General Hla Min

  Electric Power 1: Zaw Min

  Electric Power 2: Khin Maung Soe

  Energy: Than Htay

  Finance & revenue: Hla Tun

  Foreign affairs: Wunna Maung Lwin

  Home affairs: Lieutenant-General Ko Ko

  Industrial development: Major-General Thein Htay

  Industry: Aye Myint

  Information: Aung Kyi

  Mines: Thein Htaik

  Transport: Nyan Tun Aung

  Central bank governor

  Than Nyein

  March 20, 2013

• Outlook

  Myanmar: Key developments

  Outlook for 2013-17

  • The government is expected to maintain its conciliatory stance towards its opponents, including the pro-democracy leader, Aung San Suu Kyi.
  • Although members of the opposition National League for Democracy won 43 of the 45 parliamentary by-elections held in April 2012, the military and its allies will remain numerically dominant in the legislature.
  • The biggest test of the government's commitment to political reform will be the next general election, which is due in late 2015.
  • Progress on political liberalisation is likely to be sufficient to persuade Western governments to lift sanctions in 2013, paving the way for greater capital inflows.
  • GDP growth will strengthen to 5.4% in fiscal year 2013/14 (April-March), from an estimated 5% in 2012/13. In 2014/15-2017/18 growth will average 6.7% a year as the removal of sanctions leads to greater foreign investment.
  • Annual consumer price inflation is expected to average 6.7% in the forecast period. Strong domestic demand, coupled with the inability of the Central Bank of Myanmar to rein in money supply growth, will keep inflation high.

  Review

  • In late February fighting broke out between government troops and the ethnic-minority Shan State Army-South. Periodic clashes between the two sides have underscored the fragility of the ceasefire that they signed in 2011.
  • The president, Thein Sein, has made his first official visit to the EU. European countries promised more aid and support, but they are looking for further progress on the issue of political prisoners in Myanmar.
  • The military budget has been reduced by 5%, but defence expenditure in fiscal year 2013/14 (April-March) will still account for more than 20% of government spending. Healthcare and education will receive 4.4% and 3.9% respectively.
  • In another significant step towards the dismantling of the remaining US financial sanctions against Myanmar, the US government has said that it will allow American banks to route transactions through four Burmese banks.
  • Foreign investment declined in 2012, to US$1.1bn, from US$8.5bn in 2011, owing to a drop-off in major new resource projects. However, more countries are investing in more projects in a greater range of sectors.
  • Consumer price inflation accelerated to 6% year on year in December, but the inflation rate for 2012 as a whole was just 1.5%, reflecting a period of deflation in the middle part of the year.

  March 20, 2013

Economy:

• Background

  Myanmar: Economic background

  Main economic indicators, 2006
  (Economist Intelligence Unit estimates unless otherwise indicated)
  Real GDP growth (%)	3.0(a)
  Consumer price inflation (av; %)	20.0(b)
  Current-account balance (US$ m)	1,044
  Exchange rate (av; Kt:US$)	1,280
  Population (m)	48.4(b)
  External debt (year-end; US$ m)	6,632
  (a) Latest official data for 2003/04 (April-March) show GDP growth of 13.4%, but this number is overstated. (b) Actual.
  Source: Economist Intelligence Unit, CountryData.

  Download text file (csv format)

  October 19, 2007

• Structure

  Myanmar: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 20, 2013

• Outlook

  Myanmar: Country outlook

  Myanmar: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: In 2013-17 the military-backed Union Solidarity and Development Party government is expected to maintain its conciliatory approach towards its political opponents, including Aung San Suu Kyi, who leads the main opposition party, the National League for Democracy (NLD). The authorities will also continue the process of political liberalisation that was begun in 2011. Aung San Suu Kyi and Myanmar's president, Thein Sein, appear to be capable of working together in a process of reform and national reconciliation. However, it is still not clear how far hardliners in the government and the military will allow the president to go.

  ELECTION WATCH: The NLD's strong showing in the April 2012 by-elections suggests that the number of opposition member of parliament will increase substantially at the general election due in 2015 if the poll is free and fair. This in turn could open a path to the presidency for Aung San Suu Kyi, given that parliament elects Myanmar's president. She has said that she would consider the position, but the constitution would first have to be altered to remove the ban on candidates who have spouses or children with foreign citizenship.

  INTERNATIONAL RELATIONS: In the forecast period the government is likely to continue to pursue a policy of re-engagement with the West. Western governments suspended most of their sanctions against Myanmar in 2012 and could lift sanctions completely as early as 2013. US-Burmese relations will continue to strengthen, although the full removal of US economic and financial sanctions is likely to require further progress on human rights issues, such as the release of all political prisoners, as well as significant moves towards the resolution of the country's ethnic conflicts. Myanmar's relations with Western nations, as well as with Islamic countries, have come under strain owing to the government's maladroit handling of sectarian violence between Buddhists and Muslims in Rakhine state.

  POLICY TRENDS: The government has pledged to tackle widespread unemployment and foster rapid economic expansion. The process of drafting policies aimed at alleviating poverty is likely to advance as relations between Myanmar and international donors improve. The World Bank, the Asian Development Bank and the IMF have re-established a presence in the country and will provide badly needed policy advice and technical assistance. Offers of loans and aid from international institutions are set to multiply after Myanmar's major donors agreed in January to waive some 60% of the country's debt.

  ECONOMIC GROWTH: Real GDP growth will accelerate to 5.4% in fiscal year 2013/14 (April-March) and will strengthen further in 2014/15-2017/18. In the early part of the forecast period growth will be underpinned by large projects funded by investors from China, South Korea and Thailand in several sectors, notably power, petroleum and infrastructure. However, excluding these schemes, economic expansion will remain sluggish. Private consumption growth will stay steady at around 4% a year in the forecast period. Despite the fact that a sizeable proportion of the population lives below the poverty line, private consumption growth will be an important contributor to economic expansion.

  INFLATION: Myanmar's official consumer price index (CPI) rose by 1.5% in 2012, compared with 5% in 2011, owing to the fact that falling food costs led to deflation in the first half of the year. However, it is unlikely that the CPI captures inflationary trends accurately. Several indicators, including soaring property costs, suggest that the overall price level may be rising faster than indicated by the official index. During the next few years expanding domestic credit and strengthening local demand will put upward pressure on prices. The latter factor will be particularly influential, as transport and warehousing infrastructure has suffered years of underinvestment and will prove inadequate to meet demand for increased movement and storage of goods. Consumer price inflation will average 6.7% a year in 2013-17.

  EXCHANGE RATES: The kyat has fallen in value since it was floated in April 2012, depreciating from Kt818:US$1 then to around Kt870:US$1 in early March this year. The currency is likely to weaken further during the forecast period, primarily owing to a widening current-account deficit. Although higher investment inflows will increase the surplus on the capital account, they will lead to a larger deficit on the current account by pushing up demand for imports of capital goods and industrial raw materials. The deficit on the income account will also widen as foreign firms repatriate profits.

  EXTERNAL SECTOR: Growth in the merchandise import bill will accelerate in 2013-14, driven by an expansion in the number and total value of foreign-invested projects in the oil and gas, power, mining and infrastructure sectors. Meanwhile, relatively strong regional demand for Myanmar's largest exports, natural gas and gems, will underpin export revenue. The proceeds from natural-gas sales are expected to rise sharply in 2013 when new fields come on stream. Revenue from other exports, such as pulses and timber, will also strengthen in line with greater regional demand.

  March 25, 2013

• Forecast

  Myanmar: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growthc	5.0	5.4	6.0	6.5	6.9	7.3
  Gross fixed investment growthc	9.0	10.4	12.2	13.4	14.0	15.0
  Gross agricultural production growthc	3.9	3.5	4.0	4.2	4.2	4.2
  Consumer price inflation (av)	1.5	7.3	6.6	6.5	6.3	6.7
  Consumer price inflation (end-period)	6.0	5.9	7.2	6.4	7.3	5.6
  Short-term interbank rate	13.0	13.0	15.0	15.0	15.0	16.0
  Government budget balance (% of GDP)c	-4.8	-4.4	-4.0	-3.8	-3.7	-4.0
  Exports of goods fob (US$ bn)	8.2	10.0	11.7	14.0	17.1	20.8
  Imports of goods fob (US$ bn)	7.5	9.1	11.6	14.7	18.7	24.2
  Current-account balance (US$ bn)	-1.5	-1.7	-2.8	-4.1	-5.4	-6.9
  Current-account balance (% of GDP)c	-3.3	-3.3	-5.0	-6.6	-7.9	-9.0
  External debt (year-end; US$ bn)	6.9	6.4	6.6	6.7	7.2	7.4
  Official exchange rate Kt:US$ (av)d	853.5	872.5	887.1	902.9	917.9	935.0
  Exchange rate Kt:US$ (av)e	853.5f	872.5	887.1	902.9	917.9	935.0
  Exchange rate Kt:¥100 (av)e	1,066.6f	940.7	938.7	938.1	941.5	968.9
  Exchange rate Kt:Bt (av)e	27.5f	28.7	29.5	30.1	30.8	31.5
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Fiscal years (beginning April 1st of year shown). d Fixed exchange rate until March 31st 2012. e Free-market rate until March 31st 2012. f Actual.

  Download the numbers in Excel

  Download text file (csv format)

  March 20, 2013

View detailed map

Country Briefing

Land area

676,563 sq km

Population

60.4m (mid-2012 Asian Development Bank estimate)

Main towns

Population in '000 (1983 census):

Yangon: 2,513

Mandalay: 533

Pegu: 320

Moulmein: 220

Note: In 2006 the ruling military junta moved the country's administrative capital from Yangon to the town of Naypyidaw. In the text, places other than Myanmar and Yangon are referred to by their pre-1989 names. Pre-1989 place names appear in brackets on the map at the start of this report

Climate

Subtropical

Weather in Yangon (altitude 5 metres)

Hottest month, April, 24-36°C; coldest month, January, 18-23°C; driest month, January, 3 mm average rainfall; wettest month, July, 582 mm average rainfall

Language

Burmese; numerous minority languages, such as Karen and Shan, are also in use

Measures

Derived from the UK system. Some other units are in use. For example, 0.9842 long or imperial tons = 1 metric tonne = 1.10231 short tons. Local measures include: 1 lakh = 100,000 units; 1 crore = 10,000,000 units; 1 viss or peiktha = 100 ticles = 1.6 kg; 1 basket (paddy) = 20.9 kg; 1 basket (rice) = 34 kg

Currency

1 kyat (Kt); Kt1 = 100 pyas. Average official exchange rate in 2011: Kt5.3:US$1. Average free-market rate (based on Economist Intelligence Unit estimates) in 2011: Kt815:US$1

Time

6.5 hours ahead of GMT

Fiscal year

April 1st-March 31st

Public holidays

January 4th (Independence Day); February 12th (Union Day); March 2nd (Peasants' Day); March 27th (Armed Forces' Day); April 12th-20th (Thingyan, New Year); May 1st (Workers' Day); July 19th (Martyrs' Day); December 8th (National Day); December 25th (Christmas Day); plus other holidays, the timing of which depends on lunar sightings

January 08, 2013