Burma ‘to privatise 90% of firms’

Burma held its first election in 20 years last November

The Burmese government may be planning a dramatic change in the way the country’s economy is managed.

According to a report in local news media, the government intends to privatise 90% of state owned enterprises by the end of this year.

If true, it would mark a major shift in policy for the country, which recently held its first election in decades.

Until fairly recently it has been the most rigidly state-dominated economy in Asia after North Korea.

So is the report credible? Hard information on economic policy in Burma is almost impossible to obtain.

The notoriously secretive government rarely speaks to Western media.

But within that context, the latest report appears reasonably well sourced.

The reputable Burmese business news magazine Biweekly Eleven quotes the deputy minister for industry, U Khin Kyaw, as saying the government plans to sell most state enterprises into private hands within the next few months.

Observers say the main motivation for this dramatic policy shift would be political not economic.

Burma recently had a general election – the first in two decades – which, while by no standard free or fair, is leading to a change of generation in the leadership.

One theory is the privatisation programme provides a kind of golden parachute for those exiting power.

This suggests that most of the privatised assets will be acquired at knock-down prices by people who have had positions in government, and by their families and friends.

“I think what’s really going on is there’s going to be a bit of a firesale, if you like, of these assets to people closely connected to the current regime,” said Sean Turnell, a professor of economics at Macquarie University in Sydney, Australia.

“And really the motivation for them is making sure this wealth remains in their hands, regardless of what happens to the political situation,” Mr Turnell said.

In fact Burma has already moved towards liberalising what has been one of the most state-dominated economies in Asia.

More than 100 government-owned enterprises, including petrol stations and port facilities, were sold off within the last 12 months.

China has emerged as the main buyer for Burma’s plentiful exports of gas, gems and other natural resources in recent years.

But observers say sensitivities about national sovereignty make it unlikely that the Burmese authorities would allow Chinese firms to acquire outright ownership of privatised assets.

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