Myanmar 2012

Myanmar's first general election in 20 years was held in November 2010. Unfortunately, despite much anticipation, it cannot be deemed democratic. The military junta barely left the outcome to chance. The 2008 Constitution reserves one quarter of the 664 parliamentary seats for army personnel. The Union Solidarity and Development Party secured 76.5% of the votes for the remaining 498 seats. Observers reported widespread electoral malfeasance during the election, which cemented the army's considerable sway over the nominally civilian government. Moreover, the conditions accompanying the election were extremely unfair. The election laws severely limited the ability of many political parties to field candidates. To illustrate, contesting parties had to pay a non-refundable

The army continues to exert some influence on Burmese politics. However, it is gradually retreating from its once prominent role. A major cabinet reshuffle in August 2012 which had sidelined a number of hardline minister left over from the days of army rule was largely unopposed by the army.

The Burmese constitution provides for freedom of the press. Since May 2011 print media no longer have to submit articles to the Press Scrutiny Board prior to publication. (Post-publishing censorship still happens, though.) Newspapers are testing the boundaries of their new freedom. For example, the term "prisoners of conscience" is now allowed by the Press Scrutiny Board, along with calls for releases. Articles about and images of Aung San Suu Kyi and the NLD are accepted, something which had been unthinkable until recently. As this publication was going to press, a revision of the Burmese Press Law was under way. Further relaxation of press regulations is anticipated.

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As the country's political system lacks transparency and accountability, corruption is rampant at both the national and local levels. Bribery, often referred as “tea money,” is prevalent in every activity affiliated with state officials or anyone in a position of power. Economic reforms that had begun under the military regime were continued in 2011. This included the privatisation of many state assets. Some observers fear that, like in the past, this might primarily benefit family members and associates of senior government officials and risk the creation of a new generation of business magnates whose control of industries depends on government connections and other forms of collusion. In Transparency International's 2011 Corruption Perceptions Index,

Myanmar showed signs of positive change in 2012. The government has released hundreds of political prisoners, enacted laws on forming trade unions and freedom of assembly, eased official media censorship and allowed the opposition to register and contest by-elections. Peace treaties have been concluded with almost all of the ethnic armed groups (the exception being the Kachin Independence Organisation).

But some political prisoners remain and simmering ethnic tensions have led to clashes in Rakhine State. Reports accuse Burmese security forces of using forced labour and extrajudicial killings.

Neither real nor intellectual property is protected. As a consequence, competition between economic actors is low. Big state-owned enterprises and companies with ties to the army dominate the industry. Private and foreign companies who are in dispute with governmental organisations have little chance of fair arbitration. Those who have been illegally expropriated rarely get compensated.

Government expenditures (including consumption and transfer payments) have risen to 11.5%. The low level of government spending is due to a general lack of capacity rather than restraint on the part of the government.

With top income tax rate of 20% and a top corporate tax rate of 30%, Myanmar has moderately high tax rates. The overall tax revenue has risen to about 5% of the GDP.

Private entrepreneurs until now had limited access to credit and the government controlled banking through state-owned institutions which tended to direct funds to big government or army projects rather than to private businesses. But a number of prudent reforms is in the making. Government initiatives provide credit to smes through short-term loans. An amendment of the Central Bank of Myanmar Law of 1990 will give the central bank operational autonomy. It will now be able to set interest rates, manage reserves, and conduct open market operations without prior approval from the Ministry of Finance. In April 2012 the exchange rate of Myanmar‘s currency was set at 818 kyat to the dollar (for decades the official exchange rate had been rather unrealistic 6.2 kyat to the

Myanmar has been a WTO member since 1995. However, because of extensive intervention on the part of the state, foreign trade is more or less limited to the export of natural gas, agricultural products, gem stones and timber. Gas exports are managed by the state-owned Myanma Oil and Gas Enterprise through joint ventures with foreign companies. The freedom of private entrepreneurs to engage in international trade is restricted by import/export bans and regulations, high taxes and fees, complicated permit and licensing requirements, frequent policy changes, corruption, and import and export quotas for certain goods.