26.06.2020

A wake-up call to cooperation in Myanmar?

The coronavirus pandemic is uncovering the possible downfalls of Myanmar’s co-dependent development model. In a post-COVID world, the Southeast Asian latecomer needs a new model that prioritises key indigenous sectors over growth models based on international investments.

Aerial view of boats near the market on Inle Lake, Myanmar © istock / Oleh_Slobodeniuk

The range of challenges to economic development, state-building, peace and social welfare during Myanmar’s transformation process are immense. Add to that common political transformation hold-ups including those induced by established elites (i.e. patronage and clientelism), chauvinistic ideologies, enduring polarisation rooted in history and political infighting and the result is a perfect mix for a self-absorbed political landscape. In this mélange a lacking oversight and ability among policymakers and stakeholders in connecting domestic challenges with global trends is not surprising. Although in the initial stages of the coronavirus pandemic was only adding to the long list of challenges, it became soon, with little delay, the government’s priority.

Although at first it was questionable whether it would amplify domestic political demeanour, this trend has not come true. In fact, it became possible for the fragmented government system to set up complementing initiatives rather than competing ones.  What is still missing is a vision of how to create a sustainable economic and social development model after the pandemic. Here the ability for cooperation among government agencies and key stakeholders of Myanmar’s vast political landscape to focus on issues and compromise will finally be put to the test.

 

Myanmar’s response to the crisis

Due to the unpredictability of the COVID-19 pandemic, most political actors came to realise that it was impossible to politically capitalize from the crisis. Even overselling performance and achievements in managing the crisis could easily backfire. Overall, it appears that none of the government actors and agencies have sought to take direct responsibility. Rather a pragmatic approach within the means at hand came onto the agenda. In view of the astonishingly low number of infections, it still remains unclear whether or not Myanmar was a success story, if it was simply luck or the real story went unnoticed.

Given the country’s not too distant history, the confidence in the capabilities of established elites and the intentions of the military leadership in handling the crisis has been generally low. After Vice-President U Myint Swe instated the Coronavirus Disease 2019 Containment and Emergency Response Committee in late March, thereby partially duplicating the previously appointed Central Committee for Prevention, Control and Treatment of Coronavirus Disease 2019 under the chairwomanship of State Councillor Aung San Suu Kyi, some observers interpreted the move as a quasi mini-coup.

Indeed, at first sight the initiative looked like a conservative, security sector-centred approach that would take over and, opposed to its civilian counterpart, demonstrate resolve in order to achieve political gains. The new commission e.g. excluded crucial institutions such as the Ministry of Health and Sports and visible increases of grassroots surveillance and monitoring of movement in the wards underpinned this kind of assumption. Yet, the previously set up committee similarly did neither reflect a more sensitive civil-military balance nor did any consultation take place in that direction. A response was, thus, only a matter of time. While at this stage both committees are in session, a modus operandi has evolved that divides tasks of public health and enforcement/tracing in managing the crisis.  

In the short- to mid-term the government has achieved a range of results that will help to the country to soften the Corona’s impact on Myanmar’s economy and society. In mid-April the government succeeded to secure a $50 million fast track World Bank credit for an Emergency Response project in order to fill the financial gaps in strengthening its public health emergency preparedness according to its National Emergency Response Plan. Likewise the EU created an EUR 5 million COVID-19 emergency fund in order to assist garment workers who became unemployed during the crisis. It was thereby adding to the USD 25 million Livelihoods and Food Security Fund that was also supported by Australian and the US donations.

 

Managing the impact on the labour market

Overall, the task of handling the social consequences of the coronavirus crisis in Myanmar’s labour market is not an easy one. The most vulnerable groups turned out to be the cross-cutting informal sector (including day labourers) for which some have estimated that it amounts to up to 80 per cent of Myanmar’s work force (nearly 18 million) and the 4 million migrant workers in other countries. Those who tried to return during the crisis found themselves in a limbo of quarantine camps by the border.

At the same time, the key economic pillars have suffered as well. In particular the agricultural sector which is accounting for about 30 per cent of the GDP had problems because harvests did not find their way onto sales markets due to closed borders. Additionally, state of the art storage facilities and transport systems are still lacking. The industrial manufacturing sector also contributes 30 per cent of the GDP. Most manufacturing companies are micro-sized and a modern industry sector is still on the rise. Therefore, estimates about how much the sector has suffered from cuts in supply and value chains are still difficult to make.

While the government was engaged in tripartite talks in order to handle the crisis, the legal means and standards are often still lacking the ability to facilitate better protection of the employees. In view of labour strikes, reductions of work force, layoffs of trade union members, the government asked the parties to find a compromise. As early as in March, it also announced a Kyat 100 billion loan programme for employers in the garment industry, hotel sector and SMEs. During the pandemic, more than 200,000 workers became unemployed. Many companies only paid compensations according to current minimum wage (in need for review) and not actual incomes.

 

What’s for the long-term?

Possible disruptors to Myanmar’s current development model are manifold. Doubts that there may not be a return to the way things were before the COVID-19 pandemic are justified. At this stage, the indirect international implications of the crisis outweigh any direct costs for Myanmar’s vulnerable economy. Industries that are dependent on value and supply chains and exports or the tourism sector are already heavily affected.

With fragmenting globalization, the reliance on China and other East Asian Partners such as Japan and Korea as investment partners poses a high risk. European and US firms have by and large abstained from entering the market to begin with, most likely due to political reasons. Especially China is struggling to maintain the status quo of globalization. With increasing tensions in trade and access with the US and the EU, the primary target region for open markets and investment will be the immediate Asian neighbourhood. Yet, investments there depend on international markets as well. It is thus uncertain, whether industries will return or stay in Myanmar, or concentrate on economically more advanced countries with higher efficiency rates in the region.

Since Myanmar at this stage is not only vulnerable to international trends but internal governance and development are also constrained by factors that the government cannot possibly solve alone, a broader social alliance of stakeholders, government, key businesses, sectorial associations, trade unions, military and ethnic representations would be vital. Such an approach would need to be laid out in a roadmap with a clear timeline that also emphasizes two elements: a continuous focus on future industries, technologies and strategies for leap frogging, as well as a new development model that prioritises key indigenous sectors over growth models based on international investments.  This would not only help to strengthen the economy’s resilience but also reduce international dependencies.

Bernt Berger is the Director of the FES Myanmar Office. He previously led the Asia programme at the German Council on Foreign Relations (DGAP) and headed the Stockholm Office of the China and Global Security program for the Stockholm International Peace Research Institute (SIPRI). Prior to that he served as head of the Asia programme at the Institute for Security and Development Policy (ISDP) in Stockholm and held research positions at the Stiftung Wissenschaft und Politik (SWP) in Berlin and at the Institute for Peace Research and Security Policy (IFSH) in Hamburg. His work experience in Asia includes positions as a guest researcher at the Shanghai Institutes for International Studies (SIIS) and a guest professorship at the School of Advanced International and Area Studies at the East China Normal University (ECNU).

The views expressed in this blog series are not necessarily those of FES.

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