Myanmar (Burma)

COUNTRY PROFILE 2001

Myanmar (Burma)

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Comparative economic indicators, 2000

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Contents

3 Basic data

4 Political background 4 Historical background 7 Constitution and institutions 9 Political forces 11 International relations and defence

12 Resources and infrastructure 12 Population 14 Education 14 Health 15 Natural resources and the environment 16 Transport and communications 17 Energy provision

18 The economy 18 Economic structure 19 Economic policy 23 Economic performance 25 Regional trends

26 Economic sectors 26 Agriculture, forestry and fishing 28 Mining and semi-processing 30 Manufacturing 31 Construction 31 Financial services 33 Other services

34 The external sector 34 Trade in goods 38 Invisibles and the current account 39 Capital flows and foreign debt 41 Foreign reserves and the exchange rate

43 Appendices 43 Regional organisations 44 Sources of information 45 Reference tables 45 Population estimates 46 Employment by sector 46 Labour force 46 Transport statistics 47 National energy statistics 47 Government finances 47 Money supply, credit and interest rates 48 Gross domestic product 58 Gross domestic product by expenditure 49 Gross domestic product by sector 49 Consumer price index

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49 Output and yields of key crops 50 Production of livestock and fish 50 Minerals production 51 Manufacturing production 51 Construction and renovation work 52 Banking statistics 52 Tourist arrivals and receipts 52 Exports 53 Imports 53 Key exports and imports (volume) 54 Main trading partners 54 Balance of payments, IMF series 55 External debt 55 Net official development assistance 56 Foreign reserves 56 Exchange rates

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Myanmar (Burma)

Basic data

Land area 676,577 sq km

Population 45.1m (mid-1999/2000)

Main towns Population in ‘000 (1983 census)

Yangon (capital) 2,513 Bago 320 Mandalay 533 Moulmein 220

Note. In the text, places are referred to by their pre-1989 names, apart from Yangon and Myanmar. Pre-1989 names appear in brackets on the map at the beginning of this report

Climate Subtropical

Weather in Yangon Hottest month, April, 24-36°C; coldest month, January, 18-23°C; driest month, (altitude 5 metres) January, 3 mm average rainfall; wettest month, July, 582 mm average rainfall

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

Measures UK (metric) system. Some other units are in use, for example 0.9842 long or imperial tons=1 metric tonne=1.10231 short tons. Some 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)=100 pyas. Average official exchange rate in 2000: Kt6.5:US$1 in fiscal year 2000/2001: Average free-market exchange rate around Kt355:US$1; in 2000/2001 (based on private estimates)

Note. In the text, US dollar conversions are given at the official exchange rate followed by the free-market exchange rate

Time 6.5 hours ahead of GMT

Fiscal year April 1st-March 30th

Public holidays, 2002 January 4th (Independence Day); February 12th (Union Day); March 2nd (Peasants’ Day); March 27th (Armed Forces’ Day); May 1st (Workers’ Day); July 19th (Martyrs’ Day); December 25th (Christmas Day); plus other holidays that depend on lunar sightings

Political background

Myanmar’s current ruling military junta—known as the State Peace and Development Council (SPDC)—came to power in 1988 following widespread pro-democracy protests. The main opposition party, the National League for Democracy (NLD), won the last election, held in May 1990. However, the results were not recognised by the junta, which has clung on to power. In late 2000 limited contact began between the junta and the NLD, resulting in the release of some political prisoners in 2001.

Historical background

From colony to In 1886 Burma (as Myanmar was known until the current junta changed the independent country country’s name in 1989) came under British control, following three Anglo- Burmese wars. A nationalist backlash against British colonial rule led to the creation of the pro-independence Anti-Fascist People’s Freedom League (AFPFL), under the leadership of Aung San and U Nu, and independence negotiations were begun. The AFPFL won a landslide election victory in April 1947. However, in July 1947, Aung San was assassinated; U Nu subsequently became the prime minister of the Union of Burma when it finally gained independence on January 4th 1948.

A long history of The AFPFL won two further elections, and Myanmar enjoyed 12 years of military rule democratic government—interrupted only by a two-year period under a military caretaker government headed by the army chief-of-staff, General Ne Win. However, in March 1962, General Ne Win launched a coup, replacing the government with a military-run revolutionary council, plunging Myanmar into an ongoing era of military rule.

In 1972, in the face of growing discontent, General Ne Win and his senior commanders retired from the army, but remained in control of government. In a bid to find a new direction, in 1974 a new constitution declared Myanmar to be a socialist one-party state, ruled by the military’s Burma Socialist Programme Party (BSPP, or Lanzin Party). The BSPP embarked on the so-called Burmese Way to Socialism, of which the central elements were economic self- sufficiency. Myanmar remained shut off from the outside world, a policy that resulted in economic stagnation.

Pro-democracy movement In October 1987, as the economy deteriorated further, student demonstrations is crushed in 1988 were held in the capital, Yangon. Widespread protests began in March 1988, increasingly focused around the leadership of Aung San Suu Kyi, the daughter of the independence-era leader, Aung San. In July 1988 General Ne Win resigned as chairman of the BSPP, and was succeeded by General Sein Lwin, but the protests gathered strength until, on August 8th 1988, troops were ordered to fire on unarmed demonstrators. Several thousand civilians are estimated to have been killed and many more injured in the ensuing bloodbath.

The demonstrations continued, forcing General Sein Lwin to resign within weeks of coming to power. His successor—a civilian, Maung Maung—lasted less

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than one month, during which time a multiparty election was planned. On September 18th 1988 the military again formally took power, nominally under the leadership of General Saw Maung—although with General Ne Win’s involvement behind the scenes. The junta formed a military council, called the State Law and Order Restoration Council (SLORC), to rule the country. The junta also dismantled the socialist one-party order, and bowed to the demonstrators’ demands for an election to be held.

The junta rejects the result More than 200 parties registered for the 1990 election. The main contenders of the 1990 election were the National Unity Party (NUP, a renamed BSPP), the NLD, and key ethnically based parties. Although Aung San Suu Kyi was placed under house arrest, the election resulted in an overwhelming victory for her party, which won 60% of the vote. This would have translated into 392 seats in the 485-seat legislature, compared with only ten seats won by the pro-junta NUP. However, the junta refused to accept the result, and has remained in power ever since.

Senior General Than Shwe, the commander-in-chief of the army, succeeded General Saw Maung as chairman of the junta’s ruling council in 1992. On November 15th 1997 the junta was reshuffled and renamed the State Peace and Development Council (SPDC; see Constitution and institutions), but there was no marked change in its policies.

General election results, May 1990

% of vote No. of seats National League for Democracy 59.9 392 Shan Nationalities League for Democracy 1.7 23 Arakan League for Democracy 1.2 11 National Unity Party 21.2 10 Mon National Democratic Front 1.0 5 National Democratic Party for Human Rights 0.9 4 Chin National League for Democracy 0.4 3 Party for National Democracy 0.5 3 Union Paoh National Organisation 0.3 3 Kachin State National Congress for Democracy 0.1 3 Others 12.8 28 Total 100.0 485 Source: Press reports.

The junta tries to sideline Throughout the 1990s the junta made every effort to entrench itself and to the NLD during the 1990s sideline the NLD. To bolster support, the junta formed a “welfare” organisation in 1993 known as the Union Solidarity Development Association (USDA). The junta has since tried to develop the USDA into a political support block, using pressure tactics to boost membership. By 2001 the junta claimed USDA membership had reached 16m.

The junta has also pledged to hold another election once a new constitution had been completed (see Constitution and institutions). However, work on the junta’s version of the constitution—which will enshrine a central place in political life for the military, including setting aside seats in any future

parliament—has progressed at a glacial pace. The National Convention, the body tasked with drafting the constitution, has not met for years. Yet some within the democratic opposition fear a junta-appointed committee could unveil a constitution, clearing the way for a fresh election, once they feel confident of victory.

Whilst trying to entrench its hold on the country, the junta has also taken steps to sideline the NLD. Although the junta has not dared to make the NLD illegal, most normal political activities are severely restricted, and NLD members and their families have been subjected to severe harassment, including imprisonment and torture. Through the late 1990s most NLD party offices were forced to close and hundreds of NLD supporters were detained. Aung San Suu Kyi was released from house arrest in 1995, but returned to confinement in September 2000 following her attempts to leave the capital, Yangon, to attend party meetings elsewhere in the country.

The NLD fought back as best it could, pushing for international support and calling for the result of the 1990 election to be recognised. In September 1998 the NLD formed a ten-member body, known as the Committee Representing the People’s Parliament (CRPP), to take decisions on behalf of arrested NLD deputies. In September 2000 the NLD took a further step, announcing that it would begin work on a new constitution. While these efforts have yielded little except statements, they have highlighted the NLD’s continued demands for democracy.

Talks between the junta Faced with a deteriorating economy, continued international pressure, and and NLD start in late 2000 public disaffection, there appeared to be a modest thaw in the junta’s approach starting from late 2000. The chairman of the SPDC, Senior General Than Shwe, and his ally Lieutenant-General Khin Nyunt, opened a line of communication with Aung San Suu Kyi. Both sides stated that the talks were a confidence- building measure, and would remain low key—no official statements were made about their content, although the UN confirmed that dialogue was taking place. Contact continued through the first half of 2001, despite concerns that the process had stalled.

A hard-line faction within the junta that is loyal to SPDC vice-chairman, General Maung Aye, is believed to be resistant to the need for political change. Even among Khin Nyunt allies, there is little appetite for radical political reform. Rather, the SPDC is believed to favour a modest thaw—perhaps the formation of a transitional government including a greater number of civilian members. In the past, such an offer would have been dismissed as inadequate by the NLD. However, after more than a decade of impasse there appears to be a growing acceptance among key NLD leaders that the SPDC is highly unlikely to implement the 1990 election result.

The junta is opposed by The junta continues to be widely feared and disliked. In addition to the NLD, other groups the junta faces opposition from three broad groups—students, monks and ethnic minority groups. Students played a prominent role in organising the 1988 protests, a fact that has led the current junta to close the universities for much of its 12 years in power. The junta risked reopening many university

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classes in 2000, but remains jittery; many classes have been moved far from town centres to prevent students gathering. Religious leaders also played a key role in the pro-democracy movement of 1988, and have also been involved in subsequent protests. Finally, Myanmar has for decades faced armed opposition from a web of ethnic minority groups in the border states.

To counter these sources of opposition, the junta has developed a vast network of informers in most institutions—including the civil service and colleges. Even the fire brigade has been developed into a pro-junta group. Almost all information is controlled and heavily censored. The result is what Aung San Suu Kyi has termed a “blanket of fear” over the country. Yet there is probably very little real support for the junta within the USDA and other notionally pro-junta groups. The increasingly desperate political and economic situation may also have weakened support for the junta within the rank and file of the armed forces.

Important recent events

September 1988: The junta seizes power and forms the State Law and Order Restoration Council (SLORC).

May 1990: An election is held. The National League for Democracy (NLD) wins conclusively, but the results are not recognised.

July 1995: The leader of the NLD, Aung San Suu Kyi, is released from almost six years of house arrest.

November 1997: The SLORC is reshuffled and renamed the State Peace and Development Council (SPDC), but there is no change in policy.

May 1998: The NLD demands that parliament is convened. Hundreds of NLD members are detained.

September 2000: The NLD announces plans to draft its own constitution. Aung San Suu Kyi and other senior leaders are once again placed under virtual house arrest.

October 2000: Low-key talks between the NLD and the SPDC begin.

January 2001: First group of NLD members released.

June 2001: Some NLD offices given permission to reopen.

Constitution and institutions

No new constitution—yet In 1988 the junta suspended the 1974 constitution and abolished all state institutions, including parliament and the civilian courts. Myanmar still operates without a constitution, although a National Convention has drawn up the principles for a new one, and a junta-controlled committee is continuing to work on a new draft (see box below). In September 2000 the NLD announced plans to begin work on its own draft of the constitution, a move strongly resisted by the junta.

The National Convention

The junta claimed (after the event) that the 1990 election had been held solely to elect representatives to a body assigned with the task of drawing up a new constitution, called the National Convention. The National Convention first met in January 1993. However, of the National Convention’s 702 members only 106 (15%) were elected representatives, the rest being appointed by the junta. In November 1995 the National League for Democracy (NLD) was expelled from the convention for protesting against tight restrictions on debate.

By March 1996, at the close of its most recent session, the convention had identified 104 basic principles, covering, among other things:

• a central role for the armed forces (known as the Tatmadaw), to be guaranteed by a range of measures including reserving for the army one-quarter of the seats in both a lower and upper house of parliament; the military will also have the right to make appointments to key government posts (such as the ministries of defence and home affairs); and

• the effective exclusion of Aung San Suu Kyi as head of state (by requiring that the head of state should have been resident in Myanmar continuously for the previous 20 years and should not have been married to a foreigner).

Although the National Convention has not met since early 1996, the National Convention’s Convening Committee has held frequent meetings, and work on the constitution seems to be continuing.

The SPDC takes the key In November 1997 the ruling military council was renamed the SPDC. policy decisions However, the four most senior figures retained their posts in the new line-up. Senior General Than Shwe and General Maung Aye remained as chairman and vice-chairman respectively. Lieutenant-General Khin Nyunt retained his post as the council’s Secretary-1, and Lieutenant-General Tin Oo remained as Secretary-2. The newly created post of Secretary-3 was given to Lieutenant- General Win Myint. The size of the council was reduced from 21 to 19. The 12 regional military commanders (six of whom were newly appointed) and heads of the navy and air force were appointed as the remaining 14 members of the council. General Tin Oo was subsequently killed in a helicopter crash, but his post has been left vacant.

The SPDC, rather than the cabinet, takes all key policy decisions. In 1998-99 new committees were set up to oversee agricultural policy, industrial policy and trade and foreign exchange—the latter appear to be under the control of General Maung Aye. The regional military commanders also wield considerable power in the areas under their command.

The inner workings of the junta are little known; it is highly secretive, and even senior diplomats in Yangon have limited opportunities for meaningful contact. There are believed to be divisions within the junta, particularly between the army commander, General Maung Aye, and the intelligence chief, Lieutenant-General Khin Nyunt (see Main political figures box). General

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Maung Aye seemed to re-assert control over policymaking in 1999-2000. By late 2000 there were rumours that General Than Shwewidely believed to hold the balance of power between the two factionswas in ill health and on the point of retiring, a move that some believe could precipitate an open power struggle. However, by 2001 General Khin Nyunt appeared once again to be in a stronger position, enabling talks to begin with the NLD.

The cabinet has more The cabinet forms the second tier of the military government; key decisions are limited influence taken by the SPDC and its committees. The last major reshuffle of the cabinet was in late 1997, when two new ministries were added (electricity and military affairs) and 22 new ministers were appointed. General Than Shwe (the only person with a post in both the cabinet and the SPDC) remained as prime minister. The large majority of the 40 cabinet members are high-ranking military figures.

A controlled judiciary and Civilian courts were fully reinstated in 1992, but many judges still have military many political prisoners backgrounds. Pro-democracy campaigners 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 between seven and 20 years. Conditions in the jails are very harsh; torture is often used against the junta’s opponents. There are estimated to be at least 1,000 political prisonersdespite the junta’s denials.

Political forces

The military According to the International Institute for Strategic Studies, the armed forces (including police and militias) expanded from 170,000 in 1988 to 429,000 by 2000. A widespread military intelligence network extends the military’s reach.

One threat to the junta comes from weakening support among the military rank and file, where poor conditions and low pay may be affecting morale. There are also occasional reports that some officers have been arrested for expressing support for the NLD.

Political parties Only nine of the 93 parties that contested the May 1990 election are still legally recognised. Of the 485 deputies elected in 1990, the majority have been detained or disqualified, resigned under pressure, or gone into exile.

The NLD The most important source of opposition to the junta is the NLD. The NLD remains a legal party, but operates under severe restrictions: its leaders are prevented from travelling and from speaking in public; party meetings and publications are restricted. Many thousands of members have resigned and numerous party offices have closed—although some in Yangon were permitted to reopen in 2001.

The lack of political change since 1990 has also resulted in some tensions within the NLD itself, including occasional criticism of the tactics of senior NLD leaders. However, there seems to be no threat to the core NLD leadership.

The USDA The military junta established the USDA in 1993, initially to undertake public works projects. In 1997 the junta explicitly recognised the USDA as its political wing and called for its members to be trained as the “next generation” of leaders. The junta’s head, General Than Shwe, is head of the USDA. Heavy-handed recruitment—civil servants and high school students are pressured into joining—has been successful. By 2001 membership had risen to around 16m, organised in local groups throughout much of the country. USDA members act as the junta’s eyes and ears, while some USDA members have also received military training. However, real support for the junta from within the USDA is believed to be limited.

In 2001 the junta also began efforts to rejuvenate its old political wing, the National Unity Party, as well as a war veterans association.

Main political figures

Aung San Suu Kyi: Secretary-general of the National League for Democracy (NLD). Daughter of the independence hero, Aung San, she is extremely charismatic and her personal popularity remains very high.

Tin Oo: Vice-chairman of the NLD, and one of Aung San Suu Kyi’s closest allies. A former military man.

Senior General Than Shwe: Chairman of the State Peace and Development Council (SPDC), prime minister, defence minister and commander-in-chief of the armed forces. Seen as mediator between factions within the junta. Rumoured to be in ill health and on the brink of retirement.

General Maung Aye: Vice-chairman of the SPDC, deputy commander-in- chief of the armed forces and army commander. In theory, second in line to General Than Shwe. Regarded as a hardline opponent of dialogue with the NLD, who favours a return to isolationist economic policies.

Lieutenant-General Khin Nyunt: Secretary-1 of the SPDC. Has a background in military intelligence. Seen as the main force behind the recent dialogue with the NLD.

General Ne Win: Came to power in the 1962 coup and did not give up his last official post until July 1988. Some think that he still wields considerable influence over other junta members, but he is now rarely seen in public and rumours surface periodically that he is seriously ill.

Ethnic groups are still The question of the degree of autonomy to be given to Myanmar’s many fighting for autonomy ethnic groups has never been adequately settled, and at times more than 40 ethnic insurgent groups have been active. In 1989 a series of ceasefires was concluded with some of the 29 groups that were thought still to be active at that time. However, some of these ceasefires have unravelled in recent years. In 2001 the junta continued to meet armed resistance from some ethnic groups. The largest group not to have signed a ceasefire is the Karen National Union (KNU) and its armed wing, the Karen National Liberation Army (KNLA).

The junta has retaliated with harsh policies including forced relocation of ethnic minority villages and the use of forced labour. International agencies,

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including the UN, have been highly critical of the torture, rape and extra- judicial killings of ethnic minority members. As a result of such policies and the continued fighting, there are around 120,000 ethnic minority refugees in camps in Thailand—and an unknown number of ethnic minority people displaced from their homes inside Myanmar.

There are no direct links between these ethnic insurgent groups and the NLD. However, a number of the ethnic minority political and insurgent groups have voiced support for the aims of the NLD and the restoration of democracy.

Political groups in exile A number of pro-democracy political groups operate outside of Myanmar. Two prominent groups are The National Coalition Government of the Union of Burma (NCGUB), a government-in-exile comprising those elected in 1990, and the All Burma Students Democratic Front (ABSDF), composed of students who fled the 1988 massacres. The ABSDF has formed a political bloc to campaign for change from its base in Thailand.

International relations and defence

Frosty relations with the US The junta has been shunned by many countries and international bodies for and EU failing to recognise the 1990 election, as well as for its poor record on human and labour rights. Most donors—including Japan and the US—suspended aid after the September 1988 coup. The US has imposed an aid embargo, and in April 1997 banned new investment in Myanmar by US companies. The EU and other industrialised countries (such as Canada) have removed trade and aid benefits.

Since 1998 there has been a slight thaw as some members of the international community have looked for ways to break the stalemate. The UN reportedly offered technical assistance to the junta in exchange for political reforms, while the EU has sent two delegations to talk to the junta. Japan has set up a joint committee with the junta to discuss economic policy, and has resumed some aid. However, Myanmar’s economic and diplomatic isolation will not be fully overcome unless there are steps towards political reform.

Friends and allies The Association of South-East Asian Nations (ASEAN) has followed a policy of “constructive engagement” with the junta, and in July 1997 Myanmar was admitted as a full member of ASEAN. Plans to send three ASEAN representatives to the junta to push for change were vetoed in September 2000 by ASEAN members such as Vietnam. Malaysia has been particularly supportive, yet has also started to exert some influence on the SPDC. Pressure from Malaysia may have been instrumental in persuading the junta to open dialogue with the NLD in late 2000.

The junta is trying to reduce its international isolation by deepening ties with non-ASEAN neighbours including India and Pakistan. Part of the motivation is to reduce reliance on China, by far the junta’s most important ally. China has provided aid and military hardware, while economic ties have flourished, resulting in a wave of Chinese investment. Fears have grown among Myanmar’s neighbours that the ties go even deeper; India has accused the junta of allowing China to set up military installations on Myanmar’s Coco Islands.

Border troubles Relations with Thailand soured in October 1999 when the junta blamed the Thai government for freeing armed activists who attacked the Myanmar embassy in Bangkok. Thailand in turn was angered in early 2000 when Myanmar insurgents laid siege to a Thai hospital. In 2000 and 2001 a series of skirmishes between SPDC troops and ethnic forces spilled over onto Thai soil, resulting in exchanges of fire with the Thai military. Thai officials have become more outspoken in their criticism of the flow of drugs and illegal migrants from Myanmar. The presence of around 120,000 refugees from Myanmar in camps in Thailand has further strained relations.

Resources and infrastructure

Population

Population, 1999/2000 (mid-fiscal year) Total (m) 45.1 % change 1.3 Source: IMF, International Financial Statistics.

Population statistics Myanmar’s population is relatively young (with 33.2% of the population in the are dubious 0-14 age group in 1997/98, the latest available data). In 1999/2000 total population was estimated at 45.1m. Other unpublished official estimates have put the population level for the same year at 49.1m. Adding to the problems, population data show erratic growth patterns, with the population either jumping by 3.8% in 1998/99, or falling by 4.1%, depending on the data quoted. According to a UNICEF report, an internal evaluation of population data in 1994 found 40% under-reporting for births and 60% for deaths. Another complicating factor is the flow of refugees and migrant workers (see box below). It is possible that the recent large swings in population figures reflects efforts to correct some of these data problems. However, as a result, Myanmar’s population data must be treated as approximate. (See Reference table 1 for data on population growth and age structure.)

Myanmar’s mobile population: refugees, migrant workers and internally displaced people

A repressive regime and a stagnant economy have resulted in a large flow of workers and refugees from Myanmar to neighbouring countries. Thailand alone has an estimated 1m illegal migrant workers—the majority from Myanmar—as well as around 120,000 refugees from Myanmar housed in border camps.

Inside Myanmar, continued fighting in some border regions, and the junta’s harsh policies against ethnic minority members, including forced relocation, have resulted in many people being displaced from their homes. The UN High Commissioner for Refugees has been unable to estimate the numbers of such internally displaced people; exile groups estimate it could be hundreds of thousands.

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The labour force Myanmar’s labour force numbered 18.8m in 1995/96 (the latest available data), of which 64% were employed in the agricultural sector. The lack of investment in education and the prolonged closure of the universities in recent years have had a detrimental impact on the quality of the labour force. Unskilled labour is widely available. There is no minimum wage, but holiday and other entitlements are set out under the 1954 Social Security Act. (See Reference tables 2 and 3 for data on employment and the labour force.)

Data on ethnic minorities Data on the size of Myanmar’s numerous ethnic groups are contentious: no are contentious detailed census of ethnic minorities has been attempted since 1931. The 1931 census classified 65% of the population as belonging to the majority Burman group, followed by the Karen (9%), the Shan (7%), the Chin (2%), the Mon (2%), the Kachin (1%) and the Wa (1%). The majority of ethnic minorities live in the border states—although there are sizeable minority populations in the Burman-majority divisions.

Religion and language About 89% of the population are Buddhist. An estimated 4% of the population are Christian (including large numbers of Karen, Karenni and Kachin) and another 4% are Muslim, most heavily concentrated in Arakan state. A number of local languages are spoken among minority groups, but Burmese is the official language of the state and is widely spoken and understood. There are tensions between the Burman majority and a number of the smaller ethnic groups, and periodic problems between members of the different religions.

Population by state/division: census results, Apr 1983

Annual Population growtha Area Density State/division ‘000 % (%) (sq km) (per sq km) Kachin 904 2.56 2.05 89,042 10 Kayah 168 0.48 2.89 11,730 14 Karen 1,058 3.00 2.11 30,381 35 Chin 369 1.05 1.33 36,017 10 Sagaing 3,856 10.92 2.14 94,623 41 Tenasserim 918 2.60 2.46 43,344 21 Bago 3,800 10.76 1.80 39,404 96 Magwe 3,241 9.18 2.09 44,820 72 Mandalay 4,581 12.98 2.25 37,021 124 Mon 1,682 4.76 2.50 12,295 137 Arakan 2,046 5.80 1.70 36,778 56 Yangon 3,974 11.26 2.20 10,171 391 Shan 3,719 10.53 1.58 155,801 24 Ayeyarwady 4,991 14.14 1.85 35,136 142 Total 35,307 100.00 2.02 676,563 52

a Average for 1973–83.

Source: 1983 census returns.

Education

Political turmoil has For more than ten years the higher educational system has been severely disrupted higher education disrupted by regular closures aimed at curbing student dissent. The majority of universities were reopened in 2000, but courses are being significantly shortened in order to push the huge backlog of studentsmany of whom have been waiting years to start collegethrough the system.

Problems with quality The junta’s disdain for education is reflected in low spending—equivalent to around 1% of GDP throughout the 1990s, compared with around 3% of GDP in other low-income Asian economies. Official figures still put the adult literacy rate at just under 83% in 1997, comparable with rates in Malaysia and Indonesia. However, this may well be a considerable overestimate. According to the Ministry of Education’s own surveys, only around 30% of children now complete primary school education. Many children are taken out of school either because their parents cannot afford ever-increasing unofficial fees (charged to offset weak state spending), or because falling family incomes mean that children start work early. Teachers in state-funded schools are very poorly paid, and the quality of teaching is low.

There is a growing informal school system—including private classes on such subjects as English language and computing—but these are mainly in urban areas, and are only accessible to the relatively well-off. Traditional monastic schools, which have historically played an important role in education, can only go so far in making up the deficit. As a result of these problems, the overall standard of education in Myanmar, particularly in rural areas, is believed to have declined sharply in recent years.

Health

Health indicators give a A UNICEF report has described a “dramatic decline” in spending on healthcare gloomy picture through the 1990s. Spending on health was equivalent to just 0.3% of GDP in 1997/98. Private clinics have sprung up, but they are relatively expensive and located mainly in urban areas. As a result, much of the population has access to little or no basic healthcare. Consequently, health and nutrition standards are poor; according to World Bank estimates, in 1997, 39% of children under the age of five in Myanmar were moderately malnourished. Border areas suffer the worst healthcare provision, with a higher incidence of diseases such as HIV/AIDS and malaria. According to World Bank estimates, life expectancy in Myanmar averaged 60 years through 1993-98, compared with an East Asian average of 69 years.

HIV/AIDS is a According to a 1995 survey, 56.5% of Myanmar’s injecting drug users were growing problem infected with HIV. By end-1999, UN agencies estimated that around half a million people in the country were HIV-positive—far higher than the official estimate. Rates of infection are high and increasing among intravenous drug users and sex workers (amid high levels of poverty, there is a flourishing trade in women and children sold into prostitution in Myanmar, China and Thailand). Migrant workers are also a factor in spreading the disease to other

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groups. For several years the junta was reluctant to recognise the problem, and outside assistance remains limited.

Natural resources and the environment

Potentially rich Myanmar has considerable agricultural potential. The predominantly tropical agricultural resources climate allows a wide variety of crops to be grown; among the most economically important are rice, maize, wheat, pulses, oilseeds, timber, rubber, jute, cotton, and many fruits and spices. (Myanmar is, in addition, the world’s second largest producer of opium.)

Much of the country is mountainous and forested, and the area of land under cultivation remains unusually low. In 1999/2000 only 14% of the total land area was cultivated. A further 11% was classified as “wasteland suitable for cultivation”. Since 1999 the junta has offered incentives to bring more land into production (see The economy: Economic policy).

Forest resources According to official data, 48% of total land area was forested in 1999/2000. The most economically important forest resources are teak and hardwoods, as well as oil-bearing trees and bamboo. Myanmar accounts for around 75% of the world’s remaining teak, but hardwood resources are endangered by overlogging.

Water-based resources Myanmar’s rivers and 2,832-km coastline provide rich waters for fishing. According to official estimates, the maximum sustainable yield for marine fishing is 1.1m tonnes/year, of which only an estimated 337,000 tonnes was exploited in 1999/2000. Since October 1999, the junta has banned Thai trawlers from Myanmar waters. The hope is that Myanmar’s own fishing industry will benefit; although the fleet is poorly equipped, there has been some foreign interest in this sector. In addition to fishing, Myanmar’s waters have massive hydroelectricity potential, of which only around 1% is currently estimated to be exploited. However, several Chinese firms plan investments in this area, while surveying has already begun for a controversial dam project on the environmentally sensitive Salween river.

Minerals and metals Myanmar’s mountains contain reserves of a wide variety of minerals, ores and gemstones, including: copper, gold, nickel, coal, lead, zinc, silver, gemstones, tungsten and tin. A full assessment of these resources has not been undertaken, but some mining specialists believe that Myanmar could be a major producer of several minerals, including tin and copper. All minerals and metals belong to the state (in some cases this right has been ceded to regional military commanders). Investors must negotiate a profit- or production-sharing agreement with the state (or one of six state-owned mining companies), or in some cases with the regional military command. In addition, Myanmar has major offshore oil and gas reserves, some of which are already being exploited in co-operation with foreign firms.

Transport and communications

Road, rail and waterways Transport in Myanmar is slow and unreliable. All but the major roads are unpaved, and during the rainy season some of the road network becomes impassable. Efforts are being made to repair and extend the road system and a bridge-building programme is helping to reduce journey times between some cities. The public transport system, including buses and trains, suffers from an acute lack of investment and extremely antiquated stock. The railway network is in very poor repair and trains are slow and very unreliable. However, a number of efficient private coach companies have sprung up to service the main road routes. The country’s extensive inland waterways remain the principal means of long-distance transport in many areas, and carry more freight than the railway (the freight statistics included in Reference table 4 cover operations of state-owned companies only).

Air and sea services The main airports are at Yangon, Mandalay and Bagan. In September 2000 a major new international airport was opened at Mandalay, although falling tourist arrivals mean there is little traffic. Myanmar has three airlines, Myanma Airways (including Myanma Airways International), Air Mandalay, and Yangon Airways. A number of crashes of Myanma Airways aeroplanes in recent years raised concerns over the safety record of domestic flights.

Yangon seaport is the largest in the country, handling 90% of seaborne trade, but it cannot accommodate vessels of more than 10,000 tonnes. New seaports are being developed at Thilawa, on the outskirts of Yangon, and Kyaukpyu in Rakhine (Arakan) state.

Very poor telecoms At end of 1999/2000 there were only 260,579 telephones in the whole country, of which around half were in the capital, Yangon. Despite the installation of new cellphone equipment and digital phone systems in some towns, the service remains unreliable, and international calls are extremely expensive. In August 1999 international direct calls were permitted from all telephones, but the cost was raised sharply (and payment was required in US dollars or dollar-equivalent foreign-exchange certificates). Business travellers are not permitted to bring mobile phones into the country unless granted permission before hand.

Censorship of telecommunications and the media

The 1996 Computer Science Development Law regulates the use of modems and computers with networking capabilities. These regulations are backed by harsh penalties. The junta’s surveillance capabilities have been enhanced by new technology that enables the monitoring of cellphones and e-mail. Most newspapers and magazines are run by the state or its agencies, and all are heavily censored. The purchase of most foreign media, including regional newspapers, is prohibited. There are harsh penalties for unauthorised private video transmission. Foreigners travelling to Myanmar are required to obtain permission from three different ministries if they wish to take mobile phones or computers into the country.

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E-mail is available only to a small number of companies and some large organisations, and is monitored. Internet access is not available (although the Ministry of Communications is planning to establish itself as Myanmar’s Internet service provider).

Energy provision

Electricity In 1997/98 total installed electricity capacity was 1,572 mw, up from 1,394 mw in 1996/97 (latest available statistics). Of total installed capacity, the state- owned Myanma Electric Power Enterprise (MEPE) managed 77%, the remainder being run by individual ministries. Power supply is inadequatein 1998/99 around 35% of generated electricity was lost during generation, transmission and distribution. Many towns and villages are not connected to the national grid. According to a 1997 survey by the Central Statistical Organisation, only 37% of all households have access to electricity for lighting (71.6% in urban areas and 17.7% in rural areas). In fact, Myanmar’s largest source of energy, according to Energy Data Associates, remains items such as fuel wood and sugarcane by-products. (Reference table 5 provides national energy data.)

Power supply is erratic Factors including droughts, shortages of imported fuel, and the failure of old plants resulted in periods of severe power shortages through the late 1990s and into 2000-01. Yangon and other key cities have suffered repeated, very severe power cuts and brown-outs. By 2001, the several turbines had failed at the key Lawpita hydroelectric dam, which provides the bulk of electricity to cities such as Yangon. The SPDC cannot afford the imported components required to repair the Lawpita plant.

As a result of these supply problems, most larger private companies rely on their own generators, and so imports of fuel oil are rising sharply. Estimates have put total oil and petroleum imports at between 300,000 tonnes/year and 600,000 t/y (6,000-12,000 barrels/day) and the annual oil import bill is typically reported to be around US$100m. However, in 2000 and 2001, refined oil imports rose sharply in value terms (see The external sector).

Energy balance, 2000 (m tonnes oil equivalent) Oil Gas Coal Electricity Othera Total Production 0.51 2.20 0.05 0.46b 10.95 14.17 Imports 1.15 0.00 0.00 0.00 0.00 1.15 Exports 0.00 0.81 0.00 0.00 0.00 0.81 Primary supply 1.66 1.39 0.05 0.46b 10.95 14.51 Losses & transfers –0.21 –1.09 0.00 –0.28 –1.35 –3.26 Transformation output – – – 0.44c – 0.44 Final consumption 1.45 0.30 0.05 0.29c 9.60 11.69

a Mainly fuelwood. b Primary electricity production, imports and exports are expressed as input equivalents on an assumed generating efficiency of 33%. c Output basis.

Source: Energy Data Associates.

Gas may eventually take on greater importance as an energy source with the coming on stream of the massive Yadana and Yetagun gasfields— although most gas is scheduled for export (see Economic sectors: Mining and semi-processing).

The economy

Economic structure

Main economic indicators, 2000

Real GDP growtha (output basis; %) 6.2b Consumer price inflation (av; %) –0.1 Current-account balance (US$ bn) –0.3 Foreign debtc (US$ bn) 6.0 Official exchange ratea (Kt:US$) 6.50 Free-market exchange ratea (Kt:US$) 392 Populationd (m) 45.06

a Fiscal year beginning April 1st. b IMF figure. c End–1999. d Mid-fiscal year, 1999/2000.

Source: Economist Intelligence Unit.

Agriculture still drives the Myanmar remains a predominantly agricultural economy. Agriculture economy (including forestry and fishing) accounted for 66% of current-price GDP in 1999/2000 and employed 66% of the workforce in 1998/99. By contrast, the industrial sector (including manufacturing, energy, mining and construction) remains very undeveloped. Industrial output is hampered by inadequate power and infrastructure, and limited investment. Food processing and garment manufacturing dominate the small manufacturing sector. The energy and mining sector is growing in importance with the start of gas exports from the massive Yadana and Yetagun fields, and as a number of mining projects come on stream.

Low incomes hold back Data problems make an accurate assessment of the size and structure of the spending economy extremely difficult. However, by any measure, Myanmar counts among the world’s lowest-income countries. According to UNICEF, in 1994 GDP per head in Myanmar, based on a purchasing power parity basis, was the lowest in South-east Asia. A survey undertaken in 1997 indicated that 23% of Myanmar’s population lived below the poverty line. According to official, probably inflated, estimates of GDP growth for fiscal year 1999/2000, GDP per head reached Kt48,609—over US$7,000 at the official exchange rate, but a mere US$140 if exchanged at the more realistic free-market exchange rate. (See Reference table 8 for a comparison of GDP figures per head.)

No official data on retail sales are published. National savings are low, at 13% of GDP in 1999/2000 according to the junta’s estimates, reflecting the undeveloped banking sector and low income levels. The collapse in foreign

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investment (see The external sector) has further reduced the resources available for investment.

Data problems The use of the massively overvalued official exchange rate to measure some statistics severely distorts Myanmar’s economic data. In addition, a very large informal sector and extra-legal economy are not captured in the figures. The extra-legal economy includes illegal logging, widespread smuggling and opium exports. This introduces further distortions in trade and other data. The timeliness and quality of official statistics are also inadequate. For example, the junta ceased publication of its full annual statistical review in 1998. Published data are patchy with frequent, unexplained revisions.

Comparative economic indicators, 2000

Myanmara Thailand Malaysia Indonesia Vietnam Japan GDP (US$ bn) 6.2b 121.9 89.3 153.0 31.3 4,753 GDP per head (US$) 140b 1,954 3,841 721 404 37,558 Consumer price inflation (av; %) –0.1c 1.6 1.5 3.7 –1.7 –0.7 Current-account balance (US$ bn) –0.3c 9.2 8.4 7.7 0.3 117 Exports of goods (US$ bn) 1.4c 67.9 98.2 62.5 14.4 460 Imports of goods (US$ bn) 2.2c 56.2 72.2 37.4 14.3 343 Foreign traded (% of GDP) 56.1e 101.8 196.4 65.3 92.6 16.9 a Fiscal year beginning April 1st. b Converted at the free-market exchange rate; data are for fiscal year 1999/2000, based on inflated official growth figure. c Calendar year. d Merchandise exports plus imports. e Foreign trade accounts for only 1% of GDP when the latter is converted at the official exchange rate.

Sources: National sources; Economist Intelligence Unit.

The state plays a The state sector’s share of GDP has remained steady at around one-fifth of central role constant price GDP in recent years. However, the state dominates some sectors including mining and power, and has an important role in transport, domestic trade and manufacturing. The state also controls exports of many key commodities, and as a result accounted for 28% of exports (in kyat terms) in 1999/2000. However, in 1999 private investors in land reclamation projects were granted permission to export up to half of their crops (see Economic policy). The military and the Union Solidarity Development Association (USDA) are also involved in businesses including gems and logging.

Economic policy

The junta has not tackled At first sight, Myanmar’s economic performance over the last few years appears economic reform reasonable—GDP growth is robust and inflation has come down sharply. However, there are serious doubts over the reliability of the official data. The real picture is rather different, with inflation probably remaining in double- digits, and incomes remaining extremely low. Other key problems include: a very wide budget deficit; low salaries for civil servants encouraging widespread corruption; a cramped private sector; state controls on exports and imports; a

sharp fall in foreign investment; a shortage of foreign exchange reserves, and the collapse of the free-market exchange rate.

The junta has done little to tackle these problems, although there have been some efforts to curb the budget deficit by reducing capital investment (see below). Investors complain that the junta’s policy making has become increasingly erratic, particularly since 1998-99 when General Maung Aye appeared to take over trade and investment policy making—although his influence started to wane in 2000.

Instead, the main focus of in junta’s economic policy is the land reclamation plan, intended to boost agricultural output. Since late 1998 the junta has offered incentives to investors in a bid to bring more unused land into production. The incentives comprise:

• a 30-year land lease for farms of more than 2,000 ha; • the waiver of land revenue and income taxes for a fixed period; and • the right to export up to half of the rice and some other commodities produced (the state controls export of most commodities).

These policies helped to boost output of some key crops in 1998/99 and 1999/2000. But the success of the policy is hampered by a severe shortage of key inputs, the lack of modern farming techniques and continued price distortions caused by the state procurement policy (see Economic sectors: Agriculture, forestry and fishing).

Another policy focus has been substantial public expenditure on infrastructure, although the quality of some of the projects has been questioned.

The economic policies of The junta’s lack of economic reform contrasts with the stated policies of the the NLD National League for Democracy (NLD). In a September 1997 policy document the NLD set out the policies it would implement if it were in power. These included:

• the official exchange rate to be devalued and brought into line with the market rate;

• a devaluation following studies carried out in consultation with the IMF, and a stabilisation fund to be set up with assistance from the IMF and other international agencies;

• all state-owned enterprises (SOEs) to be sold, except in cases where this would seriously increase unemployment;

• the removal of SOEs from the government’s budget and strict control over budget expenditure;

• the Central Bank of Myanmar to be given responsibility for implementing monetary policy and producing reliable forecasts; and

• foreign direct investment to be encouraged.

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A history of piecemeal reforms

Agriculture: Since 1987 farmers have been allowed to sell most of their output, except rice, at market prices. In 1997-98 the junta tried to lift state rice procurement quotas and raise the price paid by the state for rice, but fear of shortages caused a retreat. Since 1998, private investors have been offered incentives to bring more land into production.

Trade: In 1988 border trade was legalised and the role of the private sector recognised. In 1988-90 exporters were permitted to retain an increasing share of their export earnings. However, private traders remain (mostly) barred from exporting rice, teak and minerals. In 1998 the junta extended the state monopoly on exports to include key commodities such as sugar and pulses. Tough restrictions were imposed on imports in 1998, and extended in 2000.

Foreign exchange: In 1995 private money-changers were licensed to deal in foreign exchange. But in 1998 the junta imposed a new limit of US$50,000 per month on access to foreign exchange for repatriation, subsequently reduced steadily to only US$10,000 per month by August 2000. Foreign-exchange licences were removed from private banks. Foreign-exchange markets are often closed at times of severe pressure on the currency. The junta has spoken of the need to realign the grossly overvalued official exchange rate, but has indicated that this remains unfeasible without external support.

Taxation: In mid-1996 the official rate used for valuing imports for customs duties was raised from Kt6:US$1 to Kt100:US$1, and the top tariff rate on imports was cut from 500% to 40%. Revenue from customs duties soared as a result. But tax evasion remains rife.

Erratic trade policy Myanmar was admitted as a full member of the Association of South-East Asian Nations (ASEAN) in July 1997. Under the common effective preferential tariff (CEPT) scheme of the ASEAN Free-Trade Area (AFTA), Myanmar was required to begin cutting tariffs from January 1st 1998, with tariffs falling to 0-5% by 2008. However, as reserves dwindled, a series of import restrictions were imposed in 1998-2000. In March 1998 the junta banned imports of non-essential goods not on two priority lists. In September 2000 the junta introduced further import restrictions, limiting traders to a maximum of Kt1m in imports per month (US$154,000 per month at the official exchange rate, or around US$3,000 per month measured using the more widely used free-market rate). Imports above that value are now subject to fines or confiscation—although the rules are widely flouted.

The fiscal deficit A range of factors including poor tax compliance and a large informal remains high economy mean that government tax revenue is very low, at around 3% of GDP. Total revenues, including transfers made by SOEs, reached around 19% of GDP in 1999/2000, according to official data. (Reference table 6 provides data on government finances.) Unable to significantly boost tax revenues, the junta has sought to control the deficit in the last few years by compressing capital spending, for example by slashing spending on investment projects.

As a result of these cutsas well as inflated estimates of GDP growth in recent yearsthe central government deficit appears to have declined slightly as a percentage of GDP. The budget deficit was equivalent to 5% of GDP in 1999/2000, down from over 6% in the mid-1990s. However, the official budget and GDP data are contradictory and also exclude high levels of off-budget defence spending. Defence spending remains a high priority for the junta, while spending on education and health has dwindled. The IMF estimates that spending on education fell to 0.4% of GDP in 1998/99, down from 0.7% in 1995/96; spending on health was even lower, at 0.1% of GDP.

Recent fiscal performance The junta’s budget projections are regularly wide of the mark, and that proved to be the case in 1999/2000. The junta set a target of cutting the overall budget deficit to Kt53.4bn, but the deficit instead rose to Kt109.7bn (US$17.4bn at the official exchange rate, around US$322m at the free-market rate). Based on the junta’s inflated GDP growth figure, the budget deficit dwindled to 5% of GDP in 1999/2000. That is still alarmingly high, and the real figure may be much higher if, as seems likely, GDP growth was lower than the junta indicated.

In the absence of significant foreign lending (see The external sector: Capital flows and foreign debt), the junta has financed the budget deficit through bank borrowing, the issuance of Treasury bills and bonds, and the accrual of arrears on external debt. The government’s need to finance large fiscal deficits has been the main cause of monetary expansion. (See Reference table 7 for data on money supply, domestic credit and interest rates.) In 2000 (calendar year) money supply (M2) accelerated again, rising by 42.4% year on year.

Fiscal trends, consolidated budget (Kt bn unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000 Total receipts 128.6 164.3 274.5 361.9 423.9 Total expenditure 167.4 216.0 331.7 453.7 533.6 Total balancea –38.8 –51.7 –57.2 –91.9 –109.7

a Figures do not sum in source.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Monetary policy The monetary policy tools available to the government remain very blunt, and instruments are very blunt interest rates are controlled. Interest rates have been lowered steadily through 1999-2001, partly in a bid to boost investment. Despite this, because the official rate of inflation has fallen sharply, interest rates appear to have turned positive in real terms—although the real level of inflation may be much higher. Credit growth remains quite strong. The private sector’s share of credit rose from around 23% in 1995 to just over 32% in 2000. Nevertheless, the state sector continues to take the lion’s share of credit.

Longer-term economic The junta’s medium-term economic aims are centred around increasing agricul- policy aims tural output to ensure self sufficiency, and efforts aimed at boosting foreign investment and tourist arrivals in a bid to stabilise foreign exchange reserves and the exchange rate. However, there is no clear plan for achieving these goals.

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Privatisation of the remaining SOEs is also a longer-term goal. According to the IMF report, Myanmar: Recent Economic Developments, in 1999 there were 54 non-financial SOEs. These enterprises managed around 1,600 factories. The SOE sector accounts for around one-fifth of GDP and around 2% of total employment. A privatisation programme began in 1995, and in December 1997 the junta called for 42 of the remaining SOEs to be privatised. However, progress has been sluggish, constrained by lack of investor capital. Since 1989 SOE accounts have been merged with those of the central government, making the imposition of hard budget constraints very difficult. SOEs enjoy privileges such as easier access to foreign exchange for imports. Yet the IMF estimates that SOE losses are increasing.

Economic performance

Gross domestic product (% real change) Annual average, 2000/01 1996/97–2000/01 Agriculturea 5.0 5.9 Industry 6.2 9.1 Services 7.5 7.4 Investment 7.0 12.6 GDP 6.2 7.0

a Excluding forestry and fishing.

Source: Economist Intelligence Unit estimates.

Doubts over new data There is considerable confusion over Myanmar’s recent economic performance. The junta ceased publishing its main annual statistical review in 1998. In mid-2000 the junta declared that real GDP growth had reached 10.9% in 1999/2000 (April/March), before slowing to 6.2% in 2000/01. It is possible that efforts to improve data collection have brought more economic activity into the official statistics, giving an apparent boost to growth in 1999/2000. However, anecdotal evidence suggests that such a surge in growth was unlikely. Earlier IMF estimates suggested that growth in 1999/2000 slowed to 5.7%, down from 5.8% in the previous year. (See Reference tables 8-10 for constant- price GDP data.)

Resource-based sectors The strongest growth rates of the last two years have been in the energy and drive growth mining sectors. Key oil, gas and copper projects are now on stream, boosting output and exports. Despite sluggish foreign investment inflows, the export- oriented garment manufacturing sector also looked up in 1999-2001. However, problems such as power cuts, shortages of investment and lack of imported inputs have hampered the manufacturing sector as a whole. The other components of industrial production—construction, mining, and power— account for only a small proportion of GDP.

Agriculture, still by far the largest economic sector, also saw very strong double- digit growth in 1999/2000, slowing to a still-high 5% in 2000/01. Agriculture

has been boosted by new incentives for private investors. Again, however, these high growth rates may be questionable, as certain growing regions faced adverse weather conditions and the sector suffers from shortages of key inputs (see Economic sectors: Agriculture, forestry and fishing).

Services are expanding The junta estimates that services expanded steadily over the last few years, rising by 9.2% in 1999/2000, slowing to an estimated 7.5% in 2000/01. There has been recent public and private investment in transport and communications, and the financial sector has expanded following the lifting of controls on private-sector activity during the early 1990s. However, the surge shown by the junta in retail and wholesale trade—by far the largest services sector— seems unlikely, given widespread economic hardship in many areas of the country. (See Reference table 10 for historical data on GDP growth rates by sector.)

No official data are produced on private consumption (the junta publishes total consumption data, which groups public and private consumption). However, real incomes have been eroded in recent years (see below) and consumer confidence remains poor. (See Reference table 9 for data on expenditure-based real GDP.) Fixed investment is now slowing compared with the average of the last five years, owing to the collapse in foreign investment, and efforts to reign in public investment spending.

Official data severely According to the Yangon consumer price index (CPI, the main measure of understate inflation inflation used by the government), inflation fell by an average 0.1% in calendar 2000, from 18.4% in 1999. (See Reference table 11 for data on consumer price inflation.) The slowdown was mainly the result of lower food prices, particularly for rice, resulting from a good domestic harvest and low world rice prices. Another factor was the opening of tax-free markets in key urban centres, an effort to curb price increases.

However, the official inflation rate is believed to be considerably higher than official data suggest, despite recent revisions such as broadening the basket of goods on which the inflation index is based. A more realistic level for inflation appears to be around 20% year on year, although some independent observers suggest that even that may be too low. In 2001, tighter rationing resulted in a steep rise in petrol prices on the black market, increasing transport costs—with a knock on impact on the price of many foodstuffs in urban areas.

Consumer price inflation (%) Annual average, 2000 1996–2000 Yangon indexa –0.1 22.0

a 1995=100.

Source: IMF, International Financial Statistics.

Public-sector wages According to the 1999 IMF report, Myanmar: Recent Economic Developments, the remains very low junta’s wage bill remained static at around Kt8bn-9bn in 1995/96 to 1998/99,

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despite the price level almost tripling during this period. As a result, although public-sector wages are supplemented by a range of subsidies, incomes have been eroded in real terms. To try to redress the balance, the junta boosted civil servants’ pay fivefold starting from April 1st 2000. The increase brought the minimum monthly wage for civil servants (which includes teachers and medical staff) to Kt3,000 (around US$476/month at the inflated official exchange rate, or US$9/month at the more realistic free-market exchange rate). The maximum wage was raised to Kt15,000/month. The increase was the first since April 1993. Both the World Bank and IMF estimate that wages in the private sector are generally higher than those in the public sector (although data are sparse). However, perhaps the majority of the population relies on seasonal agricultural labour, where wages remain very low indeed. (See Reference table 8 for data on GDP per head.)

Overall living standards are In the 1990s there was an increase in ownership of basic consumer goods, such deteriorating as radios and bicycles. However, in recent years rising input costs have squeezed farmers’ margins, resulting in a probable fall in real disposable rural incomes in recent years. City dwellers have also been hit by rising prices (some food prices fell in 2000 but many items continued to rise), and higher unemployment in sectors such as tourism and construction. An increasing share of income is spent on basic food items; the Central Statistical Organisation estimated that rice alone accounted for 20% of average monthly expenditure in 1994, and the situation has deteriorated since then. At the same time, the collapse in public spending has left many people reliant on expensive private health and educational services. As a result of these trends, for many people real incomes and living standards have declined in recent years.

Regional trends

Growth is unevenly Growth and incomes are very uneven. Over the years the main state Divisions distributed have benefited from consistently higher levels of investment than the mountainous Border States (which are home to many of Myanmar’s ethnic minorities). The fertile lowland regions of the Irrawaddy river valley and the southern delta are the key rice-growing regions. Industrial output (apart from energy and mining) is concentrated in urban areas, mainly around the cities of Yangon and Mandalay. Mandalay in particular has benefited from growing economic contact with China. Incomes tend to be higher in urban areas, and in the lowland and central regions around Yangon and Mandalay.

The border states lag The junta’s grip on the border regions remains tenuous, as ethnic tensions and behind strife continue (see Political background: Political forces). In the border areas, agricultural land tends to be less productive, investment has been very low, infrastructure is extremely poor and the tourism sector remains undeveloped. The opening of several trading posts along the borders with China, Thailand and India has allowed pockets of prosperous activity to spring up. However, security problems have resulted in the frequent closure of these border crossings. Some border regions do, however, have quite large informal and also

illegal economies (the latter based around the smuggling of timber, gems, livestock and opium).

As ceasefires have been signed with some ethnic groups, the junta has sought to invest more in some border areas. For example, there has been greater investment in infrastructurealthough many projects are of dubious quality. The junta also plans to focus its incentives to bring more agricultural land into production on the remote Kachin state, from 2001 onwards. Such efforts may be behind the surge in growth shown in some border states in 1999/2000; GDP in Kachin state for example jumped by 23.9% in real terms (although these data are suspect). However, it will be years before the border states catch up with the central and lowland regions.

Economic sectors

Agriculture, forestry and fishing

Agriculture and forestry production, 1999/2000 (‘000 tonnes unless otherwise indicated) Rice 19,808 Sugarcane 5,363 Teak & hardwood logs (‘000 cu tonnes) 1,112 Black & green pulses 891 Cotton 146 Rubber 26 Sources: Ministry of National Planning and Economic Development, Salient Economic and Social Indicators, March 1998; IMF, Myanmar: Recent Economic Indicators, November 1999.

The junta wants to boost The junta’s “four pillars” policy seeks to boost production of four key crops— production of key crops rice, pulses, cotton and sugarcane. The junta is also striving to encourage production of edible oilseeds, in a bid to reduce reliance on imports. Farmers are encouragedand in some cases pressuredto grow these crops. In addition, starting from late 1998, the junta has offered incentives to private investors to bring unused land into production (see The economy: Economic policy). Limited returns have constrained private-sector interest in the scheme. However, there has been a steady increase in output of key crops such as pulses, cotton and sugarcane through the 1990s. (See Reference table 12 for historical data on key crops.)

Rice and rubber output Myanmar was traditionally an important producer and exporter of rice. Rice remain stagnant output and exports have stagnated in recent years. However, good weather in 1999-2000 brought a series of good harvests, leaving the junta—which controls the bulk of the rice trade—with stocks estimated at around 300,000 tonnes.

However, it was still not a good year for farmers. Two good harvests combined with stalled world prices brought a sharp drop in domestic rice prices in 2000. As a result, farmers were more willing than normal to meet state purchasing requirements. Farmers are required to sell a portion of every rice

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harvest (12 46-lb baskets of paddy per acre or 620 kg/ha) to the SPDC’s grain purchasing body, Myanmar Agricultural Products Trading (MAPT), a Ministry of Commerce agency. In the past, MAPT’s procurement price has typically been around half the free-market price or less, with the result that farmers have tried to pass on their lowest quality rice to the organisation. However, the drop in rice prices in 2000 meant that MAPT’s procurement price rose above the market price for the first time. As a result, farmers are more willing than normal to sell to the junta, and the quality of stocks held by MAPT is improving. However, the improvement in quality may be short-lived. Many small-scale rice farmers are now unable to afford inputs such as fertiliser and quality seeds, while the slump in prices may also have encouraged some farmers to swap to more lucrative crops.

Output of rubber, traditionally another important source of export revenue, has remained fairly static at around 22m-26m tonnes per year from through the second half of the 1990s. Rubber output has been hit by lack of investment, particularly in replacing the ageing rubber stock. The SPDC has allowed private companies to take over the running of a number of rubber plantations, but it will be around 5-6 years before seedlings planted now begin to mature.

Constraints on agricultural In addition to erratic weather conditions, there are several reasons for the production recent mixed agriculture performance. • Lack of irrigated land. In 1999/2000 only 18.2% of the sown area was irrigated. Moreover, irrigation has been hampered by rising fuel prices and power cuts (in 1997/98 irrigation pumps—run by diesel or electricity— accounted for 41% of the irrigated area). Although the junta has built many new dams and reservoirs since 1988, much of the work has been of poor quality, leaving land classed as “irrigated” vulnerable to droughts and floods.

• Limited scope for further gains from multicropping, given farmers’ inability to buy the fuel and fertiliser vital for dry-season crops.

• Drying equipment, pesticides, storage facilities and high-quality seeds are all in short supply.

• Limited use of technology. The junta has confiscated land for use in large, mechanised “model farms”. However, most farms are small family holdings that rely on traditional techniques.

Livestock and fishing As a result of greater private investment in freezing and processing facilities, the fishing industry has recently been able to benefit from demand for processed fish exports (there is heavy demand for prawns and other fish in Thailand, for example). The junta estimates that livestock and fishing surged by 16.8% in 1999/2000 (real national accounts terms). (See Reference table 13 for livestock and fisheries data.)

Forestry Teak output stagnated through much of the 1990s, because many of the most accessible logging areas had already been exploited, and because of the introduction of protection measures. Teak output fell from 332,000 cu tonnes

in 1993/94 to 200,000 cu tonnes in 1997/98. However, since then there has been a steady rise in output, as more private firms have been granted logging concessions. Output of other hardwoods has also risen steadily through the second half of the 1990s. The real increase may be higher, because of widespread illegal logging. (See Reference table 14 for data on timber production, and Reference table 20 for data on timber exports.)

Mining and semi-processing

Prospects for the mining Myanmar has large deposits of minerals and gems, including copper, tin, sector are looking up sapphires, diamonds, rubies and jade. For years mining output has been constrained by declining deposit grades and lack of investmentsome foreign companies have pulled out or suspended their rights over various exploration blocks. (A new 1994 mining law allowed foreign investors to take concessions, although there is considerable state involvement in both production and exports.) The available output datafor the state-owned sector onlyshow a fall in output of many key minerals including zinc, lead, tin and silver in the five years to 1999/2000.

It is not all bad news, however. While figures on copper production are not available, output may be increasing, as copper exports are rising strongly. The massive Monywa copper mine, a 50:50 joint venture between the state’s Number 1 Mining Enterprise and Canada’s Ivanhoe Mines, has now come on stream. The first phase of the Monywa project is now completed, with output of 28,000 tonnes per year, expected to rise to 35,000 tonnes per year. If Ivanhoe proceeds with the third and largest phase of investment, development of the massive Letpadaung copper field, the Monywa mine could produce some 125,000 tonnes of copper a year, making it one of the largest copper mines in Asia. In the mean time, the project benefited from much stronger international copper prices in 2000.

Gem mining is also performing well. The export of gems such as rubies remains an important source of foreign exchange, and jade production has surged over the last five years. (See Reference table 15 for historical data on minerals production.)

Principal mineral products, 1999/2000a

Crude oil (m barrels) 3.5 Natural gas (bn cu ft) 57.9 Refined lead (tonnes) 1.7 Zinc concentrates (tonnes) 507 Jade (‘000 kg) 5,242 Rubies (‘000 carats) 3,163

a Output by state-owned enterprises only.

Sources: Central Statistical Organisation, Selected Monthly Economic Indicators; IMF, Myanmar: Recent Economic Developments, November 1999.

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Oil and gas have potential Two large offshore gasfields, Yadana and Yetagun, are now on stream. Both projects were contracted to sell the bulk of their output to the Petroleum Authority of Thailand (known as PTT). However, Thailand’s economic crisis has drastically reduced that country’s demand for gas. As a result, in 2000 the PTT’s uptake of gas from both projects was below schedule. PTT has since missed payments required under its take-or-pay deal, and in 2001 was reported to be seeking to renegotiate its contracts. As a result, earnings from both the Yadana and Yetagun projects may be lower than expected. Natural gas output actually fell in 1999/2000, to 57,868m cu ft, down from a peak of 63,505m cu ft in 1996/97, according to official data. However, these figures exclude private investors, and may be underestimates. (See Reference table 15 for data on output of gas and minerals.)

The Yadana natural gas project

Yadana is estimated to have 1.2trn cu ft of recoverable gas reserves. Under the original 30-year contract Thailand was scheduled to purchase 325m cu ft/day of gas, rising to 525m cu ft/day 15 months after the start of production. The remaining 20% of output was to be used domestically.

Ownership of Yadana (% share) Total (France) 31.24 Unocal (US) 28.26 PTT Exploration & Production (Thailand) 25.50 Myanmar Oil & Gas Enterprise (Myanmar) 15.00 Source: Press reports.

Gas exports started in 1998, but remained well below target in 1998-2001, because of failure to complete a power plant on the Thai side. Some aspects of the contract may now be renegotiated. The junta will not receive earnings from the project until its share of the start-up costs has been paid (originally scheduled for 2000/01), but this too will now be delayed.

Proven and recoverable oil reserves are all located onshore and are estimated at 100m barrels. The available data show a modest rise in oil production to 3.5m barrels in 1999/2000 (although the data are for the state sector only, and may understate output). Myanmar’s three refineries (with a total capacity of 51,800 barrels/day) typically run below capacity because of supply shortages and poor maintenance.

Foreign interest is Foreign firms have been key investors in energy in Myanmar. However, interest dwindling is waning, and following the imposition of sanctions, several US companies have pulled out. Texaco of the US, the main investor in Yetagun, sold its 43% stake to Premier Oil of the UK in 1997, while in 1998 Atlantic Richfield Corporation (ARCO) of the US allowed leases on two exploration blocks in the Gulf of Martaban to lapse.

Manufacturing

Manufacturing sector (1985/86 constant prices; % change, year on year, most recent data) Annual average, 1997/98 1995/96–1997/98 Manufacturing & processing 5.2 7.2 Food & beverages 2.9 n/a Clothing 3.4 n/a Industrial raw materials 6.3 n/a Mineral & petroleum products 55.7 n/a Source: Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions for 1997/98.

There has been some Manufacturing is largely agri-based, and the food and beverage industries diversification account for around 80% of total manufactured output. However, the junta’s policy of diversifying agribusiness has yielded some successes. Fish products have become an important source of export revenue, boosted by investment in refrigeration equipment. Investment in refining mills boosted refined sugar production steadily in the second half of the 1990s. Myanmar has also developed a growing forest-product manufacturing sector, producing plywood, veneer, furniture and other wood-based products, for both domestic use and for export.

Outside of the agri-processing sector, most diversification has been driven by foreign investment. For example, a small export-oriented garment sector is developing, driven by north Asian investment. By 1996 about 30 plants were reported to be producing garments for the export market; at least 16 of the plants were wholly or partly foreign-owned, mostly by Hong Kong or South Korean firms. Ready-made garment production rose from 29.8m items in 1992/93 to 57.2m items in 1997/98 (latest available data), much of which was exported to the US. The value of garment exports rose steadily through the second half of the 1990s—and almost doubled in kyat terms in 1999/2000 (see Reference table 20). However, the successful consumer boycott movement in the US and elsewhere has persuaded many garment manufacturers and retailers, including Levi Strauss, Reebok and British Home Stores, to cease sourcing in Myanmar.

Manufacturing remains For the most part, the manufacturing sector remains small in scale. Many basic small scale products—such as foodstuffs and clothing—are produced in small-scale family- based cottage industries, almost entirely outside the formal economy. These industries suffer from lack of access to capital (often available only from expensive local money-lenders) as well as the rising cost of inputs. Overall, the manufacturing sector faces the following main problems:

• Market access. Both domestically, as a result of poor infrastructure, and internationally (many countries including the US have withheld from Myanmar the trade privileges normally accorded to low-income countries because of concerns over labour rights and other human rights abuses).

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• Shortages of key imported inputs. Import restrictions were imposed in early 1998 and tightened in 2000 (see Reference table 21 for import data).

• Power shortages. Power cuts result in reliance on generators, requiring costly diesel imports.

• Growing competition. The opening of border trade with China, Thailand and India has resulted in a flood of low-cost consumer goods, from household items to packaged foods and electronics, despite restrictions on imports. Local manufacturers have little capacity to produce many of these items.

• Inadequate access to finance. Particularly for small-scale manufacturers (although the expansion of the private banking sector may be reducing the lending bias towards state-owned industries—see Financial services).

• Falling foreign investment. Foreign direct investment (FDI) approvals in the manufacturing sector peaked at US$924m in 1996/97, but have subsequently collapsed, totalling US$13m in 1999/2000. A number of high- profile manufacturing companies, including Pepsi, have pulled out of Myanmar, partly in response to international pressure (although in some cases their products continue to be sold under franchise).

(See Reference table 16 for historical data on manufacturing output in current prices and volumes.)

Construction

Construction still slack The construction sector experienced a boom in the early 1990s, with rapid growth in residential housing, industrial zones, infrastructure, hotels and office space. However, the construction boom rapidly turned to bust as foreign investment and tourist arrivals dried up and speculative property developments fell through. In addition, in 1999-2001 cuts in public spending on infrastructure further hit the construction sector. The junta’s own figures show a slowdown in the construction sector in 1999/2000, with growth of 4.4% in national accounts terms, down from 6.3% in 1998/99—and double digit growth rates in the early to mid-1990s. (See Reference table 17 for data on construction, and Reference table 10 for growth in the construction sector.)

Financial services

State banks are loosing out Myanmar’s state banking sector comprises five state-owned commercial banks: the Myanma Economic Bank (MEB), the Myanma Investment and Commercial Bank (MICB), the Myanma Foreign Trade Bank (MFTB), the Myanma Agricultural Development Bank (MADB) and the Myanma Industrial Development Bank. The MEB in particular has suffered from growing competition from the private sector (see below). According to the IMF, the MEB’s share of deposits dropped from 86% in March 1994 to 40% in March 1999. However, the Central Bank of Myanmar still provides some 60% of all credit.

The performance of the state-run banks is further undermined by the demands of the junta. For example, the MEB has had to carry the large burden of non-

interest-paying government equities into which the debts of state enterprises were converted in 1989. The MEB has also been required to purchase Treasury bills with low rates of return.

Private banks have The most notable trend in Myanmar’s financial services in recent years has expanded been the rapid expansion of private-sector banking. By 1999/2000 private banks accounted for 59% of all savings, up from only 10.4% in 1994/95. Private commercial banks were permitted from 1992, and the number of private banks reached 20 in March 1999. According to the IMF, private banks have been able to attract a growing share of deposits and to make around 20% of all loans. The private banks offer more efficient services and a wider range of products than the lumbering state-owned banks. (See Reference table 18 for banking statistics.)

The private banks have not had things all their own way, however. Heavy lending to the property sector at the height of the boom has translated into high levels of non-performing loans for some private banks (although data is sparse). The private banks have also been hampered by government policy. For example, in March 1998, as foreign-exchange reserves dwindled, the junta revoked nine banks’ licences to conduct foreign-exchange trade, leaving only two state-owned banks—MFTB and MICB—with licences to conduct foreign- exchange transactions.

Other problems noted by the IMF include shortages of qualified staff and poor communications and clearance systems. In addition, Myanmar does not have a savings culture. Despite the rapid growth in savings held at private banks, overall bank savings remain very low. Trust in the banks is limited, while interest rates have remained steeply negative for several years. Rates turned positive once again in 2000 in real terms (based on official inflation data), which should help to stimulate savings. However, poor confidence in both the banks and the kyat means that many people prefer to keep savings in the form of gold, jewellery or other valuables.

For loans, too, the banking system is cumbersome and little used even in urban areas. Particularly outside urban centres, the main source of capital is private money-lenders, who typically charge interest rates of 12-20% a month (depending on location and availability of collateral), many times the official interest rate. However, despite these problems, the IMF notes that the private banking sector is profitable, and since the Asian economic crisis there have been efforts to improve bank regulation.

Little interest from foreign Foreign banks are permitted to enter into joint ventures with local private banks banks, and a number of memorandums of understanding have been signed. However, so far no joint ventures have started operation, and foreign interest remains muted. The number of foreign banks’ representative offices fell to 21 by late 1999, down from 49 at the end of 1997, with further closures in 2000.

No stockmarket As of mid-2001, Myanmar was without a stockmarket or over-the-counter market. In June 1996 Daiwa Securities (of Japan) and the MEB set up a joint- venture securities company, the Myanma Securities Exchange Centre, intended

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to conduct securities business and eventually to enable Myanmar to create its own over-the-counter market. However, progress is likely to remain slow.

Insurance investments The Insurance Business Law, passed in 1996, opened the insurance industry (which had been a government monopoly since the early 1960s) to private (including foreign) participation. Several Japanese firms have entered the market.

Other services

Another downturn for the The junta had hoped to develop the tourism sector as a major foreign- tourism sector exchange earner. The first half of the 1990s saw a flood of foreign and other investment into the sector. Several international-class hotels were upgraded, and a rash of new hotels was built, particularly in Yangon. Arrivals for 1997/98 rose by 5.4% to 265,122, picking up by 10.2% in 1998/99 to 292,282. However, arrivals then fell by 14.4% in 1999/2000, to 246,007 (see Reference table 19 for tourist arrivals). The opening of a new international airport at Mandalay in September 2000 has had little impact on the number of arrivals. The government hopes that arrivals will pick up in 2002, when member countries of the Association of South-East Asian Nations (ASEAN) are set to co-operate in marketing the region as a tourist destination. However, the tourist sector in Myanmar faces a number of key problems, including:

• concern over political unrest; • a well-organised worldwide boycott campaign organised by supporters of the pro-democracy movement, and targeting foreign tour operators;

• worldwide awareness of human rights and other abuses in Myanmar; • relatively expensive accommodation compared with some other South-east Asian countries;

• poor infrastructure, making travel time-consuming and unreliable; and • government policy; visitors are prevented from visiting many areas of the country, and the cash-strapped junta requires all independent (non-tour) travellers to exchange US$200 into non-refundable local-currency units (foreign-exchange certificates, FECs), regardless of length of stay. (The sum was reduced from US$300 in 2000.)

Sluggish tourist arrivals have spelled disaster for the sector. Occupancy rates at most large hotels are very low, and some have temporarily suspended trading. (See Reference table 19 for statistics on tourism.) Unsurprisingly, foreign investment in hotel and tourism projects has collapsed. No new foreign projects were approved in the sector in the whole of 1998/99, with only two projects totalling US$15.5m approved in 1999/2000although it is possible that some small projects have not been captured in the data.

The external sector

Trade in goods

Foreign trade, 1999/2000a (Kt m; cif-cif) Exports 7,043 of which: pulses 1,179 teak & other hardwoods 927 prawns 531 base metals & ores 289 fish & fish products 232 Imports –16,265 of which: machinery & transport equipment 3,289 base metals & metal goods 1,723 electrical machinery 1,578 refined mineral oil 1,046 edible vegetable oil & other hydrogenated oils 478 Memorandum items Capital goods 5,335 Intermediate goods 5,132 Consumer goods 5,798 Trade balance –9,222

a Official trade data exclude some key items. For example, exports of garments are not measured, nor are imports of crude oil. The data above therefore provide only a partial picture of trade patterns.

Sources: Central Statistical Organisation, Selected Monthly Economic Indicators; Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Trade data are unreliable Myanmar’s trade statistics are particularly problematic. Although data are produced on a regular basis, they are subject to large revisions, and different official sources often show a contradictory picture. For example, two official sourcesthe Central Statistical Organisation (CSO) and an official internal report obtained by the Economist Intelligence Unitshow a marked difference in trade figures for 1999/2000. All data sources agree that imports fell in 1999/2000. CSO data suggest exports fell, or rose modestly (revised data) in 1999/2000. However, according to the internal report, exports rose strongly in 1999/2000, bringing the merchandise trade deficit down to Kt5.9bna difference of around Kt3bn.

Merchandise trade balances (Kt m) 1997/98 1998/99 1999/2000 Exports CSO 6,290.0 7,672.5 7,033.0 Revised CSO 6,446.8 6,728.1 7,042.7 Internal report 6,290.0 7,700.3 9,393.5 continued

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1997/98 1998/99 1999/2000 Imports CSO 14,257.4 16,941.1 15,852.8 Revised CSO 14,366.1 16,871.7 16,264.8 Internal report 14,257.4 16,941.1 15,247.6 Balance CSO –7,967.4 –9,268.6 –8,819.8 Revised CSO –7,919.30 –10,143.60 –9,222.10 Internal report –7,967.4 –9,240.8 –5,854.1 Sources: Central Statistical Organisation, Selected Monthly Economic Indicators; Official internal report.

The trade data are distorted by:

• widespread smuggling; • over-reporting of exports for money-laundering reasons, and extensive illegal drug exports;

• under-reporting of imports to avoid customs duties; • the use of an unrealistic official exchange rate in measuring data; and • the exclusion of many military imports.

Illegal drug exports are a particular problem. Myanmar is the world’s second- largest producer of opiates, much of which are exported. The US embassy’s Foreign Economic Trends Report: Burma (1996) estimates that the value of opiate exports may be equal to that of legal exports. Legal export invoices may be exaggerated as a result of money laundering related to the drug trade.

(See Reference tables 20, 21 and 22 for export and import data.)

Exports are diversifying, Myanmar remains reliant on exports of commodities, many of which suffered but commodities dominate from sluggish output and weak international prices in 2000-01. However, there has been some success in diversification away from traditional export staples such as rice and rubber—exports of which have flagged. For example, pulses, fish and timber have become key exports. India, which has seen fairly strong economic growth over the last few years, is the major market for Myanmar’s pulses, consuming about 80% of exports. India and Thailand are the key markets for Myanmar’s timber exports. Both timber and fish exports are performing well, boosted by a rise in private investment in production.

Two export sectors—garments and metal ores—showed particularly strong growth in 1999/2000. A number of key mining projects have come on stream, and Myanmar could become a major Asian exporter of copper if a Canadian joint venture goes ahead as planned. Garment exports also appear to be performing well, despite widespread international boycotts. There are allegations that garments are finished in Myanmar before being sent to other Asian destinations to be relabelled and sold on to third countries.

Imports of capital goods Myanmar experienced some import compression in 1999/2000. While imports are falling of intermediate and consumer goods continued to rise, imports of capital goods fell by 27.5% year on year. Imports of machinery, transport equipment, metal items, and electrical machinery all fell. It is possible that growth in the

manufacturing sector has allowed some import substitution. More likely, the fall in capital goods imports resulted from the weakness of the kyat, shortages of foreign exchange, a drop in foreign investment, and the restrictions imposed on imports (see The economy: Economic policy).

Key trade regulations

There are 14 tariff bands ranging from 0-40%. In theory the junta is committed to a schedule of tariff cuts under the ASEAN Free Trade Area (AFTA). However, a number of ad hoc non-tariff trade restrictions remain:

• restrictions were imposed on imports in March 1998, when non-priority imports were banned; further restrictions were imposed in September 2000, with traders limited to importing Kt1m/month (see The economy: Economic policy);

• licences are required to import goods; proof of foreign-exchange earnings is required;

• the government has a monopoly or near-monopoly on exports of key items, including rice and teak, which was extended in March 1998 to include other commodities such as rubber and sugar (this monopoly was relaxed in 1999 for investors in the junta’s land reclamation scheme, who may export around half of certain crops);

• some exports are subject to a 5% export tax; and

• border trade must be conducted in US dollars.

Despite import restrictions (see box above), consumer goods have risen in recent years, up by 8.5% in 1999/2000 (revised down from a much higher earlier growth figure). The opening up of more border checkpoints along the Thai and Chinese borders has resulted in a flood of previously unavailable consumer imports, including electrical items such as computers and many basic household goods.

A focus on import The junta has placed increased emphasis on import substitution. For example, substitution the junta hopes to boost production of edible oils (which are widely used in traditional cooking). However, import substitution efforts for items such as machinery are hampered by the extremely low level of industrialisation and the recent collapse in foreign direct investment (FDI; see Capital flows and foreign debt).

Reliance on oil imports Official data do not report total oil imports. For several years the annual oil import bill was estimated to average around US$100m each year. However, since the late 1990s there has been a jump in imports of refined oil in value terms. Refined mineral oil imports jumped 154% year on year in 1999/2000. Oil imports are surging as a result of frequent power cuts (forcing companies to rely on diesel-fuelled generators) and rising world oil prices. By early 2001, the cost of diesel imports was running at US$30-50m a month, according to unofficial estimates, putting severe pressure on already-low foreign exchange reserves (see Foreign reserves and the exchange rate).

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Exports are hampered Myanmar’s export sector does not enjoy many of the benefits usually accorded by industrialised nations to low-income countries. For example, a number of nations have withdrawn generalised system of preferences (GSP) trade privileges (see box below). In addition, the decision of many Western manufacturers not to source in Myanmar has hampered development of the export-oriented manufacturing sector. Finally, the junta had hoped for a significant boost to export earnings once the huge Yadana and Yetagun gasfields came on stream in 1998-2000. However, weak demand in Thailand has kept gas export earnings below initially projected targets, and the Thai purchaser (PTT) is now seeking to renegotiate its contracts.

Obstacles to trade and investment

Trade restrictions: Additional restrictions were imposed on imports in September 2000, with traders limited to importing Kt1m/month. This came on top of restrictions on both exports and imports imposed in March 1998, under the terms of which only prescribed items may be imported. Importers must purchase essential imports before permission is given to import selected non-essential items. The junta also banned private exports of key commodities.

US sanctions: In April 1997 the US banned all new investment in Myanmar by US companies.

EU restrictions: In March 1997 the EU withdrew generalised system of preferences (GSP) benefits on agricultural goods. Myanmar had already lost GSP on industrial goods.

Canadian restrictions: In August 1997 Canada removed Myanmar’s GSP benefits.

Consumer boycotts: Active and well-organised consumer boycott campaigns have contributed to the decision by a number of international companies to pull out of Myanmar or to cease sourcing goods from there.

Main trading partners, 1999/2000

Exports to: % of total Imports from: % of total India 19.5 Singapore 28.0 China 12.0 Thailand 13.3 Singapore 11.5 Japan 11.1 USA 8.0 China 9.6 Thailand 7.8 South Korea 9.1 Source: Central Statistical Organisation, Selected Monthly Economic Indicators.

Intra-Asian trade Myanmar conducts the bulk of its trade with its Asian neighbours. (See dominates Reference table 23 for historical data on Myanmar’s main trading partners.) Trade with Thailand, India and particularly China expanded strongly through the 1990s as border trade posts were opened. Increased trade with India and China helped Myanmar survive the Asian economic crisis. However, frequent closures of trading posts have disrupted trading, particularly with Thailand.

In 1999/2000 the USA appeared for the first time as one of Myanmar’s top five export destinations, perhaps owing to a rise in garment exports.

Direction and composition of tradea (US$ ’000) US China India Singapore Thailand Derived exports 2000 2000 1998 1998 1997 Food 32,042 18,358 87,381 62,636 13,606 of which: fish 27,756 6,964 230 39,112 12,129 fruit, vegetables & products 108 10,689 85,503 18,622 21 Oilseeds 3,300 834 62 12,329 129 Rubber & manufactures 0 346 1,237 7,574 2 Wood & manufactures 6,475 80,811 83,501 16,921 58,511 Ores, slag & ash 0 3,620 0 454 51 Pearls, precious stones, metals & jewellery 6,496 8,397 7 1,717 3,476 Clothing 405,337 0 n/a n/a n/a Total incl others 470,617 124,820 173,918 120,433 82,303

China Singapore Thailand Malaysia Japan Derived imports 2000 1998 1997 2000 2000 Food 19,993 27,471 39,961 3,060 219 of which: dairy products 4,784 9,013 13,418 645 0 Beverages & tobacco 7,964 17,464 39,523 87 30 Mineral fuels 24,480 55,913 29,926 145,418 16 Animal & vegetable oils & fats 120 4,600 5,983 41,771 0 Chemicalsb 53,455 46,610 63,921 17,345 5,977 Textile fibres, yarn, cloth & manufactures 110,325 21,357 32,921 3,449 4,233 Iron & steel & manufacturesc 46,627 30,029 19,396 1,546 10,783 Tools etc & miscellaneous metal manufactures 4,827 6,873 2,104 319 1,168 Machinery incl electric 119,170 166,462 37,205 7,387 139,271 Road vehicles & tractors 16,537 12,226 12,305 436 20,494 Other transport equipment 40,701 4,396 439 544 2,113 Clothing 9,405 6,065 7,091 107 13 Scientific instruments etc 2,478 12,902 696 111 3,863 Total incl others 496,391 455,914 403,602 231,045 195,862 a Figures from partners’ trade accounts. b Including crude fertilisers and manufactures of plastics. c Including scrap.

Sources: UN, External Trade Statistics, Series D; Global Trade Information Services, World Trade Atlas.

Invisibles and the current account

Current account (IMF accounts), 2000 (US$ m) Merchandise exports fob 1,386.3 Merchandise imports fob –2,229.1 Trade balance –842.8 Services balance 86.5 Income balance –39.0 Current transfers balance 502.7 Current-account balance –292.7 Source: IMF, International Financial Statistics.

The current-account deficit According to the IMF’s International Financial Statistics (IFS), the current- has narrowed account deficit narrowed for the second year running in 2000 (calendar year), to US$282.7m. The merchandise trade deficit narrowed, as growth in exports outpaced imports. The services surplus also declined. According to the IMF, services inflows were boosted through the 1990s by receipts of royalties from companies involved in oil and gas exploration, “signature bonuses” paid when contracts are signed, land-lease payments by foreign hotels, and rising tourism receipts. However, slumping foreign investment and the fall in tourist arrivals ate into services receipts in 2000. (See Reference table 25 for balance-of- payments data in US dollars.)

Current transfers keep Perhaps the most notable trend of the late 1990s was the sharp rise in current Myanmar afloat transfers. From inflows of less than US$100m in the early 1990s, current transfer credits peaked at US$685.1m in 1997. Current transfer credits then dwindled to US$502.7m in 2000—although remaining above the historical trend. Current transfer inflows are now much higher than FDI inflows and have become one of Myanmar’s largest sources of foreign exchange.

IMF studies have indicated that official (public) transfers remain relatively small, boosted mainly by inflows of Japanese debt-relief grants (see Capital flows and foreign debt). There may have been a slight increase in other official aid in the last few years, as some of the unilateral organisations and major international non-governmental organisations have established modest development projects.

However, IMF studies suggest that private transfers are much more important in value terms than such public transfers. Hence the jump in transfers in the last few years cane be assumed to reflect private transfers, probably the result of the growing number of Myanmar citizens working abroad. Political repression and a stagnant economy have driven a huge number of Myanmar citizens overseas in search of work; there may be up to 1m illegal migrant workers from Myanmar based in Thailand, with other large populations elsewhere in South- east Asia and the Middle East (see Resources and infrastructure: Population). In addition, more remittances may now end up in the formal banking system, following the liberalisation of rules on retention of foreign exchange. The dip in current transfers in 1999-2000 may reflect a tighter work situation in Thailand, as the Thai authorities began to expel thousands of illegal workers from Myanmar starting in late 1999, as well as the slowing Thai economy.

Capital flows and foreign debt

FDI inflows have stalled FDI inflows remain an important source of foreign exchange. However, after several years of rapid growth, FDI inflows have stalled. In 2000 actual FDI inflows totalled US$240m, the lowest level for five years (see Reference table 24 for actual foreign investment inflows). The outlook for a recovery in FDI inflows is not good, as FDI approvalsa guide to future inflowshave collapsed. FDI approvals for the whole of 1999/2000 (financial year beginning April 1st) totalled US$55.6m, a sharp drop compared with a peak of US$2.8bn in 1996/97. It is likely that many small FDI projects, particularly from China

and elsewhere in Asia, are not being captured in the official data. However, even given this probable under-reporting, the dramatic collapse in FDI approvals since 1997/98 is likely to be reflected in smaller actual inflows in the next few years, particularly as other Asian economies slow in 2001-02.

There has been a shift away from investment in oil and gas, first to manufacturing, property and tourism, and more recently to mining. Overall, however, FDI approvals have fallen sharply in recent years. Approvals have been hit by the following factors:

• the regional economic crisis, which slowed FDI inflows from key investors such as Thailand;

• global consumer boycotts together with sanctions on new US investment imposed by the US in April 1997; and

• investor concern over political risk and the erratic policy environment, particularly the difficulties of profit repatriation given tight controls on foreign exchange.

Foreign direct investment approvals (US$ m) 1995/96 1996/97 1997/98 1998/99 1999/2000 Mining 155.8 178.3 2.7 4.9 18.5 Hotels & tourism 79.2 114.9 40.0 0.0 15.5 Manufacturing & processing 21.3 923.6 319.2 19.6 13.1 Oil & gas 14.8 695.6 172.1 0.0 5.3 Fisheries 13.1 17.5 5.8 5.0 3.3 Transport 118.9 47.9 106.6 0.0 0.0 Real estate 251.5 623.5 122.2 0.0 0.0 Total incl others 668.2 2,814.2 777.4 29.5 55.6 Source: Central Statistical Organisation, Selected Monthly Economic Indicators.

The debt profile is shifting Myanmar’s external debt stock rose to US$6bn at the end of 1999, according to towards commercial debt the World Bank’s Global Development Finance, up from US$5.6bn at the end of 1998. Both long-term and short-term debt showed modest increases. The debt profile is shifting away from long-term concessional debt, towards shorter-term commercial debt such as exporters’ credits.

Concessional lending to Myanmar has dried up since 1990, when the country’s traditional donors cut off aid after the junta’s refusal to recognise the results of the election held that year. Myanmar’s poverty makes it eligible for generous debt relief from the Paris Club of bilateral donors, but such relief has been blocked by the US. (However, since 1991 Japan has provided debt-relief grants equal to the small amounts of debt service paid by Myanmar to Tokyo.) Myanmar still receives some UN assistance. But the junta has increasingly relied on commercial credits, much of it short term, and mostly obtained from neighbouring countries. According to the IMF, the junta has obtained short- term commercial funding for a variety of infrastructure projects from Japanese, Chinese, Thai and other companies. The junta may also have mortgaged part of its earnings from gas exports in order to raise loans.

It should be noted that debt statistics may exclude or under-report borrowings from some sources, particularly related to financing for infrastructure projects and for military imports. (See Reference table 25 for debt statistics and Reference table 26 for data on official development assistance.)

The junta is not servicing Limited access to external lending, combined with a slide in FDI inflows, and its debts strong imports, have left Myanmar with an acute shortage of foreign exchange reserves. Given this weak payments situation, the junta has continued to part- finance its overall balance-of-payments deficit through the accumulation of arrears on its external debt. By the end of 1999 interest arrears reached US$509m, accounting for 76% of the short-term debt stock. Principal arrears rose to US$1.8bn by the end of 1999, up from only US$377m at the end of 1990.

The junta has changed its policy on debt repayment. As no new lending has been forthcoming from the major multilateral institutions, the junta now concentrates on repaying commercial and then bilateral creditors. For example, in 1998 the junta ceased servicing its debt to the International Development Association (IDA), the concessional lending arm of the World Bank, as well as to the Asian Development Bank.

Foreign reserves and the exchange rate

Reserves have A widening current-account deficit and falling FDI inflows have put pressure weakened further on Myanmar’s foreign-exchange reserves in recent years. After a modest recovery in 1998, reserves weakened again in 1999 and 2000, dipping to US$233.5m by the end of 2000. In response, the junta has introduced draconian restrictions on imports and tightened access to foreign exchange (see Economic policy). (See Reference table 27 for data on foreign-exchange reserves.)

The kyat collapses Since 1977 the official exchange rate has been fixed against the SDR at Kt8.51:SDR, and has therefore remained stable at around Kt6.2-6.4:US$1. However, following liberalisation measures taken since 1988, the majority of transactions take place at the free-market rate. Citizens are permitted to buy and sell kyat at a limited number of legal foreign-exchange trade centres; more widespread trading takes place on the black market, where rates are slightly higher.

The junta does not publish data on the free-market rate; we rely on private estimates, which can be taken only as a broad indication of exchange-rate movements. In mid-1997, in a bid to stop the fall in the kyat, the authorities imposed a limit of US$50,000 per month on the exchange of foreign-exchange certificates (FECs) for foreign currency for imports or transfers abroad, subsequently reduced to a mere US$10,000 per month. Despite these and other measures, the free-market rate remained under pressure through much of 1999-2000, averaging around Kt392:US$1 in 2000/01. This pressure intensified in the first half of 2001, when the free-market rate dipped as low as Kt800:US$1 as strong oil imports ate into reserves.

In times of pressure on the kyat there is often a flight to gold and to FECs. FECs were introduced in 1993, initially for tourists but subsequently for use in a

range of transactions. They are converted to kyat at a rate close to the US dollar rate, and can be used by Myanmar citizens to open FEC accounts. (See Reference table 28 for data on official and free-market exchange rates.)

No signs of an adjustment The sharp fall in the free-market rate in 2001 has left a massive margin with in the official rate the official rate. The junta has in the past hinted that it will realign the overvalued official rate, but has made clear that this will not be undertaken without substantial external assistance.

Foreign-exchange reserves, end–2000

Total (US$ m) Per head (US$) Thailand 31,993 510 Malaysia 28,625 820 Indonesia 22,326 105 Philippines 12,938 170 Singapore 80,127 20,545 Myanmar 234 5a

a Based on the official population figure for 1999/2000, and actual reserves data for end–2000.

Source: IMF, International Financial Statistics.

Appendices

Regional organisations

Association of South-East The Association of South-East Asian Nations was established in 1967. Asian Nations (ASEAN) The five original members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Subsequent joiners were Brunei (1984), Vietnam (1995), Laos and Myanmar (1997) and, most recently, Cambodia (1999).

ASEAN summit meetings, which bring together the heads of government of member states, must now be held every three years. The most recent was in Brunei in 2001. Informal summits of heads of governments are also held. In addition, members’ foreign and economic affairs ministers meet once a year. Joint meetings of foreign and economic affairs ministers are held before each ASEAN summit. There is also a Standing Committee (consisting of the members’ accredited ambassadors to the host country), which usually meets every two months. There is a permanent secretariat, based in Jakarta (Indonesia), and a number of committees.

The organisation started with some grand objectives, but has generally failed to deliver. Early hopes that ASEAN could engineer a regional economic development strategy—with particular countries concentrating on particular industries—were soon dashed. In 1977 the Basic Agreement on the Establishment of ASEAN Preferential Tariffs was concluded, but a decade later only about 5% of trade between members was covered by this system. (Members had been permitted to exclude “sensitive” sectors, a let-out clause that a subsequent agreement in 1987 only slightly curtailed.)

Plans for a proper ASEAN Free-Trade Area (AFTA) were unveiled in 1992, with the aim of achieving this by 2008. A common effective preferential tariff (CEPT) scheme was applied in 1993, providing for the gradual reduction of tariffs on intra-ASEAN trade in certain goods over a number of years. Again, however, member states could exclude “sensitive” items, limiting progress. A new AFTA programme, with a wider spread of products covered, was launched in 1994. During the mid-1990s the timescale for implementing the programme was steadily tightened, with the aim being to reduce tariffs on most goods to below 5% by 2000, with a full AFTA achieved by 2003. (Recent joiners have been allowed more time.)

The 1997-98 regional financial crisis exposed ASEAN’s failings in a brutal fashion. The organisation was unable to stop the regional currency devaluations, or alleviate the subsequent economic hardship. A Statement on Bold Measures, released at end-1998, was exactly the opposite of what the title implied. Unfolding events in Indonesia then moved the focus on to the organisation’s security plans. ASEAN members’ commitment to the principle of non-interference in the internal affairs of other members complicated the response to East Timor. (Some members did eventually participate in the multinational force, but not under ASEAN auspices.)

On the economic front, ASEAN’s slow progress towards AFTA has encouraged one of its members, Singapore, to opt instead for bilateral trade pacts. Singapore’s bilateral trade agreement with New Zealand in 2000 prompted protests from other ASEAN members, but the island state is pursuing similar agreements with other countries, including the US. (It is unlikely that this approach will prove universally applicable, as the absence of an agricultural sector in Singapore makes it much easier for it to negotiate with trading partners with heavily protected primary sectors.) A decision in 2001 by various ASEAN members to set up bilateral currency-swap arrangements to protect against currency volatility is limited in scope, and does not presage further ASEAN economic collaboration.

The organisation’s political hopes could be severely tested in the next few years. Changing governments in member countries could undermine any remaining pretence about political consensus in the region. On the security front, the ASEAN Regional Forums (ARFs—which bring together the ASEAN ministers of foreign affairs with those of other countries, notably China) are likely to remain just talking shops, with little impact on changing geopolitical trends.

Sources of information

National statistical sources Central Statistical Organisation, Selected Monthly Economic Indicators, Yangon (bi-monthly)

Central Statistical Organisation, Statistical Yearbook, Yangon (annual)

Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions, Yangon (annual—although publication has been suspended since 1998)

Ministry of National Planning and Economic Development, Salient Economic and Social Indicators (March 1998), Yangon (occasional)

International statistical Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries sources (annual), Manila Energy Data Associates, Bishops Walk House, 19-23 High Street, Pinner, Middlesex HA5 5PJ

International Institute for Strategic Studies, The Military Balance (annual), London

IMF, International Financial Statistics (monthly), Washington, DC

IMF, Myanmar: Recent Economic Developments, 1999, Washington, DC

US embassy, Country Commercial Guide, Yangon, 2000

World Bank, Global Development Finance (annual), Washington, DC

World Bank, World Development Report (annual), Washington, DC

Select bibliography and Aung San Suu Kyi, Freedom From Fear, London, 1995 websites Aung San Suu Kyi, Letters From Burma, London, 1997

Human Rights Watch, World Report, Washington, DC (annual)

Bertil Lintner, Burma in Revolt: Opium and Insurgency since 1948, Boulder, Colorado, 1994

Mya Maung, The Burma Road to Poverty, New York, 1991

Martin Smith, Burma: Insurgency and the Politics of Ethnicity, London, 1991

Internet resources are plentiful, with a well-linked network of sites run by a variety of pro-democracy campaign groups. For example:

• http://www.soros.org/burma.html • http://www.irrawaddy.org/index.html • http://www.asiaobserver.com/burma.htm For the junta’s view, see:

• http://www.Myanmar.com

Reference tables

These reference tables provide the most up-to-date statistics available at the date of publication. Data are for fiscal years unless otherwise indicated.

Reference table 1 Population estimates (m unless otherwise indicated; mid-fiscal years) 1995/96 1996/97 1997/98 1998/99 1999/2000 Male 22.2 22.6 23.0 n/a n/a Female 22.5 22.9 23.4 n/a n/a Total 44.74 45.57 46.40 44.50 45.06 % change 1.87 1.86 1.82 –4.1 1.3 Sex ratio (male:female; %) 98.8 98.8 98.6 n/a n/a Age structure: 0-14 15.0 15.3 15.4 n/a n/a 15-59 26.3 26.9 27.4 n/a n/a 60+ 3.4 3.5 3.6 n/a n/a Sources: Ministry of National Planning and Economic Development, Statistical Yearbook 2000; Review of the Financial, Economic and Social Conditions for 1997/98.

Reference table 2 Employment by sector 1995/96 1996/97 1997/98 ‘000 % of total ‘000 % of total ‘000 % of total Agriculture 11,272 64.1 11,381 63.4 11,507 62.6 Livestock & fisheries 388 2.2 391 2.2 397 2.2 Forestry 188 1.1 188 1.1 189 1.0 Mining & energy 116 0.7 132 0.7 147 0.8 Processing & manufacturing 1,481 8.4 1,573 8.8 1,666 9.1 Power 19 0.1 21 0.1 22 0.1 Construction 354 2.0 378 2.1 400 2.2 Transport & communications 441 2.5 470 2.6 495 2.7 Social services 563 3.2 577 3.2 597 3.3 Administration & other services 776 4.4 835 4.7 888 4.8 Trade 1,715 9.8 1,746 9.7 1,791 9.8 Others 274 1.6 272 1.5 270 1.5 Total 17,587 100.0 17,964 100.0 18,369 100.0 Source: Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions for 1997/98.

Reference table 3 Labour force 1991/92 1992/93 1993/94 1994/95 1995/96a Labour force (‘000) 16,955 17,391 17,838 18,296 18,766 Urban 3,795 3,892 3,992 4,094 4,199 Rural 13,160 13,499 13,846 14,202 14,567

a Estimate.

Source: IMF, Myanmar: Recent Economic Developments, April 1997.

Reference table 4 Transport statistics (‘000) 1995/96 1996/97 1997/98 1998/99 1999/2000 Railways Passengers 53,928 55,283 54,318 57,365 58,179 Freight carried (imperial tonnes) 3,112 3,165 3,063 3,304 3,389 Airwaysa Passengers 637 598 430 386 410 Freight carried (short tonnes)23332 Inland waterways Passengers 24,979 23,404 21,524 23,486 22,599 Freight carried (imperial tonnes) 3,176 3,509 3,400 3,729 3,653 Road Passengersb 115,179 107,310 88,223 64,866 50,247 Freight carried (imperial tonnes) 1,352 1,302 1,394 1,269 1,315

Note. 1 imperial tonne=2,240 lb=1,016kg; 1 short tonne=2,000 lb=907kg. a Myanma Airways only. b Yangon city transport only; includes buses, taxis and state haulage.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 5 National energy statistics

1995/96 1996/97 1997/98 1998/99 1999/2000 Electricity generationa (m kwh) 3,762 3,770 4,446 4,606 5,025 Gas 2,061 2,049 2,504 2,848 3,515 Hydroelectric 1,595 1,622 1,686 1,486 961 Thermal 63 59 213 226 504 Diesel 43 40 43 46 45 Total installed capacity (state and other; mw) 1,317 1,394 1,572 n/a n/a of which: Myanma Electric Power Enterprise 982 1,033 1,042 1,055 1,196 a By the state-owned Myanma Electric Power Enterprise.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 6 Government finances (Kt m) 1995/96 1996/97 1997/98 1998/99 1999/2000 Central government Receipts 40,370.9 55,253.6 88,695.7 118,034.7 107,666.5 Expenditure 65,527.5 80,439.6 98,462.0 124,751.9 145,403.3 Balance –25,156.6 –25,186.0 –9,766.3 –6,717.2 –37,736.8 State-owned enterprises Receipts 88,182.9 109,023.5 185,780.7 243,799.0 316,180.9 Expenditure 101,853.6 135,578.9 233,248.8 328,948.3 388,163.2 Balance –13,670.7 –26,555.4 –47,468.1 –85,149.3 –71,982.3 Development committees Receipts 22.7 18.3 23.6 25.8 25.9 Expenditure 14.9 16.3 30.3 34.8 31.8 Balance 7.8 2.0 –6.7 –9.0 –5.9 Total Receipts 128,576.5 164,295.4 274,500.0 361,859.5 423,873.3 Expenditure 167,396.0 216,034.8 331,741.1 453,735.0 533,598.3 Balance –38,819.5 –51,739.4 –57,241.1 –91,875.5 –109,725.0 % of GDP n/a –6.5 –5.1 –5.7 –5.0 Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 7 Money supply, credit and interest rates (Kt m unless otherwise indicated; calendar years) 1996 1997 1998 1999 2000 Money supply Money (M1) 167,971 219,983 282,087 345,765 464,968 % change, year on year 33.4 31.0 28.2 22.6 34.5 Quasi-money 82,786 102,944 151,363 216,459 335,574 Money (M2) 250,757 322,927 433,450 562,224 800,542 % change, year on year 38.9 28.8 34.2 29.7 42.4 continued

1996 1997 1998 1999 2000 Domestic credita 266,191 343,689 453,714 585,994 819,364 of which: claims on government 180,029 216,704 251,204 343,385 483,240 claims on non-financial public enterprises 10,631 11,419 46,688 53,960 69,158 claims on private sector 75,346 115,505 155,761 188,649 266,966 Interest rates Deposit rate (six months; %) 12.5 12.5 12.5 11.0 9.75 Lending rate (working capital loans; one-year; %) 16.5 16.5 16.5 16.13 15.25

a Excludes a small amount of credit to local government.

Source: IMF, International Financial Statistics.

Reference table 8 Gross domestic producta (at market prices) 1996/97 1997/98 1998/99 1999/2000 2000/01 Total (Kt bn)a At current prices 792.0 1,119.5 1,609.8 2,190.3 n/a At constant (1985/86) prices 71.0 75.1 79.5 88.1 93.6 % change, year on year 6.4 5.8 5.9 10.8 6.2 Per head (Kt) At current prices 17,380 24,127 36,175 48,609 n/a At constant (1985/86) prices 1,558 1,619 1,787 1,955 n/a % change, year on year 4.5 3.9 10.4 9.8 n/a a GDP data are on an expenditure basis, and growth rates differ slightly from output basis data. There are serious question marks over the surge in growth shown for 1999/2000.

Sources: Ministry of National Planning and Economic Development, Statistical Yearbook 2000; IMF, International Financial Statistics.

Reference table 9 Gross domestic product by expenditure (Kt m; constant 1985/86 prices; % change year on year in brackets) 1995/96 1996/97 1997/98 1998/99 1999/2000a Total consumption 51,027 52,184 53,248 53,518 56,243 (6.4) (2.3) (2.0) (0.5) (5.1) Fixed investment 16,201 19,887 21,484 25,036 27,349 (28.2) (22.8) (8.0) (16.5) (9.2) Change in stocks 541 –975 –595 –129 871 Exports of goods & servicesb 5,089 5,608 6,798 7,894 9,782 (–22.0) (10.2) (21.2) (16.1) (23.9) Imports of goods & servicesb –6,117 –5,663 –5,812 –6859 –6111 (19.8) (–7.4) (2.6) (18.0) (–10.9) GDP 66,742 71,042 75,123 79,460 88,134 (6.9) (6.4) (5.7) (5.8) (10.9)c a Provisional. b Non-factor services. c There are serious question marks over the leap in GDP growth seen in the official data for 1999/2000.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook, 2000.

Reference table 10 Gross domestic product by sector (% change, year on year) 1995/96 1996/97 1997/98 1998/99 1999/2000a Agriculture 5.5 3.8 3.0 3.5 10.5 Livestock & fisheries 3.0 11.9 7.1 9.3 16.8 Forestry –4.5 2.1 2.8 3.2 4.5 Energy 8.9 –2.1 2.3 53.6 66.5 Mining 18.5 12.4 29.7 7.0 29.5 Manufacturing 7.6 4.6 5.0 6.2 14.5 Power 6.5 12.8 17.8 –5.4 14.1 Construction 27.2 24.6 9.8 6.3 4.4 Services 7.3 6.5 6.7 7.0 9.2 GDP at factor cost 6.9 6.4 5.7 5.8 10.9 a Provisional.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook, 2000.

Reference table 11 Consumer price index (calendar years) 1996 1997 1998 1999 2000 Yangon indexa 116.3 150.8 228.5 270.5 270.2 % change, year on year 16.3 29.7 51.5 18.4 -0.1

a 1995=100; from 1999, 1997=100.

Sources: IMF, International Financial Statistics.

Reference table 12 Output of key crops (‘000 tonnes unless otherwise stated) 1995/96 1996/97 1997/98 1998/99 1999/2000a Paddy 17,669.6 17,397.0 16,391.2 16,807.8 19,808.0 Sugarcane 3,199.2 3,978.7 5,055.9 5,343.9 5,363.2 Green gram 332.1 327.9 441.6 456.9 470.9 Black gram 365.4 323.2 413.0 437.1 420.7 Onions 186.0 189.4 219.1 468.7 468.4 Maize 270.4 281.4 303.4 297.9 343.6 Cotton (long staple) 129.8 135.8 141.5 135.1 146.3 Rubber 25.3 25.6 26.6 22.6 26.2 Memorandum items Net area sown (‘000 ha) 9,172 9,281 9,282 9,677 10,139 Irrigated 1,757 1,557 1,592 1,693 1,852 % of total area sown 19.2 16.8 17.2 17.5 18.2 a Provisional.

Sources: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 13 Production of livestock and fish (‘000 head unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000a Livestock Cattle 9,862 10,125 10,307 10,509 10,760 Buffalo 2,203 2,265 2,297 2,337 2,391 Pork 2,970 3,337 3,400 3,585 3,815 Fish (‘000 tonnes) Freshwater 83.4 88.7 88.5 96.1 110.5 Marine 174.3 241.6 260.6 290.8 336.8

a Provisional.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 14 Timber production (‘000 cu tonnes) 1995/96 1996/97 1997/98 1998/99 1999/2000a Teak 232.4 203.1 239.1 251.9 261.0 Other hardwoods 655.6 732.8 826.8 863.7 850.6

a Provisional.

Source: Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 15 Minerals production (tonnes unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000a Crude oil (‘000 US barrels) 4,280 3,788 3,630 3,378 3,480 Natural gas (m cu ft) 54,043 58,579 63,505 60,898 57,868 Zinc concentrates 1,704 1,589 1,303 1,236 507 Refined lead 2,074 1,986 1,585 1,855 1,716 Tin concentrates 490 230 154 114 131 Tungsten concentrates 144 24 19 7 7 Jade (‘000 kg) 1,221 1,608 2,154 1,256 5,242 Refined silver (‘000 oz) 142 118 89 117 90 Refined gold (fine oz) 3,106 5,524 5,829 5,523 6,145 Copper concentrate (‘000 tonnes) 28 26 15 n/a n/a Copper ore (‘000 tonnes) 1,101 1,024 495 n/a n/a a Provisional.

Sources: Ministry of National Planning and Economic Development, Statistical Yearbook 2000; Selected Monthly Economic Indicators; Review of the Financial, Economic and Social Conditions for 1996/97.

Reference table 16 Manufacturing production (Kt m current prices; quantum index 1985/86=100 in brackets) 1993/94 1994/95 1995/96 1996/97a 1997/98a Food & beverages 131,458 153,743 217,590 305,335 405,542 (n/a) (n/a) (119.1) (123.4) (127.0) Clothing 3,765 5,063 6,855 7,729 8,500 (n/a) (n/a) (132.6) (138.0) (142.7) Construction materials 3,946 4,141 4,877 5,562 6,553 (n/a) (n/a) (124.7) (134.5) (143.5) Personal goods 1,313 2,181 2,930 3,158 4,800 (n/a) (n/a) (114.7) (110.5) (126.0) Household goods 470 578 689 845 995 (n/a) (n/a) (171.5) (203.2) (204.5) Printing & publishing 616 598 1,064 1,962 871 (n/a) (n/a) (105.2) (200.1) (85.5) Industrial raw materials 4,485 8,075 14,335 14,879 24,737 (n/a) (n/a) (154.0) (150.3) (159.8) Mineral & petroleum products 3,210 4,904 4,805 5,332 32,797 (n/a) (n/a) (91.1) (102.7) (159.9) Agricultural equipment 603 730 962 1,540 2,362 (n/a) (n/a) (167.3) (265.9) (263.5) Machinery & equipment 76 103 171 155 209 (n/a) (n/a) (161.3) (232.2) (240.5) Transport vehicles 424 1,084 1,558 1,571 2,869 (n/a) (n/a) (76.9) (57.9) (79.9) Electrical goods 125 253 419 441 590 (n/a) (n/a) (38.8) (44.1) (68.6) Others 1,375 1,830 1,775 2,242 3,050 (n/a) (n/a) (62.4) (72.9) (96.1) Total 151,866 182,283 258,030 350,751 493,875 (n/a) (n/a) (118.4) (123.7) (130.1) a Provisional.

Source: Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions for 1997/98.

Reference table 17 Construction and renovation work (Kt m at current prices) 1993/94 1994/95 1995/96 1996/97 1997/98a State sector 13,972 23,470 36,459 44,386 53,120 of which: irrigation & embankments 899 1,074 5,800 4,196 4,069 railways, airstrips & jetties 735 2,163 3,885 8,523 9,427 roads & bridgesb 3,034 5,228 6,284 7,990 11,327 buildingsb 8,331 13,072 17,762 18,785 18,667 Private sector 3,253 4,080 7,841 18,753c 28,080c Total incl othersb 17,433 27,797 44,489 63,254 81,363

a Provisional. b Includes renovation and upgrading. c Increases steeply because from 1996/97 two large build-operate transfer (BOT) road- and bridge-building projects were begun with private- sector involvement.

Sources: Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions for 1997/98; Statistical Yearbook, 1997.

Reference table 18 Banking statistics (Kt m) 1995/96 1996/97 1997/98 1998/99 1999/2000 Total savings 58,935 88,099 109,815 162,209 236,383 State banks 44,313 55,020 63,875 79,820 96,254 Private banks 14,622 33,079 44,940 82,389 140,129 Loans 42,977 62,487 n/a n/a n/a of which: extended by private banks 11,519 20,461 n/a n/a n/a Sources: Ministry of National Planning and Economic Development, Central Statistical Organisation, Selected Monthly Economic Indicators; Review of the Financial, Economic and Social Conditions for 1997/98.

Reference table 19 Tourist arrivals and receipts 1995/96 1996/97 1997/98 1998/99 1999/2000a Arrivals 120,205 251,501 265,122 287,394 246,007 Receipts (Kt m) 181.6 190.5 180.2 n/a n/a

a Provisional.

Sources: Ministry of National Planning and Economic Development, Review of the Financial, Economic and Social Conditions for 1997/98; Central Statistical Organisation, Selected Monthly Economic Indicators.

Reference table 20 Exports (Kt m; cif) 1995/96 1996/97 1997/98 1998/99 1999/2000a Pulsesb 1,357.9 1,272.1 1,403.3 1,134.1 1,179.3 Readymade garments 300.1 402.4 436.0 471.0 877.0 Teakc 903.0 854.6 697.6 640.2 726.7 Prawns 408.7 564.2 565.4 574.8 530.5 Base metals & ores 70.4 33.1 30.1 73.7 288.5 Fish & fish products 159.4 226.6 301.7 327.6 231.9 Gems 133.0 158.0 204.0 149.0 217.0 Other hardwoodsc 145.5 130.5 155.3 198.2 199.8 Plywood, veneer & other forest products 207.9 300.5 n/a n/a n/a of which: plywood & veneer 23.5 34.5 34.4 119.6 94.7 Raw rubber 180.0 170.6 133.6 100.4 75.2 Rice 439.8 125.8 37.7 166.8 64.9 Sesame seeds 186.1 191.0 175.6 164.2 81.8 Unspecified itemsc 1,099.3 1,771.3 2,864.7 3,135.7 3,495.4 Total incl others 5,032.7 5,487.7 6,446.8 6,728.1 7,042.7 Government 2,353.0 1,910.4 1,655.3 2,075.0 1,980.5 Private 2,679.7 3,577.3 4,791.5 4,653.1 5,062.2 a Preliminary. b Includes matpe, pedesein and other pulses. c Includes border trade.

Sources: Central Statistical Organisation, Selected Monthly Economic Indicators; Ministry of National Planning and Economic Development, Salient Economic and Social Indicators, March 1998; Review of the Financial, Economic and Social Conditions for 1997/98.

Reference table 21 Imports (Kt m; cif) 1995/96 1996/97 1997/98 1998/99 1999/2000a Capital goods 3,644.5 4,714.2 6,172.1 7,358.0 5,335.1 Intermediate goods 2,376.8 3,046.0 3,350.1 4,171.3 5,132.0 Consumer goods 4,280.3 4,018.6 4,843.9 5,342.4 5,797.7 Total 10,301.6 11,778.8 14,366.1 16,871.7 16,264.8 Government 3,352.0 2,563.4 4,126.9 5,505.9 4,823.3 Private 6,949.6 9,215.4 10,239.2 11,365.8 11,441.5 Major items Machinery & transport equipment 2,402.0 3,032.1 3,597.4 4,655.8 3,289.4 Base metals & manufactures 971.3 1,535.0 1,498.6 1,933.5 1,722.8 Electrical machinery 598.2 830.1 1,202.8 1,692.0 1,578.3 Refined mineral oil 31.9 466.5 479.9 411.5 1,046.1 Edible vegetable oils 1,183.6 398.2 805.5 670.0 477.6 Fertiliser 130.5 72.2 357.4 152.1 329.0 Pharmaceuticals 108.0 150.6 185.9 242.2 302.5 Cement 135.1 299.5 502.6 393.3 252.9 Unspecified itemsb 3,848.1 4,652.7 4,984.2 5,974.5 7,035.2 Synthetic fabrics 45.6 129.9 289.5 554.4 898.5 a Preliminary. b Mostly border trade.

Source: Central Statistical Organisation, Selected Monthly Economic Indicators; Ministry of National Planning and Economic Development, Statistical Yearbook 2000.

Reference table 22 Key exports and imports (volume) (‘000 metric tonnes unless otherwise indicated) 1995/96 1996/97 1997/98 1998/99 1999/2000a Exports Rice 354.0 93.1 28.3 120.4 54.9 Pulses 609.6 594.8 768.9 621.6 650.7 Raw rubber 24.8 25.8 22.0 29.7 29.2 Teak logsb (cu tonnes) 117.3 138.7 138.0 172.2 234.0 Hardwood logsb (cu tonnes) 83.3 130.8 153.9 242.7 335.3 Prawns 9.0 12.8 13.5 13.5 14.2 Fish & fish products 34.5 33.7 41.2 46.6 31.4 Base metals & ores 34.2 16.4 26.0 8.2 33.5 Imports Wheat flour 5426254172 Edible vegetable oils & other hydrogenated oils 218 72 154 138 158 Refined mineral oil (‘000 gallons) 912 23,424 27,144 27,786 113,467 Artificial & synthetic fibres 602 262 n/a n/a n/a Fertilisers 31 17 85 62 132 a Provisional. b Includes border trade.

Sources: Central Statistical Organisation, Selected Monthly Indicators; Statistical Yearbook 2000; Ministry of National Planning and Economic Development, Statistical Yearbook, 1997/98.

Reference table 23 Main trading partners (Kt m) 1995/96 1996/97 1997/98 1998/99 1999/2000a Exports to: India 1,036.8 929.0 1,425.0 1,040.2 1,346.0 China 195.1 336.1 837.0 570.6 847.0 Singapore 986.8 1,007.3 828.8 701.5 812.9 USA 216.2 258.1 219.0 225.8 563.0 Thailand 535.0 544.2 723.9 565.3 552.5 Total incl others 5,032.7 5,487.7 6,446.8 6,728.1 7,042.7 Imports from: Singapore 1,819.7 2,791.5 4,440.4 5,187.7 4,559.0 Thailand 1,318.8 1,191.7 1,325.4 2,064.9 2,163.3 Japan 2,505.8 2,465.0 2,181.4 2,158.2 1,808.2 China 1,433.8 1,116.3 1,524.4 1,744.3 1,568.2 South Korea 402.6 438.8 787.3 8756.0 1,488.1 Total incl others 10,301.6 11,778.8 14,366.1 16,871.7 16,264.8

a Provisional.

Source: Central Statistical Organisation, Selected Monthly Economic Indicators.

Reference table 24 Balance of payments, IMF series (US$ m; calendar years) 1996 1997 1998 1999 2000 Current-account balancea –279.8 –412.0 –494.2 –365.7 -292.7 Exports, fob 937.9 974.5 1,065.1 1,125.2 1,386.3 Imports, fob –1,869.1 –2,106.6 –2,451.2 –2,160.4 –2,229.1 Trade balance –931.2 –1,132.1 –1,386.1 –1,035.2 –842.8 Services: credit 427.7 521.7 626.1 446.7 421.2 Services: debit –302.0 –443.4 –364.8 –288.4 –334.7 Services balance 125.7 78.3 261.3 158.3 86.5 Income: credit 9.1 6.5 10.9 50.6 29.6 Income: debit –53.1 –20.3 –11.3 –54.0 –68.6 Income balance –44.0 –13.8 –0.4 –3.4 –39.0 Current transfers: credit 598.4 685.1 631.2 515.0 502.8 Current transfers: debit –28.8 –29.7 –0.3 –0.3 –0.1 Current transfers balance 569.6 655.4 630.9 514.7 502.7 Capital account n/a n/a n/a n/a n/a Financial account 266.8 469.1 535.1 248.8 243.8 Outwards direct investment 0.0 0.0 0.0 0.0 0.0 Inwards direct investment 310.4 387.2 314.5 253.1 240.0 Other investment liabilities –43.6 81.9 220.7 –4.3 3.9 of which: general government –40.6 87.5 226.9 -4.1 -4.6 Errors & omissions (net) –11.7 –26.0 –18.8 71.5 50.4 Overall balance –24.7 31.0 59.7 -45.4 1.5

a Components do not add in source due to rounding.

Source: IMF, International Financial Statistics.

Reference table 25 External debt (US$ m unless otherwise indicated; debt stocks as at year-end; calendar years) 1995 1996 1997 1998 1999 Total external debt 5,771 5,184 5,063 5,609 5,999 Long-term debt 5,378 4,804 4,640 5,015 5,333 Short-term debt 393 381 434 594 666 of which: interest arrears on long-term debt 352 366 390 456 509 Use of IMF credit 0 0 0 0 0 Public & publicly guaranteed long-term debt 5,378 4,804 4,629 5,015 5,333 Official creditors 5,011 4,438 4,177 4,476 4,806 Multilateral 1,311 1,223 1,171 1,199 1,251 Bilateral 3,680 3,215 3,006 3,277 3,555 Private creditors 367 366 452 539 527 Total debt service, paid (flow) 248 157 114 88 88 Principal 180 140 101 79 64 Interest 70 18 15 14 32 Ratios (%) Debt-service ratioa 19.2 11.2 7.4 5.3 n/a Short-term debt/total external debt 6.8 7.3 8.6 10.6 11.1 Memorandum items Disbursements (flow) 86 144 175 214 64 Multilateral creditors 0 0 0 0 0 Bilateral creditors 16 97 33 100 34 Private creditors 69 47 143 114 29

Note. Long-term debt is defined as having original maturity of more than one year. Figures do not add due to rounding. a Debt service as a percentage of earnings from exports of goods and services.

Source: World Bank, Global Development Finance, 2000.

Reference table 26 Net official development assistancea (US$ m; calendar years) 1995 1996 1997 1998 1999 Bilateral 126.2 45.3 23.6 27.4 44.7 of which: Japan 114.2 35.2 14.8 16.1 34.2 Multilateral 23.2 -3.3 10.0 31.3 28.6 of which: UNDP 14.2 5.7 13.8 16.7 15.6 UNICEF 6.9 8.0 6.4 6.6 7.9 Total 151.8 56.2 45.2 58.7 73.3

a Disbursements by OECD and OPEC members and multilateral agencies. Official development assistance is defined as grants and loans, with at least a 25% grant element, administered with the aim of promoting economic or social development.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients, 2001.

Reference table 27 Foreign reserves (US$ m unless otherwise indicated; end-period; calendar years) 1996 1997 1998 1999 2000 Foreign exchange 229.1 249.7 314.6 265.3 222.8 SDRs 0.1 0.1 0.3 0.2 0.1 Golda 11.6 10.9 11.4 11.1 10.6 Total reserves incl gold 240.8 260.7 326.3 276.6 233.5 Memorandum item Gold (m fine troy oz) 0.231 0.231 0.231 0.231 0.231

a National valuation.

Source: IMF, International Financial Statistics.

Reference table 28 Exchange rates (Kt:US$; annual averages; calendar years unless otherwise indicated) 1996 1997 1998 1999 2000 Official rate 5.92 6.24 6.34 6.29 6.52 Official rate (financial year beginning Apr 1st) 5.99 6.30 6.30 6.32 6.50 Free-market rate 128.0a 210.0a 322.0a 343a 355a Free-market rate (financial year beginning Apr 1st) 155a 241a 334a 341a 392a

a Economist Intelligence Unit estimate.

Sources: IMF, International Financial Statistics; private reports.

Editors: Graham Richardson (editor); Danny Richards (consulting editor) Editorial closing date: September 1st 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected]