The buck stops with Suu Kyi -- but is that for the best?
MOTOKAZU MATSUI and THUREIN HLA HTWAY, Nikkei staff writers
YANGON -- Frustration over Myanmar's economic policy is mounting. This is heaping pressure on de facto leader Aung San Suu Kyi, who holds many -- some reckon too many -- of the power levers.
When Suu Kyi addressed around 150 business leaders in Naypyitaw on Oct. 22, she confessed that state affairs had stagnated in her government's first six months. Audience members let out audible sighs.
In late July, the government announced an economic plan highlighting 12 priorities, such as attracting foreign investment and developing infrastructure. But the three-page document was criticized for lacking specifics. The Oct. 22 meeting was convened so that Suu Kyi herself could tell companies how the policy would be implemented.
The crowd included business magnates such as Serge Pun, chairman of property developer First Myanmar Investment; Zaw Zaw, chairman of Ayeyarwady Bank, the country's second-largest bank; and Khin Shwe, chairman of construction giant Zaykabar. If they came expecting numerical targets, they were disappointed.
Suu Kyi did talk about the rule of law and the importance of vocational training, but she did not offer numerical goals of any sort. She stressed the need to lay the groundwork for the coming decades -- not just the next five years.
Planning and Finance Minister Kyaw Win, who took the podium after Suu Kyi, did not exactly improve the mood. Though the World Bank and the Asian Development Bank expect Myanmar's economy to grow 7-8% this year, Kyaw Win said the growth rate is about 5% at the moment "because of the stagnation in the first six months."
The minister likened the transition between governments to a marathon and said it naturally takes time. He called on domestic companies to do their part, explaining that private investment in smaller municipalities and the medical sector is vital given the limited national budget.
Soe Tun, vice chairman of the Myanmar Rice Federation, the country's largest agricultural group, said he had hoped to hear about concrete policies. The president of an electrical equipment company, meanwhile, said he could not believe Kyaw Win put the onus on businesses rather than promoting public-private partnerships.
The briefing was supposed to be an opportunity for the government and business leaders to exchange opinions. From the executives' perspective, however, it merely raised more questions about the government's ability to formulate a viable economic strategy.
Concentration of power
The clearest sign of Myanmar's waning momentum is the decline in foreign direct investment. Inflows of such funds had fueled the country's growth under the previous government led by Thein Sein. But investment approvals by the new government in the first six months, released in October, came to about $1.3 billion, down 60% from a year earlier.
A key reason was the delayed launch of the new Myanmar Investment Commission, which wields approval authority. The former MIC was dissolved by the time the new government took power in late March, and the new one did not get up and running until June.
What was the holdup? It seems that nominations for the commission's 11 members -- including cabinet members, high-ranking officials and leaders of economic organizations -- were examined by the Ministry of Planning and Finance and other government agencies. But Suu Kyi had the final say, and a government source said she did not have time to sign off.
In the early days of her government, Suu Kyi took on four cabinet portfolios -- foreign affairs, electric power and energy, education, and head of the president's office. She later gave up the energy and education posts but took the new title of state counselor, allowing her to oversee state affairs. Between her hectic travel schedule and other duties, it appears the investment commission landed on the back burner.
This highlights the new government's potentially problematic dependence on one woman.
An announcement at the Oct. 22 meeting hinted at a further concentration of power in Suu Kyi's hands. In her speech, she said she would set up a new organization tasked with securing official development assistance from abroad. The details have yet to be released, but the entity will report directly to the state counselor. Some worry this will create yet another impediment to policy implementation.
During her visit to Japan through Saturday, Suu Kyi is expected to ask Prime Minister Shinzo Abe and various economic organizations for assistance. But Myanmar's power structure may need to change to smooth the way for effective aid.
Myanmar faces increasingly severe economic conditions, with a deteriorating market for natural gas -- its main export -- and a weakening currency. Under the circumstances, the government's heavy reliance on Suu Kyi poses a risk.