YANGON/BANGKOK -- A full generation has grown up since the State Law and Order Restoration Council (SLORC) of Senior Gen. Saw Maung seized power on Sept. 18, 1988, putting a bloody end to a nationwide pro-democracy uprising that lasted some six weeks. An estimated 3,000 people died in the crackdown, which re-established direct military rule by a junta.
The nation was bankrupt and the central government controlled none of the frontier areas back then. The threadbare military government immediately launched a brutal late wet season offensive against the Karen National Liberation Army ranged along the rugged border with Thailand, escalating a decades-old conflict that still simmers.
The SLORC also launched a sustained campaign against intrusive foreign media, particularly the BBC, Voice of America, and All India Radio. Their broadcasts, dismissed by government propagandists as a "skyful of lies," penetrated the closeted country, allegedly spreading misinformation about the junta's political repression and human rights abuses.
Thirty years later, SLORC may be gone, but the military retains a firm grip on the country. On Aug. 24, it was a new kind of Western media company that angered the generals. On the same day as the release of a damning United Nations report on Myanmar, Facebook suspended the accounts of Senior Gen. Min Aung Hlaing and a handful of other senior officers. "We believe that their use of Facebook may have fueled ethnic and religious tension in Myanmar," said Facebook spokeswoman Ruchika Budhraja.
While many observers consider the curbing of exceptionally toxic social media in Myanmar long overdue, some in Yangon noted the usefulness of the social network for gaining insights into the military mind.
"We can write critical pieces against the military but there is still an invisible line that you have to be careful about crossing," Kyaw Zwa Moe, a senior editor at The Irrawaddy, an online news portal, told the Nikkei Asian Review.
Facebook's action was but one in a remarkable string of events that highlighted the growing standoff between Myanmar and Western companies and institutions.
The decades-old war of words between Myanmar's rulers and independent media ratcheted up once more on Sept. 3 when two Reuters journalists, Wa Lone and Kyaw Soe Oo, were sentenced to seven years imprisonment for receiving "secret" state documents while reporting military atrocities in northern Rakhine State against minority Rohingya Muslims. The consensus among the Western journalists, diplomats and supporters outside the court was that the pair had been framed by the police who gave them the documents. A police captain who confirmed as much in court in April has himself been punished.
Only seven days earlier in New York, Hau Do Suan, Myanmar's permanent representative to the United Nations, was forced to respond to a U.N. fact-finding mission that concluded there was evidence of genocide and crimes against humanity "perpetrated on a massive scale" in Rakhine State. The findings came more than 20 months after at least 700,000 terrified Rohingyas, members of a 1.3 million Muslim minority in the Buddhist-dominated country of some 53 million people, fled into neighboring Bangladesh. The report accused the Myanmar military of murder, rape and "genocidal intent," and called for the prosecution of Min Aung Hlaing and other officers.
Hau Do Suan blamed the press for distorting the events. He said "facts were conveniently discounted or ignored by mainstream media" after government outposts were attacked, and some 16 security personnel killed.
State Counselor Aung San Suu Kyi, Myanmar's de facto head of government, was also castigated by the U.N.'s departing head of human rights, who accused her of whitewashing atrocities. "She was in a position to do something," Zeid Ra'ad al Hussein told the BBC. "There was no need for her to be the spokesperson of the Burmese military."
While nobody doubts the difficulties facing Suu Kyi -- and it is clear she exercises no direct control over the military -- she has been remarkably tone deaf to the international outrage at the disproportionate military response in Rakhine State.
Speaking in Singapore the previous week, Suu Kyi provoked outrage by describing three generals in her cabinet as "rather sweet." One of the three is responsible for the interior ministry, which has pressed the prosecution of the two Reuters journalists. Over the years, she has frequently and proudly alluded to the role of her father, the pre-independence hero Gen. Aung San, in creating the Burma Army.
Many observers in Yangon believe there is now more strife in the country than when Suu Kyi, who won the Nobel Peace Prize in 1991, took the helm of government after her National League for Democracy party swept elections in 2016. While she is still adored in cities and throughout much of the country, she may find she has lost ground among minorities when national elections are held in 2020.
There have been near-constant reports of clashes with Kachin, Karen and Shan insurgent forces. In late July, the Kachin Independence Army in the north produced graphic photographic evidence showing that six Ta'ang National Liberation Army female medics had been captured, raped and murdered on July 11 by soldiers from the 88th Light Infantry Division. The 44th LID in Karen State is meanwhile reported to have twice seriously violated a cease-fire agreement this year.
After the coup in 1988, western European countries froze trade and diplomatic relations, including by withdrawing their military attaches. Such steps ignored the fact that military diplomats had the best access to the government, and might therefore have some useful influence to exert. The SLORC went down a dark hole, and the country saw no political development for over two decades. The departure of senior diplomats may have satisfied political requirements at the time, but it seriously impeded the West's influence and communications channels with the secretive military government.
Western countries may be at risk of losing their influence in Myanmar once again. The country finally opened up to the West in 2011, in part to offset an overbearing China, but the thaw is facing challenges. In the aftermath of the Rohingya exodus, Germany has decided not to post a military attache to Myanmar for at least two years, and other Western powers may be planning to make do with only regional representation. The U.S. took steps to sanction a few culpable senior military officers in August, and human rights groups have called for the prosecution of the generals by the International Criminal Court at The Hague.
Meanwhile, the influence of China and other Asian nations appears to be resurgent, with investment pouring in as Western companies pull back.
"The Rakhine situation makes it harder for any Western listed company to invest in Myanmar today," said Luc de Waegh, the founder and managing partner of West Indochina, who has been in the country for 25 years. "For some, potential opposition from shareholders, stakeholders, NGOs is simply adding too much to the risk of doing business in Myanmar."
The Asian Development Bank forecast that Myanmar's economy will be flat this year at 6.8% and resume growing next year.
De Waegh says any gap left by Western companies will be filled by Asian investors -- particularly from China, Japan and Thailand. He noted that investment from other parts of Asia is already being channeled through Singapore.
Choosing to stay
Win Pa Pa Myo (Grace), marketing manager at The Strand, the iconic British colonial-era hotel in Yangon that was once billed as the finest hostelry east of Suez, was born during the prodemocracy uprising in 1988 that shook all of Burma, as Myanmar was still known.
A generation has passed, and the hotel with rotten plumbing, ceilings liable to collapse in the rainy season, a fat complaints book and military intelligence officers scouring the guest list has been completely refurbished. Its 32 suites rent out for over $300 even in the low season, and it expects to start filling up as the peak season gets underway in September.
"We have a niche market, and I am pretty sure we are the icon of Myanmar," Grace told Nikkei. After three years studying in Sydney, Australia, she had opportunities that would have been unthinkable three decades ago. She chose to make her career in Myanmar, where the economy has improved sufficiently for decent company accountants to be able to command $3,000 a month. "Most of our generation want to have jobs abroad, but we have strict family bonding," Grace said. "Parents here want their children to come home."
The material improvements in Yangon, the former capital that remains Myanmar's largest city, are obvious. The newly opened Junction City is as modern and well-stocked a shopping mall as one would find in Bangkok or Singapore. Power supplies are relatively stable. The streets drain after heavy rain. New tenements, gated communities and overpasses have sprung up.
There are decent pharmacies selling items that previously could only be found erratically on the black market. Restaurants offering local and South Asian fare are clean and reasonable. Shops selling smartphones and internet access line the streets around Sule Pagoda in the central downtown area. Taxis are cheap and plentiful; the streets are choked with traffic and air-conditioned buses.
Perhaps best of all, Yangon has managed to retain its remarkable, melting pot charm. The stupendous Buddhist pagodas, the British Victorian and Edwardian buildings, the broad, tree-lined boulevards, the Muslim, Indian and Chinese quarters -- all continue to thrive in a city that is rich and diverse, culturally and religiously.
It's not all positive, of course. Many back streets are still slums in dire need of renovation. There is also plenty of grinding poverty in outlying areas like Seikkyi Kanaungto across the Yangon River, North Okkalapa, Shwe Pyi Thar, and Hlaingthaya, a satellite town created in the aftermath of the 1988 uprising to help clear the capital of restive slum dwellers. Many still cannot earn enough to meet basic needs. "It's all about borrowing from moneylenders and falling progressively down the ladder of debt and despair," one long-term expatriate told Nikkei. "More and more people are falling off whatever bare-bones 'safety nets' existed."
After the boom years in 2015 and 2016, when Western tourists flocked into the once closed and ostracized country, the tourism industry has seen overall arrivals up just 2% in the year to July. As hotel capacity rises, many are less than half full. The outcry in the West over the Rohingya crisis has contributed to a 26% decline in arrivals from Western Europe. That has been offset by strong increases from China (34%) and Thailand (16%), Myanmar's two largest source markets, while Japan has held steady.
Along with the Rohingya issue, observers point to the bloated prices tourists were forced to pay and the very poor infrastructure outside Yangon. Myanmar also has yet to secure the kind of repeat visits that are so much a feature of neighboring Thailand's vastly larger and better established industry.
Yet Supalak Foong, owner of the new 209-room luxury Rosewood Yangon Hotel, a $140 million renovation project in downtown Yangon, is bullish. "While some Western visitors have been deterred we don't feel it will dramatically change things," she told Nikkei. "We are seeing an increase in high-value tourists, including Thais and other Asians drawn by Myanmar's many Buddhist sites, and a general increase in Chinese and Japanese visitors."
More luxury properties have soft-opened nearby in recent months. They include The Excelsior in a converted colonial-era building, and the Pullman Yangon Centrepoint, a top-tier Accor property with nearly 70 of more than 200 rooms available.
And despite the political and humanitarian situation, private equity firms are still able to raise money for Myanmar funds following some highly profitable deals. TPG, founded by U.S. billionaire David Bonderman, boasts the country's biggest deal to date after divesting a 50% stake last year in Myanmar Distillery Company to Thai Beverage. The deal was valued at nearly $500 million from TPG's initial investment of $150 million in 2015.
Delta Capital, which calls itself a "first mover" in the country's private equity business, has raised $120 million for two Myanmar-focused funds. Anthem Asia has just launched its debut $50 million fund with an initial investment of $34.5 million from three Western development financial institutions: the U.K.'s CDC Group, the Dutch Good Growth Fund, and the World Bank's investment arm, IFC. Executives at both private equity firms say it is better to engage with the country and help develop its private sector than to isolate it.
Nick Powell, Delta Capital's managing partner, acknowledges that the Rakhine crisis has made the investment environment "more difficult" but says Myanmar has already "come a long way."
"The bigger picture is that this is an important, strategic country that we want to support," Powell told Nikkei. "From an investment perspective, the macro remains compelling -- there's very little competition for deals that can lead to outsized returns."
Delta recently invested $7 million in local firm Easy Microfinance, which provides funds to smaller businesses. "We like businesses that provide goods and services sought by the growing middle class. We tend to avoid sectors that come with high government involvement and regulatory risks."
Japanese companies have made some substantial investments -- notably the $560 million investment in 2015 by Kirin Holdings for a 55% stake in Myanmar Brewery, owned by the military-backed Myanmar Economic Holdings -- but are now showing more hesitancy. "People at our headquarters in Tokyo are concerned, but the pressures on Japanese companies are much smaller than Western ones," an executive at a Japanese trading company told Nikkei.
Sean Turnell, a special economic consultant to Aung San Suu Kyi, concedes that the refugee crisis has hurt the country and the economy. "It has been a huge direct impact," he recently told local media. "Hundreds of millions of dollars are not here, because of Rakhine basically." He places some hope in the government's new Myanmar Sustainable Development Plan (2018-2030) published in August, which offers a broad framework for tackling inequality, upgrading infrastructure and stimulating key sectors like agriculture.
New investment and companies laws that recently came into effect provide an improved legal framework for investors. Sectors such as telecoms and microfinance have been liberalized and given new regulatory frameworks. Turnell says Myanmar's economic growth remains healthy, despite some warnings of further economic fallout from the condemnation over the Rohingya crisis.
"I think growth could undershoot a little, but is still amongst the highest rates in the region," said Turnell. The larger economic question for the NLD government is whether Myanmar can tackle cronyism and implement reforms.
"I worry about a lack of boldness in economic reforms," Turnell said. "The opposition from the old interests is strong."
Additional reporting by Nikkei Yangon Bureau Chief Yuichi Nitta