Yangon (2007-2017) / Privatization of State-Owned Enterprises as Political Empowerment
Despite the governing power in Myanmar shifting from the military junta to a democratic party, its officials and cronies have been able to retain their large political position within the playing field in various ways, one of which is by withholding large portions of the formerly state-owned assets of which they gained ownership through the problematic privatization programme introduced in 1995, and of greater significance from 2011 onward. After the opening up of the regime, these assets garnered larger economic value, particularly the properties in downtown Yangon because of its cultural and historical importance, among other aspects.
The establishment of the Privatization Committee in 1995 bought in the privatization programme with the aim to lead the country into a more market-oriented economy by raising the economic competitiveness of state-owned industries, which were otherwise working at a major loss and relying on the government for compensation especially as a consequence of the’ economic stagnation under military rule’ (Matsui 2016), through ‘auctioning and leasing or establishing joint ventures with local and foreign investors’ (Xinhua, 2010), thereby also encouraging the private sector to play a larger role in the economy.
The first phase yielded little economic significance as the enterprises were mostly smaller enterprises. Only beginning with the second phase in 2008 did the privatization plan emerge as not only a significant economic factor, but also a political one. As it was revealed, many of the resultant bidding winners were select officials within the military regime or of relations.
Furthermore, the legitimacy of the auction itself raises questions due to its highly non-public nature of sealed bidding, wherein the final selling price and new owner is only revealed to the recipient and the entire process is non-transparent.
By privately owning large portions of the state’s assets, military officials can retain political power and security through economy even after the turnover to a democratic governing structure, before which these state-owned enterprises would have switched to belong to, and cronies would no longer rely on patronage only, but also play an active role in politics.
Indeed the auctions increasingly play a major role in the market economy and internal politics of Myanmar with each successive phase. ‘A real estate agent based in Tarmwe township said the announcement of the auction, which could reap hundreds of millions of dollars, had brought the market to a standstill…as potential buyers wait to see the outcome of the auctions’ (Thiha 2015 ). Of particular interest was the auctions leading from 2011, wherein a large portion of the property list up for auction included culturally and historically significant former government offices, buildings and lands from the colonial era in downtown Yangon (Service 2011). As of present day, the urban ownership of downtown Yangon is dominated by the private sector, though it was formerly the capital and base of the governing body before its move in 2006.
By the regulations of the Privatization Commission, any building or land auctioned must maintain its original function even under new ownership. This regulation too wavers however under its problematic private transactions and oftentimes to ‘developers of hotels, offices, malls, and luxury apartment buildings’ (Rieffel 2015). Furthermore, a large and convenient loophole blatantly exists within this it in light of former offices such as the City Hall or Secretariats building and lands in downtown Yangon which originally housed ministry departments and were the site of significant historical events. These buildings and lands hold extremely high market value to local and foreign investors especially after the change in governance in 2012 (Wainwright 2016), its site as a former government capital, and its number of religious sites, particularly the Sule Pagoda.
While the government’s act of national privatization advertised itself as increasing the financial efficiency of its failing enterprises and working towards a more market-oriented economy following the stagnation during the former military regime, its execution revealed behind it a largely political agenda of a specific group of people. The ownership and development of cultural and historical property particularly in downtown Yangon is still in large contention today as various stakeholders hold varying and contrasting interests for them.
Ford, Michele, Michael Gillan, and Htwe HTwe Thein. 2015. “From Cronyism to Oligarchy? Privatisation and.” Journal of Contemporary Asia.
Japan Internation Cooperation Agency (JICA), and Yangon City Development Committee (YCDC). 2013. A Strategic Urban Development Plan, The Project for the Strategic Urban Development Plan of the Greater Yangon. Final Report I, Yangon: Nippon Koei Co., Ltd, NJS Consultants Co., Ltd., YACHIYO Engineering Co., Ltd., International Development Center of Japan Inc., Asia Air Survey Co., Ltd., ALMEC Corporation.
Linn, Thein. 2009. “Government Announces Huge Yangon Property Sale.” Myanmar Times. August 3. Accessed December 13, 2017. https://www.mmtimes.com/business/6305-govt-announces-huge-yangon-property-sale.html.
Matsui, Motokazu. 2016. “Suu Kyi faces tough test in Myanmar’s privatization push.” Nikkei Asian Review. May 22. Accessed December 12, 2017. https://asia.nikkei.com/Politics-Economy/Policy-Politics/Suu-Kyi-faces-tough-test-in-Myanmar-s-privatization-push.
Myanmore. 2017. “Myanmar’s Historic Secretariat Building to be Restored.” Myanmore. November 14. Accessed December 12, 2017. https://www.myanmore.com/yangon/2017/11/myanmars-historic-secretariat-building-to-be-restored/.
Rieffel, Lex. 2015. “State-owned enterprises and the future of the Myanmar economy.” Brookings. September 16. Accessed December 12, 2017. https://www.brookings.edu/blog/up-front/2015/09/16/state-owned-enterprises-and-the-future-of-the-myanmar-economy/.
Schlaefli, Samuel. 2016. “Is this the Future of Yangon.” Myanmar Times. October 14. Accessed December 12, 2017. https://www.mmtimes.com/lifestyle/23103-is-this-the-future-of-yangon.html.
Service, Indo Asian News. 2011. “Myanmar to privatise many state-owned properties.” Yahoo. February 23. Accessed December 12, 2017. https://www.yahoo.com/news/myanmar-privatise-many-state-owned-properties-20110222-214806-593.html.
Thiha. 2015 . “Epic state auction hushes market.” Consult-Myanmar. May 22. Accessed December 6, 2017. https://consult-myanmar.com/2015/05/22/epic-state-auction-hushes-market/.
Trust, Yangon Heritage. 2016. Yangon Heritage Strategy. Proposal, Yangon: Yangon Heritage Trust.
Tun, U Thein. n.d. “Experiences of Myanmar Privatization Programme.” Non-Aligned Movement, Centre for South-South Technical Cooperation. Accessed December 13, 2017. http://www.csstc.org/reports/egm/P4/Presentation_myanmar.htm.
- “Xinhua: Myanmar privatization move gets momentum .” BurmaNet News. Feb 5. Accessed December 6, 2017. http://www.burmanet.org/news/2010/02/05/xinhua-myanmar-privatization-move-gets-momentum/.