New Myanmar government plans to focus on democratic and market reforms

With the historic general election in November 2015 followed by the new government’s official takeover in March 2016, Myanmar turned a key corner in its modern history. Unsurprisingly, this event also brought with it a wave of expectations for major and rapid change, with government ministries also outlining a series of 100-day plans, which gave an insight into many of the new administration’s priority areas for the year ahead, while also highlighting many of its most important challenges.

New Leader

On March 30, 2016, the new government, led by President U Htin Kyaw, finally assumed office, four months after the National League for Democracy (NLD) won a landslide in the country’s first openly contested general elections. The NLD leader, Aung San Suu Kyi, was barred from the top job under constitutional provisions denying the post to anyone with a foreign spouse, but instead, she took on the positions of state counsellor, foreign minister and minister of the president’s office.

The NLD had run its campaign on a platform of democracy, prosperity and peace, with its initial months in office facing daunting tasks on all these fronts. Nevertheless, the government quickly took the initiative. On the peace front, the government moved to convene Panglong II, a conference named after a pre-independence gathering of groups in opposition to British rule. Panglong I had led to a united front in the liberation of the country, with Daw Aung San Suu Kyi suggesting that a similar, second “struggle for national independence” was also now necessary.

Held in late August-September 2016, Panglong II brought together numerous ethnic groups with military and governmental representatives, with its biggest achievement being that of bringing in from the cold several of the groups that had refused to sign ceasefire agreements the year before. Yet three key guerrilla groups did not attend, some of which are still engaged in fighting with the military. The conference ended early, and many key issues will now be handled by bi-annual summits.

Ministerial Plans

On the prosperity front, many government ministries issued 100-day plans soon after their new ministers took office, outlining their development targets. Several of the plans came from ministries that had themselves recently been amalgamated from previous bodies. The new government trimmed the number of ministries from 36 to 22.

One of these new, amalgamated ministries is the Ministry of Transport and Communications (MTC), which brought together the Ministry of Railway Transportation, the Ministry of Transport and the Ministry of Communications and Information Technology. The MTC lost no time in announcing that it was developing a new national transport policy, with the Yangon-Mandalay corridor its priority. In this, the ministry will be working with the Ministry of Construction on highway development, while also focusing on the Yangon-Mandalay railway network.

At the same time, the MTC intends to give a boost to Myanmar National Airlines, with a programme of maintenance and repair of its ATR aircraft fleet, while there are plans for a river port at Mandalay.

Another major restructuring was initiated at the Ministry of Electricity and Energy (MEE), which now consists of four departments, five state-owned enterprises and two corporations. The MEE indicated it was pursuing a policy of boosting power production, while also building new power transmission lines.

The Ministry of Industry (MoI), meanwhile, also announced in its 100-day plan that it would be focusing on developing the small and medium-sized business sector. It is also looking at boosting its training and education role, while launching a series of industrial ventures that it deems in the national interest.

Reforms & New Laws

Perhaps the most crucial reform on the economic front is the new Myanmar Investment Law. Enacted by President U Htin Kyaw in October 2016, it is due to come into force in April 2017 and replaces the 2012 Foreign Investment Law and 2013 Myanmar Citizen Investment Law. The aim of the legislation is to equalise treatment of foreign and domestic investors, while also simplifying procedures (see Trade & Investment chapter). The move dovetails with efforts by the government to attract more business from the US and Europe. Both had been mainstays of the international sanctions regime against military rule, with the sanctions being gradually eased as democratic reforms were rolled out.

Sanctions

In October 2016 then-US President Barack Obama announced that US sanctions were being terminated, with the US Department of the Treasury issuing formal notice to that effect. The EU had lifted most of its sanctions against Myanmar in 2013, but retained embargoes on armaments and equipment that could be used for internal repression. Sanctions on such items were renewed for one year in April 2016. Myanmar also enjoys membership of the EU’s Generalised System of Preference, which gives goods quota- and duty-free access to that market.

A new Companies Law, prepared with the assistance of the Asian Development Bank and the Directorate of Investment and Company Administration, was also progressing through parliamentary committees in late 2016, with the expectation that it too would be enacted in 2017.

The progress of these reforms won praise from the IMF in an October 2016 statement, which also mentioned the passing of the Financial Institutions Law (FIL) and continued improvements in revenue administration. FIL was passed by Parliament in January 2016, and boosts the levels of required paid-up capital for banks, along with their reserve requirements.

Meanwhile, in education, reform is also under way. In December 2016 the Ministry of Education announced that consultations would be held with stakeholders, such as the country’s student unions, over a revision of the National Education Law. This had been introduced in 2014 and revised in 2015, but was still plagued by controversy. The hope is that further consultation and discussion will lead to a more widely accepted new law in 2017.

Regulatory Change

On the democracy front, the government moved rapidly to strike down a number of laws that it saw as harmful to the country’s democratic system, while also passing a law to allow Daw Aung San Suu Kyi to take on the new role of state counsellor. The new regulations included revoking laws such as the 1975 Protecting the State from Harm Law, and the State and People’s Council laws of 1974. Later in 2016 the Union Parliament – both houses of the bicameral legislature sitting together – also voted to repeal the Emergency Provisions Act, a relic of repressive legislation going back to 1950 that allowed detention without charge and a low standard of evidence for convictions, which could result in the death penalty. The new parliament has also passed new laws on regional and state assemblies (the Region Hluttaw or State Hluttaw Election Law) and on the national assembly, or Ayotha Hluttaw.

The NLD’s programme of reform has not been without its challenges, however. Ongoing ethno-religious conflict in Rakhine State has been one area of great difficulty and sensitivity. A controversial commission of inquiry sent by the government to investigate the violence there, headed by the former UN Secretary General Kofi Annan, is due to report in late 2017. Meanwhile, a military crackdown in the state came in October 2016, after a surge in radical Islamist violence. The state remains one of the biggest challenges for Daw Aung San Suu Kyi’s administration, as does the violence in Shan State, which saw an upsurge in late 2016 after a break down in talks between four local militias and the government.

One other challenge is reform of the justice system. There has been some progress, however, with Myanmar showing some improvement in the World Justice Project’s Rule of Law report in 2016. The country rose from a score of 0.42 out of 1.00 to 0.43, year-on-year.

Yet for all the challenges, much has already been achieved and in difficult circumstances. The government, riding a wave of popularity that gave it a landslide at the ballot box in November 2015, has largely stuck to its agenda of democratic and market reform. Working hard on the domestic peace process, it has also begun clearing the way for a more open investment environment. In the year ahead these overall policy directions look likely to continue. There is plenty to do in year two of NLD government, then, with much at stake for Myanmar and the region.

 

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Cover of The Report: Myanmar 2017

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This article is from the Country Profile chapter of The Report: Myanmar 2017. Explore other chapters from this report.