Myanmar Junta Can't Hide Behind A Sham Election| MENAFN.COM

Wednesday, 29 March 2023 07:03 GMT

Myanmar Junta Can't Hide Behind A Sham Election

(MENAFN- Asia Times)

Two years after a coup d'état orchestrated by Myanmar's military leaders ousted the elected government of Aung San Suu Kyi's National League for Democracy, the country's political and economic crisis continues to deepen.

In the World Bank's most recent forecast , released on January 30, economists predict that Myanmar's economy will grow a mere 3% over the next fiscal year – meaning that, for the foreseeable future, the economy will probably remain smaller than it was before the coup.

Since the February 1, 2021, coup Myanmar's economy has shrunk by more than 18%, beset by chaos that was brought about by the junta's gross mismanagement combined with sanctions that the United States and the European Union imposed to pressure military leaders for a return to a“democratic path.”

As if those basics weren't bad enough, additional economic issues have piled on. Rising inflation, a shortage of foreign currency reserves and wild fluctuations in the country's banking rules and monetary policies have turned international companies' operating environment more complex and challenging by the day.

A Myanmar shopkeeper counts out kyat notes in Yangon's Pazundaung market in in March 2020 before the junta's coup wrecked the economy. Photo: AFP

according to one listing , at least 1 major multinational companies were invested in Myanmar when the coup occurred.

The prolonged instability and the difficulty of mitigating reputational risks inherent to operating there have prompted at least some of the companies to cut their losses by suspending operations or exiting the country entirely.

research by the torino world affairs institute counted 28 big multinationals that, between February 2021 and December 2022,“left the country or temporarily suspended their activity as a result of the military coup.”

A timeline compiled by Reuters shows that in the first year following the coup a growing number of international companies had left and that more planned to leave soon.

In March 2023, for example, British retailer Marks & Spencer will officially stop sourcing products from Myanmar after a third-party assessment found that it would be impossible for the company to adhere to its internal principles on responsible business conduct if it continued to operate there.

In December 2022, the Myanmar Center for Responsible Business, an NGO that works with foreign companies trying to invest responsibly in Myanmar's economy, closed its Yangon office.

Earlier in the year the junta had – on bogus charges – detained and imprisoned for more than three months Vicky Bowman, the founder of the center and a former UK ambassador to Myanmar.

Former UK Ambassador Vicky Bowman. Photo: MCRB

The recent exits and the reluctance of some foreign firms to expand their current operations in view of Myanmar's continued political turbulence are bad news for a junta seeking to dig itself out of a deep economic hole.

The junta does have a plan. Within the next year, it hopes to restore the business confidence of international firms by holding an election. With that exercise, junta leaders hope to signal that normalcy has returned to Myanmar and that the country is back open for business. They also hope to legitimize their own rule in the eyes of the international community.

Before extending its self-imposed state of emergency for an additional six months on February 2, the junta had planned to hold an election before August. While the exact timing of the election is uncertain, the regime has taken early steps toward holding it in recent weeks, despite concerns over whether it is even logistically possible in view of the rapid deterioration of the security situation across most of the country.

A problem with the junta's plan to gain legitimacy with the exercise is that it will almost certainly be a fake election. On January 25, the junta released a new 20-page law outlining highly burdensome rules for political parties that hope to take part in the upcoming election.

The rules , which would likely block the National League for Democracy from participating, would immediately disqualify the election as being legitimate in eyes of most international observers.

In November, US Secretary of State Antony Blinken urged the international community to deny the junta any credibility it sought by holding an election that would fail to meet international standards.

In a statement , Blinken predicted that“the regime's planned sham elections ... will only fuel more violence, prolong the crisis, and defer the country's transition to democracy and stability.”

Yet, for certain countries, the sham election may present an opportunity.

India, a long-time supporter of the junta, in April last year expressed its support for an election by meeting with officials from the junta-backed Union Election Commission, the regime's so-called electoral watchdog. That meeting arguably provided the junta a serving of the diplomatic legitimacy it had sought in setting up the commission.

Meanwhile, Japan, a long-time investor in Myanmar and one of its largest following the country's initial steps towards political reopening commenced in 2011, has remained diplomatically quiet as more than 400 Japanese companies remain invested in the economy.

For Japanese companies, which pumped millions of dollars into Myanmar's economy before the coup, the outcome of the“election” may prove to be a critical turning point that determines whether they continue to operate there.

A survey conducted by the Japan External Trade Organization (JETRO) in January 2022, nearly a year after the coup, found that approximately 80% of Japanese companies intended to expand or at least retain their operations in Myanmar's post-coup economy – an explicit rejection of the approach taken by Western companies like Marks & Spencer that ultimately decided to exit.

Media interviews of Japanese business executives and analyses conducted by third-party observers indicate that Japanese and other Asian companies have taken a“wait and see” approach to the Myanmar crisis.

Japanese companies that suspended their operations due to the political sensitivities of the coup are waiting patiently in case an opportunity for the resumption of economic activities remains on the horizon.

Toyota's new factory inside Myanmar's Thilawa Special Economic Zone was originally slated to open in February 2021. The company suspended regular production plans following the coup.

Factories were shuttered in Myanmar's first special economic zone after the February 1, 2021, coup. Now Toyota, for one tenant, is going to regular production. Photo: Twitter / The Irrawaddy

In the months since, Toyota has produced a small number of vehicles at the factory each month, testing the waters for when a full-scale resumption of production becomes tenable. In October 2022, after having waited for 19 months, Toyota announced that it would begin regular production of vehicles at the plant.

In September 2022, Suzuki, another Japanese automaker, announced that it would be forced to suspend production at its Yangon-based factory after a lack of foreign currency reserves made it difficult for the company to import the parts necessary to continue the production of its vehicles. But despite these difficulties, Suzuki, like Toyota and other Japanese companies, has remained invested in Myanmar.

Many Japanese firms have expressed only fleeting commitments to address the human rights issues that have prompted Western companies to exit.

The approach of many Japanese companies in Myanmar somewhat mirrors their position in other politically contentious contexts, including Ukraine. In the immediate aftermath of the Russian invasion of Ukraine, more than 1,500 Western companies withdrew from the Russian economy citing Russian President Vladimir Putin's intolerable war of aggression against the Ukrainian people.

A Yale University survey conducted at the time found that while 46% of British firms, 33% of Canadian firms and 27% of US firms withdrew from Russia, only 5% of Japanese companies in Russia had done the same.

A more recent survey conducted by the University of St Gallen in Switzerland in January 2023 found that only 15% of Japanese firms had fully divested from the Russian economy since the invasion almost a year ago.

Blinken and other international observers have termed Myanmar's upcoming election nothing more than a thinly veiled attempt at legitimizing a murderous regime that continues to be categorically rejected by the majority of its people.

Protesters hold posters with the image of detained civilian leader Aung San Suu Kyi during a demonstration against the military coup in Naypyidaw on February 28, 2021. Photo: AFP / Stringer

Moreover, the upcoming sham election has the potential to inflame tensions between the military and ethnic resistance organizations even further, creating yet more instability .

As the junta moves to hold what it calls an election in the coming months, both Japanese and international companies must recognize that the exercise not only will fail to return stability to the country; it likely will result in a further deterioration of the business environment.

Companies would be wise to consider how their operations and investments in the country will impact local people – and move to act accordingly.

Sam Baron is a researcher at the University of Tokyo's Research Center for Sustainable Peace and a policy fellow at the Yokosuka Council on Asia-Pacific Studies. Follow him on Twitter at @samuelgbaron.


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