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Burma Capitalism Is Half-Baked But on the Rise

Government privatization program placates dissidents by setting them up in business

WITH his air conditioning going full blast, U Kyaw Kyaw Aung scans Rangoon's urban horizon from his new Toyota Sprinter. ``There's one,'' he says, pointing to a satellite dish barely visible from the road. ``They're not legal, but I know they're there because I installed them.''

Kyaw Kyaw Aung, who builds satellite dishes, defines Burma's (also called Myanmar) still-tiny but emerging business class. His gross income of $3,300 a month - more than 10 times what he earned as a technician for the United States Embassy - has made him one of the capital city's nouveau rich.

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Kyaw Kyaw Aung's business, too, is a mark of the nascent middle class - consumers with the money to buy a channel to the outside world. He estimates that there are some 4,000 registered satellite dishes in Rangoon and 20,000 that are not registered.

``Anybody who has a back yard has a satellite dish,'' he says. ``Nearly everybody can afford it - 50,000 kyat ($500) is nothing.''

But the average civil servant in this southeast Asian country, earning about half that amount in a year, would surely disagree. For the 85 percent of the population eking out a life in the countryside, luxury is defined by a corrugated roof and running water, not access to Cable News Network.

Still, as the government follows communist Cuba and China by choosing a capitalist path and abandoning ``the Burmese Road to Socialism,'' which impoverished the country for more than a quarter century, there are signs that the free market is beginning to create some prosperity. And the government, itself, is shrinking, pushing as many people as possible out of the socialist nest.

``They will have to fend for themselves, become entrepreneurs, join the private sector, do something,'' says David Abel, head of the National Planning Ministry. ``After all,'' he chuckles, ``it's a capitalist economy.''

In 1988, when the government initially adopted limited market reforms, Abel says it controlled more than 95 percent of the country's gross domestic product. After privatizing farming and other industries, he says, the private sector today controls 76 percent of GDP. Ultimately, he predicts that only 5 percent of Burma's economy will be in the hands of the government.

Pre-ordained winners

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As yet, Burma has a half-baked capitalist economy, with the winners pre-ordained by the government. For example, it still gives government workers very inexpensive supplies of rice, gasoline, and other necessities, as it did during the socialist era; most of these supplies go to high-ranking military officers, who then sell their rations on the black market at an 800 percent markup.

What's different today is that not only government officials are getting wealthy, but private citizens are beginning to reap the benefits of the trade and limited capitalism. Generally, the new middle class is comprised of the English-speaking educated elite well-known to the government - either through family ties, or, surprisingly, through their opposition to the government.

Take U Set Aung, who set up a joint venture importing used Korean-made motorcycles. He sees two keys to doing business here, aside from some understanding of market economics and hard work: government connections and political neutrality.

Such political caution is also heard along Maha Bandoola Garden Street, Rangoon's electronics center. Ma Phyu Phyu Htun, sales manager at the Apple Computer Coop Stores Syndicate, says only in a climate of political ``stability'' can she sell her computers, priced from $1,350 to $8,000.

``The military government is good for business. I would vote for this government over the NLD,'' she says. The National League for Democracy (NLD), led by Aung San Suu Kyi, who is currently under house arrest, won a landslide victory in the elections in 1990. But it has not been allowed to assume power. Asked why she would not support the democracy party, Phyu Phyu Htun observes simply, ``We can't eat democracy.''

What is happening is that the Burmese are beginning to taste the fruits of the market economy, even though it has not been completely liberalized. After 30 years of socialism and living in a consumer time warp, many citizens can now buy ``modern'' conveniences for the first time. Western sources estimate that the number of telephones, TVs, and cars has nearly doubled in five years.

Economic growth

The years of economic contraction have been reversed. In 1992-93, the economic growth rate was a real 6 percent, according to government statistics. Inflation rose more than 30 percent, but some western diplomats say the cost of basic necessities has increased even faster.

``The government is trying to give businessmen a stake in the system,'' says U Than Htun Aung, who manages a consulting firm in Rangoon (called Yangon). ``That's part of their strategy.''

Yadanabon Enterprises, Than Htun Aung's firm, epitomizes one of the government's biggest problems: disaffection of the country's educated elite.

In 1988, Than Htun Aung and 10 colleagues at the Foreign Ministry marched in the pro-democracy demonstrations against the government. They were forced to resign. So, they started a business advising foreign governments and nongovernmental organizations on operating in Burma.

But if Yadanabon marks a loss of government talent, it also shows how effectively political dissent is corralled. ``The government doesn't make trouble for us,'' Than Htun Aung says. ``We stay within the bounds. We don't overstep. We don't belong to any political organizations.''

The government appears to be luring former political activists into business, says one prominent former politician. After he was released from jail last year, he says government representatives told him: `` `We will not tolerate you if you go back into politics. But if you want to do business, religious work, etc., we'll give you full assistance.' So I told them I want a fax machine, and they had one installed. I told them I want an IDD [international telephone] line, and they put one in.''

But many Burmese say such compromises would dissolve if free elections were allowed and the results upheld. ``If the NLD were under the leadership of Aung San Suu Kyi and there would be a free election, they would vote for the NLD,'' says one businessman. Another adds quickly, ``Ninety-five percent of them would vote for the NLD.''

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