Burma’s government privatization commission has announced that it is selling more than 100 state-owned buildings and factories as part of the latest wave of privatizations in the military-ruled country.
An announcement in the state-run Myanmar Ahlin newspaper on Friday said that the properties for sale include some buildings owned by the Supreme Court and the Inspector General's Office in downtown Rangoon, as well as five cinemas in various parts of the city.
The announcement added that only 14 of the properties would be sold unconditionally. Other properties would be subject to various restrictions, including a requirement that new owners use factories for their original purpose.
“This condition will apply only for a certain period, such as 20 or 30 years,” said an official from the government privatization commission .
“The new owners will not, however, be required to continue to employ workers of the state enterprise,” the official added. “They can if they wish, but if not, the workers will remain state employees.”
Since 1989, the current regime has periodically sold off state-owned properties as part of its so-called “open-door” economic policy, reversing decades of nationalization under the socialist government of former dictator Ne Win.
The junta’s 1989 economic reforms encouraged foreign investment and joint-venture enterprises in a wide range of industries, from agriculture to mining and health care.
However, most observers say that the junta's reforms over the past two decades have done little to liberalize the economy.
“Their [the junta’s] track record is not good. Many state enterprises in the past have simply become private monopolies,” said Sean Turnell, an economist at Australia’s Macquarie University whose research focuses on Burma.
Turnell also expressed skepticism about the latest wave of privatizations.
“The great danger when states sell their assets is that they may sell them at 'fire sale' prices to their cronies. This danger is very real in Burma,” he said.
According to the “2010 Index of Economic Freedom,” a report prepared by the Heritage Foundation and The Wall Street Journal, Burma ranks 174th out of 179 countries in the world in terms of economic freedom. Only North Korea, Zimbabwe, Cuba and Eritrea are considered less free. In Asia, the military-ruled country comes second to last.
The report identifies a number of factors contributing to Burma's low ranking, including government interference in economic activities; structural problems such as fiscal deficits; continuing losses by state-owned enterprises; and underdeveloped legal and regulatory frameworks and poor government service.
On property rights in Burma, the index said: “Private real property and intellectual property are not protected. Private and foreign companies are at a disadvantage in disputes with governmental and quasi-governmental organizations.”
Analysts say the lack of competition in Burma is another reason the country’s economic reforms have failed to take hold.
“If a government sells a government business that is a monopoly, and does not allow new competitors, then all that happens is that a private monopoly replaces a state one,” said Turnell. “In other words, the people of Burma would still be exploited—by a regime crony perhaps, rather than the state itself.”
In 2009, the Burmese junta increased its privatization of state properties. According to official statistics, 260 state-owned buildings, factories and land plots were privatized last year, including 137 properties that were put on auction in December alone.
One of the biggest purchasers of state-owned properties last year was Tay Za, a well-known crony of the Burmese junta who has been targeted by Western sanctions. Besides buying valuable properties in Rangoon and other urban centers, in December he won a contract to run hydro-power projects. Earlier this month, he bought a police compound in downtown Mandalay.
“The only way you can buy buildings and factories on auction is if you have the right connections. If you are not connected to the ruling generals, you don't stand a chance,” said a business reporter with a private journal in Rangoon.
The recent spate of privatizations may also have something to do with the junta's plans to hold an election, according to some observers.
“The generals may think this sort of tactic will sway voters in their favor,” said a Burmese economist based in Thailand.
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