Myanmar is one of the least prepared countries in Southeast Asia to handle the Covid-19 pandemic. Although the first case was only confirmed as recently as 23 March, countrywide spread will almost certainly be exacerbated by the recent return of thousands of migrant workers from Thailand. Given the country’s weak public-health infrastructure, the virus’s impact on the country is bound to be punishing.
“The major concern for industry right now is the probable lay off of hundreds of thousands of workers, which has already begun and where the government will need to move quickly with a relief package,” noted one local businessman. “How quickly investment can rebound from this crisis is going to depend on various domestic and international factors that at this point are almost impossible to gauge.”
Domestically, however, the danger is that the impending Covid-19 wave will only act to compound two major security and political challenges already clouding the run-up to year-end elections. Access Asia Group believes this convergence of negative factors is likely to have significant economic repercussions and impede foreign investment.
Despite this short-term bleak scenario, Access Asia Group nevertheless retains an optimistic view over the longer term. We believe that foreign-investment interest in Myanmar will be kickstarted again after the Covid-19 crisis and November’s national elections – assuming they go ahead. After all, despite the country’s political and security problems, an open foreign-investment climate combined with favorable demographics and rich natural resources present one unwavering attraction: potential.
War in the West
Myanmar’s perennially troubled internal security situation has recently been roiled by an ethnic insurgency in Rakhine State along the nation’s strategic western seaboard that this year has escalated to full-blown war necessitating a commitment of government armed forces (or Tatmadaw) unprecedented since Independence in 1948.
Efforts to beat back the rebel Arakan Army (AA) have been largely hidden behind a blanket ban on access by journalists and an internet shutdown that covers most of Rakhine and as well as conflict-affected areas of neighboring Chin State.
Nevertheless, the AA’s struggle for sweeping autonomy from a central government and military dominated by ethnic Bamar (Burmese) – 68% cent of a population of 53 million – has escalated dramatically since early 2019. And in a state where decades of unemployment, poverty and political marginalization have fueled widespread alienation from the central government, the insurgent campaign led by a young and dynamic leadership has gathered a striking level of popular support.
An estimated 15,000 to 20,000 government troops are now committed to the counterinsurgency and are spread thin across at least 13 of the state’s 17 townships, where some 3,000-4,000 AA guerrillas are active.
That has translated into a growing need for fire support from both heavy artillery and air power in the shape of new Russian helicopter gunships and newer Yak-130 ground-attack jets purchased from Moscow over the past three years.
The Myanmar Navy has also been committed to operations at a level never before seen in decades of counterinsurgency operations, with fast-attack and landing craft operating on the state’s major riverine arteries, providing fire support and transport for ground troops. But as U.S. forces discovered in Vietnam during the 1960s and 1970s, massive firepower is no guarantee of victory. Indeed, as civilian casualties rise, greater firepower may simply mean that “hearts and minds” can simply counted as lost.
Since January 2019, when the conflict escalated sharply, several hundred civilians have been killed and wounded, many in indiscriminate artillery barrages and airstrikes on villages. At least 100,000 others have been forces to leave their villages and seek shelter in squalid internally displaced persons (IDP) camps closer to urban centers.
The military’s response to the challenge posed by the AA crisis appears to amount to a floundering strategy of peace through fire power – a course that is gradually turning a war in Rakhine to a war on Rakhine.
The army’s war in the west has been of little interest to the civilian administration led by State Counsellor Aung san Suu Kyi and her National League for Democracy (NLD). Since they took office – though hardly power – in 2016, after a landslide victory in the 2015 elections, the NLD government has been content to leave matters of national security to the Tatmadaw and has expressed no public misgivings over the conduct of the war in Rakhine.
Belatedly and timidly, the NLD has, however, attempted to push for amendments to the military-scripted 2008 Constitution, which guarantees the Tatmadaw a lock-grip on real power through control of key security ministries and veto power on constitutional change through a reserved bloc of parliamentary seats.
NLD calls for change, which would have crucially permitted a gradual reduction in the size of the reserved military quota and allowed Suu Kyi able to become president, were predictably voted down in parliament in mid-March. But the government’s insistence on going ahead with a vote doomed it to further poison already strained relations with the military.
Assuming elections go ahead as scheduled in late 2020, there is little doubt the NLD will again secure a convincing – if reduced – victory over the military’s proxy political party, the Union Solidarity and Development Party (USDP). Notwithstanding her government’s failure to deliver on either constitutional reform or ethnic peace, Suu Kyi still commands huge popular affection in her homeland (despite her fall from grace among the international community).
Nevertheless, the coming months will almost inevitably see rising political tensions as the military seeks – wherever it is possible – to undermine the government’s lackluster performance. How far it will use the response to the Covid-19 pandemic to further these goals remains to be seen.
The repercussions on the economy of this convergence of escalating war, confrontational politics and a looming national health emergency that has already decimated tourism, severed supply chains and closed garment factories, will be dire.
Since 2015, when it reached GDP growth of 7%, growth has hovered at around 6.5%. In January 2020, the World Bank forecasted that Myanmar’s growth would be 6.4% for fiscal year 2019-20 (October 2019 – September 2020). However, in its recent report on the economic impacts of Covid-19 in East Asia and the Pacific, this forecast has already been slashed to 3.6%. As Myanmar moves into the perfect storm of 2020, this figure may soon appear woefully optimistic.