Opening up

Myanmar is opening up to the world and is drawing the interest of tourists and investors.

On the other hand, North Korea, despite its leader’s fascination with Dennis Rodman, is still living up to its reputation as a hermit kingdom. With its masses hungry, Pyongyang is set to pour more funds into reactivating a nuclear reactor so its threat of nuking its enemies will be taken seriously.

Some quarters are hoping that the example of Myanmar, which used to belong to the small group of international pariahs, would inspire Kim Jong-un to consider the dividends of an open society.

As Pinoys have learned, however, it’s tough to end systems that benefit those in power. Even Myanmar is still struggling to break free from old ways of doing business. News reports say Myanmar, which is positioning itself as a gateway between Asian giants China and India, is being flooded with prospective investors, even if it’s far from investment grade. Among the investors’ concerns, however, apart from poor infrastructure and lack of skilled manpower, is the continuing control of the junta over key sectors of the economy.

Foreign investors want fair competition. In our investment-grade, open economy, among the problems raised by investors is that in certain places and sectors, they still tend to run against vested interests of ruling families – the tiny, privileged group that continues to control power and wealth in this country.

When this happens, the investors say, their businesses are likely to encounter extraordinary obstacles from the moment they apply for permits. The situation, the investors sigh, persists even under the watch of President Aquino.

*      *      *

In Myanmar at this time, there are efforts to discourage junta members from taking a cut out of every government deal and private business undertaking, or at least – to borrow a phrase from an earlier time – to moderate their greed. With the vigilant Burmese opposition watching, perhaps the effort will succeed.

A Western diplomat who used to be assigned in Manila and is currently manning their newly opened mission in Myanmar emailed me recently about the dramatic changes taking place in that country.

The diplomat was assigned in the 1980s in Burma so he can see the difference. It’s not so much the physical changes that he finds striking, since infrastructure upgrading does not happen overnight, except in the new capital Naypyidaw, which he likened to Disneyland.

The real change, he emailed me, is in attitudes.

“On the government side, there seems to be a real and deep-seated desire to make changes, reform the economy ASAP, and bring in democracy GASAP (gradually ASAP),” he wrote. “And among ordinary people, the change is that now they can talk – among themselves, or to foreigners. It used to be, back in the day, that it was advisable not to talk to people in the street or in the market – you would have been under surveillance yourself, and anyone you spoke to would later be questioned (or worse). That atmosphere seems to be entirely gone now.”

His observations echo what I’ve read in news reports about Myanmar since opposition leader Aung San Suu Kyi was allowed to sit in parliament following free elections.

With her poise and fluent British English, Suu Kyi, the face of the Burmese opposition, has become the face of emerging Myanmar. Wherever she goes around the world these days, Suu Kyi is received like a superstar.

It reminds me of the reception enjoyed by Corazon Aquino shortly after the 1986 people power revolt. The optimism generated by the revolution prompted the international community to put together the Multilateral Aid Initiative, also called the Philippine Assistance Plan. Aid under the PAP pledged in 1989 and 1991 amounted to $6.7 billion, but the facility was underutilized.

Policies and structures that allowed monopolies and oligopolies to flourish also remained in place. Several coup attempts and a power crisis that crippled Metro Manila and the rest of Luzon from 1991 to 1992 sent investors packing, at around the time that China, Thailand and Vietnam beckoned. Today Mindanao, which needs more investments, is facing a power crisis, and the country has the second highest power costs in Asia after Japan.

After EDSA I, the political establishment, dominated by landowning dynasties, resisted agrarian reform as well as tax and other reforms that threatened their interests. The Marcos cronies began returning (some never left), regaining their assets, legitimacy and influence.

Philippine GNP, which grew by 6.7 percent in 1988, slipped to 5.7 percent in 1989 and then to a little over 3 percent in 1990 when industrial growth also plummeted to 1.9 percent from the previous year’s 6.9 percent.

The failure of economic growth to trickle down to the grassroots has bedeviled every administration since the 1986 revolt. In the first Aquino administration, the exodus of Filipino skilled workers and professionals for greener pastures abroad, which started during the Marcos regime, continued.

It would take another president, Fidel Ramos, to implement policies that opened up the economy, allowing free competition in several sectors. But this reform process cannot be completed in six years. The process sputtered along in subsequent years, with entrenched interests flexing their muscles at every step of reform efforts.

The advantage enjoyed by these entrenched interests is one of the reasons why the Philippines may still have a long wait for foreign direct investments, despite that unprecedented investment-grade assessment from Fitch Ratings.

It’s sensible to believe that if you open your arms to the world, the world embraces you. But this does not make sense to those whose interests are threatened by competition.

P-Noy has three years to confront this problem. He won’t want to end his term with an investment grade for the country but no significant investments.