3 key governance issues facing Burma today

In March 2015, Asian Development Bank (ADB) released an excellent working paper, “Myanmar: Cross-Cutting Governance Challenges,” that provides a sweeping outline of the myriad governance plaguing the country’s path toward economic development.

The paper’s authors, Cullen Hendrix and Marcus Noland, define good governance as the transparent, socially inclusive, and efficient conduct of public affairs and public resources management, arguing that good governance yields tangible economic benefits.

The paper provide a comparative analysis of Burma’s performance in worldwide governance indicators, against comparable ASEAN countries (i.e., Cambodia, Laos, and Vietnam). Not surprisingly, Burma ranks dead last in almost every overall governance, transparency and corruption and legal system metric, hovering between the 5^th and 15^th percentiles on each measure. It fares a bit better than Cambodia and Laos in just a few indicators: judicial independence, overall freedom ranking, ability to resolve insolvency, corruption perceptions, and budget transparency.

No. 1: State influence on the economy

While private firms are notionally at the center of the Burmese economy, they are deeply connected with the state, “either as former SEEs [state economic enterprises] with implicit expectations of bailouts if they run into difficulties, or are simply controlled by politically connected cronies.“ (think back to the privatization of state assets in 2011, immediately before the elected parliamentarians took office.) The country’s historic legacy has been one of deep interventionist policies and state planning. Further, government connections present obvious conflicts of interest. The state still has a disproportionate role in the finance sector, with the state-owned Myanmar Economic Bank (MEB) possessing 80% of the finance sector’s assets. SEEs are currently not financially autonomous, as they are government-subsidized and not subject to hard budget constraints.

No. 2: Land disputes

Land ownership and disputes, affecting arable land and forests, are a visible issue—with photos of vocal farmers constantly staging protests and filing petitions splayed on newspapers on a regular basis. Rural farmers are still being displaced by large-scale projects without any sustainable alternative. The military’s seizure of land is also noteworthy (and reasons behind it): “A parliamentary commission calculated that since 1988, the military has seized nearly 100,000 hectares.” The Ministry of Industry’s designation of 18 industrial parks (in 9 of the 14 states and regions) has largely been unsuccessful too, attracting insufficient numbers of investors. Significantly, only 20% of the land in industrial parks is used for industrial-purposes; the remaining 80% is used for non-industrial purposes (e.g., warehousing or vacant).

No. 3: Insufficient bureaucratic capacity

The paper points out that the 25 years of military rule has decimated the bureaucracy’s effectiveness, because of military appointments to bureaucratic positions. (During the Ne Win era, key civil service positions were held by relatively well-educated civilians). According to the authors, the so-called “militarization” of the bureaucracy has:

1. Established a highly centralized and assertively top-down form of decision-making and policy implementation.
2. Reduced intergovernmental collaboration, policy coordination and implementation, through the proliferation of ministerial appointments (as I’ve pointed out before). For instance, “education policy currently falls under the purview of at least a dozen different ministries.”
3. Homogenized the perspectives and profiles of higher-level bureaucrats. “Of the 38 current line ministers and cabinet-level appointments, 23 are former military officers.”

Key recommendations

Hendrix and Noland make a few important recommendations worth considering:

1. Establish an elite corps of civil servants who are recruited at entry levels through highly selective examinations that could invigorate civil service reform from within, similar to South Korea’s and Malaysia’s career-based elite civil services.
2. Defer compensation and benefits for civil servants (pension and retirement benefits like subsidized insurance) to reduce current state expenditures.
3. Recruit civil servants from traditionally stigmatized communities, such as ethnic and religious minorities, to diversify the civil service and enhance the government’s credibility.
4. Reform the electoral system to reduce the presence of ethnic identity-based politics. They suggest several alternatives, such as Indonesia’s party system, which requires parties to run candidates nationwide, instead of just in ethnic homelands, to “decrease ethnic identity as a salient driver of political affiliations.” Burma’s current single member district plurality system doesn’t foster inclusiveness among disparate constituencies and instead perpetuates the reinforcement of ethnic identities.
5. Create a “power dividing” arrangement among ethnic communities. The paper suggests that power-dividing, not power-sharing, institutions tend to be more stable and robust, as “they stress the importance of multiple, overlapping majorities and checks and balances as well as universal protection of civil liberties, and ethnic and religious identities.” By comparison, federalism “reinforces ethnic and regional identities and party cleavages, producing legislation that favors certain groups over others, and mobilizing groups to engage in ethnic conflict and secessionism”
6. Exploit external governance policies and existing industry-standard practices, such as the Extractive Industries Transparency Initiative (EITI), to increase transparency and combat corruption, especially in natural resource extraction sectors.