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Donors urged to tread carefully in Myanmar

Originally appeared in IPS

October 15, 2012

Foreign donors are rushing into Myanmar (formerly Burma), whose government has been pushing the right political buttons as part of its democratic reform process. But development planners and local activists caution that  the best approach should still be ‘easy does it’.

“Please (…) don’t rush in,” Khin Ohmar, coordinator of the Thailand-based Burma Partnership, said at a discussion organised by civil society groups led by the Washington-based Bank Information Centre at the International Monetary Fund (IMF)-World Bank (WB) Annual Meetings in Tokyo on Friday.

Burma has been torn by civil war for more than 60 years and is yet to resolve many of its internal ethnic tensions, she pointed out. “So it’s worth it to step back and ensure that we start with the right stuff.”

“A lot of people still feel sceptical (of the civilian-led government’s promise of a people-centred government),” said Thein Swe, a Myanmar professor who works at Thailand’s Chiang Mai University and who has also worked with the Myanmar government.

“Yes, a lot of changes are coming in. (The government has started) using all the right terminology and development jargon, but on the ground the mindset remains the same,” he said. “Policymakers use the right words, but this has not trickled down to the bureaucracy.”

Ohmar and Swe spoke after officials from the WB and Asian Development Bank (ADB) said they were treading carefully for now, studying programmes to pursue or fund, through their recently opened offices on the ground.

Japan is Myanmar’s largest creditor so far, and has said it will give priority to aid to Myanmar, where elections led to political and economic reforms after the emergence of the civilian-led government of President Thein Sein in March 2011.

On Oct. 11, Japanese Finance Minister Koriki Jojima said Japan would resume yen loans to Myanmar early next year, after clearing that South-east Asian country’s loans of 500 billion yen (6.3 billion dollars) to help it get back on its feet.

In April, Japan agreed to cancel some 60 percent of Myanmar’s loans.

Tokyo will also give bridge loans to help Myanmar refinance its loans to the World Bank and the ADB that have been in arrears for a decade.

Annette Dixon, World Bank director for South-east Asia, explained that these bridge loans would give Myanmar a longer time to pay the outstanding amounts. “But Myanmar is unlikely to be eligible for debt relief,” she pointed out.

Overall, she said, Myanmar has had a “massive donor influx but very weak receptive capacity” and thus needed good donor coordination. The government has set up a foreign aid coordination committee.

The World Bank’s engagement is “very preliminary”, she explained, although the Bank has opened an office that it shares with the ADB and the International Finance Corporation, and is now recruiting staff.

“We had no country operations in the past, so we have decided we will take a step-by-step approach to ensure that our assistance in the future will be effective in addressing huge challenges ahead,” said Kunio Senga, head of the South-east Asia department at the Manila-based ADB. It is quite “premature to specify and commit to specific country programmes” at this point, he added.

Instead, the ADB has been doing economic and sector analyses and consulting stakeholders as it prepares an “interim country partnership strategy” for the next 18 to 24 months, Senga explained.

But Dixon said that the Myanmar government has undertaken radical reforms in the economic, financial and political spheres.

The government is drawing up a development plan and made public the IMF’s assessment of the economy. Also, for the first time, the government discussed the budget, passed it in parliament, and aired the whole process on national television.

The changes underway in Myanmar are “an enormous challenge for the government, which has to get an idea of the sen

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