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As Myanmar’s new capital emerges, analysts question its true cost

As Myanmar’s new capital emerges, analysts question its true cost
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First Published: Fri, Apr 06 2007. 10 19 AM IST
Updated: Fri, Apr 06 2007. 10 19 AM IST
Charlotte Mcdonald-Gibson, AFP
Naypyidaw: Myanmar’s vast new capital has many oddities in an otherwise poor country, such as smooth multi-lane highways, luxury cars and new apartment blocks seemingly modelled on western suburbia.
The growth of the sprawling city of Naypyidaw from the scrub of central Myanmar has raised questions about how the military is financing such a grand scheme in this impoverished nation formerly known as Burma.
In late 2005, the ruling junta began moving its offices 400 kilometres (250 miles) north of the existing capital Yangon to this remote location, where it had secretly built a city around what was a sleepy logging town.
“If you look at the land it is just scrub ... it is inhospitable, non-fertile land,” said one western diplomat, who was speaking on condition of anonymity, which most foreigners working in Myanmar insist on.
“To build a capital there is quite a challenge,” he told AFP.
Myanmar is one of the poorest countries in the world with per capita gross domestic product (GDP) well below that of nearby Cambodia, Laos and Bangladesh. UN figures show the junta spends just 0.5% of GDP on health.
Despite sanctions by Europe and the United States, imposed for the detention of democracy leader Aung San Suu Kyi and other human rights abuses, Myanmar can still splash out on mega-projects because of a wealth of natural gas which feeds power-hungry neighbours such as China, India and Thailand.
Gas exports are thought to be filling the military’s coffers, while the junta also exploits other natural resources such as gems and timber.
Taxing companies that wish to take a cut of the country’s riches, some experts say, was one of the ways Myanmar paid for their so-called “abode of kings”, where electricity runs 24 hours a day and fairy lights illuminate grand ministries.
“They have done it at the expense of companies operating in their country,” said one senior diplomatic source in Yangon.
“If you want to export timber, (work in) mining, you can afford one or two ministries, a stretch of road,” he added.
As well as taxing businesses, diplomats claim the junta offered concessions to companies in lieu of payment for construction work.
Because of the murky nature of the funding, most are reluctant to speculate on how much Naypyidaw cost.
But an International Monetary Fund (IMF) report obtained by AFP estimates that “about 1% to 2% of GDP has been spent in the last few years by the government on the move (to Naypyidaw)”.
“This level of spending is expected to continue in 2006/07 before declining,” it added.
The IMF estimates GDP for 2005/06 at $12.2 billion, putting the annual cost of Naypyidaw between $122 and $244 million — a figure one economics expert working in Yangon said was likely roughly correct.
“It can cope with that kind of outlay ... it is not a case for going bankrupt,” the expert said, adding he thought rising commodity prices were also funding the new capital.
Myanmar claims it is financing the building by selling old ministries that they deserted in Yangon.
“How much it cost is not that important,” information minister Kyaw Hsan told foreign reporters in Naypyidaw last week. “What is important is not to have a budget deficit.”
A western diplomat, however, said some in the military leadership might be realising the financial enormity of the task ahead of them.
“The chances of it becoming a black hole are very good ... It is a continuous investment for 15 to 30 years before it becomes viable. That’s money that will not be channelled into health and education,” the diplomat said.
Businessmen are already grumbling about having to make the lengthy commute to dusty, half-finished Naypyidaw at least once a month, but when it comes to valuable natural resources, analysts say companies operating here will jump through all the hoops placed in front of them.
Foreign embassies are not so compliant, with none publicly considering a move to Naypyidaw, although embassy officials say China or India would likely be the first.
Aung Naing Oo, a Myanmar analyst based in Thailand, said the international community risked being left out of the loop if they remained in Yangon.
“If the military remains in charge for the next 10 to 15 years, the embassies will have to decide whether to relocate,” he said, adding that he did not think the junta cared whether diplomats moved or not.
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First Published: Fri, Apr 06 2007. 10 19 AM IST
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