ERIC Rose from Herzfeld Rubin Meyer & Rose Law Firm Limited (HRMR), the Myanmar affiliate of New York-based Herzfeld & Rubin PC (H&R), attributed his exit to the combination of government inaction, the Rakhine crisis, remaining US financial sanctions and the suspension of the EU-Myanmar Investment Protection Agreement (IPA), which he alluded to as a “three-legged stool”.
The lawyer gave some parting advice to the National League for Democracy-led government in terms of economic reforms.
“The NLD government needs to ‘lift all boats’ at the same time. It can have the funds needed to engage in the required reform policies outlined in the US Chamber’s recommendations if it followed the tried-and-true policies adopted by Eastern European countries after 1990, as well as, for example, the opening of an electric power marketplace like the one in the Philippines. In the end, in its remaining three years in office, it should prioritise those changes which it can implement, and get going,” Mr Rose remarked.
He insisted that the remaining US sanctions are unfair “because they are unique to Myanmar, despite having had three free elections [one general election and two by-elections], whose results were respected by the military and the USDP, unlike the surrounding countries, except for India and Bangladesh.”
Furthermore, the lack of a coherent, sustained and transparent government response to the Rakhine crisis “guarantees that this situation will mar the country’s and, by implication, the NLD’s reputation for the remaining three years of its term”. However, the combination of the three legs has a disproportionate effect only on Western and, specifically, American investments with this country. Asian investors are not as much affected - such a view was echoed by both Vicky Bowman, director of Myanmar Centre for Responsible Business, and Katsuji Nakagawa, chair of Japan Chamber of Commerce and Industry in Myanmar (JCCM).
Those who defend the current administration will point to the recent Investment Law as well as to new Companies Act. But the HRMR lead director said that because of the “lack of a coherent, comprehensive and transparent marketing and public relations campaign”, Myanmar is “falling further and further behind its ASEAN neighbours in both reputational risk, as well as ability of foreign investors to understand the government’s policies”, despite the new legislative reforms.
The lack of reform in banking and insurance, the refusal to secure a sovereign credit rating, and no exploitation of the rich natural resources for the benefit of the country are another three areas where Mr Rose believed Nay Pyi Taw worsened. Specifically, there have been no new exploration blocks opened, while in fact some licenses are being returned unused to MOGE by the winners.
Other examples he mentioned include the fact that no new power plants built in the last two years, not even temporary plants such as APR Energy’s in southern Mandalay. Meanwhile, there has been little to no investment in new transmission lines, except for those already being built like those to the Chin State, which were initiated under the previous administration.
U Thant Myint U, chair of Yangon Heritage Trust, questioned on social media in response to an earlier interview Mr Rose gave to Asia Times that hoping the civilian-led government to embrace economic liberalism is a misplaced expectation.
“What I don't understand is why anyone expected this government to move decisively in an economically liberal direction, when it was bound to be at least in part a left reaction to the crony capitalism of the past quarter century,” the historian tweeted.
In theory, economic liberalism is not incompatible with de-cronisation but “in practice, people will feel that moves away from state control may entrench existing political economy” and that new opportunities will be captured by existing elites. Hence, the instinct will be to try to redirect newly won state powers.
Eric Rose responded that while Daw Aung San Suu Kyi’s only experience with capitalism in the country is “crony capitalism”, the success of capitalist economic reforms is well-documented.
“I understand the reluctance ... to adopt capitalist economic policies to change the direction of the country and give it a chance to leap-frog its regional competitors. There is, however, an outstanding, multiple-level prior experience in the economic change from dictatorship and control economies to market-based capitalism: Eastern Europe after 1990s. The results speak for themselves, and what originally was an ‘experiment’ became textbook of what to do and not do in that transition. We, and others, have that experience based on advising local governments in transition, and have made our suggestions to the NLD government, together with the US Chamber, back in June 2016.
“To paraphrase an American expression, ‘what has the NLD to lose’ by trying to adopt the tried-and-true successful policies in Eastern Europe, which have resulted in a multiple increase in their respective people’s standard of living, while also developing a true market economy in which the state has an increasingly diminished role?” he argued.