Burma to create SEZ, spur growth

New laws have been agreed that would allow the creation of Special Economic Zones (SEZ) in Burma as the country looks to encourage a business-friendly environment after decades of economic stagnation.

State-run press today announced the “promulgation” of the law, which comprises 12 chapters, in a bid to boost growth. It comes as fresh loans were announced from China, with one for an airport in the capital, Naypyidaw, and another between the Myanmar Economic Bank and the Chinese import-export bank.

The loan deals were signed by Burma’s deputy finance minister, Hla Thein Swe, and the Vice-President of the China Exim Bank Zhu Xinqing, with the Burmese government’s first secretary, Tin Aung Myint Oo, and Chinese Ambassador Li Junhua also in attendance.

The SEZ law will likely be developed in tandem with the $US8 billion Tavoy port project and associated facilities around the site in southern Burma, which is led by Thai company Italian-Thai.

SEZ’s have been used in regional economic giants like India and China, as well as Thailand, as a way to stimulate business in specific areas without having to alter overall legislation, and have met with varying degrees of success and controversy.

In Thailand they are often seen as a way of circumventing labour laws in order to exploit cheap, migrant workers from countries like Burma and Cambodia. And in India the creation of an SEZ in the state of West Bengal near Nandigram caused considerable violence between locals, whose land was being seized, and the local government who met protests with armed militias, resulting in dozens of deaths.

The junta may then look more towards China’s success with its original SEZ in Shenzhen, which was visited last year by Senior General Than Shwe. Shenzen has been the centre of China’s export-led rise following the government’s decision to allow foreign investment and deregulated laws over private enterprise, which were able to exploit the dollar and China’s hungry labour force.

Such labour-intensive industry is heavily needed in Burma, where agriculture’s share of GDP has changed little since 1938. Then it accounted for 47.9 percent of overall GDP, whilst today it accounts for just over 43 percent. This compares with regional nations such as Bangladesh, where its contribution of agriculture to GDP dropped from roughly 40 percent in 1980 to 18.9 percent in 2007.

Shenzhen has witnessed a dramatic rise as industry has shifted to more hi-tech value-added industries. But it will remain to be seen whether the Tavoy SEZ in Burma can develop in the same manner, or whether it will perpetually be a source of cheap labour for foreign companies and a home for dirty industries that other countries no longer permit or desire.

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