Suu Kyi Win Risks Myanmar Backlash Without Economic Gains

Aung San Suu Kyi
A supporter kisses Aung San Suu Kyi, leader of the National League for Democracy (NLD), as she visits polling stations in her constituency during parliamentary elections in Kaw Hmu, Myanmar on April 1. Photographer: Mikhail Galustov/Getty Images

Myanmar dissident Aung San Suu Kyi’s sweeping by-election win risks invigorating hardliners opposed to change if she fails to join reformers in implementing policies that boost incomes in one of Asia’s poorest countries.

Suu Kyi yesterday called for a “new era” after her National League for Democracy rejoined the political system and claimed victory in 43 of 44 seats it contested in April 1 by-elections. It boycotted a 2010 election won by President Thein Sein’s army-backed party, which along with the military still controls more than 80 percent of parliamentary seats.

The victory “will definitely scare a number of people who were expecting the government party would do better than this,” said Hans Vriens, managing partner of Vriens & Partners, a Singapore-based political risk firm. “I don’t think the army is in a position to roll back reforms now, but the reformers have to point to successes, which ultimately means jobs.”

Myanmar lawmakers are pushing to revamp the financial system and attract investment to revive an economy hindered by decades of military rule and sanctions from the U.S. and European Union. The central bank implemented a managed float of its currency yesterday to improve the business climate in the country of 64 million people that borders China and India.

‘Key Test’

How the government reacts to Suu Kyi’s win will be a “key test” of its commitment to reform, according to Andrew Rickards, chief executive officer of Singapore-listed Yoma Strategic Holdings Ltd. Shares of the company, which develops properties in Myanmar, have risen 580 percent in the past year.

“Twenty years ago when we had this situation, what happened next wasn’t very nice,” he said in an interview with Bloomberg Television yesterday. “It’ll be different this time. There’s a maturity in government that will see them embracing party politics.”

In 1990, the military rejected an election victory by the National League for Democracy in which the opposition party won about 80 percent of seats for a committee to draft a new constitution. Suu Kyi, a Nobel Peace Prize winner known in Myanmar simply as “The Lady,” was detained during both that vote and the 2010 elections.

In that time, the U.S. and EU imposed economic and financial sanctions against the country that are now under review following Thein Sein’s recent reforms.

‘Important Step’

White House spokesman Jay Carney called the April 1 elections, held to fill parliamentary vacancies, an “important step.” The EU will consider whether to renew sanctions at a meeting of foreign ministers on April 23, Maja Kocijancic, a spokeswoman for EU foreign policy chief Catherine Ashton, said yesterday in Brussels.

“We urge the international community to consider lifting economic sanctions on Myanmar so that the people of Myanmar can enjoy better opportunities,” Hor Namhong, foreign minister of Cambodia, said in a statement today. Cambodia holds the rotating chairmanship of the 10-member Association of Southeast Asian Nations, which includes Myanmar.

Rich in natural gas, gold and gems, Myanmar represents one of Asia’s last untapped frontier markets, attracting investors such as Jim Rogers, the chairman of Rogers Holdings, who predicted a global commodities rally in 1999. Cambodia-based Leopard Capital plans to raise $100 million for a fund to invest in Myanmar once sanctions are lifted, Douglas Clayton, founder and chief executive officer of Cambodia-based Leopard Capital, said in an interview yesterday.

Mobile Phones, Internet

Myanmar’s per capita gross domestic product amounts to $2.25 per day, about half that of Vietnam and 14 percent of neighboring Thailand’s, according to International Monetary Fund estimates. Only one in 30 people has a mobile phone and even fewer have Internet access, Nomura Holdings Inc. said in a March 14 report.

“We are encouraged by the positive developments in Myanmar, and what appears to have been a much improved electoral process compared to the last elections,” three U.S. business groups whose members include Chevron Corp., Google Inc. and Intel Corp., said in a statement. “Resolving political differences will be fundamental to Myanmar’s economic development, and to the welfare of its people.”

Shwe Mann

Suu Kyi’s party will hold less than 10 percent of seats in the 664-member national legislature, where lawmakers have shown a willingness to discuss everything from ethnic conflicts to foreign investment to fish and rice prices. One of the most vocal members is Lower House speaker Shwe Mann, the former No. 3 member of the junta who has been cited as a presidential contender in the next nationwide election set for 2015.

Shwe Mann “is a very dynamic man who has assembled a good brain trust and is clearly interested in making the most of parliament,” said Michael Montesano, visiting research fellow at the Institute of Southeast Asian Studies in Singapore. “The trick here is whether the NLD MPs are able to relate as successfully to their fellow MPs in the parliament as Suu Kyi has with Thein Sein.”

Suu Kyi met Thein Sein last August, paving the way for her party to re-register for elections. The former general released hundreds of political prisoners several months later, including pro-democracy activists and ethnic minority leaders.

“I am confident that he genuinely wishes for democratic reform,” Suu Kyi said of the president in a March 30 press briefing in Yangon. “But as I have always said, I have never been certain as to exactly how much support there is behind him, particularly from the military.”

British Children

For Suu Kyi to have a shot at the presidency in 2015, she’ll need the army’s help. The constitution passed in 2008 bans her from becoming head of state because her children are British. Amending that article requires support from 75 percent of lawmakers, a quarter of whom are active-duty soldiers, followed by a referendum, according to the constitution.

“Now that she’s in the parliament, will she test how far she can go and will that upset people, or will she try to get incremental change?” said David Steinberg, a professor at Georgetown University. “There would have to be a broad mandate for changing the constitution so she could run.”

Suu Kyi’s party didn’t field a candidate for one of the 45 legislative seats up for grabs on April 1, leaving the possibility that Thein Sein’s ruling United Solidarity and Development Party may win at least one seat.

The result is a “tremendous humiliation,” said Derek Tonkin, a former British ambassador to Vietnam, Thailand and Laos and now chairman of Network Myanmar, a U.K.-based group that promotes reconciliation.

Suu Kyi’s “greatest challenge to begin with is to ensure her relations with other political parties and particularly the USDP have not been too seriously damaged,” he said. “We don’t want to go to Plan B where the conservatives and hardliners take over and reverse all the gains that have taken place.”