Wednesday, August 13, 2008

Strange world of post-Nargis numbers revisited: after PONJA

In a previous post we highlighted the extremely odd nature of the loss and damage estimates from cyclone Nargis paraded before the world by the SPDC in Rangoon on 25 May. The UN and ASEAN have now been able to carry out the so-called Post Nargis Joint Assessment exercise and report on the results.

The PONJA team derived their estimates from findings in sampled village tract areas. They lay out their sampling methodology explicitly in their report. By contrast the SPDC report at the Pledging Conference contained no such methodological cues; indeed the specious precision of the counts of lost lampposts etc strongly conveyed the impression that the losses etc had been comprehensively *counted* rather than estimated from samples.

As we noted, not only did the claimed figures lack credibility but the extremely haphazard approach taken to the exchange rate used to convert kyat to $US alone accounted for an inflation of the sought relief budget of the order of US$15om. The results of the PONJA exercise reveal even more disturbing discrepancies in the SPDC's request for funds, as outlined in this table.

The table shows for a selection of categories the loss and damage estimates (in kyat) from both the SPDC Pledging Conference presentation and the PONJA report. In each case the differences are represented by a ratio (SPDC estimate/Ponja estimate) and difference (SPDC-PONJA). The latter is also shown converted into millions of $US using the PONJA preferred exchange rate of 1100K/$. The total net discrepancy is shown at the bottom.

The first thing to notice is the staggering discrepancy in private housing in which SPDC claimed close to $US 4.5 billion over what PONJA estimated to be the true loss and damage arising from Nargis! Industry also contributes a hefty $US 555m to the total discrepancy which in total checks in at over $US 5 billion or 50% of the total damage claimed by SPDC in the Pledging Conference Report.

The discrepancies in health and education are small and negative respectively. However it should be noted that in our previous post we noted that the exchange rate manipulations were particularly egregious for these categories. Use of exchange rates of only 1/5-1/4 of those used elsewhere contributed to an overclaim of $US 34m for health and $US 111.5m for education, the latter more than enough to cancel out the effect of PONJA's higher estimate of damage in kyat terms.

A final point worth noting is that while the SPDC report presented parallel estimates of loss and damage for the 'public' and private sectors, the PONJA report has virtually no estimates of damage to 'publicly' owned buildings, firms etc. No doubt they considered whatever information they received on 'public' losses to be too unreliable (not surprising given the prima facie implausibilities we identified) to even include in the report. A fitting comment on the SPDC and, in tandem with the pecuniary distortions of their loss-estimating, another sign of the insanity of the idea of increasing the flow of international financial resources into their hands.

Thursday, July 31, 2008

Tuesday, July 15, 2008

Major Aung Linn Htut Open letter to Than Shwe

Than Shwe as Buddha: Shwedagon Pagoda

Major Aung Linn Htut Open letter to Than Shwe
(Burma’s Former Military Attaché to the United States)
In Response to Cyclone Nargis

Dear Senior General Than Shwe,

It is time to stop believing and relying so much on superstition, astrological predictions and advice, as Burma will disintegrate due to a failure to adhere to our cultural and religious values.

I understand that the following are a reflection of your reliance on superstition:

(1) If any foreign forces or the United Nation were to enter Burma’s territory, the SPDC would loose power.

(2) Rangoon city, established by the King Aung Zeya, will be destroyed after 200-years.

(3) A Tuesday born lady will rule the country.

(4) Than Shwe will face difficulties and run into trouble before August 2008.

These predictions were made by an old Pa-O woman, whom Kyiang Kyaing worships as a goddess. Kyaing Kyaing first consulted this woman, who was famous for the accuracy of her predictions, around 1983/84 when she was the wife of the Commander of Irrawaddy Division.

The woman predicted that Kyaing would become a queen one day. As the prediction became true in April 1992, Kyaing became fully convinced in the accuracy of her predictions. Since then she has done everything the woman has advised. The extreme nature of her superstition and belief in this woman were known to close friends of the family, such as the former Education Minister U Than Aung, General Ne Win (Than Shwe was his personal officer), Colonel Soe Shein (Than Shwe’s Security Officer), Lt-colonel Myint Kyi (Kyaing Security Officer).

I know of the following actions undertaken by Than Shwe,

(1) Than Shwe has ridden the white (albino) elephant that is kept at Mindama hill, believing he is the re-incarnation of the famous King Thalun.*

(2) Gave a verbal order for his wife to be referred to as the royal mother and his daughters as royal princesses.

(3) The timing of the release and detention of Daw Aung San Suu Kyi is based on superstition.

(4) General Soe Win was appointed as Prime Minister because he was Tuesday born (to ward of the rule of another Tuesday born Daw Aung San Suu Kyi).**

(5) Moved the capital to Kyat Pyay suddenly without any planning.

To my knowledge, Than Shwe has never made any decision without astrological advice.

My wish is that Than Shwe and his family should cease to make decisions based on astrological advice and predictions, especially at a time when people in Burma are experiencing serious difficulties.

To consider the country first, I would like to suggest to Than Shwe to put aside his self interest and to stop believing in astrological and supernatural predictions and comply with international appeals and wishes.

Major Aung Linn Htut.


*King Thalun was the King the white Tsu-lar-mani Pagoda in Sagaing, which is recognizable by its large white dome. He built this pagoda to fulfill the wish of his late wife. King Thalun was a contempary of the Moghul King Shah Jahan of India, who built the Taj Mahal for his wife Mumtaz Mahal. The era under King Thalun is widely believed to be the most prosperous era in Burmese history. This is why he is referred to as Thalun, which translates as the richest or greatest era in (Burmese history).

** Soe Win’s death might be interpreted as a failure to ward-off rule by Daw Aung San Suu Kyi.

The Pa-o woman is illiterate and of the same ethnicity as Kyaing.

Than Shwe had a jade Buddha statute based on his image at around the age of 40 built and placed in the Shwedagon Pagoda. It is widely believed that foreign leaders and dignitaries are guided to the image to pay homage to ‘Than Shwe’.

Friday, July 11, 2008




The handing over of money to the international NGOs, UN agencies, Burma’s government (I use the term loosely) and the Burmese NGOs does not mean that the resources are used effectively and efficiently for the people of Burma. Uncovering the performance of aid - that is its cost effectiveness and its impact on the intended recipients is not necessarily an easy task. It is also a task made more difficult by the poor quality of the information generally provided by the donors and the recipient organisations.

We can not hope to address the performance of all the aid provided to Burma, but let’s have a brief look at the use of funds supplied by the Fund for HIV/AIDS in Myanmar (FHAM) to the Burmese NGOs. FHAM provided monies to the international NGOs, Burmese NGOs, the UN agencies and the Burmese ‘government’ between 2003/04 till 2007/08. The funds were provided by Norway, Sweden, the United Kingdom, Australia and the Netherlands. It was the first multi-donor health fund established in Burma and distributed around USD27m to the different organisations. The Global Fund came to Burma in 2004/05, but only hung around for 1 year having disbursed around USD11m. After the closure of FHAM and the exit of the Global Fund, those donors that had established FHAM set up the 3 Diseases Fund. FHAM only provided monies for HIV/AIDS projects, whereas the 3 Diseases Fund (as with the Global Fund) provided money for TB and malaria in addition to HIV/AIDS projects.

So lets have a brief look at what FHAM says was the performance of the Burmese NGOs. By Burmese NGOs I meant the following organisations, each with the differing reputations and agendas:

1) Myanmar Medical Association (MMA)

2) Myanmar Nurses Association (MNA)

3) Myanmar Health Assistance Association (MHAA)

4) Myanmar Red Cross Society (MRCS)

5) Myanmar Anti-Narcotics Association (MANA)

6) Myanmar Business Council on Aids (MBCA)

7) Pyi Gyi Khin (Darlings of the Big Country)

The MMA, MNA and the MHAA have been around for a long period of time, as has the MRCS. The history or background of these organisations is for discussion elsewhere. MANA is a more recent invention of the regime and its cohorts, parading as an NGO. The advertised mission of the NGO is to reduce the problems associated with drug use. One could be cynical and think that one of the missions of the organisation is to obtain aid money, given the popularity of funding HIV/AIDS projects, but let’s just see what they did with the money from FHAM. MBCA was allowed to register in 2000, but due to delays (unspecified) it took them 3 years to get started. The impetus for the organisation came from their namesake in Thailand. Then there is the mysterious new NGO, Pyi Gyi Khin, which translates roughly as Darlings of the Big Country is reportedly a sex workers self-help group that in 1997.

It should be noted that the per capita expenditure on healthcare in Burma is only USD4. Most of this is expenditure is undertaken by the individual out of their pocket, but a small proportion of this comes from foreign donors. Given this very low expenditure on healthcare it is important that aid funds be allocated efficiently and effectively.

So let’s get to what FHAM says about the performance of these organisations. The record keeping of the NGOs supported by FHAM was precise, with the number of people attending sessions, condoms distributed meticulously counted. The attention and resources allocated to counting must have been considerable. Unfortunately, all the false precision makes it resemble an article from the New Light of Myanmar. Even more unfortunately the information is from a report funded by the governments of some of the Western democracies.

Myanmar Medical Association (MMA) - USD21,390

The MMA received the smallest amount of funds from FHAM, at USD21,390. To be fair to the organisation they only received the funds to tide them over after the Global Fund left. For this money the MMA (or members of the organisation) apparently achieved the following:

  • tested 591 people for sexually transmitted diseases (STD). The number of those testing positive was not disclosed and whether they were treated effectively was also not provided. It is not clear if this was the total number tested or the increase in the numbers tested (by whom exactly is not clear)
  • treated 1,487 people with HIV/AIDS for opportunistic infections. No information was provided about the nature of the treatment, the infections or the results. It is also not clear, if this was the total number of people treated or the extra amount that could be treated given the funds provided
  • referred 76 people for HIV tests

Assuming that referrals don’t entail the use of additional resources, and that the above figures represent the number of patients attended for the money provided, then it cost the MMA around USD10 to test for STD and treat people for HIV/AIDS. The per capita expenditure on healthcare is USD4, so if the above is correct, then the may have done a reasonable job. At least the MMA utilized their funds the most cost effectively of all the Burmese organisations (on the basis of the information provided by FHAM).

Myanmar Nurses Association (MNA) – USD91,000

The MNA received around USD91,000 for projects in 2003/04 (the first funding round). Despite receiving this money they did not manage to impact on any of the so-called performance indicators developed by FHAM. The MNA was not directly funded in the following rounds and maybe their lack of performance was the reason, but became part of a ‘consortium’ headed by Save the Children (UK). So based on the information provided by FHAM the USD91,000 added nothing to improving the health of the people of Burma.

Myanmar Health Assistants Association (MHAA) – USD42,000

The MHAA as with the MMA only received the funds at the end of the FHAM, to cover them after the Global Fund stopped funding projects in Burma. For the 42,000 the MHAA made the following contributions:

  • 38, 206 (very precise) condoms were distributed. Burma seems to be awash with condoms. The issue is whether people are using them regularly, not the number being given away.
  • Conducted 28 health education sessions on HIV/AIDS for 15,148 young people (of which 604 received counseling). So on average there were 541 people at these gatherings, rather large for health education on such sensitive issues. There is no information that such gatherings are successful in communicating information about HIV/AIDS, and more importantly in affecting behaviour. There is no information about where the education sessions were conducted, advertised and the reasons people attended. Incentives are an important determinant of behaviour and new information, even if properly understood, does not necessarily change behaviour.
  • 13,249 pamphlets were distributed. Presumably people attending the education sessions were provided with some pamphlets. Not that there is anything wrong with pamphlets, but there mere existence provides absolutely no indication that behaviour of those reading pamphlets changes. How many smokers have seen “DON’T SMOKE” and continue to do so. No NGO working in a Western country could get up and state we distributed blah number of anti-smoking pamphlets. People would ask, but yes what has happening to number of people smoking.
  • 190 peer educators trained. Again this tells us nothing about impact. There is no information even on the quality of the training, the length of the training, and what the peer educators learnt from the training. What were the incentives of those undertaking the training? Did they have nothing else to do? How active are they in the communities? Training people is one thing, but does not tell us anything about quality and what the educators are doing.
  • 310 people were given HIV tests
  • 195 people referred for HIV tests

If we accept that HIV tests can be provided for USD10, as based on our estimates from MMA use of monies, then the MHAA could have tested the 310 people for a total of USD3,010. As the condoms and pamphlets were provided free and distribution costs should be minimal, any costs associated with this activity are ignored. It is also assumed that referring people for tests is undertaken in the course of other activities, hence entail no additional expenses. Based on this and assuming that the costs of training a peer educator and providing health education sessions for the population incur equivalent costs, then each training or workshop was provided by the MHAA at around USD178. If the costs are calculated on a per person basis, i.e. the number of people reached by the organisation then, then it cost the MHAA around USD2.50 to provide each person with HIV/AIDS information.

Myanmar Red Cross Society (MRCS) – USD245,000

The MRCS seemed to engage in lots of meetings and distributed lots of condoms. Not much for a ½ million USD. Lets look a bit more at what they did

  • 411,378 condoms distributed - again did they put them on?
  • 6 Mass Awareness Sessions held by MRCS. It seems that 21,689 young people were educated at these sessions. They must have been big events with more than 3,5000 young people attending each. Of the 21,689 young people reached, 3,259 were reportedly provided with counseling. FHAM reports this as video shows, TV spots, public talks, festivals. Possibly unfairly, but mass awareness sessions in Burma brings to mind having to listen to mind-numbing speeches given by mind-numbed government apparatchiks to people, who have been rounded up and forced to listen. We might be cynical, but if any of the poor participants were left awake at the end, maybe they picked up something about HIV/AIDS, but who knows what.
  • 30,917 pamphlets or HIV/AIDS educational materials distributed, possibly at the mass rallies. At least local the printeries must be doing well. (Wonder, who owns them?) Am I being cynical to suggest that there might be lots of pamphlets lying around in some near empty MRCS warehouse? Hopefully, they were put to better use pasted on the walls of people’s homes to improve insulation.
  • 2 Workshops for healthcare providers and 91 peer educators trained
  • 72 people referred to services for sexually transmitted diseases. Maybe after the mass meetings or a discussion at the tea-shop, the educators tell their peers “Hey you better go and get a test. Could have caught something”
  • Lots of Meetings
    • 46 advocacy meetings
    • 48 multi-sector meetings

Does anything more need to be said about this? The New Light of Myanmar comes to mind. The meeting was held and advice was given.

Well it appears that for ½ a million US dollars, the MRCS held some mass rallies, and handed out a lot of condoms and pamphlets, but provided no healthcare. Condoms and pamphlets are provided free and the costs of distribution in a local area would be very small. Referring people for testing is also costless and presumably arose out of the counseling sessions. If we assume (for simplicity) that the costs of putting a workshop, a mass rally, sessions, and training peer educators are the same, then it cost the MRSC around USD5,800 to provide each service. As expenditure on healthcare is only USD4 per capita, the costs incurred by the MRCS to produce their services is outrageously cost inefficient. If the costs are calculated on the number of people reached by the education provided by the MRCS, then the NGO spent more than USD11 for each person. Again a ridiculous allocation of resources, when the per capita expenditure on healthcare is only USD4, coupled with there being no evidence that this education has had any impact on behaviour. Even, if everyone educated, trained and counseled came out understanding the issues, changed their behaviour and became active peer educators (which is highly unlikely), the amount of resources allocated to this area of healthcare is questionable. Surely, HIV/AIDS education can be provided much more cheaply.

Myanmar Anti-Narcotics Association (MANA) – USD280,00

  • 5 drop in centres (established or run was not specified) and 58 workshops were held, presumably in the drop in centres. From this 868 intravenous drug users (IDU) were reached. 1 of these was referred for drug treatment, and 96 received HIV tests.
  • 48,000 syringes were distributed, though none were 868 – an usual needle exchange program. It is not clear, who obtained the syringes, but presumably they were distributed to the 868 IDU’s reached.
  • Total of 9 reports, which included 8 evaluations, reviews and 1 survey were undertaken. None of these have been made public.

Let’s assume initially that all the monies were allocated on the 868 IDUs, who were provided with 58 workshops and 196 received HIV tests. If we assume that each test cost USD10, as was the case with the MMA, then MANA would have needed to allocate around USD1,960 of their resources. This left them with around USD278,040 for other activities. Since there program reached 868 IDUs, (of which 196 were tested for HIV and 1 referred for drug counseling), then around USD320 was spent on reaching each IDU. If every IDU, who came in contact with MANA changed their behaviour (highly unlikely), then MANA this still means that a small number of people where provided with an inordinate amount of resources, especially when this is compared with the average expenditure on healthcare of only USD4.

Of course MANA did produce 8 reports, evaluations and undertook 1 survey, about which there is absolutely no information. Of course some resources would have been necessary to produce this output, which lowers the amount of resources required to produce the above outcomes. So if half of MANA’s funds were allocated to producing their reports, then the costs of reaching each IDU would have been still ridiculously high at USD160. This would also mean that a ridiculous amount of scare health resources were allocated to the production of reports, which are not even available to the public that paid for them (or to the people of Burma, who lost precious healthcare resources for their production). Another approach to examining the efficiency of the allocation of resources by MANA with regard to the production of their reports is to use the expenditure incurred by MHAA in the production of their outreach services. MANA, unlike the MHAA did produce 9 reports, so if we assumed that MANA could actually provide workshops and outreach at the same costs, then MANA could have provided all their services to IDUs at a cost of around USD10,000. This would have left around USD235,000 for the 9 reports, with each costing on average around USD26,000. Either way the allocation of resources by MANA is extremely cost inefficient.

Myanmar Business Council AIDS (MBCA) – USD273,000

  • 13,649 condoms 30,995 pamphlets distributed
  • 110 health education sessions & 10 mass awareness sessions, though no-one was reported as being reached. Maybe there was no-one at the meetings. 31 advocacy meetings were also held, though it is not clear, who with or what for.
  • 91 peer educators trained & 14 workshops. It is not clear that these are in addition to the original training provided for the 91 peer educators, or whether it took 14 workshops to train 91 peer educators
  • 10 workshops for non-health professionals & non-peer educators
  • 2 large companies with HIV/AIDS policies
  • 38 people referred for HIV tests

Let’s assume again that the distribution of condoms and pamphlets and referrals for tests are costless or incur minimal costs. As the MBCA did not provide the number of people it reached with its education sessions and workshops, the cost per person can not be calculated. So we are left with the number of health education sessions, mass awareness session and number of peer educators trained. So the MBCA held a 120 health education sessions, 10 mass awareness sessions and trained 91 peer educators. If we assume that the cost for each of training is the same, then it cost USD1,235 to hold each education session and train each peer educators. This is about 20 percent of the expenditure of MRCS to produce education sessions, but still an absurd amount of resources, when resources are so scarce. The expenditure is also considerably higher than that of MHAA to produce health education sessions. Surely, health education sessions can be held in Burma at the fraction of the cost.

Pyi Gyi Khin – USD155,00

  • 142,599 condoms and 335,000 pamphlets were distributed
  • 33 advocacy meetings were held, though there is no information for what or with whom these were held. Another 83 multi-sectoral meetings were also held, with no more information provided.
  • 30 peer educators trained and 5 workshops for peer educators. As with the MBCA it is not clear that it took 5 workshops to train the 30 peer educators or these were in additional to the original education provided.
  • 689 education sessions held, where 462 were reached, with 29 receiving counseling. As only 462 people were reached, some of these education sessions must have been without participants.
  • 1 needs assessment and 1 base-line study were conducted. Again these are not publicly available.
  • 418 people were given HIV tests
  • 400 received with AIDS received home based care
  • 1,012 with HIVS were treated for opportunistic infections

If we assume that HIV tests, home based care and treating AIDS patients for opportunistic infections cost the same at USD10 (as provided by MMA), then PGK spend around USD18,300 on caring for HIV/AIDs patients. This would have left around USD136,700 for other activities. With 30 peer educators trained and 689 education sessions held this implies that each cost around USD190, less than most of the other Burmese NGOs. However, since only 462 people were reached the cost of reaching each person would have been around USD300. Again this is a ridiculous allocation of resources when per capita expenditure on health is only USD4.

Comparison of the Costs of Outreach of Burmese NGOS

Average No. People at each Health Education Session

Cost of each Education Session

Cost/Head Education





















These estimates are obviously rough, but they do indicate that resources were allocated in an extremely cost inefficient manner. The estimates also indicate that little attention has been given to the cost effectiveness of the different organisations. The large expenditure on health education, with no indication of its impact, also indicates an extremely inefficient allocation of scarce health resources.

Hopefully, the international NGOs, the United Nations agencies and Burma’s ‘government’ made better use of monies provided by FHAM. We will examine their use of scarce health resources shortly.

Wednesday, July 2, 2008

Lagging the pack - the grim realities of Burma's place in the economic firmament

In May we illustrated the extent of the challenge (purely in terms of the remorseless arithmetic of growth) that Burma would face in achieving something like Thailand's current standard of living. To further underscore the urgency of the need for regime change in Burma, we have compiled an assessment of where Burma is situated currently with regard to a wide range of countries and what will be required in terms of growth performance to close the gaps. It is vital to bear in mind that what is presented here represents unavoidable, non-contextual constraints. Increasing per capita income to a multiple of 4, say, in a short time requires, by definition, very high rates of annual growth by historical standards; maintaining low rates of growth must cause the time taken to blow out significantly. With that said, consider the following depiction of Burma's relative economic position and prospects for catchup and convergence circa 2007.

This table shows, for a range of countries:

* the ratio of 2007 GDP per capita on a purchasing power parity basis to that for Burma (source: CIA World Factbook)
* the rate of annual growth in real GDP per capita required for Burma to reach the country's 2007 PPP GDP per capita in 50 years
* the number of years it will take for Burma to reach the country's 2007 PPP GDP per capita if Burma's real GDP per capita continues to grow at its long run (1953-2003) average rate of 2.9% pa (source for long-run growth data: Angus Maddison's 1-2003 AD database)
* the number of years it will take Burma to converge to the same GDP per capita as the country in 2007 PPP terms if both continue to grow at their respective long-run (1953-2003, Maddison) averages

Some points of explanation are in order. The two numbers in each column reflect different population figures used to calculate per capita GDP. In a macabre sense, the CIA figure for Burma is 'best-case' as they use a population figure adjusted for excess mortality due to AIDS (47,758,181). The latest official figure (apparently the SPDC was able not only to run an astonishingly successful referendum and an incredibly painstaking damage assessment in the aftermath of Cyclone Nargis, they also managed to slip in a census as well!) is considerably higher at 57,504, 368. The first number in each set is based on the CIA figure of $1900 per capita in 2007, the second is based on the official population which yields a GDP per capita of $1620. Only countries that had an estimate of GDP per capita for 2007 and that were ahead of Burma on at least one of the measures of GDP per capita are included. Some countries lack the data required to compute the long-run growth rates needed for the convergence calculation and so have no entry in the final column. Countries with a red 'X' in the final column have long-run per capita growth rates that exceed Burma's 2.9% - if these relativities are maintained then convergence will never occur. Obviously, average growth rates decline with time (typically 100- year average rates, where available, are 4/5 of 50-year rates in the Maddison data) so a red 'X' does note that convergence is impossible - but in these cases Burma would have to outperform the countries in question very significantly historically speaking in terms of both growth rates and duration for it to occur.

The data confirm Burma's status as one of the poorest countries in the world, and the striking distance between it and many countries considered mediocre rather than stellar performers. The median GDP ratio (using just those based on the CIA estimates) is 5.4 - hence 50% of countries in the sample have per-capita incomes that are more than 5.4 times that of Burma's when compared on a common value (PPP) basis. 25% of listed countries have incomes that are more than 12.8 times that of Burma. 25% have per-capita incomes that are at most 2.3 times the size of Burma's - which means that 75% of the sample are more than twice (and a bit) as wealthy as Burma in 2007 on a per capita basis.

These gaps require time to close. Hence, at its current long-run per-capita growth rate, Burma is a generation away from matching the current living standards of say Jamaica, or Jordan and given a life expentancy of 63 years (according to the CIA world factbook) the representative person born now need not expect to live to see Burma as well off as Venezuela, Libya or Gabon. The temporal ground to cover to reach contemporary Western European levels of income per capita stretches to a century and beyond. Actual convergence times (although less relevant as policy goals) measure several centuries in many cases.

Catch up can be faster if growth rates are higher - but Burma's position at the back of the pack means that if catch-up to current standards is to occur within 50 years, growth rates will have to rise now to 'Asian Tiger' levels. For example, catching up to where Trinidad & Tobago is now in 50 years rather than in 80+ years will require real per-capita growth of 5% per annum for those 5 decades - a prodigious feat of extreme historical rarity. Adding an extra 1% to the long-run rate and maintaining it for 50 years (the difficulty of which must not be underestimated) will see Burma's income per-capita rise no higher than that of Libya or Venezuela now.

It is easy to underestimate the significance of the ratios in the first column - doubling per-capita income in real terms may not seem like a particularly onerous task. Historical experience tells a different story. The following table of historical comparisons is based on the Maddison dataset. It shows the historical points of comparison for a selection of countries in terms of ratios of GDP per capita in constat-dollar PPP terms. The ratios in question are the quartiles of the set of 2007 ratios to Burma as discussed above.

So, for example, 75% of the countries selected in 2007 had per-capita incomes which were more than 2.3 times that of Burma. What exactly does that imply? Well according to Maddison's 1AD to 2oo3AD data, for Australia GDP per capita in 2003 was 2.3 times what it was in 1963. Hence the gap between 75% of the countries examined and Burma in 2007 was greater than that between Australia in 2003 and Australia in 1963! In other words, comparing Bolivia to Burma in 2007 is like comparing Australia in 2003 to Australia in 1963. The median ratio was 5.4 - this ratio is comparable to that of Australia in 2003 to Australia in 1904! So that is the comparative situation to the Belarus:Burma ratio in 2007, and 50% of countries in 2007 were further ahead of Burma in relative terms than 2003 Australia was of 1904 Australia. The third quartile ratio of 12.8 is equivalent to that of Australia in 2003 to Australia in 1847 on the Maddison data. So the contemporary gap between South Korea and Burma is comparable to that which took Australia 150+ years to traverse. 25% of our sample of countries are further ahead than this. The maximum ratio (42.5 for Luxembourg) equates to the comparison between Japan in 2003 and Japan in 1500. In a very real sense, at historically observed growth rates over the long-long-run, Burma is currently centuries behind the world's most well-off nations. The importance of periods of sustained rapid growth is evident for the entries for Asian countries in the table; the effects of long periods of stagnation are clearly identifiable in the Brazlian and Mexican experiences.

The point of these numbers is not to instil despair but clear thinking. The calls for increased aid for Burma after Nargis often appear based on the mistaken idea that international disparities in income are like pie-distribution problems: the North currently has too large a slice and so what is required is a trimming thereof and a redistribution to reduce inequality. As such, the problem of international disparities appears solveable by a kind of lump-sum transfer, a transaction at a point in time (e.g. more aid). This 'synchronic fallacy' fails to take account of the fact that disparities can only be eliminated by growth (a process in time, 'diachronic') at appropriate rates. Nothing will eliminate the disparities unless it causes the poorer countries to grow faster. William Easterly's work on growth spells out quite clearly that aid does not do this, and his work specifically on aid performance shows some of the reasons why.

Growth can only occur if the economic environment is conducive to (provides incentives for) productive activity. Pouring aid into toxic economic environments achieves nothing - as the history of aid expenditure shows. It need not even achieve its immediate objective: this chart shows for Burma the share of total health expenditure accounted for by 'external financing' after household out of pocket expenditure has been removed and external financing reduced by the measured expenditure of NGO's - in other words the share of external financing in total 'government' health expenditure in Burma. What is clear is that increasing external financing (rising by a factor of 7 between 2000 and 2006) has led to pari passu reductions in expenditure by the regime: health spending has not increased so much as changed in composition to be virtually all aid-driven. Thus greater aid for health spending doesn't necessarily lead to more health spending (which isn't surprising: the initial problem is that the regime chose not to devote sufficient resources to health expenditure; why would handing them money alter their motivation?). As for health, so for other aspects of ODA.

What Burma desperately needs is a rapid change in the economic environment - by one means or another. Regime change is required to permit transition to a growth path that can close the gap to reasonable economic health in an acceptable timeframe. The 'Asian Tigers' experience shows that this need not entail liberal democracy immediately, but it also shows that a relatively rapid transition to democracy may require the disruptive and catalytic effects of sustained growth at extremely high rates. Growth performance like that requires an environment that provides the right incentives (in terms security of property rights etc) that the Tigers had and Burma manifestly does not. Propping up the regime with increased aid will lead to mediocre growth and negligible prospects for endogenous institutional transformation. We need to look beyond the time horizon of self-interested individuals and NGO's who are content to feed the flames rather than put them out. The people of Burma need revolution, not reproduction of their grim status quo.

Thursday, June 26, 2008

ODA Burma 1988-2005

ODA Burma 1988-2005

Click on the following link for chart showing Overseas Development Assistance (ODA) to Burma from 1988-2005. The chart shows aid from the following:

1) All Donors
2) Development Assistance Committee (DAC) Countries (Rich Western Countries + Japan)
3) Japan

Constitutional sophistry

"As it is, some of the commentaries on the Constitution are not well founded. Thus it is widely held that Daw Aung San Suu Kyi is debarred from office because of her former marriage to a British citizen, Michael Aris, but in fact she is technically debarred from the Presidency only because her two sons are not Burmese citizens, while this nationality barrier does not in fact apply to nomination as a candidate for election or as a Minister. If she is also debarred from the Presidency because she is not “well acquainted” with military affairs, one might dare to ask whether military nominations would be allowed because knowledge by the military of political and economic affairs has been demonstrably deficient ever since 1962. There are however
political grounds on which she could be debarred from representative or ministerial
office, for example as a result of her declared support for Western sanctions policies."

Derek Tonkin, "Burmese Perspectives" (

The above is an example of the logic-chopping that has been employed by the pro-engagement lobby with regard to the sham Constitution recently affirmed in Burma's sham referendum. The claim that the Constitution is not designed to prevent Suu Kyi following a Mandelaesque path to the Presidency, that technically, legally (whatever that means in Burma) she could still end up as Head of State is used as a tool to paint regime opponents as misinformed and, more usually, purveyors of deliberate anti-regime misinformation (the terms 'anti-regime' and 'misinformation' being virtually synonymous among sections of the pro-engagement cheer squad). As usual, this piece of sophistry in fact reveals itself to be the product of either ineptitude or deliberate dissembling. The Constitution as it currently stands


clearly does prevent Suu Kyi from attaining not only the Presidency but any other Executive Post; this however, despite the strategic focus upon it of Tonkin et al, is not the main point of concern. The Constitution effectively disenfranchises all existing opposition forces in toto, and whittles the possible space for future political organisation to virtually zero.

The qualifications for the Presidency are set out in Chapter II of the Constitution. They are as follows:

Qualifications of the President and Vice-Presidents

(4) (a) The President of the Union shall be loyal to the Union and the citizenry,

(b) The President of the Union must be a citizen of Myanmar who was, and both of whose parents were, born in the territory under the jurisdiction of the State, belonging to the nationality of Myanmar,

(c) The elected President of the Union shall be a person who has fully attained the age of 45.

(d) The President of the Union shall be well acquainted with affairs of State such as political, administrative, economic and military affairs,

(e) The President of the Union shall be a person who has been residing continuously in the country for at least 20 years up to the time of the election,

(f) The President of the Union himself, parents, spouse, children and their spouses shall not owe allegiance to a foreign power, shall not be subject of a foreign power or citizen of a foreign country. They shall not be persons entitled to the rights and privileges of a subject or citizen of a foreign country,

(g) The President of the Union shall possess specific qualifications required of the President in addition to qualifications required to stand for election to the Hluttaw.

(h) The Vice-Presidents shall possess qualifications required of the President.

With regard to Suu Kyi's eligibility, she clearly meets conditions b), c), and e). Come 2010, condition a) my be used to disqualify her (grounds with which Derek Tonkin concurs - after all, she supports sanctions) as may the military requirement in condition d). Condition f) clearly puts her out of the running due to the nationality of her sons (and their spouses - surely a patently bizarre Constitutional requirement?). It is condition g) that presents the real barrier, and the fundamentally anti-democratic heart of the new Constitution.

Eligibility for election to the Pyithu Hluttaw and Amyotha Hluttaw (the two National representative assemblies) is defined by a common set of requirements (apart from age, which is at least 25 for the former and at least 30 for the latter - condition a) below). They are:

32. In connection with prescribing of the qualifications of the Pyithu Hluttaw representatives,

– Persons who possess the following qualifications have the right to stand for election as Pyithu Hluttaw representatives:


(b) being a citizen born of parents both of whom are also citizens;

(c) having settled in the Union of Myanmar for at least 10 consecutive years up to the

time of being elected Pyithu Hluttaw representative; Exception—‘The period of staying abroad with the permission of the government shall be deemed to have settled in the Union.

(d) possessing qualifications prescribed in the election law.

Condition d) is sufficiently vague to allow for considerable future manipulation, but more importantly there is a list of circumstances which preclude an individual from standing for election. These are:

33. In connection with those who have no right to stand for election as Pyithu Hluttaw representatives,

The following persons shall not have the right to stand for election as Pyithu Hluttaw representatives:

(a) person serving prison term, having been convicted by the court concerned for having committed an offence;

(b) person still within the period the authorities have prescribed that he or she has no right to be elected as Pyithu Hluttaw representative for having been punished for a commitment of offence that makes him or her lose qualifications required of a Pyithu Hluttaw representative before or after the State Constitution comes into force;

(c) persons adjudged to be of unsound mind as provided for in the relevant law;

(d) person who has not yet been cleared from being declared destitute;

(e) person owing allegiance to a foreign government, or a subject of a foreign government or a citizen of a foreign country;

(f) person who is entitled to rights and privileges of a subject of a foreign government, or a citizen of a foreign country;

(g) person who obtains and makes use or member of an organization that obtains and makes use of money, land, housing, building, vehicle, property etc. directly or indirectly from a foreign country’s government, or religious organization or other organizations;

(h) person who commits or abets or member of an organization that commits or abets acts of inciting, making speeches or issuing declarations to vote or not to vote misusing religion for political purpose;

(i) members of a religious order;

(j) civil service personnel;

proviso: The expression shall not apply to Tatmadaw member Hluttaw representatives.

(k) person who obtains and makes use or member of an organization that obtains and makes use of State funds, land, housing, buildings, vehicles or property directly or indirectly;

proviso: (1) The expression ‘State funds’ does not apply to pension or allowances officially granted by the State for services rendered for the benefit of the State.

(2) The expression ‘land, housing, buildings, vehicles and property belonging to the State’ does not apply to State-owned land, housing, buildings and apartments, other buildings and apartments, State-owned air-craft, trains, vessels and motorcars and property etc. which have been permitted by the State to be used under an existing law or as required by duty or leased from the State on payment;

(l) person still within the period the authorities have prescribed that he or she has no right to be elected as Pyithu Hluttaw representative for commission of an unlawful act or for failure to act in conformity under the election law making him or her lose qualifications required of a Pyithu Hluttaw representative before or after the State Constitution comes into force.

Several of these conditions are fairly standard (e.g. c), d), e), f), j), k)) but some are striking in their implications. Condition h) would appear to render anyone who has been involved in political activity ineligible to stand for parliament, and indeed would appear to make political activity in the traditional sense impossible - the very activity of politicking would prevent achievement of the desired end! [the clumsy drafting re misuse of religion is a post-September 2007 addition that is absent from the Detailed Principles document circulated earlier] .Condition g) tightens the noose on the NLD and other anti-regime groups, but also appears to disenfranchise those individuals in receipt of aid, post-Nargis. That presents an acute dilemma for the pro-engagement forces: the act of engagement may well directly hamper the development of democracy by disenfranchising the engagees! Conditions b) and l) complete the barrier by permitting discretionary (and retrospective) action to disenfranchise individuals.

Given that Suu Kyi would have to meet these criteria as well as the specific requirements for the Presidency, it is clear that she could not be eligible to be Head of State. But nor could any NLD member or any political activist aspire even to be a member of the National assemblies (which adds a further block on Suu Kyi re the Presidency as the President is chosen from among 3 Vice Presidents who are in turn chosen by each Hluttaw and the Tatmadaw representatives). But the problem is much more fundamental, as those eligible for the State and Region Hluttaws must meet the same criteria, as must nominees for the positions of Union Ministers, Attorney and Deputy Attorney-General, Auditor and Deputy Auditor-General, Chairman and members of the Union Civil Service Board and Justices of the Supreme Court. Furthermore, the requirements are replicated for all of these functions at the State/Region level.

In other words, those active in political activity will be locked out of political power at every significant level. The 25% quota for the Tatmadaw is nothing in terms of a block to democracy compared to this wholesale exclusion. The idea that this Constitution represents in any way a step forward on a road to democratisation is a fantasy in the minds of some and a lie issued from the mouths (and pens) of others.

Friday, June 20, 2008

Natural Gas Exports and the Missing Money

Burma’s emergence as a major regional supplier of natural gas should proved considerable revenue for any the government to spend on much needed infrastructure, health care and education. Rising gas prices and increasing output volumes have caused Burma’s gas exports to soar in the last few years, dramatically improving the country’s balance of payments and the size of its foreign currency reserves.

Burma’s Gas Exports, Earnings and International Reserves


Gas Export


(million cubic metres)

Gas Price

($US per

million Btu)1

Balance of


($US m)




























* ie, April–November 2007. Source: MCSO (2008), IMF (2007, 2008).

** Projection

Burma’s gas exports come courtesy of its possession of large, and exploitable, fields of natural gas offshore in the Gulf of Martaban and in the Bay of Bengal. Cumulatively, these fields have confirmed recoverable reserves of around 540 billion cubic metres – enough, at present prices and production volumes, to bring in annually around $US2 billion for the next 30 to 40 years.2 Two of the fields, the so-called ‘Yadana’ fields off Mouttama, and the ‘Yetagun’ fields off Burma’s Tenasserim (Tanintharyi) Division, came on stream in 1988 and 2000 respectively, and it these that are the overwhelming source of Burma’s current gas deliveries. The primary customer of the output from the Yadana and Yetagun fields is Thailand which, as a consequence, now runs a substantial trade deficit with Burma (of just over $US2 billion in 2006/07).

Over the next few years, however, the export of gas from Yadana and Yetagun will be joined by that from new fields off Burma’s coast in the Bay of Bengal. These fields, the most lucrative of which are collectively known as the ‘Shwe’ (‘gold’) fields, have roughly the same gas reserves present (an estimated 200–240 million cubic metres) as collectively present at Yadana and Yetagun.3 The Shwe fields were explored and developed by a consortium that comprised Myanmar Oil and Gas Enterprise (MOGE), together with South Korea’s Daewoo Corporation, the Korean Gas Corporation, the Gas Authority of India Limited, and India’s Oil and Natural Gas Corporation.

The ultimate customer of the gas actually delivered from Burma’s Shwe fields, however, will be China, which in 2007 ‘won’ a fiercely contested bidding war against India and South Korea. This result provoked consternation in South Korea and India at the time, not least because China’s reported bid was below that of India’s offer.4 China’s Yunnan Province will be the recipient of the gas, courtesy of a 2,400km pipeline that will come ashore near the port of Sittwe (via a facility at nearby Ramree Island), and run more or less the length of Burma into Yunnan Province. With little in the way of labour or environmental considerations to get in the way, construction of the Shwe pipeline can be completed relatively quickly (two to three years). As matters currently stand, however, a delay seems likely in the project, with a senior Yunnan official recently stating with respect to the pipeline that ‘whether, when and how to build it are yet to be decided’ (emphasis added).5 In the light of this, it is now likely that the first Shwe gas (and its revenue) will not flow until at least 2011/12.

Burma’s ‘Missing Billion’

Whatever the latest delays, the gas earnings discussed above should be transforming Burma’s fiscal circumstances – allowing for the spending on basic infrastructure, health and education the country so desperately needs.

However, under current arrangements, the foreign exchange revenues Burma is accumulating via its exports of natural gas are making next to no impact on the country’s fiscal accounts. The reason for this is simple – Burma’s gas earnings are being recorded in its state finances at their ‘official’ (exchange rate) kyat value. This official exchange rate of the kyat (at around 6 kyat:$US1) over-values the currency by around 150–200 times its market value (currently about 1,000 kyat:$US1). This dualism in Burma’s exchange rate imposes other great costs on Burma’s economy, but critical here is that the use of the official exchange rate to convert the country’s gas earnings into kyat dramatically underplays their true (potential) contribution to state finances. Recorded at the official rate, Burma’s gas earnings for 2006/07 of $US1.25 billion translated into 7.5 billion kyat, or a mere 0.6 per cent of budget receipts.6 By dramatic contrast, if the same US dollar earnings were recorded at the market exchange rate (at that time around 1,200 kyat:$US1) their contribution of 1,500 billion kyat would more than double total state receipts, and more or less eliminate the country’s fiscal deficit. That this is not done is yet another revealing episode of the chronic macroeconomic mismanagement that inflicts Burma, as well as the SPDC’s priorities.

So where do Burma’s generals hide the ‘missing’ billion or so kyat they keep away from the state’s official finances? No-one but they know for sure, but the gas revenues do show up in the statistics for Burma’s foreign reserves provided by the Myanmar Central Statistical Organisation (MCSO) to the IMF. An inspection of the vaults of the Myanmar Foreign Trade Bank for the money might be a good place to start however – as also might the accounts of some accommodating if unscrupulous banks offshore. From these refuges the SPDC can (and does) spend as they might whim – on the new capital of Naypyidaw, on the nuclear reactor that is being purchased from Russia, on the extraordinary ‘physic nut’ bio-fuel campaign, and so on. In any case, the generals can rest assure that the money they expropriate is safe from prying eyes, and safe from the peoples for whose lives it might make a difference.

1 Prices are a composite of those applying to the delivery of natural gas to a number of countries and regions. Gas export prices are typically quoted in ‘British Thermal Units’ (Btu’s), a measure that accounts for both volume and energy intensity. Though there are other complications that must be taken into account in particular contexts, one Btu is equivalent to approximately 28 million cubic metres of gas.

2 British Petroleum, BP Statistical Review of World Energy, June 2007-

3 Estimates of the size of the Shwe fields vary, but those here refer to confirmed gas reserves according to British Petroleum’s BP Statistical Review of World Energy, op.cit.

4 Anupama Airy, ‘Myanmar Prefers China as Gas Buyer’, Financial Express, May 29, 2007, -

5 The official was Bai Enpai, Secretary of the Yunnan Provincial Committee of the Chinese Communist Party. The statement, which was made on March 8, 2008 caused widespread astonishment given the conventional wisdom that the pipeline was a ‘done deal’. Bai Enpai’s comments were reported by China’s Xinhua News Agency, <>.

6 Calculations derived from data in IMF (2007, p.9).