A Day of Hope Dawns

They waited for hours in the merciless tropical sun for their Lady to come. On this sweltering day in the height of the dry season, when even dusty palm fronds failed to catch a breeze, tens of thousands of Burmese lined roads and fields to openly venerate Aung San Suu Kyi, the democracy icon who inspires devotion that is nearly spiritual in its intensity. For the first time in her life, the veteran opposition leader is directly participating in Burma’s political process by running for a seat in April 1 by-elections, which will fill fewer than 50 vacancies in Burma’s 664-seat parliament. On the campaign trail in late March, Suu Kyi was visiting her constituency in the township of Kawhmu, a landscape of bamboo shacks and parched rice paddies in the impoverished flatlands of the Irrawaddy Delta.

A year ago, flashing a clandestine image of the Nobel laureate known as the Lady (or, alternatively, Auntie Suu or Mother Suu) could invite arrest. In 1990, her National League for Democracy (NLD) won elections that Burma’s long-ruling junta ignored. Until late 2010, Suu Kyi was confined under house arrest by the army generals, who locked her up for most of two decades. Back then, to speak of the Lady was to converse in whispers.

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And now? On the campaign trail in Kawhmu, supporters openly waved the opposition party’s red flag emblazoned with a star and golden peacock. Others wore T-shirts with the 66-year-old’s graceful visage or that of her father, independence hero Aung San. Even those associated with the army’s proxy party, the Union Solidarity and Development Party (USDP), were charmed. “I went out to greet her,” said the daughter of the USDP organizer in Kawhmu. “I love Auntie Suu.”

Suu Kyi’s mere candidacy is proof of remarkable reforms under way in Burma, which the junta renamed Myanmar in 1989. After flawed elections in 2010 that supplanted the results of the 1990 polls, the country’s junta began transferring power to a quasi-civilian government dominated by the USDP. Few people inside or outside Burma put much stock in the retired generals who control the country. But in rapid order, the new regime, helmed by a soft-spoken ex-general named Thein Sein, has released hundreds of political prisoners, loosened media restrictions and lifted much of the culture of fear that stifled the nation for decades. A ban on the NLD’s political participation was overturned, and Suu Kyi was allowed to contest the April 1 polls. “This small by-election of only 48 seats carries a symbolism far greater than the number,” says a Western diplomat in Burma. “This is an opportunity for the Burmese to decide at least a small part of their future.”

Still, a sole woman — and her political party — cannot serve as a struggling nation’s only savior. Even if the NLD wins nearly all the seats up for grabs in the April 1 contest, it will not challenge the USDP’s grip on parliament, where one-quarter of seats are also reserved for active military members. And not everyone is convinced that the political thaw will prove long-lasting or immune to a backlash by xenophobic hard-liners.

Then there’s the economy. A free and fair contest on April 1 will probably trigger Western nations to begin lifting sanctions imposed because of the country’s appalling human-rights record, but coaxing Burma’s economy into the modern age will be a decades-long process. “It’s not just the government that needs to change,” says Aung Tun, a local economist. “It’s the whole economy, the whole society.”

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It is hard to overstate just how broken Burma is. In economic terms, the country is aspiring just to become a Bangladesh. One-third of the nation lives below the poverty line. By the reckoning of watchdog Transparency International, Burma ties with Afghanistan as the third most corrupt nation in the world, outdone only by North Korea and Somalia. “You can call it ‘transaction costs’ or ‘lubricants’ or whatever,” says Thida Thant, an entrepreneur who’s a member of the Myanmar Business Executives Association. “But the way to do business here can never be 100% ethical.” An audit by the new government has alleged rampant corruption at six ministries, some of which are still headed by the same men (now retired from the army) as before. Wealth is concentrated in the pockets of state enterprises or government cronies. Electricity is spotty even in the cities. Phones, as Suu Kyi once joked, should be approached with a prayer. Credit cards are useless pieces of plastic in all but a few establishments. “For many decades, we fell more and more behind, but people could not say the truth about what was going on,” says Toe Naing Mann, the son of Thura Shwe Mann, the former junta’s No. 3 general who now leads the lower house of parliament. “Now the political structure is changing, but the economic structure needs to reform in parallel. The problem is we don’t have enough people with the technical know-how to make that happen.”

Despite its Rip Van Winkle economy, Burma is waking up to find itself in an important geostrategic position. Not only is the country wedged between China and India, Asia’s fast-growing and competing powers, but its natural treasures — from timber and hydropower to natural gas and minerals — have caught the attention of energy-hungry nations hoping to turn Burma into the world’s newest economic frontier.

So far the rush has come mainly from Asian countries, most notably China. But if the by-elections proceed without a hitch — a limited number of overseas monitors are being allowed in for the vote — Western nations are likely to start allowing their companies to venture in. Any effect will not be immediate: in the U.S., for instance, changes to financial embargoes have to make their way through Congress. Nevertheless, many in this nation of 50 million — plus people are preparing frantically for a postsanctions environment. Practically every week brings news of another foreign trade delegation arriving to sniff out business opportunities. English signs across the commercial capital of Rangoon promise the fruits of “multi-language academies,” “diplomas in business enhancements” and even a preschool that will help toddlers “get knowledged.”

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Burma’s parliament, which convened for the first time last year after a recess of more than two decades, is rushing to create a climate more conducive to foreign investment. Just this year, the country’s legislature has rammed through foreign-investment and labor laws. It is trying to hammer out banking and foreign-exchange regulations. Theoretically, foreign companies soon will be able to enjoy a five-year tax holiday and other investment incentives if they set up shop in the country. But who knows if these statutes will actually be implemented? Rule of law is hardly taken seriously in Burma. British risk-analysis firm Maplecroft considers the country’s legal structure the worst on the planet for doing business. When parliamentary leader Thura Shwe Mann, who has emerged as a surprise liberal seemingly intent on outreforming President Thein Sein, tried to find out just how many laws his homeland had on its books last year, he was stymied. First, says his son Toe Naing Mann, in a rare interview during which he acted as his father’s de facto spokesman, Thura Shwe Mann was told by soldiers turned bureaucrats that there were 700 laws. That was quickly reduced to 500. Further investigation eventually turned up just 394 active laws (since then, parliament has worked on 17 more). “Frankly speaking, I think the original strategy [by the junta] was for our congress to be a rubber-stamp body,” says Toe Naing Mann, who serves on a parliamentary legal-affairs commission. “But we are trying our best to make a dynamic and active body because we know unless the rules are changed, foreign investors will not want to come here.”

Patience Please

Burma was not always an economic backwater. Back in the 1940s, the British colony was the world’s largest exporter of rice. Burma greeted independence in 1948 as one of the richest nations in Asia. A Burmese economist, in fact, was the architect of the export-led economy model, which has transformed so many Asian nations. But decades of appalling mismanagement followed a coup in 1962 that marked the start of nearly 50 years of army rule. One military leader decided to denominate the currency by multiples of nine because he considered it an auspicious number. Banks went belly-up. Even in a country blessed with fertile land, malnutrition proliferated.

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The past few years have brought a flood of investment courtesy of China and other Asian nations that do not impose economic sanctions on Burma. Yet, even as these foreign investors outbid each other for control over dams and pipelines, the inflow of cash has remained in the hands of the government and its cronies. Complicating matters further, the bulk of these natural resources are located in regions of Burma where oppressed ethnic minorities are still battling government troops.

Financial sleight of hand also keeps money flow obscured. Officially, the local currency, the kyat, is fixed at around 6 to the U.S. dollar. In reality, the exchange rate is around 800 to the dollar. By forcing the street rate on foreign companies but then calculating inward investments by the official one, the government is able to turn a $1 billion foreign investment into a mere $7.5 million. Where the rest of the money goes is a mystery. (There’s been a promise to begin reforming the dual exchange rate after the by-elections.) It was only this year, after decades of secrecy, that the Burmese government published a proper national budget. “Can we make the right choices for a successful transition to a market economy?” asks Khin Maung Nyo, an economist at the Myanmar Development Resource Institute. “I have my doubts. But everybody has such high expectations from the government that when the reality sinks in, we may face serious social unrest.”

At the very least, the danger now is that Burma’s citizens, so long exploited, will have their hopes dashed anew. In Rangoon, a slum dweller named May Soe, who lives with 17 family members in a one-room shack, thinks that Suu Kyi is already Burma’s leader. She has no idea who the country’s President actually is. In the upcoming by-elections, her district has an open seat for which an NLD candidate is running. May Soe says she will vote “for Auntie Suu because she will develop our country quickly.”

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But the Lady, presuming electoral triumph, will be just one parliamentarian from a minority political party — albeit one with a considerable moral sway. (Burma’s next nationwide polls will be in 2015.) On the campaign trail, Suu Kyi’s soaring rhetoric has trumped actual policy platforms. In late March, two days after the Kawhmu trip, her campaign stalled for hours in southeastern Burma when her boat was stranded on a sandbar. “I know people will make jokes about how the NLD is stuck out at sea,” says one party operative. “I’m worried there may be a little bit of truth in it. Even if we win these elections, how will we change the country? We need open discussion inside the NLD about how to develop human resources and strong laws, but we’re too busy talking about democracy and freedom.”

Even Burma’s recent progress is more complicated than it first appears. Earlier this year, after the new labor law was passed, nearly 2,000 workers at the Tai Yi footwear factory in Rangoon held a 15-day strike for better pay. The protest at the factory, which has received investment from a Taiwan company, was hailed by labor activists as a rare victory by Burma’s workers, who are some of the world’s worst paid. But, in reality, says legal consultant Phoe Phyu, who advised some of the strikers, average net pay for workers only increased from 51,000 kyat to 61,000 kyat per month. That’s equivalent to a raise of just 4 cents per hour. Change in Burma is going to have to come in equally tiny increments.

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