Report Contents

November 6, 2020

Asia

MYANMAR: No surprises expected in next week’s election

BY Bob Herrera-Lim

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( 5 mins)
  • Aung San Suu Kyi and her party remain popular domestically.
  • Re-election will mean policy continuity, but whether the government can use some of its momentum for reforms remains to be seen.
  • China’s role will increase as western investors continue to be mindful of reputational risks.

The ruling National League for Democracy (NLD) led by State Counsellor Aung San Suu Kyi is widely expected to retain control of the government after the 8 November elections, even though with a slightly smaller majority. Simply put, she and the NLD remain popular with the dominant Bamar ethnic group that accounts for roughly 70% of the population. The military-backed Union Solidarity and Development Party (USDP) has been faltering since the 2015 vote. Sen. Gen. Min Aung Hlaing, the powerful chief of the military, the other day criticized the NLD for “weakness and deficiencies” in its management of the election process, but this is unlikely to fester and probably reflects the military’s frustration at the likely weak showing of the USDP.

In the border regions and among minority ethnic voters, support for the NLD has declined, and smaller parties in the Chin, Kachin, Kayah, Kayin, and Mon states have been consolidating to strengthen their leverage against the NLD and the Bamar majority. Even then, there are still around 90 regional parties, which limits their headway nationally. NLD’s nationwide reach constrains its potential gains in this election, and the pandemic has amplified its organizational advantages since a substantial part of the campaign has had to shift online. Despite the overall increase in internet usage over the past decade, rural and ethnic communities are still difficult to reach because of the low quality of internet service.

The strong international criticism of Aung San Suu Kyi over a range of issues, especially on the abuses against the Rohingya, has not dampened domestic support for her. In fact, her defense of domestic policies against criticism from abroad has helped preserve her nationalist credentials with the majority. And even though Myanmar has struggled with a recent surge in Covid-19 cases (which has been dropping in October since a stay-at-home order), the ruling party has also been able to avoid a backlash. Aung San Suu Kyi’s messaging and warnings on the pandemic have been consistent, even if the country continues to grapple with new cases, and the government is not being blamed for any inadequacies in its response. The People’s Alliance for Credible Elections reported in early October that the level of trust in Aung San Suu Kyi, as measured in a mid-year survey, had risen from 70% last year to 79% this year.

Therefore, in terms of the nominal political landscape, investors will find only a limited number of changes after 8 November, and the overall balance of power will continue. Aung Saan Suu Kyi and the NLD will push reforms at a very gradual pace — a pragmatic approach that the party believes has for the past few years helped prevent a potentially more problematic confrontation with the military while allowing a gradual restructuring of the bureaucracy and economy that has resulted in an average annual growth rate of 6.4% in the three years after the 2015 elections.

To its credit, the NLD has registered improvements in tackling corruption, primarily with the 2018 creation of an anti-corruption commission that has investigated high-level malfeasance. One high-ranking chief minister has been arrested, and several upper-level resignations and detentions have taken place. The main challenge in the country’s anti-corruption effort remains the armed forces, especially in the money flows around the military-controlled state enterprises. Patronage links between bureaucrats and businesses are also increasing, with NGOs claiming the widespread use by mining companies of their CSR budgets to bribe community and local government leaders for approvals.

But on the assumption that policy is driven strongly by domestic concerns, there may be a greater incentive for economic reforms after the elections, as the focus turns to reviving the economy and possibly bringing in more investment and aid. The problems are numerous: weak support for small and medium enterprises, slowing productivity gains, lack of coordination between the central and local governments, and low-quality agricultural products. After a strong start in Aung San Suu Kyi’s first term, foreign investment has tapered off because of western investors being wary of reputational risks due to the Rohingya crisis. Therefore, while there may be some momentum after the elections, whether this can be translated into reforms that address the country’s persistent economic weaknesses will likely be the most prominent one in the months after the vote.

Meanwhile, Myanmar’s foreign policy priorities will remain the same: balancing its geopolitical relationships while avoiding over-entanglement that generates political vulnerabilities. China will become a major source of needed infrastructure investment and trade, especially with western caution increasing. Of the 1.06-gigawatt solar power tender in September, only one out of the bids for the 30 sites did not have ties to China. Yangon is wary of becoming too close to Beijing; Myanmar’s generals believe that China also provides weapons and supplies to rebels at the border while acting as “mediator” for some conflicts. But with western interest possibly remaining weak in the near term and Myanmar needing to speed up the recovery from the pandemic, Aung San Suu Kyi and the NLD may find their options becoming increasingly more limited.