THE SPDC'S ECONOMIC PRIORITIES

S E C R E T SECTION 01 OF 02 RANGOON 000187

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NOFORN

STATE FOR EAP/BCLTV, EB
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA
USPACOM FOR FPA

E.O. 12958: DECL: 02/10/2015
TAGS: ECON PGOV BM
SUBJECT: THE SPDC'S ECONOMIC PRIORITIES

REF: 04 RANGOON 31

Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D)


1. (S/NF) Summary: A sensitive GOB document has given us a
rare glimpse at the economic policymaking process of the
SPDC's top leadership. From its list of 30 "guidelines,"
it's clear that the SPDC is not totally ignorant of the
economy's key problems (energy shortages, budget deficits,
and poor agricultural and industrial production). However,
it's also clear that the SPDC has little idea what to do
about them. End summary.

The View from the Top


2. (S/NF) We have seen a GOB 'Top Secret' document outlining
the 30 economic priorities set by the top four SPDC leaders
(Senior General Than Shwe, Vice Senior General Maung Aye,
Prime Minister Lt. Gen. Soe Win, and Secretary One Lt. Gen.
Thein Sein) during the January 20-21 quarterly SPDC
coordination meeting. A short note covering the list of
"guidelines" instructed ministries, other SPDC members, and
regional Peace and Development Councils to "note and
implement" these instructions as quickly as possible.


3. (S/NF) The guidelines are often vague, and always
dogmatic. Some instructions are extremely general ("keep the
economic growth rate high"),while others are excessively
micromanagerial ("plant rubber in Tamu, Sagaing Division" and
"grow more corn because people in Chin State like to mix it
with rice"). The guidelines also occasionally repeat
themselves, and often are contradictory. For example, while
urging attention to import-substitution industries first and
export-oriented industries second, they also stress the
importance of increasing the "production of export items."

Energy, Agriculture, Industry, and the Budget are Key


4. (S/NF) Several themes emerge, however, notably the
leaders' concern over agricultural production and diversity,
electricity and crude oil shortages, building the industrial
sector, and cutting the budget deficit. Seventeen of the 30
guidelines address these topics. Other areas address the
need for better statistics and reform of border trade.

-- Agricultural goals are to increase cultivation of new
crops and more efficiently cultivate traditional ones.
Specifically mentioned are cash and import-substitution crops
like oil palm, rubber, coffee, tea, and pepper. Agricultural
production must move away from small and medium-sized farms
to "commercial size" enterprises. To this end, farmers
should start cooperative production and "entrepreneurs who
are financially strong" (read: cronies) should develop
"thousands of acres of virgin land."

-- Energy problems must be solved by conservation across the
board, with a priority given to manufacturers for supplies of
electricity and domestic and imported fuel oil. Despite
admonishments elsewhere to maximize import substitution,
there is no suggestion of using offshore, exportable natural
gas to help improve the domestic power situation.
Hydropower, long the SPDC's public answer to Burma's energy
problems, is not mentioned.

-- Industrial success is dependent on better long-term
planning and increased use and specialization of industrial
zones. The generals recognize the lack of "know-how" in the
private and state-owned sectors, but offer no advice on
getting it -- other than to establish a goal of achieving
"high-level industries" by 2009.

-- Budget deficits remain chronic despite the publicized
target of a surplus by FY 2003-04. Like in the energy
sector, budget deficits must be fixed through conservation of
resources and controlled spending. Supplementary
expenditures will not be authorized (except presumably for
SPDC priority areas),government construction projects must
cease (except for manufacturing infrastructure),and
ministries must "increase departmental income."

-- Correct data and statistics must be compiled by
responsible authorities while ministries must devise
"feasible" production plans for FY 2005-06. The guidelines
do embrace, however, the absurdly overstated official GDP
growth figure of 13.8 percent, and stress the need to keep it
up.

-- Perhaps dwelling on the previous domination of border
trade activities by ousted Prime Minister, and military
intelligence chief, General Khin Nyunt, the new guidelines
insist that trade at the two largest border trade points,
Muse (on the China border) and Myawaddy (on the Thai border),
be converted from more informal and decentralized border
trade rules to more centrally controlled "normal" trade. A
separate instruction orders "training" of border traders so
they can conduct future commerce as normal, vice border,
trade.

A Kinder Gentler SPDC?


5. (S/NF) Somewhat incongruously, three of the guidelines
address the importance of government servants treating the
people well while striving to achieve these economic
objectives. Local officials "should live together with the
people and should not behave haughtily or arrogantly."
Likewise, GOB-affiliated NGOs are cautioned to improve their
organizations to be more "firmly rooted among the people."

Comment: Moments of Lucidity


6. (S/NF) There are few surprises from the list, which
reflects the top-heavy dirigiste policymaking process that
has caused the economy so many problems. However, the
majority of the guidelines make it clear that the senior SPDC
leadership does have a concept of some of the challenges
facing the Burmese economy -- if not why these problems have
arisen. It has long been debated whether the GOB's inept
economic policymaking was based on ignorance of the situation
or inability to address it properly. From this document, it
appears to be as much the latter as the former, as the
guidelines identify several real problems, but propose few
realistic or creative solutions. End comment.
Martinez