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Burma (Myanmar) Country Brief

October 1998

This publication is part of the Department of Foreign Affairs and Trade's program for disseminating information about foreign affairs and trade issues. Unless otherwise stated, the opinions and interpretations in it should not be regarded as the views of the Australian Government.

General Information
Foreign Relations
Australia-Burma Relations
Contact Details


General Information

Political History

Under the leadership of General Ne Win, who came to power in 1962, Burma experienced three decades of the "Burmese Way to Socialism", which effectively meant military rule, economic hardship and political isolation. In 1988, student protests against Ne Win were crushed, with widespread loss of life and another military regime under General Saw Maung was installed. The new regime, however, announced elections, holding out the prospect for a return to democratic civilian rule.

National elections in May 1990 for a constituent assembly to draft a new constitution saw the opposition National League for Democracy (NLD) win 80% of the seats. Prior to the election,some of the leaders of the various political parties had been arrested, including Daw Aung San Suu Kyi, General Secretary of the NLD and daughter of independence hero General Aung San.

The military junta, styling itself the State Law and Order Restoration Council (SLORC) refused to accept the election result and during late 1990 and early 1991 a campaign was conducted banning minor opposition parties and imprisoning hundreds more political opponents - including most of the remaining leadership of the NLD. In October 1991, when students rallied in support of the awarding of the Nobel Peace Prize to Daw Aung San Suu Kyi the previous year, the SLORC counteracted by tightening its grip, closing down universities and abolishing more political parties. When General Than Shwe assumed the SLORC chairmanship in early 1992, the regime took some steps to ameliorate its low domestic and international standing. Over 2,000 political prisoners were released including a number of prominent ones, the curfew was lifted, and military courts were replaced by the civil legal system. Parallel with these moves the SLORC implemented a policy of national "reconsolidation" aimed at bringing about peace with the ethnic insurgents that have fought for autonomy almost since the nation's founding. Today, only a few groups have yet to conclude ceasefire agreements, and these appear to be militarily on the back foot. At the same time, the regime instituted a number of economic reforms and established a National Convention, which includes some opposition representatives but is dominated by the regime's apppointees, to draft a new constitution. On form to date, this aims to entrench the military in a leading political role, exclude the opposition from the political process and pay only lip service to the ethnic minorities.

The restraints which confined Daw Aung San Suu Kyi to her house in Rangoon for almost six years were lifted in early July 1995. Her dominant theme since her arrest has been the need for "dialogue" with the regime and the ethnic minorities on the political future of the country. Immediately following her release, Daw Aung San Suu Kyi adopted a conciliatory approach, calling for the military to work with the NLD and implicitly recognising that the armed forces have a political role to play in the country's development. The regime's response was to insist that the stage-managed National Convention was the appropriate forum in which to discuss the country's political future and to ignore calls for either a separate dialogue or amendments to the National Convention. In response Daw Aung San Suu Kyi increased her criticism of the armed forces in Burma's political, economic and social development and specifically attacked the composition and work of the National Convention, withdrawing the NLD from the process in late 1995.

On 15 November 1997 the SLORC was dissolved and the State Peace and Development Council (SPDC) formed. The SLORC's top four players remain at the top of the SPDC and appear to have more power concentrated in their hands. The SPDC also includes the top 15 military commanders. The change seems to have been triggered by a corruption inquiry into senior SLORC ministers (a number are reportedly under investigation). Most new ministers are drawn from the military and the new Ministry remains overwhelmingly comprised of military or ex-military officers. The SPDC's initial approach to the NLD was ambiguous. On one hand it approved a number of releases, partially lifted restrictions on Daw Aung San Suu Kyi's freedom of movement and allowed - after considerable indecision - NLD delegates to meet in May this year. On the other hand it continued to take an approach aimed at neutralising the party's ability to play an effective political role (fresh detentions, restrictions on movement and gatherings). Daw Aung San Suu Kyi's response has been to seek to expose the regime's intolerance by testing the limits on her freedom of movement and political activity. While relations between the two sides have steadily deteriorated amid much brinkmanship, both sides appear to want to avoid confrontation that could result in violence on the streets.

The NLD sent a letter to the SPDC on 23 June "requesting and urging" them to convene Parliament, as constituted at the 1990 elections, before 21 August, and subsequently launched a series of actions aimed at provoking the Government into responding to its request. This mainly comprised a series of attempts by Daw Aung San Suu Kyi to leave the capital for meetings with NLD suporters. Each attempt resulted in a stand-off with the security forces on the outskirts of Rangoon. The first two ventures were resolved in Aung San Suu Kyi's favour when the authorities, after ordering her to return to Rangoon, agreed to bring to her the MPs she intended to visit. A third attempt, timed to coincide with the ASEAN meetings being held in Manila, ended on 30 July when the Burmese security forces forcibly returned her to Rangoon. The SPDC's handling of this case was soundly condemned by the international community, including Australia.

The SPDC's response to a fourth attempt suggested that it had learnt from previous impasses. It did whatever it could to make her stay comfortable, issuing statements emphasising this approach and mocking her sojourn as a "camping holiday". Daw Aung San Suu Kyi eventually returned to Rangoon on 24August. Meanwhile, the 10th Anniversary of the students' uprising on 8 August this year passed relatively peacefully, with only isolated outbreaks of protest, as well as the detention for six days of 18 foreigners, including one Australian, for distributing "messages of goodwill" to the Burmese people . (The Government released the group for deportation on 14 August, immediately after they had each been sentenced to five years imprisonment under the Emergency Act.) Unsurprisingly, 21 August also passed without sign that the Government was prepared to accede to the NLD's ultimatum for the convening of Parliament. However, two meetings between the two sides in August (the first between NLD Chairman Aung Shwe and SPDC Secretary-1 Khin Nyunt on 18 August, and the second between lower level officials on 24 August) provided an encouraging sign that dialogue might at some stage be possible.

Despite these preliminary contacts between the two sides, the situation deteriorated through September. The Government, in response to NLD statements that it would press ahead with the convening of Parliament, arrested 157 NLD members, including 63 MPs-elect in early September in what was clearly a pre-emptive strike designed to head-off any possibility of such action by the NLD. On 16 September the NLD announced the formation of a Committee representing the parliamentarians elected in 1990. According to the NLD, the Committee was given a mandate by 251 of the 459 MPs-elect still living (26 have died since 1990), to act on their behalf. The Committee Chairman is U Aung Shwe (NLD Chairman) and its membership comprises the other eight members of the NLD Central Executive Committee (CEC), including Aung San Suu Kyi, and one other representing several of the ethnic minorities parties'. Following the Committee's second meeting on 17 September, it released a statement announcing it would perform the functions of a parliament until the whole parliament could be established. Dr Saw Mra Aung of the Arakan League for Democracy was appointed as Speaker. At the time of the Committee's formation the total number of detainees had grown to 835, including 195 MPs-elect. The SPDC's initial response to the formation of the Committee was one of mockery, decrying it in the state-owned press. However it has now upped its response through a barrage of propaganda against the NLD and by holding mass meetings of ordinary "citizens", protesting the Committee's establishment. It has also put pressure on the ethnic ceasefire groups to dissociate themselves from the Committee and the NLD's call to convene a parliament. None of the Committee members have yet been detained and the situation remains tense.

Human rights Burma's continuing record of human rights abuses and lack of progress towards democracy are a major concern to Australia. Statements by the Government of Burma that human rights abuses do not take place in Burma, and that reports of abuses are totally fabricated by opponents of the regime are not encouraging. Human rights conditions in Burma remain far from satisfactory in terms of widely accepted international standards. While hundreds of political prisoners have been released since 1992, arbitrary arrests and detentions continue. Several hundred political prisoners remain in detention. Conditions in jail are very poor. The use of forced labour in infrastructure development and in support of military activities continues throughout the countryside. In August the ILO Commission of Inquiry issued a report sharply critical of forced labour practices in Burma.


Ethnic Minority Groups

Negotiating a sustainable modus vivendi between Burma's ethnic minority groups and the Burman majority, albeit on the latter's terms, is one of the military regime's key objectives. Around fifteen former ethnic insurgent groups have now signed ceasefire agreements with the Government. Most of the ethnic groups have been allowed to retain arms and some administrative control over their areas under ceasefire agreements. Therefore, if the process of national reconsolidation stalls, the potential exists for renewed military activity posing a threat to Burma's internal stability. With the surrender of Khun Sa's Mong Tai Army in February 1996, the Karen National Union (KNU) is the only major ethnic insurgent group not to have reached a ceasefire agreement with the regime. In early 1997 a Government offensive succeeded in driving the major remaining armed ethnic insurgent group - the Karen National Union - from its foothold on the Thai border. Ethnic dissatisfaction over the past two years with the power sharing arrangements being offered in the National Convention have seen the process stall amid calls from key insurgent groups for a tripartite dialogue between the military regime, ethnic groups and the democratic opposition.


Narcotics

The illegal production and use of narcotics is a major problem within Burma and between Burma and members of the international community. While the regime does devote resources to narcotics reduction, it has accorded greater priority to the ceasefires it has negotiated with narco-insurgents in Burma's Northeast since 1988. As a result, the United States estimates that despite some decline over the past year, Burmese opium production has almost doubled over this period and now accounts for around 90% of South East Asian production (and almost 60% of global production). Opium production concentrated in Shan State which is in the east of the country bordering Thailand, Laos and China. Approximately 80% of the heroin entering Australia comes from opium produced in Burma. While the Burmese Government is not a "narco regime", there is little doubt that the regime turns a blind eye to the trade to underpin its ceasefires with narco-insurgent groups. Some military officials may also benefit privately. Of more concern, Burma's foreign exchange crisis has increased the economy's dependence on narco-profits and, by extension, the potential influence of narco traffickers on the regime. At the UN Special Session on Drugs in June, Mr Downer announced the allocation of $1 million for narcotic eradication programs in the Mekong sub-region. Drug abuse in Burma itself is spreading rapidly and a recent study has found that those of Burma's drug addicts who inject heroin have the highest rate of HIV infection in the world (estimated by the UN Drug Control Program to be 90% in Rangoon). Although the spread of HIV is not yet at Thai levels, it is spreading fast, and drug addiction is a key factor. Treatment of drug addicts remains rudimentary and focuses on prosecution, with the consequence that the prisons have shockingly high rates of both drug addiction and HIV. While official figures state that there are 60-70,000 registered drug users in Burma, based on registered numbers at drug treatment centres, UNDCP estimates in Rangoon put the figure at five to six times this. Accurate figures for the number of intravenous drug users are not available, but extremely conservative UNDCP estimates would indicate at least 50% of addicts are injecting, an alarming statistic considering that many share needles, thus increasing the risk of spreading the HIV/AIDS virus.


Economic Developments

The last year has been a difficult one for Burma's economy. It has seen stagnant export growth, poor paddy harvests, a year-on-year 50% depreciation in the kyat, an inflation rate of around 40 per cent and declining foreign investment due to the Asian financial crisis, US sanctions and Aung San Suu Kyi's discouragement of foreign investment. Foreign exchange levels remain critically low and new regulations have put on hold, for the time being at least, the policy of opening Burmese markets and trade. It was partly as a response to the growing economic crisis that the SLORC was replaced by the SPDC in and announced a renewed focus on economic development. Fourteen Ministers were sacked and anti-corruption investigations were launched against several of them and throughout the bureaucracy. The SPDC's economic performance since then has been patchy and more changes appear to be in the pipeline. Reforms announced to date have been a mixture of the positive, such as the increasing withdrawal of the state sector from commercial activity, and the disappointing, such as the effective closure of the border trade since late 1997 and in March, the announcement of new restrictions on imports and exports. The archaic banking and finance sector remains a serious impediment to foreign investors, along with inconsistent and opaque policy-making. Other disincentives to foreign investment include poor infrastructure, a vast and inefficient bureaucracy and corruption, the last in spite of an extensive campaign to counter it. Investors, particularly those with interests also in North America and Europe run the risk of shareholder revolts, consumer boycotts and international opprobrium so long as the SPDC remains in power. The government acknowledges the need for far-reaching economic reform, particularly with the parallel exchange rate but without access to the USD 3 billion soft loan it requires to cushion the changes, it remains constrained by fears of ensuing social unrest. It was hoped that Burma's admission into ASEAN in July 1997 would bring increased capital inflow but, although the effect of the Asian financial has been less dramatic than elsewhere in the region, it has still suffered as potential foreign investors have withdrawn to concentrate on their domestic situations. The crisis has also shaken the SPDC's confidence in continued economic reform as increasing civil unrest in its neighbours, particularly Indonesia, strengthens its mistrust of civilian and foreign economic expertise. Burma's economy underwent considerable change after the adoption of market-oriented policies in 1988. These included significant deregulation and liberalisation measures with regard to foreign direct investment , agriculture, foreign and border trade and development of the private sector. Economic development improved considerably in the early 1990s and accelerated to double digits by 1992/93 but the pace has slowed in the past two years. The government has maintained a level of military control over most areas of the economy which has limited the extent of free market competition. The macroeconomic situation has continued to deteriorate over the last twelve months. Foreign exchange reserves remain critically low and are estimated to be at best only two to three weeks import cover. The exchange rate in the parallel market has fluctuated from 180 kyat to the US dollar in July 1997 up to 360 in December before falling back to 250 by March 1998. The rate is currently around 345. Exports, particularly of rice, traditionally Burma's chief source of foreign earnings, continued to stagnate and the flood-affected monsoon crop of late 1997 was expected to be sufficient for domestic demand but leave little surplus for export. As a result, new regulations were imposed in March 1998 severely limiting imports, including inputs for manufacturing, and reducing industrial output. Accordingly, the targeted real growth in GDP of 6.4% in 1997/98, based on a projected 6.3% growth in agriculture, was not achieved, and GDP growth was a more modest 4%, a reduction of 37% from 6.4% growth the previous year. Poor performance in the agriculture sector (the largest sector with 36 % of GDP and 29% of exports in 1997/98) has been the main cause of the declining growth rate of the economy. Sector-wide growth in agriculture fell to just 2.9%, down from 3.7% the previous year. The main factor was a fall in rice production due to a poor main (monsoon) harvest complicated by widespread flooding in October 1997 which inundated nearly 8% of the sown land and particularly affected two of the largest rice growing areas in Rangoon and Bago divisions. Exports of beans and pulses declined 3% in value and the drop in value of total crop exports was 7.3%, with rice exports falling 14%, according to official figures, although many believe the decline was probably closer to 60%. Maize exports fell 50% and sesame fell 25%. Only the fact that beans and pulses constituted 88% of agricultural exports prevented the sectoral decrease from being more dramatic. Livestock and fisheries production increased by only 6.4%, a decline of 46% on the previous year's increase of 11.8%, and exports of animal and marine products grew only 4.7%. Manufacturing and processing continued to grow at just over 5% and maintained its 9% share of GDP. In terms of exports, its value grew 73% and as a share of total exports manufacturing and processing grew from 19% to 30%. It is difficult, however, to ascertain exactly which sectors were responsible for export growth as official figures ascribe most of the increase to the growth in border trade, but do not explain which commodities were being traded. The mining and minerals sector grew by only 1.5% during the year but declined marginally as a percentage of GDP and constituted 40% of total exports. Construction increased by 9.3% which, while appearing encouraging, contrasted with rises of around 25% in each of the two preceding years. Official figures show growth in construction of just 1% in the coming year, due chiefly to a government decision not to approve or invest in any capital projects for the next two years as part of an attempt to reduce the budget deficit.

Growth in services declined 7.5%, mainly due to a 21% drop in the communications sector. Growth in the formal financial sector also slowed although it still recorded a healthy 13.7% increase, due largely to the small size of the sector. The financial sector forms less than 2% of GDP and will remain at this level until the government addresses the major structural impediments such as deregulating interest rates thereby making banking more profitable. Tourist inflows increased about 8%, leaving hotels with very low occupancy rates for most of the year and causing ongoing operating losses. The trade sector grew a modest 3%, holding its share of GDP at 21%. The value of foreign investment approvals for the year dropped 53.6% from the previous year to just USD 771 million for 1997/98, due largely to the regional economic crisis and the continued refusal of the international financial institutions to assist Burma until it resolves its internal political problems. The largest proportion, 30%, went into the hotels and tourism sector while oil and gas fell from 35% of the total last year to 20% in 1997/98. Investment in manufacturing increased slightly to 20% but investment in agriculture, livestock and fisheries and mining combined totalled only USD 13 million and, according to official figures, there was no new foreign investment in construction or industrial estates. Singapore, Malaysia and Thailand were again the most active foreign investors although the domestic economic situations in the last two throw doubt on whether they will be able pursue their interests so vigorously in the future. ODA flows remained minimal with only modest loans coming from China, South Korea, other ASEAN countries and India. Japan partly resumed its aid program, the most significant part of which was a grant of 2.5 billion yen for Rangoon airport and the continuation of its grant-in-aid matching Burma's debt repayment. The continuing budget deficit, a narrow revenue base (just 3.9% in 1997/98) and declining agricultural exports, are major contributing factors to the deteriorating economic situation. The Central Bank finances the bulk of the public sector deficit by purchasing treasury bills from the government (ie printing money) and resulting uncontrolled money supply growth and high inflation inhibit economic growth. The money supply has become so sensitive the government has refused to release statistics on it since June 1997.

Burma's balance of payments position has reached a critical level as the trade deficit and arrears have increased while foreign investment fell and foreign aid remains largely suspended. The balance of trade has continued to deteriorate with Jun-Dec inclusive year on year figures showing an increase in imports of 45% compared to an increase in exports of 36%. Inward capital flows are insufficient to cover the remaining current account deficit. The government has attempted to maintain reserves by reneging on bilateral foreign debt repayments, printing kyat to buy dollars, restricting private sector imports of consumer goods and non-essential public sector imports and relying increasingly on the diminishing credit of suppliers and commercial loans. However these efforts have not been successful and reserves are thought to fluctuate around the USD70 million mark - enough for about a fortnight's imports. It is unclear how the government can extricate itself from this situation. Revenue from the Yadana gas fields is due to become available to the government sometime in 2001 but a series of deferred payments to creditors are due for repayment from about that time. There are increasing signs the government is moving back to the days of self-reliance and, although there is unlikely to be a formal announcement suspending further economic liberalisation, that may in effect be the outcome of the present economic difficulties.


Foreign Relations

Burma's foreign and security policies are predicated on ensuring internal security first and foremost. Burma's security environment is defined in terms of the threat to the Government from insurgent groups and the history of support for these from foreign governments. The past 40 years of ethnic insurgency have shaped perceptions within the country's successive military governments of Burma's security requirements: the need to ensure national unity, the ability of neighbouring countries to sharpen threats to the unity, and the need of the central government to enhance its capacity to exercise control throughout the country. The country's security is seen as being guaranteed by a strong self defence capability supported by a network of good bilateral relations with its neighbours. Over the last two years the regime has strengthened its regional relations, in particular with ASEAN. The latter has pursued a policy of constructive engagement, arguing that greater contact and dialogue will provide opportunities to influence the SPDC in positive ways, while furthering their commercial and security interests. Burma was admitted as a full member of the ASEAN Regional Forum (a security forum) in July 1996 and ASEAN in July 1997. Since then, ASEAN leaders and ministers have used their unprecedented access to the regime to encourage political and economic reform. For example, both the Foreign Ministers of the Philippines and Malaysia called on Daw Aung San Suu Kyi during state visits to Burma by President Ramos and Prime Minister Mahathir. Until Burma joined ASEAN last year, China was the regime's most important foreign supporter. China provides the bulk of Burma's military equipment and is also one of Burma's most important economic partners, with total two-way trade estimated at over US$800 million per annum in 1995 (latest reliable figures), although the under-reported border trade is, according to some estimates, as high as US$1 billion a year. Burma has accepted China's support readily, although it has also sought to broaden its sources of international support through ASEAN membership. While Japanese companies have pushed for the resumption of aid and full economic cooperation, Japan remains constrained by concerns about the political and human rights situation. South Korea also has resumed providing development assistance and is seeking expanded economic links. The release of Daw Aung San Suu Kyi has accelerated the process of engagement with Burma by most countries in East Asia and many elsewhere. Relations between Burma and India have developed in recent years, although fuelled by commercial opportunities and Indian strategic concerns about Chinese influence in Burma.

Over the past two years, a number of Western countries have imposed punitive economic measures against Burma. In October 1996, the European Union adopted a "common position" which, among other things, introduced a visa ban on senior military leaders and their families and senior military officials and suspended high-level bilateral visits. The EU subsequently withdrew Burma's benefits under the EU General System of Tariff Preferences (GSP), a scheme to provide developing countries with improved trade access to the EU market. In late 1996, the United States also adopted a visa ban on senior military officers, Ministers and their families and on 22 April last year President Clinton imposed a ban on new US investment in Burma. This ban was renewed this year. In August last year, Canada also announced a package of punitive economic measures against Burma including the imposition of an export licensing system, the removal of GSP privileges and a call on Canadian industry to voluntarily cease all trade and investment with Burma.


Australia-Burma Relations

Fundamentals of Australia's current policy on Burma

No resumption of bilateral development assistance (but the limited program of humanitarian assistance delivered through NGOs will continue) without substantial progress in the political and human rights field. A ban on defence exports to Burma and a suspension of defence visits from Australia. The suspension of Austrade visits to Rangoon, and the maintenance of a locally-staffed Austrade office in Rangoon, with guidelines to "neither encourage nor discourage" trade and investment We do not consider that further restrictions on trade and investment are warranted at this time. Unlike the United States, which has imposed sanctions on new investment in Burma (but not on trade), Australia has a very low level of trade and investment in Burma, and any unilateral action by us would not have a practical effect on improving the situation in Burma. Like the United States, Canada and many other countries, our key objective in Burma is to seek an improvement in the human rights situation there. But our aim is to adopt policies suited to our own circumstances which are most likely to encourage the regime to undertake political reform. The provision of humanitarian assistance to displaced people from Burma in Bangladesh and Thailand as needs dictate. Using our best endeavours to restrict the assistance programs of UN organisations in Burma to grassroots activities. Support for strong United Nations consensus resolutions calling for political and human rights reform in Burma. Urging influential (ie mainly regional) countries to use their influence with the regime to promote positive change. Australia has an interest in an independent, peaceful prosperous and stable Burma, which can play a full and constructive role in regional political and economic affairs. We have been prominent in international efforts to bring about political reform and universally accepted standards of human rights in Burma. The high proportion of narcotics entering Australia from Burma, and the presence of a substantial Burmese community in Australia, are important factors for Australia. We have made our concerns on political reform and human rights issues clear to the Burmese Government on a number of occasions. Mr Downer has repeatedly called on the Government of Burma to open a genuine process leading to political reform involving all the main players - the military, leaders of political parties represented in the election and representatives of the ethnic minorities. He has taken every possible opportunity to raise our concerns in international fora, most recently at the ASEAN PMC and ASEAN Regional Forum (held in Manila in July) and in his meetings with ASEAN and other Foreign Ministers in the margins of these meetings. Our Embassy in Rangoon also makes frequent representations to the Burmese authorities on the human rights situation In his meeting with the Burmese Foreign Minister, U Ohn Gyaw, on 26 July, Mr Downer again expressed the Australian Government's concerns over developments in Burma. Mr Downer also participated in a joint demarche of Foreign Ministers to U Ohn Gyaw, in an attempt to stress the depth of the international community's concern about the situation in Burma, and to help resolve the stand-off outside Rangoon between Aung San Suu Kyi and the Burmese Government. Mr Downer also took the opportunity in his meeting with U Ohn Gyaw to urge the Burmese Government to set up a national human rights commission as a step towards improving its human rights record. Additionally, he urged ASEAN countries to use their relationship with Burmese leaders to encourage change in Burma and an improvement in the human rights situation there. During the AUSMIN talks held in Sydney on 31 July, the U.S. Secretary of State Albright and Mr Downer, telephoned the UN Secretary-General, Kofi Annan, and urged a greater UN involvement in Burma. Most recently, Australia joined several countries (United States, Japan, Korea, U.K, Germany, Italy and France) to convey to the Burmese Government our serious concern in regard to the recent incident involving Daw Aung San Suu Kyi and reiterated the urgent need for dialogue between the Government and the political opposition. We have urged the Government to allow Aung San Suu Kyi freedom of movement and we expressed concern about members of parliament-elect who have been imprisoned for the peaceful expression of their political views. The Government has also devoted much effort to Burma in our multilateral diplomacy. In multilateral fora, such as the United Nations General Assembly and the Commission on Human Rights, we have worked, and will continue to work, with other like-minded countries to produce tough consensus resolutions on Burma. In addition to these efforts, the Government continues to look for practical and creative ways to bring about democracy and greater respect for human rights there. In this context, Mr Downer sent a senior DFAT official (Mr John Dauth, former head of the South and South East Asia Division) as his Special Envoy to Rangoon from 10-14 September 1997. Specifically, he asked Mr Dauth to find out directly from the most senior level of the Burmese Government what it proposed to do to engage the NLD and ethnic minorities on a process of political reform. Mr Downer also asked Mr Dauth to hold out to the Burmese Government the prospect of positive responses by Australia if they make measurable progress towards democratic institutions and the better observance on human rights. In Rangoon, Mr Dauth was able to deliver Mr Downer's message to a range of senior members of the Government, notably one of the top four leaders of the regime, Secretary-1 of the SLORC (now SPDC), Lt-Gen Khin Nyunt. The visit allowed him to raise the Australian Government's concerns about the human rights situation in Burma directly with the key players responsible for these policies. It was therefore the best opportunity Australia has ever had to register our concerns directly with the regime. The Burmese Government was left in no doubt about the direction in which we want them to move. On the anniversary of Mr Dauth's visit, another senior DFAT official visited Rangoon in September 1998 to review our policy approach. The opportunity was taken to meet with NLD General Secretary, Daw Aung San Suu Kyi and other members of the opposition as well as SPDC representatives. Throughout the development of our policy approach, we have stayed in close touch with Daw Aung San Suu Kyi, and we will continue to inform and consult her about our Burma policy. Through our ongoing dialogue with the opposition NLD and legal ethnic minority groups inside Burma, the Government provides moral support and standing for those inside Burma who seek greater respect for human rights. Outside the country, we also keep in touch with Burmese democratic and ethnic groups. And because our Embassy is an important source of reliable information about the situation in Burma for the international and Australian media and NGOs, we contribute in a very tangible way to international awareness on Burma and to pressure for change. The Government also listens to the views of Australian-based NGOs on Burma: in June 1997 Mr Downer met with a number of NGOs with specific Burma interests to discuss the situation and the Government's policy approach. We will continue to judge the Burmese Government by its actions and we will remain focused on our policy objectives which are the evolution of democratic government in Burma and the proper observance of human rights, all of which will enable Burma to play a full and constructive role in regional political and economic affairs.


Sanctions

Like many in the international community, Australia wants to see the evolution of democratic government in Burma and the proper observance of human rights, all of which will enable Burma to play a full and constructive role in regional political and economic affairs. But unlike many of these countries, Australia has a very low level of trade and investment in Burma, and any unilateral action by us would not have a practical effect on improving the situation in Burma. Our share of Foreign Direct Investment (FDI) commitments fell from 12th to 14th position over the year to March 1998 with just 0.124 per cent of total committed FDI (down from 0.66 per cent a year earlier). Well over half our investment (US$25 million) is accounted for by BHP petroleum's unsuccessful exploration venture prior to its withdrawal from Burma in 1992. Direct bilateral trade between Australia and Burma is small. In 1996/97, Australian exports direct to Burma came to just AUD24.8 million. Direct imports from Burma in 1997/98 remain unchanged from the previous year, totalling only AUD 12.1 million. In 1996/97 Burma was our 81st largest trading partner representing just 0.014% of our total trade. The Government will nevertheless continue to take practical steps on other fronts to encourage political reform in Burma.


Bilateral Trade

As mentioned above, direct bilateral trade between Australia and Burma is small. In 1996/97, Australian exports direct to Burma came to just AUD24.8 million up from AUD14.6 million the year before. Direct imports from Burma in 1997/98 remain unchanged from the previous year, totalling only AUD 12.1 million. Few exports show consistent growth, there may be large orders one year and very little the next. For example, Australia exported considerable quantities of petroleum to Burma in the early 1990s but nothing at present. Australian exports to Burma consist largely of steel, copper, zinc, other minerals, machinery and wheat. Other Australian exports include dairy products, foodstuffs, perfumes, electrical goods, chemicals and scientific instruments. The main Burmese imports to Australia are marine products comprising of over 60% of imports. This reflects Australian investments in the Burmese fishing and seafood processing industry (mainly prawns and barramundi fishing). Australian Investment and Australian Business Presence Over the 12 months to end March 1998, Australian foreign direct investment approved by the Burmese Government increased to USD 82.08 million (AUD 128.25 million and the number of projects rose from eleven to 14 projects. However, about USD 25 million is accounted for by BHP petroleum's unsuccessful exploration venture prior to its withdrawal in 1992. Overall, Australia's share of FDI approvals fell from 12th to 14th position, with just 0.124 % of total approved FDI - down from 0.66 % a year earlier. Australian investment is concentrated in natural resources, reflecting Australia's comparative advantage in this area. 14 approved projects are in mineral and oil exploration and eight of the 14 projects belong to three companies. In addition, there is a small Australian business presence in construction and infrastructure, telecommunications, processed food (especially seafood), beverages, and legal and investment consultancy services. For most Australian companies, investment in Burma often forms part of a regional strategy: most investing or seeking investment opportunities in Burma are active in other parts of South East Asia, especially in Indonesia and Vietnam. Nevertheless, concerns about political risk and consumer / shareholder reaction as well as Burma's economic / business fundamentals, result in continuing wariness by Australian companies.


Displaced Persons

The Government has a particular concern for the human rights of ethnic minority refugees driven across the Thai border by the Burmese Army's counter-insurgency operations inside Burma. In March this year Mr Downer publicly deplored attacks on the Thai side and called on the Burmese Government to ensure no further attacks occurred. Our Embassies in Bangkok and Rangoon also made representations on this issue at the time. Further, Mr Downer instructed senior officials from our Embassy in Bangkok to travel to a widely representative group of border camps to observe first-hand the current situation facing Karen and other ethnic minority peoples living there. There they spoke to representatives of the Karenni, Karen and Shan, to Thai officials and to NGOs involved in looking after these camps. Their conclusions were that while some anecdotal evidence of forced repatriation continues, international attention and visits to the camps by foreign observers have had a salutary effect on local officials and policy. As a result, the displaced people involved now feel less likely to be forcibly repatriated than before. At the same time, although conditions in many of the camps are comparatively good by international standards, there is scope for improvement. The Embassy in Bangkok has just recently undertaken another visit to the camps on the Thai-Burma border.

The Australian Government has welcomed the recent agreement between the Thai Government and the UNHCR on an expanded role for the latter in the border region. Along with other members of the international community, we will continue to encourage Thailand to continue to provide sanctuary to civilian refugees as long as it remains unsafe for them to return to Burma. At the same time, it is of great concern to the Australian Government that the number of refugees on the Thailand border continues to rise. In material terms, the Australian Government channels assistance through foreign NGOs and UN agencies to meet the humanitarian needs of the Burmese people, in particular the marginalised ethnic groups who have borne a disproportionate share of the regime's human rights abuses. Over the past seven years well over $4.7 million has been provided to purchase food, medicines, shelter materials and to support water and sanitation programs. The 1997/98 budget allocation - at $1 million - is up 25% on the previous year's initial allocation and will be used for similar purposes. AusAID is currently working with an Australian NGO to develop a distance education program for refugees from Burma still living in camps on the Thai/Burma border. This program, which is expected to commence in 1998, will provide up to 200 Burmese refugees access to higher education in Australia.


Aid program

Like most other donor countries, Australia suspended bilateral aid to the Burma government following the civil unrest of 1988. It will not be resumed until significant progress on the political and human rights fields have been made. In the interim, Australia runs a modest humanitarian assistance program channelled through NGOs and the UN targeted at grass roots activities within the country eg immunisation, HIV/AIDS prevention etc and displaced people on the Thai and Bangladeshi borders. In addition, we provide development assistance for displaced persons living outside the country, mainly on the Thai border (A$4.7 million over seven years, A$1 million in 1997/98).


Transport linkages

There are no direct airlinks to Australia. Daily flights operate to Singapore and Bangkok and bi-weekly flights to Kuala Lumpur, Osaka, Hongkong andTaipei. Bilateral treaties and agreements Australia does not have investment protection or double taxation bilateral agreements with Burma.

Contact Details

Department of Foreign Affairs and Trade - Australia

Ian Kemish
Director
ASEAN, Regional Issues and Burma Section
South and South East Asia Division
Department of Foreign Affairs and Trade
Barton ACT 0221
Tel: (02) 6261 1345
Fax: (02) 6261 2342

Australian Embassy
88 Strand Road
YANGON MYANMAR
Tel: (95-1) 25 1810; 25 1798; 25 1809; 25 1797; 25 2183; 24 6161
Fax: (95-1) 24 6159; 24 6160
Ambassador: HE Ms Lyndall McLean AM

Embassy of the Union of Myanmar - Canberra
22 Arkana Street
Yarralumla ACT 2600
Tel: (02) 6273 3811; 6273 3751
Fax: (02) 6273 4357
Ambassador: HE U Maung Maung Lay