By - Mar 23, 2011 5:00 PM ET
Bloomberg Markets Magazine
Aung San Suu Kyi, leader of the National League for Democracy party and Oxford University–educated Nobel Peace Prize laureate, poses in her office in Yangon, Myanmar (previously known as Burma). Photographer: Namas Bhojani/Bloomberg Markets via Bloomberg
The voice on the end of a crackling phone line is soft and conspiratorial: “So you have arrived in Rangoon? Come at 10:30 a.m. Wednesday. The Lady will see you then.”
In Myanmar, a Southeast Asian nation ruled for 49 years by a military junta, “The Lady” is code for Aung San Suu Kyi, the Oxford University-educated Nobel Peace Prize laureate who spent 15 of the past 21 years imprisoned in her decaying lakeside home. Though she was released in November from her most recent seven-year spell of house arrest, arranging an interview with the leader of the banned National League for Democracy party still requires subterfuge, Bloomberg Markets magazine reports in its May issue.
A visit to Myanmar, a Texas-sized former British colony of 55 million people that was previously known as Burma, can be a cloak-and-dagger affair. Reporters arriving in the dilapidated main city, Rangoon, which the regime renamed Yangon, must play hide-and-seek with dictator General Than Shwe’s secret police.
Meeting Suu Kyi, 65, for the first time in her ramshackle party office nevertheless evokes a sense of deja vu. Slender in a blue longyi, the traditional Burmese sarong, and sporting fresh, yellow roses in her jet-black hair, she remains instantly recognizable as the defiant, sylphlike figure whose first challenge to the generals in 1988 drew comparisons with Nelson Mandela and the Dalai Lama.
In 1990, Suu Kyi’s NLD won a landslide election victory, capturing 392 of 485 seats in the national assembly. Yet the military blocked her from taking power by nullifying the poll, a move that drew the condemnation of Western nations and, along with subsequent human rights abuses, triggered economic sanctions.
Economic Debate
Now, Suu Kyi is back at the center of international attention as Western governments and investors debate whether to help pull Myanmar out of the economic wilderness in the wake of her release.
Suu Kyi, who still refers to her country as Burma, says that while Myanmar may one day be open for business, investment should also benefit its people.
“I worry about the fact that so many businesses look on Burma as virgin land to be exploited at will,” she says. “Even hardened businessmen can see this is a situation where they might be able to do some good rather than just squeeze out a lot of profit.”
Suu Kyi says now it’s premature to lift sanctions because there’s no evidence yet that the generals are moving toward democracy and respect for human rights. Although Suu Kyi has been freed, some 2,200 political prisoners languish in jail.
‘Sanctions Have Failed’
The Brussels-based International Crisis Group disagrees.
“Isolation and sanctions have failed to promote reform and must end,” the ICG, which advises governments on resolving conflict, said in a March 7 statement.
Myanmar, strategically sandwiched between the world’s two emerging giants, China and India, is a treasure trove of natural resources.
These include a proven 20 trillion cubic feet (570 billion cubic meters) of natural gas, mines that are potentially the world’s greatest source of high-quality rubies and jadeite jade (popular with Chinese consumers) and waters so abundant that fishermen joke that their country is the only place where prawns die of old age.
“The opportunities in Myanmar are enormous,” says billionaire U.S. fund manager Jim Rogers, chairman of Singapore- based Rogers Holdings. “I am doing my homework on how to invest there.”
Black Market Rates
It’s clear that Myanmar is in need of investment.
Its per capita gross domestic product is only $582, making its citizens poorer than those of Haiti, Bangladesh and Burkina Faso, according to the International Monetary Fund. The currency, the kyat, is so worthless that it requires 850 to buy one U.S. dollar on the black market compared with the official exchange rate of 6 to $1. Only 1 person in 100 owns a mobile phone and 1 person in 500 uses the Internet, according to the Geneva-based International Telecommunication Union.
Myanmar’s pariah status means that companies such as Lonely Planet have been criticized in the past by Burmese democracy activists for issuing guidebooks to the country. Today, this land of gold-spired pagodas and crumbling British colonial buildings draws about 300,000 visitors annually -- compared with neighboring Thailand’s 15.8 million.
Davos Message
Many Western businesses would seek access to Myanmar only if the U.S., the European Union and other Western countries lift sanctions. The final word may rest with one woman.
“If Suu Kyi calls for an end to sanctions, it could very well happen,” says Thant Myint-U, a former head of policy planning in the United Nations Department of Political Affairs. “Over Western policy, she has an amount of influence.”
In January, Suu Kyi, who can’t leave Myanmar for fear of not being allowed to return, sent a recorded message to the World Economic Forum in Davos, Switzerland.
In it, she called on Myanmar’s generals to initiate legal reforms to attract foreign direct investment, adding, “I look forward to the day when there will be a political and social environment that is favorable to a wide range of investments in Burma.”
In a separate statement in February, her party called for negotiations with the U.S., EU, Canadaand Australia to determine under what circumstances sanctions might be modified. Those governments have yet to officially respond.
Billionaire George Soros, chairman of Soros Fund Management LLC, says the desire for democracy in Myanmar means the junta could go the way of deposed rulers in Tunisia and Egypt.
“Recent events in the Middle East and North Africa demonstrate that change can come at any time and any place,” Soros says. “If I were General Than Shwe, I would think about starting a real dialogue with the opposition.”
Investment Rush
Ending Myanmar’s outsider status could lead to an investment rush, says Luc de Waegh, managing partner of Singapore-based West Indochina, a consulting firm that runs trips into the country for foreign businessmen. Consumer product companies would find a market for everything from toothpaste to motorcycles; mining services firms could supply items such as helicopters and rubber boots, says de Waegh, who declines to name the companies who have sent executives to Myanmar.
On her release, Suu Kyi told cheering crowds that she bore no grudges toward, and would be prepared to talk to, the generals.
Leadership Question
Since then, she says, they haven’t responded. Complicating the issue is the decision by Than Shwe, 78, to step further into the shadows following elections in November in which the junta- backed Union Solidarity and Development Party claimed to have won 76 percent of the seats after the NLD boycotted the poll.
The government is now officially headed by a president, former General Thein Sein, 66, although above him sits a state supreme council headed by Than Shwe.
“We don’t know who’s at the helm,” Suu Kyi says.
While Western nations and investors debate the ethics of investing in Myanmar, Asian companies are profiting from the lack of competition for assets. Chinese, Indian, Korean, Thai, Singaporean and Malaysian companies are drilling for oil and gas, building ports and pipelines and trading jade, rubies, sapphires and timber.
Even some Western companies continue to do business there. French energy company Total SA (FP) and its minority partner, San Ramon, California-based Chevron Corp. (CVX), are extracting Myanmar’s natural gas at an offshore field in the Andaman Sea called Yadana.
Grandfather Clause
Total and Chevron aren’t in breach of U.S. and European sanctions because they were there before Myanmar was declared an international outcast by the West. Under a grandfather clause, they’re barred from increasing their investments in Myanmar, according to Gareth Johnstone, a Singapore-based Chevron spokesman.
Both companies say their operations in Myanmar create jobs and improve living conditions for ordinary citizens. China National Petroleum Corp., South Korea’s Daewoo International Corp. (047050) and GAIL India Ltd. are developing another gas field to the north.
Already, natural gas from Myanmar provides 20 percent of neighboring Thailand’s energy needs. By 2013, it will be flowing through pipelines to Kunming, capital of Yunnan, the southwestern Chinese province that adjoins Myanmar. Beijing is also building two ports at which oil from the Middle East can be offloaded and then piped overland to China, reducing the security risks attached to shipping it through the narrow Malacca Strait, a choke point between Indonesia on one side and Malaysia and Singapore on the other that could be easily blocked by potential enemies in the event of war or even disrupted by terrorists.
Thai Investment
Thailand’s biggest construction company, Bangkok-based Italian-Thai Development Pcl (ITD), is putting together a group that wants to spend $80 billion during the next 10 years to transform 250 square kilometers (96.5 square miles) of Myanmar’s southern coast near Dawei into a port and petrochemical hub.
“The consequence of this foreign investment will change the Myanmar landscape,” says Somchet Thinaphong, the engineer in charge of the project.
For the moment, Soros supports targeted sanctions and says existing Asian investments can perpetuate abuses.
“The cash flow from oil and gas continues to be used to oppress rather than benefit the people,” says Soros, founder of the philanthropic Burma Project, which supports democratic change in Myanmar.
Struggle for Freedom
Of more than 60 military coups that took place in the world from 1962 to 1974, only two regimes installed then remain in power today: Myanmar and Libya, according to Bertil Lintner, author of Outrage: Burma’s Struggle for Democracy (Review Publishing, 1989).
Suu Kyi is watching events in Egypt and Tunisia, where absolute rulers were ousted, and in Libya, where Muammar Qaddafi was fighting to hold on to power in the face of an insurgency and the subsequent UN-backed no-fly zone over his country.
“It confirms what I have always believed: that ultimately people do not like to be ruled by despots and autocrats,” she says.
Could it happen in Myanmar? “It’s always possible,” she says. “In five years’ time, I don’t know which regime will be in place or what kind of government, but the scene will not be the same. This is an age of change.”
Suu Kyi says that change won’t be easy for Myanmar. The daughter of Aung San, a resistance hero who fought British and Japanese occupation, she says she has a harder job than her father, who was assassinated in 1947.
Home for All
“Internal struggles and civil strife are much worse than a war with any external enemy,” she says. “The Japanese and the British had a country to go back to. But I want this country to be a home for everyone, including the military.”
Dislodging Myanmar’s military could be a much bigger challenge than anything seen in the Middle East. In 1988 and 2007, Burma’s leaders fired on their own people when students and Buddhist monks led street protests. They have also fended off the impact of Western sanctions, fought ethnic secessionists and succeeded in keeping Suu Kyi out of power.
“This little group of village-born soldiers has run circles around everyone,” says Thant Myint-U, whose grandfather, U Thant, was a former UN secretary-general and opponent of the regime.
Restlessness continues to exist among a population that either lives without electricity or suffers daily power outages in a country that exports oil and gas. Car owners can wait in line for five hours to buy fuel.
Inflation Woes
There’s no stock market, meaning the closest Myanmar residents can get to betting on equities is an underground lottery based on the daily closing price of the Stock Exchange of Thailand.
Ordinary citizens say inflation makes their lives miserable.
“A year ago, a bag of rice cost me 1,200 kyats,” says U Tun, 76, a retired university professor. “Now, it’s 1,600 kyats. Myanmar is a rich nation, but the people are poor.”
Inflation is currently running at a rate of 30 to 50 percent a year, according to Sean Turnell, an economics professor at Macquarie University in Sydney.
The only global indicators in which Myanmar scores highly are narcotics production (No. 2 opium producer in the world, according to the U.S. government, after Afghanistan) and corruption (joint No. 2 with Afghanistan in Transparency International’s latest annual index).
Once Rich
It wasn’t ever thus. Under British rule, it was the richest country in Southeast Asia, according to Turnell, author of Fiery Dragons: Banks, Moneylenders and Microfinance in Burma (NIAS Press, 2009). In 1942, the British were driven out by Japanese forces helped by Burmese fighters led by Suu Kyi’s father, Aung San.
Soon, however, Aung San and his comrades became disillusioned with the Japanese and joined forces with the British, who recaptured Rangoon in 1945. In 1947, Aung San negotiated self-rule with the British and won a subsequent election. He never lived to lead the country to full independence. In July 1947, at the age of 32, he was assassinated on the orders of a political rival, U Saw. His daughter was 2 years old at the time.
For most of the next 14 years, Burma was governed by a democratically elected government of the Anti-Fascist People’s Freedom League, the party formerly led by Aung San, before the military coup of 1962 that followed a period of political turmoil.
Oxford Education
By then, Suu Kyi had moved to India, where her mother had been appointed Burma’s ambassador by the democratic government. She moved to England to study philosophy, politics and economics at Oxford, where she met her future husband, Michael Aris, and had two sons.
One March evening in Oxford in 1988, when the couple were reading after putting the children to bed, Suu Kyi, about to begin work on a doctorate in Burmese literature, was told her mother was seriously ill in Rangoon.
“She put the phone down and at once started to pack,” Aris later wrote. “I had a premonition that our lives would change forever.”
Suu Kyi arrived back in Burma to find student protests in full swing. Soon, she became one of the opposition leaders, co- founding the NLD. The protests were suppressed by soldiers, who massacred some 3,000 people.
House Arrest
The following year, Suu Kyi was put under house arrest for the first time. In 1990, the generals agreed to call elections and then refused to recognize the NLD’s victory. Suu Kyi spent much of the next two decades under house arrest away from her sons, becoming a global icon of nonviolent opposition. In 1999, Suu Kyi’s husband, whom she hadn’t been allowed to see for four years, was diagnosed with terminal cancer. The generals refused him a visa to make a final visit to Suu Kyi before he died that same year.
Suu Kyi survived a 2003 assassination attempt when, during a period of freedom, her motorcade was ambushed near the town of Depayin by what Western governments claimed was a junta-backed gang. Some 70 of her supporters were killed, and she escaped only because her driver sped away from the mob.
Suu Kyi says she doesn’t fear for her safety.
“We don’t go around inviting trouble, but on the other hand, we don’t avoid what we ought to do because it might possibly be dangerous,” she says.
Soros isn’t so sure about Suu Kyi’s security.
“She’s always in danger of re-arrest or worse,” he says.
New Capital
In 2005, the generals overnight stripped the nation’s largest city of its role as capital, having in total secrecy carved a grandiose new one out of jungle 400 kilometers (250 miles) to the north. The new capital, Naypyidaw, boasts a parliament building as big as the U.S. Capitol. The nearby presidential palace is perhaps twice the size of the White House. A zoo features a climate-controlled penguin house that ensures that the inmates can bask in a cold environment even though they have been transplanted to the tropics.
While the generals and their public servants decamped to Naypyidaw, Yangon began to experience a commercial property boom as crony businessmen profited from a government sell-off of some state assets. While the crumbling downtown skyline began sprouting high-rise office towers, in the northern suburb of Golden Valley, new McMansions were selling for as much as $3 million, according to Thant Myint-U, who says the new rich include genuine entrepreneurs as well as cronies.
Wealth Gap
“We Burmese say there are only two kinds of people in Burma -- the ones who have nothing to eat and the ones who have nowhere to put their riches,” Suu Kyi says.
Ultimately, investors may simply be deterred by the immaturity of the market and horror stories of foreign investors falling foul of local partners. And there’s also competition from other, better markets, says investor Marc Faber, who oversees $300 million at Hong Kong-based Marc Faber Ltd.
“So many markets are opening up: Cambodia, Laos, Vietnam and Central Asian republics,” says Faber, who publishes the Gloom, Boom & Doom Report. “Based on my experience with Vietnam, you are not missing much for the first 10 years.”
Back at Suu Kyi’s offices, “The Lady” is about to leave for her next appointment. She knows there may be years of struggle ahead to restore democracy.
Is the continuing sacrifice worth it?
“You mustn’t use the word sacrifice,” she says. “I find it very embarrassing. It is a choice I made.”
Soon, Western investors will face their own choice: whether to put their money into a fragile yet promising economy or to stand back and watch rivals with fewer qualms about political oppression exploit the country’s riches -- while at the same time propping up the world’s longest-running military dictatorship.