Heritage Foundation Reports
December, 1997
1998 INDEX OF ECONOMIC FREEDOM; Pg. 255
1568 words
HEADLINE: Chapter 6: The 1998 Index of Economic Freedom: The Countries;
Myanmar (formerly Burma)
BYLINE: by Bryan T. Johnson; BRYAN T. JOHNSON is a Policy Analyst at The Heritage Foundation.
________________________________________________________________________________
1997 Score: 4.30 1996 Score: 4.30 1995 Score: n/a
Trade 5 Banking 4
Taxation 3 Wages and Prices 4
Government Intervention 5 Property Rights 4
Monetary Policy 4 Regulation 5
Foreign Investment 4 Black Market 5
________________________________________________________________________________
Burma, now known as Myanmar, gained its independence from the United Kingdom in 1948. A fragile parliamentary democracy arose but was overthrown by the military in 1962. The country then embarked on a self-imposed state of isolation. In 1974, it declared itself a "socialist republic." In 1988, an economic crisis led to some opening for foreign investment, particularly in energy and tourism, although tight controls over other sectors have kept the level of foreign investment far below that of neighboring countries. A new military government began to introduce some free market and democratic reforms, but these reforms were put on hold in 1990 after opposition parties won national elections and the regime refused to relinquish power. Today, it continues to suppress democratic opposition. Myanmar currently is seeking membership in the Association of Southeast Asian Nations.
TRADE POLICY
Score: 5 -- Stable (very high level of protectionism)
Myanmar's average tariff rate is over 70 percent. n1 Nontariff barriers include licenses and import bans.
n1 Based on total taxes on international trade as a percentage of total imports.
TAXATION
Score -- Income taxation: 2 -- Stable (low tax rates)
Score -- Corporate taxation: 3 -- Stable (moderate tax rates)
Final Taxation Score: 3 -- Stable (moderate tax rates)
Myanmar's top income tax rate is 30 percent; the average taxpayer finds himself in the 3 percent bracket. The top marginal corporate tax rate is 30 percent. A commercial tax ranges from 0 percent to 200 percent.
GOVERNMENT INTERVENTION IN THE ECONOMY
Score: 5 -- Stable (very high level)
The government is privatizing several companies, but the economy remains largely state-controlled, with most GDP generated by government sources. "The number of state economic enterprises (SEEs)," reports the U.S. Department of Commerce, "fell only slightly from 1,765 in FY 90/91 to 1,675 in FY 94/95. No large SEE has been privatized, and no major privatization initiative appears imminent." n2
n2 U.S. Department of Commerce, Country Commercial Guide, 1997.
MONETARY POLICY
Score: 4 -- Stable (high level of inflation)
Myanmar's average annual rate of inflation from 1985 to 1995 was 26.4 percent. In 1996, the rate of inflation was 16.2 percent.
CAPITAL FLOWS AND FOREIGN INVESTMENT
Score: 4 -- Stable (high barriers)
Investment in Myanmar is heavily restricted. Although the government has moved to open some sectors of the economy to foreign investment, most of the economy remains closed. Foreign investors face a massive bureaucracy and extensive government corruption. Investments are approved only if they are deemed to benefit Myanmar, and only on a case-by-case basis.
BANKING
Score: 4 -- Stable (high level of restrictions)
The banking system in Myanmar is controlled almost entirely by the government. There is little competition, although the private banking industry is growing. According to the U.S. Department of Commerce, "At the end of FY 94/95, 82 percent of the outstanding loans of the legal banking system were to the central government, up from 79 percent two years before." n3
n3 Ibid.
WAGE AND PRICE CONTROLS
Score: 4 -- Stable (high level)
In many industries (such as public utilities and some agricultural goods), wages and prices are set primarily by the government. The government also controls prices through direct ownership of such industries as postal services, telecommunications, utilities, and rice. Prices are becoming more liberalized, however.
PROPERTY RIGHTS
Score: 4 -- Stable (low level of protection)
Private property owned by foreigners as a result of foreign investment is exempt from expropriation, but the property of Myanmar's citizens still is subject to confiscation. Government corruption makes it difficult to seek legal protection for property. The judiciary is both inefficient and subject to extensive government influence. According to the U.S. Department of Commerce, "The government continues sporadically to seize land and other property from its citizens and forcibly to relocate people. Such seizures are done without due process or transparency of purpose, and are not in accordance with international law. . . . Seeking protection for property rights from Burmese courts can be difficult. Although Burma has a well-developed legal system based on British law, in practice the system is undermined by corruption, unprofessional behavior on the part of some legal officials, and blatant interference in some cases by the military government." n4
n4 Ibid.
REGULATION
Score: 5 -- Stable (very high level)
Establishing a business in Myanmar can be time-consuming and costly. Bureaucrats are corrupt and often seek bribes, and regulations can be applied unevenly and inconsistently. According to the U.S. Department of Commerce, "Enforcement of tax, labor, health and other regulations is haphazard and can be arbitrary." n5
n5 Ibid.
BLACK MARKET
Score: 5 -- Stable (very high level of activity)
Myanmar's black market, mainly in consumer goods and pirated intellectual property from Western counties, continues to grow. "There is no effective protection of patents, copyrights, trademarks or any other intellectual property in Burma," reports the U.S. Department of Commerce. "A Patents and Design Act was introduced in 1945, but never brought into force. . . . Pirating of books, software, designs, etc., is rampant. . . . Civil action can be taken against misuse of a trademark, but is cumbersome and costly. Burma does not belong to any international conventions on patents, trademarks or copyrights." n6
n6 Ibid.
________________________________________________________________________________
1 Hong Kong 1.25
2 Singapore 1.30
3 Bahrain 1.70
4 New Zealand 1.75
5 Switzerland 1.90
5 United States 1.90
7 Luxembourg 1.95
7 Taiwan 1.95
7 United Kingdom 1.95
10 Bahamas 2.00
10 Ireland 2.00
12 Australia 2.05
12 Japan 2.05
14 Belgium 2.10
14 Canada 2.10
14 United Arab Emirates 2.10
17 Austria 2.15
17 Chile 2.15
17 Estonia 2.15
20 Czech Republic 2.20
20 Netherlands 2.20
22 Denmark 2.25
22 Finland 2.25
24 Germany 2.30
24 Iceland 2.30
24 South Korea 2.30
27 Norway 2.35
28 Kuwait 2.40
28 Malaysia 2.40
28 Panama 2.40
28 Thailand 2.40
32 El Salvador 2.45
32 Sri Lanka 2.45
32 Sweden 2.45
35 France 2.50
35 Italy 2.50
35 Spain 2.50
38 Trinidad and Tobago 2.55
39 Argentina 2.60
39 Barbados 2.60
39 Cyprus 2.60
39 Jamaica 2.60
39 Portugal 2.60
44 Bolivia 2.65
44 Oman 2.65
44 Philippines 2.65
47 Swaziland 2.70
47 Uruguay 2.70
49 Botswana 2.75
49 Jordan 2.75
49 Namibia 2.75
49 Tunisia 2.75
53 Belize 2.80
53 Costa Rica 2.80
53 Guatemala 2.80
53 Israel 2.80
53 Peru 2.80
53 Saudi Arabia 2.80
53 Turkey 2.80
53 Uganda 2.80
53 Western Samoa 2.80
62 Indonesia 2.85
62 Latvia 2.85
62 Malta 2.85
62 Paraguay 2.85
66 Greece 2.90
66 Hungary 2.90
66 South Africa 2.90
69 Benin 2.95
69 Ecuador 2.95
69 Gabon 2.95
69 Morocco 2.95
69 Poland 2.95
74 Colombia 3.00
74 Ghana 3.00
74 Lithuania 3.00
77 Kenya 3.05
77 Slovak Republic 3.05
77 Zambia 3.05
80 Mali 3.10
80 Mongolia 3.10
80 Slovenia 3.10
83 Honduras 3.15
83 Papua New Guinea 3.15
85 Djibouti 3.20
85 Fiji 3.20
85 Pakistan 3.20
88 Algeria 3.25
88 Guinea 3.25
88 Lebanon 3.25
88 Mexico 3.25
88 Senegal 3.25
88 Tanzania 3.25
94 Nigeria 3.30
94 Romania 3.30
96 Brazil 3.35
96 Cambodia 3.35
96 Egypt 3.35
96 Ivory Coast 3.35
96 Madagascar 3.35
96 Moldova 3.35
102 Nepal 3.40
103 Cape Verde 3.44
104 Armenia 3.45
104 Dominican Republic 3.45
104 Russia 3.45
107 Burkina Faso 3.50
107 Cameroon 3.50
107 Lesotho 3.50
107 Nicaragua 3.50
107 Venezuela 3.50
112 Gambia 3.60
112 Guyana 3.60
114 Bulgaria 3.65
114 Georgia 3.65
114 Malawi 3.65
117 Ethiopia 3.70
117 India 3.70
117 Niger 3.70
120 Albania 3.75
120 Bangladesh 3.75
120 China (PRC) 3.75
120 Congo 3.75
120 Croatia 3.75
125 Chad 3.80
125 Mauritania 3.80
125 Ukraine 3.80
128 Sierra Leone 3.85
129 Burundi 3.90
129 Suriname 3.90
129 Zimbabwe 3.90
132 * Haiti 4.00
132 * Kyrgyzstan 4.00
132 * Syria 4.00
135 * Belarus 4.05
136 * Kazakstan 4.10
136 * Mozambique 4.10
136 * Yemen 4.10
139 * Sudan 4.20
140 * Myanmar 4.30
140 * Rwanda 4.30
142 * Angola 4.35
143 * Azerbaijan 4.40
143 * Tajikistan 4.40
145 * Turkmenistan 4.50
146 * Uzbekistan 4.55
147 * Congo/Zaire 4.70
147 * Iran 4.70
147 * Libya 4.70
147 * Somalia 4.70
147 * Vietnam 4.70
152 * Bosnia 4.80
153 * Iraq 4.90
154 * Cuba 5.00
154 * Laos 5.00
154 * North Korea 5.00
________________________________________________________________________________
* Repressed
Nothing written here is to be construed as necessarily reflecting the views of The Heritage Foundation or as an attempt to aid or hinder the passage of any bill before Congress.