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Combating Cronyism

(Editorial) — The expressions "military crony” and “cronyism” have long been associated with Burma, much in the same way as the word “nepotism” might denote the extended family links of monarchies such as in Saudi Arabia, or the way “oligarchy” conjures images of modern Russia.
Tay Za pictured in his office in Rangoon. Photo: Raimondo Bultrini
Cronies, by definition, are close friends or those given partiality over others for reasons that do not relate to their qualifications or skills. In Burma, we might politely refer to such gentlemen as “persons of influence”.

During the era of the military junta under Ne Win, Khin Nyunt and Than Shwe, the unofficial government policy of cronyism extended to award positions of privilege—or business contracts—to those who were close to the military hierarchy regardless of their qualifications, education or experience.

Of course, such forms of favoritism are endemic around the world—even the most democratic and developed nations share favors with those close at hand. Major donations by firms to both or all political parties are made to ensure favorable tax benefits or the award of government contracts in the near future.

The difference in pre-Thein Sein Myanmar is that the award of business contracts to cronies was the rule—it was as close to 100 percent as it could be.

That’s why, in this new arena of economic reform and renewed interest in the Burmese business arena, almost everybody agrees that cronyism should be abolished—everyone but the cronies themselves, of course.

But some challenging questions need to be considered: how to prevent cronyism? Or, more to the point, how to reverse an ingrained economic system? And, how should the former cronies be treated?

In this country which long suffered from grinding poverty, the few rich businesspeople were cronies, friends of the military elite, often married into the generals’ families for additional security. Their motives were mostly selfish; natural resources were exploited ruthlessly, and profits from these national treasures were stuffed directly into the pockets of the cronies and their benefactors. They deserve to be punished.

On the other hand, from the viewpoint of management and administration, these existing businessmen may be essential in restoring Burma’s economy. They are the ones with international connections, the (only) ones with money to invest. Without their immediate involvement, factories will close, unemployment will rise.

Recently, National League for Democracy (NLD) chairperson Aung San Suu Kyi said, “If those people who are labeled ‘cronies’ decide to support the NLD’s charity work or any other charity work, then let them. It is good that their money is spent on issues that need financial support rather than wasting money on other matters.”

Suu Kyi was speaking after it was reported that the NLD had received a large donation from a company owned by tycoon Tay Za, perhaps the most notorious (or successful) of Burma’s military cronies.

Years earlier, as a pro-democracy and human rights activist, Suu Kyi was the very nemesis of the cronies. Today she is, at the very least, pragmatic and has a vested interest in the country’s immediate progress. How exactly she would deal with the problem of cronyism if she were president we do not know. However, she has set herself up for much criticism by her apparent about-face on the issue.

It is reasonable that many people in Burma have bitter feelings against the “persons of influence” who took advantage of their townships, who reaped the harvest from their natural resources, who evicted them from their homes.

But for Suu Kyi and the Parliament at large, the only way to look is forward. Rather than punish, they will reward—much in the same way as the US and the West did with their bankers and financiers after the recent financial collapse. That’s the ugly truth.

But is there an alternative?

To put an end to the time-tested policy of cronyism in Burma, the current government needs to give up its centrally-controlled economic system and create conditions that will encourage a market economy.

Moreover, the country needs to introduce a functioning and fair taxation system. The rule of law must be emphasized and shown to prevail, especially by penalizing those who evade taxes. And those hardworking citizens with ingenuity and skills must be given a level playing field to play on.  

The elimination of cronyism should not and will not happen overnight. But it must be a long-term goal for the country.

Related articles:
Last Updated ( Tuesday, 29 January 2013 13:45 )  
The Kachin’s last stand
Since October this year, Burma has been in a state of civil war, with fighting between Burmese military and armed ethnic rebels. The ruling junta started a crackdown on these armed groups.

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