State-Owned Factories: Sovereignty and Employment
The following is an excerpt from a podcast episode with Guillaume de Langre, a former adviser to the Myanmar Ministry of Electricity and Energy (MOEE), who offers valuable insight into the economic thinking of the Tatmadaw government and the challenges they face in transitioning from extractive industries to more productive activities. He explains how state-run industrial activities were never designed for profitability and how the Tatmadaw's economic thinking is first and foremost based on extractive industries, and how that differs from productive activities.
“In order to understand the Tatmadaw’s economic thinking, you have to understand that it’s based on extractive industries, not productive activities.”
“Whenever you speak to people who are well informed about the state economic enterprises of the Ministry of Industry, for example, they will tell you that these state-run industrial activities were never really designed from the point of view of profitability. Profitability was not the objective!
The objectives were, number one, having some industries in country so that you could produce some things and be more sovereign in terms of your economic production of certain key goods. Secondly, it was about employment, as you see in a lot of Soviet countries.
So they start from the point of view of sovereignty and employment, and from that point of view, access to electricity. So making these factories more productive really wasn't a priority, and it was not obvious from the point of view of the people who were managing the state-owned factories.
In order to understand the Tatmadaw’s economic thinking, you have to understand that it's first and foremost based on extractive industries, not productive activities. And those are very different economic models.
The Tatmadaw’s activities are based on extracting natural resources and extracting rents from those natural resources. Extracting these natural resources, you can do that without a massive national grid, without building massive dams. It's pretty simple. You put on a generator, maybe if you want, you can add water turbine if you're in the mountains of Kayah, Shan or whatever. It doesn't require a particularly complex logistical chain.
I think the challenge for the Tatmadaw has always been to transition from this extractive-oriented economic thought to the fact that Myanmar has actually undertaken, under Aung San Suu Kyi, transition towards much more productive activities, and reduce its dependence on natural resource extraction. But those activities require a lot more modern energy.
Energy is a key element of the cost of production.
It's a completely different aspect of economic thought, and a completely different economic perspective on the economy than ‘where can we build a new mine, and where can we extract more gas?’ That's very different from how can we improve the productivity of our factories or reduce their costs or be more internationally competitive.”