From SLORC to SPDC:Political Continuity Versus Economic Change in Myanmar

-Shankari Sundararaman, Researcher, IDSA


The recent dissolution of the State Law and Order Restoration Council (SLORC) and the subsquent formation of the State Peace and Development Council (SPDC) is yet another "rabbit from the military's hat" in Myanmar. In real terms, the dissolution of the SLORC is merely a theoretical one and the practical implications are likely to be minimal. The change, though it was expected, did occur suddenly and is viewed by several analysts as a move to "purge some of the troublesome elements" in the council against whom corruption charges have been levelled.1 Interestingly enough, the top positions within the military leadership have been retained by the former leaders of the SLORC itself. The SPDC is in that sense nothing but old wine in a new bottle and seems to be more of an attempt at improving the military junta's international image, rather than any real effort at changing the nature of the political leadership in Myanmar. Probably the recent contention at the ASEM (Asia-Europe Meeting), where the European Union (EU) refused to directly cooperate with the Myanmar junta, brought home the message to the Generals of the need for a quick face-lift. The SPDC seems to be the recourse. The larger question of whether there is likely to be any real political change in the country will remain concealed in ambiguity. In the years since the SLORC came to power in 1988, the trend of its policy has been political continuity versus economic change. The following study attempts to understand the dichotomy of the SLORC's policy and the potential implications it will have on the political setting in Myanmar.

Internal Political Developments Under the SLORC

In the wake of the September 1988 students uprising, that was ruthlessly put down by the then governing junta, two groups emerged on the political front in Myanmar—the State Law and Order Restoration Council (SLORC) and the National League for Democracy (NLD) under the leadership of the charismatic Aung San Suu Kyi. The SLORC resulted from the fragmentation of the previous system under Gen. Ne Win, during whose time Burma was placed on the "Burmese Way to Socialism. Totally isolated from the outside world, Burma at this point entered a period of stasis and things within the country came to a grinding halt. In 1988, the tatmadaw or the armed forces took over after Gen. Ne Win retired and formed the SLORC with the following objectives:

(i) to ensure law and order;

(ii) safe transportation and communication;

(iii) adequacy of food;

(iv) housing and other essential needs;

(v) preparations for the holding of multi-party elections.

In 1988, the leader of the NLD, Suu Kyi was placed under house arrest, but the preparations for the elections continued. The 1990 elections in Burma comprised a landmark in the internal political developments in that country. The victory of the Opposition NLD was not only unprecedented, but also unexpected. The SLORC's complacency was rather badly shaken when the NLD managed to secure 400 of the 485 seats in the National Assembly. What really surprised the observers of the 1990 elections was the apparent willingness of the SLORC to hold the elections, which was in sharp contrast with its unwillingness to transfer power to the NLD. In hindsight, the elections were undoubtedly a move on the part of the junta to appease foreign critics and remove the sanctions that had been placed following the massacre of 3,000 pro-democracy protestors in September 1988.2 One of the views was that the junta would rig the elections and simultaneously intimidate the voters, consequently leading to a minor victory for the NLD while the SLORC remained largely in charge of the governmental mechanism. However, there seems to have been no evidence of intimidation or coercion and to all extent, the elections were free and fair.

The NLD took almost 72 per cent of the 13 million votes cast.3 Even in the military dominated areas, the NLD emerged successful. It was only in the minority areas that the NLD met with opposition, especially since the minority groups fielded their own candidates in these regions. In spite of the obvious success of the NLD in the elections, the SLORC made no moves to transfer power to the newly elected Opposition and Aung San Suu Kyi continued to remain incarcerated. Two factors that should have been discussed prior to the elections had been ignored by the SLORC and the NLD and these proved to be intractable points of contention afterwards. The nature of power transfer and the timing were not discussed beforehand—the SLORC ended up using these as the main issues of its refusal to hand over power to the NLD. It was of little import to the leaders of the SLORC that it had to endure criticism both from within and outside Myanmar with regard to the pace and character of the democratisation process, as well as the continuing suppression of dissent.4

One of the arguments offered in favour of the SLORC policy has been presented by Dobbs-Higgins who argues that, "national societies need to have time to evolve from an authoritarian environment where the individual is told what to do, to a democratic environment where the individual has the free choice to do as they choose."5 While this logic is hard to digest, it is, perhaps, not too off the mark to say that for a democracy to work effectively, it is necessary to have a sufficiently well educated population with personal moral responsibility as well as accountability for their activities.6 Whatever may be the argument, the SLORC, for reasons of its own understanding and logic, denied the transfer of power to the NLD and Suu Kyi remained under house arrest till July 1995. Thus, in the post-Ne Win period, the line of political thinking remained very much the same and very little change occurred in terms of a more liberal political process with a greater participation by the Burmese people.

After the elections, the SLORC began to consolidate its position within the Burmese political setting and two steps were taken towards this: first, the ruling junta took several repressive measures against the NLD thereby ensuring that the Opposition could not resist the onslaught of the SLORC in the political arena. Second, the SLORC believed that repression of the NLD would also influence the various dissident groups into a state of pacification, which would then allow the SLORC to legitimise its own position.

Another important issue that must be understood is that between 1990 and 1995/96, the move for democracy itself was reduced in its intensity—possibly because of two factors. First, Suu Kyi's incarceration till 1995 resulted in the lack of a personality who could lead the movement. The significance of her presence is best understood by the fact that Asian politics in general has always been personality oriented. A second, more plausible explanation is that the SLORC opened up the Burmese economy and ushered in a market-oriented system, which put an end to the "Burmese Way to Socialism" and instead replaced it with the "Burmese Way to Capitalism". As such, an observer of the political scene in Myanmar stated that in 1988/89 Suu Kyi attracted several supporters because "at that time, many business people were behind her in the belief that democracy would also mean an open economy with business opportunities. The SLORC may not have permitted any political freedoms, but it has opened the economy. People who are now making money don't really want to change the status quo."7 One of the issues which arose to challenge the democratic movement was that many of the elected members of the NLD participated in the SLORC sponsored National Convention—of the 392 NLD candidates in the 1990 elections, only 223 remained in the "officially recognised" NLD, while the rest had been expelled or disqualified.8 Thus, in the post-1990 period, the repressive measures against the NLD occurred in three different phases— immediately after the elections, the SLORC moved against the electoral victors. Then in August 1994, several NLD workers, including its founder Khin Maung Shwe, were arrested. This was quite an unexpected move since the SLORC at that time was showing more signs of openness.9 The third phase of repression followed the release of Daw Aung San Suu Kyi, after which there has once again been some impetus to the move for democracy.

The release of Aung San Suu Kyi was pretty significant in that it sent a dual message to the international community on the nature of the political thinking within the SLORC. On the one hand, it has been regarded as a change in the internal political set-up—one in which the SLORC, confident of its consolidated role, decided to release the leader of the Opposition NLD. However, the behaviour of the SLORC following Suu Kyi's release has belied any such hopes. On the other hand, a probably more realistic view is that Suu Kyi's release was the result of growing pressure from various foreign investors. When Gen. Than Shwe, Chairman of the SLORC, visited Indonesia in June 1995, the Indonesian Defence Minister, Edi Sudrajat, had urged the release of the detained Opposition leader with the hope that it would improve Myanmar's international status.10 In this sense, the results following the release of Suu Kyi were favourable to Myanmar--its pariah status vanished almost overnight and discussions on the restoration of aid began.11

Initially after the release of Suu Kyi, the political situation remained calm. At that time, the junta had asked for her help towards "achieving peace and stability in the country."12 With that aim, Suu Kyi and the NLD recognised the need for a dialogue with the junta, rather than the adoption of a confrontationist policy. However, the junta ignored the call for a dialogue and clearly indicated that all future discussions on political affairs would only be dealt with under the banner of the National Covention, a forum where the regime could control the nature and range of such discussions.

Frustrated with the intransigence of the junta, Suu Kyi and the NLD moved towards a more confrontationist stand and refused support to the National Convention in November 1995. In response, the SLORC's position became even more intolerant and the NLD was expelled from the National Convention. By September 1996, the situation had worsened and the SLORC began to oppose the weekly meetings that Suu Kyi addressed at her residence--her only contact with the people. By the final week of September, the repressive measures had increased--the junta acknowledged that it arrested 159 people who were scheduled to attend the Eighth Anniversary of the founding of the NLD at Suu Kyi's residence and had also taken into custody 400 other activists. There were reports that "the NLD headquarters had been closed down, supposedly at the behest of the landlords and telephone lines to the residence of Suu Kyi and most of her lieutenants were out of order."13

The direction to which the SLORC moves point were significant indicators of the political setting in Myanmar.14 The fragility of the political situation is well emphasised by the fact that, despite the SLORC's claims of having brought peace, stability and hope of prosperity to Myanmar, just a meeting of a few hundred Opposition members was enough to send it into an over-exaggerated, paranoid frenzy. What can be gauged from such contradictory behaviour is that the military junta in Myanmar, be it the SLORC or the SPDC, will not tolerate any threat to internal stability and political continuity, a fact that has been well endorsed in Khin Nyut's statement just prior to the release of Suu Kyi that "the rights of 45 million people are more important than the rights of one individual."15

SLORC's Efforts to Legitimise its Role

Having seen the extent to which the students' uprising had spread in 1988 and the subsequently victory of the NLD in the 1990 elections, the SLORC resorted to legitimising its position within the political arena. This entailed certain political reforms--first, the Burmese Socialist Programme Party (BSPP) was replaced by the National Union Party (NUP). The NUP like the BSPP was the political wing of the SLORC and was expected to give the much needed civilian hue to the SLORC.16 A number of civilians were introduced in the new set-up, though many of them were retired Army officers. Immediately after the May 1990 elections, the SLORC introduced Decree 1/90 under which the upcoming National Convention was to be held. According to this Decree, the representatives elected by the people were responsible for the drafting of the Constitution. The Decree further stipulated that "only the SLORC has the right to legislative...administrative...(and) judicial powers."17 Moreover, it ruled out any Parliamentary role for elected MPs which the Army had promised prior to the elections.

The SLORC attempted to camouflage the military character of the government by increasing the number of civilians in the NUP. This, however, was not enough to conceal the hardline of the military character and a more lasting political solution was sought by the SLORC, in the form of a new Constitution which would create room for legitimising a more permanent role for the military in the politics of the country. In 1993, a Constitutional Convention was started by the National Convention which was to draft a new Constitution--among the 700 delegates only 155 represented the political parties, while the others were from ethnic groups and the Army.18 In drafting this Constitution, the junta inducted a clause which reserved one quarter of the seats in the National Assembly for the military--which meant reserving 110 of the 440 seats in the Lower House of Representatives and 56 of the 224 seats in the Upper House of Nationalities for the military.19 Another clause was that it disqualified from the Presidency anyone married to a foreigner who did not have familiarity with the military.20 This clause was targetted against Suu Kyi who is married to British academic, Michael Aris. Evidently, these reforms were merely intended to broaden the SLORC's power base and help it to retain control over most of the political authority.

Another move which went towards broadening the SLORC's power base was the remodelling of the NUP. The National Union Party was replaced by the Union Solidarity and Development Association (USDA)--this was not an officially registered party but was more of a broad association. The distinction between the NLD and the USDA was that in the NLD there was a law against membership to civil servants and Army personnel, while these two groups could join the USDA. The USDA was, therefore, replicated along the lines of the Indonesian Golkar. The SLORC intended to create a political system along the lines of the dwifungsi policy of the Indonesian model which would endorse a dual role for the military within the government--both in administration, as well as in the defence of the country. As such, the new Constitution was along the lines of the previous one, however, with two distinctions:

(i) the Constitution would enshrine a multi-party system;

(ii) a bicameral Parliament would be introduced with a directly elected Lower House and an appointed Upper House representing Myanmar's various ethnic groups.

With regard to the new Constitution, a Yangon based diplomat stated, "The old, pre-1962 federal system is not going to be reinstated; it will be a highly centralised power structure in which the army will remain the most crucial player, perhaps, even with the constitutional right to assume power if the situation so demands."21

Economic Developments Under the SLORC

In the post-1988 period, while there was no change in the political system that the SLORC implemented, the angle of its economic programme shifted. Realising the need to economically evolve, the Myanmarese government in 1992 adopted an open market system. This transition has begun to show some results--a growth rate of about 4-6 per cent has been evident and it is expected to exceed 6 per cent this year. The economic shift has taken place in spite of the West and Japan taking a hardline policy towards the military junta for its suppression of democracy and record on human rights. It was the Association of South-East Asian Nations (ASEAN) countries that have followed a policy of "constructive engagement" towards Myanmar, probably due to their own political systems that were rigidly structured as compared to the liberal economic policies that they had adopted.

Prior to 1988, Myanmar had for several decades, plunged itself into isolation and experimented with its own version of socialism as a development model. This, however, resulted in Myanmar becoming one of the poorest nations, listed among the least developed countries. The SLORC resorted to following the growth of the East Asian economies and opened up the country to various economic reforms.22

Several benefits accrued from the reforms that began in 1988--both in the form of foreign investment as well as increased domestic investment. The results became obvious by 1993, when the economy grew by 6 per cent as compared to the negative growth which it had experienced in the late 1980s.23 Almost all sectors of the economy showed a double digit growth--mining 21 per cent; financial 18.8 per cent; power 13.9 per cent; manufacturing and processing sectors 10.3 per cent; construction 7.6 per cent; and agriculture 5.4 per cent.24 Due to the increased economic relations between Myanmar and the rest of South-East Asia, exports during 1993-94 grew by about 14 per cent. One of the sectors that witnessed tremendous growth was that of tourism--in recent times this has been recognised as an area of potential growth. To facilitate tourism, foreign exchange certificates were introduced leading to a de facto devaluation of the local currency at 100-110 kyats per US dollar. Within Yangon itself there was a surplus of consumer goods, increased local trade, new factories, shops, hotels and other business ventures grew rapidly.

One of the results of this growth was that a number of private financial institutes and banks emerged--since the early 1960s, all private enterprise had been nationalised, but by 1994, 13 private banks were opened of which four had close links with the government and were allowed to handle foreign currencies. At the time when the SLORC took power, the country was on the verge of bankruptcy with less than $10 million as foreign exchange reserves. In order to overcome this, the military junta initially resorted to the sale of natural deposits such as timber and precious stones.

By early 1990, the junta decided to enact a new and more liberal "Foreign Investment Law (FIL)" which allowed:

(i) almost a dozen foreign oil companies to function between 1989-90 which had secured offshore concessions;

(ii) these companies had to pay a hefty signature bonus and were committed to spending large amounts of money;

(iii) Myanmar's FIL was similar to that of Vietnam which allowed a wholly owned foreign venture a three-year tax break and also the repatriation of profits.

In fact, since the introduction of the FIL, almost 30 joint ventures were established with foreign investors.25

Another area that showed potential growth was in the construction sector--between 1993-94, roughly 582 private hotels and tourist ventures were established in Yangon and Mandalay. On the whole the total of private enterprises increased by 1,239 per cent--from 874 to 11,075 since 1988.26 The total number of private factories and establishments grew from 39,059 in 1987-88 to 40,145 in 1993-94--effectively only a 2.7 per cent increase in six years.27

The investments within Myanmar have come from several foreign investors among whom ASEAN has been the major group. In mid-1994, the CDC Construction Company of Singapore completed a 265 room hotel in Yangon. It also invested in 23 other projects, with investments totalling US$293.3 million till late 1996. The Shangri-la chain from Malaysia had pledged US$150 million for two more tourist establishments. Thailand too had committed itself to raise US$100 million for the Myanmar fund. Another project has been approved for Thailand in Mandalay where the Thais are to invest US$450 million. South Korean groups like Daewoo and Hong Kong's Kerry Securities have also invested in the Myanmarese economy.28 Evidently, in the last few years the pace of investment has increased to a total of more than US$ one billion and this is quite considerable when compared to the US$135 million that was the investment in 1992.

Despite these indicators of liberalisation, the growth has been slower than expected--and the only two industries that have done exceedingly well are natural resource export and tourism. Investments in other areas were hindered by the restrictions on repatriation of profits and the SLORC's refusal to devalue the exchange rate--officially the dollar-kyat exchange was at 6.2 kyats to a dollar but in the black market one dollar could easily fetch 100-110 kyats. Moreover, the local profits were in unconvertible kyats--thus investors spent these on limited quantities of rice and pulses which then had to be resold for dollars outside the country. Other aspects that deterred investors was poor infrastructure, frequently changing rules and regulations and overly centralised decision making on licensing applications. Added to this were the commercial oversights of entertaining the military officials, contribution to the clergy, hospitals and other charities sponsored by the junta.29

These factors are now likely to undergo change with the induction of Myanmar into ASEAN. In July 1996, ASEAN included Myanmar as a dialogue partner. In spite of the continued pressure from its Western allies, ASEAN followed a policy of constructive engagement with the junta in Myanmar. There have been several criticisms against the ASEAN policy in the sense that it ignored the human rights situation in Myanmar and that narrow economic gains were placed ahead of a more principled approach. However, this did not influence the ASEAN decision and in July 1997, Myanmar, along with Laos entered the ASEAN fold. The issues that hindered the easy growth of the economy are likely to be more easily addressed now that Myanmar is a part of ASEAN.

In the recent ASEM, the EU raised some difficult issues with regard to its interaction with the Myanmarese junta. In fact, ASEAN had even been asked to leave Myanmar out of its fold but this was ignored and ASEAN was firm in its position that any decision on Myanmar could not be influenced by those outside ASEAN. Myanmar had been a part of the ASEAN Regional Forum (ARF) and its inclusion is likely to have some significant security implications. However, the EU and the West are still clinging to their position on the need for greater democracy and respect for human rights. The dissolution of the SLORC must be viewed with these issues in mind. Having entered the ASEAN fold, the SLORC would not want to become a source of embarrassment for its South-East Asian friends. In this light the change to the SPDC, though it may help in restoring a little of the junta's international image, will not have any marked difference on the political continuity in Myanmar and no other interest will outweigh the regime's priority of maintaining domestic political stability.


1. The Hindu, November 23, 1997.

2. Time, June 11, 1990, p. 14.

3. The percentage of seats won varies from 72 per cent to 82 per cent. It is probable that some estimates only take into account the NLD's victory while others include the NLD along with its allies among the minority ethnic groups.

4. Tin Maung Maung Than, "Neither Inheritance Nor Legacy: Leading the Myanmar State Since Independence," Contemporary Southeast Asia, vol. 15, no. 1, June 1993, p. 45.

5. Michael S. Dobbs-Higgins, Burma Debates, p. 24.

6. Ibid.

7. Far Eastern Economic Review, July 27, 1995, p. 23.

8. Frontline, October 6, 1995, p. 49.

9. Time, July 24, 1995, p. 18.

10. Mary P. Callahan, "Burma In 1995: Looking Beyond the Release of Aung San Suu Kyi," Asian Survey, vol. 36, no. 2, February 1996, p. 158. See also, Far Eastern Economic Review, August 17, 1995, p. 27.

11. Ibid.

12. Far Eastern Economic Review, July 20, 1995, p. 16.

13. The Economist, October 5, 1996, p. 25.

14. In fact, even in 1995, as tensions began to increase in Yangon, Mandalay and other parts of the country, the short term gains that the SLORC had made in the aftermath of Suu Kyi's release were eroded. The US threatened the possibility of sanctions and Japan postponed its loan arrangements till the following year.

15. Far Eastern Economic Review, July 20, 1995, p. 14.

16. Abu Salahuddin Taher Ahmed, "Myanmar: Road to Democracy or East Asian Model," BIISS (Dhaka), vol. 17, no. 1 (1996), p. 125.

17. Far Eastern Economic Review, July 9, 1992, p. 14.

18. Asiaweek, August 4, 1995, p. 17.

19. Far Eastern Economic Review, Janaury 18, 1996.

20. Time, July 24, 1995, p. 19.

21. Far Eastern Economic Review, July 23, 1992, p. 20.

22. Ahmed, n. 16, p. 128.

23. For details see, Regional Outlook: Southeast Asia 1995-1996 (Singapore: Institute of Southeast Asian Studies, 1995), p. 63.

24. Ibid., pp. 64-5.

25. Ibid., p. 65.

26. Ibid.

27. Ibid.

28. Far Eastern Economic Review, February 16, 1995, p. 50.

29. Callahan, n. 10, p. 162.