Best Laid Plans: The Inside Story of Reform in Aung San Suu Kyi’s Myanmar
By Sean Turnell
Lowy Institute for International Policy, 2024, 128 Pages
Although it is a small book with fewer than 150 pages, Best Laid Plans presents the insider perspective of Sean Turnell, who worked as “Special Economic Consultant” to Daw Aung San Suu Kyi on economic reform in the National League for Democracy (NLD) era. However, Turnell makes very clear that he was never an employee of the NLD government but subcontracted by Australia’s Department of Foreign Affairs and Trade to provide advice to the Myanmar government.
The late scholar Naing Ko Ko described Myanmar’s economic reform period as the emergence of “Suukyinomics” built on the rule of law and institutional economics with two broad plans: the Myanmar Sustainable Development Plan (MSDP) and the Myanmar Investment Promotion Plan (MIPP).
In his book, Turnell covers four key elements of Myanmar’s economic reform: banking sector reform; microfinance, mobile money and markets; escaping China’s debt trap; and an attempt to create economic resistance during the COVID-19 period. Apart from that, he highlights the roles of the three most committed reformers—U Winston Set Aung, U Bo Bo Nge and U Min Ye Paing Hein.
Reformers, financial institutions and development partners
Turnell explains the four main goals of the MSDP. The first was to give special attention to establishing a “functional federalism”, outlining how equalization payments and fiscal transfer might be employed to unite the country’s states and regions. The other three goals were steadying Myanmar’s chronically unstable macroeconomy, transformational economic growth led by the private sector, and building human capital through improvements in Myanmar’s health and education systems.
One of the first acts of the reformers, Turnell observes, was to establish the Development Assistance Coordination Unit. He highlights two important multilateral financial institutions operating in Myanmar—the World Bank and the International Monetary Fund (IMF)—and their policy advice, and Myanmar’s three most useful bilateral development partners, the US, the UK and Australia.
As Turnell observes, the US provided macroeconomic and monetary advice; the Bank of England was a generous source of advice and connection to global capital markets; and Australia’s aid to Myanmar concentrated on education. Australia was also a steady source of expertise in a range of economic areas, from public sector reform to infrastructure financing.
“My own position as adviser to Daw Aung San Suu Kyi and the NLD government was the product of Australian Aid.”
Apart from development partners from the West, Turnell notes that not many Association of Southeast Asian Nations member countries provided assistance for Myanmar’s reform except for Singapore. Japan provided more hard cash than any other bilateral partner. South Korea was another key player in the reforms through the creation of the Myanmar Development Institute, modeled on the Korean Development Institute.
The roles of Russia and China
Turnell didn’t observe any Russian involvement in the early days of the NLD government but later noticed Russia’s ties with the Myanmar military, which Moscow supplied with advanced weapons such as fighter aircraft. It also provided training and other support to Myanmar’s military in cyber warfare. “In terms of our economic reform efforts, Russia was a malign influence throughout,” Turnell observes.
In his view, China was “the most secretive and troublesome of all the donor countries” in the NLD era. He writes, “China’s assistance was mostly in the form of self-interested ‘mega projects’ that were at least partly about securing for itself key resources, trade routes, strategically located ports and other geo-politically important assets.”
Turnell prepared a memo for the State Counselor in 2018 regarding China’s Belt and Road Initiative (BRI) projects, stating that “BRI funding was invariably in the form of loans rather than grants; that these loans were usually at commercial rates of interest; were repayable in ‘hard currencies’, usually US dollars regardless of whether any part of the loan itself was issued in dollars; required some sort of sovereign guarantee irrespective of actual counterparties; and were usually employed in funding capital-intensive projects that created little in the way of local employment but were highly profitable for Chinese State-owned enterprises.”
Turf war
During his term, Turnell became fully aware of the political tension between the NLD government and the military: The government was dedicated to eradicating the stain of money laundering; the military was not. He learnt that the military controlled the Ministry of Home Affairs (MOHA) and MOHA had charge of the Financial Intelligence Unit (FIU), the policing body meant to enforce anti-money laundering provisions in conjunction with the Central Bank of Myanmar. MOHA did not allow the FIU to meet with the anti-money laundering team at the central bank.
In 2019, Turnell and the reformers approached the State Counselor about moving the FIU from the MOHA to the Ministry of Planning and Finance. “She agreed, but when the military-aligned Vice President, Myint Swe, brought the issue to the Commander-in-Chief of the armed forces, Senior General Min Aung Hlaing, the military chief blocked the proposal.”
Positive achievements
Despite the various disturbances that occurred during the reform period, Turnell lists a few positive outcomes the NLD government was able to achieve from the reform efforts. The country’s public finances and money-printing were largely restored along sound and sustainable lines; economic growth was never below 5 percent per annum throughout the NLD government’s term; inflation was stable; trade and balance of payments deficit were both halved; electricity generation was a little better (on this, more below); tourism numbers were high; and structural change in the economy and the greater formalization of economic life were visible all around.
Escaping China’s debt trap
Myanmar’s economic reformers were well aware that the cost of US$10 billion for the Kyaukphyu deep-sea port project in Rakhine State—part of China’s BRI—was much too big for Myanmar’s needs and the debt too large for Myanmar to cope with, Turnell observes. “Kyaukphyu unquestionably made strategic sense to China (a port on the Indian Ocean; an alternative to the Malacca Straits) and brought certain economic benefits too. For Myanmar, it made little sense.”
Led by Minister of Planning and Finance U Soe Win, a team of economic reformers including U Winston Set Aung and Deputy Minister of Industry Min Ye Paing Hein went to China in late 2018 to renegotiate the project and returned with a new deal for a port that would cost just $1.2 billion. Turnell saw it as “an unexpected and astonishing victory.”
He recalled what Daw Aung San Suu Kyi told him: “I’m not pro-China, nor pro-anyone else but Myanmar,” in response to the international commentariat who, with little evidence, had decided she was “pro-China”.
Turnell cites a report of Yun Sun, a senior fellow and a director of the China Program at the Stimson Center in Washington regarding the Kyaukphyu project. “[China] feels particularly betrayed by the fact that the Myanmar government turned to the United States government for technical assistance on the downsizing of the Kyaukphyu deep-sea port.”
However, Turnell disagrees with Yun’s report and finds the reports of foreign involvement were exaggerated. He responds, “The Kyaukphyu negotiations were, in all their important aspects, completely under the charge of Myanmar’s reformers.”
Hands tied in Rakhine
The violence in Rakhine State made Turnell reconsider his involvement as an adviser to Daw Aung San Suu Kyi and the NLD government. He even considered leaving Myanmar. He made sure the State Counselor and other civilian leaders were fully aware of “the international opprobrium building on Myanmar over the military’s atrocities.”
Daw Aung San Suu Kyi told Turnell that she was aware of the international reaction to Rakhine, but thought that even close friends underappreciated her limited room for maneuver, the ever-present threat of a coup, and the notion that she might just have ideas herself on how to bring the military to heel.
Then she asked, “Do they really think I would just abandon the principles over which I was detained for nearly 20 years so easily?”
Inevitable pandemic, inevitable coup
Recognizing that a pandemic was inevitable, the Myanmar economic reformers had to prepare a COVID-19 Economic Relief Plan (CERP). The CERP included an official interest rate reduction, low exchange rate, electricity tariff reduction, tax reduction, low interest loans and so on. On the international finance front, Myanmar received $300 million from the G20 and Paris Club, $200 million assistance from Japan, and all manner of in-kind support from the US, the UK, South Korea and Australia. Myanmar was also able to request 50 percent of the country’s quota of $357 million from the IMF for emergency financing.
Turnell observes that “the one country that offered Myanmar little real assistance was China, notwithstanding its position as by far Myanmar’s largest creditor, [and] its extravagant claims of fulfilling a protective role to a country it so often portrayed as ‘little brother’”.
“There was great suffering, and the country went into substantial lockdown in September 2020. Nevertheless, Myanmar’s economic team thought it had dodged the catastrophe.”
Despite their tireless efforts to implement economic reform, Turnell and the reformers were thrown into prison soon after the inevitable military coup in 2021.
Turnell observes that “Min Aung Hlaing and his team had long been hostile to the liberalizing approach of the NLD government, preferring state direction to decentralized economic freedom and outcomes of the market.”
Turnell’s book explains not only the rough road faced by Myanmar’s economic reform, but also the conundrums of democratic decentralization under an elected civilian government as the military sought to maintain the status quo.
