Pyinmana is booming—but at what cost?

Once a rural backwater, Pyinmana is now a boom town, as Burma’s rulers shift their power center from Rangoon, some 320 km to the south. Visitors returning to Pyinmana after an absence of only a few years would scarcely recognize the city that has risen from a provincial town of 100,000 inhabitants, who once owed their livelihoods to logging and a sugarcane refinery.

Now new businesses—particularly construction companies and real estate firms—are shooting up like forest mushrooms in the rainy season.

“We are seeing more new faces and buildings in town,” said a Pyinmana gold shop owner. “But, I’m pleased that our town is becoming a capital and I’m hoping that our businesses will be prosperous,” she said.

Pyinmana’s central Myoma market is packed with shoppers, and new shops, minimarkets, hotels and guesthouses open for business every day, according to the local press. Many of the new hotels springing up to accommodate the new arrivals, their families and friends are privately-owned.

A Rangoon-based real estate agent recently told The Irrawaddy that property prices have increased as much as tenfold in one year. Investors are being urged to join the business boom by local weeklies, which are predicting big growth and employment possibilities.

This optimism, however, contrasts with a report issued in April by the Manila-based Asian Development Bank, which described Burma’s economic development as “handicapped” and the official estimate of current annual economic growth of 12.2 percent as “unrealistic.” The report also concluded that “significant improvements in economic performance are unlikely in view of structural weaknesses in domestic policies, which include the monetization of fiscal deficits and a dual exchange rate.”

The appearance of boom conditions in Pyinmana is also misleading—although most government offices and their employees have now arrived, there are massive infrastructure gaps. Half-built structures stand on dusty roads, and government engineers and private contractors alike are struggling to complete and expand transport routes to the new capital.

Three privately-owned airlines have joined the state-run Myanmar Airways in operating a regular service between Rangoon and Pyinmana. Myanmar Airways has a daily service, while Air Bagan made its first flight from Rangoon to Pyinmana in March, opening a service it hopes can be expanded to three flights weekly. Air Mandalay and Yangon Airways have also begun regular flights. Bus services linking Pyinmana, Rangoon and other major cities have also been expanded.

Despite the infrastructure difficulties, several ministries are up and running. The Ministry of Commerce, for instance, recently announced that it will issue import-export licensing from its new premises in Pyinmana, and the state-owned Myawaddy Bank has opened a branch office there. The junta-affiliated Union Solidarity and Development Association, patronized by the regime’s supremo Snr-Gen Than Shwe, has also just moved in.

Government offices and facilities are about 13 km northwest of central Pyinmana, forming an administrative center given the name Naypyidaw—“royal city,” a term carrying heavy historical connotations and used by past monarchs. Its mayor is Col Thein Nyunt, Minister of Progress of Border Areas and National Races and Development Affairs.

“Burmese kings traditionally established new capitals when they became powerful,” said Dr Aung Kin, a London-based Burmese historian. “Than Shwe seems to be following their steps by creating his own reign.”

Aung Kin recalled that Burma’s former colonial masters, the British, initially established a capital at Moulmein after the first Anglo-Burman war but later moved the administrative center to Rangoon when the port city became an economic hub.

Military headquarters lie 18 km north of Pyinmana and carry the name Naypyidaw Command. Huge statues of three Burmese kings have been erected at the parade ground, where Snr-Gen Than Shwe declared in a speech marking the 61st anniversary of Burma’s Armed Forces Day: “Our Tatmadaw [armed forces] should be a worthy heir to the traditions of the capable Tatmadaws established by noble kings Anawarahta, Bayintnaung and Alaung Phaya U Aung Zeya.”

The city of Pyinmana itself, located in dense forests in central Burma’s Mandalay Division, also has historical significance—as the World War II military headquarters of Burma’s independence hero Gen Aung San and later a stronghold of Burma’s communist insurgency in the 1970s. It is strategically well placed for easy access to Chin, Karen, Karenni and Shan states.

Secrecy and uncertainty surrounded the Pyinmana project from the start. Two Burmese journalists were arrested and jailed after undertaking a reconnaissance trip to the city in late December, less than two months after it had been officially announced that the government was to move there. One foreigner caught in the city about the same time escaped imprisonment but was put on the first available bus back to Rangoon.

It wasn’t until March that the government opened up its new administrative capital for all to see, at a ceremony marking the 61st anniversary of Burma’s Armed Forces Day, attended by foreign diplomats, journalists and invited guests. In late April, Chinese Minister for Information Industry Wang Xudong paid an official visit to Pyinmana.

The “unveiling” of the new administrative capital in March was preceded by feverish attempts to complete unfinished building projects. Construction standards inevitably fell, and some soldiers were reportedly injured when building works collapsed at the site of the Armed Forces Day celebrations.

Frustrated by delays, indecision, official confusion and hikes in the cost of building materials, private contractors are also being kept waiting for settlement of their accounts. The bigger companies are said to be compensated instead with offers of lucrative concessions and further contracts. They include Asia World, Htoo Trading, Eden Groups, Max Myanmar, Ngwe Sin, Shwe Thanlwin and Ayer Shwe Wah. Two junta-friendly companies, Htoo Trading Company (owned by Burmese tycoon Tay Za) and Asia World (run by former drug lord Lo Hsing Han), have reportedly built mansions for the regime’s top generals.

The construction of military facilities was entrusted to Burma army engineers, although assistance is suspected to have come from China, North Korea and Russia. China helped build Pyinmana’s main power source at Paunglaung, east of Pyinmana—a huge underground hydro-electric plant generating 280 megawatts, Burma’s first and biggest of its kind.

“China has been well aware of the development in Pyinmana,” said Aung Kyaw Zaw, a Burmese military analyst. “Unlike other countries, it shows no surprise about the [government’s] sudden move to Pyinmana.”

Although the junta has been trying to sell the move to Pyinmana as a logical political decision, observers see it as the result of a paranoid fear of foreign invasion and civil unrest. The generals are known to have discussed seriously their fears of invasion by an outside power, presumably the US, and the need to withdraw to a defensible stronghold away from the sea. An additional reason is thought to be the need for a contingency plan to meet any national uprising. Part of this plan is said to be the regime’s acquisition of 1,000 armed personnel carriers from the Ukraine, vehicles suitable for use only in local military engagements.

With its transformation into a new national capital, Pyinmana will undoubtedly grow over time. But, in view of the regime’s record in crippling the economic and social life of the nation, the question remains: at what cost?

Burma’s Other “Mini-Capitals”

Burma’s new administrative center is by no means the first artificial “capital” to spring up in the Burmese landscape. More than a dozen have been set up over the years by drug war lords and rebel leaders—among them Mong La (pictured here). Once an unknown village on the Burmese-Chinese border, Mong La was developed by former drug lord Sai Lin, who reached a ceasefire with Rangoon in 1989.

Sai Lin, aka Lin Mingxian, was a member of the Communist Party of Burma, which faced disintegration in 1989. He now leads the National Democratic Alliance Army. Like Sai Lin, Burma’s ethnic rebel leaders who reached ceasefire deals with Rangoon have developed their own mini-capitals or kingdoms. More than a dozen mini-capitals were built in Shan, Kachin and Karen States. Most of them were set up in Shan State by drug warlords and rebel leaders.