Economic Policy

Land reform, nationalization, and socialist industrial planning formed the keystones of government economic policy. U Nu and other AFPFL leaders were committed to the goal of building a socialist welfare state. Nationalism, however, also provided a significant impetus. Nationalization was aimed at both Westernowned firms and enterprises owned by non-indigenous, particularly Indian, residents.

In line with the 1947 constitution's provisions naming the state as the ultimate owner of the land and prohibiting large, absentee estates, the Land Nationalization Act of October 1948 transferred absentee landholdings to the government, aiming to redistribute the land in parcels of up to 20 hectares to individual cultivators. The Ministry of Land Nationalization was created in 1952. Progress, however, was slow. By 1959 some 1.3 million hectares were acquired but only 587,000 hectares distributed to some 190,000 farmers. Forty-four percent of all farmers were still tenants in fiscal year 1961. Nationalization proceeded in the industrial, transportation, and distributive sectors of the economy. In 1948 the Bombay-Burma Trading Corporation, the casus belli of 1885, lost its teak concessions and sawmills. The prewar oil companies were not nationalized but in 1954 were obliged to come into a joint venture with the government, which would hold a one-third interest. After 1955 there was some slowdown in nationalization, owing to the need to attract foreign investment into the country.

At the 1952 Pyidawtha (Welfare State) Couerence tn Rangoon, U Nu announced an ambitious eight-year program of development, drawn up with the assistance of United States and United Nations advisers. A target gross domestic product of K7 billion (kyat), the equivalent of US$1.5 billion, was set for 1959; K1 billion was to be invested in industry, mining, electrification, transportation, communications, and irrigation during the 1952-55 period. This could be accomplished it was asserted, if the insurrections were quelled by 1954. The Pyidawtha program was to be financed through exports, principally rice. As long as international markets were good, it was even suggested that Pyidawtha might be funded without resort to foreign loans, and the public sector Agricultural Marketing Board took over rice export.

The end of the Korean War in 1953, however, brought a collapse in international rice prices. Burmese rice, often of poor quality, remained rotting on the docks or in storage. In 1955 the eight-year Pyidawtha development plan was scrapped, and the more modest Five-Year Plan was proposed the following year. The government found itself increasingly dependent on foreign assistance, such as Japanese war reparations (the equivalent of some US$250 million), PL-480 grants from the United States, and long-term loans from the World Bank, the United States, and other sources. The Soviet Union and other communist countiies gave gifts and loans and agreed to buy Burmese surplus rice, despite its poor condition.

By 1960 many sectors of the economy had not returned to prewar levels. Rice production was only 93 percent of pre-World War II levels and exports only 64 percent. Petroleum and teak exports were even more severely depressed at 52 percent and 39 percent of prewar exports, respectively. Although agricultural exports other than rice were up 125 percent, Burma's position in the international economic system had deteriorated, even if the government could claim that the profits from exports were more equitably distributed. In the Four-Year Plan initiated in FY 1962, just before the military coup, many of the socialist orientations of earlier plans were dropped, emphasizing instead the development of the economy through encouragement of the private sector. This aroused the opposition of military officers committed to socialism, however, with serious consequences.