Ever since General Ne Win’s coup d’état in 1962, Myanmar’s military junta, the State Peace and Development Council (SPDC), has maintained an iron-fisted political doctrine while sending mixed signals about its economic agenda.

Although initially opposed to capitalism, Myanmar dismantled its socialist economy with the Foreign Investment Law of 1989. Tourism became the leading beneficiary of deregulation, reaching a high of 287,394 foreign arrivals in 1998 to 1999. Behind the façade of a booming tourism industry, however, measures taken by the SPDC in the name of improving tourism have resulted in countless human rights violations. Tourism provides Myanmar’s junta with an economic backbone to support oppression and resist political reform; thus, if Myanmar is to make progress towards democracy, international sanctions will need to apply not only to corporations and business capital, but to the Burmese tourism industry as well.

Shortly after the passing of the Foreign Investment Law, the military junta held a parliamentary election in 1990 that gave opposition leader Daw Aung San Suu Kyi’s National League for Democracy (NLD) 82 percent of the seats. The junta, however, never allowed the elected parliament to convene. This affront to popular sovereignty led the United States, Japan, and the European Union to impose economic sanctions on Myanmar. In order to recover lost governmental revenue, the SPDC focused on expanding its tourism industry. However, there has not been much attention to the costs of expanding the tourism industry, nor to the direction of funds generated by the newly developing tourism industry, which are undoubtedly merited.

Because of its lack of monetary stability, Myanmar relies on tourism for foreign exchange. Although the official exchange rate for Myanmar’s currency is about 6 kyats to US$1, the actual rate of exchange can reach 1000 kyats to US$1. The high unofficial exchange rate coupled with steep inflation makes attracting foreign currency a top priority for the government. Each visitor to Myanmar must exchange US$300 for Foreign Exchange Certificates—a special monetary unit accepted by most hotels. Additionally, Myanmar’s government profits from foreign investments in state-run hotels by exchanging state protection and infrastructure for foreign capital.

In 2003 alone, tourism generated over US$116 million in investments and revenues for the economy. Despite declining foreign investment in other fields, the hotel industry has attracted investments totaling over US$1.06 billion since 1988. For a regime that spends over 50 percent of its income on the military, tourism income perpetuates its illegitimate military rule. The US$300 minimum spent by every tourist in Myanmar is enough to equip a Burmese soldier for a year.

To attract more visitors, SPDC re-development campaigns build up tourist destinations at the cost of human rights. Despite the passage of SPDC Order No. 1/99 in 1999, which banned all uses of forced labor by the government and the military, the junta continues to employ unpaid laborers. A 2001 US State Department report mentions the confiscation of land and the use of forced labor in building a “hill resort” in the town of Than Daung Cyi. In a similar report published in 2003, the US State Department found that non-Buddhist laborers were forced to renovate aged Buddhist shrines for tourism. A 2003 report by Paulo Sergio Pinheiro, Special Rapporteur for the UN Commission on Human Rights, documents numerous cases of eviction, relocation, and forced labor in minority states. Under the guise of counter-insurgency, the military has destroyed minority villages and properties in the Kayin state, generating a feeling of perpetual terror.

Many observers believe that tourism benefits Myanmar’s citizenry by sustaining the local economy and introducing foreign ideas. In reality, small farmers and villagers with no connection to tourism comprise 70 percent of Myanmar’s labor force. The hotels reap the majority of profits from tourism, and state-run hotels accommodate a majority of the larger tour groups.

Contact with persecuted minority groups remains restricted. In September 2004, three Japanese Buddhist missionaries were sentenced to three years in prison for visiting the restricted town of Mogok near the Shan state. Myanmar also continues its ban on human rights investigators from the United Nations. Both Pinheiro and Razali Ismail,UN Secretary-General Kofi Annan’s special envoy to Myanmar, have been banned from visiting Myanmar since November 2003. The SPDC strives to develop tourism as a profit-generating mechanism while minimizing the political impacts that such contact may engender.

Myanmar’s hoteliers and airline operators spent much of 2004 touring major Asian cities. This latest push to attract visitors is not a sign of reform but a fundraiser for the SPDC. Many members of the legitimately elected NLD, including its leader Aung San Suu Kyi, remain in custody or under house arrest. In October 2004, the junta forced reformist Prime Minister Khin Nyunt to resign for “health reasons” and placed him under house arrest for alleged corruption. His successor, Lieutenant General Soe Win, is a hardliner who has been linked to violence against Aung San Suu Kyi and the NLD.

With tourism as a stable source of income, the SPDC can survive economic sanctions and continue its human rights violations. Only sanctions and limitations on the tourism industry can force the SPDC to reexamine its actions. Potential tourists must look beyond the façade of magnificent pagodas and boycott Myanmar’s militant regime.