Set on the arid plains of upper Myanmar, Naypyidaw has been a significant drain on the country’s finances and is estimated to have cost at least US$4 billion. Nowhere has the effect been felt more than in Yangon, where potted roads, blackouts and weeds growing from old government offices speak of the deliberate neglect that is taking place.

The present military rulers have always been ambivalent about this ‘foreign’ city, which was little more than a village when the British established it as the capital of lower Burma after the Second Anglo- Burmese War in the 1850s. The shift north owes more to strategy and tradition than the oft-cited astrological motives. Naypyidaw is centrally located and in the traditional heartland of Burmese kings. It’s also far away from the two main perceived threats to military rule and, in the words of the generals, most likely causes of ‘disintegration of the union’: foreign invasion and popular uprising.

Under the 2008 Constitution, the 440-member Pyithu Hluttaw, or house of Representatives, must convene within 90 days of the general election, scheduled for sometime later this year. Both elected and appointed delegates—25 per cent of seats are reserved for military candidates—will meet in a 31-building parliament complex which should be completed by the end of may.

That first session, marking the country’s return to democracy after 48 years of military rule, will be another indicator of Yangon’s demise. But it is precisely because of the city’s faults in the eyes of the generals—its foreignness, population base and location—that it will continue to be the country’s most important urban area.

The shift to Naypyidaw has found little acceptance, both locally and internationally. Government staff forced to move have done so only reluctantly, and local businesses, outside of the construction industry, still see few opportunities there at present.

Only a handful of embassies—the Chinese and the North Koreans— have moved north, while the United Nations continues to be scattered across Yangon. When the UN began looking for a large office space late last year to integrate its agencies, there was little discussion of the possibility of transferring to the new capital.

With no international flights to Naypyidaw, Yangon remains the centre of international trade. Its five million residents represent the largest consumer market and the country’s primary port, at Thilawa, is just 25 kilometres away, as are most of Myanmar’s industrial zones. If the much-anticipated law permitting Special Economic Zones, modelled on the Pearl River Delta, is finally introduced, Thilawa would be the mostly likely location for these, providing a much-needed boost to employment.

Much of what remains of the country’s human capital is based in Yangon and it continues to be the most vibrant city in Myanmar, the only one that could even remotely be called cosmopolitan or international.

There are also signs that the decline in fortunes in recent years will soon reverse. The elections might be the sham that many in the international community expect, but the spectre of polls has at least forced the military regime to reconsider its priorities. more emphasis is now being put on delivering services to appease voters in the lead-up to polling day.

One of the main gripes in Yangon, the city most susceptible to political unrest, is the lack of electricity; the government supplies only 300 megawatts a day, less than half of the estimated demand. Some neighbourhoods receive less than eight hours of power a day, while most get no more than 12. As a consequence, businesses and households rely heavily on generators fuelled by subsidised diesel—or simply go without.

A new natural gas pipeline from the Yadana offshore field—operated by French company Total—should help alleviate the power outages. At an estimated cost of US$270 million, the pipeline project is a rare display of government largesse in lower Myanmar, and should conveniently come online in the third quarter of 2010.

While the city is now more of a transit point for up-country travel (with a brief stop-off at Shwedagon Pagoda, of course), with more investment in a wider range of accommodation and a revitalisation of the city’s colonial districts, it could become a tourist destination in its own right.

But the greatest hope for the city’s future perhaps lies in the possibility of a post-election business revival. Economic development and opportunities are shaping up as the crucial election issues, and among the first acts of the new, mostly civilian government should be sweeping economic reforms that make the country a more attractive place for foreign investment, both large- and small-scale.

If this happens, Yangon could be transformed from a crumbling colonial relic to the fulcrum of Myanmar’s reintegration into the global economy.

Thomas Kean is the editor of the English-language edition of The Myanmar Times newspaper, based in Yangon.