Since
2011,
Myanmar has embarked upon a series of reforms, including political, economic, and
administrative amendments. Progress has been made on the economic front with
reforms initiated to address issues of corruption, currency exchange rates, and
integrated foreign investment and taxation laws. However, the pace and extent
of economic reforms in the country remains slow and leaves much to be desired.
Ergo, what are the imperatives and opportunities that are critical to
furthering the country’s economic reconstruction in 2013?
Imperatives
The
Search for an Appropriate Economic Model: In June 2011, President Thein Sein
highlighted four critical markers to the reforms process: a balanced and
proportionate growth amongst all states and divisions; priority to food
security and ameliorating the agricultural sector; all-inclusive development;
and finally, the reliability of statistics and an overall improvement in how
primary data is collected.
Naypidaw
is yet to find an appropriate economic model that ensures the right mix of
financial and political reforms, along with an independent legal structure to
insulate employees, assets and supply chains of businesses.
Although
macroeconomic policy reforms have been initiated in Myanmar, they have largely
been pursued in isolation since the country lacks a consolidated framework for
achieving its economic goals. This was not a major concern over the last two
years. However, today, at a juncture where the country has successfully met its
first set of policy reform objectives, the issue has become requisite. Given
that Myanmar’s neighbours have largely undergone democratic transitions over
the last few decades; in 2013, perhaps Naypidaw could draw upon its contemporaries’
experiences to devise its own indigenous model for growth and development.
Resolution
for Peace and National Reconciliation of Ethnic Minorities: It is also critical
for Naypidaw to reach permanent ceasefires in all its ethnic crises to ensure
that development equilaterally integrates and empowers Myanmar’s society. This
is crucial since a large proportion of its natural resources are situated in
the peripheries, which is where most of the crises were engendered.
Attracting
FDI: Myanmar’s high economic growth needs to be sustained by creating an
environment conducive to attracting foreign direct investment (FDI) and
expanding foreign trade. The country’s new investment law, implemented at the
end of 2012,
allows for large-scale liberalisation of the economy with huge incentives for
international businesses to invest in Myanmar. So far, FDI remained
concentrated on extractive industries such as oil, gas and mining, but in
recent times, the government has tried to encourage investment in tourism,
agriculture and, information and communications technology (ICT). These
positive phenomena need to be maintained and diversified in 2013.
Opportunities
International
Re-engagement: The global community, over the last two years, has welcomed
Myanmar’s democratic transition vis-à-vis its re-engagement with the country.
International institutions such as the ADB, the IFC and the World Bank believe
that Myanmar’s reform process has now progressed to a stage where it can robustly
engage with development partners to define its priorities and projects critical
to maximising opportunities that have emerged from the country’s
transformation. On 17 January 2013, the Asian Development Bank (ADB) for the first time
in almost 30
years, sanctioned an USD512 million loan to the Myanmar government. On 5 February 2013, the International Finance
Corporation (IFC) declared that the country would receive an interest-free loan
of USD 165
million, besides the previously earmarked USD 80 million loan from the World
Bank.
This
confidence and commitment to support and aid the reform process seems to be
largely reiterated in the country’s recent debt rescheduling agreements with
the World Bank, the ADB and the Paris Club (an informal group of creditor
governments from major industrialised countries; including France, Germany,
Norway, the US and the UK).
Naypidaw
is also set to implement the Myanmar Comprehensive Development Vision (MCDV) to
lay a solid foundation for infrastructure and human resource development with
assistance from countries such as Japan. These financial stimuli will help the
country sustain its developmental reformation by focusing on building public
finance and capacity-building, implementing standardisation, legislation and technical
regulations; improving trade and investment in small and medium-sized
enterprises, increasing public infrastructure such as access to financial
services, roads, electricity; and bridging gaps in access to technical and
secondary education.
Geographical
Advantage: Myanmar must capitalise on its strategic location to its economic
advantage. The recent loan impetuses allow for reviving previously stalled
plans of developing special economic zones (SEZs) both within the country and
along its borders with neighbouring countries, including countries of the ASEAN
and India. This may enable, for example, shifting labour-intensive industries
from the Thai side of the border to the Myanmarese side, as well as
cross-border financial transactions. The consequent increase in employment
opportunities, and the feeling of inclusiveness in the country’s war-torn
peripheries is an added incentive.
Membership
in Regional Organisations: Like other member states, Myanmar could also use its
membership in the ASEAN to avail of the bloc’s economic framework in boosting
its foreign trade and FDI. In this regard, the Initiative for Asean Integration
(IAI) provided by the Asean Economic Community, aims to narrow the
intra-regional development gap by stipulating that new members be provided
assistance in accelerating their development for greater integration with the
core members. This could serve as a useful guide to aid the reform process.
As
it prepares to take up the ASEAN chair in 2014, Myanmar must avail of its
economic prerogatives to ensure the continuity and sustainability of its
democratic transition.
Nayantara Shaunik
Research Officer, SEARP, IPCS
E-mail: nayantara@ipcs.org
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