Myanmar’s economy

Crawling up through the wreckage

Jul 3rd 2012, 13:06 by R.C. | SINGAPORE

IT IS immediately obvious to any visitor to Myanmar that the South-East Asian country has fallen a long way behind the rest of the region, let alone much of the rest of the world. Yangon, the former capital, offers mostly crumbling colonial-era masonry rather than the air-conditioned malls to which other Asians have become accustomed. Indeed, the sad contrast in fortunes between Yangon and, say, Kuala Lumpur or Bangkok, is one of the main reasons why the generals who mismanaged the country for decades have been obliged to change tack.

It’s only now however that the full extent of the wreckage created by the “Burmese road to Socialism”, which was officially adopted in 1964, is becoming clear. For with the political opening-up of the country over the past year or so foreign economists have finally had a chance to run the rule over a country that was until recently almost as isolated as North Korea. This week the Asian Development Bank (ADB) published the first of what should be several substantive reports on the real state of Myanmar’s economy. The results aren’t pretty. It’s a snapshot of a once-prosperous country brought low by 50 years of central planning. The report might sober up some of the over-optimistic investors who have become intoxicated by the “potential” they see everywhere. Likewise it should worry those reformers within the Myanmar government who hope that they can justify the current programme of democratic reform to the hardliners with promises of a quick economic fix.

For example, the ADB asserts that Myanmar sits on vast energy resources; nonetheless the country has one of the lowest domestic consumption rates of energy in the region. Myanmar has a total electrification rate of just 26%. In the bank’s findings, “electricity is only provided up to two hours per day in remote areas”.

Indeed, the startling contrast between relatively benign conditions in the few urbanised areas, which are mostly occupied by ethnic Burmans, and in the outlying regions, which tend to be inhabited mainly by other ethnic groups, such as the Kachin, Shan and Karen, runs all through the report. Yangon has an electrification rate of 67% while in “rural areas” the average ratio is only 16%. Poverty is twice as high in rural areas, which account “for nearly 85% of total poverty”. In the countryside 75% of children end their education during primary school whereas in urban areas 63% of primary-school children progress to secondary school. These are the sorts of inequalities that fuel the endless conflicts between the Kachin, Karen and the Burmans. Unless such gaps in basic services can be reduced, even a bit, the destabilising tensions between the ethnic periphery and the Burman centre will only continue.

There’s lots more. After years of under-investment and haphazard planning the country’s transport system is a mess. The ADB reports that while the road density for South-East Asian countries overall is about 11km per 1,000 people, in Myanmar the figure is more like 2km per 1,000 people. Indonesia and Thailand have about 250 and 370 motor vehicles per 1,000 people respectively, while Myanmar has just 18.

If the money and know-how are available, of course, roads can be built relatively quickly. An education system, however, can take much longer to turn around—and according to the ADB, Myanmar’s system is broken. The government spends only 3.74% of the national budget on the sector, “very low by international standards”, even among countries with much more to spend, and the results show. A quarter of primary schoolchildren never progress to secondary school. The quality of teaching and learning is obviously poor too: two years ago 61.3% of those taking the test for high-school completion failed the exam. Most of the schools’ meagre budget goes to teachers’ salaries, leaving almost nothing for textbooks and facilities.

Given all this, concludes Stephen Groff, the vice-president for East and South-East Asia at the ADB, “it will take a generation for us to see significant improvement”. He argues that it will take “30 years for Myanmar to catch up to where Thailand is today”—and that’s if there are no hiccups and reverses in Myanmar’s reform programme, of which there are bound to be a few.

Myanmar’s reformers in government, led by the president, Thein Sein, will probably have to get used to reading such gloomy assessments of their country. It might spur them on, but it should also worry them.

After all, it is well known that there are many in the quasi-military government who resent the country’s new democratic opening. These officers have been persuaded to go along with it anyway, consoled with the belief that with the lifting of sanctions a sudden rush of foreign investment will quickly boost the economy out of the doldrums, and with it millions people out of poverty—maybe even enough to save some of the army’s contested seats in the 2015 general election. But the ADB chronicles in excruciating detail just how unrealistic such expectations really are. The truth may set you free, but these truths pose an obvious threats to Myanmar’s ongoing rehabilitation as a functioning, democratic country.

Ref:economist