Myanmar: Asia's Next Tiger?
Positive outlook to the political and economic scenario in Myanmar. A rapid series of reforms and forecasts for further economic and social development have ...
Ref: www3.weforum.org/docs/EA13/EA13_MyanmarOverview.pdf
Myanmar: Asia's Next Tiger? by Than Han on Scribd
Positive outlook to the political and economic scenario in Myanmar. A rapid series of reforms and forecasts for further economic and social development have ...
Ref: www3.weforum.org/docs/EA13/EA13_MyanmarOverview.pdf
Myanmar: Asia's Next Tiger? by Than Han on Scribd
....
Don’t count on Myanmar’s new reforms to make it the next Asian tiger: Corruption still reigns
Myanmar: a slight gap between promise and reality. (Getty Images/Kuni Takahashi)
Myanmar (a.k.a. Burma) has approved a new foreign investment bill,
part of a raft of reforms to open the country’s economy after decades
of near economic isolation. The final version is not yet public but is
expected to have dropped earlier proposals requiring foreign investors
to provide at least 35% of start-up capital in joint ventures with local
partners, or limiting foreign ownership of a joint venture to 50%.
Foreign investors and lawmakers are both optimistic about the
country’s economic potential– the biggest of the “big four” auditors,
KPMG, announced yesterday that it was opening a new office in Myanmar (paywall). But the nation slated by some as Asia’s next economic frontier
(video) could see its growth limited if the country doesn’t rein in
government corruption like bribery, kickbacks and ties to organized
crime. In 2012, Myanmar ranked second to last for economic freedom in Asia
and seventh from last out of 179 countries ranked worldwide, according
to a survey by the Heritage Foundation. “In the absence of institutional
reforms, corruption is rampant and continues to be a serious barrier to
sustained economic development,” the report says.
There are many reasons to be dubious
about the potential growth of Myanmar, which is home to untapped oil
and gas reserves as well as timber, minerals and precious metals. Quartz
has reported
on several of the problems foreign investors could encounter, but
government corruption could thwart long-term growth. “It is more the
rule than the exception that you get corruption at some point in
Southeast Asia,” says Roberto Herrera-Lim, director of Asia for the
political risk research firm Eurasia Group. “The challenge for Burma is
to avoid that path… The big question is when the amount of money coming
in really surges will they have the… ability to avoid the same
mistakes?”
Here is what you need to know about corruption in Myanmar:
Historical baggage
Myanmar was one of six countries in the Association of Southeast
Asian Nations (ASEAN) that ranked near the bottom of Transparency
International’s Corruption Perceptions index for 2011. According to that
list, Myanmar was the world’s third most corrupt country
behind Somalia and North Korea. Rule by the military junta ended in
2011 and the closed nature of the military years has made governance and
corruption problems hard to independently verify, but analysts say
long-standing ties exist between the ruling elites and organized crime
like human and drug trafficking or illegal logging. Despite eradication efforts by the government, the amount of land used to cultivate opium has been growing for six years straight,
according to a UN report released on Oct. 31. After Afghanistan,
Myanmar is the second-largest opium grower in the world and produces
about 10% of the world’s heroin.
Myanmar’s cheerleaders often compare it to Vietnam or Cambodia, which
made the move from international isolation to become major regional
manufacturing hubs. But rife corruption in both of those countries will
ultimately limit growth, Herrera-Lim says. Officials in Myanmar,
including those with connections
to the former military regime, seem to realize they need to at least
look credible to stay in power. As a result, members of parliament have called for clearer penalties for taking bribes in an anti-corruption bill based on a similar law in Singapore, which is considered to have the least corrupt government in the region.
Image control
Myanmar needs a better image after its violent crackdown
on protests in 2007. It also needs new alliances to balance its
longstanding reliance on China, Myanmar’s main ally throughout years of
US and European nations sanctions. Myanmar’s officials have grown wary
of Beijing’s growing influence on domestic politics. Some Burmese also complain of an exploitative trade relationship with China. The United States, the European Union and Australia
only recently lifted most of their sanctions on Myanmar; a poor effort
at rooting out corruption could mean those sanctions are reinstated.
Analysts expect aid and advice to flow in from multilateral financial
organizations like the World Bank or the Asian Development Bank and
countries like the US or Japan,
a major donor in the region. That could mean more scrutiny and possibly
better accountability on the government’s part. The US Treasury
Department sent its deputy secretary, Neal Wolin, to Yangon and
Naypyidaw (the administrative capital) last week to advise officials on improving revenue transparency and fighting financial crime.
An expectant public
Parts of Myanmar’s population of 54.5 million are growing bolder and
more demanding. Public protests are becoming increasingly common with
residents marching against Chinese investment and the confiscation of land
for development. “People are really expecting more. [The government]
has crossed the point of no return. Right now, if they roll back
liberalization, they’re going to get a very strong reaction from the
people,” says Herrera-Lim.
Myanmar’s government has also not addressed growing tension between
Buddhists and Muslims in the western Rakhine state. Violence erupts too
frequently. Most recently at least 89 have been killed and 32,000 made homeless
as thousands of homes were burned in a recent outbreak of clashes
starting Oct. 21. The government denies accusations of abuses by its
security forces in the state but has rejected inquiries by the United
Nations to investigate the situation.
On the bright side, foreign investment could help lessen corruption,
says Marc Mealy, vice-president at the US-ASEAN Business Council. He
notes that US companies investing in Myanmar must comply with the
Foreign Corrupt Practices Act, which, Mealy says, “will bring better
practices and raise the standards for how business is done there.”
Before the bill’s approval, President Thein Sein had said he was sure foreign investors would find the law “really worth waiting for.”
Potential investors have been anticipating the law since September and
now wait to see if it will include details like how many Burmese
nationals foreign firms must employ, or whether big investment projects
will still require going to Naypyidaw in person
for approval. It might be worth waiting a little longer to see if
Myanmar’s economic opening will translate into more transparent and less
corrupt governance.
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