Much has been said about the National League for Democracy (NLD)-led
elected government's stance on peace and security in recent weeks, with
attention being drawn to the conflicts in Rakhine state and the actions
of Myanmar's de facto leader Aung San Suu Kyi.
Within the country there is concern, however, over the state of the economy.
Recently, Professor Sean Turnell of Macquarie University of
Australia, the Special Economic Consultant to the State Counsellor of
Myanmar, came out to paint a positive picture of the Myanmar economy at
his briefing, Myanmar's Economy 2017: Taming Dragons, Finding Tigers. He
said the NLD government has saved the economy from bankruptcy after the
so-called "sugar-rush" spending during the final years of the previous
Thein Sein administration.
The previous government was wasteful as it pushed the Budget deficit
to 4.5 per cent of gross domestic product (GDP) in 2015-2016, which was
funded through the printing of money.
Prof Turnell said the NLD government had reduced the Budget deficit
to 2.5 per cent of GDP in 2016-2017. He forecast optimistically that
Myanmar's GDP growth would be 6.9 per cent this year, putting it among
the world's top five fastest-growing nations.
Echoing his remarks, Myanmar's National Planning and Finance Minister
Kyaw Win likened Myanmar to "an aircraft on a runway in 2016, but ready
to take off in 2017", at a forum with local and foreign businessmen.
"Our mission is also trying to fix things… to boost the economy," he
asserted.
On
the streets of Myanmar, ordinary people have been complaining about
higher daily food prices and businesses have few positive things to say
about the government's economic measures. PHOTO: BLOOMBERG
But the World Bank's Myanmar Economic Monitor estimates that
Myanmar's economy slowed down in 2016-2017, with growth expected to
moderate to 6.5 per cent from 7.3 per cent in the previous year.
On the streets, ordinary people have been complaining about higher
daily food prices and businesses have few positive things to say about
the government's economic measures.
De facto leader Suu Kyi is seen paying attention to peace as the
priority, but her supporters say the economy is coming into focus.
The NLD government, in fact, has been slow to set up a new Investment Commission.
It took six months after it came into office to announce various economic measures, which were subject to visible delays.
When Myanmar's 12-point economic policy came out on July 29 last year
- four months after the new administration was formed - there were
questions on implementation. The policy outlines were rather vague.
It was portrayed as a people-centred policy, with broad grassroots participation.
It raised hopes on actions towards national reconciliation,
protection of natural resources, and setting up of an economic framework
in order that the resources can be allocated equally and fairly among
states and regions.
At first glance, the NLD government's policy appeared as a possible
reversal of the previous government's policies. It suspended many
government projects and subjected many to reviews. There were delays to
payments and some construction works were suspended.
Additionally, the Yangon chief minister ordered the suspension and
review of high-rise construction in his domain, the business capital of
Myanmar, which further weakened local construction activities.
Many people in the business community have criticised the government
for its lack of serious attention to economic policy as priority and
novice approach to getting things done.
Many in town said "life is as tough as ever", including once
"privileged cronies", as business opportunities dried up and the state
pursued higher tax collection.
A year after government formation, ministers said they were serious
about economic reforms and would pursue macroeconomic stability,
encourage small and medium-sized enterprises' (SMEs) development, and
ensure more credit to the private sector at the micro level.
Prof Turnell said, at a recent economic forum, that the Myanmar
government had introduced a number of important financial-sector reforms
in recent months, and stricter capital requirements and liquidity
ratios for private banks.
In April, the government enacted regulations for a new investment law
- introducing a new regime of incentives based on geography and sector -
and in July, it submitted a draft company law to Parliament.
In September last year, the United States surprised many with the
decision to lift all of its remaining economic sanctions on Myanmar. One
hundred and eleven individuals and companies were taken off the
blacklist.
The US also reinstated Myanmar's trade Generalised System of
Preferences scheme. The status grants Myanmar tax privileges on exports
to the world's largest economy and, in turn, brings in foreign
investment to the industrial sector.
But, those economic opportunities seem in vain as Myanmar is far from ready to export its products or services.
Moreover, some critics say the NLD government has neither a broad
economic vision nor the ability to create harmonious economic conditions
to attract local and foreign investors.
The government reported that foreign direct investment (FDI) grew in
2017-2018, with more than US$3 billion (S$4.1 billion) worth of
investment approved by the Myanmar Investment Commission in the first
four months of the fiscal year, which is well ahead of the government's
US$6 billion target.
But one must distinguish between FDIs on paper and actual inflows. Frequently, they may differ.
According to media reports, agriculture, mining, oil and gas, and
construction received no investment, but a few million US dollars came
in for transport and communication, manufacturing, power generation,
hotels and the tourism sector.
There are necessary conditions for Myanmar's economy to grow and the
government must acknowledge that "business confidence" is most important
to increase investments and domestic consumption spending.
The government needs to cut bureaucracy and red tape, increase
investment in infrastructure (especially in transport, logistics, and
providing electricity), and support SMEs in securing land, finance and
accessing new technology, in the short term.
Education must be reformed for long-term productivity enhancement.
The Myanmar economic policy outlined objectives to nurture human
resources, to give high priority to develop infrastructure such as
electricity supply, roads and ports, and to set up a "Data ID Card
System", "Digital Government Strategy" and "e-Government System" to
create job opportunities for all Myanmar citizens who live in Myanmar
and those who have returned from foreign countries.
Yet, its performances against these objectives are far from
realisation and, unfortunately, recent racial tensions and conflict in
Rakhine as well as international pressure on human rights are shifting
further attention to security, rather than the economy.
Ref:Min Lwin Editor-in-charge Eleven Media Group, Myanmar .
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