Myanmar Economy: Will it take a new turn?
By Dr B K Mukhopadhyay
ADB is hopeful that Myanmar’s positive political developments and structural reform programs will help foster economic growth and investment.
As per latest assessment of ADB [Asian Development Bank] Myanmar’s economic growth will increase by 1.2 percent in the fiscal year 2016-2017. Accordingly, Myanmar’s economic growth will reach 8.4 percent in the fiscal year 2016-2017, up from 7.2 percent in 2015-2016. The inflation will remain high at 9.5 percent for the 2016-2017 but will decrease to 8.5 percent in 2017-2018.
Yes, Myanmar is off to a fresh start: on 15 March, 2016 - the Parliament voted overwhelmingly to elect Htin Kyaw as the country’s next president. The candidate of the tiol League for Democracy is the first civilian president following five decades of military rule. Although Htin Kyaw’s presidency highlights the growing role of civilians in a former military dictatorship, the military still controls major parts of the bureaucracy, which could hamper efforts to reform the just-opened economy.
Let us examine to what extent the once autarky can turn itself into a tion reflecting the latent strength to forge ahead.
Significantly, Myanmar has launched its first stock exchange with just one listed company, with hopes the move could aid the country’s economic rise as it emerges from decades of isolationist military rule.The Yangon Stock Exchange (YSX) officially opened for trading 20 years after it was first conceived, and days before Aung San Suu Kyi’s party will form a civilian government. The YSX started trading with just a single firm — First Myanmar Investment (FMI) — one of the country’s largest companies with stakes in the aviation and health industries.
The head of Myanmar’s Securities and Exchange Commission opined ‘it marked a great day for the country, which would now leave the tiny club of tions without a functioning stock exchange….We can now proudly and mightily proclaim to the world that we are no longer a backward tion.’
However, significant hurdles still lie ahead in a tion that still lacks a credit rating and is grappling with entrenched corruption and widespread poverty.
In Myanmar falling farm yields is a concern for other industries. Rice production has declined. The rate of agricultural growth has been falling for the past four years. A key reason for the decline is that farmers have not generated sufficient profits from previous harvests to invest in the following years. Fall in paddy farming and available stocks of oilseed was sure to put additiol pressure on the livestock and fisheries industries, while on the other hand, consumer spending power was low and people could not afford to pay high commodity prices as a result of which producers were uble to raise their prices.
This declining trend in agricultural production has key players in the fisheries industry worried. Lowered production of bran is a great difficulty for the livestock and fisheries industries because at least half of bran comes from paddy. The fisheries industry relies on such commodities and as such any slowdown in agricultural production impacts the sector. Waste products made during oil milling are also important ingredients in animal feed.
Apart from this, their worries come from exterl sector as well - local mills cannot get enough raw groundnut (or peanut) because traders were exporting the product to Chi. Large amount of beans and pulses are exported to Chi, which, in turn, reduces the amount of edible oil produced domestically. Though the price of fertiliser had declined, yet farmers were not motivated to farm more extensively because of uncertainty about profit, adverse weather conditions coupled with idequate availability of inputs.
Challenges galore - deep poverty in the country has been in existence that call for immediate attention. Only a third of Myanmar’s households have electric light, the infant mortality rate is 62 per 100,000 live births, and life expectancy stands at 66.8 years compared to neighbouring Thailand’s 74 years, according to the World Bank. Many parts of rural Myanmar are mired in poverty and one million people are estimated to be in need of humanitarian aid due to tural disasters and interl conflict which have driven hundreds of thousands from their homes, according to the United tions.
What is more: one in five children aged 10 to 17 in Myanmar go to work instead of school, according to figures from a census report on employment. The Occupation and Industry report [a part of Myanmar’s 2014 census] shows about 1.7 million children between 10 and 17 years of age are working.
Myanmar’s population stood at 51.4 million. The employment picture reveals a gender gap in the labour market, with about half of women aged 15 to 64 working or looking for a job, compared to 85 percent of men. More than half (52 percent) of Myanmar’s population is working in the agriculture, forestry or fishing sectors. The report also showed one in five elderly people aged 65 or older still work, mostly in the physically demanding agriculture, forestry and fishing sectors.
Whatever is, these updated findings can be used to improve agricultural productivity to boost economic growth and farmers’ earnings, according to UNFPA [which assisted the government in carrying out the census].
Despite fundamental economic and political challenges, will it not be reasoble to expect that Myanmar will jump into its fast pace of expansion? Focus Economics panelists are right in expecting the economy to grow 8.1 percent in 2016. For 2017, the panel projects growth of 8.3 percent.
ADB’s assessment is very practical in as much as it has rightly located that intensified efforts are needed to connect and develop rural areas to improve access to markets and services and to generate opportunities and jobs. ADB estimated that Myanmar needs 60 billion U.S. dollars to upgrade transport systems until 2030. In as much as weakness of transport infrastructure provides poor access to markets and services, which, in turn, also perpetuates poverty and regiol inequality.
Further, foreign direct investment may increase due to the successful political transition, especially investment flow to the special economic zones, transport, telecommunication and energy sectors.
No doubt, Myanmar’s new government will face the challenges of advancing economic reform, addressing infrastructure and labor shortages and making progress towards peace and social cohesion. The risks for the economic growth are thin exterl and fiscal buffers, the capacity of the government to maintain reform momentum, ethnic and sectarian tensions and vulnerability to bad weather.
Let us hope that under the new regime Myanmar will leap forward maintaining harmonious relations with all of the neighbouring countries in particular. It has the strategic importance so far as the continent is concerned!
(The Writer, a noted Magement Economist, an Intertiol Commentator on Business and Economic Affairs and Director, Netaji Subhas Institute of Business Magement, Jharkhand, India, can be reached at email@example.com)