TheBurmaroadMyanmar'seconomy

TheEconomist.419.8983(Apr.2,2016):p73(US).
Copyright:COPYRIGHT2016EconomistIntelligenceUnitN.A.Incorporated
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Ripeforinvestment

AlongandpainfuljourneyawaitsMyanmar'snewgovernment

SPENDadayinYangon,shuttlingamongnewhighrisesandbarsbeforeretreatingtoyourboutiquehotel,andyou
canalmostbelievethatafterdecadesofisolation,Myanmarissquarelyontheroadtoprosperity.Spendmorethan
afewdays,however,andthecracksstartshowing:intermittentpowercuts,ancientsewagesystems,insufficient
housingforaninfluxofmigrantsfromthecountryside.

ThesituationisworseinruralMyanmar,wheremuchofthepopulationlivesnotjustinextremepoverty,butalso
miredindebt.Badroadsmakeitcostlytogetgoodstomarketandimpedeinvestment.Aroundthreequartersofthe
country'schildrenliveinhomesthatlackelectricity.Myanmar'svotershopetheirfirstfreelyelectedgovernment
sincethe1960s,whichtookofficethisweek,willchangethingsforthebetter.

Thetaskaheadisdaunting:withinSouthEastAsia,onlyCambodiahasalowerGDPperperson.Itsinfrastructure
(bothphysicalandfinancial)issomewherebetweencrumblingandnonexistentitslawsarearchaicand,after
decadesofisolationandunderinvestmentineducation,itsskillsbaseiswoeful.Governmentrevenueisanother
problem:corporateandindividualtaxratesarehigh,butfewpeoplepay.TheincominggovernmentofAungSan
SuuKyi'sNationalLeagueforDemocracy(NLD)willinherithighinflation,sizeablebudgetandcurrentaccount
deficits,avolatileexchangerateandinstitutionsbothossifiedandhollowafterdecadesofcorruption,stagnation
andtopdownrule.

Still,potentialabounds.Myanmarhasayoungandcheapworkforce,alongcoastline,abundantagriculturalland
andanideallocation,wedgedbetweenthemassivemarketsofChina,IndiaandSouthEastAsia.Expatriate
Burmesearereturningindroves,bringingenthusiasmandprofessionalexpertisewiththem.

Meanwhile,thebabystepstakenundertheoutgoinggovernmentofTheinSeinhavebecomeapropertoddle.
PreliminaryfiguresshowthatGDPgrewbyaround8.3%in2015theAsianDevelopmentBankforecastsmuchthe
samethisyear.Yangon'snewstockexchangesawitsfirstlistingonMarch25thasmanyastenothercompanies
maylistthisyear.Foreigninvestment,particularlyintelecomsandenergy,isflowingin.ThankstoMissSuuKyi's
electionvictory,Myanmarhastheworld'sgoodwill.

MissSuuKyi'sgovernmentsaysthatagriculturewillrankamongitstoppriorities,whichmakessense:directlyor
indirectlythesectoremploysaround70%ofthelabourforce.BeforeamilitaryjuntaseizedcontrolofMyanmarin
1962itwastheworld'sleadingriceexporteratitlemanybelieveitcouldreclaim.Butmostfarmersgrowlowvalue
cropswithoutdecentfertiliserorseeds.BadinfrastructureandByzantineinternaltraderuleskeepthedomestic
marketfragmentedandproductivitylow:in2012averageannualincomefromagricultureinMyanmarwas$194per
worker,comparedwith$507inBangladeshand$706inThailand.

Inthenearterm,makingiteasierforfarmerstogetaffordablecreditwouldhelp.Themain(andfordecades,the
only)sourceofruralcreditisthestaterunMyanmarAgriculturalDevelopmentBank,whichprovidesonlytinyloans.
Thissendsfarmersintothearmsofinformalmoneylenders,whochargeasmuchas10%amonth,fuellingacycle
ofdebtthatoftenendswithfarmerslosingtheirland.

Myanmar'snewgovernmentwillalsohavetotacklelandrights:confusingandpoorlyenforcedlanduselaws
impedeforeigninvestmentandleaveruralfarmersvulnerabletoconfiscation.TheNLD'selectionmanifesto
promiseslandreform,butgiventhatitwillrequirethenewgovernmenttoconfrontthestillpowerfularmy,thatis
easierpromisedthandelivered.

ThathintsatthefirstoftwohugequestionshangingoverMyanmar'seconomicreform:willthearmyandtheNLD,
inveteratefoesuntilrecently,beabletoworktogether?Andafter50yearsofmilitaryrule,willthecreaking
bureaucracybeabletoadaptandatleasttrytomeetthecitizenry'shighexpectations?Asoneforeigninvestorin
agriculturenotes,"Theministersmayunderstandwhatneedstobedone.Buttherearesomanylayersbelowof
peoplewhohavebeenlivingdifferentlyforsolongthat[change]willtakealongtime."

SourceCitation(MLA8thEdition)
"TheBurmaroadMyanmar'seconomy."TheEconomist,2Apr.2016,p.73(US).AcademicOneFile,
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