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COUNTRY REPORT – MYANMAR

AN EXPORT DESTINATION ?

ECONOMIC UPDATE October 11, 2103.

INTRODUCTION

From a development point of view Myanmar has embarked on ambitious development reforms following its decision to work towards a democratic society.

Following its time in office from March 2011 the new government has implemented reforms in all aspects. The government has prioritized political reform and national reconciliation resulting in prominent achievements which have won the trust of the international community. Some of these developments include:

             reconciliation with political parties and armed national groups

             the release of political prisoners

             welcoming members of the Myanmar Diaspora to participate in the country’s reforms

             registration of Daw Aung San Suu Kis’s National League for Democracy as a legal political party

             entering into by-elections-held April 1, 2012

             endeavour for the rule of law

             removal of media censorship and restrictions on the Internet communications

             peace building process’s in conflicted areas

 

The international community’s re-engagement with Myanmar has been strengthened following the clearing of external debt arrears in January 2013 and its success has been attributed to the common aspiration of achieving a modern, developed and democratic nation and an inclusiveness of society’s participation in the country’s political affairs.

Legislative power, executive power and judicial power have been separated, and the authorities have put in place reciprocal controls, checks and balances among them. In addition the country’s new governance model has come up with the division of powers between union and regional governments, with the development of the culture of mutual cooperation and understanding between the Union Government and Regional/State Government. These distinct developments have been witnessed in the course of democratic transition so far.

REFORM

The reforms of 2012 and 2013 have focussed on economic and social well being of the Myanmar people and there has been the establishment of democratic governance. Soon after the Government assumed office they adopted the Framework for Economic and Social Reforms (FESR). The Framework covers the legal reform, land reform, budgetary, taxation, monetary and exchange reforms so as to improve access to credit, maintain economic stability and stimulate the economy, and there have been reforms to create jobs with a more conducive business environment for investors. This reform strategy is focused on the people-centred approach with the aim of poverty reduction. The government has launched a series of national and regional level workshops on poverty reduction in May and August 2013. There has been the launching of Rural Development and Poverty Reduction Strategy’s that have targeted the reduction of poverty levels in Myanmar to 16% from the current level of 26% by 2015, this is in line with targets under the UNMDG’s. This Strategy also highlights development priorities and they include:

             agricultural production

             livestock and fishery

             rural co-operative

             rural socio-economy

             rural energy

             environmental conservation

Key economic reforms include:

             budget discussion in Parliament for the first time and publication of the budget:

             RELAXATION OF TRADE RESTRICTIONS

             removal of barriers to foreign investment and an improved investment climate

             rationalization of tax rates

             Improved tax administration and fiscal decentralization

There has been an improvement in economic infrastructure and social infrastructure (education) thru improved public finance management and community driven projects that have had the support of financial institutions and multi development partners.

NEW LAWS

These have included:

Land law

Microfinance law

Foreign investment law

The new central bank of Myanmar law

The new foreign exchange management law

Securities exchange law

Anti-corruption law

Law environment law

Environment conservation law

A welcome move has been the distinct liberalization in the banking sector accompanied by a change in the status of the Central Bank of Myanmar (CBM) which is now an autonomous institution which will allow the implementation of dynamic monetary policy.

There is an opening up of the domestic banking system accompanied by the development of a modern payment system with the intent of transforming Myanmar from the present cash economy into a bank economy. Already Visa, MasterCard and JCB have networks in place in anticipation of credit card transactions in late 2013. The economy is now entering a fourth phase, the enhancement of private sector participation in the country’s development endeavours.

THE ECONOMY

With significant investment in tourism, construction, oil and natural gas, the GDP of Myanmar is expected to reach 6.5% in 2013.   There is an expected rise in imports and exports by 16% and 13% respectively in 2013 while inflation remains flat at 5.3%, slightly down from 2012. Tourism and extractive industries are expected to increase, attracting substantial FDI.

The authorities are looking for much increased involvement and cooperation between the AFIS and Myanmar and discussions are being made for priority development needs. The World Bank has provided a pre-arrears clearance of USD80 million for community driven development in about 640 village tracts across the country and there is a USD 420 million loan to support reforms to strengthen economic stability and improve public financial management and the investment climate in general.

Source : Selected date from the World Bank, IMF and the Myanmar authorities

John Brooks

Trade Economist

The Auspacific Institute

15 November 2013