A little help from Myanmar

by Dian Amalia

While countries in South East Asia are struggling to improve their economic growth and are assumed to be in the ‘middle income trap’, Myanmar spreads the good news that it is transitioning from military rule to a civilian democracy. Western Nations’ response to this was predictable; they are considering easing economic sanctions on Myanmar. Its regional neighbors in ASEAN have already called for all sanctions to be lifted

Myanmar, or also known as Burma, was ruled by military Junta from 1962 to 2011. Human rights abuses led Myanmar to be isolated from the rest of the world. The USA and the EU enacted sanctions against Myanmar and cut off their economic relations. In 2011, President Thein Sien decided to bring Myanmar into democratic reform because the threat posed by various ethnic insurgencies.

 Image

US Secretary of State Hillary Clinton said the US would ease its import ban on goods from Myanmar

Source: http://www.rawstory.com/rs/wp-content/uploads/2011/12/clintoninmyanmar.jpg

 

Being one of the last virgin markets left in the world, Myanmar is becoming a new hotspot in the area. Sandwiched between India and China and surrounded by other emerging countries from ASEAN, it has geographically strategic location. Imagine a previously isolated country, now opens up for business, there would be a massive race of investments to start the economy. There is a huge opportunity to expand businesses in this situation. Myanmar has vast reserves of natural resources, including oil and gas, gems, timber and agricultural products. With a population of over 54 million, the country offers a new labor force, and it is also a new market for imported products that were previously banned.

Some economists say that as the labor needed to run an industry in China becomes more and more expensive, investors may move production to countries like Vietnam where labor is cheaper.  Now that Myanmar is also open, it may benefit from the spillover.

It is quite amazing that Myanmar’s transition to democracy was peaceful, far from the bloody uprisings in the Arab world. Having a more stable political condition, the leaders now need to think of ways to make the perfect step for their economic growth. There are many examples of countries reforming their economies, such as China, with its mesmerizing economic growth system, then now known as “Beijing Concensus”. On the other hand, Myanmar is under pressure from the West and will probably use the Washington Consensus tradition and might make a different story of success, not as the ones that did not maximize the output.

Myanmar can also create its own system by making a new economic growth plan, learning from the mistakes of all the economic crises that happened in this last several decades. It has a big chance to improve yet a long way to go. According to Vinod Chugani, an American-educated Singaporean, to be in the same economic position as Vietnam today, Myanmar needs approximately 20 years to catch-up. Infrastructure, investments, skilled and well-educated laborers are strongly needed for it to become an emerging country. Also, the government needs to be willing to change. Although it was a brave step for Thein to choose the smooth transition, in order to build a good governance system, there must be a strong commitment by all parties, including those who were previously opposed to the current administration. For most countries that have gone through major political reforms, corruption is the biggest challenge. It would create another problem including poverty and inequality.

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Source: http://www.preawza.com/wp-content/uploads/2012/08/Asean_01.jpg

It is too naive to say that Myanmar will be the next Asian Miracle in a short period since it still has many problems to overcome, but it not too much to say that the country has a potential to enhance the South East Asia economic performance. To benefit the most from it, ASEAN needs to embrace the transformation of Myanmar and give assistance especially with the goal of 2012 ASEAN Community coming up. With Singapore and Brunei leading, followed by Malaysia, Indonesia and Thailand; Myanmar could support the rest of South East Asia countries to rise.

 

Sources:

http://www.bbc.co.uk/news/business-18284085

http://www.bbc.co.uk/news/world-asia-17607842

http://www.bbc.co.uk/news/world-asia-19739376

http://www.bbc.co.uk/news/world-asia-19744596

http://www.thejakartaglobe.com/columns/as-nobel-prize-winner-teaches-economics-to-another-laureate-more-than-meets-the-eye/547836

 

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