No turning back for Myanmar’s economy

The headlines on Myanmar in local and foreign media are often worrying – and not without reason.

Myanmar’s army is embroiled in a border war, its peace process with 16 armed ethnic groups and alliances hangs in the balance, students are protesting against the education system and the recently freed media is discovering the limits of the government’s tolerance.

Rights activists at home and abroad accuse the quasi-civilian government of backsliding on political reforms.

Despite the fraught political environment, economic liberalisation is too established and too attractive to stop, said Dr Sarasin Viraphol, executive vice-president of Charoen Pokphand Group, Thailand’s largest company.

The CP Group, which had a 2013 worldwide revenue of US$41 billion, has been operating in Myanmar for close to 20 years and is on the cusp of major expansion.

“No matter what happens on the political front or the international front, we can only see further development as the society, the people, move forward,” Dr Sarasin said in an interview in Yangon on the sidelines last Monday of a high-profile, one-day Asean-Myanmar Forum.

“We believe that the momentum will accelerate,” he said.

“Myanmar has abundant natural resources, skilled and unskilled labour and a sizeable market of 50 million people, of which only 4 per cent is the consuming class compared to the rest of the world’s 35 per cent. How can you go wrong with that?”

The CP Group began poultry farming in Myanmar even before the transition to democracy in 2011 after decades of stifling military rule, and now plans to open up to 100 grilled and barbecued chicken stalls in towns and cities across the country – and then move into exporting poultry.

The group is also planning to open branches of its mid-market retail chain Makro – a stalwart of Thailand’s retail landscape – across Myanmar.

It is not alone. Foreign direct investment (FDI) in Myanmar has soared to more than $8 billion this fiscal year, $3 billion more than anticipated, owing to increased activity in the energy, manufacturing and telecoms sectors, a senior government official told Reuters last week.

There is more to come. One in four Asian enterprises plans to expand into Myanmar this year, according to the United Overseas Bank (UOB) Asian Enterprise Survey 2014, revealed at the forum last Monday.

“This makes Myanmar… one of the top investment destinations in the region,” said UOB in a statement.
Nine banks have been given provisional licences to operate in Myanmar, of which two are Singaporean – UOB and OCBC.

A total of 1,024 Asian enterprises from China and Hong Kong, Indonesia, Malaysia, Singapore and Thailand were surveyed.

Automotive, food and beverage, information technology and shipping and logistics were among the top sectors of interest.

“Investments in Myanmar will create more jobs and boost income. This in turn will open the doors for new business opportunities,” UOB said.

The Asian Development Bank has forecast gross domestic product growth of 8.3 per cent for Myanmar in the 2015-2016 fiscal year, up from 7.8 per cent in 2013-2014.

“Myanmar’s structural reform programme has underpinned strong growth in recent years, which will continue this year,” the bank said in its annual Asian Development Outlook released last week.

Also last week, Myanmar unveiled a five-year National Export Strategy – its first.

The strategy outlines a sweeping design to move the low-value-added, low-wage commodity-dependent export sector to a more diverse and competitive base, better integrated with the neighbouring markets of India and China and the rest of the globe.

The country was starting from a very low base, said Arancha Gonzalez, executive director of the Geneva-based International Trade Centre, which developed the strategy after 18 months of consultations with the government and the private sector.

Most small and medium-sized enterprises, which comprise about 98 per cent of Myanmar businesses, did not even know China and India offered duty-free and quota-free access to Myanmar products.
This represented a vast opportunity, she said.

“The sense I have is that… the direction – the gradual opening up of the economy and the opening of trade – is something this country has decided on and will hopefully remain,” she told a small group of foreign correspondents in Yangon.

“The direction is towards more openness, more competition and a better environment to do business,” she added.

Professor Simon Tay, chair of the Singapore Institute of International Affairs which organised the Asean-Myanmar Forum, told the audience of top executives from around the region: “Headlines in the Western press are probing and disturbing… but there are other perspectives.

“From those of us who have watched from nearby for many years, we see step by step a steady commitment.
“None of us can become a perfect democracy overnight. We are fundamentally optimistic about Myanmar as a vital part of our region and Asean.”

Separately, Thuta Aung, co-founder of the business consultancy HamsaHub, has a full portfolio of clients and is not worried about the political environment. Reforms had already come much too far to be rolled back, he said.

“People will say it’s backsliding, or reforms have stalled, because everyone had high expectations, forgetting that the government has very limited capacity,” he said in an interview.

“Some expect we should have US-style freedom, without even having been to the US or knowing that there are issues there as well. That is unrealistic,” he said.

Source: Straits Time

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