Navigating the Economic Reform Process

Summary

Myanmar's political transition and economic reconstruction are intimately entwined. Achieving either depends on achieving both.

Introduction

The speed and extent of economic and political developments in Myanmar since March 2011 have surprised many observers of the country. The rate with which change is seemingly being embraced in the country contrasts markedly with the more cautious and incremental approaches taken in most other transitional economies of Asia, such as neighbouring China, Laos and Vietnam. This in turn has generated a great deal of excitement about Myanmar's immediate future, and the expectations of many stakeholders have become lofty as a result. For foreign investors, Myanmar is the last major “frontier” market in South and Southeast Asia, and poses an enticing business prospect in a number of ways. For the international development community, Myanmar is clearly in need of considerable technical and financial assistance, and the country will almost certainly be the recipient of significant aid inflows in the years ahead. And most importantly, for the Myanmar people themselves, the end of international isolation and improved prospects for internal peace provide an opportunity for the economy, and particularly their own incomes, to get a much-needed boost.

But delivering on all those expectations is not going to be an easy task, notably within the context of the fast-approaching 2015 elections’ time horizon, but also beyond that date. A number of hurdles, including the institutional and human capacity constraints that currently afflict Myanmar, necessitate that a development “road map” is designed and adopted that can deliver inclusive and sustainable growth, and which is feasible in its scope. Experience from other transitional countries shows that implementing and adhering to such a “road map” is rarely an easy task, and that delays and disappointments are virtually inevitable. There will always be different, yet legitimate, views on what the policy priorities are, as well as the optimal pace and depth of change. In addition, entrenched and powerful lobbies can have interests that are not aligned with economic reform, and seek to thwart some key components, particularly when it comes to business liberalization efforts and the opening up of the market to free and fair competition. Thus, Myanmar's future long-term economic growth prospects are potentially good, but are certainly not “a given”, and thus expectations have to be tempered with some degree of healthy realism about the numerous challenges that lie ahead.