Human Capital, Infrastructure Key to Myanmar Growth, Says ADB

News Release | 11 September 2014

YANGON, MYANMAR – Myanmar must upgrade its infrastructure and improve the quality of human capital if it is to achieve sustainable economic growth and reap the full benefits from its ambitious reform agenda, says a new Asian Development Bank (ADB) report on the country’s growth prospects.

The report, Myanmar: Unlocking the Potential, says full realization of the economy’s potential could push annual average gross domestic product (GDP) growth as high as 9.5% by 2030, up from its pre-reform baseline of 4.8%. Growth of this magnitude could push GDP per capita to nearly $5,000 by 2030, up from about $900 today.

“Myanmar is at a pivotal moment in its economic, social, and political transition,” said ADB Assistant Chief Economist Cyn-Young Park in launching the report. “Modernizing an economy is a huge and complex task. Prioritization and sequencing of policy actions and investments will be critical to the success of the reform agenda and the long-term development of the country.”

Planning and managing Myanmar’s complex modernization and reform program requires a high degree of coordination, skill, knowledge, and commitment. The importance of quickly increasing government capacity in every aspect of development cannot be overemphasized, the report says.

This upgrading should be done in parallel with an increase in public spending on education, particularly for primary and secondary schools. To improve access and quality of education across the country the government should consider the use of cash transfers and scholarships to higher education, build more secondary schools or expand transport systems in rural areas, and upgrade the school curriculum.

Improvements in transport, power, and information technology infrastructure are needed to mobilize domestic and foreign investment and lay a foundation for long-term growth.

Immediate priorities in transport include establishing coordination between all relevant ministries and neighboring countries to ensure efficient planning of road, rail, inland waterway, and air transport projects. Investments should be prioritized to generate the highest economic returns and improve connectivity between urban and rural areas, and with border areas.

Power investments should be guided by a least-cost power expansion plan that increases power supply from available resources, with a focus on hydropower and natural gas. Existing coal and gas-fired generation plants should be upgraded to provide reliable energy supply. The use of more efficient generation technologies such as combined cycle gas power plants should be encouraged.

Early efforts to integrate information and communication technology (ICT) into the economy should focus on developing policies to support spectrum management for wireless and broadband services, licensing arrangements, and deployment of the most efficient technologies available. The report recommends the establishment of an independent regulator for ICT industries.

The report, which was prepared through close collaboration between ADB and the Union Government of Myanmar, presents detailed policy recommendations in eight strategic areas that will shape the country’s development: (1) accelerating governance and public sector reform; (2) ensuring macroeconomic and financial stability; (3) creating a business-enabling environment; (4) leveraging rich natural endowments; (5) fostering internationally competitive sectors—manufacturing and services; (6) enhancing regional connectivity and integration; (7) promoting human development and poverty reduction; and (8) pursuing environmentally sustainable growth.

“We welcome this report and its findings. It clarifies and illuminates many of the important issues that need to be addressed both now and in coming years,” Dr. Kan Zaw, Minister of National Planning and Economic Development, wrote in a foreword to the report. “These include weaknesses in infrastructure, human development, market and government institutions, regional integration, and environmental protection.”