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Why investing in Myanmar matters
It was a sight not often seen these days in Washington. In an emotional ceremony in the Rotunda of the U.S. Capitol last month, Myanmar democracy leader Aung San Suu Kyi brought together members of both chambers and of both political parties for a momentous and rare gathering to cheer a hero and most remarkably, to honor the aspirations of people on the other side of the world.
"This is one of the most moving days of my life, to be here in a house undivided, a house joined together to welcome a stranger from a distant land,” Suu Kyi said. Yet, Suu Kyi and Myanmar, by all accounts, are no strangers to the United States or international development financial institutions like the Asian Development Bank.
Our communities have a long history with Myanmar – a history that underpins the exuberance with which the country is welcomed back to the fold. Laying at the heart of Asia, nestled between India, the People’s Republic of China and Southeast Asia, its development is strategically important – both politically and economically – not just for the region, but also for the world.
Despite being isolated economically and diplomatically for the last few decades, Myanmar has come a long way in the last year and if reforms continue, we believe that the country is poised to join the ranks of the region’s fast-growing economies.
This is hardly surprising. Given its young workforce and abundance of natural resources, arable land, forests, minerals, natural gas, marine resources and freshwater, Myanmar is uniquely positioned to tap into Asia’s growing economic strength and prosperity.
It is also positioned to tap into the global economy especially with the U.S.’s recent announcement that it will begin the process of easing restrictions on imports from Myanmar which will undoubtedly strengthen the country’s commerce and economic vitality.
Also notable is the Congress’ passage of new legislation that allows the U.S. to support the Asian Development Bank and World Bank in our plans to invest in Myanmar’s future development. HR.6431, which was passed by the House and Senate and which President Obama signed over the weekend, will pave the way for a new Myanmar and one that can propel the country to be a dominant regional actor in Southeast Asia.
For the past several months, ADB has been undertaking economic and poverty assessments in the country. We have looked at the transport, education, energy and agricultural sectors as well as studied poverty, environment and gender statistics. This analysis leaves us cautiously optimistic – if the government remains committed to across-the-board reforms, we believe its economy could expand at 7% to 8% a year, meaning the country could move to middle income status and triple per capita income as early as 2030.
But we also realize that there is much work to be done.
Myanmar has an enormous amount of catching up to do on almost every imaginable front. When I visited the country in July and August, the vibrancy and palpable sense of change was striking, but I also found a country whose isolation, to borrow the words of Rudyard Kipling, has made it “quite unlike any land you know about.”
Today, one in four primary school children in Myanmar never move on to middle school, limiting their prospects as the country's next generation of workers. Investment in education, healthcare and other social services is fundamental for Myanmar's future. While recent increases in social spending are encouraging, more remains to be done.Opportunities also need to be created for people living in rural areas, where 84% of the country's poor reside amid spotty access to electricity, water and transportation. For Myanmar, enhancing inclusiveness of growth is crucial to maintaining strong growth momentum.
This is no small task, and Myanmar's growth will not come without risks. It is important that the country avoid allowing resource revenues to heighten inflation and affect international competitiveness through impact on the exchange rate - a vicious cycle that can hinder the country's development. Sound economic management and diversification, greater transparency, and stronger institutions will all be needed to ensure Myanmar avoids the "resource curse."
The lifting of sanctions is one of many steps, but it is one that will lead to higher levels of trade and investment. Over the past six years, total foreign direct investment inflows in Myanmar amounted to just under $3.8 billion, concentrated largely in the oil and gas sector, alongside mining and power. These funds are crucial to the future of the country but it is equally critical that the environmental sustainability of such investment be kept firmly in frame. The government’s stated intention of joining the Extractive Industries Transparency Initiative is certainly a positive sign.
Myanmar's government has also been designing policies and regulations to draw foreign investment and promote sustainable, inclusive growth. Knowing that the international community has the freedom to explore opportunities in the country can help accelerate this process and jumpstart much-needed investments in infrastructure, including telecommunications and energy. This is crucial if Myanmar is to diversify its economy from one concentrated on resource extraction and agriculture.
Despite the many challenges and a difficult road ahead, the country is optimistic of its future. In my conversations with both President Thien Sein and Ms. Suu Kyi, there was confidence that the country could mobilize both the resources and political will to improve the quality of life for the all the people of Myanmar.
In her acceptance speech on that bright September afternoon in the U.S. Capitol, Ms. Suu Kyi epitomized that optimism. She said, "As I go forward with my countrymen and women along the difficult path of building a truly democratic society where all our people can live together in peace -- remembering always that Burma is a nation of many ethnic nationalities and peoples -- we believe that we can go forward in unity and in peace, and give our friends the satisfaction of helping us get to ... a place where dreams are realized."
The international community stands ready to help Myanmar make those dreams a reality.