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Opening Remarks at the Myanmar Country Seminar: "Progress of Myanmar's Socio-Economic Reform"
Opening Remarks by ADB Vice-President Stephen P. Groff on 4 May 2013 at the Myanmar Country Seminar: 'Progress of Myanmar's Socio-Economic Reform"
Honorable Governors, Ministers, Panelists, colleagues, ladies and gentlemen.
I would like to thank Ms. Yin Yin Mya for a most interesting presentation, and for the opportunity to convey my views.
The presentation made a persuasive case for Myanmar’s immense potential going forward, with the country’s rich and diverse topography, abundant natural resources, young population, and strategic location, among other positive factors.
It also provided a glimpse of the challenges facing the country including ethnic conflicts, natural disasters, and a long period of isolation which deprived it of productivity-enhancing technology, new ideas and the positive pressures of global competition.
The Government of the Republic of the Union Myanmar has made a promising start since 2011 to rejuvenate economic growth, increase opportunities for marginalized groups, and reduce poverty. The Government’s reform agenda is large, commensurate with the degree of “catch-up” necessary to bring policies to international practice, following a long period of isolation.
Many of these reforms are systemic, fundamental and will require a sustained effort. It will, however, be important to show results along the path of reform to ensure that reality and expectations (of the public) do not diverge too much. This, in turn, would increase the chance that reform momentum will be sustained.
Let me start with the example of development of the private sector, which will ultimately be the main engine of growth. This will require a stable macroeconomic environment, and efficient and effective delivery of infrastructure and other services.
The presentation detailed the reforms necessary to attain macroeconomic stability. It outlined efforts toward prudent monetary and exchange rate policies; enhanced fiscal transparency and accountability; state economic enterprise reform; and better tax policies and administration – all of which are critical ingredients of macroeconomic stability.
The underdeveloped financial system, where credit to the private sector amounts to only about 8% of GDP, is another area for urgent reform. Allowing greater participation by private banks and easing both controls on interest rates and restrictions on lending (with prudent regulation) will boost lending and increase access to credit for the private sector.
Predictability and enforcement of key laws, including on land, labor, and foreign investment, and measures to simplify business registration, will all support the business environment.
Beyond the private sector and the financial sector, challenges abound. For example, infrastructure development is critical but typically takes years to achieve. This said, some relatively quick improvements could be made in infrastructure by reducing power transmission and distribution losses (estimated at 28%), by upgrading the power systems, through developing a sound regulatory framework for independent power producers and public-private partnerships, and also by rehabilitating roads.
In agriculture, which accounts for about 40% of GDP and the majority of employment, near-term measures to improve access to finance and quality inputs, expansion of the irrigation network, and agricultural extension services would contribute to inclusiveness of overall growth as well as to food security.
As we know, capacity within the public sector is limited especially when set against the ambitious but necessary reform agenda. It is encouraging that many development partners are enthusiastically supporting the Government in these reform efforts. There will be a considerable amount of learning during this process, both on the part of Government agencies and their partners. This learning process will be enhanced as development projects and programs are implemented in line with international practice, while broader legal and regulatory frameworks are being reformed.
Considering the currently weak institutional and organizational capacity, coordination among development partners is especially important. The Government has made impressive progress with the successful conclusion of the first development cooperation forum and the adoption of the Nay Pyi Taw Accord in January. It has been leading the process of development cooperation with the establishment of an overall coordination mechanism and of working groups for some key sectors, all under Government leadership.
ADB, in close cooperation with the Government counterparts and other partners, is actively supporting this process.
Thank you and I look forward to hearing from our panelists.