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Myanmar: The Path to Growth
Sean Crowley: Hello and a very warm welcome to everyone who has joined us for today's live chat with ADB Assistant Chief Economist Cyn-Young Park. I am Sean Crowley, Communications Specialist, ADB Department of External Relations.
Cyn-Young Park: Hello, good to interact online.
Sean Crowley: Cyn-Young authored the recent ADB publication “Myanmar in Transition – Opportunities & Challenges” and she's here to talk about the report's findings as well as answer your questions
Sean Crowley: Wannaphong Durongkaveroj, from Chiang Mai University asks:
Can you suggest the policy for Myanmar to develop its living standards rather than merely economic growth?
Cyn-Young Park: Economic growth is often very instrumental for improving living standard for an economy. What is important in addition would be policies that would ensure broad participation of people in economic activities and ensure the benefits of that growth to be shared widely.
Sean Crowley: Anshuman Lath would like to know what is the current status of village electrification in Myanmar?
Cyn-Young Park: Access to electricity varies significantly across different cities and subregions. For the overall economy, about one in four has access to electricity, but in rural area, access is very low, while in urban area, it would be more than 80%.
Sean Crowley: Sai Aung Mane in Singapore joins us with this question:
If I want to take advantage of the strategic location and invest in Myanmar border areas (with China, Thailand and India) of the country, what are the opportunities and challenges?
Cyn-Young Park: No doubt that Myanmar's strategic location presents great opportunities for unlocking the country's economic potential. However, the current status of limited transport infrastructure poses a significant barrier for Myanmar to take advantage of such location.
John Whitehead: You highlight weak macroeconomic management and an immobile fiscal climate as two constraints in your report. What can the current administration do to improve the environment for financial institutions, including development banks, to increase engagement?
Cyn-Young Park: Myanmar's government has introduced a series of important reforms on macroeconomic management including exchange rate regimes, monetary policy, and fiscal framework. It would be important for the government to continue and accelerate these reforms to provide a stable macroeconomic backdrop for business activities and more investment friendly environment.
Cheryl Arcibal: How can ASEAN help Myanmar in its bid to develop? And do you see it succeeding in attracting foreign investments despite misgivings about its human rights record?
Cyn-Young Park: Myanmar's affiliation with ASEAN jointly with its strategic location in Asia offers great economic opportunities. ASEAN has a roadmap for ASEAN Economic Community by 2015, which will provide a useful platform for Myanmar in its bid to become integrated with the region and the world economy.
Beni Suryadi: How can Myanmar tap its lag in the region to "participate" in the ASEAN Economic Community by 2015?
Cyn-Young Park: AEC has a detailed roadmap to create a common market for the region, and scorecard to monitor the progress of its member countries. Myanmar needs to accelerate its reforms and liberalization process to keep abreast of the ASEAN members' efforts.
John Whitehead: What is the current status of Myanmar's property rights regime? To what extent do you think the current system can be improved to improve land use productivity, particularly in the agricultural sector?
Cyn-Young Park: Myanmar needs to establish clearer legal and regulatory frameworks for land use issues. There has been some progress as a part of the government effort to attract foreign investment, but plenty of room for improvement.
Winny: Hello, I am from Myanmar and I would like to know what would you suggest are the main steps to take in terms of growth in the economy?
Cyn-Young Park: The basics first. The country needs to establish legal, regulatory, and institutional frameworks to guide economic policies, build infrastructure, especially in energy and connectivity, and invest in its people by strengthening education and health services.
Guest: Should the Myanmar government form strong partnerships with the private sector in builidng up infrastructure, investments or other services need for the growth of the economy?
Cyn-Young Park: It would be desirable. After all, the private sector should be the main driver of growth to make that growth sustainable. Initially, however, the government needs to provide the growth fundamentals in terms of providing a business friendly environment.
Chee-Seng Liew: You mention in your report that Myanmar has a high public debt level estimated at 47.6% of GDP in 2010. As tax-to-GDP ratio is low, it appears that Myanmar may have to incur foreign official debt or assistance in order to fund public development in education and healthcare. Do you agree or are there other alternatives?
Cyn-Young Park: Myanmar has a sizeable public debt and high investment needs, which seems to require foreign investment and aid. However, Myanmar has room to increase tax collection and can take advantage of rich natural resources to increase government revenue as well.
Sean Crowley: Steven Ayres, Development Policy intern at UNESCAP in Bangkok:
Are the reforms of Myanmar's macroeconomic management system enough to cope with the expected increases in capital flows?
Cyn-Young Park: It is true that many reforms have been introduced to strengthen its macroeconomic management. However, further efforts would be necessary to strengthen its fiscal management, including how to manage the expected increases of resource earnings. Another critical element is human capital development and capacity building for the government to properly implement these reforms.
Sean Crowley: And a follow up from Steven in Bangkok:
Do you think Myanmar could benefit from encouraging structural transformation through targeted investment towards explicitly stated industries and sectors in the new FDI legislation?
Cyn-Young Park: Yes, Myanmar needs to make important structural transformation to attract foreign investment. FDI in some sectors and industries would be helpful to improve technology and promote competition, hence facilitate the necessary structural transformation as well.
maricel solatre: Climate change threatens food and water security and may further increase rural poverty. What are the government of Myanmar's adaptive, mitigation, and anticipatory measures to address the risks of climate change?
Cyn-Young Park: Myanmar is a part of ASEAN and some regional groups on forest and environment protection. Myanmar has vast land, water, agricultural resources, and would be able to play an important role in the region's food and water security.
Beni Suryadi: How do you see the current energy prices (gasoline price, electricity tariff, etc) in Myanmar will affect its economic growth?
Cyn-Young Park: Myanmar is aresource rich countries, exporting natural gas and has potential to generate and export energy through hydropower development. For sustainable growth, Myanmar needs to ensure environment sustainability of its potentially resources driven economy and make sure proper management of resource earnings to avoid Dutch disease.
Sean Crowley: Janice Reed in London wants to ask Cyn-Young:
Surely it is now appropriate for there to be a comprehensive peace deal between Myanmar's ethnic groups ahead of any serious development assistance for the country? Can development take place while the country remains mired in conflict?
Cyn-Young Park: Ethnic tensions are important challenges to Myanmar's economic growth, threatening to disrupt social stability. However, strong growth and development can help mitigate these ethnic tensions if the authorities ensure that the benefits of growth reach the broad public, including minority groups.
Steven Ayres: How can Myanmar ensure that growth is inclusive (particularly given its ethnic diversity) and that the exploitation of natural resources doesn't result in rising inequality as has occurred in North and Central Asia?
Cyn-Young Park: Some Asian countries have successfully managed to achieve inclusive growth in an environment of ethnic diversity. Social agreement on how to share the resource earnings would be helpful. Also the government needs to take more proactive decisions in channeling resource revenues to build social infrastructure and invest in human capital to promote inclusive growth.
Mitch: How confident is ADB of Myanmar's prospects given the host of reforms the country needs to undertake to ensure sustainable, inclusive economic growth? Do you feel the government has enough political will to see through these reforms?
Cyn-Young Park: ADB laid out its baseline scenario for Myanmar's strong growth to more than triple its per capita GDP by 2030, if the government stays true to the reforms. The government has demonstrated political will to commit to the reforms and we hope that it does not deviate from its current path.
Teo Do: With "weak marcro-enonomic management" issues, how can the Myanmar government manage FDI effectively?
Cyn-Young Park: Myanmar has been instituting basic systems for proper macroeconomic management, for example, unifying exchange rates, providing some monetary policy independence, and establishing some legal framework for foreign investment. More needs to be done, particularly in terms of fiscal management and capacity building for the government and related institutions.
Sean Crowley: Joel Swithin in Marina Del Rey, California would like to know:
How will ADB work with other development banks and commercial banks to try and help provide the huge infrastructure the country needs? What's the strategy over the next, say, decade?
Cyn-Young Park: Given the resource constraint, prioritization would be key to deciding which investment would be the first. ADB is assessing the country's investment needs in collaboration with other donors and development banks to be able to provide more effective development assistance.
Tim Mclaughlin: Do you see electronic payment systems, like those being introduced by Visa and Mastercard, as ways to push economic growth in Myanmar?
Cyn-Young Park: Access to finance is one of the major development challenges facing Myanmar. Innovative approaches including e-banking and mobile technology should be considered positively to extend the reach of the financial services to geographically and socially remote areas and people.
Sean Crowley: Mrigank Ojha in Singapore asks:
Does Myanmar have the required human capital - in terms of trained technical and managerial talent - to support its transition? Or would it be dependent on overseas talent for the near and mid-term?
Cyn-Young Park: Human capital development is a key development agenda for Myanmar. The government spending in this area, especially in education and health needs to be increased further. As Myanmar opens up, we expect a return of overseas Myanmar people to the country which may provide some human resources, but in the end, further increases in human capital development are a must to provide the necessary human capital for its development.
Alistair D. B. Cook: What role is there for the Burmese diaspora in its political transition and economic development? What policies can be implemented to encourage their role in Myanmar?
Cyn-Young Park: Myanmar has a good economic potential, which will attract its own people back as long as the government demonstrates a strong commitment to reform and openness.
Mitch: May I know what is the status now of Myanmar in ADB? Is it now back to being a fully fledged member of the institution or does the question over its arrears remains an issue?
Cyn-Young Park: Myanmar has always been a member of ADB. However, ADB cannot initiate its lending program unless its arrears are fully cleared.
Irene: When do you think Myanmar will be ready to apply for ADB loans? Are there projects already being developed in the pipeline?
Cyn-Young Park: ADB can resume its lending programs when we see satisfactory progress in the country's engagement with the international community and a resolution of the arrears issue.
Guest: When I talk to Burmese migrant workers in Thailand, they said they do not plan to go back soon because they are uncertain about economic development in their country and they think that wages will not be as high as in Thailand. So what should the Myanmar government do to attract those living abroad to return?
Cyn-Young Park: Further reforms and the government efforts to promote business and investment friendly environment would help facilitate fast economic growth, which will help attract its people back to the country.
Sampa Kundu: Picking up on a point made a few minutes ago, what should Myanmar do to more fully engage with the international community?
Cyn-Young Park: Unwavering commitment to both political and economic reforms.
Tom: Regarding infrastructure and connectivity: do you foresee the expansion of internet services playing a major role in the development of Myanmar, both economically and politically?
Cyn-Young Park: Yes. Connectivity is an important issue for Myanmar's development. Phone, internet, transport services are very limited in Myanmar even compared with the regional peers of the similar income levels.
Sampa Kundu: How can Myanmar benefited from its memberships in regional and sub-regional initiatives like ASEAN, MGC, GMS and BIMSTEC? and how can these organizations have a positive impact on Myanmar's transition?
Cyn-Young Park: Regional and subregional groups promote trade, investment, and economic integration to allow greater economies of scale and enhance competition and efficiency through a common market. Myanmar can benefit from increased markets and economic integration through its affiliations with these regional and subregional groups.
Sampa Kundu: What's your view on India-Myanmar-Thailand trilateral highways?
Cyn-Young Park: There are already some regional agreements on such regional connectivity. Asian highways and some regional road network would be beneficial not only for Myanmar but also the region as a whole.
Sean Crowley: Maricel Solatre from Manila writes:
What should be the role of the agricultural sector in the overall development of Myanmar's economy?
Cyn-Young Park: Agriculture employs more than 60% of Myanmar people, account for about 36% of GDP, and 25-30% of total exports. Given Myanmar's rich agricultural resources, agriculture presents as low hanging fruit for its economic development. Investment in rural infrastructure, irrigation and access to markets, would be key to increasing its productivity.
Sean Crowley: Sangwook Lee, writes:
If the government has proper development plans, which sector should be the top priority? Infrastructure, education, power generations, etc.
Cyn-Young Park: The government is developing medium-term development plans, which focus on inclusive, balanced, and environmentally sustainable growth. Yes, priorities should include building social infrastructure, investing in human capital, and promoting inclusive growth by strengthening the rural and agriculture development.
Sampa Kundu: Myanmar borders with two Asian Giants- China and India- how can this location be beneficial for Myanmar's overall development?
Cyn-Young Park: The rise of Asia, especially the emerging giants in the region, offers great potential for a newcomer like Myanmar. It borders with these large, fast developing countries/regions (China, India, and ASEAN), which provides easy access to their markets and can be a hub for the region once Myanmar properly develops its connectivity infrastructure.
Sean Crowley: Thanks very much to all of you who have contributed and participated today. We've run out of time so we're closing and saying goodbye. Until the next chat!
Cyn-Young Park:Thank you for your participation. It was great fun. Tune in for the next bits on Myanmar.