Myanmar Government Delivers Broad Economic Outline

Threadbare on details and containing mainly sweeping principles, none of them new, the much-anticipated launch of Myanmar new economic plans by the National League for Democracy (NLD) has disappointed academics, analysts and businessmen alike.

“We know the importance of investment, energy and infrastructure, so we will issue detailed policy papers in due course. Today is just a general economic policy,” the State Councilor, Aung San Suu Kyi told an audience of senior government officials, Myanmar businessmen, international organizations and diplomats when she unveiled the policy on July 29.

The policy, as outlined, stresses the government’s commitment to the principles of a “market economy” across all sectors and promoting a level playing field between businesses by ending monopolies. The government also promises to cut red tape and make doing business easier, shifting more government functions online and taking significant efforts to create jobs.

The policy also outlines broad plans to reform the financial sector and state-owned enterprises, increase access to credit, encourage foreign investment, and develop the country’s infrastructure.

The plan has been months in the making. Initially expected more than two months ago, it is not much different from the previous government’s five-year plan. “The difference is we’ll implement it, unlike the previous government,” one of the party’s economic czars, Hanthar Myint told Asia Sentinel.

But even this commitment is overoptimistic given of the country’s crucial lack of capacity. It is one of the reasons for the delayed announcement, according to Sean Turnell of Macquarie University, an expert on Myanmar and a key economic advisor to the NLD government. An important plank is aimed at attracting expatriates back to help fill the gaps in the professions, while resources will be devoted to building a new generation of educated and skilled workers.

The policy document includes a commitment to develop a skilled workforce to fill the jobs created in the manufacturing and services sectors. To support this goal, the government plans improvement in health care and education, especially vocational training. This is key for the future economic development of the country, according to Zaw Naing, CEO of Mandalay Technologies and founder of the Myanmar Business Executives Association.

Most local businessmen agree that economic development depends on investing immediately and creatively in education, training and developing the country’s human resources.

“We need to expand the pool of academics, doctors, professionals, architects, technologists – with both local and international knowledge,” said Zaw Naing – who is also running MBA courses and classes in business leadership in his spare time. It is essential to establish an enabling environment, encourage and motivate them, by giving them the space to help the country with their knowledge and experience, he said.

But Myanmar also critically needs vocational training centers to produce engineers and craftsmen – electricians, carpenters and plumbers – and hotel management schools, according to Zaw Naing. While we cannot compare with Singapore and its service oriented training, we can provide technically trained people to support the growth of the manufacturing sector, he said. More software development is both essential and feasible in Myanmar, he said – an industry he is intimately involved in.

Ironically when the Singapore prime minister, Lee Hsien Loong visited Naypyidaw recently he offered Singapore’s help in developing vocational education – as this is regarded as one of the island state’s strengths. But Aung San Suu Kyi reportedly rebuffed the offer, according to diplomatic sources, preferring Singapore’s help to set up “hawker areas” instead.

But the government is committed to vocational education, according to sources close to the education minister. Various options are being explored. And a white paper – with specific and concrete proposals for vocational training – is being drawn up, along with plans for the overhaul of the education sector in general, according to ministry sources. This is nearing completion and expected to be revealed soon.

At the same time the economic ministries are working hard to formulate concrete policies and specific detailed plans for all the economic areas outlined in the government’s overall strategy. The State Councilor – who effectively chairs the newly created economic coordinating committee, headed by the Planning and Finance Minister Kyaw Win – told the first meeting in June that the top priority is creating jobs, according to Hanthar Myint, a leading NLD economic advisor.

“We have to create jobs to soak up the unemployed workers, especially those laid off recently from the suspended construction projects,” he explained.

This is all the more important, according to government insiders, given plans to encourage thousands of Myanmar migrant workers in Thailand to return home. Another part of the job creation scheme is to push on with the Special Economic Zones – established under the previous government. These zones will be a focus for creating new and vibrant manufacturing centers. Attracting foreign investment is crucial, said Hanthar Myint.

“We want to attract foreign direct investment – like for the garment sector.” But there are problems, he conceded, for example labor unrest and workers strikes, which seem to be on the increase may discourage some foreign investors, he admitted.

Infrastructure projects – roads, bridges and power generation -- will also create employment. “But these projects need to be seriously reviewed before being implemented,” he said. “For example dams shouldn’t be the priority: they make the cost of water too high; more efficient use of water needs to be explored.”

Much of the government’s economic rejuvenation plans center on agriculture. “Improving agricultural productivity is a priority,” Myo Myint, another senior member of the NLD’s economic team and a former government official in the Finance Ministry under Ne Win, told Asia Sentinel. “This would involve granting the country’s farmers their land rights, creating greater and easier access to credit, and ensuring seeds, tractors and milling equipment are available, as well as enhancing market access.”

Food security needs to be guaranteed as soon as possible, according to the government’s economic policy. The agriculture sector still contributes 40 percent of the country’s gross domestic product, while employing 70 percent of the labor force. This has to be rectified as quickly as possible, says the NLD economic committee. “Seventy percent of the people in Myanmar are poor. Only if we create a living for them can we develop the country,” Minister Kyaw Win told the forum on Friday.

The government’s second priority is “to make state-run businesses more successful, to privatize some state-run businesses that can be changed, and to support small and medium enterprises (SMEs) that will improve the economy,” according to the written policy that was published on the internet immediately after it was presented by Aung San Suu Kyi to a select audience on Friday.

Many businessmen believe helping SMEs is the most effective way of boosting economic growth quickly, one which the NLD seems to accept in principle. Boosting manufacturing, especially providing credit for the SMEs, and finding alternative markets and improving access to them for the farmers are also an essential part of the government’s economic strategy,” said Hanthar Myint.

“Supporting SMEs is critical for Myanmar to quickly boost economic development, create jobs and increase incomes,” said Maung Lay, a businessman and vice chairman of the Union of Myanmar Chambers of Commerce and Industries (UMFCCI). “By necessity they need to be innovative, resilient, flexible and strong,” he said. The importance of SMEs in generating manufacturing and boosting economic growth can be seen in China, Thailand and Vietnam’s economic development in the past two-three decades, he added.

While most Myanmar businessmen have welcomed the government’s economic policy statement, many have reservations. “It covers a lot of different points, which raises the question of whether it can all be achieved or not,” said KK Hlaing. Others like Soe Tun, deputy chairman of the Myanmar Rice Federation are concerned at the lack of defined government priorities. “So we just have to wait and see what they are before we can see what we can focus on.”

Be patient, detailed sector and industry policy papers are in the pipeline, senior government officials say. Advisors to the government understand the general impatience, but believe businessmen are too quick to complain.

“At worst, nothing is actually worse now, and at best much has been done, is ready to go, and will be unveiled in detail in the near future,” Sean Turnell told Asia Sentinel on the eve of the government’s policy announcement. “Above all the entire system is much more stable and predictable. Fifty years of arbitrary and irrational decision-making has been replaced by, whatever the complaints about pace of change, something that is essentially just 'normal' political economy.”