BANGKOK—With planeloads of foreign investors rushing in daily, Burma’s economy is poised for substantial growth that could surge beyond expectations if sanctions are lifted and the government steps up reforms, the Asian Development Bank (ADB) said on Wednesday.
But the challenges will be “tremendous” and much needs to be done to overhaul the economy of a nation that sank to become one of the poorest in Asia after suffering almost half-a-century of military rule, said Craig Steffensen, the bank’s director for Burma and Thailand.
“We’re still at the beginning of the beginning,” Steffensen told reporters in Bangkok. “We’re trying to unwind a knotted ball of yarn if you will, and it’s going to take a long time to untangle.”
But planes and hotels in the once-pariah nation “are full of business people looking for opportunities,” Steffensen said. “And I really think that Myanmar has the capability for private sector growth that we haven’t seen anywhere else for a long time.”
ADB figures indicate the economy has already been significantly bolstered by a 26 percent jump in tourist arrivals and a 15 percent rise in gas exports that alone are worth US $3 billion in annual revenue.
The bank said it forecasts GDP growth in the country, also known as Burma, will rise from 5.5 percent in 2011 to 6 percent in 2012, and at least 6.3 percent the following year.
Steffensen said those estimates may prove conservative and could rise “substantially” if sanctions are eased and the government continues on its path of reform.
“I wouldn’t be a bit surprised to see these figures higher next year and moving forward,” he said.
Hordes of investors from Japan, South Korea, India, China and Thailand have already begun hurrying in to boost investment in a largely undeveloped nation that has long been considered one of the last frontiers in Asia, a rush Steffensen called “a veritable free for all.”
Longtime ally China has been one of Myanmar’s biggest international backers for years, pouring billions of dollars into the extraction of gems, timber, oil and gas.
US and European Union sanctions, however, are holding back Western entrepreneurs. And they are preventing the Asian Development Bank and other global financial institutions from providing crucial loans, grants and expertise that could help major projects like a planned deep sea port in the Myanmar coastal town of Dawei get off the ground.
Since Burma’s military junta ceded power a year ago, the nominally civilian government has surprised the world with a series of sweeping political reforms, including releasing prominent political prisoners, signing truce deals with rebel movements, and opening a dialogue with prisoner-turned-parliamentarian Aung San Suu Kyi, who will enter the nation’s national assembly as a lawmaker for the first time on April 23.
The European Union is expected to review its policy on Burma on April 23 and could ease sanctions. Washington’s complex sanctions regime, some of it in place since Myanmar’s opposition won 1990 elections that were annulled by the junta, may take more time to change.
US Secretary of State Hillary Rodham Clinton said last week Washington would allow select Burma officials to visit and ease restrictions on the export of financial services. But she also said sanctions against people and institutions in Burma that try to thwart democratic progress would remain.
Steffensen praised Burma for floating its exchange rate earlier this month, a move he said was hugely important for reforming the economy.
“Just getting that through the system was unprecedented. We haven’t seen this kind of thing for decades,” Steffensen said. But “there’s a long list of things that need to be done, and the exchange rate is the first of many reforms that need to be undertaken.”
He said the government was also pushing new laws to stimulate growth, including offering five-year tax breaks to investors and another giving farmers the right to sell and mortgage their land.
But the administration of reformist President Thein Sein must also invest in education, health and infrastructure and revamp its tax system to bolster revenue.
Burma is believed to be home to around 60 million people, but there has been no census in more than a quarter century.
The ADB says per capita income is about $715 per person with about 26 percent living below the poverty line on less than $1.25 per day. Only about 25 percent of people have electricity, and even those supplies are unreliable.