Burma Business Boom Looms: ADB

Business in Burma is about to boom, claims the Asian Development Bank. (Photo: Irrawaddy)

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.

2 Responses to Burma Business Boom Looms: ADB

  1. Going too fast for other purposes than genuine progress of the citizens and environment of Myanmar could cook more serious and nation-breaking troubles than good. Right now what we are seeing is increasing amount of imports of those elements that are not basic life necessities even when substantial part of the country is lacking these basic needs.

    While there are huge differences between Myanmar and other developed countries we can not effort to copy a lot of those that are happening on the basic of ‘progressive desire’ and ‘trends-following desires’.

    We need education, education on health, physical and mental health, skills and technology to produce basic life supporting needs such as food and building construction and conservation of clean and healthy environment – and to make our society active, happy and learning culture.

    At this moment we certainly do not need lots of so-called personal care products such as cosmetics, lots of entertainment stuff, and those plastic and electronics that will fill up the garbage piles scattering around all over. We certainly do not need those culture-changing cultures right now too.

    Look in depth and width at those Asian countries which have been trying to open up for the so-called progress during the last immediate 20 or so years and which more or less carry the similar characteristics with Myanmar population (physical, mental, culture and histories variables etc.) you will get a lot of lessons. Do not let taboos, bias, and other filters block you from finding the truth. Do not limit your communication to only the select groups of peoples.

    Now is time to see the reality, and to refrain from focusing too much on personal gain. It is absolutely important to include seriously the health, education and environment of the nation in every single deal you are going to make.

  2. Sai, your comments are very suitable but note that human minds were designed to follow their desire and our society was not designed to last very long.

    Only a handful of most advanced countries own the technological platforms and on/off switches. They do have much much stronger cultures (well yes, based on fundamental human desire) and nationalist attitudes than yours. When your country sets to follow democracy or freedom (whatever it is called) think about how can you manage for the most benefits of the minds and physics of your citizens against something you have no control in the democratic sets of rules.

    We have walked the path, we have seen the problems, we are still in the problems, we are unable to find the solutions. We kind of reset our minds to look a different way to enjoy the life in the current state. That makes us feel good. We have no other way than be nice (or worship as some others say) to those most powerful because it is the order of the society. Just look at those in your country who supposedly fight for freedom, and ask who they depend on.

    Anyway I do have to add a couple of problems that you seemed to miss for which you still have a room to prepare to avert.

    Human movement in the order that could dangerously change the demography. If the developments, whatever they are and of course they fulfill & increase our desires, tend to happen in only some places then peoples will tend to leave the other areas to converge at those hot spots. Problems are diverse. One is losing farming population and having overcrowded and filthy cities where your cultures have lost to dominant occupying cultures.

    Ownership of the business. Your country investment law allows 100% foreign ownership that we do not have. We allow only 49%. We have logical reasons, and we know the consequences. Think of two peoples with almost same quality and contribution to the society. One live in a developed country, the other live in Burma. The one in developed country tend to have more income and save more – probably 20 times more. Their contribution and quality of work are about the same. The one in Burma would likely eat less (so he is small!) and consume the world’s resources less. It is clear the foreigner can buy 20 times more than the native in the native’s own country.
    You thought it is fair and have the law done. In the next 20 or so years who will own what portion of your country’s physical and mental assets? Another consequence is security in every context. In this world every country protects theirs – I don’t understand what your country is doing?

    Wondered from Thailand

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