Adviser: Actually, the Government Has Made Significant Strides on the Economy
By Sandy Barron 7 April 2017
Government economic adviser Sean Turnell has hit back against a barrage of recent criticism over the performance of the National League for Democracy (NLD)-led administration during its first year of office.
The government’s achievements on the economy were “considerable” and “too often overlooked” the adviser said.
Daw Aung San Suu Kyi’s government has been bruised over the past week by a chorus of mainly negative judgments at home and abroad for its one-year performance, on everything from peace to human rights to the perceived slow pace of economic reform.
Turnell suggested that much of the negativity on the economy was misplaced.
The full extent of fiscal and other problems inherited by the current government was not widely understood, he said in a presentation to the Australian Chamber of Commerce (AustCham Myanmar) in Rangoon and in comments to The Irrawaddy.
There was also widespread underestimation of the “bad economic legacy” that had been bequeathed by the previous government, he said.
During its final year of office, the government under former President U Thein Sein had increased the budget deficit by more than three times the level of the year before, according to Turnell.
The former government had also overseen a “dramatic deterioration” in Burma’s trade deficit.
In addition, according to the adviser, the NLD-led administration had inherited a number of “very questionable loans, mostly from China,” taken on by the U Thein Sein government.
“The loans added significantly to Myanmar’s debt burdens, on projects of very questionable value,” Mr. Turnell said, without elaborating on the loan details.
The economist, who has conducted research on Burma over a period of decades, provided a list of what he identified as significant achievements of the NLD government on the economy.
For a start, the government had been fiscally responsible, he told The Irrawaddy.
“If we look around the world we observe a miasma of fiscal crises, sovereign defaults, currency demonetizations, drastic austerities, monetary gambles, and so on.”
“The NLD inherited a budget deficit that, as a percentage of GDP, increased threefold across the last year of the Thein Sein government. Since then, and in the face of a slowing global economy, all the global headwinds noted, as well as the pent up demand of 60 years of spending misallocations, the deficit has barely moved.”
This showed that the “fiscal extravagances” of Burma’s previous governments were not the practice of its newest one, Turnell said.
The government had facilitated the easing of international sanctions, and the dividends for this were only now starting to come in, according to Turnell.
Other achievements were that the administration had successfully initiated a bond tender as a critical foundation for fiscal reform, he said. This would be the basis for future budgetary increases in health, education, infrastructure and other useful social expenditures.
Mobile financial services were promoted and the opening up of payment systems to international credit-card providers was making life easier for businesses and consumers and giving a boost to the tourism sector, he said.
The liberalization of rules in the microfinance sector “would greatly expand access to capital to smallholder farmers and other rural enterprise in the years ahead,” Turnell said, adding that the upcoming foreign investment law would provide greater certainty to international investors and stimulate more investment.
Burma’s economy has been dominated for decades by the state and state-linked business interests. Mr. Turnell’s presentation suggested that the government had made headway in efforts to reduce the part played by legacy interest groups.
An ambitious program of privatization of state-owned enterprises had been initiated, he said. “Half of all state-owned factories are now public/private partnerships and we are currently inviting proposals for private partners for 17 more factories.”
Referring to the jade mining sector as “currently the source of expropriations, human rights abuses and despair,” the economist said that licenses had been suspended until the sector “can be the location of shared revenues that could prove transformational.”
Other achievements on the part of the government included its work on restructuring state banks and “turning them into the institutions the country needs to aggregate and allocate capital.”
The NLD-led government had supported entrepreneurs and small and medium enterprises as the engines for economic growth, Turnell said.
Loans had been provided by the state to more than 450 entrepreneurs. The administration was working with the Japanese government to provide additional loans to almost 200 other businesses.
A credit guarantee insurance system had been established to facilitate loans for entrepreneurs who could not provide collateral, he added.
The economist emphasized the importance of enhancing the potential of Burma’s long-neglected “human capital.”
Calling the country’s population and its people’s potential “the true and lasting capital for the 21st century,” he pointed to government achievements on health and education.
The NLD-led administration was improving health care through the introduction of the Myanmar National Health Plan, the rebuilding of Rangoon General Hospital, and through initiating anti-stunting programs through cash transfers to new mothers.
A “host of other initiatives” were being tested and trialed, he said.
The fully costed and initiated National Education Plan aimed to transform Burma’s education system from pre-school to the universities, Turnell added.
Finally, Mr. Turnell said the recently established donor coordination unit had been initiated to better align the priorities of international development partners to those of Burma’s elected government.
Taken together, the government’s actions so far “constitute a secure down-payment on the transformational measures that will follow in the years ahead,” the adviser maintained.
During a discussion period at the Chamber of Commerce event, audience members from the business community criticized existing restrictions on businesses and complained of challenges dealing with government bureaucracy.
Turnell said it was important for government entities to move on from a ‘command’ mindset and to see themselves instead as “facilitators” of growth.