Burma Not Ready for Asean Economic Community, Businesspeople Say

By Zarni Mann 13 August 2013

RANGOON — Although Burma is moving forward with economic reforms and opening up to the international community, businesspeople say the country is not yet ready to join a planned integrated network of Southeast Asian economies in 2015.

A lack of infrastructure, human resources and technology, along with an unfinished legal framework for businesses, are a concern for Burma as the Association of Southeast Asian Nations (Asean) attempts to form a single market within the next two years.

Burma, which began transitioning from half a century of military dictatorship in 2011, has a largely agricultural economy that depends on rice and bean exports. But rice trader Pyae Sone Oo told The Irrawaddy that he worried the country’s agricultural sector would struggle to meet requirements for the Asean Economic Community (AEC).

“We’ve been left far behind,” said the member of the Myanmar Rice Federation. “Even if we want to catch up, we can only do it gradually. There are some areas—like the rice industry, overall—which we can say are quite ready. But there are still gaps.”

According to data compiled by Burma’s Ministry of Agriculture and Irrigation from 2011, 25 percent of the country’s economic output comes from the farming sector.

The country’s rice exports almost tripled over the past three years and are expected to reach 1.4 million tons in the current fiscal year, according to the Myanmar Rice Federation. However, rice traders say they lack solid financial support and continue to encounter logistical problems, largely due to poor infrastructure.

Pyae Sone Oo said ports and trading points were not yet sufficient to upgrade the export sector. The quality of Burma’s rice also makes it difficult to compete with neighboring countries such as Thailand and Vietnam, he said.

“If we could delay Myanmar’s full participation in the AEC for about two years, I think we will be ready,” he said. “But in the meantime, other countries will pass us and I’m afraid we will remain delayed.

“On the other hand, we need to educate and support farmers to get quality grains so we can compete with other countries, and capacity building for farmers is needed as well.”

Dr. Maung Maung Lay, vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), agreed that Burma was not yet prepared for the Asean single market but said businesspeople were ready to overcome existing hurdles.

“We Burmese people are smart enough and resilient enough to face the challenges of joining the 2015 Asean Economic Community,” he told The Irrawaddy.

Nearly every sector of Burma’s economy lags behind those of neighboring countries, after decades of isolation, internal conflicts and economic hardship under military rule.

Since reformist President Thein Sein took power in 2011, the United States and the European Union have eased restrictions to allow companies to do more business in the Southeast Asian country.

“The sleeping beauty has awakened, and there are many suitors,” said Maung Maung Lay. “The challenges are quite enormous. Most of the smallest enterprises are technically and financially weak—there’s no capital market yet.”

Apart from infrastructure concerns, a lack of human resources also hampers growth. The country is already suffering from brain drain to neighboring countries with higher wages. Once the AEC comes into full effect, Maung Maung Lay said, even more qualified workers could go abroad for employment in more lucrative markets.

Still, Khine Khine Nwe, secretary general of the Myanmar Garment Manufacturers Association, said her industry was ready to take part in the regional economic community in 2015.

“To look at the bright side, we are quite ready to take orders and we have skilled laborers,” she said, adding that she runs a garment factor in the country’s commercial capital, Rangoon.

She said the garment industry had struggled to survive due to international economic sanctions imposed against Burma under the former region, but that she was optimistic now that the country has opened its door to foreign investors.

Her factory, which once received garment orders from the United States, Canada and Europe, was forced to shift its focus to Asian markets—especially in Japan and Korea—due to the sanctions. The garment industry was particularly hard hit by American sanctions, she said.

The United States is gradually lifting sanctions to encourage political and economic reforms.

“Whether or not we are ready [for the AEC] depends on the mindset of people,” Khin Khine Nwe said. “From experience, those of us in the garment industry know we can overcome the hardest times. I believe we are ready to face any challenge, good or bad.”