Dateline Irrawaddy: ‘The Economic Policy Does Not Provide New Insights’

By The Irrawaddy 6 August 2016

Thalun Zaung Htet: Welcome to Dateline Irrawaddy! This week, we’ll discuss the national economic policy released by the National League for Democracy [NLD] government. Vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry [UMFCCI] Dr. Maung Maung Lay and The Irrawaddy’s Burmese business reporter Ko Thit Nay Moe will join me for the discussion. I’m Irrawaddy Burmese editor Thalun Zaung Htet.

The NLD government released its economic policy following the completion of its 100-day plan. The policy has 12 points and four objectives. There have been criticisms that the policy is too vague and not sufficient to revive the country’s economy. Some argue that the policy is good but too difficult to implement. U Maung Maung Lay, you are the vice chairman of the UMFCCI and also a businessman and you were deeply involved in business affairs during the former military regime. What is your view of the NLD’s economic policy?

Maung Maung Lay: The original idea of the 100-day plan comes from countries like the UK and the United States. They assume that momentum, popularity and authority [to introduce changes] of a new administration are highest in the first 100 days in office. Usually, those countries adopt their national economic policy during the first 100 days. There is an English saying: “Better late than never.” It is better to be late than not adopt an economic policy at all. It has vision and mission and elaborates 12 points. Generally speaking, the policy is an elaboration of the NLD’s party manifesto. It includes the NLD’s dreams along with necessities for the country. However, it does not provide new insights into the country’s economy.

TZH: Ko Thit Nay Moe, what is the response in business circles to the NLD’s policy?

Thit Nay Moe: Businessmen say the policy is too broad. Businessmen and economists criticize that the policy does not explain the current economic position nor set a timeframe for particular goals. Some points in the NLD’s manifesto are not included in the economic policy, for example, the role of the Central Bank. Economists have pointed out that the policy says nothing about what role the Central Bank will play or how the policy will promote stability—by stabilizing commodity prices or the inflation rate, for example.

TZH:  We found some of the points interesting, including that the NLD would adopt a separate policy to attract foreign investment—which is critically important for development. Many argue that our country’s infrastructure is not ready to attract new foreign investment, citing exorbitant land prices and an unreliable electricity supply. Theoretically, the NLD is designing a policy to boost investment. But practically, what should their priorities be?

MML: Attracting foreign investment depends on the politico-economic status of the country. The first necessity is political stability. Every foreign investor wants that. The NLD’s economic policy seeks to bring about political stability. Secondly, foreign investors will take internal peace and infrastructure into consideration. The previous governments exercised a so-called open door economic policy. But, investors found that the policy was not clear or coherent. It was a swinging door policy and they did not like it. All investors—whether in manufacturing, service, or industry—make calculations before investing abroad. They invest not because they love a country, but because of profits. If it is unlikely that they can reach targeted profits, they will not invest.

In Asean, member countries compete for foreign investment and solicit such investment competitively. It is important that our economic policy is clear, detailed and allows for a favorable investment environment for potential investors. It is also important to adopt a clear framework. The most important thing is infrastructure mainly, electricity. Potential investors will consider everything before investing—security, accessibility to electricity, if rental prices for land and offices are fair, projected profits, and availability of transportation for exports. The government needs to prepare for this. It needs to cut the red tape and walk the walk in every stage of the process from company registration to customs clearances, tariffs and money transfers. While the government should work toward ending sanctions, it also needs to prioritize and take firm action toward promoting the banking sector in order to smooth financial transactions. Today, the world can be characterized by competition. If we are too slow, no one will want to invest in our country.

TZH: The United States has lifted most of the sanctions against the government now, such as sanctions on government banks. The remaining sanctions are targeted at individuals. Although sanctions have eased, the economy has not picked up as expected. Why?

MML: There are over 100 individuals on the US Specially Designated Nationals List [SDN]. Any financial transactions in US dollars made between Burma and other countries have to go through a US bank, which has to check if people on the SDN list are involved in the transactions. It is a tiring job for the bank, because it has to check not only the listed individuals but also all of the companies related to them. Banks do not want to handle financial transactions related to Burma and this serves as an impediment to the economic performance of our country. Most Burmese businessmen want to do financial transactions in US dollars, because the pound [£] and euro [€] are not stable following the UK’s vote to leave the European Union. The difficulty in conducting financial transactions serves as a hindrance to the economic progress of the country.

TZH: Ko Thit Nay Moe, we heard that businessmen are not happy with the NLD’s economic approach in the first 100 days or its economic policy. What were their expectations?

TNM: There was a lot of criticism of the NLD’s actions regarding the economic sector. Other than the commerce minister stating that his ministry aimed to triple the country’s exports within five years, the new government said almost nothing about its plan to rescue the country’s economy. The new Myanmar Investment Commission (MIC) was formed recently, which caused delays in scrutinizing and approving investment proposals and hindered businesses. The economic policy was finally released four months after the new government came to power. But then, as I have said before, the policy lacks clarity and fails to sort out priorities or set a timeframe. Businessmen said it was difficult for them to make predictions under the current policy and they would have to wait and see.

TZH: U Maung Maung Lay, do you think the NLD’s policy will help revive the economy within the next four or five years?

MML:  It has adopted a framework and defined the objectives. Previously, there was no objective and the policy was like a drifter—reaching nowhere. Now, we have a framework—in other words, a playground. And we have to see how the government will play. Considering the overall situation, their position is good. To realize dreams, the government alone is not responsible. Citizens are obliged to do their fair share. Both the will of the government and the participation of the public are important. I found that the NLD’s policy aims to guarantee sustainability and inclusiveness, which is good. But it is important that everyone participates with consciousness.

TZH: Thank you for your contributions!