Burma's AEC Performance
By Myint Thin 27 February 2013
Only around 300 days remain before Burma takes up the Association of Southeast Asian Nations (Asean) chair for the first time. As the chair, the future of the Asean agenda will be in the hands of officials in Naypyidaw. Most importantly, Burma will set the tone for the arrival of the Asean Community after it passes the chair to Malaysia.
As international businessmen and investors flock into Burma, the demand for information for decision-making is very high. Apart from the official versions and UN-sponsored reports, there are very few reliable assessments of local economic conditions and performance.
Burma is currently struggling to meet the deadline for the Asean Economic Community (AEC). Overall, the Asean members have been able to complete around 74.5 per cent of the economic pillar. The other two pillars—political and security as well as social and cultural pillars—are much harder to implement, let alone to evaluate.
At the Asean Summit in Phnom Penh last November, the Asean leaders were embarrassed by the lack of tangible progress on the political and security pillar, which is vital if the Asean Community is to become a reality in 2015. In the case of the social and cultural pillars, the report by the Asean foreign ministers to their leaders simply said that 87 projects were successfully implemented and another 73 projects are ongoing.
Out of 667 action plans, nearly half of them are in the social and cultural pillar.
At the moment, there are three mega projects worth nearly US $100 billion committed by Japan, China and Thailand that would set forth the path of Burma’s economic development. First of all, Japan has already completed the feasibility studies and will soon begin to establish the special exclusive economic zone in Thilawa, 35 km from Rangoon. This huge deep seaport facility will also receive complete renovation and out of the 2,400 ha, 200 ha will be an industrial park. This is the so-called heart and mind of Burma’s economic engine.
The second is in the northeastern part of Burma at Kyauphyu in Arakan State. The plan calls for deep seaport development along with road and railway, gas pipeline networks and an industrial estate. It will cost around $27 billion. The gas pipeline is expect to operation in the fall of this year.
The third project, the Dawei Special Economic Zone, which covers a land area of 20,500 ha, is by far the biggest industrial project in the country’s history. Ital-Thai Ltd, a Thai construction company, won the concession a decade ago. When the Yingluck government came to power, it came to the rescue, turning the project into a government project. So far, very few countries have made the financial commitment. This mega project will cost at least $58 billion to complete.
For the immediate future, however, Burma has to worry about meeting the target set out by the AEC. By all indicators, the country needs the most improvements on almost every area, especially on trade facilitation, financial liberalization and domestic reform. Naypyidaw is very well aware of the need to accelerate measures to integrate with the Asean economic schemes of things. But the lack of human resource and capacity continue to hamper any effort to move forward.
Under the Midterm Review of the Implementation of AEC blueprint conducted by the Jakarta-based Economic Research Institute for Asean and East Asia, Burma need to improve the Customs Department to meet the standard of other Asean members. For the time being, Asean goods have to go through a labyrinth of procedures and measures. Even in the country’s area of core competency in agricultural development, the government is behind in mobilizing the partnership between public and private sectors. With rich alluvial soil, Burma could become a good producing giant in Southeast Asia if there are continued agricultural innovation and research.
Another important area is small and medium enterprises (SMEs). Burma can learn from the experience of Thailand or Singapore, where SME businessmen and women can easily obtain loans to invest and expand their business. At the moment, there is not such service that would provide start-up funds for firms. There is an urgent need for the government to have special system for the income of SMEs.
Again, as a latecomer, Burma has lots of advantages over the rest of Asean. Its young workforce and resource-rich country could easily turn this once most isolated country into a new tiger in the near future provided that Naypyidaw continues with the economic and political reforms and establishing institutions to ensure sustainability and transparency.