September 23, 2017

Economic Scenario In One Year Together With The People

Labourers sorting at fish cold storage factory. Photo: MNA

The democracy government elected by the people had spent a period of one year endeavoring for political, economic and social development in line with changing political landscape and prevailing situations to keep abreast of the international community. Immediately after taking office, the new government has sought the best possible way to reduce budget deficit to a certain extent which incurred due to imbalanced budget and, with this it made cabinet reshuffle. Towards this end, it combined the ministries whose nature of works is nearly the same, and formed the new ministries according to the demand of time. Thus, the number of ministries has been reduced from 36 to 22.
To be in line with the number of ministries, the number of ministers has been reduced from 36 to 21 and that of deputy ministers from 56 to 45. As a result, a large amount of expenditures of ministers and deputy ministers were able to be reduced.
As the amount of expenditures including the salaries and facilities of ministers and deputy ministers have been able to be reduced, it cannot be denied that the new government is in a very frugal existence, thus saving millions of Kyats of public funds.
As part of its reforms, the new government reconstituted the Ministry of Agriculture and Irrigation, the Ministry of Livestock and Fisheries and the Ministry of Cooperatives into the Ministry of Agriculture, Livestock and Irrigation, the Ministry of National Planning and Economic Development and the Ministry of Finance into the Ministry of Planning and Finance, the Ministry of Mines and the Ministry of Forestry into the Ministry of Natural Resources and Environmental Conservation, the Ministry of Transport and the Ministry of Communications, Posts and Telegraphs into the Ministry of Transport and Communications, the Ministry of Electric Power and the Ministry of Energy into the Ministry of Electric Power and Energy.
Although there are different reviews and perspectives of scholars and experts over the size of government weighing its strengths and weaknesses in capacity and national development, it should be a government capable of serving the interests of the State and the people to its utmost. The most suitable government for the country is the one capable of bringing about sustainable development of political, economic and social sectors and long-lasting peace among national brethren on the basis of democratic practices, assessing the prevailing situations.
With sweeping reforms, the incumbent government is trying to be compact in its Cabinet, reducing the burden of expenditure of Cabinet. In the process, it formed a Cabinet that saved millions of Kyats in a country which is facing budget deficit.

Baluchaung Hydropower Plant in Kayah State. Photo: GNLM/Phoe Khwar

Initiatives for anti-corruption
Corruption is a major obstacle for economic development of a country. Corruption is also a grave threat to a developing country or a country which is in the process of reforms. To totally wipe out corruption that had been deeply entrenched in the country in a short period of time is a great challenge. However, the new government since its inception has dealt with the corruption problems in a careful manner. On 4 April nearly one month into the office, the ongoing government issued the guidance of the President Office on acceptance of gifts as part of its drive for anti-corruption. The State Counsellor Office on 1 November 2016 issued a notification titled “people may file a formal complaint about corruption” and launched anti-corruption campaigns extensively. As a result, Myanmar’s position fell 136 out of 176 nations in 2016 from 147 out of 167 nations in the Corruption Perceptions Index of Transparency International and it can be expected that the country will be free from corruption in the very near future.

Farmer ploughing the field with the use of tractor in Kachin State. Photo: MNA

Economic policy based on national reconciliation
The future objectives of the State were issued on 29 July 2016 as follows:
1.    to practice economic policy which contributes to the emergence of a united federal democratic Union based on national reconciliation.
2.    to adopt economic platforms that are helpful to equitable development among regions and states.
3.    to formulate economic policy capable of brining about new generation youths of high capability.
4.    to establish an economic system generating achievements by innovation and efforts.

The 12 economic objectives are:
1.    to boost financial resources trough transparent public financial management.
2.    to assist SMEs helpful to job opportunities and economic development while ensuring the success of State-owned enterprises and privatization.
3.    to produce human resources capable of bringing about economic development and  to generate professionals.
4.    to ensure development of infrastructures such as roads, ports and power facilities and set up of Data ID Card System, Digital Government Strategy and e-Government System.
5.    to create job opportunities for locals and expats and to adopt enterprises with higher employment.
6.    to ensure parallel development of agriculture, livestock breeding and industrial sectors for all-round development, food security and increased export.
7.    to create better environment for foreign investors and to encourage private sector development through free engagement of citizens in their business.
8.    to ensure monetary and financial stability contributing to sustainable economic development.
9.    to set up cities suited for environmental conservation, boost public services and engage in cultural preservation.
10.    to protect the people’s rights and property in accord with the law with the adoption of fair taxation system that contributes to increasing revenues.
11.    to formulate procedures and systems for intellectual property that could spur innovation and development of advanced technology.
12.     to establish economic platforms in the ASEAN region and beyond with great breadth of vision to keep pace with changes and developments.
Myanmar was subject to sanctions of major powers including the US and the EU in the  time of the previous administration and there still remain some economic sanctions to date. In the time of the new government almost economic sanctions were eased and trade preferences retained through efforts of the State Counsellor. During her trip to the US, the State Counsellor on 14 September 2016 met with Obama who signed and issued the lifting of sanctions against Myanmar on 7 October 2016, terminating International Emergency Economy Power Act, Freedom and Democracy Act, Tom Lantos Block Burmese Jade Act, Foreign Operation, Export Financing and Related Programme Appropriation Act.

New Myanmar Investment Commission
More than two months into its office, the new government reconstituted the Myanmar Investment Commission with intellectuals and businessmen numbering 11, amending some investment laws in favour of foreign investors. It adopted and ratified the Myanmar Investment Law on 18-10-2016 as part of efforts for attracting more foreign investment. On 1-4-2017 when slightly more than one year into the office, it promulgated the Myanmar Investment Bylaws which could attract more foreign investments.

Electric power
Construction of new power stations, repair and upgrading of stations in place, construction of substations and transmission lines in regions and states and clearing of old service wires were conducted for more power supply. In the year 2016-2017, ten towns and 333 villages have access to power supply, benefiting 4.05 million people, representing 3.24 per cent. At present, the National Electrification Plan-NEP is being drawn with US$ 310 million loan from the World Bank. Moreover, with loans from JICA and KFW (IDA) of German Government, steps are being taken to provide southern Shan State with electric power.
For economic infrastructure development, roads, bridges including the ASEAN Highway and highways linking India-Myanmar and China and public housing are being constructed through utilization of public funds, Public-Private Partnership, assistance of JICA, ADB, WB, KOICA and TICA and other donors. With the help of JICA and KOICA, city development plans for Mandalay, Mawlamyine and Pathein were adopted while City and Regional Development Law (draft) and National Housing Development Law (Draft) were formulated.

Traditional clay pots on display in a village. Photo: MNA

Production sector
Steps are being taken for development of production sector, revitalization of industrial sector and sustainability of extractive industry without harming natural environment while striving for development of agriculture, livestock and fisheries sector with the technical assistance of the ADB, the UNFAO and others.
The Myanmar Agriculture Development Bank in cooperation with private banks was striving to provide farmers with more loans and the disbursement of loans has been increased to K 150,000 per acre from K 100,000 per acre in the time of the new government, amounting to K 1614.453 billion of subsidies. Meanwhile, the emerald green projects which contributed to improvement of the socio-economic status of 70 per cent of rural people have been extended to 8756 villages, with an increase of 2017 villages in the 2016-2017 fiscal year, benefiting over 5.8 million people.
Altogether 168 small financial institutions were given green light to run and as a result, K 2.268 million loans were disbursed to 2.45 million people from 15918 villages, fetching K 0.140 million as savings. The fisheries sector has been able to produce over 630 million viss of fresh water fishes and 328 million viss of sea water fishes.
In the industrial sector, factories and mills that are operated at a loss entered joint venture with local and foreign entrepreneurs and 59 factories out of 118 had already entered joint venture with private sector and 17 factories more are to follow suit. For SMES development, 679 SME businessmen in Mandalay Region were integrated into 88 SMEs Clusters and 23 entrepreneurs were funded by the CB Bank, Myanma Insurance and the SMBC of Japan whereas rice mills and salt plants in Ayeyawady Region were provided with technical assistance from overseas organizations, Moreover, Training and workshops were conducted for capacity building of SMEs entrepreneurs and a total of 360 private industries were registered.
Altogether 456 SME businessmen were funded through the government loans and whereas 189 SME businessmen were funded through Two Step Loan of Japan for development of SMEs. Under the guidance of the State Counsellor, the Vice President-1 met with businessmen on a monthly basis and dealt with problems encountered by the latter, reducing company registration fees nearly by half.

Booming tourism industry helps boost the economy of local villages. Photo: MNA

Energy sector
To meet local consumption and to export the surplus of energy, efforts are being made to explore more oil and gas. During one-year period, altogether 29 wells were drilled and, out of which 12 wells were successful. A total of 27 on-shore blocks were in partnership with foreign oil companies. This has been able to increase local consumption of gas to 233 cubic feet million from 150-200 cubic feet million per day as of January 2017, thereby contributing to facilitate 143 passenger vehicles with CNG which plays an important role in the public transport.
Licenses for export and distribution of Condensed Natural Gas were granted as of May 2016 and, so far B License was granted to 19 companies, D License to 68 companies and C License to 436 companies the length and breadth of the country. At the same time, 156 domestic oil refineries, 256 private filling stations and other related businesses were granted licenses.

Trade sector
The Ministry of Commerce has been adopting and implementing the Medium Term Programme-MTP under the 12 Economic Objectives for trade sector development. In order to boost trade volume and export volume, 14 categories of re-export items which have been banned in the past were allowed to export while controlling illegal trade. With a view to reducing trade deficit, means and ways have been sought for extended export of new items in cooperation with private sectors and traders.
Officials from the Ministry of Planning and Finance and the Ministry of Commerce had a monthly meeting with those from the UMFCCI and touched upon matters on better trade activities. To prevent illegal trade and create job opportunities a new border trade camp Bawlakhe District, Kayah State was opened in October 2016. Meanwhile, Myanmar Automated Cargo Clearance System-MACCS was introduced on 12 November 2016 with the technical assistance of Japanese Government. The system has brought about better trade activities among government bodies, export & import businessmen, shipping lines, ports and customs service providers, and it is projected to be used extensively in future.

Tourism sector
There has been a great deal of excellent potential for the development of tourism sector in Myanmar. As peace prevails in a vast area of the country, tourists were allowed to visit far-flung corners with the exception of some places in border areas due to security reasons. And this has contributed much to tourism development. During 11 month-period from April 2016 to February 2017, altogether 42 hotels and guest houses with 1992 rooms were allowed to be established while setting to start constructing the Hanthawady International Airport in Bago Region in December 2017.
In the meanwhile, two hotels and four guest houses were granted licenses at Pathein, Ngwehsaung, Chaungtha, Pyapon and Myat Mawtinsone regions for foreign tourists to stay.

A worker oversees the assembly of a vehicle at a factory under the Ministry of Industry. Photo: MNA

Financial stability
In the time of the new government, the Ministry of Planning and Finance, the Ministry of Commerce and the Central Bank of Myanmar are constantly engaged in ensuring the stability of dollar exchange rate, which rose to K 1400 in the third week of December. The CBM issued a new set of directives on 5-1-2017 and 9-1-2017 in that regard.

National Strategy for Development of Statistics-NDCS
The Committee for Ensuring Correct and Quality Data was formed in April 2016 with the Vice President-2 as patron for the emergence of quality statistics which play a pivotal role in national development. And the Statistical Policy Brief and the National Strategy for Development of Statistics-NDCS are being initiated whereas striving for the emergence of the Myanmar National Statistics.

Aircraft fuelling service is now a joint-venture business. Photo: MNA

Financial sector
The new government amended the 2016 Union’s Finance Law based on 3.91 per cent of the deficit-GDP ratio, which was 4.7 per cent in the past. And the State-owned enterprises which were being run at a loss were closed and service personnel transferred to other suitable departments and organizations. Meanwhile, the CBM sold treasury bonds and certificates to private banks and foreign bank branches to prevent deficits.
Under the 2016 Union’s Tax Law, a five per cent levy was imposed on telephone subscribers in the 2016-2017 fiscal year and the taxes collecting in April 2016 totaled K 7.454 billion went to the education sector. In order to transform the commercial tax to good and service tax, the special commodity tax law was enacted and taxes were levied accordingly.
In the monetary sector also, the Central Bank of Myanmar invited tender on deposits for 20 times in the 2016-2017 fiscal year, each of which fetched K 333 billion and, it has been able to subtract the surplus from the market. In the year 2016-2017 alone, government treasury bonds to the value of K 1181 billion and the government treasury certificates to the value of K 3032 billion were sold. Meanwhile, 13 foreign bank branches, 24 private banks and 1475 branches of their, 16 private financial companies, 45 foreign banks’ representative offices and two foreign financial companies were allowed to upgrade banking infrastructures.
Rules and regulations were issued on 30 March 2016 for international mobile network operators such as Telenor and Ooredoo and MPT to engage in mobile financial services. Beginning January 2017, banks were allowed to issue international cards such as Visa Card, Master Card, JBC Card, UPI Card as well as International Credit Card (Clean Card). And locally produced MPU cards were transformed to MPU-JCB, MPU-UPI to be used internationally. So as to prevent the loss in foreign currency exchange, Currency SWAP and Currency Forward were introduced starting from the 2016-2017 fiscal year.  The new government was included in the Reserves Advisory and Management Program-RAMP, which enables it to invest its foreign reserve funds internationally like central banks of other countries.

Insurance
Starting from August 2016, a premium has been increased from K 2000 to K 5000 along with an increase of from K 500,000 to K 1,000,000 in compensation and, 11 more categories of insurance were given to private insurance companies.

State Counsellor’s interest in economic development
In the clarification of the State’s economy policies at the MICC II in Nay Pyi Taw on 29-7-2016, the State Counsellor said that 70 per cent of Myanmar people solely depend on agriculture, which could not be ignored although the country is focusing on industrial development. Though food security is commonly mentioned, efforts for ensuring it are insignificant. Thus, steps need to be taken for equitable development of agriculture, livestock and industrial sectors. She also attended the meeting between entrepreneurs and development partners and the 1st Myanmar Entrepreneurship Summit 2016 held at the MICC II on 22-10-2016 and touched upon long-term economic policy, cooperation among the people young and old for poverty alleviation to keep abreast of international community.
At the Myanmar Women Week Forum held at Kempinski Hotel in Nay Pyi Taw, the State Counsellor said that there is no sustainable economic development in a nation without peace, adding we are engaged in economic development not for a person or an organization but for all the people.
In her address to mark the anniversary of the new government held on 30-3-2017, the State Counsellor said we are focusing on job creation, better transport and electric power supply. This exhibits her interest in national development.

Sea of paddy plantations in Mon State. Photo: MNA

Future Myanmar economic climate
In economic reforms, there are many obstacles ahead such as economic stagnation, lack of institutions and market machinery, twin deficit in the budget and macro economic weakness. However, the new government elected by the people will try its best to overcome all the obstacles, showing integrity, straight forwardness and thrift. It is also extensively in the fight against corruption, a major hurdle to development in every aspect. At the same time, it has to deal with fulfillment of economic institutions to obtain aid from international economic organizations, land confiscation, inflation, vendor and bus problems and others while initiating economy policy based on national reconciliation that would serve the interest of the entire national people during one-year period.
In the revitalization of economic sector of the country that has been in the list of least developed nations since 1987, it is hoped that the new government will be able to formulate economic policy which is in conformity with changes and developments and is making all-out efforts in the interest of the entire people including national brethren.

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