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September 23, 2019

Myanma Economic Development: Past, Present and Future

  • By Dr Maung Aung

 

Myanma Economy in the Past

Chronicle of Myanma economy could be seen under various eras such as the last of Kongbaung Dynasty, the post era of 1886 and the British colonial period, the post independence and multiparty democracy period, the Revolutionary Council and subsequent Myanma Socialist Economic era, the Tatmadaw Government period, and then Multi-Party Democracy eras.
Myanma economy during pre-war period was enveloped with Laissez-Faire Policy, the policy of allowing private businesses to develop without government control, of the British where rice trade was the main focus, and Myanmar stood as the top rice exporting country in the world edging over Asian countries.
As the rice demand of the world grew wild, the British brought the Indian nationals into lower Myanmar for expanded cultivation of paddy resulting with the yearly export of three million tons of rice.
The development of Myanma economy during colonial era was healthy due to the Laissez-Faire economy; however, the split stories erupted among political leaders and the political parties.
On the other hand, the divide and rule policy of the British had shattered the unity of the nationalities in the country. Due to political instability in the country, the Revolutionary Council came into power through the coup d’état in 1962, and switched into socialist economy, resulting with nationalizations ending the market economy.
In quest of economic development, the government adopted inward looking policy, while trying to stand on own two feet with the attempt of industrialization through import substitute arrangement.
At that juncture, the Asian countries were building their nations after gaining independence.
Myanmar economist Professor Dr. Hla Myint advocated Outward Looking Policy, and that Malaysia, Indonesia and Singapore embraced and applied as their economic policy.
With a host of weaknesses in the administration sector and the market economy, the nation is swallowed by black market system and experienced the economic hardship, resulting with price hikes in all the commodities in a downhill journey of the nation’s economy.
The leading status of Myanmar in the South East Asia economy in the 1960s had jumped into the Least Developing Country list in 1987. With the surging dissatisfaction of the people, the demonetization of legal tender notes had ignited the 1988 upheaval of the public in the country; however, the Tatmadaw took hold of the state power.
At that time, the Outward Looking Policy adopted by the Asian countries for about three decades showed tangible economic developments, and we all learned the lesson that the economic development of a nation depends on the correct decision in policy making.

Tatmadaw Government aftermath of 1988
Socialist economic system had been abolished and market oriented economic system had been initiated. The government-owned enterprises with loss had been transferred to the private hands, and the foreign trade had been encouraged.
With the open market, some agricultural items were exported, and due to the opening up of Indian market, the peas and bean trade flourished and expanded in the country, making the cash crops for the farmers.
During the administration of the Tatmadaw government, the Myanma economy functioned better than the socialist economic era. When the dishonored business people and the corrupted official manipulated the economy, the people were frustrated and demanded for multi-party democratic system, resulting with the end of Tatmadaw administration in 2010.
A lesson was learned that market oriented economy was better than the socialist economic system even under the pressure of international sanctions.

First Democracy period (2010-2015)
The administration was in the hands of the Union Solidarity Development Party (USDP), backed by the Tatmadaw leaders, which continued the market oriented economic system and some of the state enterprises were transferred to the private sector in momentum.
While driving for the economic reform, the Foreign Investment Law was enacted and the Special Economic Zones were initiated added with many changes in financial matters.
Motley assortments of reforms were seen in sectors such as that of the vehicle imports, that of telecommunication operators, that of the privilege in getting GSP, that of allowing foreign investment in production, energy and construction, and that of profuse inflow of garment industry.

However, the great expectation of foreign investment was not practicable as the high cost and difficulty of electricity, land rent, and factory lease compounded with the transport cost and logistic cost. Despite the invitation of foreign investment, some sectors are not permitted for the incorporation with the international community.
Outward Looking Policy has been applied more in the country compared to the past, and therefore, the first three years of economy saw the upswing, but the remaining two years experienced with stagnation.

Current democratization period (2016-2020)
Under the National League for Democracy (NLD) Government, elected by the people, the 12-point economic policy has been adopted along with the market oriented economic system with vision of Outward Looking Policy. The NLD government reduced the intervention of the government with a view to encouraging the market oriented economic system.
The Myanmar Sustainable Development Plan – MSDP (2018-2030) had been adopted in 2018 for multi-purpose development by integrating with the Sustainable Development Goal being mapped out by the UNGA. The MSDG has three main pillars with five objectives spanning (28) strategies with pragmatic implementation tasks of (238) by enveloping all areas for the sustainable development.
The 12-point economic policy is under pragmatic implementation with the drive for attracting more investment in conjunction with enhanced exports. Especially, the new Myanmar Foreign Investment Law was enacted with a view to attract investment with transparency in smooth functioning cutting out the old red tape barriers, and accommodating the investment venture in the shortest possible time.
Moreover, irregular and lopsided economic practices were substituted with proper and orderly methods, and also curbing out the bribery and corruption system. In the merchandise, the list includes 24 products and items, the foreign investors are permitted to do business.
Moreover, the State Counsellor invited foreign countries to invest more in Myanmar, and that (35) per cent of foreign investment is being allowed to roll into Myanmar companies. Within two years, many economic reforms are being implemented for the investment sector including the establishment of the Ministry of Investment and Foreign Economic Relations.
In the years ahead, more investments are in the pipelines and the nation’s economy has a silver lining. The Ministry of Commerce is paying more attention on the trade development, pushing the trade value up, and gradually pulling down the trade deficits being encountered during the previous years, reflecting the real growth in the export value.
Especially, the 2017-2018 financial years had witnessed the export of rice over three million tons, a record breaking figure during (70) years’ time coming on a par with the pre-war period of rice export.
At a time when the connectivity is much better in the region, more investment is likely to roll in that could elevated the value added export items of the country hooking up with the Global Supply Chain, with expectation of multiplying trade value.
More reforms have been carried out such as that of the lending of the SMEs that could be carried out without depositing property or loan guarantee in taking out more soft loans, that of lending farmers with added crop loans, that of enhancing the basic pay of the low income workers, that of the recommendation of the minimum wages of the workers, that of the permission granted to the foreign banks to function in support of financial matters in the country, that of enhanced support in the infrastructure sector such as electricity, road communications and transport, that of profuse supplementing budgets towards education and health.

Lessons learned from the past
In retrospect over the past economic situations of the country during the time of successive governments and eras, it could be generally said that the socialist economic system had institutionalized the inward looking economic policy, and that the remaining eras had adopted the outward looking economic policy.
It could be assessed and evaluated that the period of inward looking economic policy had experienced the downswing of economy, and that the eras of outward looking economic policy had at least lifted the economy upward.
It is to be noted that the macro economy is the State-level economy of the nation, and the micro economy is the working level economy, in other words, which could be termed as the pragmatic economy of the people of the country. Only when the people could enjoy the fruits of economic development, the economy may remain sustainable.
The Myanma economy during pre-war era was buoyant, but it served only to the foreigners and the people were deprived of the benefits. Similarly, the socialist economic system had ignored the lives of the people that become poorer each day.
The lesson we learned is that we must constantly observe and assess people on the ground, and respond with appropriate solutions in time. When we looked back on the world economy, amazing and incredible economic development had occurred twice. Unbelievable development was witnessed during the Industrial Revolution was the transition to new manufacturing processes in Europe and the US, in the period from about 1760 to sometime between 1820 and 1840.
The Industrial Revolution in Europe and US added up with machineries, trains, steamers that pushed up the production and trade in miraculous pace making the nations in that region developed and prospers. The change began in the 18th century, when agricultural societies became more industrialized and urban. The transcontinental railroad, the cotton gin, electricity and other inventions permanently changed society.

(To be continued)
Translated by UMT (Ahlon)

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