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Managing great expectations of Myanmar
Certain political questions like the peace process can be especially fraught and take years to resolve.
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Rohingya children gather at the Dar Paing camp for Muslim refugees, north of Sittwe, western Rakhine state, Myanmar, June 24 2014. (AP/Gemunu Amarasinghe)
E
xpectations for Myanmar have been nothing short of a roller coaster ride. Sky-high expectations followed the National League of Democracy’s (NLD) victory at the 2015 elections, led by Aung San Suu Kyi. But now these have given way to a somewhat downcast outlook.
Some projects approved under the previous administration have been re-assessed and foreign investments have been slow moving. The level of approved foreign investment into Myanmar dropped from US$9.5 billion in the last fiscal year to $6.6 billion this year — the first fall in the four years after the country began its opening. Myanmar’s gross domestic product (GDP) growth too has slowed — from 7.3 percent in 2015 to 6.4 percent in 2016.
Myanmar companies are feeling the slowdown. Some potential foreign investors are beginning to look elsewhere. These are reasons for concern. But it would be premature to write off Myanmar.
More than a few investments and projects are moving ahead. Some developments are sizeable. They serve as positive examples of how businesses can move forward, and what the government can and must do.
When the Thein Sein administration began opening up the country in 2012, there was a stampede to enter “the last frontier” market. There was a second wave of optimism when the NLD secured a landslide election victory at end-2015. Too many believed that there would be a “happily ever after.”
But really, no one should ever have thought that doing business in Myanmar would be easy. After almost 50 years as a closed economy under military rule, a backlog of issues remains. The need to upgrade physical infrastructure is obvious. Financial systems and political structures are also in need of repair.
Following bank failures and crises, an informal money-lending hundi black market has emerged. Less than 20 percent of the people use formal financial services. This limits the Central Bank’s ability to reform the country’s financial system effectively. The government is also limited by the absence of a working tax system.
