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Getting Myanmar moving
Myanmar’s economic outlook is extremely bleak, say many regional experts, and local business sentiment continues to slide downward. And with foreign investment down substantially from last year, future growth is likely to fall short of government targets.
This combination of negative factors has led to an increasingly fractious relationship between the country’s business community and the government — the first democratically elected administration in decades.
The business community is constantly complaining that confidence is low, and dropping every quarter. “It’s the worst I’ve known since I returned to Myanmar 25 years ago,” said Moe Kyaw, a self-made entrepreneur who grew up in the United Kingdom and returned in the 1990s to try his hand at business.
“Even under the military regime things were better, even though they blocked my attempt to import and sell Teletubbies,” he mused, referring to the characters from the popular British children’s television programme.
“Despite our high expectations since ‘Auntie’ (a popular and affectionate nme used locally for Aung San Suu Kyi) was elected, our dreams were killed almost overnight,” said Moe Kyaw, now head of the country’s leading market research company, Myanmar Marketing Research and Development Company (MMRD).
“We know nothing will change until after the 2020 elections. We just have to grin and bear it,” he told Asia Focus.
But many observers feel that this “whingeing” attitude among local businesses is making things worse. They should be more proactive, according to regional analysts following developments in Myanmar.
“The business community should make a conscious effort to advocate a balanced system with reasonable wages, effective environmental policies and a strong social safety net,” said George McLeod, a regional economic and political risk analyst based in Bangkok.
In other words, help the government cope with the daunting tasks confronting it by offering advice, proposing policy initiatives and being a positive influence.
“Under the National League for Democracy (NLD) government, they have a unique opportunity to move forward and reinvent themselves as a positive force in the country,” Mr McLeod added.
Other analysts and observers also believe the private business sector has a crucial role to play in transforming the economy and spearheading reform. Essential to this is ensuring that Myanmar businesses themselves adopt international standards and norms.
“The private sector is best placed to drive reform,” said Vicky Bowman, director of the Yangon-based Myanmar Centre for Responsible Business (MCRB).
Developing the country’s human resources — through training and encouraging people to understand the importance of corporate governance policies — will produce more responsible businesses, she said. “The private sector is well positioned to develop this approach to business, which is so vital for Myanmar’s transition.”
The country’s main employers’ association — the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) — insists it is playing a key role in the formulation of national economic policy and presenting the employers’ point of view to government. Unlike in the past when it was virtually an extension of government to deliver the military regime’s economic plans, now the UMFCCI has an advocacy and education role.
As part of its newly developed independent role, it launched the Myanmar Business Initiative. One of its functions is to prepare a quarterly report on the economy, highlighting the issues and suggesting some solutions, which is distributed to all the MPs in Nay Pyi Taw. Its executives also provide face-to-face briefings to the various parliamentary committees that have responsibility for economic issues.
“We meet Vice President Myint Swe and a delegation of union ministers once a month where problems are aired, explained and discussed,” Dr Maung Maung Lay, the UMFCCI vice-president, told Asia Focus. Each session focuses on a specific agreed industry. More than 90 issues have been raised, of which some 60 have been solved.
The UMFCCI has been monitoring local business leaders’ attitudes since NLD took office, through a quarterly online survey of its 31,000 members. The latest survey results reveal a strong decline in business confidence over the last two years.
In the last three months, those confident about the future fell by over 10%, with less than two-thirds of respondents confident about the future. The figure has steadily declined since 2016. Forty percent of businesses now express pessimism about the future.
The slow pace of reform and economic liberalisation is not for want of political will, according to Sean Turnell, chief economic adviser to State Counsellor Aung San Suu Kyi.
“Part of the problem is that Myanmar finds itself in a transition — between the centralised and highly planned economy of the past and a modern, liberal economy relying on market forces to drive economic development,” he told Asia Focus recently. He suggests that at the moment it is neither, creating confusion and uncertainty.
For many analysts this is the crux of the dilemma facing the government: how to rid the country of the hangover from the past decades of military and authoritarian rule.
“Myanmar is unusual in Asean because it never had a 1997-style economic crisis that despite its devastating impact had the effect of shaking out the oligarchs and giving breathing space for competition,” said Mr McLeod.
“Consequently, Myanmar’s economy is dominated by a few hundred ultra-rich — who largely control land, production and finance, like in pre-crisis Thailand and Indonesia — and these business interests still have disproportionate sway over economic policy.”
Naing Ko Ko is more blunt. Crooks, criminals and cronies run the country, said the political scientist and economist who recently completed his doctoral thesis in Australia on corruption in Myanmar. “This mafia runs the banks, runs the football clubs, runs the key industries, and has run down the country’s resources,” he told Asia Focus.
But the NLD government is perhaps unique in the region, and certainly different from its predecessors, in that it truly represents the country’s civilian population and their aspirations. “This position allows them to act as a neutral referee,” said Mr McLeod. “So the NLD needs to treat business for what it is: a special interest. Government should not serve as an extension of business; or of any other special interest.
“The NLD should look closely at Japan, which has set up an exemplary tripartite model that incorporates input from business and labour in its policymaking.”
But others believe the onus is on the business community to take the initiative and ensure the private sector’s voice is heard on regulatory reform and other initiatives.
“The private sector ought to be building human capital and developing their employees to be creative and critical thinkers, accountable leaders, good delegators, supporters of equality and respectful of differences,” Ms Bowman told Asia Focus.
As the private sector is driven by market pressures, Myanmar businesses have no choice but to reform and modernise, she said. “These market pressures are not felt by the civil service, military, political or religious leaders.
“So crucially, change management and leadership skills — which are essential for commercial success — are the same ones that are necessary to lead Myanmar through its ongoing and challenging ‘triple transformation’ of peace, politics and economics.”
Businesses have a key role in nation building and by helping employees to develop such skills, they are building the human capital and leaders needed for Myanmar to become a prosperous and democratic country, she said.
