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Myanmar maps out recovery and reform
The Myanmar government is putting the finishing touches on an ambitious new economic recovery and reform plan. To be announced during the current transition period following the Nov 8 elections, it will be part of the strategic plan for the next five years.
The “recovery and reform roadmap” will guide the formation of economic policies to be rolled out for the next few years, a senior economic official told Asia Focus, asking not to be identified.
Government agencies and ministries are now undertaking “comprehensive consultations” before the final document is unveiled in the next few weeks. This is the final stage of the process, which followed consultations with international financial institutions — the Asian Development Bank and the World Bank — plus foreign donors and local chambers of commerce.
The Myanmar Economic Resilience and Reform Plan (MERRP), as it is formally known, was drawn up after a recent review of the Covid-19 Economic Relief Plan (CERP), which was rolled out at the end of April in response to the pandemic, said Thaung Tun, the minister in charge of the committee that oversaw the earlier plan.
“We know that short-term stimulus measures must be complemented by longer-term policy reform,” said Thaung Tun, in a recent online lecture to international business representatives.
The CERP was a short-term response to manage the impact of Covid-19 on households and businesses, whereas the MERRP is an extension that is aimed at rebuilding the economy over the longer term, he explained.
The new plan will focus on macroeconomic and financial stability, prioritise growth strategies that are sustainable for the economy in the longer run, such as renewable energy sources. It will include support for agriculture, infrastructure that boosts connectivity, as well as improving human capital and promoting innovation.
“The virus and the efforts to contain it continue to inflict severe damage on Myanmar’s economy, and so emergency policies of relief and alleviation remain necessary,” Sean Turnell, special economic adviser to Aung San Suu Kyi, told Asia Focus in an interview.
“These will, in turn, have an impact on Myanmar’s fiscal situation and, accordingly, partly determine what might be possible later. That said, the government will avoid at all costs anything like austerity, and will look to all avenues with which to reform Myanmar’s public revenues as well as spending.”
Myanmar escaped the first wave of Covid-19, with fewer than 800 people infected nationwide as recently as late August. But since then it has endured a brutal second wave, with nearly 74,000 cases and 1,650 deaths as of late last week.
Despite the outbreak, which severely curtailed campaigning, this month’s election went ahead and the National League for Democracy (NLD) party won an even larger absolute majority than in 2015.
Parliament is in recess until the newly elected MPs gather at the end of January to elect speakers and start the process of choosing a new president. The new cabinet will not be formed until the end of March. By the time ministers finally get down to work, the reform plan will provide them with a clear path forward.
The plan comprises six broad goals, according to a confidential early draft seen by Asia Focus: strengthen the macroeconomic environment; strengthen private sector participation and promote private sector-led growth; promote inclusive rural growth through agricultural development; promote financial sector stability; facilitate reverse migration; mitigate economic shocks and aftershocks affecting the most vulnerable groups.
This is broken down into 16 strategies and more than 130 action plans, some of which involve extending some of the support packages that were part of the CERP for sectors still struggling to survive the effects of Covid.
“The MERRP will be the base is for building a resilient economy during, and in the wake of the pandemic,” said Mr Turnell. “This will include expanded expenditure on health, infrastructure — both for long-term economic development, as well as counter-Covid stimulus — and then a range of liberalising measures deigned to make doing business easier and to encourage foreign investment.”
But some local commentators worry that despite the NLD’s massive electoral victory, there is a danger that plans for accelerated economic liberalisation will be unattainable because of the resistance of entrenched vested interests of the business elite and bureaucratic intransigence — which derailed much of the government’s well-intentioned plans in the last five years.
“The government’s latest ‘recovery plans’ are very broad and aspirational,” said William Maung, a local independent financial and business consultant. “Its agenda has been carefully designed to align with the government’s long-term strategy — the Myanmar Sustainable Development Plan (MSDP) — intended to reinforce the NLD-led government’s existing economic reform programme.”
“But the problem has been the government’s hitherto half-hearted approach to carrying out its own reform goals — especially in the financial sector — over the last five years. And there is no guarantee the government will be able to be any more successful in implementing this grandiose recovery and reform plan.”
The new plan is meant to cascade down through the ministries into effective plans of action. Already ministries are developing their individual recovery plans. For example, the ministry of tourism has just released its strategic recovery roadmap, based on what it touts as “enchanting Myanmar’s health and safety protocols for safe tourism”. The states and regions are also in the process of announcing local five-year economic plans.
Continued reform of the financial sector and support for struggling small and medium size businesses is crucial for any post-Covid recovery and long-term sustainable economic development, say businesspeople. “Any recovery plan and priorities for developing the economy must centre on the survival of local MSME (micro, small and medium enterprises),” said Aung Kyi Soe, secretary-general of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).
These have been very hard hit by the pandemic, he said. “Many of the country’s small business have been closed since the start of September and some are at risk of never reviving; the government’s Covid recovery plans must prioritise resuscitating them, with more support interest-free loans and other privileges,” he told Asia Focus.
Two key areas seen as cornerstones for future development are agriculture and the digital economy. For most leading representatives of Myanmar’s business community, agriculture — which accounts for 70% of the country’s workforce — has been treated for too long as a “Cinderella” industry, but its potential could be enormous as a driver of an economic rebound. On top of that, 65% of MSMEs are in food production, based on the country’s agricultural production, Aung Kyi Soe points out.
Most business leaders strongly endorse the MERRP’s strategy of “promoting value-added industries”. Aung Kyi Soe believes the government should provide more assistance to the agriculture sector, such as for improving access to markets — mainly local, but for export too — and access to the latest technology to digitise the agribusiness environment.
To encourage more agricultural exports, the government also needs to support building agribusiness production plants, so that local produce can be processed and exported to regional and international markets. Building on the fisheries and livestock sectors could yield quick returns, suggested Dr Maung Maung Lay, the UMFCCI vice-chairman.
“Canned and processed fruit and vegetables like tomatoes and garlic, processing the excess fishing catch, could easily be a major money-spinner in no time,” he added.
He also pointed to the potential of avocados for export: last year just eight tonnes were harvested; this year’s harvest was around 50,000 tonnes. The government should try to find new niche markets for up-and-coming products, he added. As it turns out, the government recently announced the start of avocado exports to the UK: half a tonne of Hass, Buccaneer and Amara (a local variety) have been airfreighted to London. Perhaps it will be the start of a lucrative trade.
As it enters the fine-tuning stage, the MERRP has certainly helped highlight Myanmar’s huge potential for development. But the proof is in the eating, as they say. Business leaders and others will want to see concrete action to help realise this potential. Will the MERRP remain aspirational and unattainable, or prove to be innovative and inspirational?
Source: https://www.bangkokpost.com/business/2024039/myanmar-maps-out-recovery-and-reform