Myanmar: Time to fix the economy with action, not words
Peace in Myanmar has come with a heavy price tag.
Economists and business owners, while acknowledging and applauding the measures put into achieving peace and stability, say the National League for Democracy-led government has largely ignored the economy during its first year in power.
Some experts and entrepreneurs told The Myanmar Times that the government needs to focus on ways and means of stimulating economic growth and getting the budget, monetary and fiscal policies fixed so that real benefits can be drilled down to the ground.
Economists say that the fluctuating exchange rates and inflation have brought the economy to a standstill and brought hardship to the people as well as uncertainty to the economy.
Economist Dr Soe Tun said: “It is time to focus on the economy and people at the grassroots level as it is the ordinary folk who will feel the pinch and ultimately bear the brunt of this failure if the country goes on this way.
“It could be very dangerous for the country in the long-term. The people can tolerate this situation for one or two years, at most. Making a living will become more and more difficult if the economic ills are not addressed,” he said.
He added that despite the high expectations that there would be an influx of local and foreign investments after the new government took office, this has yet to happen.
Some experts The Myanmar Times spoke to said that the new Investment Law enacted to encourage local and foreign investments to create new jobs, has yet to kick in.
“This [delay] is because there are inherent weaknesses in some policies and the bureaucratic red tape of the previous government still persists,” they said.
In fact, economists say that in some cases it is now taking more time under the new government to get things moving.
Dr Soe Tun cited the motor vehicle policy as one area where there is uncertainty.
“For example, there are some new policies relating to motor vehicles and the transport sector. But they are vague and there is no clear way of knowing what they are all about.
“Investors are clueless about which direction to take and what the government intends to achieve in the transport sector. There is also no solid policy covering the use, sale and rental of cars,” he said.
As part of the efforts to address economic problems, the Minister of Finance and Planning, U Kyaw Win, met representatives of the country’s entrepreneurs and discussed ways and means on how to fix the situation and provide a clear direction for the road ahead.
Also on the discussion table were broad policy announcements on the issuing of business permits and licensing relating to investments in Regions and States in the Union.
Entrepreneur U Myat Thin Aung said that U Kyaw Win and State Counsellor Daw Aung San Suu Kyi met members of the business community about a year ago, but the outcome was disappointing.
“Daw Aung San Suu Kyi merely provided advice. There was not enough time to discuss the real difficulties entrepreneurs faced on the ground. Many were left disappointed after the meeting. If Daw Aung San Suu Kyi did not have enough time to spend with them, there should have been discussions with other officials.
“Union Minister U Kyaw Win sometimes comes to the UMFCCI [Union of Myanmar Federation of Chambers of Commerce and Industry]. But, the meetings excluded people who could work out ways and means of addressing issues. We did not have enough time to cover ways to bypass economic difficulties or get specific relief. It would be great to have these things done this year,” he said.
A year ago, the NLD-government had announced a 12-point economic policy on the future direction and measures planned. But, the public and and business community were in the dark as to the details of this plan.
Some of the entrepreneurs felt that action speaks louder than rhetoric. In order for the business community to thrive, they said clear and uncluttered procedures must be in place and red tape must be eliminated to ensure economic development.
In addition, there must be proper infrastructure in order to implement many economic policies.
An unforeseen inflation rate last year added to the woes of both the people and businesses. The fall in the value of the kyat exacerbated the problems and resulted in belt tightening in an already tight situation.
The problems were compounded by a slow economic growth that had a domino effect on business, resulting in fewer job opportunities.
Economic adviser to the NLD government, U Ye Min Oo, said that there were initially teething problems when ministers were appointed to various portfolios.
He said that during the first year after taking over the government, there was insufficient time to study the workings of individual ministries as well as integrating and avoiding overlapping of functions.
This resulted in the inability to appoint the right people as deputy ministers to run the day-to-day functions. As such, reforms came very slowly while ministers and officials grappled with the system that was put in place by the previous governments.
After a year in power, the NLD government has gained valuable experience and should be better placed to address the economy and problems plaguing the country.
U Ye Min Oo said: “They accepted that the economy declined last year but assured measures would be taken redress the situation this year.
“We expect the economy to improve next year. However, it will take time to get the momentum going. I think the government has now realised that politics alone do not make the country work. They should also fix the economy.
If all of them make a concerted effort, the economy will pick up.
“Economic growth depends on how long an enterprise has been around and the way business permits are issued.
Based on the current situation – the local production figures, trade balances of neighbouring countries and the acumen of our entrepreneurs – the economy can only develop to a certain level,” U Ye Min Oo said.
“Myanmar’s economy cannot be like the US or Singapore. I think it started in the right direction and momentum.
These measure must continue. Is Myanmar producing a lot of oil, gas, jade or minerals?
“If not, we do not have many economic chips to bargain with. We should reduce imports from other countries. We must try to produce goods and services locally,” he added.
The government needs to support local production but at the same time discourage imports. To develop and improve local production, the government should invest in or provide technical and other support to help local manufacturers, business experts told The Myanmar Times.
One area to focus is the food manufacturing sector. Businesses will develop with government support as food products can be manufactured locally without the need to import and result in self-sufficiency.
The food manufacturing sector is the main engine of the Small and Medium Enterprises (SME) program that is headed by the president,
The SME working committee should be effective and act quickly on proposals, for it to be beneficial to the sector. It is only when the local manufacturing sector attains self-sufficiency, can imports be reduced and the outflow of cash be cut to achieve a balance between income and expenditure, economic experts pointed out.
They said that policies must be turned into action to invite Foreign Direct Investments (FDI) to support economic development.
U Ye Min Oo added: “There must be a conducive environment to make Myanmar attractive to FDI. Promises alone will not do. We must create enticing ways for them to invest. We must make them willing to come and take the first steps. Empty invitations will not do.”
Other experts said that for foreigners to do business in Myanmar, they had to go through the rigmarole of red tape and procedures involving several ministries. They said that only when these bureaucratic obstacles are removed, would more FDIs come in.
One entrepreneur voiced his concern about the need to maintain peace and stability in the country and the nexus between economic development and armed conflicts.
“There is a direct correlation between the peace in a region its economic development. Armed conflicts may lead a region to be underdeveloped and sometimes it could be the other way round. Both are intertwined. The economy of a region and the peace enjoyed are related.
“Part of the reasons for many regional conflicts could include the lack of job opportunities and education. When there are no jobs and a lack of education, the result may be crime and armed conflicts, he said.
The NLD government must take cognizance of the connection between peace and a stable economy.
With peace, policies and economic measures can be implemented and carried out in a structured and unfettered manner for the nation to develop and prosper.