The government has presented its long-awaited economic policy on July 29, highlighting the importance of developing a market-oriented system “in all sectors” and establish an economic framework in support of national reconciliation.
Stakeholders looking for a detailed timeline or structured plan were left disappointed. Some felt the three-page document was too vague to be useful, while others were more forgiving, noting that the government has been in power for just four months, and has not had time to write detailed policy papers.
On July 29, Daw Aung San Suu Kyi presented the policy to diplomats, businesspeople and donors. Most reporters were told to wait outside, but a 12-point summary was passed to members of the media after the event. A longer English-language document seen by The Myanmar Times elaborates on some of the key points.
The policy puts national reconciliation as the top priority, based on a “just balancing of sustainable resource mobilisation and allocation across states and regions”.
The government will ensure that natural resource extraction is transparent and sustainable and will extend the Extractive Industries Transparency Initiative remit to include the mining industry, it says, and will also weigh up the costs and benefits of economic policies for their impact across the entire country.
Earlier this week the Ministry of Natural Resources and Environment Conservation demonstrated its intention to shake up the troubled mining industry, by announcing that jade and gems mining permits will not be renewed until new laws are in place.
In its second point, the government says it plans to support competition and a vibrant private sector. It aims to practise a market-oriented system in every sector, cut unnecessary red tape, dilute the power of monopolies and expand access to credit.
The third point develops the National League for Democracy’s promise in its economic manifesto to strengthen public financial management and work on fiscal prudence and macroeconomic stability.
This includes making public spending more efficient, improving budget transparency and privatising “appropriate” state-owned enterprises, which are an enormous burden on the budget, though an open and transparent process.
The government also plans to tackle smuggling, or “fully account for Myanmar’s foreign exchange earnings”, especially from the sale of natural resources, streamline the tax system to boost public revenues, and develop capital and money markets to help finance the growing budget deficit, which is expected to reach K3.76 trillion by the end of this financial year.
The fourth point in the ambitious document refers to infrastructure development, noting that the government is preparing an infrastructure policy, which will focus on producing and distributing power, building and maintaining rural roads, and developing better port facilities.
Fifth, the government will support the agriculture and livestock sectors to promote inclusive growth, enhance food security, increase exports, and boost living standards. Farmers will be given full production freedoms, while the state will support high value-added crops and livestock breeding.
Farmers will have more access to credit, land tenure will be strengthened and production chain sectors improved, it says.
Sixth, the government says it will focus on job creation to reduce domestic poverty and inequality and encourage migrant workers and the displaced to return from overseas. It sees most jobs being created in special economic zones, and by infrastructure development projects, particularly in rural areas.
In its seventh point the government says it welcomes foreign direct investment. It is preparing a more detailed policy note on this, but in brief it will promote responsible business by creating a stable environment where companies feel secure to invest, and improving property rights and the rule of law.
The eighth point addresses human capital and commits to developing a skilled workforce to fill jobs created in the manufacturing and services sectors. To support this goal, the state will improve healthcare and academic and vocational education, while enforcing international standards on labour rights.
The ninth point covers monetary and fiscal stability and the creation of a financial system that can sustainably provide capital to businesses, farmers and households. The underdeveloped financial sector currently excludes large sectors of the economy, but will soon be liberalised to encourage growth, the government says. It will review limitations on bank lending, enable mobile banking, allow foreign insurance companies into Myanmar and aim to get a sovereign credit rating.
Tenth, the government will reform state-owned enterprises, making them more accountable and responsive to the public, and privatising them where necessary. They will be audited as a prerequisite for their reform or transformation.
In the 11th point the government says it will help small and medium enterprises by improving the ease of doing business in Myanmar, increasing access to financial services and developing a more skilled workforce. Myanmar was ranked 167 out of 189 countries in the World Bank’s ease of doing business ranking last year.
Finally, the government says it will promote inclusive economic growth and development, “to enable our country to escape poverty and achieve the prosperity our people deserve”.
“Democracy, the rule of law, the promotion of human rights, are ends in themselves, and need no economic or other justification,” it says.
A step in the right direction
The policy has been generally well-received by business leaders, although some have been disappointed by its brevity. U Maung Maung Lay, vice chair of the Union of Myanmar Federation of Chambers of Commerce and Industry, said it is a good first step.
“I see an elaboration of the National League for Democracy manifesto. It seems more will follow. Rules, regulations and laws have to be elaborated and defined,” he wrote yesterday in an email, while stressing the importance of support from all sides.
“The stakeholders are the most important. We all should make the dreams come true. Each and everyone should contribute in order for Myanmar to regain its past glory,” he said.
Sunil Seth, the Myanmar head of the multi-billion-dollar Tata Group, one of India’s largest companies, said he is happy with the new policy.
“While it sets the direction going forward at a broad level it covers all important sectors like power generation, infrastructure development, agriculture, mining, and small and medium enterprises,” he said.
“It will certainly trigger foreign investment and with this clarity on economic policy, Tata Group will also consider opportunities in power generation including renewables, infrastructure development, automobiles and agriculture.”
U Kyaw Kyaw Hlaing, chair and CEO of Smart Group of Companies and president of Myanmar Oil and Gas Services Society, agreed that the policy is generally good.
“However, it covers a lot of different points, which raises the question of whether it can all be achieved or not,” he said, noting that three points should have been given more attention – responsible business, services and the extraction of natural resources.
For U Soe Tun, deputy chair of theMyanmar Rice Federation, the wait is not yet over.
“All sectors are covered by the policy, but there are no priorities. It is too general, we can’t focus on anything by looking at it,” he said. “So we just have to do one thing – wait and see.”
Additional reporting by Aung Shin,translation by Khant Lin Oo and Thiri Min Htun