Friday, April 28, 2017
The Myanmar Times
The Myanmar Times

UK funding for Myanmar likely to fall, but will continue ‘in or out of the EU’

For the past two weeks, Britain’s stunning decision to leave the 28-member European Union (EU) bloc has dominated the world’s attention, sending shockwaves through global markets. Several key issues have emerged at the heart of the bruising post-Brexit debate, ranging from immigration, political fallout and economic meltdown to regulation on bananas.

A man waves an EU flag during the “March for Europe” rally in London on July 2. Photo: EPAA man waves an EU flag during the “March for Europe” rally in London on July 2. Photo: EPA

But one of the biggest issues pushed to the sidelines of the largest political fiasco for decades is humanitarian aid. According to a survey by the Organisation for Economic Cooperation and Development (OECD), Britain is second only to the US in the world league table of aid spending. It was one of a handful of states to meet a target to give at least 0.7 percent of national income to overseas assistance. As other G7 countries fail to meet the UN’s 45-year-old target, the UK’s foreign aid budget has soared by 144pc in 10 years, hitting £13.2 billion (US$17.8 billion) in 2015.

In February, some of the most influential people associated with UK overseas aid organisations cautioned that the outcome of the referendum would have a direct impact in achieving the UN’s sustainable development goals, which include ending poverty, increasing access to education and achieving gender equality. In a signed appeal letter, the leaders warned that withdrawing from the EU would diminish the UK’s role as a global leader in providing international humanitarian aid.

The UK government’s budget for the Department for International Development (DFID) for this year stands at £11.8 billion, with a commitment to allocate 50pc of its budget to “global stability” and to “regions of strategic importance”, which includes Southeast Asia.

In Myanmar, the DFID has been a key player in promoting good governance, humanitarian support and economic development. As the UK government continues its close ties with Daw Aung San Suu Kyi’s National League for Democracy government, it remains one of the largest donors to Myanmar, committing £291 million to support the country’s transition over four years, from 2011 to 2016.

However, the total amount that the UK spends on international humanitarian assistance is pegged to its gross national income (GNI). In the wake of the Brexit announcement, the UK’s £11.8 billion aid budget lost more than £1 billion in global value overnight.

Gavin McGillivray, head of DFID Burma, told The Myanmar Times that the UK’s humanitarian budget is guided by the UK Aid Strategy. Despite the outcome of the referendum, it remains committed to supporting Myanmar’s future development.

“Under the UK law, international aid spending remains at 0.7pc of UK gross national income, which fluctuates in real terms in line with the economy,” he said. He also said that the DFID’s support for Myanmar echoes Prime Minister David Cameron’s commitment to keeping Britain’s promises to the poorest people in the world.

In a statement earlier this week, the British embassy in Yangon also pledged its support to strengthen Myanmar’s democracy. “We are one of its greatest development partners, and our businesses and institutions are building significant ties. Burma continues to hold a special place in the hearts of British people,” it said.

Strong bilateral ties between the two countries will be fundamental in ensuring Britain’s engagement in Myanmar’s humanitarian issues. Human rights activist Benedict Rogers said both countries have a “particularly close relationship”, and most likely the “great interest” in the British parliament in issues related to Myanmar will remain.

“It is fair to say that within the EU, the UK has been the strongest voice for Myanmar over many years. Particularly before the reform period in 2012, the UK fought hard within the EU to ensure that human rights and the struggle for democracy were very much at the heart of EU policy on Myanmar,” saod Mr Rogers, who serves as Christian Solidarity Worldwide’s team leader for East Asia.

Mark Farmaner, the director of Burma Campaign UK, said that despite a possible reduction in the value of UK aid, people in Myanmar are unlikely to notice any difference when the UK is outside the EU.

“There will be a period of volatility with the pound and it will recover some of its strength, but it could remain lower and this will mean less aid. However, the DFID plays a key role coordinating aid within Myanmar, both with EU and non-EU members, and this will continue whether the UK is in or out of the EU,” he said.

Rights groups had earlier raised red flags on the future of international aid funding post-Brexit. Based on the recent figures by the EU’s emergency aid department ECHO, British NGOs received 145 million euros ($161 million) in 2015. UK-registered non-profits will no longer be eligible for that funding, and the ECHO annual budget is also likely to shrink in the absence of UK contributions.

Besides international humanitarian aid, economic development in Myanmar post-Brexit is also a concern. As some of Asia’s biggest manufacturing companies take a hit following the controversial decision, solid economic ties between Britain and Myanmar are expected to remain, said Peter Beynon, president of the British Chamber of Commerce Myanmar.

“The British chamber remains committed to promoting trade and investment between the UK and Myanmar, and to supporting existing and developing new business partnerships between our two countries,” he told The Myanmar Times.

According to the Directorate of Investment and Company Administration, the UK maintains its position as the largest European investor in Myanmar. From 1988 to the 2014-15 fiscal year, UK investments in Myanmar amounted to $31.59 billion. The embassy’s figures also show that UK exports to Myanmar increased from £13 million to £44 million between 2012 and 2013, a staggering 239pc increase.

While potential investors remain vigilant for more Brexit fallout in the region, Myanmar is poised to become a new, attractive low-cost destination for ASEAN-bound investments, said Dustin Daugherty, an analyst at the regional business intelligence firm Dezan Shira & Associates.

According to the latest World Bank figures published in May, Myanmar’s economic outlook remains strong, driven by sound macroeconomic policies. GDP growth in Myanmar is also projected to rise to 7.8pc in 2016-17.

“If the UK becomes excluded from the EU-Vietnam Free Trade Agreement [FTA], which looks increasingly likely, Myanmar could further increase its chances of capturing UK foreign direct investment by continuing its political reform and becoming party to an increasing number of FTAs,” Mr Daugherty said.