Myanmar

Myanmar is a multicultural society comprising some 135 ethnic groups, with Bamar, Chin, Kachin, Kayah, Kayin, Mon, Rakhine and Shan being the largest communities. Women’s equal rights are safeguarded in national legislation, as well as in traditions and dhammathats (customary laws). Despite this legislation, there is a gender-based division of labour: in addition to performing 80% of all agricultural labour, women carry the main burden of household work.

This chapter considers how and if economic reform in Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV) has reduced poverty and income inequality. It opens with a brief introductory section that puts CLMV in a regional context and outlines the themes the chapter addresses. The section on the CLMV experience of poverty and inequality – country by country – examines each country in turn, sketching its history from independence, its experience of war, and its transition from a centrally planned people’s democracy to a market economy in the 1980s and 1990s. In this respect, Myanmar is an exception as it is only now ushering in its first tentative reforms. Cambodia, Lao PDR and Viet Nam, however, have effectively rebuilt and reaped the benefits. Their export-driven economic growth has been strong. Cambodia and Viet Nam have diversified their economies away from agriculture and both are currently fostering eco-tourism and new green industries. All three have reduced poverty – Viet Nam by half. Income disparities, however, persist between men and women, urban areas and rural regions, and ethnic groups. Inequality has actually widened in Lao PDR. CLMV have much to do to ensure development is inclusive and sustainable: further build infrastructure and institutional capacity, widen equitable access to education and employment, make the business environment investor-friendly, invest in human capital, nurture small and medium-sized enterprises, weed out corruption. The section on CLMV countries briefly compares the four countries and their performance in reducing poverty and inequality. Myanmar is a constant exception, principally because so little data are available. However, the final section “Conclusion”, also applies to Myanmar: economic growth does not of itself deliver equally shared benefits for all.

This volume is the first of the OECD Development Pathways, a new series that looks at multiple development objectives beyond an exclusive focus on growth. The series starts with Myanmar, a country to be covered for the first time by the OECD. This initial assessment shows that Myanmar’s success in achieving stable and sustainable growth will depend vitally on its ability to develop the institutional and social capital necessary to maintain macroeconomic and financial stability, to ensure the rule of law, to achieve environmentally sustainable development and to create an enabling environment for the private sector. To be sustainable, growth also needs to be more equitable and inclusive. Seizing the momentum created by the country’s opening and internal peace process will be imperative. Moreover, Myanmar’s increasing population provides a demographic dividend which needs to be reaped in the next couple of decades to boost the potential of the economy. After that, the population will begin ageing and Myanmar risks getting old before the incomes and living standards of its people can significantly improve.

Myanmar boasts numerous assets including fertile land that is rich in minerals and hydrocarbons, forests and hydro-resources, and a relatively young population. By coupling these assets with its favourable geo-strategic location in a dynamic region, Myanmar can establish a multi-pronged strategy for sustained, rapid growth and development based on agriculture, resource extraction, manufacturing and services. Yet time is of the essence: Myanmar’s now comparatively young population will start ageing in the next two decades. If the momentum for development created by the country’s opening and internal peace process is not seized, Myanmar could get old before it gets rich.

Transitions are complex phenomena which require astute policy making backed up by unwavering political will. The progress made in Myanmar since the start of its transition process in 2011 has been remarkable, particularly given the country’s unique challenge of a “triple transition”. In the political sphere, the country has moved from military rule to multi-party democracy; economic reforms aim to transform a largely centrally planned economy to a market-based one; and finally, negotiated ceasefires in the on-going peace process have halted several of the prolonged conflicts in the country’s border areas.

The following chapter provides an overview of the development opportunities and challenges facing Myanmar, framed in terms of the four capital stocks – physical, human, institutional and social – which underpin development. The discussion begins with an assessment of Myanmar’s assets, notably its fertile land, natural resources, rich cultural heritage, abundant labour and strategic geographical location. It then examines the key challenges the country faces to ignite growth that is both sustainable and equitable and looks at factors determining the longterm potential of the economy, such as demographics. The chapter closes with an analysis of well-being in Myanmar, drawing on the OECD How’s Life? framework, and compares indicators of well-being for Myanmar over time and in relation to other countries in the region or at similar levels of economic development.

Economic growth is just one facet of development. Policy makers are focused on ensuring that their country’s development path is sustainable and that the lives of citizens improve, which calls for the need to reconcile economic, social and environmental objectives.

The following chapter examines the policy challenges facing Myanmar in achieving growth that is more inclusive and which provides more equitable opportunities than it has in the past. The first section examines Myanmar’s recent growth performance in order to highlight which groups in society have benefited and which have been excluded, looking at levels of poverty and inequality and sources of growth. The discussion then turns to people’s access to public services and goods, looking at differences in access between poor and non-poor households, between rural and urban areas, across different states and regions, and along gender lines. Equality between ethnic groups is also discussed in the context of building a multi-ethnic state. The chapter ends by assessing the state of trust in Myanmar’s institutions, looking primarily at trust in public institutions, and suggesting ways to build this component of social capital.

This chapter discusses the policies being undertaken by Myanmar which aim to achieve stable and sustainable development and identifies issues for further attention, particularly in relation to building up institutional capital. It focuses on four priority areas: establishing sound frameworks for macroeconomic and financial stability; strengthening the rule of law; achieving environmentally sustainable development; and creating a level playing field for the private sector. The section on macroeconomic stability examines the country’s financial sector and frameworks for monetary, exchange rate and fiscal policies. The discussion on the rule of law assesses the reforms and legislative changes underway as well as the progress made in strengthening voice, accountability and transparency. Next, the degradation of Myanmar’s natural resources, the sources of pressure on these resources and the country’s legal framework and institutions for environmental policy are discussed. The section on private sector initiatives describes the characteristics of Myanmar’s business sector before turning to examine the legal and regulatory frameworks governing private initiatives. The chapter ends with an examination of Myanmar’s human and physical capital stocks.

While the Emerging Asian region has positioned itself well to weather short-term economic volatility, it is imperative to ensure that the new growth and development strategies of countries in the region do lead to sustainable growth over the longer term. To this end, there must be structural policy reforms to ensure sustained and robust productivity growth, the cornerstone of every nation’s economic growth and competitiveness. The reforms should also target upgrading of economic activities to ensure that the region’s economies can remain competitive participants in global value chains in the face of changing domestic and external conditions.

This comprehensive review of Myanmar's policies regarding inward direct  investment covers such issues as trends in investment in Myanmar, responsible business conduct, regulation and protection of investment, investment promotion and facilitation, tax policy, the financial sector in Myanmar, infrastructure in Myanmar, and sustainable investment in Myanmar's agriculture.

This chapter looks into Myanmar’s challenges for developing its financial sector and current reforms being implemented by the government. It begins with a brief description of Myanmar’s financial sector stage of development, followed by an assessment of regulatory deficiencies that have prevented the development of the banking sector. It looks into regulatory asymmetries between private and state-owned financial institutions that prevent greater competition in financial sectors and examines briefly some current institutional framework challenges that discourage the development of financial services in the country. This chapter also outlines the government’s recent reform efforts to modernise Myanmar’s financial sector and expand access to finance, including recent reforms to introduce more competition to the banking sector by allowing the entry of foreign banks. This chapter also briefly covers challenges and reforms being implemented to build Myanmar’s capital market.