Myanmar, a country with a population of approximately 55.0 million (according to the website of CIA World Factbook) people comprising of various ethnic groups such as the Shan, Karen, Chinese, etc., shares borders with Thailand, Bangladesh, and China. Lately, there has been much discussion over the potential economic growth happening in Myanmar under the current civilian administration led by President Thein Sein. The country is perhaps famous for its iconic political figures, including the Nobel Peace Prize winner, Ms. Aung San Suu Kyi, and famous golden Buddhist Pagodas, along the Irrawaddy River delta region.
In a recent Bloomberg.com news article published on May 29, 2013, it quoted that, according to a research report by McKinsey Global Institute, Myanmar is expected to attract as much as $100.0 billion in foreign direct investment (FDI) over the next two decades as it transitions itself from a military junta to a market-based economy. This form of transformation is reminiscent of what Vietnam, and other Indo-Chinese countries have experienced following the withdrawal of the final American presence following the end of the Vietnam War in 1975, and the lifting of US sanctions during the early 1990s under the administration of President Bill Clinton.
In the McKinsey Global Institute report, the authors estimated that Myanmar’s gross domestic product (GDP) could more than quadruple to $200.0 billion with an estimated 8.0 percent annual growth rate, which is much like the average GDP growth rate seen in China recently. This, according to McKinsey, is almost double the pace from 1990 to 2010, which may help the country to lure in approximately $170.0 billion in capital inflows, with FDI accounting for approximately $100.0 billion, more than twice as much as it attracted in the previous two decades.
The country has also come into prominence lately under somewhat similar circumstances as most of the Indo-Chinese countries, including Vietnam, following the lifting of trade sanctions. The civilian administration has been in rule since 2011 and with the release of political icon Ms. Suu Kyi in the second half of 2010, and parliamentary elections that took place in April 2012 that witnessed the victory and comeback of Ms. Suu Kyi and her party, the National League for Democracy (NLD). The restoration of the civilian administration and the gradual political reforms being introduced in the country has also shown some positive reception of foreign investors, and governments as the major trade embargoes imposed by the US and European Union (EU) were lifted. This turn of events has resulted in foreign investors, including those from Singapore, the US, EU, and Chinese, among others are showing renewed interest in the country’s potential, and are streaming into the country in the bid to tap its vast pool of cheap labour, natural resources, infrastructure contracts, etc.
Recently, the International Monetary Fund (IMF) released its semi-annual world economic growth forecast report, which cited Myanmar’s economy may grow 6.75 percent this fiscal year (FY 2013), and is expected to be led by natural gas sales and investment as the country takes concrete steps to modernise its financial system, namely the convertibility of its national currency, the Kyat, against other foreign currency quotes. This process is currently being implemented in phases as the economy is slowly opening up to FDI. The civilian government leaders and policy makers do recognise the need to reform its monetary system in order to ensure sources of capital are available and be easily transacted.
With FDI slowly streaming into the country, there has also be attention focusing on the current ethnic clashes among the Buddhist majority and the minority Muslim population. This has resulted in an some discomfort shown by many governments, including US President Barrack Obama who met with President Thein Sein last week in Washington D.C. President Obama urged the Myanmar leader to do more to ease the sectarian and religious violence inflicted among the Muslim minorities by the majority Buddhists. In my opinion, if the religious violence does escalate, this could hamper Myanmar’s continued economic growth, and uneasiness among foreign investors as it relates to the security and well-being of their assets in the country. The country is also trying to lure in tourism dollars from abroad, but the issue of safety could hamper tourism growth if the issue of religious and sectarian violence is not being resolved amicably.
In conclusion, I believe that Myanmar could be the next wave of growth in Asia, and the country has shown some positive signs of reforms, and change. The country has a vast pool of untapped resources, and scenic beauty, especially its iconic Buddhist pagodas which are poised to be potential UNESCO world heritage sites. This could attract additional visitors from abroad. However, the country still needs to resolve its ethnic differences through conscientious reforms in ensuring ethnic and religious harmony are being maintained at all times