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Just as Myanmar’s long-detained icon Aung San Suu Kyi began campaigning for a parliamentary seat, the country’s President Thein Sein made a state visit to Singapore.
Accompanied by a high-level delegation, the President’s visit concluded with an agreement for technical assistance and training in a number of key areas including finance, investment law and trade facilitation.
These two events over the same week demonstrate the ambitious pace of change and growing confidence in Myanmar. Reaching out to Singapore also brings into the spotlight an economic dimension to the ongoing political reform.
The Association of South-east Asian Nations (ASEAN) – the regional group to which Myanmar belongs – wants to be supportive and so does Singapore, as a major hub for the region. This goes beyond the politics of having Myanmar assume the group’s chairmanship in 2014.
ASEAN’s plan for a more integrated economic community, targeted for 2015, can also gain.
Much, however, depends on whether sanctions put in place by the West for more than two decades are lifted. The European Union has already begun to unwind its sanctions. In Washington, a complex legal process is gaining bi-partisan support.
There is cause for optimism, but is Myanmar ready for business and investment? Can the country follow up on its current political reform with parallel reforms to the economy and boost the country’s development?
A recent publication by the International Monetary Fund (IMF) predicts the economy will grow at a rate of some 5.5 per cent for 2012. Such projections – in line with neighbouring Indochinese economies – are significant given the weak global outlook. But there is potential for greater, sustained growth.
A strategic location that can link China, India and South-east Asia
Consider the country’s ample natural resources of oil and gas, as well as forestry products and minerals. Factor in a strategic location that can link China, India and South-east Asia. Add also that Myanmar has a sizeable population of some 54 million, many of whom are of working age and eager for jobs. The economy, among the region’s poorest at present, has the potential to grow.
There are, of course, concerns, many of which are typical of frontier economies – like the need for infrastructure and concerns about corruption and power shifts during this political change. But Myanmar also faces special challenges.
One key issue – as pointed out by the IMF – are exchange controls and currency stability. Officially, US$1 (S$1.26) is exchanged for just six Myanmar kyats. But in the widespread black market, the rate currently hovers around 750 kyats and has been as high in recent years as 1,250 kyats. Only with astute financial management can the country hope to liberalise its currency while maintaining macro-economic stability.