Friday, September 22, 2017

GDP growth not enough for economic progress

The advent of new government is likely to provide a short-term boost to GDP, but long-term inclusive economic growth will be more difficult, said government officials and economists at a conference this week.

The two-day conference, held on January 11-12 at the Yangon Economics Institute, was titled “New Myanmar beyond 2015: The need for a new paradigm”. The event brought together local economists, economic advisers to the president and government officials.

Although Myanmar has posted robust GDP growth, which is expected to continue, the benefits have accrued to a small proportion of the country, attendees heard. The IMF projects real GDP growth of 8.5 percent for 2015 and 8.4pc for 2016 – up from 7.8pc in 2014. But despite the upturn, real economic improvement was still lacking, said U Tin Win, chair of the Yangon Economics Institute’s Maykha Hall Foundation.

The share of economic growth was still unfair, with business activities monopolised by a relatively small group of people, he said. “We have to try [for a] strategy that shares improvements in business fairly among [the majority of] people,” he said. Such a plan would not materialise immediately during a transition between governments, he added. But a collective approach was still necessary to build a successful strategy, U Tin Win said.

Although GDP growth reached 8.5pc in 2015, inflation over the 2015-2016 financial year may reach 11.3pc – due to currency depreciation and nationwide flooding, the World Bank said.

Conference delegates also raised the issue of corruption, which is still a serious problem in Myanmar. Weak economic laws and policies have also delayed economic development, they said. Weak regulations would prevent significant economic growth in 2016, although progress on this front could pave the way for economic development over the long-term.

“We will search for a solution,” U Khin Maung Nyunt, a senior economist for the ASEAN-Australia Development Cooperation Program, told The Myanmar Times. “Myanmar has good policies, but it is weak in implementing them. The economy will develop in 2016, but the development might be better if [policy] implementation was conducted systematically.”

Trade volumes between April 1, 2015, and January 8, 2016, reached US$20.76 billion – $1 billion lower than the same period the previous year, according to the Ministry of Commerce. The ministry said the drop was down to a decline in export revenue, which was over $1.1 billion lower, according to a ministry statement.

Some 70pc of Myanmar’s population depends on the agriculture and livestock, according to government officials who spoke at the conference. But investment in agricultural areas, such as rice production and fisheries, has been lacking. Production in those areas has declined over the last few years, and his in turn has hurt agricultural exports.

The country received more than $4.1 billion in foreign investment between April 1, 2015, and December 31, which again was lower than the same period in 2014, the directorate of Investment and Company Administration said.

U Aung Thura, CEO of Thura Swiss, a financial consulting firm, said that it was necessary to improve the management standards in government ministries and departments. Weak management was compromising economic growth in Myanmar, he said.

If the government was to concentrate on one area, it should be reducing corruption, he said. In many cases things could be improved through simply tackling corruption, rather than changing the system, he said.

Better international relations under the incoming National League for Democracy (NLD) government would bring changes, U Aung Thura said. But real improvement would depend on how much change the new government really wants to see, he said.

The NLD takes office in just a few months, but has made no comments on what policies it will implement in the business sector.

Translation by Kyawt Darly Linn and Thiri Min Htun