The formerly reclusive Southeast Asian nation is undergoing an economic liberalization similar to what its northern neighbour embarked on in 1978.
At first glance, the idea that Myanmar is a “next China” should strike most readers as absurd. Myanmar’s population of less than 60 million is not even 5 percent of China’s. Most of the people are farmers and don’t even have a light bulb to read by because they aren’t connected to the aging electrical grid. Even factories in the commercial capital of Yangon only have electricity five hours a day. Most people are subsistence farmers who would consider themselves lucky to own an ox.
Myanmar’s wealth and heritage have been squandered as a result of 50 years of disastrous policies that saw it drop from one of Asia’s richest countries to one of its poorest. Its medical school was one of South Asia’s best. Now Burmese doctors work in hospitals from London to Hong Kong while back home the health care system is in shreds. The “Burmese way of socialism,” as the military government that ruled the country after a 1962 military coup styled its policies, was a disaster that might even rival Mao Zedong’s Great Leap Forward.
In short, Myanmar is a lot like the China of 1978 when Deng Xiaoping launched reform and opening up. There is lots of potential, and a fast-growing, mostly young population, with only about 5 percent of the people over 65. People are hungry for change.
I visited Myanmar in May as part of a delegation from the Hong Kong General Chamber of Commerce and found it impossible not to be swept along by the belief that a transformation is underway. A reform-minded government, led by President Thein Sein, has started a sweeping process of economic and political reform. Long-time democracy activist and Nobel Peace Prize winner Aung San Suu Kyi has joined Parliament, with her party winning 43 of 45 seats in recent by-elections. Parliament passed a new foreign investment law in early May. The government has set a goal of creating one million new jobs before the end of its term in 2015. Six different exchange rates are being unified into one market-driven rate. Tax holidays and other inducements for foreign investors are being introduced. U.S. and E.U. sanctions, which badly hurt export industries, are being relaxed.
Officials have embraced change, with more or less enthusiasm, but have limited knowledge of the world beyond their borders. Managerial expertise is extremely limited, as is human capital more generally. Ditto infrastructure: Factories in Yangon typically only get electricity from noon until 5pm, relying on generators the rest of the time. Laws are archaic. The copyright law was enacted 70 years ago, under the British. The Companies Act dates from 1914, when Burma, as it was known then, was ruled as part of the British Raj.
But this country of more than 100 different ethnic groups also has the largest land mass in Southeast Asia outside of Indonesia. It has vast natural resources and a well-educated population. In short, if the economic policy shift now underway takes root, Myanmar is in the early stages of an economic takeoff that could parallel China in the 1980s.
China, too, wasted time during the years from 1949 until new policies started in 1978.
The question many people ask is if Myanmar is the next province of China. The country seemingly has made a strategic decision to ensure that it is not overly dependent on China. It sent shock waves from Beijing to Washington when it suspended work on the controversial US$ 3.6 billion Myitsone dam last year, a joint venture between Chinese and Myanmese companies.
“Are we worried that we will be a province of China?” This was the rhetorical question posed by a prominent member of the country’s business community. “Not really. Why would you leave China with 24-hour electricity, and come to a place where you get electricity every three days, there’s no running water, you can’t speak the language and it’s bloody hot.” China is going to have a say in Myanmar, just as it does in most neighboring countries, but fears that the country will be dominated by Beijing are receding. This is a proud, independent nation.
The embryonic economic liberalization is similar to what China experienced. Of course, it wasn’t only China but South Korea, Taiwan, Singapore and its Association of Southeast Asian Nation neighbors like Cambodia, Vietnam and Thailand that have gone through this sort of economic takeoff.
Myanmar, in short, is trodding a well-travelled road toward a more open economy. It has critical shortages in everything from human skills to infrastructure. But, for better or worse, the promise and perils of Myanmar today are similar to those of China in the 1980s.
Originally published in Caixin: http://english.caixin.com/2012-06-20/100402714_1.html