Myanmar’s Development Agenda – Opportunities and Challenges

I was fortunate enough to participate at the recent Myanmar Development Summit held in Yangon on the 10th of August 2014. I participated in a panel discussion on the opportunities and challenges for Myanmar’s development agenda.


Panel discussion: Myanmar's development agenda - opportunities and challenges
Panel discussion: Myanmar’s development agenda – opportunities and challenges (L-R: Dr Thet Thet Khine, U Aye Chan, U Kyaw Tin, Dr Maung Maung Lay, Reza)

The panel was moderated by U Kyaw Tin, Chairman of the Myanmar Institute of Certified Public Accountants and I shared the panel with Dr Maung Maung Lay, Vice President of the Union of Myanmar Federation of Chambers of Commerce and Industry, UMFCCI, Dr Thet Thet Khine, Secretary General of the UMFCCI and U Aye Chan, CEO of IMA Group.

Developments to date

Over the last few years as Myanmar has opened up economically and politically, there have been some major strides made in a number of areas:

1. Social and political reforms:

Politically we have seen a greater freedom of speech, improved press freedom and broader steps towards national reconciliation. The ongoing dialogue with armed groups in a number of states is also a step in the positive direction.

In the last three years government spending on education has more than trebled (it was increased by 30% in the last year alone) and government spending on healthcare has almost increased five-fold (it grew by 78% in the last 12 months alone).

The government has also implemented a strategy for greater public financial management reforms to enhance efficiency and transparency of government spend.


2. Improved monetary policy and central bank independence

The monetary policy has improved starting with the unification of exchange rates (there used to be a time where the official kyat to US dollar rate was 8 kyat to a dollar whilst the market rate was closer to 800 kyat to a dollar!).

The regulations governing central bank independence have also been brought more in line with international best practices, granting the central bank greater independence and autonomy.


3. Improved tax collection and reforms

With support from the World Bank, Myanmar is also embarking on a series of ambitious tax  reforms to strengthen revenue administration, which will increase the effectiveness of tax and non-tax revenue mobilization.

This was further supported by the passing of the Union of Myanmar Revenue Law of 2014 and four other tax bills in March this year.


4. Improving business, investment and trade climate

Approved FDI has increased to US$4.1 billion in 2013/2014 (almost 300% from 2012/2013 when it was only US$1.4 billion). The investment has also been distributed across a diverse range of sectors from manufacturing (45%), telecommunications (30%) and hospitality hotels (10%). This will prove beneficial in the long term as it will increase employability whereas investment primarily in the resource sector would have not necessarily created sufficient job opportunities. The investment has also come from unlikely trade partners including Ooredoo of Qatar and Telenor of Norway (both in the telecommunications sector).

This improved business climate has come on the back of passing of the Foreign Investment Law (FIL) in late 2012 which provided better clarity for international businesses seeking to do business in Myanmar along with the removal of restrictions and barriers to foreign investment. The highly efficient Directorate of Investment and Company Administration (DICA) have also reduced the time for businesses to establish operations in Myanmar (this is also on the back of my own personal experience as we established our operations in Myanmar).


5. Progressive financial sector developments

The government is working very closely with industry stakeholders as Myanmar seeks to establish its first stock exchange in Yangon – the Yangon Stock Exchange (YSE).  This is following the passing of the Securities Exchange Law last year.  Japan’s Tokyo Stock Exchange (TSE) and Daiwa Securities Group, a Japanese investment company will supporting Myanmar in delivering the YSE by October 2015.

A microfinance law was also passed last year to improve access to finance for small and medium sized firms and to increase the level of liquidity in the market.

Banks are also being held to more stringent regulations and are required to improve their capital adequacy ratios to be more in line with international best practices.


Some key facts to consider:

  •  GDP growth was 7.5% in 2013 (forecasting 7.8% in 2014).
  • Agriculture provides jobs for over 50% of Myanmar’s workforce.
  • Government budget for 2014 was US$ 19.5 billion (a third of Myanmar’s GDP)
  • Inflation has been creeping up and is expected to increase to 6.6% in 2014 from 5.8% in 2013. This is as a result of the weakening of the kyat vis-à-vis the US dollar, increasing wages (both in the private and public sector), a real estate boom/bubble and increased credit.
  • According to McKinsey, Myanmar has the potential to achieve a GDP od US$200 billion per year by 2030 (it was just under US$60 billion in 2013).
  • The average productivity of a working individual in Myanmar is currently only US$1,500 per annum (which is 70% less than other Asian economies including Thailand, China, Indonesia, India, Vietnam, etc). This low productivity also results in the low GDP per capita.


Key areas of focus for sustained development and progress:

Below are seven areas I view as critical for Myanmar’s continued development and progress. The achievements to date remain delicate and can be easily derailed if some of the below trends and developments are not addressed sufficiently.


1. A need for harmonious development.

One of the biggest perils faced by rapidly emerging economies is a severely widening income gap. It is vital that Myanmar addresses the issue of income inequality by providing broader employment opportunities and increase the number of middle-class Burmese.

It is also important that Myanmar’s leadership resolves on-going ethnic and sectarian tensions and friction in the country. This can severely destabilise the country and reduce the quality of life for Myanmar’s people. There has to be greater social and religious tolerance. Persistent incidences of communal violence between the Buddhists and Muslims are exacerbating the tensions. The government should support further initiatives by centrist leaders of the Muslim and Buddhist communities and support greater dialogue between the various communities. There needs to be greater efforts to reform education starting with the primary levels, to encourage greater tolerance for the different ethnicities and religions in the country.

The role of the military is still not entirely clear and this ambiguity needs to be resolved for a greater entrenchment of democracy taking root in the country so as to produce the optimal opportunities for further growth.


2. Improving access to education and creating educational opportunities for all.

Myanmar’s investment in education has increased significantly over the last three years but it still has one of the lowest averages of schooling the world at just four years. The universities and institutions of higher learning remain chronically underfunded and after four decades of neglect, do not yet have adequate infrastructure. However, this is slowly changing with the likes of Yangon University, Yangon University of Economics and Dagon University striking up partnerships with other top universities and organisation. This will help improve the teaching faculty and also provide greater exposure for the students and staff of these universities which will in turn improve overall performance.

A good national education is also essential for enhanced social mobility. The notion of social mobility is critical in helping people move out from the cycle of poverty and in increasing the middle class segment of a nation. Social mobility can only take effect if the right opportunities and education is provided to the people. As Myanmar continues its growth and development, the educational institutions will need to prepare Burmese youth with the right skills and capabilities so that they can gain meaningful employment and support Myanmar’s development.


3. Improving employability, productivity and efficiency

For growth and development to remain inclusive and sustainable, it is important that investment continues in the areas of labour intensive industries and sectors such as manufacturing.

The majority of the population still live in poverty (GDP per capita based on purchasing power parity is about US$3.60 per day)

The government is focusing on an export-led growth supported by productivity gains in agriculture and industrial development. President Thein Sein’s ‘Framework for Economic and Social Reforms’ launched in 2011 emphasised the need for a market-driven economy to support economic growth and to provide jobs and opportunities for Burmese.

There must be greater support provided to farmers and the agricultural sector (which as I’ve stated above provides employment for more than half of Myanmar’s working population) to introduce modern practices and improve productivity. Over time, this ensures greater food security for Myanmar and it also helps to boost the export-driven economy which Myanmar is gearing up towards as food production increases. Myanmar’s agricultural sector is also endowed with the 25th largest arable land in the world and has ten times the per capita water endowment of China and India. This gives the opportunity for Myanmar to be a true powerhouse in agriculture and help feed the world’s growing population.


4. Increasing access to finance

As Myanmar’s banking sector continues with reforms, increasing access to finance for smaller and medium sized businesses will help increase further growth, productivity and employment. There isn’t sufficient liquidity in the market and SMEs in Myanmar do not yet have the same impact as SMEs in other ASEAN countries. Part of this is due to a lack of sufficient access to finance which will allow for Myanmar SMEs to compete with their regional counterparts.

On an individual level, more than half of Myanmar’s population have no access to financial services, 30% are using unregulated services and only 20% have access to regulated financial services. The limited access to regulated financial services not only impose significant costs on poor people given interest rates of up to 240%-a-year compared to up to 36%-a-year for regulated services, but informal mechanisms also offer individuals limited protection, less choice and lower returns.


5. Sustained commitment to reforms and global standards.

Myanmar has adopted international standards in a number of areas. They adopted the International Financial Reporting Standards (IFRS) along with the International Standards on Auditing (ISA). The government, in an effort to boost transparency and greater fiscal control and management have also adopted the International Public Sector Accounting Standards (IPSAS).

Myanmar is also currently reforming the Companies’ Act which is still loosely based around the 1914 Burma Companies Act! This will ensure greater clarity for enterprises operating in Myanmar and also improve business and investor confidence and sentiment.

Myanmar has also recently become a signatory to the Extractives Industries Transparency Initiative (EITI), a global anti-corruption scheme that requires member governments to disclose payments earned from oil, gas and mineral wealth. Burma’s EITI arrangement could also be expanded to include hydropower and forestry.

Such initiatives will support Myanmar’s reform efforts and development and pave the way towards strong frameworks that support sustainable and inclusive growth.


6. Greater transparency, accountability and robust governance

President Thein Sein set up an anti-corruption committee to weed out corrupt public officials. Corruption poses one of the most severe threats to Myanmar’s reforms and development. Crony capitalism exacerbates issues of income inequality and social discontent and the government will need to continue to act to curb corruption.

He also implemented various initiatives to improve administrative reform and cutting red tape.

Though efforts have been made to establish a stronger rule of law, the daily papers recount stories of land grabs, ethnic and sectarian conflicts and corruption and the pervasive conflicts of interests across all levels of government and business. There needs to be grater efforts in the areas of establishing an independent judicial system that will allow for a stronger implementation of rule of law. A clear and robust rule of law improves public confidence, enhances investor sentiments and paves the platform for sustainable growth.


7. Capacity building with an eye on sustainability

Myanmar has to undertake sufficient capacity building – both in terms of people capacity as well as physical capacity.

Myanmar’s current physical infrastructure is not adequate to meet future growth demands needs. Massive infrastructure investment in the areas of power, water, rail, road are being planned both locally and with foreign investors’ assistance. However, as Myanmar builds more roads, more railway tracks, better power grids and improved water systems, it will be important that there is effective and well-managed town planning and resourcing. We already are witnessing severe traffic congestion and delays, particularly during peak periods, and it this continues, Yangon’s traffic issues could well rival Jakarta’s or Bangkok’s and this becomes a huge social and business cost. Investment in technological upgrades and telecommunications must also continue as Myanmar’s telecommunications and Internet infrastructure still lags that of the rest of ASEAN.

These infrastructure improvements must also consider the wider impacts on sustainability (including social, human and environmental). Myanmar’s decision to suspend the construction of the Chinese-backed Myitsone Dam in Kachin state due to environmental concerns was a step in the right direction. It is important that Myanmar’s leadership consider the longer term impacts over the possible short-term benefits when making infrastructure plans and decisions.

Physical capacity building must be matched by sufficient human capacity building too. As has been described earlier, there needs to be appropriate educational, training and development opportunities for people to ensure that they have the right skill sets, aptitudes and capabilities necessary to support Myanmar’s development. People and physical infrastructure development go hand in hand and a holistic approach needs to be taken to ensure longer term, viable and sustainable development for Myanmar.

Ultimately, it is vital that the right implementation approach is taken to the policy developments taking place in Myanmar. Policy must translate into action or inclusive growth, economic and social progress and sustainable development will merely remain a pipe dream for Myanmar.



  1. Myanmar Economic Update, Asian Development Bank
  2. Myanmar’s Moment, McKinsey
  3. Myanmar:  Between Economic Miracle and Myth, Institute of Southeast Asian Studies (ISEAS)
  4. Sustaining Myanmar’s Transition, Asia Society


Economic updates from Myanmar: Brief impressions


Always good to be back in Yangon. So many developments and changes in such a short span of time. I always enjoy coming to Myanmar. I am always treated to the very best of Burmese hospitality and the resilience and entrepreneurial qualities of the Myanmarese continue leaving a deep impression on me.

A few observations from Myanmar on the economic front:

  • Hotels – When I first used to come to Myanmar – I was paying about US$70 for a good room at well-known hotels like the Traders, Chatrium or Park Royal. Room rates now start at US$200 for any of these hotels! And they are all running at above 95% occupancy rates!


  • Traffic – The cost of car ownership has gone down dramatically. In the past, to purchase a car required a permit which cost an exorbitant amount (for instance, it used to cost about US$350,000 to buy a Toyota Land Cruiser). However the permit system has changed and now you can purchase any cars manufactured from 2007 onwards. The cost of a Toyota Land Cruiser is now about US$25,000. This has led to newer cars on the roads, but more pertinently, the number of the cars have increased dramatically with no corresponding increase in the roads and traffic infrastructure, leading to snarling traffic jams which were previously unheard of before.


  • Capital market development – It is expected that Myanmar will have a stock exchange by 2015. This development is being supported by the Tokyo Stock Exchange and Daiwa Securities Group. This will lead to significant demand for qualified professionals in the finance sector to support the stock exchange and capital market development. Myanmar previously set up a Myanmar Securities Exchange – back in 1996 but trading volumes were extremely low and there was little or no technical or IT infrastructure available for an efficient and effective functioning capital market. However this new development will be significant given the resource and technical assistance provided by the Japanese. With development and effective governance, we can expect the Myanmar Stock Exchange to rival Malaysia’s BURSA, Indonesia’s IDX and Singapore’s exchange by 2030.


  • Currency exchange rate – Up until last year, the Myanmar Central Bank had fixed the exchange rate at 6 kyats to the US Dollar. However, the black market rate at the time was about 700 to 800 kyats to the dollar. The Myanmar Central Bank has now implemented a managed floating system – where the official rate is around 850 kyats to the dollar. This has been a signficant development in helping with the modernisation of the Burmese economy and one that will support further investment into the country.


  • Adoption of International Financial Reporting Standards – Myanmar has now formally adopted IFRS and have converted them in their entirety to the Myanmar Financial Reporting Standards. This has been instrumental in providing greater clarity and transparency to financial statements being prepared in the country. This will drive further investment into the country as investors have a better view of the financial positions and performance of the firms they are investing in or keen on acquiring.


  • Passing of the Investment Law – Myanmar also passed the Foreign Investment Law in November 2012. Some provisions in the law allow for overseas firms to fully own ventures and offers tax breaks and lengthy land leases, amongst other things. However, the bye-laws and regulations to support the Foreign Investment Law have not yet been passed and are still being deliberated by the Myanmar Parliament. However, under the law, details of bye-laws and regulations should come out within 3 months of the law being passed in Parliament so we should expect further developments by March 2013.


  • Tax reforms – The government has also announced a slew of tax law and regulatory changes. There is a plan to widen the tax base but also to make it easier for local residents to calculate the tax. The tax-exempt status will also change for citizens at the lower end of the income spectrum. A progressive tax system is in place and is likely to continue.


  • Increased foreign investment and donor funding – Myanmar has also benefited from the increased inward investment into the country from multinational firms. Of the accounting firms, PwC, EY and KPMG all have presence now in Myanmar. Coca-Cola has entered into a JV agreement with a local partner. Other MNCs are also increasing their branding and presence in the country. The Asian Development Bank (ADB) and the World Bank (WB) have also approved loans and grants to support Myanmar’s continued economic and social development.


  • ASEAN Economic Community (AEC) – There is also a strong support by the Myanmar government and businesses to support the AEC 2015 vision of greater economic integration by all of the members of ASEAN. This requires further development in terms of capacity and capability – and one that will benefit a broad section of the Myanmarese.


Exciting times for Myanmar. However, the key thing to address will be to ensure that the economic progress is one that benefits a broad base of the Myanmar population and not one that only serves to widen the income gap between the top earners and the rest of the country. Ignoring the potential consequences of this will only set back Myanmar’s development down the road. It will also be important to ensure that there is continued focus on education and social development. Environmental sustainability also remains crucial. It is easy to ignore the impact of industrial and economic development on the natural environemnt but doing so will again lead to severe consequences for Myanmar in the long run.

However, that said, I am confident that in the years to come, Myanmar will again take leadership within South East Asia both economically and politically like they did back in the day up to the 1960s!

Myanmar: After the elections – where to next? Some suggestions

After peaceful and fair parliamentary by-elections, the people of Myanmar can look forward to even greater optimism.

Myanmar is a country of immense potential and there is plenty of scope for development and enhancement of the quality of life there. A few interesting facts about Myanmar:

  • It is the 40th largest country in the world, the second largest country in Southeast Asia:
  • and 24th most populous country with over 58.8 million people;
  • Under British administration it was the second wealthiest country in South East Asia;
  • The current capital of Myanmar is now Naypyidaw (“City of Kings” in Burmese) which was chosen as the new capital in 2006. The previous capital used to be Yangon, which is still the commercial hub of the country;
  • It is a hugely vibrant country with a significant level of multi-culturalism and tolerance. Indeed it is not uncommon to see mosques, churches and Hindu temples dotted around the main cities in a largely Buddhist nation.

I have proposed below a number of suggestions as to what Myanmar should consider as the country grows. These thoughts should by no means be viewed as expert opinion but rather as those made by a layman with a deep interest and affection for Myanmar and its people.

Infrastructure improvements

There is an urgent need for Myanmar to improve the following:

Telecommunications & IT infrastructure – Internet access remains expensive and patchy. This is a result of very few operators in the telco space and there should be an active process of inviting regional/international telco partners into the fold and help drive down costs of Internet access. There should also be tie-ups with international partners to allow for an upgrading of the current telecommunication infrastructure. The Myanmar Ministry of Communications, Posts and Telegraphs needs to start working with foreign partners to help support the upgrading efforts.

Roads/railway – With greater economic growth, we will see greater rural-urban migration, which will increase the burden on roads/highways and railways in the cities especially Yangon. Yangon’s traffic network as it stands is just sufficient – but with any further increase in the city’s population, there is a real risk that we will find gridlocked roads that’s commonplace in Jakarta and Bangkok. There must be a realization that there is a severe business and economic cost to poorly managed roads – a point not lost on Jakarta/Bangkok’s city planners. Yangon however – if it chooses to be proactive – can mitigate future problems and issues in a more efficient manner.

Natural disaster early warning systems – The government should also seek aid support (both financially and technically) to help develop and establish early warning systems for cyclones and other natural disasters that afflict Myanmar. This will help minimize casualties and mitigate damages. An early warning system, cyclone shelters, coordinated response systems, integrated medical and emergency protocols, etc will all help with recovery efforts subsequently.

Healthcare – There should be an effort to upgrade medical and healthcare facilities. The current facilities are outdated and with the medical teams normally being overworked and underpaid. The health of the people has to be paramount and there has to be good state hospitals. The easy alternative is to simply let private hospitals operate in the country but this normally tends to create a 2-tier healthcare system – one for those who can afford it (normally a minority) and those who cannot (the majority) and this only exacerbates the problems of social inequality.

Banking sector reforms (including currency exchange)

Banking system

Myanmarese banking systems need to be plugged in with regional partner banks. There should be greater facilitation of international banking norms like Automated Teller Machines (ATMs), international banking transfers, trade financing (such as the use of LCs, DPs, DAs, etc), credit cards, etc.

Credit card acceptance in Myanmar is extremely low – and this hurts locals as well as tourists and businessmen. It also affects the hospitality industry. Plenty of tourists go into Myanmar without realizing that the 99% of the economy is a cash economy which prevents tourists from spending what they would have planned in advance.

Lack of international banking transfers also means that profit repatriation is affected for international investors. This has to be managed as well.

Currency exchange regulations

It is good to note that the Myanmar government has allowed for managed floating of the kyat. However it is important to note that there is still significant dollarization within the economy. Myanmar should avoid the path taken by Vietnam which allowed for the US Dollar to be used as a currency of choice within the country – which effectively meant that the Vietnamese lost all control of their monetary policies as they had no control over the USD. The Myanmar government should restrict the use of the USD extensively within the economy and there should be a push to use kyats by all key sectors of the economy. This will help support the use of the kyat as well as ensure greater monetary policy control subsequently. If the Myanmarese do not control this problem early, it will become too big to solve – see Vietnam experiences.


There should be an extensive review of current tertiary education institutions. There should be greater quality control and better alignment to international best practices. Myanmar’s key universities should invest in (and seek support for investment) their teaching infrastructure and lecturers. There should also be a regional broad-based support of Myanmar’s universities through partnerships with other leading institutions within ASEAN. Exchange programmes, best-practices sharing and scholarships should be implemented with reputable partners. There should also be a review of curriculum (at all levels), textbooks and teaching material (many of which are obsolete), teachers’ competency frameworks and teachers/lecturers’ remuneration.

There should also be additional focus on the development of competencies of Myanmerese youngsters in these areas:

  • Software programming
  • Accountancy & Finance
  • Medicine
  • Engineering
  • Architecture

The above are all areas which Myanmarese have traditionally excelled in and there is a natural gravitation of the talented youngsters towards these subject areas. The government should support the aspiration of the youngsters by ensuring they develop robust and viable capacities and capabilities in these areas.

Public sector / civil service salary review

As the country grows economically and with increasing incomes and greater investments by multinational firms, there remains a real risk that corruption will rear its ugly head. Rampant corruption has been the bane of many a rapidly emerging economy and it becomes a real business cost for the country subsequently. One way of curbing this is to ensure that the members of the civil service have salaries that are consistent with the private sector. Yes, it will be an extremely costly affair, but rather than as a cost, it should be viewed as investment to protecting the country’s future.

A better benchmarked salary will also mean that the civil service and public sector will attract a better quality of individuals with a real commitment to the country’s cause which will help in the country’s development.

This should be a matter which the government addresses sooner rather than later (when it may be too late – the Indian experience is a sorry tale in this regard).

Reinventing the economy

Free-trade zones / Special Economic Zones / Preferred Trading Nations agreements

Myanmar should establish formal country economic partnerships with India, China, the UK and ASEAN. This could be in the form of preferred trading nations agreements, free trade agreements and also in the form of special economic zones whereby the investing nation will get tax breaks and incentives to set up operations in Myanmar. Therefore, we could have an Indian special economic zone (SEZ), a Chinese SEZ, an ASEAN SEZ (where all interested ASEAN member states can invest freely and enjoy liberal benefits). This means that Myanmar also diversifies its economic dependency across a whole host of countries and not remain entirely under the influence of just one major economic partner. This will result in severe risks further down the road.

Professio-nationalisation of key industries and sectors

The country should also consider professionalizing and nationalizing key industries in areas such as mining, energy, infrastructure and transportation. Currently they are either nationalized (but lack professionalism) or have not yet been nationalized at all. Vital industries should be protected by the government. Perhaps one other model is to allow for joint ventures with foreign companies in areas where the government does not have the skill sets. For instance, in Brunei, Shell has a 50-50 venture with the Brunei government (a JV entity known as Brunei Shell Petroleum or BSP) which ensures that Brunei enjoys the technical and managerial expertise of Shell but also ensuring that the returns are shared with the government and ultimately the people.

Supporting small and medium sized enterprises

The government should also provide incentives and support structures for small and medium sized enterprises (SMEs) as they tend to account for the bulk of employment and GDP of any country. Supporting SMEs will also spur greater entrepreneurship, innovation and growth that is led from the bottom-up and which will ensure better distribution of economic resources amongst people.

Conservation & commitment to sustainable growth

In the midst of all these developments, Myanmar however, should not lose sight of the fact that it is a large country with significant environmental beauty and value which must be preserved. Economic progress must not come at all costs and therefore endangering the environment. There must be an overriding commitment to conversation and sustainability. There is no point if the country grows but finds itself polluted and dying from the inside. To this day, I find it absurd that nations spend significant percentages of their GDP of defence spending and yet neglect to look after their environment and allow it to be robbed, pillaged, polluted and destroyed. Effectively, guns are being bought to secure the country from external forces while the country dies from the inside. Myanmar has a real opportunity to ensure this is not the case from a very early stage.