Myanmar - Economy
On the subject of economic development, the new government is exerting great efforts for the development of entire economic structure. Fiscal, financial, trade and investment policies are now under review and the new government of President U Thein Sein has stated that is is prepared to introduce any type of reform for the benefit of the State and the people. The government is updating the existing Foreign Investment law, and also in a process of drafting a competition policy that will be in conformity with the market economic policy.
Furthermore, with the aim of simplifying the procedure of issuance of Export-Import licenses for foreign trade, licenses are issued within two days from application. On the other hand, Union Commodity Price Stabilization Committee has been formed and with the efforts of the committee, inflation rate has been steadily decreasing from 8.27 per cent in April, to 8.15 per cent in May and 7.82 per cent in June 2011. Regarding the financial sector, Department of Internal Revenue is in process of reviewing, amending, supplementing or cancelling the laws concerning income tax, commercial tax, stamp act and office tax act. Similarly, for the promotion of rural development and poverty alleviation, it is also promulgating the micro-financing law and before such law come into existence, the provisional order will be issued to enable implementation of micro-financing projects on trial basis.
In the same token, starting from July 2011, pension salaries of retired service personnel who are drawing pension based on the old pay scales have been increased to bring into line with the pension salaries of current pay scale. This enables the total of 815,633 retired civil servants, including the Tatmadaw service personnel, to enjoying the pension salary increase. The pensions raise enables retired service personnel who had been drawing the lowest pension salary rate of Kyat 750 to now receive pension salary of Kyat 20,000. The pensioner who has been receiving the mid level rate of Kyats 1,375 will now receive pension salary of Kyats 32,000. Similarly, the pension of a high ranking officer will increase from Kyats 2,500 to Kyats 110,000.
According to the all-round survey report of the living condition of household, jointly conducted by the Ministry of National Planning and Economic Development and the United Nations Development Programme (UNDP), the rate of poverty in Myanmar had declined from 32 per cent to 26 per cent. In order to meet the Millennium Development Goals, Myanmar is now targeting to lower the poverty rate to 16 per cent by 2014-15. To this end, Myanmar held a national-level workshop on poverty alleviation and rural development in May 2011 and is commencing the implementation of development projects. The action plan for the poverty alleviation and rural development has been designated covering the period of July 2011 to 31 December 2015.
Burma is a resource-rich country with a strong agricultural base. It has vast hardwood timber, natural gas, and fishery reserves and is a leading source of gems and jade. Tourist potential remains underdeveloped because of weak infrastructure and Burma's international image, which has been damaged by the regime's human rights abuses and political oppression. Due to Burma's poor human rights record, the United States imposes an array of economic and travel sanctions, including bans on the importation of Burmese products into the U.S. and the export of financial services from the United States to Burma. Australia, Canada, and the EU also impose economic sanctions on the Burmese regime.
Despite Burma's growing GDP, the regime's mismanagement of the economy has created a downward economic spiral for the people of Burma. The state remains heavily and inefficiently involved in most parts of the economy, infrastructure has deteriorated, and rule of law does not exist. The majority of Burmese citizens lead a subsistence-level existence with minimal opportunity for economic improvement. Inflation, though relatively low in 2009, increased in 2010 and shows signs of remaining higher in 2011.
The military's commercial entities play a major role in the economy. The limited moves to a market economy, begun in 1990, have been accompanied by a significant rise in crony capitalism. A handful of individuals loyal to the regime benefit from policies that promote monopoly and privilege. State-controlled activity predominates in energy, heavy industry, and the rice trade. The state embarked on a campaign to privatize state-owned enterprises and properties in late 2009 and continued to sell off assets throughout 2010 and into 2011. By all credible accounts most buyers of these privatized assets have been those closely connected to the regime: crony businessmen, the military's for-profit business arms, and proxies acting on behalf of military families.
Burma remains a primarily agricultural economy with 50% of GDP derived from agriculture, livestock and fisheries, and forestry. Burma's rice exports hit a near-record high in 2009, but experienced a more than 50% drop in 2010 due to drought, delayed monsoon rains, and a government desire to carefully control domestic rice prices. Manufacturing/industry constitutes only 15% of recorded economic activity, and state industries continue to play a large role in that sector. Trade and services constitute 35% of GDP.
A wave of foreign investors pulled out of Burma beginning in 1997 due to the increasingly unfriendly business environment and political pressure, some in the form of sanctions, from Western governments, consumers, and shareholders. However, successive waves of new investment from regional neighbors, predominately China, has increased in recent years and is very difficult to quantify accurately. The government conserves foreign exchange by limiting imports and promoting exports. Published estimates of Burma's foreign trade (particularly regarding imports) are greatly understated because of the large volume of off-book, black-market, illicit, and unrecorded border trade. In the near term, growth will continue to be constrained by government mismanagement and minimal investment. Government economic statistics are often unavailable and unreliable. According to official figures, GDP growth has been over 10% annually since FY 1999-2000. However, the true rate is likely lower; the Economist Intelligence Unit estimated that the growth rate in 2010 was 3.1% and predicted 3.2% growth in 2011. Burma's economic growth has been driven by its natural gas exports, which account for over half of Burma's export receipts and foreign direct investment.
Natural gas exports will increase significantly once production begins from the offshore Shwe and Shwephyu Fields, estimated to hold 5.7-10 trillion cubic feet of natural gas. Much of the gas from these fields will flow to China's Yunnan Province via a pipeline currently under construction by a consortium of Burmese and foreign partners, with an estimated completion date of 2014. A second roughly parallel pipeline will carry Middle East- and Africa-origin crude oil offloaded by tankers at a port in Rakhine State. Corporations based in China, India, South Korea, Thailand, Russia, Australia, France, and Malaysia have interests in the exploration and development of several offshore and onshore blocks. One U.S. corporation continues to maintain its interests in the energy sector, with an investment that predates U.S. sanctions.
Burma remains the world's second-largest producer of illicit opium--amounting to 5% of the world's total, according to a 2009 UN Office on Drugs and Crime (UNODC) report. Annual production of opium has been estimated at less than 15% of mid-1990 peak levels. Cultivation rose for 3 years following a steady decline through 2006, but yields fell during that period. Burma is a major source of amphetamine-type stimulants in Asia. Although the Burmese Government has expanded its counternarcotics measures in recent years, production and trafficking of narcotics remain major issues. The Burmese Government has actively pursued mid-level and independent traffickers, but it remains reluctant to investigate, arrest, and prosecute high-level international traffickers associated with ethnic ceasefire groups.
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