Country at the CrossRoads :

Socio-Economic Development of
Myanmar
T
Upendranadh Choragudi

he advent of the democratically elected government

led by Daw Aung San Suu
Kyi as State Counselor has
accompanied by an all-round positive expectations as global investors
are anticipating an economic policy
environment that demonstrates stability and predictability. This needs
to be seen in contrast with the
previous era. A dismal performance
in terms of index of economic
freedom wherein Myanmar remains
(even in 2016) in the cohort of the
most repressed countries.
Pro-market, liberal economic
outlook appears to be the cornerstone of Myanmars new economic
policy vision which vows to be
people centric. A brief 12 point
economic policy document, released
last month, is a pointer towards a
delicate balance that the government
needs to undertake in order to ensure inclusive economic growth and
development of its people, though it
said very little to nothing on welfare
and poverty reduction!
Apart from infrastructure, agriculture, industrialisation and job
creation seem to be the engines for
economic growth. To what extent
these translate into improved human
conditions remains an open question, unless the growth and redistribution go hand in hand.
Be that as it may, for the millions of poor and ordinary citizens
living in rural areas (over 70% of the
population), challenges of poverty,
secured livelihoods, assured basic
needs and reduced vulnerability to natural hazards are critical.
They would expect government to
provide succor. How would the

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Photos: Hong Sar/Mizzima

government be able to respond?

What are the policy instruments
and programmes that are needed?
How and where to find resources for
expanding basic services? How to
prioritize and identify quick wins?
These and many more questions
need to be addressed. It appears that
the government is taking cautious
and well calibrated steps in order to
balance, consolidate and manage the
transition and expectations. This is
in contrast to the anticipation of the
global community to have bold and
urgent steps.
A strong political will to improve
the living conditions of the masses is
reflected in the NLD party manifesto. And the same has been echoed at
various public consultations by high
ranking party functionaries and government ministers. With the passing
of first 100 days agenda, this is the
time for taking stock and setting out
realistic and workable propositions
of action. At recently held policy

August 18, 2016

dialogues on these themes several

scholars have put forward appraisals and a set of recommendations
for people centric socio-economic
development.
For enhancing the socio-economic conditions of people living in
rural areas, an obvious entry point
would be improving agriculture and
allied sectors. The twin-engines of
economic growth and job creation
would be through agriculture productivity and development of allied
industries (including agro-processing). This would lead to structural
transformation in terms of contribution to the GDP and employment.
Here, the policy choices are whether
to go in the direction of developing
high-value corporate agriculture and
agri-food sector or supporting small
holder cultivation and improving the
productivity and market access so
that peasant agriculture be revitalized.
Improving small holder agri-

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culture and sustainable and climate

resilience agriculture would involve
a series of measures that include
diversification, using appropriate
technology for productivity growth,
input and credit support, extension
services (with R&D support) and
creating market access so that incomes for small farmers would grow,
which in turn would lead to effective
demand in rural areas. Another related and critical question is whether
Myanmar remains rice focused
agriculture or a food basket that has
its diversity. The policy choices thus
involve a judicious mix of promotion
of family oriented small holder agriculture and agri-food value chains
involving organized private sector.
The central message is that public
and private investment in agriculture needs to be boosted up in order
to enhance productivity and rural
incomes. Structural transformation
in agriculture occurs through enhanced production, productivity and
through its linkages to agro based
industrialization.
Peoples welfare, in terms of
investments in basic human development sectors like education,
health, water and sanitation, housing
and social welfare measures need
resources. While the market oriented economic principles may not
give pre-eminent position for these
sectors, a government that adheres
to a people-centric approach needs
to necessarily play a central role in
enhancing its investments. This is
critical for improving human capabilities that would in turn be critical
for the private sector to grow as they
depend on the workforce that comes
out to serve the economy. Viewed
from this vintage, several studies
point out Myanmar needs to invest
much more in education, health and
social welfare measures. Social security coverage in Myanamar is abysmally low and this is one area that
requires concerted effort in order to
enhance the well-being of people.
The large informal sector, precarious
workers, low skill levels of people,
and lack of basic social security are
impediments for economic growth.
Resource mobilization thus becomes critical and herein comes the
role of taxation and fair tax policies.
Domestic resource mobilization for
economic development and poverty
reduction forms a clarion call with
respect to Myanmars quest for an
economy that propels itself into
a higher growth path and human

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development. Overhauling the tax

system in all its nuances would not
only enhance domestic resource
mobilization, it would also lead to
improved investor confidence and
investment climate. These twin
objectives would be met if Myanmar
embarks on a progressive tax system
that ensures a fair, transparent and
predictable system. Improving tax
administration, arresting leakages,
fair and transparent policies of corporate taxation and rationalization
of concessions and tax rebates are
some of the fine print reforms needed in order to enhance tax revenues.
The potential, as studies point out, is
huge in terms of domestic resource
mobilization. Measures to arrest
corporate tax avoidance and evasion
are to be in place. The current tax
GDP ratio is around 5% which is far
below the potential. Improving the
share of direct taxes is to be definitely a goal so also is rationalizing
avoidable tax incentives, concessions.
Using tax policies for the benefit of
self-reliant domestic manufacturing
would in fact be a more prudent economic policy instead of relying on
foreign direct investment and export
oriented sectors.

August 18, 2016

At a recently conducted policy

dialogue, speakers pointed out the
need for productive spending, public
investment and prudent public
expenditure management. These
are critical for fiscal consolidation
expanding public spending on basic
services. Prudent expenditure management would also involve changing the mind-set of the bureaucracy,
arresting leakages and effective
project monitoring. Decentralisation and fiscal devolution are longhaul reforms needed to achieve this,
which are predicated on the political
decision making in terms of federalism and devolution of powers to the
lower tiers of governance.
Myanmars socio-economic
development critically hinges on the
political dialogue in terms lasting
peace and stability. Creative use of
economic and social policy instruments for creating an enabling environment for long term peace and
stability of the union depends on the
state-craft in terms of developing
a policy framework that is built on
the principles of fairness and meets
the aspirations as well as resource
endowments of the various states
and regions.

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