Getting Facts Right about Myanmar’s Economic Growth

 

By U AC

 

FIRST of all, how do we find out about economic growth in Myanmar? Facebook is flooded with unsubstantiated postings about how the economy is doing, based on gut feelings, hearsay and sharing of postings by Celes, whose highest form of economics education comprises of experience as loan sharks to friends and families.

 

In technical terms, economic growth simply means growth in GDP (Gross Domestic Product). GDP per capita to be exact. It is the whole GDP (US$ value of the output) of the country divided by the total population.

 

In terms of measuring the GDP of Myanmar, we can look at global institutions such as the World Bank, IMF, ADB, etc., to see the trend as well as extract the relevant data easily. Websites such as tradingeconomics.com also contain these data.

 

Two comparisons

There is no point in looking at economic figures alone. We would either do a chronological comparison through the passage of time, or inter-country comparisons with our regional or competition.

 

If we do a chronological comparison, we will see Myanmar’s GDP growth rates hovering around eight per cent+ during the 2011- 2016 period and a much lesser five per cent+ in the past five years. In absolute terms, these figures seem encouraging. Yet, our neighbouring countries are also doing similarly well. Only when we include our neighbouring countries in our comparison, then the performance became obvious. We did not do significantly better than our neighbouring countries in the past five years. In fact, we did worse in the past five years. We took over the dubious honour of being the poorest country in South East Asia, from Cambodia in 2017. Our GDP per capita is now the lowest in the region.

 

Some doubters may try to cast doubt over this type of measure, saying GDP should not be the only measure of a nation’s wealth. Yet we do not do well on other fronts either, such as inflation, healthcare or the happiness index.

 

GDP is and has been the only internationally recognized measure of a nation’s wealth so far. It makes it easier to compare the wealth of different nations e.g., the fact China has become the second richest country or biggest economy in the world, to help in ranking and contributions towards economic development and international obligations.

 

How do we increase Myanmar’s wealth?

Adam Smith’s instructions do not seem to have an expiry date. Land, labour, capital and entrepreneurship, he said. Myanmar has plenty of space for economic activities. We do not need high-rise buildings to create space, like in Hong Kong or Singapore. Yet, space is not just about creating industry parks of all kinds alone. It is also about infrastructure.

 

Myanmar business people just want to set up industrial parks, with the primary motive of getting the land cheap from the government or farmers and selling it after getting the licences to subdivide and sell the land plots with industry park titles. The priority has to be on getting electricity, water supply, telecom and fibre, sewage and sanitation system, and waste disposal in order so that businesses in the park can produce much-needed economic activity and growth.

 

Labour also has various shortcomings in Myanmar. Even though we have the quantity required for economic growth, the quality of labour is solely lacking. Our productivity levels are well below that of China and Viet Nam. Our white-collar workers and graduates lack skills that are useful in modern work environments such as public speaking, presentation, language, computer skills, etc. We need to seriously address these starting with the curriculums taught from high schools onwards. While children in Singapore are doing research and presentation from Primary 6 (equivalent to 6th Standard here) under GEP (Gifted Education Programme), some Myanmar university graduates still do not know how to use emails.

 

Capital is also at a disadvantage in Myanmar. Our stock exchange is the last in ASEAN, in terms of valuation and trading statistics. We have little savings among the general population. After all, one cannot expect much capital from the poorest country in the region. Collateralized lending from banks is of not much help either. We do not have a venture capital industry or private equity market, to help SMEs up to the next level of growth. As mentioned in many of my recommendations relating to the digital economy, the government must set up an entrepreneurship development fund, together with private investors, to invest in start-ups and give Myanmar entrepreneurs a much-needed boost.

 

This leads to the last pillar of economic growth - entrepreneurship. Following an entrepreneur route is shrouded with dangers and pitfalls with death traps for failures along the way. Why do we have more employees than entrepreneurs in every single country on earth? Simple. It is because the risks of being an entrepreneur are too high. Yet, we must have a sufficient number of them to create SMEs so that a few of them become giants and scions of the nation’s economy. Pro-business fiscal policies would give them a welcome boost too. E.g., by acknowledging losses that businesses made and allowing these losses to be carried forward to offset future taxable profits. (Currently an extremely difficult task for Inland revenue here).

 

The government must have long and medium-term plans for the above four too. We can take a leaf out of Xi Jinping’s latest book on Governance of China IV. CPC (Communist Party of China) has plans for the country with various targets for the next half-century. As Sun Tzu said, ‘Without a plan, you would surely fail. With a plan, you may have a chance at victory. Only with detailed planning, you can ensure of success!’.

 

What growth rate would be acceptable for Myanmar?

First, we have to realize we are playing a catch-up game. To cite real figures, Myanmar’s GDP per capita is $1,200+ and Thailand’s is $7,000+, at present. In layman’s terms, an average Thai is seven times as wealthy as an average Myanmar. By growing at the same rate as Thailand, we would be forever behind them, as their starting point was a lot higher.

 

For those who love sensitivity analysis, if Thailand grows in the next ten years at four per cent and Myanmar grows at double that number i.e., eight per cent, the respective GDP per capita at the end of the next ten years would be $10,000+ for Thailand and $3,000+ for Myanmar only.

 

Anything less than an average of 10 per cent GDP growth rate would keep Myanmar forever the poorest in ASEAN in the foreseeable future.