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18 Jul, 2013

Myanmar faces ageing population, must fast-track development, says OECD-ESCAP report

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OECD – Paris, 18 July 2013 – Myanmar faces a crucial few years to come to ignite economic growth and embark on a higher, more sustainable and more equitable development trajectory. The challenge is even more important as the country’s population will start ageing in 2017, says the Multi-dimensional Review of Myanmar: Initial Assessment which was launched by the OECD and UNESCAP in Yangon today at an event supported by the Hanns Seidel Foundation.

“Myanmar is at a crossroad: it has to capitalise on its numerous assets and seize the momentum for development. The demographic dividend needs to be reaped now and the potential of the economy lifted by productivity-enhancing reforms,” said OECD Development Centre Director Mario Pezzini. “Otherwise, Myanmar risks getting old before the incomes and living standards of its people can significantly improve,” added M Pezzini.

Recent economic growth in Myanmar has been relatively low for its level of income. The OECD’s medium-term growth forecasts indicate that without structural change the economy can grow at an average of 6.3% over 2013-17, somewhat below the government’s 7.7% target for 2013-2015.

The report finds that Myanmar needs to build up institutional and social capital, as these are the key constraints preventing the country from reaping the benefits of its abundant natural resources, relatively well-trained labour force, favourable geographic location and rich cultural heritage. These assets could form the foundation of a multi-pronged development strategy. Improved institutional capital – the legal and regulatory frameworks as well as the country’s institutions and bodies – will be vital if the country is to meet its development targets.

Myanmar’s tax to GDP ratio is just 3-4%. Together with boosting this low level of fiscal revenue, more consistency and transparency in public finances will be important to meet development spending needs. Greater public consultation on new laws would enhance voice and transparency, thereby strengthening the rule of law.

Better tools for environmental policy are needed to cope not only with the expected effects of rapid urbanisation but also those of climate change, such as increased tidal variations and more frequent and intense tropical cyclones in the delta and coastal regions.

Click here to access the underlying data

A simplified registration and regulatory system for business could boost entrepreneurship, increasing the number of formal small and medium-sized enterprises (SMEs) from the current 6 per 1000 people. This is low when compared to neighbouring Thailand’s 40 SMEs per 1,000 people. A more efficient and stable financial system could allocate funds to where they are most productive.

A more equitable access to public goods and services could contribute to reducing poverty, which now affects a quarter of the population. Landlessness is widespread: in populous rural areas the share of households with no land holdings can be as high as a third. Greater equality is crucial to consolidate a base of popular support for the reform process, opening political space for addressing the complex endeavours such as consolidating the political transition, reducing the ethnic tensions or overcoming regional disparities.

Further information on the OECD Development Pathways series is available at: www.oecd.org/dev/development-pathways.htm.