24 Jan, 2015

OECD Report: Will Myanmar reap the last mover advantage?

Imtiaz Muqbil

Nay Pyi Taw, Myanmar — Business marketing slogans often cite the importance of the “first mover advantage” but Myanmar is now well-placed to reap a “last-mover advantage.” Having for years been left behind by Western economic sanctions, and the advances of its Mekong region brethren, Cambodia, Laos and Vietnam, it is now rapidly making up for lost ground. The foot is on the gas pedal, with no speed limits.

However, a multi-dimensional country review released in December 2014 by the Organisation of Economic Cooperation and Development, the first covering Myanmar, indicates that excessive speed is not always advisable, especially if neither the car nor the highway are in good shape. It says that while Myanmar can replicate the successes of its ASEAN neighbours, it also needs to learn from their mistakes.

In purely economic terms, Myanmar has everything going for it — a fertile land that is also rich in minerals, hydrocarbons, forests and hydro-resources, an ancient civilisation with historical sites of global importance and a relatively young population. It shares a 5,870 kilometre border with Laos, Thailand, China, India and Bangladesh.

Says the report, “Nearly 47% of Myanmar’s total land area is covered by forests, which account for nearly 40% of the total forested area of Southeast Asia. The country’s forests contain 25 major commercially viable species, including 80% of the teak of the Southeast Asian region and extensive rosewood and ironwood tracts. Furthermore, Myanmar ranks 14th among all nations in water availability. Rich water resources provide diverse marine life and a basis for the fishing industry. Water is also the source of three-quarters of Myanmar’s electricity. Myanmar has huge hydropower potential in its upland border regions, estimated to be more than 100,000 megawatts.”

Historically, the area where Myanmar is now situated was a multi-nation area with flourishing economies and sophisticated cultures. Its central location on trade routes as well as fertile land attracted new settlers from overpopulated areas or migrants seeking a secure place with possibilities to make a stable living.

Then came the “Burmese Way to Socialism”. In 1962 a military Revolutionary Council overthrew the civilian government and suspended the constitution. The coup d’état ushered in a 26-year period of one-party rule which drafted a 28-point manifesto drawing on elements of Marxism, Buddhism and mysticism. It advocated transition to a socialist economy, the nationalisation of all major industries, rejected parliamentary democracy, increased the role of the military and reduced foreign influence.

Says the OECD report, “In the phase the followed 1962, Burma transformed from being one of Asia’s most prosperous countries into one of the world’s poorest. The economic decline saw the country officially reach Least Developed Country status in 1987. During this period, freedom of expression and association were repressed. Political imprisonment and human rights abuses were commonplace. The armed conflicts with ethnic opposition groups in Burma’s border areas persisted.”

Myanmar was granted membership of ASEAN in 1997, the same year as Laos. But the international sanctions remained in place. It was not until the country had the opportunity to hold the chairmanship in 2014 that pressure was exerted to make the necessary internal changes.

Today, most of the sanctions are gone, and the “Burmese Way to Socialism” is being dismantled. Myanmar’s location between the two emerging giants of China and India and its access to the Indian Ocean via the Bay of Bengal ensures its geo-strategic importance. The country forms a land bridge between South Asia and Southeast Asia and provides access to maritime trade routes in the Indian Ocean. The Asian Highway, which connects India to Thailand via Myanmar (the AH1), is being upgraded and a bus service is planned to run from Imphal, the capital of India’s Manipuri, to Mandalay; the Myanmar-Lao PDR-Viet Nam Trilateral East-West Corridor will link the sea ports of Kyaukphyu on Myanmar’s west coast to the Hai Phong sea port in Viet Nam. China has helped Myanmar build a road linking Yunnan Province with a port on the Ayeyarwady River.

The key driver is the country’s 60 million population which will enjoy a demographic dividend for about two decades before the ageing population phase sets in. That is the window of opportunity. But the OECD report warns, “As the country is starting from a relatively low base, growth will be needed for incomes to rise, lifting people out of poverty and improving living standards. However, economic growth should not be the only objective. Development policies need to go beyond growth, ensuring that the path of development is sustainable and that all citizens share the benefits. Sustainable growth that brings about benefits for all citizens is a multi-faceted target whose achievement depends on political legitimacy and social acceptability as much as purely economic considerations.

“Equity and inclusion are particularly important in a country as ethnically diverse as Myanmar. The delicate balance between nation building and preserving cultural diversity will need to be struck if national unity is to be maintained and progress toward a multi-ethnic nation state sustained. A more effective form of federalism, whose precise form may need to be decided by experimentation, is likely to be required to successfully reconcile the legitimate demands of ethnic groups that their culture be respected with the needs of a coherent nation state. Building trust among social groups and with the government will be equally critical to the attainment of this goal.”

The role of tourism

This is where tourism can play a vital role.

Says the report, “Myanmar’s rich cultural heritage is a major asset that can support the country’s development by boosting the tourism sector. The country has many sites of historical, cultural and architectural significance which are comparable to sites in other countries that have world heritage status. Currently no sites in Myanmar are included on the UNESCO World Heritage List, although eight locations have been submitted on its tentative list, including the Bagan Archaeological Area and Monuments – the capital city of the first Myanma Kingdom – and Inle Lake. Areas of natural beauty, such as the 800 or so islands in the Myeik Archipelago in the south, also have the potential to be developed as tourist destinations.

“Making the most of these cultural and natural assets will require careful management, developing tourism in a sustainable way that does not degrade or destroy the very features that make Myanmar an attractive destination for tourists. The Ministry of Hotels and Tourism is updating their existing five-year plan for the development of the tourism sector. The Ministry has stated that it aims to foster quality tourism that does not adversely impact the environment and is looking at the lessons learned from neighboring countries’ experiences of developing tourism as well as drawing on advice and support from multi-lateral and bilateral partners who are active in this field, such as UNESCO.”

It notes that international visitors to Myanmar grew by 92% from 1.06 million visitors in 2012 to 2.04 million visitors in 2013 and are projected to reach 3 million in 2014 and seven million by 2020. Employment in tourism and directly related industries is expected to grow from 293,700 in 2012 to between 563,056 and 1,497,801 in 2020. Business travel and travel for meetings, incentives, conferences and exhibitions (MICE) are also likely to become more important with economic growth and as the country continues to build strong relationships in the region and beyond.

The Cambodia-Laos-Myanmar-Vietnam Agreement of 2003 and ASEAN’s Open sky policy planned to begin in 2015 should encourage more visitors by removing restrictions on international commercial airline operations. Eased rules on entering the hotel market and expanding operations are perhaps even more important for maintaining Myanmar’s competitiveness as a travel destination. Construction of new accommodations has not kept pace with increases in the number of visitors in recent years, as administrative barriers and remaining limits on foreign investment in tourism have discouraged development.

Ethnicity and culture: Asset but Potential Liability

Ultimately, the report warns that the country’s multi-cultural assets, so vital for the promotion of tourism, could also become its greatest liability.

It says: “What complicates the situation in Myanmar is that the de facto (ethnic) majority has not historically been in charge of the whole country and hence the other ethnicities refuse to be treated as or even called minorities. At the Panglong Conference in 1947, the Chin, Kachin, Shan and other non-Bamar nationalities were promised the right to exercise administrative, judicial, and legislative powers in their own autonomous national states and to preserve and protect their language, culture, and religion in exchange for voluntarily joining the majority Bamar in forming a political union and giving their loyalty to a new state. Thus, building a nation state in Myanmar implies creating an image of the Myanmar nation that is a blend of multiple ethnicities residing in the country. This would involve cultivating a national culture that tolerates ethnic diversity and equality in the treatment of ethnicities.

“If national culture becomes irreconcilable with minority cultures, there appears to be a trade-off between the nation state and minority cultures and either nation building prevails at the weakening of minority cultures, or nation building remains incomplete for the sake of preserving cultural diversity. In Myanmar, the delicate balance between nation building and preserving cultural diversity will need to be struck if national unity is to be maintained and progress toward a multi-ethnic nation state sustained.

“Ensuring peace and government control over the whole territory of the country and respecting the rights of minority ethnic groups are mutually reinforcing requirements for strengthening the legitimacy of the government. Minority ethnic groups are an important election base and are key to union-wide peace and security. In addition, owing to their geo-strategic locations, they are indispensable for the improving of political and economic relations with neighbouring countries. The eradication of opium growing and the halting of drug production and smuggling as well as the smuggling of minerals, agricultural and forestry products and the closing of illegal businesses in border areas are only possible through a joint effort with ethnic groups involved in those activities.”

The report notes that some ethnic groups in Myanmar are automatically excluded from access to public services due to their status as non-citizens. While the constitution affords some rights to “persons” in general, other rights are reserved specifically for citizens. In particular, the constitution guarantees the right to education and healthcare and the state provision of compulsory basic education only to citizens. Yet people from certain ethnic groups residing in Myanmar are not considered to be citizens. The UNHCR estimates that there are 808,075 stateless people residing in Myanmar.

“The Rohingyas are one such ethnic group. This group was stripped of their citizenship status in 1982 when the Burma Citizenship Law came into force. This law requires that in order to be acknowledged as a full citizen, people must prove that they belong to a recognised ethnic group or that they are descendants of people who were permanently settled in Myanmar prior to the first Anglo-Burmese war in 1823. As such, the Rohingyas are denied access to public services. The Rohingya people live in Rakhine State, which is, as a result, one of the worst-performing states/regions in Myanmar in terms of access to public services and in health and education outcome indicators. Stateless people in Myanmar were given temporary documents which enabled them to vote in the 2010 elections but there has been no progress since then in granting some form of more formal permanent residential status or citizenship.”

Another problem area where this disparity makes itself felt is in education. The highest literacy rates are found in Yangon (95.9%) and the lowest in Rakhine (75.1%) and Shan (75.2%). “Rakhine ranks at the bottom again in terms of enrolment rates for both primary and secondary school. Secondary enrolment rates in Rakhine are just 32%, trailing more than 20 percentage points below the Union average of 52.5% and over 30 percentage points below the highest performing state/region of Yangon, where the secondary enrolment rate is 73.8%. Physical access to secondary schools is an important barrier to access in Rakhine: only 23% of households live within an hour’s walk of the nearest school.”

The report notes that the Myanmar government is now under pressure to deliver tangible results within a short time and deliver on the high expectations of the Myanmar people for improved living conditions and a more equitable distribution of the nation’s wealth. In a comment of direct relevance to the theme of ATF 2015 and the ASEAN community at large, it says, “To meet their expectations and include them in the nation-building process, the government needs to devise an inclusive political and economic agenda. This would include securing peace and setting it as a common goal for all, valuing political diversity and fostering dialogue, preserving ethnic identities and cultures, guaranteeing a decent livelihood, protecting private initiatives and fair returns and most importantly, distributing the proceeds from the nation’s wealth on a sustainable and equitable basis, taking the interests of future generations into account.”

This, then, is Myanmar’s challenge. Precisely as the ASEAN Community plan states, balancing the economic and socio-cultural blueprints will be critical to the success of the third political-security blueprint.