Posted at the star on Monday February 20, 2012
ON Feb 26, International Trade and Industry Minister Datuk Seri Mustapa Mohamed will meet with his Asean counterparts in Nay Pyi Daw, Myanmar, to discuss regional economic issues.
This will be the 18th session of the Asean Economic Ministers’ (AEM) meeting, and the fact that it is being held in Myanmar is of no special significance, given that it is the country’s rotational turn.
Until now, that is.
Events in Myanmar have unfolded so rapidly that this meeting in Myanmar’s new capital city has now assumed a much higher profile.
Myanmar is on the verge of a new political and economic beginning. Trade and investment sanctions are coming down. National reconciliation dominates domestic politics. And the conditions for the commencement of economic reconstruction appear to be falling into place.
All this is good news. Myanmar is a country full of promise. It has vast reserves of natural resources and its people are hardworking and capable. Given the space and the opportunity, it will develop and grow, driven by a desire to prosper and join the developed world.
Myanmar’s success will be good for Asean too. It will give the regional organisation more heft and make the Asean Economic Community a more meaningful proposition. In practical terms, how will Myanmar’s economic development proceed?
There are models of development in Asean that Myanmar can look at. Its three fellow members in the CLMV (Cambodia, Laos, Myanmar and Vietnam) grouping in Asean Cambodia, Laos and Vietnam opened up their economies earlier and have achieved different levels of success. The development experience of the six other more mature economies in Asean can also be instructive.
The Myanmar has announced a number of measures to boost private investment and take advantage of the overwhelming interest from the global business community. On the cards are: eight year tax exemptions to foreign investors; revision of its investment laws within the first quarter of the year; increased health and education budgets while reducing the defense budget. To boost tourism and facilitate trade, Myanmar plans to re-introduce an e-visa system. It is also looking to upgrade the Yangon International Airport to accommodate more planes and passengers.
And there’s also good news for Myanmar’s business community and citizens: Myanmar money exchangers are now allowed to process up to US$10,000 into kyat without documentations, a 500% increase from what was previously allowed.
There is no doubt that significant amounts of loans and foreign investment will be needed to fund its development. Maintaining a right balance between public sector effort and private enterprise is equally important in determining the pace and direction of development. The Myanmar economy is forecast to grow at between 4% and 6% in 2012 and 2013, and probably at a higher rate after that. Much would depend on the country’s ability to deliver on economic reforms, which in turn will lead to increased investment flows.
Myanmar, no doubt, will chart its own development path. The rest of Asean will want it to succeed, and indeed, one of Mustapa’s priorities at the coming weekend’s AEM meeting will be to push for greater effort to narrow the development gap between the CLMV and Asean Six.
Before attending the AEM retreat, Mustapa will lead a trade and investment mission to Thailand and Myanmar from Feb 22 to Feb 25. Joining him will be a sizeable private sector delegation from Malaysia.
The minister’s investment mission to Myanmar aims to familiarise Malaysian businesses with the rapid changes taking place in the country. Malaysia’s business community has much to contribute to the growth and development of Myanmar.
Our bilateral trade and investment flows are limited. In 2011, total bilateral trade amounted to only RM2.4bil or less than 1% of Malaysia’s global trade. The good news: trade has been growing at an annual average of 13.5%.
Malaysia is the seventh largest investor in the country. Our investments in Myanmar as at Dec 31, 2011 however amounted to only US$977.46mil. Clearly, so much remains untapped.
The Government would also be keen to find out how it could collaborate with its Myanmar counterparts to support its development plans. Currently, Malaysia provides technical assistance to the CLMV through the Malaysian Technical Cooperation Programme and the Initiatives for Asean Integration (IAI). Under the IAI, Malaysia contributed US$5.2mil to various projects in CLMV. This we will continue to do.
On route to Myanmar, Mustapa would also make a stopover in Bangkok. As with Myanmar, his message in Thailand would be that Malaysia is committed to enhancing trade and investment relations with our Asean partners. Although Thailand is Malaysia’s fifth largest trading partner (US$23bil in 2011), Thai equity investments in Malaysia have been minimal. One of Mustapa’s objectives would be to encourage more Thai companies to invest here.