Myanmar’s Developmental Catch-22

What a difference a year makes.  

A functioning ATM at Yangon International Airport; a reporter from Myanmar International Television on prime time; a brand new KIA showroom sparkling with chrome and glass; Italian gelato counters serving raspberry and lime sorbet alongside a sumptuous buffet of Burmese cuisine.


On Yangon’s streets, hundreds of new Toyota Land Cruisers and Mitsubishi Pajeros have emerged as clear favorites – even an occasional Porsche sweeps past.   

These material symbols of Myanmar’s recent transformation indicate rapid progress, but also pose reasons for concern. Growth this year is projected at 6 percent, keeping pace with some of Myanmar’s Southeast Asian neighbors, and possibly overtaking others.

While these are welcome changes, runaway economic development produces its own dilemmas: destruction of the environment, displacement of communities, erosion of cultural bonds as creeping consumerism replaces fellowship and camaraderie. Call it Myanmar’s Catch 22. 

Eleven months ago when I arrived in Yangon, it was a week before the elections and the city was abuzz with campaigning. Daw Aung San Suu Kyi was hot on the campaign trail. Journalists arrived from every corner of the globe to cover Myanmar’s long-overdue political resurrection. Eager citizens awaited the day of reckoning, hoping that this time, the disappointment of past elections would not come back to haunt them.

A year later, the process of political and economic liberalization shows no signs of abating. If anything, the pace and quality of reforms that would hastily reverse Myanmar’s long isolation has surprised the international community.

Jin-Yong Cai, executive vice-president and CEO of the International Finance Corporation, the World Bank’s private sector arm, recently told the Wall Street Journal, “The political risk (in Myanmar) will go away. There is such goodwill from the political community.”

After languishing in a state of underdevelopment for fifty years, the Burmese have reclaimed their country. But now the real work begins.

Last November, President Thein Sein passed a new Investment Law, opening the door to foreign direct investment in what The Economist described as “the last frontier” for Western investors. The law allows foreign companies to lease land on a long-term basis without the involvement of a local partner. Tax incentives, infrastructure development and the creation of special economic zones are also covered in the law.

The Ministry of Agriculture and Irrigation has also proposed an aggressive agriculture development program. Its five-pronged strategy calls for the opening of new agricultural land, providing sufficient irrigation water, supporting agricultural mechanization, applying modern agro-technologies, and developing high-yielding crop varieties.

Meanwhile, by developing its oil and gas industries, alongside supporting infrastructure, Myanmar will be able to engage with many of its neighbors. Specifically, it stands to benefit from the enormous energy demands of China, India, and Thailand.

Reuters reported last year that Myanmar’s reforms will lead to an energy boom.  Already, RH Petrogas of Singapore has signed a Seismic Option Agreement with Rimbunan Petrogas Limited in Myanmar. If all the planned pipelines materialize, Myanmar could eventually supply 20 percent of China’s oil and gas needs. 

In response to environmentalists’ fears that massive investments in Myanmar’s extractive sector will wreak havoc on the country’s precious natural resources, parliament passed the Environmental Conservation Law last March. Its declarations are bold, its stipulations formidable and sweeping. No company can do business in Myanmar without, at the very least, an Environmental Impact Assessment.  Companies must obtain clearance from the Ministry of Environmental Conservation and Forestry, widely known as MOECAF. 

But the devil is in the details. The law requires specific procedures that have not yet been translated into a set of globally compliant standards. Technical requirements such as establishing criteria to screen investment proposals and ensuring a timely approval process need to be addressed.

There is also the thorny issue of whether to allow projects to move forward in areas where they could potentially dislocate local ethnic communities. This also creates the need for dispute mechanisms that give voice to the communities affected by such projects. These practices were conspicuously absent during five decades of decision-making by military fiat. 

In many ways, Myanmar is Asia’s darling today. But this privileged position brings with it the burden of having to live up to standards, uphold ideals, and make good on promises. The onset of economic and political reform has left many in a state of exuberance, yet the rush to modernity has a steep learning curve.   

Myanmar stands on the brink of an exciting new era. Let’s hope the country never looks back. 

Teresita Cruz-del Rosario is a Visiting Senior Fellow at the Center for Asian Legal Studies at the National University of Singapore. She can be reached at delrosatess@gmail.com.

source: The Diplomat
http://thediplomat.com/asean-beat/2013/02/19/myanmars-developmental-catch-22/