Despite the slowdown of gross domestic product growth in fiscal year2016-17 that ended in March 31, Asia Development Bank has forecast that Myanmar will grow further from this year onwards if it can address some challenges.
Yumiko Tamura, officer-in-charge of ADB’s Myanmar Resident Mission, said at the launch of the development lender’s annual report entitled “Asian Development Outlook 2017” on Thursday that Myanmar’s economy will grow at 7.7 per cent this year (FY2017-18) and will increase to 8 per cent next year (FY2018-19).
She said that inflation and current account deficit would go along with the GDP growth in the near term, projecting that inflationary pressures will continue to grow from 6.5 per cent last year to 7 per cent this year and 7.5 per cent next year. The current account deficit is projected to be around 8 per cent of GDP in the next two years.
According to the report, Myanmar’s GDP growth slowed to 6.4 per cent last year from 7.3 per cent in FY2015-16. Inflation eased, but the current account deficit worsened.
“We are confident that Myanmar will grow further until FY2018-19. It is the last frontier among Asean countries, which has opened to the regional and international arena. So, there are certain disadvantages of (being) a late comer, as well as certain advantages. This country can invite businesses from developed economies,” she said.
Tamura urged the Myanmar government to create an enabling business environment by strengthening legal and institutional framework as well as human capital.
“We have seen a lot of the government’s efforts to strengthen the legal framework, but there are many things to be done,” she said.
To her, laws and regulations need to be set with proper consultations within the government as well as with other stakeholders including businesspeople. Rules and regulations should be easy to comply with. Effective implementation of the laws is crucial, and government agencies need to deepen their understanding of modern business practice.
Yan Paing Oo, programmes officer at ADB Myanmar, echoed Tamura’s view. He said that current legal and regulatory framework for business activities in Myanmar is complex and fragmented. Multiple layers of laws, regulations and procedures are outdated or inconsistent. Implementation and enforcement of laws has been limited.
“Laws should be developed in a clear, consistent and coordinated manner. Regulatory and administrative practices need to be aligned with laws and regulations. Proper implementation and uniform enforcement of laws is critical,” he said.
Yan Paing Oo stressed the importance of private sector development, as it is the primary engine of national productivity and sustainable growth. He said it also played a key role in poverty reduction.
Thi Da Myint, economics officer at ADB Myanmar, said that the nation’s market was dominated by commodity prices.
She said both internal drivers and external forces led to the slowdown of economy last year. The internal shocks included slowdown in production, slow recovery of the agricultural sector, drop in private and public investment, and uncertainty in economic policy. The external forces included weakening demand from major trading partners like Thailand due to reduced gas export and low international commodity prices.
Thi Da Myint also pointed out that service sector growth also declined despite marginal increase in the tourism sector. She said creating a better business environment would lead Myanmar to reduce impacts of the widening current account deficit.
Tamura said that the government should prepare for both internal and external shocks particularly related to economic and financial crisis at the regional or global level.
She urged to safeguard the financial sector by putting appropriate policy measures in place including strengthening the banking sector and the capital market. To her, innovation or advanced technology can also drive Myanmar’s growth.
“There are things we can do. For example, the agricultural sector can look into more sustainable engagement and participation in global and regional value change,” she said, adding that such initiative would yield positive results even in unexpected weather conditions.
Tamura underscored the importance of regional cooperation to reduce the impacts of underlying causes of slow growth. She urged to attract more investment, build confidence, and improve financing in which ADB could play a role.
“There is a prospect of stronger demand from neighbouring countries. In Myanmar, I see potential opportunities for businesses, investment and the trade activities from other Asean countries,” she said.
“A lot of development cooperation agencies including ADB actually look at the very promising prospects of the public-private partnership. This is the model where basically the public sector and the private sector_ both domestic and international_ actually cooperate to pursue certain projects, strategically infrastructure projects in Myanmar,” she said.
Tamura said the private sector could be mobilised more effectively for available funding, and there is a huge potential to grow up private sector investment, both from foreign direct investment and domestic businesses.