Myanmar Economy

By | October 1, 2021

Myanmar is a potentially rich but heavily backward country; it presents very conservative economic structures, on which colonialism has had little weight and to which in practice not even the past government policy, set according to principles inspired by a sort of community socialism, has been able to bring substantial changes. The first signs of change occurred in 1988, when the military government decided to embark on a process of economic reforms that should have allowed the transition from a centralized and planned economy to a market economy. The significant increase in GDP in 1992, despite a low per capita income, indicated that the chosen strategy was the right one and, consequently, the government has placed greater emphasis on projects to open up foreign trade and investment, committing itself to favoring the decentralization of economic decisions, the reduction of taxes, the restructuring of the banking sector and the simplification of import and export procedures, as well as the creation of guarantees for direct investments. See smber for agriculture of Myanmar.

Myanmar has obtained signs of openness mainly from China, which intends to exploit the strategic position of the country to guarantee an outlet on Indian Ocean, an objective that counterbalanced the need of the Burmese political class to find weapons to preserve internal power. In this perspective of mutual exchange, the two countries signed, starting from August 1988, numerous agreements, aimed at strengthening economic collaboration and that relating to the construction or renewal of the road network of their border areas, to which it has followed, in 1994, by the signing of an agreement which provided for the transfer to Myanmar of military supplies for 400 million dollars. The government has also focused heavily on the revival of the economy on tourism, which suffered a dramatic decline between 1988 and 1989, due to the political situation. In 1996, however, the number of tourists increased significantly, exceeding 170,000 admissions. Beginning in 1989, the government announced plans to build new hotels with the support of foreign companies and in 1993 passed a law that encourages the development of tourism and allows private entrepreneurs to take an active part in the tourism industry. In the last years of the twentieth century, in the meantime, oppression, corruption, drug trafficking and the distrust of international political circles towards the local government pushed Myanmar into a state of recession, despite the fact that in the first half of the nineties the GDP had registered rhythms very high growth rates and numerous macroeconomic indices had become positive.

In July 1997 Myanmar joined the ASEAN (Association of South East Asian Nations), with its consequent integration into the regional economy of Southeast Asia, but, in the same year, the United States placed the country under embargo due to repeated violations of human rights and the lack of commitment shown in the fight against drug trafficking.. Economic growth, at the end of the nineties, was in decline, inflation was high, the local currency (kyat) underwent a devaluation of about 50% in 1997, the number of soldiers almost doubled and spending military has absorbed half of the public budget, so that many foreign investors have withdrawn (-70% in the first half of 1998 compared to the previous year). Furthermore, the weakness of Myanmar’s productive and financial apparatus has exposed the country to the repercussions of external crises, as happened in 1997, following the collapse of the Asian and domestic markets as happened in 2003. In the same year the United States provided for new sanctions against Myanmar with a veto on the importation of Burmese products and the offer of financial services; the same has done repeatedly by the European Union, which in 2007 intensified its sanctions on imports, excluding oil and natural gas, and on exports. The GDP produced in 2008 was US $ 27.182ml, with a GDP of US $ 462 making Myanmar one of the poorest countries in Asia. International organizations complain about the lack of privatization policies for public enterprises and incentives for the private sector, whereas, on the contrary, there is an oppressive state presence, while, on the external front, a real opening to the rules of the world market would be necessary. In fact, Myanmar is still too closed and unstable from a political and social point of view and lacks the indispensable reforms aimed at encouraging foreign investments in key productive sectors (mineral resources in the lead), exports and tourism.

Myanmar Economy