ADB says Myanmar’s economy gets back on track

Adb Says Myanmar's Economy Gets Back On Track
The legendary empty 20-lane-highway in Myanmar’s capital Naypyitaw © Arno Maierbrugger

Myanmar’s economic growth, which has been slowed down by sluggish government reforms, lack of confidence of foreign investors in a sound business environment and internal tensions and conflicts in the past, seems to be on the road to recovery, according to an assessment by the Asian Development Bank (ADB) in its newly released Asian Development Outlook 2019.

The ABD forecasts Myanmar’s economy to grow by 6.6 per cent in 2019 and by 6.8 per cent in 2020. Last year, Myanmar’s growth slowed to 6.2 per cent, down from 6.8 per cent in 2017.

The ADB said foreign direct investment approvals in Myanmar nearly doubled from $823 million between October 2017 and January 2018 to about $1.5 billion over the same period a year on which shows that investor confidence is improving. The growth came from Singapore and other Asian investors taking larger stakes in the country’s manufacturing and service sectors.

“Prospects for Myanmar’s economic growth for 2019 and 2020 look positive as the country opens up the retail and wholesale sectors and continues to modernise corporate governance and management,” Newin Sinsiri, country director of ADB for Myanmar said.

The government has continued to reform since April 2016, albeit slowly, announcing a number of strategic planning initiatives such as the Myanmar Sustainable Development Plan 2018–2030, National Education Strategic Plan 2016–2021 and Myanmar National Health Plan 2017–2021.

According to the Myanmar Investment Commission, Singapore became Myanmar’s top investor after committing more than $20 billion, surpassing China as of February. However, what the commission didn’t say is that not just a few Singaporean investments are coming from proxy firms owned by Myanmar oligarchs who are using this channel to repatriate black money through “foreign investment” by buying real estate and other assets and thereby in addition are distorting prices in their home country.

Last month, the Myanmar Investment Commission announced that foreign direct investment flows into Myanmar increased for the first time since Aung San Suu Kyi took office as State Counselor in early 2016.

The report further said that growth in the service sector was expected to reach nine per cent this year if tourism revives at the beginning of the dry season in October and telecommunications continues to expand. The industry sector should grow 8.2 per cent.

However, growth in agriculture was projected to slow from two per cent during April–September 2018 to 0.5 per cent this year following floods in mid-2018 that likely affected harvests, especially of rice in November.

According to the report, the trade deficit is expected to widen this fiscal year and the next as export earnings weaken and imports strengthen on the back of growing investment, particularly by the government. It said that even if net service receipts improve with a pickup in trade and tourism-related business, the current account deficit was forecast to widen to four per cent this year and five per cent the next.

According to the report, external risk would increase if the European Union withdraws Myanmar’s privileges under the Generalised System of Preferences, affecting ten per cent of exports from the country. Domestic risks may include lackluster progress on economic reform and communal tensions flaring in conflict-affected areas.

The ADB also warned that “reform to public financial management should aim for greater fiscal prudence, transparency and efficiency. It should also include strengthened treasury functions, more systematic public investment planning and implementation and the adoption of appropriate accounting and auditing standards to make public spending more productive.”

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The legendary empty 20-lane-highway in Myanmar's capital Naypyitaw © Arno Maierbrugger Myanmar’s economic growth, which has been slowed down by sluggish government reforms, lack of confidence of foreign investors in a sound business environment and internal tensions and conflicts in the past, seems to be on the road to recovery, according to an assessment by the Asian Development Bank (ADB) in its newly released Asian Development Outlook 2019. The ABD forecasts Myanmar’s economy to grow by 6.6 per cent in 2019 and by 6.8 per cent in 2020. Last year, Myanmar’s growth slowed to 6.2 per cent, down from 6.8...

Adb Says Myanmar's Economy Gets Back On Track
The legendary empty 20-lane-highway in Myanmar’s capital Naypyitaw © Arno Maierbrugger

Myanmar’s economic growth, which has been slowed down by sluggish government reforms, lack of confidence of foreign investors in a sound business environment and internal tensions and conflicts in the past, seems to be on the road to recovery, according to an assessment by the Asian Development Bank (ADB) in its newly released Asian Development Outlook 2019.

The ABD forecasts Myanmar’s economy to grow by 6.6 per cent in 2019 and by 6.8 per cent in 2020. Last year, Myanmar’s growth slowed to 6.2 per cent, down from 6.8 per cent in 2017.

The ADB said foreign direct investment approvals in Myanmar nearly doubled from $823 million between October 2017 and January 2018 to about $1.5 billion over the same period a year on which shows that investor confidence is improving. The growth came from Singapore and other Asian investors taking larger stakes in the country’s manufacturing and service sectors.

“Prospects for Myanmar’s economic growth for 2019 and 2020 look positive as the country opens up the retail and wholesale sectors and continues to modernise corporate governance and management,” Newin Sinsiri, country director of ADB for Myanmar said.

The government has continued to reform since April 2016, albeit slowly, announcing a number of strategic planning initiatives such as the Myanmar Sustainable Development Plan 2018–2030, National Education Strategic Plan 2016–2021 and Myanmar National Health Plan 2017–2021.

According to the Myanmar Investment Commission, Singapore became Myanmar’s top investor after committing more than $20 billion, surpassing China as of February. However, what the commission didn’t say is that not just a few Singaporean investments are coming from proxy firms owned by Myanmar oligarchs who are using this channel to repatriate black money through “foreign investment” by buying real estate and other assets and thereby in addition are distorting prices in their home country.

Last month, the Myanmar Investment Commission announced that foreign direct investment flows into Myanmar increased for the first time since Aung San Suu Kyi took office as State Counselor in early 2016.

The report further said that growth in the service sector was expected to reach nine per cent this year if tourism revives at the beginning of the dry season in October and telecommunications continues to expand. The industry sector should grow 8.2 per cent.

However, growth in agriculture was projected to slow from two per cent during April–September 2018 to 0.5 per cent this year following floods in mid-2018 that likely affected harvests, especially of rice in November.

According to the report, the trade deficit is expected to widen this fiscal year and the next as export earnings weaken and imports strengthen on the back of growing investment, particularly by the government. It said that even if net service receipts improve with a pickup in trade and tourism-related business, the current account deficit was forecast to widen to four per cent this year and five per cent the next.

According to the report, external risk would increase if the European Union withdraws Myanmar’s privileges under the Generalised System of Preferences, affecting ten per cent of exports from the country. Domestic risks may include lackluster progress on economic reform and communal tensions flaring in conflict-affected areas.

The ADB also warned that “reform to public financial management should aim for greater fiscal prudence, transparency and efficiency. It should also include strengthened treasury functions, more systematic public investment planning and implementation and the adoption of appropriate accounting and auditing standards to make public spending more productive.”

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