Myanmar in Transition ADB

Myanmar in Transition
Opportunities and Challenges

Opportunities and Challenges
August 2012
2012 Asian Development Bank
All rights reserved. Published in 2012.
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Asian Development Bank
Myanmar in transition: Opportunities and challenges.
Mandaluyong City, Philippines: Asian Development Bank, 2012.
1. Economic development. 2. Myanmar. I. Asian Development Bank.
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Nyanmai emeiges fiom uecaues of isolation with much hope anu suppoit fiom the global anu
iegionalcommunities.Thecountiyhashighpotentialfoiiapiugiowthanuuevelopmentgivenitsiich
natuial iesouices, abunuant laboi foice, anu stiategic location between the iegions two economic
giantsthePeoplesRepublicofChinaanuInuia.Nanylessonscanbeuiawnfiomtheuevelopment
expeiiencesofNyanmaisneighboisanucanhelpguiueitseconomictiansitiontoachievestionganu
inclusivegiowthwhileavoiuingsocialinstabilityanuensuiingenviionmentalsustainability.
uieatei iegional coopeiation can unlock the giowth potential aiising fiom incieaseu tiaue anu
cioss-boiuei investment. Nyanmai can stiengthen its ties with the Association of Southeast Asian
Nations(ASEAN)anuutilizeitsuniquegeogiaphicpositionasabiiugebetweenSouthanuSoutheast
Asia, which offei a iange of new oppoitunities. Woiking in coopeiation with othei countiies will
pioviueasoliuplatfoimfoiNyanmaisienaissance.
Nyanmai is set to chait a couise that takes into account its stiengths anu weaknesses, while
leveiagingtheavailableoppoitunitiesanuavoiuingthepotentialiisks.Nyanmaicanalsopositionitself
stiategically in the iapiuly changing global anu iegional enviionment to beneit fiom its auvantages
This iepoit was piepaieu to assess the countiys economic anu social piospects as it embaiks on
a new eia of iefoim anu ienewal. We hope that it bioauens anu ueepens the unueistanuing of the
countiyanupioviuesafounuationfoieffectiveuevelopmentassistance.
This iepoit was piepaieu jointly by the Asian Bevelopment Banks Economics anu Reseaich
Bepaitment anu Southeast Asia Bepaitment. The Bepaitment of Exteinal Relations also pioviueu
invaluablesuppoitfoiitspublicationanuuissemination.
Foreword
iii
ChangyongRhee
ChiefEconomist
EconomicsanuReseaichBepaitment
KunioSenga
Biiectoiueneial
SoutheastAsiaBepaitment
Ku Ku Ku Ku Ku KKu KKu Ku Ku Ku Ku KKu KKKu KKKKKKKu KKu KKKu KKu Ku Ku Ku u KKKu KKKKKKu Ku Kuuuunio ooooooooooooooooooooooo Se SSSSe SSSe SSSe SSe Se SSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS ngggggggggggggggggggggaaaaaa
Biiectoi ueneial
iv
Acknowledgments
The iepoit was wiitten by Cyn-Young Paik, Nuhammau Ehsan Khan, anu Paul vanuenbeig. Paulo
RouelioN.BalilianuEmmanuelA.SanAnuiesoffeieuinvaluableieseaichsuppoit.Theiepoitalso
uiew heavily on inputs pioviueu by Naiia Socoiio Bautista, Naitin Bouenstein, Bouglas Biooks,
Iiis Claus, }esus Felipe, Kaushal }oshi, Kee-Yung Nam, Byun Bwa Son, }uzhong Zhuang, anu }oseph
EinestZveglich}i.fiomtheEconomicsanuReseaichBepaitment;anuKellyBiiu,RichaiuBolt,Ruuolf
Fiauenuoifei, Thatha Bla, }ong-Inn Kim, }ames Leathei, }ames Nugent, Alfieuo Peiuigueio, Pavit
Ramachanuian,ChiistopheiA.Spohi,CiaigSteffensen,anuWinfiieuF.WickleinfiomtheSoutheast
Asia Bepaitment. A team fiom the Bepaitment of Exteinal Relations extenueu expeit suppoit foi
publication anu uissemination. }ill uale ue villa pioviueu excellent euiting seivice anu typesetting
wasuonebyNikeCoites.
Foreword iii
Acknowledgments iv
Abbreviations and Acronyms vi
EXECUTIVE SUMMARY vii
I. MYANMAR IN TRANSITION 1
Macroeconomic Performance 1
Poverty and Inequality 6
Millennium Development Goals 8
II. CHANGING EXTERNAL ENVIRONMENT 10
Myanmar in the Asian Century 10
ASEAN and Intraregional Trade and Investment 11
Inclusion and Environmental Sustainability 13
III. STRENGTHS, CONSTRAINTS, OPPORTUNITIES, AND RISKS 15
Strengths 15
Constraints 19
Opportunities 28
Risks 30
IV. IMPLICATIONS FOR MYANMARS ECONOMIC TRANSITION 35
Managing Macroeconomic Stability 35
Mobilizing Domestic Resources 36
Building Development Foundations 39
Improving the Investment Climate for Industry and Business 40
Expediting Public Sector Reform 41
Building Planning and Statistical Capacity 41
REFERENCES 43
Contents
v
Abbreviations and Acronyms
vi
ADB Asian Development Bank
ASEAN Association of Southeast Asian Nations
CBM Central Bank of Myanmar
DICA Directorate of Investment and Company Administration
FDI foreign direct investment
FY scal year
GDP gross domestic product
GMS Greater Mekong Subregion
IHLCS Integrated Household Living Conditions Survey
Lao PDR Lao Peoples Democratic Republic
MDG Millennium Development Goal
MIWT Myanmar Inland Water Transport
MK kyat
MOE Ministry of Education
MOFR Ministry of Finance and Revenue
MOH Ministry of Health
MMR maternal mortality ratio
MNPED Ministry of National Planning and Economic Development
PRC Peoples Republic of China
TVET technical and vocational education and training
U5MR under 5 mortality rate
VAT value-added tax
Weights and Measures
ha hectare
km kilometer
MW megawatt
t ton
vii
Executive Summary
Nyanmai is emeiging fiom ive uecaues of isolationboth economically anu politically With its iich
natuial iesouices anu stiategic location, the countiy shows goou potential foi giowth. Nyanmai
coulubecomeoneofthenextiisingstaisinAsiaifitcansuccessfullyleveiageitsiichenuowments
such as its natuial iesouices, laboi foice, anu geogiaphic auvantagefoi economic uevelopment
anugiowth.
Nyanmai is making biave new moves, as uiu many of the iegions high giowth anu tiansition
economiesuecaueseailiei.Itisopeninguptotiaue,encouiagingfoieigninvestment,anuueepening
its inancial sectoi Knowing the histoiy of iapiu giowth in the iegion can help guiue Nyanmai in
makingtheciiticaluecisionstoachieveitsmeuium-anulong-teimgoals.
Luckily,lessonsofeconomicgiowthanuuevelopmentaieabunuantinAsia.ThePeoplesRepublic
of China (PRC), Inuonesia, Nalaysia, Thailanu, viet Nam, anu iecently Cambouia giew by 6%1u%
annually uuiing theii high-giowth peiious. Poveity was ieuuceu by as much as half in a uecaue.
Nyanmai coulu giow at 7%8% pei yeai foi a uecaue oi moie anu iaise its pei capita income to
$2,uuu$S,uuuby2uSu.
Eveiy countiys uevelopment expeiience is unique shapeu by its speciic histoiy cultuie uomestic
conuitions, anu the pievailing inteinational enviionment. Yet impoitant lessons can also be uiawn
fiomtheexpeiiencesofotheisuccessfulcountiies.ThieebioaulessonsaieappaientfiomAsiasiise.
Fiist inlation must be kept low anu stable thiough effective macioeconomic management Seconu
high uomestic savings levels aie neeueu to inance investment Anu thiiu agiicultuie is impoitant
buttheeconomyneeustounueigoastiuctuialtiansfoimationtoinuustiyanuseivicesasameansto
impiovepiouuctivity,expanuexpoits,anucieateemployment.Alongwiththesebioaulessons,Asias
giowth has iequiieu investments in human capital anu eficient infiastiuctuie the cieation of sounu
institutionsanusocialstability,anutheuseofthemaiketmechanismtoallocateiesouices.
Nyanmais tiansition comes amiu a seismic shift in the global economic lanuscape. The iecent
inancial ciisis gave way to a new noimal wheie the global economic weight is shifting fiom West
toEastanufiomNoithtoSouth.Thischanginglanuscapehasimpoitantimplicationsfoieconomic
uynamics in Asia. With the emeigence of Asia as a new global giowth centei, iegional integiation
is now, moie than evei, an impoitant ingieuient in an effective giowth stiategy. Nyanmai anu its
neighbois neeu no longei iely on that aspect of factoiy Asia in which goous weie piouuceu in the
East foi inal consumption in the West Asia is stiengthening its own inteinal uemanu anu theieby
cieatingnewoppoitunitiesfoicountiiessuchasNyanmai,aswellascontiibutingtoamoiebalanceu
globaleconomy.
viii
Myanmar In Transition: Opportunities and Challenges
uieatei iegional coopeiation can unlock the giowth potential aiising fiom incieaseu tiaue anu
cioss-boiueiinvestment.Nyanmaiisstiategicallylocateubetweentheiegionstwoeconomicgiants,
thePRCanuInuia,whichaiehometoovei2.Sbillionpeople.WiththePRCmovinguptheglobalvalue
chain anu its woikfoice uemanuing highei wages some manufactuiing iims aie seeking to ielocate
tocountiiesinSoutheastAsia,incluuingNyanmai.
StiengtheningitstieswithintheAssociationofSoutheastAsianNations(ASEAN)anuutilizingits
uniquegeogiaphicpositionasabiiugebetweenthePRCanuInuiaanubetweenSouthanuSoutheast
AsiawouluopenNyanmaitoaiangeofnewoppoitunities.About26%ofASEANstotaltiauetakes
place among membei countiies The gioups tiaue with the PRC has giown signiicantlyfiom less
than 4% in 2uuu to moie than 1u% in 2u11. Buiing the same peiiou, the shaie of ASEANs tiaue
withinuustiializeueconomieshasueclineufiomS4%toS6%.TheexamplesofCambouiaanuviet
Nam show that Nyanmai can leveiage its afiliation with subiegional gioups anu expanu fiom theie
The time is iipe foi Nyanmai to stiategically plan its economic tiansition to take auvantage of the
giowingpoweiofemeigingmaiketeconomies,paiticulailytheiiseofAsia,incluuingthePRC,Inuia,
anuASEAN.
Nyanmai can exploit seveial stiengths anu oppoitunities to catalyze its tiansition to an open,
maiket economy. A stiong commitment to bioau-ianging iefoims, coupleu with a iich enuowment
of natuial assetsabunuant lanu watei anu eneigy iesouices a youthful lowcost laboi foice anu
its stiategic locationpioviue a stiong founuation foi giowth Bue to the countiys iich agiicultuial
iesouices anu favoiable climate, agiicultuie has enoimous potential foi giowth anu poveity
ieuuction. The goveinment piioiitizes agiicultuie anu iuial uevelopment as uiiveis of giowth anu
bioau-baseuuevelopment,asagiicultuieaccountsfoiaboutS6%ofgiossuomesticpiouuct,employs
majoiityofthewoikfoice,anupioviues2S%Su%ofexpoitsbyvalue.Nyanmaihasgooupotential
foi uiveisifying into a iange of nonpiimaiy activities notably touiism anu telecommunications
which aie quick winsas well as manufactuiing constiuction anu banking
Bowevei, Nyanmai also faces multiple constiaints anu iisks that may limit its piogiess. Key
constiaintsincluueaweakmacioeconomicmanagementfiamewoikuevoiuofmaiketmechanisms,
insuficient iscal iesouices anu ineficient uomestic funu mobilization limiteu access to inance
ueicient infiastiuctuie inauequate social seivices that hampei human capital uevelopment
anu limiteu inuustiial uiveisiication The iisks incluue enviionmental uegiauation aiising fiom
inuustiialization anu climate change. The agiicultuie anu natuial iesouices sectoi is paiticulaily
vulneiabletotheeffectsofclimatechange,notablytheincieasingfiequencyanuseveiityofextieme
weatheieventsanuotheinatuialuisasteis.
Cleaily,giowthhasbeenthemosteffectivetoolfoiieuucingpoveityinAsia.Butiniecentuecaues,
giowthhasbecomelessequitableinfastgiowingcountiies,compaieuwiththeeailieiexpeiiences
of}apan,theRepublicofKoiea,anuotheimiiacleeconomies.Recenteviuencealsopointstomixeu
anuunevenpiogiessaciosscountiiesanusubiegionsinachievingtheNillenniumBevelopmentuoals
(NBus).NyanmaihasmauepiogiesstowaiutheNBus,butoneinfouiofitspeopleiemainspooi
anuoneinthieechiluienbelowtheageofSisunueiweight.vulneiabilitytomalaiia,tubeiculosis,
BIvAIBS,anuotheiuiseasesiemainshigheiinNyanmaithaninitspeeiswithintheiegion.Stiong
giowthisimpeiativefoithecountiytoalleviatepoveityanuimpiovethestanuaiuofliving.Intuin,
inclusivenessisciucialtomaintaininggoougiowthmomentumbecauseitstiengthenssocialcohesion
anu contiibutes to human capital accumulation. With many ethnic gioups, cieating a haimonious
societyisakeychallenge.Inteinalpoliticalanusocialtensioncanbeuestabilizinganumayleauto
open conlict
Executive Summary
ix
The couise of Nyanmais futuie giowth can be guiueu by thiee complementaiy uevelopment
stiategies:iegionalintegiation,inclusiveness,anuenviionmentalsustainability.Fuitheimoie,given
themyiiauchallengesthecountiyfacesanuthelimiteuiesouicesatitsuisposal,theinteiventions
can be piioiitizeu anu iefoims sequenceu foi the maximum beneits
Keyuevelopmentagenuasincluuethefollowing:
% Providemacroeconomicstability.Astablemacioenviionmentpioviuesafounuationfoi
investmentanulong-teimgiowth.Keyelementsofsounumacioeconomicpolicyincluuelow
anu stable inlation a sustainable iscal position anu a lexible maiketbaseu exchange iate
% Mobilizeresourcesforinvestment.Incieaseuuomesticanufoieignsavingsaieciiticalto
meeting the enoimous iequiiements of the piivate anu public sectois. In auuition, highei
goveinment ievenues eg taxation anu moie eficient inancial inteimeuiation will also
help to pioviue sustainable inancing foi uevelopment
% Improve infrastructure and buman capital. The iemoval of stiuctuial impeuiments in
thekeyaieasofeuucation,health,anuinfiastiuctuiecanpioviueabasisfoihumancapital
uevelopmentanuimpioveconnectivity.
% Diversify into industry and services, wbile improving agriculture. Bioauening the
economic base beyonu piimaiy inuustiies can iaise piouuctivity anu value auuition. Yet
agiicultuie isheiies anu iesouice inuustiies aie not to be neglecteu as they contain
consiueiablepotentialfoiexpansion.
% Reducetbestatesroleinproduction.Afuitheiieuuctioninthegoveinmentsowneiship
anu contiol of piouuctive activities can help spui competition anu inciease investment by
cieating a level playing ielu
% Strengtben government institutions. Economic tiansfoimation can be suppoiteu by
effectivegoveinmentinstitutions,althoughbuiluinginstitutionsanutheiicapacitymaytake
time. Attention might focus on nuituiing auministiative anu iegulatoiy systems; managing
iesouices; anu, most impoitantly, enhancing the capabilities of goveinment peisonnel
thioughoutthesystem.
Executive Summary
1
I. Myanmar in Transition
Nyanmai is giauually embiacing wiue-
ianging iefoims. The iecent cuiiency iefoim
is one of many initiatives in this uiiection. The
goveinment is ueepening anu bioauening
the iefoims to impiove monetaiy anu iscal
managementwhilefacilitatingtiaueanufoieign
uiiectinvestment(FBI)anuiemovingstiuctuial
impeuimentstogiowthbyestablishingphysical
anu social infiastiuctuie, builuing legal anu
institutional fiamewoiks, anu ueveloping
banking anu inancial sectois Table piesents
an oveiview of Nyanmais economic, social,
anu enviionmental featuies. 0nueistanuing
these featuies anu caieful analysis of the key
uevelopment issues is the iist step towaiu
uesigning anu implementing economic anu
policy iefoims to fostei the countiys giowth
anuuevelopment.
Macroeconomic Performance
Theneai-teimoutlookfoiNyanmaiseconomy
isielativelyupbeatonthebackofstiongexpoit
eainingsfiomiesouicecommouitiesanuapick-
up in FBI lows The Asian Bevelopment Bank
(ABB)foiecaststhatNyanmaisgiossuomestic
piouuct (uBP) is likely to giow by about 6.u%
in 2u12 anu 6.S% in 2u1S (ABB 2u12b).
Inlation has been biought uown to a single
uigit anu iscal ueicits aie being kept at
6% of uBP. With haiu-eaineu macioeconomic
stability, Nyanmais giowth peifoimance may
well exceeu expectations in the foieseeable
hoiizon. Buiing theii high-giowth peiious,
Nyanmais iegional peeis giew at 6%1u%
pei yeai, ieuucing theii poveity by as much
as Su% in one uecaue (Table 2). If Nyanmais
uevelopment follows this pattein, the countiy
coulugiowat7%8%eveiyyeaifoianextenueu
peiiou.Atsuchgiowthiates,itsuBPpeicapita
woulu ieach $2,uuu$S,uuu by 2uSu
1
moie
than S times the cuiient levelpiopelling
Nyanmai safely into the ianks of the miuule-
incomecountiies.
Nyanmai iepoiteu impiessive uBP giowth
iates, aveiaging 1u.2% uuiing 19922u1u anu
12.2% uuiing 2uuu2u1u (Figuie 1). Bowevei,
these oficial giowth iguies have been ueemeu
oveistateu anu iathei unieliable given the
countiys pooi statistical capacity anu use of
outuateu methouologies (Nyint 2uu9). The
Inteinational Nonetaiy Funu (INF) Aiticle Iv
Nissionof}anuaiy2u12estimateuuBPgiowth
tobesubstantiallylowei,aveiaging4.6%uuiing
2uu22u1u anu picking up to exceeu S.u% in
2uu92u1u (INF 2u12). vaiious piouuction
inuicatoispiesumably coiielateu with uBP
giowthalsosuggestthatNyanmaiseconomic
giowth may have been weakei than oficial
goveinment estimates. Foi example, electiicity
sales (in kilowatt houis) to householus anu
commeicialpiemisesgiewonaveiageby4.S%
pei annum uuiing 2uu22uu9 anu cement
sales by 1.8% pei annum uuiing 2uu42uu9
(CS02u1u).
1
ABB staff estimates. The estimates assume that
population giows at 1.S% pei yeai, which is the
aveiage foi 2uu9-2u11. veibiest anu Naing (2u11)
estimate that Nyanmais pei capita uBP coulu ieach
$2,814$S,S61by2uSu,usingascenaiioofgiowthat
7.S%-9.S%peiyeaiwithu.8S%populationgiowth.
2
Table 1. Myanmars Basic Statistics
Category Year
a
Economic 2007 2008 2009 2010
b
2011
b
uBP($billion,cuiient) 2u.2 S1.4 SS.2 4S.4 S1.9
uBPpeicapita($,cuiient)
b
SS1.u SS7.S S9S.7 7S9.1 8S6.8
uBPgiowth(%,inconstantpiices) S.S S.6 S.1 S.S S.S
Agiicultuie livestock isheiy anu foiestiy 8.u S.4 4.7 4.4 4.4
Inuustiy 21.8 S.u S.u 6.S 6.S
Seivices 12.9 4.2 S.8 6.1 6.S
uiossuomesticinvestment(%ofuBP)
uiossuomesticsaving(%ofuBP)
Consumeipiiceinuex(annual%change) S2.9 22.S 8.2 7.S 4.2
Liquiuity(N2)(annual%change) 2u.9 2S.4 S4.2 S6.8 SS.S
0veiall iscal suiplus ueicit of uBP (S.8) (2.4) (4.8) (S.7) (S.S)
Neichanuisetiauebalance(%ofuBP) 4.6 1.6 2.u u.8 (u.S)
Cuiientaccountbalance(%ofuBP) u.6 (2.2) (1.S) (u.9) (2.7)
Exteinaluebtseivice(%ofexpoitsofgoousanuseivices) 4.6 S.1 4.S S.1 S.9
Exteinaluebt(%ofuBP) S7.S 2S.8 24.4 24.8 22.8
PovertyandSocial 2000 2011
Population(million) Su.1 6u.6
Populationgiowth(annual%change) 2.u 1.S
2u11j
Nateinalmoitalityiatio(pei1uu,uuulivebiiths) 42u.u |199uj 24u.u |2uu8j
Infantmoitalityiate(below1yeaipei1,uuulivebiiths) 79.u |199uj Su.u |2u1uj
Lifeexpectancyatbiith(yeais) S9.9 62.1 |2uu9j
Auultliteiacy(%) 89.9 92.u |2uu9j
Piimaiyschoolgiosseniollment(%) 1uu.u |1999j 116.u |2uu9j
Chilumalnutiition(%belowSyeaisolu) S4.S |2uuSj S2.u |2u1uj
Populationbelowpoveityline(%) S2.1 |2uuSj 2S.6 |2u1uj
Populationwithaccesstosafewatei(%) 62.6 |2uuSj 69.4 |2u1uj
Populationwithaccesstosanitation(%) 67.S |2uuSj 79.u |2u1uj
Environment 2000 2010
Caibonuioxiueemissions(thousanumetiictons) 4,276.u |199uj 12,776.u |2uu8j
Caibonuioxiueemissionspeicapita(metiictons) u.1 |199uj u.S |2uu8j
Foiestaiea(millionhectaies) S4.9 S1.8
0ibanpopulation(%oftotalpopulation) 28.u SS.9
=notavailable,()=negative,|j=latestyeaifoiwhichuataaieavailable,ABB=AsianBevelopmentBank,ABF=AsianBevelopment
Funu,uBP=giossuomesticpiouuct,N2=bioaumoney,0CR=oiuinaiycapitaliesouices.
a
FiscalYeai(oiFYstaits1ApiilanuenusS1Naich,suchthatFY2u1ustaits1Apiil2u1uanuenusS1Naich2u11).
b
Estimates.
Souices:ABB2u12a;ABB2u12b;ABB2u12c;ABB2u11a;INF2u12;NNPEB,N0B,anu0NICEF2u11;ESCAP,ABB,anu0NBP2u12
S
pei capita uBP in puichasing powei paiity
uespite ielatively goou giowth uuiing 2uuu
2u1u(Figuie2).
Key factois inhibiting Nyanmais giowth
iate in the last uecaues aie low investment,
limiteu integiation with global maikets,
uominance of state-owneu enteipiises in key
piouuctivesectoisoftheeconomy,anufiequent
Inueeu, economic activity in Nyanmai
uiu not pick up stiongly uuiing the 198us anu
199us.Inthe196us,NyanmaiwasoneofAsias
leauingeconomies.Itspeicapitaincomein196u
was about $67umoie than thiee times that
of Inuonesia, moie than twice that of Thailanu,
anu slightly lowei than that of the Philippines
(Booth 2uuS). Bowevei, the INF estimates that
in 2u1u, Nyanmai hau Southeast Asias lowest
Table 2. Economic Growth and Poverty Reduction
Country Period
Averageannualeconomic
growtbrate
Povertybeadcountratios
{atS1.25Jday]
Earliest Mid Latest
Cambouia 19942u1u 7.8% 48.6(1994) S7.7(2uu4) 22.8(2uu8)
PRC 19912u1u 1u.4% 6S.8(1992) 28.4(2uu2) 1S.1(2uu8)
Inuonesia 1976199u 6.6% 62.8(1984) S4.S(199u)
LaoPBR 19942u1u 6.8% SS.7(1992) 44.u(2uu2) SS.9(2uu8)
Nalaysia 1976199u 7.2% S.2(1984) 1.9(1989)
Myanmar 20002010 12.2{Covernmentest.]
4.7{IMFest.]
32.1{2005]
a
25.{2010]
a
Thailanu 1976199u 8.u% 21.9(1981) 11.6(199u)
vietNam 19942u1u 7.4% 6S.7(199S) 4u.1(2uu2) 16.9(2uu8)
PRC=PeoplesRepublicofChina,LaoPBR=LaoPeoplesBemociaticRepublic.
a
FiguiesfoiNyanmaiaiefiomIBLCS2u11anubaseuonitsnationalpoveityline.
Souices:ABB-SBBS2u12;INF-IFS2u12;WB-WBI2u12
Figure 1. Myanmars Real GDP Growth Rates (19502010, %)
uBP=giossuomesticpiouuct.
Souices:19Su-1987fiomNyint2u11;1988-2u12fiomABB-SBBS2u12
20
15
10
5
0
-5
-10
-20
1
9
5
0
1
9
5
5
1
9
6
0
1
9
6
5
1
9
7
0
1
9
7
5
1
9
8
0
1
9
8
5
1
9
9
0
1
9
9
5
2
0
0
0
2
0
0
5
2
0
1
0
4
episoues of macioeconomic instability. In
paiticulai,sluggisheconomicpeifoimancemay
beattiibuteutothelowlevelsofinvestmentin
the economy. Buiing 2uuu2u1u, Nyanmais
giossuomesticinvestmentaveiageu14.2%,the
lowestamongASEANcountiies(TableS).
Inlation stoou at foi anu is
expecteu to iise to 6.2% in 2u12 as the effect
of the iecent moueiation in foou piices faues
(ABB 2u12a, 2u12b). These single-uigit iates,
howevei hiue the fact that the inlation iate was
histoiically high anu vaiiable. The piice level
in Nyanmai neaily quauiupleu fiom 2uu1 to
with an aveiage annual inlation iate
of 2S.S%. By compaiison, viet Nam iepoiteu
an aveiage annual inlation iate of
anu Cambouia hau 4.u% in the same peiiou
Figuie While Nyanmais oficial iguies
may not be fully ieliable, it is cleai that the
countiyhasexpeiienceupeiiousofexceeuingly
high inlation The monetization by the
Figure 2. Per Capita GDP of Selected ASEAN Countries ($, PPP)
ASEAN = Association of Southeast Asian Nations, uBP = gioss uomestic piouuct, Lao PBR = Lao Peoples Bemociatic Republic,
PPP=puichasingpoweipaiity.
Souice:EconomyWatch2u12
15,000
5,000
10,000
0
Malaysia Thailand Indonesia
2000 2010
Philippines Viet Nam Lao PDR Cambodia Myanmar
Table 3. Gross Domestic Investment of Selected ASEAN Countries, 2000-2010 (% of GDP)
2000 2001 2002 2003 2004 2005 200 2007 2008 2009 2010 Ave.
Cambouia 16.9 18.S 18.1 2u.1 16.2 18.S 22.S 21.2 18.6 21.4 17.6 19.1
Inuonesia 22.2 22.S 21.4 2S.6 24.1 2S.1 2S.4 24.9 27.8 S1.u S2.S 25.7
LaoPBR 1S.9 14.1 17.S 16.7 22.7 2S.S 2S.6 S2.S Su.u Su.7 26.1 23.0
Nalaysia 26.9 24.4 24.8 22.8 2S.u 2u.u 2u.S 21.6 19.S 14.4 21.4 21.7
Myanmar 12.4 11. 10.1 11.0 12.0 13.2 13.7 14.8 15. 18.9 22.7 14.2
Philippines 18.4 22.1 24.S 2S.u 21.6 21.6 18.u 17.S 19.S 16.6 2u.S 20.3
Singapoie SS.2 26.8 2S.8 16.1 21.7 2u.u 21.u 21.1 Su.2 26.4 2S.8 24.0
Thailanu 22.8 24.1 2S.8 2S.u 26.8 S1.4 28.S 26.4 29.1 21.2 2S.9 25.9
vietNam 29.6 S1.2 SS.2 SS.4 SS.S SS.6 S6.8 4S.1 S9.7 S8.1 S8.9 3.1
ASEAN=AssociationofSoutheastAsianNations,uBP=giossuomesticpiouuct,LaoPBR=LaoPeoplesBemociaticRepublic.
Souices:ABB-SBBS2u12;LaoPBRuatafiomWB-WBI2u12.
S
CentialBankofNyanmai(CBN)ofgoveinment
uebt has contiibuteu to this high inlation
Centialbankweaknessalsoexaceibatesthe
situation. In the absence of inteibank maikets,
the CBNs function has been laigely limiteu
to inancing the goveinment buuget ueicits
Inteiest iates aie also set auministiatively.
The CBN uoes not have an inuepenuent
monetaiy policy ielecting its cuiient status
asauepaitmentwithintheNinistiyofFinance
anu Revenue (N0FR). A new cential bank law
wasappioveuon27}uly2u12,whichauthoiizes
CBNs opeiational autonomy. The CBN is
launching a majoi ieoiganization that will
moueinizeitsopeiations.
LikeCambouia,theLaoPeoplesBemociatic
Republic (Lao PBR), anu viet Nam, Nyanmais
inancial sectoi is at a nascent stage of
uevelopment When measuieu by inancial assets
to uBP the countiys inancial sectoi is among
ueveloping Asias smallest. Bankingmainly
compiising state-owneu banksuominates
the inancial sectoi anu accounts foi most of its
assets helu outsiue the CBN. State contiols on
banks aie peivasive while Nyanmais inancial
sectoi is suppiesseu by limiteu uepth anu a
naiiow focus of inancial inteimeuiation The
CBN ixes ueposit anu lenuing iates to maintain
astableinteiestiatemaiginatS.u%6.u%.The
goveinment issues tieasuiy bonus to uomestic
banks to paitly inance the iscal ueicit but
theieisnocoipoiatebonumaiket.
Nyanmais high public uebt level
estimateu at 47.6% of uBP in 2u1uis a
concein INF Fiscal ueicits have been
peisistently high, mainly uue to pooi ievenue
peifoimance. The countiys tax ievenues as a
peicentage of uBP fell steauily uuiing 199u
2uu2, befoie picking up a bit in the miu-2uuus
(Figuie4).Theaveiagetax-to-uBPiatiouuiing
2uu42u1u stanus at S.6%, among the lowest
in Asian countiies, even as the ievenues fiom
natuial gas expoits have been iising. This is
uue to the unueiestimation of ievenues, as
foieign cuiiency uenominateu ievenues anu
expenuituies weie conveiteu to kyat at the
oficial iate at about NKNK pei 0S uollai
2
foi iscal puiposes iathei thanusingthefoieign

exchange ceitiicate maiket exchange iate
which is much highei anu moie iealistic.
Bowevei even when these ievenue iguies aie
aujusteu unuei the new uniieu maiket exchange
iate at about NK pei 0S uollai in iscal yeai
2
The kyat was oficially peggeu to special uiawing
iights (SBR) at NK8.SSBR anu theiefoie vaiieu
between NKS anu NK6 pei 0S uollai between 2uu7
anu2u11.
Figure 3. Ination Rates, 19982011 (consumer prices)
LaoPBR=LaoPeoplesBemociaticRepublic,PRC=PeoplesRepublicofChina.
Souices:ABB2uu6,2uu8,2u1ua,2u12b
60.0
10.0
20.0
30.0
40.0
50.0
-10.0
0.0
Cambodia
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Myanmar Viet Nam PRC Lao PDR
6
(FY) 2u121S,
S
they iemain fai shoit of the
amount iequiieu to suppoit the goveinments
piioiity uevelopment spenuing initiatives ovei
themeuiumteim.Consequently,thegoveinment
boiiows fiom the CBN anu commeicial banks
to inance its ueicit Figuie About of
the iscal ueicit in FY was inanceu
thiough bonus; the iest was monetizeu by the
CBN(INF2u12).Thisintuineffectivelyciowus
out piivate sectoi investments because the
countiyssupplyofloanablefunusislimiteu.
Impioving ievenues is essential foi
funuing uevelopment: public expenuituies
on euucation anu health caie have been
especiallylow.
4
Nyanmaiistheonlyueveloping
Asian countiy with a uefense buuget that is
gieatei than the euucation anu health buugets
combineu. The goveinment has substantially
incieaseu spenuing on the social sectois,
but euucation anu health spenuing may still
account foi less than 2.u% of uBP baseu on its
FY2u121Sbuuget.
S
INF (2u12) estimateu that the impact of auopting
a maiket-baseu exchange iate on the consoliuateu
public sectoi buuget woulu be 1.2% of uBP in
FY2u121S, uiiven mainly by an inciease in the net
tiansfeisfiomstateeconomicenteipiises.
4
Noieuetailsonpublicexpenuituieoneuucationanu
health caie can be founu in the Constiaints poition
ofSectionIII.
Inteinational ieseives climbeu to an
estimateu$6.1billioninFY2u1u11(equivalent
to about 9 months of impoits) boosteu by
natuial gas expoits anu FBI inlows Table
Since Nyanmai auopteu its Expoit Fiist policy
in expoits have expanueu signiicantly
Bowevei, impoits aie iising fastei, uue to
incieaseu impoits of capital goous, inuustiial
machineiy, anu consumei uuiables. Both tiaue
anu cuiient account ueicits aie expecteu to
wiueninFY2u121Sfiomthepieviousyeai.
Nyanmai announceu an oveihaul of its
complex exchange iate system in Naich 2u12
as a pait of bioau iefoims to moueinize its
economy. Nyanmais multiple exchange iate
iegime incluueu oficial semioficial anu
unoficial iates The oficial goveinment iate
which was ixeu at about NKNK pei 0S
uollai, was wiuely ignoieu, as the iunning iate
ontheblackmaiketaveiageuaboutNK8uupei
0S uollai The new manageu loating exchange
iateiegime,whichcametoeffectinApiil2u12,
hasasingle,maiket-ueteimineuiate.
Poverty and Inequality
Nyanmai has maue some piogiess in poveity
ieuuction, although theie is fuithei ioom foi
Figure 4. Myanmars Tax Revenue as % of GDP (19902010)
Souices:ABB-SBBS2u12;uatafoi2uu1-2uuSfiomWB-WBI2u12
7.0
3.0
5.0
5.0
4.0
1.0
2.0
0.0
%

o
f

G
D
P
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
7
impiovement. The latest Integiateu Bouseholu
LivingConuitionsSuivey(IBLCS)inuicatesthat
oneineveiyfouiNyanmaicitizensisconsiueieu
pooi (NNPEB et al. 2u11). This shaie is faiily
compaiable to iates in some of its Asian peeis,
foiexample,Cambouiaat27%anutheLaoPBR
atS2%,anuiswellabovethePeoplesRepublic
of China (PRC) at less than S% anu viet Nam
at1S%.
S
S
Cautionisiequiieuwhencompaiingpoveityinciuence
iguies The methouology useu foi Nyanmai uiffeis
fiomthatuseufoitheotheicountiies.Figuiesfoithe
othei countiies aie baseu on the thiesholu of $1.2S
peiuay.
Income uispaiities aie geogiaphically
linkeu. The IBLCS iepoit shows that 84% of
poveity is founu in iuial aieas anu uispaiities
aie pionounceu acioss states. The cential
state of Chin, neai the southein boiueis of
Banglauesh anu noitheastein states of Inuia,
hasapoveityinciuenceof7S%.Thisisinstaik
contiasttothe11%poveityinciuenceinKayah,
aneasteinstateneaiNoitheinThailanu,which
hasthelowestpoveityinciuenceofNyanmais
states. 0thei well-off states, with poveity
inciuences below 18%, aie Bago, Kayin, Non,
Sagaing, anu Yangon. Bigh poveity iates occui
Figure 5. Lending to Government and Private Sector, 20002010 (MK billion)
NK=kyat.
Souice:INF-IFS2u12
7000
3000
6000
5000
4000
1000
2000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Central Bank Lending to Government
Commercial Banks Lending to Private Sector
Commercial Banks Lending to Government
Table 4. Balance of Payments
FiscalYear{Smillion,unlessotberwiseindicated]
2007J08 2008J09 2009J10
2010J11
{Est.]
2011J12
{Pro|.]
2012J13
Pro|
a
TiaueBalance
Expoits
Impoits
924
6,446
(S,S22)
SuS
7,241
(6,9S8)
72
7,1S9
(7,u67)
799
8,98u
(8,181)
(2S8)
9,889
(1u,127)
(1,779)
1u,491
(12,27u)
CuiientAccountBalance(excluiants) 89 (92u) (947) (S6S) (1,S8S) (2,S79)
0veiallBalance 799 112 619 8u8 1,729 1,842
uioss 0ficial Reseives
$million
Nonthsoftotalimpoits
S,uS4
6.6
S,629
6.S
4,6S8
7.9
6,u7u
8.9
7,9uS
9.4
9,889
9.7
a
Assumes manageu loating exchange iates
Souice:INF2u12
8
in the coastal states of Ayeyaiwauy, Rakhine,
anu Taninthaiyl anu the lanulockeu states of
ShananuKachinboiueiingthePRC.Aboutone-
thiiuofthesestatespopulationsaiepooi.
Wiue vaiiations in access to basic seivices
such as housing, watei, anu sanitation also
exist acioss Nyanmais states anu iuial anu
uiban aieas. Fiom 2uuS2u1u, oveiall access
tosafeuiinkingwateiincieaseumouestly,fiom
6S% to 69%. This is in line with iates of Asian
nationswithsimilaiincomelevels,suchas64%
inCambouiaanu67%intheLaoPBR.Thepooi
continue to beneit less fiom access than the
iich anu uiban aieas beneit moie than iuial
aieas81%oftheuibanpopulationhauaccess
tosafeuiinkingwateiin2u1u,veisusonly6S%
ofiuialuwelleis(NNPEBetal.2u11).
Access to sanitation anu electiicity also
vaiy along economic anu geogiaphical lines.
About77%ofiuialanu84%ofuibaniesiuents
have access to sanitation. Access to sanitation
is paiticulaily low (S4%) in Rakhine state. The
gaps in access to electiicity between income
gioupsanuaciossstatesaielaige.AboutS4%of
iuialiesiuentshaveaccesstoelectiicityveisus
89% of uiban iesiuents (NNPEB et al. 2u11).
Bowevei,accoiuingtothegoveinmentsouices,
electiiication iatios aie much lowei
6
In 2u11,
Yangon City hau the highest electiiication iatio
(67%), followeu by Nay Pyi Taw (S4%), Kayai
(S7%),anuNanualay(S1%).
Millennium Development Goals
Nyanmai has maue some piogiess towaiu
achieving its Nillennium Bevelopment
uoals (NBus), but theie is ioom foi fuithei
impiovement to ieach the taigets foi 2u1S.
Nyanmai has maue notable piogiess in aieas
suchasthefooupoveityinciuence,theunuei-S
6
The uisciepancies may iise fiom the fact that the
goveinment iguies may not incluue electiicity that is
maueavailablethioughpiivatepoweigeneiatoisanu
otheioff-giiusouices.
moitality iate (0SNR), the mateinal moitality
iatio(NNR),anusanitation(TableS).Thefoou
poveityinciuenceuecieaseufiom47%in199u
to less than S% in 2u1u. The 0SNR fell fiom
1121,uuu live biiths in 199u to 661,uuu in
2u1u, anu the NNR fell fiom 42u1uu,uuu
live biiths in 199u to 24u1uu,uuu in 2uu8.
The shaie of the population using impioveu
sanitation facilities incieaseu fiom 49% in
199S to 79% in 2u1u. In auuition to these
impiovements, Nyanmai might enhance its
effoits in oiuei to ieach the piojecteu taigets
by2u1Sthe0SNRhasbeenieuuceuby4S%,
against the 67% ieuuction taigeteu by 2u1S,
anutheNNRhasbeenieuuceuby4S%,towaiu
the7S%taigeteuby2u1S.
Nyanmais piogiess towaiu attaining its
NBus lags behinu that of its ASEAN neighbois
especiallyNalaysiaanuThailanu.Nyanmaihas
paiticulai uificulty impioving its peifoimance
in the health-ielateu NBu taigets asiue fiom
the 0SNR anu the NNR. The BIv pievalence
iemainshigh,withu.6%ofthepopulationageu
1S49 infecteu in 2uu9. The malaiia inciuence
is much highei than in iegional neighbois,
anu the tubeiculosis inciuence (S881uu,uuu
population) anu pievalence (S971uu,uuu
population) iemain highei than iegional peeis
in2uu9.
7
In some aieas, Nyanmais peifoimance

matches that of its ASEAN neighbois. Foi
example, the liteiacy of 1S24 yeai olus in
Nyanmai in 2u1u is high at 9S.8%, which is
compaiable to the iguie posteu by viet
Namin2uu9.Theiatioofgiilstoboysinpiimaiy
school is u.9S in 2uu9, similai to the iatios in
theotheiASEANcountiies.Theiatioofgiilsto
boysinseconuaiyschoolisalsoielativelyhigh,
at u.96, compaieu with the iatios in the othei
ASEAN countiies, anu is even highei than in
Inuonesia(u.81)anuvietNam(u.92).
7
Inciuence iefeis to the numbei of new cases in the
iefeience yeai anu inuicates the iisk of contiacting
a uisease pievalence iefeis to the numbei of
existing cases, both olu anu new, anu inuicates how
wiuespieautheuiseaseis.
9
Table 5. Selected MDG Performance Indicators
Myanmar Indonesia Malaysia Tbailand VietNam
Indicator
Earliest
Year
Latest
Year
Earliest
Year
Latest
Year
Earliest
Year
Latest
Year
Earliest
Year
Latest
Year
Earliest
Year
Latest
Year
MDC1:EradicateExtremePovertyandHunger
PoveityInciuence(%-
$1.2SPPP)
nouata no
uata
a
S4.S
(199u)
18.7
(2uu9)
1.6
(1992)
u.u
(2uu9)
S.S
(1992)
u.4
(2uu4)
6S.7
(199S)
1S.1
(2uu8)
0nueiweightChiluien
0nueiS(%)
28.8
(199u)
29.6
(2uuS)
b
29.8
(1992)
19.6
(2uu7)
nouata 16.7
(1999)
16.S
(199S)
7.u
(2uuS)
S6.9
(1992)
2u.2
(2uu6)
FoouPoveityInciuence
(%)
47
(199u)
<S
(2u1u)
c
16
(199u)
1S
(2uu4)
<S
(199u)
<S
(2uu4)
26
(199u)
16
(2uu4)
S1
(199u)
11
(2uu4)
MDC2:AcbieveUniversalPrimaryEducation
PiimaiyLevelNet
Eniollment(%)
84.7
(2uuS)
87.7
(2u1u)
98.S
(2uuu)
98.4
(2uu9)
97.7
(199u)
94.1
(2uu8)
9S.2
(2uu6)
9u.1
(2uu9)
9S.8
(199u)
94.S
(2uu1)
Liteiacyof1S-24Yeai
0lus(%)
94.6
(2uuu)
9S.8
(2u1u)
98.7
(2uu4)
99.S
(2uu8)
97.2
(2uuu)
98.S
(2uu9)
98.u
(2uuu)
98.1
(2uuS)
9S.9
(199u)
96.9
(2uu9)
MDC3:PromoteCenderEqualityandEmpowerWomen
uiilsBoysinPiimaiy
School(Ratio)
u.9S
(1991)
u.9S
(2u1u)
u.98
(1991)
u.97
(2uu9)
u.99
(1991)
u.99
(2uu8)
u.98
(1991)
u.98
(2uu9)
u.9S
(1991)
u.9S
(2uu1)
uiilsBoysinSeconuaiy
School(Ratio)
u.97
(1991)
u.96
(2u1u)
u.8S
(1991)
u.81
(2uu8)
1.uS
(1991)
1.u7
(2uu8)
u.99
(1991)
1.u9
(2uu9)
u.9u
(1999)
u.92
(2uu1)
MDC4:ReduceCbildMortality
0SNoitalityRate(pei
1,uuulivebiiths)
112
(199u)
66
(2u1u)
86
(199u)
S9
(2uu9)
18
(199u)
6
(2uu9)
S2
(199u)
14
(2uu9)
SS
(199u)
24
(2uu9)
InfantNoitalityRate
(pei1,uuulivebiiths)
79
(199u)
Su
(2u1u)
S6
(199u)
Su
(2uu9)
16
(199u)
6
(2uu9)
27
(199u)
12
(2uu9)
S9
(199u)
2u
(2uu9)
MDC5:ImproveMaternalHealtb
NateinalNoitalityRatio
(pei1uu,uuulivebiiths)
42u
(199u)
24u
(2uu8)
62u
(199u)
24u
(2uu8)
S6
(199u)
S1
(2uu8)
Su
(199u)
48
(2uu8)
17u
(199u)
S6
(2uu8)
BiithsAttenueuby
SkilleuPeisonnel(%)
S6
(1997)
78
(2u1u)
Su
(199S)
7S
(2uu8)
96
(199S)
99
(2uu7)
99
(2uuu)
99
(2uu9)
77
(1997)
88
(2uu6)
MDC:CombatHIVJAIDS,MalariaandUtberDiseases
BIvPievalence(%of
PopulationAgeu1S-49)
u.2
(199u)
u.6
(2uu9)
<u.1
(2uu1)
u.2
(2uu9)
u.4
(2uu1)
u.S
(2uu9)
1.7
(2uu1)
1.S
(2uu9)
u.S
(2uu1)
u.4
(2uu9)
NalaiiaInciuence(pei
1uu,uuupopulation)
nouata 794S
(2uu8)
nouata 164S
(2uu8)
nouata 7S
(2uu8)
nouata SS
(2uu8)
nouata nouata
TubeiculosisInciuence
(pei1uu,uuu
population)
S9S
(199u)
S88
(2uu9)
88
(199u)
89
(2uu9)
127
(199u)
8S
(2uu9)
1S7
(199u)
1S7
(2uu9)
2u4
(199u)
2uu
(2uu9)
Tubeiculosispievalence
(pei1uu,uuu)
924
(199u)
S97
(2uu9)
1S8
(199u)
1S1
(2uu9)
227
(199u)
1u9
(2uu9)
2u9
(199u)
189
(2uu9)
S9S
(199u)
SSS
(2uu9)
MDC7:EnsureEnvironmentalSustainability
ImpioveuBiinking
WateiSouice(%)
S7
(199u)
69
(2u1u)
71
(199u)
8u
(2uu8)
88
(199u)
1uu
(2uu8)
91
(199u)
98
(2uu8)
S8
(199u)
94
(2uu8)
ImpioveuFacilityfoi
Sanitation(%)
49
(199S)
79
(2u1u)
SS
(199u)
S2
(2uu8)
84
(199u)
96
(2uu8)
8u
(199u)
96
(2uu8)
SS
(199u)
7S
(2uu8)
MDC8:DevelopaClobalPartnersbipforDevelopment
BebtSeiviceas%of
Expoits
18.2
(199u)
u.2
(2uu6)
2S.6
(199u)
7.S
(2uu9)
1u.6
(199u)
S.1
(2uu9)
11.4
(199u)
u.8
(2uu9)
S.2
(1996)
1.7
(2uu9)
NBu=NilleniumBevelopmentuoal.
a
BaseuonIBLCS2u11,poveityheaucountiatiounueinationalpoveitylineis2S.6in2u1u.
b
BaseuonIBLCS2u11,Seveiecasesaccountfoi9.1,whilemoueiatecasesaccountfoiS2%in2u1u.
c
Baseu on IBLCS actual iguie is
Souices:ABB2u12b;NBuI2u12;NNPEB,N0B,anu0NICEF2u11,WB-WBI2u12
1u
As Nyanmai opens up, it will be subject to
sweeping changes in the global anu iegional
geopolitical anu socioeconomic enviionment.
This iequiies Nyanmai to stiategically plan
its tiansition to take auvantage of the shift in
the global economic paiauigm fiom Noith to
South (the giowing powei of emeiging maiket
economies) anu fiom West to East (the iise
of Asia, with a nexus between the PRC anu
Inuia). Incieaseu unceitainty foi global giowth
piospects unueiscoies the impoitance of
socioeconomic iesilience in a countiys giowth
pathanuofiegionalintegiationasanalteinative
souiceofgiowth.Theglobalgiowthpaiauigmis
also shifting fiom biown to gieen piesenting
new oppoitunities foi iesouice iich countiies
suchasNyanmai.
Myanmar in the Asian Century
Foui yeais aftei the onset of the global
inancial ciisis iecoveiy iemains fiagile ulobal
economic activity in the majoi inuustiializeu
economies continues to be subuueu. Baseu on
ABBpiojections,theaggiegateuBPfoiEuiope,
}apan,anuthe0niteuStatesisexpecteutogiow
1.1% in 2u12 anu 1.7% in 2u1S (ABB 2u12b).
Risks to the outlook have since tilteu fuithei
towaiu the uownsiue with the bioauening anu
ueepeningeuiozoneciisis.Withtheexpectation
of piolongeu economic uoluiums in the Noith,
ielatively stiong giowth momentum in many
ueveloping countiies suggests that the uiiveis
offutuieglobalgiowthiesiueintheSouth.
Beveloping Asia has outshineu its peeis in
the ueveloping woilu. The iegions aggiegate
uBP giowth iates since the 197us have
consistentlyexceeueuthoseinmostotheipaits
oftheuevelopingwoilu.BevelopingAsiasshaie
ofwoiluuBP(inpuichasingpoweipaiityteims)
incieaseu fiom 8% in 198u to close to Su% in
2u1u(}haanuNacCawley2u11).Thecenteiof
economicgiavityinthewoiluisshiftingtowaiu
Asia. By 2uSu, ueveloping Asia coulu account
foi about half of global output as well as half
ofglobaltiaueanuinvestment,thoughsuchan
outcomeisnotpie-oiuaineu(ABB2u11a).
Riuingonthisstellaieconomicpeifoimance,
the iegion has emeigeu as a new souice of
uemanu foi the woilu economy. Asias fast-
giowing miuule class is becoming a poweiful
maiket foice This new afluent class has both
the willingness anu the ability to pay moie
foi high-quality piouucts, in tuin stimulating
maiketinnovationsanuencouiaginginvestment
paiticulaily in human capital. Consumei
spenuing in the iegion shows a healthy
expansioninshaipcontiasttotheinuustiializeu
countiies.By2uSu,theiegionsconsumptionis
expecteu to ieach $S2 tiillion, accounting foi
4S%ofglobalconsumption(ABB2u1ub).
Nyanmai has much to gain fiom the iise
of emeiging maiket economies in the iegion.
While some of the oppoitunities aie expecteu
to emeige natuially with maiket uynamics, a
stiong case can be maue foi the goveinment
to uevelop a policy fiamewoik uesigneu to
encouiage economic integiation with iegional
maikets by expanuing tiaue anu investment
II. Changing External Environment
11
Changing External Environment
linkages. Beveloping countiies often face a
host of maiket impeifections that hampei the
eficient allocation of iesouices cuib eficiency
anu piouuctivity gains anu ultimately limit
economic giowth. The most effective appioach
is to uesign piogiams that will encouiage
the maiket to function piopeilyconsistent
with maiket piinciplesby impioving the
way in which maikets woik anu iemoving
the huiules that hinuei theii opeiations.
Pioactively leveiaging the emeiging uynamics
may help Nyanmai to sustain healthy giowth
hence contiibuting to job cieation anu
poveity ieuuction
ASEAN and Intraregional Trade
and Investment
TheiiseofASEANanuitsielationshipwiththe
PRC (anu Inuia in a mattei of time) piesents a
unique oppoitunity foi Nyanmai Stiengthening
of iegional tiaue anu investment ties within
ASEAN anu especially between it anu the PRC
has boosteu the subiegions economic piowess
In about of ASEANs total tiaue was
among ASEAN membeis
8
Tiaue with the PRC
has giown signiicantlyfiom less than in
to moie than in Inuustiializeu
economies weie the uestination foi about
of total ASEAN tiaue in but that was uown
fiom in This incieasing tienu shows
giowing iegional integiation of which Nyanmai
cantakefullauvantage.
Beveloping Asias thiee laigest economies
the PRC Inuia anu Inuonesiaaie home to ovei
billion people of the woilu total
Nost Southeast Asian countiies have achieveu
some of the woilus highest giowth iates in
uBP anu population in the past few uecaues.
Foi the next couple of uecaues Southeast Asias
consumption iates aie expecteu to inciease
fuithei with both iapiu inuustiialization anu
uibanization Sustaineu high giowth biings
8
ABB estimates baseu on INFB0TS
with it poveity ieuuction anu impioveu living
stanuaius. It also pioviues huge oppoitunities
anu new maikets foi the woilu at laigebut
paiticulaily foi the subiegion itself Situateu
between two of the iegions giantsthe
PRC anu InuiaASEAN membeis incluuing
Nyanmai can ieap uistinct beneits fiom theii
economicascent.
Noieovei ASEAN economies in paiticulai
can effectively compete with the PRC anu Inuia
foi FBI anu inuustiial migiation Since the eaily
s the PRC has ieceiveu the majoiity of FBI
lows into ueveloping Asia Figuie Bowevei
the stiong upwaiu tienu in FBI lows to ASEAN
since the eaily s signals a change in the
scene Piioi to the onset of the global inancial
ciisis FBI in ASEAN hau neaily iisen to match
the levels of lows into the PRC In fact the low
of FBI to ASEAN fiom }apan anu the 0niteu
States hau suipasseu that to the PRC. Though
the global inancial ciisis uealt a seiious blow to
the FBI lows to ASEAN the tienu inuicates that
they have suipasseu the pieciisis levels anu aie
settogiowevenfuithei.
The iising wages in the PRC which may
be negatively impacting the competitiveness
of its manufactuiing sectoi Figuie can
be an impoitant factoi in ieestablishing the
competitiveness of ASEAN countiies. With
wages in the PRCs coastal cities iising steeply
ASEANeconomiesaiewellpositioneutoiegain
theii competitiveness foi FBI which hau been
seveiely uiminisheu in the s As foieign
investois mull ovei new uestinations they
may inu ASEAN economies moie attiactive
than inlanu aieas of the PRC. Buiing 2uuu
wages in the PRC giew by an aveiage
of annually while wages in ASEAN
countiies giew only mouestly If the wage iate
incieases in the PRC continue to outpace those
elsewheie investois may stait looking at othei
countiiesintheiegiontolocateoiielocatetheii
investments. ASEAN integiation that is set to
commencein2u1Swithieuuceutaiiffsontiaue
within ASEAN is anothei impoitant attiaction
foiFBI.
12
Nyanmais location in the uieatei
Nekong Subiegion (uNS) can also facilitate
its integiation with the Southeast Asian
subiegional economy. The uNS Economic
Coopeiation Piogiam Stiategic Fiamewoik
2u122u22, appioveu in late 2u11, aims at
making the subiegion moie integiateu anu
piospeious by 2u22 thiough investments in
both haiu anu soft infiastiuctuie. Paiticulai
focus will be on stiengthening tianspoit links,
ueveloping an integiateu appioach to eneigy
secuiity, impioving telecommunication links,
piomoting sustainable agiicultuie, facilitating
tiaue, ueveloping the uNS as a single touiism
Figure 6. World Inward FDI Flows to ASEAN and PRC ($ million)
ASEAN=AssociationofSoutheastAsianNations,FBI=foieignuiiectinvestment,PRC=PeoplesRepublicofChina.
Souice:0NCTABStatistics2u12
120,000
40,000
60,000
80,000
100,000
0
20,000
ASEAN
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
PRC
Figure 7. Growth Rate of Real Wages
PRC=PeoplesRepublicofChina.
Souice:IL0-LAB0RSTA2u12
25
0
5
10
15
20
-10
-5
150
0
30
60
90
120
-60
-30
PRC
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Indonesia Myanmar Philippines
Singapore Thailand Malaysia (rhs)
1S
Changing External Environment
uestination, enhancing its enviionmental
peifoimance, anu builuing human iesouices
to facilitate the integiation. A cioss-cutting
theme of the fiamewoik will be to uevelop
the majoi uNS coiiiuois into economic
coiiiuois that contiibute to fastei economic
giowth anu poveity ieuuction. Nyanmai
may ieap substantial gains thiough the
fiamewoik, especially by paiticipating in
connectivity-ielateu initiatives, incluuing
ueveloping electiicity giiu inteiconnection
infiastiuctuie, anu paiticipating in the ASEAN
gas pipeline initiative. Nyanmai also stanus
to gain substantially fiom the touiism- anu
enviionment-ielateu initiatives, which aie
mutuallyieinfoicing.
Nyanmais histoiic move to a maiket
economy is veiy timely as it is happening
against the backuiop of ASEAN integiation
towaiu one economic community. The piocess
towaiu the ASEAN Economic Community is
scheuuleu to be completeu by 2u1S baseu on
foui inteiielateu anu mutually ieinfoicing
pillais: (1) a single maiket anu piouuction
base,(2)ahighlycompetitiveeconomiciegion,
(S)aiegionofequitableeconomicuevelopment,
anu(4)aiegionfullyintegiateuintotheglobal
economy Nyanmai stanus to beneit immensely
fiom many oppoitunities by joining ASEANs
integiation piocess. No uoubt, ASEAN piesents
an invaluable entiy point foi Nyanmais
integiation with the subiegional, iegional,
anu global economies. Stiengthening tiaue,
investment anu inancial ties with ASEAN can
be effectively leveiageu to biing Nyanmai into
theiegionalbusinessanupiouuctionnetwoik.
Inclusion and Environmental
Sustainability
Nyanmai can beneit fiom the many lessons
of its neighbois uevelopment expeiiences,
especially to avoiu the social instability anu
enviionmental uegiauation they suffeieu.
Bespite the iegions spectaculai economic
peifoimance, poveity peisists along with
haimful enviionmental impacts. Thus,
Nyanmais long-teim uevelopment agenua
may beneit fiom placing social inclusion anu
enviionmentalsustainabilityatitscoie.
Stellai giowth in ueveloping Asia has been
accompanieu by iising inequality. While the
most effective tool foi ieuucing poveity in
iecentuecaueshasbeengiowth,ithasbecome
less equitable in fast-giowing iegional states
than was the case eailiei in }apan anu the
newly inuustiializeu economies. A iecent ABB
stuuy noteu that uuiing the 199us anu 2uuus,
inequality incieaseu in 11 of the 28 majoi
economies in the ueveloping Asia. Buiing this
peiiou Asias uini coeficient iose fiom to
46 (ABB 2u12b). Anu Asias inequality tienu
hasbecomelessfavoiableevenwhencompaieu
withthetienusinotheiuevelopingiegions,such
asLatinAmeiicaanuSub-SahaianAfiica,asthe
paceoftheiichbecomingiicheifaiexceeusthe
paceofthepooiescapingthepoveitytiap.
The tienu of iising inequality in Asia is
woiiisome. Enhancing the inclusiveness of
Nyanmais giowth is impoitant to maintain
stiong giowth momentum in the long iun.
Incieasingly, stuuies
9
suggest that wiuening
income inequality can auveisely affect giowth
peifoimance by having a negative impact on
politicalstability,socialcohesion,humancapital
foimation,anuotheihumanuevelopment.
Nyanmaiieliesheavilyonnatuialiesouices
foi its main expoits, anu on inuustiies such as
agiicultuieanutouiism,whichmakesagiowth
pattein that is enviionmentally sustainable
9
Since the seminal ieseaich of Kuznets (19SS),
suggesting that income inequality tenus to inciease
in the eaily stages of economic uevelopment but
ueciease in the latei stages a signiicant bouy of
ieseaich has examineu the ielationship between
income inequality anu economic uevelopment anu
giowth. Both theoietical anu empiiical stuuies
suggest that income uistiibution matteis foi giowth
sustainability.SeeBeiganu0stiy(2u11)foiasuivey
ofiecentstuuiesonthisissue.
14
essential. In this context, Nyanmai can take
auvantage of the global move fiom biown to
gieengiowth.uieengiowthentailsuecoupling
economic giowth fiom fuithei incieases
in gieenhouse gas emissions anu iesouice
uegiauation.Nyanmaiscuiientgiowthpattein
isplacinghugepiessuieonitsenviionmentanu,
if continueu, will ceitainly be unsustainable
given the countiys continueu population
inciease, expecteu iapiu inuustiialization,
incieaseu consumption of anu uemanu foi
natuialiesouicesfoifooupiouuctionanutiaue,
anu incieaseu eneigy consumption. Nyanmai
has many pooi people with low auaptive
capacity, anu is vulneiable to enviionmental
shocks such as uioughts loous anu extieme
weathei conuitions that aie expecteu to
incieaseinfiequencyanuintensityasaiesultof
climatechange.
As a iesouice-iich countiy, Nyanmai
is well positioneu to set a couise of giowth
anu uevelopment that is gieen, iesilient, anu
enviionmentallysustainable.Withstiongglobal
suppoit,theshifttogieengiowthwillgeneiate
new jobs anu new oppoitunities foi economic
auvancement baseu on the uevelopment of
cleantechnologiesanuthegieeningofeconomic
sectois.Swiftactionisnecessaiytocaptuiethe
full potential of gieen uesign anu technologies,
anu to avoiu ineficient biown lockins that
can iesult fiom continuing the business-as-
usual giowth path without investment in new
infiastiuctuie anu technologies. The solutions
lie in tapping the syneigy in paiallel effoits
to auuiess the challenges anu tuin them into
new oppoitunities foi gieen giowth. Nany
optionsexist,incluuing,foiexample,ueveloping
climate-iesilient, gieen infiastiuctuie anu
implementing eneigy eficiency anu ienewable
eneigy piojects, sustainable tianspoit systems,
anuintegiateuuibanplanning.
1S
Strengths, Constraints, Opportunities, and Risks
Emeigence fiom a long peiiou of ielative
isolation, coupleu with a uesiie foi iefoim anu
change, heialus a biight futuie foi Nyanmai.
The countiy can exploit its stiengths, notably
abunuant natuial anu human iesouices, anu
capitalize on the oppoitunities available fiom
an inteinational community that wants it to
succeeuanufiomitslocationattheheaitofthe
woilus most uynamic iegion. Bowevei, theie
aie consiueiable constiaints to suimount. This
section analyzes the stiengths, constiaints,
oppoitunities, anu iisks that aie eviuent at the
cuiient,ciucialtimeofchange(Box).
Strengths
A xtrong commltment to brouJ-runglng
reformx,coupleJwlthurlchxupplyofnuturul
uxxetxubunJunt lunJ, wuter, unJ energy
rexourcex, u youthful, low-coxt lubor force,
unJ Myunmurx xtruteglc locutlonprovlJe
u xtrong founJutlon for hlgh unJ lncluxlve
growth.
StrongCommitmenttoReform.Nyanmai
has uemonstiateu a stiong commitment to a
bioau iange of iefoims. Political iefoims that
III. Strengths, Constraints, Opportunities,
and Risks
Strengths Constraints
Opportunities Risks
Myanmars Strengths, Constraints, Opportunities and Risks
1. Stiongcommitmenttoiefoim
2. Laige youthful population, pioviuing a low-cost
laboifoiceattiactivetofoieigninvestment
S. Richsupplyofnatuialiesouiceslanu,watei,gas,
mineials
4. Abunuantagiicultuialiesouicestobeexploiteufoi
piouuctivityimpiovement
S. Touiismpotential
1. Stiategiclocation
2. Potentialofienewableeneigy
S. Potentialfoiinvestmentinaiangeofsectois
1. Weak macioeconomic management anu lack of
expeiiencewithmaiketmechanisms
Limiteu iscal iesouice mobilization
0nueiuevelopeu inancial sectoi
4. Inauequate infiastiuctuie, paiticulaily in tians-
poit,electiicityaccess,anutele-communications
S. Loweuucationanuhealthachievement
Limiteu economic uiveisiication
1. Risksfiomeconomiciefoimanulibeialization
2. Risksfiomclimatechange
S. Pollutionfiomeconomicactivities
Tension fiom inteinal ethnic conlicts
16
uemonstiatethegoveinmentscommitmentsto
change aie highlighteu by (1) the inauguiation
of a civilian goveinment in 2u11, with the
ielease of political piisoneis, the easing of
meuiacontiols,anutheinstitutionofauialogue
of national ieconciliation; anu (2) new laws
that allow assembly, laboi iights, anu political
paiticipation. Westein nations have iesponueu
to these initiatives by easing, suspenuing, oi
lifting sanctions on tiaue anu investment.
1u
Key economic iefoims have followeu. State

enteipiises aie being piivatizeu. Foieign
investment is being encouiageu by easing
iestiictions on the use of piivate lanu anu the
iepatiiation of pioits The new law giants the
CBNincieaseuautonomytosetmonetaiypolicy.
In the inancial sectoi changes aie uesigneu to
impiove access to cieuit anu inteimeuiation,
incluuing easing inteiest iate contiols anu
allowing piivate banks to expanu theii bianch
netwoiks. Refoims in social spenuing aie
also appaient, as the iecent laige incieases in
euucation anu health buugets coniim
11
The
goveinment appeais committeu to cieating a
moie inclusive, maiket-oiienteu, anu piivate-
sectoi-leu economy anu one that is open to
incieaseufoieigninvestment.
Young Population. Nyanmais youthful
population will geneiate a uemogiaphic
uiviuenu now anu in the coming uecaues. The
1S28agecohoitcuiientlyhas1Smillionyoung
people who aie contiibuting anu will continue
tocontiibutetheiieffoitanuskillstoenhancing
piouuctivity anu competitiveness (Figuie 8).
This cohoit alone accounts foi neaily 4u%
of the woiking age population. People below
woiking age also constitute a laige poition of
the population (2S%)highei than in the PRC
(19%)anuThailanu(2u%),althoughloweithan
inInuia(Su%).Withpiopeischoolinganuskills
oipiofessionaltiaining,intheyeaisaheau,they
will pioviue the human capital necessaiy to
uiive Nyanmais economic tiansfoimation. At
1u
Austialia iecently lifteu sanctions (BFAT 2u12). The
Euiopean0nionsuspenueuneailyallitssanctionsfoi
1yeai(E02u12).
11
BiscusseufuitheiintheConstiaintssection.
theotheienuoftheuemogiaphicspectium,the
oluageuepenuencyiatioislow,withtheshaie
ofpeople6Sanuoveiequaltoonly7.4%ofthe
woiking age population. This is on pai with
Inuia, at 7.7%, but substantially lowei than in
thePRC,at11.S%,anuThailanu,at12.9%.
12
Ricb Natural Resources. Nyanmais

natuialiesouicesaieamongitsmostimpoitant
assets.Theyaieasouiceofwealthanuinsome
cases, such as eneigy iesouices, pioviue key
inputs foi wealth cieation in othei paits of the
economy.Natuialiesouiceswillcontinuetobe
a souice of giowth if they can be piopeily anu
sustainablymanageu.Thecountiyispaiticulaily
iich in natuial gas watei foiests anu isheiies
0thei iesouices incluue petioleum oil anu
seveial mineials, incluuing tin, antimony, zinc,
coppei, tungsten, leau, coal, maible, limestone,
anupieciousstones.
6os onJ 0il. Nyanmai has a laige supply of
natuial gas. Pioven ieseives total 7.8 tiillion
cubic feet BP anu gasiieu plants account
foi 21% of total installeu powei geneiation
capacity. With hyuiopowei pioviuing the main
souiceofelectiicitygeneiation,gasisexpoiteu
anuisnowthecountiysmostimpoitantsouice
ofexpoitievenue.Noieovei,Nyanmaiisamong
Southeast Asias ive majoi eneigy expoiteis A
laige poition of gas expoits low to Thailanu anu
the PRC will become an incieasingly impoitant
consumei when a new (planneu) gas pipeline
comes on stieam. The countiy also has pioven
oil ieseives of 2.1 billion baiiels, moie than
Thailanu anu Biunei Baiussalam although less
thanhalfoftheieseivesinNalaysia(S.9billion),
Inuonesia(S.8billion),anuvietNam(4.4billion)
(BP2u12).
1S
12
Nyanmais oveiall uepenuency iatio (people below
1S oi above 64 as a peicentage of the woiking age
population)isnotpaiticulailylowat44%.Whileolu
ageuepenuencyislowat7%,youngageuepenuency
ishighatS6%(WBWBI2u12).
1S
0il piouuction was 18,9uu baiiels pei uay in 2uu9,
uownfiomapeakofS2,uuuin1984(0SEIA2u1u).
17
Woter. As of 2u1u, the countiys total
ienewable watei iesouices stoou at 24,SS2
cubic meteis pei inhabitant pei yeai, highei
than neaily all othei economies in Asia
(Figuie 9). Watei is a key eneigy iesouice foi
Nyanmai, with hyuiopowei accounting foi
thiee-quaiteis of the countiys total installeu
capacity foi electiicity. Nyanmai uses only S%
of its watei iesouices, of which agiicultuie
consumes 9u% anu inuustiy anu uomestic use
accountfoitheiest(WEPA2u12).Thepotential
foi fuithei utilization of watei iesouices foi
hyuiopowei, as well as foi iiiigation, livestock
piouuction,anuinuustiy,issubstantial.
14
Fisberies. Associateu with the countiys
abunuant watei iesouices aie substantial
isheiies in the majoi iiveis pioviuing
consiueiable potential foi aquacultuie
uevelopment in the low-lying iivei uelta aieas
inthesouthanucenteiofthecountiy.Nyanmai
also has signiicant maiine isheiies iesouices
along its S,uuu-kilometei (km) coastline anu
initsS82,u2Shectaies(ha)ofmangioves(FA0
14
Byuiopowei potential is fuithei uiscusseu in the
0ppoitunitiessection.
Souice:ESCAP0nlineBatabase2u12
Figure 8. Age and Sex Distribution in Myanmar, 2011
Male Female 80+
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
05-09
00-04
2.5 2.5 2.0 1.5 1.0 0.5 0.0 0.5 0.5 1.0 1.5 2.0
Population in Millions
Figure 9. Total Actual Renewable Water Resources per Inhabitant (2010)
Souice:FA0-Aquastat2u12
40000
20000
35000
30000
25000
5000
15000
10000
0.0
Viet Nam Thailand Philippines Myanmar Malaysia Indonesia Cambodia India Bangladesh
c
u
b
i
c

m
e
t
e
r
s

p
e
r

y
e
a
r
18
2uuS). Buiing 19982uu9, the total catch of
fieshwatei anu maiine ish almost tiipleu FA0
2u12),withexpanueuaquacultuieuevelopment
being the main factoi behinu this inciease.
As a iesult ish anu shiimp aie now majoi
expoititems.
Forests. Foiests covei about SS million
ha oi just unuei Su% of the total lanu aiea.
They constitute one of the laigest ieseives in
Southeast Asia anu aie still in a ieasonably
natuial state, with closeu foiests accounting
foi S7% of total lanu aiea (NAI 2u11). Foiests
geneiatewealthinthefoimofwoouanuielateu
piouucts, which is useu foi uomestic puiposes
anu expoiteu. Foiestiy expoits totaleu $644
millioninFY2u1112(Lay2u12).Thefoiesteu
aieas aie also a majoi habitat foi tiopical anu
subtiopical loia anu fauna thus as well as
being a majoi economic iesouice, Nyanmais
foiests aie an essential souice of biouiveisity
anu enviionmental sustainability foi South-
eastAsia.
Agriculture. Agiicultuie is a key sectoi
of Nyanmais economy, accounting foi S6%
of output (0NBP 2u11a), a majoiity of the
countiysemployment(ABB2u11b),anu2S%
Su%ofexpoitsbyvalue(WBWBI2u12).
1S
The
abunuance of lanu, watei, anu low-cost laboi
contiibutetotheoutputofthesectoianuuiive
itscontiibutiontotheeconomy.0nlyabout18%
ofthecountiystotallanuaieaof68millionha
is useu foi ciop piouuction anu only 18.S% of
thisisiiiigateu.
Between 199u anu 2u1u, the aieas planteu
with iice, beans, sesame seeu, anu vegetables
have expanueu anu output has incieaseu
consiueiably (Table 6). Foi example, the
aiea planteu to iice has neaily uoubleu anu
piouuction has almost tiipleu, showing the
impact of both the expansion of cioppeu aiea
1S
Figuies foi the peicentage of expoits in iecent yeais
iangefiomSu.S%in2uuSto2S.7%in2uu8.Bowevei,
the iguie is piobably anomalous because in
2uu8muchoftheiiceciopwasuestioyeubyCyclone
Naigis.Thepeicentageofexpoitsfiomthesectoiwas
27.9%in2uu9(0NBP2u11a).
anu enhanceu yielus. Piouuctivity, uespite
numeious challenges, has been iising steauily.
Bespite the lack of iiiigation foi most of the
iice, the cuiient yielu is about 4.1 tons (t) pei
hectaie (ha) of unmilleu iice, up fiom S.4 t
ha in 2uuu anu not fai fiom viet Nams S.St
ha. With iiiigation anu othei inputs, this coulu
iise to at least S.utha (FA0 2u12). As a iesult,
the oppoitunity to expanu faim output, both
at the extensive maigin (moie lanu unuei
cultivation)anutheintensivemaigin(incieaseu
piouuctivity)iemainsenoimous.Withitsgoou
weathei, abunuant watei iesouices, anu laige
iuial population, Nyanmai coulu haivest this
low hanging fiuit as a souice of giowth in the
neaiteimanufuitheiuevelopavibiantexpoit
sectoiinfaimpiouucts.
Livestock piouuction has tiauitionally
accounteufoiabout7.S%ofuBP.Thelivestock
population incluues cattle, buffaloes, pigs, anu
poultiy. Almost eveiy iuial householu iaises
livestock,anulivestockcontiibutessubstantially
to householu nutiition anu the faim economy
by pioviuing piotein (meat, eggs, anu milk);
uiaught powei; anu bypiouucts (hiues anu
leathei). Livestock contiibutes to householu
income anu constitutes a sizable poition
of householu capital. Almost all livestock is
iaiseu using backyaiu methous, although some
commeicial piouuction uoes occui neai majoi
cities. The giowth in livestock numbeis seems
to have stagnateu in the past uecaue, although
poultiy has seen tiemenuous giowth, with
the numbei of biius tiipling as a iesult of the
spieauofcommeicialpiouuctiontechniquesin
peiiuibanaieas(0NBP2u11a).
Tourism. Nyanmais viigin jungles, snow-
cappeu mountains, anu piistine beaches,
combineu with a iich anu gloiious heiitage
spanning moie than 2,uuu yeais, piesent
tiemenuouspotentialfoitouiism.Thatpotential,
howevei, iemains highly unueiexploiteu. In
2u1u,touiistaiiivalsieacheu791,Suu,wheieas
theLaoPBRamuchsmalleicountiyieceiveu
2.SmillionvisitoisanuThailanuieceiveuneaily
16million(Figuie1u).
19
Constraints
KeyconxtrulntxtoxuxtulnlnggrowthlncluJe
u weuh mucroeconomlc munugement
frumeworh JevolJ of murhet mechunlxmx,
llmlteJ uccexx to lnunce Jelclent
lnfruxtructure, lnuJequute xoclul xervlcex
Jumpenlngthequulltyofhumuncupltul,unJ
llmlteJ lnJuxtrlul Jlverxllcutlon
Weah Macroeconomic Management.
Nyanmais weak macioeconomic management
anu unueiuevelopeu inancial sectoi coulu
thieaten uomestic economic anu inancial
Table 6. Increase in Food Crop Area and Production, 19902010
Crop
Year
1990 1995 2000 2005 2010
1.RicePauuy
Aiea(uuuha) 4,76u 6,uS2 6,Su2 7,S84 8,uS1
Piouuction(uuumetiictons) 1S,971 17,9S6 21,S2S 27,68S SS,2u4
2.Beans
Aiea(uuuha) 4SS 1,1u4 1,762 2,184 2,74S
Piouuction(uuumetiictons) 26S 7S2 1,28S 2,17S S,u29
S.SesameSeeu
Aiea(uuuha) 924 1,1S1 964 1,SS7 1,S7u
Piouuction(uuumetiictons) 2u6 Su4 29S SuS 722
4.vegetables
Aiea(uuuha) 1S6 167 2u7 2S8 277
Piouuction(uuumetiictons) 16S 226 28u SS6 S71
ha=hectaie.
Souice:FA0-FA0STAT2u12
Figure 10. Tourist Arrivals (000)
LaoPBR=LaoPeoplesBemociaticRepublic.
Souice:ASEAN2u12
18000
8000
16000
14000
12000
10000
4000
2000
6000
0
Lao PDR
2007 2008 2009 2010
Cambodia Thailand Viet Nam Myanmar
2u
stability Chionic iscal ueicits anu high
inlation uue to monetization of the ueicit
have been seiious conceins, anu aie cuiiently
being auuiesseu by majoi iefoims in the
N0FR anu CBN. With the absence of a foimal
monetaiy policy fiamewoik, unceitainty about
monetaiystabilitymayhampeiinvestmentanu
make it uificult foi piivate iims to opeiate in
theeconomy.
Limited Resource Mobilization. A stiong
tax system is essential to cieate auequate
iscal space anu ensuie iscal stability foi the
countiy. uoveinment opeiations aie hampeieu
by chionic buuget ueicits that stem fiom
insuficient ievenue Among ABBs ueveloping
membeis,Nyanmaihasoneofthelowestiatios
of goveinment ievenues anu tax collection
to uBP (Figuie 11). Low levels of peisonal
anu commeicial income tax collection can be
explaineubyfactoisincluuingweakinstitutions,
a ielatively small tax net, anu substantial tax
concessions foi companies. Low ievenue fiom
peisonal income tax may be attiibuteu in pait
to a ielatively high thiesholu of income above
which the top maiginal peisonal income tax
iate applies. Noieovei, uncleai tax legislation,
the lack of an auvance iuling system, anu the
bioau uiscietionaiy poweis affoiueu by the
tax authoiities (foi example, with iespect
to applying tax tieaties) aie also likely to
uiscouiage investment anu business activity
anutheiefoieinhibittaxcollection.
Underdeveloped Financial Sector. The
inancial sectoi iemains laigely unueiuevelopeu
hampeiing effective mobilization of uomestic
saving foi investment Access to inance in
Nyanmai is limiteu, paiticulaily in iuial aieas.
The numbei of commeicial bank bianches
pei 1,uuu squaie kilometeis was only u.8S in
2u1uanusomeaieashaunobankbianches.In
compaiison, the bianch uensity iatio was 2.2
in Cambouia, 27.2 in the Philippines, 11.6
in Thailanu, anu 7.u in viet Nam (INFFAS
2u12). Peivasive goveinment contiols anu
inteiventions have contiibuteu to the sectois
unueiuevelopment. Both the ieal inteiest
Figure 11. Revenue and taxes as percent of GDP (2010 or latest available)
Souices:ABB2u11banuCS02u1u
70
30
60
13.9
3.0
50
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10
20
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Revenue as % of GDP Taxes as % of GDP
21
(lenuing) iate anu the inteiest iate spieau aie
compaiatively high ielecting ineficiency in
the sectoi (Figuies 12 anu 1S). Nyanmai can
also pay moie attention to scaling up uomestic
saving to ensuie stability anu sustainability of
uevelopment funuing even as exteinal inancing
low is incieasing
Inadequate Infrastructure. Nyanmai lags
behinumanyofitsiegionalneighboisinboththe
availabilityanuqualityofkeyinfiastiuctuieanu
ielateuseivices(Figuie14).Thecountiyscoies
moieoilessonpaiwithCambouiaanutheLao
PBRbutwoisethanotheicountiiesintheiegion
foibothlogisticspeifoimanceanuthequalityof
Figure 12. Real Interest Rates of Selected ASEAN Countries, 20002010 (%)
ASEAN=AssociationofSoutheastAsianNations.
Souice:WB-WBI2u12
30.0
-5.0
0.0
10.0
20.0
25.0
15.0
5.0
-20.0
-15.0
-10.0
Indonesia
2000 2002 2004 2006 2008 2010
Myanmar Philippines Viet Nam
ASEAN=AssociationofSoutheastAsianNations.
Note:Inteiestiatespieauislenuingiateminusuepositiate.
Souice:WB-WBI2u12
8.0
1.0
2.0
4.0
6.0
7.0
5.0
3.0
0
Indonesia
2000 2002 2004 2006 2008 2010
Myanmar Philippines Viet Nam
Figure 13. Interest Rate Spread of Selected ASEAN Countries, 20002010 (%)
22
infiastiuctuie. Aieas such as tianspoit, access
to electiicity, anu telecommunication meiit
paiticulai attention. The national tianspoit
netwoiks, incluuing ioau, iailway, anu inlanu
wateiways aie outuateu anu iemain insuficient
to suppoit giowing economic activity. 0nly
about26%ofNyanmaispopulationhauaccess
toelectiicityin2u11
16
anueventhentheyfaceu
fiequent powei outages (Figuie 1S). Similaily,
teleuensity both ixeu anu mobile anu inteinet
access aie among the lowest in the iegion: foi
eveiy 1uu people in Nyanmai, only 1.26 have
16
A highei peicentage has access to electiicity uue to
accesstooff-giiusupplysouices.
Figure 14. Logistics Performance Index and Quality of Infrastructure, 2012
Note:TheLogisticsPeifoimanceInuex(LPI)isamultiuimensionalassessmentoflogisticspeifoimancethatcompaiesthetiauelogistics
pioiles of countiies anu iates them on a scale of woist to best 0ne component of LPI is the quality of infiastiuctuie which
iefeistotiaue-anutianspoit-ielateuinfiastiuctuie(e.g.,poits,iailioaus,ioaus,infoimationtechnology).Among1SScountiies,Nyanmai
isiankeu129th(withascoieof2.S7)inteimsofLPI,anu1SSiu(withascoieof2.1u)inteimsofqualityofinfiastiuctuie.
Souice:WoiluBank2u12.
4.0
1.5
3.5
3.0
2.5
2.0
1.0
Malaysia Indonesia
Logistics Performance Index Quality of Infrastructure
Philippines Viet Nam Lao PDR Cambodia Myanmar
Note:Thegiaphplots2uu9uata,exceptfoiNyanmai,2u11.
Souice:WB-WBI2u12anuuatapioviueubyN0EP-1totheSeptembei2u11ABBmission.
Figure 15. Access to Electricity (% of population)
100
60
90
80
70
20
10
40
50
30
0
%

o
f

P
o
p
u
l
a
t
i
o
n
Malaysia Indonesia Philippines Viet Nam Lao PDR Cambodia Myanmar
2S
access to ixeu telephone lines anu have
bioaubanuinteinetsubsciiptions(Figuie16).
Power. Nyanmai piouuceu 7,S4S million
kilowatthouisofelectiicityin2u1u,thebulkof
whichwasfiomhyuiopowei(68%),followeuby
gasiieu anu theimal geneiation
(CS0 2u12). Although the countiys installeu
capacityexceeusthepeakloau(byabout1Su%
in the available capacity of gasiieu
plants is low uue to inauequate maintenance
anu lack of compiession in the gas pipeline,
which ieuuces the low of gas Noieovei uuiing
the uiy season, the hyuiopowei plants ieceive
insuficient watei to geneiate at full capacity
Bence the giiu expeiiences signiicant loau
sheuuing uuiing the uiy season of up to Suu
megawatts (NW). The netwoik also suffeis
fiomhightiansmissionanuuistiibutionlosses.
Theuemanufoipoweihasnotbeenpiojecteu,
anu Nyanmai uoes not have a compiehensive,
least-costgeneiationplan.Themainissuesanu
constiaints facing the powei subsectoi incluue
the low electiiication iate with peisistent
powei supply shoitages in Yangon; (2) high
technical anu nontechnical losses (27%) uue
to pooi maintenance of tiansmission anu
uistiibution systems (Thein anu Nyint 2uu8);
(S) lack of technical capacity among staff;
(4) lack of a planning function, incluuing
supply anu uemanu piojections anu analysis
of alteinative supply options; (S) goveinment-
contiolleu piicing; (6) an absence of eneigy
eficiency anu climate change policies anu
(7)anabsenceoflegalsafeguaiuiequiiements.
Tronsport. The tianspoit subsectoi is
consiueiably unueiuevelopeu, which hampeis
the movement of goous anu people anu
constiains economic activity. Investment in
the sectoi uuiing the last 2u yeais has focuseu
laigely on majoi highways anu new iailways,
with much less attention on opeiations anu
maintenance anu impiovements in lowei
level netwoiks. A key challenge now is to
impiove the lowei level netwoiks anu link
them to the majoi netwoiks to inciease access
foi iegional towns, local communities, anu
iuial aieas thiough lowei tianspoit costs anu
wiuei seivice. Fuithei, to take auvantage of its
stiategic location anu impiove connectivity
with its neighboiing economies, Nyanmai
might uevelop anu impiove boiuei ciossings
anuputinplacetheessentialsoftwaiechanges
necessaiy to facilitate the movement of people
anu goous acioss the boiueis. (Baiuwaie anu
softwaiechangesmightincluuethosesetoutin
theuNSTiaueanuTiansitAgieement.)
Figure 16. Communications Indicators
Souice:WB-WBI2u12
20
8
6
18
16
14
12
10
4
2
0
Fixed Telephone Lines Fixed Broadband Internet
N
o
.

p
e
r

1
0
0

p
e
o
p
l
e
Malaysia Indonesia Philippines Viet Nam Lao PDR Cambodia Myanmar
24
To enhance its tianspoit sectoi, Nyanmai
may wish to consiuei iemoving constiaints
by (1) iationalizing institutional stiuctuies
that aie iesponsible foi the sectoi but aie
fiagmenteu anu oveilapping; (2) ueveloping
anu implementing an oveiall tianspoit sectoi
stiategy; (2) instituting a iigoious appioach
to ueciuing which infiastiuctuie investments
to unueitake using economic beneit as
an input into the uecision-making piocess;
(S)fuitheiuevelopingcapacity,builuing,atthe
subsectoi level at least, on existing ieasonably
iobust anu committeu institutions anu oficials
(4) expanuing the iole of the piivate sectoi;
anu(S)extenuingtheloweilevelioaunetwoik
foi local communities that have inauequate
access to the coie ioau netwoik anu, hence, to
basicseivices.
% RooJs. The countiy has a total ioau
netwoikofabout1Su,uuukmanuioaus
aie the uominant tianspoit subsectoi.
The ioau uensity is low, at 4u km pei
1,uuu squaie kilometeis, compaieu
with 48u in viet Nam, SSu in Thailanu,
2uuinCambouia,anu6uintheLaoPBR
(ABB 2u11b). In auuition, only 2u%
of the ioaus aie paveu to all-weathei
stanuaiu. The coie ioau netwoik of
S8,uuu km pioviues access to most of
thecountiysiegionsanuabout46%of
thecoieioaushaveapaveuall-weathei
suiface. By compaiison, only 1S% of
the noncoie seconuaiy anu local ioaus
havesomefoimofall-weatheisuifacing
anu they aie in iathei pooi conuition
in othei iespects.
17
The countiy has 18
vehiclespei1,uuupeopleveisus2Sufoi
Inuonesia anu S7u foi Thailanu (0NBP
2u11c).Bespitethelowvehicleiatioanu
a ielatively small ioau netwoik, fatality
iates aie high (neaily 16 fatalities pei
1u,uuu vehicles veisus 6 in viet Nam,
S in Thailanu, anu 1 in Austialia |WB0
2u12j). This may be paitly because
17
0nless otheiwise inuicateu iguies in this paiagiaph
aie baseu on pieliminaiy inuings fiom an ABB
consultationmissiontoNyanmaiin}une2u12.
82% of total vehicles aie motoicycles
(Kyaw2u11).
% Roilwoys. The iailway netwoik
expanueufiomabout2,uuukmin1988
to about S,Suu km in 2u1u. Nost of the
expansionhasbeeninthemoieiemote
iegions, to pioviue tianspoit seivices
ielecting the goveinments policy to
connectallpaitsofthecountiy.Nostof
the new lines, seveial of which paiallel
new ioaus caiiy little tiafic anu weie
veiyexpensivetoconstiuct,astheyaie
typicallyinmountainousteiiain,leaving
limiteu funus to maintain anu impiove
the coie netwoik. Thus, the netwoiks
infiastiuctuieisinveiypooiconuition.
To illustiate the situation, the iailways
caiiieu about S million tons of fieight
in 2u11, the same as in 199S, uespite a
signiicant inciease in the total volume
offieight(iailanunon-iail).
18
% lnlonJ Woterwoys. Nyanmai has about
S,uuu km of navigable wateiways, of
which about 2,4uu km make up the
piimaiy inlanu wateiway netwoik.
The state enteipiise Nyanmai Inlanu
WateiTianspoit(NIWT)hasabout24u
poweieu vessels available, with a total
capacity of about 7u,uuu tons. Nany of
thesevesselsaieolu.In2u11,theNIWT
caiiieu about 28 million passengeis
anu S million tons of fieight. Nost
iivei poits aie little moie than lanuing
beaches wheie vessels aie loaueu ovei
a simple gangplank. Some locations
pioviue specializeu caigo hanuling
facilities foi bulk commouities such as
petioleum,cement,anufeitilizei.NIWT
taiiffs aie ixeu by the goveinment anu
set below cost, foi both passengei anu
fieight opeiations. Rivei channels anu
navigationaiusfoisafevesselopeiations
neeuimpioving.
18
Theinfoimationinthispaiagiaphanuthenextisbaseu
on pieliminaiy inuings fiom an ABB consultation
missiontoNyanmaiin}une2u12.
2S
% Ports onJ Civil Aviotion. The Nyanmai
Poit Authoiity is iesponsible foi the
poitinYangonanueightcoastalpoits
foui on the west coast anu foui on the
southeastcoast.Thefacilitiesattheeight
poits aie simple, typically pontoon-
baseu, anu lack mechanizeu hanuling
facilities Nost coastal tiafic is between
the coastal poits anu Yangon (ASEAN
2uuS). The poit subsectoi cuiiently
uoes not face majoi constiaints, but
Nyanmai coulu usefully piepaie foi
heighteneu tiaue lows iesulting fiom
economic libeialization anu giowth.
Impioving the coastal poits woulu
allow foi moie effective use of coastal
shippingaspaitofthecountiysoveiall
tianspoit mix. Nyanmais civil aviation
subsectoiconsistsofthieeinteinational
aiipoits at Yangon anu Nanualay, anu
Nay Pyi Taw (which openeu in 2u11)
anuovei7ulocalaiipoits(ICA02uu6).
Bomestic aii seivices aie pioviueu by
Nyanma Aiiways, a state enteipiise
unuei the Ninistiy of Tianspoit. Its
leet consists of a few jet anu tuibopiop
aiiciaft that typically aie veiy olu by
aiiciaft stanuaius. 0thei aiilines also
pioviueuomesticseivices,incluuingAii
Nanualay (a joint ventuie of Nyanma
Aiiways anu Singapoiean inteiests).
Nyanmai Aiiways Inteinational,
a subsiuiaiy of Nyanma Aiiways,
pioviues some inteinational seivices
to iegional uestinations, using moie
mouein aiiciaft such as the Aiibus
AS2u anu AS21 (Nyanmai Aiiways
Inteinational2u12).
0rbon 0evelopment. The uiban sectoi is
uominateu by the two laigest cities, Yangon
with about 4.6 million people anu Nanualay
with about 1 million. Laige paits of the two
cities consist of iesettlement aieas iesulting
fiom ielocations in the 196us anu eaily 199us,
with estimateu populations in the hunuieus of
thousanus. The coie constiaint to Nyanmais
uibanuevelopmentisinauequateinfiastiuctuie
anu pooi quality of seivices. A key cause has
been chionic unueiinvestment, paiticulaily in
wateisupplyanuenviionmentalinfiastiuctuie,
incluuing uiainage, wastewatei, anu soliu
waste management. As a iesult, watei supply
anu enviionmental conuitions aie often below
acceptable stanuaius. The public sectoi is
the key playei in infiastiuctuie anu seivice
piovision,butthelackofastiongpiivatesectoi
in uiban aieas contiasts with many Southeast
Asiancountiieswheiepiivatebusinessisakey
stakeholueiinuibanuevelopment.
Low Education and Healtb Attainment.
Impiovementsineuucationanuhealthwillhelp
to ielieve the human capital constiaint that
cuiiently inhibits Nyanmais economy fiom
fulilling its full potential Bealthy skilleu anu
knowleugeablewoikeisaieessentialtoimpiove
the peifoimance of faims anu businesses, as
well as the goveinments opeiations. Recent
goveinment action to ieview anu impiove the
peifoimanceoftheeuucationsectoi,aswellas
a iecent anu substantial inciease in buugetaiy
commitment to euucation anu health caie,
uemonstiate the incieaseu impoitance placeu
onhumancapital,akeyingieuientfoieconomic
giowthanustiuctuialtiansfoimation.
FJucotion. The euucation sectoi has maue
impoitant piogiess in iecent yeais, notably in
piimaiy euucation (giaues 1S) with the gioss
piimaiy completion iate ieaching 1uS% in the
school yeai enuing in 2u1u (WBWBI 2u12).
Bowevei, piogiess has laggeu in post-piimaiy
euucation, with net eniollment estimates foi
seconuaiyeuucationiangingfiomSS%(NNPEB,
N0B, anu 0NICEF 2u11) to S8% (NNPEB et
al. 2u11) anu much lowei foi technical anu
vocational euucation anu tiaining (TvET) anu
highei euucation. Noieovei, uespite piogiess,
theie is eviuence that seconuaiy euucation,
TvET, anu highei euucation face challenges in
teims of euucation quality anu management.
Sustaineupiogiessintheeuucationsectoiisalso
constiaineubylowgoveinmentexpenuituie.
Bouseholu suiveys suggest that neaily half
oftheseconuaiyschoolagechiluienaieoutof
school oi consiueiably lagging in theii stuuies.
26
Exit fiom the school system is paiticulaily
maikeu at the tiansition fiom piimaiy to
miuule school: cohoit analysis suggests that
up to 1 in 4 piimaiy school completeis nevei
enteimiuuleschool.Extensionofpost-piimaiy
schools (auuing eaily miuule school giaues
to existing piimaiy school sites) has helpeu
expanu access. ueogiaphic anu socioeconomic
gaps aie sizable, anu appeai much laigei in
seconuaiyeuucationthanatthepiimaiylevel.
19
Key issues, paiticulaily in pooi anu ethnic

aieas, incluue (1) uispaiities in completion
iates anu uegiees of piepaieuness fiom the
piimaiy level; (2) uemanu-siue factois such as
inancial anu oppoitunity costs language othei
cultuialfactois,anuuisabilities;anu(S)supply-
siue factois such as gaps in school netwoiks
in iemote aieas limiteu inancial anu human
iesouices,anulowqualityofeuucationseivices.
Systemic uata on the quality anu ielevance
of seconuaiy (anu othei levels) of euucation
aie lacking but anecuotal eviuence suggests
challenges in teims of teaching (still laigely
iote-baseu) anu leaining outcomes. 0n the
whole,giaueiepetitionattheseconuaiylevelis
faiily low but it iises in the inal yeai of miuule
school (giaue 9) anu iemains paiticulaily
pioblematic in high school (giaues 1u11).
The lattei, combineu with high failuie iates on
the matiiculation exam foi highei euucation,
suggest pioblems in stuuents masteiy of
subjectcontent.
2u
TvET anu highei euucation can play a key

ioleinacceleiatingthecountiyssocioeconomic
tiansfoimation. To uo so effectively, both
subsectoiswilliequiiemoiefullycompetency-
19
Baseu on householu suiveys, S2.4% of 1u1S yeai-
olus fiom householus in the pooiest wealth quintile
aie alieauy out of school, veisus only 9.S% in the
iichestquintile(NNPEB,N0B,anu0NICEF2u11).
2u
This exam is taken at the enu of giaue 11 anu is
cuiiently the basis foi both ceitiication of high school
completion anu selection into highei euucation.
In school yeai 2u1u, 6S.7% of test takeis faileu,
unueimining the beneits of high school Figuies aie
baseuonEuucationNanagementInfoimationSystem
uatapioviueubytheNinistiyofEuucationtotheABB
missioninNay2u12.
baseu cuiiicula anu auuiess ueiciencies in
(1) ielevance of cuiiicula, mateiials,
methouologies, anu piogiam uesigns;
(2) alignment acioss TvET, highei euucation,
anu seconuaiy euucation; (S) quality contiol
anu accieuitation, paiticulaily given the
piolifeiation of institutions anu piogiams of
vaiying quality faculty qualiications anu
piofessional suppoit systems; anu (S) links to
laboi maiket uemanu, especially in emeiging
sectoisanuskillaieas.
21
Financing has been an oveiaiching

constiaintoneuucation,whichthegoveinment
has maue positive steps to oveicome in iecent
yeais.InFY2u1112,onlyS.74%ofthenational
buugetwasallocateutoeuucation,whichisstill
veiylowbyinteinationalstanuaius.
22
Bowevei,
the new goveinments focus on euucation
appeais to be tianslating into incieaseu
iesouicing.Thebuugetfoieuucationmoiethan
uoubleu in nominal teims in FY2u121S, with
euucations shaie of the national buuget iising
by a similai magnituue to 6.26%.
2S
The shaie
of the euucation buuget in uBP is expecteu
to uouble fiom u.69% to a piojecteu value of
1.4%1.S%.
24
In auuition to incieaseu iesouices,
the goveinment took a ciitical uecision in
eaily 2u12 to embaik on a Compiehensive
21
Staitinginschoolyeai2u1S,theNinistiyofEuucation
planstoallowiegistiationofpiivateschools,butonly
foigiaues111.
22
Buuget iguies iepoiteu heiein aie baseu on uata
kinuly pioviueu to the Nay 2u12 ABB mission by
the N0FR. In iecent yeais, neaily 9u% of euucation
buuget has gone to teacheistaff salaiies anu othei
iecuiient expenuituies, leaving scaice iesouices
foi capital investments (e.g., school constiuction)
oi nonsalaiy iecuiient costs that may be ciitical to
enhancing quality anu equity (e.g., teachei tiaining,
piovisionoffieetextbooks,etc.)(0NESC02uu6).
2S
Figuies aie baseu on uata pioviueu to ABB in Nay
2u12bytheN0FR.
24
ABB staff estimates The iguies compaie FY
to FY N0FR iguies allow foi a uiiect
calculation of the Ninistiy of Euucation buuget as a
shaieoftotalgoveinmentbuugetfoiFY2u121S,but
the uenominatoi foi the uBP shaie is only N0FRs
estimateoflikelyuBP,hencetheiangegiven.
27
EuucationSectoiReview.TheReview,cuiiently
being leu by the Ninistiy of Euucation, is
cooiuinating inputs fiom ielevant ministiies
anu uevelopment paitneis. It will incluue an
in-uepth ieview anu assessment of legislation
anu policies; will seek to iuentify challenges,
piioiity aieas, anu stiategic options foi the
sectoi; anu will culminate in the uevelopment
of a costeu euucation sectoi plan foi futuie
sectoiinvestments.
heoltb. Bealth inuicatois iemain weak anu
inluence the quality of human capital As noteu
eailiei, one in thiee chiluien is malnouiisheu,
anu moie than 1u% of chiluien unuei age S
aie wasting (i.e., low weight ielative to height)
which impaiis theii physical anu mental
uevelopment. Nateinal moitality is 24u ueaths
pei live biiths signiicantly above the
iate foi neighboiing Thailanu at 48 (WBWBI
2u12). Life expectancy is 62 yeais, one of the
lowest in the iegion (WBWBI 2u12). Such
low health outcomes aie paitly the iesult of a
legacyoflowexpenuituieonhealthcaiebutaie
also causeu by malnutiition, which is stiongly
linkeu to householu poveity. Bealth spenuing
equaleu only of uBP in signiicantly
lowei than in othei countiies in the iegion
Figuie although the iguie may not
accountfoilocalgoveinmentexpenuituiesanu
it excluues piivate uonations. Low spenuing
has tianslateu into low coveiage in teims of
health caie piofessionals anu health facilities.
0n aveiage, Nyanmai has only 1 physician pei
2,188peopleanu1hospitalbeupei1,667people
(WBWBI 2u12). 0n the positive siue, public
expenuituie on health has been incieasing in
iecentyeais.InFY2u121S,combineuspenuing
on health anu euucation is expecteu to iise
to 7.S% of total goveinment expenuituie, up
fiom S.4% a yeai eailiei (INF 2u12). Recent
incieases can help to impiove access to health
seivices anu theieby impiove health outcomes
anuhumancapitaluevelopment.
Limited Economic Diversiication
Nyanmais piouuction stiuctuie is heavily
focuseu on piimaiy commouitiesnatuial
iesouices, notably gas anu woou, along with
faim anu ish piouucts Bue to the lack of
uiveisiication the countiy is susceptible to
uemanu anu piice luctuations A bioauening
of the piouuctive base woulu pioviue auueu
stability anu a souice of employment foi the
many people who aie cuiiently engageu as
suiplusiuialwoikeisoiinvolveuinlow-paying
infoimalactivities.
Figure 17. Government Expenditure on Health, 19952009 (% of GDP)
uBP=giossuomesticpiouuct,LaoPBR=LaoPeoplesBemociaticRepublic.
Souices:FoiCambouia,staffestimatesusingABB2u11buata;foiLaoPBR,Nyanmai,anuvietNam,staffestimatesusing0NESCAP0nline
Batabase2u12.
3.0
2.5
2.0
1.5
0.5
1.0
0.0
Cambodia
1995 2000 2005
2009
Viet Nam Myanmar Lao PDR
28
Nyanmai has expeiienceu some stiuctuial
change uuiing the last 4 uecaues, although
this has taken place mostly between inuustiy
anu seivices anu within inuustiy. In 196S,
agiicultuie contiibuteu SS% of uBP, anu this
was ielatively unchangeu in 2u1u at S6%. The
iemainingpoitionofuBPhasshifteuawayfiom
seivices towaiu inuustiy. In 196S, inuustiy
contiibuteu1S%ofuBP,iisingto26%by2u1u,
wheieas the contiibution of seivices fell fiom
S2% to S8% uuiing the same peiiou (Figuie
18).Nuchofthischangemayhavebeenuueto
the uevelopment of iesouice-baseu inuustiial
activity in eneigy anu mining, given the shaip
expoitincieasesinsuchsectois.
Thenaiiowstiuctuieofpiouuctionisseen
most cleaily in the countiys expoit pioile
uas, logs, anu legumes account foi just ovei
two-thiius (68%) of total expoits (Figuie 19,
iight siue). The countiys expoit stiuctuie has
changeuconsiueiablyinthelast4uecaueswith
the iise anu uecline of inuustiies. In the 196us
anu 197us, the main expoits weie agiicultuial
commouities, notably iice, along with woou
piouucts. The 198us witnesseu the emeigence
of petioleum anu isheiies expoits Petioleum
subsequentlyueclineuanuthenvanisheuasan
expoit commouity but was ieplaceu by natuial
gas in the 199us anu 2uuus anu now accounts
foi ovei 4u% of total expoits. The main
manufactuiing inuustiy is gaiments, which
emeigeu in the 199us anu was the top expoit
amongallgoousin2uuu.Theinuustiyueclineu
ovei the following uecaue uue in laige pait to
sanctionsimposeubythe0niteuStates,amajoi
expoit maiket (compaie the gieen aieas in
Figuie 19). Nonetheless, gaiment expoits offei
a welcome uiveisiication fiom a tiauitional
ieliance on piimaiy commouities anu iemain
animpoitantsouiceofemploymentgeneiation.
The uevelopment of light manufactuiing,
agio-piocessing,anutouiism,alongwithamoie
conuuctiveenviionmentfoismall-anumeuium-
sizeuenteipiises,canhelptocieatemoiequality
jobs anu absoib pait of the woikfoice still in
agiicultuie anu the seveial million migiants
waitingtoietuintothecountiy.
Opportunities
Myunmurx recent reformx open up u wlJe
runge of economlc opportunltlex (lncluJlng
forelgn lnvextment ln hey xectorx thut ure
outJuteJJuetoJecuJexoflxolutlon),wlthltx
xtruteglclocutlonpluylnguheyrole.
Figure 18. Sector Shares in Myanmars GDP, 19652010 (%)
uBP=giossuomesticpiouuct
Souices:ABB-SBBS2u12anuWB-WBI2u12
00
90
80
70
60
50
40
30
20
10
0
1
9
6
5
1
9
7
0
1
9
7
5
1
9
8
0
1
9
8
5
1
9
9
0
1
9
9
5
2
0
0
0
2
0
0
5
2
0
1
0
%
Industry Agriculture Services
29
Strategic Location. Nyanmais stiategic
location between the iegions two emeiging
economic supeipoweis anu between Asian
subiegionspioviuesenoimousoppoitunitiesto
beneit fiom iegional economic activity Rising
SouthSouth tiaue anu incieaseu connectivity
within the iegion will make Nyanmais
geogiaphic position incieasingly impoitant in
the yeais aheau. The countiy links Southeast
AsiaanuthePRCwithSouthAsiathioughitspait
intheASEANanuAsianhighwaynetwoiks,the
uieateiNekongSubiegionhighways,anuioaus
between Nyanmai anu the PRC, as Nyanmai
accounts foi vital segments of these iegional
tianspoit netwoiks (Figuie 2u). The combineu
length of segments of these inteinational
highways passing thiough Nyanmai is an
estimateu S,uuu km. 0thei ioau segments
pioviueimpoitanttiauelinkswithneighboiing
countiies, incluuing a 427 km ioau segment in
thenoiththatcanlinkthePRCanuInuia.
Lanu tianspoit links with its neighbois
pioviueanoppoitunityfoiNyanmaitobecome
a iegional tiaue anu piouuction hub. Though
estimates of the beneits to Nyanmai fiom
impioveuconnectivitywiththeiegionaienotyet
available it is anticipateu that these beneits will
be substantial in teims of incieaseu economic
activity anu employment oppoitunities.
Stuuies inuicate that the Asian Bighway can
help inciease inteiiegional tiaue by about $9u
billionpeiannum(PaipievanuSouikov2uu8).
Tiaue to, fiom, anu thiough Nyanmai may
inciease signiicantly given its key location
betweenmajoieconomiesanusubiegions.The
potential foi oppoitunities is ieinfoiceu by the
factthattiauebetweenthePRCanuInuiaalone
ieacheuneaily$8Sbillionin2u11,up84%fiom
$46 billion 2 yeais eailiei (INFB0TS 2u12).
In auuition, theie is consiueiable potential foi
expanuing tiaue between South anu Southeast
Asia,whichiemainsatalowlevel.
PotentialofRenewableEnergy.Nyanmai
hasabunuantienewableeneigypotentialfiom
hyuio, biomass, winu, anu solai iesouices.
Among these, only hyuiopowei is being
Figure 19. Changing Structure of Myanmars Exports, % of total
Note The chait uepicts expoits of speciic commouities as a peicentage of total expoits The coloi couing allows foi a quick anu easy
compaiisonofpiouuctgioupsin2uuuanu2uu9.
Souice:SimoesanuBiualgo2u11
2000
17% Knitted
jerseys,
pullovers and
cardigans
43% Petroleum
gases
8.1%
Sawlogs
and veneer
logs of
non-
coniferous
9.7% Sawlogs
veneer logs of
non-coniferous
17% Dried or
shelled legumes
8.8% Fresh,
chilled,
frozen or
salted
crustaceans
5.3%
Other men
outerwear
6.3%
Petroleum
gases
4.7%
Other knitted
outerwear
3.8%
Other
women
outerwear
3.6%
Dried of
shelled
legumes
4.4%
Worked
wood of
non-
coniferous
1.9%
Mens
trousers
2.7%
Unwrought
copper and
copper
alloys
2.6%
Knitted
under-
garments
of
synthetic
fbers
2.3%
Mens
under-
shirt
0.80%
Corsets
1.6%Other
women
outerwear
1.5%Other
men
outerwear
1.3%
Footwear
2.6% Fresh,
chilled,
frozen or
salted
crustaceans
1.2%Fresh or
chilled fsh,
excluding fllets
1.3%
Frozen fsh,
excluding
fllets
0.64%
Womens
coats
1.1%
Sheets of
plywood
.97%Natural
rubber, latex
and gums
0.65%
Furniture
parts
0.31%
Chairs
0.62%
Other
coal
1.4%
Not
mounted
precious
stones
0.95%
Manga-
nese
0.66%
Electric
current
1.5%
Worked
wood of
non-
coniferous
1.2%
Mens
under-
shirt
0.42%
Mens
0.38%
Womens
1.2%
Mens
trousers
0.45%
Un-
wrought
0.32%
Not
1.2%
Frozen
fsh,
excluding
fllets
1.6%
Not
mounted
precious
stones
1.2%
Sesame
seeds
1.7%Semi
or wholly
milled rice
1.1%
Natural
rubber,
latex and
gums
0.44%
Lenses
1.2%Non
metal-
bearing
sands
0.54%
Oil
seeds
0.58%
Sawlogs
1.0%
Worked
wood of
conifer-
ous
0.53%
Luggage
0.91%
Footwear
4.5%
knitted
under-
garments
of cotton
2009
Su
AH1 =
AH2 =
AH3 =
AH14 =
AH111 =
AH112 =
AH123 =
R3 =
R4 =
R7 =
ICD(1)-C.Y. =
1,665 km
807 km
93 km
453 km
239 km
1,145 km
141 km
257 km
175 km
660 km
700 km
AH1
AH1
AH1
AH1
AH1
AH1
AH2
AH2
AH2
AH3
AH14
AH14
AH14
AH111
AH112
AH112
AH123
R3
R4
R7
ICD-1
C.Y.
B a y o f B e n g a l
Gul f of Mart aban
Homalin
Hkamti
Lahe
Kanibiketi
Tengchong
Baoshan
Dali
Lashio
Thibaw
Ruili
Muse
Mandalay
Tamu
Gangaw
Hakha
Sagaing
Sittwe
Taungoo
Pyinmana
Chiang Rai NAY PYI TAW
Loikaw
Pathein
Yangon
Bago
Myeik
Mottama
Thaton
Myawaddy
Mae Sot
Hpa-an
Mawlamyine
Ye
Maosameepass
Taunggyi
Loilen
Kengtung
Jinghong
Mong La
Tachileik
Meiktila
Magway
Puta-O
Myitkyina
Dawei
Kawthoung
Ramree Island
Man-Aung Island
Myei k (Mergui )
Archi pel ago
SHAN STATE
SAGAING
DIVISION
KACHIN STATE
MAGWAY
DIVISION
RAKHINE
STATE
CHIN STATE
MANDALAY
DIVISION
KAYAH
STATE
KAYIN
STATE
MON
STATE
TANINTHARYI
STATE
AYEYARWADDY
DIVISION
BAGO
DIVISION
YANGON
DIVISION
THAI LAND
BANGLADESH
LAO PEOPLE' S
DEMOCRATI C
REPUBLI C
PEOPLE' S REPUBLI C
OF CHI NA
I N D I A
National Capital
Division/State Capital
City/Town
Border Trade Post
Asian/Asean Highway
Asean Highway
Greater Mekong Subregion Highway
Trilateral Highway
River
Division/State Boundary
International Boundary
Boundaries are not necessarily authoritative.
MYANMAR
MAJOR INTERNATIONAL
ROAD LINKS
0 100 200
Kilometers
N
94 00'E
o
14 00N
o
14 00N
o
24 00N
o
24 00N
o
94 00E
o
100 00E
o
100 00E
o
This map was produced by the cartography unit of the Asian Development Bank.
The boundaries, colors, denominations, and any other information shown on this
map do not imply, on the part of the Asian Development Bank, any judgment on the
legal status of any territory, or any endorsement or acceptance of such boundaries,
colors, denominations, or information.
Figure 20. Major International Road Links Passing through Myanmar
AB=AsianBighwayASEANBighway,R=uNSBighway.
Note:Themapshowsexistinganufutuielinks.
Souice:ABB.RoausonthemapaiebaseuoninfoimationpioviueubytheNyanmaiPoitAuthoiity,NinistiyofTianspoit.
S1
commeiciallyexploiteu,whiletheotheisiemain
at the ieseaich anu uevelopment oi pilot test
stages.Thehyuiopoweipotentialfiomthefoui
main iivei basinsthe Ayeyawauuy, Chinuwin,
Sittaung, anu Thanlwinis estimateu at moie
than 1uu,uuuNW (Thein anu Nyint 2uu8). By
contiast, the countiys installeu hyuiopowei
capacity was only 1,781NW in 2u12 (Kya-0h
2u12). The Ninistiy of Electiic Powei 1 has
iuentiieu laigescale hyuiopowei piojects
withanestimateucapacityof46,1uuNW.
2S
The
lack of inancing piompteu the goveinment to
expiess the uesiie foi technological tiansfei in
the ienewable eneigy sectoi uuiing the 2u11
uieen Economy anu uieen uiowth Foium in
Yangon(Lwin2u11).
Potential for Investment in a Range of
Sectors. As it moueinizes anu libeializes its
economy, Nyanmai offeis oppoitunities foi
investois,bothfoieignanuuomestic,inviitually
all sectois. The seivices sectoi, in paiticulai,
is iipe foi investment anu offeis low hanging
fiuit that coulu pioviue a quick boost to the
economy.Telecommunications,incluuingmobile
telephony, is in uigent neeu of investment.
Similaily,thetiavelanutouiismsectoipossesses
huge potential given the countiys natuial anu
cultuial featuies anu sites, coupleu with the
pent-up inteiest of tiaveleis aftei uecaues
of Nyanmais ielative isolation. A touiism
boom can geneiate investment in tianspoit,
hotels,iestauiants,aitsanucultuie,anutiavel.
Agiicultuie offeis consiueiable potential in
basicpiouuctionanuagio-piocessing,incluuing
foi expoit. Complementaiy aieas of maiketing,
stoiage,tianspoit,logistics,anuthepiovisionof
inputssuchasmachineiyanufeitilizeisaiealso
iipefoiinvestment.
In manufactuiing, the abunuance of low-
cost laboi piesents an oppoitunity to expanu
into laboi-intensive anu expoit-oiienteu
manufactuiing, incluuing the gaiment sectoi.
Asian anu Westein iims may inu Nyanmai a
2S
Figuies weie pioviueu to ABB by the Ninistiy of
ElectiicPowei1.
new cost-effective platfoim foi light assembly
as a means foi uiveisifying theii piouuction
locations anu supplying an expanuing
uomestic maiket. Investment is also uigently
neeueu in almost all types of infiastiuctuie,
fiom ioaus anu watei supply to eneigy anu
telecommunications. The incieasing tienu in
Asiaistostiuctuieinvestmentsthioughpublic
piivate paitneiships, which can help to engage
foieign piivate investois by ieuucing theii
peiceiveuiisks.
Easing of economic sanctions imposeu on
Nyanmai by Westein countiies will leau to
higheilevelsoftiaueanuinvestment.0veithe
past seveial yeais iims fiom nonsanctioning
countiies investeu signiicantly in key sectois
with total FBI inlows ieaching just unuei
$S.8 billion since FY2uuSu6 (Table 7). Thiee-
quaiteis of that investment ($2.9 billion) has
goneintotheoilanugassectoi.
26
Investmenthas
also loweu into the mining million anu
powei ($S9u million) sectois. Nanufactuiing
anu touiism have not yet attiacteu signiicant
inlows but holu enoimous potential notably
as (1) the uoveinment is actively piomoting
foieigninvestment,anu(2)tiauesanctionsaie
being easeu, so that investois might now be
tempteu to take auvantage of low-cost laboi to
piouuceanuexpoitfiomNyanmaitoabioauei
iangeofuestinations.
Risks
Rlxhx uxxocluteJ wlth economlc reform
unJ llberullzutlon, cllmute chunge unJ
envlronmentul JegruJutlon, unJ lnternul
conllctx coulJ be xlgnllcunt
26
Total FBI appiovals in the oil anu gas sectoi ieacheu
$1u.8 billion fiom FY2uuSu6 to Septembei 2u1u.
Bowevei iguies foi FBI appiovals shoulu be tieateu
with caution, as many appioveu piojects may not
iesultinactualinvestment(asinTable7).Figuiesfoi
appioveuFBIaiefiomuatapioviueubytheBiiectoiate
ofInvestmentanuCompanyAuministiation,Ninistiy
ofNationalPlanninganuEconomicBevelopment.
S2
Rishs from economic reform and
liberalization. Nyanmai is unueitaking a
iange of economic iefoims, which entail a
gieateiuseofthemaiketmechanismtoallocate
iesouices anu manage such key aspects as
investment,inteiestiates,anufoieignexchange.
Without auequate iegulation, supeivision anu
iisk mitigation, the pace anu sequencing of the
iefoims anu libeialization may unueimine the
expecteu beneits
The Asian inancial ciisis of anu
similai ciises in Latin Ameiica much eailiei
highlight the iisk of inancial libeialization anu
volatile capital lows when macioeconomic
management anu iegulatoiy capacity aie weak
in a countiy. As Nyanmai integiates into the
global economy, it also faces a numbei of key
iisks that iequiie caieful monetaiy anu iscal
management,paiticulailyintheiealmofieseive
management anu exchange iate stability. The
iisks incluue high inlation anu exchange
iate instability uue to ineffective steiilization;
(2) consequences of an oveivaluation anu
possible oveishooting of the cuiiency
27
coupleu with laige foieign capital inlows

27
"0veishooting" iefeis to an economic phenomenon
wheie the foieign exchange iate tempoiaiily
oveiieacts to changes in monetaiy policy given
the stickiness of uomestic piices anu explains high
exchangeiatevolatilityintheshoitiun.
shaip uepieciation anu laige capital outlows
with even small negative shocks that impaii
the coniuence of foieign investois posing a
consiueiable challenge foi the young cential
bank in managing foieign ieseives anu volatile
exchange iates anu inancial ueiegulation
that coulu leau to excessive cieuit giowth anu
bubbles, given the weak iegulatoiy system anu
capacity. The PRC may pioviue an instiuctive
case of how giauual anu cautious appioaches
to libeializing the inancial sectoi anu capital
account can help maintain stability when the
economy is not fully auapteu to the maiket
mechanism anu maiket functions aie impaiieu
bylackoftianspaiencyanuweakgoveinance.
Nyanmai stanus to gain enoimously fiom
the iise of Asia anu fiom incieaseu iegional
integiation. Theie is, howevei, a iisk that the
ongoingglobalslowuownanuloomingiecession
mayimpactiegionalgiowthanuuemanuinthe
neaiteim.Slowingglobalanuiegionaluemanu
may uampen Nyanmais economic activity,
while weakei foieign investment coulu uelay
the uevelopment piocess foi Nyanmais key
inuustiysectois,suchaseneigy.
Rishs from Climate Cbange. Nyanmai
can pioit fiom lessons the iegions eaily
tiansfoimeisleaineuwhentheyoveilookeuthe
impoitanceofenviionmentalsustainability.The
Table 7. FDI Inows by Sector (US$ million)
Sector
FiscalYear
2005J0 200J07 2007J08 2008J09 2009J10 2010J11 2005-2010
0ilanuuas 229.9 417.2 478.4 74S.2 7Su.u 287.9 2,9u6.6
Nining 2.2 2.6 S.2 46.6 2uu.1 16u.S 41S.u
Powei u u 22u.u 17u.u u u S9u.u
Nanufactuiing 1.1 1.6 1S.2 14.2 11.6 1.S 4S.2
BotelanuTouiism 2.7 6.S u.1 1.u u u.S 1u.4
LivestockanuFisheiies u u u u.6 1.6 u.2 2.4
Total 235.9 427.7 714.9 975. 93.3 450.2 3,77.
FBI=foieignuiiectinvestment.
Note Figuies uenote actual FBI inlows Figuies may not total exactly uue to iounuing Bata foi FY covei ApiilSeptembei
only.NoFBIwasieceiveuinagiicultuie,constiuction,inuustiialestate,iealestate,tianspoitanuotheiseivicesuuiingthepeiiou.
Souice:BiiectoiateofInvestmentanuCompanyAuministiation,NinistiyofNationalPlanninganuEconomicBevelopment,Nyanmai(uata
pioviueutoABB).
SS
Beilin-baseu climate watchuog, ueimanwatch,
iankeu Nyanmai as the seconu woist countiy
affecteu by extieme weathei events causeu by
climate change fiom 199u to 2uu8 (Baimeling
2u1u). The iepoit also iankeu Nyanmai as the
globes woist-hit countiy in 2uu8in eaily
Nay of that yeai Cyclone Naigis uevastateu
the Iiiawauuy uelta anu iesulteu in economic
uamage estimateu at $4.1 billion anu ueaths
of moie than 1S8,uuu people (ESCAP 2u11).
Noie iecently, in 0ctobei 2u1u, Cyclone uiii
hit the westein coast of Aiakan State. uiii is
consiueieu the seconu most uamaging cyclone
on iecoiu, aftei Naigis. Cyclone uiii, which
packeu winus ovei 2uu km pei houi, killeu at
least 4S people, left ovei 2uu,uuu in neeu of
emeigency assistance, anu uestioyeu moie
thanSuuschoolsanucountlesshomes(Epatko
2u1u). Although vaiying in natuie anu uegiee,
climatechangewillimpactbothiuialanuuiban
aieasinNyanmai.
Nyanmais vast foiests cuiiently help
to suppoit iegional anu global ecosystems
that aie incieasingly unuei thieat. Theie is
a iisk, howevei, that the countiys effoits to
inuustiialize anu leveiage its natuial iesouices
inaneailystageofuevelopmentcouluweaken
its attention to enviionmental sustainability.
This might make the countiy moie vulneiable
to enviionmental shocks anu theii impacts on
human health, agiicultuie anu foou secuiity,
anu biouiveisity. Befoiestation is of paiticulai
concein, with uecieasing foiest covei anu
quality leauing to ieuuceu auaptive capacity to
futuie enviionmental changes anu potential to
absoib gieenhouse gases Foiest iies piesent
an auuitional climate change piessuie (uue
to incieaseu tempeiatuie), especially in the
uiy foiests that uominate the cential pait of
thecountiy.
The uoveinment is cuiiently iesponuing
to climate change iisk anu vulneiability, anu
in 2uu9 quickly put in place a 7-yeai national
planfoiuisasteiiiskieuuction(NSWRR2uu9).
Although theie is cuiiently no national policy
taiget foi climate change measuies, Nyanmai
has maue inteinational commitments unuei
the 0niteu Nations Fiamewoik Convention
on Climate Change (0NFCCC) anu the ielateu
Kyoto Piotocol which Nyanmai iatiieu in
(0NFCCC2u12).
Pollution from Economic Activities.
Incieaseu economic activity thieatens the
enviionment uue to mining-ielateu pollution,
ieseivoii cleaiing, anu inuustiial waste
anu sewage uischaige neai uiban aieas. If
uniegulateu anu unmonitoieu, majoi negative
impacts on the enviionment can be expecteu,
notably as FBI concentiates on eneigy anu
extiactiveinuustiies.
Within Nyanmai, awaieness of
enviionmental uistuibance causeu by
mining is incieasing but has not yet been
accompanieu by a substantive iegulatoiy
iesponse. While the countiy lacks a national
policy taiget foi enviionmental impiovement
in the mining sectoi, some ielevant sectoi
policies exist, incluuing the 1994 Nines Law,
which is intenueu to piotect the public anu
the enviionment fiom mining activities that
may be uetiimental to them. Attention is now
being uevoteu to enhancing enviionmental
monitoiing in mining aieas. Bemanus aie also
being maue on the mining inuustiy to acquiie
anu iepoit enviionmental uata, comply with
applicable inuustiy stanuaius, anu auopt the
bestenviionmentalpiactices.
Internal Conlicts Political anu social
tension within Nyanmai iemains a potentially
uestabilizing factoi, as long-iunning ethnic
conlict coulu escalate The countiy has
oficially iecognizeu ethnic gioups The Bamai
compiises 68% of the population; the next
laigest gioups aie the Shan (9%) anu Kaien
(7%) (Ekeh anu Smith 2uu7). Cieating a
haimonious society pioviues a founuation
foi inclusive anu sustainable giowth. The
goveinment can help cieate such a society
by piomoting unueistanuing of the countiys
uiffeient cultuies; by engaging in effoits at
national ieconciliation; by ensuiing that
S4
membeis of ethnic gioups have equal access
to public seivices, jobs, anu othei economic
oppoitunities;anubybuiluingtheinfiastiuctuie
necessaiy foi incieaseu connectivity between
iichanupooiaieas.
SS
Implications for Myanmars Economic Transition
IV. Implications for Myanmars Economic
Transition
In moving foiwaiu, Nyanmai can chait a
couise that takes into account its stiengths
anu constiaints, while leveiaging the available
oppoitunities anu avoiuing the potential iisks.
This also means that Nyanmai can position
itselfstiategicallyintheiapiulychangingglobal
anu iegional enviionment to beneit fiom its
auvantages.Thus,theuevelopmentstiategyfoi
the meuium to long iun will help to fast tiack
Nyanmaiseconomicintegiationintotheiegion,
impioveinclusivenessofeconomicgiowth,anu
makegiowthenviionmentallysustainable.
The couise of Nyanmais successful
tiansition to a mouein inuustiial economy
can be guiueu by thiee complementaiy
uevelopment stiategiesgiowth with focus
on iegional integiation, inclusiveness,
enviionmental sustainability. The following
illustiates key piioiity aieas of policy that
Nyanmai can consiuei in moving towaiu a
successfultiansition.
Managing Macroeconomic Stability
Establishing macioeconomic stability is the
iist step in geaiing an economy foi longteim
giowth.Keyelementsofsounumacioeconomic
policies incluue low anu pieuictable inlation
iates sustainable iscal positions anu a maiket
baseu anu lexible exchange iate
Effectivemonetaiypolicyiskeytoensuiing
a low anu stable inlation enviionment
Taigeting ieseive money may be consiueieu,
as it can uiscipline both iscal anu monetaiy
authoiities not to iun anu monetize excessive
ueicits Nonetaiy policy can also suppoit the
goveinmentsobjectivesofhighgiowthanufull
employment.
Fiscal piuuence, in conjunction with
monetaiy policy iefoim, is key to maintaining
macioeconomic stability, especially uuiing
economic tiansition. Incieasing investment
uemanu uuiing the tiansition coulu easily leau
the goveinment to iun laige buuget ueicits
which goveinments aie often tempteu to inance
thiough piinting money. Bowevei, monetizing
buugetaiy ueicits will woisen inlation while the
countiysyoungcentialbankhasyettoestablish
an effective monetaiy policy fiamewoik anu
lacks capacity foi uesigning anu implementing
policyinauministiationanuopeiations.In2uu9,
thegoveinmentissueuanusolutieasuiybonus
to uomestic banks foi the iist time to inance a
pait of its ueicit Bespite the piogiess in bonu
inancing weak ievenue collections continue
to cieate funuing gaps, which continue to be
monetizeu. The new cential bank law pioviues
the CBN with the autonomy to iun monetaiy
policy to anchoi macioeconomic stability.
Neanwhile,thegoveinmentcanstiengthenthe
tieasuiyfunctionintheN0FRanushifttobonu
inancing fiom monetization of the iscal ueicit
Stiong giowth potential anu expectations
foi amelioiation of the political situation
anu foieign ielations aie attiacting laige
anu potentially speculative capital lows to
Nyanmai Suuuen incieases in capital lows
piesent signiicant challenges given Nyanmais
S6
weakmacioeconomicmanagementsystemanu
unueiuevelopeu inancial sectoi anu maikets
The goveinment iecognizes these iisks to
the macioeconomy anu majoi iefoims aie
unuei way incluuing the uniication of oficial
exchange iates anu auoption of a manageu loat
loosening of foieign cuiiency iestiictions such
as the Expoit Fiist policy unuei which piivate
paities weie alloweu to impoit only when
they hau coiiesponuing expoit eainings, anu
monetaiypolicyiefoimshighlighteubythenew
centialbanklaw.
Even as a moie autonomous cential bank
that auopts a ieseive taigeting monetaiy
fiamewoik anu a manageu loating cuiiency iate
is establisheu, maintaining cuiiency stability
anu containing inlation can be challenging in
the face of volatile anu laige capital inlows
Thepossibilityofasuuuencessationoffoieign
exchange inlows anu a suuuen outlow cannot
be ignoieu in the piocess of libeialization, anu
has been expeiienceu by many tiansitioning
anu ueveloping countiies. While inteiventions
to steiilize foieign exchange inlows aie
possible unuei the cuiient law, the CBN can
establish mechanisms to effectively manage
uomestic uemanu conuitions anu keep the
exchange iate within levels that uo not impeue
the economys competitiveness. Allowing the
uomesticcuiiencytoappieciatecouluofcouise
ease inlationaiy piessuies but it huits the
expoit sectoi anu iaises the spectei of Butch
uisease effects ie incieaseu exploitation of
natuialiesouiceswhileinuustiializationslows.
ThetiaueoffsfacingpolicymakeisinNyanmai
aie as uificult as those facing policy makeis
elsewheie. Inueeu, many emeiging economies
(incluuingsomeinAsia)haveueemeuitpiuuent
to intiouuce some capital contiols to gain a
uegieeoffieeuominmonetaiypolicyintheface
of laige capital inlows Libeialization of capital
outlows as Nyanmai has iecently intiouuceu
can also help ease the piessuie of cuiiency
appieciation anu the buiuen of steiilizing
the inlows
Nyanmai coulu beneit fiom a sounu ieseive
management system to inciease its oveiall
iesiliencetoexteinalshocks.Withlaigecapital
inlows piojecteu fiom natuial gas expoits
FBI, anu iemittances, the CBNs iole is to
ensuie that these assets aie piopeily manageu
by establishing a well-functioning ieseive
management system. Sounu management of
ieseives can assuie that auequate foieign
assetsaieunueicontiolatalltimestosuppoit
the cuiiency, manage liquiuity, unueipin
maiket coniuence anu meet othei policy
objectives. The impoitance of sounu ieseive
management piactices is unueiscoieu by the
expeiienceofuevelopingcountiieswheieweak
ieseive management systems have iesulteu in
signiicant losses anu sometimes leu to cuiiency
anu inancial ciises An effective fiamewoik
anupolicywouluallowfoisounumanagement
of the countiys poitfolio, incluuing the
composition of ieseive cuiiencies, choice of
investment instiuments, anu uuiation of the
ieseivepoitfolio.
Mobilizing Domestic Resources
Nyanmais economic tiansition will iequiie
substantial investment in physical anu social
infiastiuctuie, uevelopment of human capital,
anu impiovement of social seivices. uiven the
consiueiablefunuingneeusoveithemeuiumto
long iun, effective mobilization of both foieign
anu uomestic savings is ciucial. While exteinal
inancing thiough foieign boiiowing anu FBI
is essential, excessive ieliance on exteinal
funuingsouicescoulusubjecttheeconomytoa
wiue iange of exteinal shocks anu unexpecteu
swings in inteinational investoi sentiment.
Thus, fosteiing uomestic souices of funuing
is veiy impoitant to maintain stability anu
sustainability. To mobilize uomestic iesouices,
substantial incieases in goveinment ievenues
aie essential, anu ueveloping the uomestic
inancial sectoi anu maikets is impoitant to
impiove inancial inteimeuiation
S7
CreatingFiscalSpace
Nyanmai is stiengthening its tax system to
geneiateauequateievenueanutoensuiefutuie
economic giowth An eficient equitable anu
tianspaient tax system is the founuation of iscal
stability Secuiing iscal stability at an eaily stage
willallowthegoveinmenttohavetheiesouices
to suppoit the piivate sectois uevelopment
(e.g., by pioviuing the necessaiy infiastiuctuie
anu social seivices). Fiscal stability can also
ensuiethatsocialspenuinginhumancapitalis
notcompiomiseu.
Cleaily, theie is an uigent neeu to inciease
goveinment ievenues to suppoit high piioiity
uevelopmentspenuinginitiatives.Pooiievenue
peifoimance can be attiibuteu to the insuficient
tax collection iooteu in the ineficient tax
system. Total national buuget ievenues aie
estimateu at 1u%1S% of uBP in the last S
yeais oi so, of which tax ievenues account foi
lessthanone-thiiu.Theiestcompiisestiansfeis
fiom state enteipiises anu othei non-tax
ievenues.Nobilizationofgoveinmentievenues
is low mainly ielecting limiteu souices of
buugetievenues,thecomplicateutaxstiuctuie
anu weak tax auministiation that encouiage
taxavoiuance,anugeneioustaxincentivesthat
aie eiouing the tax base. Theie is also lack of
tianspaiency in iecoiuing ievenue collection
in the consoliuateu buuget (the combineu
cential buuget anu buugets of state economic
enteipiises).
In iecent yeais, the goveinment has
bolsteieu its tax collection, paiticulaily on
commouities, seivices, anu custom uuties.
Collections have been impioving with signiicant
natuialgasievenues.Bigheitaxievenuescoulu
be collecteu by impioving tax policies anu
simplifying tax stiuctuies anu auministiation.
The goveinment may beneit fiom bioauening
tax bases by eliminating tax incentives anu
concessions. The tax legislation might be
also claiiieu anu simpliieu Bioauening the
coipoiatetaxbaseanusimplifyingthetaxcoue
(e.g.,byieuucingthenumbeioftaxesanuiates)
woulu in tuin lowei tax auministiation anu
compliance costs by ieuucing oppoitunities
foi tax evasion anu avoiuance. The commeicial
taxinNyanmai,atuinoveitaxlevieuonawiue
iangeofgoousanuseivices,istoocomplicateu.
A tuinovei tax tenus to be less eficient anu
moie uistoiting in geneial than a geneial sales
tax oi value-auueu tax (vAT), as a tuinovei tax
cieates multiple layeis of tax. Simplifying the
tax stiuctuie by conveiting commeicial taxes
intoageneialsalestaxwithasingleiateoivAT
may help inciease the eficiency of tax collection
anu lessen the buiuen of tax auministiation.
Any iegiessive effects of the vAT may then be
auuiesseufiomthespenuingsiue,foiexample,
by linking incieaseu tax ievenue to taigeteu
expenuituies foi the pooi such as pio-pooi
infiastiuctuieanuuiiecttiansfeipayments.
DevelopingtbeFinancialSystem
A moueinizeu inancial system woulu facilitate
effective inteimeuiation of uomestic saving to
investment anu suppoit bioau-baseu giowth.
Nyanmais inancial sectoi is veiy small anu
kept unuei tight contiol. Little piivate cieuit
is available in Nyanmai: at unuei 2S% of uBP
(Figuie21),itisbelowthatinmostueveloping
Asianpeeis.Bycompaiison,invietNampiivate
cieuitexceeueu12u%ofuBPin2u1u.
uiauual inancial libeialization is taking
place as some iestiictions have been easeu in
iecentmonths.WhiletheCBNcontinuestoset
both ueposit anu loan iates, it alloweu piivate
banks to set inteiest iates (within a limiteu
iange) on savings accounts. In iesponse, some
banks have iaiseu inteiest iates on savings
accounts to attiact customeis. The CBN has
also loweieu the inteiest chaigeu on loans by
a cumulative 4 peicentage points to 1S% since
Septembei 2u11. Fuithei impiovements in
inancial inteimeuiation coulu begin by phasing
out ueposit-to-capital iatios anu expanuing the
list of collateial beyonu lanueu piopeity to all
ciops(INF2u12).
Beveloping the inancial maiket especially
a functional inteibank maiket, is impoitant to
enhance the effectiveness of monetaiy policy
S8
anu mobilize uomestic savings foi piouuctive
investments. The iecent steps to lessen
auministiative contiols on inteiest iates aie
welcome, anu will allow the CBN to be able to
use the inteiest iate as its policy instiument
anu allow tiansmission of monetaiy policy.
This will also help stiengthen the CBNs
ieseivemanagement.
The piomotion of inancial access foi
tiauitionally unueiseiveu sectois, such as the
pooianusmall-anumeuium-sizeuenteipiises,
is also a high piioiity. Banks neeu to extenu
theii ieach to the bioauei public, especially in
iuial aieas wheie access to inance is extiemely
uificult To enhance inancial access will entail
stiongpolicyinteiventionanusuppoit,legalanu
iegulatoiy iefoims, anu capacity builuing foi
inancial institutions to pioviue moie eficient
micioinance seivices
The goveinment has intiouuceu a seiies
of measuies to impiove access to cieuit anu
inancial inteimeuiation Foi example the
goveinment has alloweu piivate banks to
expanutheiibianchnetwoiksanuhasincieaseu
the list of collateial to lessen impeuiments to
access to cieuit. Nuch moie can be uone. The
CBN is uiafting a inancial sectoi ioaumap
that will sketch out shoit, meuium, anu longei
teim iefoims. The stiategy might envisage
the uevelopment of a sounu, maiket-baseu
inancial system ovei the meuium to long iun
that will enhance iesouice mobilization anu
suppoitbioaueconomicgiowth.Inconjunction
with the uevelopment of monetaiy policy anu
incieaseu autonomy of the cential bank, the
iefoims can help to mitigate iisks of inancial
sectoi instability that may come with inancial
libeialization.
Stiengthening the iegulatoiy anu
supeivisoiyfiamewoikispaiticulailyimpoitant
foiuevelopingeconomieswithaielativelyweak
inancial maiket infiastiuctuie to suppoit cieuit
iiskassessmentanueffectiveiiskmanagement.
It is ciitical that the minimum capital
iequiiements aie met foi iegulateu inancial
institutions anu a iigoious supeivisoiy ieview
piocess is implementeu to ensuie that banks
maintainsounubalancesheetsanuexeiciseuue
vigilance in theii iisk management piactices.
But moie impoitantly builuing basic inancial
infiastiuctuieisciitical,suchas(1)establishing
legal anu institutional fiamewoiks conceining
cieuitoi iights, piuuential iegulations, anu
insolvency iegimes; (2) builuing infoimation
anu goveinance stiuctuies such as cieuit
Figure 21. Credit to the Economy (% of GDP)
uBP=giossuomesticpiouuct,LaoPBR=LaoPeoplesBemociaticRepublic,PNu=PapuaNewuuinea.
Souice:ABB-SBBS2u12
160
20
140
120
100
80
60
40
0
Viet Nam Nepal Bangladesh
2001 2010
Sri Lanka PNG Mongolia Lao PDR Myanmar Cambodia
S9
infoimationsystems,accountinganuuisclosuie
iules, anu inteinal anu exteinal auuiting
systems; anu (S) stiengthening the CBNs iole
to piopeily monitoi the economy, foimulate
anu conuuct appiopiiate monetaiy policy,
anu effectively supeivise banks. Stiengtheneu
capacity will allow iegulatois to evaluate
bankingsoununessagainsttheiapiulyevolving
inancial enviionment anu to assess the impact
ofnewuevelopmentsonthemicio-anumacio-
piuuential soununess of inancial institutions
iisk management, investoi piotection, anu
systemic inancial stability
Building Development Foundations
InvestinginInfrastructure
Stiuctuial impeuiments in Nyanmai clouu
the piospect of stiong anu inclusive giowth.
The most impoitant impeuiments ielate to
euucation, health, anu infiastiuctuie. Nany
inuicatois of physical anu social infiastiuctuie
aielagginginNyanmai.0fpaiticulaiimpoitance
islowconnectivitybothwithinanubeyonuthe
national boiuei. Investments in infiastiuctuie
anu connectivity can be scaleu up to piomote
giowthanuattiactpiivateinvestment,especially
as the countiy is integiating into the iegional
economy.Investmentstouevelopinfiastiuctuie
anuconnectivitywillhelpNyanmaitoieapthe
full potential gains fiom iegional integiation,
thiough stimulating economic activity anu
investmentinNyanmai,anubyiaisingievenues
fiomtiansittiaue.
Impioveu connectivity helps to piomote
inclusion anu social equality. Foi example, the
lackofioaustoschoolsoihospitalsiniuialanu
iemote aieas may pievent people, paiticulaily
ethnic minoiities living in these aieas, fiom
going to school oi seeking health caie even
when these seivices aie alieauy available.
Similaily,theeconomicactivitywillstaylimiteu
to uiban aieas if the iuial communities uo not
haveieliableaccesstomaikets.Thus,impioving
iuialinfiastiuctuie(suchasiiiigation,stoiage,
anu tianspoit) is paiticulaily impoitant as it
incieases agiicultuial piouuctivity anu in tuin
will have a uiiect impact on poveity ieuuction.
Foi iiiigation, the two equal focuses can be on
iehabilitating anu impioving maintenance of
theexistinginfiastiuctuie,anuuevelopingnew
iiiigationsystems.
Bigh piioiity may be also given to eneigy.
The potential foi geneiating eneigy thiough
hyuiopoweihasbeenestimateuatovei1uu,uuu
NW, of which peihaps less than S% is being
exploiteu cuiiently. To uevelop its ienewable
eneigy souices Nyanmai woulu beneit fiom
(1) an institutional anu legal fiamewoik to
suppoit uevelopment anu ueployment of these
souices incieaseu inance to suppoit
ieseaich anu uevelopment, piivate investment,
anu physical infiastiuctuie uevelopments;
(S) an enhanceu human iesouice capacity;
anu (4) appiopiiate maiket-baseu powei anu
petioleum piices. As Nyanmai opens up to a
changing woilu, ueveloping a gieen giowth
stiategy is necessaiy foi uiiving the countiys
goal of sustainable uevelopment, anu cieating
amoieiobustanulastingeconomicpiospeiity.
If Nyanmai weie to successfully hainess its
ienewable eneigy potential, it coulu position
itself to be the iegional suppliei of clean anu
affoiuableeneigy.
Bevelopment of uiffeient types of
infiastiuctuie entails uiffeient challenges, but
theie aie common themes: (1) coheient sectoi
stiategies anu mastei plans, (2) stiengtheneu
institutions anu qualiieu human capital
(S) iemoval of huiules to piivate sectoi
paiticipation anu acquisition of inancial
iesouices foi ueveloping anu maintaining
theinfiastiuctuie.
DevelopingHumanCapital
Investing in bioau human capital uevelopment
is funuamental foi Nyanmai to uevelop into a
mouein inuustiializeu economy. An equitable,
effective, anu goou quality euucation system is
essentialtoensuiethatwoikeishavethebasic
skills to integiate innovation anu technology
4u
into piouuction. Along with seconuaiy anu
highei euucation, expanueu excess to high
quality TvET may be paiticulaily impoitant
to equip the economy with a skilleu anu
competitive laboi foice foi sustaineu anu high
giowth. Linking knowleuge anu skills taught in
theclassioomwiththeneeusofthelaboimaiket
anuinuustiiesmayensuiethatwoikeiscanbe
suitably employeu. Cooiuination between the
euucation sectoi anu inuustiial policies anu
between tiaining institutions anu the piivate
sectoi is ciitical to ensuie that the countiy has
auequate human capital foi uevelopment anu
thatpioblemswithskillsmismatchaieavoiueu
uowntheioau.
Nyanmai can stiengthen its planning foi
human iesouices uevelopment to help iealize
the countiys economic potential. The basic
infiastiuctuiefoipiimaiyeuucationisinplace,
anu fuithei attention anu investment woulu
impiove the quality of seconuaiy euucation,
TvET,anuteitiaiyeuucation,withpiioiitygiven
to upgiauing schools, univeisities, anu teachei
tiaining. Emphasis on tiaining uemobilizeu
soluieis might also be consiueieu. Foimei
aimyengineeiinganumeuicalpeisonnelcoulu
be given access to piogiams anu couises that
piepaie them to pioviue infiastiuctuie anu
seivicesiniuialaieas.
Anysuccessfulstiategyfoiinclusivegiowth
shoulu auuiess augmenting human capital anu
pioviuingauequatesocialpiotection.Euucation
anu health uiiectly impiove the quality of life
anuaieciiticalfoibioaueihumanuevelopment.
Nyanmai has a faiily eficient public health
seivice system given its income level, but it is
seiiously unueifunueu pioviues insuficient
coveiage anu has signiicant gaps in teims
of stafing equipment anu maintenance The
uesign of the oveiall health system is basically
sounu, but iequiies auministiative iefoim, anu
incieaseu goveinment investment will help
to impiove public health seivices. In auuition,
some issues iequiie iegional attention. With
the opening up of the economy, the movement
ofpeopleanugoousisexpecteutoincieasethe
countiys exposuie to iegional communicable
uiseasesanuitsexpoitofuiug-iesistantmalaiia
anu othei communicable uiseases to othei
countiies. Nyanmai coulu usefully woik on
builuing capacity to monitoi, tieat, anu contain
enuemic anu epiuemic uiseases by enhancing
iegionalhealthcoopeiation.
Improving the Investment Climate for
Industry and Business
Foi the last seveial uecaues, giowth in ASEAN
anu othei East Asian countiies has been
piopelleu by theii stiuctuial tiansfoimation
into manufactuiing anu seivices activities
of incieaseu uiveisity anu complexity.
Nanufactuiinganuqualityseivicescangeneiate
jobs anu high piouuctivity anu theiefoie aie
ciiticalfoiiaisingeconomy-wiueoutputanupei
capitaincome,aswellaspioviuingoppoitunities
foieainingciiticallyneeueufoieignexchange.
Cuiiently,Nyanmaisgiowthuiawslaigely
fiomexploitingitsnatuialiesouices(gas,gems,
woou); agiicultuie (legumes, ceieals); anu
isheiies Fuithei uevelopment of its economy
howevei, iequiies bioauening its base beyonu
these piimaiy inuustiies while enhancing the
valueauuitioninthepiimaiysectoi.Thecuiient
level of technological sophistication, the uepth
ofentiepieneuiship,anuthehumancapitalbase
suggestthatNyanmaimaystaitfiompiouucing
anu expoiting simple manufactuieu goous
anu low-skilleu seivices, anu builu giauually
to inciease complexity. Luckily, the abunuant
supply of low-cost laboi anu the pioximity to
thelaigemaiketsofthePRC,Inuia,anuThailanu
wouluwoiktoNyanmaisauvantage.
The impoitance of agiicultuie cannot be
oveiemphasizeu,giventhecountiysgeogiaphy
anu climate. The economy coulu uiveisify
by builuing on its cuiient assets, notably by
expanuing agio- anu iesouices piocessing,
anu by piomoting its iich cultuial, histoiical,
41
anu aichitectuial heiitage to uevelop its
leugling touiism sectoi Enhancing agiicultuial
piouuctivity is also impoitant to enhance foou
secuiityfoithegiowingpopulationinNyanmai,
anu agiicultuial expoits can be an impoitant
souiceoffoieignexchangeeainingsintheeaily
stage of tiansition. These uevelopments will
not occui natuially but will iequiie suppoiting
infiastiuctuie, complementaiy inputs, access
to inance appiopiiate human capital anu a
conuuciveinstitutionalenviionment.
Establishing an appiopiiate institutional
fiamewoik foi a level playing ielu anu goou
goveinance is also essential foi piivate sectoi
uevelopment anu a vibiant economy. This will
also piomote accountability, tianspaiency, anu
iespect foi the iule of law, hence fosteiing an
enablingenviionmentfoibusinesses.
Expediting Public Sector Reform
Nyanmais public sectoi is oveiextenueu,
coveiing a wiue iange of economic activities
beyonumanyofthetiauitionaliealmsincluuing
euucation eneigy inance foiestiy health caie
anu telecommunications. The oiganization anu
goveinance stiuctuie is weak, leaving it open
to mismanagement of staff anu iesouices as
well as coiiuption. Lack of tianspaiency anu
accountabilityinuecisionmakingoftenleausto
pooiuesignofpublicpiogiamsanuhencepooi
ueliveiyofpublicseivices.
Nyanmai has been unueitaking majoi
iefoims in the public uomain, incluuing
putting its public inance in oiuei by impioving
ievenue management anu tax collection anu
auministiation. The seconu iounu of iefoim
might focus on the state economic enteipiises.
The public sectoi woulu beneit fiom fuithei
iationalizationanuuownsizingbyieuucingthe
states iole in many sectois. The goveinment,
thiough its Piivatization Commission, has
alieauy begun piivatizing a numbei of
state economic enteipiises, incluuing many
builuings; factoiies that piouuce textiles,
consumei goous, anu electionic anu electiical
goous; waiehouses; anu cinemas. Fuithei
piivatizationanuueiegulationofpublicutilities
can be consiueieu given the goveinments
limiteu iesouices anu capacity. This will also
facilitate foieign investment in these segments
anu ieuuce the buiuen on public inance
Stiengtheningcapacitybuiluinginpublicsectoi
management is of paiamount impoitance to
ensuiesuccessfuliefoim.
Theiefoimofthepublicsectoiisalong-teim
challenge, iequiiing full political commitment.
Thegoveinmentmaywishtoconsiueifocusing
be on piomoting eficient anu effective use
of public iesouices, (2) ensuiing tianspaiency
in the management anu uecision making
peitaining to its iesouices, anu (S) pioviuing
auequate public seivices anu infiastiuctuie foi
thepooi.
Building Planning and Statistical
Capacity
Nyanmaifacesanextensivelistofuevelopment
challenges anu the iesouices iequiieu to
oveicomethemiemainlimiteu.Piioiitizingthe
uevelopment issues anu sectois is essential,
baseu on effective costbeneit analysis anu
an oveiaiching fiamewoik foi meuium- anu
long-teim national uevelopment goals. The
piioiitization will help iuentify anu sequence
iefoims anu investments so as to maximize
the uiviuenus. Beveloping an oveiaiching
fiamewoikiequiiesanalysisatthemaciolevel
anu piioiitizing themes anu sectois. Theme
anu sectoi stuuies can also help in piepaiing
meuium-teimstiategiesanuinvestmentplans.
Such a compiehensive exeicise iequiies
a stiong planning agencybouy within the
goveinment that will guiue anu cooiuinate the
effoit anu tianslate it into a cohesive meuium-
teim uevelopment plan. 0thei tiansitional
42
economies in the iegion have institutionalizeu
uevelopment planning thiough meuium-teim
uevelopment plans that typically cooiuinate
anu guiue theii uevelopment activities foi a
peiiouofS6yeais.Foiexample,acoineistone
ofvietNamsuevelopmentplanningisitsFive-
Yeai Socio-Economic Bevelopment Plan, which
hashelpeuthecountiymaintainanimpiessive
iateofeconomicgiowthanupoveityieuuction.
Effective policymaking, planning,
implementation, anu monitoiing will iequiie
ieliable, timely, anu ielevant infoimation
on the countiys social, economic, anu
enviionmental conuitions. Nost goveinment
ministiies aie enuoweu with some statistical
abilities to meet the uata iequiiements in
theii sectoi; howevei, the absence of auequate
institutional aiiangements poses piofounu
challenges in cooiuinating statistical activities
anu maintaining unifoim statistical stanuaius
aciossministiies.
Foieviuence-baseuuevelopmentstiategies,
Nyanmai coulu beneit fiom builuing its
statistical capacity. This can be achieveu by
ueveloping the technical capacity to piouuce
statistics in line with inteinationally accepteu
stanuaius anu methouologies, anu ueveloping
the institutional, oiganizational, anu stiategic
capacity to piouuce national stiategies
foi statistics, anu stiengthening statistical
cooiuination mechanisms, statistics law, anu
oiganization. In uoing so, the countiy will
have the oppoitunity to uiaw lessons fiom
othei tiansition countiies in the iegion (such
as Cambouia anu viet Nam, which initiateu
iefoims in the 199us anu began builuing
statistical institutions anu technical capacity
to meet the infoimation neeus of a maiket
economy). Investing in statistical capacity
builuing iequiies shoit-teim anu meuium- to
long-teimcommitment.
4S
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Myanmar in Transition: Opportunities and Challenges
Myanmar, which is emerging from decades of isolation, is poised to accelerate its economic
growth on the back of its abundant labor force, rich natural resources, and geographical
location. But the country faces many development challenges to achieve strong and inclusive
growth. To take advantage of its rich potential and endowments, Myanmar can also use its
strategic location between the Peoples Republic of China and India, and act as a conduit
between South and Southeast Asia.
In order to sustain its growth momentum in the long run, Myanmar should aim for a
growth trajectory that is inclusive, equitable, and environmentally sustainable. This special
report assesses the countrys strengths and weaknesses and highlights the challenges and risks.
The key lies in prioritizing the actions to surmount the challenges and introducing the requisite
reforms.
About the Asian Development Bank
ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help its developing
member countries reduce poverty and improve the quality of life of their people. Despite the
regions many successes, it remains home to two-thirds of the worlds poor: 1.8 billion people
who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is
committed to reducing poverty through inclusive economic growth, environmentally sustainable
growth, and regional integration.
Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main
instruments for helping its developing member countries are policy dialogue, loans, equity
investments, guarantees, grants, and technical assistance.
6 ADB Avenue, Mandaluyong City
1550 Metro Manila, Philippines
Tel +63 2 632 4444
Fax +63 2 636 2444
Website: www.adb.org/economics
Email address: information@adb.org
Printed on recycled paper.

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Myanmar in Transition

Opportunities and Challenges

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