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Myanmar – the Next Asian Tiger Cub Economy?

by Joshua Kurlantzick
January 18, 2012

Cashiers are seen behind piles of kyat banknotes as they count it in a private bank in Yangon. Cashiers are seen behind piles of kyat banknotes as they count it in a private bank in Yangon (Soe Zeya Tun/Courtesy Reuters).

With the upgrading of American diplomatic relations with Myanmar, and a wave of political reform in the country over the past year, many businesses have begun eying the Southeast Asian nation, which has a population of over 50 million people and has been essentially isolated from Western companies by U.S., Japanese, and EU sanctions. A delegation of Japanese business leaders recently visited the country, as did an American delegation. Business magnate and philanthropist George Soros also visited recently (of course, the U.S. would have to drop sanctions for investment to happen, but that is looking more likely).  Asia Sentinel has provided an update on all the corporate interest in Myanmar.

I have personally heard from a number of Western businesspeople who see great potential in Myanmar – they see the sizable population, the history of British law, and the significant natural resources including offshore petroleum, and compare Myanmar today to Vietnam in the early 1990s, when that country began to seriously open up to Western investment.

But, at least right now, that comparison is seriously flawed. Myanmar is a large consumer market, but its development indicators overall are more on the level of some of the poorest countries in sub-Saharan Africa. Large areas of the country have virtually no infrastructure, having been dominated by ethnic insurgencies for decades. Although the country has a history of quality education and use of English, for decades the regime essentially shut down the best universities, fearful that they would be breeding grounds for anti-government protests as they have been many times in Myanmar’s history. This was perhaps the most destructive blow to the country’s economic future – despite some government talk of IT and computer science in recent years, in reality Myanmar is one of the least technologically advanced nations in Asia, outside North Korea. It would be very hard for a multinational to build an office of any size in Myanmar doing medium-value or high-value added work, without recruiting many Burmese exiles to come back to the country, which probably is not going to happen at this point.

Of course, in certain industries such as natural resources, all these flaws may not matter; Oil companies have prospered in other climates inhospitable to business. But then there is another problem, which did not exist as much in Vietnam: Even in the resources industry, any Western companies coming in will start with at least a ten-year disadvantage against Chinese firms already established in Myanmar, and with shorter supply chains, more diplomatic support, and large pools of cash.

Post a Comment 3 Comments

  • Posted by Ko K Aung

    It is true that infrastructure is bad and universities are destroyed.But there is an informal education sector which cultivates hundreds of hundreds of young Burmese in vocational like training especially in IT industry.Gov. tries to overcome this kind of short fall by building or allowing industrial zone.One thing Burma is not left behind any rival countries is a cheap labor . It also lacks danger of floodThailand faced recently. It is also true that Burmese expatriate community can play a significant role but it also depends on how much they are attached to their motherland.

  • Posted by Tom

    A new article on Asia Sentinel today offers a more sobering take and is also worth reading.

    http://www.asiasentinel.com/index.php?option=com_content&task=view&id=4147&Itemid=217

  • Posted by Sha

    I would beg to differ with the individual who indicates that Myanmar is safe from flooding. Cyclone Nargis in 2008 resulted in a storm surge that moved at least 25 miles inland resulting much devastation to the economy and an unconscionable loss of life in the tens of thousands (no one really knows how many). furthermore, many other editorials and well-research articles point out many concerns for present investment – not to mention human rights abuses.

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