Bangkok: Blessed with natural resources, including significant gas reserves and precious gems, Myanmar has the potential to more than quadruple the size of its economy by 2030 if it manages to diversify, build infrastructure and maintain political stability, a report said Friday.
The McKinsey Global Institute said Myanmar has the land, manpower and resources to expand the size of its economy from $45 billion in 2010 to more than $200 billion by 2030.
Growth potential rests mostly four key areas - energy and mining, agriculture, manufacturing and infrastructure. Of these, manufacturing is by far the most important since companies could conceivably relocate to Myanmar from China and other Asian countries where wages are rising, said the report by MGI, the research arm of management consulting firm McKinsey & Company.
“Myanmar is coming of age in the digital era. If it uses technology fully and innovatively — in banking, government, health care, agriculture, education, and retail — Myanmar could leapfrog interim development phases to become one of the world’s fastest-growing economies,” Fraser Thompson, an MGI senior fellow, said in the report.
Myanmar’s gross domestic product is now less than 1 percent of Asia’s GDP or roughly equivalent to cities such as New Delhi and Johannesburg. It is the poorest country in Southeast Asia, its economy stunted by decades of international sanctions and strict import controls imposed by its former military junta.
Labour productivity is 70 per cent lower than other countries in the region, and the population has only an average of four years of schooling. Only 4 per cent of Myanmar’s population has enough income for discretionary spending, compared with 35 per cent of the global population, the report said.
But the potential is high for growth. Myanmar has arable land, water and a large but unskilled workforce, the report said. What the country needs now to fulfill its potential for sharp growth is political stability, infrastructure development, and the rule of law.
Myanmar had one of the region’s strongest economies in the 1950s but plunged into a decline after a coup in 1962 instituted military rule with a socialist bent. Myanmar, then called Burma, was declared a least-developed nation by the United Nations in 1987. The status is given to countries with the lowest indicators of socio-economic development according to the UN’s Human Development Index.
The country began undertaking political reforms in 2011 after the country’s military junta handed power to a nominally civilian government. But new freedoms of speech and assembly have provided opportunities for some groups to disseminate radical views, sparking violence between religious and ethnic groups. Buddhist-Muslim tensions are particularly high.
Still, foreign investors have been rushing in. In April, Ford Motor Co announced its entry into Myanmar, saying it plans to open its first sales and service showroom for new vehicles by August. The US automaker joins PepsiCo, Coca-Cola, GE, Caterpillar and Danish brewer Carlsberg, which have all signed distribution deals in Myanmar.
Longtime ally China has been one of Myanmar’s biggest international backers for years, pouring billions of dollars into the extraction of gems, timber, oil and gas. Thailand has also been a significant investor. Japan, meanwhile, is stepping up its investment and has canceled billions in old debt and is doling out new low-interest loans.
“For much of the 20th century, Myanmar largely missed out on the spectacular growth seen across most of the global economy and most recently in its Asian peers,” Richard Dobbs, a McKinsey director, said in the report. “It now has the potential to be one of the fastest-growing economies in emerging Asia.”
