Burma's economy—the long road ahead

Parliament house flag post

Burma's economy—the long road ahead

Posted 13/06/2012 by Cameron Hill

Following the Parliamentary by-elections in April, much of the commentary has now shifted focus from domestic political reforms and international responses to Burma’s economy and the challenge of achieving sustainable and inclusive growth. A brief discussion of these issues is important in the wake of the Australian Government’s decision to ‘normalise’ the bilateral economic relationship and last week’s visit to Burma by the Foreign Minister, Senator Bob Carr. During this visit, Senator Carr announced that Australia would suspend all remaining financial and travel restrictions against the Burmese Government. He also canvassed the potential for increased trade and investment in areas like mining and financial services as part of a new policy of engagement.

In the early days of its independence, Burma was described as one of Southeast Asia’s most promising economies. This promise, however, has not been fulfilled. Today Burma is one of the region’s poorest countries, with over one quarter of its 60 million people living in poverty. Burma rates 149 out of 187 countries on the UN’s Human Development Index and, in 2011, tied with Afghanistan as the second most corrupt country in the world according to Transparency International (North Korea and Somalia tied for first).

Burma; Human Development Trends, 1980-2011*

Human development trends showing east Asia and the Pacific, Low human development, World and Myanmar
[click graph for larger image] 

* The Human Development Index (HDI) provides a composite measure of three basic dimensions of human development: health, education and income. The HDI sets a minimum and a maximum for each dimension, called goalposts, and then shows where each country stands in relation to these goalposts, expressed as a value between 0 and 1.

Nevertheless, Burma possesses significant economic strengths. It has a young labour force, a large natural resource endowment, and, most importantly, is strategically located between two of the world’s largest and most dynamic economies, China and India. Indeed, when one looks at the extensive network of trade and transport infrastructure across the greater Mekong sub-region, the potential for expanding this network into Burma – enhancing its role as what India’s Prime Minister has described as an ‘economic bridge’ between South and Southeast Asia – becomes clear.

In an effort to boost growth, the Burmese Government’s reform program has included efforts to liberalise the economy by easing restrictions on the exchange rate and foreign investment. As a result of the suspension of Western sanctions and recent economic reforms, The Economist forecasts that GDP growth will increase from a projected 5 per cent in 2012 to 6.9 per cent in 2016, with much of this increase coming from more exports and foreign investment. Higher growth scenarios could be realised if domestic reforms, internal peace efforts and international engagement gain further momentum.

A key test for Burma’s economy will be whether these increases in trade, investment and growth can be sustained and whether they will benefit a larger segment of the population, particularly ethnic minority groups for whom decades of grinding poverty, conflict and dislocation have added fuel to longstanding grievances against the military and their proxies. Burma’s military continues to dominate many elements of the economy, particularly the extraction of natural resources in rural and ethnic minority areas, through various state-owned companies and local commercial ventures.

A recent piece by the US-based Carnegie Endowment advocates five economic policy priorities to bolster popular support for the reform program and generate ‘quick-wins’ for poverty reduction:

  • establish a financially viable government through a transparent and proper budget process 
  • allow increased economic activity by private entrepreneurs free from state or military patronage and respect and protect the property rights of private investors
  • eliminate the broad variety of import and export restrictions in order to jump-start the non-oil and gas sectors of the economy
  • develop natural resources in a way that manages macro-economic risks, minimises environmental and social problems, and provides a transparent basis for providing sustainable public investment in ethnic minority regions
  • work with the international community to assist in clearing debts owed to the Asian Development Bank and the World Bank (estimated at US$5.5 billion) so as to allow Burma to access concessional financing from these institutions.
These kinds of changes are obviously easier said than done; some will face fierce opposition from powerful vested interests associated with the military, most will require sustained support from donor partners, and nearly all will test the civilian government’s limited capacity. Despite high levels of poverty, Burma receives one of the lowest levels of aid per capita in the world, around US$8 per head. As well as easing sanctions, in the 2012–13 Budget Australia increased its bilateral development assistance to Burma by over 30 per cent (from $48.8 million to $63.8 million), with a focus on health, education and rural development. Senator Carr announced last week that Australia’s bilateral aid will reach $100 million per year by 2015 and that the Government will seek to establish a formal development cooperation relationship with Burma. Importantly, $80 million over four years will be allocated to improving basic education outcomes and increasing the number of tertiary scholarships available to Burmese students to study in Australia.

One of the most important issues confronting Australia as it scales up aid to support economic transition is how to ensure that we and other donors do not end up competing with each other for ‘good projects’ and thereby overwhelm Burma’s fragile and evolving systems. One commentator has spelt out the negative consequences associated with this scenario:
...donors will conduct their own uncoordinated (indeed secret) country strategy reviews of Myanmar. Consultant missions will pour in and government officials will find themselves in many repetitive meetings explaining the same basics to each donor mission. Donors will then decide what they want to do, inform the government, which will accept nearly everything as it is grant funding (and what is proposed will be in line with general government priorities and strategies). Limited good office space will then be taken up by donors and, more seriously, many of the best English-speaking educated Myanmar will be employed by donors. The quality public servants that do remain will have much of their time consumed in meeting with donors. Within five years Myanmar could become a typical aid-dependent country.
These concerns have been echoed by The Asia Foundation.

If this outcome is to be avoided, well-coordinated, long-term support for the improvement of Burma’s own development planning, human resource and budget systems will need to be a core part of donors’, including Australia’s, increased assistance.


  • 21/01/2014 2:50 PM
    Martin Butterfield said:

    As always, an interesting post. I hope these comments stimulate a bit of debate. In any competition, if two competitors are tied for first, the next cab in line (excuse the mixed metaphor) is third. This applies to corruption as much as any other part of the great game. An issue not mentioned here, but perhaps worth exploring, is the nutrition of the people. When I visited Burma in the 1980s one of the issues was extracting water from the Irrawaddy to irrigate rice paddies. This had trashed the fish stocks in the river thus removing a rich source of protein and replacing it with a poor source of carbohydrate. The final paragraphs are very important. From my experience working on aid projects for various employers, the key issue is to get donors working together and not engaged in some chest thumping competition to aggrandise the home government (for agencies such as AUSAID, DFID or USAID)or the folk in New York, Washington, Rome or Geneva (for UN agencies).

Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print


Flagpost is a blog on current issues of interest to members of the Australian Parliament

Parliamentary Library Logo showing Information Analysis & Advice




refugees asylum immigration Australian foreign policy Parliament elections climate change social security women welfare reform taxation Indigenous Australians Australian Defence Force welfare policy school education higher education private health insurance health financing emissions trading Middle East Senate Australian Bureau of Statistics employment people trafficking Asia statistics illicit drugs gambling health reform federal election 2010 Australian Public Service income management Medicare disability Sport United Nations environment industrial relations constitution transport politics criminal law Afghanistan health forced labour food public service reform aged care aid Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget Carbon Pricing Mechanism dental health international relations governance regulation Fair Work Act voting law enforcement electoral reform OECD Australian Electoral Commission WADA child protection poker machines Australia in the Asian Century steroids National Disability Insurance Scheme detention 43rd Parliament slavery health system leadership domestic violence parliamentary procedure International Women's Day accountability defence capability multiculturalism ASADA Australian Federal Police labour force people smuggling debt New Zealand Australian Crime Commission pharmaceutical benefits scheme political parties coal seam gas Human rights crime China Census election results UK Parliament Papua New Guinea banking corruption pensions children's health Aviation federal election 2013 foreign debt gross debt net debt Senators and Members ALP Newstart Parenting Payment Youth Allowance sea farers United Kingdom energy food labelling Australian economy violence against women vocational education and training military history by-election High Court skilled migration mental health Federal Court terrorist groups science social media Higher Education Loan Program HECS federal state relations youth paid parental leave same sex relationships customs planning doping health risks Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy ANZUS Rural and regional trade unions Foreign affairs election timetable Indigenous royal commission Productivity firearms public policy Population ADRV terrorism transparency research and development welfare ASIO intelligence community Australian Security Intelligence Organisation carbon tax mining employer employee renewable energy regional unemployment fishing European Union family assistance United Nations Security Council forestry Drugs welfare systems Indonesia children Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report social inclusion paternalism environmental law US presidential election nutrition ODA Defence sitting days electoral divisions Southeast Asia administrative law universities TAFE Ireland citizenship asylum seekers early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity standards NATO Australian Secret Intelligence Service sexual abuse World Trade Organization Australia public health housing affordability bulk billing water health policy Governor-General US economy export liquefied natural gas foreign bribery question time speaker superannuation public housing expertise climate Intergovernmental Panel on Climate Change Department of Agriculture Fisheries and Forestry Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets animal health middle class welfare constitutional recognition of local government referendum consumer laws PISA competition policy US politics language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage alcohol entitlements ministries Hung Parliament social citizenship maritime Iran regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution Turkey Syria marine pollution sustainability prisons police deaths in custody electoral margins electoral pendulum electoral redistribution redistribution NSW redistribution WA redistribution ACT electoral boundaries ASEAN Sustainable Development Goals Double dissolution Senators safety vehicles MYEFO Pathology tertiary education Taiwan Xi Ma meeting family violence government financial advisers financial planners Financial System Inquiry Murray Inquiry China; Economic policy; Southeast Asia; Africa housing Speaker; House of Representatives; Parliament High Court; Indigenous; Indigenous Australians; Native Title ACT Indigenous education Norfolk Island External Territories emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Israel Palestine asylum refugees immigration political finance donations foreign aid Economics efficiency human rights; Racial Discrimination Act employment law bullying Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct retirement Parliament House standing orders prime ministers First speech defence budget submarines workers Somalia GDP world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC anti-dumping Rent Assistance obesity evidence law sacrament of confession international days DFAT UN General Assembly deregulation Regulation Impact Statements small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing Victoria astronomy resources sector YMCA youth parliament Korea rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office work-life balance

Show all
Show less
Back to top