Myanmar has been under military rule for five decades spanning from 1962-2011. This period was characterized by nationalization of corporations and centralization of operations (Scott, J. 2015). Companies from other nations feared entry into the market as they would risk being nationalized. This period saw trade embargoes imposed and financial aid being halted. World’s super power- the US, for instance banned any form of assistance to the nation other than humanitarian assistance (Yahuda, 2004).
A democratically elected government took office in 2011 and set on undoing the harm imposed to the economy by the military rule. The government aimed at accelerating economic growth and attracting Foreign Direct Investors (FDI’s) (Selma Kurtishi-Kastrati). The new government set to formulate and implement new rules to liberalize the economy and move away from socialism. These rules saw increase in FDI and gross growth of the GDP as well as per capita income.
The 2015 elections saw the first non-military President elected since the 1962 coup. The president came into power in a period in which reforms are taking place and economic growth acceleration in place. There are reasons for and against liberalization of the Myanmar economy.
Reasons For Liberalization
1) Rapid economic growth- The period1962-2011 saw economic stagnation. This was caused by nationalistic policies that blocked the nation from the outside world. The Generals nationalized many companies therefore making it hard for foreign and domestic investors to invest their money as they feared having their hard earned money and work being taken away. This made Myanmar to be the least growing nation in ASEAN region. The Pro-democracy government implemented policies which saw this revert and by the fiscal year 2013/2014, Myanmar was the second fastest growing nation in the region (Chellaney, 2014).
2) Transparency- Unlike the military regime whose budget was opaque and passed in closed doors by generals and never saw the light of the day, the new government had the budget discussed and passed by parliament. In 2008. The corruption perception index in Myanmar ranked 162 out of 175. In 2014, the perception had slightly improved and Myanmar was ranked 156th in the world. This is a good indicator which shows that liberalization is improving in Myanmar and should continue.
3) Eased bilateral payments- During the military regime, Myanmar operated under a pegged exchange regime (Magone, Neuman, & Weissman, 2011). However, the new government changed it into a managed float exchange regime. This eased the trade with other nations as the Kyat now as its value determined by the market (Baker, 2005). The payment with other nations has also been eased. This has lead to opening of foreign banks in this nation. It has directly contributed to FDI and consequently improving the nation’s economy.
4) Healthy competition- The government of Myanmar enacted the competition Act. This Act prohibits monopolization in the market. This therefore leads to completion and therefore prices are not negotiated but determined by supply and demand. The act also prohibits unfair competition. The act also states the conducts which constitute unfair competition, they include: misleading of consumers; disclosing secrets of another business, defaming, intimidating another business/person; discriminating among businessmen among others.
5) Exports diversification- Myanmar is moving away from the traditional exports to new exports. For example, Apparel/Garment industry accounted for 7.7% of exports in 2014 surpassing the traditional exports such as timber. This has lead to job creation and overall improvement of living standards in Myanmar. This is because value addition to exports not only translates to higher profit margins to the producers but also to higher wages for those in the industry (Baker, 2005).
Reasons against Economic Liberalization
1. Dumping – Myanmar does not have an antidumping law (Gwartney, 2012). This puts the country at a risk of being used as a disposal point by the developed and developing nations which it trades with as it opens up due to liberalization. The increasing garbage that has no law to manage is also increasing as the purchasing power of the citizen’s increase.
2. Control by multinational corporations – The opening up of the economy will see corporations own a significant portion of land in Myanmar. The debt owed to these corporations will also increase. These will in turn give the corporations a say in the policies to be implemented as the government may be heavily in debt to them. Some of the investments are also conditional and are only received under certain conditions. The conditions are to the good of the corporations but not to Myanmar or its people (Rondinelli, D. & Cheema, 2003).
There are numerous reasons for and against liberalization of Myanmar economy. However, the reasons for liberalization outweighs the reasons against, therefore the government should continue with the liberalization. The Liberalization is set to increase the trust the public has in the government institutions and improve the corruption perception index. This will in turn attract more investors into the nation.
The liberalization of the economy has lead to improved lifestyle in Myanmar. This is due to increased financial stability and purchasing power. Fair market prices have also enabled the attainment of this goal. The fair market prices are as a result of scrapping monopolies and therefore letting the prices to be determined by supply and demand.
Myanmar should enact a law to shield the country from dumping. It should also at the same time find ways to dispose waste and control the garbage situation in the country. At the same time it should take care in the deals/contracts it enters into with corporations to avoid putting itself in debt with them.
Baker, R. (2005). Capitalism's Achilles heel : dirty money and how to renew the free-market system. Hoboken, N.J: John Wiley & Sons.
Chellaney, B. (2010). Asian juggernaut : the rise of China, India, and Japan. New York: HarperCollins e-books.
Magone, C., Neuman, M. & Weissman, F. (2011). Humanitarian negotiations revealed : the MSF experience. London: Hurst & Co.
Rondinelli, D. & Cheema, G. (2003). Reinventing government for the twenty-first century : state capacity in a globalizing society. Bloomfield, CT: Kumarian Press.
Scott, J. 2015). Burman, his life and notions. BiblioBazaar: Nabu Pres
Yahuda, M. (2004). The international politics of the Asia-Pacific. London New York: RoutledgeCurzon.
Cite this page
Liberalization of Myanmar Economy. (2018, Feb 15). Retrieved from https://speedypaper.com/essays/102-liberalization-of-myanmar-economy
If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal:
- Financial Field
- Budgeting Theory
- Discussion Question Example 1
- Nation Branding
- Black Tuesday
- Satan in Paradise Lost and Inferno
- Sales Budget
- Title: Feminism in The Age of Innocence
- Why Smartphones Shouldnt Be Given To Kids Under 13
- Impact of Social and Personal Factors
- Critique of the Media Effects Model
- CDC Health
- Immigration Policy
- Humanitarian Intervention in Libya
- Recruitment Interview