Big economic challenges for Myanmar’s new leaders

With the United States as a “friend and partner” who provided over $150 million in assistance in 2014, the government of President-elect of Myanmar, Htin Kyaw, a former senior aide to Nobel peace prize and now multi-Minister Auung Suu Kyi, is now facing a significant political agenda. In continuation of the reforms Myanmar has undertaken since 2011, Kyaw has to focus on advancing national reconciliation and de-militarizing national politics – in short, creating increased stability – with a view to achieving broad-based economic development.

Years of economic sanctions have crippled Myanmar’s economy despite enjoying an average 8% GDP annual growth in recent years – on a total GDP of $65 billion for a population of 54 million. Moreover, economic growth in Myanmar is expected to moderate to 6.5% in 2016 due to floods, landslides and slowing investments as inflation is projected to increase to 11%, a World Bank report highlighted. Another assessment by the Asian Development Bank (ADB) forecast an 8.4% growth instead, while estimating that $60 billion is needed through 2030 to upgrade transport systems. Energy in this country where 3 out of 4 households lack electricity should be a top priority too.

Myanmar’s Energy Ministry just signed a concession agreement with Thailand’s UPA to produce electricity within the Dawei Special Economic Zone (SEZ). Overall, quasi-nonexistent social policies, rampant child labor and widespread corruption are the 3 main obstacles for the country’s sound economic development that is essential for the political transition to succeed in maintaining pro-business reform momentum. With Kyi appearing as the strongest leader of Myanmar today, popular expectations are high and therefore proportional to the risk of disillusion. Exercising power effectively won’t be an easy task after decades of military rule.