Myanmar’s Future In Asia

Courtesy of The Economist, a report on Myanmar’s future role in Asia:

THE visit of Aung San Suu Kyi to Thailand this week marked another extraordinary milestone in Myanmar’s (so far) peaceful revolution. For the first time since 1988, when the opposition leader returned to her homeland from Britain to nurse her dying mother, she has felt confident enough to leave the country—in the expectation that she will be allowed back. Miss Suu Kyi met low-paid Burmese workers and refugees in the Thai provinces (see picture above) and was due to attend a World Economic Forum summit in the Thai capital, Bangkok; just the sort of stuff that any freshly minted MP might undertake.

On the morning of May 29th, just before heading off to Thailand, she had met the Indian prime minister, Manmohan Singh, who was on an official three-day visit to Myanmar. This was another momentous occasion. Mr Singh may have been late out of the blocks, trailing behind other leaders from Europe, America and Asia who came to Myanmar a while ago, but his visit was more significant than most. India is intimately bound up with Myanmar; the two countries share a 1,600-km (1,000-mile) border. Yet this was the first time for 25 years that an Indian prime minister had visited the country. It was another sign of how swiftly Myanmar’s diplomatic and economic isolation is coming to an end.

All this, together with further internal economic reforms, is encouraging people to contemplate what a fully functioning Myanmar might one day look like—and how such a country might fit into a world that it turned its back on 50 years ago. Given its size and economic history, a revitalised Myanmar could make itself felt in the region. With 55m people, it is the fifth-most-populous member of the ten-strong Association of South-East Asian Nations (ASEAN). Myanmar may be impoverished now, but in the 1930s it was the world’s biggest exporter of rice.

Cheap and increasingly cheerful

In the 2010s and 2020s Myanmar could become an obvious destination for low-cost manufacturing, particularly of textiles. The country used to be an important hub for the garment industry, but as most of its exports went to America and Europe, sanctions choked off the trade. Some exporters have found new markets in Asia, but by one estimate the industry shed 80,000 jobs over the past decade. Now, relatively low wages and other costs might lure investors back—as might Myanmar’s location. Government officials make much of how the country is an ideal place from which to sell into both China and India.

If those jobs do return, then countries like Cambodia, which has carved out a niche for itself in the low-cost textile business, could suffer, as could Vietnam. But no country will have to adjust to the new reality more than Myanmar’s immediate neighbour, Thailand. There is much speculation about how many of the 2m Burmese immigrants who work in low-wage jobs underpinning the Thai economy will return home. They may be unskilled by the standards of a sophisticated economy like Thailand’s, but what they have learned overseas could make them invaluable to a revival of Myanmar’s economy.

Some predict trouble for Thailand if many Burmese return to Myanmar. However, Ammar Siamwalla, a respected Thai economist, argues that such an eventuality could spur Thai businesses, because they would have to improve productivity to compensate for the loss of unskilled labour. “Our employers have had it too easy with cheap labour,” he says.

China is the country that has gained most from the Western absence from Myanmar in the past 15 years. The Chinese have poured about $27 billion into the country, much more than any other investor. They now dominate the oil, gas and minerals industries; indeed, many believe one of the reasons for Myanmar’s government to change tack so dramatically was to end its over-dependence on China. But despite the new competition for Myanmar’s favours, the Chinese surely remain quietly confident of their future there. China is so far ahead that it will take a long time for anyone else to catch up. Besides, the Chinese have not shown much interest in the sectors, including banking, education, tourism and food-processing, that attract Indian and Western businessmen.

India, by contrast, has the most ground to make up, having neglected its eastern neighbour for years. And it could yet prove to be the country most affected by Myanmar’s opening. Certainly, India can draw on the ties of history. Millions of Indians settled and prospered in what was then called Burma when it was part of Britain’s vast Indian empire. Even after mass expulsions of Indians by Myanmar’s new military governments in the 1960s, there are still thought to be up to 3m people of Indian descent in Myanmar. This is the sort of diaspora that India’s government likes to tap for commercial opportunities elsewhere in South-East Asia. During his visit, Mr Singh encouraged them to “keep a place for India in their hearts”.

Singh along

The Indian prime minister was accompanied this week by an entourage of businessmen looking to sign deals in industries such as banking, oil, gas, paper and telecoms. Mr Singh and Myanmar’s president, Thein Sein, signed 12 agreements to strengthen trade and diplomatic ties; Mr Singh wants bilateral trade to reach $5 billion by 2015. Optimists are hoping for a flourishing cross-border trade that might help to develop the whole of India’s restless and impoverished north-east, cut off as it is from the rest of the country by India’s partition in 1947. Mr Singh spoke this week of Myanmar becoming an “economic bridge” between South and South-East Asia.

Bangladesh’s 170m people should benefit as well. The country also shares a border with Myanmar and has enjoyed good relations with the military regime. A former Bangladeshi foreign minister, Iftekhar Chowdhury, argues that his country could help ease Myanmar back into the international arena through their shared membership of an obscure regional body, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation. Mr Chowdhury points out that this cumbersomely named grouping is the only one in the region that includes countries to both the west (Bangladesh, India, Nepal, Bhutan, Sri Lanka) and east (Thailand) of Myanmar. And through Myanmar, he argues, “Bangladesh can link itself to China and South-East Asia.”

That may or may not happen. But for the time being, at least, everyone sees the possibilities that could come from one of the greatest recent political transformations in South-East Asia

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