Myanmar was one of East Asia’s fast growing advanced economies in the early 20th century. But decades of isolation took its toll and Myanmar was left out of the region’s remarkable transformation as Japan, Korea, China and fellow ASEAN countries became a global engine of growth, lifting millions of people out of poverty.
In 1960 Myanmar’s real per capita income was much closer to its neighbors: Indonesia’s income was 40 percent higher and Thailand’s was 80 percent higher. Today Indonesia’s per capita income is 350 percent higher and Thailand’s is almost 500 percent higher. For Myanmar to converge with the per capita income levels Indonesia and Thailand enjoy today, it would require annual per capita income growth of 8 percent over 20 years.
Myanmar’s annual per capita income is estimated at aboutUS$1,000, roughly one-third the average income of its developing ASEAN neighbors. Myanmar’s social and economic indicators show how far it has fallen behind - a quarter of all children are malnourished and three quarters of the population has no access to electricity.
Policy makers across the region and even around the globe ask me “how can Myanmar catch up with the standard of living of its neighbors?” We only need to look to South Korea to find a source of inspiration. It was poorer than many countries in Africa in the 1950s and now has a per capita GDP of over $20,000.
The challenge, at once exciting and daunting, is for Myanmar to learn from the experience of its Asian neighbors who have grown fast and adapt their best practices to the unique context of Myanmar. As it pursues‘people-centered’ reforms it can build on its strengths which lie in its strategic location, within a large regional and global export market, young and vibrant population, vast untapped natural resources, and improving prospects for trade, investment and development aid. Doing this offers a chance to accelerate its development.
Myanmar can realize its full potential and end extreme poverty and build shared prosperity by buildinga strong macro-economic framework with fiscal policies that align the budget with development priorities. It can also benefit by maintaining prudent levels of debt and pursuing monetary policies that contain inflation while adopting exchange rate policies to promote its export competitiveness.
Regulatory reform is also important to encourage private sector investment and to help businesses grow. Myanmar has taken an important first step by passing a new Foreign Investment Law to attract responsible foreign investors. Increasing access to finance for rural and urban borrowers and for small- and medium-sized enterprises can also help create jobs across the country.
Ultimately, it is the private sector that will produce jobs for people in Myanmar who have growing expectations that reforms will improve their lives. To prepare the next generation to compete means investing in education.Thailand’s example shows how reforms to increase skills have made it a good place to do business. Similar investments in workforce training and innovation programs will be at the heart of Myanmar’s future success.
Thailand has also made strides in its path to universal health coverage. With a more open government, that is pursuing ‘people-centered’ development, Myanmar has the opportunity to reform its health system and address high infant mortality and diseases including AIDS and tuberculosis. Children should not die because they cannot get access to health services and pregnant women should not die in childbirth.
Smart investments in infrastructure including water supply, telecommunications and transportation can help accelerategrowth. Turning on the lights in Myanmar is also critical so that children can study at night and doctors can refrigerate medicine. The World Bank Group is helping in the short run with support for the cleaner and greener gas turbines to produce much-needed electricity to reduce blackouts and improve access for the3 out of 4 people who have no electricity. In the long run, the country has the opportunity to dramatically increase access toelectricity like Laos and Vietnam.
Participation of the people in these changes will ensure that more people benefit and increase chances for success. Transparency and accountability around public financial management, public investments,and privatization, will build public support.Myanmar is making important strides with the establishment in Parliament of the Public Accounts Committee and the Planning and Finance Committee to help show how money is being spent.The broadcast of budget debates on TV and publication of the budget in newspapers is allowing scrutiny and oversight.
Myanmar is also embracing transparency in managing its natural resources, and is preparing to join the Extractive Industries Transparency Initiative (EITI). The Initiative can provide entry points towards promoting sustainable use of the country’s natural resources. As natural resource revenues become more transparent, people will start demanding answers on how well they are being utilized, including on re-investment in their livelihoods and environmental conservation.
Myanmar has embarked on an exciting path of transformation that will bring opportunities for reducing poverty and building shared prosperity for all of the people. The journey will be determined by the country and it will face enormous challenges. It is a privilege for the World Bank Group and other development partners to accompany the people on this journey and to offer our global experience and practical solutions to help improve people’s lives.