Here in Burma, at the largest World Economic
Forum meeting outside of Davos, the overwhelming consensus is that the
country will not turn back. Economically, it can't afford to.
International businesses are here in force to assess the
country for investment. They are counting on political and economic
reforms continuing.
For instance, Visa and Mastercard are tempted by the prospect
of a country the size of the UK transforming from a cash to a credit
society.
Right now, only 10% of the population have access to a bank
account. The first ATM appeared just a couple of years ago and there are
only 130 in the entire country. To make that shift would seem daunting.
But, it is also a huge opportunity.
Politics crucial
It's not just for large, foreign businesses. Young entrepreneurs from
Burma also say that they believe the reforms won't be rolled back.
It all hinges on the politics, notably the reforms of
President Thein Sien, and the rapprochement with Burma's most famous
figure Aung San Suu Kyi.
There is a sense of wariness when I spoke with people in
Burma. A hope tinged with worry that reforms won't continue or benefit
them.
A mother in a village near Rangoon living in a thatched hut
without electricity or running water told me that her dream was for her
son to be educated. But, money is tough and she is struggling to make a
living as a small vendor.
The growth in the cities hasn't yet been felt in the rest of
the country which is largely agrarian. Only 16% of the population have
electricity, and the average years of schooling is just four years.
Needless to say, credit is scarce for those like Tin Tin.
But, those are the key traits needed for a country to
industrialise. Manufacturing requires infrastructure, a semi-skilled
labour force and credit to start a business. Burma needs all three to
develop to lift its people out of poverty.
This is why there is an overwhelming hope that reforms must continue as there is still so far for Burma to go.
Impact of detente
Incomes have already risen significantly even before the political
detente as the country is richly endowed in natural resources.
It has reserves of oil and gas, and 90% of the world's jade.
In 2000, average incomes were the equivalent of 10% of those earned in
Thailand in 2000. They have risen to nearly a quarter of the Thai
average income now.
Imagine what it is capable of growing at if it industrialised
and joined global production chains - as the cheapest link in Asia.
The executives here at the World Economic Forum certainly
can, and have descended on this modest capital in force. With bidding
opened for a range of licences from resource extraction to telecoms,
global businesses are eyeing one of the last potentially double-digit
growth economies in Asia.
A risky business
But, there are risks for both Burmese and foreign companies, including reforms stalling.
For Burma, there is a risk that the country does not gain the
positive spillovers from foreign investment. These include learning
from more advanced know-how, utilising technology, and adopting best
practice in management.
This is the key to imitation that can allow a country to
catch up and grow quickly. Policies towards foreign investment should
bear this in mind to ensure that the country benefits rather than just
letting in multinational corporations who can dominate the local market
and squeeze out domestic firms.
In extractive industries, there is a danger in specialising in commodities that can run foul of the so-called "resource curse."
That curse could manifest itself by depressing manufacturing
through a currency strengthened by commodity exports that then hurts
manufactured goods sold abroad. Or, seeking control over resources could
lead to more conflict, adding to what the country is contending with on
different fronts.
It is worth bearing in mind that one of the strongest
correlations with economic growth is the absence of conflict. Pushing
the right reforms forward will be more important than ever for the
country once known as the Golden Land that bridged South and East Asia.
source: BBC News
No comments:
Post a Comment