Economists warn that although the super rich in Myanmar may get richer, the gap between the rich and poor may grow wider in the next 10 years.
Currently there are only 40 people in Myanmar who own more than US$
30 million in personal wealth. By 2022 the super rich will increase to
307 according to Wealth-X, a global leader on ultra high net worth
(UHNW) individuals.
This is in a country still considered one of the poorest in East
Asia, according to the World Bank, with an estimated GDP per capita of
between US$ 800 and US$ 1,000.
"At the moment, the gap between the rich and the poor of Myanmar is
the highest in the world," said the economist Dr. Aung Ko Ko.
"The existence of the gap between the rich and the poor depends on
the country’s policy of income distribution. If the country is depending
on selling the country’s resources such as oil and gas, the gap may
continue to exist," he added.
As the government embarks on a series of political and economic
reforms, foreign investors and capital are pouring in as companies vie
for lucrative contracts in new hotel businesses, construction, natural
gas and energy. Myanmar looks set to embrace the economic growth
witnessed by the emerging Southeast Asian economies in the early 90's.
However, economists fear that if Myanmar fails to rethink some of its
economic policies on how to balance the distribution of income, the
rich will only grow richer while the poor will grow poorer. Such income
inequality can lead to political instability and lower growth in the
future.
After decades of state-run socialism, Myanmar is now embracing a free
market economic system which allows for competition. However, equal
access and opportunities in the market place are still lacking as
companies known locally as "cronies" - because of their connections to
the old regime - have often been the first to profit from lucrative
contracts and deals.
Widening participation, guaranteeing fairness through laws as well as
preventing economic manipulation are also crucial to avoid the
emergence of a crony economy, according to Dr. Aung Ko Ko.
"There are competition laws in over a hundred countries of the world
except Myanmar. Even in China. In some local markets, there is no
competition at all. Therefore, there is no price emerging from
competition. A market without competition will only result in unbalanced
incomes," added Dr. Aung Ko Ko.
To ensure fair competition in the market there has to be equal
opportunity for every citizen to do business, without special
priviledges being awarded to companies due to corruption or connection.
Creating such opportunities are also essential to encourage innovation.
"Cronies from Myanmar were doing businesses at least some ten or
twenty years before. They have more benefits in manpower, financial
power and technology know-how compared with those who just started their
businesses. Therefore, the government will grant them projects because
they are better equipped. We need to give equal opportunity to
everyone," said a young entrepreneur.
The tax list of the top 500 Myanmar businessmen will soon be
established, said an official from the Department of Revenue in June.
Until now no list has emerged leading some to criticise a lack of
transparency in the tax system.
"Myanmar has tax dodgers and the two committees of the Lower House
need to cooperate to submit a report to ensure everyone is taxed," Lower
House Speaker Shwe Mann said on August 1.
Although Myanmar has more than 30,000 of local and overseas companies, only about 3,000 commercial organisations paid tax.
Most of commercial organisations are small and medium enterprises and
a tax break for small enterprises is not certain yet. About 26 percent
of the total population lives in poverty and 75 percent have no
electricity.
source: Eleven Myanmar
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