Development Bank Exec Sees Tripled Myanmar Economy by 2030
June 25, 2013 | By Lorna Aldrich | email@example.com
Myanmar's economy could triple by 2030, Stephen Groff, Asian Development Bank (ADB) vice president for East and South Asia and the Pacific, told a June 25 National Press Club Newsmaker.
The country's "incredible advantages" include its location at the historic trade routes between China and India, natural resources and a younger population than neighboring Asian countries, he said.
Groff expressed confidence in Myanmar's President U Thein Sein and his advisers, but said the country faces some "challenges" that must be met for the economic tripling to occur.
The first, restructuring overhanging debt, has occurred in negotiations with Japan - the largest creditor - the ADB, the World Bank and some other creditors, he said. The restructuring opened the door for the ADB to work with Myanmar for the first time in 25 years. he said.
Groff listed other steps required for the robust GDP growth of the past three years - 6.3%, 6.5% and 6.7% - to continue and accelerate.
He first cited macroeconomic policy, the need to keep inflation low and to maintain a strong monetary policy, which would require reforming the central bank and giving it more independence.
Further, he said, there are no financial markets or capital markets, and therefore no ways to connect lenders with borrowers, something "any country needs to operate."
He added a reformed tax system and tax collections to his list.
The country needs a positive business environment so "private investors can come into the country and have some confidence that they will have the opportunity to make money," he said.
Groff also cited the need for judicial reform because "investors need to know they have recourse to a court system that is not rigged in any way."
Large investments in education and health are required to develop the demographic advantage of a young population, he said.
He noted that the population is 70% rural so agricultural investment would spur economic growth in that sector and could help the country regain its position as a leading rice exporter.
Over time, he said, agricultural productivity should grow to support a smooth transition toward manufacturing growth and, eventually, services growth. Sequencing investments will be important, he said.
The final requirement he listed is to "manage expectations" of donors, investors and the population because economic development is a long term process.
The challenge for ADB and other donors is to find some investments that create benefits the average person can see while, "at the same time laying the foundation for long term sustainable growth," he said.