Grand strategy for economic growth of Burma, well sort of!

We have been talking a lot about political change in current “reform” process taking place in Myanmar. I now kind of want to talk about economic change after all of these political talks. Don’t take me wrong, I still believe political reform process is still a foremost priority and should still continue until Burma is politically mature enough with good and efficient government, rule of law under independent and credible judiciary system, and rights for its citizens and businesses to prosper and live with dignity.

When pursuing economic development for a developing country, we could all be overwhelmed with what steps to take. Because there are so many examples for economic miracles and success stories especially among Asian countries, starting with China who is just next door to us. While all success or failed stories can have common patterns we can learn, what we implement actually will be different what others have done before at least in terms of action plans if not different principally. Because time and situation has changed and has been changing especially with the order in global economy.

Past decades, many third world countries could have enjoyed in the flurry of trade and exports to rich consumers in the West. Twenty years ago, China was a poor country with its struggle to revive from years of failed economic policies and mismanagement under authoritarian communist regime. India was mainly running on socialist economy. Now, things have changed a lot. China now is now second biggest economy as the powerhouse for manufacturing in the world and posing to become the biggest economy in next couple of decades. India thriving with its service sector boom we can start to see emergence of middle class consumers although many desperately poor citizens still left behind. West and other developed economies are facing with large debt crisis and unemployment issues, thus more importantly weaker demands for Asian countries. Therefore, simply copying what China, India or other Asian countries have done will not work for us around this time. We are late in terms of building a nation based on export-driven economy. But the good thing in this change is we are no longer living next to poors, but living close to rising markets.

With my humble confession, since the beginning I would like to point out I am not an expert on formulating economic success stories but a matter of expressing my thoughts and opinions. Actual implementation, verification and adjustments will be left to the experts and policy makers in the country. What I see for economic growth path is the two phases of nation building.

1. From “nothing” to “something” aka labor and natural resource driven economy

2. Knowledge driven advanced economy

The first phase we have to start and so I will put more focus in discussing about it, while keeping our eyes in sight for advancing to second phase, which will takes at least another generation.

From “nothing” to “something”

During the first phase, as we have nothing literally expect cheap labor and natural resources we have to invite investments with pro-business laws and taxation, less demand for rights of workers, and might even have to put up with pollution. This will be an age of sacrifice for current generation to move from “nothing” to “something”.  Luckily, Burma has more than cheap labor and natural resources. It is its place and time. We are located between two rising economic giants China and India, and part of a vibrant economy ASEAN. Time-wise, we can start to see growing consumers in emerging markets while it might not gold solidly reliable as Western consumers in golden days. That leads me to conclude the following three driving forces for the first phase of economic growth.

(1) Trade route

(2) Commodity supplier of natural resources

(3) Labor-driven manufacturing base

(1)  Trade Route

Burma must exploit its geo-location for its economic drive. China needs a secure route of energy supply from Middle East to its country and it can be done through Bay of Bengal and Burma and then through its south western frontiers. China will expand more and more markets in South Asia, Africa, Middle East and Europe either exporting products or importing raw materials for its industries. China wants to spread out its economic developments across its country especially the Western and southern inner provinces which are left behind from other provinces in East coast line.  For all these of Chinese interests and needs, Burma can become a win-win partner by becoming a reliable and secure trade route for China.  For India, they have been practicing “Look East” policy with aims of penetrating ASEAN market and beyond. We can become a logistics base and springboard for Indian companies to conduct their businesses and expand market share in Southeast Asia. If they look for closet brothers in the region, India will find Burma as an oldest friend after being together under British colony geographically contiguously and having cultural exchanges through Buddhism. We can also provide a shorter trade route for other East Asian countries by cooperating with our neighbor Thailand. The list can go on for opportunities with the growing importance of Asia Pacific region in this century.

Now the main task for policy makers and Burmese government is how we make ourselves a trade route or hub as mentioned above.  Clear indications are major investments in infrastructures for transportation and communication, training people for trade related services such as multilingual supports (learning Chinese, English, Hindu etc), finance and trade specialist services, and a reliable financial institutions for currency exchange and banking. And also building a great hotel and tourism service industry for business travelers is crucial. And perhaps building a commodity exchange for regional trades of raw material and agriculture products.Of course, these are tantamount investments and will require creative ways of financing, such as borrowing from IMF and World Banks through good relationship with Western countries, joint venture with foreign companies, fund raising through selling bonds locally and internationally.

Being a trade route will play a very crucial role for Burma until after it moves to second phase and virtually remains crucial for eternity until Asia Pacific is a major market of the world.

(2) Commodity supplier of natural resources

This part of the economy is about exploration and extraction of nature resources for raw material to industrial productions. Success of this sector and its implication for sustainable development of the country in long run will largely depends on how much the government can attract FDI in this sector and having appropriate laws and regulations that can balance incentives for investors and sustainable development. Again this will require build good political relationship with international community by the government and breeding elite civil servants in international trade, rule and regulations, environmental conservation in a short time.

The country’s already existing agricultural sector can be included as part of this economic drive by opening international markets for agricultural produces, food services in the region, encouraging communal plantation and industrial scale production by private companies , knowledge transfer and research in agriculture, and funding through future and commodity market.

(3) Labor-driven manufacturing base

Although this sector can play as driving force for economic growth, we might not be able to rely on it as other countries did in the past, especially when we hope to see weaker global demand for exports to Western countries. However, we can still get some market share for export market to the West and developed countries,  which is really big compared to zero manufacturing export from Burma now. When the markets in the West are relatively weak compared to past in short-term, we can still be an outsource center for manufacturing certain niche products for other emerging Asian markets through cheaper young labor, creative investment laws and incentives, and proximity to regional consumers.

To make this happen, we will need to invest again in infrastructures for transportation and powers, relaxed labor law and regulations, pro-business tax and stream-lined support and subsidy.

Other Factors

So far I listed each possible economic drives and specific tasks we need to carry out for each sector. However, these sectors will not survive or prosper without improving other factors that can create a conducive ecosystem for those sectors to grow upon. Other factors are:

1. Good governance

2. Education

3.  Public healthcare

Good governance –  by which I mean all stuff that have to do with political process and leadership that can provide stable political atmosphere for business confidence, smart and efficient civil servants for shrewdness and foresight to take existing opportunities and create new opportunities that does not exist yet, and prevent crisis before it happens.

It starts with an honest administration and people involved in national politics by respecting to the rule of law and avoiding corruption. Then, reduce the government size and retain the best and produce brightest for civil servants.  As a poor nation, we cannot employ a large amount of people in the government with very low salary and thus encouraging corruption and inefficiency inherently.  We must run the government with best and brightest of a few while paying the best salary on per with private industry.  Building an academy for civil servant and public administration by enrolling best students and working professionals across the nation and sending very few of the best for further study abroad and with lucrative job positions back home. How Singapore generates and nurtures one of the world’s best civil servants can be a great example for us to learn.

Stop civil wars and fighting to remove our heavy investment from our scare resources in military to especially education, healthcare and other areas that will promote for economic development. Give ethnic nationalities more authority in their state affairs while binding to the principle of national unity.

Education

Education system in Burma must now focus on equipping our workforce with necessary technical and vocational training as soon as possible for their job entry to economic sectors mentioned above. And soliciting the best and brightest students and investing in them heavily with emphasis in meritocracy for leadership in government, public service and business innovations.  Here, IT or software industry primarily can be produced relatively in shorter time by training the brightest minds in the country and also encouraging entrepreneurship for technology innovations.

Specifically, we could setup vocational and technical training school and community colleges for majority of our average students, working professionals. Then, build a four-year universities only for brightest students and sending most potential students out of them for abroad study. This is for current generation for the first phase of economic growth.

For future generations to be ready for second phase, we must reform from the very beginning of our education system, starting with KG and primary school and encouraging science and math, but also supporting for creativity and teamwork. The biggest lesson the students of new generations is if they don’t learn, they won’t survive in this new century when the economy will be built based on knowledge.

Here either for now or future, traditionally our learning system is parrot-learning but instead teaching students to think critically and solve problems must be included as part of major education reform. It does not matter if it is student-centered or teacher centered. The truth is we need both based on situations. Learning is not just one-sided effort but it must be made by both teachers and students.

Health Care

To save huge amount of money likely to cost from chronic diseases and providing young and healthy work force, we need to start investing in public health care with prevention and educating people. Vaccines are one of the most crucial areas we can invest for preventable diseases.  Building good infrastructures will help us in prevention of diseases by providing clean water and sanitation.

TO BE CONTINUED WITH PART 2.

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