Simon Tay
For The Business Times
PEOPLE now perceive Myanmar very differently compared to just two years ago. In 2016, there was euphoria after the iconic Aung San Suu Kyi’s National League for Democracy swept the elections. Myanmar’s economic opening, begun under the previous military-backed government, brought massive investment into “Asia’s last frontier economy”.
On both business and politics, today’s outlook has sharply worsened. Myanmar’s economy is still due to grow by 6.9 per cent in 2018 but sectors such as property and construction are slumping. Foreign investment fell by nearly US$900 million compared to the previous year. Inflation is notably rising and the kyat has markedly depreciated against the US dollar, making imports more expensive.
Political controversies, moreover, have come to a boil, especially about the northern Rakhine state and the Muslim minority, the “Rohingya”. A recent report by a UN fact-finding mission has for the first time described the actions of Myanmar’s military as showing “genocidal intent”. Several high-ranking military officers were singled out for possible prosecution by the International Criminal Court. More controversy arose when Myanmar’s courts sentenced two Reuters journalists to seven-year jail terms for accessing state secrets while investigating the Rakhine state situation.
Such issues merit attention. Even as Singapore-based businesses and investors recognise Myanmar’s potential, they need to consider risks and responsibilities.
From this perspective, some good news on the economy. Speaking in Singapore recently, Aung San Suu Kyi promised that “any serious investor would be given all attention”. The Myanmar government understands the problems faced by the business community and real steps have been taken to solve them.
Amendments to laws and regulations have resulted in faster, simplified processes for business registration. The revised Myanmar Companies Law now allows foreigners to hold up to 35 per cent of a company and still have it treated as a local company. This will empower foreign investors to participate in sectors currently restricted to locals and companies.
Changes to top-level personnel and institutions are also noteworthy. There has been a change in the Minister for Finance and Planning – a key portfolio – and Ms Suu Kyi is personally overseeing the reinvigoration of the National Economic Coordination Committee.
Also noteworthy is the Myanmar Sustainable Development Plan (MSDP), which outlines a roadmap of the government’s development objectives and proposes targeted solutions to achieve those goals. There is now a “project bank” that enables the government to prioritise key projects. In the World Bank’s assessment, the MSDP is a significant step forward.
Beyond business issues, more problematic and complex is the Rakhine state situation. This affects foreign investment, as the Myanmar government increasingly realises. Speaking at an investor forum in Singapore, Myanmar Investment Commission director-general Aung Naing Oo said his government had “seriously underestimated” the issue’s impact on investor sentiment.
NO SILVER BULLET
However, conflicts between Buddhists and Muslims in Rakhine state are long-running and rooted in colonial history. Even under the previous government, violent conflicts triggered waves of mass migration by foot and by sea. It is wrong therefore to pin the blame entirely on the current government, and unrealistic to expect a resolution in the short term. There is no silver bullet.
There is instead an interlinked set of tasks to be completed. Many of these were flagged by the Advisory Commission on Rakhine State, which was established by the Myanmar government and headed by the late Kofi Annan, an esteemed former UN Secretary-General. Speaking at the 43rd Singapore Lecture in August, Ms Suu Kyi indicated that 81 of 88 recommendations made by the Commission in its final report have already been implemented.
Other efforts made by the Myanmar government should be acknowledged, such as the Union Enterprise for Humanitarian Assistance, Resettlement and Development (UEHRD). Formed in October 2017, UEHRD is a high-level public-private enterprise tasked with coordinating responses across development partners and key ministries. With the help of international donors, UEHRD prepared shelters, temporary housing and other amenities for those wishing to return to Rakhine state. Larger Myanmar businesses have also contributed to infrastructure development, for example, by building roads to improve connectivity to Rakhine state’s more remote areas.
The Myanmar government needs to increase access and transparency, and to be forthcoming when engaging with the international community. Selected UN agencies have begun working in some affected areas of Rakhine state to provide help and relief. This follows an earlier visit by ambassadors from UN Security Council member-states. If trust can be developed, more can be done to assist the displaced, and a fuller account of recent events can be garnered.
Until then, there is reason to caution against taking the recent UN report as “authoritative” in its “fact-finding”. The report’s authors were not granted access by the Myanmar government, so their investigations were based primarily on interviews conducted remotely, satellite imagery and a short visit to Cox’s Bazaar on the Bangladesh side of the border.
We also disagree with the report’s assertion that Ms Suu Kyi failed to exercise her civilian and moral authority to prevent military action. Myanmar’s Constitution gives the military direct control over the ministries – defence, home affairs and border affairs – most relevant to the problems. The majority of Myanmar’s population is also unsympathetic towards Rakhine Muslims, whom they regard as illegal migrants.
A democratically elected politician, even a figure like the Lady, can only do so much. However, the steps we note – including recent positive engagement with UN agencies and the Annan report – are evidence of ongoing efforts by the civilian leadership.
In this context, we disagree with those advocating more sanctions against Myanmar. Even current sanctions, which target only a handful of military officers, have broader impact. Heightened controversy may deter major international corporations concerned about reputational risks, as well as activist shareholders, from investing. This would hinder development prospects for millions of Myanmar’s ordinary citizens and risk returning the country to its long decades of isolation.
POSITIVE DEVELOPMENTS
Yet for many, especially in the West, the Rakhine state situation is now the dominant or even sole narrative about Myanmar. Positive developments as well as the needs of its impoverished millions are overshadowed. So too are political issues such as the peace process with other minority groups, or the strong presence of China.
Singapore has had a long-term relationship with Myanmar that, with ups and downs, goes back many decades. Today, with a total of US$19.3 billion across 286 projects, Singapore ranks with China among Myanmar’s top investors. As the world turns away, however, opportunities remain for investors to engage with a nation eager to accelerate its economic and social development. If initial concerns can be overcome, potential partners will find opportunities not only to profit enormously, but also make a genuine difference in the growth of a massively developing economy. In the midst of this, patience, open minds and a commitment to responsible and sustainable business will be essential in taking a relook at Myanmar.
ABOUT THE AUTHOR
The writer is chairman of the Singapore Institute of International Affairs. This commentary was first published in The Business Times on 21 September 2018.
Photo credit: Photo by Magdalena Roeseler is licensed under CC BY 2.0
