U Myint Speech.pdf

Union ofMyanmar Federation of Chambers of Commerce and Industry Convention 2017 UMFCCI Mingalar Hall, Yangon 9 December 2017 Keynote Address: Overview of the State of the Myanmar Economy at Present, Why it is in this State, apd What to Do About It by U Myint, UMFCCI Econom

  Union ofMyanmar Federation of Chambers of Commerce and Industry Convention 2017 UMFCCI Mingalar Hall, Yangon 9 December 2017 Keynote Address: Overview o he State o he Myanmar Economy at Present Why it is in this State apd What to Do About It by U Myint, UMFCCI Economic Adviser Honorable Ministers, Excellences, Distinguished Guests, Ladies and Gentlemen, I wish to express deep appreciation to UMFCCI President U Zaw Min Win and to his colleagues for giving me this opportunity to deliver a keynote address at this important conference. Their specific request to me, as stated in the title of he address, is to give an overview of the state of the Myanmar economy at present, why it is in this state, and what to do about it. This is a crucial issue facing us today. I think there is general agreement that the economy is not in good shape. There is growing concern that t~e situation may get worse. Hence, it will be useful to devote my address to why our economy is under performing, and what we may have to do to deal with it. To do so, I would like to begin with an observation made by economist Ashok V. Desai, on reflecting upon his short stint as adviser to the Government of India. He said:. An economic adviser's job is to tell as it is and advise as he sees right. But the basic instinct of the government is political survi;val. To tell it as it is would be treason if the facts give ammunition to the opposition, an.d to advise what the government should but cannot do would point to its impotence. 1· ' Regarding issues quoted above, the question of a government's political survival and having an effective opposition are certainly· important, but these are beyond the scope of this keynote address and will not be discussed. However, Professor Desai's statement about need of advisers, perhaps including those holding responsible positions in the administration, to tell it as it is and advise as they see right, and our perceived inability to fulfill this need at p~esent seems to be causing considerable concern to many people in our country. This I understand is due to lack of adequate access and meaningful exchange of views with the key decision-maker. I don t believe this is a big problem that is holding us back, and we can and should deal with it. A lot has already been said on the matter by well-meaning people both within and outside the country. I plan to devote my address this morning to give my own views on the issue. Then there is a perception that our economy is not functioning well because we are not giving the attention it deserves. On this, the Indonesian experience provides some interesting insights for us. The chief architect of Indonesia's economic reforms, Professor Widjojo said .this on the matter: It is a fact that our economy has been neglected for years, and it is still not getting the attention it deserves. In addressing economic problems we have often pushed economic principles aside. This rejection of economic principles is often based on revolutionary sounding arguments, but these are precisely the kind of things that have brought our economy down. 1 Quoted by Deena Khatkhate in a review of Ashok V. Desai s book, My Economic Affair (New Delhi: Wiley Eastern Limited, 1993). The book review appeared in IMP/World Bank, Finance and Development March 1995, vol. 32, no. 1,   2. It is important for us to know that improve~ents in the economy cannot be achieved solely by making speeches, or holding symposiums or seminars, or other such events; concrete measures are also required for that. 2 The danger of down-playing economic principles and analyses and mixing them up with other preoccupations has also been warned by Bogyoke Aung San in 1947 when he said: When we plan our economy, do not let us confuse issues by bringing in politics. I appreciate that economics and politics are intimately connected, but let us keep politics out for a moment. 3 Keeping in view these :ise words from Bogyoke and the Indonesian experience noted above, let us now tum to the present state of our economy. For that we need to look at what has been dubbed as the most powerful number in the world Gross Domestic Product (GDP). 4 I have been looking at this number for a long time, especially how it has be7n speeding along, particularly at double digit rates, as it was once favoured by our authorities. Table (1) given in the Annex (I) page 8 shows real GDP growth rates 5 ofMyanmar from fiscal year 1948 when we got Independence to fiscal 20~8 covering a period of 60 years. Over these years Myanmar achieved double digit growth twice in the 1950s and three times in the 1960s. The double digit growth years are shaded. Please also note that there was never double digit growth of two years in succession. Instead, every double digit year has be~n either preceded by or is followed by a negative growth year. Then there was no double digit year for three decades -the 1970s, 1980s and 1990s. But beginning with the onset of he new millennium and starting from 2000 to 2010 Myanmar experienced double digit growth for 11 years in succession. h~ growth experience of Myanmar together with 18 selected Asian countries over this decade is given in table (2) in Annex (II) page 9. The double growth years are shaded here as well. As. we can see, among the 18 Asian countries, 15 did not have any double digit year at all. Only Bhutan had two years and Cambodia had four. Even China did not experience double digit in five years out of eleven. Moreover, the average growth of he 18 countries for the decade was 5.6%. Our average was 12.2% so more than twice the Asian average. Since China's average was 10.3% we were growing faster than China as well. · Most people in the country did not share this overly optimistic view of GDP growth. IMP and World Bank did not also publish these GDP figuresin their official reports and documents. Hence, this has led some of us to suspect that there were two economic worlds in Myanmar at that time. One was the real world where people lived, and the other was the statistical world that existed in official reports and documents. For a long time, there was a strongly felt need among us for national reconciliation of these two worlds. Such reconciliation was considered essential because concepts like equitable, sustainable and inclusive growth would not inspire much confidence, if the growth process itself and its key indicator lacked credibility and were under suspicion. However, there was a measure of success in the national reconciliation of the two economic worlds when the 10.5% average annual target growth rate set for the 2011112-2015/16 First Five Year Plan was revised downwards to more realistic and achievable 7.7% by President U Thein Sein in June 2 Emil Salim, The Indonesian Development Experience: A Collection o Writings and Speeches o Widjojo Nitisastro (Singapore: Institute of Southeast Asian Studies, 2011); pp. 26-27. · 3 David I. Steinberg, Burma: The State o Myanmar (Washington, D.C: Georgetown University Press, 2001), p. 123. Lorenzo Fioramonti, Gross Domestic Problem, the Politics Behind the World s Most Powerful Number (London: Zed Books, 2013). Another important reference on this matter is Joseph E. Stiglitz, Amartya Sen a:nd Jean-Paul Fitoussi, Mismeasuring our Lives: Why GDP doesn t Add Up (New York: The New Press, 2010). 5 Real GDP growth is GDP growth in constant prices. ã    3 2012. 6 The Plan's annual growth targets set at 6.0% ~ 6.3% for fiscal2011/12 and 2012/13 were also modest judging by Myanmar's past high growth sta*dards. And unlike in the past, these target growth rates were more in line with ADB's forecast of6.1 and 6.7% growth for these two years for the Asian region. The Plan's yearly growth rates achieved are given in table (3) in Annex (III) page 10. This national reconciliation of the real and statistical worlds, unlike reconciliation in the political sphere, was not a dramatic affair and it did not receive any noticeable local and international acclaim or attention. Nevertheless, it was a big relie:f for those of us who were often called upon to draft policy briefs on the state of the economy that were expected to be credible and were not at variance with the rudiments of economics. The trouble with working with dubious statistics was that we often cannot help but get an uneasy feeling that we might perhaps be engaging in writing a scholarly piece in the realm of social science fictiol}. Let us now consider how the efforts made by previous regimes noted above resulted in the state of the Myanmar economy. We have often pronohnced our hope and desire to stand shoulder to shoulder with neighbours and other countries in, the rest of the world when we think about our economic prospects. Table (4) on page 10 provides Per Capita GDP of ASEAN countries in current US dollars. In 2000 Myanmar with Per Capita GDP of'US$193.2 was at the bottom of the list of ASEAN countries. After double digit growth of a decade, in20 10 Myanmar was able to catch up with Cambodia and rose to occupy the second last place. This second last place was retained at the end of our First Five Year Plan in 2015/16. The question now is what are our prospects to achieve a respectable level of income that is comparable, or at least not too different, with levels of our ASEAN neighbours like Vietnam, Philippines, Indonesia, Thailand and alaysill ~   In order to do that we must first go up one step to reach third place from the bottom by catching up with our friendly neighbour Laos. What are prospects of achieving this in our current 2016/17-2020/21 Five Year Plan? Table (5) on page 10 provides an answer. In this table IMF has made a projection of our per capita GDP and came up with an estimate of US$1,832 in 2020/21. Please note this figure is below the per capita GDP of Laos amounting to US$2,159 five years ago in 2015 as shown in table (4). And of course, the per capita GDP of Laos will also be growing during the 5 years up to 2020/21. Hence prospects of catching up with Laos during the remaining term of office of the present regime seem rather slim. And that is something we may wish to bear in mind in thinking about where we are at present in our statistical economy. But how about the real economy where people live, what is our present situation there? I don't think that is difficult to figure out. All we need to do is to go to any market and observe the daily ordeal that buyers and sellers are facing to get the bare necessities of life for their families. Briefly put, I believe we have a sick economy to deal with and to cure a sick economy we need to consult a doctor, do tests, get diagnosis, take prescribed medicines, follow instructions regarding dosages to take, when and what to take, etc. Ifthe malady is more serious such as need for brain surgery or transplant then we must think of hospitalization, post operative care and so on. In short, all that I am saying is that like a sick person, to cure a sick ec<momy will require a plan (or a strategy) involving diagnosis, prescription and taking medicines, makit -g sure the medicines are swallowed even if they are bitter pills, and to make sure there are no serious si~e affects and also that the pills are working. 6 New Light of Myanmar, Job opportunities, income can be increased and triple growth realized only i current volume o .f .nancial investments be doubled (Yangon: New Light of Myanmar, 20 June 20 12); p. 1 I am leaving out Brunei and Singapore for the time being because that would be too challenging.   4. This means we will need a strategy to promote economic growth. We can set up an outline for such a strategy, calling it Myanmar co Vision (MEV) with following seven sections: (i) Objectives (a) To become a modem developed nation that meets the aspirations of its people for a better life; and (b) To enhance interaction ~ cooperation with the international community which will not only help Myanmar to become a developed country but a developed Myanmar could be counted upon to meet the regional and global problems that we are faced with i in the twenty-first century. In saying MEV aims at meeting the aspirations of the people of Myanmar, people is used in an all inclusive sense. t includes members of h~ Tat-ma-daw (armed forces), residents, civilians, nationalities, and members of the Myanmar community residing abroad. (ii) Underlying principles The people of Myanmar take considerable. pride in their culture and traditions. Hence, MEV will be drawn up within the framework of the country's well-known traditions, customs, beliefs and values. Many aspects of Myanmar's cultural heritage, and traditional beliefs and values are in harmony with modernization and progress. These beliefs and values will be drawn upon and appropriately reflected in MEV. (iii) National imperatives Several national imperatives have been established to give Myanmar national direction and purpose. These are to maintain peace and stabili~y preserve unity and security, and to perpetuate independence and sovereignty. MEV will accord high priority to these imperatives and will be guided by them. (a) First, the critical need of maintaining peace and stability will be given emphasis. The crucial role of the Tat-ma-daw to achieve this end will be recognized and highlighted. MEV will support and strengthen national endeavours in this area. t will, for instance, make proposals and implement plans aimed at meeting the needs and aspirations of he people and improving their quality of life, ,which will also contribute substantially to sustaining peace and stability in the country. (b) Second, national unity is another critical area that must be addressed. MEV looks to enhancing national unity by promoting ã mutual respect and understanding and preserving the cultural heritage and traditions of all the nationalities that compose the Union of Myanmar. (c) Third, in addition to security provided by the Tat-ma-daw and the national police force, MEV aims to give due attention to other forms of security such as in the economic and social sectors. Economic and human security will become increasingly important for Myanmar in the process of becoming a modem developed nation. (d) Finally, independence and sovereignty certainly enable a country to become a master of its own destiny at home and in its relationship with the international community. Perpetuation of independence and sovereignty are essential for social and economic progress as these bestow upon a country the capacity and freedom to fulfill the responsibility it has to its citizens and to the orl community. With respect to fulfilling the responsibility towards citizens, MEV will draw upon Myanmar's traditional beliefs