Burma could follow Asia’s fast growing economies and expand at 7-8 per cent a year, becoming a middle income nation with triple its per capita income by 2030, if it can surmount development challenges through reforms, says a new Asian Development Bank (ADB) study released on Saturday.
The report, Myanmar in Transition: Opportunities and Challenges, is ADB’s first major assessment of the country since it began political and economic reforms in 2011.
It noted that there is much work to be done: only a quarter of people in Burma have access to electricity and only one in five of the country’s roads are paved to all-weather standards. The report says concerted efforts are needed to increase transparency and enhance public services.
Growth will depend on the country maintaining macroeconomic stability – including measures for low (under 6 per cent) inflation and sustainable budgets, encouraging domestic savings, and investing in human capital and infrastructure. However, the report warned that the country might also face risks associated with economic liberalization if the process is not managed prudently. Vulnerability to climate change and environmental degradation, as well as ongoing tension from internal conflicts could also derail the country’s future growth, it said.
To strengthen social cohesion and cut poverty rates, the ABD called for greater investments are needed in education, health and social services. Although more than half of Burma’s people rely on agriculture for a living, less than 20 per cent of the country’s cropland is irrigated, it noted. The report said that investment in irrigation and other inputs could dramatically expand crop yields and boost incomes.
The country’s location between the People’s Republic of China, India, and other South and Southeast Asian nations leaves it poised to benefit from rising regional trade, tourism and investment, and growing demand for energy and natural resources from its wealthier neighbors, said the ADB.
To fully realize Burma’s potential, the report suggested the country must focus on strengthening connectivity — via infrastructure in transport, power and telecommunications services, as well as modernizing its financial sector. Its economic base must also broaden beyond agriculture to the manufacturing and service sectors to meet a growing demand for jobs, it said.
The ADB recently established an office in Rangoon, and is currently studying strategies to resume operations in Burma, which were halted in 1988.