Introduction

If you're interested in Myanmar's economy, a Southeast Asian nation that once held promising economic prospects, or if you're considering investing in Myanmar, this information is for you. Let's begin by examining Myanmar's economy from its time as a British colonial territory.

The Colonial Era (1886-1948)

Myanmar was once a British colony. In 1886, it fell under British rule and lost its independence. British companies dominated key industries such as rice, gems, timber, and oil. During the colonial period, Myanmar's economy was controlled by major British capitalist companies like Steel Brothers, BOC, East India, and Irrawaddy Flotilla. Under these companies, Chinese and Indian ethnic groups were able to establish secondary businesses. However, the native Myanmar people did not have any significant business presence.

Colonial Development

On the other hand, the British built infrastructure to support their colonial administration, and Myanmar's development was once admired by other countries in the region. After the opening of the Suez Canal, colonial Myanmar became the world's largest rice exporter.

Post-Independence Era (1948-1962)

Myanmar gained independence from Britain in 1948. Just three months after independence, civil war broke out, preventing the establishment of a proper economic system. Nevertheless, Myanmar's economy maintained good potential and held a significant position in Southeast Asia.

Socialist Period (1962-1988)

Military Takeover and Nationalization

In 1962, military leader General Ne Win seized power. Subsequently, in 1963, private businesses were nationalized. Banks, manufacturing, and other private enterprises became state-owned. Foreign businesses that remained after independence were expelled. This included foreign banks. The country adopted a socialist economic system based on central planning.

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Economic Policies and Consequences

While exports were restricted, imports were also controlled. Although economic experts recommended an export-oriented economic model, it didn't materialize. Thus, Myanmar became a country practicing closed-door economic policies. The import restrictions led to the growth of black market economy. While agriculture and domestic production were encouraged, misguided policies of government market control and ministerial corruption meant Myanmar's economy didn't achieve its expected potential. Consequently, the country became listed as one of the Least Developed Countries (LDC) in 1987.

Transition Period (1988-2010)

After 1988, private businesses began to be encouraged again. From 1988 until the political changes of 2020, China was the largest investor in Myanmar. During this period, most investments were characterized by low transparency, accountability, and responsibility. In 1997, Myanmar became a member of the Association of Southeast Asian Nations (ASEAN) and primarily relied on regional trade. During these periods, Myanmar also faced economic sanctions from the United States and Europe.

Reform Era (2010-2021)

Political and Economic Changes

In late 2010, Myanmar experienced political changes. The 2010 election led to the emergence of a quasi-civilian government led by President Thein Sein. Due to political changes, Japan and Paris Club member creditor nations forgave debts. The country moved toward a market economy system. Many foreign investment companies re-entered.

Major Developments

International companies like Telenor and Ooredoo won tenders and operated telecommunications businesses according to international standards. Due to political changes, the US and Europe also relaxed their economic sanctions. They also eased individual economic sanctions on some business tycoons and military leaders who controlled Myanmar's economy.

During this period, governments made numerous economic law reforms. Laws such as the 2012 Foreign Direct Investment Law, Consumer Protection Law, and Farmers' Rights and Enhancement of Benefits Law were enacted. Investment protection treaties with foreign countries were also signed.

Aung San Suu Kyi's Government (2015-2020)

During the civilian government led by Nobel Peace Prize laureate Aung San Suu Kyi (2015-2020), Myanmar was recognized as one of the best-responding countries to the COVID-19 global pandemic. From 2010 to early 2021, Myanmar's economy showed positive growth. GDP increased, and sectors such as banking, mobile money, microfinance, foreign investment, and small and medium enterprises gradually developed.

Post-Coup Economy (2021-Present)

Immediate Impact

After the coup, the situation deteriorated to the point where banks couldn't return deposits to their customers. Public confidence in banking services plummeted. Mobile money businesses also declined. After the 2021 coup, Myanmar's economy reverted to its pre-2010 condition.

Foreign Investment Changes

Foreign investment businesses withdrew. Major telecommunications companies like Telenor are no longer present in Myanmar. Companies such as Telenor, Toyota, Kirin Beer, the famous Adani Port business, and oil companies like Total and Chevron have left Myanmar. However, China remains the largest investor in Myanmar after the coup. Trade volumes have declined.

Current Economic Structure

Key Economic Sectors

Looking at Myanmar's economy as a whole, Myanmar is a country building an agriculture-based economic system. Despite being agriculture-focused, the sector hasn't adopted modern farming methods and equipment. About 70% of Myanmar's population is engaged in agriculture-related work.

Although it's an agricultural country, Myanmar's main exports are oil and natural gas, generating about $4 billion annually in foreign income. Among Myanmar's exports, rice, various beans, and seafood are primary products. These exports are used to earn foreign currency.

Economic System Components

Myanmar's 2008 Constitution states that the country practices a free market economic system. However, Myanmar's economy can be understood as divided into three parts: state-owned enterprises, private businesses, and military-owned businesses. Businesses generating significant foreign income like teak, gems, oil, and natural gas are mainly operated by military-affiliated companies.

Investment Considerations

Key Factors for Investors

Currently, investors consider four main factors when thinking about investing in Myanmar:

  1. Political system stability
  2. Presence of armed conflicts and battles
  3. Myanmar government's economic policies and rule of law
  4. Existence of promising markets

Investment Opportunities

Despite these challenges, Myanmar still has potential. Myanmar has extensive land, presenting good agricultural opportunities. Another point is that with a large young workforce, labor-intensive manufacturing can be viable. Additionally, Myanmar welcomes technology-based startup businesses. Due to infrastructure needs, infrastructure construction projects are also considerable for investors. Moreover, logistics businesses are suitable for countries like Myanmar. There is still a housing demand for urban residents, which could create opportunities for housing development projects.

Conclusion

This once-prominent Southeast Asian nation, despite its weaknesses, continues to hope for foreign investors.

Han Thit Eain (Y3A)

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