Tuesday, 21 August 2012

On foreign investment and economic change...

A series of articles have recently come out commenting on foreign investment and economic change (real and potential):

The Wall Street Journal, "Myanmar’s Growing, but Has a Long Way to Go," 20 August, 2012
  • Myanmar’s economy will grow by about 6.0% in 2012 and 6.3% in 2013
  • Myanmar could grow at 7%-8% per year for a decade or more
  • it could take years if not decades for it to start catching up to many of its regional peers
  • Only about 26% of Myanmar’s population had access to electricity in 2011
  • Only 1.26 people out of every 100 in Myanmar have fixed telephone lines
  • Agriculture accounted for 35% of Myanmar’s gross domestic product in 1965; in 2010, it was 36%
  • Myanmar's per capita income in 1960 was about $670, more than three times that of Indonesia and more than twice that of Thailand. By 2010 it had the lowest GDP per capita in Southeast Asia, at about $1,300 on a purchasing power parity basis.
Asia Times Online, "Rocky road to World Bank re-engagement," 22 August, 2012
At the beginning of August, the World Bank, along with the Asian Development Bank, reopened offices in Yangon... This marks the first formal engagement between the World Bank and Myanmar... in 25 years, as well as the first ever entry of the International Finance Corporation (IFC), the World Bank Group's private-sector arm.... But the move comes following urging by local and international NGOs and amidst ongoing complaints that the bank has not engaged in adequate consultation with local communities... To date, local organizations and communities have felt the World Bank's approach is non-inclusive, sparse on details, lacks transparency and, most worrisome, does not solicit input from the organizations and communities most affected by conflict and development to inform their decision-making process... Perhaps the most contentious section of the ISN will be the bank's plan to "support the peace process in border areas through community-driven development programs to promote the recovery of conflict-affected communities... While a focus on these communities is undeniably critical, their engagement is also the most complicated. It is here that locals are most marginalized from the reforms process in Myanmar, most alienated from the state and most suspicious of "development", often seeing such projects as thinly veiled attempts to take over their resource-rich lands.
Voice of America, "Economists Warn Burma Against Breaks For Foreign Investors," 21 August, 2012
Burma is drafting a foreign investment law to usher in a flood of foreign capital aimed at helping the country emerge from decades of poverty and isolation. But, economists warn the law, as drafted, has problems. Burma’s reformist government hopes the new law will diversify and increase foreign investment, partly by offering several years tax-free. But economists including Turnell say a tax holiday is an unnatural competitive advantage over local entrepreneurs.... Economists say one of the bigger challenges for investors in Burma is getting access to credit to build a business. Some farmers turn to loan sharks, paying as much as 10 per cent a month, and falling into deep debt.
Forbes, "Myanmar Opens Up, Slowly," 21 August, 2012
For U.S. and Asian companies, Myanmar is still in its “look-see” phase. Some, like Visa, are now dipping in, watching carefully to see if and how the nation unfolds its authoritarian grip.

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