In this webinar, Professor Turnell discussed the challenges Myanmar’s economy faces, the overall economic trajectory for the foreseeable future, lessons learnt during the NLD administration, and the broader impact of the military coup on the Myanmar people.
MYANMAR STUDIES PROGRAMME WEBINAR
Wednesday, 29 Mar 2023 – The ISEAS Myanmar Studies Programme convened a webinar under Chatham House Rule inviting Dr Sean Turnell to share his insights on the state of Myanmar’s economy since the 2021 coup. Ms Moe Thuzar, acting coordinator of the ISEAS Myanmar Studies Programme, moderated the webinar. The webinar attracted the interest of 225 attendees. The key discussion points are summarised below:
- Professor Turnell credited his colleagues for drawing up the Myanmar Economic Resilience and Reform Plan (MERRP). Dr Turnell believed that MERRP would have set Myanmar’s economy on a better course if the military coup had not occurred in 2021.
- MERRP was intended as an update to and an extension of the longer-term Myanmar Sustainable Development Plan (MSDP), and also addressed responses to COVID-19 pandemic. The COVID pandemic had presented the NLD government with the opportunity to push through ‘radical’ liberalisation reforms through the MERRP, such as public finance reforms and liberalisation of interest rates and the export sector.
- MERRP was thus a recalibration of Myanmar’s economic liberalisation plans to shift Myanmar’s economy from conflict to peace.
- In its time in office from April 2016 to January 2021, the NLD administration had eliminated money-printing as a source of funding by late 2020. In Myanmar today, three-quarters of government spending is financed by money printing.
- Additionally, the NLD administration was set to implement further banking sector reforms despite pushbacks from the banking industry.
- The NLD administration had also started testing an unconditional cash transfer system during COVID as a first step towards a nascent social security system.
- Overall, MERRP was considered a major long-term reform document. Professor Turnell acknowledged that Myanmar’s political situation was already in distress due to the 2016-2017 atrocities in Rakhine State; however, there was some optimism that Myanmar’s economic trajectory was becoming more predictable and conducive for investors.
- The present state of Myanmar’s economy, however, highlights that the root causes of the economic quagmire are political. Restrictive export/import requirements and foreign currency restrictions imposed by the State Administration Council regime point to a certain desperation, as the international responses to the 2021 coup and targeted economic sanctions have limited the regime’s revenue streams. The SAC’s current policies are the opposite of those practised by successful Asian Tiger economies. The SAC is resorting to an extractive economy for regime survival.
- Thus, proposing technical solutions for the current situation, in Dr Turnell’s view, may prove counterproductive for Myanmar’s economy.
- The NLD administration’s economic team, though small, had been efficient. They also cooperated well with Myanmar teams of the World Bank and the International Monetary Fund. This good cooperation was particularly helpful in responding to COVID-19 pandemic challenges and in improving the public finances of the Myanmar government in general.
- The team also managed to successfully renegotiate with China the Kyaukphyu Special Economic Zone project in Rakhine State. The Kyaukphyu SEZ was a key part of the China-Myanmar Economic Corridor.
- The NLD negotiated with Beijing to downsize the initial USD10.8 debt-fuelled investment to over USD1 billion, adding safeguards for environmental and social impacts. In Professor Turnell’s opinion, the Kyaukphyu project renegotiation presented a blueprint for the Global South’s relations with China and the Belt and Road Initiative.
- In the current scenario, however, a reversal of policies on big infrastructure projects such as Kyaukphyu might yet happen. A military regime with limited international backing may most likely rely more heavily on the few interlocutors with whom it still engages.
- The NLD administration’s Project Bank scheme is now in abeyance. The Project Bank was intended as a matching and coordinating mechanism for donor interest and Myanmar’s sectoral priorities, giving due consideration to the environmental and social impacts of investment projects. Ultimately, the Project Bank’s objective was to make efficient use of Myanmar’s scarce resources.
- The state of Myanmar’s economy in 2023 is thus a landscape where the basis for liberal democratic capitalism has been destroyed. Myanmar now has an economy where any actor – investors, consumers, local households – cannot realistically plan for the future. The arbitrary policymaking is a reflection of the present governing apparatus. Institutions of trust have crumbled. Therefore, any business that needs to be protected by the rule of law and formal institutions (e.g. hotels, airlines and financial institutions) faces enormous risks as Myanmar today resembles a state run by cartels in South America. Extractive industries such as logging and gas would continue and narcotics trade looked likely to run more rampant.
Professor Turnell’s overview triggered over fifty questions from the audience, seeking Professor Turnell’s further thoughts on the military’s views of NLD’s reform agenda, effectiveness of sanctions, rampant corruption in Myanmar’s economic sectors, whether foreign investments should stay or leave, specifics on BRI projects, further details of the Project Bank, whether there is a roadmap for Myanmar out of the present economic quagmire, development plans for Rakhine State, the SAC’s planned election, and the quality of data on Myanmar’s economy.