ASEAN to Myanmar: Help will always be given to those who ask for it — Chayut Setboonsarng
AUG 7 — Business delegations, state visits, and investors are descending on the former pariah state searching for new opportunities in Myanmar’s blue ocean of industries.
However, experts consistently caution that the country’s basic infrastructure is simply insufficient to absorb foreign direct investment (FDI). Rudimentary financial and political institutions are being built: civil servants are learning parliamentary procedures, while economists are being trained to manage the economy as Myanmar begins its modernisation.
It has political will and natural endowments to make this successful, but it would be remiss to overlook its highly capable and capital-rich ASEAN neighbours that have vast experience in economic development.
Myanmar already has enduring ties with ASEAN countries and now is the time to deepen those relationships to help build institutional capacity and reap the benefits of foreign investment. Conversely, further integration will also bring strategic benefits as Naypyidaw tries to hedge its relationship with Beijing.
There is, however, some uncertainty from Myanmar’s nascent industries, businesses, and SMEs. Firms are averse to competition that will be ushered in under the ASEAN Economic Community (AEC) in 2015.
For example, senior officials have indicated that Myanmar wants to develop an agribusiness industry and is not in a hurry to industrialise. However, fear of cheap agricultural products from Thailand could marginalise the domestic industry.
These are legitimate concerns, but examination of the ASEAN Economic Community will show that beggar-thy-neighbour policies are far from the spirit of the ASEAN.
While many countries had trade embargos against Myanmar, ASEAN member states did not ostracise Naypyidaw. Likewise, the AEC will continue to be inclusive and ensure equitable economic growth.
The AEC Blueprint, since its inception, has taken into consideration the needs of ASEAN’s lesser developed countries and provides provisions in an ASEAN-X framework that allows Cambodia, Laos, Myanmar, and Vietnam (CLMV) to liberalise at a pace that would not interfere with development.
Myanmar should look to its ASEAN neighbours and the Secretariat as collaborators in policy formulation and basic infrastructure development. The ASEAN-5 share similar histories of attracting and managing FDI for long term growth.
Take, for example, Thailand’s development of its 140km eastern seaboard — the infrastructure between Bangkok and Pattaya that enabled a robust manufacturing base of Japanese autos and eventually the core the nation’s export industry.
Or Malaysia’s ability to attract Intel’s first overseas office, and later AMD, Motorola, and Bosch in the Bayan Lepas Free Industrial Zone in Penang.
Or the transformation of a sleepy harbour city of Batam, Indonesia into a business and industrial centre. There is a vast pool of knowledge and experience in building industries that is not beyond the reach of Naypyidaw.
To some extent, collaboration has already taken place in the form of Track 1.5 diplomatic engagements. Track 1.5 refers to a process that convenes members of government, civil societies, scholars, and businesses in semi-formal capacities to discuss the pertinent issues.
Within these forums, an investor could raise a policy issue in a specific industry that officials can take into consideration, study, and rectify. Myanmar can increase co-operation with former bureaucrats to assist with macroeconomic and monetary policy design.
In building basic industries, co-operation with seasoned businesses can accelerate the process. This, too, has already materialised in a partnership in the establishment of an special economic zone in port city of Dawei with the Italian-Thai Development construction company.
The Thai hospital group, Dusit Medical Services, has plans to invest in Myanmar, which would help address the country’s dire need for quality medical service. There is also discussion between the central bank of Myanmar with Malaysia’s top two banks, Maybank and CIMB Group, in improving financial services.
Another area of massive potential is the tourism industry of which Amazing Thailand, Malaysia Truly Asia, Wonderful Indonesia have a wealth of knowledge in attracting visitors. An array of other industries and policy areas such as plantation, public health, telecommunications, project tendering, agribusiness, and education all have ingenious ASEAN expertise.
The opening of Myanmar comes at the time of Western lethargy, but considerable upswing in Southeast Asia. Indonesia recently pledged a US$1 billion (RM3.1 billion) loan to the IMF, while Malaysia’s government-linked energy Petronas is making a US$5 billion acquisition in Canada, and Thailand’s CP Group is looking to make deals with US-based Smithfield Foods and the French retailer, Carrefour.
If ASEAN companies are ready to export their capabilities to the West, surely, Myanmar stands to gain technology transfer and best practices through regional partnerships. It does not need to rush reform its economy is not ready for; the investors are not going anywhere. Patience, consultations, and building trust should be priorities.
* Chayut Setboonsarng is an analyst with CIMB Asean Research Institute.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.