Despite an influx of foreign investment and large resource base, Burma’s exponential growth in gross domestic product (GDP) could be held back by inadequate basic infrastructure and a lack of skilled workers, says a Rangoon-based business and market entry adviser.
Jean-Pierre Verbiest, an economic and finance expert at West Indochina, said Burma, officially known as Myanmar, is still in the early stages of developing its independent power producer policy framework and creating energy regulators.
According to the International Monetary Fund, World Bank and Asian Development Bank, the problem could improve in two to three years, he told the CLSA Asean Forum 2014.
“The constraints to Burmese growth are a lack of necessary infrastructure, especially in the energy sector, and skilled workers,” he said.
“The difficulty in finding skilled and manager-level workers in Burma is because there are not that many of them. However, Burma still has one of the lowest wage costs, which is ideal for labour-intensive industries.”
According to the Japan External Trade Organisation, Japanese investors have expressed interest in establishing satellite factories for labour-intensive industries to supply raw materials to Thailand.
That is likely to happen once the Eastern and Southern Economic corridors that link the main production hubs in Thailand with Burma are completed, said Setsuo Iuchi, Jetro’s president and chief representative for ASEAN and South Asia.
According to West Indochina, Burma’s economy grew by about 5 percent in the 10 years prior to reform. In 2011, when reform began, gross domestic product grew by 7-8 percent; last year it rose by 7.5 percent.
“Its 2014, GDP is set to grow by about 9 percent and will continue to be about 8-9 percent for the next 20-30 years due to the inflow of foreign investment, especially in the oil and gas sector, as new projects continue to come online,” said Mr Verbiest.
Similarly, the telecommunications sector will attract a lot of investment in the next 18 months as the country aims to have 80 percent mobile phone coverage.
“Burma is starting its development when technology is cheap and widely available, so it could develop slightly faster than Vietnam did in the ’90s,” said Luc de Waegh, founder and managing partner of West Indochina.
Other than oil and gas and telecoms, its growth areas are consumer goods, packaging, market research and law.
In the tourism sector, the number of visitors is likely to reach 10 million per year in the next 10 years, up from 2 million now.
This article was originally published in the Bangkok Post on 10 May 2014.