In Burma’s fraught transition to civilian rule, two of the biggest political questions have been answered. The military permitted free elections but it still won’t allow the leader of the victorious opposition, Aung San Suu Kyi, to become president. Now, with Suu Kyi’s childhood friend and political ally newly elected to that office, the new government needs to focus on the economy.
The economy is growing at near 8.5%, while foreign investment has taken off from virtually nothing in 2010 to a reported $8.1 billion in the last fiscal year. But the benefits of growth have yet to be widely felt. Corruption and cronyism are deep-rooted. Opaque state-owned and military-linked companies continue to dominate key sectors.
So far, Suu Kyi’s National League for Democracy (NLD) has been vague about its economic priorities and plans. That has to change. Expectations for the new government are running wild. While fundamental issues await attention, from uncertainty over land rights to the plunder of natural resources by the military and ethnic rebel groups, it will be important to notch a few quick wins before tackling them.
A lot can be done simply by lifting the government’s still heavy hand on the economy. Farmers are constrained in what they can grow and when, for example, while banks are limited in how much they can lend to them. The government should start planning to privatise much of the extensive state sector, even if government-owned oil and gas giants remain off-limits for now.
Government spending will be bound to a budget passed by the previous parliament. But the new government can merge ministries and shift money around to areas where it can have a more immediate impact — focusing more on preventative health care, for instance, and on primary-school education rather than on universities.
Given Burma’s location, young population and low wages, the country is perfectly positioned to develop a low-cost export industry. But if it wants to create a more productive and modern workforce, it will have to keep kids in school longer and provide better skills training for those who have already left.
The new leadership can help itself by welcoming investment and expertise from wherever it comes. In the government, Suu Kyi has said she’s open to retaining the best administrators from the previous regime, and she’d be smart to tap the talented and growing pool of returned Burmese expatriates for their expertise. In the private sector, foreign banks can help improve efficiency at their smaller Burmese counterparts, freeing up capital for small and medium-sized businesses. Suu Kyi should also think seriously about asking the US to lift remaining sanctions on Burma, clearing the way for hesitant US players to join the Japanese, Korean, Thai and Singaporean companies already in the market.
This is unquestionably Aung San Suu Kyi’s moment, whether she’s president or not. To make the most of it, she’s going to need help.
This opinion piece was written by Nisid Hajari and Michael Newman of the Bloomberg View editorial team. The views expressed here do not reflect DVB editorial policy.