Sep 29, 2017, 3:13 PM ETPanel, Conference Presentation

Open for Business: Myanmar's Great Comeback

The panel focused on Myanmar's economic trajectory, excluding the Rohingya crisis due to the technocratic nature of the panelists.
The moderator outlined a structure to discuss the transition from the previous regime, current government priorities, investment opportunities, and necessary investor strategies.
Myanmar is described as having 53 million people, a median age in the 20s, and a 90% mobile phone penetration rate.
The session was framed to reveal actionable investment opportunities only after establishing the macroeconomic and political context.

Myanmar recorded a GDP growth rate of 6.9% for the current year, estimated by the World Bank, making it the second-fastest growing economy in Asia after Cambodia.
The new NLD government successfully reduced the budget deficit by half in its first year to address chronic macroeconomic instability.
Inflation was reduced from a peak of 16% just prior to the new government's take office to approximately 7%.
The government has eliminated the reliance on the central bank to finance recurrent expenditure, with a phased target to reach zero reliance by the following fiscal year.
The first competitive government bond tender occurred in July of the previous year, yielding between 7% and 9.5% for investors.
A roadmap is in place to gradually reduce central bank financing of the deficit from 40% in the current financial year to 20% the next, and zero thereafter.
Panelists noted that the necessary fiscal consolidation caused a temporary slowdown in growth, described as a "sugar rush" correction following a period of unsustainable spending under the previous regime.
Capital expenditure has historically been trending downward since the construction of the new capital and requires significant replenishment through concessional financing.

Business leader Serge Poon projects a highly promising nine-year horizon, based on the assumption that the NLD will secure re-election in 2020 with no strong opposition.
State Counsellor Aung San Suu Kyi has personally assumed responsibility for the economy, a move panelists viewed as a significant positive signal for accountability.
Azeem (Ayah Bank) expressed optimism regarding the "democracy dividend," noting that the initial year was spent resetting foundational economic structures rather than immediate growth stimulation.
Panelists identified execution capacity at the bureaucratic level as a primary deficiency, where policy clarity exists but implementation often falls short.
The government is currently working to dismantle a "vast, bureaucratic, hierarchical, rigid structure" inherited from the previous 60 years of dirigiste economic thinking.

Azeem proposed a multiplier effect of 2.6x for the financial services sector, suggesting that $1 billion invested in banking capital formation could generate $3 billion in GDP growth annually.
Serge Poon advocated for a simplified economic headline of "2 million jobs," arguing this would necessitate labor-intensive manufacturing (e.g., 1,000 factories employing 2,000 workers each).
The panelists recommended prioritizing labor-intensive manufacturing over high-tech, capital-heavy FDI projects to maximize employment and immediate economic impact.
Sean Turnell emphasized the need for "freeing things up" through deregulation and red tape reduction to unlock the private sector's potential beyond just capital injection.
Specific reforms mentioned include a new Company Law and an attractive Investment Law offering certainty on land rights and tax concessions.

Agriculture: Identified as a massive opportunity due to Myanmar's second-largest global access to fresh water, positioning it to supply high-quality food to China and India.
Tourism: Projected to grow exponentially from current levels (approx. 1 million visitors) to compete with Thailand (28 million) and Cambodia (5 million), with a focus on eco-friendly expansion in the Mergui Archipelago.
Infrastructure: Estimated to require $10–20 billion in investment over the next 5–10 years, with a shift toward Public-Private Partnerships (PPPs) moving away from state-only execution.
Human Capital: The country boasts a 93% literacy rate and a 27-year median age, with a demonstrated "thirst for learning" among the workforce.
Diaspora Engagement: Azeem noted the existence of a skilled Burmese diaspora ("repsats"), with 198 already recruited by his organization, suggesting a potential pool of thousands more willing to return.

Stock Market: The Yangon Stock Exchange launched recently with the first listed company (FMI) as a successor to a 25-year over-the-counter market; liquidity remains low due to the lack of a new Companies Act needed to allow foreign equity investment.
Interest Rate Caps: Long-standing interest rate caps are viewed as obsolete obstacles to financial market liberalization, though removal must be managed carefully to prevent bank balance sheet instability.
Microfinance: The sector holds a gap where 90% of the population remains unbanked, with microfinance serving 700,000 people out of a 51.3 million population; 153 licenses exist but few are operational.
Environmental Protection: A master plan for the Mergui Archipelago tourism zone is being implemented to designate "no-touch" and "limited" zones to prevent coral degradation and environmental collapse.
Regulatory Framework: A new financial sector reform roadmap is being finalized to gradually liberalize interest rates and fully develop the bond market.