Myanmar Wants to Be the Next Tiger
Jim Rogers is bullish on Myanmar. The Singapore-based investor, chairman of Rogers Holdings, last month compared the Southeast Asian country today with China in 1979, just as Deng Xiaoping was launching the economic reforms that helped transform China into the world’s second-largest economy. With Myanmar’s authoritarian government finally starting on the road of reform, Rogers said, there’s no end to the possibilities for the country’s economy. “It’s right between China and India, 60 million people, massive natural resources, agriculture,” Rogers said. “You could feed much of Asia, they have metals, they have energy, they have everything.”
That kind of enthusiasm is helping make Yangon, Myanmar’s former capital and largest city, an unlikely hot spot for travelers. With so many business people and tourists suddenly flocking to Myanmar, the city’s underdeveloped hotel industry is feeling the strain. Rooms can cost up to $400 a night, Tony Picon, associated director of property broker Colliers International Thailand, told Bloomberg on March 28.
Sunday will be a major test in Myanmar’s nascent rise from the economic and political obscurity it has suffered through for the past half century. On April 1, the country will conduct parliamentary elections, with about 10 percent of the lower house’s seats up for grabs and a few upper house seats, too. The election will be the first since 1990 that will have the participation of the country’s major opposition party, the National League for Democracy, led by Nobel Peace Prize laureate Aung Sang Suu Kyi. Her party won the elections in 1990, only to have the country’s junta invalidate the vote and put Suu Kyi under house arrest.
Also on April 1, the government will ease currency restrictions, allowing the currency, the kyat, to fluctuate under a managed float exchange rate, the official New Light of Myanmar newspaper reported on March 28.
A successful election would likely provide optimists like Rogers with even more reason to favor Myanmar. “If the polltical and economic reform process continues to move forward after the elections on April 1st, then the Myanmar economy could rapidly become Asia’s newest economic Tiger,” Rajiv Biswas, Asia-Pacific chief economist for IHS Global Insight, wrote in a March 28 report. The country has potential “to become a hub for low-cost manufacturing,” he added.
The country’s reform comes at a time when there’s a potential opening for a low-wage Asian alternative to the region’s two giants, China and India. The Chinese economy is slowing as manufacturing costs increase and labor-intensive manufacturers feeling the pinch of higher wages look for alternative locations, such as Cambodia and Vietnam. Meanwhile, India’s coalition government is rudderless, beset by scandals and struggling to push through economic reforms such as liberalization of the country’s retail sector.
A lot therefore rides on what happens in the elections on Sunday. For the country’s economic future, the most important verdict might be made not by the voters in Myanmar but by policy makers in Washington. If the Obama administration decides the elections were reasonably fair, the U.S. might find ways to ease some of the crippling sanctions it has maintained against Myanmar for years.
“While Washington will not be able to—nor will it want to—eliminate the complex web of sanctions against Myanmar overnight, there are steps it can take to reward the government, especially if Suu Kyi characterizes the election in a positive light,” Center for Strategic & International Studies deputy director of the Southeast Asia program, Murray Hiebert, and CSIS researcher Tracy Quek wrote in a March 27 report.