Burma requires patience

Burma requires much patience to secure its developmental future, argued Asian Development Bank Vice President, Stephen Groff, at a recent Washington seminar.

Burma requires much patience to secure its developmental future, argued Asian Development Bank Vice President, Stephen Groff, at a recent Washington seminar.

Burma's opening up over the past 18-24 months is nothing short of remarkable, emerging as it is from five decades of economic and political isolation. Its potential is great. And the government is committed to this new path.

The country has many strong points, and could be the next rising star in Asia if it can leverage its rich endowment of resources.

The country's key strengths and opportunities include: large youthful population, providing an attractive labor force for foreign investment; rich supply of natural resources and inputs for agricultural development; potential of renewable energy, notably hydro power; investment opportunities in a range of sectors, including tourism and telecommunications; and a strategic geographic location between the region's emerging giants and able to benefit from Asia's integration -- historical trade routes can be reinvigorated.

But the country is currently one of the poorest in Asia and faces many challenges. Ethnic and sectarian violence has been widely reported. Tremendous restraint has however been shown by the government compared with the severity of the past.

It also has immense shortages in human capital (education and health) and physical infrastructure for transportation, telecommunications, energy and so on. Some 75% of the population live in rural areas, mostly without electricity. Maintaining macroeconomic stability is another challenge.

Expectations management may however be the greatest challenge in Burma. The public has a great expectation that the government will deliver results and change. Foreign investors are excited by this new "last frontier". Donors and civil society are also impatient for progress on human rights and other issues.

Burma would benefit from great restraint and patience from all concerned. It is critical to get development on a sustainable path. At this stage, the country lacks most of the institutions and policies for a well-functioning market economy. The development agenda is huge.

The ADB estimates that Burma's GDP could triple by 2030, with 7/8% growth rates. This would put it in the range of Indonesia, the Philippines or Thailand today.

In short, the possibilities are great, and so are the challenges. But Burma does have a "second mover advantage". It can learn from others, and leapfrog some development hurdles.

The attractiveness of Burma's natural capital is both the country's bright spot and risk, argued WWF's Tom Dillon. All of Burma's neighbors have their eyes on its resources. If not well managed, things could deteriorate quickly.

Burma has 100 million acres of virgin forest, and forestry could become a major economic sector. But illegal logging is now underway, with exports to China, India and Malaysia. The government needs to implement responsible forestry, in contrast to Vietnam where almost all natural forests have been cut down these past two decades.

Burma also has freshwater in abundance. Hydroelectricity has the potential to service the country's vast needy population. The Burmese President has announced his intention to build dams in an ecologically responsible way, following the model of Austria and Norway. In this regards, the much-publicized cancellation of the Chinese dam project was a positive step.

Regarding education, the thirst for knowledge is palpable in Burma, according to George Washington University's Linda Yar. The country suffers from a "missing middle". It has a good elite at the top, and a civil society bubbling up from below. But there is a big gap in the "middle", the level of those that implement policy. But the Burmese education system lacks all sorts of resources.

Eco-tourism has great potential in the coastal area, and it is growing. But again, ensuring environmentally sustainable tourism will be the challenge.

One of the fundamental challenges facing Burma, like its resource-rich South East Asian neighbors, is managing its relationship with resource-hungry China. This challenge involves deep conflicts of interests.

Much of the resources lie in areas belonging to minority ethnic groups who should be included in land use planning, and should share in the benefits. But there is no history of such inclusive governance in the past. If only the elites continue to benefit there will be social unrest.

In a similar vein, natural resource infrastructure like pipelines to service China and other neighbors also passes through lands of minority tribes. Again, inclusive governance is critical.

And many anomalies from the past remain. For example, natural gas is exported to China, while most of the Burmese population does not have electricity.

In short, the challenge boils down to governance -- how the Burmese government and elite manages to work with China and other neighbors, while involving and respecting its own population. History shows that inclusive governance is no easy thing to manage, especially for people coming out of dictatorship who have experience in openness, transparency and accountability -- despite the government's commitment to the Extractive Industry Transparency Initiative.

The patience required to manage these complex issues would test the most patient of people. We can only pray for the good Burmese people.