Myanmar’s moves to relax military rule and reopen to the world are earning calls for an end to Western sanctions. While it’s true that sanctions never succeeded in dislodging the nation’s ruling junta, Myanmar may not be ready for openness. After 50 years of isolation, economic and financial institutions are stunted. Opening the doors to international trade and investment would be disastrous, and may spoil its chance of sustainable growth.
Encouraging moves like holding elections and freeing political prisoners, including opposition leader Aung San Suu Kyi, may be a genuine response to Myanmar’s deteriorating fortunes. Its 56 million people are among the world’s poorest, with a per-capita GDP of $1,400 and an average lifespan of 64 years. Yet, the country is rich in natural resources such as natural gas and timber, and offers an inexpensive labour force, with a literacy rate of 92 per cent.
Those are being exploited already, despite US and European sanctions. China and Singapore have been engaging with the junta. But, foreign trade is just $243 per capita a year, and profits are unlikely to be evenly shared. Myanmar’s corruption is on a par with Somalia and Afghanistan, according to Transparency International. Even if trade and investment benefit the average citizen, they benefit the junta more.
But, removing curbs may create a deluge. Unchecked foreign investment, especially lured by the still-high commodity prices, would overwhelm the nation’s ability to absorb efficiently or equitably. Cambodia and Russia learned how a sudden opening can worsen corruption and create destabilising price spikes, entrench the elite and hinder the emergence of a middle class. Resource-rich Mongolia is struggling with similar issues, too.
Myanmar has taken a positive step, inviting officials from the International Monetary Fund to help map out economic liberalisation. Next on the list should be the World Bank. Strengthening tax collection and the central bank are the priorities. Besides, Myanmar’s rulers have dangled openness before, only to brutally yank it back. All the more reason the country’s re-entry into the global economy should be gradual.
