Courageous Transformation for Inclusion and Integration

The 22nd World Economic Forum on East Asia was a pivotal moment for Myanmar. It was the first international gathering to be held there following a series of bold and swift reforms. After years of relative isolation, a revived peace process was underway, the foundations of an open market economy were being laid and the formerly hermetic country was keen to move fast to heal its divisions and set upon a path of inclusive growth.

For the meeting’s 900 participants – coming as they do from all regions of world, backgrounds and sectors of society – Myanmar’s opening up represented an unmissable historic opportunity to analyse and help shape the country’s reforms and reconciliation. It was also a chance to explore the ramifications of plans for wider regional economic integration in the coming years. As such, senior-level leaders from government, business and civil society came together in Nay Pyi Taw to leverage their collective creative and strategic capital to address the most pressing economic and societal challenges in new ways. They focused on opportunities to accelerate Myanmar’s growth.balanced with a significant social and inclusive development agenda to benefit all stakeholders through responsible investments. Across South East Asia, the idea of regional economic integration is gathering momentumand Myanmar is part of that process. In 2014, it will chair the Association of South East Asian Nations (ASEAN) ahead of the bloc’s plans to establish a common market and transform the strikingly diverse region of 600 million people into a cohesive economic community by 2015. Participants noted that achieving this target will require a solid commitment to improving the region’s connectivity, investing in an integrated energy agenda, securing an efficientfood supply chain and building a skilled workforce. For many, the meeting provided insight to those who see an important and evolving geopolitical and geo-economic pillar of the global economy. “I believed in ASEAN probably before ASEAN believed in itself,” said Anthony F. Fernandes, Group Chief Executive Officer, AirAsia, Malaysia; Co-Chair of the World Economic Forum on East Asia. “For me, it is the final piece of the puzzle to get Myanmar into this wonderful group of countries. It is a very exciting period for us, and a great way to reduce poverty”. Located as it is between Bangladesh, China, India, Laos and Thailand, Myanmar sits at the crossroads of a market of more than a billion people. The political spring of the past two years

represents a turning point for the region and has fuelled a rush of investors excited by the prospect of transformational change in a nation that for decades had shunned and been shunned by the West. “We are part of the global community now,” President Thein Sein declared in the closing plenary of the World Economic Forum on East Asia. “We are getting back to our rightful place.”

International businesses were there to assess the country for investment. Emerging from decades of disinvestment and isolation, the country’s infrastructure needs must be prioritized. With a predominately rural population and a threadbare electricity grid, only 13% of households have electricity. As John Rice, Vice-Chairman, GE, Hong Kong SAR, a Co-Chair of the World Economic Forum on East Asia, put it, “You don’t care if a nice new road passes by your house if you can’t even turn on the light.”

Implementing comprehensive power grids is a prerequisite for all components of development not only in Myanmar, but also across ASEAN’s emerging markets. Analysts estimate that East Asia will need US$ 750 billion a year over the next five years to meet basic infrastructure goals in transport, communications and the energy sector. Lack of infrastructure is a huge drag on growth; infrastructure improvements will benefit both individual nations and ASEAN as a whole.

These advancements will also see the emergence of a more sophisticated market as ASEAN moves beyond export-oriented growth towards increased intra-regional connectivity. With a somewhat overwhelming list of regional infrastructure needs, not everything can be built at once and choices must be made; but the burden cannot rest with government alone. What governments can do is take responsibility for ensuring political stability and regulatory clarity to create an environment conducive to investment. It is certainty, not liquidity, that is lacking. “We are not looking for a riskfree environment,” said Rice, “We are looking for stability and reasonable risk-adjusted returns.” But development is more than just economics.To improve lives from the rice paddy up, less-developed nations must target growth that is sustainable and inclusive. ASEAN is a success story in terms of economic growth. But what about its human and intellectual capital, and the numbers of local patent and PhD holders? In ASEAN, participants agreed, the emphasis should not only centre on cost, but on quality. Aung San Suu Kyi, Chairman of the National League for Democracy (NLD); Member of Parliament from Kawhmu Constituency, Myanmar, called on businesses rushing into her country to be socially responsible, to invest in the skills of young people and to ensure that their investments help eradicate corruption and reduce inequality. “We don’t want our road workers to remain at the level of road work. Give us the skills to solve our own humanitarian and development problems ourselves,” said Suu Kyi. That call struck a chord with Forum participants. In Nay Pyi Taw, they took a sober look at Myanmar’s transformation

,examining it in the context of the regional integration. As a late arrival on the globalization wave, Myanmar can learn from the experience of its neighbours, including China and India. Yet, despite its controversial past and current communal challenges, Myanmar has its own lessons to impart about reconciliation, the sequencing of reforms and the need for inclusion. Social responsibility and sustainability are part of the culture, Serge Pun, Chairman, Serge Pun & Associates (Myanmar), Myanmar, maintained.

“We have this CSR (corporate social responsibility) culture embedded in individuals and companies,” he added. Notable to all at the meeting were reforms that could well drive financial inclusion and job creation in rural areas and enhance health and education delivery. The reformist government’s priorities have been to pass legislation on labour and land rights and lift controls on the press. Two new telecom licences – due to be awarded at the end of June – should lead to the swift growth of mobile telephone service. Economic reform are just starting, with laws on financial regulation and the central bank not yet in place. “Everybody says let’s get the economy going and workers’ rights will come later,” Pun observed. “We have it the other way around. This is a new model.”

Myanmar’s arrival at the development runway may be opportune, coming more than 15 years after the Asian financial crisis revealed the perils of cronyism and corruption and five years after the global meltdown underscored the value of resilience. Times have changed. Gone are the days of fast growth without consequences. The internet, smartphones and social media have rendered command-control leadership – even in the tightest of societies – obsolete. Protecting the environment is no longer a matter only for those who can afford to be concerned. Already evident is the impact of climate change and water scarcity.

Like a new car that has to be driven carefully and fine-tuned once or twice in its first few thousand kilometres so that it eventually runs at peak performance, Myanmar could risk a crash or malfunction if it goes too fast too soon. Argued Helen E. Clark, Administrator, United Nations Development Programme (UNDP), New York, a Co-Chair of the 2013 World Economic Forum on East Asia: “For Myanmar, a lot of boats have been pushed out and are midstream. It is now a question of prioritizing and sequencing the reforms.”

Take the development of the extractive sector. While Myanmar possesses abundant natural resources that are much sought after by large economies looking for energy security, it should open up its extractive industries in a measured way that neither leaves the economy vulnerable because of a narrow base nor wreaks havoc on the environment. From the minerals and other materials that it does unearth, Myanmar should aim to gain the most value by building up the capacity to process the raw materials rather than simply exporting them. Plentiful now, these resources could run out, leaving the prosperity of future generations in jeopardy. As in many other countries that have exploited their natural wealth, vested interests could take advantage, abuse privileges and get rich quickly, leaving others to suffer the consequences or clean up. “This is an amazingly rich country with some of the poorest

people on the planet,” observed Salil Shetty, Secretary-General, Amnesty International, United Kingdom, a Member of the Global Agenda Council on the Role of Civil Society. “The rule of law is still a work in progress at best,” he said.

In the post-crisis age where resilience is the key, inclusive transformation – whether in Myanmar or any other economy in East Asia or elsewhere – is achieved through balanced development and growth, said World Economic Forum on East Asia Co-Chair John Rice, Vice-Chairman, GE, Hong Kong SAR. Myanmar will have to move forward with improving its hardware or infrastructure, as well as its software or capacity. This includes the rule of law, regulatory frameworks and education to help the country make best use of its youth dividend. The country needs to move quickly on some fronts, such as addressing extreme rural poverty by investing in agriculture to make farmers more productive and farming profitable, and to take a deliberate approach in other areas such as the development of the extractive sector. Concluded Rice: “Balance is required to make responsible, sustainable progress.”

The deliberations in Nay Pyi Taw explicitly demonstrated the commitment of all stakeholders – from Myanmar, the region and globally – to leveraging investment towards responsible and inclusive growth both in Myanmar and in ASEAN. Only by coming together and having frank discussions is it possible to build trust and an understanding of how key social and economic development challenges such as creating jobs, improving education, ensuring better healthcare and enhancing regional connectivity can be addressed.