Oct 22, 2012

Thailand - Welcoming Myanmar out of the darkness

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At present, for Thailand and its Asean counterparts, there is much to be happy about. The countries have managed to buck the economic woes from the West.

In addition, Asean has also seen a US re-engagement that will contribute to the balance of power, the upcoming Asean Economic Community in 2015, and the latest and probably foremost development, Myanmar on the rise.

Since the Myanmar elections of 2010, the world has been taken by surprise. Presently, the transition in Myanmar look promising. The old regime itself has put great efforts into transforming Myanmar. The democratisation process began at the same time as the Arab Spring was rampant in the Middle East. The release of Aung San Suu Kyi and political prisoners and the drafting of the highly anticipated foreign investment bill are positive developments that bode well for Myanmar and the region. Moreover, foreign observers were elated by the result of the by-elections in April 2012 which gave the National League for Democracy (NLD), the main opposition party, 43 out of 44 representative seats for which they contested. Albeit not adequate to give the NLD a parliamentary majority, the election outcome reflects a gradual shift in power from a cadre of military elites to the people.

However, it is less important who is holding power than the apparent concerted efforts of two political figures. U Thein Sein and Mrs Suu Kyi, the leaders of the government and the opposition, who are working in tandem to restore the country's position as one of the region's wealthiest countries and the world's largest rice exporter that lasted up until the 1960s.

Mrs Suu Kyi, who advocated that the West should impose further economic sanctions on Myanmar, recently has shown a more compromising stance. Mrs Suu Kyi's overseas trips have lobbied for the easing of sanctions. Concurrently, President Thein Sen has also exhibited seriousness in reconciling with minority groups and in the military transitioning to full democracy; the Myanmar Times reported that since coming to office in 2011 the government has reached ceasefire agreements with 10 of 11 non-state armed groups. The government has also relaxed control of the press by ending pre-publication scrutiny.

This author had a chance to converse with the locals. It was rather paradoxical but optimistic in the sense that the reforms are being implemented and ubiquitous. One local expressed his admiration for both the reformist president and the resolute opposition leader for their omnipresent efforts. This anomaly is praiseworthy especially if compared with our situation at home where compromise is seemingly remote.

For Thailand, it is imperative to urge the public to recognise the rise of Myanmar. The direct beneficiary of Myanmar's ascent is none other than Thailand, provided that it engages and demonstrates to Myanmar that it is in for long-term mutual benefits, not exploitative lopsided gains. Myanmar has demographic and geopolitical significance for Thailand. Its geography is logistically and strategically important as it is the region's direct gateway to the Indian Ocean. This allows maritime trade, including oil from the Middle East, to bypass the congested Malacca Straits, thereby reducing hefty amounts of time and cost.

That the Myanmar authorities made the decision to reform the country and open its borders means a new market opportunity of 60 million people for Thai businesses; regardless of Myanmar's natural abundance and potential economic growth, which makes the opportunity even more eye-catching. The value of Thai investments, accounting for 23.8% of Myanmar's total foreign investments, is second only to that of China. Thai merchandise is also well received by Myanmar consumers; the locals generally prefer Thai products, deemed superior to Chinese ones.

So far Thailand has been blessed with Myanmar consumers' loyalty. This is a soft power advantage on which Thai policymakers and the private sector must continue to build for Thailand's economic interests. In the near future, certainly most of the sanctions will be lifted; Myanmar's rapid growth will inevitably spill over to its immediate neighbour. Up until now Thailand has had luck in terms of its vast economic presence in Myanmar. Since the coup in 1988, continuing pressure from Washington has forced Western and Japanese enterprises to limit their operations in Myanmar; foreign development aid was also halted. Thailand, however, responded cleverly. Then-army chief General Chavalit Yongchaiyudh espoused constructive engagement toward Myanmar. Furthermore, from 1997, Thailand has pursued Asean's principle of flexible engagement with Myanmar, which has helped improve the relationship.

Yet, from 2012 on, foreign competition for economic influence in Myanmar will only intensify; a few years back Thailand was the largest investor in Myanmar by investment volume. Now it has lost that title to China. It is, thus, in Thailand's interests to ramp up its engagement in Myanmar amid the rising number of players.

So what should be done on Thailand's side? As a result of imperialism and hardline pressure from the West, Myanmar has developed a strong distrust of foreigners. Thailand must therefore display its commitments in development assistance to Myanmar. In comparison to wealthy donors like China and Japan, Thailand is marginal in terms of financial aid. However, with our proximity in cultures and in distance, Thailand can conveniently offer assistance in capacity development and technical knowledge that are more crucial. That Myanmar isolated itself for over half a century implies that at the outset its institutions will likely experience a shortage of technical knowledge and well-functioning bodies to run public affairs. Notwithstanding the fact that rich countries (China, Japan, and the US) best Thailand in technical and institutional expertise, such inferiority is our advantage because Thailand's models would be more viable and logical for Myanmar to follow.

One scenario is the financial sector. For the financial industry, the introduction of complex financial instruments and highly automated systems that are beyond officers' ability to administer would only be poisonous. Even the US has failed to supervise subprime and other complex financial instruments which led to the financial meltdown in 2008. In this case, Thailand's model should be more suitable for Myanmar's financial development. Just a few decades ago, trading stocks in Thailand had to be done physically. Ex-officials and a few current officials who have been in the financial sector since its embryonic stage can extend their practical expertise and experience to institutions and businesses in Myanmar. Without being too jocular, the Stock Exchange of Thailand has already extended its influence beyond the expertise of the bourse. The Economist reported that the winning numbers for Myanmar's informal lottery are generated by the SET Index.

As this wave of opportunity lies before us, it would be a grave mistake to manoeuvre at tortoise speed while other counterparts vigorously expand their influence in Myanmar. Thailand's cultural and economic influences in Myanmar are contingent on it developing awareness of Myanmar domestically. Thailand's top priority is to publicise the significance of Thailand's neighbours, be it Myanmar or Asean partners. If the public can see the importance of their westernmost neighbour, more budgets and resources can be allocated to engaging Myanmar. And once all the efforts start bearing fruit, Myanmar's rise will be the new engine of the region and of Thailand in particular.

Sirapol Ridhiprasart

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