Inadequate infrastructure, investment laws,
other problems stand in the way
As
Burma strives to raise the living standards of its people, two key engines of
economic growth—foreign investment and exports—remain hampered by a host of
obstacles despite the recent suspension of Western sanctions on the
long-isolated country.
Although
interest in Burma’s energy sector and extractive industries such as mining is
strong, efforts to boost income from other areas that depend heavily on access
to foreign markets, such as agriculture and manufacturing, are still struggling
due to internal and external factors.
According
to the Ministry of Commerce, representatives from 29 countries visited Burma in
the fiscal year that ended on March 31, but few brought deals that would do
much to lift the country out of its decades of poverty.
“We
have met many foreign businessmen and diplomats, but not much has come of it,”
said Commerce Minister Win Myint in Naypyidaw on May 25. “In my opinion, we
need more discussions among ourselves before we meet with them. There are many
things we need to prepare.”
While
Burma’s own shortcomings—particularly its lack of infrastructure and investment
laws—are a significant hurdle to growth, the protectionist practices of its
trading partners are also an impediment.
“We
have tried to increase our export volume, but that isn’t good enough,” said Win
Myint. “We need to improve our quality and add value if we want to profit more
from trade, but that isn’t easy when other countries impose restrictions on
us.”
Citing
the example of Burma’s trade difficulties with its neighbors, Win Myint said
the country faces a variety of barriers to its exports.
“China
doesn’t buy Myanmar rice in accordance with the rules of the World Trade
Organization (WTO),” he said, noting that Burmese rice does poorly on
international markets because of its low quality.
“We
also export salt to Bangladesh, but they impose high taxes on our product,”
said Win Myint, adding that the two countries are in talks to address the
issue.
Other
observers say that some of Burma’s trading partners actively discourage
attempts to produce value-added products.
“We
would like to export peanut oil to China, but China will only import the
peanuts, which they buy for 4,200 kyat per viss [about US $3.10 per kilogram]
and sell as oil for 44.8 yuan [$7] per kilo,” said Khin Soe, the owner of the
Ayeyarwaddy Peanut Oil Trading Company.
Even
the recent suspension of most sanctions by the West has not gone far enough to
create a level playing field for Burma’s exports, say business leaders in the
country.
“Getting
back on the GSP list is not as important as becoming part of the Everything But
Arms (EBA) scheme,” said Khine Khine Nwe, the joint secretary-general of the
Union of Myanmar Federation of Chambers of Commerce and Industry.
The
GSP, or Generalized System of Preferences, is a formal system of exemption from
the more general rules of the WTO, aimed at opening markets to products from developing
countries.
Burma
was withdrawn from the GSP list in 1997 in response to findings by the
International Labor Organization (ILO) of widespread forced labor in the
country. The European Union, which suspended its sanctions on Burma in April,
said it would support restoring the country’s GSP status once the ILO has
reassessed the situation there.
The
EBA, which is part of the EU’s GSP scheme, was introduced in 2001 to further
open European markets to all products, with the exception of armaments, from
the world’s Least Developed Countries (LDCs).
“Our
neighbors, such as Bangladesh, Laos and Cambodia, are already included in the
EBA program. Myanmar is also an LDC, so it should be given EBA status, too. If
we only get GSP, how can we compete?” asked Khine Khine Nwe.
The
Irrawaddy
Business & Investment Opportunities
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