MYANMAR - What do we do now ?

Does anyone remember the song by ‘The Zombies’ in their album ‘Odessey’ which goes, ‘Our lives are shaped by what we love ‘? There is also a quote by Karl Menninger, the famous American Psychiatrist ‘Our lives are shaped by those who love us and those who refuse to love us’. What we say, sing or write so much depends on what we feel at a particular juncture or in a particular situation of our lives. What I am feeling now is well summed up in a neat essay by the Oxford Indian essayist Pico Iyer. In his essay ‘What do we do now’, he writes and I quote. ‘Our lives are shaped by unexpectedness’. So true for the year 2016, England leaving the European Union, the refugee crisis in Syria, Trump becoming the US President, unabated terrorist bombings in the world and India declaring more than 85 percent of its currency nullified. These were just some of the unexpected happenings in the topsy-turvy year. That was for the world, what about the country that I have adopted or rather that which has adopted me since the last 8 years, Myanmar. The title of this essay is the same as Pico Iyer’s ‘What do we do now’, only in the Myanmar perspective.

The much awaited moment for generations of Myanmar came actually in 2015 when the ‘Daughter of the Nation’, Daw Aung San Su Kyi came to power with a majority so overwhelming that it totally derailed the dreams of the former regime, who had expected a loss but not to the extent of getting on the verge of being wiped out of country’s political scene. Thanks to the newly drafted constitution which allows the military to be in-charge of defense and home affairs, the former regime in some way, still calls the shots in the country administration and also since Daw Su Kyi cannot occupy the highest chair of the country and is deprived of the ‘first citizen’ status. The new constitution was drafted keeping this eventuality in mind and it has worked. That is what foresight is and that’s what a good administration does, because whatever the country feels emotionally, it is the military (and in some way the former regime), which is best suited to handle the defense and the home needs of the country considering the vast amount of administrative, geographical and people knowledge they have garnered ever since independence.

All written above is just to sum up the country’s political scene which does not form the core of what I want to express. I am interested in the resultant business climate of the country. People, let us please understand, a large country never prospers by trading business alone. You need agriculture, manufacturing, services and tourism, all of these or at least some of each or in the worst case two of the four. Agriculture was not too bad till last year but was heavily dependent on Teak, Rice and Pulses exports all of which are dead. Teak log export is banned, rice prices are not conducive for exports and pulses exports face a total washout because of the bumper crop in India, which imports 80 percent of Myanmar’s produce. Tourism is expanding but has started to peak out, moreover a country of 55 million cannot survive on the tourism industry even since it has a dearth of quality tourism Infrastructure and connectivity. Service industry in Myanmar will not take shape for at least the next decade or more since the country has absolutely little or no human resource to feed the service industry, add to that the language barrier. That leaves us with the only ray of hope, manufacturing.

I have always felt and said, Manufacturing is not a ray of hope, it is all the sunlight in which Myanmar can bask. Look at it, Myanmar has a big Geography which is absolutely essential for a manufacturing country, a large young population (even though unskilled) which can act as a huge work force, enough natural resources (water, natural gas, biofuels, coal) and a virgin landscape where no manufacturing exists so even a bottle cap (which is a cottage industry product in India and China) is imported in Myanmar. Myanmar has vast tracts of land near and around Yangon which can be served by the port and also near the borders with India, China and Thailand, from where the raw material (if not local) can be imported through the thriving land border trade. The availability of bio fuels is so huge that most of them are available free of cost, so individual power generation is very economical. The labor is cheap, very cheap and available in plenty. All in all, great qualities to turn a manufacturer.

So what is holding Myanmar from becoming a manufacturer? As Henry Ford had once said, “There is no big problem, there are just a lot of small problems” and that is exactly what the scene is in Myanmar. First, the import duties and allied taxes are woefully low. Consider a product ‘glass bottle’. The customs duty and taxes in India are 30%, those in Myanmar 7%. On LED televisions, 27% in Thailand, 10% in Myanmar, moreover you can get away without paying even that much when you import through the border. Why will anyone want to invest millions and manufacture locally when the same can be imported at such low costs.

Second problem is the availability of raw material. Consider the garment industry which has received so much sops from the US and the UK governments. Everyone made a bee line to setup garment manufacturing units without getting into the logistics of raw material. Cloth, Yarn, buttons, even the smallest components of garments are not made in Myanmar. You import, pay freight and duties and thus increase financial and time costs of the end product. For an end product manufacturer to succeed, at least the basic raw materials have to be manufactured first. Such is the condition of the Garment manufacturers that some cannot even afford to pay the minimum wages to the labor.

Third, availability of land and finance. No foreign individual or company can buy land in Myanmar. They can however take land on long lease. The problem is no private party wants to commit land for long lease and getting land from the Government is more difficult than climbing Mt. Everest. Local banks do not do project financing and foreign banks are not allowed to do commercial business. Getting local partners is the only way out to get land but they do not want to invest in manufacturing and are very happy and content traders. Other than these, there are so many other irritants for manufacturing like lack of insurance facilities, bureaucratic red tape, infrastructure, permissions, licenses and many other. The laws of Myanmar are the biggest hurdle of the lot, so much so that each law has several shades of grey and no associated rules and hence are always subject to interpretation, by the law makers, the enforcers, the experts as well as those practicing.

The price of Myanmar currency has risen as much as 60% in the last few months with ever increasing imports, no new exports and thus the trade deficit has had a multiplier effect. The new Government, I believe, are trying their best to bring decorum to the never ending chaos but the question is, are they experienced enough? The people of Myanmar (God bless them) have brought this Government with the best intentions but I fear and as Dr. William Grant said in Jurassic Park III, “Some of the worst things in life have been done with the best intentions“. No wonder then, our lives in Myanmar are being shaped by unexpectedness. The only positive unexpectedness that we await is that there will be SOMEONE who can really show Myanmar, WHAT TO DO NOW.