Myanmar knows it needs to modernize, but it’s not sure where to start

Myanmar’s government will unveil a slew of new reforms to donor countries and international organizations this weekend, aiming to consolidate achievements since the end of military rule in 2011 but also quickly improve the lives of its citizens.

In opening remarks to donors on Saturday, President Thein Sein said the government wanted “a modern, industrialized country” but also stressed the need to develop the agricultural sector and narrow development gaps between the regions.

He told the donors the government wanted their help to raise living standards and skills of its people.

“This will also help us undertake political reforms that are aimed at transforming the country into a modern, developed democracy,” he said.

A wide-ranging “Framework for Economic and Social Reforms” seen by Reuters set out broad initiatives to achieve those goals by 2030 plus more immediate priorities for the next three years.

Admitting Myanmar was “way behind neighboring countries”, it touches upon the liberalization of trade and investment, health and education, transparency and infrastructure.

Thein Sein, himself a former junta general, has already pushed through far-reaching reforms since taking office in March 2011 at the head of a quasi-civilian government.

He has introduced a market-oriented exchange rate, freed hundreds of political prisoners and agreed ceasefires with most of the ethnic rebel groups that have fought for decades for autonomy.

In his speech he said peace and stability went hand in hand with socio-economic development.

“We will start political dialogue with all 10 major ethnic armed groups that have concluded ceasefire agreements with the government in the near future,” he said.

He invited rebels in Kachin state who have not yet joined the process to take part in peace talks.

Late on Friday he issued a ceasefire order in Kachin state, where tens of thousands of people have been displaced in 20 months of fighting, although rebel leaders would not immediately commit to the truce, suspicious of the government’s motives.

The army’s continued attacks in the state have raised doubts about his control over the military and even led some to question his sincerity about the reform process in general.

Encourage investment

Western governments have dropped or eased sanctions imposed on the former junta in recognition of Thein Sein’s reforms, and international firms are keen to move into a country with vast resources, located between China and India and part of a vibrant Southeast Asia heading for closer economic union in 2015.

Improving the environment for foreign investment is a central aim of the latest proposals.

The unification of exchange rates, already undertaken by the government, will be bolstered by further liberalization efforts, such as removing all exchange and non-tariff restrictions on imports “as a matter of urgency”.

The government says it will give priority to a new central bank law that will grant it operational autonomy.

A new foreign investment law was passed at the end of 2012 but left many questions open about how it would work.

“Feedback from the business community suggests that it is particularly important that the law and procedures are specific as to which sectors are restricted with respect to foreign investment and does not allow for discretion with respect to implementation,” the reform document said.

Further efforts at transparency will be made in the natural resources sector. The government will disclose the revenue it gets from oil, gas and mining assets and companies must publish what they pay to the state.

In the telecoms sector, the government will aim for an 80 percent penetration rate for mobile phones by 2015. The rate in 2011 was less than 3 percent.

The tourism industry, which requires “immediate adjustments”, will receive a boost from looser visa rules, modeled on those of successful holiday destinations such as Thailand.

Fiscal proposals include raising the threshold for income tax and introducing a value-added tax, and the government will look at how it can make the national budget more transparent.

As one of the “quick wins” to help ordinary people, the government will improve public transport in the commercial capital, Yangon, perhaps by lifting restrictions on motorcycles, and banks will be able to start offering mortgage financing.

Additional reporting by Aung Hla Tun in Yangon; Writing by Paul Carsten; Editing by Alan Raybould and Daniel Magnowski. Copyright (2013) Thomson Reuters. Click for restrictions.