[Premium] Chairman’s Note (04/2016) – Myanmar: Our Reservations and Perceived Opportunities after 100 Days

July 2016 |
A number of you have asked our views about Myanmar and the new government’s priorities, especially on economic investment. As you may remember, the SIIA was appointed an adviser by the preceding government and we also hosted a closed door discussion with the NLD shortly before their election victory.

We went up to Nay Pyi Taw and then Yangon 7-9 July and had good meetings with key bureaucrats (Director General or higher) in the Ministry of Finance & Planning, Ministry of Foreign Affairs, and Myanmar Investment Committee (MIC) as well as two senior leaders of the NLD. We have written a comment arguing that the majority perception by foreign media is incorrect in saying that little or nothing has been done. Our comment suggests that the new government’s priorities are clear but that these do not match what the foreigners hopes to see (e.g. Rohingya issue); this explains the external criticism. A soft copy of our comment, published in Singapore as well as a number of regional media, is attached for your convenience.

We stand by our public comments and believe that an engage-and-see attitude is warranted. We do however have reservations that we do not want to voice in our public comment as this may negatively impact our access to key decision makers in the new government. We are therefore writing to specifically share our reservations on a confidential basis with you as our member and friend.

Please note that, notwithstanding these concerns, we remain generally positive on developments in Myanmar. We also see, as my note explains, that more opportunities should present themselves to Singaporean and Singapore-based companies in the coming six to twelve months.

Reservations

1. Concentration of Decision Making: All sources point to the concentration of authority and decision making by the Lady; these range from the peace process and donor coordination, to economic policies and decisions. This is perhaps to be expected at this stage and given the common reading of the Lady’s character. Over concentration can however lead to bottle-necks and should be monitored in the coming months. Another issue is the high degree of access that certain economic advisors have to the Lady. There is some sense of tension between the long serving advisors and assistants with the newer entrants especially those who are non-Myanmar nationals. The MIC which is in charge of approving foreign investments has also been recently placed under the jurisdiction of the Ministry of Planning and Finance which may bring questions about the transparency of the approval process in the future.

2. Instincts of Socialism: Some feedback suggests that the Lady and her NLD colleagues do not fundamentally understand and accept modern market theories. There are suggestions that their instincts are instead shaped by the kind of Fabian Socialism that was prevalent in the 1950s and 1960s, both within the country and among Oxford intellectuals (somewhat like early PAP Singapore). One example cited was the decision to merge the Ministries of Finance and Planning – this key ministry combines functions of planning for economic development with a state-led imperative, rather than reliance on market forces.

3. Experience, Expertise and Capacity: The new cabinet has generally been applauded for appointing people who are of good reputation, despite getting off to a rocky start with two ministers being accused of having fake degrees. Indeed, the Parliament too has been screened and disciplined to ward off dangers of corruption. The NLD has also streamlined ministries. However, there are questions about the experience, expertise and capacity of the ministers. Take for example the new and relatively untested Minister for Planning and Finance, U Kyaw Win. He will have to helm a ministry brought together from two different parts, chair the MIC and the new Economics Committee.

4. Question of Bureaucrats: Given the above there are questions about how much the NLD government can and will rely on bureaucrats from the old administration. There is recognition that they have relatively more experience and expertise but questions of loyalty and ideology are paramount to the new government. This is not only in the central government but in the provinces. One senior NLD leader used the analogy of whether the horse (former bureaucracy) will obey a new rider to describe the current situation. There will be a selective process and testing period of accommodation but the feedback we have received thus far has been positive. Former bureaucrats have said that they feel empowered in their new positions and are optimistic working under the new government.

Opportunities

5. Economic Committee and MIC: We were informed that a new Economic Committee has been formed and will shortly announce its broad policies. They indicate that further work and thinking will follow and have shown interest to receive outside inputs and suggestions. For the MIC equally, they are looking to revise their policies when granting business licenses and has been involved in proposing amendments to parliament regarding the upcoming Myanmar Investment Law.

6. Joint Ministerial Meeting and Next Steps: Singapore’s PM Lee Hsien Loong was the first head of government to visit Nay Pyi Taw and this is a symbol of the importance placed by both governments to deepen ties with each other, notwithstanding an initial sense that the NLD and the Lady have reservations about Singapore’s past cooperation with the military-backed government. Following up on this meeting, we expect a joint ministerial meeting to be held before the end of the year. This would provide a platform for closer engagement and the timing would allow a longer gestation for economic priorities set by the NLD government.

The SIIA is in discussion with the MIC and Ministry of Planning and Finance on ways in which we can, in some small measure, assist to give feedback and suggestions.

I sincerely hope that read together with our public comment, this confidential chairman’s note can share our perspective on Myanmar at this 100-day juncture of their transition. This was never going to be easy or smooth, in view of the frontier nature of the country and system, the rapid shift in politics and the lack of governmental experience in the NLD. However given those basics, what we returned from Myanmar with was a relative sense of confidence – certainly higher than what most foreign analysts see – and a continuing interest to engage Myanmar.

Yours sincerely,
Simon Tay