Burma can benefit from a rapidly developing China

by Moe Thu
Thursday, 10 December 2009 21:56

Rangoon (Mizzima) - Burma needs to reorient its economy and business environment in order to deal with and gain from economic challenges and opportunities resulting from China’s economic boom, according to a Rangoon-based veteran economist

“Chinese firms are the nearest and are already challenging Burmese counterparts in terms of technology, human resources and financial strength,” said the economist, who avidly follows Burma’s economic development and regional factors.

He said Burma’s heavy reliance on foreign revenue from exporting resources like natural gas and luring foreign direct investment (FDI) primarily into such sectors as energy and mining is not a long-term solution to the Southeast Asian country’s economic growth.

The economist’s comments came at a seminar entitled “Rise of China and its Implications for Neighboring Countries,” which was organized by the Union of Myanmar Federation of Chambers of Commerce and Industry at its Rangoon headquarters on December 5th.

“Such economic sectors do not bring much technical knowledge and human resources into the country, and gas and minerals are not renewable resources,” the economist argued.

Revenues generated from gas sales are expected to go into development projects with human resources and infrastructure, which in turn appeal to FDI projects that bring in not just capital but technologies and other skills like business management and services, he continued.

However, he said FDI in an uncertain economic climate, as the world is experiencing these days, would enhance the exploitation of the country’s natural resources - providing for quick profits but contributing little to the domestic economy.

Citing illegal logging on the Sino-Burma border as a concrete example, the economist warned such an activity hampered the development of the country, as the government fails to collect taxes on the export of illegal logging.

Referring, however, to a new project involving natural gas sales to China, he said future earnings would likely contribute to the country’s economic performance if utilized for domestic capacity building.

According to official figures, Burma is estimated to earn about US$29 billion from gas exports over the next 30 years.

“The amount seems large, but it is not impressive when compared to one ASEAN partner, Malaysia’s, export earnings for only the year 2006 - which stood at US$161 billion,” he pointed out.

Keeping an eye on potential uses of natural gas, he also said the growing output of natural gas could abet downstream activities such as fertilizer production, power generation and chemical industry, thereby encouraging domestic industrialization.

Local industrial development is crucial in order to tap into markets with a heavy and increasing Chinese demand - such as food, raw materials and agricultural products.

“Just across the 2185-kilometer border, Burma can export such products,” the economist explained, adding that communication facilities are being provided to farmers to gain timely access to information about what Chinese markets need.

The military-friendly academic, who wished his name be omitted from this report, proposed the adoption of a policy of appropriate change in asset composition. For example, fair access to the country's natural resources, reducing procedures that encourage corruption and greater transparency. This approach, it is projected, will attract long-term FDI that brings not only capital but additionally much needed technologies and skills to the country.

"Also we have to look at the government’s budget. The government’s budget should clearly show how much revenue is obtained from gas exports and what use is made of the revenue," the economist said.

Burma, it is contended, should be able to rack up significant profits from its geographical advantage, placed as it is at the foot of a rapidly developing China.

“If this is not done, it will be one of the most worrisome things facing the country,” he concluded.

According to official Chinese statistics, the trade between the two countries was valued at US$2.626 billion in 2008, up more than 24 percent from the previous year.