Myanmar: the Next Tiger? Hub for Low-cost Manufacturing (BusinessWeek)

Sunday will be a major test in Myanmar’s nascent rise from the economic and political obscurity it has suffered through for the past half century. On April 1, the country will conduct parliamentary elections, with about 10 percent of the lower house’s seats up for grabs and a few upper house seats, too. The election will be the first since 1990 that will have the participation of the country’s major opposition party, the National League for Democracy, led by Nobel Peace Prize laureate Aung Sang Suu Kyi. Her party won the elections in 1990, only to have the country’s junta invalidate the vote and put Suu Kyi under house arrest.

A successful election would likely provide optimists like Rogers with even more reason to favor Myanmar. “If the polltical and economic reform process continues to move forward after the elections on April 1st, then the Myanmar economy could rapidly become Asia’s newest economic Tiger,” Rajiv Biswas, Asia-Pacific chief economist for IHS Global Insight, wrote in a March 28 report. The country has potential “to become a hub for low-cost manufacturing,” he added.

The country’s reform comes at a time when there’s a potential opening for a low-wage Asian alternative to the region’s two giants, China and India. The Chinese economy is slowing as manufacturing costs increase and labor-intensive manufacturers feeling the pinch of higher wages look for alternative locations, such as Cambodia and Vietnam. Meanwhile, India’s coalition government is rudderless, beset by scandals and struggling to push through economic reforms such as liberalization of the country’s retail sector.

A lot therefore rides on what happens in the elections on Sunday. For the country’s economic future, the most important verdict might be made not by the voters in Myanmar but by policy makers in Washington. If the Obama administration decides the elections were reasonably fair, the U.S. might find ways to ease some of the crippling sanctions it has maintained against Myanmar for years.

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Interview with Murray Hiebert
Deputy Director, Southeast Asia Program
Center for Strategic & International Studies

“If the United States is satisfied that Myanmar’s government did its best to ensure the polls were as close to free and fair as possible, Washington is expected to follow up with reciprocal action. While Washington will not be able to—nor will it want to—eliminate the complex web of sanctions against Myanmar overnight, there are steps it can take to reward the government, especially if Suu Kyi characterizes the election in a positive light.

“For example, some sanctions can be waived by executive order if the administration decides it is in U.S. national interests to do so. The White House may also ask Congress to consider legislation easing some existing sanctions.

“Experts say that partially lifting visa bans for individual officials to travel from Myanmar to the United States might be useful to further engagement. Washington may also consider a nuanced easing of sanctions on investment and business that would have a direct, positive impact on improving the livelihoods of Myanmar’s citizens.”

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