Illustration: Liu Rui/GT
Myanmar's real GDP growth stayed at 7 percent in 2015 and is estimated to reach 8.6 percent in 2016, according to the IMF's latest statistics. And in its latest Asian Development Outlook report, Asian Development Bank expects Myanmar's economy to grow by 8.4 percent over the year, the fastest in Asia-Pacific region. Given the previous Union Solidarity and Development Party government's achievement in growing economy, for the National League for Democracy (NLD), Myanmar's economic development is key to the government's stability. Therefore, the new government announced that it would issue a "100-day plan" setting out the government's priorities in the first few months after taking office.
The NLD government will continue promoting economic and societal reforms, deepen domestic economic privatization, encourage the development of small and medium-sized enterprises and increase agricultural investment to eliminate poverty in rural areas as well as to adapt to the ever-changing domestic and international economic environment.
The NLD-government has drawn up short- and long-term plans to meet increasingly larger electricity demands, and will resort to natural gas, water, clean coal and other clean energies to generate more electricity. In the meantime, it will speed up infrastructure construction to aid regional connectivity, take effective measures to stabilize prices, lower foreign exchange risks, create a sound investment environment, and take full advantage of foreign technologies and capital to facilitate its industrial structural transformation.
However, despite the progress that has been made, the nation's economic development is still facing a number of challenges.
First of all, Myanmar is beset by inflation. The nation's inflation rate was as high as 11.3 percent in 2015, and is still estimated to reach 9.5 percent in 2016. How to create a flexible and secure foreign investment environment to draw in more investment and technologies, so as to enhance the nation's industrial structure and improve productivity, is a major problem facing the new government.
In addition, the modernization of Myanmar's financial systems needs further reforms. The government needs to strengthen its supervision over the rapidly developing banking sector. The participation of foreign banks may help address problems, but reforms should be carried out step by step so as to minimize risks.
Furthermore, foreign capital management is not perfect, and the prospect of investment remains unclear. A mature and fair market has not been established in Myanmar. The nation's skyrocketing land prices and its imperfect infrastructure have also contributed to the high costs faced by foreign investors. As a result, many are still reluctant to enter Myanmar's market.
Myanmar's geographic position makes it a significant neighbor for China. Despite a decrease in recent years, China's investment to and trade volume with Myanmar rank high. Under the framework of "One Belt, One Road" initiative, the two nations are expected to deepen cooperation in infrastructure, agriculture, manufacturing, tourism and reducing poverty.
The US announced a relaxation of sanctions on Myanmar in May, which will help eradicate trade barriers between the two nations. However, Washington, perplexed by its own economic problems, has no spare energy to enhance its economic relationship with Nay Pyi Taw.
As neighbors, Myanmar and India are economically interdependent on each other. Nay Pyi Taw is indispensable in ASEAN's economic cooperation with the South Asian Association for Regional Cooperation as well.
Myanmar's economic development is the most significant promise that the NLD government has to fulfill. After all, it was public support that won Aung San Suu Kyi and her NLD political victory, and how long they can stay on top is dependent on how much they can improve standards of living. Myanmar's citizens have pinned high hopes on the NLD. The party will risk losing people's trust if it fails to improve the nation's economy and enhance citizens' living standard.
The NLD has to consolidate its ruling position by pragmatic policies. However, many NLD elites, including Suu Kyi, lack administrative experience as they have not been in office before. How to select capable politicians to form cabinet and train effective administrative teams in a short span of time remains a test for the NLD.
The author is a professor at the School of International Studies at Yunnan University. firstname.lastname@example.org