Keep An Eye on Myanmar.

A Business Week article entitled “Myanmar Wants to Be the Next Tiger” draws interesting parallels between Myanmar (formerly Burma) and China circa 1979.

Readers will recall that 1979 marked the beginning of Deng Xiaoping’s adoption of the capitalist – communist economic hybrid model which propelled China to its current status as the world’s number two economy.

Myanmar’s military government is beginning to adopt measures to lessen the impact of what has been an authoritarian strangle-hold on this strategically situated country and its people. Positioned right between India and China, Myanmar has many economic comparative advantages (agriculture, other natural resources, energy) which portend a bright future assuming the current reform movement is able to prevail. Parliamentary elections are scheduled for April 1, 2012, as is a move to allow the kyat exchange rate (the kyat is Myanmar’s currency) to float in a managed fashion. This currency move will favor Myanmar in that it will make its products and services more competitive on the open market.

Given these developments, Myanmar may emerge as an alternative out-sourcing destination for Western firms. Business Week reports that “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.”

This being said, caution is in order. The election on Monday “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.” Another potential stumbling block is whether the United States will deem the election process and its outcome as being worthy of a relaxation of sanctions we have had against Myanmar for many years.

Reader input welcome.

Here is a link to the Business Week article: http://www.businessweek.com/articles/2012-03-29/myanmar-wants-to-be-the-next-tiger

 

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