Name : Sean Turnell
Position : Special Economic Consultant to the Government of Myanmar, Director of Research, Myanmar Development Institute (MDI)
Tell us something about your background?
I was a Professor of Economics, Macquarie University, Sydney, Australia and a former central banker at the Reserve Bank of Australia.
When did you first visit Myanmar?
What were your impressions then and how is it different now? My first ‘official’ visit was in 2010, but I had been involved with Myanmar for nearly twenty years before that. The country in 2010 was still tense. Things had started to loosen up, but people were still very cautious about meeting foreigners – especially those known to be sympathetic to Myanmar’s democracy movement. I had met a great many brave and wonderful Burmese people outside the country, now I saw they were not unrepresentative of the country as a whole.
What do you think of Myanmar now?
I continue to love the place. I live here now, in Naypyitaw, and the longer I stay the more I appreciate just how resilient the Burmese people are. How hard they work. How tough life is for so many. Transitioning away from five decades of extraordinarily bad economic-policy making was always going to be a long and hard process. So it is proving. But I think critical foundations have been laid that will now enable strong and stable economic growth, and without the arbitrary and erratic policies that were a characteristic for so long.
Could you tell us more about your duties and responsibilities?
I am a consultant to the Myanmar Government on economic policy, and I am also a member of the Myanmar Development Institute (MDI). In the former role my job is highly varied, and ranges from what might be called ‘triage’ activities in responding to events, to assisting Burmese colleagues in their job of nation building. Especially exciting is my work with MDI, which is fast emerging I think as the premier economic ‘think tank’ in Myanmar, and a source of fiercely independent advice to the Government. Created by a Cabinet decree, MDI will shortly publish Myanmar’s first true quality economic journal, train from its ranks a cohort of some excellent young economists, as well as continue to provide research and advice to the Government. Building institutions is partly what genuinely transformational economic growth is all about, and I believe that MDI is an example of this.
What is your opinion on Myanmar’s outlook, which is relatively favorable, but the country is facing several macroeconomic risks to stable growth and those risks including a narrow production base, a more competitive global market, a lack of diversification in commodities, vulnerability to natural disasters, and higher prices for international commodities according to the World Bank’s report?
As one would term it in financial markets, I am very ‘bullish’ about Myanmar’s economic prospects, especially in the medium to long term. I think most people have actually missed the realeconomic story of the new Government, which has been the emphasis it has placed on ensuring macroeconomic stability, even when that has come at the expense of faster (but arguably, less sustainable) economic growth. It’s frustrating that this has been missed (and/or, that the government has not been very good at getting the story ‘out’), since it is critically important.
The first year of the NLD government had to be concerned with stabilization more than anything else. The first NLD budget set in place measures aimed to reduce the budget deficit by 16%, bring inflation down to single digits, stabilize the current account, while dramatically reducing the recourse to money printing. In all of these measures it succeeded – but at a cost of the sort of populist upswing that carefree ‘growth at all costs’ policies might bring.
However, the good news about all of this is that, having brought certain stability to Myanmar’s macro-economy, room has been created to precisely bring about more expansionary policies designed for growth. These are what we should now see in the years ahead, even while care must always be taken on the stability front.
Will Myanmar’s economy grow an average of 7.1 percent per year in the next three years, as inflation pressures are expected to ease up and private and public investments in infrastructure services and non-commodity sectors?
Could you comment on current Myanmar economy? It is impossible to say what exact rate of growth will take place in Myanmar in the years ahead but, barring catastrophe and the collapse of the international economic order (a proposition that, whilst still unlikely, looks more possible now than it did just a few short years back!), growth rates in this ballpark are eminently achievable.
The ruling government took steps to improve the clarity, communication and credibility of its economic policies building on the 12-point economic policy issued last July and complementing by regular reporting on near term economic policies and conditions. Could they help anchor economic expectations and sustain investor confidence in Myanmar?
Communication is incredibly important in economics. Indeed, if one was to divide the economy into those parts that were tangible (physical activities, real goods and services and so on) and those based on psychology, market ‘sentiment’, expectations, and simply what the famous economist John Maynard Keynes labeled as the ‘animal spirits’ of business, I think the ratio of importance would be about 50:50. On this front the Government has been wanting a bit. As I have mentioned elsewhere here, the Government has brought in some deeply important economic measures, especially in terms of trying to lock-in macroeconomic stability – but they have been rather less successful in telling people about them. Thus sometimes there is criticism about the pace of reforms, a supposed lack of vision and so on – when, in fact, much is being done in a coherent and much directed way, but it often escapes people’s attention.
Will NLD government be able to find and empower a strong team of technocrats to manage the economy?
Deficiencies in key areas of what economists (rather unimaginatively) call ‘human capital’ holds Myanmar back. Nevertheless, and although the team is small and greatly over-worked, the NLD government has been able to assemble a team to drive through economic reform. We will see more of the fruits of their herculean labor before too long I hope.
Will Myanmar’s newly elected Members of Parliament act in the national interest instead of their own and those of their wealthy supporters?
I certainly hope they will, but this is not an area I know much about. With respect to NLD MPs, I don’t really see much evidence of ‘money-politics’ making significant inroads. I know many of these MPs, and almost universally they have sacrificed much in money terms and even simple life comforts to be in the parliament. Most of them work insanely hard, and life in Naypyitaw can be isolating and difficult.
Will foreign community give Myanmar’s Ministers and Director Generals the time and encouragement to make on tough issues?
I certainly hope so. My experiences suggest that foreigners are amongst the most impatient for change in Myanmar, partly because they don’t understand the context and constraints through which the Government has to operate. Interestingly, many foreign entities tend to be much more critical of the new democratic government of Myanmar than they were of the previous largely military one. Expectations about the latter were low, and so the ‘bar’ was similarly set short. By contrast, the new government has faced much higher expectations, arguably at levels that any administration, no matter how adroit, would find it hard to meet.
All that said the new Government has been able to enter into a number of highly productive collaborations with international bodies, foreign companies, foreign governments, and so on. In broad terms Myanmar has now returned to the comity of nations, and the external world represents now a field of opportunity rather than being seen as an existential threat.
Myanmar economy was growing at near 8.5 percent, while foreign investment has taken off from virtually nothing in 2010 to a reported $8.1 billion in the last fiscal year. Can NLD government save Myanmar economy and attract foreign investors?
Attracting foreign investment is the key to the Government’s economic vision. The best thing the Myanmar government can do is to create an environment here that is an attractive one for international and local investors alike. This means establishing macroeconomic stability in the ways mentioned, but it also means the protection of property rights and the rule of law (big priorities of the new Government) and functioning infrastructure. The latter is obviously still a work in progress, and will require billions of dollars of investment from the Myanmar government, assisted in places by various development partners. Again, and I know I keep going on about it, but getting Myanmar’s finances right are critical here too – since in the end infrastructure must be funded.
Of course, getting Myanmar’s finances right means not only ensuring sound financial policies of the government, but also creating a banking and financial system that genuinely meets the needs of society. For many years Myanmar’s financial system has been dysfunctional and unstable, and so correcting some of its obvious maladies has been a priority for the government. Shortly, with the assistance of the World Bank, Myanmar’s state-owned banks will undergo a thorough diagnostic exercise and corrective restructuring. Meanwhile, with respect to the private banks, recently the Central Bank of Myanmar implemented four of the core prudential principles of the international Basel accords on banking supervision. In short, Myanmar will soon have banking regulation that is immeasurably better than anything that has gone before.
So far, Suu Kyi’s National League for Democracy has been vague about its economic priorities and plans according to Bloomberg. That has to change. Expectations for the new government are running wild. While fundamental issues await attention, from uncertainty over land rights to the plunder of natural resources by the military and ethnic rebel groups. Will it be important to notch a few quick wins before tackling them?
As per above, the government has been concerned to deliver macroeconomic stability along the way to delivering long-term sustainable growth. But in addition to this, much progress has been made in other areas too. One of the first acts of the new Government, for instance, was pushing through enabling regulations for the establishment of ‘mobile money’. Such mobile money schemes have proved transformational in other countries (especially in Africa) in driving financial inclusion, greater formalization of the economy, greater revenue collection by government, and greater certainty to export enhancing trade finance and the like. It has another of those seemingly technical reforms with broad and positive spin-offs. Meanwhile, national (fully-costed) plans for education and health have been rolled out, and a substantial national rural road-building program is about to commence. Reform of the electricity sector has been slower, but it too is just about ready to go.
Can Myanmar awake from sluggish economy again?
Yes, and it is already. Amidst the impatience and pessimism of some groups, it’s important to remember that right now economic growth Myanmar is amongst the highest in the world.
Youth unemployment is a global concern. The ILO estimates 40 per cent of world’s 160 million jobless are between the ages of 15 and 24, and that 85 percent of the 1 billion in that age bracket live in developing countries. How are you addressing to expand job opportunities for youth in Myanmar?
As you note, youth unemployment is a problem everywhere, and always has been. No surprise in this, since the less experienced and educated a worker is, the less productive they are likely to be. We can’t do anything about experience – this naturally has to develop for individuals across time (and over which we have no control!), but clearly much can be done on the education front. This is why the new government has greatly expanded education funding; with much more to come once the National Education Plan is fully funded and implemented.
If you could make one major changes to a government policy, what would it be? Communication plays a crucial role in economics. A vast amount of hard work has taken place, and some really difficult decisions made. The Government needs to tell people about it a bit more. Having said that. I think we will shortly see a lot of improvements on this front too.