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Business in the doldrums?

Upbeat business environment

More than 500 people flocked to the Kayin State Investment Fair 2017 at the Thiri Hpa-an Hotel last November 24 with government officials, local businessmen and representatives from international development agencies participating in the event. Touted as the biggest gathering of investors in the State, the fair was jointly organized by the Kayin State government, Myanmar Investment Commission (MIC) and the Japan International Cooperation Agency (JICA).

Very conspicuous are the Japanese business people who seemed to extend their interest in the region. With their success in the Thilawa SEZ, they are looking for other areas to focus their attention and resources to. Last year, the Asian Development Bank (ADB) financed the extension of a ‘world-class’ road from Kawkareik to Eindu which will greatly improve the movement of goods from Thailand and the southeastern part of the country to the rest of Myanmar. The Yangon-Myawadday highway is designated as the ASEAN Highway 1 (AH1), part of the road network intended to enhance the connectivity of ASEAN member-countries. The same road is the main trunk line for the East-West Economic Corridor, one of the priority areas in the development plan of the country.

Japanese involvement in the economic development of the area is hoped to provide the needed infusion of funds, technology and other resources. JICA supported the conduct of a study on the economic activities in the State and focused on several sectors that can be pursued for investment, which includes agriculture, food processing, manufacturing, hotel and tourism, logistics, infrastructure, construction and livestock. Business matching sessions were arranged during the fair and trip to selected businesses and potential areas.

Conflicting interests

Kayin State has to fast track its economic development program to cope with the challenges it is facing. It has signed a peace pact with the government, sustained peace for several years and is now reaping the peace dividends. Local businesses were energized and the capital township of Hpa-an is currently undergoing a transformation from a small town to becoming a commercial hub. But the State is also faced with the challenge of returning refugees who are being repatriated from the camps in the Thai border. Decades of conflict created a massive refugee problem, and returning refugees will have to be given jobs and sources of livelihood. This concern is now in the hands of the Kayin State leadership.

In this context, the State government through Chief Minister Nan Khin Htwe Myint has thought of pushing for support to agriculture modernization and manufacturing sectors to be able to cope with the influx of people needing work. But the war has stunted the economy of the State, leaving it with traditional agriculture and no manufacturing sector. The dream of the Chief Minister is to gradually develop a manufacturing sector through the State’s industrial areas in Hpa-an and Myawaddy.

This plan however requires a more stable source of power for manufacturing companies to operate. And here lies the problem, because the grid cannot support the needs of the State even for household consumption. Blackouts still occur when power supply is low. With not enough power, manufacturing companies cannot be motivated to locate in the designated industrial zones.

Efforts at building dams for hydropower and coal plants are met with negative response from the people. The government is in a bind how to sustain the economic gains it has attained and provide for the needs of the people without alienating the same people they are supposed to serve.

Scaring away investors while maintaining peace?

Instead of a bright sunny day, a pall of gloom has descended on the country, raising doubts on the government’s capacity to sustain the progress it has started with the assumption of the National League for Democracy (NLD). There was an observed slowing down of investment and interest in the country the past several months. Besides the standard causes related to commerce such as ease of doing business, level playing field and transparency, human rights issues defined the slowing down of investments in the country.

The violence in Rakhine and the human rights issues related to it took the center stage and pushed aside efforts at the economic sphere that has been gradually built up since the time of President Thein Sein.

S o m e W e s t e r n c o u n t r i e s h a v e withdrawn support and cancelled programs previously arranged. There were even proposals to impose again sanctions to the country. One of the main questions raised was the role of the civilian government as the crisis unfolded. Its capacity to ‘collaborate’ with the Tatmadaw is in question.

For the business sector the absence of peace and order is an unfavorable condition. The civilian government may want to prevent violence and chaos, but the military may have only one tool to impose peace and order, and this tool may not be the ideal tool. There is a need to see the civilian and the military responded in synergy and complementary to each other. Working this out maybe a tall order but it has to be done to dispel the image that they  are indeed separate and doing their own thing without the knowledge of each other.

Creating the right environment

As in the case of Kayin, signing the peace agreement is not enough. It may be the first step and challenges along the way are sure to emerge. The capacity of the leaders to steer the country away from conflict and violence and moving it towards progress and development requires a lot of understanding and negotiation. Arriving at a consensus is the best thing to make any action inclusive. More work to be done to integrate the dynamics of the civilian and military leaders, but working towards peace should remain the priority.

The government has to continue engaging the world and taking the critiques as basis to make it more responsive to its people and the global community. The idea of disregarding ‘threats’ from other countries because Myanmar has survived during the period of sanctions, will not work positively in the long run.