Despite the widespread and rapid normalising of relations with Naypyidaw over the past three years, the US (and the West in general) has been reluctant to engage the country’s military — the Tatmadaw. But the recent signing of the US National Defense Authorization Act for 2015 facilitates the gradual opening of military-to-military relations between the US and Myanmar.
Myanmar’s progress towards a more democratic political system and a more prosperous and productive economy is a story that continues to unfold and that can be expected to surprise. This year is likely to carry more than its share of surprises. With the national elections due by December, the National League for Democracy (NLD) opposition party leader Aung San Suu Kyi declared last month that it is still too soon to commit to contesting the election before the date and the terms of the election have been confirmed.
Myanmar’s initial reforms beginning in March 2011 were dramatic and surprised everyone, but they are still incomplete and not always operating well. Many problem areas have not yet undergone reform (such as land reforms, judicial system reform, and ending human rights abuses), meaning that much ‘unfinished business’ remains. But this does not mean that Myanmar’s reform process has stalled.
The story of Myanmar’s transition to a more democratic political system, and a more productive economy, is far from over.
With one year remaining before Myanmar’s general election there is growing concern, both internationally and domestically, that the reform process is at best beginning to stagnate and at worst rolling back in some critical areas.
On 30 September the Central Bank of Myanmar (CBM) announced the names of the nine foreign banks that are to be awarded licenses to operate in the country. It was a keenly awaited decision that, as with the telecommunications licenses last year, was conducted via a generally well-regarded selection process presided over by a German consultancy firm, Roland Berger.
Myanmar has embraced greater economic openness since it emerged from decades of economic and political isolation. Reforms so far and re-engagement with the international community have successfully stimulated growth. The economy has sustained GDP growth of more than 7 per cent for two years running, bolstered by rising exports and foreign investment, according to the latest IMF estimates.
In April 2012, by abolishing the official pegging of the Myanmar kyat to the Special Drawing Right (SDR) of the IMF, Myanmar terminated the decades-old de facto multiple exchange rate system and moved to a managed floating exchange system. While noteworthy in its own right, this is merely the first step in an arduous journey of foreign exchange market reform. The Central Bank of Myanmar is now facing two interlinked challenges: establishing the institutions for a formal foreign exchange market and transferring informal market activities into the formal market.
China has started importing natural gas from Myanmar, a historic milestone as the world’s largest energy consumer continues to diversify its energy supply routes. While the pipelines are expected to provide only a small proportion of China’s energy needs, they are a vital energy security asset that will reduce Beijing’s reliance on shipping through the narrow choke-point of the Malacca Strait.
The Japanese government on Sunday agreed to grant Myanmar nearly $503 million in fresh development loans, while cancelling about $1.74 billion in debt remaining from pre-1988 contracts, reported the Associated Press.
