Columbia International Affairs Online: Working Papers

CIAO DATE: 05/2012

Myanmar: White elephant or new tiger economy?

April 2012

Economist Intelligence Unit


The new government in Myanmar has made a series of liberalising gestures over the past year, raising hopes that it is serious about meaningful political reform. Coming after national elections in November 2010, the release from house-arrest of the pro-democracy icon, Aung San Suu Kyi, and by-elections in 2012, many observers are concluding that Myanmar is finally embarking on a process of genuine democratisation. Aung San Suu Kyi is among those who have expressed optimism over future changes in the country, with her confidence bolstered by the release of hundreds of political prisoners in recent months. As ties with Western governments slowly thaw, there is now a high probability that sanctions and other restrictions on trade and investment will be lifted over the next year or so, and foreign investors are taking note of the opportunities that could soon present themselves. However, there are still many voices arguing for a cautious approach, with concerns that this recent wave of optimism about prospects for a change in Myanmar’s political order is premature. The latest developments are certainly a step in the right direction, and have generated much hope, but they may be exaggerated—after all, the country’s fundamental power structure remains little changed. In theory, Myanmar has great potential, with vast untapped natural resources and land, along with a large population of some 60m. It is already a member of the World Trade Organisation and the Association of South-east Asian Nations (ASEAN), which may evolve into a strong economic community in the coming decade and which has already implemented trade agreements with large trading partners. Myanmar is also well positioned geographically: in addition to its southern coastline, it borders India to the west, China to the north and Thailand to the east. If the new administration chooses to remain on the path of political and economic reform, and secures the support of foreign governments and multilateral financial institutions, Myanmar could yet emerge as South-east Asia’s next frontier.