Burma – Trade Policy

OVERVIEW

As recently as 2011, Myanmar was still labelled a pariah state. However, this perception has changed as a result of the general election in 2010 followed by the establishment of a civilian government and President U Thein Sein's election in March 2011. In his inaugural speech, the President stressed the importance of reform and openness in launching the first stage of reforms, with emphasis on solidifying national reconciliation and building good governance. A year after these reforms were introduced, the President announced a second stage of reforms in May 2012, focusing on the economic as well as social transformation of Myanmar. The wide-ranging Framework for Economic and Social Reforms (FESR) was released in late December 2012. It was prepared in order to push the ongoing reforms forward and to accelerate Myanmar's integration into the international community. The FESR outlines policy priorities for the Government of Myanmar (GOM) during the next three years, with emphasis on agro-based industrial development, equitable sharing of resources among the regions and the states of the country, promoting local and foreign investment, effective implementation of people-centered development, and poverty reduction.

In the context of these developments, the GOM welcomes Myanmar's first Trade Policy Review (TPR), which is undertaken in the spirit of transparency, as embodied in the TPR Mechanism. It provides an excellent opportunity to bring to Members' attention progress during the past three years in transforming Myanmar from a centrally-planned into a market-oriented and more open economy at the cross-roads of Asia, and re-integrating it into the global economy, after five decades of isolation and consequent stagnation. This TPR also highlights the formidable challenges Myanmar faces in advancing its economic and social development and the key roles of trade and related policies in meeting these challenges. Liberalization of trade and foreign investment is an integral part of these economic reforms. Accordingly, Myanmar is looking increasingly outward and strongly supports the multilateral trading system (MTS). An open global trading system, including access to export markets and inward flows of FDI, is a key to Myanmar's economic development and thus poverty reduction.

At the same time, however, as a consequence of its membership of the Association of South East Asian Nations (ASEAN), and the latter's deepening economic relationship with China, Japan, Korea, India, Australia and New Zealand, Myanmar is becoming increasingly integrated economically with these regional trading partners.

The opportunities for freer trade created by the MTS and these regional trade agreements are also providing an impetus for unilateral market-driven reforms, which will enable Myanmar to take advantage of these opportunities in order to achieve sustained growth and diversify its economy, which is rich in natural resources, but hitherto largely under-developed.

The single most important economic reform so far has been the replacement of the overvalued official foreign exchange rate peg with a "managed float" in April 2012 (a main step in removing restrictions on the purchase and sale of foreign exchange for the import and export of goods and services). Among the other major economic reforms have been the new, much more liberal, law aimed at ensuring a stable and predictable environment for foreign investment, which was passed in November 2012. In addition, Myanmar has, inter alia, abolished import and export licensing requirement on an initial selection of 1,928 non-sensitive commodities, made some progress on land and tax reform, and made improvements to basic infrastructure (transport and telecoms). Further reforms are envisaged, including: the granting of more autonomy to the Central Bank of Myanmar (CBM) as a consequence of its separation from the Ministry of Finance in accordance with the new CBM law, which entered into force on 11 July 2013; a new financial sector law to improve the functioning of the capital market; and an overhaul of Special Economic Zones, a key element of the government's industrial development plan.

In order to ensure continued strong, sustainable and inclusive growth, Myanmar faces a number of economic policy challenges, many of which are inter-related. These include: establishing a market-oriented economy in which private enterprises play an increasingly important role; integration into the global and regional economy through trade and inward FDI (a major source of new technology and managerial know-how); achieving the removal of remaining restrictions imposed by some Members on investment in Myanmar; enhancing the transparency of economic policies and measures; establishing a fiscally viable Government that can address Myanmar's developmental needs, including essential infrastructure (such as that involving electricity, transportation, telecommunications, water, educational and health facilities); developing Myanmar's abundant natural and human resources so as to ensure that the fruits of economic growth are fairly shared, thereby contributing to social harmony; and ensuring that growth is not detrimental to the environment. These and other challenges, together with the policies designed to address them, are laid out in the Framework.