Following Myanmar's November 8 elections that saw Aung San Suu Kyi's National League for Democracy (NLD) winning an outright majority in the parliament, the country will begin selection of its new president on March 10. Myanmar's next leader will be one of three candidates from the House of Representatives, Senate and Army.
Among the NLD's more notable economic policies are: 1) prudent fiscal policies; 2) reforms in state administration; 3) development of the agricultural sector; 4) financial system reforms; and, 5) infrastructural development. Considering these key policies, KResearch is of the view that the NLD's economic plan encompasses a raft of initiatives that could help remove the nation's obstacles to doing business and thus lure larger FDI. Meanwhile, Myanmar's improved political climate and democratic reform are expected to help build investor confidence towards future policies to attract FDI.
However, the new administration will have a lot to do to achieve Myanmar's full potential. Looking at Myanmar's FDI data over the past 2-3 years, investment flowing into Myanmar has been concentrated within the energy sector. This has been partly because although Myanmar has low labor costs, overhead is considered high with pricey office rentals, as well as high costs for human development, amid a shortage in skilled workers, among other matters. To ready Myanmar for the new economic era will take time, and the new government will definitely encounter daunting challenges to economic reforms, e.g., inflation, a depreciating Kyat, plus large trade and budget deficits for FY2016-2017. Myanmar's government has set a 2016 growth target at 7.8 percent; while the IMF and KResearch projects 8.4 percent and 7.8 percent GDP growth, respectively, versus the estimated 7.7-percent pace of last year.
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