How Hong Kong can play a role in Myanmar’s economic and political development
The election of Htin Kyaw as Myanmar’s president – the country’s first civilian president in over five decades – marks a major transition of power in the country. In this transition, Myanmar has to overcome the legacies of decades of misrule, such as ethnic insurgencies, an underdeveloped financial system and an inefficient civil service. Given Hong Kong’s experience in professional services, geopolitical proximity and policy priorities, there is much we can do to facilitate a smooth political transition and economic progress in Myanmar.
The challenges are immense. For a start, the resource-rich borderlands of Myanmar have been plagued by the insurgencies of ethnic minorities fighting for greater autonomy. Aung San Suu Kyi, the leader of the governing National League for Democracy party, has identified peacemaking as one of the new government’s priorities.
The country also needs a more efficient financial system to encourage foreign investments. With the opening of the Yangon stock exchange, the country may be among the fastest-growing in the world this year; the International Monetary Fund forecasts an 8.4 per cent increase in real gross domestic product. To facilitate investment, the central bank last year granted preliminary licences to nine foreign lenders, including the Industrial and Commercial Bank of China.
Yet another challenge is to streamline the country’s notoriously complex civil service. There are 36 ministries under military rule and corruption is a problem. Though Myanmar’s civil servants should be at the forefront of leading the country to change, in many ways their hands are tied because of the military, which still controls a quarter of parliament seats and three key ministries – home, defence and border affairs.
Despite these problems, the nation has high hopes for the new government. To deliver on its lofty promises of peace and development, Myanmar has to embark on new partnerships and seek feasible models for economic growth.
Contrary to some Western beliefs, Myanmar is likely to remain friendly with China. Under the previous government, about one-third of Myanmar’s foreign trade was with China, and a third of its foreign investment also came from China. Most of the new border trade zones that Myanmar aims to open create links to China. Politically, the Chinese government has shown tentative support to Suu Kyi’s political party. In short, although Suu Kyi and her party have excellent connections with the West, relations with China will strengthen because of Myanmar’s pragmatic needs for economic support from its powerful neighbour.
For Hong Kong, now is an opportune time to reach out to Myanmar. Through its “One Belt, One Road” Initiative, China is addressing the country’s critical infrastructure needs. The China-Myanmar oil and gas pipelines and the proposed China-Myanmar railway linking Kunming (昆明) and Kyaukpyu will become the main body of the corridor linking Bangladesh, China, India and Myanmar. The proposed Dawei special economic zone project in the south would include railways linking Vietnam, Cambodia, Thailand and Myanmar. If Hong Kong is willing to participate in this central government initiative, it could make a unique contribution to Myanmar’s development with its financial expertise and governance experience.
Hong Kong’s judicial system can provide a reference for Myanmar, since both jurisdictions use the common law system. Financially, Hong Kong can also share its experience on investor protection and contract enforcement. Better investor protection, especially for the generally more risk-averse foreigners, is associated with enhanced financial development, greater contractual flexibility and enforcement, as well as higher ownership dispersion or greater breadth in market participation.
Politically, the “one country, two systems” policy has fostered Hong Kong’s development and stability. While enjoying preferential access to the mainland market and support from the central government, Hong Kong has kept its common law system, capitalist system, and a high degree of autonomy in business.
The wheels are rolling for institutional-level exchange with Myanmar. The US government has been engaging companies like Microsoft to work with the Myanmar government to train local teachers and computer programmers. On the financial side, as part of the preparation for opening the Yangon stock exchange, delegates from Myanmar have attended “Stocks 101” classes taught by veteran Daiwa traders in Tokyo. South Korea is helping to build a government think tank modelled on its own Korean Development Institute, the brains behind the country’s rapid economic rise in the ’80s and ’90s.
Hong Kong professionals should not miss out. To this end, a group of young professionals from Hong Kong have started a new initiative, Governance Partners Yangon, that links former and current Hong Kong civil servants with those of Myanmar. Its objective is to mobilise the unique assets of Hong Kong society to build partnerships with Myanmar.
Greater cooperation will bring mutual benefits. While Myanmar can learn from Hong Kong’s years of development experience, Hong Kong can benefit from the new model for the city’s engagement with Southeast Asia. Possible engagements are unlimited as the belt and road plan involves more than 60 countries, representing a third of the world’s total economy. Beyond the civil partnerships and exchange of knowledge, economic opportunities are sure to follow.
This article was originally published in South China Morning Post on 4 April, 2016.