After more than 50 years of military rule and socioeconomic isolation, Myanmar now sees the outside world through a window of opportunity. The 2010 democratic elections created new prospects for the country’s future; International investment rapidly increased, particularly from western governments. However, in order for its new economy to succeed, Myanmar must focus its efforts in filling the significant infrastructure finance gap. The debate now moves toward which country will be the main external actor in the process: China or the United States?
According to the World Bank, Myanmar’s economic outlook will be positive for the next few years; its growth rate for 2013-2014 was 8.3%, and the World Bank anticipates that this will grow to up to 8.5% in the 2014-2015 period. Major infrastructure challenges, however, could prevent the country’s development from meeting these projections. Approximately 73% of the country’s citizens lack access to electricity, and water infrastructure is limited.
The Logistics Performance Index, which measures the status of physical capital, customs processes, and other trade-related inputs, ranked Myanmar 149 out of 160 countries in 2014. In infrastructure Myanmar ranked 137 out of 160, below the average in both its region and its income group. This reflects a drop in rank from the 2012 index; as other countries with similar conditions saw accelerated improvements, Myanmar has failed to keep up.
China’s relationship with former Burma goes back decades; the apparently beneficial partnership is characterized by projects involving natural resources and energy. However, under the authoritarian regime, the relation was constantly interrupted. China sees Myanmar’s political changes as an occasion to further solid economic relations, as well as defending their interests in the region; since approximately 60% of Myanmar’s economy is controlled by the Chinese. The United States interests in the country are also notorious, with a market larger than South Korea and Singapore, Myanmar stands as a potential commercial partner. American investors in the country are avidly looking at Myanmar’s large reserves of gems, timber, mineral, oil and offshore natural gas. In addition to economic incentives for both the U.S and China, the stability of the country is relevant since a major religious conflict is developing, particularly targeting the Rohingya community.
Following former Secretary of State Hillary Clinton’s and President Obama’s visit to Myanmar in 2012, the US government lifted all non-military sanctions and committed $100 million of official development assistance. Additionally, development projects funded by the US-dominated World Bank have sought to address many issues in the country. In April 2015 The World Bank Group authorized a $100 million grant to the Agricultural Development Support Project to create more resilient crops, to establish irrigation infrastructure, and to increase productivity levels in the agriculture sector. This initiative aims to generate employment and increase incomes for over 120,000 farmers. The Myanmar Community Driven Development Project, another initiative financed by an $80 million grant from the World Bank, aims to close the infrastructure gap at a local level. The projects include school repairs and the construction of footpaths, feeder roads, water supply systems and health centers; it is expected to benefit over 900,000 people in nine different townships. This initiative involves a variety of stakeholders including civil society, NGOs, private sector, and local government officials.
The Chinese private sector is also a relevant actor in Myanmar. The 2015 Myanmar Infrastructure Summit aimed to promote private investment and stimulate partnerships with companies and foreign governments for strategic development in the country. The Mystone Dam in the Irrawaddy River, for example, is a $3.6 billion controversial initiative developed through a partnership with the Burmese Government’s Ministry of Electric Power, Asia World Company, and China Power Investment Corporation, to be completed by 2017, if challenges are overcome. The fifteenth largest hydroelectric dam in the world will yield the Burmese government around $4 billion in revenue; the energy output will be shared with China for the next 50 years.
Projects like the Mystone Dam and recent events have raised questions about the future of Myanmar’s relationship with China. Aung San Suu Kyi was received by Chinese president Xi Jinping in Beijing’s Great Hall of the People in June 2015. There is much speculation especially about China’s underlying intentions in its attitude towards Myanmar’s opposition party and incorporation of the country into the One Belt One Road economic integration project. Even as China’s involvement with Myanmar appears to grow through these various engagements, many claim that it is in fact decreasing. Myanmar’s citizens and former dissidents are raising concerns and public critics regarding the relationship with China, which is perceived as damaging
Once the former largest exporter of rice in the world, Myanmar now must grapple with constraints that range from a lack of workers to a lack of capital and infrastructure. Despite these impediments, Myanmar has incredible potential; its large stocks of natural resources and its strategic location between India and China make its development an appealing foreign investment, both for the US and for China. The question that remains is who is going to fulfill this infrastructure financing gap, and what conditions will determine the donor/investor-recipient relationship.