Myanmar in ASEAN: Working Toward the ASEAN Economic Community

Myanmar in ASEAN: Working Toward the ASEAN Economic Community Kyaw Soe Thein Director ASEAN Division Foreign Economic Relations Department Ministry of National Planning and Economic Development

Outline • Introduction: Southeast Asia, Myanmar and ASEAN • Myanmar in ASEAN • Establishment of ASEAN Economic Community • Issues and Challenges Relating Myanmar’s to Join AEC • Conclusion

1. Introduction: Southeast Asia, Myanmar and ASEAN 1.1 What is Southeast Asia • The term Southeast Asia was occasionally used by European, especially German writers, in the late 19th century. • Myanmar, Thailand, Laos, Cambodia, Vietnam, Malaysia, Brunei, Singapore, and Indonesia, were considered as some kind of geographical unit. • Ten Nations • Each country has its individual style. • Unity and diversity

Cont 1.2 Socio-economic characteristics of Southeast Asian Nations: A Brief Overview • ASEAN member countries vary widely in size, population, and income. • Total population of nearly 600 million and land area of 4,495 thousand sq.km. • Indonesia is the largest, Brunei is the smallest.

Cont • In 2011, Singapore had the highest per capita GDP of US$ (50129.9) followed by Brunei with US$ (38702.5). • Malaysia with US$ (9940.6), Thailand and the Philippines had US$ (5115.8) and US$ (2340.9) respectively. • Cambodia had US$ (879.7) and Laos had US$ (1278.5). • Myanmar’s per capita GDP was US$ (875.1), and Vietnam had US$ (1403.3). • The average per capita income of ASEAN countries would be about US$ (11422.9).

cont • GDP growths also differ between countries. • In 2011, the fastest growing economies were Myanmar and Lao PDR with rates of 10.4% and 8.0% respectively, closely followed by Cambodia with 7.1%. • Thailand economic growth in 2011 was disappointing, with a rate of 0.1%. • In term of social indicators, ASEAN 6 (Brunei, Singapore, Malaysia, Indonesia, Thailand, and the Philippines) generally perform better than the CLMV countries

Table (1.1) Selected Economic Indicators (2011): ASEAN Source: Asian Development Bank, Key Indicators for Asia and Pacific 2012, ASEAN Statistics

Table (1.2) Selected Social Indicators (2011): ASEAN Source: World Development Indicators, 2012, Asia Pacific Human Development Report, UNDP.

Cont 1.3 Myanmar: Geography, Demography, and Natural Resources • Myanmar has a land area of more than 676,000 sq.km. occupied by more than (57) million people in 2011. • 135 nationalities, multi-ethnic, multi-cultural and multi-religious society. • Myanmar, the largest ethnic group, comprises about 70% of the country’s total population followed by the Shan, with 8.5% of the country’s inhabitants. • Other major ethnic group include the Kayin, 6.2% , Rakhine, 4.5%, and other indigenous races, 6.5%. • rich in natural resources: forests, minerals and fish. • an abundance of human resources- literate labors

2. Myanmar in ASEAN 2.1Why Myanmar Decided to Join ASEAN • In 1967, Myanmar was approached by friends in ASEAN to join the regional association. • as a founding member of the Non-Aligned Movement, adhering to the five principles of peaceful co-existence and neutrality, and decided not to join ASEAN. • In 1995, Myanmar decided to join the regional association and attained observer status, along with Laos and Cambodia, in July 1996.

Cont • At least two reasons which led to Myanmar’s decision to join ASEAN. (1) internal and external conditions had changed in the country (2) age of globalization and regionalism • Politically • peace and stability in the region • better confidence among members of ASEAN • Strengthening of external security • Economically • increase trade and investment links within the region • achieve greater development • increased efficiency • Culturally • contribute to ASEAN through promoting its own rich traditions

Cont 2.2 Myanmar Participation in ASEAN • the summits to ministerial meetings to officials meetings. • Several committees and sub-committees were formed to assist the ASEAN Economic Minister • small-and medium-enterprise activities, transport, and services. • several committees at the national level such as the National Committee on Information and Culture, the National Committee on Science and Technology, and the National Committee on Social Development were formed to coordinate with relevant ASEAN committees and subcommittees.

Cont • The National Commission for Environmental Affairs, the Central Committee for Drug Abuse Control (CCDAC), and the Public Services Selection and Training Board (PSSTB) were established to be in line with existing ASEAN committees. • Became a part of AFTA • participating in ASEAN activities fully since its first day of entry into the regional association.

2.3 Myanmar - ASEAN Cooperation for Economic Development Table (2.1) Myanmar Exports to ASEAN (Kyat million) Source: Statistical Yearbook 2010.

Table (2.2) Myanmar Imports from ASEAN (Kyat million) Source: Statistical Yearbook 2010.

Table (2.3) Foreign Direct Investment Flow into Myanmar from ASEAN Source: Directorate of Company Administration and Investment, Ministry of National Planning and Economic Development.

3. Establishment of ASEAN Economic Community 3.1 Why ASEAN decided to establish AEC • 9th ASEAN Summit agreed to establish the ASEAN Economic Community (AEC) as the end goal of economic integration as outlined in the ASEAN Vision 2020. • As a single market and production base • To make the ASEAN region a more dynamic and stronger segment of the global supply chain • the integration of its Member Countries and enhancing the region’s economic competitiveness.

Cont • To strengthen the implementation of its existing economic initiatives. • ASEAN Free Trade Area (AFTA), ASEAN Framework Agreement on Services (AFAS) and ASEAN Investment Area (AIA) • accelerate regional integration in the priority sectors facilitate movement of business persons, skilled labor and talents • strengthen the institutional mechanisms of ASEAN, • Dispute Settlement Mechanism to ensure expeditious and legally binding resolution of any economic dispute.

Cont • goals are being pursued through the Initiative for ASEAN Integration (IAI) and the Roadmap for the Integration of ASEAN (RIA). • deepening and broadening of integration of ASEAN shall be accompanied by technical and development cooperation in order to address the development divide and accelerate the economic integration of Cambodia, Laos, Myanmar and Vietnam so that the benefits of economic integration are shared

Cont 3.2 Economic Implications of Myanmar to Join AEC • expects general regional trade area (RTA) advantages from joining ASEAN and AEC • greater trade, service, and investment links within the region increased attractiveness to foreign direct investment (FDI) from outside the region, more secure access to the greater ASEAN market, • improved resource allocation from specialization according to comparative advantage, • economies of scale in an enlarged regional market, • enhanced industrialization prospects of small and medium enterprises, • spill-over effects, and infant industry learning effects with improved quality control, design, and marketing and thus improved competitiveness in the world market .

Cont 3.3 How Ready was Myanmar to Join AEC • Myanmar has made a commitment to establish an ASEAN Economic Community (AEC) and actively participating and coordinating with other member countries. • Chair of ASEAN in 2014 • To develop a viable stock exchange by 2015 • To develop the capital market, and the Capital Market Development Committee and its sub-committee are now endeavoring to implement the road map for the development of capital market in Myanmar, which is drawn up in accordance with time frame of ASEAN Capital Market Forum (ACMF).

Cont • Custom modernization preparedness, measures for rationalization, simplification, and harmonization are trying to be consistent with ASEAN Singe Window (ASW) • Custom clearance time which usually takes two days for containerized cargo of import and one day for containerized cargo of export is targeted to reduce to 30 minutes. • the aim of facilitating investment procedures and getting opportunities in doing business, government issues two notifications relating to land used and foreign currency • One Stop Service in company registration is finished one day if the documents are completed. • the standard and conformance areas • performance and factors of IPR in line with AEC measures

4. Issues and Challenges Relating Myanmar’s to Join AEC • Development of capital market in Myanmar • need to improve legal and regulatory framework • need to the development of issuing system • private sector participation • SMEs development • poor infrastructure with regards to power, communication, transportation, • access to world market, • higher cost of materials and inputs, • outdated technology, • insufficient R&D, limited knowledge and poor management skill.

Cont • financial sector Development • difficult to develop the correspondent arrangement account with foreign hard currency in EU nations and US. • depends on Singapore and China currency to operate international transaction • barrier to attract investment which is a key factor for economic development in financial sector from EU and US

Cont • Implementation in standard and conformance • lack of initiator, lack of public awareness • lack of technical infrastructure • lack of laboratory equipments • In ASEAN region, harmonization of standard and conformance help to build credibility and reputation for domestic producers and traders

Cont • Implementation of AEC • lack of awareness on the program areas and implementation progress even among the main beneficiary groups and responsible department and agencies • the target areas of some projects are mismatch with the specific requirement of respective sector • the priority areas of some programs do not satisfy the needs and development priority of individual country

Conclusion Myanmar’s Implementation in AEC • Phase I : 95% • Phase II : 80% • Phase III : 77%

Thank You

Myanmar in ASEAN: Working Toward the ASEAN Economic Community