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262 Khin Ohn Thant© 2001 Institute of Southeast Asian Studies, Singapore 262 11 ASEAN Enlargement: Economic and Financial Implications for Myanmar KHIN OHN THANT Introduction Since Myanmar became a member of ASEAN in July 1997, many analysts and others have speculated about the implications and impact of this new relationship. This chapter presents the Myanmar perspective on this topic. In particular, it examines how Myanmar can meet the new obligations and challenges of ASEAN membership, as well as how it can exploit the opportunities and privileges presented by the ASEAN grouping. Before going to the main subject, however, we will first provide an overview of Myanmar’s economy. Myanmar is the largest country on mainland Southeast Asia, with a total land area of 676,577 sq km. It has a long international border of 5,858 km with Bangladesh, India, China, Lao People’s Democratic Republic (Lao PDR), and Thailand. This long border is both an asset and a liability to the country. Myanmar also has a coastline of 2,832 km. Within the country, it has three river systems, with the Ayeyarwaddy running right through the country from north to south. This facilitates trade, transport, and communication. Myanmar’s population was estimated at 46.4 million in 1997/98, with an average annual growth rate of 1.84 per cent. Most of its population, 67 per cent, are employed in the agricultural sector. Myanmar attained an average economic growth rate of 7.5 per cent during 1992/93 – 1995/ 96. The provisional figure for 1996/97 was 6.4 per cent. The savings ISEAS DOCUMENT DELIVERY SERVICE. No reproduction without permission of the publisher: Institute of Southeast Asian Studies, 30 Heng Mui Keng Terrace, SINGAPORE 119614. FAX: (65)7756259; TEL: (65) 8702447; E-MAIL: publish@iseas.edu.sg ASEAN Implications for Myanmar 263© 2001 Institute of Southeast Asian Studies, Singapore and investment ratios were almost 10 and 15 per cent of gross domestic product (GDP) respectively. Myanmar’s GDP at current prices was K792 billion1 in 1996/97, with agriculture contributing a little over 36 per cent. Agricultural products constituted a major share of exports at almost 38 per cent, followed by forest products at 22 per cent. The country’s economy continued to be exceptionally closed, with imports and exports comprising 1.7 per cent and 0.8 per cent of GDP respectively in 1996/97. Both the balance of trade and the terms of trade have been unfavourable for the past decade. Myanmar’s trade balance in 1996/97 ran a deficit of K5.6 billion, and the terms of trade for the same period was K61.5 million. Foreign direct investment (FDI) is equally important to Myanmar. Oil and gas offer the most significant development potential and accordingly attracted the most foreign direct investment, accounting for almost 36 per cent of the total investments of US$6.44 billion, as at 30 September 1997. FDI in manufacturing comprises 19 per cent of the total, followed by real estate, and hotel and tourism, with 14 per cent and 12 per cent of the total respectively. The United Kingdom, Singapore, and Thailand are the three top investors in Myanmar, with more than US$1.3 billion committed for 29 projects; US$1.2 billion for 55 projects; and US$1.1 billion for 41 projects, respectively, as at 30 June 1997. Myanmar’s private sector has expanded in most areas of the economy. The country witnessed most private sector growth in the form of Myanmar limited companies, which comprised 8,000 enterprises in December 1996, a 24 per cent increase over 1995. The next most important area in the private sector was the export/import business, with almost 7,000 enterprises, a 27 per cent growth over the previous year. Inflation has been a serious problem in Myanmar in the 1990s. The annual percentage has hovered between 20 and 30 per cent. Its dual exchange rate is another problem for the business sector. The parallel exchange rate had been stable in the past, but recently the gap has been widening at an increasing rate. This may be partially due to the fallout from the currency crisis in the region. Myanmar’s external indebtedness is very low in comparison with its neighbours. The level of external debt is also static. In brief, Myanmar is not a rich country, but it offers substantial economic opportunities. Furthermore, its long-term strategic importance must be considered. Compared with its significant resource base...

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