Myanmar’s economy on a growth path

The Asian Age, November 06, 2014

By Pradeep S Mehta

Ho mere piyaa gaye Rangoon, kiya hai wahan se telephoon (My beau, away in Rangoon, has telephoned me),” sang Nigar Sultana joyously in the 1949 Hindi film Patanga. The heroine was thrilled that her beau Gope was able to speak to her, in Dehra Dun, from a trunk line in Rangoon, Myanmar. It was a superhit and immortal number and even the smartphone-empowered youth today sing it.

If the scene was to be shot today, it may not be as exciting as it was then. Because nowadays mobile telephones connect people across the world anyone in split seconds without going through the trunk operator. In Myanmar (Burma) until recently, there used to be only two mobile phone operators, one of which belonged to the Myanmar Posts & Telegraph (MPT), while the other was a private operator. Due to incumbency advantage, the MPT has the largest geographical coverage, but its services are quite wanting. Now Norway’s Telenor is the third operator launched in October 2014 and hopefully competition will help improve services.

Competition means that there are large number of suppliers and large number of consumers, though distortions can take place due to restrictive and unfair trade practices. In order to promote competition, countries ensure that the number of suppliers are large, entry barriers are low and if firms indulge in anti-competitive practices it can be checked through a competition law and an implementing authority.

All over the developing world mobile telephony is one notable example of promoting competition. However, in many countries like Myanmar and India, state-owned enterprises co-exist with private enterprises. In most of these countries, the state-owned enterprises (SOEs) get a carve out from the competition law. Thus the playing field remains skewed, which is not good for the economy or good service to consumers.

Consequent to an obligation under the Asean Free Trade Agreement, all 10 member states have to adopt a competition law and policy to ensure that trade is unencumbered and does not suffer due to restrictive and unfair trade practices. Of the 10 member states, Myanmar is one which still does not have a competition law and the deadline to put it in place is 2014 end.

Along with colleagues Udai Mehta and Alice Pham, and former Competition Commission of India’s official K.K. Sharma, I visited Myanmar in October to run training workshops for government officials and the emerging private sector assisted by the libertarian German foundation, Friedrich-Naumann-Stiftung.

One question which was raised by a government lawyer in the workshop held at the new capital, Nay Pyi Taw, was whether the state-owned enterprises (SOEs or public sector in Indian jargon) should be covered under the new Competition Act. My answer was yes, but that it will require political will and vision. I gave two examples: India amended its old competition law in 1991 to cover SOEs after launching reforms. And Vietnam, another Asean member and a communist country, also covers SOEs under its competition law. In fact, the first case before the Vietnam competition agency was against SOE the Vietnam Air Petrol Company for abuse of a monopoly position in supplying aircraft fuel. It used its market position and refused to supply fuel to domestic carriers. As a result, a fine of 3.7 billion dong ($174,000) was imposed. Generally many countries, particularly where the economy was under a command and control regime, when adopting a new competition law, hesitate to cover SOEs under its ambit due to political pressures. Vietnam was an exception, but Myanmar may not be.

Implementation of regulatory regimes and a level-playing field are a sine qua non with liberalisation, otherwise the gains would fritter away and the economy may not benefit. This task depends upon the vision and will of the polity. One example which I used in my interaction with the participants was that of Pakistan as an analogy with Myanmar where, too, the Army is in power. However, in spite of it, in Pakistan they have supported a healthy competition law and an independent, professionally staffed competition authority. It is one of the best competition regimes in the developing world.

Under the grip of the Army rule for many years, Myanmar languished in its economic growth, but the scene has changed now. The Army is gradually relaxing its grip on governance with it joining the Asean. Democracy of sorts has been allowed with the popular mass leader and Nobel laureate, Aung San Suu Kyi, serving in Parliament as an Opposition member.

Be that as it may, Myanmar is now on the growth path with several countries providing aid and technical assistance. India is one of them, for several reasons. We share a border with Myanmar and have a treaty to build the India-Myanmar Friendship Highway and the India-Myanmar-Thailand Trilateral Highway. The Friendship Highway is lagging but one hopes it will pick up speed soon after the government of India has agreed to increase its role. Both these roads will help our and Myanmar’s economy in a big way.

The writer is the secretary-general of CUTS International

This article can also be viewed at: