Willy ShihSenior Contributor
Myanmar has been called the last frontier market in Asia. Even with relatively low growth rates over the last several years, it has been one of the fastest in Southeast Asia, and cumulative foreign direct investment has been higher than Bangladesh and Sri Lanka. With manufacturers rushing in to Vietnam, Indonesia, and Malaysia as part of their diversification efforts, some firms saw the potential of a low-cost manufacturing base with a plentiful labor force in a country that only opened up relatively recently. The development of special economic zones (SEZs) and industrial parks, along with improving infrastructure reflected an improving business climate. The problem has been, and continues to be, political.
The country has a strategic location straddling China to its north, India and Bangladesh to its west, and Southeast Asia to the south and east. This means it has nearby access to around half the world’s population. This geographic advantage is not lost on the Chinese, and it has been called China’s “virtual west coast.” The Chinese government has been envious of the strategic benefits that the U.S. enjoys with access to two oceans. As part of its Belt and Road Initiative, China has built oil and gas pipelines from Kunming in Yunnan Province to Kyaukphyu in Rakine State on the Bay of Bengal on the Indian Ocean. This allows some oil imports from the Persian Gulf to bypass the Straits of Malacca northwest of Singapore, which the Chinese government views as a chokepoint vulnerable to U.S. control. In 2019, China imported 10.8 million tons of crude oil, and a substantial amount of natural gas from an offshore field.
Economic development of the former British colony has been hobbled by a complex history of military rule, ethnic conflicts, and international sanctions. A coup d’état in 1962 put the country under the rule of a military revolutionary council, and almost all businesses and media were nationalized. This put the country into an economic dark age, chasing away trade and foreign investment. Historically the Mogok Stone Tract to the northeast of the city of Mandalay was one of the most important global sources for rubies, sapphires and other gemstones. We visited several firms in the fine jewelry trade supply chain several years ago; most of them had relocated to Bangkok after the coup. Years of economic mismanagement and poverty led to protests that culminated in an uprising and general strike on August 8, 1988 (“8/8/88”). Activists organized citizens to step in and perform basic government tasks as the administration collapsed, but that ended five weeks later when a new military ruler imposed martial law and crushed the rebellion.