Myanmar’s leaders are pressing ahead with ambitious political change. But support for that process can evaporate quickly unless there is material improvement in ordinary people’s living standards. Carefully sequenced economic reforms are now a priority to generate broad-based growth in employment, incomes and output. Over time— the economy will enter a virtuous circle of reform and growth.
The impact of political transition on Myanmar’s business environment has been significant. The country faces the risk of a lost generation with erosions in human capital development, and public spending on health and education has decreased, leading to disruptions in education and public healthcare. The government’s ambitious political change needs to be supported by carefully sequenced economic reforms to generate broad-based growth in employment, incomes and output.
Myanmar’s economic reforms and political transition have led to improvements in the business environment, significant FDI growth and opportunities for investing in emerging sectors.
Myanmar faces the risk of a lost generation with erosions in human capital development. Public spending on health and education has fallen from 3.6 percent to about 1.8 percent of GDP There have been severe disruptions in education and public healthcare due to the COVID-19 pandemic with service delivery further constrained in the aftermath of the coup.
Myanmar’s political liberalization initially brought optimism regarding an improved business climate. Hundreds of new laws and regulations were introduced to modernize the economy. Business registration and investment approvals were streamlined. State monopolies gave way to increased private sector participation across sectors like telecoms and banking.
However— the 2021 coup and ongoing crisis has profoundly disrupted recent progress. The Myanmar economy is estimated to have contracted by over 18% in 2022. Foreign investors have fled amid security concerns and sanctions. Even domestic firms face severe operational constraints from cash shortages, supply chain disruptions, infrastructure failures and more. Restoring political stability and policy direction will be crucial for reviving business confidence.
