ESCAP High Level Policy Dialogue and Eleventh Bank Indonesia Annual International Seminar. Economic Reforms in Myanmar

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1 ESCAP High Level Policy Dialogue and Eleventh Bank Indonesia Annual International Seminar Economic Reforms in Myanmar By Daw Yin Yin Mya Deputy Director General Central Bank of Myanmar Yogyakarta - May 15, 2013 Contents 4 Parts I. Pre-existing conditions conducive to growth II.Reforms III.Results of Reforms IV.Way Forward

2 Pre-existing conditions conducive to dynamic growth Rich natural resources (including water resources) Favourable demographic position - population of about 60 million, with sizable young work force Fertile and vast land space (total area - 261,228 sq miles) Strategic geographical location - gateway to Andaman sea and Indian Ocean, intersection of three economic corridors (South Asia, China & South East Asia) Ngapali Beach in Rakhine State Foreign Direct Investment in Myanmar

3 Myanma Pearls Myanma Ruby On Land Gas Exploration Myanma Sapphires Myanma Jade Challenges Poverty (low income mainly generated from agriculture), Prolonged conflicts among ethnic groups International sanctions Ambitious change in political and economic paradigm

4 Building a new nation Reforms (First Wave) National Reconciliation Peace process The release of Daw Aung San Suu Kyi and political prisoners Registration of National League for Democracy (Chaired by Daw Aung San Suu Kyi) which entered byelections on 1st April 2012 Paradigm shift on Democratic concepts-freedom of speech, rule of law, good governance, clean government, human rights etc.

5 Reforms (Second & Third Waves) Four points economic policy (1) Sustainable agricultural development with industrialization (2) Balanced development among states and regions (3) Development of the entire population (4) To improve quality of statistics and statistical system National Economic & Social Advisory Council Framework for Economic & Social Reforms (Land reform, improvement of access to credit, creating job opportunities) Clean & good governance Financial Reforms Managed float exchange rate system (unification of exchange rate) Foreign Exchange Management Law August 2012 License to do international banking Revocation of foreign Exchange Certificates (FEC) Securities Exchange Law Plan to set up capital market (timeline ) New Central Bank Law Road Map for Banking Sector Liberalization of Insurance market Budgetary changes

6 Monitoring the Reforms Quantitative and Structural Benchmarks are set up in consultation with IMF They form the basis for the joint assessments of the IMF & Myanmar scheduled for June 2013 and January 2014 SMP by IMF Committee consists of representatives from the Central Bank, Ministry of Finance and Revenue and the Ministry of National Planning and Economic Development was formed to assist SMP Cooperation with International Financial Institutions World Bank, IMF, Southeast Asian Central Banks, ADB, JBIC, JICA, ASEAN Finance Cooperation Technical Assistance, Capacity building Rewriting existing Financial Laws, Regulatory matters, restructuring the Financial System Debt Management MIGA Establishment Agreement with the World Bank

7 Results of the Reforms Growth accelerated slightly (5.9%) Inflation - moderate (FY : 2.7%, FY : 2.8%) Fiscal deficit (3.25% of GDP in FY ) US and EU sanctions relaxed Greater Foreign Investment potential Debt Clearance Since 1973 the debt of USD 11 billion accrued Settled the debt arrears of World Bank & ADB in the amount of USD 1 billion by way of Bridge Loans from JBIC Signed an agreement on the treatment of our debt with the representatives of the Paris Club Creditors Will have to achieve more favorable and concessional debt treatment bilaterally with Paris Club Creditor Countries

8 Better Engagement with International Community First Development Forum adopted Nay Pyi Taw Accord wherein international community committed to support Myanmar s development efforts Pre-arrears clearance grant of USD (80) million was provided by the World Bank for National Community Driven Development Project Deeper integration into ASEAN community Presence of the offices of IFIs including ADB Current Development Priorities Electricity Poverty Reduction Health Education Capacity Building

9 Way Forward Stepping up reforms Further expanding economic activities Needs tangible and sustained support from International community