2012: At a glance
Dec 28, 2012
2012 will be marked in the history of Myanmar as the ‘Year of Transformation’. Even amongst criticism, unparalleled economic and political reforms were taken by the Myanmar government this year that were sincerely rewarded by the global commu-nity.
Myanmar began the year by freeing about 200 political prisoners. This amnesty was bestowed throughout the year releasing about 100 more political prisoners. The World Bank announced its re-engagement with Myanmar after a gap of 25 years in February in order to provide technical assistance to financial and banking sectors.
April perhaps was the most significant month in the year as Myanmar’s economy marched towards liberalization as the multiple exchange rate of overvalued Kyat was abolished and a managed float of USD at market exchange rate was established. The USD was floated in auction with 17 authorised dealer banks at 818 Kyats per $1 against the previously overvalued rate of about 6 Kyats per $1.
April also witnessed by-elections which were claimed by international community as “largely fair” electing Nobel laureate Aung San Suu Kyi into the parliament for the first time while her party swept 43 out of 45 seats. Satisfied by the conduction and results of elections, the global community responded by easing of sanctions. The European Union opened a diplomatic office and suspended sanctions for a year while Australia and Canada eased them. Japan announced resumption of official de-velopment assistance and writing off $3.7bn worth of loans in arrears.
In May, the United Kingdom announced the opening of an interest office in Myan-mar while the US allowed its private companies to invest in Myanmar’s energy, min-ing and financial services sector.
The US upgraded the diplomatic ties with the country by appointing Derek Mitchell as the first US ambassador to Myanmar in June. The banking sector was further eased up by launching of remittance services into Myanmar by four domestic private banks. Six private banks commenced trial run for debit cards using the interbank Myanmar Payment Union network.
The month was also marked with violent clashes in the Rakhine state between the Buddhist and Muslim communities displacing around 90,000 people and resulting in the death of about 50 people. These clashes were reignited in October 2012.
The World Bank opened its office in Myanmar in August and announced its aid to clear $397m in arrears by providing a re-structuring loan. 11 domestic private banks launched the internationally recognized letter of credit (LC) system with foreign counterparts in Singapore, Thailand and Malaysia.
US President Barack Obama signed the bill on lifting the ban on provision of financial aid to Myanmar through international development banks such as the International Monetary Fund and the Asian Development Bank in October. Mr. Obama’s landmark visit to the Southeast Asian nation in November became the first for any sitting US President.
A much awaited Foreign Investment Law was passed by the parliament and enacted in November paving the way for foreign firms to enter the Myanmar market. The law does no more include certain restrictions, such as minimum capi-tal requirements and caps for the foreign share of the investment, as in some earlier drafts. However, it is too early yet to judge the attractiveness of the new law as the by-laws are not yet in place. Also there has been some concern about the Myanmar Investment Commission having too much discretionary power. To gain the trust of foreign inves-tors, the Commission will have to define transparent processes and show consistency in its decisions over time.
This month was again marred by the violent crackdown of protests against the Monywa copper mine expansion injur-ing monks amongst others.
MasterCard, Visa and Western Union launched their services in Myanmar while many foreign banks opened their representative offices awaiting heads up from the Central Bank to start operating branches in Myanmar. Though many believe an overly optimistic picture of the reforms is being presented, nobody can deny that wheels of progress have been set in motion.