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Interview: ‘Burma has an extraordinary future in agriculture’

Prof. Sean Turnell of Mcquarie Univiersity in Sydney, Australia, is an expert on Burma's economy. (Photo: Sean Turnell / Facebook)

Economist Sean Turnell has been a researcher of Burma’s economy for over twenty years. He has been an advisor on Burma to the US State Department, to USAID and to Australia’s Department of Foreign Affairs and Trade. he is also an informal advisor to the Burma’s National League for Democracy (NLD) government. He spoke to DVB about Burma’s economic policy released last week.

Q: What are your overall thoughts on Burma’s 12-point economic policy?

A: I thought it was good — nothing that a reasonable person would object to. I think the extent to which there has been criticism has been over the lack of detail. It is a little bit frustrating, as I know behind those 12 points there has been a lot of work that has been done and is still being done. So the criticisms are missing the point, but the government does bear a little responsibility for that, as they could communicate a little better. The 12 points are quite well balanced and there are no economic issues. It is very prudent and institutions like the IMF and World Bank wouldn’t have any trouble with it. I think that both in the particular and in the broad sense it mixes good economics with social justice.

Q: One of the criticisms of the NLD has been its focus on the peace process, rather than on approving international investment projects. What is your response to these criticisms?

A: When the new government came into power, there had been all these new projects approved but there has really been a need for a bit of a stock-take — to look at projects closely and look at if they are going to damage the livelihoods of local people or if there are environmental issues. Ethnic nationalities are vulnerable in some of these areas so it was absolutely the right thing to do, to put all of these projects under scrutiny and to slow the process down. That is part of their prudent approach. Actually, one of the criticisms of the previous government I had was they made a number of deals, a number of which I thought were extremely bad, with China — such as the whole project in Kyaukphyu, the Special Economic Zone, where the Chinese have a pipeline that is meant to pump oil and a gas project all the way up to Yunnan Province in China. One can say the contracts for that project definitely warrant scrutiny, as well as some of the controversial dam projects. I think investors that object to it are doing it more for theatre.

Q: Regarding the mega-dam projects, what can the NLD do about some of the existing contracts?

A: There is no one answer that fits all. Sometimes the project should definitely not be done, in other cases the contracts may be written so tightly that there is no way out except for compensation. But if some are really serious, then what you have to do is suck up and pay the damages. In other cases, the project shouldn’t go ahead and there are loopholes in the contract, or in other cases the project might be alright but it just needs to be modified. An example of that is sometimes the dam itself might be OK, but all the electricity is going into the grid in Thailand or China. So people in Burma, who are desperate for electricity, don’t get a share in it. So under the old regime, it just meant a lot of cash was going to people in the regime and no one in Burma was really getting anything out of these projects. On the other hand, there could be quite viable projects that have utility for the people of Burma, but more broadly it would just be a matter of modifying the spot of where the dam is to be built or changing the terms of compensation, not for developers but for local people who are to lose their land. It hinges on the bigger question: Is the project worthwhile and how to proceed, or if not worthwhile, [how to] stop it and what is the nature of getting out of it?

Q: What are some of the areas of opportunity for investment and growth in Burma?

A: I’m very confident that Burma has an extraordinary future in agriculture. It’s really interesting as the standard image we have of development is of poorer countries moving from agriculture into industry and using their cheap labour to initially make clothing, footwear and textiles and then move up the value chain. But a lot don’t — they get stuck. But one of the other stories of development which is not often heard is every developing country which has strongly grown — except maybe for Singapore — transitioning to a middle income country or higher, has got agriculture right first. There have been dramatic improvements. Making agriculture more efficient means you can release labour, which becomes part of the labour force for labour-intensive manufacturing, and then you grow enough food, which is important for the people. It also means you are able to earn foreign-exchange earnings for exports, and recycle those earnings back into the economy to develop industry. Likewise, a vibrant agriculture sector tends to lead naturally into industrialisation anyway, such as processing, packaging and the marketing and milling — you get a natural outgrowth.

Q: Are Burma’s opportunities in agriculture exports unique to its neighbours?

A: The real opportunity for Burma is also that agricultural commodities have risen in value compared to manufacturing commodities. The extraordinary rise of China and all sorts of produced commodities from cars to microchips have fallen dramatically in price, whereas one of the things that is not going away is the need for food. Burma is so well placed, and so well endowed with natural resources in an agricultural sense, as you have got China and India sitting on both sides, with massive populations and relative land scarcity and relative water scarcity. Over time, as those countries lose land, the need to import food is going to grow and grow. There is also an extra element if you establish a brand of high quality in fruits and vegetables, certain meats and so on, you can really do well.

Q: One of the points talked about was privatising state-owned enterprises. What are the lessons on how to do this?

A: To some extent Burma has a lot of state-owned enterprises that are a hangover from the socialist days. There are a couple of traps you need to look out for if you are privatising. Firstly, who you privatise to needs to be paying the proper price so you don’t just hand over state assets to your friends or cronies. The biggest thing is if you have an enterprise that is really a commercial enterprise run by the state, then what tends to happen is that it is run on behalf of the people who are in control of that rather than for the greater good. One of the key areas we may see privatisation is in the banks; there are too many state-owned banks. There may be the argument that you could keep a state-owned agricultural bank, but there is probably no need to have a state-owned commercial bank because the question becomes, what is its purpose? If it is not seeking to make a profit and not lending on commercial terms, then what terms is it lending on? More controversial enterprises would be airlines, transport and services broadly. The most important thing is process: If it is done properly, the state will make money, which means the people will get the right price.