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CONCLUSIONS AND RECOMMENDATIONS:
The Government of Myanmar has made it clear that it recognises the crucial importance of a dynamic, liberalised agricultural sector to the country, describing it as the base’ for national economic growth and calling for the evolution of a market-oriented economic system’ as a key economic objective, while the first policy declaration of the MOAI is to allow freedom of choice in agricultural production’. Yet more than a decade after the commencement of the transition from the previous Socialist regime, many aspects of the agricultural and rural economy remain substantially under Government control or influence, including the choice of crops to be planted, priorities for agricultural research and extension, access to inputs, processing and international trade...
The enormous potentials inherent in the agricultural and rural economy of Myanmar outlined in this document will continue to go unrealised unless the liberalisation process started in the late 1980s is encouraged to fully evolve. Although moves such as the liberalisation of rice marketing in 2003 should be welcomed, their impact is often reduced by a subsequent tightening of state controls – as indeed has been the case with the reintroduction of the prohibition on private sector exports of rice just a few months later. This study has identified a number of important technical issues that need to be addressed in order to facilitate the growth of the sector1, however, it must be understood that the impact of investment in the rural sector will be greatly lessened in the absence of continued liberalisation measures...
The three policy areas which are exerting the greatest influence on sector development at this time are those relating to rural financial services, international trade and directed production. The liberalisation of rural finances is critical because state-controlled structures (e.g. MADB) are currently unable to provide farmers and other rural entrepreneurs with access to the financing they need to increase productivity. This lack of financing reduces the use of inputs, limits the adoption of new technologies, constrains the development of unutilised land and encourages low cost/low output production. Furthermore, by forcing rural populations to use much higher cost credit from informal sources it is, without doubt, a major factor in increasing rural indebtedness and poverty. Limitations on access to international markets are almost equally important, as they prevent the sector from identifying, and responding to, those opportunities which will provide the greatest returns, both for their families and for the country as a whole. The result has been to distort production patterns towards perceived national priorities, at the expense of economic growth. Finally, the continued use of directed production for perceived strategic crops limits the ability of the agricultural sector to seek out and adopt the most productive and profitable activities, effectively preventing its evolution in a rapidly changing world...
The temptation to solve economic problems through direct intervention is an age old one, and it is not surprising that the Government sees intervention as an effective instrument for achieving short-term goals, such as maintaining low consumer prices, guaranteeing supplies, or reducing expenditure of scarce foreign currency – even when this is in conflict with its own broader national policies. Nevertheless, action in one area has inevitable consequences elsewhere, many of which may not be anticipated. As many countries have discovered, one intervention often requires another intervention to resolve an unintended side-effect. Consequently, such intervention should be used very sparingly, if at all, and alternative approaches, which do not conflict with basic national policies should be sought instead...
With ASEAN integration now a likely prospect in the medium term, growing pressures from international globalisation, and strong indications of increasing poverty in rural areas, a continuation of the partial liberalization regime effectively in place at the moment will prove difficult to maintain and is likely to further constrain economic growth and development. Myanmar may ultimately have to choose between broad choices: To return to the socialist model of the 1970s and 1980s, and in so doing effectively disconnect the country from the international and regional economic system; or to push forward with existing national policies of economic liberalisation and realize the great potential of Myanmar as an agricultural producer and exporter. While the second choice will bring with it many challenges, few doubt that the agricultural sector in Myanmar can be a competitive force in the world economy, and the growth that such
competitiveness would bring could both reduce rural poverty and catalyse the development of the rest of the economy.
14.95 Finally, it is worth noting that experience across a broad spectrum of developing countries has shown that food security is most prevalent when national policies influencing the productive sectors of the economy have a marked pro-poor orientation. In a predominantly rural economy such as that of Myanmar, agricultural growth provides the most opportunities for pro-poor development, as long as the poor are central to the process. This requires not only access to appropriate technical, financial and physical resources for production, as well as associated services such as health, sanitation, water supply and education, but also an economic and policy environment which enables rural households to respond to market demand and benefit from their contribution to national growth.
