Economists fear rich-poor divide will grow even larger
Economists warn that while the super rich in Myanmar are likely to get richer, the gap between the rich and poor may grow wider in the next 10 years.
Currently, only 40 people in Myanmar own more than US$30 million in personal wealth. By 2022 that number of super rich will surpass 300, according to Wealth-X, a global researcher on ultra-high net-worth individuals.
This is in a country still considered one of the poorest in East Asia, according to the World Bank, with an estimated GDP per capita of between $800 and $1,000 (Bt29,650 to Bt32,100).
“At the moment, the gap between the rich and the poor of Myanmar is the widest in the world,” said economist Dr Aung Ko Ko.
“The existence of the gap between the rich and the poor depends on the country’s policy of income distribution. If the country is dependant on selling its resources, such as oil and gas, the gap may continue to exist,” he added.
As the government embarks on a series of political and economic reforms, foreign investors and capital are pouring in as companies vie for lucrative contracts in new hotel businesses, construction, natural gas and energy. Myanmar looks set to embrace the economic growth witnessed by the emerging Southeast Asian economies in the early ’90s.
However, economists say that if Myanmar fails to rethink economic policy on balancing income distribution, the rich will grow richer while the poor sink deeper into poverty. Such income inequality can lead to political instability and lower growth in the future.
After decades of state-run socialism, Myanmar is now embracing a free-market system which allows for competition. However, equal access and opportunities in the market place are still lacking, as “crony” companies with connections to the old regime are often first to profit from lucrative contracts and deals.
Widening participation, guaranteeing fairness through laws, and preventing economic manipulation are crucial defences against the emergence of a crony economy, says Aung Ko Ko.
“There are competition laws in over 100 countries of the world, even China, but not in Myanmar.
“A market without competition will only result in unbalanced incomes,” said the economist.
“Cronies from Myanmar have been doing businesses for at least 10 or 20 years. They have advantages over new businesses in manpower, financial power and technological know-how. Thus, the government will grant them projects because they are better equipped. We need to give equal opportunity to everyone,” said a young entrepreneur.
Manipulation of taxation is also giving crony firms and others an unfair advantage.
After criticism of a lack of transparency, the Department of Revenue promised to draw up a tax list of Myanmar’s wealthiest 500 business tycoons soon.
“Myanmar has tax dodgers, and the two committees of the Lower House need to cooperate … to ensure everyone is taxed,” Lower House Speaker Shwe Mann said last month.
Though the country has more than 30,000 local and overseas companies, only about 3,000 currently pay tax.
As a privileged few reap the rewards of the economic reforms, one figure illustrates the humble existence most people lead: 75 per cent of the population have no electricity. Meanwhile, more than a quarter (26 per cent) live in poverty.