Cranes Stand Idle as Myanmar Businesses Lament Economic Policy Drift

By Timothy Mclaughlin

YANGON – Aung San Suu Kyi’s ruling party is set to reveal its economic plans for Myanmar this week, a long-anticipated announcement aimed at alleviating concerns among businesses and investors anxious about the lack of clear policy guidelines.

Following the National League for Democracy’s (NLD) remarkable electoral victory last year, the private sector had hoped for a swift implementation of reforms. However, eight months later, the NLD’s economic strategy remains largely unclear.

"We have yet to hear about their broad economic policy and direction. There has been little interaction," stated Win Win Tint, CEO of City Mart Holdings Co. Ltd., which operates the largest supermarket chain in the country. She noted that the company is scaling back its expansion plans for new supermarkets, hypermarkets, and convenience stores next year due to insufficient "encouraging economic policies."

While the government’s economic plans will provide some clarity, they are unlikely to fully alleviate concerns regarding the initial economic direction taken by the government. The dismantling of development projects approved by the previous administration and a thorough review of construction initiatives have halted work on numerous half-finished high-rises throughout the Yangon skyline, intensifying unease among investors.

A senior NLD official indicated that parts of the government’s economic vision for the nation, home to 51 million people, would be outlined later this week. Han Tha Myint, a member of the newly established National Economic Coordination Committee (NECC), mentioned that the policies would prioritize agricultural development and job creation in the private sector, but he acknowledged that the policy paper would lack specifics. "It covers a lot of topics but is quite general," he admitted.

Myanmar, once a tightly controlled economy, is now growing rapidly, with annual growth rates between 7 and 8 percent since the military loosened its grip in 2011, allowing for extensive reforms under former President Thein Sein. Despite her official ban from the presidency due to the military-drafted constitution, Suu Kyi effectively leads the NLD government that took office in April. However, her primary focus has been on navigating the intricate peace process in the ethnically fragmented country, which critics argue has slowed economic decision-making.

"It appears that they have not prioritized business," remarked City Mart’s Win Win Tint. Economic policy is primarily directed by Kyaw Win, the Minister of Finance and Planning, who presides over the merged ministries that previously operated separately. Concerns have arisen about his capacity to manage the extensive responsibilities, particularly given that he is supported by only one deputy minister.

Significant delays followed the reformation of the Myanmar Investment Commission (MIC), a crucial organization for approving domestic and foreign investment initiatives, which did not occur until June—over two months into President Htin Kyaw’s term. This delay contributed to a backlog of $2.3 billion in foreign investment proposals awaiting consent, prompting business leaders to suggest that the NLD’s priorities may differ from those expected.

Kyaw Win Tun, director of the Directorate of Investment and Company Administration, reported that the reformed MIC has convened twice since its restructuring last month, approving 11 foreign investments and eight local projects valued at approximately $123 million. In contrast, figures from the same period last year show that 64 foreign and 30 local investment projects worth around $2.8 billion were greenlit.

By June, MIC officials indicated a backlog of 102 projects pending approval. "The entire government apparatus seems to be stalling," said a business advisor based in Yangon. "People are waiting for the ministers to make decisions, but the ministries are overwhelmed and hesitant to act."

One of the most prominent actions taken by the government has been a comprehensive review of high-rise construction projects in Yangon approved by the previous administration. This review, aimed at ensuring compliance with safety and zoning regulations, has resulted in the suspension of work on 185 construction sites in the commercial hub.

The outcomes of the first twelve project evaluations were made public earlier this month, with most projects requiring considerable alterations to their original plans. This situation has frustrated developers, who argue that discontinuing the stalled projects could result in losses exceeding $5 billion. "We are disheartened," said Thiha Zaw, general manager of PSWN Development Company, whose plan for a 31-story luxury apartment complex is now reduced to a maximum of 12 stories. The company has already invested $9-10 million of the estimated $80 million total cost and will now have to reconsider their strategy.

Thiha Zaw noted that this decision has initiated a ripple effect in the industry, resulting in layoffs for construction workers, job losses for subcontractors, and uncertainty for customers regarding the completion of purchased apartments. "If these projects can’t advance, everyone connected to them will be affected," he added.