In November, Myanmar saw its first free elections in 25 years, with the National League for Democracy (NLD) winning an absolute majority in parliament. It could prove to be a watershed moment for a place consistently afflicted by civic war and ethnic conflict.
With burgeoning democracy, the country can hope for better connections with the rest of the world and improved access to trade. Until recently, its export potential has been hampered by sanctions imposed by developed nations in response to widespread human rights abuses.
Those sanctions have been gradually eased off in light of humanitarian progress in the past few years. For example, Canada mostly lifted its own in 2012, and the EU did the same in 2013. The U.S. has been more reluctant; while President Obama lifted some restrictions in 2012, they were left largely intact.
While the trade volume with Canada remains small, its growth is a good illustration of the positive effects that lifting sanctions can bring.
Myanmar’s RMG Sector
The government has paid particular attention to potential in the ready-made garment industry, and hopes to make the country a major competitor in that market. Several large retailers already source out of Myanmar, including Gap and H&M.
RMGs have often played an important role in the export growth of developing economies. Clothing production is labour-intensive, yet relatively simple, giving poorer countries with inexpensive labour the chance to build a competitive advantage. Myanmar’s sector is still small, and it will take years to develop the levels of infrastructure and business relationships that could rival established players like Bangladesh.
In August, a national minimum wage was established at about US$67 a month, almost the same as that in Bangladesh’s garment sector. The move was controversial, with several employers complaining the floor was too high. Yet, supporters claim that following through with ethical labour practices (such as fair wages) will attract more and higher-quality investors in the long run.
The wage is significantly lower than that of most neighbouring countries with established garment exports, such as Cambodia and Thailand. At the same time, it amounts to greater purchasing power in Myanmar than in Bangladesh.
Some have been quick to point out that one free election does not automatically make for a mature democracy. It is still up to the current regime to bow out gracefully, and the military will maintain significant power even with a new one in place. There is still much progress to be made on rights and freedoms, and it remains to be seen whether the NLD will be able to govern effectively.
All of these problems won’t be solved overnight, but greater prosperity could be in Myanmar’s future if the country can competently handle its transition to democracy, as well as foster the right relationships with potential investors and trading partners. November’s elections could be an important step toward that future.