THURSDAY, March 28, 2024
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Human capital, infrastructure are key to growth: ADB

Human capital, infrastructure are key to growth: ADB

Myanmar's economic growth rate could rise from 7-8 per cent at present to 9-10 per cent by 2030, if the country puts more focus on human capital and infrastructure, according to a new report by the Asian Development Bank.

The average growth for Asia for the past decade has been 7.6 per cent.

“Infrastructure needs substantial investment. Myanmar has a limited supply of electricity. The country will need as much as US$80 billion by 2030 for meeting the demands rising from a high-growth scenario in major infrastructure systems. The country will need 5 billion a year on average by 2030,” said Cyn-Young Park, an assistant chief economist at the bank.

“The fundamental thing for inclusive growth is to create jobs, create economic opportunities, and lay a foundation for agricultural and rural development. That would create opportunities for rural society. That will be immediate help for people living in the countryside.”

The development bank today launched the country diagnostic study “Myanmar: Unlocking the Potential".

The economist said that transport connectivity and electrification are the areas to be prioritised.

“Regional connectivity and integration will enlarge trade and FDI [foreign direct investment] potential. There has to be a substantial and immediate increase in spending on human capital, not only just in education but also health expenditures. When compared to other Asian countries, the public spending on health and education is still very low. These have to be sharply increased,” she said.

The country also needs to increase agricultural productivity.

“Agricultural productivity of all different products, the variety and the value-added, will push the economy to obtain much higher growth, 6.3 per cent for each year. Some of the big gains come when we combine these industries together with better human capital,” she said.

Myanmar is should also increase public spending on education, particularly for primary and secondary schools. The government should consider the use of cash transfers and scholarships to higher education, build more secondary schools or expand transport systems in rural areas, and upgrade the school curriculum.

In transport, immediate priorities include establishing coordination between all relevant ministries and neighbouring countries to ensure efficient planning of road, rail, inland waterway, and air transport projects. Investments should be prioritised to generate the highest economic returns and improve connectivity between urban and rural areas, and with border areas.

Power investments should be guided by a least-cost power expansion plan that increases power supply from available resources, with a focus on hydropower and natural gas. Existing coal and gas-fired generation plants should be upgraded to provide reliable energy supply. The use of more efficient generation technologies such as combined cycle gas power plants should be encouraged.

The report was prepared through close collaboration between ADB and the government. It presents detailed policy recommendations in eight strategic areas that will shape the country’s development:

  1. accelerating governance and public sector reform;
  2.  ensuring macroeconomic and financial stability;
  3. creating a business-enabling environment;
  4. leveraging rich natural endowments;
  5. fostering internationally competitive sectors—manufacturing and services;
  6. enhancing regional connectivity and integration;
  7. promoting human development and poverty reduction; and
  8. pursuing environmentally sustainable growth.

“We welcome this report and its findings. It clarifies and illuminates many of the important issues that need to be addressed both now and in coming years,” Dr Kan Zaw, Minister of National Planning and Economic Development, wrote in its foreword. “These include weaknesses in infrastructure, human development, market and government institutions, regional integration, and environmental protection.”

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