By May Oo
YANGON, Nov. 8 (Xinhua) -- Myanmar's economy did not grow as high as expected although it has experienced exactly one year after the country's general election on Nov. 8 last year, said local economic experts and businessmen on Tuesday.
Aung San Suu Kyi-led National League for Democracy (NLD) won a landslide victory in the general election last year, forming the new government in April.
In the first four months after taking office, as its first action for economic reform, the new government introduced a 12-point economic policy highlighting the vitality of national reconciliation, luring of foreign direct investment, job creation and reforming financial sector.
State Counselor Aung San Suu Kyi admitted that the economy grew slowly in the first six months of the new government when meeting with the local business players and development partners in Nay Pyi Taw.
The economic growth of Myanmar is projected to rise to 7.8 percent in this fiscal year 2016-2017 while the country's inflation rate is expected to ease 8.5 percent (annual average), according to the East Asia and Pacific Economic Update of World Bank in early October.
Sudhir Shetty, Chief Economist of the World Bank's East Asia and Pacific Region, said that inflation is particularly a bad signal for investors. The country needs to take any measure to control the inflation.
The country also faces growing challenges to short-term macroeconomic stability. A combination of fiscal prudence, enhanced monetary operations, exchange rate flexibility and strengthened banking supervision capacity are required to cope with the challenges.
The U.S. dollar exchange rate with Myanmar kyat in local market started to increase again since August.
One U.S. dollar was sold for 1,292 kyats but bought for 1,288 kyats on the official market Monday although the exchange rate was stable at over 1,100 kyats per USD before.
Habib Rab, Senior Country Economist of World Bank for Myanmar, said that the government needs appropriate monetary policy for more flexible inflation rate and exchange rate to lure foreign direct investment. These phenomena also have the impact on the daily life of the people.
President U Htin Kyaw, in a Finance Commission meeting earlier this month, called for speeding up monetary reform as the country experienced some instability with its local currency due to inflation caused by consecutive deficit and imbalanced demand and supply.
The huge trade deficit makes the country's economy slower as it is a main major reason for inflation and the government should make efforts to enhance the export, according to local experts.
Minister for Commerce U Than Myint vowed in April to triple the export .
The total trade deficit of Myanmar amounted to 1.737 billion U.S. dollars in the first half of this fiscal year 2016-2017.
The second important undertaking done by the new government is introduction of the new investment law which is one of the key factors to lure foreign direct investments and drive the economy.
The new law , which combines the Foreign Investment Law drafted in 2012 and the Citizens' Investment Law drafted in 2013, comprises new forms of tax breaks and encourages export-oriented businesses.
The local experts said that the economy growth is currently relying on the foreign direct investments as it is too earlier to enjoy the results of other macro-economic policies.
However, the country failed to hit its targeted investment amount of 6 billion U.S. dollars in this fiscal year 2016-2017 as the total value of foreign direct investments in the first seven months was only over 2 billion U.S. dollars.
The country can use the advantage of U.S. lifting of sanctions in early October to improve not only the investment environment but also trade and financial transactions.
Fortunately, as an emerging market, the country receives international aids for the government's political reforms.
Aung Ko Ko, a local economist, commented that weakiness in policy enforcement and far from reality of country's economy are the main factors why the former government did not succeed with their policies.
The current government is to emphasize the importance of management and performance to enforce the policies in collaboration with state and regional governments and bureaucracy mechanism for implementing the policies, he added.
