Economic reforms
Thein Sein inherited a highly dysfunctional economy that
had suffered from decades of mismanagement, rampant
cronyism, corruption and the punitive effect of Western
sanctions. By far the poorest of the 10 ASEAN member states,
in 2011 Myanmar was exporting only $1 worth of products for
every $25 worth sent abroad by its similarly sized neighbour,
Thailand.9
To address the situation, the government has
committed to a series of reforms that, although not as
extensive as those in the political arena, have still led to some
important changes.
In April 2012, the central bank floated the national currency
(the kyat), setting a new official value of 818 to the US dollar.
This was an important move. Under the former exchange
rate system, the military junta used an artificially strong kyat
(6.4 to US$1) to disguise and then appropriate earnings from
the sale of the country’s natural resources. The move to a
floated currency radically reduces the opportunity for this
type of fiscal impropriety and should ensure a more or less
realistic reporting of such income.10
Another major reform was passed in November 2012—the
introduction of a new Foreign Investment Law aimed at
attracting outside companies to establish businesses in
Myanmar and provide much-needed employment and
infrastructure. The legislation permits fully foreign-owned
firms to operate in the country (as long as all their unskilled
workers are locals), provides lucrative tax incentives for
their ventures and crucially introduces measures to protect