Building on rural sector is key for Myanmar’s economic modernization: OECD

Improving Myanmar’s agricultural sector by building up food processing activities and related services could help transform the country’s economy into a more modern one that is able to produce higher-value goods for export, a new Organization for Economic Co-operation and Development (OECD) report says.

The second volume of the OECD’s Multi-dimensional Review of Myanmar reveals poor rural infrastructure, inadequate farmer skills, insufficient government services to promote exports and lack of access to finance in the agricultural sector need to be addressed.

Only 2.5 percent of loans in Myanmar go to the rural sector, despite the fact the sector accounts for 30 percent of the country’s gross domestic product (GDP) and two-thirds of its jobs, it says.

“Myanmar’s transformation into a modern economy could be kick-started through a strong focus on the agricultural sector where most people currently work. Increasing access to finance in rural areas and improving farmer skills will be vital to boost farm productivity and free up workers for manufacturing and services”, OECD deputy secretary-general Rintaro Tamaki said during the launch of the report in Yangon, Wednesday.

The report reveals that in the manufacturing sector, the main factors hampering business development are corruption, a lack of technology and poor access to land and office space.

“Resolving ambiguity over land rights, improving infrastructure and reforming the financial system would help create the right conditions for the wider economy to flourish. More government support to promote Myanmar’s exports abroad and in strengthening health and safety regulatory systems so that products meet export standards would also have a positive impact,” said the report.

Such structural transformation will need considerable investment, however. Achieving the government’s growth targets could require investments amounting to between 21 and 28 percent of GDP annually over the next two decades and as much as 30 to 40 percent of GDP by 2035.

“To meet its funding needs, Myanmar should consider all available sources of finance. External sources, including official development aid, foreign direct Investment and remittances from the country’s large diaspora, could meet as much as one third of the financing needs for the rest of the decade,” said the OECD.

“However, the bulk of financial resources, especially for the medium to long term, will need to come from domestic sources, including government revenues and household savings, which are currently very low.”

Source: The Jakarta Post

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