Myanmar’s foreign direct investment (which includes mergers & acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans) dramatically increased since the 2011 reforms, more than doubled in one year, and in 2014, FDI was worth at least $4.4 billion. From 2005 to 2014, foreign direct investment increased from close to non-existent to almost 10% of the country’s GDP, with an average increase of $365 million per year.
In contrast, the level of international aid to Myanmar continues to rank amongst the lowest in the world (and the lowest in the Southeast Asian region) – the country receives $7 per capita in development assistance, as compared to the regional average of $42 per capita. Official aid received was steady with little change between 2005 and 2012, and then in 2013 the amount of aid quadrupled to almost $4 billion. For the first time since at least 2005, the official aid received was greater than foreign direct investment. In 2014, Myanmar’s GDP was $64 billion and the combination of both direct investment and official aid represented about 15% of the country’s GDP.
During the same period, the country’s statistical capacity has consistently dropped when one might imagine an increase. In 2011, the country reformed its policies regarding anti-corruption, currency exchange rate, foreign investment laws, and taxation, and the level of statistical capacity is one dimension used to asses transparency, accountability, and corruption of which Myanmar’s rating increased from 2.5 to 3.0 on a scale of 6.0 over the last two years. Myanmar’s level has fallen an average of 1.7% per year since 2005. The 2014 level of 46.7 is low in comparison to the rest of East Asia, which has an average level of 71.4, and in comparison to all middle-income countries, which has an average level of 68.9.
This drop in statistical capacity may be related to the rapid growth of the economy, although the downward trend in capacity appears to have started at least five years prior to 2011. Regardless of the reason, Myanmar will need to deal with this deficit as investment and foreign aid continue to expand, and the foreign institutions will increasingly demand accountability.
