Myanmar’s “Triumph of the People”
We wrote about Myanmar and the stirrings of a middle class at the end of last year, and we remain keenly interested in the transformation of its political system and economy. With real reforms in place, the opportunities for this country are tremendous, as it could benefit from substantial energy reserves as well as the kind of comparative labor advantage that China had over the last few decades (which has largely evaporated). It is still early for any type of public investing opportunities (perhaps other than regional companies in Southeast Asia serving the country), but there is much for us to learn by closely observing the process.
Suu Kyi’s election victory on Sunday is hopefully a big step in the reformation of the country:
Confirmation of Sunday’s results came just a few hours after Ms. Suu Kyi hailed her party’s victory as a “triumph of the people” and promised to work with other parties to bring reconciliation to the long-suffering Southeast Asian nation, one of the poorest in Asia.
It also came as the government appeared to pull off a smooth start to one of its biggest reforms to date: A managed float of the Myanmar currency, after years of pegging the Myanmar kyat at an artificially inflated level, confusing foreign businesses. The government set a new target price for the Myanmar kyat that is close to unofficial street-market levels, and banks appeared to be complying, trading dollars in a close range of the new rate.
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The vote was “not so much our triumph as a triumph of the people who have decided that they have to be involved in the political process in this country,” she said.
The reform to Myanmar’s foreign exchange regime, meanwhile, is likely to help attract more foreign investment by simplifying a system that previously had at least two different exchange rates. They included a fixed “official” exchange rate of about six kyat to the dollar, mainly for government budgets, and unofficial street rates of about 800 kyat to the dollar.