Back on the Map

• Author: Meral Karasulu and Sergei Dodzin
• Position: a Deputy Division Chief and is a Senior Economist, both in the IMF's Asia and Pacific Department.

In a startling turnaround, Myanmar is emerging from decades of seclusion from the rest of the world. The new government of Thein Sein has initiated historic political and economic reforms that are reintegrating Myanmar into the global community and jump-starting its economic development.

But paving the way for a better future for Myanmar will require firm resolve by its policymakers to sustain the momentum of reform and translate it into concrete gains for the people. And other countries can help Myanmar benefit from their experience through much-needed technical and development assistance.

Inching toward reform

Myanmar has taken a series of steps toward political reconciliation and democratization. Political reforms since March 2011 include the release of political prisoners, relaxation of media censorship, a new labor law that allows for labor unions, and several cease-fire agreements with ethnic minorities. A more visible sign of this political process is the most famous new member of parliament, opposition leader Aung San Suu Kyi, who until late 2011 was under house arrest.

These steps have triggered a positive response from the international community. Following the April by-elections that carried Suu Kyi and her National League for Democracy party to Parliament, the United States, the European Union, Canada, and Australia agreed to suspend most of their economic sanctions against Myanmar, although U.S. markets remain closed to Myanmar’s exports.

Myanmar is rich in natural resources, including natural gas, gems, minerals, and forestry products, and it has a young labor force. Its membership in the Association of Southeast Asian Nations (ASEAN), which Myanmar will chair in 2014, and its proximity to India and China make it a strategic bridge in one of the most dynamic regions in the world.

With the new political openness, hotels in Yangon are already full of foreign businessmen exploring entrepreneurial possibilities. They are immediately recognizable—meeting in lobbies and traveling around the city in their business suits, braving the Myanmar heat. Many large foreign companies, including Coca-Cola, Chevron, and General Electric, have announced plans to invest in Myanmar.

The air is filled with optimism for economic growth and improved living standards, but so far there has been little tangible change on the ground. Daily electricity cuts are routine not only in the commercial center, Yangon, where use of generators is widespread, but...