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On Optimism and Caution: Connecting East Asia

Kevin Lu's picture

It was all about connectivity in the just-concluded World Economic Forum for East Asia that took place in Bangkok last week. Participants pondered many questions related to how we could make this region more connected, in terms of trade, tourism, investments, and even value.

In a session on infrastructure financing, IFC Vice President Karin Finkelston spoke eloquently about the need to mobilize financing for many developing countries in Asia and what IFC has been doing in terms of both investing and advising governments to prepare bankable projects. When Professor Joe Stiglitz on the same panel raised his proposal to establish an ASEAN development bank, it received mixed feedback from the fellow panelists.

In a session titled “Investing in East Asia: Unlocking Opportunities and Overcoming Challenges,” a part of the private program for about 30 of the forum’s financial services members, I spoke about risk perception. Legal and political risks were top of mind for bankers at the sessions. A poll was taken in the room about the “hottest” investment destinations in Asia , and it turned out that people have lots of interests in Indonesia, Mongolia, Philippines and—not surprisingly—Myanmar, also known as Burma.

The person who stole the show at the forum was Daw Aung San Suu Kyi, who took her first trip abroad in 24 years. She showed up at several panel discussions unannounced, and sat and listened quietly. On Friday at a plenary session specifically arranged for her, she spoke passionately but realistically about her country and particularly about the prospect for foreign investors who are excited about this populous and resource-rich country that has so many needs after its extended period of isolation from the world. Some viewed her opinions on Myanmar, especially with respect to the lack of a properly enforceable legal system, as overly pessimistic. But her advice for investors to add some caution to their optimism and to think about risk was taken seriously by the audience. In fact, from many other conversations I had at the forum with foreign investors who have invested or are about to invest in the country, I got the sense that what Aung San Suu Kyi called “reckless optimism” among some investors could backfire.

I also had the privilege to have a one-on-one discussion with Daw Aung San Suu Kyi about foreign investments into the country. I shared with her what we do at the World Bank Group and MIGA, and how we have played a role in countries that re-emerged from various situations—especially as the World Bank is setting up a new office in the country sometime this summer. She expressed a strong desire to see foreign investments create local jobs as she told me that her top agenda item is youth employment. She is concerned about the state of youth in Myanmar and sees FDI as a potential opportunity to improve the employment situation.

Myanmar needs development and growth as she implied when sharing her reaction when her plane landed in Bangkok on Tuesday evening. She was invited to the cockpit by the pilot and sat in front of the myriad buttons and controls. But she said her biggest fascination was not those control buttons, but the lights she saw in Bangkok, something one does not see any more in Yangon given the power shortage in the country. Her country has been disconnected from the world for too long.

Connectivity indeed matters.

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