Due to wartime destruction and the insurrection, per capita output in Burma today is at a little less than 80 per cent of the 1938-39 level, although it is slowly rising. Industrial production plays a very minor role in the Burmese economy. In the colonial period, the British concentrated on developing the extractive industries — oil, mining, teakwood, etc. — and agricultural products, such as rice, which could be sold abroad. Profits from these operations were seldom reinvested in Burma. Manufactured goods were all imported; only a handful of local factories were set up. At present, agricultural production and the related sectors such as processing and marketing make up just below two-thirds of the total gross domestic output.
To put our economy in balance, we must carry out a moderate industrialization program immediately. Because there is so little accumulated private wealth in Burma, the State has a vital role to play in supplying and mobilizing investment funds and spearheading this modest industrialization. Certain essential utilities have been nationalized—railways, river transport, electric power—and also rice and timber export. In addition, the State has stimulated manufacturing by the erection of plans in cement, textiles, jute, steel-rolling, sugar, brick and tiles, and pharmaceuticals. Some of the old British enterprises, such as in oil and mining, have been revived as joint ventures, and have proved successful.
Together with this increase in the Government investment, private capital formation has also been on the increase and has nearly trebled in the period between 1948-49 and 1956-57. However, these developments were not made without great hardship. For the last four or five years, the foreign exchange part of the capital program (roughly $80 million a year for both private and public sectors) has been financed out of extraordinary resources, i.e. with Japanese reparation receipts and foreign loans. Burma needs to have this level of investment sustained for about eight years more in order to be finally able, when the investments bear fruit, to finance all of her necessary foreign expenditures on her own.
On the domestic scene, Bruma—as with so many other countries today—is obliged to practice deficit financing to find part of the money needed for growth. The moderate inflation she is experiencing can be traced to consumer pressure for imported goods—which must be limited because of her exchange position—rather than to any lack of confidence in the soundness of her currency.
To accomplish her goal, Burma needs a measure of financial assistance from abroad. Foreign investment in mining and industry is especially welcome. Technical assistance has been gratefully accepted and Burma has enlisted American consulting firms to help plan her development.
Burma is determined to devote to long-run development a large share of the meager resources presently available even if it necessitates some sacrifice of current consumption for later benefits.