publication
Removing Barriers to Doing Business Key for Myanmar’s Growth

Image
Photo: Nyain Thit Nyi / World Bank

The first Investment Climate Assessment (ICA) in Myanmar provides an up-to-date analysis of the business climate for the government and other stakeholders. It is based on the 2014 Enterprise Survey, also the first in Myanmar, and other quantitative and qualitative data.

  • Myanmar is a poor country in the midst of an extraordinary transition with a GDP per capita of over $1,000 and a poverty rate of 37.5% in 2010.
  • The economy is predicted to grow by 7.8% and inflation is expected to be around 6.6% during fiscal year 2014 (ending March 31, 2015).
  • Since the political change of direction in 2011, the country is undergoing a huge political and economic transformation.

The government has made strong private sector growth a key principle and goal for economic policy, though challenges remain.

  • Access to finance is the top constraint for business operations. Only 1% of fixed-asset investment costs are financed by bank borrowing, while 92% of firms rely on their own funds.
  • The rules and procedures for obtaining, keeping and transferring land-use rights are complicated, non-transparent, and uncertain making access to land an issue.
  • Almost all firms face power outages, the worst level in the region. As a result, firms are forced to rely on their own power generators for electricity. 
  • Over 9% of firms cite inadequate workforce as an obstacle to doing business. 
  • Firms also claim that the educational system does not produce workers with up-to-date knowledge and an adequate work attitude.
  • Difficult legal and regulatory environment coupled with lack of transparency and corruption makes direct interaction between firms and the government a challenge.

Focusing Myanmar’s economic reforms on removing these obstacles will create a better business environment and enhance the productivity and efficiency of private enterprises.

  • Improving regulation, taxation and eliminating corruption should be continued and expanded.
  • Creating a more competitive private sector and attracting more investment, particularly foreign direct investment, can help support the reform process.
  • Capacity building to make sure that government agencies, as well as civil servants, become agents of change in the government’s reform program is critical.
  • While reforms for improving access to finance and electricity have been initiated, more analysis is needed on the appropriate role of the government in vocational training and similar programs to improve workplace readiness.