Number of SMES halves as competition from across the border bites
THE number of small and medium enterprises (SMES) in Mandalay industry zone has halved, according to U Nay Win, vice chair of Mandalay industry zone management committee U Nay Win.
“According to our data, there were over 1,000 SME businesses in 2010 but now in 2017 there remains only over 500.” he said.
The number of SMES has halved because local SMES can no longer compete with the products entering from China and other ASEAN countries.
“Myanmar SMES cannot compete with international industrial goods, food products and consumer goods,” he said.
This is due to scarcity of skilled workers, inadequate capital, insufficient electricity supply, weak government support to the SME sector and weakness in coordination and collaboration practice among businessmen.
“Prices of our products are high because we can’t go mass production due to the lack of modern machinery. When our neighbor China is producing an item in hundreds of thousands, we are producing just in tens of thousands. So, we are not able to reduce production cost and gain from economies of scale,” he continued.
Therefore, the government should impose more levies and tariffs on the goods entering Myanmar via the borders and from ASEAN countries if those goods can be produced by local businessmen, he added.
“As local SME producers have to pay tax while foreign goods are not taxed upon entering Myanmar, the local businesses are not able to compete with them in terms of cost. Therefore, the very first thing to do for the government is to strictly impose levies on imported goods,” he said.
Meanwhile, former SME owners who were put out of business have switched to more profitable brokering jobs. “They have become gem brokers, real estate brokers and car brokers. They left their businesses behind and moved to more easily profitable lines of business,” U Nay Win said.