Small gain in ease of do­ing busi­ness

The Myanmar Times - - Front Page - STEVE GIL­MORE s.gil­more@mm­times.com HTIN LYNN AUNG htin­lyn­naung@mm­times.com HTOO THANT thanhtoo@mm­times.com

Myan­mar has moved from 171 to 170 out of coun­tries ranked by the World Bank for ease of do­ing busi­ness, but chal­lenges in lo­gis­tics and sup­port­ing for­eign trade per­sist.

ELEC­TRIC­ITY sup­ply, land reg­is­tra­tion and ac­cess to credit are still se­ri­ous headaches for a new ven­ture in Myan­mar. But the coun­try con­tin­ues to climb the World Bank’s coun­try rank­ings for ease of start­ing a busi­ness, hav­ing cut the cost of set­ting up a busi­ness by half in the last year and sim­pli­fied reg­is­tra­tion.

The coun­try was ranked 170 of out 190 coun­tries in the bank’s an­nual Do­ing Busi­ness report re­leased yes­ter­day, which mea­sures reg­u­la­tion across a range of cat­e­gories in­clud­ing start­ing a busi­ness, in­vestor pro­tec­tion, elec­tric­ity sup­ply and en­forc­ing con­tracts.

New Zealand took the top spot, forc­ing Sin­ga­pore from first place after 10 con­sec­u­tive years. Den­mark, Hong Kong and South Korea were in third, fourth and fifth place re­spec­tively.

Myan­mar’s 170th-place fin­ish is only one higher than the pre­vi­ous year, but the coun­try man­aged another leap in the ease of start­ing a busi­ness cat­e­gory. After com­ing last in that field in 2014, Myan­mar is now ranked 146th out of the 190 na­tions sur­veyed when it comes to set­ting up a busi­ness.

“Myan­mar is steadily mak­ing progress in cre­at­ing a busi­ness en­vi­ron­ment that will help the coun­try sus­tain its strong pace of growth,” said World Bank coun­try man­ager for Myan­mar Ab­doulaye Seck.

The num­ber of pro­ce­dures re­quired to start a busi­ness in Myan­mar – 11 – re­mains the same, as does the num­ber of days it takes to start the busi­ness – 13. But the cost of start­ing up a ven­ture has fallen from 97 per­cent of the av­er­age in­come to 40pc, and reg­is­tra­tion for­mal­i­ties have been sim­pli­fied, ac­cord­ing to the report.

U Aung Naing Oo, di­rec­tor gen­eral of the Direc­torate of In­vest­ment and Com­pany Reg­is­tra­tion, said that reg­is­tra­tion fees had been cut from K1 mil­lion to K500,000 and doc­u­men­ta­tion re­quire­ments re­laxed. The World Bank noted Myan­mar re­moved a re­quire­ment to sub­mit a ref­er­ence let­ter and a crim­i­nal his­tory cer­tifi­cate in or­der to in­cor­po­rate a com­pany.

Se­nior World Bank op­er­a­tions of­fi­cer Charles Sch­nei­der told me­dia at a press con­fer­ence for the report’s launch that Myan­mar had made progress and be­come more trans­par­ent. But more work is needed on sup­port­ing for­eign trade, lo­gis­tics and port op­er­a­tions, he added.

Con­ges­tion at the port of Yan­gon – a key hub for im­ports and ex­ports – has made trad­ing more dif­fi­cult, which saw Myan­mar’s score on the trade across bor­ders cat­e­gory fall. The gov­ern­ment had to in­tro­duce emer­gency mea­sures in May to clear a back­log at Yan­gon port that was hold­ing up trade.

The coun­try also failed to make much progress on mak­ing it eas­ier for a busi­ness to se­cure a per­ma­nent elec­tric­ity sup­ply or reg­is­ter prop­erty – al­though it rose slightly in the coun­try rank­ings for both cat­e­gories. It takes an av­er­age of 77 days to get elec­tric­ity for a busi­ness in Myan­mar, ac­cord­ing to the report. This is less than a day longer than the av­er­age in high-in­come coun­tries, but the cost – as a per­cent­age of av­er­age in­come – is many times higher in Myan­mar.

The World Bank also noted Myan­mar has “im­proved its credit in­for­ma­tion sys­tem by en­act­ing a law that al­lows the es­tab­lish­ment of a new credit bureau”. Credit bu­reaus help lenders col­lect the in­for­ma­tion they need to make de­ci­sions on in­di­vid­ual loans for a fee. Myan­mar’s bank­ing sec­tor suf­fers from a lack of credit in­for­ma­tion, which helps keep in place a strict sys­tem of col­lat­eral re­quire­ments and in­ter­est rates that holds back lend­ing.

But even with the new law in place the Cen­tral Bank still needs to pro­vide spe­cific reg­u­la­tions, after which it could take another year for the bureau to ac­tu­ally start op­er­at­ing, U Zaw Lin Aung, sec­re­tary of the Credit Bureau com­mit­tee, told The Myan­mar Times ear­lier this year. In the mean­time, Myan­mar is ranked bot­tom across East Asia and the Pa­cific for ac­cess to credit, ac­cord­ing to the World Bank report.

For the over­all ease of busi­ness rank­ings in that re­gion, only Ti­morLeste ranks lower than Myan­mar. In ASEAN, Myan­mar is by far the low­est-scor­ing mem­ber coun­try, 31 places be­hind Laos at 139th.

– Trans­la­tion by Khine Thazin Han

Photo: Naing Lin Soe

A man rides a bike past con­tain­ers at Yan­gon port. The World Bank says im­prove­ments in port op­er­a­tions are needed to make do­ing busi­ness in Myan­mar eas­ier.

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