‘Myanmar remains worst place in ASEAN for doing business’
MYANMAR has failed to improve its ease of doing business ranking for the third consecutive year, with the latest figures from the World Bank showing that the country remains the worst place in ASEAN to conduct business.
The newly-released 2019 Doing Business rankings by the World Bank showed that Myanmar ranks 171th out of 190 economies in the overall ease of doing business, unchanged from last year’s position.
Economies are ranked on their ease of doing business, from 1-190, based on the average of each economy’s ease of doing business scores for the 10 topics included in this year’s aggregate ranking.
The country occupies the same ranking with Iraq (171st), lower than Sudan (162nd) and above Angola (173rd). It remains the lowest-ranked ASEAN member and, with the exception of Timor-Leste (178th), the worstranked economy in East Asia and the Pacific. Laos (154th) - the second lowest-ranked in ASEAN - is 17 places higher. Other large economies include Indonesia (73rd), the Philippines (124th), Thailand (27th) and Vietnam (69th).
Myanmar dropped from the fourth lowest-ranked in Asia last year to the third lowest (above Bangladesh and Timor), having been overtaken by Afghanistan (167th).
This is the third consecutive year where Myanmar has failed to improve its position. The country made it to 167th in the 2016 report, jumping from 182nd two years earlier. But, under the current government, it fell back to 170th in the 2017 report and dropped to 171th last year.
This will be widely seen as a major policy failure by the Myanmar government, which has repeatedly committed to elevating the country into the top 100 by 2020. Vice President U Myint Swe said in July 2017 that Nay Pyi Taw wants to raise the ranking to less than 100 within the next three years (before seeing the country slipping down instead in October that year). In February this year, U Aung Htoo, deputy commerce minister, repeated the same pledge.
As Myanmar has not numerically advanced its ranking at all under the NLD-led administration, it is unlikely that it will be able to deliver the great leap it promised by 2020.
Grim reading The latest figure comes just as approved FDI has this year fallen short of the government’s estimates, while tourist numbers have been largely stagnant. Protectionist policies across a wide range of sectors remain a barrier to business. The government, for example, has yet to open up the insurance sector to foreign players, despite having committed to liberalise in the first quarter of last year.
Commenting on the index, Marc de la Fouchardiere, deputy director of European Chamber of Commerce in Myanmar, said that despite the efforts to improve the investment framework, notably with the new Companies Law, the conditions of doing business “remain extremely challenging”.
The main difficulties for businesses have been the same over the years, which “shows a lack of improvement and which worries me the most”, he added. Key obstacles are regulatory issues, legal uncertainty, lack of qualified labour, lack of financial infrastructure and difficulty in market penetration.
“We have also witnessed a increase in protectionism from local industries and the authorities,” he explained.
The way forward What should be the way forward? American investor and director of S&S Robert Walsh highlighted the need to quicken the “glacial pace of permitting process in any given ministry”, reduce artificial barriers for international businesses to access geographical areas as well as to provide infrastructure.
While the Myanmar Investment Commission and Directorate of Investment and Company Administration can register a company efficiently now, a company is “still very much on its own in navigating permits at the national, state/ region, and district/ township level. For instance, it shouldn’t be absolutely necessary to have a connected “fixer” in order to get something done that is well within Myanmar law, but this is precisely how a lot of foreign companies get things done.
Apart from areas with a relatively high population of foreign business people, there are usually artificial barriers to access to any given location. This automatically gives Myanmar companies an edge over their foreign counterparts. “Sadly, some foreign companies have a lot of value to add to infrastructure projects, and at a decidedly lower cost than some local companies,” Mr Walsh said.
While it is possible to tackle the lack of infrastructure as long as “whatever you’re doing offers a return on investment that justifies the expense of generating your own electricity, wear and tear on vehicles, and logistics costs,” Myanmar needs to scale up its enabling infrastructure like transport, power supply and public utilities,” he said. Otherwise, an investor would need to build the project from scratch at a much higher cost and difficulty.
Despite reforms, Myanmar remains unfriendly territory for businesses.