‘Myan­mar re­mains worst place in ASEAN for do­ing busi­ness’

The Myanmar Times - - Business - THOMP­SON CHAU t.chau@mm­times.com

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.

Photo: Shin Moe Myint

De­spite re­forms, Myan­mar re­mains un­friendly ter­ri­tory for busi­nesses.

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