Title Financing Small and Medium Enterprises in Myanmar Author(s ...

may be categorized as small and medium enterprises (SMEs) and were essentially
geared towards import substitution 33 .
The imposition of new restrictions on the exchange rate and trade system after the
1997 Asian economic crisis deprived private companies of access to imported goods,
causing a slowdown in their economic activities. Most of the private industries heavily
used imported materials, equipment, and components in their production processes to
produce import substitution finished products. The fluctuations in the exchange rates,
severe shortage in electricity supply, rising costs of inputs due to high inflation, and
spiraling prices caused by imported goods that mainly flowed from border trade
prevented the growth of private industrial companies.
As for the public sector, privatization measure for SEEs was introduced as part of
a reform package to transform the command economy to a market-oriented system. The
Myanmar Privatization Commission (MPC), which was formed in January 1995,
announced the list of candidates for privatization (mainly cinema halls, small
processing plants, and nationalized business premises). By early 2003, the number of
privatized assets reached 180 (out of some 600 enterprises identified by 18 ministries)
with a total sales value of 2.87 billion kyat 34 .
However, starting from the second half of 1990s, with the state’s focus on
processing and manufacturing, SEEs became increasingly oriented towards an import
substitution industrialization strategy aimed at gaining self-sufficiency and
self-reliance 35 .
Toshihiro Kudo stressed the shift to a state-owned-factory strategy in his paper,
“Stunted and Distorted Industry in Myanmar (2005).” He comments:
The number of public industrial enterprises did not decrease throughout the
transitional period toward a market economy; their number increased from
597 in FY 1985 to 1,132 in FY 2002. Moreover, the establishment of new
public industrial enterprises is accelerating. The number of such enterprises
increased by only 19 for five years between FY 1985 and FY 1990, by 92 for
the next five years between FY 1990 and FY 1995, and by around 20 to 30
every year until 2000. Thereafter there was further impressive growth: 53
public industrial enterprises being set up in FY 2001 and 231 in FY 2002.
33 Toshihiro Kudo (Ed.), Industrial Development and Reform in Myanmar (2): Prospects and Challenges,
2002, p. 266
34 Tin Maung Maung Than ,State Dominance in Myanmar, The Political Economy of Industrialization,
2007 pp360-61
35 Ibid p.379