Myanmar

MYANMAR BUSINESS SURVEY: DATA ANALYSIS AND POLICY IMPLICATIONS
tourism and foreign enterprises) and industrial zones
(OECD, 2013 and 2015). As a result, the country’s
regulatory and policy framework remains fragmented
and less transparent, with businesses having to deal
with a number of parallel line ministries that often fail
to adequately coordinate activities between themselves
(OECD, 2013).
One of the consequences of the present regulatory
framework is that the informal sector has become
large and diverse, comprising everything from small
family businesses to large enterprises (OECD, 2013).
Small informal firms tend to have low productivity and
inadequate access to financing while large informal
firms may avoid paying tax which leads to less revenue
for the Government and unfair competition for formal
businesses. A transition to the formal economy is
essential for Myanmar’s development, and this will
require the Government to pay greater attention to
the regulatory framework in particular and business
environment more generally (Abe, 2014).
2. Market conditions
Myanmar has a population of 51.4 million and is the
second-largest country in South-East Asia in terms
of geographical territory. Although it is categorized in
the low-income group as a least developed country,
the country is rich in natural resources and fertile
terrain, with large agricultural areas. Myanmar is part
of ASEAN and strategically located between two
giant markets, China and India, which enable it to
benefit from a rapidly growing Asia that is likely to
become the most prosperous region in the world in
the next few decades. Thus, the country has much
untapped potential for future growth and development
(ESCAP, 2015).
The favourable geostrategic characteristics and
location of Myanmar offer the country an opportunity
to become a major production hub in the region and
a key exporter to its high-growth neighbours (e.g.,
other ASEAN members). The country borders not
only the major markets of China and India but also
the emerging markets of Bangladesh, the Lao PDR
and Thailand. The integration of ASEAN into one
economic community (i.e., AEC) offers Myanmar the
opportunity to benefit immensely from integration with
subregional, regional and global economies (ADB,
2012). Myanmar could potentially join regional business
and production networks by strengthening trade and
investment ties with other ASEAN members (ADB,
2012). The McKinsey Global Institute (MGI) (2013) has
estimated that by 2025 the country will be within a
five-hour plane ride of 2.5 billion consumers.
These opportunities, however, come with challenges
as an open border will bring greater competition to
local firms that have been shielded for decades. SMEs
are particularly vulnerable as they are not prepared to
face the global transformation of business strategies
and practices (Abe and Dutta, 2014). This means
that they might lose market share domestically while
being unable to take advantage of the benefits that
integration provides. It therefore becomes all the more
essential for SMEs as well as larger firms to enhance
their competitiveness, product quality and management
practices so that they can integrate seamlessly into
the global economy (Abe and Dutta, 2014). At the
same time, the Government of Myanmar will have
to work hard to enhance the competitiveness of
local business by (a) upgrading various key factors
such as infrastructure, human resources, technology
and business development services, and (b) further
liberalizing trade and investment together with the
implementation of trade facilitation measures (ESCAP,
2015).
3. Innovation
Innovation and technology are widely regarded as
essential to quickening the pace of development
and growth in any country. Increasing productivity
and competitiveness as well as developing innovative
products are all the more important to gain market
share overseas and to resist domestic competition.
The use of transformative technologies such as the
Internet has been shown to have dramatic effects on
GDP growth. A World Bank study of 120 low- and
middle-income countries found that a 10 per cent
increase in broadband penetration between 1980 and
2002 yielded an additional 1.38 per cent in GDP
growth (Qiang and Rossotto, 2009). Another study
(MGI, 2012) estimated that the Internet had accounted
for as much as 12 per cent of cumulative GDP
growth during the previous five years in a group of
developing countries.
Given the potential of the Internet and other technologies,
it is unclear whether Myanmar businesses are utilizing
those technologies to their full potential. Furthermore,
investment in research and development (R&D) remains
low in Myanmar, which is particularly problematic
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