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MYANMAR BUSINESS SURVEY: DATA ANALYSIS AND POLICY IMPLICATIONS Myanmar has the potential to achieve rapid economic growth of more than 8 per cent per annum, but this will require increasing the rate of labour productivity growth to 7 per cent from the current level of 2.7 per cent (MGI, 2013). This will be challenging but not unprecedented as China was able to increase its labour productivity by seven per cent from 1994 to 2006 and reached a GDP per capita level that is four times the level of Myanmar today (MGI, 2013). Myanmar’s productivity challenge is twofold. First, the economy must undergo a structural shift away from sectors such as agriculture, which are characterized by low productivity internationally. Second, productivity within sectors is low compared to regional peers and must be increased. For example, in manufacturing, labour productivity in Myanmar is 50-75 per cent lower than the weighted average for China, India, Indonesia, Thailand and Viet Nam (MGI, 2013). Improving productivity is all the more important to increasing competitiveness in the face of increasing regional integration. 7. Corruption After decades of the military rule and a tightlycontrolled economy, corruption remains one of the most significant challenges facing Myanmar. The level of corruption is high by international standards, with the country ranking 156 out of 175 in Transparency International’s Corruption Perception Index 2014, alongside Cambodia and Zimbabwe (Transparency International, 2014a). 12 Corruption pervades the entire economy from high level nepotism and cronyism to everyday bribery and harassment. Businesses and individuals requiring licences and permits from public officials are often asked for bribes-colloquially referred to as ‘tea money’ (OECD, 2013). The Government has acknowledged the problem and has made commitments to achieve good governance and a clean government as part of its reform agenda (OECD, 2013). A new Anti-Corruption Law was passed in 2013. A key provision in this law was the establishment of an Anti-Corruption Commission that came into force in 2014 with the stated aim of reducing corruption and bribery. Corruption cases are now being investigated more frequently, with the Government announcing that nearly 17 000 civil servants had been punished between April 2011 and December 2012 (OECD, 2013). However, the Anti-Corruption Commission has also come under criticism for lacking impartiality, as the Commissioners are appointed by the President and the Lower and Upper Houses of Parliament (Linn, 2014). The inclusion of former senior military officers in the Commission is also of concern as they may have vested interests and may be unwilling to investigate their former colleagues (Thompson, 2014). The Myanmar Enterprise Survey 2014 conducted by the World Bank also found that corruption was still prevalent in the country. More than 40 per cent of respondents reported having experienced at least one bribe payment request (World Bank, 2014a). Thus, more work remains to be done to extinguish corruption in the country. Business surveys in Myanmar A major challenge to implementing the required reforms is the dearth of information on the business conditions on the ground. In Myanmar several international surveys have been conducted to assess the business environment and assist policymakers in determining the right course of action. These surveys include, among others: (a) the Global Competitiveness Index; (b) the World Bank’s two business surveys – the “Doing Business” report and Myanmar Enterprise Survey 2014; (c) the Heritage Foundation’s Index of Economic Freedom; and (d) Japan External Trade Organization (JETRO) surveys of Japanese companies operating in Asia and the Pacific, including Myanmar. The World Economic Forum (WEF) Global Competitiveness Index has been reporting and benchmarking the factors that underpin national competitiveness in more than 100 countries for more than three decades. The index defines competitiveness as the “set of institutions, policies, and factors that determine the level of productivity of a country” (WEF, 2014; p.4). Many different factors that drive productivity and competitiveness are arranged into 12 pillars of competitiveness. These include: (a) institutions; (b) infrastructure; (c) macroeconomic environment; (d) health and primary education; (e) higher education and training; (f) goods market efficiency; (g) labour market efficiency; (h) financial market development; (i) technological readiness; (j) market size; (k) business sophistication; and (l) innovation (WEF, 2014). The index reveals that although Myanmar’s institutional quality is low, it has improved recently. When Myanmar 8
CHAPTER 1. Business environment was assessed for the first time in 2013, it was ranked at 139 out of 148 countries (WEF, 2013); however, since then its ranking has advanced to 134 of 144 countries (WEF, 2014). However, challenges still remain as the country ranks beyond 100 in all pillars apart from labour market efficiency and market size. The labour market is ranked at 72, mainly driven by flexible wage determination and the high female-male ratio in the labour force (WEF, 2014). Market size refers to the domestic market, as the export market is not well-developed. During 2013-2014 the country has seen improvements in all pillars except health and primary education where its rank has been downgraded from 111 out of 148 countries to 117 out of 144 (WEF, 2013 and 2014). A key ingredient of the Global Competitiveness Index is the Executive Opinion Survey which captures the opinion of business leaders from around the world on a broad range of topics. In the latest survey in Myanmar, a total of 165 leaders were asked to name the issues they believed were most problematic for conducting business in Myanmar. Access to finance, corruption and inefficient bureaucracy topped the list, followed by lack of skilled workers and unstable policies (WEF, 2014). The detailed results of the Executive Opinion Survey are presented in figure 1.3. The World Bank’s annual “Doing Business” report conducts a comprehensive survey of business conditions in more than 180 countries. It reviews quantitative indicators on regulatory conditions faced by a local SMEs by tracking changes in regulations affecting 11 areas in the operations of a business: (a) starting a business; (b) dealing with construction permits; (c) getting electricity; (d) registering property; (e) getting credit; (f) protecting investors; (g) paying taxes; (h) trading across borders; (i) enforcing contracts; (j) resolving insolvency; and (k) employing workers (World Bank, 2013). The report provides policymakers with a useful view of the position of their country compared to other countries in the region. As shown in figure 1.4, Myanmar is lagging behind its neighbours considerably (World Bank, 2014a). The distance from the frontier Figure 1.3. The most problematic factors in doing business in Myanmar Access to financing.......................................................18.0 Corruption.....................................................................13.9 Inefficient government bureaucracy................................9.7 Inadequately educated workforce...................................8.7 Policy instability...............................................................8.6 Inadequate supply of infrastructure.................................7.1 Foreign currency regulations...........................................6.2 Tax regulations................................................................4.8 Inflation...........................................................................4.0 Government instability/coups..........................................3.8 Poor work ethic in national labour force..........................3.8 Restrictive labour regulations..........................................3.8 Tax rates..........................................................................3.3 Insufficient capacity to innovate......................................2.1 Crime and theft................................................................1.6 Poor public health............................................................0.6 0 5 10 15 20 25 30 Percentage of respondents Source: WEF, 2014. Figure 1.4. Myanmar lagging behind its neighbours in doing business Malaysia (ranking 18) Thailand (ranking 26) 78.8 75.3 ESCAP Average (ranking 88) China (ranking 90) Indonesia (ranking 144) India (ranking 142) Lao PDR (ranking 148) 63.5 62.6 59.2 54.0 51.5 Myanmar (ranking 177) 43.6 0 20 40 60 80 100 Distance to frontier score Sources: Doing business database; authors’ calculations. 9
Page 1 and 2: Myanmar Business Survey Aaron Soans
Page 3 and 4: Myanmar Business Survey: Data Analy
Page 5: FOREWORD With vast natural resource
Page 9 and 10: Acknowledgements This publication w
Page 11 and 12: 2. Market conditions As the country
Page 13 and 14: Abbreviations and acronyms ADB AEC
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CHAPTER 3. Data analysis AGRIBUSINE
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CHAPTER 3. Data analysis Figure 3.6
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CHAPTER 3. Data analysis Figure 3.7
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CHAPTER 4. Policy implications The
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CHAPTER 4. Policy implications and
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CHAPTER 5. Limitations and future r
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eferences Abe, M. (2014). “Growin
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eferences (undated). “Enterprises
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MYANMAR BUSINESS SURVEY: DATA ANALY
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United Nations ESCAP Rajadamnern No
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Myanmar

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