Myanmar

CHAPTER 3. Data analysis
this effect does not appear to be very large – a 1
per cent increase in the number of employees is
estimated to reduce productivity by only 0.22 per
cent. The apparent higher productivity of micro firms
appears to have more to do with their small workforce
rather than their superior revenue earning capacity.
More than 40 per cent of micro firms (1-9 employees)
earn less than 100 lakhs ($10 000) per year, while 50
per cent of large firms (250+ employees) earn more
than 10 000 lakhs ($1 million) per year (figure 3.56).
The lower labour productivity of larger firms may be
related to financing constraints that restrict capital
expenditure on machinery and equipment that
complement labour in the production process. In
other words, given the relative scarcity of capital in
Myanmar, larger firms achieve lower labour productivity
than smaller firms – possibly because larger firms
are over-utilizing their fixed stock of capital. Another
possible theory is that some of larger enterprises,
which comprise various firms with different types of
ownership – such as domestic enterprises, stateowned
enterprises (SOEs), state-controlled enterprises
and military enterprises as well as joint ventures and
foreign companies – may aim to maintain or create
employment beyond the profit maximizing level for
political reasons through political interventions instead
of seeking revenue or profit maximization. This issue
is further investigated below.
3. Higher revenue does not necessarily mean higher
profits
The respondents reported that, on average, almost
20 per cent of sales revenue was retained as profit.
This high profit margin may be due to low levels
of competition in the heavily regulated markets or
because respondents may misunderstand their cost
structure when reporting this figure.
There also appear to be important differences across
sectors. Although firms in manufacturing and agriculture
earn the highest revenue (figure 3.57), their reported
profit margin (figure 3.58) is less than the average of
the sample as a whole. Hotels and restaurants earn
less revenue, on average, but they have the highest
profit margin at almost 30 per cent. Firms in extractive
industries earn the least revenue, on average, as well
as the lowest profit margin at just 10 per cent. These
results are contrary to the common understanding that
the extractive and manufacturing sectors generally have
a higher profit structure than other industries (cf. Abe
and others, 2012). This requires further investigation
by the Government in order to determine whether
the lower profits are a result of corruption or other
structural factors.
Figure 3.56. Annual revenue, by size of firm
Micro
Small
Medium
Large
0 20 40 60 80 100
Percentage of respondents
Less than 50 lakhs
50-100 lakhs
101-500 lakhs 501-1 000 lakhs
1 001-5 000 lakhs 5 001-10 000 lakhs
10 001-50 000 lakhs 50 001-100 000 lakhs
100 001-500 000 lakhs More than 500 000 lakhs
Source: ESCAP-OECD-UMFCCI Myanmar Business Survey Database.
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