Access to finance is the top constraint for private enterprises as Myanmar’s economy undergoes market-oriented reforms after emerging from decades of isolation, the World Bank said.
Addressing this and other challenges will help create a strong private sector to drive the country’s future growth and create much-needed jobs, the bank's first Investment Climate Assessment report in Myanmar revealed.
Among more than 1,000 foreign and domestic non-agricultural businesses interviewed in the report, only 1 percent of fixed-asset investment costs are financed by bank borrowing, while 92 percent of firms rely on their own funds – a percentage higher than that of any other comparable country, the DC-based lender said.
Difficulties in getting land-use rights, power outages, and inadequate workforce skills are other main barriers to business operation and growth in Myanmar, the report added.
“I want to borrow a loan from a bank for business expansion, but it is not easy at all,” said U Myint Lwin, an owner of a small business in Yangon.
Focusing Myanmar’s economic reforms on removing these obstacles will create a better business environment and enhance the productivity and efficiency of private enterprises allowing them to grow and flourish, the report finds.
“Myanmar has the potential for enormous growth. To realise this potential it is essential to create space for entrepreneurship. A vibrant private sector can generate jobs, and spur growth,” said Kaushik Basu, the World Bank’s Chief Economist and Senior Vice President.
"Creating a level-playing field for the private sector will help unleash its potential. Government's role is to provide an efficient regulatory system that encourages and facilitates individual creativity."
Equally important to the reform process is the consistent implementation of laws and regulations as well as raising transparency and disclosure.
“The government is fully committed to engaging the business community in shaping business-friendly laws and regulations through regular and coordinated public-private dialogues,” said U Tin Naing Thein, union minister for the President's Office.
“The … report facilitates this dialogue process by helping to identify and prioritise a common set of issues facing the private sector.”
The Myanmar Investment Climate Assessment is supported by the United Kingdom’s Department for International Development (DFID) and has been carried out in collaboration with the Ministry of National Planning and Economic Development.
“Policy makers need an assessment of the investment climate as part of their private sector development strategies,” said Gavin McGillivray, head of DFID office in Myanmar.
“This tool is especially significant for Myanmar as it evaluates the competitiveness of the private sector and identifies ways to help firms improve productivity during its transition into a market-driven economy.”