Better business climate could accelerate growth

Despite its favourable economic outlook, Myanmar still needs to reduce impediments for doing business in order to achieve sustainable economic growth, a senior World Bank official said.

Myanmar ranked 182 in World Bank’s Doing Business 2014 report, which marked the first time the country was included in the survey covering 189 economies. Operating a business in Myanmar is much more difficult than in the rest of the East Asia Pacific Region, which has an average ranking of 88, the survey found.

Myanmar needs to "develop an enabling business environment to attract investment [both domestic and foreign] to create new jobs and better jobs," Fabio Artuso, the World Bank’s senior trade and regional integration specialist, said in an exclusive interview.

Underemployment and unemployment are the biggest challenges, he said. "A big portion of Myanmar’s population is still employed – often with informal jobs – in agriculture. They can be given a chance to improve their standard of living by getting access to formal jobs, either in the manufacturing or in the services sector," he said.

Artuso noted that the Doing Business ranking shows that Myanmar faces several difficulties. For example, the average time to enforce contracts and start a business is still very high. It takes 1,160 days to enforce a contract. Myanmar also has the highest minimum capital requirement in the East Asia and Pacific region.

Obtaining construction permits is also a long and costly process, more than in other countries in the region. It takes fewer days but it is more costly to obtain an electricity connection in Myanmar compared to the regional average. Myanmar did not have a functioning credit reporting system in place, as of last year.

Artuso acknowledged the reforms being undertaken by the Thein Sein administration. He expressed his belief that improvements would flow from progress in implementing reforms. The introduction of a specialised commercial court and electronic filing system would help reduce time for implementing a contract.

To assist, the World Bank is about to complete an enterprise survey. To be published in the "Investment Climate Assessment" report, the survey will help to identify main bottlenecks experienced by both domestic and foreign operators and compare answers with data collected in other countries in the region and beyond.

The survey could serve as guidelines to structure a solid, reform agenda, remove business stumbling blocks and attract additional investment, Artuso said.

"We expect to find that enterprises will be answering both issues related to infrastructure [including access to land, electricity, transport] and soft issues [such as access to finance, poor skills and difficulties with the regulatory framework] are of concern," he said.

Earlier this month, a two-day workshop was completed, to raise awareness on opportunities and challenges that the Asean Economic Community (AEC) will introduce. This will compliment the government’s comprehensive gap assessment, which will lead to new reforms.

"Private sector participation in identifying these reforms is crucial. During the workshop we could hear the voice of the business community, but more consultation with specific business group operators is expected to take place in September and October," Artuso said.

He has a positive view on Myanmar’s future, forecasting that Myanmar could move into the ranks of the regional average in the medium term if it takes a comprehensive approach to improve its ranking on the Doing Business index.

Myanmar is a potentially attractive investment destination, because of its resources, its geographical location and its AEC membership, Artuso said. Moreover, Myanmar has also a sizeable domestic market, which is an additional draw for investors. The government is attempting to open the economy and improve the business environment.

"If this effort is successful, trade can contribute substantially to reduce poverty by creating job opportunities and improving access to cheaper goods of higher quality," Artuso said.