93848 Report No. 93848-MM January 2015 Myanmar Investment Climate Assessment Sustaining reforms in a time of transition D o c u m e n t o f t h e 1W o r l d B a n k G r o u p CURRENCY EQUIVALENTS Currency Unit – Myanmar kyat (MMK) EXCHANGE RATE December 31, 2014 MMK 1,025.00 = USD 1.00 FISCAL YEAR 1 April – 31 March Regional Vice President : Axel van Trotsenburg Country Director : Ulrich Zachau Senior Practice Director : Anabel Gonzalez Country Manager : Abdoulaye Seck Practice Manager : Mona Haddad Task Team Leader : Connor P. Spreng Abbreviations and Acronyms AEC ASEAN Economic Community CEBSD Centre of Excellence for Business Skills Development CFS Committee on World Food Security DB Doing Business DfID United Kingdom’s Department for International Development DICA Directorate of Investment and Company Administration EITI Extractive Industries Transparency Initiative ES Enterprise Survey FESR Framework for Economic and Social Reform GW Gigawatt ICA Investment Climate Assessment IHLCA Integrated Household Living Conditions Assessment IRD Internal Revenue Department IFC International Finance Corporation ILO International Labor Organization IPP Independent Power Producer JICA Japan International Cooperation Agency LGAF World Bank’s Land Governance Assessment Framework LUR Land Use Rights MADB Myanmar Agricultural Development Bank MBF Myanmar Business Forum MCA Myanmar Company Law MIC Myanmar Investment Commission MIGA Multilateral Investment Guarantee Agency MOHT Ministry of Hotels and Tourism MW Megawatt NEP National Electrification Plan NSSA National Skill Standards Authority OECD Organisation of Economic Cooperation and Development PPP Public-Private Partnership SABER Systems Approach for Better Education Results SEE State Economic Enterprise SLRD Township Settlement and Land Record Department SME Small and Medium Enterprises STEP Skills Toward Employability and Productivity UMEHL Union of Myanmar Economic Holdings Limited UMFCCI Union of Myanmar Federation of Chambers of Commerce UNDP United Nations Development Program UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNIDO United Nations Industrial Development Organization VGGT United Nations’ Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forests in the Context of National Food Security WBG World Bank Group WEF World Economic Forum YESB Yangon Electricity Supply Board YESC Yangon Electricity Supply Company ACKNOWLEDGMENTS This report was prepared by a World Bank Group team led by Connor Spreng (Senior Economist), with input from Charles Schneider (Senior Operations Officer), Peter van Diermen (Consultant), Nataliya Mylenko (Senior Finan- cial Sector Specialist), Mika-Petteri Torhonen (Senior Land Policy Specialist), Rome Chavapricha (Senior Energy Specialist), Jan Rutkowski (Lead Economist), Sjamsu Rahardja (Senior Economist), Michael Engelschalk (Senior Private Sector Development Specialist), Ed Keturakis (Senior Agribusiness Specialist), and Edith Bowles (Con- sultant). Support on data analysis was provided from the Enterprise Survey team, namely Joshua Wimpey (Private Sector Development Specialist) and Asif Islam (ET Consultant). Support on writing and framing the report itself was provided by Peter Milne (Consultant). Excellent leadership of the project early on, including the survey itself and thoughtful initial analyses of the data, from Nataliya Mylenko is gratefully acknowledged. Support on com- munications for the presentation of early findings was provided by Anh Thi Van Chu (Communications Officer). Administrative and organizational support was provided by Pwint Thet Khaing (Team Assistant) and the IFC team in Yangon. Additional input and feedback were provided by P.S. Srinivas and Wendy Werner (Practice Managers) as well as Ulrich Zachau (Country Director), Abdoulaye Seck (Country Manager), Lars Sondergaard (Program Leader), Shabih Mohib (Program Leader), and Vikram Kumar (Resident Representative). Overall guidance was provided by Mona Haddad (Practice Manager). Peer reviewers were Khwima Nthara (Program Leader), Alvaro Gonzalez (Lead Economist), and Declan Magee (Economic Advisor, DfID). We are especially grateful for the financial support from the United Kingdom’s Department for International De- velopment, which enabled this work to be carried out in the first place. We also thank Thom Adcock and the DfID team in Yangon for their substantive contributions and guidance. The report has greatly benefitted from discussions with stakeholders in Myanmar. The contributions from staff from the Ministry of National Planning and Economic Development and in particular with the Directorate of In- vestment and Company Administration, as well as the Ministry of Commerce helped to shape the report. Valuable questions and input were received from participants in the presentation and discussion of early results on October 31, 2014, in Yangon, and a subsequent discussion with members of the British Chamber of Commerce. We also thank all of those who provided comments and feedback informally. The findings and interpretations expressed here are those of the authors and do not necessarily reflect the views of the World Bank Group, its Executive Directors, or the countries they represent. Table of Contents EXECUTIVE SUMMARY........................................................................................................................................... i Chapter 1. Introduction.......................................................................................................................................... 1 1.1 Context and the challenge ahead............................................................................................. 2 1.2 Role of the state................................................................................................................................... 4 1.3 Role and implications of a firm survey................................................................................... 4 1.4 Brief description of the Enterprise Survey sample.......................................................... 6 1.5 Characteristics of private firms................................................................................................. 8 Chapter 2. Constraints faced by firms operating in Myanmar........................................................................ 11 2.1 Main constraints................................................................................................................................ 11 2.2 Access to finance............................................................................................................................... 12 2.3 Access to land...................................................................................................................................... 19 2.4 Access to electricity....................................................................................................................... 23 2.5 Access to skilled workers............................................................................................................ 28 Chapter 3. Direct influence of government oversight........................................................................................ 35 3.1 Firm regulation................................................................................................................................... 35 3.2 Taxes........................................................................................................................................................... 40 3.3 Corruption.............................................................................................................................................. 42 Chapter 4. Reform agenda – next steps.............................................................................................................. 47 4.1 Reform process.................................................................................................................................... 47 4.2 Policies to facilitate access to inputs................................................................................... 48 4.3 Policies to improve direct oversight of the economy................................................. 53 References ............................................................................................................................................................. 57 Annex – methodological notes on the Enterprise Survey....................................................................................... 59 List of boxes Box 1: Current and future data availability in Myanmar............................................................................................... 5 Box 2: Gender roles within private sector firms.......................................................................................................... 10 Box 3: Case study – The investment climate for agriculture....................................................................................... 33 Box 4: Case study – Trade........................................................................................................................................... 46 Box 5: Protecting the public interest during time of transition.................................................................................... 48 List of figures Figure 1: Sampled firms by region................................................................................................................................. 7 Figure 2: Sampled firms by size..................................................................................................................................... 7 Figure 3: Sampled firms by exports............................................................................................................................... 7 Figure 4: Sampled firms by sector................................................................................................................................. 7 Figure 5: Informal firms sampled by region.................................................................................................................. 8 Figure 6: Characteristics of private firms in international comparison.......................................................................... 8 Figure 7: Firm characteristics by size............................................................................................................................ 9 Figure 8: Female ownership and management (%) across countries and firm size..................................................... 10 Figure 9: Share of firms identifying the main obstacle (%)......................................................................................... 11 Figure 10: Share of firms that need to pay for security (%)......................................................................................... 11 Figure 11: Share of firms with losses as a result of theft, robbery, vandalism or arson (%)....................................... 12 Figure 12: Constraints faced by businesses of different size....................................................................................... 12 Figure 13: Main obstacle to businesses by sector........................................................................................................ 13 Figure 14: Share of firms that purchased a fixed asset (%); source of funding........................................................... 13 Figure 15: Share of firms using only own funds to finance (%).................................................................................. 14 Figure 16: Trade credit use in Myanmar (% firms and % purchase/sale on credit)..................................................... 14 Figure 17: Share of firms with account (%), in comparison and by size..................................................................... 15 Figure 18: Share of firms with a line of credit (%), in comparison and by size.......................................................... 15 Figure 19: Source of financing for firm borrowing, small (left) and large firms (right).............................................. 16 Figure 20: Stated reasons for not applying for a loan.................................................................................................. 16 Figure 21: Access to land is the second-biggest constraint for firms in Myanmar...................................................... 19 Figure 22: Access to land is not a big problem for large firms.................................................................................... 19 Figure 23: Share of firms that report “owning” their land (%).................................................................................... 20 Figure 24: Firms owning their land and seeing land as the main obstacle, by sector (%)........................................... 21 Figure 25: Bureaucracy involved in obtaining land use/leasing documents................................................................ 22 Figure 26: Access to electricity increases as a constraint for larger firms................................................................... 23 Figure 27: The share of firms experiencing power outages in the region (%)............................................................. 24 Figure 28: Myanmar has the highest level of generator ownership by firms............................................................... 24 Figure 29: Share of power from generator if generator owned (%)............................................................................ 25 Figure 30: Distribution of waiting times for electricity connection (days)................................................................. 25 Figure 31: Share of firms that applied for electricity connection (%)......................................................................... 26 Figure 32: Inadequately educated workforce is one of the biggest obstacles facing firms in Myanmar..................... 28 Figure 33: Firms identifying low workforce skills as major or severe constraint (%)................................................ 29 Figure 34: Inadequately educated workforce as major or severe obstacle to firm operation by sector....................... 29 Figure 35: Low workforce skills as major or severe obstacle by growth and innovation status................................. 30 Figure 36: Educational system does not meet firms’ needs......................................................................................... 31 Figure 37: Share of firms in manufacturing that provide training (%)........................................................................ 32 Figure 38: Procedures, time and cost for starting a business....................................................................................... 35 Figure 39: Time and cost to resolve bankruptcy cases................................................................................................ 36 Figure 40: Time spent by senior management dealing with government requirements.............................................. 36 Figure 41: Senior management spends time dealing with regulation (%), by size and region.................................... 37 Figure 42: The waiting time for an operating license is excessive.............................................................................. 39 Figure 43: Share of firms visited or inspected by tax officials (%)............................................................................. 40 Figure 44: Average number of times in a year firms met with tax officials................................................................. 41 Figure 45: How Myanmar compares with other countries on the ease of paying taxes.............................................. 41 Figure 46: Informal payments required for getting specific things done..................................................................... 42 Figure 47: Firms paying bribes/informal payments/gifts (%), by size of the firm and by region............................... 43 Figure 48: Share of firms believing the court system is fair, impartial and uncorrupted (%)...................................... 44 Figure 49: Share of firms who attempted to obtain a government contract (%).......................................................... 49 Figure 50: Summary of sampling approach................................................................................................................. 60 List of tables Table 1: Summary of recommendations, incl. prioritization......................................................................................... v Table 2: Proportion full-time female workers (%)....................................................................................................... 10 Table 3: Land issues for firms, by region..................................................................................................................... 21 Table 4: Problems of electricity supply facing various sectors in Myanmar............................................................... 26 Table 5: Regional differences in firms’ access to electricity........................................................................................ 27 Table 6: Types of problems hiring firms encountered when trying to recruit workers................................................ 30 Table 7: Summary of recommendations, incl. prioritization....................................................................................... 56 Table 8: Sample frame................................................................................................................................................. 62 Table 9: Achieved sample............................................................................................................................................ 63 Table 10: Firm population estimates............................................................................................................................ 65 Myanmar Investment Climate Assessment အက်ဥ္းခ်ဳပ္ ံ ေၾကာင္းအရာ ေနာက္ခအ ၁။ ႈ ည္ ျမန္မာႏိင ဤေလ့လာအကဲျဖတ္မသ ္ အ ု င ံ တြက္ ပထမအႀကိမရ ္ င္းႏွီးျမႇပႏ ္ မ ႈ န္းက်င္ဆိင ံွ ဝ ္ ာအကဲျဖတ္ျခင္း (ICA) ျဖစ္သည္။ အဆို ု ရ ႈ တြက္ ကနဦး ေလ႔လာသံး ပါ အကဲျဖတ္မအ ႈ ို အစိး ု သပ္မက ု ရႏွင့္ ေဆြးေႏြးခဲၿ့ ပီး ကမာၻဘ ႔ ဏ္အပ ု စ ့ း ္ ု (WBG) ၏ ပံပ ႈ ို အသိ ို ကူညီမက ု ရ ေပးႏိင ု ျပဳခဲပ ္ န္ ၎င္းကို အသံး ု ါ အကဲျဖတ္မက ့ ါသည္။ အဆိပ ႈ ို ျမန္မာႏိင ု င ္ အ ု အၾကိမေ ံ တြက္ ပထမဆံး ့ သာ ၂ဝ၁၄ လုပင ္ လ့လာခဲေ ္ န္း ု သပ္မေ စစ္တမ္းသံး ္ င ႈ ပၚတြင္အေျချပဳထားၿပီးအျခားေသာအရည္အတြကဆ ို ရ ္ ာ၊အရည္အေသြးဆိင ု ရ ႔ို လ ္ ာအခ်က္အလက္တက ို ည္းအေျချပဳ ု သပ္ထားပါသည္။ အဆိပ သံး ႈ အဓိကရည္ရြယခ ု ါအကဲျဖတ္မ၏ ွ ့္ ္ ်က္မ်ားသည္ (i) ျပဳျပင္ ေျပာင္းလဲေရးအစီအစဥ္ အတြက္ ဦးစားေပးရန္ႏင ့ လ်ာ္မန သင္ေ ္ န္ေသာ အစီအစဥ္မ်ားကို အစိး ွ က ု ရႏွင့္ အျခားေသာ သက္ဆင ို ရ ္ ာ ပုဂဳိၢ လ္မ်ား သိရႏ ို ရ ိွ င ံွ ႈ ဝန္းက်င္၏ ္ န္ အတြက္ ရင္းႏွီးျမႇဳပ္ႏမ ိွ ေျခအေနကို ေဖာ္ျပေပးရန္ႏင လက္ရအ ွ ့္ (ii) လက္ရျိွ ပဳျပင္ ေျပာင္းလဲမႈ အစီအစဥ္အတြက္ အနာဂတ္တး ို တက္မဆ ႈ င ို ရ ႈ င ္ ာ အကဲျဖတ္မႏ ွ ့္ စပ္လ်ဥ္းသည့္ အေျချပဳေဖာ္ျပခ်က္ကို ဖန္တီးေပးရန္ ျဖစ္ပါသည္။ ၂။ ွ ားေသာ macroeconomic ၫႊနး မၾကာေသးမီက ရရိထ ္ ကိနး ္ မ်ားက ျမန္မာႏိင ု င ္ အ ႔ ီးပြားေရးႏွင့္ ျပန္လည္ခ်ိတဆ ံ ေနျဖင့္ ကမာၻစ ္ က္ကာ ျပဳျပင္ ေျပာင္းလဲမအ ႈ စီအစဥ္ တိး ္ တြက္ (၂၀၁၅ မတ္လ ၃၁ ရက္တြင္ ္ ာမႈကို ထင္ဟပ္ ေစပါသည္။ ၂ဝ၁၄ ဘ႑ာႏွစအ ု တက္ေကာင္းမြနလ ္ ြနမ ကုနလ ု င ္ ည္ျဖစ္ပါသည္) ျမန္မာႏိင ္ ံ ၏ စီးပြားေရးသည္ ၇.၈ % တိး ု တက္မည္ဟု ခန္မ ႔ န ္ ထားျပီး ေငြေၾကးေဖာင္းပြမသ ွ း ႔ ြင္ ႈ ည္ ၆.၆ %ခန္တ ွ ည္ ဟု ေမွ်ာ္မန ရိမ ္ ထားပါသည္။ ဘ႑ာေရးလုိေငြျပမႈသည္ ၄.၆% ရိရ ွ း ွ တ ွ ာမွ ၂၀၁၂/၂၀၁၃ခုႏစ ့ ါသည္။ ္ ြင္ GDP ၏ ၃.၇%သိ႔ု က်ဆင္းခဲပ ု က ထိသ ႕ ၀ ႔ို ်ဆင္းမႈသည္ သဘာ၀ဓာတ္ေငြမ ွ င္ေငြႏင ွ ့္ အခြနမ ္ ်ားစြာ တိး ု တက္ေကာက္ခံ ရရိမ ႈ ၾကာင့္ ဘ႑ာ၀င္ေငြတး ွ ေ ့ ာခဲျ့ ခင္းေၾကာင့္ ို ျမင္လ ႔ု သာ္ ဝန္ထမ္းမ်ား၏ လစာတိး ျဖစ္ပါသည္။ သိေ ့္ ႏ ု ျမွငမ ႈ င ွ ့္ ပညာေရး၊ က်န္းမာေရးအသံး ု စရိတမ ္ ်ားအတြက္ ဘတ္ဂ်တ္တး ့္ တ ို ျမႇငမ ႔ို ၾကာင့္ ႈ ေ ု စရိတလ အသံး ့ ားလာပါသည္။ ေရနံႏင ္ ည္း ျမင္မ ု တ ွ ့္ သဘာ၀ဓာတ္ေငြ႕ ပိမ ို င္ပမ ႔ို ၊ ႈ ခရီးသြား လုပင ္ ၊ အဝတ္အထည္ႏင ္ န္း ု ပ ွ ့္ စိက ္ ်ိဳးေရးထုတ္ ္ င္ပမ ကုနတ ႈ က ႔ို တ ႔ို ကုနသ ္ ြယမ ္ ဆ ႈ င ္ ာတိး ို ရ ႈ ို ဦးေဆာင္လ်က္ ရိပ ု တက္မက ွ ါသည္။ ၃။ ု င ျမန္မာႏိင ံ ည္ သမား႐ိး ္ သ ု က်မဟုတေ ္ သာ အကူးအေျပာင္းၾကားကာလတြငေ ္ ရာက္ရိေ ွ နသည့္ ဆင္းရဲႏြမး ု င ္ ပါးေသာ ႏိင ံ စ္ႏင ္ တ ္ ျံ ဖစ္ပါသည္။ ို င ု င ျမန္မာႏိင ံ ည္ ေဒသအတြငး ္ သ ုံ ႏိင ္ အဆင္းရဲဆး ု င ္ မ ံ ်ားအနက္ တစ္ႏင ္ ျံ ဖစ္ၿပီး ၂ဝ၁ဝ ျပည္ႏ ို င ွ တ ့ စ ္ ြင္ တစ္ဦးခ်င္း GDP သည္ အေမရိကန္ ုံ ်ွ ရိက ေဒၚလာ ၁,ဝဝဝ ေက်ာ္႐မ ္ ပါးမႈႏန ွ ာ ဆင္းရဲ ႏြမး ႈ း ္ သည္ ၃၇.၅ % ရိပ ွ ါသည္။ ၂ဝ၁၁ ခုႏစ ွ တ ု င ္ ြင္ ႏိင ံ ရးလားရာ ေျပာင္းလဲလာ ္ ေ ွ အ သည္ႏင ု င ့္ မွ် ႏိင ံ ရးႏွင့္ စီးပြားေရးဆိင ္ ေ ု ရ ္ ာ အသြငက ္ း ိွ ါသည္။ လြတလ ူ ေျပာင္းမႈသည္ ႀကီးမားလာလ်က္ရပ ို း ္ ပ္ေရးရၿပီး ေနာက္ပင ္ အမ်ား ု င အားျဖင့္ ျမန္မာႏိင ံ ည္ စစ္အာဏာရွင္ လက္ေအာက္တြင္ ရွငသ ္ သ ္ န္ခရ ့ဲ ပါသည္။ ႏိင ု င ္ ပ ို ္ ကုမဏ ံ င ို ္ ကုမဏ ၸ ီမ်ားႏွင့္ စစ္တပ္ပင ၸ ီမ်ားက ု င ႏိင ့ံ ီးပြားေရးကို ၾကာျမင္စ ္ စ ္ မိး ့ ြာ လႊမး ု လာခဲပ ့ ါသည္။ ထိအ ႔ု ျပင္ ႏိင ု င ံ ္ က ္ ခ်ဳပ္ထားမႈႏင ထိနး ႔ို လည္း ွ ့္ စီးပြားေရးအရ သီးျခားျဖစ္ေနမႈတက ္ န္းရွငျ္ ဖစ္လမ လုပင ို က ႈ ို ခ်ိဳးႏွိမထ ္ ားၿပီး ပုဂလ ၢၸ ိကအခန္းက႑သည္လည္း အားနည္းေမွးမွိနခ ့ဲ ာအေျခခံအေဆာက္အအံမ ္ က ု ်ားႏွင့္ နည္းပညာ ု တက္မေ မ်ား ဖြၿ႔ံ ဖိဳးတိး ္ ်ား၊ ႏိင ႈ လ်ာ႕ပါးက်ဆင္းျခင္း၊ ဖြၿ႔ံ ဖိဳးမႈေအာက္ေလ်ာ့က်ေစ်းကြကမ ု င ္ ျံ ခားတိက ု ႐ ္ က ံွ န ို ္ ရင္းႏွီးျမႇဳပ္ႏမ ့္ ်မႈတက ႈ ိမက ႔ို ျို ဖစ္ေပၚ ္ ခၚမႈမ်ား ရိဆ ေစပါသည္။ စိနေ ္ ပ္သည့္ စာနယ္ဇင္းမူဝါဒႏွင့္ ၂ဝ၁၅ ခုႏစ ွ ျဲ ဖစ္ေသာ္လည္း လြတလ ွ ္ အမ်ိဳးသားေရြးေကာက္ပြဲ အပါအဝင္ ု င ႏိင ံ ရးပြငလ ္ ေ ့္ င္းလာမႈနင ွ အ ့္ တူ အစိး ု ရအေနျဖင့္ ပုဂလ ု မ ၢ ိက က႑ ခိင ွ း ္ ာအားေကာင္းလာေစေရးအတြက္ အဓိကက်သည့္ ရည္မန ္ ခ်က္ ျဖစ္ ္ ပ သည့္ စီးပြားေရး မူဝါဒကို ခ်မွတလ ္ ဆာင္လာခဲသ ု ေ ု င ့ ည္။ ျမန္မာႏိင ္ ၏ ံ ္ း အသြငက ု င ူ ေျပာင္းမႈသည္ ႏိင ံ ကာ၏ စိတပ ္ တ ္ ါဝင္စားမႈကို ဲ ဆာင္ႏင စြေ ္ ၿ့ဲ ပီး ျမန္မာႏိင ို ခ ္ အ ု င ံ တြက္ ပိမ ု ယ ို ဥ ွ ၿ္ ပိဳင္မအ ၢ ိကက႑ ဖန္တီး ေဖာ္ေဆာင္ေရးႏွင့္ ႏိင ႈ ားေကာင္းေသာ ပုဂလ ္ ျံ ခားတိက ု င ္ က ု ႐ ို ္ ္ မ ရင္းႏွီးျမႇပႏ ႈ ်ား ပိမ ံွ မ ု ရ ို ရိေ ွ စေရးတိအ ႔ု တြက္ အခ်ိနေ ္ န္းစဥ္ကလ ္ ကာင္း ျဖစ္ကာ ျပဳျပင္ ေျပာင္းလဲမႈ လုပင ့ း ို ည္း ပံပ ို ကူညီေပးပါသည္။ ၄။ ၢ ိကက႑ ခိင ပုဂလ ု မ ္ ာအားေကာင္းလာေစေရးသည္ အစိး ု ရ၏ ေမွ်ာ္မန ွ း ွ ျမႇဳပ္ႏမ ္ ခ်က္ျဖစ္သျဖင့္ ရင္းႏီး ံွ ႈ ဝန္းက်င္အတြက္ ထူးျခားေလးနက္ ု ပ္ပါသည္။ ႏိင ေသာ ျပဳျပင္ေျပာင္းလဲမျႈ ပဳလုပရ ္ န္ လိအ ု င ္ ပ ို ္ ကုမဏ ံ င ို ္ ကုမဏ ၸ ီမ်ားႏွင့္ စစ္တပ္ပင ္ စ ု င ၸ ီမ်ားက ႏိင ့ံ ီးပြားေရးကို ၾကာျမင္စ ့ ြာ ္ မိး လႊမး ့ မ ု လာခဲ႐ ္ အားစုမ်ား ရယူႏင ုံ က အေရးပါေသာ သြငး ို မ ္ တ ႈ ြငလ ု ရြားရြား ျပတ္လပ္မက ္ ည္း ဆုိးဆိး ႕ လ်က္ရပ ႈ ို ၾကံဳေတြရ ိွ ါသည္။ ျပဳျပင္ ႈ လွ်င္အျမန္လအ ေျပာင္းလဲမအ ု ရႏွင့္ ပုဂလ ို ပ္ေနျခင္းကို အစိး ၢ ိကလုပင ္ န္းမ်ားၾကား တိက ု ႐ ္ က ္ ျပန္အလွန္ ဆက္ဆမ ို အ ႈ ်ားက ထင္ဟပ္ ံ မ ့ ်က္ျခစားမႈကို ကိင လ်က္ရၿိွ ပီး အက်င္ပ ု တ ္ ြယျ္ ခင္းမွသည္ စည္းမ်ဥ္းမ်ားခ်မွတသ ္ ည္အထိ ပိမ ု ထ ္ ဆာင္ရန္လိအ ို ိေရာက္ေအာင္ လုပေ ု ပ္ ိွ ါသည္။ လ်က္ရပ ၅။ ႔ု ာ ႈ ို ထိေရာက္ေစရန္အလိင ျပဳျပင္ေျပာင္းလဲမက ွ အေရးႀကီးေသာ ကိစရ ၥၸ ပ္မ်ားကို ဦးစြာ ေျဖရွငး ို ပ္ပါသည္။ လုပေ ္ ေဆာင္ရြက္ ရန္လအ ္ ဆာင္ ္ သာ္လည္း ယခုေဖာ္ျပပါအခ်က္မ်ားကို မျဖစ္မေနလုပေ ရန္မ်ားျပားသည္ မွနေ ို ပ္ပါသည္- (i) ျပဳျပင္ေျပာင္းလဲမႈ ေဆာင္ ္ ဆာင္ရန္လအ ္ ်က္မ်ားကို ဦးစားေပး အစီအစဥ္မ်ားခ်မွတေ ရြကခ ္ န္ႏင ္ ဆာင္ရြကရ ု ရအေနျဖင့္ နည္းနည္းသာလုပေ ွ ့္ (ii) အစိး ို ပ္သည့္ ္ ဆာင္ရန္လအ ု ရ က႑မ်ားကို ေဖာ္ထတ ံွ ၀ ္ န္ အေရးၾကီးလွပါသည္။ ရင္းႏွီးျမွဳပ္ႏမ ု တက္ေကာင္းမြနေ ႈ န္းက်င္ကို တိး ု ရ ေအဂ်င္စီမ်ား၏ ္ စျခင္းသည္ အစိး ္ ကြၽဝ အလြနအ ံ င္ေရာက္စက ြ ဖ ္ က္မမ ႈ ်ားကိုရပ္တန္ေ ၸ ယ္သက္ေရာက္ေစပါသည္။သတင္းေကာင္းမွာအစိး ႕ စျခင္းဟုအဓိပာ ု ရအေနျဖင့္ျပႆနာ ု ရြားျပင္းထန္မက ၏ ဆိး ႈ ရးျပဳျပင္ေျပာင္းလဲမႈ မူေဘာင္တြင္ ေဖာ္ျပထားသည့္ ထူးျခား ႈ ို နားလည္ သေဘာေပါက္ၿပီး စီးပြားေရးႏွင့္ လူမေ ိွ ါသည္။ ျမန္မာႏိင ေလးနက္သည့္ ျပဳျပင္ေျပာင္းလဲမႈ အစီအစဥ္ကို စတင္ အေကာင္အထည္ေဖာ္လ်က္ရပ ္ အ ု င ံ တြက္ ပထမအႀကိမ္ ရင္းႏွီး Myanmar Investment Climate Assessment ံွ ဝ ျမႇဳပ္ႏမ ို ရ ႈ န္းက်င္ဆင ္ ်က္သည္ အဆိပ ္ ာအကဲျဖတ္ျခင္း (ICA)၏ ရည္ရြယခ ု ါ ျပဳျပင္ေျပာင္းလဲမဆ ႈ င ို ရ ္ က ္ ာ အားထုတမ ့ း ႈ ို ပံပ ို ကူညီ အသိေပး ရန္ ျဖစ္ပါသည္။ ၆။ ု င ျမန္မာႏိင ံ ္ ၏ ျပဳျပင္ေျပာင္းလဲမႈ အစီအစဥ္တြင္ အေရးပါေသာ အစိတအ ္ ပိင ု း ္ မ်ားအနက္တစ္ခသ ္ း ု ည္ အဓိက အသြငက ု င ူ ေျပာင္းမႈတြင္ ႏိင ံ ္ ၏ အခန္းက႑ျဖစ္ပါသည္။ အေရးပါေသာ က႑မ်ားကို ္ မိး လႊမး ု ထားျခင္းအားျဖင့္ စီးပြားေရးလားရာကို ု င ္ ေ ႏိင ံ တာ္က ္ ဆာင္ လုပေ ု င ေနျခင္းထက္ အနာဂတ္တြင္ ႏိင ံ တာ္၏ အခန္းက႑သည္ ပိင ္ ေ ္ င ု ဆ ို မ ္ ႈ (သိ) ႔ု ပုဂလ ံ ်ိတဆ ၢ ိက ဆက္ဆခ ႔ို င္ ရိေ ္ က္မႈ မည္သပ ွ စကာမူ ္ န္းမ်ား အားလံး လုပင ့ း ု အေနျဖင့္ စီးပြားေရးပတ္၀န္းက်င္ကို ပံပ ို ေပးသည့္ အစိတအ ္ ပိင ု း ္ မ်ားအား တန္းတူညီမ်ွ ရယူႏင ္ ြငရ ို ခ ိွ စရန္ ကူညီေပး ့္ ေ ု ရ၏ မူ၀ါဒမ်ားသည္ လုပင ရမည္ျဖစ္ကာ အစိး ု သိ႔ု တူညီစြာ သက္ေရာက္မႈ ရိေ ္ န္းမ်ားအားလံး ု ရအေနျဖင့္ စီးပြားေရးတြင္ ွ စရပါမည္။ အစိး ု ႐ တိက ို ပ ္ က ္ ါ၀င္ေနရာမွ စည္းကမ္းထိနး ္ သိမး ္ ၾကီးၾကပ္သမ ၢ ိကပိင ူ ်ားအနက္ တစ္ဦးအျဖစ္သ႔ို ေျပာင္းလဲျခင္းျဖစ္ေသာေၾကာင့္ ပုဂလ ု ္ ျပဳလုပ္ ့ း ေရး လွ်င္ျမန္စြာ က်င္သ ွ ့္ စည္းကမ္းထိနး ုံ မႈႏင ္ သိမး ္ ႀကီးၾကပ္သအ ူ ျဖစ္ ယံၾု ကည္မႈ တည္ေဆာက္ျခင္း၏ ျဖစ္ေပၚလာႏိင ္ ခ်ရိေ ု ေ ွ သာ အႏၲရာယ္ ႔ု ို ထိနး တိက ံ န္ လိအ ္ ခ်ဳပ္စီမရ ု ပ္ပါသည္။ ေလ့လာမႈရလာဒ္မ်ား ၇။ ု င ျမန္မာႏိင ံ ိွ ပုဂလ ္ ရ ၢ ိကလုပင ္ န္းမ်ားက စီးပြားေရးလည္ပတ္မမ ႈ ်ားအတြက္ အဓိက အဟန္အ ္ အားစုကရ ႔ တားသည္ သြငး ွ ရး ျဖစ္သည္ဟု ို ရိေ ္ န္းမ်ားအတြက္ အခက္အခဲအျဖစ္ အမ်ားဆံး ု ါသည္။ လုပင ဆိပ ွ ဘ႑ာေငြ ရရိေ ု ေဖာ္ျပ ၾကသည့္ အခက္အခဲ ေလးခုမာ ွ ရး၊ ွ ရး၊ ေျမရရိေ ွ ရးႏွင့္ ကြၽမ္းက်င္ လုပသ လွ်ပ္စစ္ရရိေ ွ ရးတိျ႕ု ဖစ္ပါသည္။ လာဘ္ေပးျခင္းႏွင့္ တိင ္ ား ရရိေ ္ တာလွ်င္ အက်င္ပ ု း ္ ့ ်က္ ျခစားမႈသည္ ေဒသတြငး ့ း တြင္ အျမင္ဆ ု င ုံ ႏိင ္ မ ံ ်ားအနက္ တစ္ႏင ို င ၢ ိကလုပင ္ ျံ ဖစ္သည္ဟု ပုဂလ ု ါသည္။ ္ န္းမ်ားက ဆိပ ၈။ ွ ရးသည္ ျမန္မာႏိင ဘ႑ာေငြ ရရိေ ု င ္ တ ံ ြင္ စီးပြားေရးလုပက ို ရ ္ င ္ ာတြင္ အဓိက အတားအဆီးျဖစ္သည္ဟု လည္း မၾကာခဏဆိၾု ကျပန္ပါသည္။ ႔ ပ ဘ႑ာေရးက႑သည္ ၾကားခံအျဖစ္ ႀကီးႀကီးမားမားက်ယ္က်ယ္ ျပန္ျ႔ ပန္လ ္ ဆာင္ႏင ု ေ ို ျ္ ခင္းမရိပ ွ ဲ လုပင ္ န္းမ်ားသည္ မိမိတ၏ ႔ို ု ပ ကိယ ို ္ ္ င ုံ ငြမ်ားျဖင္သ ရန္ပေ ု ပ္ခ်က္အမ်ားစုကို ေျဖရွငး ့ ာ ေငြေၾကးလိအ ု လ ္ ၾကရသည္ဟု အခ်က္အလက္မ်ားက ေဖာ္ျပပါသည္။ လက္ဆပ ို ္ ္ က္ကင ္ န္းတြင္ အသံး ရေသာ လုပင ္ မ်ားအတြက္ ရင္းႏွီးျမႇဳပ္ႏမ ု ျပဳသည့္ ပစၥညး ႔ သ ံွ ႈ (fixed asset investment) ၏ ၁% ခန္က ို ာ ဘဏ္ေခ်းေငြျဖင့္ ့ း ပံပ ္ န္းမ်ား၏ ၉၂%သည္ မိမိတ၏ ို ျခင္းျဖစ္ပါသည္။ ဥပမာ - လုပင ႔ို ကိယ ု ပ ို ္ ရန္ပေ ္ င ု ါ ပမာဏ ုံ ငြမ်ားကို အားထားလွ်က္ရျိွ ပီး အဆိပ ု င သည္ အျခားႏိင ံ င ္ ႏ ွ ့္ ႏိင ႈ း ္ ယွဥလ ္ ်ွ င္ ပိမ ့ ားပါသည္။ လုပင ု ျို မင္မ ့္ ားေၾကာင္း တင္ျပထားၿပီး ္ န္းမ်ား၏ ၃၀% ကသာ ဘဏ္တြင္ စာရင္းဖြငထ ု င ယင္းပမာဏသည္ အျခားႏိင ံ င ္ ႏ ွ ့္ ႏိင ႈ း ္ ယွဥလ ္ ်ွ င္ အနိမဆ ုံ ျဖစ္ပါသည္။ ျပဳျပင္ေျပာင္းလဲမမ ့္ း ု ေ ႈ ်ားကို ဆက္လက္လပ ္ ဆာင္ ေနဆဲျဖစ္ ႔ု သာ္ လက္ရိွ ဥပေဒႏွင့္ စည္းကမ္း ထိနး ပါသည္။ သိေ ္ ေရး မူေဘာင္သည္ အေရးႀကီးေသာ ဖြစ ္ သိမး ု င ႕ဲ ည္းပံဆ ္ ာ အတားအဆီးမ်ား ပါဝင္ေန ို ရ ႔ု ြင္ အျမင္ဆ ဆဲျဖစ္ပါသည္။ ယင္းတိတ ုံ အတိး ့ း ္ ကန္သ ု ႏႈနး ႕ တ္ခ်က္ (interest rate cap) ၊ ေခ်းေငြသက္တမ္း (maturity limit) ႏွင့္ ေခ်းေငြ ္ ထားရန္ လိအ အတြက္ အာမခံအျဖစ္အေပါင္ပစၥညး ု ါ အတားအဆီး ု ပ္ခ်က္ (onerous collateral requirement) တိ႔ု ပါဝင္ပါသည္။ အဆိပ ္ ရန္ အေရးႀကီးၿပီး ထိသ မ်ားကို ေျဖရွငး ု ေ ႔ို ဆာင္ရြကျ္ ခင္းသည္ ႐ႈပေ ္ ထြးၿပီး ဘဏ္မ်ားကို စည္းကမ္းထိနး ္ ေက်ာင္းမႈႏင ္ မ ွ ့္ ႀကီးၾကပ္ကြပက ဲ ႈ ႈ ်ား လုပေ နည္းလမ္းမ်ားအပါအ၀င္ အေျခခံ ျပဳျပင္ေျပာင္းလဲမမ ု ပ္ပါသည္။ ္ ဆာင္ရန္ လိအ ၉။ ေျမရရိေ ္ န္းမ်ားသည္ လုပင ု အတားအဆီးျဖစ္ပါသည္။ Micro ၊ အေသးစားႏွင့္ အလတ္စား လုပင ွ ရးသည္ ဒုတိယအေရးအႀကီးဆံး ္ န္း ု ၍ ႀကီးမ်ားထက္ ပိမ ု ဆိး ို ဆိး ု ရြားရြား ဒဏ္ခရ ံ ေလ့ရပ ိွ ါသည္။ လုပင ွ ရးကို ျပႆနာႀကီးတစ္ခအ ္ န္းၾကီးမ်ား၏ ၂% ကသာ ေျမရရိေ ု ျဖစ္ ု တက္မႏ ႐ႈျမင္ၾကပါသည္။ ယင္းသည္ ျမန္မာ့ေရရွည္ စီးပြားေရး ဖြၿ႔ံ ဖိဳးတိး ွ ့္ လူမေ ႈ င ္ က ႈ ရးအရ ေပါင္းစည္းညီၫြတမ ႈ ို သိသိသာသာ ္ ေျခာက္ လ်က္ ရိျွ ပီး အထူး သျဖင့္ သမိင ျခိမး ္ ၀င္ မေျဖရွငး ု း ္ ႏိင ု ေ ္ သာ တရားမွ်တမႈမရိသ ွ ည့္ ေျမယာျပႆနာမ်ားသည္ ေျမပိင ္ င ု ဆ ္ သံး ို အ ု ခ်ခြင့္ ၥ ပ္မ်ားအေပၚ သက္ေရာက္မႈ ရိေ ကိစရ ု ဆ ွ စပါသည္။ ေျမပိင ္ င ို အ ္ သံး ု ခ်ခြင့္ အခြငအ ု ခ်ခြင့္ လံၿု ခံဳေရးသည္ ျပႆနာျဖစ္သည္။ ေျမအသံး ့္ ေရး ္ သိမး ကို ရယူျခင္း၊ ထိနး ဲ ျပာင္းေပးျခင္းတိႏ ္ ျခင္းႏွင့္ လႊေ ႔ု င ွ ့္ စပ္လ်ဥ္းသည့္ ဥပေဒသမ်ားႏွင့္ လုပထ ္ း ္ ည္းမ်ားသည္ ႐ႈပေ ုံ လုပန ့္ င္း ္ ထြး၊ ပြငလ ွ မေသခ်ာမေရရာ ျဖစ္ေနပါသည္။ ျမင္သာမႈမရိ၊ ၁၀။ အားကိး ု အားထားျပဳေလာက္သည့္ လွ်ပ္စစ္ဓာတ္အားရရိေ ု ေထာက္ျပသည့္ အတားအဆီး ျဖစ္ပါသည္။ ယင္း ွ ရးသည္ တတိယအမ်ားဆံး ္ န္းႏွင့္ လုပင ျပႆနာသည္ အလတ္စားလုပင ု င ္ န္းၾကီးမ်ားအတြက္ အေရးပါေသာ ျပႆနာျဖစ္သည္။ ျမန္မာႏိင ံ ိွ လုပင ္ ရ ု ္ န္းအားလံး ု သ လိလ ႈ ို ႀကံဳေတြရ ို ည္ မီးျပတ္မက ႕ ၿပီး ေဒသတြငး ္ တြင္ အဆိး ု ဆံး ု အဆင္ျ့ ဖစ္ပါသည္။ ရလဒ္အေနျဖင့္ ျမန္မာႏိင ္ ရ ု င ္ နး္အမ်ားစုသည္ ံ ိွ လုပင ္ ြင္ မိမိတ၏ မီးျပတ္ခ်ိနတ ႔ို ကိယ ု ပ ္ င ို ္ (သိ) ု စြသ ႔ု မွ်ေ၀သံး ္ ျဖစ္ ဲ ည့္ မီးစက္မ်ားအေပၚတြင္ မွီခၾို ကရသည္။ မီးျပတ္ျခင္းသည္ ေႏြရာသီတြငအ ္ ပ မ်ားၿပီး ေရအားလွ်ပ္စစ္ဓာတ္အား ထုတလ ္ မ ု မ ႈ ်ား က်ဆင္းသြားေသာေၾကာင္ျ့ ဖစ္ပါသည္။ ျမန္မာႏိင ု င ္ တ ္ ပ ံ ြင္ ေရအားလွ်ပ္စစ္ ထုတလ ု ္ ု ေ ႏိင ို လွာင္မမ ္ ျခ အလားအလာႏွင့္ သဘာ၀ဓာတ္ေငြ႕ အရံသေ ွ သာ္လည္း စြမး ႈ ်ားစြာ ရိေ ္ ခၚမႈက သိသိသာသာ ္ အင္က႑တြင္ စိနေ ွ နပါသည္။ ျပည္တြငး ရိေ ု ပ္ခ်က္ကို တိး ္ လွ်ပ္စစ္ လိအ ု ခ်ဲ႕ ျဖည္ဆ ့ ည္းေပးျခင္းသည္ စီးပြားေရး တိး ု တက္မန ွ ့္ ဆင္းရဲႏြမး ႈ င ္ ပါးမႈ ေလ်ာ႔ခ် ု ို အစိး ေရးအတြက္ အေရးပါပံက ွ ့္ စပ္လ်ဥ္းသည့္ မာစတာအစီ ု ရအေနျဖင့္ ယခုအခါ နားလည္သေဘာေပါက္ေနၿပီျဖစ္ပါသည္။ လွ်ပ္စစ္ႏင ႕ း အစဥ္မ်ားျဖစ္သည့္ ဓာတ္ေငြတ ႕ တ ို ခ်ဲထ ု လ ္ ပ ု ျ္ ခင္းႏွင့္ လက္ရိွ ထုတလ ္ ပ ္ မ ု မ ု ်ားကို တိး ႈ ်ားႏွင့္ ျဖန္ျ႔ ဖဴးေရး အေျခခံအေဆာက္အအံမ ု တက္ Myanmar Investment Climate Assessment ႔ု ို စတင္လပ ေစျခင္းတိက ္ ဆာင္ရန္ အားထုတလ ု ေ ္ ်က္ ရိပ ွ ါသည္။ ေရွသ ႕ ေ ့ ်ွ င္ စြမး ႔ို မွ်ာ္ၾကည္လ ု တက္ေရးအတြက္ ္ အင္က႑ ေရရွည္ ဖြၿ႔ံ ဖိဳးတိး ွ အ ေငြႏင ္ န ့္ ခ်ိနက ္ က္သာသည့္ စြမး ု သ ္ အင္ ထုတလ ္ ပ ု မ ႈ ို အဆင္ျ့ မႇငတ ္ က ္ အင္ရင္းျမစ္မ်ား လိအ ့္ င္ျခင္းႏွင့္ ျပန္ျဖည္ၿ့ မဲစြမး ု ပ္ပါသည္။ ၁၁။ ု သ ကြၽမ္းက်င္လပ ္ ား ရွားပါးျခင္းကို စီးပြားေရးလုပေ ္ ဆာင္မတ ႈ ြင္ အေရးပါေသာ ၳ တားအဆီးအျဖစ္ စတုတအ ္ န္းမ်ားက လုပင ေထာက္ျပ ္ န္းမ်ား၏ ၉% ေက်ာ္က ကြၽမ္းက်င္ လုပသ ၾကပါသည္။ လုပင ွ မ ္ ား ေလာက္ငမ ႈ ရိျွ ခင္းကို လုပင ္ န္းလည္ပတ္မႏ ႈ င ု တက္မတ ွ ့္ တိး ႈ ြင္ အဓိက ္ င အတားအဆီးအျဖစ္ ႐ႈျမင္ၾကပါသည္။ တ႐ုတႏ ္ န ို င ွ ့္ ႏႈိငး ံ င ္ ်ွ င္ ထုတလ ္ ယွဥလ ္ ပ ု မ ္ လ ု င ႈ ပ ္ င ္ န္းမ်ားမွ အလုပရ ္ ်ား၏ ၂% ကသာ လုပသ ွ မ ္ ား ု သ အရည္အေသြးကို ေ၀ဖန္ခၾ့ဲ ကသည္။ ထိက ့ဲ ႔ို အလုပရ ္ င ွ မ ္ ်ားအေနျဖင့္ ျပည္တြငး ္ ားထုအေပၚ စိတေ ္ လုပသ ္ က်နပ္ မႈမရိျွ ခင္းဟူ ့ ခ်က္သည္အာဆီယံစီးပြားေရးအသိင သည္အ ္ အဝိင ု း ္ (AEC) ကို၂၀၁၅ခုႏစ ု း ွ ္တြင္စတင္ဖြငလ ့္ စ ွ ခ ္ င ္ ်ိနတ ု ေ ြ ္ပိမ ့ င္တန္းေပးထားေသာ ို လ့က်င္သ ္ ီးခ်င္းႏိင အိမန ္ မ ု င ံ ်ားႏွင့္ ယွဥၿ္ ပိဳင္ရာတြင္ ျမန္မာႏိင ု င ္ အ ံ တြက္ အခက္အခဲမ်ားစြာ ရိပ ု င ွ ါသည္။ ယင္းအခ်က္က ျမန္မာႏိင ံ ေနျဖင့္ အကယ္ ္ အ ္ ႏိင ၍ ကြၽမ္းက်င္မႈ ကြာဟခ်က္မ်ားကို မေျဖရွငး ု လ ု ္ မကုသႏိင ္ ်ွ င္ တန္ဖး ို ျမင့္ ထုတက ္ န ု ္ ထုတလ ု ေ ္ ပ ု တက္ေစရန္ ႀကိဳးပမ္း ္ ရးက႑ကို တိး ္ ကန္အားထုတရ ႐ုနး ္ န္းမ်ားတိး ္ င္း လုပင ု ခ်ဲ႕ ျခင္းႏွင့္ တီထြငဖ ္ န္တီးျခင္းတိက ႔ု လ ္ ဆာင္ရန္ လိအ ို ည္း လုပေ ု ပ္သည္ဟု ေထာက္ျပ ေနပါသည္။ ္ န္းမ်ား၏ ၈၀% က ပညာေရးစနစ္သည္ လုပင လုပင ္ ္ န္းခြငက ု ပ္ေသာ ေနာက္ဆး လိအ ့ ေသာ ုံ ေပၚ အသိပညာမ်ားႏွင့္ ကြၽမ္းက်င္မႈ ျပည္ဝ ု ေ ဝန္ထမ္းမ်ားကို လံလ ုံ လာက္ေလာက္ ေမြးထုတေ ္ ပးႏိင ု ျ္ ခင္း မရိဟ ွ ု ေဖာ္ျပၾကၿပီး ၇၅% ခန္က ႔ ု လာက္ေသာ ပညာေရးစနစ္သည္ လံေ ္ န္းခြငလ လုပင ္ အ ို ပ္ခ်က္ကို ျဖည္ဆ ့ ည္းေပးႏိင ု ျ္ ခင္းမရိဟ ု ါသည္။ အဆိပ ွ ု ေျဖဆိပ ု ါ ရာခိင ု ႏ ္ န ႈ း ု င ္ မ်ားသည္ ျမန္မာႏိင ံ အိမန ္ ၏ ု င ္ ီးခ်င္း ႏိင ံ ်ား ္ မ ု ျို မင္မ ထက္ ပိမ ႔ု သာ္ ျမန္မာႏိင ့ ားေနပါသည္။ သိေ ု င ္ ရ ံ ိွ လုပင ု တ ္ န္းမ်ားတြင္ ပံစ ္ င္စား ံ က် သင္တန္းေပးမႈ အေလ႔အထ ရွားပါးသည္ကို စိတ၀ ္ န္းမ်ား၏ ၉၀% က ပံစ စရာေကာင္းစြာ ေတြျ႕ မင္ရပါသည္။ လုပင ု တ ံ က် သင္တန္းေပးမႈမ်ား မလိအ ု ပ္ဟု ဆိပ ု ါသည္။ ျမန္မာႏိင ္ တ ု င ံ ြင္ ႈ ်ား လုပေ အေျခခံပညာေရးစနစ္ကို ထူးထူးျခားျခား ျပဳျပင္ေျပာင္းလဲမမ ိွ ာ လုပင ္ ဆာင္လ်က္ရရ ႈ ို ေျဖရွငး ္ န္းခြင္ ကြၽမ္းက်င္မက ္ ေပးမည့္ ို ရ သက္ဆင ႈ ်ား (သိ) ္ ာ ျပဳျပင္ေျပာင္းလဲမမ ္ ထိ မရိေ ႔ု အစီအစဥ္မ်ား ယခု အခ်ိနအ ွ သးပါ။ ၁၂။ ္ အားစုမ်ားမရရိႏ အေရးပါေသာ သြငး ို ျ္ ခင္းကို ေျဖရွငး ွ င ္ ျခင္းအျပင္ လုပင ္ န္းမ်ားက အစိး ု ရႏွင့္ တိက ္ က ု ရ ္ က္ဆရ ို ္ အျပန္အလွနဆ ံ ာတြင္ ႀကံဳေတြ႕ ္ ရပါမည္။ ႏိင ေနရေသာ စိနေ ္ ခၚမႈမ်ားကို ေျဖရွငး ု င ္ ပ ို အ ံ င ႕ဲ စည္းမ်ား လႊမး ္ ဖြအ ္ မိး ု ထားေသာ ဆယ္စႏ ွ င ု စ ႔ ီးပြားေရးမွ သီးျခား ္ ါးခုတြင္ ကမာၻစ ဲ ြကၿ္ ပီး အခ်ိနၾ္ ကာျမင္စ ခြထ ့ ြာ ရပ္တည္ေနခဲၿ့ ပီးေနာက္ ပုဂလ ၢ ိက က႑၏ လိအ ု ပ္ခ်က္မ်ားကို အစိး ု ရေအဂ်င္စီိမ်ားက အျပန္အလွန္ ညိႏ ိႈ း ႇ င ္ ္ ပးႏိင ေဆာင္ရြကေ ္ န္ အတြကစ ု ရ ႇ င ္ တင္ ညိႏ ိႈ း ္ လုပေ ္ ဆာင္ရန္သာ လိပ ္ န္းမ်ားအေနျဖင့္ အစိး ု ါသည္။ လုပင ံ ာတြင္ လြယက ု ရႏွင့္ ဆက္ဆရ ္ ူ ့္ င္းျမင္သာမႈ ရိေ ကာ ပြငလ ႔ု ာ ွ စရန္ အလိင ွ အဆိပ ု ါ ဆက္ဆေ ံ ရးကို ျဖည္းျဖည္းခ်င္း လက္ခေ ႔ု ႀကိဳဆိေ ံ ပး (သိ) ု ပးေနပါသည္။ ၁၃။ ု ရႏွင့္ ဆက္ဆေ အစိး ႕ စရန္ လုပင ံ ရး အဆင္ေျပေခ်ာေမြေ ု လို လာဘ္ေပးေနရသည္ဟု လုပင ္ န္းမ်ားအေနျဖင့္ မၾကာခဏဆိသ ္ န္းမ်ားက အစီရင္ခံ ု တ တင္ျပထားပါသည္။ ပံစ ္ သာ လက္ေဆာင္မ်ား (သိ) ံ က်မဟုတေ ႔ု ေငြေပးမႈမ်ားကို လုပင ္ န္းမ်ားက လက္ေတြက ႕ ်င္သ ့ း ု ႏ ုံ ေနသည့္ ရာခိင ႈ း ္ န ္ ္ တြင္ အျမင္ဆ သည္ ေဒသတြငး ုံ မ်ားထဲမွ တစ္ချု ဖစ္ၿပီး ယင္းအခ်က္ကို အက်င္ပ ့ း ွ ့္ စပ္လ်ဥ္းသည့္ ပြငလ ့ ်က္ျခစားမႈႏင ့္ င္းျမင္သာမႈ ု င ႏိင ံ ကာ စစ္တမ္းက အတည္ျပဳထားပါသည္။ ျမန္မာႏိင ္ တ ္ သ ု င ံ ည္ ၂၀၁၃ ခုႏစ ွ တ ္ ြင္ ႏိင ္ ံ ၁၇၇ ႏိင ု င ္ အ ု င ့ ်က္ျခစားမႈတြင္ ၁၅၇ ံ နက္ အက်င္ပ ့ ြငရ အဆင္တ ိွ ါသည္။ တရား႐ံး ္ ပ ု စနစ္သည္ မွ်တၿပီး သမာသမတ္က်ကာ အက်င္ပ ့ ်က္ျခစားမႈမရိဟ ွ ု လုပင ု ပံတ ္ န္းမ်ား၏ သံး ုံ အာက္ ု စ္ပေ ု ါရာခုိငႏ က ယံၾု ကည္ထားၿပီး အဆိပ ႈ း ္ န ္ း ္ သည္ မြနဂ ို လီးယားႏွင့္ ဘဂၤလားေဒရွတ ႕္ မ ႔ို လ ြဲ ်ွ င္ အျခားေသာႏိင ွ လ ္ မ ု င ႔္ ်ပါသည္။ ံ ်ားထက္ နိမက ု ရအေနျဖင့္ အက်င္ပ အစိး ္ ရန္ အက်င္ပ ့ ်က္ျခစားမႈကို ေျဖရွငး ့ ်က္ျခစားမႈတက ို ဖ ္ ်က္ေရး ဥပေဒႏွင့္ အက်င္ပ ု ဖ ့ ်က္ျခစားမႈ တိက ္ ်က္ေရး ္ ႏ ေကာ္မရွငတ ွ ့္ လုပေ ႔ို င ္ လည္း ျပဳျပင္ေျပာင္းလဲမႈ အေကာင္ အထည္ေဖာ္ေရးကို အရိန ္ ဆာင္လ်က္ရၿိွ ပီး ေကာ္မရွငက ့္ င္ရန္ ယခုေဆာင္ ွ ျ္ မွငတ ္ မည္ျဖစ္သည္။ အလားတူစြာ ျမန္မာႏိင ရြကရ ္ အ ု င ံ ေနျဖင့္ သယံဇာတ တူးေဖာ္မလ ႈ ပ ု င ့္ င္းျမင္သာမႈ ရိေ ္ န္းမ်ားပြငလ ွ စေရးအစီအစဥ္ (EITI) ႕ဲ င္ျဖစ္ေရးအတြက္ လက္ခမ ၏ အဖြ၀ ႈ ည္ သယံဇာတ တူးေဖာ္မလ ံ သ ႈ ပ ု င ္ န္းမ်ားတြင္ အနာဂတ္၌ ပြငလ ့္ င္းျမင္သာမႈပမ ွ င ို ို ရရိႏ ္ ခ်ကို ို ေ ျဖစ္ေပၚေစပါသည္။ ၁၄။ ္ န္းစစ္တမ္း (Enterprise Survey) က လုပင လုပင ္ န္း၀န္းက်င္ႏင ္ န္းမ်ား၏ စီးပြားေရးလုပင ္ ဆာင္မႈ မ်ားႏွင့္ စပ္လ်ဥ္းသည့္ အေၾကာင္း ွ ့္ လုပေ အရာ က်ယ္က်ယ္ျပန္ျ႕ ပန္က ္ န္းႏွင့္ အစိး ္ န္း အဆင့္ အေတြး အေခၚကို ေဖာ္ျပေပးပါသည္။ ယင္းတြင္ စီးပြားေရးလုပင ႕ ို အေျချပဳသည့္ လုပင ု ရ၏ ံ ရး၊ လုပင ဆက္ဆေ ္ မား၊ အေျခခံအေဆာက္အအံ၊ ္ န္းဘ႑ာေရး၊ အလုပသ ု ပံစ ု တ ံ က်မဟုတေ ့ ်က္ျခစားမႈႏင ္ သာ ေငြေပးမႈမ်ားႏွင့္ အက်င္ပ ွ ့္ ႕ု ်ျခငး္ႏင အျခားေခါင္းစဥ္မ်ားျဖစ္သည့္ သင္တန္းပိခ ု း ွ ့္ ဖန္တီးဆန္းသစ္ျခင္းတိ႔ု ပါ၀င္ပါသည္။ ES ကတိင ု ါ အေတြး ္ တာေသာ အဆိပ ္ န္းမ်ား၏ လုပေ အေခၚမ်ားတြင္ လုပင ႈ ်ားႏွင့္ ေစ်းကြကတ ္ ဆာင္မမ ို ႏ ္ ြင္ ၿပိဳင္ဆင ္ င ို မ ္ တ ႔ို တြက္ စီးပြားေရးလုပင ႈ အ ို ေ ္ န္း၀န္းက်င္၏ ျဖစ္ႏင ္ ခ် ႔ု င နည္းပါးေသာ အေျခ အေနတိႏ ွ ့္ ယင္းတိက ႔ု ို ထိနး ္ ညိေ ႇ ပးျခင္းတိ႔ု ပါဝင္ပါသည္။ အခ်က္အလက္မ်ားကို ဖတ႐ႈ အဓိပာ ့္ ရ ၸ ယ္ဖြငဆ ို ာတြင္ ္ န္းအတြက္ (ဥပမာ- စီးပြားေရးလုပင စီးပြားေရးလုပင ္ င ္ န္းလုပက ို ျ္ ခင္းစစ္တမ္း)ကုနက ္ ်မည့္ ကုနက ္ ်စရိတမ ု း ္ ်ား အားတိင ္ တာသည့္ အျခား ္ ်က္မ်ားႏွငလ ရည္ရြယခ ု ည ့္ ည္း ကိက ႈ ိမ ္ ီမရ ိွ စႏိင ွ ရိွ သိရေ ု ပ ္ ါမည္။ ထိသ ု ေ ု င ႔ို ဆာင္ရြကျ္ ခင္းသည္ ျမန္မာႏိင ံ ္ ၏ ္ မ ရင္းႏွီးျမႇပႏ ံွ ႈ ရာသီဥတု ု း တစ္ခလ ့ စ ုံ ကို ျပည္ျ့ ပည္စ ုံ ုံ ၿခံဳငံသ ု း ုံ သပ္ႏင ္ စရန္ႏင ို ေ ွ ့္ ျမန္မာႏိင ု င ္ ႏ ံ င ု င ွ ့္ အျခားႏိင ္ မ ံ ်ား၏ စီးပြားေရးအရ တြကေ ္ ျခကိက ု မ ႈ ို ရည္ၫႊနး ္ က ္ ႈ း ဇယားမ်ား (Metrics) ျဖင့္ ႏိင ု သပ္ႏင ္ ယွဥ္ သံး ္ န္ ရည္ရြယပ ို ရ ္ ါသည္။ Myanmar Investment Climate Assessment ၁၅။ ု င စီးပြားေရးဥပေဒသမ်ားႏွင့္ ပတ္သတ္လ်ွ င္ ျမန္မာႏိင ္ သ ံ ႔ို လုပင ္ န္းမ်ား စတင္၀င္ေရာက္ လာမႈ၊ ထြကခ ္ ြာမႈ ႏွင့္ လုပင ႈ တ ္ န္းလည္ပတ္မတ ႔ို ြင္ ေတြႀ႔ ကံဳရသည့္ အခက္အခဲမ်ားကို ES ေဖာ္ျပခ်က္တြင္ အနည္းအက်ဥ္းးသာ ေဖာ္ျပေကာင္း ေဖာ္ျပႏိင ္ ါသည္။ အျခားေသာ စစ္တမ္းမ်ား ု ပ ္ န္းလုပက ျဖစ္သည့္ စီးပြားေရး လုပင ို ျ္ ခင္းစစ္တမ္း (DB) မွ ၫႊနး ္ င ္ ကိနး ္ မ်ားက ပိမ ု ဆ ို ရြားသည္အ ို း ္ ထားပါ ့ ေျခအေနကို ေဖာ္ၫႊနး ူ ည့္ ႏိင သည္။ စစ္တမ္းေကာက္ယသ ္ ံ ၁၈၉ ႏိင ု င ု င ္ အ ံ နက္ ျမန္မာႏိင ္ သ ု င ု ရအေနျဖင့္ ရင္းႏွီး ံ ည္ ၁၇၇ ေနရာတြင္ ရွိပါသည္။ အစိး ံွ ႈ ရာသီဥတုအေပၚ သက္ေရာက္မရ ျမႇဳပ္ႏမ ိွ စမည့္ ဥပေဒျပဳျခင္းမွတဆင့္ ျပဳျပင္ေျပာင္းလဲႏင ႈ ေ ္ န္ ႀကိဳးစားလ်က္ရၿိွ ပီး အမွနတ ို ရ ္ ကယ္ ု ပ္ေနသည္မာ လိအ ွ အဆိပ ု ါ ဥပေဒမ်ားကို လက္ေတြတ ႔ ြင္ အေကာင္ အထည္ေဖာ္ႏင ို မ ွ ထ ္ ည့္ စည္းမ်ဥ္းဥေဒသမ်ားႏွင့္ စံသတ္မတ ္ ားသည့္ ္ န္းအဆင္မ လုပင ႔ ြင္ လုပင ့ ်ား ျဖစ္ပါသည္။ လက္ေတြတ ္ န္းငယ္မ်ားသည္ စည္းကမ္းထိနး ္ သိမး ္ မႈဆင ္ ာ လိအ ို ရ ု ပ္ခ်က္မ်ား၏ အႏၲရာယ္ ွ င ရိႏ ္ ခ်ကို ပံစ ို ေ ု တ ံ က်ျဖစ္ျခင္းမွ ေရွာင္လျႊဲ ခင္း (informal) ျဖင့္ စီမခ ံ န္ခ ႔ ြဲ လ်က္ရပ ၸ ီ မွတပ ိွ ါသည္။ ကုမဏ ုံ င္ျခင္းကို အဓိက ေရွာင္လႊဲ ္ တ ့ ခ်က္မာ ေနရသည္အ ု ရ၏ ဝင္ေရာက္ စြကဖ ွ အစိး ္ က္မက ႈ ို ေၾကာက္ရံြ႕ ၍ဟု ပံစ ု တ ္ သာ လုပင ံ က် မဟုတေ ္ န္းမ်ား (informal firms) က ES ု ရ၏ စည္းမ်ဥ္းဥပေဒသမ်ားသည္ ေဒသတစ္ခႏ စစ္တမ္းတြင္ ေဖာ္ျပခဲၾ့ ကပါသည္။ အစိး ွ ့္ တစ္ခု အခ်ိနႏ ု င ွ အ ္ င ့္ မွ် ေျပာင္းလဲေနၿပီး ေအဂ်င္စီ ွ ထ မ်ားအေနျဖင့္ စံသတ္မတ ္ န္းအဆင္ဆ ္ ားသည့္ လုပင ့ င္က ့ ို အသံး ု ျပဳျခင္းမရိပ ု ာ ွ ါ။ ေနာက္ျပႆနာတစ္ခမ ၢ ိကက႑ကို ၾကီးၾကပ္ ွ ပုဂလ ္ သ ကြပက ု ရေအဂ်င္စီမ်ားၾကား ပူးေပါင္း ေဆာင္ရြကမ ဲ ည့္ အစိး ႈ ရိျွ ခင္းျဖစ္ၿပီး ေအဂ်င္စီမ်ိဳးစံ၊ ္ မ ု ွ အရာထမ္းမ်ားက အႀကိမ္ ု ၀န္ႀကီးဌာနမ်ိဳးစံမ ္ ာ ေရာက္ျခင္းျဖစ္သည္ဟု လုပင ႀကိမလ ္ န္းမ်ားက ေျဖၾကားထားပါသည္။ ၁၆။ ္ န္းလုပက စီးပြားေရး လုပင ္ င ို ျ္ ခင္းစစ္တမ္း (DB)အရ ျမန္မာႏိင ု င ္ တ ္ န္းခြနသ ံ ြင္ လုပင ္ န္းငယ္မ်ား ္ ည္ အဓိက ျပႆနာျဖစ္ၿပီး အထူးသျဖင့္ လုပင ု ဝ အတြက္ ဝန္ထပ ို ျဖစ္ေစပါသည္။ လက္ရိွ အခြနႏ ္ န္ပး ႈ း ္ န ္ ထားႏွင့္ လက္ရိွ အခြနဥ ိွ ည့္ လုပင ္ ပေဒမ်ားနွင့္ မူဝါဒမ်ားကို သိရသ ္ န္းမ်ားသည္ မရိွ ္ ကာက္ျခင္းကို ကိယ သေလာက္ နည္းပါးပါသည္။ အခြနေ ္ င ု တ ္ ကဲျဖတ္ျခင္း (self-assessment) ေပၚတြင္ အမွီျပဳျခင္း မဟုတပ ို အ ္ ဲ အခြန္ ္ န္းမ်ားကို သြားေရာက္ေလ့လာၿပီး အဆိပ အရာထမ္းမ်ားက လုပင ္ န္းမ်ားက တင္ျပလာသည့္ စာရြကစ ု ါ လုပင ္ ာတမ္းမ်ားကို အေျချပဳကာ ့ ခြနပ ေပးရမည္အ ္ ်က္ျခင္း ျဖစ္ပါသည္။ အခြန္ စနစ္၏ ရႈပေ ္ မာဏ (liability) ကို တြကခ ွ ့္ ပြငလ ္ ထြးမႈႏင ႔ု ၾကာင့္ ့္ င္းျမင္သာမႈ မရိျွ ခင္းတိေ ု ါအေျခအေနသည္ လုပင အဆိပ ု က ္ န္းငွားရမ္းမႈကို ပိမ ႕ ာေစပါသည္။ အခြနစ ို ်ယ္ျပန္လ ႈ ်ားကို လာမည့္ လမ်ား ္ နစ္အတြက္ ျပဳျပင္ေျပာင္းလဲမမ ္ ဆာင္ရန္ စီစဥ္ထားၿပီး အခြနထ တြင္ လုပေ ု တ ္ မ္းႀကီးမ်ားအတြက္ ကိယ ္ င ို အ ္ ကဲျဖတ္စနစ္ကို ၂၀၁၅ ခုႏစ ု ေ ွ ္ ဧၿပီလတြင္ စတင္လပ ္ ဆာင္ျခင္းႏွင့္ ံ န္ခ ကြနျ္ ပဴတာျဖင့္ အခ်က္အလက္မ်ားစီမခ ြဲ ည့္ စနစ္ကို ထူေထာင္ျခင္းတိ႔ု ပါ၀င္ပါသည္။ ႔ သ အၾကံျပဳခ်က္မ်ား ၁၇။ ႈ န ျပဳျပင္ေျပာင္းလဲမႏ ္ သည္ ႈ း ့ ားေနဆဲျဖစ္ေသာေၾကာင့္ ျမင္မ အေကာင္အထည္ေဖာ္မအ ႈ တြက္ ့ ာ႐ံစ ထပ္ဆင္အ ို ရ ု က ္ န္ ု ပ္ပါသည္။ လိအ ု ္ အေကာင္အထည္ေဖာ္မ၏ ဂ႐ုတစိက ႈ ွ ့္ ျပဳျပင္ ေျပာင္းလဲမအ အေရးပါမႈႏင ွ ္ ႈ ရ အေကာင္အထည္ေဖာ္ရာတြင္ ဦးစားေပးက႑ သတ္မတ ႔ု ို ပိမ ျခင္းတိက ို ေရးေပး အာ႐ံစ ု အ ု က ို ရ ္ ပါမည္။ က႑စံတ ု ြင္ ျပဳျပင္ေျပာင္းလဲမႏ ႈ း ႈ န ု ပ္ခ်က္သည္ ျပဳျပင္ေျပာင္းလဲမႈ လုပင ္ ျမန္ဆန္ရန္လိအ ္ န္းစဥ္ ္ မင္း ျမန္ဆန္ေအာင္ ေဝးေဝးသိ႔ု တြနး ကို အလြနအ ႔ု နသည့္ အႏၲရာယ္ကလ ္ ပိေ ္ ခၚရာ ေရာက္ပါသည္။ ျပဳျပင္ ေျပာင္းလဲမက ို ည္း ဖိတေ ႈ ို ု ရ၏ လုပေ အေကာင္အထည္ေဖာ္မည့္ အစိး ို စ ္ ဆာင္ႏင ္ ြမး ္ သည္ အကန္အ ႔ သတ္ရေ ွ ထင္ရာ ိွ နဆဲ ျဖစ္သည္မာ ္ ေဆာင္ရည္ျမႇင့္ ွ းပါသည္။ စြမး ္ ေဆာင္ရည္ ရိရ တင္ျခင္းႏွင့္ စီးပြားေရးကို စြမး ို သ ွ ျိွ ဖင့္ ႀကီးၾကပ္ႏင ္ တင္းကို တည္ေဆာက္လ်က္ရသ ္ ူ ဟူသည့္ ဂုဏသ ု ရအတြက္ ိွ ည့္ အစိး ႈ း ျမန္ႏန ႈ က္ တည္ၿငိမေ ္ ျမင့္ ျပဳျပင္ေျပာင္းလဲမထ ု အေရးပါ ပါသည္။ ္ သာ တသမတ္တည္းျဖစ္ေသာ ျပဳျပင္ေျပာင္းလဲမႈ က ပိ၍ ၁၈။ ံွ ႈ ရာသီဥတုျပဳျပင္ေျပာင္းလဲေရးအတြက္ အၿမဲတမ္း ေဆြးေႏြးဆက္ဆမ ရင္းႏွီးျမႇဳပ္ႏမ ္ န္းစဥ္ ယႏၲရားေဖာ္ေဆာင္ျခင္းသည္ အေရးပါေသာ ံ ႈ လုပင မွတတ ို တ ္ င ္ စ္ချု ဖစ္ပါသည္။ ၢ ိက က႑အေနျဖင့္ ျမန္မာႏိင ပုဂလ ု င ႈ က္မလ ္ ံ စက္မလ ု င ႈ ပ ္ ်ားအသင္း (UMFCCI) မွ တစ္ဆင့္ ္ န္းရွငမ ံ ႈ လုပင ေဆြးေႏြးဆက္ဆမ ႔ု တြက္ ျမန္မာ့စီးပြားေရးဖိရ ္ န္းစဥ္ ယႏၲရားကို ဖန္တီးေဖာ္ေဆာင္လ်က္ရၿိွ ပီး ထိအ ု မ္ (MBF) ကို UMFCCI က ႕ဲ ည္း တည္ေထာင္ခပ ဖြစ ု ရဘက္မွ MBF အတြက္ ဆက္သြယေ ့ဲ ါသည္။ စီးပြားကူးသန္းဝန္ႀကီးဌာနကို အစိး ႔ ရ ္ တြဆ ုံ ာ ဝန္ႀကီးဌာန (focal ွ ခ point) အျဖစ္ တာဝန္ခ်ထားသတ္မတ ့ဲ ါသည္။ ပုဂလ ္ ပ ု ရက႑ ႏွစဘ ၢ ိကႏွင့္ အစိး ု မွ ပါ၀င္ေဆြးေႏြးသူမ်ားသည္ MBF ကို ေအာင္ျမင္ ္ က္စလံး ု မ္တစ္ချု ဖစ္လာေစရန္ႏင သည့္ ဖိရ ု ါ ဖိရ ွ ့္ အဆိပ ွ ဆင့္ ျပႆနာမ်ားကို ရင္းရင္းႏွီးႏွီး ပြငပ ု မ္မတ ့္ င္းလင္းေဆြးေႏြးကာ ျပဳျပင္ေျပာင္းလဲ ့္ ြငလ ္ ဆာင္မမ မႈမ်ား၏ ေနာက္ဆက္တြဲ လုပေ ု ည္း ႀကိဳးႀကိဳးစားစား ေဆာင္ရြကသ ႈ ်ားကိလ ္ ြားႏိင ု ရ ္ န္ ရည္ရြယပ ့ စ ္ ါသည္။ လာမည္ႏ ္ ်ားတြင္ ွ မ ႈ င ျပဳျပင္ေျပာင္းလဲမဆ ္ ာ အားထုတမ ို ရ ္ က ႈ ို အဓြနရ ႔္ ည ္ စရန္အတြက္ MBF ၏ ဦးေဆာင္မက ွ ေ ႈ ို ဆက္လက္ အားေကာင္းေနေစရန္ အထူး ို ္ ေဆာင္ရြကရ ဂ႐ုစက ို ပ္ပါသည္။ ္ န္လအ ၁၉။ ွ ့္ လွ်ပ္စစ္ ပိမ ဘ႑ာေငြႏင ို း ု တ ွ င ို တက္ ရရိႏ ို ေ ္ ရးအတြက္ ပိမ ု က ့ ေ ို ်ယ္ျပန္ျ႔ ပည္စ ႈ ်ားကို ေဆာင္ရြကလ ုံ သာ ျပဳျပင္ေျပာင္းလဲမမ ိွ ဥ္တြင္ ေျမယာ ္ ်က္ရစ ႏွင့္ ကြၽမ္းက်င္အလုပသ ္ မား ပိမ ု ခ ို ်ဥ္းကပ္ရရိႏ ္ ရးက႑တိတ ွ င ို ေ ႔ု ြငလ ္ ည္း အာ႐ံစ ု က ို မ ႈ ပ ္ လ ္ ဆာင္ရမည္ျဖစ္ပါသည္။ ေျမယာအတြက္ က်ယ္ျပန္႕ ု ေ ႈ ်ားျဖစ္သည့္ အမ်ိဳးသား ေျမယာ အသံး ေသာ ျပဳျပင္ေျပာင္းလဲမမ ု ည္း ခ်မွတၿ္ ပီးျဖစ္ပါသည္။ ဥပမာ - ေျမအသံး ု ခ်ေရးမူ၀ါဒကိလ ု ခ် ဲ ျပာင္းေရး လုပင ခြင့္ လႊေ ္ န္းလုပက ္ န္းစဥ္ကို စီးပြားေရး လုပင ္ င ို ျ္ ခင္းစစ္တမ္း (DB) ၏ ၫႊနး ္ ကိနး ့ ွ ၾကည္လ ္ ႐ႈေထာင္မ ္ ့ ်ွ င္ ‘ပစၥညး ္ တ မွတပ ုံ င္ျခင္း’ သည္ ပိမ ု ို ပြငလ ့္ င္းျမင္သာ၊ ရိး ု ရွငး ု ါသည္။ အဆိပ ္ ၊ ျမန္ဆန္၊ သက္သာရမည္ဟု ဆိပ ု ါ ကနဦး ျပဳျပင္ေျပာင္းလဲမႈ မ်ားေနာက္မွ ု ႐ ပိမ ႈ ေ ို ပ ္ ထြးေသာ ျပဳျပင္ေျပာင္းလဲမမ ႈ ်ား ု ပ လိက ္ ါလာမည္ျဖစ္ပါသည္။ ကြၽမ္းက်င္၀န္ထမ္းမ်ားအတြက္ ု သပ္မႈ သံး Myanmar Investment Climate Assessment ္ ဆာင္ ရပါမည္။ ထိေ ကို ထပ္ေလာင္းလုပေ ု ရအေနျဖင့္ ကြၽမ္းက်င္ဝန္ထမ္းမ်ား ရွာေဖြမည့္ လုပင ႔ု နာက္ အစိး ့ း ္ န္းမ်ားအား မည္သ႔ို ပံပ ို ကူညီ ု ေ မည္ကို ေဆြးေႏြးရပါမည္။ ပိမ ္ သာ ပညာေရး ရလဒ္မ်ား အတြက္ စနစ္မ်ား (SABER)၊ အလုပသ ို ကာင္းမြနေ ု တက္ေရးႏွင့္ ္ မား ဖြၿ႔ံ ဖဳိးတိး ္ ပ အလုပလ ္ င ု က ္ င ို ႏ ္ ႏ ို မ ႈ င ွ ့္ ထုတလ ္ ပ ္ ႈ ေရွး႐ႈ ကြၽမ္းက်င္မမ ု မ ္ ထာင္စႏ ႈ ်ား (STEP)၊ အိမေ ွ ့္ လုပင ု င ု ဝင္ ္ န္းမ်ားအတြက္ စစ္တမ္းမ်ားသည္ အသံး ု သပ္မန ေသာ သံး ္ န္းခြငအ ႈ မူနာအခ်ိဳ႕ ျဖစ္ပါသည္။ လုပင ႈ း ္ တြက္ အဆင္သင္ျ့ ဖစ္မတ ို တက္လာေစရန္ အသက္ေမြးဝမ္းေက်ာင္းမႈ သင္တန္းမ်ား ႔ု ်မႈတြင္ အစိး ႏွင့္ အလားတူ အစီအစဥ္မ်ားပိခ ့ ခန္းက႑မွ ပါဝင္မည္ကို အကဲျဖတ္ဆန္းစစ္ႏင ု ရအေနျဖင့္ မည္သည္အ ္ န္ ေလ႔လာသံး ို ရ ု သပ္မႈ ု လိအ မ်ား ပိ၍ ု ပ္ပါသည္။ ၂ဝ။ ္ ကာက္ခမ စည္းမ်ဥ္းဥပေဒမ်ားႏွင့္ အခြနေ ႈ ႔ို ပိမ ံ တ ု တ ို း ို တက္ေကာင္းမြနလ ွ ့္ အက်င္ပ ္ ာေစရန္ႏင ိွ ဆာင္ရြက္ ့ ်က္ျခစားမႈ ပေပ်ာက္ေစရန္ လက္ရေ ေနေသာ ျပဳျပင္ေျပာင္းလဲမႈ အစီအစဥ္မ်ားကို ဆက္လက္လပ ု ေ ု ခ်ဲလ ္ ဆာင္၊ တိး ႕ ပ ံ ်က္မ်ားေဖာ္ျပ ္ ဆာင္ရပါမည္။ ICA က အႀကံျပဳေထာက္ခခ ု ေ ႔ု ို ျပည္ျ့ ပည္၀ ထားေသာ္လည္း ၎င္းတိက ့ ၀ အေကာင္အထည္ေဖာ္ရန္မာ ွ မလြယက ္ သ ူ လို ျမန္ဆ ္ ါ။ အစိး ္ န္မည္လည္း မဟုတပ ု ရ ေအဂ်င္စီ ူ ်ားကိယ အမ်ိဳးမ်ိဳးႏွင့္ အရပ္ဘက္ျပည္သမ ု တ ္ င ို ္ စီးပြားေရးက႑ရိွ အစိး ု ရ၏ အခန္းက႑အသစ္တြင္ ေျပာင္းလဲမႈ ကိယ ္ ားလွယမ ု စ ္ ်ားအျဖစ္ ့ ဆာင္ရြကၾ္ ကရန္ လိအ စဥ္ဆက္မျပတ္ ပါ၀င္အားျဖည္ေ ္ န္းစဥ္သည္ ေရရွညေ ု ပ္ပါသည္။ ယင္းလုပင ္ မည့္ အလုပျ္ ဖစ္ၿပီး ္ ဆာင္ရြကရ ံ န္ခ ေျပာင္းလဲမႈ စီမခ ြဲ ရးအတြက္ စြမး ႔ ေ ့္ င္ျခင္းသည္ အေရးပါလွပါသည္။ အႀကံျပဳခ်က္အေနျဖင့္ အေကာင္အထည္ေဖာ္ရန္ ္ ေဆာင္ရည္ျမွငတ ္ ြယက အလြနလ ူ ါသည္ - အစိး ္ ပ ္ စၥညး ု ရသိ႕ု ကုနပ ္ (သိ) ႔ု ၀န္ေဆာင္မမ ႈ ်ားေပးရာတြင္ ပုဂလ ၢၸ ိကလုပင ု င ္ န္းမ်ား ထက္ ႏိင ံ င ္ ပ ္ ီးပြားေရးလုပင ို စ ္ န္း ႔ု အမိနေ မ်ား (SEEs) ၏ အက်ိဳးေက်းဇူးကို ေရွးရႈသည့္ နည္းဥပေဒမ်ား(သိ) ု င ႔္ ဟာင္းမ်ား ကို ပယ္ဖ်က္ရပါမည္။ အကယ္၍ ျမန္မာႏိင ံ ွ ္ မ ၢၸ ိကလုပင ပုဂလ ို မ ္ န္းမ်ားကို အားေပးေျမေတာင္ေျမႇာက္ေပးလွ်င္ ၿပိဳင္ဆင ္ အ ႈ တြက္ ပြငလ ့္ င္းေသာ အစိး ို သ ု ရစာခ်ဳပ္မ်ားခ်ဳပ္ဆမ ႈ ည္ ရွားပါး ႕ူ န္ပေ သည့္ ျပည္သရ ွ စမည္အ ုံ ငြအေပၚ ထိေရာက္မႈ ရိေ ့ ျပင္ ပုဂလ ၢ ိကလုပင ္ န္းမ်ားႏွင့္ ရင္းႏွီးျမႇဳပ္ႏသ ူ ်ားသည္ လည္း ခိင ံွ မ ္ ာအားေကာင္းေသာ ု မ ္ ီးပြားေရးျဖစ္ေပၚေစရန္ အစိး ျမန္မာ့ေစ်းကြကစ ္ အ ု ရ၏ သႏၶိ႒န္ခ်မွတမ ု ယ ႈ ေပၚ ပိမ ု လာမည္ ျဖစ္ပါသည္။ ို ၾုံ ကည္အားကိး ၂၁။ ျပဳျပင္ေျပာင္းလဲမႈ အစီအစဥ္ၿပီးေျမာက္ေစေရးအတြက္ အဓိက ္ ခၚမႈသည္ စိနေ ႏိင ု င ံ ရးျဖစ္ပါသည္။ ္ ေ ျပဳျပင္ေျပာင္းလဲမႈ အစီအစဥ္သည္ က်ယ္ျပန္ၿ႔ ပီး ရည္မန ႈ ်ားစြာ ရရိခ ္ ခ်က္ႀကီးမားပါသည္။ ေအာင္ျမင္မမ ွ း ု ေ ွ ၿ့ဲ ပီးျဖစ္ေသာ္လည္း ဆက္လက္လပ ္ ဆာင္ရန္ က်န္ပါေသးသည္။ ့ ဝ အေကာင္အထည္ေဖာ္ေရးအတြက္ တကယ္စ ျပဳျပင္ေျပာင္းလဲမႈ အျပည္အ ္ ခၚမႈသည္ ႏိင ့ ိနေ ္ ေ ု င ံ ရးျဖစ္ပါသည္။ ယင္းအေျခအေနသည္ ေခတ္မီ စီးပြားေရးသိ႔ု ္ း အသြငက ု သာ၊ ူ ေျပာင္းလိေ တရားမွ်တ၊ ပြငလ ့္ င္းျမင္သာမႈရေ ိွ သာ ံွ ႈ ရင္းႏွီးျမႇဳပ္ႏမ ရာသီဥတုသ႔ို အသြင္ ု သာ ႏိင ကူးေျပာင္းလိေ ္ မ ု င ံ ်ားေတြႀ႔ ကံဳရမည့္ ေယဘုယ် စိး ု ရိမပ ္ ပ ူ န္မျႈ ဖစ္ပါသည္။ စြမး ို ေ ္ ေဆာင္ႏင ့ ်က္ခ်စားမႈ မရိေ ္ သာ အက်င္ပ ွ သာ ္ သိမး စည္းကမ္းထိနး ္ ရည္ျမင္အ ္ သူမ်ားပါဝင္သည့္ စြမး ့ ပ ု စ ္ သ ု ည္သာလွ်င္ အဆိပ ္ း ု ါ အသြငက ္ ေဆာင္ ူ ေျပာင္းမႈကို ျဖစ္ေျမာက္ေအာင္ စြမး ု ပ ႏိင ု ရအေနျဖင့္ တစ္ဖက္က ပညာသည္ျဖစ္မအ ္ ါသည္။ အစိး ္ င ႈ တြက္ အေရးပါမႈကို ဆုပက ္ ားၿပီး အျခားတစ္ဖက္က အထင္ႀကီး ို ထ ္ က္မ်ား၏ အေမြအႏွစႏ ေလးစားေလာက္ေသာ အားေပးမႈကြနယ ွ ့္ လိအ ္ င ္ င ု ပ္ခ်က္မ်ားကို ဆုပက ို က ္ ာ မိမိလပ ု ႏ ို သ ္ င ့ ဘာင္အတြငး ္ ည္ေ ္ မွ ိႇ င ေစ့စပ္ညႏ ္ ရန္လအ ိႈ း ု ါစိး ို ပ္ပါသည္။အဆိပ ု ရိမပ ္ ပ ူ န္မက ႈ ိုမည္သ႔ိုေပါင္းထုပ္ေစ့စပ္မည္ဆသ ု င ို ည္က ျမန္မာႏိင ံ ျဖစ္ႏင ္ ၏ ္ ခ်ရိသ ို ေ ွ ည့္ရင္သပ္ ႈ ို ဆံး ႐ႈေမာေလာက္စရာ ေကာင္းသည့္ အလားအလာ၏ ျဖစ္တည္မက ု ျဖတ္ေပးမည္ျဖစ္ပါသည္။ Myanmar Investment Climate Assessment ဇယားကြက္ ၁ - ဦးစားေပးျခင္းအပါအ၀င္ အႀကံျပဳတင္ျပခ်က္မ်ားအက်ဥ္းခ်ဳပ္ အႀကံျပဳတင္ျပခ်က္မ်ား ္ တ္မတ အခ်ိနသ ္ ်က္ / အဆင့္ ွ ခ ႈ ်ား ပထမ ဦးစားေပး ႏွင့္ ျမန္ျမန္ဆန္ဆန္ေအာင္ျမင္မမ ံွ ဆ ရင္းႏွီးျမႇဳပ္ႏမ ို ရ ႈ င ္ ာဝန္းက်င္ျပဳျပင္ေျပာင္းလဲေရးအတြက္ ေဆြး ျဖစ္ေပၚေနမႈအေျခအေန - ျမန္မာ့စီးပြားေရးဖိရ ု မ္ကို တည္ေထာင္ ု မ္ စတင္ ေႏြးမႈ ဖိရ ၢ ိကႏွင့္ အစိး ၿပီး ျဖစ္ပါသည္။ ပုဂလ ႔ု က္မွ သက္ဆင ု ရတိဘ ို ္ သူမ်ားက ံွ ႈ ရာသီဥတုျပဳျပင္ေျပာင္းလဲေရးအတြက္ သက္ဆင ရင္းႏွီးျမႇဳပ္ႏမ ို ္ ္ ာ အဆိပ ပါ၀င္ေဆာင္ရြကက ္ ဆာင္ ု ါ ဖုိရမ္ျဖစ္ေျမာက္ေစေရးကို လုပေ သူမ်ားပါ၀င္သည့္ ယံၾု ကည္ ္ ်ရေသာ စိတခ ပုဂလ ၢ ိကႏွင့္ ုရ အစိး ရပါမည္။ ု ပ္ပါသည္။ ေဆြးေႏြးမႈ လိအ ု က်ိဳးျဖစ္ေစေသာ ဥပေဒသမ်ားကို ပယ္ဖ်က္ ဆိး ျမန္ဆန္ေသာေအာင္ျမင္မႈ ု ရပိင အစိး ္ ီးပြားေရးလုပင ု စ ္ မ်ားႏွင့္ ၀န္ေဆာင္မမ ္ န္းမ်ားမွ ပစၥညး ႈ ်ား အစိး ု ရ၏ ရည္မန ွ း ု ည ္ ခ်က္မ်ားႏွင့္ ကိက ႈ ရိေ ္ ီမမ ု ါ ွ သာေၾကာင့္ အဆိပ ု ရ ၀ယ္ယျူ ခင္းဆိင ု ရအမိနက ္ ာ အစိး ႔္ ို ပယ္ဖ်က္ရပါမည္။ ႔ တ္မက ကန္သ ႈ ို ပယ္ဖ်က္ ရပါမည္။ ႈ ားေကာင္း ဘ႑ာေရးစနစ္ၾကီးၾကပ္မအ ယခုစတင္ပါ - ဘဏ္လပ ု င ္ န္း ၾကီးၾကပ္ကြပက ္ မ ဲ က ု င ႈ ို ႏိင ံ ကာ ္ တ ္ ေဆာင္ရည္ရေ စြမး ူ ်ားကို စြမး ိွ သာ ဘဏ္ၾကီးၾကပ္သမ ့္ င္ ္ ရည္ျမႇငတ အဆင္သ ့ ႔ို ျမႇငတ ့္ င္ႏင ္ န္ စြမး ို ရ ့္ င္ျခင္းသည္ အခ်ိနယ ္ ေဆာင္ရည္ ျမႇငတ ္ ူ ု င ေပးျခင္း။ ဥပမာ - ႏိင ံ ကာမွ ၾကီးၾကပ္သမ ္ တ ူ ်ားျဖင့္ မိတဖ ္ ပ ႕ြဲ း ူ ေပါင္း ္ ဆာင္ရန္။ ပါသည္။ ခ်က္ခ်င္းလုပေ ံ ျူ ခင္း။ ေဆာင္ရြကျ္ ခင္းႏွင့္ ညႊနျ္ ပမႈခယ ိွ ြမး လက္ရစ ္ အင္အေျခခံအေဆာက္အအံမ ု ်ား၏ ထိေရာက္မက ႈ ို တိး ု ျမႇင့္ စတင္လ်က္ရိွ - စြမး ု ပ္မႈ ္ အင္က႑ရိွ အျခားေသာ အေရးေပၚလိအ ဥပမာ - ိွ ာတ္ေငြသ လက္ရဓ ုံ ႕ း လွ်ပ္စစ္ဓာတ္အား ထုတလ ္ ပ ု ္ ိွ ေျခခံ အေဆာက္အအံတ မ်ားၾကားမွ လက္ရအ ို တက္ေရးကို ဦးစား ု း ုံ ်ား၏ စြမး သည့္ စက္႐မ ့္ င္ျခင္းႏွင့္ ျဖန္ျ႔ ဖဴးမႈအေလ ္ ေဆာင္ရည္ကို ျမႇငတ ေပးရမည္။ ့္ ်ားကို ေလွ်ာ႔ခ်ျခင္း။ အလြငမ ု ရွငး စီးပြားေရးစည္းမ်ဥ္းဥပေဒသမ်ားကို ႐ိး ္ ူ ေစျခင္း ္ လြယက အရိန ွ ျ္ မႇငတ ့္ င္ရန္ - ု မ္တည္ေထာင္မႏ စီးပြားေရးဖိရ ွ ့္ ႈ င PSD ု ေ ပိမ ္ ြာ အေကာင္အထည္ေဖာ္ေရးသည္ လိအ ို ကာင္းမြနစ ု ပ္ပါသည္။ ေကာ္မတီ ဖြစ ႕ဲ ည္းမႈတေ ႔ို ၾကာင့္ စည္းကမ္းထိနး ္ ေရးဆိင ္ သိမး ္ ာ ျပဳျပင္ ု ရ ုံ စည္းကမ္းထိနး ဥပမာ - ေန႔စဥ္သး ္ ေရးအလုပမ ္ သိမး ္ ်ားတြင္ စံ သတ္ ေျပာင္းလဲမႈ ႏႈနး ္ ကို တိး ့္ င ု ျမႇငႏ ္ ည္။ ို သ ္ ားေသာ လုပင မွတထ ့ း ္ န္းစဥ္မ်ား က်င္သ ုံ ရန္ ျပ႒ာန္းျခင္း။ ့ ်က္ျခစားမႈဆန္က အက်င္ပ ႔ ါ၀င္ ႔ ်င္ေရးတြင္ က်ယ္က်ယ္ျပန္ျ႕ ပန္ပ ု ပ္ခ်က္မ်ားကို ျပန္လည္သက္၀င္ေစရမည္ - ျပည္သပ လိအ ႔ူ ါ၀င္မႈ ို သ သက္ဆင ူ ်ားအားလံး ္ မ ့ ဝ ပါ၀င္ေရးသည္ ေအာင္ျမင္မႈ ု ျပည္ျ့ ပည္ဝ ို စားမႈကို ျဖစ္ေစသည္။ ဥပမာ - သတင္းအခ်က္ သည္ ယံၾု ကည္ကး ့ ်က္ျခစားမႈ အတြက္ အခ်က္အခ်ာက်ပါသည္။ ဥပမာ - အက်င္ပ ္ ပ္မႈ ဥပေဒေရးဆြျဲ ခင္း အလက္ လြတလ ႔ ်င္ေရး ေကာ္မရွငမ ဆန္က ္ ွ တစ္ဆင့္ ေရရွညျ္ ပဳျပင္ေျပာင္းလဲမႈ ု ်ား တည္ေဆာက္ အေရးပါေသာ ဘ႑ာေရးအေဆာက္ အအံမ ႈ ်ား ဆက္လက္လပ ဘ႑ာေရးက႑ ျပဳျပင္ေျပာင္းလဲမမ ္ ဆာင္ေန ု ေ ္ င ဥပမာ - interbank ေစ်းကြကႏ ွ ့္ ေငြေပးေခ်မႈစနစ္ တည္ေဆာက္ၿပီး ပါသည္။ ၾကီးၾကပ္ကြပက ဲ ႏ ္ မ ွ ့္ အေျခခံ အေဆာက္အအံမ ႈ င ု ်ားကို လုပ္ collateral registration စနစ္မ်ား ျပဳျပင္ေျပာင္းလဲရန္။ ေဆာင္ရမည့္ စာရင္းတြင္ ပထမဦးစားအျဖစ္ထားရန္။ ု ျပဳခြငဆ ေျမယာအသံး ို ရ ့္ င ္ ာ လံၿု ခံဳမႈကို အားလံး ု အတြက္ တိး ု ျမႇင့္ ရပါ ႈ ွ ျပဳျပင္ေျပာင္းလဲမမ ့္ ်ားကို အက်ိဳးအသီးအပြငမ ု ကို အားလံး မည္။ စီမခ ႔ မ ံ န္ခ ြဲ ႈ သံး ု သပ္ခ်က္၊ မွတပ ္ တ ုံ င္ျခင္းႏွင့္ cadaster စနစ္ႏင ွ ့္ ္ ဆာင္ဆဲ ျပဳျပင္ေျပာင္းလဲေရးဆိင မွ်ေ၀ေပးကာ လုပေ ု ရ ္ ာ အားထုတမ ္ မ ႈ ်ား ဥပေဒျပဳျခင္းဆိင ္ ာ ျပဳျပင္ေျပာင္းလဲမႈ အပါအ၀င္ ေျမယာကိစမ ု ရ ၥ ်ားကို ့ း ကို ပံပ ္ န္းစဥ္မ်ားကို လြယက ို ကူညီရပါမည္။ လုပင ူ စရပါမည္။ ္ ေ ္ ျခင္းျဖင္။ က်ယ္က်ယ္ျပန္ျ႔ ပန္႔ ေျဖရွငး ့ အမ်ိဳးသား ု စြမ လွ်ပ္စစ္ဓာတ္အားသံး ႈ စီအစဥ္ကို ဲ အ အေကာင္ ထုတလ ္ ပ ္ ေဆာင္ရည္တက ု ျ္ ခင္းႏွင့္ ျဖန္ျ႔ ဖဴးျခင္း စြမး ့္ င္ျခင္း ႔ို ို ျမႇငတ အထည္ေဖာ္ၿပီး ပုဂလ ၢ ိကက႑ ပါ၀င္ေစပါမည္။ ဥပမာ - ႀကီးမား ္ ရင္းျမစ္ႏင သည္ အခ်ိန၊ ု ပ္ပါသည္။ ွ ့္ က႑အသီးသီးမွ ကြၽမ္းက်င္မႈ လိအ ံွ ႈ လိအ ေသာ ရင္းႏွီးျမႇဳပ္ႏမ ု း ု ပ္ခ်က္မ်ားအတြက္ ဘ႑ာေရးပိင ္ ျပင္ဆင္ ေပးျခင္း။ Myanmar Investment Climate Assessment ္ န္းခြငအ လုပင ု ပ္ေသာ ပညာေရးကို တိး ္ တြက္ လိအ ု တက္ေစရမည္။ ပိမ ု အ ို ေသးစိတေ ္ သာ ု ရ အႀကံျပဳခ်က္မ်ားေပးႏိင ွ ့္ ္ န္ႏင ု ရ၏ အစိး ဥပမာ - အလုပသ ္ မားေစ်းကြက္ အေျခအေနႏွင့္ စပ္လ်ဥ္းသည့္ သတင္း ၸ ယ္ ဖြငဆ အခန္းက႑ကို အဓိပာ ့္ ႏ ို င ို ရ ု သပ္မမ ္ န္ ထပ္မံ သံး ္ ႈ ်ားျပဳလုပရ ု တက္ေစျခင္း၊ လုပင အခ်က္အလက္ ဖလွယျ္ ခင္းကို တိး ္ န္းမ်ားႏွင့္ ပညာ မည္။ ႕ဲ စည္မ်ားၾကား ထိသ ေရးအဖြအ ု ႔ို ဖလွယျ္ ခင္း။ ံွ ဆ စီးပြားေရးႏွင့္ ရင္းႏွီးျမွဳပ္ႏမ ို ရ ႈ င ္ ာ စည္းမ်ဥ္းဥပေဒအတြက္ ထပ္မံ အစိး ု ရအေနျဖင့္ (႐ိး ု ရွငး ္ ေ ္ လြယက ္ န္းစဥ္မ်ားကိ) ူ သာ လုပင ု ခပ္နည္း ျပဳျပင္ေျပာင္းလဲရပါမည္။ အျပည္အ ု င ့ ၀ ေကာင္အထည္ေဖာ္ေရးႏွင့္ ႏိင ္ ံ နည္းသာ လုပေ ္ ဆာင္ ႏိင ု ၿ္ ပီး လုိအပ္ေသာ စြမး ွ ့္ လုပင ္ ေဆာင္ရည္ႏင ္ န္း ေတာ္၏ အခန္းက႑သစ္အတြက္ ္ ေဆာင္ရည္ျမႇငတ စြမး ့္ င္ျခင္းကို ္ ူ ပါသည္။ စဥ္မ်ားတည္ေဆာက္ျခင္းသည္ အခ်ိနယ ု ို အာ႐ံစ ပိမ ို ရ ု က ္ ပါမည္။ ္ ပေဒမ်ားကို အခြနဥ ု ရွငး ႐ိး ္ ေအာင္ျပင္ဆင္ၿပီး အခြနထ ္ မ္း႐ံး ု မ်ား ႈ ို တည္ေဆာက္ရင္း အခြနစ ကနဦး ျပဳျပင္ေျပာင္းလဲမက ု စံု ္ နစ္အလံး ွ သ ျပန္လည္ရင ္ န္ေစမည္။ အခြနထ ္ မ္းႀကီးမ်ား႐ံး ု ဖြငလ ့္ စ ွ ၿ္ ပီးေနာက္ တြင္ ု ပ္ပါသည္။ စစ္ေဆးျပဳျပင္ျခင္းကို လိအ ျဖစ္သည္။ ့ ်က္ခ်စားမႈ ဆန္က အက်င္ပ ္ က ႔ ်င္ေရးအားထုတမ ႈ ို ျပဳျပင္ေျပာင္းလဲမႈ အရပ္ဘက္ျပည္သမ ူ ်ား (သိ) ႔ု လြတလ ွ ခိက ္ ပ္အမီအ ႔ ပ္ ု င္းသူမ်ား ခန္အ ္ စ္ပင ၏ တစ္စိတတ ္ အျဖစ္ ဆက္လက္လပ ို း ္ ဆာင္ပါမည္။ ဥပမာ - ု ေ ႈ ို ကာ ေကာ္မတီကို ၾကီးၾကပ္ေစျခင္းျဖင့္ EITI အေကာင္အထည္ေဖာ္မက ု ရ ေအဂ်င္စီမ်ားအားလံး အစိး ့္ င္းျမင္သာမႈကို အားေပးျခင္း။ ု တြင္ ပြငလ ႕ စမည္။ က်ယ္ျပန္ေ EXECUTIVE SUMMARY CONTEXT 1. This is the first Investment Climate Assessment (ICA) in Myanmar. The ICA’s preliminary analysis has been discussed with the government and has been used to inform World Bank Group (WBG) support. This ICA is based on an analysis of the 2014 Enterprise Survey, also a first in Myanmar, and on the analysis of other quantitative and qualitative information. The main objectives of this ICA are to (i) provide an up-to-date analysis of the investment climate for the government and other stakeholders to help prioritize and contextualize the reform agenda, and (ii) to offer a baseline for future assessments of progress in terms of the current reform agenda. 2. Recent macroeconomic indicators reflect Myanmar’s re-engagement with the world economy and growing reform agenda. For the Fiscal Year 2014 (ending March 31, 2015), Myanmar’s economy is predicted to grow by 7.8 percent and inflation is expected to be around 6.6 percent. The fiscal deficit declined in 2012/13 to 3.7 percent of GDP, down from 4.6 percent a year earlier. The decline was primarily due to strong revenue growth led by higher gas and tax revenues. However, expenditure also increased, led by increases in civil service salaries and higher allocations to education and health. Growth in trade was led by commodity exports of oil and gas, tourism, garments and agriculture. 3. Myanmar is a poor country in the midst of an extraordinary transition. Myanmar is one of the poor- est countries in the region, with a GDP per capita of just over USD 1,000 and a poverty rate of 37.5 percent in 2010.1 Since the political change of direction in 2011, the country has been undergoing a huge political and eco- nomic transformation. For most of its post-independence period, Myanmar has been under military dictatorship. Companies owned by the state or the military have long dominated the economy. Furthermore, state controls and economic isolation resulted in suppressed entrepreneurship and a diminished role of the private sector, stagnating infrastructure and technology, under-developed markets, and low levels of foreign direct investment. Now, along- side a political opening including a free press and national elections in 2015, the government has made strong pri- vate sector growth a key principle and goal for economic policy, though challenges remain. Given the international interest in Myanmar’s transition, the timing is right for creating a more competitive private sector and attracting more investment, particularly foreign direct investment, to help support the reform process. 4. Now that private sector growth is an official goal, the investment climate will require significant re- form. Not only have companies owned by the state or the military long dominated the economy, there is also a severe lack of access to critical inputs. The urgency for reform is also reflected in the government’s direct interactions with private firms, from tackling corruption to making regulations leaner and more effective. 5. For the reforms to be effective, they need to focus on the key issues first. Given that there is so much to do, it is imperative to (i) prioritize reform efforts, and (ii) identify areas where the government should do less. Improving the investment climate is often about stopping excessive interference by government agencies. The good news is that the government recognizes the seriousness of the problem and has already started to implement a significant reform program, set out in its Framework for Economic and Social Reform. The aim of this first ICA for Myanmar is to support and inform this reform effort. 6. One of the crucial aspects of the reform program in Myanmar will involve a major transition in the role of the state. Instead of the state directing the economy by dominating key sectors, in the future its role will need to become one of ensuring that all firms—regardless of ownership or personal connections—have equal ac- cess to the supporting elements of the business environment and that government policies are applied to all firms equally. As the government shifts from playing a direct role in the economy to one of regulator, it will need to manage the risk of too rapid privatization and of establishing credibility as a regulator. 1 Based on World Bank staff calculations of the IHLCA 2009/10 data (presented in draft World Bank Systematic Country Diagnostics, SCD), compared with the government’s official figure of 25.6 percent. i RESULTS 7. Private firms in Myanmar indicate that the top constraints for business operations are access to in- puts. The top four most-mentioned obstacles for firms are access to finance, access to land, access to electricity, and access to skilled workers. Private firms also indicate that the incidence of corruption as measured by bribe payments is one of the highest in the region. 8. Access to finance is cited most frequently as the main obstacle to doing business in Myanmar. The data indicate that the financial sector is not playing a sufficiently large role as an intermediary and that, instead, most financing needs are covered by firms’ own funds. A mere 1 percent of fixed asset investment costs was financed by bank borrowing, for example, while 92 percent of firms rely on their own funds—a higher level than in any comparator country. Meanwhile, only 30 percent of firms report having a bank account—the lowest level among all the comparator countries. Reforms are underway. However, the current legal and regulatory framework still contains serious structural impediments. These include an interest rate cap, a maturity limit and onerous collateral requirements. While it is vital to address these constraints, among others, doing so is far from straightforward and will require fundamental reforms including the ways in which banks are regulated and supervised. 9. The second most important constraint is access to land. Micro, small and medium firms are more ad- versely affected by this than large firms, and in fact only 2 percent of large firms cite access to land as a major constraint. This is a significant threat to Myanmar’s sustained economic growth, as well as its social cohesion, especially in view of the historic and unresolved grievances that affect land tenure issues. At issue is the security of land tenure. The rules and procedures for obtaining, keeping and transferring land use rights are complicated, non-transparent, and uncertain. 10. Access to a reliable electricity supply is the third most-often cited constraint. The problem is particu- larly prominent for medium and large firms. Almost all firms in Myanmar face power outages, the worst level in the region. As a consequence, most firms in Myanmar are forced to rely on their own or shared generators for power, at least during outages. The problem is most acute during the dry season when there is lower power production from hydropower stations. The significant challenge in the power sector has developed despite Myanmar’s abun- dant hydropower potential and natural gas reserves. The government now recognizes that expanding the domestic electricity supply is crucial to both economic growth and also to poverty reduction. It has moved to initiate several master plans related to electricity, which include further gas exploration and improvements to existing generation and transmission infrastructure. Looking further forward, the long-term sustainable development of the energy sector will require the scaling-up of energy efficiency and also renewable energy sources. 11. The fourth-most-important constraint that firms cite as an obstacle to doing business is the lack of skilled workers. Over 9 percent of firms cite inadequate workforce skills as the main obstacle to operations and growth. This compares with China were only 2 percent of employers in manufacturing firms complain about the quality of the workforce. Such a high level of employer dissatisfaction with the local workforce indicates that Myanmar will also have problems competing with its better trained neighbors, especially with the opening of the ASEAN Economic Community (AEC) in 2015. This also indicates that Myanmar will struggle to develop its value-added manufacturing sector, together with expanding and innovating firms, if the skills gaps cannot be ad- dressed and rectified. Eighty percent of firms claim that the educational system does not produce enough workers with up-to-date knowledge and the level and kinds of skills needed in the workplace, while about 75 percent of firms say that the educational system fails to instill an adequate work attitude. These proportions are far higher than Myanmar’s neighbors. However, it is also interesting to note that firms in Myanmar rarely provide formal training, with 90 percent of firms citing that they do not need to provide formal training programs. While significant reforms of the basic education system in Myanmar are now underway, specific reforms or programs to address workplace skills have yet to be put in place. 12. In addition to addressing the lack of access to critical inputs, the challenges faced by firms in their direct interactions with government should be addressed. After five decades of state-dominated institutions, together with a prolonged period of isolation from the global economy, attuning the interactions of government ii agencies with the needs of the private sector is only just starting. Making it transparent and easy for firms to deal with the government is only very slowly being accepted or even embraced. 13. Firms report having to pay bribes very frequently in order to smooth transactions with the govern- ment. The proportion of firms giving informal gifts or making payments is one of the highest in the region, and this seems to be confirmed in Transparency International’s survey on corruption, which ranked Myanmar at 157th out of 177 countries in 2013. Less than one-third of firms believe that the court system is fair, impartial and un- corrupted—a lower proportion than all comparator countries with the exception of Mongolia and Bangladesh. The government has started making efforts to address corruption, with an Anti-Corruption Law and an Anti-Corruption Commission that should now accelerate reform implementation. Similarly, Myanmar’s acceptance as an Extractive Industries Transparency Initiative (EITI) candidate country suggests potential for future transparency in the ex- tractive industries. 14. The Enterprise Survey (ES) provides firm-level perception of a broad range of issues about the busi- ness environment and performance of firms. This includes business-government relations, firm financing, labor, infrastructure, informal payments and corruption, and other topics such as training and innovation. The percep- tions measured by the ES already include adjustments to, and low expectations of various aspects of the business environment that matter for competitiveness and firms’ performance. In reading and interpreting the data, it is use- ful to complement them with other objective measures of the costs of doing business (such as the Doing Business survey), in order to acquire a comprehensive picture of the investment climate and shed light on how Myanmar compares to other economies for comparable competitiveness metrics. 15. When it comes to business regulation, the ES may understate the difficulties experienced by firms entering, exiting and operating in the economy. Other surveys such as the Doing Business (DB) indicators paint a rather bleak picture: Myanmar ranks 177th out of all the 189 countries surveyed. The government has been mak- ing efforts at reform in this area through legislation affecting the investment climate, but what is really needed are regulations and standard procedures for implementing these laws on the ground. Currently, smaller firms manage the risks of regulatory requirements by staying relatively informal. Informal firms state in the ES that the fear of government interference is a major factor in avoiding company registration. There are significant variations in the time spent on government regulations from region to region, indicating that agencies in the various regions may not be using standardized procedures. Another issue is the lack of coordination between the various government agencies in overseeing the private sector, with firms citing an excessive number of visits by government officials from diverse agencies and ministries. 16. According to the DB survey, taxation of firms is a major issue in Myanmar, and particularly oner- ous for small businesses. Few firms are aware of the prevailing rate of tax and the current tax laws and policies. Taxation is not based on self-assessment but instead requires tax officials to visit firms’ premises and calculate liability based on documentation provided by the firms. In view of the complexity of the tax system and the lack of transparency, this situation creates considerable scope for rent-seeking. Several reforms of the taxation system are planned in the coming months, such as a move towards self-assessment for large taxpayers in April 2015, and the building of a computerized data management system. RECOMMENDATIONS 17. Additional attention is needed on implementation, especially as the pace of reforms remains high. The importance of careful implementation and even the prioritization of implementation over further reforms should be emphasized. The need for a fast pace of reform across the different areas needs to be tempered with the dangers of attempting to push the reform process too far too fast. The capacity of the government to implement reforms is clearly (still) limited. In building not only the capacity but also the reputation as a capable overseer of the economy, consistent and steady reform is vital, more so than a high pace. 18. The formation of a permanent dialogue mechanism for investment climate reform marks a signifi- cant milestone. The private sector has taken steps to create a dialogue mechanism through the Union of Myanmar iii Chambers of Commerce and Industry (UMFCCI), which has established the Myanmar Business Forum (MBF). The Ministry of Commerce has been assigned the role of government MBF focal point. Both the private and public sector participants seem committed to making MBF a success and a forum through which frank discussions of the issues, as well as diligent follow-up of initiated reforms, can be carried out. In order to sustain the reform effort in the coming years great care will have to be taken to continually strengthen the leadership and buy-in for the MBF. 19. While comprehensive reforms for improving access to finance and electricity have been initiated, improving access to land and to skilled labor are areas where additional attention is warranted. On land, broad reforms are underway, including a new national land use policy. The process for transferring land use rights, for example, as captured by the Doing Business indicator ‘registering property’ could be made more transparent, simpler, faster, and cheaper. More complicated reforms can then follow such initial reforms. For skilled workers, additional analytical work is needed first, and a discussion about what role the government will take in supporting firms in finding skilled workers. Examples of helpful analytical work include the Systems Approach for Better Ed- ucation Results (SABER) workforce development and the Skills Toward Employability and Productivity (STEP) household and firm surveys. In order to assess what the appropriate role of the government should be in fostering vocational training and similar programs to improve workplace readiness, more analysis is needed. 20. The reform agendas in place to improve regulation, taxation and eliminate corruption should be continued and expanded. While the ICA makes a number of specific recommendations, the full implementation in these categories will be neither easy nor quick. Persistent effort is needed to make sure that the various govern- ment agencies, as well as the civil servants themselves, become engaged actors of change in this new role of the government in the economy. This is a long-term endeavor and capacity building in change management will be critical. As a recommendation that is very easy to implement: any old mandates or rules favoring state economic enterprises (SEEs) over private firms as suppliers of goods or services to the government should be eliminated. If Myanmar’s private firms are to be encouraged, then opening government contracts to competition will improve not only the efficiency of scarce public funds, but will also give private firms and investors increased confidence in the government’s commitment to a strong and dynamic market economy in Myanmar. 21. Ultimately, the real challenge in completing the reform agenda will be political. The reform agenda is broad and ambitious. A great deal has already been accomplished, but much more remains to be done. The real challenge in fully implementing reforms will be political. This is the common tension in countries seeking to transition to modern economies and to a fair, transparent investment climate. Only with an empowered group of capable and non-corrupt regulators is such a transition possible. The government needs to reconcile this imperative for professionalism within its ranks, on the one hand, with the legacy and the demands of formidable patronage networks, on the other. How this tension is reconciled will ultimately determine whether Myanmar’s staggering potential is realized. iv Myanmar Investment Climate Assessment Table Table1: 1:Summary Summary ofrecommendations, of recommendations,incl. incl. prioritization prioritization Recommendation Timeline / status First priority and quick wins Start dialogue forum for investment climate reform Ongoing – Myanmar Business Forum is being A credible public-private dialogue for stakeholder engagement established. Public and private stakeholders now on investment climate reforms is needed. have to make it work. Eliminate harmful rule Quick win – This restriction should be dropped, Mandate for government to procure goods and services from as it is not compatible with the government’s state-economic enterprises should be dropped. goals. Strengthen financial system oversight Start now – Building capacity to bring banking Empower capable bank supervisors, for example through supervision up to international standards takes partner- and mentor-ships with supervisors internationally. time; an urgent undertaking. Improve efficiency of existing power infrastructure Being initiated – Amid other urgent needs in the For example by increasing capacity of existing gas-fired power energy sector, improvements of existing plants and reducing transmission losses. infrastructure should be prioritized. Simplify business regulation To be accelerated – With established Business Better implementation is needed, for example by enforcing Forum and PSD Committee pace of regulatory standard procedures in day-to-day regulatory work. reform can be increased. For access to land: simplify registering property Reform blueprint readily available – The Process for transferring land use rights should be made more Doing Business report provides guidance on the transparent, easier, cheaper, and quicker. needed reform steps. Put in place tax administration reform plan To be accelerated – As initial reforms have Clear plan to guide ongoing and future reforms is needed. started, clarity on next steps is needed. Encourage broad engagement on anti-corruption Needs to be revitalized – Public participation Full stakeholder involvement is critical to success, for example can give credibility, e.g. to drafting of a freedom through the Anti-Corruption Commission. of information law. Reforms with longer time horizon Build core financial infrastructure, for example by Financial sector reforms are ongoing. establishing an interbank market and payments system, and Sequencing matters, with supervision and basic reforming collateral registration systems. infrastructure being first on the list. Improve land tenure security for all, by addressing land Ongoing reform efforts should be supported, comprehensively including governance review, system for ensuring benefits from reforms are shared by all; registration and cadaster, and legislative reform. and processes are simplified. Implement National Electrification Plan, including Upgrading generation and transmissions involvement of the private sector, for example by preparing the capacity will require time, resources, and financing for the huge investment needs. expertise from different sources. Improve education for the workplace, for example by Additional analytical work needed in order to improving information exchange on labor market conditions, develop more detailed recommendations, and and between firms and educational institutions. define appropriate government role. Pursue further reform for regulation of businesses and Even where the government should be doing less investment, with strong focus on full implementation and on (simplified processes) establishing required building capacity for new role of the state. capacity and processes takes time. Simplify tax laws and revitalize taxpayer offices, following Building on initial reforms, tax system overhaul the pilot of the large taxpayer office. is needed. Continue anti-corruption efforts, as a part of overall reform, Implementation of EITI should be broadened by for example by further encouraging transparency across all appointing civilians or independents to oversight government agencies. committee. vi v Myanmar Investment Climate Assessment 24 Myanmar Investment Climate Assessment Chapter 1 Introduction 22. This is the first Investment Climate Assessment (ICA) for Myanmar. The main objectives of this ICA are to (i) provide an up-to-date and fact-based analysis of the business environment for the government and other stakeholders in Myanmar to help prioritize and contextualize the reform agenda, and (ii) to offer a baseline for future assessments of progress in terms of the investment climate reform agenda. 23. As requested by the government, the Myanmar ICA will directly support the ongoing reform pro- gram. The government has requested an analytical foundation for the ongoing reform program, and a means for prioritizing the legal and institutional changes that are currently being initiated. The timing of the ICA fits well with the launch of the Myanmar Business Forum, for example, and the start of a number of new reform initiatives around improving the investment climate. 24. This ICA is based on the 2014 Myanmar Enterprise Survey. As with previous ICAs completed by the World Bank Group in many countries, the Myanmar ICA provides a comprehensive analysis of the country’s En- terprise Survey (ES). The ES in Myanmar was carried out between February and April 2014, although significant work preceded and followed the survey itself. Just like the Myanmar ICA, this is the first time an ES has been carried out in Myanmar. 25. This ICA report is organized into four chapters. The first chapter provides an introduction into the context of Myanmar’s challenges in terms of the overall economy and the investment climate in particular. It out- lines the road ahead for the government, as it shifts from being the main actor in the economy to a role of prudent overseer. The context for this ICA includes a discussion on how this assessment contributes to the government’s ambitious and urgent reforms. The second chapter analyzes the main constraints faced by firms operating in Myan- mar today, in particular the constrained access to inputs like finance, land, electricity, and skilled workers. The data analysis is combined with a summary of the key issues in each of the areas identified, as well as the reforms that the government is currently undertaking in each area. The third chapter looks at policies the government has in place for overseeing the economy, such as firm regulations and taxation. The chapter closes with an analysis of the incidence and perception of corruption. The fourth and concluding chapter provides policy recommendations that follow from the analysis, in terms of the process of reform and the specific reform steps needed over the short and medium terms. The annex to this report provides details on the methodology of the ES itself. 26. The structure of the report distinguishes between the constraints firms face due to the lack of in- puts on the one hand and the constraints they face as a result of direct interactions with the government on the other. In light of the significant challenges and the impressive scope and ambition of the government’s reform program, this distinction is useful. The dichotomy helps us to focus on those policies and reforms that will facilitate access to inputs, and those policies and reforms that will lead to improvements in how the government interacts with firms directly. Both sets of issues and policies are somewhat different from one another, and should be addressed accordingly. The ambitious reform program will need to address the availability of inputs that firms need to expand and thrive. The reforms will have to also fundamentally alter the way the government—as a whole, each agency, and each civil servant—interacts with firms in carrying out the essential functions of regulation and taxation. Fully implementing such changes can take a considerable amount of time and effort. 1.1 Context and the challenge ahead 27. Myanmar is undergoing a huge transformation after decades of stagnation, self-imposed seclusion from the world beyond Asia, and under economic sanctions from the West. On the one hand, Myanmar is mov- ing from isolation to a new degree of openness and integration, while on the other it is evolving from pervasive state control towards inclusion and participation. This transformation is taking place against a backdrop of broader political reforms that started in 2011, when a new administration took office, and that are gaining momentum to- wards a more complete transition after planned democratic elections in 2015. 1 Myanmar Investment Climate Assessment 28. Myanmar is one of the poorest countries in the Southeast Asian region. For 2013/14, the country’s GDP per capita is estimated at around USD1,105, one of the lowest in the East Asian region. The poverty rate is estimated to be around 37.5 percent of the population, and in addition a high concentration of households live very near the poverty line and are thus vulnerable to falling into poverty.2 29. The low level of development can be traced to Myanmar’s long history of isolation, conflict, and military control of political and economic life. For most of its post-independence period, Myanmar has been under military dictatorship and has been ravaged by conflict in the ethnic minority border areas. State controls and economic isolation resulted in suppressed entrepreneurship and a diminished role of the private sector, stagnating infrastructure and technology, under-developed markets, and low levels of foreign direct investment. 30. Recent macroeconomic indicators reflect Myanmar’s re-engagement with the world economy and growing reform agenda. For the Fiscal Year 2014 (ending March 31, 2015), Myanmar’s economy is predicted to grow by 7.8 percent. A similar rate of growth is expected to continue through 2015/16. Growth has been led by increased gas production, services, construction, foreign direct investment, and strong commodity exports. During this time, inflation increased and is expected to be around 6.6 percent for the fiscal year. It is likely to remain at that level or slightly higher for FY2015. Factors contributing to inflation include increases in public sector wages, higher electricity tariffs, and continuing demand pressures. 31. Myanmar’s fiscal position is sensitive to changing conditions. The fiscal deficit declined in 2012/13 to 3.7 percent of GDP, down from 4.6 percent a year earlier. This decline was primarily due to strong revenue growth led by higher gas and tax revenues. Tax revenues increased from 3.9 percent of GDP in 2011/12 to 6.4 percent in 2012/13. Improved tax administration and the exchange rate revaluation after the introduction of a managed float- ing exchange rate accounted for most of this increase. During the same period, expenditure also increased, led by hikes in civil service salaries and higher allocations to education and health. 32. Trade is predicted to grow in the short to medium term. Commodity exports of oil and gas have grown. Commodity prices have remained subdued but production capacity, particularly of gas, has supported increased export earnings. Garments and agriculture have contributed to export earnings, as has the rapidly growing tourism sector. The reinstatement of Myanmar to the EU’s Generalized System for Preferences (GSP) for least-developed countries has improved access to markets. Risks to export growth include persistently low commodity prices and a further slowdown in China. 33. Companies owned by the state or the military have long dominated the economy. The country has 44 formally defined state economic enterprises (SEEs) some of which are operating in areas that do not justify public sector involvement. SEEs enjoy significant subsidies and are the preferred supplier of goods and services to the government. In addition, the Ministry of Defence owns two holding companies with vast business interests: The Union of Myanmar Economic Holdings Limited (UMEHL), which was established to focus on light industries, trading, and services, and the Myanmar Economic Corporation (MEC), which was established to focus on heavy industries. These two holding companies also enjoy privileges that the private sector does not, such as exclusive access to preferential contracts with foreign firms. As Myanmar has opened up, the dominance of the military and groups associated with it in the economy has begun receding, yet the shift is a gradual one. 34. Having recognized the negative impact of extensive state interference and dominance in the econ- omy, the government has endorsed the encouragement of private sector growth. Promoting openness and sustainable private-sector-led growth with the aim of creating more, and better, jobs is one of the key pathways to eliminating poverty. Not only is the country opening up and integrating with the outside world in terms of trade and investment, the state is actively encouraging greater private sector participation in many areas of the econo- my, though implementation challenges remain. Greater participation will also need to be accompanied by greater competition through clarity and certainty in the rules regulating the economy. 2 Based on World Bank staff calculations of the IHLCA 2009/10 data (presented in draft World Bank Systematic Country Diagnostics, SCD), compared with the government’s official figure of 25.6 percent. 2 Myanmar Investment Climate Assessment 35. Increasing the participation of the private sector in the economy, however, will depend at least in part on a much stronger and more coherent investment climate than currently is the case. The investment climate in Myanmar is currently not conducive to encouraging a strong private sector. A number of international assessments make this point abundantly clear. 36. The World Economic Forum’s Global Competitiveness Index highlights serious issues in Myanmar’s ability to compete. In the World Economic Forum’s Global Competitiveness Index (GCI) rankings, Myanmar comes in at 134th out of 144 overall. Looking in more detail at the GCI indicators, the country ranks outside 100th in 10 out of the 12 pillars. Myanmar scores worst in the areas of infrastructure (2.0 out of 7) and technological readiness (2.1), with its scores not all that much better for innovation (2.3), financial market development (2.6), higher education and training (2.4), and institutions (2.8). The overall ranking is slightly improved on the previous year (ranked 139th), reflecting the initiation of reforms to improve the country’s economic landscape and pros- pects, albeit from a very low starting point. Going forward, Myanmar has the opportunity to leverage its extraor- dinary assets, which include an abundance of natural resources, favorable demographics, and a strategic location in the heart of Asia. Competitiveness will need to be at the core of this strategy. However, the needs for reform are many and the road to prosperity will be a difficult one. 37. Addressing the challenges that Myanmar faces “will take time, particularly the question of capacity, while some [other challenges] may be tackled in a shorter timeframe.” As the 2014 Investment Policy Review of Myanmar by the Organisation for Economic Co-operation and Development (OECD) further states, “failure to [tackle short-term challenges] will affect both the credibility and effectiveness of reforms in achieving the desired outcomes in terms of inclusive and sustainable development”. As the review confirms, the task ahead is immense. It states further that “the challenges for Myanmar in simultaneously engineering a political and economic transi- tion are enormous.” The review also emphasizes correctly that solutions will have to be achieved with a sustained effort over time. 38. The size of the challenge is also reflected in the WBG’s Doing Business indicators for 2015 and the Economic Freedom Index. The 2014 Economic Freedom Index from the Heritage Foundation ranks Myanmar 162nd in the world out of 178, and the country is ranked 40th out of 41 countries in the East Asia Pacific region. In the 2015 edition of Doing Business, Myanmar ranks 177th out of 189 economies. This ranking is a slight improve- ment from the 2014 ranking (182nd) and reflects some of the early reform efforts by the government, such as the elimination of import and export licenses on a number of goods. 39. The good news is that the government has already started to implement a significant reform program. Policymakers have set out their ideas in a Framework for Economic and Social Reform, which includes: budgetary and tax reforms; monetary and financial sector reforms; the liberalization of trade and investment; food security and agricultural growth; addressing land issues; and improvements in infrastructure availability and quality. 40. This first ICA supports and informs the reform efforts. The ICA offers a means for prioritizing and contextualizing the reform agenda. The pace of recent reforms and their overall ambition are remarkable. A host of new laws and regulations has been passed and more are currently in preparation. As increased attention will have to be placed on implementation and building capacity to implement, the government is asking for support in prioritizing reforms. The available data for Myanmar are scarce and there are currently still too many blind spots and areas that are poorly understood. The ES and this ICA aim to fill in some of the gaps. In addition to providing an assessment of the current situation, the ICA also serves as a baseline for future assessments of progress of the investment climate reforms. This prospect is important now, during the current reform efforts, as concerns about uneven implementation of the reform plans persist. The risk that reforms will favor the already-well-connected or will stall without a transparent stock-taking can be partly mitigated with the monitoring that this ICA along with subsequent ones will allow. 3 Myanmar Investment Climate Assessment 1.2 Role of the state 41. In addition to the content of the ICA, its format and process fits well into the changing approach to designing and monitoring the implementation of reforms. Along with the expanded role that the government is seeking for the private sector comes the necessity of giving the perspective of private firms a more prominent place in prioritizing and monitoring reforms. Paying attention to the current and future ICAs, signals a shift in the attitude of the government from one of dominance and control, towards encouraging private sector growth and listening to what the private sector has to say about it. 42. The basic change in Myanmar involves a transition in the role of the state. Through the planned and ongoing reforms, the role of the state has to change fundamentally. Over the past few decades, the government established a direction for the economy by dominating key sectors and directly supervising economic activity through companies owned by the state or the military. Instead, going forward the government will need to ensure that all firms, irrespective of ownership or personal connections, have equal access to the key supporting elements of a business environment. Instead of doing so as a main actor in the economy, the state has to establish a direction for the economy through policies and interventions that affect all firms equally. This is not a trivial undertaking. 43. The challenge of fully implementing such a change should not be underestimated. Changes in policies and strategic statements of a new direction are critical first steps. However, implementing the change towards pru- dent oversight and enabling services for the private sector will also require new capacities, new procedures, and new attitudes at all levels of the government. Not only the government as a whole, but also the different govern- ment agencies, and the individual civil servants carrying out the day-to-day work need to embody this changing role. 44. Correspondingly, the private sector and other stakeholders have to develop their organization and their behavior as well. The importance of private sector associations and groups that can represent the disparate elements of the private sector increases significantly in a setting where the government is actively trying to provide an enabling environment. It is critical for the sustainability of such reforms that the interests of the whole private sector are represented vis-à-vis the government, including small firms that do not have a significant voice by them- selves. 45. Notwithstanding the shift towards greater reliance on market mechanisms to grow the economy, safeguarding the public interest by protecting the environmental, cultural, and social endowments of the country and its people, remains a key function of the government. Ensuring that elements which the market tends to undervalue remain protected is and remains a critical function of the government, especially during a time of transition. By understanding the role of the government as an impartial and honest steward of the economy the protection of the public interest can be carried out more effectively as well. 1.3 Role and implications of a firm survey 46. Firm surveys provide important information on perceptions and experiences of the private sector. In addition to the ES, other business surveys have been conducted in Myanmar, such as the 2014 Business Survey conducted by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the OECD, in cooperation with the Union of Myanmar Federation of Chambers of Commerce (UMFCCI). The sur- vey’s results echo to a large extent the findings of the ES. However, it should be noted that the ES is the first na- tionally representative business survey. One area where the findings seemingly diverge, on corruption, is discussed in greater detail in Chapter 3. 4 Myanmar Investment Climate Assessment Box 1: Current and future data availability in Myanmar The relative dearth of reliable data is a serious constraint in Myanmar. Without reliable data it is dif- ficult to analyze the present, draw conclusions and formulate policy recommendations. The ICA and the ES in particular help fill this gap for the investment climate, even as the ICA is limited to an overall- or a birds-eye view. Generating more data and more frequently will have to be an overarching priority not only for the government but also for all stakeholders in Myanmar. Policy formation and the necessary ongoing adjustments of policies require reliable data for assessing their impact. Although based primarily on the 2014 Enterprise Survey, the ICA draws on several other data sourc- es, primarily the WBG’s Doing Business survey, the OECD’s 2014 Investment Policy Review and the 2014 OECD and UNESCAP Myanmar Business Survey. In addition to these main sources of data, the ICA also draws on more specific data from The Heritage Foundation’s Economic Freedom Index, Transparency In- ternational’s Corruption Perception Index and the 2014 World Economic Forum’s Global Competitiveness Index. Reference is also made to the UNDP’s 2014 Myanmar Business Census. These data sources are the most relevant to, and also the most up-to-date sources of information on, the business climate in Myanmar. However, with the recent surge in interest in the country, numerous other useful and informative sources of data have also appeared. These are listed in the references at the end of the report. It is worth noting that a number of potentially useful surveys are currently ongoing, including an enterprise cluster mapping and industrial zoning survey by UNIDO and a labor force survey by ILO. In order to better understand several of the issues highlighted in the ICA, not only further analysis will be needed, but also more data. Further research will have to be carried out to analyze in greater detail some of the key constraints identified in the report. But in several cases, the data for additional, in-depth analysis has yet to be collected. One good example of an area where considerable further data need to be collected and analyzed concerns the broad and complex issue of corruption. As discussed below, corruption is an important, multifaceted issue. The Enterprise Survey and other surveys clearly show that corruption is a huge problem in Myanmar. Further research will be needed, for example to delve into the socio-cultural aspects of corruption in Myanmar that appear to have turned it into an accepted ‘fact of life’ for many busi- nesses. Going forward, more data is needed for the prioritization of reforms. Much of the data does not yet exist or is not collected frequently enough to enable the government and relevant stakeholders to understand where the most urgent issues are, let alone measure what impact initial reforms are having. As the govern- ment seeks to be as efficient as possible with its scarce attention, improving the availability and reliability of information will be a critical contribution. 47. Basing the assessment on employers’ perceptions has both advantages and limitations. The advantage is that the responses are given relative to the actual demand and requirements of firms. The disadvantage is the unavoidable subjectivity of judgments. Employers may either overstate or understate the severity of constraints, depending on the reference points that they use. Employers in different countries may also use different reference points. This is true especially for a first-time survey, and subsequently reference points may change over time. All those participating in the ES were doing so for the first time and this may have implications for their answers and also for the opinions they express in subsequent ES. 48. An important consideration is that the supply of inputs, such as finance, electricity, land, or skills, is evaluated relative to existing current demand. There are two limitations with evaluating the availability of in- puts in this way. First, it leaves out the demand for inputs by firms that did not enter the market or did not survive, in particular due to a lack of inputs (selection bias). Second, it does not capture the future demand for inputs, which is particularly relevant given that supply responds with a lag to changes in demand. These caveats notwithstanding, 5 Myanmar Investment Climate Assessment the subsequent sections make it clear that firms in Myanmar experience the lack of access to inputs as a serious constraint. 49. The assessment of firms’ interactions with government agencies, and the degree to which these inter- actions are an obstacle for firms, provides another critical perspective. Coordination of individual government departments and their respective roles in overseeing the economy is a task of the government, not of the private sector. However, firms’ responses to the survey questions dealing with interaction with government agencies can give the government valuable insight into the strengths and weaknesses within its own systems and departments. These responses can also highlight problems of coordination and overlapping authorities within the government that complicate the investment climate. 50. A key priority for the government should be to develop the ability to respond to the feedback provid- ed by the ICA and other channels of communication. The capacity of government agencies has to be strength- ened; not only to carry out restrained oversight over the private sector, consistent with government policy priorities and well-coordinated with other agencies, but also to respond to input provided by the private sector. This will enable the government to improve its reform efforts on a continuous basis. 1.4 Brief description of the Enterprise Survey sample 51. Significant preparatory work is done for the Enterprise Survey in order to ensure that the results are nationally representative. In a country with very little data regarding private firms, obtaining a nationally repre- sentative sample of firms requires additional work.3 In countries that have a reliable and comprehensive company registry, it is relatively straightforward to construct a sample based on the registry. Since such a registry does not exist in Myanmar, the process is more complicated, but all the more important. The methodological details of the ES are provided in the annex. A brief description is included here. 52. Ensuring the sample of firms is nationally representative provides significant advantages. The sur- vey’s results have greater external validity, so it can be said with greater confidence that firms that were not includ- ed in the survey would have responded similarly, statistically speaking. In addition, the combination of achieving a nationally representative sample and having the identical core questionnaire in all countries allows comparisons across two dimensions. First, it allows the comparison across time: comparing Myanmar now with Myanmar in a few years’ time, and analyzing what has changed. This is important for assessing the progress of the current round of investment climate-related reforms, for example. Second, it allows the comparison across countries: comparing Myanmar now with other countries, where the exact same survey has been carried out and analyzed. 53. A sample of 632 small, medium, and large firms is collected for the comparable ES sample. All of the cross-country comparisons have to be carried out using only the standardized sample. Also, simple country aver- ages are typically shown for just the standard sample. Micro firms are included, where appropriate, as a separate category. Including the micro firms would skew country averages heavily in favor of micro firms. This would risk discounting the opinions of non-micro firms, where much of the economic dynamism is expected to come from in the coming years. The firms were sampled from the five major cities in Myanmar, with the majority of firms located in Yangon. 3 The Enterprise Survey is the most comprehensive survey undertaken so far. However, it has limitations in capturing regional differences in the investment climate and providing a detailed description of the informal economy. 6 Myanmar Investment Climate Assessment 4 1: Sampled Figure 1: Figure rms by Sampled firms byregion region4 Yangon Mandalay Bago Taunggyi Monywa 375 125 36 46 50 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 4 Figure 1: Figure Sampled rms 1: Sampled by region rms by region 4 54. Very few firms are large or trade internationally. Indeed, the numbers in the sample overstate the pro- Yangon portion of Figure 2: large firms Sampled and rms by the size numberMandalay Yangon Mandalay Bago Bago of exporting firmsTaunggyi Taunggyi in Myanmar, Monywa Monywa since large and medium firms were over- sampled. Among all firms in Myanmar, even fewer are large or engaged in exports. Within the sampled firms, less small(<20) medium(20-99) large(1001and over) than 10 percent of firms export3 75 7 3some 5 25 12 of their products. It is a reflection 36 5 of the long 46 46 of50 36 period being closed off inter- 50 nationally. This observation also aligns with more detailed findings discussed below, that private sector firms are not 0% 10% very sophisticated 0% 10% 20% in terms 20% 3 7 their 40% 6of 30% 30% 40% 50% integration 50% 60% 60% markets, with global 162 and80% 70% 70% 90% the use of 80% 103 100% technology 100% or international 90% standards. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Figure 2: Figure Figure 2: Sampled firms 2: Sampled Sampled rms by rms by by size size size Figure 3: Sampled rms by exports small(<20) small(<20) medium(20-99) medium(20-99) large(100 and large(100 and over) over) Non-exporter Exporter 67 36 3 7 62 16 1 2 103 103 573 59 0% 0% 10% 10% 20% 20% 30% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Figure 3: Sampled firms by exports Figure 3: Sampled rms by exports Figure 3: Sampled rms by exports Non-exporter Non-exporter Exporter Exporter 573 573 59 59 0% 0% 10% 10% 20% 20% 30% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% 55. The ES distinguishes between three main sectors. Agricultural firms are excluded from the ES, not only in Myanmar but globally. The majority of firms in the sample are in manufacturing, with the rest being in retail and other services. However, given the importance of agriculture in Myanmar and the impact of the reform process on the sector, the ICA includes a case study of the investment climate for agriculture as a Box 3 in Chapter 2. Figure 4: Figure Sampled firms 4: Sampled by rms by sector sector Manufacturing Retail Other Services 353 105 174 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 56. Figure Population 5: estimates Informal rms and sampled by corresponding weights are used in all calculations, unless otherwise noted. region Based on the sampling methodology described in detail in the annex, the population of firms in Myanmar, includ- Yangon Mandalay Bago Taunggyi ing the breakdown by size, is estimated. These estimates are used toMonywa calculate population weights which, in turn, are used to turn the results into nationally representative ones. With regards to firm size, for example, the break- 127 72 30 41 30 0% otherwise 4 Unless 10% the source for specified,20% 30%all figures40% and tables in the ICA report 50% 60% 70% Survey is the Enterprise 80%data, and team 90%calculations. 100% 7 Figure 6: Characteristics of private rms in international comparison Myanmar Investment Climate Assessment down in the population estimate is: 80 percent small, 16 percent medium, and 4 percent large. Figure 57. 4: In Sampled rms addition toby sector the standard ES sample, data were collected on micro firms in Myanmar. Micro firms are categorized as those with fewer than five employees. A total of 460 micro firms were surveyed. Manufacturing Retail Other Services 58. Also, a separate survey was carried out with 300 informal firms. While the standard sample contains 353 105 174 firms and micro firms that are all formally registered, in Myanmar an additional survey was carried out with firms that were not registered anywhere. The survey for the informal firms is significantly different from the survey of the 0% 10%Therefore, other firms. 20% only limited 40% 30% 60% 50% can be comparisons 70% made between 80% informal 90% and firms 100% others. Figure 5: Informal firms sampled by region Figure 5: Informal rms sampled by region Yangon Mandalay Bago Taunggyi Monywa Figure 4: Sampled rms by sector 127 72 30 41 30 Manufacturing Retail Other Services 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 353 105 174 1.5 Characteristics of private firms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Figure 6: Characteristics of private rms in international comparison 59. Compared with the average firm in other countries in the region, the average firm in Myanmar is fairly small, uses very little technology or international standards, and offers little training. When it comes to 120 the average sizerms of the firm or 200 Figure 5: Informal sampled by its registration at start up, firms in Myanmar look fairly similar to region 180 firms across the 100 On the other hand, the proportion of firms with international quality certification, at less 160 region. than 2 percent, is the lowest 80 by far in the region.Yangon In terms Mandalay of the use Bago Taunggyi of emails Monywa or foreign in Myanmar also licensed technology, firms 140 rank 60very low. Only in Indonesia is the use of email less common than in Myanmar, where 30120 5 percent of firms 100 127 report using it to communicate with customers and/or 72 suppliers. The 41 of firms30 30 proportion using80 foreign licensed 40 60 technology is lower in Myanmar than in most other countries, at 6 percent. Only in Nepal (2 percent) and, again, 20 40 0% in Indonesia 10% 20%is that (4 percent) 30% 40%lower. proportion Only 1560% 50% 70% percent of 80% firms in Myanmar90%report 100% offering 20 training to 0 their employees. That is significantly lower than in most other countries, with the exception of 0Indonesia where only 5 percent of firms offer training. Figure 6: Characteristics of private rms in international comparison Figure 6: Characteristics of private firms in international comparison 120 200 % firms with international quality certification % firms using e-mail with clients/suppliers 180 100 160 % firms using foreign licensed technology % firms offering formal training 140 80 120 60 % firms registered from the start # full-time workers (right axis) 100 80 40 60 20 40 Figure 7: Firm characteristics by size 20 0 0 100 90 % firms with international quality certification 80 70 % firms using e-mail with 60 % firms with international quality certification % firms using clients/suppliers e-mail with clients/suppliers 50 % firms using foreign licensed technology % firms offering firms using %formal foreign licensed training 40 technology 30 % firms registered from the start # full-time workers (right % firms axis) formal training offering 20 5 Technology 10 licensed from a foreign-owned company measures access to foreign technology. The license may be held by the establishment’s parent compa- ny. Computer software is one of the most % firms formally registered at the common items of ownership of foreign licensed technology. 0 7: Firm characteristics Figure by size start micro small medium large 100 % firms with international quality 90 8 certification 80 70 % firms using e-mail with 20 40 20 0 0 Myanmar Investment Climate Assessment 60. Looking across the different firm sizes within Myanmar, including micro, the pattern is as expected. It is notable that with % firms most firms, irrespective international of their size, report quality certification having % firms had using a registration e-mail from the start. On all other with clients/suppliers dimensions, however, firm size is clearly % firms using foreign licensed technology correlated with sophistication. The larger the % firms offering formal training firm, the more likely it is to use email, foreign technology, quality certification or training for its workers. The pattern of less use of technology continues %for informal firms registered from although firms, the start due to the different # questionnaire, they axis) full-time workers (right cannot be included directly in the comparison. Figure 7: Figure characteristics Firmcharacteristics 7: Firm by by size size 100 90 % firms with international quality certification 80 70 % firms using e-mail with 60 clients/suppliers 50 % firms using foreign licensed 40 technology 30 % firms offering formal training 20 10 % firms formally registered at the 0 start micro small medium large 61. When comparing the characteristics of firms’ performance, very few differences exist between the top 25 percent and the bottom 25 percent. Using real annual sales growth, annual employment growth and an- nual labor productivity (sales per worker), the main difference is that those firms in the top group are between a third and a quarter younger than their bottom comparators. This conforms to the literature that finds younger firms are often more dynamic. For all other measured characteristics, such as exports, ownership, gender and access to finance, there are no significant differences. 9 Myanmar Investment Climate Assessment Box 2: Gender roles within private sector firms The overall participation of women in the la- Table 2: Proportion Table2: full-timefemale Proportion full-time femaleworkers workers(%) (%) bor force is similar to other countries in the Myanmar average 33.5 region and also internationally. About a third Small (5-19) 32.8 of full-time workers are female, in Myanmar and Medium (20-99) 30.6 on average in other countries. Interestingly, how- Large (100+) 61.1 ever, large firms have workforces comprising East Asia & Paci c 36.9 over 60 percent women, far more than smaller All Countries 33.6 firms and more than the international average. Female ownership and management of private firms is significantly lower than in most com- parator countries. Only Bangladesh and Sri Lanka have a lower proportion of women as owners or managers. Again, it is the large firms in which women are more prevalent. Over 40 percent of owners and managers of large firms are women compared with about 25 percent for small and medium firms. Figure 8: 8: Figure Female ownership Female and ownership management and (%) management across countries and (%) across and firm size rm size female owners female owners female manager Bangladesh2013 female manager SriLanka2011 Myanmar2014 27 42 29 large 41 LaoPDR2012 Indonesia2009 medium 26 26 Vietnam2009 China2012 27 small Philippines2009 30 0 50 100 0 20 40 60 Table 2: Proportion full-time female workers (%) According to the ES results, the experience Myanmar average 33.5 of women owners or managers does not differ Small (5-19) from that of their male counterparts. significantly 32.8 One exception to this is that women seem to have a significantly Medium (20-99) the courts. better impression of30.6 Large (100+) 61.1 East Asia & Paci c 36.9 All Countries 33.6 Figure 9: Share of rms identifying the main obstacle (%) Access to finance 22.7 Access to land 21.4 Access to electricity 16.9 Access to skilled workers 9.5 Labor regulations 4.9 Political instability 4.5 Tax rates 3.0 Tax administration 2.4 Transport 2.2 Business licensing and permits 1.7 Customs and trade regulations 1.6 10 Courts 1.4 Competition from informal sector 1.0 Myanmar2014 27 42 29 large 41 LaoPDR2012 26 Myanmar Investment Climate Assessment Indonesia2009 medium 26 Vietnam2009 Chapter small firms operating 2 Constraints faced by China2012 27 30 in Myanmar Philippines2009 62. The current 0 investment 50climate in100 Myanmar is0 well behind 20 its peers 40and faces 60major challenges go- ing forward. As indicated in the introduction, this first Investment Climate Assessment for Myanmar, based on the Enterprise Survey completed in 2014, confirms that the current investment climate in Myanmar is much less Table 2: Proportion full-time female workers (%) conducive than in comparable countries and faces huge challenges. Myanmar average 33.5 2.1 Main Small constraints (5-19) 32.8 Medium (20-99) 30.6 Large 63. (100+) The ES of small, medium and61.1large firms can identify what the main obstacles to the firms’ success are. The East two Asia most & Paci c important constraints 36.9are seen as access to finance, followed closely by access to land. The third constraint is access to reliable electricity supply and the fourth constraint an inadequately educated workforce or All Countries 33.6 the access to skilled workers. Figure 9:Share Figure 9: Share firms ofofrms identifying identifying the main the main obstacle obstacle (%) (%) Access to finance 22.7 Access to land 21.4 Access to electricity 16.9 Access to skilled workers 9.5 Labor regulations 4.9 Political instability 4.5 Tax rates 3.0 Tax administration 2.4 Transport 2.2 Business licensing and permits 1.7 Customs and trade regulations 1.6 Courts 1.4 Competition from informal sector 1.0 Corruption 0.7 Crime, theft and disorder 0.4 0 5 10 15 20 25 64. Crime, theft and disorder are a low priority for firms in Myanmar. Before focusing on the considerable challenges that Myanmar faces in improving its investment climate, it is worth briefly acknowledging one area where Myanmar offers a positive picture. Crime, theft and disorder are a low priority, with only about 0.4 percent of firms citing these as the main obstacle. When looking at international comparisons in Figures 10 and 11, it is clear that firms in Myanmar are in a good position with regard to security compared with other firms in the region. Figure 10: Figure 10: Share Share ofrms of that firms need that to pay need for security to pay (%) (%) for security Bangladesh2013 78 China2012 66 Vietnam2009 58 Mongolia2013 57 LaoPDR2012 57 Philippines2009 48 SriLanka2011 37 Nepal2013 36 Bhutan2009 33 Afghanistan2014 30 Indonesia2009 23 Myanmar2014 23 0 10 20 30 40 50 60 70 80 90 11 Figure 11: Share of rms with losses as a result of theft, robbery, vandalism or arson (%) Philippines2009 Myanmar2014 23 0 10 20 30 40 50 60 70 80 90 Myanmar Investment Climate Assessment Figure 10: Share of rms that need to pay for security (%) Bangladesh2013 Figure 11: Figure Shareof 11:Share of firms lossesas withlosses rms with asaa result result of of theft, theft, robbery, robbery, vandalism vandalism or or arson arson (%)(%) 78 China2012 66 Vietnam2009 Philippines2009 58 29 Mongolia2013 Vietnam2009 57 26 LaoPDR2012 57 26 Afghanistan2014 Philippines2009 17 48 Mongolia2013 SriLanka2011 37 17 Bhutan2009 Nepal2013 36 16 Nepal2013 Bhutan2009 11 33 SriLanka2011 Afghanistan2014 8 30 Indonesia2009 Bangladesh2013 8 23 Myanmar2014 7 23 Indonesia2009 0 10 4 20 30 40 50 60 70 80 90 China2012 4 0 5 10 15 20 25 30 35 Figure 11: Share of rms with losses as a result of theft, robbery, vandalism or arson (%) 65. As measured by the ES, Myanmar has a low level of crime. Perhaps influenced in part by the strong Figure 12: presence ofConstraints in by faced the military businesses Myanmar of dithe since erent size there are relatively low levels of crime, with violent crime 1960s, Philippines2009 29 extremely rare. The presence of organized Micro Smallcrime in the country seems Medium to be confined primarilyLarge to drug trafficking. Vietnam2009 26 As a result, Myanmar has the lowest level of expenditure by firms on security in the region, while only Indonesia LaoPDR2012 25 26 This andAccess China tohave lower levels 36 lossesto of Access 25 robbery, due to theft, vandalism Access to or arson. is about a quarter46 Electricity of the level finance Afghanistan2014 % finance % 17 land % % seen in Myanmar’s ASEAN neighbors, such as the Philippines, Vietnam and Lao PDR. Mongolia2013 17 Access to 17 Access to 21 17 Access to 30 2.2 Access land to finance Bhutan2009 % land % Electricity 16 % finance % Nepal2013 11 Access to 11finance is the most 8 66. Tax SriLanka2011 Electricity frequently identified obstacle to business in Myanmar. 9% Looking across rates 15 Access to 15 Inadequatel % % finance % y educated small, medium and large firms, an average Bangladesh2013 8 23 percent of firms cite access to finance as the main obstacle to doing business. Access to finance is also among Myanmar2014 Political 7 the top three obstacles cited by firms across all firm sizes and the main Inadequatel 6% (36 percent) Inadequatel 12 obstacle for micro and small (25 percent) enterprises. Corruption y educated In addition, access to finance is one of the most instability 9% 5% Indonesia2009 y4educated % frequently identified main obstacles in all three broad industry sub-sectors, namely manufacturing (23 percent), the China2012 Practices 4 retail trade of percent) and the Labor (36 6% services sector (14 percent). Business Labor 0 5 10 5% 20 15 licensing an 5% 25 30 3%35 competit regulations regulations Figure 12: Constraints faced by businesses of different size Figure 12: Constraints faced by businesses of di erent size Micro Small Medium Large Access to 36 Access to 25 Access to 25 46 finance % finance Electricity % land % % Access to 17 Access to 21 17 Access to 30 land % land % Electricity finance % % 11 15 Access to 15 Inadequatel Tax rates Electricity 9% % % finance % y educated Political Inadequatel Inadequatel 12 6% 9% Corruption 5% instability y educated y educated % Practices of 6% Labor Business Labor 5% 5% 3% competit regulations licensing an regulations 12 Myanmar Investment Climate Assessment Figure13: Figure obstacleto Mainobstacle 13: Main businesses tobusinesses by by sector sector 40% 35% 30% 25% Access to finance 20% Access to land Figure 13: Main obstacle to businesses by sector 15% Access to electricity 40% 10% Access to skilled workers 35% 5% 30% 0% 25% Access to finance Manufacturing Retail Other services 20% Access to land 67. 15% 14: Figure Share of has Myanmar a large rms that shareaof purchased firms xed (%); sourceinvestments reporting asset of funding Access in fixed to electricity assets, reflecting an acceleration in economic 10% growth, but with most financing needs covered byown own funds. funds About Access 46 to skilled bank workersof firms reported percent acquiring fixed assets in the recent fiscal Vietnam2009 63% year—a relatively high share reflecting rapid economic growth in Myan- 5% Myanmar2014 92 1 mar driven by a new climate of economic openness and liberalization (Figure 14).6 On average, a mere 1 percent of LaoPDR2012 49% China2012 fixed asset investment costs was financed by bank borrowing, 0% while a staggering 92 90 percent was 5 financed by using theirMyanmar2014 Manufacturing own funds—a higher level 46% Retail Other than in any comparatorIndonesia2009 services country. 86 6 China2012 40% LaoPDR2012 80 10 Figure 14: Figure of firms Shareof 14: Share that rms that purchased purchased fixed aa xed asset asset (%); (%); source source of funding of funding Philippines2009 35% Vietnam2009 75 12 own funds bank SriLanka2011 Vietnam2009 23% 63% Bangladesh2013 74 12 Myanmar2014 92 1 Bangladesh2013 LaoPDR2012 23% 49% Philippines2009 73 12 China2012 90 5 Indonesia2009 Myanmar2014 22% 46% SriLanka2011 54 34 Indonesia2009 86 6 China2012 0% 50% 40% 100% LaoPDR2012 0 80 50 10 100 Philippines2009 35% Vietnam2009 75 12 SriLanka2011 Figure 23% 15: Share of rms using only own funds to nance (%)Bangladesh2013 74 12 Bangladesh2013 23% Philippines2009 73 12 Myanmar2014 87 Indonesia2009 22% SriLanka2011 54 34 Afghanistan2014 85 Indonesia20090% 50% 100% 0 73 50 100 Philippines2009 68 68. Working capital needs are also largely financed by using own funds. In Myanmar, 87 percent of firms Nepal2013 67 use own Figure funds 15: Share of working for rms usingcapital only ownneeds—also a significantly funds to nance (%) higher share than in any of the comparator countries China2012 67 (Figure 15). Moreover, there is only limited use of trade credit. Fewer than half of firms in Myanmar purchase LaoPDR2012 or sell goods or services on credit (Figure 16). For example, only Myanmar2014 58 27 percent of responding 87 firms said that they purchased any Bangladesh2013 Afghanistan2014 goods or services on credit, compared with 94 percent 58 in China, 84 percent 85 in the Philippines, and about 70 percent Mongolia2013 Indonesia2009 in both Sri Lanka and Vietnam. Not42 only do fewer firms purchase 73 goods and services on credit, but those that do also purchase a smaller share. Firms SriLanka2011 41 buying goods and services on credit on average made 34 Philippines2009 68 percent of their Vietnam2009 purchases on credit, compared 35with 66 percent in China and 81 percent in the Philippines. Only Nepal2013 67those that do also sell a lower share. On 49 percent of firms in Myanmar sell any goods or services on credit, and Bhutan2009 China2012 24 67 of their sales. This compares with 96 average, firms in Myanmar that do sell on credit only do so for 36 percent LaoPDR2012 percent of firms in 0 China10 selling 20 at least30 40 some goods or 50 services60 58 70 On 80 on credit. average,90 100 sell about 66 these firms percent of all their sales on credit. Bangladesh2013 58 Mongolia2013 42 SriLanka2011 41 6 Due toVietnam2009 35 differences in survey years the indicator needs to be interpreted carefully as it does not aim to compare current levels of investment by firms but rather point in time indicative estimates. Bhutan2009 24 0 10 20 30 40 50 60 70 80 90 100 13 Indonesia2009 22% SriLanka2011 54 34 0% 50% 100% 0 100 Climate Assessment 50 Myanmar Investment Figure 15: Figure 15: Share Shareof rms using of firms usingonly onlyown ownfunds to to funds nance (%) finance (%) Myanmar2014 87 Afghanistan2014 85 Indonesia2009 73 Philippines2009 68 Nepal2013 67 China2012 67 LaoPDR2012 58 Bangladesh2013 58 Mongolia2013 42 SriLanka2011 41 Vietnam2009 35 Bhutan2009 24 0 10 20 30 40 50 60 70 80 90 100 Figure 16: Trade credit use in Myanmar (% rms and % purchase/sale on credit) Figure 16: Figure credituse Tradecredit 16: Trade use inin Myanmar Myanmar (%(% andand firms rms % purchase/sale % purchase/sale on credit) on credit) Share of firms that BUY on credit Average share of purchase on credit for those that do so (right axis) 120 Share of firms that BUY on credit Average share of purchase on credit for those that do so (right axis)90 120 90 80 100 80 70 100 80 70 60 80 60 50 60 47 50 40 60 40 47 40 30 40 30 20 20 34 34 20 10 20 0 10 0 0 0 Share of firms that SELL on credit Average share of sales on credit for those that do so (right axis) 120 Share of firms that SELL on credit Average share of sales on credit for those that do so (right axis) 90 120 80 90 100 70 80 100 80 60 70 80 50 60 60 49 40 50 60 49 40 30 40 40 36 20 30 20 36 10 20 20 0 0 10 0 0 Figure 17: Share of rms with account (%), in comparison and by size Figure 17: Share of rms with account (%), in comparison and by size Share of firms with a current/checking account Share of firms with a current/checking account Share of firms with a current/checking account Share of firms with a current/checking account Philippines2009 98% Philippines2009 China2012 98% 96% 14 large 91% China2012 96% large 91% SriLanka2011 89% 80 60 50 60 49 40 Climate Assessment Myanmar Investment 40 30 36 20 20 10 69. Reliance 0 on the banking system for basic transactions is very limited. Only 30 percent 0 of firms in Myanmar report having a bank account—the lowest level among all the comparator countries. For example, 98 percent of firms in the Philippines and 96 percent of firms in China have accounts with banking institutions to conduct their business (Figure 17). In terms of using bank accounts there is a significant difference among firms of different size in Myanmar. While 91 percent of large companies have a bank account, fewer than half of SMEs report having an account. Only 10 percent of microenterprises have an account. Figure 17: Figure Shareof 17: Share of firms with rms with account account (%), (%), in comparison in comparison and and by size by size Share of firms with a current/checking account Share of firms with a current/checking account Philippines2009 98% China2012 96% large 91% SriLanka2011 89% Vietnam2009 medium 41% 89% Bangladesh2013 86% small 19% LaoPDR2012 82% Indonesia2009 52% micro 10% Myanmar2014 30% 0% 50% 100% 0% 50% 100% 70. Few firms have lines of credit or a loan with a financial institution. Only 7 percent of firms report hav- ing a loan in Myanmar—significantly lower than in the comparator countries. There is a significant divergence by firm size: while 30 percent of large companies use credit facilities, only 1 percent of microenterprises and 3 percent of small firms report having a loan. Figure 18: Figure Shareof 18: Share of firms with rms with aa line ofof line cr credit edit (%), incompar (%), in comparison ison and by size size share of firms with a line of credit share of firms with a line of credit Vietnam2009 50% large 30% SriLanka2011 40% LaoPDR2012 35% medium 13% Bangladesh2013 34% Philippines2009 34% small 3% China2012 25% Indonesia2009 18% micro 1% Myanmar2014 7% 0% 20% 40% 60% 0% 10% 20% 30% 40% 71. Figure Consequently, 19: mostfor Source of nancing firms in Myanmar rm borrowing, rely small on (left) personal and borrowing large rms (right) to finance business activity. Among small enterprises, 82 percent report using only personal loans to finance business activities, and another 14 percent report using both personal and business loans (Figure 19). While the use of personal finance for financing small enterprises is common due constraints relating to titles, it is unusual for large businesses to rely on to a variety ofOnly Business personal loans to finance & business activities. Despite this, in Myanmar 82 percent of large companies report per- personal business sonal loans or a combination of personal and loan %, 4 Onlybusiness activities. This practice diverges business loans to finance loan %, personal significantly from that observed 14 in other countries. For example, loan, 34 and Bangladesh, the vast majority of in China Business large businesses Only relied exclusively on business loans (92 percent and 79 percent, personal &respectively). personal loan, 48 loan %, Only 82 business loan, 18 15 Indonesia2009 18% micro 1% Myanmar2014 7% Myanmar Investment Climate Assessment 0% 20% 40% 60% 0% 10% 20% 30% 40% Figure 19: Figure 18: Source 19: Share Sourceofofrms of financing with a nancing for rm line for firm of cr borrowing, edit (%), borrowing, small in small compar(left) (left) and and ison large and large by firms rmssize (right) (right) share of firms with a line of credit share of firms with a line of credit Vietnam2009 Business 50% Only large 30% SriLanka2011 & 40% personal business loan %, 4 Only LaoPDR2012 loan %, 35% personal 14 medium 13% Business Bangladesh2013 34% loan, 34 Only & personal Philippines2009 personal 34% loan, 48 loan %, small 3% China2012 25% Only 82 business Indonesia2009 18% micro 1% loan, 18 Myanmar2014 7% 0% 20% 40% 60% 0% 10% 20% 30% 40% 72. Figure Figure Very 19: 20: few Source Stated firms of in not nancing reasons for Myanmar applying report for rm borrowing, small for a loanapplying forlarge (left) and a loan in rms the most recent fiscal year. Only 4 percent (right) of firms in the survey say that they applied for credit in the past year, compared with 54 percent in Vietnam, 35 percentDon't know in Lao PDR, and 22 percent inNo need for China. a loan Most firms (56 percent) Application cite no need procedure for financing as the main rea- Interest rates not favorable son for not applying for Business Collateral a loan, while 20 Only requirement Size of loan percent say that the loan application procedures and maturity are too complex. There Did not think it would be & approved by firm size. While are significant variationspersonal 80 percent of large firms state that they have sufficient internal funds business and do not need a loan, loan over 40 percent loanof%,micro, 4 small, and medium Only enterprises identify complex procedures, large %, 81 personal 10 unfavorable interest rates,14 and strict collateral requirements as the primary loan, 34 reasons for not applying for a loan. Business About 26 percent of those firms that state they do not need a loan also rate access Only & personal to finance as the main obstacle medium 57 12 loan, 48 the current business environment and borrowing terms are unsuitable, borrowers may refer to the to business. If personal available products,loan %,replying with “no need for the type of loan products Only available”, rather than “no need for exter- small 82 55 24 nal funds”. Alternatively, there is a possibility that firms in Myanmar have business a strong preference for equity financing rather than debt financing. Consequently, they rate access to finance as the18 loan, main obstacle while at the same time micro 57 20 they are not willing to borrow. It will be important to clarify the access to finance constraints faced by firms with targeted follow-up 0% interviews. 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Figure 20: Figure reasons for Stated reasons 20: Stated notapplying fornot applying for for aa loan loan Don't know No need for a loan Application procedure Interest rates not favorable Collateral requirement Size of loan and maturity Did not think it would be approved large 81 10 medium 57 12 small 55 24 micro 57 20 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 73. Overall, the survey results show a business sector in Myanmar largely reliant on its own financial resources with minimal interaction with the formal financial system, especially in the case of MSMEs. Even in cases when firms do borrow, funds are largely borrowed by business owners in their own name. At the same time, firms rate access to finance overall as the main constraint to business. As Myanmar modernizes its economy, its financial sector will have to undergo a transformation in order to meet the needs of a growing economy with increasing demands for formal financing. 16 Myanmar Investment Climate Assessment 74. Myanmar’s banking sector is small relative to the size of the economy although it has grown rapidly over the past three years. Private credit as a share of GDP increased from 5.1 percent in 2010 to 14.9 percent in 2013, with nominal annual growth of about 60 percent during the period.7 Myanmar’s banking system consists of four state-owned banks and 23 private banks.8 State banks are significant and account for 65 percent of total banking system assets, although only 22 percent of total loans. The private banking industry is concentrated in the three top banks, accounting for more than 50 percent of total private bank assets and about 60 percent of loans and deposits. In October 2014, nine foreign banks obtained limited licenses to operate in Myanmar. This potentially represents a major shift in Myanmar’s banking landscape, although restrictions on domestic deposit and credit op- erations will provide for a gradual adjustment of the domestic sector to future competition from foreign banks. In addition, reforms are underway to establish a credit information system (credit bureau) to allow sharing of credit information. More is needed to enable collateral use such as moveable asset financing through secured lending rules and collateral registries. Recent and ongoing reforms 75. Microfinance in Myanmar has expanded significantly since the enactment of the Microfinance Law in late 2011. Organizations, including private domestic and foreign companies, NGOs, INGOs and cooperatives, can provide microfinance once licensed under the Microfinance Law. Over 200 institutions have been granted such licenses over the past two years. As a result, the microfinance sector now reaches about 900,000 clients, according to the Ministry of Finance and Revenue. Recent reforms have allowed microfinance institutions (MFIs) to borrow funds, and an increase in loan sizes has made the sector more viable. More needs to be done, however, to remove the interest rate ceiling and deposit rate floor to allow better commercial viability. 76. Myanmar has laid the foundations for the development of a stock market with the enactment of the Securities and Exchange Law in July 2013. Regulations for listed companies and market infrastructure are expected to be ready in 2014-15. However, despite the potential this could create, experience in the region with countries of similar, or even larger, financial sectors has not involved many listings, or much new funding. For example, in Lao PDR, only two companies have been listed since the market opened in 2011, while in Cambodia only one public sector utility has been listed, with two more companies considering listing. Based on the survey results illustrated above, Myanmar firms largely rely on own financing, reflecting lack of adequate institutions to raise external funds. The ability of larger companies to raise public funds through listings and bond issuance is a potentially important source of funds in the future. It is important to take into consideration experience of other countries and adopt the correct sequencing of actions, including the development of a money market and a debt instruments market. 77. Myanmar’s financial system is undergoing a fundamental transformation, including a revamping of the entire legal and regulatory framework for the financial sector. The Central Bank Law passed in 2013 provided for an independent central bank and defined its key roles and functions, including its role in bank supervi- sion. The Financial Institutions of Myanmar Law is currently being finalized and will define a broad framework for financial institutions operating in Myanmar. The scope and implementation of these laws will shape the structure of Myanmar’s financial sector for years to come. 78. The current legal and regulatory framework contains structural elements significantly affecting the ability of financial institutions to intermediate effectively. The existing legal and regulatory framework to a large extent reflects a history of weakness in the financial sector culminating in a major banking sector crisis and a run on Myanmar’s banks in 2003, significantly undermining trust in the domestic banking system. The regulatory system that emerged after the crisis, while severely restricting basic banking operations, did nonetheless bring to a large extent a return of stability. As the financial system evolves, authorities are gradually adapting the regulatory 7 IMF Article IV consultations report, October 2014. http://www.imf.org/external/pubs/ft/scr/2014/cr14307.pdf. It is important to note that statistics and accuracy of reporting is gradually improving and some of this increase is due to better reporting. 8 As of October 2014, with plans to issue more licenses. 17 Myanmar Investment Climate Assessment framework. In terms of loan financing as currently available, there are three key constraints: (i) an interest rate cap; (ii) a maturity limit; and (iii) collateral requirements, combined with onerous documentary requirements for processing. Addressing these constraints, however, is far from straightforward and requires deep and fundamental reforms in the way banks are regulated and supervised. 79. The country’s interest rate cap limits the ability of financial institutions to provide financing, espe- cially to smaller businesses. There is a regulatory cap on the maximum lending rate of 13 percent per year, a floor on deposit rates of 8 percent per year, and a limit on the fees that banks can apply to loan products. The resulting margin of 5 percent may not be sufficient to allow banks to provide finance in a sustainable manner, especially to SMEs and the retail segments. On average, the loan-to-asset ratio for private banks in Myanmar stands at 55 percent and the loan-to-deposit ratio at 65 percent, indicating scope to expand lending, especially given recent relaxation of the loan-to-deposit requirements. However, in the presence of rate caps, fee-based income such as the remittance business, for example, presents a more attractive opportunity for many market participants. Microf- inance providers are also subject to interest rate caps on loans of 2.5 percent per month or 30 percent per year, and deposits of 1.25 percent per month or 15 percent per year. Gradual liberalization of interest rates would enable the financial industry to expand financing to the sectors that it currently does not serve. 80. The limit on loan maturity restricts the use of bank financing for investment purposes. At present, private sector banks can provide loans of maturity of up to one year, with prolongation for up to two years. This restriction eliminates the possibility of banks offering investment loans. The regulatory restrictions, however, also reflect the nature of the deposits maturity structure. With most lending funded through deposits and the vast majority of deposits being short term, banks even in the absence of regulatory limits would find it difficult to offer longer-term financing. In view of the history of the banking crisis in Myanmar a decade ago and the low levels of trust in the overall system, it may take time for depositors to take up longer-term deposit products. Addressing this challenge will require continued efforts to sustain banking-sector stability through improved regulation and supervision. 81. Other countries in similar circumstances have been successful in extending loan maturities by ac- cessing longer-term funding facilities from international sources. Extending loan maturities by accessing in- ternational finance not only allows long-term financing but also increases the leverage in financial institutions. Allowing greater leverage to extend loan maturities needs to be matched by efforts to strengthen bank supervision. Enabling borrowing in an environment with an uneven playing field in terms of deposit and loan cap regulations could expose both MFIs and banks to risks and unintended consequences. Regulatory reforms to address these issues will require close cooperation between the banks and microfinance supervisors. 82. Collateral restrictions and reliance on land as the main form of collateral significantly restricts the ability of MSMEs to access finance. Survey results show that many firms identify secure access to land as one of the major constraints to doing business in Myanmar. Given that banks primarily rely on land as collateral means that firms without clear land titles are unable to obtain financing. Reforming legislation and a regulatory frame- work for acceptable forms of collateral, as well as institutional structures for movable and immovable collateral registration are an essential step in improving access to finance for SMEs, most of which do not own land. A shift to other forms of collateral or non-collateral-based lending also needs reform of the supervisory framework for bank risk management, together with extensive capacity-building among banking professionals and supervisors. 18 Myanmar Investment Climate Assessment 2.3 Access to land Figure 21: Access to land is the second-biggest constraint for rms in Myanmar 83. Access to land is the sec- Figure Figure21: Access 21: to to Access land is the land second-biggest is the constraint second-biggest for firms constraint in for ond-biggest constraint for firms in Myanmar Myanmar rms into Access finance 22.7 Myanmar. On average, 21 percent of firms cite access to land as the main Access to finance Access to land 22.7 21.4 constraint. This is with just 1.5 percent- age points behind access to finance as a Access to land Electricity 16.9 21.4 constraint, and well ahead of access to electricity as a constraint. Electricity 0 5 10 15 16.9 20 25 84. Smaller firms are more ad- 0 5 10 15 20 25 versely affected by access-to-land issues than large firms. Smaller firms Figure 22: Access to land is not a big problem for large cite access to land as a major constraint, rms Figure 22: Access to land is not a big problem for large firms Figure 22: Access to land is not a big problem for large while large firms hardly see it as an is- rms sue at all. About 25 percent of medium % of firms who see land as the main firms and 21 percent of small firms cite constraint, by firm size 30 % of firms who see land as the main access to land as a constraint to business, 25 constraint, by firm size while for large firms access to land only 30 25 ranks seventh as a constraint and only 2 20 25 21 25 percent of large firms mention it as the main constraint (Figure 22). Microen- 15 20 17 21 terprises cite land as a major obstacle 10 15 17 in 17 percent of cases. Many of them may be too small to involve themselves 5 10 in acquiring land for their businesses, 2 and some operate from people’s homes. 0 5 micro small medium large2 Indeed, a majority of informal firms (64 0 percent) are located within a household micro small medium large and therefore do not require access to land on their own. Micro firms would Figure 23: Share of rms that report “owning” their land (%) be most similar to informal firms and a significant number of them are likely to Figure 23: Share of rms that report “owning” their land (%) SriLanka2011 operate within a household as well. Myanmar2014 SriLanka2011 85. the services sector than to manufacturing. Manufacturing Access to land is more of a constraint toMyanmar2014 Mongolia2013 firms see land access as less of a constraint than services sector firms. Only about 17 percent of manufacturing China2012 Mongolia2013 40% firms cite access to land as a major constraint, while 21 percent of retailers see it as a constraint, rising to 25 per- 13).China2012 cent of firms in other services sector firms (FigureBangladesh2013 39% 40% Afghanistan2014 Bangladesh2013 27% 39% 86. In Myanmar, with a few exceptions, all land in the country is owned by the State. Although the State owns almost all land in Myanmar, private companies Nepal2013 and individuals can enjoy a degree23% Afghanistan2014 ownership of parcels of 27% 0.1rights” 0.2 of land as prescribed by the law. There are broadly three types of0“property 0.3 namely: in the country, 0.4 0.5 Nepal2013 23% • Freehold: Mostly exists in large towns and cities such 0.1 and Mandalay, 0 as Yangon 0.2 this is the 0.3 exception 0.4 0.5 rather than the norm. The owner is not required to pay land revenue and the land is inheritable and transferrable. • Grant, lease, license: The right to make use of land at the disposal of the government can be awarded to public agencies, private companies or individuals for approved purposes, for periods of 10, 30 or 90 years. The land is transferrable and the occupier is required to pay land revenue. However, such land can still be reacquired by the State in accordance with the Land Acquisition Act of 1894 when this is 19 Electricity 16.9 Myanmar Investment Climate Assessment 0 5 10 15 20 25 perceived to be in the interests of the State. • 22: Figure Access to land Agricultural 9 a big problem for large is not land: In the case of agricultural land, the Farmland Law 2012 establishes a land use rms right, which can be sold, mortgaged, leased, exchanged or donated in whole or in part. Limited land use restrictions and control remain, but a permission to change land use can be applied from the farmland % of firms who management see land as structure. Thethe main land use rights are recorded in the Township Settlement and Land Record constraint, by firm size Department (SLRD), but while some by-laws to the Farmland Law have been prepared, no regulations 30 for processing or registering farmland sales or mortgages exist, and no policies for transaction fees or 25 taxes have been established. Also, 25 the SLRD records and offices are established for maintaining land 20 revenue records and not to serve customers as registers of rights. Thus, while farmland land use rights (LURs) are tradable 21 by law, there is no supporting system in place to trade farmland in Myanmar. 15 17 87. 10 A relatively high proportion of firms enjoy land use rights on their land in Myanmar, which for the purposes of this questionnaire has been categorized as “ownership”. Firms have a right to use the land for a spec- ified5purpose and for a specific term. Alternatively, companies “rent” land from non-government entities, or lastly 2 obtain access to land in “other” ways. Land use right “ownership” is the most common form according to the sur- 0 vey. About 72 small state that percent of firms micro large permission from the government to use the land for their they have official medium stated business activities (i.e., ownership). The proportion of firms that report “owning” their land, or enjoying a direct land use right, is relatively high in the regional comparison (Figure 23). Figure 23: Figure Share 23: of Share firms of thatreport rmsthat report“owning” land (%) “owning” their land (%) SriLanka2011 74% Myanmar2014 72% Mongolia2013 68% China2012 40% Bangladesh2013 39% Afghanistan2014 27% Nepal2013 23% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 88 The combination of a high percentage of “ownership” —as defined by the ES—in Myanmar and the fact that land is one of the most critical constraints for businesses illustrates the challenges with land tenure. What is critical for firms’ investment decisions is the security of tenure. Companies invest in land that they have a secure land use right for. The ES results show that secure access to land is extremely constrained. Lack of secure land transaction mechanisms is a major obstacle for access to land and financing. 89. Secure access to land, or secure land rights, in Myanmar are crucially important for sustainable eco- nomic development. Secure access to land is necessary for economic growth and social equity. In Myanmar, land is subject to historical land grievances, which can cause reputational and social risks for enterprises. Sustained economic growth, foreign direct investment, poverty reduction, environmental protection and social harmony all depend at least in part on resolving some of the issues relating to land tenure security and land conflict. Currently, Myanmar’s institutional arrangements for land tenure are fragmented and outdated, despite some recent changes. 90. Despite some recent progress to improve tenure, land disputes and conflicts persist. Myanmar has 73 laws, amendments, orders and regulations that define its land tenure system, many of which date back to when the country was under British administration. Since Myanmar’s transition started to take hold, two new land laws 9 Notwithstanding the explanations to agricultural land, the ES and thus the ICA itself focus on firms in manufacturing and services, and on access to land for these non-agricultural firms. 20 Myanmar Investment Climate Assessment have been passed with the aim of improving land rights, namely the Farmland Law (2012) and the Vacant, Fallow, and Virgin (VFV) Lands Management Law (2012). These two laws enable farmers to acquire formal and tradable land-use rights, but no regulations or institutions for land transactions have been established in the interim. The laws have also been criticized by local civil society organizations and external observers for failing to adequately address important issues, such as gender equality, recognition of customary land tenure, land reclassifications, and independent land dispute procedures (there is currently no access to the judiciary for those seeking redress in rural land disputes), or failing to curtail large-scale issuance of land concessions to investors despite the un- derperformance of their existing concessions. Furthermore, despite the passage of the two laws, acquisitions and compensation are still governed using the colonial-era 1894 Land Acquisition Act. Lack of clarity in procedures and provisions in this law, together with lack of clarity on practices and guidelines on property valuations and compensation, has led to uncertainty, sometimes resulting in conflict. Compounding the situation, there are signif- icant weaknesses in the institutional framework for handling disputes. In terms of the reconciliation of past issues, in order to remove the uncertainty that historical land grievances create, land policy and land law development is important. Similarly, further reforms are needed to address discriminatory practices against women in terms of land ownership and property inheritance in customary laws of individual ethnic groups. 91. Access to land as a constraint to business varies significantly from one region to another. There are big differences in how firms perceive land tenure as an issue depending on the region. At one extreme, firms in the Yangon region are much more likely to cite access to land as the major constraint, with over 25 percent of firms surveyed holding this view. At the other extreme, only just over 2 percent of firms in the Monywa region cite ac- cess to land as a major obstacle to business (Table 3). Table 3: Land issues for firms, by region Table 3: Land issues for rms, by region Description ALL Yangon DescriptionBago Mandalay ALL Taunggyi Yangon Monywa Mandalay Access to land as biggest obstacle (%) 22.7 17.9as biggest Access to land 25.1 obstacle (%) 3.6 22.7 11.4 25.1 2.2 17.9 % of land owned 72.3 % of land owned 71.0 74.2 82.5 91.872.3 71.0 73.5 74.2 % of land rented 27.7 % of land rented 29.0 25.8 17.5 8.2 27.7 29.0 26.5 25.8 92. Manufacturing firms tend to enjoy Figure 24: Firms owning their land and seeing land as the main Figure 24: Firms owning their land and seeing land as land use rights on their land more often than obstacle, by sector (%) the main obstacle, by sector (%) other sectors. About 85 percent of manufactur- ing firms report that they “own” their own land land is the main obstacle (i.e., had obtained land-use rights from the gov- 60% ernment), a rate significantly higher than retail firms (77 percent) and other services-sector firms 50% Services (61 percent) (Figure 24). This may be related to 40% Retail generally higher costs of investment for manu- facturing firms, requiring them to have longer 30% and more secure land-use agreements in order to 20% Manufacturing achieve adequate returns on investment. 10% 93. Firms in more industrial regions enjoy 0% land use rights of their land more often than 40% 50% 60% 70% 80% 90% in other regions. Direct land use rights seems own land (%) to be more common in some regions that in oth- ers (Table 3). In particular, firms in the Taung- gyi and Monywa regions, which are Myanmar’s Figure 25: Bureaucracy involved in obtaining land use/leasing documents most industrial regions, report 92 percent and 73 Procedures (number) Ti m e percent, respectively, “own” their land, while in Sri Lanka 9 Bangladesh 244 the Bago region, which is more services sector oriented, this is the case for 82 percent of firms. Philippines 9 Myanmar 113 The lowest level of direct land use rights is in the Lao PDR 98 Bangladesh 8 Cambodia 7 Vietnam 57 21 Myanmar 6 Cambodia 56 Indonesia 5 Sri Lanka 51 Access to land as biggest obstacle (%) 22.7 25.1 17.9 11.4 3.6 2.2 % of land owned 72.3 71.0 74.2 82.5 91.8 73.5 Myanmar Investment Climate Assessment % of land rented 27.7 29.0 25.8 17.5 8.2 26.5 Yangon region, Myanmar’s capital, at 71 percent. Figure 24: Firms owning their land and seeing land as the main 94. obstacle, by sector (%) According to Doing Business, registering property in Myanmar is very complicated, slow, and costly. latest Theland report DBmain is the shows that the bureaucratic process to register property is particularly onerous. The survey obstacle indicates that on average 113 days are needed to complete the process, the longest time required among the peer 60% countries analyzed in Southeast Asia, and only less than the time needed in Bangladesh—an outlier at a staggering 244 50% days (Figure 25). It takes one month to obtain a land clearance certificate in Yangon (where Doing Business Services 40%its data), up to three weeks for appraisal collects by the relevant Township Inland Revenue Department, another Retail month to register the new land use right certificate, one more month to announce the transfer, before the change 30% can be legally completed. Further, it takes one month to register the land use right with the Ministry of Agriculture. compares with ASEAN countries such as Indonesia and Thailand, where only 25 and 2 days are required, re- This20% Manufacturing spectively, to complete the whole process. Meanwhile, in terms of the number of procedures required, Myanmar is 10% about average compared with its peers, at six procedures, with only two procedures required in Thailand but nine 0% required in the Philippines. The costs of registering property, however, are also relatively onerous in procedures Myanmar. 40% 50% the 60% On average, costs come70% 80% of90% to 7.2 percent the value of the property, compared with far lower costs in ASEAN peers, such as Vietnam (0.6 own land (%) percent), Lao PDR (1.1 percent), and Cambodia (4.4 percent). Such high costs can of course be prohibitive for firms looking to invest in new sites or expand their operations. Figure25: Figure 25: Bureaucracy involved Bureaucracy involved inin obtaining obtaining land land use/leasing use/leasing documents documents Procedures (number) Ti m e Cost(% of property value) Sri Lanka 9 Bangladesh 244 Indonesia 10.9 Philippines 9 Myanmar 113 Myanmar 7.2 Bangladesh 8 Lao PDR 98 Bangladesh 6.6 Cambodia 7 Vietnam 57 Thailand 6.3 Myanmar 6 Cambodia 56 Sri Lanka 5.1 Indonesia 5 Sri Lanka 51 Cambodia 4.4 Lao PDR 5 Philippines 35 Philippines 4.3 China 4 China 28 China 3.6 Vietnam 4 Indonesia 25 Lao PDR 1.1 Thailand 2 Thailand 2 Vietnam 0.6 0 5 10 0 100 200 300 0 5 10 15 Source: Doing Business 2015 Source: Doing Business 2015 95. Land reforms are a long-term process requiring strong political commitment. Experience with land reforms in the region and internationally is that they are long-term processes. The importance of political will cannot be overstated, and ongoing engagement and support of the government at all levels, including local gov- ernments (provincial, municipalities, etc.), are essential for the successful implementation of land reform projects. Beyond the local government, engagement with the public is also essential for developing a legitimate policy and regulatory framework for implementing reforms, settling disputes and introducing necessary land administration systems. Gender issues are especially delicate and an important part of equitable tenure security. Tenure issues tend to be polarized and politicized with a general discourse debating titling vs communal and customary systems. This is an old-fashioned debate with modern thinking being that transparency over the individual, group, indigenous and communal land rights is the key for their protection. Therefore, comprehensive land records registering all lands and all tenure types are needed. Administrative systems for land registration and dispute resolution need to be inclusive and accessible. 22 Myanmar Investment Climate Assessment Recent and ongoing reforms 96. Recently, the government has set up a Land Loss Enquiry Commission in parliament to investigate claims of land confiscation by the military. In an effort to demonstrate sensitivity for some of the historical grievances related to confiscation of land, especially rural/agricultural land, the government is putting in place mechanisms to review past practices. 97. In October 2014, the government unveiled for public consultation the draft of a new National Land Use Policy. The goal of the policy is to guide the establishment of a new framework for the governance of tenure of land and related natural resources, such as forests. 98. With concerns about land governance widespread, established guidelines and frameworks for re- form could be useful. Land governance is one of the biggest challenges facing Myanmar. The United Nations’ Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forests in the Context of National Food Security (VGGT), which is based on global best practices, provides useful principles for adoption in Myanmar’s land based sectors. The VGGT have been endorsed by the Committee on World Food Security (CFS) and have received global recognition, including at the recent G8, G20, G77 and Rio +20 meetings. These guide- lines are fundamental principles for land governance. The World Bank’s Land Governance Assessment Framework (LGAF), which has already been undertaken in 38 countries globally, may prove helpful in Myanmar too. LGAF provides a diagnostic tool for assessing the state of land governance across the land-based sectors through a locally driven, participatory evidence-based approach. LGAF will result in vetted policy recommendations for improving land governance and provides a base for monitoring progress. 2.4 Access to electricity Figure 26: Access to electricity increases as a constraint 99. Access to electricity is iden- Figure 26: Access for larger rms to electricity increases as a constraint for larger firms tified by firms as the third-most-im- portant constraint to doing business 50 Access to electricity as the main constraint, by in Myanmar. Overall, 17 percent of firm size small, medium, and large firms state that 40 electricity is the main constraint in busi- ness, third in importance behind access to finance and access to land. Interest- 30 ingly, the importance of electricity as a constraint grows in size with the size 20 of firms in Myanmar. While cited as the main constraint by only 5 percent of mi- 10 cro firms, about 15 percent of small firms feel electricity is the main constraint, rising to about 17 percent for medium 0 firms. Finally, among large firms access micro small medium large to electricity is most often stated as the main obstacle to business, at 46 percent Figure 27: The share of rms experiencing power outages in the region (%) of firms. Myanmar2014 100. Almost all firms face power outages in Myanmar. Given that Myanmar has one of the lowest levels of LaoPDR2012 electrification in Southeast Asia, and in view of the rapid economic growth in recent years (and corresponding in- SriLanka2011 crease in the demand for electricity), it should not come as a surprise that the country suffers from a lack of supply Bangladesh2013 73 of electricity. This lack of supply creates power outages and these, in turn, cause disruptions for firms. About 94 Afghanistan2014 70 percent of firms in Myanmar experience power outages—by far the highest level among all countries in the region Nepal2013 63 (Figure 27). Philippines2009 55 Vietnam2009 49 Indonesia2009 45 23 Mongolia2013 37 China2012 34 20 0 Myanmar Investment Climate Assessment 10 micro small medium large 0 27: Figure Figure 27: The of firms share of The share experiencing rms experiencing power power outages outages inin the the region region (%) (%) micro small medium large Myanmar2014 94 LaoPDR2012 89 27: The share of rms experiencing power outages in the region (%) FigureSriLanka2011 76 Bangladesh2013 73 Myanmar2014 94 Afghanistan2014 70 LaoPDR2012 89 Nepal2013 63 SriLanka2011 76 Philippines2009 55 Bangladesh2013 73 Vietnam2009 49 Afghanistan2014 70 Indonesia2009 45 Nepal2013 63 Mongolia2013 37 Philippines2009 55 China2012 34 Vietnam2009 49 Bhutan2009 28 Indonesia2009 45 Mongolia2013 0 10 20 30 40 37 50 60 70 80 90 100 China2012 34 101. Consequently, Bhutan2009 many firms in Myanmar 28 are forced to rely on their own or shared generators for their Figure 28: Myanmar has the highest level of generator ownership by rms power needs. As a result 0 of the 10 shortage 20 of 30electricity, 40 Myanmar 50 also has 60 70one of80 90 rates the highest 100 in the region for firms using or sharing their own generators for power. Among the comparator countries, firms in Myanmar choose Firms own a generator (%) to rely on back-up generators the most, by far, at 76 percent of all firms (Figure 28). Myanmar2014 76 Figure 28: Myanmar has the highest level of generator ownership by rms Bangladesh2013 Figure 28: Myanmar has the highest level of generator ownership by firms 63 Nepal2013 Firms own a generator (%) 50 Afghanistan2014 48 Myanmar2014 76 Philippines2009 41 Bangladesh2013 63 SriLanka2011 35 Nepal2013 50 Vietnam2009 35 Afghanistan2014 48 Mongolia2013 21 Philippines2009 41 Bhutan2009 18 SriLanka2011 35 LaoPDR2012 14 Vietnam2009 35 China2012 8 Mongolia2013 21 Indonesia2009 6 Bhutan2009 18 LaoPDR2012 0 10 14 20 30 40 50 60 70 80 China2012 8 Indonesia2009 6 0 10 20 30 40 50 60 70 80 102. High full or partial ownership of generators does not reflect high use. For firms that have access to a generator, they take 23 percent of their electricity from these generators. That is more than in Lao PDR or Viet- nam, for example, with 21 and 10 percent, respectively, but much less than in Mongolia or Nepal, with 44 and 41 percent, respectively (Figure 29). The probable reason for this is to be found in Myanmar’s seasonal pattern of electricity production. Myanmar’s power shortage is most acute in the dry season months due to low power production from hydropower dams. Power outages therefore, while pervasive, are mostly clustered around the dry season. While some firms may need to run generators continuously during the dry season, this is probably less the case throughout the year. But since the supply of electricity through the grid is uncertain, especially during the dry season, almost all the firms choose to have a generator as a backup. 24 Myanmar Investment Climate Assessment Figure29: Figure 29: Share ofpower Share of powerfrom generatorifif fromgenerator generator owned generator (%) owned (%) 50 45 40 35 29: Share of power from generator if generator owned (%) Figure 30 50 23 25 45 20 40 15 35 10 30 5 23 25 0 20 15 10 5 0 103. Getting an electricity connection after an official request may take a full year. The distribution of waiting times for an electricity connection is very wide. Some firms report waiting almost a full year before getting Figure 30: Distribution of waiting times for electricity connection (days) the requested connection (Figure 30). It is not surprising, therefore, that only few firms actually apply for an elec- (Figure tricity connection otal 1 731). 30 p90 enterprises, While lack of electricity is manageable for micro p50 p10 growth of the formal economy and large ietnam2009 enterprises 1 15 requires more 90 efficient access. SriLanka2011 14 30 120 Figure30: Figure 30: Distribution Philippines2009 waiting ofwaiting Distribution of 7 15 30 times times for for electricity electricity connection connection (days) (days) Nepal2013 16 30 Myanmar2014otal 1 7 30 p90 p50 360 p10 Myanmar micro 20 ietnam2009 1 7 15 35 90 Mongolia2013 SriLanka2011 1 14 30 120 365 LaoPDR2012 Philippines2009 47 152030 45 Indonesia2009 Nepal2013 1269 30 China2012 Myanmar2014 147 15 30 360 MyanmarBhutan2009 micro 20 17 30 35 Bangladesh2013 Mongolia2013 1 30 180 365 Afghanistan2014 LaoPDR2012 5 20 3545 4 360 Indonesia2009 0 2 9 30 50 100 150 200 250 300 350 400 China2012 1 4 15 Bhutan2009 17 30 Bangladesh2013 1 180 30 for electricity connection (%) Figure 31: Share of rms that applied Afghanistan2014 5 35 360 0 50 100 150 200 250 300 350 400 Mongolia2013 27 Bhutan2009 23 FigureLaoPDR2012 31: Share of rms that applied for electricity connection (%) 17 Vietnam2009 14 Afghanistan2014 13 Mongolia2013 China2012 27 11 Bhutan2009 Bangladesh2013 23 9 LaoPDR2012 Philippines2009 17 9 Vietnam2009 Nepal2013 14 9 Afghanistan2014 Indonesia2009 13 8 China2012 Myanmar2014 11 5 Bangladesh2013 SriLanka2011 9 4 Philippines2009 9 Nepal2013 0 5 910 15 20 25 30 Indonesia2009 8 Myanmar2014 5 SriLanka2011 4 25 0 5 10 15 20 25 30 Bangladesh2013 1 30 180 Afghanistan2014 5 35 360 0 50 100 150 200 250 300 400 Climate Assessment 350 Investment Myanmar Figure 31: Share of rms that applied for electricity connection (%) Figure 31: Share of firms that applied for electricity connection (%) Mongolia2013 27 Bhutan2009 23 LaoPDR2012 17 Vietnam2009 14 Afghanistan2014 13 China2012 11 Bangladesh2013 9 Philippines2009 9 Nepal2013 9 Indonesia2009 8 Myanmar2014 5 SriLanka2011 4 0 5 10 15 20 25 30 104. Manufacturing sector firms in Myanmar tend to be more adversely affected by electricity supply problems. Table 4 shows in more detail how the shortage of electricity affects firms in different sectors of the economy, and the nature of the problems that those firms face. As might be expected, manufacturing firms cite access to electricity as a far more important constraint to business than other sectors, at 31 percent of firms in the survey. Meanwhile, retails firms and other services sector firms consider access to electricity to be a major ob- stacle in about 13 percent and 11 percent of cases, respectively. Unsurprisingly, manufacturing sector firms also rely more heavily on their own sources of power, at about 22 percent, while for retailers and other services firms the numbers are 12 and 16 percent, respectively. However, this is not as high as some other regional comparators. These results show that improving electricity infrastructure for manufacturing firms will be critical in attracting investment into the manufacturing sector. It is likely that many potential investors in Myanmar’s manufacturing sector are deterred by concerns over reliable electricity supplies. Table 4: Table Problems 4: of electricity Problemsof supplyfacing electricity supply various facingvarious sectors sectors inin Myanmar Myanmar Other Description ALL Manufacturing Retail services 1 Electricity as biggest obstacle (% rms) 17.9 31.2 12.7 11.1 2 No. of electrical outages in a typical month 12.5 13.3 13.6 11.4 3 Duration of electrical outages (hours) 1.5 1.8 1.3 1.4 4 Value lost due to electrical outages (% of sales) 2.1 2.6 2.3 1.7 5 % of rms owning or sharing a generator 75.7 86.7 62.4 75.9 6 Electricity from generator (%) 16.8 21.7 11.8 16.0 105. There are very wide regional variations in electricity supply in Myanmar. As Table 5 below highlights, there are significant differences in firms citing access to electricity as a constraint depending on the region. This Tablebe could partially 5: Regional didue to major erences differences in rms’ in the quality of local infrastructure networks for transmission and dis- access to electricity tribution. However, the direction of causation is unclear. For instance, at only 8 percent, Mandalay has the lowest level of firms’ complaints concerning access All electricity, toYangon but also theBago Mandalay use of generators, highest Taunggyi Monywaat 89 percent. This contrasts with the Bago region, which has the lowest use of generators outside Yangon, at 81 percent, but the Electricity as biggest obstacle (%) 17.9 17.8 8.2 33.2 20.1 30.2 highest level of complaints concerning access, at 33 percent. Clearly, therefore, more research is needed in order No. Of electrical outages in a typical to better understand the reasons behind the month 12.5significant 12.7 between 13.1 differences 7.8firms’ responses 8.3 6.1 regions. in the Duration of electrical outages (hours) 1.5 1.3 2.1 2.2 1.3 3.5 Value lost due to electrical outages (% of 2.1 1.9 2.3 6.3 2.6 2.0 sales) % of rms owning or sharing a generator 75.7 72.4 89.4 81.3 81.7 95.5 Electricity from generator (%) 16.8 14.9 32.8 11.3 10.4 18.0 26 6 Electricity from generator (%) 16.8 21.7 11.8 16.0 Myanmar Investment Climate Assessment Table5: Table 5: Regional differences Regional di in firms’ erences in access rms’ access toto electricity electricity All Yangon Mandalay Bago Taunggyi Monywa Electricity as biggest obstacle (%) 17.9 17.8 8.2 33.2 20.1 30.2 No. Of electrical outages in a typical 12.5 13.1 12.7 7.8 8.3 6.1 month Duration of electrical outages (hours) 1.5 1.3 2.1 2.2 1.3 3.5 Value lost due to electrical outages (% of 2.1 1.9 2.3 6.3 2.6 2.0 sales) % of rms owning or sharing a generator 75.7 72.4 89.4 81.3 81.7 95.5 Electricity from generator (%) 16.8 14.9 32.8 11.3 10.4 18.0 106. Firms exhibit clear compensatory behaviors through the use of generators. Based on the survey re- sponses, there appears to be a clear correlation between firms in regions reporting the highest complaints regarding access to electricity and the percentage loss of sales due to outages of firms in those regions. For example, firms in Table the 6: Types Bago of problems region complainhiring rms most encountered about access towhen trying tobeing electricity workers recruitthe main constraint to business, at about 33 per- cent, while also indicating the highest level of Firms hiring lost sales due to Of outages, electricity which: at just over 6 percent. However, there are also contradictions in the responses. Taking workers in last 2 the Bago example once % of rms that encountered again, this following is the region where firms problems rely for only 11 percent on electricity from years generators, despite thewhen level to hightrying ownership of generators and the ofhire high level of sales losses due to outages. These anomalies could be due to other factors not picked up by the survey, applicants applicants applicants % of all generators such as fuel shortages in some regions preventing being used. no or few fromlacked expected didn’t like N rms applicants required higher working Recent and ongoing reforms skills wages conditions Managers and professionals 56 8.86 12.5 33.93 37.5 12.5 107. Myanmar Technicians, has abundant hydropower associate 208 32.91 potential 20.67 and natural 54.33 gas resources, 50.96 as well 20.67 as significant re- professionals, newable workers (wind, geothermal and solar). In the past, the development of energy resources in salespotential energy Unskilled workers Myanmar was mainly driven by plans 48.58natural22.15 307to export 44.95 gas and hydroelectricity 49.84 to Thailand 14.66 and China. As a result, Skilled the lackproduction workers of attention to thea) domestic217 61.47 market has led to13.36 42.86in both 43.32 large shortages 15.67 supply (50 and gas and electricity 30 percent, Unskilled respectively). production workers a) shortage This 215 of 60.91 now become38.6 energy has 16.28 35.81 for economic a major obstacle 19.07 activities, job creation, and improvement Note: Unweighted data for all rm of health and education services. Furthermore, plans for the development of industrial sizes. a) Manufacturing rms only. parks and gradual industrialization of the country depend on adequate supplies of reliable and affordable electricity and gas. 108. The government recognizes that expanding the quantity and quality of electricity supply and im- proving access to modern energy is crucial to both economic growth and poverty reduction. To address these challenges and set the energy sector on a sustainable development path, the government recently adopted the National Energy Policy based on the guiding principles set in the national Framework of Economic and So- cial Reforms (FESR-2012). The new energy policy focuses on sustainable energy development and balancing the need to continue energy exports as a major source of public revenue with the longer-term development objectives of improving security, reliability and quality of energy supply in the domestic market. The new policies embrace principles of diversification of the energy mix, reducing energy intensity by means of energy conservation and energy efficiency measures, and the introduction of energy pricing policies that reflect the economic costs for both suppliers and users of energy in the domestic market. 109. The government has initiated the preparation of the Energy Sector Master Plan, the Power Sector Master Plan, and the National Electrification Plan aiming to achieve universal access to electricity by 2030. Strategic issues of the future energy mix in power generation and the role of the private sector in power generation and distribution are under consideration through the preparation of the Power Sector Master Plan (supported by the Japan International Cooperation Agency, JICA). The Power Sector Master Plan will also include a least-cost gener- ation expansion plan, which will be the basis for assessment of the long-run marginal cost of electricity supply in the country. With help from the Sustainable Energy for All initiative, led by the World Bank and the UN, the gov- ernment is preparing a National Electrification Plan (NEP), which will include the assessment of least-cost solu- 27 Myanmar Investment Climate Assessment tions for achieving universal access to electricity by 2030, and prepare an Investment Prospectus for the phased financing of the investment needs. The NEP will also propose institutional reforms required to ensure alignment of funding sources and accountabilities for effective and timely implementation of the electrification program. 110. The new energy policy envisages a significant role for the private sector in meeting the fast growing electricity demand and improving efficiency in the power sector. In order to mobilize urgently needed invest- ments and improve efficiency in the power sector, the government plans to attract additional independent power producers (IPP), promote public-private partnerships (PPPs) to accelerate construction of modern power genera- tion plants, and reduce losses in the power distribution sector. The first IPPs (about 270 MW in total) have com- menced operation using a “tolling arrangement” under which the government has a responsibility to supply gas and off-take electricity, while the private investor takes the risk of making the new plant available on time and of being able to convert gas into electricity at an agreed fixed price. However, the availability of gas is likely to remain a major constraint for the construction of new gas-fired power plants in the near to medium term. Specifically for industrial zones, the government has established a framework for self-generation of reliable power for those zones. 111. The government plans to eliminate gas shortages by attracting investment in new off-shore gas fields and increasing the share of gas allocated to the domestic market. Recently, the government announced that a new off-shore gas field (expected to start production in 2017) will be fully allocated to the domestic market and most of its production will be earmarked for power generation. The government recognizes that the reduction of gas shortages will also require adoption of market-based pricing for the domestic gas supply, implementation of a transparent and efficient gas allocation mechanism, and investment in the primary and secondary gas networks (gas infrastructure). Currently, the available gas networks are underdeveloped and are causing a bottleneck in the improvement of the gas supply to the domestic market. 112. The sustainable development of the energy sector requires the scaling-up of energy efficiency and renewable energy. Past policies, particularly the electricity pricing policies, failed to provide incentives for ef- ficient production and use of energy, and failed to stimulate the development of renewable energy. An exception is hydropower, which was mainly developed in collaboration with China. Going forward, the new energy policy calls for improvements in the institutional capacity and regulatory framework for energy efficiency and renewable energy. This includes capacity-building for environmentally and socially sustainable development of hydropow- er. The government has identified 92 large-scale hydropower projects with a total capacity of 46 GW out of an estimated 100 GW of total hydropower potential in the country. The Ministry of Electric Power plans to build 13 hydropower plants, adding 2,572 MW of installed capacity, while 44 further projects are planned as joint ventures with independent (and private) investors for another 42 GW of total capacity. 2.5 Access to skilled workers 113. Lack of access to skilled work- Figure 32: Figure Inadequately 32: educated Inadequately workforce educated is one workforce of the ofbiggest obsta- is one ers is the fourth most frequently men- cles facing the firms biggest in Myanmar obstacles facing rms in Myanmar tioned constraint for firms. In other countries’ results of the Enterprise Sur- Access to skilled workers as main constraint, 14 by firm size vey, inadequately skilled workforce is rarely the most important constraint men- 12 tioned, with other constraints being seen 10 as more severe. Myanmar is no exception, 8 but the lack of access to skilled workers 6 still ranks high among the obstacles. It is 4 the fourth obstacle mentioned by firms, more often than taxes, regulations and 2 bureaucratic barriers. Over 9 percent of 0 firms cite inadequate workforce skills as micro small medium large the biggest obstacle to the operations and Figure 33: Firms identifying low workforce skills as major or 28 severe constraint (%) Afghanistan2014 53 Mongolia2013 8 8 6 6 Myanmar Investment Climate Assessment 4 4 2 2 growth. This is by no means a negligible proportion0 and indicates that skills shortages are the binding constraint 0 workers for a significant number of firms. Access to skilled as the main micro changes only little constraint medium small largewith firm size (Figure 32). While only 5 percent of micro firms name skilled micro workers as small the main constraint, medium for large and large small firms it is 9 percent, and for medium sized firms 12 percent. Figure 33: Firms identifying low workforce skills as major or 114. A regional comparison rein- Figure severe Figure 33: Firms identifying constraint 33: Firms (%) identifying low low workforce skills workforce major asas skills or or major severe con- forces the view that a skills shortage severe(%) straint constraint (%) is an important issue. Myanmar firms Afghanistan2014 53 more often consider an inadequately Afghanistan2014 Mongolia2013 24 53 educated workforce a major obstacle Mongolia2013 LaoPDR2012 16 24 than their competitors in Vietnam, the SriLanka2011 LaoPDR2012 16 16 Philippines, Indonesia or China (Fig- Bangladesh2013 SriLanka2011 16 16 ure 33). The best performing country Bhutan2009 13 Bangladesh2013 16 sets the benchmark and, in this case, Myanmar2014 Bhutan2009 12 13 that country is China, where only 2 percent of employers (from manufac- Nepal2013 Myanmar2014 9 12 turing firms) complain about work- Vietnam2009 Nepal2013 99 force skills. This would be a highly Philippines2009 Vietnam2009 8 9 ambitious target for Myanmar. Indonesia2009 Philippines2009 48 China2012 2 Indonesia2009 4 115. Formal growing firms in manufacturing suffer most from a China2012 0 2 10 20 30 40 50 60 skills shortage. It is also the type of 0 10 20 30 40 50 60 firms that suffer from a skills short- Figure 34: Inadequately educated workforce as major age that is important. In most coun- tries registered and expanding firms or severe Figure 34: to rmworkforce obstacleeducated Inadequately by sector operationmajor Figure 34: Inadequately educatedas as obstacle or severe workforce major to are most affected by a skills short- firm operation by sector or severe obstacle to rm operation by sector age. Myanmar fits into this pattern. 18 Hit hardest by a skills shortage are manufacturing firms, young and me- 16 18 dium-size firms, and innovating and 14 16 expanding firms. Manufacturing firms 12 more often report inadequately educat- 14 10 ed workforce as a major obstacle than 12 8 services sector firms (Figure 34). The 10 6 difference is likely to reflect the fact that manufacturing tends to be more 84 skill intensive than retailing and other 62 services. Accordingly, finding work- 40 ers with the right skills is often more difficult for manufacturing firms. The 2 Manufacturing Retail Other Services results imply that the skills shortage, if 0 not addressed, may hinder moderniza- Manufacturing Retail Other Services tion and growth of the economy, espe- cially in manufacturing. 116. Inadequate workforce skills are a constraint for expanding firms. Figure 35 shows that firms that in- creased employment during the past three years are more than twice as likely to report an inadequately educated workforce as a major constraint than firms that did not. Firms that introduced new products or methods of man- ufacturing goods report skills as a major obstacle slightly more frequently than firms that did not introduce any innovation. The pattern whereby innovative and growing firms suffer from a skills shortage more than traditional and stagnant firms is quite typical and found in many other countries. Modern or innovative firms tend to require higher skills than traditional firms. Firms that are growing need to hire workers who possess skills that meet the 29 Myanmar Investment Climate Assessment requirements of the newly created jobs, and often this is difficult because the supply of skills does not match the demand. Figure 35: Low workforce skills as major or severe obstacle by growth and innovation status Figure 35: Low workforce skills as major or severe obstacle by growth and innovation status 30 25 20 15 10 5 0 YES NO YES NO Expansion Introduced new product/technology 117. There is also a substantial regional variation in employers’ perceptions of a skills shortage. While poor workforce skills are seen as a major obstacle by over 50 percent of employers in the Monywa region, few employers see skills as an obstacle in the Taunggyi and Bago regions. These differences are not easily explained. For example, both the Monywa and Taunggyi regions are industrial regions, with a similar share of employment in manufacturing (in contrast, the Bago region is services oriented). One possible explanation is that the profile of manufacturing firms in the Monywa region is different from that in the Taunggyi region, but the exact nature of the difference still needs to be determined. For example, the proportion of growing firms is somewhat higher in the Monywa than in the Taunggyi region, while the proportion of innovative firms is slightly higher in the Taunggyi region. It is recommended that the substantial regional variation is further investigated with follow-up qualitative interviews. Table 6: Types of problems hiring rms encountered when trying to recruit workers Table 6: Types of problems hiring firms encountered when trying to recruit workers Firms hiring Of which: workers in last 2 % of rms that encountered following problems years when trying to hire applicants applicants applicants % of all no or few lacked expected didn’t like N rms applicants required higher working skills wages conditions Managers and professionals 56 8.86 12.5 33.93 37.5 12.5 Technicians, associate 208 32.91 20.67 54.33 50.96 20.67 professionals, sales workers Unskilled workers 307 48.58 22.15 44.95 49.84 14.66 Skilled production workers a) 217 61.47 13.36 42.86 43.32 15.67 Unskilled production workers a) 215 60.91 16.28 38.6 35.81 19.07 Note: Unweighted data for all rm sizes. a) Manufacturing Note: Unweighted rms only. data for all firm sizes. a) Manufacturing firms only. Figure 36: Educational system does not meet rms’ needs 118. Job applicants often lack the skills sought by employers. There are two main reasons why hiring a work- Percent er often of employers is difficult who agree that in Myanmar: jobthe education system applicants doesrequired lack the not produce enough skills or people they expect wages higher than the em- with: ployer offers. Both point to a skills shortage. The focus is on two groups of workers: (a) technicians, lower grade professionals and sales workers, and (b) skilled production workers, the first group representing skilled white good joband collar workers, attitude 70 the second representing 12 workers. Table 6 shows that among firms hiring skilled blue-collar skilled white-collar workers, 54 percent report that job applicants lacked the requiredTend to Agree skills and 51 percent report the kinds of skills needed 71 9 that they expected wages higher than the firm could offer. Among firms hiring skilled blue-collar Strongly Agree workers, about 43 percent claim that job applicants both lack the required skills and have excessive wage expectations. The fact the level of skills needed 75 9 up to date knowledge 71 30 11 60 65 70 75 80 85 Myanmar Investment Climate Assessment that job applicants bargain for wages higher than some firms can afford indicates a skills shortage, because workers who possess scarce skills that are in high demand expect adequate returns to those skills. A similar combination of high wage demands and lack of skills is reported by employers for example in Lao PDR. There, about half of all firms indicate excessive wage expectations from applicants and up to 70 percent of firms find the applicants’ lack of skills a constraint. 119. Myanmar firms complain about a number of different things when trying to recruit workers for un- skilled jobs. Close to 49 percent of firms were hiring unskilled workers. In this case the problem is likely to be not so much technical job specific skills, but rather inadequate social and behavioral skills (e.g., job attitudes). Another interesting fact concerning low-skilled jobs is that often there are no or few applicants. As many as 22 percent of vacancies for jobs requiring only elementary skills were hard to fill because there were few applicants. As the Lao PDR Development Report indicates, that is a higher percentage than in Vietnam or China (Yunnan Province), for example, but a significantly lower percentage of low skilled jobs that are hard to fill due to lack of applicants than in Lao PDR. Better data and further research, on wages and the evolution of the wage gap between farming and manufacturing jobs, are needed to understand why firms in Myanmar are facing difficulty in filling vacancies even for unskilled Table labor. 6: Types of problems hiring rms encountered when trying to recruit workers 120. The educational system does not Firms meet firms’ needs. Most firms hiring claim that the educational system does Of which: not respond to labor market demands. does It in workers 2 equip last not prospective % of rms that encounteredwith workers up-to-date following problemsknowledge and the years level of skills needed in the workplace. This is likely to translate into when trying productivity lower to hire and competitiveness of Myanmar firms, especially given the better quality of education in some regional applicants competitors. applicants applicants % of all no or few lacked expected didn’t like N 121. Firms have a very negative assessment the quality of rms of applicants highersystem the educational required in Myanmar. The re- working sults in Figure 36 illustrate firms’ negative assessment of the quality skills conditions wages system of educational in Myanmar. Over 80 Managers and professionals 56 8.86 12.5 33.93 37.5 percent of firms claim that the educational system does not produce enough workers with up-to-date 12.5 knowledge Technicians, associate and the level and kinds of skills needed in the workplace. These are very high proportions. For comparison, in 208 32.91 20.67 54.33 50.96 20.67 professionals, sales workers Vietnam less than 50 percent of firms express a negative opinion about the quality of the educational system. Even Unskilled workers 307 48.58 22.15 44.95 49.84 14.66 if firms are unduly harsh in their assessment of the quality of education, the comparison indicates substantial room inSkilled production Myanmar workers to make the a)educational 217 61.47 system 13.36 to labor more responsive 42.86 43.32 These findings 15.67 market needs. are supported byUnskilled production an ADB-led workers education a) sector 215 on Myanmar review 60.91 16.28 on technical focusing 38.6 and 35.81 19.07 vocational education and training. Note: Unweighted data for all rm sizes. The review found that vocational training is very supply-driven and the subjects taught have “no or little affilia- a) Manufacturing rms only. tion” with the labor market or the world of work. Figure 36: Figure system Educationalsystem 36: Educational does does not not meet firms’ meet needs rms’ needs Percent of employers who agree that the education system does not produce enough people with: good job attitude 70 12 Tend to Agree the kinds of skills needed 71 9 Strongly Agree the level of skills needed 75 9 up to date knowledge 71 11 60 65 70 75 80 85 122. Myanmar needs to improve the overall quality of the educational system. The above results suggest Figure that 37: Share Myanmar of rms needs in manufacturing to improve both thethat provide oftraining quality (%) the educational system, as well as make it more responsive to labor market demands in order to prepare students for the world of work. This will ultimately make Myanmar’s Mongolia2013 workforce more productive and competitive. China2012 LaoPDR2012 Nepal2013 large Afghanistan2014 31 medium SriLanka2011 small Philippines2009 Percent of employers who agree that the education system does not produce enough people with: Myanmar Investment Climate Assessment good job attitude 70 12 Tend to Agree the kinds of skills needed 71 9 Strongly Agree 123. Notwithstanding the negative assessment of Myanmar’s educational system, firms rarely provide training to the level oftheir workers. Firms do not75 skills needed seem willing or able to compensate 9 for the low quality of education and to address the skills gap. Training is rarely provided because most firms see no need to provide formal training, or they fail seeknowledge todate up to of providing it. As in virtually the benefit to the firm 71 11 all countries, large firms provide training more often than small ones. Importantly, modern, young, innovative and growing firms provide training more often than traditional, old and stagnant 60 This suggests firms. 65 75 that employ 70 that firms 80 skilled 85labor are more likely to provide training to further enhance their human capital and productivity. Figure Figure 37: 37: Shareof Share of firms in manufacturing rms in manufacturingthat providetraining that provide training(%) (%) Mongolia2013 China2012 LaoPDR2012 Nepal2013 large Afghanistan2014 medium SriLanka2011 small Philippines2009 Vietnam2009 Bangladesh2013 Bhutan2009 Indonesia2009 31% Myanmar2014 26% 10% 0% 20% 40% 60% 80% 100% 120% 124. Modern and young firms are more likely to provide training than traditional and old firms. The inci- dence of training among firms that introduced new products or technology is 26 percent compared with less than 12 percent among firms that did not. Start-ups (firms aged 0-4 years) are much more likely to provide training than older firms (29 percent vs. 6 percent among firms aged 5-9 years, and 4 percent among firms older than 20 years). This implies that a firm’s young age is an important factor behind the provision of training. 125. Myanmar firms seldom provide formal training to their workers because they do not see a need to do so. About 90 percent of firms claim that they do not need to provide formal training programs. This is surprising given the widespread dissatisfaction with the quality of education received by the workers and complaints about a skills shortage. Probably firms use informal on-the-job training to address the purported skills gap and equip workers with the practical job-specific skills. Contrary to expectations, few firms mention affordability and the high cost of training programs as a factor. Some firms, however, report the lack of relevant training programs. The last reason points to room for improving the capacity of training providers and enhancing the scope of training programs offered. The insufficient availability of training programs may adversely affect the productivity of some Myanmar firms. Recent and ongoing reforms 126. Education reform is one of the key priorities set out by the government. The 30-Year Education Devel- opment Plan (2001/02-2030/31) lays out strategies to promote greater access and to improve the quality of basic education. Some progress has been made. 127. Some vocational training centers have sprung up in urban areas. As the need for more and better workplace education has become more prominent, different groups and organizations have tried to respond with a variety of vocational training centers. These training centers are not (yet) coordinated in any meaningful way, while the government is not involved in promoting such activities, or aligning them with overarching goals. None- theless, a National Skills Standard Authority (NSSA) was established in 2007 to improve the quality and relevance of vocational training, and improve access to it. The NSSA has developed skills standards for 155 occupations of which 55 have been applied in curriculum development. 32 Myanmar Investment Climate Assessment 128. Reforms or programs to address workplace skills in particular have yet to be designed or implement- ed. There are significant reforms underway to improve the basic education system in Myanmar, including those supported by development partners, including the World Bank Group. Programs that seek to address the workforce skills issue fundamentally and at scale are still rudimentary, however. The World Bank Group’s Systems Approach for Better Education Results (SABER) and Skills Toward Employability and Productivity (STEP) survey tools would be useful in helping to inform which workplace skills reforms and programs are most required. The NSSA should be encouraged to continue developing a national vocational qualifications framework in close cooperation with stakeholders in the private sector, among others. Box 3: Case study – The investment climate for agriculture Agribusiness has great potential in Myanmar, but is suffering from a lack of access to inputs and the consequences of inappropriate or inadequate government intervention. Agriculture represents 35 to 40 percent of GDP and employs more than 50 percent of the country’s workforce. However, these figures are mostly accounted for by smallholder subsistence production, mainly of rice. Subsistence farming in Myan- mar is characterized by low yields, lack of input use, lack of mechanization, and poor quality outputs. Access to finance is especially problematic in agriculture. The Myanmar Agricultural Development Bank (MADB) is the only major formal financial service provider in rural agriculture. Microfinance institutions are only just entering this market and commercial banks are not allowed to lend to farmers by law. And yet MADB lacks the capacity to provide adequate services and products to farmers. MADB’s coverage, loan sizes, and tenors are all insufficient, with the result that farmers borrow in the informal market, increasing the overall cost to borrow in agriculture. The recently reformed framework of laws relevant to agriculture, the Farmland Law and the Seed Law, constitute useful steps toward liberalization, but more reform is needed. Tight controls on rice exports through export licensing and the threat of export bans continue. These practices are stifling invest- ments in the rice value chain and pulling down the entire sector. While the government is intervening too much in the rice value chain, it is not playing an adequate role in the input sub-sector. The regulations for the recently passed Seed Law are suboptimal. In order to accommodate more private sector participation as the seed sub-sector grows, the focus should be on build- ing capacity to inspect and certify increasing volumes of multiplied seed, including supporting the develop- ment of locally-adapted varieties of seed for its major crops. Myanmar invests only 20 percent as much as its regional counterparts in agricultural research. More is needed. Fertilizer use in Myanmar is one of the lowest in the world at only 6 kg/ha, which is directly related to the yield gaps experienced in its major crops. The high costs of port clearance, transport, and distribution are keeping fertilizer prices unnecessarily high. Another factor contributing to Myanmar’s relatively low rate of fertilizer usage is that many spurious fertilizers (and pesticides) reach farmers. Truth-in-labeling requirements are needed for inputs, including mechanisms to enforce such requirements. Finally, improvements in rural infrastructure are critical for the development of agriculture. Roads along key trade corridors, coupled with well-placed rural feeder roads, can increase smallholders’ access to market and reduce the cost and the time it takes to trade. As Myanmar’s entrepreneurs strive to claim a larger and higher-value share of the international rice market, while also growing their exports of beans, pulses and corn, investments in road and irrigation infrastructure would support both domestic and foreign investors in filling the voids in input supply and distribution, equipment sales/leasing, aggregation, storage, processing and export. 33 Myanmar Investment Climate Assessment 34 Myanmar Investment Climate Assessment Chapter 3 Direct influence of government oversight 129. As outlined above, this report distinguishes between the constraints that firms face due to the lack of inputs, and those they face in their direct interactions with the government. This chapter now turns to the latter, in particular the regulation of firms, taxation, and the cross-cutting issue of corruption. 130. The challenges that firms face in their direct interactions with government agencies should be rela- tively easier to identify and address, from a technical standpoint. Since the government directly controls when and how it interacts with private firms, reforming such interactions should be relatively more straightforward, at least from a technical standpoint, since the challenges reside within the apparatus and operations of the govern- ment itself. By contrast, constraints to doing business caused by a lack of access to inputs are more indirect. Im- proving the access to finance, for example, ultimately requires actions by banks, even as such actions may be the result of a change in government policy. By contrast, if the government has one particular area that it should be well-placed to transform it is the direct interaction with firms in the private sector. 131. Modern and efficient institutions to manage a competitive and innovative economy, and interact directly with firms, are only recently under development. It is useful to remember the context of Myanmar’s public administration. After five decades of a state-dominated economic system, coupled with a prolonged period of isolation from the global economy, institutional interactions that are attuned to the needs of the private sector are only now being established—and even then only very slowly. The goal of making it as transparent and easy as possible for firms to deal with the government has yet to be fully embraced by the various agencies. As a result, some of the potential for inclusive economic growth is not yet being realized. In the following sections the report looks at some of the most pertinent areas where reforms could have the greatest impact. 3.1 Firm regulation 132. Myanmar ranks low for firms entering, exiting and operating in the economy. Indicators that capture the constraints for firms to enter and exit the economy, such as the Doing Business indicators, paint a bleak picture. In terms of starting a new business, Myanmar ranks 189th, that is last out of all the countries surveyed. As illus- trated in Figure 38, it takes 11 procedures, 72 days, and costs 156 percent of income per capita to start a business. It should be noted that recent reforms related to starting a business have not yet been reflected in the most recent report, and additional reforms are underway. It is expected that these will improve Myanmar’s DB indicator on starting a business in future iterations, albeit from the lowest possible base. In terms of enforcing contracts and protecting investors, Myanmar ranks 185th and 178th, respectively. For firms exiting the economy, as captured by how difficult it is to resolve insolvency, Myanmar ranks 160th out of 189 countries. Figure 38: Figure Procedures, 38: Procedures, time time andand costcost for starting for starting a business a business Procedures (number) Time (days) Cost (% of income per capita) Philippines 16 Cambodia 101 Myanmar 155.9 Myanmar 11 Lao PDR 92 Cambodia 139.5 China 11 Myanmar 72 Sri Lanka 20.7 Cambodia 11 Indonesia 52.5 Indonesia 20 Vietnam 10 Vietnam 34 Bangladesh 16.8 Indonesia 10 Philippines 34 Philippines 16.6 Sri Lanka 9 China 30 Thailand 6.6 Bangladesh 9 Thailand 27.5 Lao PDR 5.7 Lao PDR 6 Bangladesh 19.5 Vietnam 5.3 Thailand 4 Sri Lanka 11 China 1 0 10 20 0 50 100 150 0 50 100 150 200 Source: Doing Business 2015. Source: Doing Business 2015. Figure 39: Time and cost to resolve bankruptcy cases Time (years) Cost (% of estate) 35 Cambodia 6 Thailand 36 Lao PDR 6 Bangladesh 19.5 V Bangladesh 9 Thailand 27.5 Thailand 4 Lao PDR 5.7 Sri Lanka 11 Lao PDR 6 Bangladesh 19.5 0 Vietnam 10 20 5.3 Myanmar 0 Climate Investment 50 Assessment 100 150 Thailand 4 Sri Lanka 11 Source: Doing Business 2015. China 1 133. Similar 0 to entering 10 20 the market as 0 50 Figure 100 Figure 39: 150 and cost to resolve 39:Time Time 0 bankruptcy 50 100 150 and cost to resolve bankruptcy 200 cases cases Source: Doing Business 2015. a private firm, exiting is difficult in Myan- Time (years) Cost (% of estate) mar. The DB indicator on resolving insolvency shows Cambodia 6 Thailand 36 Figurethat along 39: Time with and cost entry, exit bankruptcy to resolve is unduly cost- cases ly and time consuming (Figure 39). Resolving Myanmar 5 Philippines 32 Time (years) Cost (% of estate) bankruptcy takes a full five years in Myanmar; Vietnam 5 Cambodia 28 onlyCambodia in Cambodia does it 6 take longer.Thailand And while 36 resolving bankruptcy is Bangladesh 4 Indonesia 22 Myanmar many coun- 5 costly in Philippines 32 tries of the region, 18 percent of the asset value Philippines 2.7 China 22 is stillVietnam 5 a steep (and prohibitively Cambodia steep) price. A 28 Thailand 2.7 Myanmar 18 difficult process for exiting Bangladesh 4 constrains the dyna- Indonesia 22 Indonesia 2 Vietnam 14.5 mism in the private sector and thus reduces the Philippines 2.7 China 22 contributions it can make to the economy as a Sri Lanka 1.7 Sri Lanka 10 whole. Thailand 2.7 Myanmar 18 China 1.7 Bangladesh 8 Indonesia 2 Vietnam 14.5 Lao PDR Lao PDR 134. The Enterprise Survey suggests that mostSri Lanka managers senior 1.7 in firms do Sri not spend 10 Lanka 0 5 10 0 20 40 much time dealing China with government require Bangladesh - Source: Doing Source: Doing 2015.2015. Business Business 1.7 8 ments. For those who do, the time involved is Lao PDR relatively small compared with otherLao PDR in the region (Figure 40). In fact, among Myanmar’s ASEAN peers, countries Figure 40: Time spent by senior management dealing with government requirement only Indonesian 0 senior 5 managers 10 spend less time 0 on20 government 40 requirements. The share of senior management senior management spends time on dealing with government requiremen time spent on government Source: Doing Business 2015. requirements does vary across regions and size of the company (Figure 41), but remains share of management time spent (%, right axis) overall low. 100 90 Figure 40: 40: Time 80 requirements Figure spentby Timespent bysenior seniormanagement managementdealing dealingwith withgovernment government requirements 70 60 senior management spends time on dealing with government requirements (% of firms) 50 share of management time spent (%, right axis) 40 32 100 30 25 90 20 80 10 20 2 70 0 60 15 50 40 32 10 30 20 5 10 2 0 0 135. Firms manage to save time on regulatory requirements, because most of them are able to remain rela- tively informal. As the description of the ES sample and estimated population in Chapter 1 indicated, only a small portion of businesses are registered as companies. Most businesses are registered at the municipal level only (¾ of the formal firms in the ES sample), or remain entirely informal. By contrast, it is the large firms that are more affected by government regulatory requirements. Not surprisingly, senior management in larger firms spends more time dealing with government requirements than smaller firms. About 58 percent of senior managers from large firms say that they need to spend time on dealing with government requirements, while the proportion in small firms is only 29 percent. 136. There are significant regional differences in the burden of government requirements. Only 13 percent of firms in the Mandalay region state that they spend time on government requirements, as opposed to almost all the firms (97 percent) in Taunggyi. Such huge differences between regions suggest that government agencies are not following the same standardized procedures from one region to another. 36 Myanmar Investment Climate Assessment Figure 41: Figure Senior 41: managementspends Seniormanagement time dealing spendstime dealing with regulation (%), with regulation (%), by by size size and and region region Taunggyi 97 large 58 Monywa 54 medium 35 Yangon 33 Bago 17 small 29 Mandalay 13 0 20 40 60 80 0 50 100 150 137. Informal Figure firms 42: The waiting report for anto time the Enterprise operating Survey that the fear of government interference is a major license is excessive reason for avoiding registration. Among the informal firms surveyed, the majority do not really see any benefit waiting time for operating license (days) in registration. This could be due to the under-utilization of formal finance, which is even lower than it is for the formal firms. And yet, a third of informal firms report their desire to have their business registered, Mongolia2013 45 but about half of all firms cite time, fees, and paperwork required to complete registration Bangladesh2013 34as reasons why they are not registered. China2012 27 138. Notwithstanding recent reform efforts, the government Myanmar2014 27 approval processes to start up and operate a business inIndonesia2009 Myanmar are still very costly and time consuming. 21 Businesses are sometimes wary of the fact that Bhutan2009 19 government approval processes are not time-bound, leading to uncertainty in planning. While in some instances SriLanka2011 specific laws 17 comply with, at times the practices followed may be different or policies may be relatively easy to Vietnam2009 and discretionary. 16 The company registration process for rice millers and the hotel licensing process mentioned in Afghanistan2014 14 greater detail below provide specific examples of bottlenecks and areas where improvements are needed. LaoPDR2012 14 139. In Philippines2009 addition, the inspection regime11 is non-transparent and unclear, particularly for small businesses. Inspection for Nepal2013 10 currently does not provide adequate information (or no information at sectors such as rice milling all) to businesses on what0 they are inspected 10 on, and what criteria are 20 40inspections, etc. 30 followed for 50 While in some instances the information may be available within agency websites (such as the tax authority website on tax rates), access theFigure to 43: such Share ofinformation uneven, by is inspected rms visited or tax o Therefore, at best. cials (%) enhancing transparency and greater provision of in- formation to the private sector on selected areas would be an important signal to investors. LaoPDR2012 93 Coordination among government agencies 140. Philippines2009 Monywa private sector activity is sorely 87 in overseeing 97 lacking. A common issue that has been raised across the 80 Afghanistan2014 private sector is the number of agencies and ministries that busi- Bhutan2009 nesses typically 73 inspections have to visit and the numerous 93 agencies. There carried out by different government Taunggyi Mongolia2013 are examples 68 region and around the world where inter-agency coordination has of good practices within the Asia Nepal2013 improved using different tools to enhance66service delivery to the private sector. Examples include the (online) Myanmar2014 Mandalay 73 65 single window interfaces for licensing or customs processes that have been employed in the ASEAN region, but Vietnam2009 also worldwide, 61 coordination of any sub-processes squarely on the government as the as they put the burden for Bangladesh2013 operator of the single window. 59 Yangon 62 China2012 59 SriLanka2011 54 141. There is significant scope for improving and streamlining Bago procedures.55 Detailed reviews of econo- Indonesia2009 10 12 my-wide general licenses and registrations, such as company registrations, small business registrations, inspec- tions and taxation, have 0 shown some 50of the potential. 0 100 Similarly, reviews 50 licensing requirements of typical 100 to start up and operate a rice mill or a hotel suggest the potential for removing constraints on private sector activity in the 10 Any ex-ante authorizations required for any business to commence commercial activities and operate. This includes all licenses, clearances, permits, approvals, certificates, recommendations, authorizations, accreditations issued by any regulatory authority such as ministries and agencies. Licenses typically impose on businesses a range of conditions, obligations and rights. See IFC Licensing Policy Framework, 2010. 37 Myanmar Investment Climate Assessment formal sector. For large local businesses and foreign companies, the current company registration process gov- erned by the Burma Companies Act of 1914, the Burma Companies Rules of 1940, and the Burma Company Reg- ulation of 1957 (together: MCA) is burdensome and costly for businesses. The two-step procedure for obtaining temporary and then permanent certificates is unnecessary and lengthy, and not in line with good practice. Lawyers’ fees vary from USD 5,000 to USD 18,000 depending on the complexity and size of the business for completing the case, which includes the preparation of the documents and their presentation to the Directorate of Investment and Company Administration (DICA) as well as to the Myanmar Investment Commission (MIC). 142. The government has been instituting reforms to reduce and eliminate very high minimum capital requirements. The paid-in capital required amounted to USD 50,000 for certain types of companies (services companies), while for infrastructure and manufacturing companies it was USD 150,000. This is in stark contrast to 90 economies globally that have no paid-in minimum capital requirement at all, according to the Doing Business data. For foreign firms, the fund transfer process from abroad to Myanmar is complex and lengthy. There is a lack of clarity over whether local banks require foreign firms to produce two specific forms (Forms No. 6 and 26) from the DICA or not, and there is inconsistency in applying such practices among different banks. Although the Com- pany Law allows for share transfers, in practice, share transfers in a local company from a local shareholder to a foreign shareholder have been problematic. 143. Sector-specific licensing requirements are overly onerous in Myanmar. For example, the many licens- ing requirements for a rice mill to start up and operate act as a hindrance to further growth. These requirements are very costly and time consuming for rice millers to comply with. For example, to be able to operate, rice millers have to obtain seven different licenses and permits, and can expect on average about seven inspections annually. A rice miller has to comply with requirements and separate regulations and inspections from at least four ministries. The cost of complying with the current licenses and inspections cost around USD 1,400 per rice miller annual- ly.11 It takes about 45 days for a rice miller to obtain all the required licenses/permits. The inspection regime for rice millers is also burdensome. The current practice is that inspections are carried as a requirement for relevant agencies to renew licenses every year. Rice millers are inspected seven times annually on average and there is no risk-based approach to inspections. The requirements and criteria for inspections are arbitrary and non-transparent. 144. Firms in Myanmar generally have to wait longer for operating licenses to be granted than in compar- ator countries. About 69 percent of firms report having applied for an operating license, a number that is fairly similar to other countries. However, on average firms have to wait 27 days for an operating license, while in Indo- nesia the wait is 21 days, and only 11 days in the Philippines. With 27 days waiting time for an operating license, firms in Myanmar face the longest wait among the ASEAN countries. 11 Interview with the Rice Millers Association. 38 Mandalay 13 0 20 40 60 80 0 50 100 150 Myanmar Investment Climate Assessment Figure 42: The waiting time for an operating license is excessive Figure 42: The waiting time for an operating license is excessive waiting time for operating license (days) Mongolia2013 45 Bangladesh2013 34 China2012 27 Myanmar2014 27 Indonesia2009 21 Bhutan2009 19 SriLanka2011 17 Vietnam2009 16 Afghanistan2014 14 LaoPDR2012 14 Philippines2009 11 Nepal2013 10 0 10 20 30 40 50 145. Similar to rice-millers, licensing for hotels is overly complicated and presents a constraint to Figure 43: Share high-quality of rms growth. visited or inspected Myanmar by tax is currently o cials (%) rapid growth in international tourist arrivals and tour- experiencing ism receipts, being strategically located in Southeast LaoPDR2012 93 Asia. In 2012, there were around 1 million tourist arrivals in Myanmar and tourist arrivals grew by almost 30 percent Philippines2009 87 Monywawith 2011. To cater for in-bound compared 12 97 tourists from abroad, Myanmar has Afghanistan2014 about 787 hotels/motels/guest 80 houses (28,291 rooms available) operating in the country. The hotels and other tourism Bhutan2009 businesses are governed 73 by the Myanmar Hotel and Tourism Law of 1993. Hotel business- Taunggyi 93 es in Myanmar obtain necessary licenses from Mongolia2013 68 the DICA, the Yangon City Development Committee (YCDC), and of Hotels and Tourism (MOHT) the MinistryNepal2013 66 to start operating. The process to start up a hotel is complicated and costly. The overall process may take between Mandalay 73 65 3 to 6 months to comply with all the requirements, including prepa- 13 Myanmar2014 submission of all supporting documents. ration andVietnam2009 61 The official fee to obtain the hotel license is around USD20 per room. Bangladesh2013 59 Yangon 62 China2012 59 146. ASriLanka2011 major problem is the sheer Bago regulatory framework. complexity of the current 54 55 Half a dozen laws regulate firm entry, currentlyIndonesia2009 12 depending on the sector and location of the investment and on whether or not the in- vestor is foreign. In addition, 0 the approval 50 is just as complex, process100 0 with firms sometimes 50 requiring 100 overlapping approvals and facing time-consuming and unclear criteria for scrutinizing individual projects. If these regulatory processes are not streamlined, they risk creating bottlenecks as investment proposals jostle against capacity con- straints in DICA. Recent and ongoing reforms 147. Significant progress has been made in terms of the legal framework for investment, though the real difficulty lies in the implementation. A new Foreign Investment Law was promulgated in 2012, the Myanmar Citizens Investment Law in 2013 and Special Economic Zones Law in 2013, all of which provide generous tax holidays and duty exemptions to investors. The Foreign Investment Law in particular is a major step forward in creating a more secure legal environment for foreign investment, but still leaves questions regarding investor pro- tection and the criteria for admitting foreign investors. A key issue according to investors is the opaque and oner- ous procedures for obtaining approvals from MIC. MIC is the gateway for approval of domestic investors seeking incentives and virtually all foreign investors. Without MIC approval, foreign investors have no right to lease land for over one year, import or export, hire expat workers or repatriate funds. The government has recognized the need to strengthen investor protections, streamline entry and screening procedures for domestic and foreign invest- ment, and rationalize incentives. The WBG is supporting the design and implementation of such reforms through technical assistance. 12 Myanmar Tourism Master Plan 2013-2020 13 Interview with selected group of hotels. 39 medium 35 Yangon 33 Myanmar Investment Climate Assessment Bago 17 small 29 148. Myanmar’s initial rounds of reforms relatedMandalay 13and institutional strengthening over the to legislative past couple of years have started to have some effect. Myanmar hopes to continue the reform momentum in the coming years 0 and make20 significant 40 strides 60 terms of ease of business, in 80 0 investment 50 facilitation, 150 and job creation 100 with the ultimate objective of sustained growth and shared prosperity. As many of the reforms in firms’ entry, exit and operating licenses lie within the government’s realm of responsibilities and their interactions with the private sector, Figurethere is hope 42: The waitingthat timerapid for anprogress operatingcan be made. license If so, Myanmar’s international ranking in terms of ease of is excessive doing business should waiting time to rise(days) begin license for operating more noticeably, and such a signal would not be lost on private sector investors. Mongolia2013 45 3.2 Taxes Bangladesh2013 34 China2012 27 149. Similar to business regulation, the ES results are likely to underestimate the problems that firms face Myanmar2014 27 with regards to taxation. Businesses are not generally aware of the actual tax rate or exactly how the amount of Indonesia2009 21 tax due is calculated. Businesses often end up paying a “minimum amount” of tax based on the size and type of Bhutan2009 19 business and the frequency of paying taxes. In that sense, similar to business regulation, firms are able to avoid SriLanka2011 17 some of the administrative burdens of taxation, by staying relatively informal. Vietnam2009 16 Afghanistan2014 14 150. The number of visits that firms receive from tax officials is relatively high and very uneven. Ac- LaoPDR2012 14 cording to the ES, about 65 percent of firms report having been inspected by tax officials (Figure 43). This puts Philippines2009 11 Myanmar roughly in the middle of the pack, compared with other countries in the region. But across Myanmar, this Nepal2013 10 percentage varies dramatically. While almost all firms in Monya (97 percent) are visited by a tax official, barely 0 more than half of the firms 20 a visit in the 10 percent) report in Bago (55 30 past year. 40 50 Figure 43: Figure Share 43: of Share firms of visited or inspected rmsvisited inspected by by tax tax o officials (%) cials (%) LaoPDR2012 93 Philippines2009 87 Monywa 97 Afghanistan2014 80 Bhutan2009 73 Taunggyi 93 Mongolia2013 68 Nepal2013 66 Myanmar2014 Mandalay 73 65 Vietnam2009 61 Bangladesh2013 59 Yangon 62 China2012 59 SriLanka2011 54 Bago 55 Indonesia2009 12 0 50 100 0 50 100 151. In order to pay taxes, firms in Myanmar have to meet with tax officials more frequently than in many other countries. Although the overall tax revenue collected by the state is very low in Myanmar, the average number of visits by a tax official is higher for firms in Myanmar than for their competitors elsewhere. The frequent interaction between taxpayers and tax officials is largely a result of the lack of a system for self-assessment and for risk-based compliance management. 40 Myanmar Investment Climate Assessment Figure 44: Figure Average number 44: Average number of timesin oftimes inaa year rms year firms met met with with tax tax o officials cials Myanmar2014 2.14 Mongolia2013 2.13 China2012 2.11 Bhutan2009 2.09 Philippines2009 1.71 Afghanistan2014 1.54 Vietnam2009 1.50 Indonesia2009 1.42 0 1 1 2 2 3 152. One of the most critical deficiencies of the current tax system is the absence of a dedicated law on Figure 45: How Myanmar compares with other countries on the ease of paying taxes tax administration. Without a dedicated law on tax administration, business processes and procedures for various types of tax may be interpreted inconsistently across tax laws and regulations. Currently, the tax structure is overly Malaysia (Rank 32) 84 complicated, with 15 different types of taxes and duties collected by seven different departments falling under six Thailand (Rank 62) 78than 90 percent of total ministries. In practice Figure 44: Average only number oftwo taxes, times commercial in a year tax and rms met with tax othe income tax, contribute more cials taxRegional Average revenues, with(Rank state84) economic enterprises (SEEs) being the main revenue source for 74 income tax collection. Myanmar2014 Myanmar (Rank 116) 69 2.14 153. Taxation 120)cumbersome for firms to comply with, and overall tax is very China (Rank Mongolia2013 67 revenue in Myanmar remains 2.13 low. Most firms find it difficult to comply with the taxation system, and this is reflected in the low ratio of tax-to- Lao PDR (Rank 129) China2012 66 2.11 GDP of less than 10 percent. This is extremely low by any international comparison and insufficient to sustain the India desired levels (Rank 156) 56 of economic growth for a country such as Myanmar. Such a low tax ratio2.09 Bhutan2009 also forces the government to be over-reliant on unstable Indonesia (Rank 160) to meet its spending needs. revenues from natural resources in order54 Philippines2009 1.71 0 10 30 20 40 50 60 70 80 90 154. Myanmar is 116th in the ranking of 189 countries Afghanistan2014 on the ease of paying taxes. According to the WBG’s 1.54 Distance to frontier score Doing Business survey, on average firms spend 154.5 hours annually 1.50 Vietnam2009 filing, preparing and paying taxes, including Source: the time Doing for 2015. Business needed meeting with local tax officials to discuss tax receipts, and make 31 tax payments a year. On Indonesia2009 average firms in Myanmar pay total taxes amounting to 47.7 percent 1.42 of profits. Although Myanmar scores signifi- cantly lower than the East 0 Asia Figure 46: Informal payments and Pacific required for 1 average, which 1 getting speci c things is equivalent done 2 2 of 84th, it still to a ranking 3 scores higher than some of its ASEAN peers. For example, Lao PDR and Indonesia rank lower, at 129th and 160th, respectively. 100 % of firms reporting informal gift or payment expected while paying for Figure 45: How Myanmar compares with other countries on the ease of paying taxes Figure 45: How Myanmar compares with other license on the countries import tax taxes ease of paying op license 80 Malaysia (Rank 32) 84 60 Thailand (Rank 62) 78 Regional 40 Average (Rank 84) 74 Myanmar (Rank 116) 69 20 China (Rank 120) 67 0 Lao PDR (Rank 129) 66 India (Rank 156) 56 Indonesia (Rank 160) 54 0 10 20 30 40 50 60 70 80 90 Distance to frontier score Source: Doing Business 2015. Figure 46: Informal payments required for getting speci c things done 100 % of firms reporting informal gift or payment expected while paying for 80 import license 41 op license tax 60 Myanmar Investment Climate Assessment Recent and ongoing reforms 155. A number of important reforms are planned for the coming months. Self-assessment for income taxation is scheduled to be implemented in the large taxpayer office starting in April 2015. At the same time a dedicated taxpayer service and assistance program, as well as a taxpayer risk assessment capacity is planned. In addition to the self-assessment system, a Tax Procedures Code, is currently being developed and is expected to enter into force in 2015. The large taxpayer office is Figure 44: Average number of times in a year rms met with tax o cials now responsible for the administration of around 460 large businesses. Following the large taxpayer pilot it is planned to also establish functionally organized medium and small taxpayer offices. Myanmar2014 2.14 156. OnMongolia2013 2.13 the tax policy side, several reforms are being envisaged to better align the tax system with standard inter- national practice. Of key China2012 importance will be the replacement of the existing commercial tax by 2.11 a value-added tax (VAT). The current commercial tax is a turnover tax with cascading features and a relatively low tax rate of generally 5 percent. To Bhutan2009 2.09 at least reduce the impact of cascading on export competitiveness, commercial tax on most exports has now been eliminated. cascading remains an issue for domestic production and distribution. Authorities However, Philippines2009 1.71 are taking a prudent approach with regard 1.54on building administrative capacity for VAT to the timing of VAT introduction and the immediate emphasis is put Afghanistan2014 administration. The actual operation of the VAT system will therefore probably not start before 2018. Vietnam2009 1.50 157. More imminent is the reform of the excise tax regime. Excises Indonesia2009 1.42 currently are part of the commercial tax, and Schedule 6 of the Commercial Tax Law lists 18 items that are taxed at a higher rate than the standard commercial tax rate. 0 1 1 A special excise tax law is expected to streamline the regime, align the 2 2 excise tax burden with regional3 and international standards, and contribute to additional revenue mobilization from excises. Figure 45: How Myanmar compares with other countries on the ease of paying taxes 158. Finally, a new tax law was recently issued, although there is already discussion of revising it. A clearer and more transparent Malaysia (Rank 32) of the income tax regime and reduced possibilities for tax planning and tax definition 84 avoidance are par- ticularly needed, for Thailand 62) through creating the legal base for transfer pricing adjustments. An example, (Rank issue for further reform of 78 the direct tax regime will be the introduction of a simplified tax regime for small businesses. Regional Average (Rank 84) 74 Myanmar (Rank 116) 3.3 Corruption 69 China (Rank 120) 67 159. Firms Lao PDR do report corruption as being a main constraint in the ES, not 129) (Rank 66 and yet they pay bribes very frequently in order to facilitate India (Rank 156) specific transactions with the government. 56 While corruption is mentioned only barely more often than crime, as a main obstacle, the ES confirms previous findings that the incidence of corrupt Indonesia (Rank 160) 54 practices in Myanmar is high. Frequent bribes to facilitate transactions with the government undermine and com- plicate the enforcement of 0 10 regulatory the formal 20 environment. 30 40 50 percentage The 60 key transactions of70 90 where firms are 80 comparison. expected to pay a bribe is very high in internationalDistance Figure 46 below shows, only firms in Bangla- As score to frontier desh report Source: Doinghaving Businessto pay a bribe more frequently in order to obtain an import license, an operating license, or pay 2015. their taxes. Figure46: Figure Informalpayments 46: Informal required paymentsrequired for for getting getting specific speci things c things done done 100 % of firms reporting informal gift or payment expected while paying for import license op license tax 80 60 40 20 0 42 Myanmar Investment Climate Assessment 160. The high incidence of corruption aligns with other comparative assessments. The size of the problem that corruption presents seems to be confirmed in Transparency International’s Corruption Perception Index, which ranks Myanmar 157th out of 177 countries in 2013. The differences between the ES and other indicators may be partly explained by frequent payments being accepted as the norm and therefore not perceived as a constraint. However, further research will need to be done to provide insight into perceptions on corruption. 161. The seemingly low perception of corruption as the main obstacle in ES must be kept in perspective. It is important to keep in mind that questions regarding the perception of constraints are sensitive to the manner in which the question is asked and to external factors, such as macroeconomic conditions (Kaplan and Pathania, 2010). If respondents are given the choice to name several obstacles, as was the case in the recent Myanmar Busi- ness Survey for example, instead of naming the single most important obstacle, it is easily possible to get a very different result. It is possible to assume a scenario where two different types of questions are given to the same respondents. These respondents all feel corruption is the second or third most important obstacle to their business, but they all have different opinions as to what is the single most important obstacle (financing, land, etc.). In such an example, the main obstacle identified by the survey would depend entirely on how many answers are allowed in the question. If multiple answers are allowed, corruption (mentioned most frequently, in second or third place) is the most important obstacle; if only a single answer is allowed, corruption (never mentioned first) would not even appear. Aside from the methodology of the question influencing results, corruption can also be so commonplace that firms do not perceive it as a serious obstacle, even as bribes are frequently paid. Firms in Myanmar have been to some extent conditioned by decades of interactions with government agencies and officials who did not feel it was their job to make life particularly easy for them. Corruption, in that sense, is just ‘how it works’ rather than an obstacle. This nuance matters because changes in attitudes may influence the answers given in future surveys. 162. Larger firms are expected to pay more bribes than smaller firms, as are firms from Monywa region. Twenty-seven percent of firms report paying bribes generally, independent of any particular transaction. The firms’ experience here differs depending on their size and the region they are from. While a majority of large firms report having to pay bribes/ offer gifts, less than a quarter of small firms do so (Figure 47). This finding is in line with the number of large firms reporting that senior management spend more time on government requirements in the first section of the chapter. There is significant regional variation in Myanmar when it comes to the frequency of paying bribes. For example, firms in Monywa are five times more likely to be expected to pay a bribe than firms in Taunggyi. Figure Figure 47: 47: Firms paying Firms paying bribes/informal bribes/informal payments/g ifts payments/gifts (%), by (%), size of by size ofthe rm and the firm andby byregion region Monywa 59 large 54 Taunggyi 11 medium 33 Bago 21 Mandalay 29 small 23 Yangon 26 0 50 100 0 50 100 163. Additional measures of firms’ perception of corruption and the strength of the rule of law reveal the Figure 48: challenge Share ofAccording further. rms believing theES, to the court thanis system less afair, thirdimpartial and uncorrupted believe (%) of respondents that the court system is fair, impartial and uncorrupted. That is a lower percentage than in all comparator countries with the exception of Mongolia and Ban- gladesh.LaoPDR2012 The proportion of firms in neighboring Lao PDR or even Indonesia believing that courts will treat them fairly is more than double. Given the history of military rule, there remains a strong perception within civil society that judges Bhutan2009 are susceptible to corruption and bribery. Moreover, judges have seldom given any explanation or written justification SriLanka2011 for decisions. Indonesia2009 China2012 Nepal2013 Vietnam2009 43 Philippines2009 Afghanistan2014 small 23 Yangon Figure 47: Firms paying bribes/informal payments/g ifts (%), 26 rm and by region by size of the 0 50 100 0 50 100 Climate Assessment Myanmar Investment Monywa 59 large 54 Taunggyiand Figure 48: Share of rms believing the court system is fair, impartial 11uncorrupted (%) Figure 48: Share of firms believing the court system is fair, impartial and uncorrupted (%) LaoPDR2012 Bago 21 medium 33 Bhutan2009 SriLanka2011 Mandalay 29 Indonesia2009 small 23 China2012 Yangon 26 Nepal2013 0 Vietnam2009 50 100 0 50 100 Philippines2009 Figure 48: Share of rms believing the court system is fair, impartial and uncorrupted (%) Afghanistan2014 Myanmar2014 31 LaoPDR2012 Mongolia2013 Bhutan2009 Bangladesh2013 SriLanka2011 0 10 20 30 40 50 60 70 80 Indonesia2009 164. An additional vector of quasi-corruption is the overall disadvantage that private firms have relative China2012 firms 49: to Figure owned Shareby of the rmsstate or the military. who attempted As to obtain mentioned in a government (%) 1, the SEEs and the military-owned holding Chapter contract Nepal2013 companies enjoy significant privileges that private firms do not get. One such privilege is being a preferred suppli- 60 Vietnam2009 er for goods and services to the government through regular procurement mechanisms. Private firms are given the Philippines2009 opportunity only when SEEs or military-owned companies cannot deliver. Even though the practice may have a 50 foundation, it clearly runs counter to the declared goal of encouraging private sector participation. Therefore, legalAfghanistan2014 insofar as this practice continues to this day it constitutes 40 Myanmar2014 31 an important form of corruption or state capture, as it constitutes a misappropriation of public resources by systematically favoring a particular set of firms to the detri- Mongolia2013 ment 30of many firms. More generally, it prevents the establishment of a level playing field in the economy. Indeed, a Bangladesh2013 mere 20 2 percent of firms have actually tried to obtain a government contract. That is the lowest figure in the region. 0 10 20 30 40 50 60 70 80 It is less than half of the proportion in Bangladesh and Indonesia, at 5 percent each, the two next lowest countries. 10 Figure 49: Figure 49:Share 2 Share of firms of who attempted rms who to obtain attempted to a government government contract obtain a contract (%) (%) 0 60 Myanmar Bangladesh Indonesia Nepal Philippines Sri Lanka Lao PDR Bhutan India 50 40 30 20 10 2 0 Myanmar Bangladesh Indonesia Nepal Philippines Sri Lanka Lao PDR Bhutan India Recent and ongoing reforms 165. The government is making efforts to start reforms and an Anti-Corruption Law was enacted by parliament in 2013. After a year of deliberation, a new Anti-Corruption Law was passed by parliament in August 2013. The Anti-Corruption Law aims to improve transparency within the government, to take effective action against corrupt public officials, improve the country’s economic development, and attract foreign investment. Once it enters into law it will, among other things, require all officials in the executive, judicial and legislative branches of government to declare their assets. This stipulation was the subject of a vigorous debate among law- makers, illustrating the challenges that could lie ahead. 44 Myanmar Investment Climate Assessment 166. A new 15-member Anti-Corruption Commission was announced early in 2014. As required by the Anti-Corruption Law, a new Anti-Corruption Commission has been established and tasked with implementing the Anti-Corruption Law. The commission’s members were chosen in February 2014 from a list of former senior civil servants, lawyers, auditors, lawmakers, and military generals submitted to parliament by the President. 167. As part of the overall reform program, the government is seeking to improve its capacity for good public financial management. Improving the way the government manages public finances in general will help to tackle corruption. Procurement reform, for example, may serve to address some of the issues identified in the report. 168. The Extractive Industries Transparency Initiative (EITI) has accepted Myanmar’s application to become a candidate country. EITI has evolved to become a global standard encouraging better governance of the extractive sector in each of its member countries. A new Myanmar EITI (MEITI) Coordination Office has recently been established and Myanmar’s application to become an EITI candidate country was approved by the EITI Board in July 2014. Myanmar joins 45 other countries that have committed to improved transparency of government revenues from the extraction of natural resources through implementing EITI’s global transparency standard. EITI provides a global framework that enables countries to ground its practices in national priorities for extractive sec- tor reform as a means of delivering meaningful change. 169. As an EITI candidate country, Myanmar will be required to disclose details on its extractive indus- tries. As an EITI candidate country, Myanmar, which has significant mineral and hydrocarbon deposits (including oil, gas, gold, copper, jade and gemstones, among many others) will now be required to publicly disclose a range of information about its extractive industries in an annual EITI report. In particular, this information will include payment and revenue data, and production data, as well as information about how licenses are allocated, who the license-holders are and other contextual information about the extractive industries. Myanmar has 18 months to produce its first EITI report and will need to meet all of the requirements of the EITI Standard within three years in order to become an EITI compliant country. 45 Myanmar Investment Climate Assessment Box 4: Case study – Trade Excessive and outdated government regulations and compliance procedures are the critical constraint on trade. This problem undermines the connectedness of the economy to international markets and global value chains. It also exacerbates the fact that most firms do not export, as outlined in Chapter 1, and the economy as a whole is not well integrated with the markets of its neighbors, let alone global markets. Border management follows an archaic process. There are burdensome requirements for obtaining trade licenses. Plus, for trade-related regulations, there is a lack of transparency. In addition, the automation of processes and use of ICT is still very low. The combination of these two factors enables a high level of discretion in the border clearance process. The resulting uncertainty is prohibitively costly for many would- be traders. The figure below illustrates the comparison of obtaining a trade license. For firms in Myanmar, a majority have to pay a bribe to get their license. Only firms in Bangladesh pay a bribe more frequently than in Myanmar, although the Bangladeshi firms do not have to wait as long. By contrast in Myanmar, the process takes on average more than 15 days. 100 paying a bribe (% of firms) - left axis waiting time (days) - right axis 30 80 25 60 20 16 15 40 10 20 53 5 0 0 Burdensome regulation is further limiting the ability and incentives for private firms to respond to trade opportunities. Logistics service providers, for example, are often unclear about the regulation. The Logistics Performance Index, a global benchmarking tool, shows that Myanmar’s sizable gap with the rest of the region in terms of trade logistics has remained roughly the same. Finally, the lack of access to financing impacts trading firms especially. The financial sector does not seem to catch up with the needs of traders. This is partly due to regulations making it difficult to transfer money out of the country, and partly due to the overall weakness of the financial system. The government has undertaken a number of important reforms. Among the Doing Business indicators trading across borders is where Myanmar does best in the 2015 report, thanks to the recent elimination of a host of import and export licenses. Myanmar now ranks 103rd out of 189 economies. Expanding on this partial success, a comprehensive diagnostic on barriers to trade is underway, setting up a broader reform program. 46 Myanmar Investment Climate Assessment Chapter 4 Reform agenda – next steps 170. Building on the analysis of the Enterprise Survey (ES) data, as well as the qualitative analysis, a number of policy recommendations can be made. The emphasis is on addressing the lack of competition in the economy by introducing greater certainty and consistency in the rules and regulations. In this chapter, potential next steps are discussed, both for the reform process, as well as for the content of the reforms. 171. To put the recommendations below into context, it is worth acknowledging the reforms that this ICA does not deal with. There are a number of policy areas where reforms are needed and where reforms are underway or planned. These will impact, at least indirectly, the investment climate. And yet, the ICA does not discuss these topics in detail. The reason for excluding them is primarily to follow through on the prioritization that the govern- ment has explicitly asked for. The topics not discussed further include public financial management; improvements in ICT infrastructure; improvements in transportation networks, especially rural roads; and access to essential services and safety nets to facilitate labor mobility. 172. The recommendations from this ICA are also about what the government should do less of. The pre- ceding analysis clearly points towards areas where the government should become active to develop an effective and streamlined mechanism to process issues such as access to secure tenure of land, or tax payments for small businesses. Just as important, however, are the areas where the government should do less, for example by elim- inating unnecessary procedures or doing away with burdensome or unfair restrictions. Such areas for reform are perhaps even more important, because there is no technical reason for the government to delay the implementation of reform. 173. The rapid transition from a state managed economy toward one in which the government plays a role as regulator has inherent risks. There are lessons to be learned from several countries’ past experience of rapid transformation. This includes: (i) the need for sustained and high-level political will; (ii) avoiding too rapid and poorly sequenced reforms; and (iii) clear delineation of the divisions of responsibility and coordination between the different levels of government. Furthermore, as the government takes on more of a regulatory role, this will also require building and sustaining greater credibility and trust with the private sector. Similarly, privatization of state-owned enterprises will need to be carefully sequenced so as avoid disruption to services and economic activity. 174. Focusing on implementation cannot be overemphasized. Especially as the pace of reforms looks to re- main high, careful implementation is critical. Pushing the reform process too far too fast can be dangerous. Instead, it is important to acknowledge that the capacity of the government to implement reforms is clearly (still) limited. In some instances, so-called second-best reforms may be preferable if their implementation is stronger. Building a reputation as a capable overseer of the economy will be a longer-term proposition for the government, which will require consistent and steady reform, rather than speed. 4.1 Reform process 175. In order to sustain the reform momentum and ensure appropriate implementation, the process of reform matters just as much as the content. Just as important as what to reform is how to reform. Maintaining the reform effort and institutionalizing achieved reforms depend on a mechanism for making all stakeholders part of the process and making them believe that their voice is being heard. 176. The private sector has established, with the full participation and endorsement of the government, the Myanmar Business Forum (MBF). Prior to the establishment of the MBF, the government lacked the neces- sary long-term and sustainable platform for consulting with the private sector, relying instead on ad hoc consulta- tions. To ensure private sector involvement in the reform process an effective public-private dialogue mechanism is needed. The private sector has taken steps to create such a platform through the Union of Myanmar Chambers of Commerce and Industry (UMFCCI), which has established the MBF. The Ministry of Commerce has been assigned the role of government MBF focal point. 47 Myanmar Investment Climate Assessment 177. The formation of the MBF is a major milestone for future investment climate reforms. Although the current capacity to coordinate and sustain such a public-private dialogue is scarce among the relevant private and public institutions, the initiation of the MBF constitutes a critical step for ongoing and future reforms. Develop- ment partners have pledged to support this mechanism for prioritizing, specifying, and monitoring the implemen- tation of reforms related to the investment climate. As of this writing, several thematic working groups organized by business sectors have begun their discussions to come up with a reform action plan to present to and discuss with the government. 178. In the medium term, it will be particularly important to extend the membership of MBF so that as broad a range of private firms feel represented in these discussions. While the launch of MBF is an excellent start, once its work becomes more routine and initial successes are achieved it will be important to ensure that a large proportion of private firms feel represented. This is important not only for providing input to an action plan, but also to become more aware of and engaged in a general sense with the ongoing reforms. Box 5: Protecting the public interest during time of transition The protection of the environmental, cultural, and social endowments of the country and its people, remains a key function of the government. If the high pace of reforms and the desired rate of economic growth are to be maintained over a longer period, it is critical to avoid the appearance that the country’s most precious, irreplaceable assets are being neglected or even sacrificed for abstract ends. Greater participation of the private sector in the economy has to be accompanied by more deliberate protection of Myanmar’s public goods. The private sector, by itself, does not protect the public’s interest in, for example, a clean natural environment very well. Therefore, as Myanmar’s private sector grows, it is important for the government and relevant stakeholders in civil society to improve their protection of public goods. Such an emphasis is especially important during a time of economic transition. Protection of natural resources matters especially in rural areas. The rural population is particularly vulnerable to environmental degradation and so its protection is also a matter of equity and social cohesion. To better protect Myanmar’s forests, there is a role for the government to enable and promote institutions like community forest user groups. To protect water resources, more sustainable water management is need- ed throughout the country. Freshwater resources in Myanmar are abundant, but water quality has rapidly deteriorated as a result of urbanization, industrialization, mining activities, and a lack of adequate sanitation facilities. When it comes to mining, Myanmar currently lacks the necessary laws and enforcement mech- anisms to protect its environment and vulnerable populations against the impacts of mining. Over the past two decades, this has led to conflict and severe environmental degradation in the wake of a rapid increase in large-scale mining. 4.2 Policies to facilitate access to inputs Finance 179. Myanmar has an ambitious and far-reaching reform program for the financial sector that is being implemented cautiously. The reforms have the potential to significantly improve access to finance across the country. However, the reforms have triggered concerns in the domestic banking sector over exposure to competi- tion. Going forward, key areas for further reforms to improve access to finance should include the following. 180. There is a need to strengthen supervision of banks and microfinance institutions. Efforts to liberalize the regulatory framework must be matched by strengthening the capacity of regulators to effectively implement and enforce rules and regulations. The quality of financial system supervision must be brought into line with inter- 48 Myanmar Investment Climate Assessment national standards. As reforms are being considered, the authorities need to take into consideration the regulatory impact of certain restrictions on access to finance and carefully balance measures to minimize risk in the system without unduly restricting access to finance. Ultimately, financial stability is the key prerequisite for building an inclusive financial system. And a critical component to secure financial stability is to build and maintain the capac- ity of banking supervision. 181. A core financial infrastructure needs to be put into place, along with the development of capable and well-resourced supervision of the financial system. In the short term, the core infrastructure should include an interbank market and a payments and settlement system, including as a minimum the architecture to allow retail payments and the eventual use of mobile banking. In the medium term, a sound accounting and auditing system, strengthened corporate governance, depositor protection, a government securities market, credit information, and an adequate consumer protection framework, together with a dispute resolution mechanism should be developed. 182. Reform of the legislation and registration systems for movable and immovable collateral will make a big difference in terms of access to finance. A major shift away from land as collateral is important in order to open up access to finance for firms. Legal reforms enabling the use of movable collateral and the institution of a unified national collateral registration system, as well as improvements in land titling and registration, are funda- mental steps that would help to enable a functioning credit market in Myanmar. 183. Improving efficiency and strengthening governance of state financial institutions. The government needs to carefully consider the changing roles and functions of the four state-owned banks as it overhauls the overall financial system. Ideally, this should be done within the context of banking supervision by giving the su- pervisors the mandate to protect the financial system from any risk that the state financial institutions might pose. In countries around the world, state-owned banks when poorly managed pose a significant fiscal risk. They also have the potential to undermine the development of a viable private banking sector. From the access-to-finance point of view, there needs to be a level playing field among state-owned banks and private-owned banks, and a clear delineation of roles. In many countries, state-owned development banks play an important role, for example by providing longer-term financing through wholesale activities, without undermining the private sector. 184. Strengthening the financial sector will require building capacity and skills. Given the rapid expansion of the financial industry in Myanmar in the past few years there is an enormous need to train a cadre of financial professionals to run the country’s modernized financial system. There is a need for a coordinated effort by both private and public sectors in the financial sector to put in place a financial skills development framework, including regular training and exchanges with international professionals, both private bankers and regulators. Land 185. Land tenure issues in Myanmar remain a serious constraint on business despite some recent progress to improve the regulatory framework. Also due to historical grievances, land disputes and conflicts over land continue to impact the security of tenure. Looking to the future, the following key areas for further reforms should be considered. 186. The process for transferring land use rights should be made easier, cheaper, and quicker. A good start in the near term would be to improve the processes captured by the Doing Business indicator “registering prop- erty”. Making the official transfer of a land-use right easy and quick would make a big difference. This should be initiated right away and should be able to be accomplished relatively quickly. 187. The government should consider the implementation of the World Bank Group’s tried-and-tested Land Governance Assessment Framework (LGAF) in Myanmar. This would contribute to on-going land policy initiatives in the country and provide properly vetted information to all land actors. Such a reform initiative could be initiated with the support of development partners. 49 Myanmar Investment Climate Assessment 188. The government should initiate analytical work on establishing a unified and transparent system of real property (land and built property) registration and cadaster in Myanmar. The rolling-out of land regis- tration systems or the implementation of first registration campaigns will need the involvement of development partners due to the volume of required financing. International experience in supporting the establishment of modern and transparent systems of real property registration and cadaster is also needed. Analytical work could start with a situational analysis on the real property registration and cadaster systems to provide cost estimates and detailed recommendations. 189. In the medium term, the government should seek to develop a comprehensive land law and related implementing rules and regulations. The body of law governing land in Myanmar is expansive, complex and fragmented, with many of the legal instruments dating back to the late nineteenth century. Although the govern- ment enacted several major land-related laws in 2012, their effect on pre-existing laws is unclear. This ambiguity should be resolved through the development of a comprehensive land law and the implementing rules and regula- tions that would follow it. 190. In the medium term, land tenure security needs to be improved for vulnerable populations, includ- ing women. Populations relying upon customary tenure arrangements, which have not been registered, as well as smallholder farmers who possess land outside classified lands, or whose land use rights have not been registered, are vulnerable to being ejected from their land without receiving compensation. Tenure security for these popula- tions could be improved by supporting the development of (i) a policy and regulatory framework that recognizes customary tenure, and (ii) registration campaigns for the registration of customary and communal land rights. Sim- ilarly, cultural norms and practices often marginalize women within their marriages and households, and women may lack awareness of their rights as joint owners of family land, or as family members with rights of inheritance. Women’s land rights can be better protected and improved through educational programs and legal literacy cam- paigns. 191. Compulsory acquisition, property valuation and compensation policies, standards and procedures should be brought into line with international best practice. Myanmar’s laws permit the state to use compul- sory acquisition to acquire land for public purposes and for business purposes. The law defines neither purpose in detail, leaving landholders vulnerable to losing their land through arbitrary processes. Compulsory acquisition policies should be improved by providing technical, legal and policy support for the development of a law that embodies minimum international standards for fair and effective compulsory acquisition procedures. Equally im- portantly, international valuation standards should be applied for defining land acquisition compensation. Electricity 192. While Myanmar has abundant hydropower and natural gas resources, as well as significant potential for renewable sources of energy, many firms in the country suffer from electricity outages. The development of energy resources in Myanmar has been largely driven by plans to export power to its neighbors. The government now recognizes the crucial importance of improving access to energy for economic growth and poverty reduction. Regarding electricity, several issues are beyond the scope of this report but worth flagging. These include: (i) the relationships with Thailand and China; (ii) the status of subsidies on electricity tariffs; and (iii) the role of civil society and ethnic armed groups with regards to the development of hydroelectric power. In addition to the Ener- gy Sector Master Plan, the Power Sector Master Plan and the National Electrification Plan, the following further reforms would also help to improve access to energy. 193. As a first priority, existing gas-fired power plants should be made more efficient and better able to work at higher capacity, while the problem of transmission losses should be addressed. The existing gas-fired power generation plants are obsolete and operate at a half of their nominal capacity and very low efficiency levels (less than half of standard efficiency of modern plants). The overall efficiency of the power supply system is fur- ther reduced by large losses (25 percent) in the transmission and distribution networks. Therefore, increasing the efficiency and capacity of existing gas-fired power plants and cutting losses during transmission and distribution should be prioritized. The overall objective should be to reduce electricity shortages, balance supply and demand, 50 Myanmar Investment Climate Assessment and improve the reliability and quality of the domestic power supply. 194. The government should aggressively pursue the implementation of the National Electrification Plan (NEP) in order to reduce the rural-urban divide and eliminate absolute energy poverty. NEP implementation will require institutional reforms and investment activities, so that access to grid-based and off-grid electricity can be scaled up, particularly in rural areas. Affordability barriers are likely to be significant in these areas, requiring efficient and targeted subsidies. The on-going Poverty and Social Impact Assessment in the power sector should provide key inputs for further policy recommendations on the design and implementation of subsidies. These inputs will help design policies that protect the poor and vulnerable groups from future tariff increases, while en- suring that the electrification program benefits them as well. The support of development partners will be crucial in order to enable faster implementation of the NEP. 195. The private sector should be encouraged to play a key role in meeting large investment needs in the energy sector. The investment needs in the energy sector (particularly gas and power) are huge and growing rapidly. If the government is to achieve its target average annual GDP growth rate of 7.7 percent, then annual elec- tricity demand of about 10 percent will need to be met. In order to achieve this, the government plans to attract independent power producers (IPPs) and promote public-private partnerships (PPP)—a PPP framework is in devel- opment—to accelerate construction of modern power generation projects and reduce distribution losses. Support from development partners, including IFC and MIGA from the WBG, should continue. For example, this could be through support in introducing a transparent and efficient competitive process for selection of IPPs, long-term financing support including through MIGA guarantees, corporatization of the Yangon Electricity Supply Board (YESB) and facilitation of the commercialization and efficiency improvements in the future Yangon Electricity Supply Corporation (YESC). 196. It is crucial to build institutional capacity in the energy sector, particularly from the perspective of environmentally and socially sustainable development. Energy choices have significant environmental and social impacts that require comprehensive assessment and adequate mitigation measures. The legal and regulatory framework and adequate institutional capacity for dealing with environmental and social impacts of energy proj- ects, such as hydropower, are cornerstones of sustainable sector development. Therefore, institutional develop- ment and capacity-building in this area are essential to ensure the sustainability of energy solutions. Skills 197. Myanmar faces a challenge of improving the quality of education so as to equip workers with the skills that are demanded by the labor market. Employers in Myanmar find it difficult to hire workers with the required skills and are highly critical of the quality of the education system. There is a skills gap indicating that the education system is not responsive to labor market demands. It does not produce enough workers with up-to- date knowledge and the level of skills needed in the workplace. Addressing this challenge is critical for improving the productivity and competitiveness of Myanmar’s firms, especially those operating in the modern and growing sector of the economy. There are two policy priorities associated with the improvement of workforce skills and their labor market relevance. First, the education system needs to be reformed so as to make it more responsive to the changing labor market demand. Second, the quality and scope of labor market information has to be improved. Both priorities are closely related. 198. Myanmar should promote regular institutionalized interactions between firms and representatives of educational institutions. It is critical for the educational system to have information on the demand for skills and to incorporate this information into the curricula design. In order to make the education system more responsive to labor market needs, employers need to be actively and systematically involved in the process of curricula design. This is the way to ensure that students are equipped with the knowledge- and job-related skills that are needed in the workplace. The general education system needs to teach students not only basic but also higher-order cognitive skills (such as problem-solving, creative and critical thinking), as well as socio-behavioral skills (such as work eth- ics, team-work and communication skills) that are required in the modern workplace. The vocational and technical education and training systems need to provide students with adequate occupation specific technical skills (such 51 Myanmar Investment Climate Assessment as skills of a mechanic, electrician, IT specialist). The worlds of education and work need to be brought closer to- gether. The key point is that educators need to regularly communicate with employers in order to learn about their demands and to revise the curricula accordingly. The National Skill Standards Authority (NSSA) is well-placed to facilitate this dialogue and help ensure that vocational curricula meet the needs of the labor market. 199. Private-public partnerships (PPP) should be considered as an alternative in developing and improv- ing technical and vocational institutions. The recent PPP in education involving PepsiCo, UNESCO, and the Myanmar Ministry of Education was celebrated in September 2014 by the launch of Myanmar’s first Centre of Excellence for Business Skills Development (CEBSD).14 The establishment aims to expand employment prospects for youth in Myanmar by offering courses and training especially focusing on business skills, career counselling, and networking opportunities. It will facilitate the development of industry-responsive vocational training courses to prepare young people entering the workforce. In addition to PPP, various cost-sharing arrangements and in- come-generation programs aimed at higher education institutions should also be explored by taking into account the involvement of all stakeholders in education. 200. The introduction of a national skills training program to improve labor outcomes should be con- sidered. There is a gap in providing skills for those seeking jobs and the needs of the labor market. International experience shows that non-formal skills training interventions (for example, the Jóvenes programs in Latin Amer- ica) can be successful in improving labor market outcomes both for participants and for firms. Rather than simply providing classroom-based learning, these programs offer a broader array of services that include: internships, job search assistance, on-the-job training, and wage subsidies. 201. Better labor market information is necessary to inform education, training and employment policies, and to guide career choices of students. By facilitating rational choices of labor market actors, better information contributes to reducing the mismatch between the supply of and demand for different occupation and skills. The demand for skills is constantly changing due to technological progress and economic restructuring. Thus, in order to make informed choices, the stakeholders (education and training authorities, students, jobseekers, vocational counselors and job brokers) need to know what are the occupations and skills for which the demand is grow- ing, and for which it is falling. The information on occupational trends can be either quantitative or qualitative. Quantitative information comes from regular labor market monitoring and shows trends (past and projected) in employment, unemployment, job vacancies and wages by occupation. Qualitative information comes from focus group discussions with employers and shows their expectations concerning changes in the demand for different occupations and skills in relation to the current supply. Both approaches allow one to determine (although with different degrees of precision) the occupations in short and excess supply. Compared with quantitative methods, qualitative methods provide a better insight into the specific skills that employers demand. Additional information on career prospects associated with a choice of different types of schools and fields of study comes from graduate tracer studies, which have recently gained in popularity. 202. The government plays a critical role in generating (directly or indirectly) and disseminating infor- mation on labor market conditions. Labor market observatories are institutions established in many countries in order to improve the quality and scope of available labor market information and to analyze labor market de- velopments. Their analysis is tailored to the diverse needs of various users (government agencies including public employment services, education and training institutions, investors, etc.). It is also critical that the relevant labor market information reaches students and job seekers so that they can make informed career choices. This function of turning information into knowledge is played by career development centers, as well as by public employment services. These institutions still need to be developed in Myanmar to address the skills mismatch and improve worker-job matching. 203. Additional work will be needed to develop more detailed policy recommendations along the priorities outlined here in order to improve the access to skilled worker for Myanmar. 14 Source: http://www.unescobkk.org/news/article/public-private-partnership-in-education-pioneered-with-the-launch-of-the-centre-of-excellence-for-bu/ last accessed 2014/11/02 52 Myanmar Investment Climate Assessment 4.3 Policies to improve direct oversight of the economy Regulation 204. As highlighted in the Enterprise Survey, regulatory barriers are holding back the private sector. There is a need to develop the manufacturing sector, expand SMEs, and exploit business opportunities created by the country’s growing engagement with the global economy. Looking at the regulation of firms and the regulation of investment, the following recommendations emerge. 205. As a matter of priority, reforms of the stock of existing business regulation should be continued and accelerated. The recent DB report, this ICA, and a forthcoming diagnostic on trade can give specific guidance for the government in further pursuing the urgent reforms of existing business regulation. In particular, the recently formed Private Sector Development (PSD) Committee of the government will need to carry out its mandate to provide needed coordination of regulatory reform, identify reform options and track progress on reform imple- mentation. The PSD Committee is in a position to formulate a reform action plan targeting at first Doing Business indicators and expanding to a wider reform agenda based on other diagnostics and then, crucially, the Myanmar Business Forum dialogue. These reforms should include trade-related regulations, as identified in the forthcoming diagnostic. Overall, the focus on follow-up and implementation, along with the engagement of all stakeholders cannot be overemphasized. 206. The government should further rationalize the current regulatory framework governing investors’ entry and operations and ensure easy access to, and wide comprehension of, relevant laws. The regulatory framework governing investors’ entry and operations remains unnecessarily complicated. There is considerable scope for further rationalization of the regulations to make them simpler to follow, while at the same time access to the relevant regula- tions and laws should be made more accessible by making them available on the websites of government agencies. The framework should be simple, straightforward and designed to inform investors in a practical and accessible way. 207. Specifically, progress towards a unified Investment Law should be continued with prudence. The gov- ernment is currently developing the foundations and principles for improved investment policy, with support from development partners, including the WBG and the OECD. This work includes combining the Foreign Investment Law and the Citizen Investment Law into a new unified Investment Law, revising screening and approval proce- dures for investment, assessing investment protection gaps, and decoupling incentives from the approval process. The government is also reviewing the role of relevant agencies that are responsible for investor protection and engaging them in future reforms. 208. The government should accelerate its efforts to improve administrative processes governing domes- tic and foreign investment. Through simplification of procedures and establishment of supporting mechanisms around investment entry and protection, Myanmar can become far more attractive for both domestic and foreign investment. One example relates to the role of MIC in screening investments. Currently, MIC screens all invest- ments regardless of the size and level of sensitivity. Numerous screening and reporting requirements add signifi- cant administrative costs for investors. On average it takes six months to obtain MIC approval. Sharpening MIC’s focus so that it approves only sensitive and large projects and implementing streamlined procedures for other projects would reduce the burden on both investors and the government, as would reforms to eliminate any unnec- essary steps in the approval process. 209. Investment incentives need to be rationalized and used more sparingly. Currently, incentives in the form of tax holidays and duty exemptions apply to all approved projects and are not used in a selective manner to promote strategic sectors. The IMF estimates that 6.9 percent of total tax revenue is foregone as a result of tax exemptions and tax collection (excluding royalties from natural resources) was only 3.4 percent of GDP in 2010. The government should identify strategic sectors where incentives would be beneficial and rationalize incentives in sectors where incentives are not warranted. 53 Myanmar Investment Climate Assessment Taxation 210. As the government is encouraging greater participation of the private sector in the economy, a more deliberate and more sophisticated approach to collecting taxes is needed. The following key areas for further reforms should be considered. 211. As a matter of priority, the development of the overall tax administration reform plan should be finalized rapidly and its implementation initiated. The draft strategic plan for the reform of the Internal Reve- nue Department (IRD) is currently awaiting approval. Key elements of the plan are the roll-out of the functional organizational structure, the move to overall self-assessment, the improvement of staff skills, and the introduction of an integrated tax administration IT system. International experience shows that such a strategic plan is an ef- fective tool to set clear reform objectives and the sequencing of prioritized activities within an appropriate time frame. Indicators, such as increased tax revenue, raised taxpayer awareness, higher levels of taxpayer compliance, and improved efficiency and effectiveness of internal processes, all need to be included. The strategic plan should also help the tax administration to secure sufficient human and financial resources to effectively implement its responsibilities, and also establish how to coordinate with various other members of the state apparatus to work harmoniously towards achieving the same goals. An in-depth diagnosis aimed at identifying major problems and defining reform objectives is a crucial first step in developing such a plan. 212. As part of the strategic plan implementation, a number of technical recommendations should be adopted. Implementation of the strategic plan should focus on the following issues: (i) simplify the complexity of Myanmar’s current tax laws; (ii) develop programs to provide higher quality services to taxpayers and also education programs about tax and tax compliance; (iii) build capacity in the tax administration staff to improve the currently low levels of integrity and professionalism; (iv) revise the current penalty system so it is no longer punitive and unfair; (v) strengthen systemic weaknesses in auditing programs; and (iv) introduce an integrated tax administration IT system. The support of development partners should be solicited for the implementation of reforms to address these issues. 213. In the medium term, new medium and small taxpayer offices should be established, after the success of the pilot of the large taxpayer office. With the recent establishing of the large taxpayer office organized along functional lines and servicing about 460 large firms, the government should move on to establish functionally or- ganized medium and small taxpayer offices. The roll-out to medium and small firms will require the building of an integrated computerized data management capacity within the IRD. 2014. A simplified tax regime specifically designed for small firms should be introduced. In view of the current complexity of the taxation regime and given the capacity constraints of small firms in Myanmar, there is a strong case for developing a simplified tax system specifically designed for small firms. This would not only help to broaden the tax base, but would also increase the levels of tax compliance among small firms. 215. In the medium to longer term, focus should turn to the commercial tax, the income tax, and the excise tax. The existing commercial tax should be replaced with a new value-added tax (VAT). This will first require the building of administrative capacity to implement a VAT administration. The Income Tax Law should be revised with a view to making it clearer and providing a more transparent definition of the income tax regime. This should reduce the possibilities for tax planning and tax avoidance. The revised Income Tax Law should also incorporate the simplified tax regime for small firms. The current excise tax regime should also be reformed. 216. Building a culture of tax compliance through concerted outreach activities will be a valuable comple- ment to the broader tax reforms. The government should design an outreach program to raise awareness among businesses of the need for tax compliance and the consequences of tax evasion. 54 Myanmar Investment Climate Assessment Corruption 217. Corruption is a huge and complex problem in Myanmar, and one that is also intertwined with the areas of regulation and taxation discussed above. There are a number of additional steps that Myanmar should take to strengthen its fight against corruption—efforts that should be supported by development partners. 218. As an easy and quick fix, the mandate for government agencies to procure goods and services from state- owned or military-owned enterprises should be dropped. While establishing proper procurement processes and capacity takes some time, any formal directive that disadvantages private firms should be dropped. In the medium term, efforts should be undertaken to make sure the capacity and the practice exists for the government to procure from the private sector on a regular basis. 219. Starting now, all stakeholders should be encouraged to critically review the operations of Myanmar’s new Anti-Corruption Commission. The quality of the new commission’s work will be critical in the fight against corruption. Its independence, in particular, should be scrutinized on an ongoing basis to ensure the Anti-Corruption Commission can carry out its mandate and can work to fight impunity in an effective and meaningful way. This will be crucial in overcoming public skepticism that the commission is a toothless body. The government should encour- age not only private sector associations, but also civil society organizations more broadly to engage on this topic. 220. The government should be encouraged to draft a freedom of information law to enable public scru- tiny of government documents. Public participation and debate should be encouraged in both the government’s law-making and decision-making processes, with ample space provided for civil society and the media. Such participation would be supported by the introduction of freedom of information laws. While Myanmar’s Central Statistical Organisation occasionally provides some country-specific information to development partners and multinational agencies, members of the Myanmar public are prevented from accessing government documents showing public revenue, public expenditure and government procurement details. Without a public reporting sys- tem enshrined in freedom of information laws, corruption in Myanmar will likely remain widespread and continue to be a major obstacle for firms in the private sector and future investment in the country. 221. Anti-corruption mechanism such as the Extractive Industries Transparency Initiative (EITI) should be encouraged and not allowed to be compromised. Myanmar needs to continue to establish credible anti-cor- ruption mechanisms, such as it has recently started to do with its application to join EITI. Great care will be needed for the appointment of civilian or independent members to EITI’s high-level committee responsible for overseeing the EITI’s implementation. The appointment of individuals who are perceived to be less independent should be avoided (e.g. former military generals who were once on EU and US blacklists). It will be critical to maintain mo- mentum and to win credibility in the fight against corruption. Summary of recommendations 222. The reform agenda, as it is outlined here, is broad and ambitious. So far, the government has, by and large, shown a remarkable willingness to maintain a high pace of reforms. Much has already been accomplished. Yet, as the ES analysis in the ICA clearly shows, much more remains to be done. The technical challenges them- selves are formidable. In the end, however, the real challenge in fully implementing reforms will be political. It is the common tension in countries seeking to transition to modern economies and to a fair, transparent investment climate. Only with an empowered group of capable and non-corrupt regulators is such a transition possible. The government needs to reconcile this imperative for professionalism within its ranks, on the one hand, with the lega- cy and the demands of formidable patronage networks, on the other. How this tension is reconciled will ultimately determine whether Myanmar’s staggering potential can be realized. 223. Among the urgent reforms to improve Myanmar’s investment climate, clear priorities can be identified. The reforms represent a range of actions required, from more immediate policy or regulatory changes to longer-term large-scale investments. The table below summarizes the report’s recommendations and distinguishes between reforms that are first priority and/or have some potential to show results sooner, vs. reforms that will take more time to show results. 55 Myanmar Investment Climate Assessment Myanmar Investment Climate Assessment Table Table7: 7:Summary Summary ofrecommendations, of recommendations,incl. incl. prioritization prioritization Recommendation Timeline / status First priority and quick wins Start dialogue forum for investment climate reform Ongoing – Myanmar Business Forum is being A credible public-private dialogue for stakeholder engagement established. Public and private stakeholders now on investment climate reforms is needed. have to make it work. Eliminate harmful rule Quick win – This restriction should be dropped, Mandate for government to procure goods and services from as it is not compatible with the government’s state-economic enterprises should be dropped. goals. Strengthen financial system oversight Start now – Building capacity to bring banking Empower capable bank supervisors, for example through supervision up to international standards takes partner- and mentor-ships with supervisors internationally. time; an urgent undertaking. Improve efficiency of existing power infrastructure Being initiated – Amid other urgent needs in the For example by increasing capacity of existing gas-fired power energy sector, improvements of existing plants and reducing transmission losses. infrastructure should be prioritized. Simplify business regulation To be accelerated – With established Business Better implementation is needed, for example by enforcing Forum and PSD Committee pace of regulatory standard procedures in day-to-day regulatory work. reform can be increased. For access to land: simplify registering property Reform blueprint readily available – The Process for transferring land use rights should be made more Doing Business report provides guidance on the transparent, easier, cheaper, and quicker. needed reform steps. Put in place tax administration reform plan To be accelerated – As initial reforms have Clear plan to guide ongoing and future reforms is needed. started, clarity on next steps is needed. Encourage broad engagement on anti-corruption Needs to be revitalized – Public participation Full stakeholder involvement is critical to success, for example can give credibility, e.g. to drafting of a freedom through the Anti-Corruption Commission. of information law. Reforms with longer time horizon Build core financial infrastructure, for example by Financial sector reforms are ongoing. establishing an interbank market and payments system, and Sequencing matters, with supervision and basic reforming collateral registration systems. infrastructure being first on the list. Improve land tenure security for all, by addressing land Ongoing reform efforts should be supported, comprehensively including governance review, system for ensuring benefits from reforms are shared by all; registration and cadaster, and legislative reform. and processes are simplified. Implement National Electrification Plan, including Upgrading generation and transmissions involvement of the private sector, for example by preparing the capacity will require time, resources, and financing for the huge investment needs. expertise from different sources. Improve education for the workplace, for example by Additional analytical work needed in order to improving information exchange on labor market conditions, develop more detailed recommendations, and and between firms and educational institutions. define appropriate government role. Pursue further reform for regulation of businesses and Even where the government should be doing less investment, with strong focus on full implementation and on (simplified processes) establishing required building capacity for new role of the state. capacity and processes takes time. Simplify tax laws and revitalize taxpayer offices, following Building on initial reforms, tax system overhaul the pilot of the large taxpayer office. is needed. Continue anti-corruption efforts, as a part of overall reform, Implementation of EITI should be broadened by for example by further encouraging transparency across all appointing civilians or independents to oversight government agencies. committee. 67 56 Myanmar Investment Climate Assessment References ADB, 2012. Myanmar: Energy Sector Initial Assessment. ADB, 2014. Myanmar Country Diagnostic Study: Unlocking the Potential. ABD, 2014. Myanmar One Pager Business Census 2013-2014, First General Report. ADB, GIZ and UNESCO, 2013. Myanmar Comprehensive Education Sector Review (CESR) Phase 1: Rapid Assessment. Techni- cal Annex on TVET Subsector Analysis – Policy, Legislation, Management & Service Delivery. Asia Society Policy Institute, 2013. Sustaining Myanmar’s Transition: Ten Critical Challenges. The Brookings Institution, 2012. The Myanmar Economy: Tough Choices. Working Paper, September 2012. DICA, 2014. http://dica.x-aas.net/dica/ Government of Myanmar, 2012. Framework for Economic and Social Reforms: Policy Priorities for 2012-15 towards the Long- Term Goals of the National. The Heritage Foundation, 2013. Economic Freedom Index. Jones, Lee. 2013. The Political Economy of Myanmar’s Transition. Journal of Contemporary Asia. Kaplan, David, and Vikram Pathania, 2010. What influences firms’ perceptions? Journal of Comparative Economics, 38 (2010) 419–431. Masato, Abe and Madhurjya Kumar Dutta, 2014. A New Policy Framework for Myanmar’s SME Development. Working Paper Series No. 142, Bangkok, UNESCAP. McKinsey Global Institute, 2013. Myanmar’s Moment: Unique Opportunities, Major Challenges. OECD, 2014. Investment Policy Review: Myanmar. OECD and UNESCAP, 2013, Multi-Dimensional Review of Myanmar Vol. 1, Initial Assessment. OECD and UNESCAP, 2014. Myanmar Business Survey 2014. PwC, 2014. Myanmar Business Guide. Transparency International, 2013. Corruption Perceptions Index. UNCTAD, 2014. World Investment Report 2014. UNDP, 2014. Myanmar One Pager Business Census 2013-2014: First General Report. World Bank, 2014. Lao People’s Democratic Republic Development Report 2014: Expanding Productive Employment for Broad- Based Growth. Report No: ACS9577. World Economic Forum, 2014. Global Competitiveness Index 2014-2015 Rankings. WTO, 2014. Trade Policy Review: Myanmar. 57 Myanmar Investment Climate Assessment Annex – methodological notes on the Enterprise Survey The following methodological details are largely based on the implementation report for the 2014 Myanmar En- terprise Survey and on the Block Enumeration Report. The data and further details on the survey and methods are available at www.enterprisesurveys.org. Sampling Structure The sample for Myanmar was selected using stratified random sampling. Stratified random sampling was preferred over simple random sampling for several reasons: a. To obtain unbiased estimates for different subdivisions of the population with some known level of precision. b. To obtain unbiased estimates for the whole population. The whole population, or universe of the study, is the non-agricultural economy. It comprises: all manufacturing, construction, services, and transport, storage, and communications sector. Note that this definition excludes the following sectors: financial intermediation, real estate and renting activities, and all public or utilities-sectors. c. To make sure that the final total sample includes establishments from all different sectors and that it is not concentrated in one or two of industries/sizes/regions. d. To exploit the benefits of stratified sampling where population estimates, in most cases, will be more precise than using a simple random sampling method (i.e., lower standard errors, other things being equal.) e. Stratification may produce a smaller bound on the error of estimation than would be produced by a simple random sample of the same size. This result is particularly true if measurements within strata are homogeneous. f. The cost per observation in the survey may be reduced by stratification of the population elements into convenient groupings. Three levels of stratification were used in this country: industry, establishment size, and region. Industry stratifi- cation was designed in the way that follows: the universe was stratified into one manufacturing industry, and two service industries (retail, and other services). Size stratification was defined following the standardized definition for the rollout: small (5 to 19 employees), medium (20 to 99 employees), and large (more than 99 employees). For stratification purposes, the number of employees was defined on the basis of reported permanent full-time workers. This seems to be an appropriate definition of the labor force since seasonal/casual/part-time employment is not a common practice, except in the sectors of construction and agriculture. Regional stratification was defined in 5 regions (city and the surrounding business area) throughout Myanmar. Sampling implementation Given the stratified design, sample frames containing a complete and updated list of establishments as well as information on all stratification variables (number of employees, industry, and region) are required to draw the sample. Great efforts were made to obtain the best source for these listings. In consultation with the contractor, the World Bank decided to undertake block enumeration, i.e. the contractor would physically create a list of establishments from which to sample from. In total, the contractor enumerated 8,130 eligible establishments for the survey fieldwork; the block enumeration elicited firms for both the Enterprise Survey and the Microenterprise Survey (a total of 6,595 registered businesses), as well as the Informal Survey (1,535 unregistered businesses). Since there isn’t any government list or database in Myanmar which allows categorizing firms as per their level of employment and sector, the list generated from the block enumeration serves as the sample frame. The list con- tained the following information: 59 Myanmar Investment Climate Assessment • Business name; • Business address; • Business sector classification code; • Total numbers of employees; • Registration status Note that businesses were classified as formal enterprises if they were registered with either (i) DICA, (ii) Direc- torate of Industrial Supervision and Inspection of the Ministry of Industry, or (iii) City Development Committees or Department of Development Affairs. Figure 50 below summarizes the sampling approach: Figure 50: Figure 50: Summary Summary of sampling of sampling approach approach It should be noted that three quarters of firms surveyed are registered only with the City Development Committee or Department of Development Affairs. In addition to the firms included in the sample frame (regular and micro samples), another 19 percent of firms were not registered anywhere; completely informal. Just under 20 percent is probably a lower-bound estimate, since the block enumeration (i.e., a door-to-door “census” of all firms in each chosen block) only targeted firms that were readily identifiable as such. Of the registered businesses, the ES esti- mates that there are around 30,000 firms in the five surveyed metropolitan areas. The following section provides additional detail on the block enumeration, based on the Block Enumeration Re- port. Block enumeration The first task of block enumeration was obtaining aerial map of the 5 cities and dividing into blocks and then clas- sifying blocks by using local knowledge into different business types. A total of 485 blocks were obtained after carrying out the block enumeration stage. Random selection of the 52 pilot blocks was done using a column of random numbers and then sorting the list. The second task was to randomly select 20 pilot blocks in two cities, Yangon and Bago, from the list among the blocks and undertake full enumeration. Undertaking full enumeration of the 20 pilot blocks is essential because 1) 60 Myanmar Investment Climate Assessment it starts the process of block enumeration, 2) it allows the researchers to double-check the classification of blocks in stage 1 for those 20 blocks and may cause reclassification of other blocks, 3) allows the researchers to have a glimpse of on average, the number of eligible sector-specific business establishments in each block type. The third task was to carry out the pilot census study using a combination of visual surveys and face-to-face inter- views by the enumerator at the randomly selected 20 blocks. Later, the actual enumeration census was conducted over randomly-selected 32 blocks in 5 cities. Issues during Division of Blocks Clusters in Yangon and Mandalay were divided into blocks based on its townships, i.e., for Yangon, there are 31 townships according to Yangon City Development Committee and therefore, there are 31 clusters in Yangon. How- ever, in remaining three cities, Bago, Monywa and Taunggyi, the clusters are based on wards unlike Yangon and Mandalay. The constraints in dividing clusters into blocks, it is difficult to set clear area boundary of blocks due to its city area and other geographic area. Therefore, by using aerial maps, clusters were divided into blocks defined by practical boundaries such as ward and township boundary. From a total of 104 clusters and 485 blocks, 52 blocks were randomly selected. A total of 18 enumerators (9 teams of two enumerators each) were used during block enumeration across over 4 weeks. Each of the teams were sent out to their respective area of blocks, all later finish to help with enumeration of larger clusters/blocks in Yangon after finishing their respective blocks. The teams conducted the survey within 2 week simultaneously at 5 cities. The enumeration of enterprises was carried out. A total of 9,300+ enterprises were enumerated during the block enumeration process from the selected 52 blocks. The data process team consisted of 5 people, supported by 2 people for verification of enterprise information during the data entry process. The block enumeration data was entered into data-entry forms. The data were en- tered as block enumeration progressed along with simultaneous verification and cross checking. The verification and filtration process removed 884 enterprises based on their non-eligibility (e.g. due to business type: clinic, poly- clinic and special clinic, beauty spa, barber shop and education agency and copying and typing business, which are excluded from ES) to end up with a total of 8,481 enterprises in the final database. The following issues arose during Block Enumeration: • During enumeration, since residential and businesses are mixed together, it was difficult to find espe- cially in residential wards or street. • Majority of factories were shut down and security or others present could not answer the questions. • The main factor of formal or informal businesses is based on “Registration in Directorate of Invest- ment and Company Registration (DICA) and got Business License from City Development Commit- tees and Development Affairs”. • It was seen that there was a sense of hesitancy, especially in retail business to state the number of employee and they usually “would like to identify themselves as small”. Combination of enumerators’ observation and numbers provided by the enterprises were used to get to the number of employees. • For the number of employees, the permanent and temporary staff are mixed and the answers tend to consist both. So it was essential to ask clearly how many are permanent and how many are temporary. • Some businesses refused to participate since they do not have any experience like this type of survey before. • Businesses such as barber shop, education agency, clinic, watch repair and co-employee which are not eligible, were not enumerated. • Retail business, mostly comprises of provisions stores and clothing store and are often managed by owners themselves, along with their family. Thus, many more people are involved in the business than 61 Myanmar Investment Climate Assessment actual “employees”. • In retail business size of the employees seems to be a very bad indicator for size of the business vol- ume or size of the business. • Getting in touch with relevant person to answer about the business usually prolongs the process more than planned. Myanmar Investment Climate Assessment Counts from the blocks enumeration are shown below for formal enterprises. Counts from the blocks enumeration are shown below for formal enterprises. Table Table8: Sampleframe 8:Sample frame Region Employees Manufacturing Retail Other Services Grand Total Yangon 1-4 233 1,402 789 2,424 5-19 712 415 799 1,926 20-99 474 18 139 631 100+ 194 3 8 205 Total 1,613 1,838 1,735 5,186 Mandalay 1-4 9 124 80 213 5-19 29 37 84 150 20-99 46 0 11 57 100+ 8 0 1 9 Total 92 161 176 429 Bago 1-4 4 118 113 235 5-19 6 9 29 44 20-99 1 2 3 6 100+ 0 0 0 0 Total 11 129 145 285 Taunggyi 1-4 13 107 111 231 5-19 43 1 29 73 20-99 5 0 3 8 100+ 0 0 0 0 Total 61 108 143 312 Monywa 1-4 17 77 84 178 5-19 92 25 75 192 20-99 11 1 1 13 100+ 0 0 0 0 Total 120 103 160 383 Grand Total 1,897 2,339 2,359 6,595 62 73 Myanmar Investment Climate Assessment Myanmar Investment Climate Assessment Theenumerated The enumerated establishments werethen establishments were used thenused as as the the frame frame for for the the selection selection of of a sample a sample with with the the aimaim of of obtaining interviews at 1,092 establishments. The quality of the frame was assessed at the onset of the project through visits obtaining interviews at 1,092 establishments. The quality of the frame was assessed at the onset of the to a random subset of firms and local contractor knowledge. project through visits to a random subset of firms and local contractor knowledge. Table Table9: Achieved sample 9:Achieved sample Region Employees Manufacturing Retail Other Services Grand Total Yangon 1-4 70 65 24 159 5-19 81 45 38 164 20-99 62 15 34 111 100+ 95 1 4 100 Total 308 126 100 534 Mandalay 1-4 14 46 26 86 5-19 27 31 35 93 20-99 17 2 9 28 100+ 4 4 Total 62 79 70 211 Bago 1-4 4 35 32 71 5-19 5 6 19 30 20-99 0 4 2 6 100+ 0 0 0 0 Total 9 45 53 107 Taunggyi 1-4 8 23 33 64 5-19 30 2 8 40 20-99 4 0 2 6 100+ 0 0 0 0 Total 42 25 43 110 Monywa 1-4 28 22 30 80 5-19 22 16 7 45 20-99 3 1 1 5 100+ 0 0 0 0 Total 53 39 38 130 Grand Total 474 314 304 1,092 74 63 Myanmar Investment Climate Assessment Weights Since the sampling design was stratified and employed differential sampling, individual observations should be properly weighted when making inferences about the population. Under stratified random sampling, unweighted estimates are biased unless sample sizes are proportional to the size of each stratum. With stratification the proba- bility of selection of each unit is, in general, not the same. Consequently, individual observations must be weighted by the inverse of their probability of selection (probability weights or pw in Stata). Once an accurate estimate of the universe cell (projections) was available, weights were computed using the number of completed interviews. Universe Estimates Given the impact that non-eligible units included in the sample universe may have on the results, adjustments may be needed when computing the appropriate weights for individual observations. The percentage of confirmed non-eligible units as a proportion of the total number of sampled establishments contacted for the survey was 1.8% (24 out of 1365 establishments), based on out of target contacts and impossible to contact establishments (the firm discontinued businesses or was unattainable, education or government establishments, establishments with less than 5 employees, no reply after having called in different days of the week and in different business hours, no tone on the phone line, answering machine, or fax line, wrong address or moved away and could not get the new references). The information required for the adjustment was collected in the first stage of the implementation: the screening process. Using this information, each stratum cell of the universe was scaled down by the observed proportion of ineligible units within the cell. Once an accurate estimate of the universe cell (projections) was available, weights were computed using the number of completed interviews. Universe estimates for the number of establishments in each cell in Myanmar were produced based on strict, me- dian and weak eligibility definitions. The estimates were the multiple of the relative eligible proportions. For some establishments where contact was not successfully completed during the screening process (because the firm has moved and it is not possible to locate the new location, for example), it is not possible to directly deter- mine eligibility. Thus, different assumptions about the eligibility of establishments result in different adjustments to the universe cells and thus different sampling weights. Three sets of assumptions on establishment eligibility are used to construct sample adjustments using the status code information. Strict assumption: eligible establishments are only those for which it was possible to directly determine eligibility. Median assumption: eligible establishments are those for which it was possible to directly determine eligibility and those that rejected the screener questionnaire or an answering machine or fax was the only response. Weak assumption: in addition to the establishments included in points a and b, all establishments for which it was not possible to contact or that refused the screening questionnaire are assumed eligible. This definition includes as eligible establishments with dead or out of service phone lines, establishments that never answered the phone, and establishments with incorrect addresses for which it was impossible to find a new address. Under the weak assumption only observed non-eligible units are excluded from universe projections. The indicators computed for the ICA, as well as the indicators computed for the Enterprise Survey website use the median weights. The table of population estimates below also uses median weights. 64 find a new address. Under the weak assumption only observed non-eligible units are excluded from universe projections. Myanmar Investment Climate Assessment The indicators computed for the ICA, as well as the indicators computed for the Enterprise Survey website use the median weights. The table of population estimates below also uses median weights. Table 10: Firm population estimates Table 10: Firm population estimates Region Employees Manufacturing Retail Other Services Grand Total Yangon 1-4 457 7,616 3,342 11,414 5-19 1,488 2,405 3,610 7,502 20-99 903 95 573 1,572 100+ 414 18 37 468 Total 3,262 10,134 7,561 20,957 Mandalay 1-4 24 1,217 502 1,743 5-19 83 387 561 1,032 20-99 120 0 67 187 100+ 23 0 0 23 Total 250 1,605 1,130 2,984 Bago 1-4 17 1,144 560 1,721 5-19 28 93 153 274 20-99 4 19 15 38 100+ 0 0 0 0 Total 48 1,257 728 2,033 Taunggyi 1-4 18 995 483 1,496 5-19 63 10 135 207 20-99 7 0 12 19 100+ 0 0 0 0 Total 88 1,004 630 1,723 Monywa 1-4 19 453 248 721 5-19 110 157 236 503 20-99 12 5 3 20 100+ 0 0 0 0 Total 141 616 487 1,243 Grand Total 3,789 14,616 10,536 28,941 76 65 Myanmar Investment Climate Assessment Trade and Competitiveness Global Practice East Asia and Pacific Region World Bank Group Myanmar The World Bank No.57, Pyay Road (Corner of Shwe Hinthar Road) 1818 H Street, 61/2 Mile, Hlaing Township, Yangon NW USA Washington, DC 20433. Republic of the Union of Myanmar Phone: (202) 473-1000. Phone: +95(1) 654 824 Fax: (202) 477-6391. www.worldbank.org/myanmar Website: www.worldbank.com