Businesses worry red tape will remain an obstacle despite reforms

Cutting red tape in line with regional standards is going to be an uphill struggle for many government departments, experts said, as the government has instructed its ministries to simplify bureaucratic procedures to meet ASEAN standards by the end of March.

U Tin Maung Than, director and senior research fellow of Myanmar Development Resource Institute (MDRI), who is involved in the effort, said the initiative came after the World Bank published its annual Doing Business in Myanmar at the end of last year, which ranked Myanmar the 182nd most difficult country, out of 189 countries, to do business in.

“Corruption exists in the government and in the private sector. Corruption and rent-seeking have become part of daily life. Many ministries do not follow the instructions of the president’s office,” he told a seminar on February 24 at the International Business Centre in Yangon.

In identifying the key issues, U Tin Maung Than added that there is a fundamental lack of understanding on the part of the government in how such problems affect policy reforms.

“The previous government issued many regulations related to doing business, which are not necessary and involve too many steps. Other countries conduct a regulatory impact analysis, but Myanmar officials don’t know how.”

One solution discussed at the forum is to decentralise the government in favour of power-sharing between the ministries and other relevant government bodies, said U Tin Htut Oo, chair of the National Economic and Social Advisory Council (NESAC).

“Deciding even a small thing needs an instruction from the minister and the structure of many ministries dates back to the socialist mindset and should be reorganised. Otherwise, it will not be possible to reduce red tape whatever instructions the government sends.”

While the perception of Myanmar among international businesses is unfavourable, local business community leaders said there has been only a minimal reduction in red tape under the current government and remains a constant problem for businesses, which are unable to offer modern services due to outdated policies and bureaucratic practices.

“It’s better than under the previous regime, but at the ground level, when it comes to building permits or money transfers with state-owned banks, there is a lot of paperwork,” said U Nay Lin Zin, secretary general of the management committee for the Shwe Lin Ban industrial estate in Yangon’s Hlaing Tharyar township. “They say they have been eliminating unnecessary procedures, but some of this goes back more than a decade.”

Another such issue is the government’s failure to bring in a letter of credit system to ensure badly needed loans for local companies now worried they will have no access to capital and, in turn, no way to compete with foreign firms.

“Sometimes we find reliable foreign buyers but they want to use the letter of credit system. Although we’ve found a good opportunity, we can’t take advantage of it,” said U Myo Htwe, managing director of locally-based commercial importer-exporter Farmer Phoyarzar Co.

U Than Aung Kyaw, director of the Ministry of Commerce’s Directorate of Trade, said that a lack of modern business practices is not entirely the fault of the government as policies hinge on existing sanctions abroad.

“The government does not allow the letter of credit system because of continuing US sanctions on money transfers and issues related to tax avoidance,” he said. “The ministry will consider allowing letters of credit when Central Bank of Myanmar regulations have been finalised and the US permits money transfers with Myanmar.”

Source: Myanmar Times

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