Business Sector Optimistic But Wants Clarity

​​

The absence of a clear economic policy and an unpredictable legislative environment are among the key issues for local and international firms in Myanmar, according to the results of Roland Berger’s first business confidence survey. But most companies polled are still optimistic on the outlook.

The consultancy firm surveyed almost 200 senior executives from local and international firms on a range of business issues during August and September. When it came to barriers to business, the lack of qualified staff was rated the most serious issue, with 85 percent of respondents rating it “significant” or “very significant”.

From food and beverage to information technology, firms say they face a talent war for a limited pool of qualified employees.

The second and third most significant issues were the lack of a “clear government economic policy” and the unpredictable legislative environment. The “selective, unpredictable enforcement of regulations” came fourth.

“It’s confirmation of the point that quite a few things have been done – like the investment law,” said Thomas Klotz, a managing partner for Roland Berger in Southeast Asia. “But more is needed given where the country is coming from and what [the] market expects.”

Some 62pc of respondents were from international firms, and the other 38pc from local companies. But there had been no “significant differences” in responses between the two groups, said Dieter Billen, a principal at the firm’s Malaysia office.

Myanmar passed its long-awaited new investment law in August, and the authorities are in the process of drawing up the rules and regulations. But there remains uncertainty over how much foreign investment the authorities will allow in specific sectors and under what conditions. The retail sector, for example, holds huge potential for foreign firms. But the existing rules governing trading activities are unclear.

The business community is asking “questions about what the rules of the game are”, said Mr Klotz. “Clarifying these rules, policies and conditions – that’s what the business community, local and international, is looking for.”

Respondents pointed to transparent government policy as the most important way for the government to improve the economy. A stable electricity supply, better broadband internet and better transport infrastructure were second, third and fourth respectively.

Despite these uncertainties, Roland Berger found local and international firms optimistic. Some 73pc of respondents expect the business environment to improve, although Mr Klotz believes that had the firm made its survey earlier in the year this figure could have been higher.

“[Our] guess would be that in June or July [optimism] could have been ever higher,” he said. “We’re sensing from our conversations in the market that there’s a bit of nervousness.”

Mr Klotz is confident that the optimism will last, but said that the business sector needs regulators to provide “the right environment”.

“It’s time to make a decision on what the policies should be,” he said.

But while firms wait for clarity over government policy the great majority are still planning to expand. Of the local firms surveyed, 70pc said they were planning to expand operations in the next 12 months. The percentage was even higher for international firms, with 80pc planning to ramp up Myanmar operations in the next year.

“I don’t know any other country in the world right now where you’d get that statistic,” said. Mr Klotz “No-one is really scaling back, [although] some are in the waiting [period].”

The two groups did differ on how they are planning to expand, however.

“Organic growth [is] the number one way of [expanding], but 55pc of local firms are looking for partnerships [with multi-national firms] and only 16pc of international firms are,” said Mr Klotz.

Among international firms 67pc said they would expand using organic growth , while for local firms the figure was 57pc.

International companies surveyed are more open to partnerships with local firms, with 34pc saying they planned to partner with a Myanmar company in order to expand.

Roland Berger did not ask local firms if they were worried about foreign competition for the survey, but Mr Klotz said that from conversations in the market it was clearly an issue.

“If you talk to [local] business people of course it is [a concern],” he said. “Many local firms have to transform themselves from an economy that may not have been as open or competitive to facing competition.”

 

Source: Myanmar Times

 

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, “Puma Energy”, “MOGE”, “yangon new town”,”MECTEL”, “hydropower”, etc.

.

Looking for foreign investors to invest in your business in Myanmar