Businesses demand quicker reforms, policy clarity in 2018

After a somewhat “disappointing” 2017 for the private sector, during which key economic legislation failed to take shape as expected, leading businessmen and chambers of commerce have urged Nay Pyi Taw to be more decisive and efficient in implementing reform in 2018.

Moving forward, the business community wants to see stronger leadership and direction from the government in liberalising individual sectors, accelerating tax, infrastructure and land reforms and implementing the new Companies Law as soon as possible.

But what should the top priorities be for the government in 2018? What can realistically be done to facilitate larger investments and stimulate economic growth this year?

Peter Beynon, chair of the British Chamber of Commerce, said the first priority would be for the government to issue a master plan with a clear mandate and defined objectives for each sector. “What I am seeking is for the government to establish firm objectives and have all ministries focus on achieving these aims,” Mr Beynon said.

Meanwhile, the government should start facilitating communications between the ministries so there are common objectives to be achieved at the different levels and across sectors.“Too often, the ministries are competing for authority and ignoring the overall objective to be achieved,” he added.

He stressed that sectors which have languished and failed to progress in 2017 as a result of Nay Pyi Taw’s inaction include the insurance sector as well as the property sector, in which revision of the condominium law has been “totally ineffective” in helping buyers and investors.

This year, there is a need to focus on developing the utility infrastructure, particularly in power, so investors and corporations can establish manufacturing plants in Myanmar. At the same time, land and tax incentives should be offered to entice businesses to build a base in the country. Access to financing, such as allowing term loans, different forms of collateral and working capital finance, should also be improved, said Mr Beynon.

Barriers to entry

Filip Lauwerysen, chief executive of the European Chamber of Commerce in Myanmar (EuroCham), said the latest business confidence survey conducted by EuroCham suggests that European companies are still facing many challenges and barriers to investment in the country.

Among the anticipated obstacles for investors looking to enter the country this year is inadequate infrastructure, including the lack steady and reliable electricity supply. With frequent power cuts and a highly inefficient power supply, businesses still resort to other alternative sources of electricity, such as generators.

The quality of major roads is also poor. Without a reliable nationwide network, companies are often constrained by high distribution costs associated with inefficient means of transporting goods.

Meanwhile, laws which favour local businesses remain a huge challenge for international investors. In order to protect domestic businesses, the Investment Law restricts foreign participation in various sectors. For example, even though foreign banks have been granted licences to operate in Myanmar’s financial market, they are limited to only providing wholesale services for foreign companies and financial institutions.

The lack of human capital is another problem. Despite a large working-age population, skilled labour is in short supply, a main growth obstacle for many foreign investors.

Additionally, existing laws are outdated and new laws have yet to be enacted. “Even though we do see progress being made by the recent new Investment Law and the drafting of the Intellectual Property Law as well as other liberalisation efforts which are planned for 2018, enforcement of these laws will remain an obstacle as long as the civil servants are underpaid,” the EuroCham chief commented.

In that light, Mr Lauwerysen reckons the top priorities for 2018 should be ironing out regulatory issues, upgrading and improving the labour force and establishing better financial and legal infrastructure to attract foreign investors.

Jodi Weedon, chief executive of the Australian Myanmar Chamber of Commerce, said Nay Pyi Taw should continue to focus on the peace and reconciliation process while, at the same time, work on its economic policies and strengthen the regulatory regime, including “ensuring that new legislation such as the Investment Rules and Regulations and the Company Law are implemented as intended.”

“Meaningful policies”

Business leaders such as the British Chamber chair said the administration should focus on implementing “meaningful policies” which will stimulate and liberalise trade and encourage inward investment. This includes allowing the setting up of bonded warehouses, which allow businesses to store and manage inventories and improve logistics and delivery.

Tomoaki Yabe, managing director of Thilawa-based Daizen Myanmar, the first bonded warehouse operator in the country, said that trade facilitation is one area that the government should focus on in 2018 to boost investment, adding that bonded warehouse operations will contribute to trade facilitation by easing the flow of goods into and out of the country. For bonded warehouse to work, Nay Pyi Taw should enable the scheme to serve a wide range of goods.

Cyrus Pun, executive director of Yoma Strategic, told The Myanmar Times that legislative and regulatory reform need to be completed and that Myanmar should be actively wooing foreign investors this year.The investment process should be simplified, such as “streamlining the process for approval, especially in the space of infrastructure and manufacturing,” he said.

U Zaw Naing, a leading businessman in the country, said the administration should take measures to reinvigorate the economy and prevent a recession by boosting employment and spending.

In addition to the small and medium enterprise (SME) loan schemes financed by Myanma Economic Bank and the launch of housing projects for the poor, investment incentives and access to financing should be channeled into industry-related activities, such as industrial zone development, industrial loans, machinery and equipment loans, he said.

Funds should also be earmarked for the mechanisation of agriculture, including setting up an agricultural development fund, as well as for vocational training, such as setting up a vocational training or human resources development fund to support private vocational training centres.

U Zaw Naing said while some people blame the Rakhine crisis for the sluggish foreign direct investment inflows, investors from ASEAN and regions such as Hong Kong, China, Korea and Japan may see the vacuum left by western investors as a golden opportunity to secure a foothold in the country.

“We should take advantage of the golden opportunity. For example, the government may encourage the Myanmar private sector to attract FDI by sponsoring them in trade fairs, tourism fairs or investment conferences abroad.

Private sector FDI-promotion grants would be a feasible measure to support the private sector and draw the interest of Asian and east-Asian investors towards the country,” he said.The businessman added that tourism, light industries, individual power producers, mobile money service providers and agriculture deserve special attention and investment this year.

Source: Myanmar Times

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