The Directorate of Investment and Company Administration published a report last week, written with help from the Asian Development Bank, which suggests the government should create a special council and a task force – with the interests of businesspeople clearly represented in both – dedicated to building a stronger Myanmar private sector.
The Private Sector Development Framework and Action Plan, published on the DICA website, highlights the need for high-level and cross-government support in order to boost private enterprise, held back by years of state-centric policies and economic isolation.
On the government side, the action plan recommends a private sector development (PSD) council responsible for setting a reform agenda and monitoring the cross-government approach. The council would have to be able to consult with the private sector, and must include representatives of women in business as well as men.
Private sector representatives, again including businesswomen, would also have to be credibly represented on a task force that would help coordinate PSD policies, and measure targets, outcomes and data.
A government National Strategic Plan for the Advancement of Women, approved in 2013, had several objectives relevant to the PSD action plan, the report said. These objectives included creating mechanisms to ensure equal access to employment opportunities, such as quota systems for women in management and improved hiring process, according to the action plan.
The PSD action plan is also a product of the previous government, which asked the Asian Development Bank for help in mid-2015.
The Mekong Business Initiative (MBI) – an ADB regional technical assistance project – prepared the plan with guidance from the Ministry of Commerce, the Myanmar Investment Commission, and the Union of Myanmar Federation of Chambers of Commerce and Industry.
The MBI works on private sector development across Laos, Vietnam and Myanmar, with a specific focus on improving opportunities for female entrepreneurs.
Consultation took place from June 2015 to March of this year, and although the plan was commissioned under a Union Solidarity and Development Party-led government, it was presented to the incoming National League for Democracy administration.
Since then the ADB has been working with DICA and the Ministry of Commerce to raise awareness of the report and its recommendations, Peter Brimble, the ADB’s principal country specialist for Myanmar, told The Myanmar Times.
Mechanisms allowing government officials and private sector businesspeople to coordinate on the PSD are crucial – regular consultations between representatives of those two groups and development partners are a fundamental part of the action plan.
The plan points to Malaysia, where collaboration between the prime minister’s office, private sector chief executives and the heads of business associations, has been key in boosting private sector development.
Malaysia also adopted monthly high-level working group meetings, a separate public-private task force, and dedicated government “delivery units” charged with implementing reforms.
Meanwhile, many of the actual reforms the framework highlights as necessary to allow Myanmar’s private sector to thrive are those already identified by development agencies – including the ADB – and the government.
The framework’s first reform “pillar” is improving the legal and regulatory environment. This involves passing and updating legislation – such as the new investment and companies laws already being prepared – that help promote private sector activity.
But actual implementation and enforcement of new and existing laws is crucial – in consultations private sector representatives identified this as one of the main obstacles to progress.
Access to finance is the second pillar, where the recommendations include broadening the criteria on eligible collateral, a specific focus on women’s access to finance and control and ownership over assets, and the development of a modern credit bureau that can help businesses and consumers create a credit history.
There has been welcome progress on financial reform in recent years – the Central Bank has introduced mobile money regulations, and is in the process of setting up a credit bureau with help from commercial bank officials.
Promoting trade and investment is a third key focus of the report. Customs and trade operations are weak and slow, and importing many types of goods requires a licence. Setting up a business is time-consuming and difficult, and company registration is valid for only five years.
The government is hoping to have an automated customs service running across Yangon later this year, and is in the process of removing licence requirements on a variety of goods.
While Myanmar’s continued transition away from a state-owned economy will also help the private sector, the framework highlights the need for careful planning as state-owned enterprises (SOEs) are reformed.
Phasing out selected SOE monopolies will help create competitive markets for services, and well-organised and regulated public-private partnerships will be a key part of SOE reform, according to the action plan.
Ministry of Planning and Finance officials told The Myanmar Times earlier this year that the government had started an SOE review to determine which enterprises could be privitised or corporatised.
The PSD framework also notes that the private sector will need human capital to grow, which in turn will require more spending on education and carefully constructed education sector laws and regulations.