Electricity supply, land registration and access to credit are still serious headaches for a new venture in Myanmar. But the country continues to climb the World Bank’s country rankings for ease of starting a business, having cut the cost of setting up a business by half in the last year and simplified registration.
The country was ranked 170 of out 190 countries in the bank’s annual Doing Business report released yesterday, which measures regulation across a range of categories including starting a business, investor protection, electricity supply and enforcing contracts.
New Zealand took the top spot, forcing Singapore from first place after 10 consecutive years. Denmark, Hong Kong and South Korea were in third, fourth and fifth place respectively.
Myanmar’s 170th-place finish is only one higher than the previous year, but the country managed another leap in the ease of starting a business category. After coming last in that field in 2014, Myanmar is now ranked 146th out of the 190 nations surveyed when it comes to setting up a business.
“Myanmar is steadily making progress in creating a business environment that will help the country sustain its strong pace of growth,” said World Bank country manager for Myanmar Abdoulaye Seck.
The number of procedures required to start a business in Myanmar – 11 – remains the same, as does the number of days it takes to start the business – 13. But the cost of starting up a venture has fallen from 97 percent of the average income to 40pc, and registration formalities have been simplified, according to the report.
U Aung Naing Oo, director general of the Directorate of Investment and Company Registration, said that registration fees had been cut from K1 million to K500,000 and documentation requirements relaxed. The World Bank noted Myanmar removed a requirement to submit a reference letter and a criminal history certificate in order to incorporate a company.
Senior World Bank operations officer Charles Schneider told media at a press conference for the report’s launch that Myanmar had made progress and become more transparent. But more work is needed on supporting foreign trade, logistics and port operations, he added.
Congestion at the port of Yangon – a key hub for imports and exports – has made trading more difficult, which saw Myanmar’s score on the trade across borders category fall. The government had to introduce emergency measures in May to clear a backlog at Yangon port that was holding up trade.
The country also failed to make much progress on making it easier for a business to secure a permanent electricity supply or register property – although it rose slightly in the country rankings for both categories. It takes an average of 77 days to get electricity for a business in Myanmar, according to the report. This is less than a day longer than the average in high-income countries, but the cost – as a percentage of average income – is many times higher in Myanmar.
The World Bank also noted Myanmar has “improved its credit information system by enacting a law that allows the establishment of a new credit bureau”. Credit bureaus help lenders collect the information they need to make decisions on individual loans for a fee. Myanmar’s banking sector suffers from a lack of credit information, which helps keep in place a strict system of collateral requirements and interest rates that holds back lending.
But even with the new law in place the Central Bank still needs to provide specific regulations, after which it could take another year for the bureau to actually start operating, U Zaw Lin Aung, secretary of the Credit Bureau committee, told The Myanmar Times earlier this year. In the meantime, Myanmar is ranked bottom across East Asia and the Pacific for access to credit, according to the World Bank report.
For the overall ease of business rankings in that region, only Timor-Leste ranks lower than Myanmar. In ASEAN, Myanmar is by far the lowest-scoring member country, 31 places behind Laos at 139th.
Translation by Khine Thazin Han