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October 18, 2018

SMEs and a Variety of Myanmar Economic Patterns

  • By Maung Myo Chit
    [University of Economy]

According to the statistics of the department of SMEs under the Ministry of Industry, the Union of Myanmar SMEs occupied 90 percent of the driving force of Myanmar Economy, managing to create 96 percent of job opportunities as estimated initially. In other word, SMEs play an important role in the national economy, being the major driving force for the national development. Occasionally, it is called industrial factories which cause adjustable social development.
SMEs include farmers, agro-industry businessmen, manufacturers and producers, retail and whole-sale sellers, logistics businesses and those who run service industries of delivering goods to customers in some ways or other. On a nationwide scale, there are altogether 40700 SMEs from the private sector registered at the department of supervision and examination under the Ministry of Industry, with out of them, 6650 located in Yangon Region. Enterprises are categorized into 13 groups such as foodstuff, textile and garment industries, lodging houses, kitchen utensils, literary and artistic industries, factories producing raw materials, produce from agriculture and gardening, mining industries, vehicles and accessories production, electrical equipment production and general industrial factories. Among them, mostly-registered industries are foodstuff industries, it was learnt. According to the data of the department of supervision and examination under the ministry, registered industries amounted to over 58.5 per cent.
Being a country rich in natural resources, job opportunities may be created greatly, provided that high-valued products can be produced by using modernized techniques. Nowadays, opportunities were caused by cooperating in economic sectors among the global countries. As for Myanmar which had already related with global countries in trade, production and service industries, it had more opportunities to enter the global production channel as it had already set up the ASEAN circle. Therefore, Myanmar had more opportunities for the development of SMEs.

Challenges for SMEs
In building up SMEs entrepreneurs may face challenges and difficulties. U Pyay Nyein, the manager of Thuriya Win Company Ltd, which produces “Flying Green Tea Leaves,” said that lack of power supply was the major difficulty for the production of tea leaves. But, very recently power supply problem was solved to some extent. Due to the utilization of power generators, it cost much less than before, in production, but compared to other countries are overhead costs, unable to compete with other countries for the acquisition of markets. For example, it cost K 200 for one kilogram production in Vietnam, with in Myanmar costing double for one kilogram production. Hence local production had to yield to foreign ones in market competition.
Challenges and disadvantages which today’s SMEs are experiencing are lack of start-up investment money and weakness to penetrate into technical market, poor quality in standardized production, inability to acquire news and information changing all the time, weakness of respective departments which will support for economic development, scarcity of infrastructure, weakness in laying down principles, rules and regulations for promising developments, invasion of reasonable taxes and privileges, and lack of opportunities for just and fair competitions.
According to experts on sales and marketing promotion, for local SMEs to penetrate into the global market it is the major necessity to designate standardized prices for locally-made products. For the time beings, so as to deal with the existing problem the government and civil societies are making concerted efforts. Meanwhile, local SMEs are solely depending upon local markets, simultaneously facing challenges of foreign imports in quality.
Daw Hnin Lei Wai, assistant marketing manager of City Mart Holding Company Ltd., which tried hard to acquire markets across the world since 2013 said, “Failure to supply the demands, weakness in sustainable production, poor knowledge in package system and lack of knowledge on market economy are challenges we are experiencing.”

Strengthening local markets
Concerning imported foodstuff, with the increasing amounts of foodstuff products can reduce production costs much for market competition. But, contrariwise local products are too much smaller, costing much than that of foreign imports. Even if qualities are similar, Myanmar products cannot compete with foreign ones in prices. Survival of local SMEs wholly depends upon the entire Myanmar populace amounting to over 50 million. At such a time when the government is making efforts to link with global markets, it needs to make arrangements for local businesses to firmly survive in the local markets as well.
“Had the project been urgently implemented successfully consumers would take Myanmar products with great trust,” said some people. But, SMSs alone cannot perform the task.
As for policy-makers, they need to use skills in manipulating the process, simultaneously requiring to make economic enterprises leading local and foreign markets cooperate energetically in the project so that local SMEs can get strengthened markets in the land as expected as well as to gain development.

Penetration into the sphere of market economy
Due to various reasons including wrong administration some 50 years ago, Myanmar plunged into the bottom of the poorest countries in the world. Now the incumbent government is striving hard for Myanmar to become a developed nation. In trying to achieve the national development without any hindrance, the State is seeking for rightful ways, means and systems for the development of SMEs, making concerted efforts influx of local and foreign investment come into the country.
For the emergence of the national economic development, it needs to support for the development of SMEs in such a time when economic enterprises are being established. SMEs are the most fundamental factors for the national development, causing the per capita income to increase. Hence, the government is encouraging the SME’s development.
As for Myanmar which abounds with various kinds of natural resources, it needs to upgrade by constantly monitoring situations of small economic enterprises, because the national economic development is directly proportional to the development of SMEs. Only if there is a strengthened foundation in any kinds of economic, political or administrative system, will it be helpful for emergence of highly powerful infrastructures. In a democratic nation civil societies are the most fundamental foundation, with the people taking part in the important role. As for ward and village-tract committees and organizations representing the people, they need to monitor and examine actualities of socio-economic development, that is, to constantly fulfill basic requirements of the people and the national economic development. Yet, there are still other requirements for the success of SMEs. Especially, it is far away from success and not firm yet to penetrate into promising markets.
Requirements for the betterment of economy include efforts to export more and to reduce imports. As it is, Myanmar is depending less-valued imports and high-valued ones. Moreover, local SME’s products are still finding it difficult to penetrate into the promising markets. Imports from the neighboring countries are still occupying local markets because of their qualities, reasonable prices and efficient supplies to the internal demands. Myanmar can mostly export raw materials only. What is worse for us is that we have to import the refined products of our exported raw materials.
To sum it up, it is necessary for local organizations to constantly monitor the requirements of SMEs and to support. Similarly, businessmen and economic entrepreneurs should collectively make efforts for SMEs’ products to penetrate into the global market, without focusing their own benefits only.

 

Translated by
Khin Maung Oo

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