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July 18, 2018

Time is Up to Encourage the SMEs in Myanmar!

  • By Than Phyo Naing [Kanyinkyo]

  • Development Law for SMEs was promulgated by Pyidaungsu Hluttaw under law no/23 in 2015. In article 5 of the chapter 4 it was prescribed concerning the formation of the central committee and its duties. In accordance with the law, a central committee for the development of SMEs was formed just at the time when the incumbent government commenced to take office. With its formation, it is included in the article 7 to form a working committee to implement the tasks laid down by the central committee.

Neo-Working Committee Reformed
Later after formation of the central committee, under notification 1/2017 on 29th November a working committee was formed headed by Vice-President 1 as chairman with 40 members including Union Ministers for Industry, Commerce and Planning and Finance, Chief Ministers of Regions and States, Deputy Ministers from other Ministries, entrepreneurs, professional experts.

Duties laid down in accord with prescriptions in the law
It was found that duties of the working committee include submission to the central committee concerning facts and figures necessary for upgrading SMEs, helping to overcome the matters hindering small enterprises, helping to link with inland and external markets for market expansion, upgrading by educating after linking with local and foreign organizations for technical assistance to train workers into skilled workers and to create job opportunities and mainly to link with governments and institutions for acquisition of monetary aids from home and abroad.

Facts included in the national economic policy
On the study of encouraging SMEs from private sector, it was found to have included in serial number 6, 7 and 8 the creation of the economic type that is in harmony with mechanized agricultural sector and for agricultural, livestock breeding and industrial sectors to proportionally develop for multi-development, abundance of food and upgrading exports, for every citizen to freely run economic enterprises they want, to separately draw policies for increasing foreign investments, to implement activation of patents and intellectual property rights to revitalize rule of law and stability of monetary system which will help for the long-term development of families, farmers and economic enterprises.

Current situations of SMEs in the country
Currently, as for the national economy there are only a few foreign investments in the country. SMEs that will produce more import substitution as well are slow in movement. According to the statistics, K 30 billion including foreign loans were lent to only 180 entrepreneurs, starting from 2012. As per the last statistics, there were more than 200000 SMEs registered in the country. And, interest rates exceeded 8 percent, it was learnt.
At the time when the former government took office loans were taken from JICA at the interest rate of 0.001. Why did it rise up to such amount after passing Central Bank, MEB and other related banks? It was a great wonder for the people.
Matters which are really worth encouraging wholeheartedly
What we want to say is that it is urgently needed to bring about the economic development by encouraging SMEs in the country in accordance with the designations included in the duties of the working committee according to the economic policies laid down by the State, without looking forward to foreign investments in the midst of current situations the country is facing—a great need in power supply, skyrocketing real estate prices, incompatibility of investment law and companies’ act with the last situations and weakness in rule of law.
Lending money to more than 200000 SMEs at low interest rate and cooperating with other countries for techniques and markets can increase national outputs.

Potential benefits
With the increasing amount of import substitutes, commodity prices will decrease. Availability of formerly imported good inland by Myanmar currency can lift up Myanmar currency’s value, thus keeping inflation rate under control. Citizens will have more opportunities for jobs. Simultaneously, per capita income and GDP percentages can rise up. Thus, poverty can be alleviated and Economic Indicator will also increase to some extent.

Ministries’ implementation of economic policy
On the other hand, our country is an agro-based nation, comprising of 70 percent of rural populace. Myanmar abounds with a vast area of arable land for growing and creeks, ponds, rivers and shallow part of sea for breeding fish and prawns. Provided that agriculture and breeding can be implemented effectively within 4-5 months, we can depend upon these sectors for national export. What we mainly need is subvention, techniques and markets.
In the past we had ever experienced of rapid plunge of paddy prices. But as the government managed to open markets by linking with other countries, it caused paddy prices to recover into the normal stage. This year also the government could bring about legal trade through linkage between governments at the time when prices of pulses remarkably dropped, overcoming the difficulties pulse farmers suffered.

Need to build up smokeless industries
Another one is to upgrade tourism industry, the smokeless industry. Places where foreigners frequent must be implemented as the national economic enterprises. In a recent news item, there were 105029 foreign tourists in all coming to Kyaikhtiyoe Pagoda in Mon State from January to 30th November, fetching K 700 million from the tourists, it was learnt. Throughout the previous year, local pilgrims amounting to 2.2 million came there. Similarly, Mandalay Palace attracted over 200 foreign visitors daily, fetching K 2 million daily from them.
That is K 60 million from them the whole month. The money entered into the budget funds of regional governments, not into the budget fund of the Union Government.

Regional governments’ cooperation will lead to national economy
On the other hand, Regional governments are still demanding for the budget allotment of the Union Government. So, the regional governments should change their policies which are worth changing in accord with their respective policy.
To sum it up, local businessmen, farmers, animal farming entrepreneurs were not sufficiently subsidized. This may lead to the bad condition for the country. And now is the time to solve the problems of unemployment, skyrocketing commodity prices and shortage of job opportunities.
These should be cured in time. As for the government, the regime is strong in the sector of politics but weak in implementation of economic development. Accordingly, during the period of one and half year when the incumbent government took office, the Union Government should have made efforts to be well convinced of the people’s actual situations so that economic change can be made if necessary.

(Translated by Khin Maung Oo)

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