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June 03, 2020

Investment, competition, SMEs and Myanmar business environment

  • By Zaw Min (GNLM)
Mobile phone shop also offering sales of accessories and repair works. Photo: Zaw Min

Quality investment from countries will increasingly come in only when a business environment that has free and fair competition was created. The government was seen to have setup a good strategy toward easing and smoothening investments.
A good strategy toward easing and smoothening investments means handling investment applications smoothly and speedily without bias according to the basic principle of transparency, simplicity and predictability.
In addition to having cheap labour charges, abundance natural resources, having a sizable market and being at a strategic location, Myanmar has been attracting foreign investment by granting tax incentives. As other countries with similar situations will attract foreign investments in a likewise manner, our country would need to increase competitiveness.
Investment and competitiveness. Competitiveness plays an important role for the establishment of a good and effective market. As foreign direct investments enter, local businesses strive to increase competitiveness and to gaining more shares in the local market as well as entering into the region and the world market.
Through entry of foreign investments in the same line of businesses, investors in ongoing businesses will face more competition and are to view and grasp it as an economic opportunity.

A car-wash in operation. Photo: Zaw Min

Entry of big foreign investments will be a driving force for local investors to develop and innovate. Consumers on their side will also have more choices of products and services at prices that are competitive, fair and affordable.
Increasing investment is an important development policy. As such governments were striving toward attracting not only quality foreign direct investments and local investments but also going abroad to bring in investment for a sustainable development.
Small but significant positive outcomes of investment and competition.
Automobile industry in Myanmar starts with local manufacture of cars and trucks of Mazda and Hino brand in the early 1970s. The industry had an opportunity of becoming a major industry in the region but for many reasons didn’t become what it could. Human resources built up during that period were lost as the industry declines.
In the 1990s when market economy was practiced Suzuki came in to produce cars for local market but was constrained by many factors. However it started building up local human resources required for the industry providing employment opportunities for locals and this 1990 generation human resources trained in the industry becomes a foundation for the revival of auto industry in the country.
When Tan Chong, a Malaysian company plan to establish a Nissan car assembly plant in Myanmar several years ago, it recruited several hundred workers from Myanmar and trained them in their Malaysia plant where Nissan cars were produced. The aim was to develop human resources for their plant in Myanmar and had been using it in the plant that it had started in Myanmar since.
Market demand and easing of some restrictions is now bringing in more multi-national companies into the sector. The recent opening of SC Auto (Myanmar) Factory in Yangon Industrial Zone of Mingaladon Township was one such case. SC Auto (Myanmar) Factory is a 100 percent foreign-owned company based in Singapore, which produces the “SC Neustar” brand of buses/coaches in accordance with Myanmar Investment Commission permit. The factory will create over 200 jobs and future expansion will increase this to 400. The factory has a capacity to produce up to 600 buses a year. In addition to producing buses for the local market, the factory plan to produce and export it to Hong Kong and Singapore as well.
Toyota was another multi-national company in the auto industry that was entering the Myanmar market with a factory. The Toyota factory in Thilawa Special Economic Zone will be operated with 130 staffs and an investment of US$ 52.6 million. It’ll produce 2,500 Toyota Hilux trucks per year starting from 2021 under a Semi Knocked-Down (SKD) system.
The investment in the auto industry show human resources development that was driven by the investors but the government also play its part by opening up more vocational schools to have a skilled labour force ready for both local and foreign investments.
Opening up of small car-washes and motorcycle washes are also another spill-over effect of the development of an auto industry. This was more of a grass root response that springs up from the requirement of the developing market.
Similar outcomes can also be seen in Myanmar telecommunication sector. While the market was closed, consumer has no alternative except to rely on the state own enterprise MPT. With the entry of Telenor and Ooredoo, mobile phone service increases with cheaper SIM cards available to the consumer. The telecommunication infrastructure of telecommunication towers and networks were vastly improved with foreign investment. Support industry to construct and maintain telecommunication towers and networks develop with foreign companies entering the market with local construction and logistic companies providing local support creating employments and work related skills for the locals.
At the grass root level, mobile phone and accessory shops springs up creating SMEs that sought to serve the increasing demand and development in the telecommunication industry.
Through the necessity of training up skilled personnel to repair and maintain the millions of mobile phones that enter the market some phone and accessory shops were conducting mobile phone repair and maintenance courses for urban and rural youths who were unable to carry on with higher or even basic education to start up their own mobile phone and accessory shops to sell, repair and maintain mobile phones and accessories.
Street corner or local mom and pop shops had an additional product, top up cards for mobile phone, to sell in their shops. With the financial sector using the telecommunication network for money transfer, some of these shops become agent for mobile money transfer scheme likes Wave Money.
The need for investment, competition and SMEs in business environment
While governments all over the world strives to entice investments to flow in, the governments also have the market ready for investment to enter and create competitive business environment.
And as the markets and industries develop, there’ll be more opportunities for locals and local SMEs to provide necessary support services and products. Finally, as more services and products were available in the market, the consumers will have a wide range of choices and options to choose for their requirements.
This is evidence enough for the need to promote investment, competition and SMEs in a business environment.

(Reference: Increasing competition and Myanmar business environment by Myanmar Thuzar, Myanma Alin 5 July 2019.)

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