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September 23, 2019

Planning and Finance Ministry’s performance in second year in office

By Khin Yadana

Union Minister and Deputy Ministers for Planning and Finance were interviewed about the vital and important Ministry that collect revenue for the government, fund the government’s services to the people and the works it had conducted during the two-year period.

Union Minister U Kyaw Win

Q. Please explain about the country’s financial situation and economy when the incumbent government took over the responsibility of the country.
A. Both the budget and trade was running at a deficit. This shows that export and import are not balanced. Foreign exchange rates were unstable and rising while important state-owned enterprises were operating at a loss for four-five years. In addition to this, there were loans prior to 1988 and loans obtained during the term of the Tatmadaw government.
A country’s image is good only when loans are repaid in time. Since we took over the responsibility of the government, we strive toward total repayment of loans. Foreign exchange rates were stabilised through coordination between the ministry, Central Bank of Myanmar and Ministry of Commerce. Through coordination with Central Bank of Myanmar, management and other reforms for private banks were conducted so that banking services were systematic and in accordance to the law.

Q. Explain about the importance of local small and medium enterprises (SMEs) to the country’s economic development.
A. Although the country has local manufacturing, it is unable fulfil the local demand. Local SMEs lag behind in development. Neighbouring countries had higher technology and imported products overwhelm the local products. Because the local demands are met by import, the country’s economy is a Trade Base Model and efforts are put toward SME development.

Q. What are the supports provided by the government for SME development and what are the processes and methods employed for SME development?
A. For the country to develop, the economy must be based on manufacturing. For SME development, their
products need to be well established in the local market. Financial support by the government is also required for goods produced by local SMEs to be competitive with imported goods both in term of quantity and quality. Manufacturing will develop only when the high interest rates on loans are reduced. Technical knowhow also need to be provided.
If the SMEs are put on a path toward import substitution, imports, trade deficit and foreign currency outflow can be reduced. Reducing tax on raw material import will also reduce production cost and manufacturing will develop.

Q. What has been done for agriculture and fishery sector development?
A. Our neighbouring countries have big population and we have a good basis for agriculture and fishery. Every country needs food. The aim is for the country to become agriculture based industrial country. In addition to providing normal loans for planting crops, Myanma Agriculture Development Bank plan to become a real agriculture development bank by providing low interest loan for agriculture inputs such as farm machineries.
Tax under special goods tax law has been removed from fishery export to develop the fishery sector. Despite having a long coastline and weather that is good for palm oil production, this sector is yet to develop. Rice bran oil was widely produced in the past but this sector is also yet to be revived. Discussions are held with traders and merchant to produce good quality cooking oil.

Q. What has been done to develop investment in the country?
A. Government is encouraging all sort of investment in the country. Despite having huge acreage planted with sugar cane, we lack modern factories to produce quality sugar and we were importing sugar instead. Salt production from the sea was a big business in the delta area but after Cyclone Nargis, this business has almost disappeared. Now we are importing salt instead. That is why basic economy system is being changed in order to reduce import and produce locally. The State will support the SMEs for import substitution works to develop.

Q. Explain about the State’s economic projects and preparation of budget.
A. On tax, the State plan to reduce the amount of direct tax and set as priority to increase indirect tax. Revenue for the State will be mainly from indirect tax and financial processes were systematically drawn up and implemented for priority works of the State. Based on the federal system, economic projects of the State were drawn up in a bottom-up approach. State projects are linked with the State budget and are aimed to be projects that produce true value.
Q. Explain about international economic cooperation.
A. According to the geographical location of Myanmar and the recent discussion between the President of People’s Republic of China and the State Counsellor of Myanmar, China-Myanmar economic development will create a lot of opportunities.
Comparing the work processes of GMS, CLMV (Cambodia, Laos, Myanmar, Viet Nam) and ASEAN, the entire coastline of Myanmar is the main door that link the region to the west. The economic corridor developed in cooperation with China and Dawei industrial zone developed in cooperation with Thailand are investments that will have great significant in a short time for the country’s development.

Q. What are the opportunities for Myanmar businesses in the Economic Corridor jointly conducted with China?
A. In this case, there will be parts that will have to be conducted at the State level, parts that will be conducted through State and local businesses and parts that are conducted through business to business cooperation. Some will be through what is known as PPP, Private Public Partnership.

Q. What is being done by the ministry to raise the living standard of the people?
A. The ministry is working with Ministry of Electricity and Energy in the electrical power sector for the country’s economic development. e-Government processes and Data ID practices are included in the State’s 12 economic policies. Plans are being drawn for the technical development to be in line with other developed countries. International loans were obtained in developing the country’s economy and the image of the country is being raised by timely and full repayment of loans.

Q. Is there anything else that you want to add?
A. The country’s population has a high ratio of working age youths. But due to lack of job opportunities in the country, work forces in the rural areas are declining. The ability to accept and use technology is important in SME development. As such, priority will be given to use State funds in education, social and health sector to develop youth with high capability.

Deputy Minister
U Maung Maung Win

Q. Please explain about the organisation setup of the ministry.
A. There are 20 departments under the ministry. Seven are related to planning while 13 is finance related.

Financial policy sector
There are two parts in the financial policy sector, namely, taxation policy and expenditure policy. The ministry prepare and submit to the Hluttaw the Union Tax Law, National Planning Law and National Budget Law. Tax is not used to raise revenue only but is used as a weapon for the economic development of the State. Internal Revenue Department had increased the numbers of tax offices so that the tax is not collected by the department as in the past but for the tax payer to pay tax on their own. Customs Department is using Myanmar Automated Cargo Clearance System (MACCS) in Yangon port and is easing the works of importers and exporters. Preparations are made to use this system in border trade stations like Myawady and Muse.

Q. What has been done in the banking sector?
A. The ministry manage four state-owned banks, Myanma Economic Bank (MEB), Myanma Foreign Trade Bank, Myanma Investment & Commercial Bank and Myanma Agriculture Development Bank on behalf of the State.
The State use these banks to provide SME and agriculture loans. MEB also provide loans for agriculture, SME and construction sector.

Q. Explain about what is being done in insurance, micro finance and investment market sector.
A. Insurance sector has one state-own insurance company and 11 private insurance companies. Insurance services provided were increased to 18 types but insurance services are low in comparison to the country’s GDP and population. That is why 26 representative offices of foreign insurance companies were permitted. The service of a consultant company will be used in arranging to permit foreign insurance services based on these 26 representative offices.

Q. What about the micro finance sector?
A. Loan in micro finance sector is being expanded for grass root level individual sellers and small home businesses in rural areas. There are now a total of 176 micro finance entities in all states and regions and 3.2 million persons were being provided with loans totalling more than Ks 3,800 billion. This is greatly benefiting the grass root level people.

Q. What has been done in the investment market sector?
A. Yangon Stock Exchange has been established by the ministry since two years ago. Five listed companies are traded in the stock exchange through six security companies. The government plan to continue the expansion of the investment market.

Deputy Minister U Set Aung

Q. Let us know about the changes made to project planning work.
A. The main changes made were establishing detailed strategies and work processes for sustainable development. In the past policies were issued but detailed processes to implement it were not made. Now, detailed processes were also made making the implementation part stronger.

Q. Explain in detail about implementing the economic policies.
A. Three step work process is established to implement the economic policies. A monitoring program is also included to check the process.
Instead of the respective ministry planning for the development of their own ministry, a system of different departments in different sectors coordinating for the development of the country will be seen. Once the transformation to this system is made, coordination and cooperation between departments and sectors will be more effective.
By that time, all will cooperate and participate in a new format under the National Development Plan that we are striving toward.
(Translated by ZM)

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