U Zaw Min Win, President, Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI): Interview

Interview: U Zaw Min Win

What should be the next priorities for improving business conditions in Myanmar?

U ZAW MIN WIN: Myanmar rose six places in the World Bank’s Doing Business Index in 2019 to among the world’s top-20 performers. However, there remains much progress to be made. The priorities for improving conditions should be to minimise transaction costs and time in order to reduce the cost of doing business. A one-stop service centre has opened up in the Directorate of Investment and Company Administration, which will serve to solve issues relating to licences and approvals that previously required companies to work with multiple ministries simultaneously. Other areas of focus include trading across borders and resolving insolvencies. Unfortunately, we dropped in the rankings for access to credit, electricity supply, the payment of taxes and labour market regulation. As Myanmar begins to receive more foreign investment, the lack of skilled labour may become more of an issue. This is particularly the case for sectors such as construction, tourism, manufacturing and ICT, which should be prioritised. One issue is that some skilled and semi-skilled workers may lack certification to prove their qualifications, while others may leave for neighbouring countries due to the higher earning potential available. Myanmar is known for its competitive labour rates, but we must focus on increasing productivity, which is about one-third of that in China. Although the cost per worker may be low, the long-term financial viability of businesses will be limited if production efficiency continues to lag behind.

In what ways has the China-US trade dispute impacted Myanmar’s industrial sector?

ZAW MIN WIN: Being neighbours with China, Myanmar needs to be prepared against any unexpected shocks that might come from the ongoing trade difficulties. Trading over the northern border can be unreliable, and the exchange rate between the kyat and the yuan may be discouraging for Myanmar businesses. There is an opportunity for us to leverage the relocation of labour-intensive industries from China. Myanmar has much to offer: it retains special trading arrangements with many large buying nations and blocs, boasts a young and affordable workforce, and has a steadying macroeconomic environment. To further encourage these companies to choose Myanmar, we must improve our electricity and transport infrastructure. This is being done to some extent through special economic zones (SEZs). There are five SEZs in active operation or under construction, and there are 28 industrial zones located in the Yangon region alone. We believe that as latecomers we are better equipped and able to learn from other countries. Thilawa SEZ has shown that localised solutions to utility problems can be successful, and in this case more than 100 projects have been approved.

How can Myanmar ensure that tariff agreements on garment exports to the EU are protected?

ZAW MIN WIN: The garments sector is turning into a powerful growth engine for Myanmar’s economy; it now represents 10% of the country’s total exports. Preferential tariff agreements from the EU have helped to drive this expansion. To qualify, countries must abide by human and labour rights conventions set by the UN and the International Labour Organisation, and adhere to certain environment and governance principles. Thus, the UMFCCI and government partners are working hard to improve our labour law and governance structures. The EU’s Generalised Scheme of Preferences (GSP), which covers these tariffs, is designed to help low-income countries increase their exports. Since Myanmar gained access to the GSP in 2013, the garments industry has helped hundreds of thousands of people obtain decent employment. Meanwhile, Myanmar is predicted to achieve middle-income country status in the early 2020s, which will bring the GSP to an end. This would have severe consequences, and stakeholders have been lobbying for the EU to continue to maintain the scheme.