MYANMAR BUSINESS SURVEY: DATA ANALYSIS AND POLICY IMPLICATIONS 2012). The McKinsey Global Institute (MGI) (2013) has estimated that by 2025 the country will be within a five-hour plane ride of 2.5 billion consumers.
tourism and foreign enterprises) and industrial zones (OECD, 2013 and 2015). As a result, the country’s regulatory and policy framework remains fragmented and less transparent, with businesses having to deal with a number of parallel line ministries that often fail to adequately coordinate activities between themselves (OECD, 2013).
These opportunities, however, come with challenges as an open border will bring greater competition to local firms that have been shielded for decades. SMEs are particularly vulnerable as they are not prepared to face the global transformation of business strategies and practices (Abe and Dutta, 2014). This means that they might lose market share domestically while being unable to take advantage of the benefits that integration provides. It therefore becomes all the more essential for SMEs as well as larger firms to enhance their competitiveness, product quality and management practices so that they can integrate seamlessly into the global economy (Abe and Dutta, 2014). At the same time, the Government of Myanmar will have to work hard to enhance the competitiveness of local business by (a) upgrading various key factors such as infrastructure, human resources, technology and business development services, and (b) further liberalizing trade and investment together with the implementation of trade facilitation measures (ESCAP, 2015).
One of the consequences of the present regulatory framework is that the informal sector has become large and diverse, comprising everything from small family businesses to large enterprises (OECD, 2013). Small informal firms tend to have low productivity and inadequate access to financing while large informal firms may avoid paying tax which leads to less revenue for the Government and unfair competition for formal businesses. A transition to the formal economy is essential for Myanmar’s development, and this will require the Government to pay greater attention to the regulatory framework in particular and business environment more generally (Abe, 2014).
2. Market conditions Myanmar has a population of 51.4 million and is the second-largest country in South-East Asia in terms of geographical territory. Although it is categorized in the low-income group as a least developed country, the country is rich in natural resources and fertile terrain, with large agricultural areas. Myanmar is part of ASEAN and strategically located between two giant markets, China and India, which enable it to benefit from a rapidly growing Asia that is likely to become the most prosperous region in the world in the next few decades. Thus, the country has much untapped potential for future growth and development (ESCAP, 2015).
3. Innovation Innovation and technology are widely regarded as essential to quickening the pace of development and growth in any country. Increasing productivity and competitiveness as well as developing innovative products are all the more important to gain market share overseas and to resist domestic competition. The use of transformative technologies such as the Internet has been shown to have dramatic effects on GDP growth. A World Bank study of 120 low- and middle-income countries found that a 10 per cent increase in broadband penetration between 1980 and 2002 yielded an additional 1.38 per cent in GDP growth (Qiang and Rossotto, 2009). Another study (MGI, 2012) estimated that the Internet had accounted for as much as 12 per cent of cumulative GDP growth during the previous five years in a group of developing countries.
The favourable geostrategic characteristics and location of Myanmar offer the country an opportunity to become a major production hub in the region and a key exporter to its high-growth neighbours (e.g., other ASEAN members). The country borders not only the major markets of China and India but also the emerging markets of Bangladesh, the Lao PDR and Thailand. The integration of ASEAN into one economic community (i.e., AEC) offers Myanmar the opportunity to benefit immensely from integration with subregional, regional and global economies (ADB, 2012). Myanmar could potentially join regional business and production networks by strengthening trade and investment ties with other ASEAN members (ADB,
Given the potential of the Internet and other technologies, it is unclear whether Myanmar businesses are utilizing those technologies to their full potential. Furthermore, investment in research and development (R&D) remains low in Myanmar, which is particularly problematic 6