Strengthening Myanmar’s private sector
Title: Strengthening capacities of the private sector
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: Ministry of Commerce
Overall term: 2019 to 2021
Following years of isolation, Myanmar has begun to open up its economy and introduce economic policy reforms. The legal framework for micro, small and medium-sized enterprises (MSMEs) has since improved, although there are still a number of obstacles to private sector development. First and foremost, regional governments and authorities are not yet capable of implementing economic policy reforms and strategies. Excessive bureaucracy combined with contradictory and non-transparent regulations stand in the way of private sector development. The state does not involve the private sector sufficiently in policy design and implementation, and the situation is compounded by the fact that trade associations and chambers still fail to fully represent the interests of MSMEs. Parallel to this, the pressure on MSMEs to become more competitive is increasing, as the country opens up its economy.
Politically, Myanmar remains a country with high conflict potential. Recurrent armed clashes between ethnic groups and human rights violations harm the population, the country’s international reputation and its economic development. The latter could also be adversely affected by trade sanctions.
The framework conditions for private sector development have improved, partly due to the availability of better services that integrate micro, small and medium-sized enterprises into value chains.
The project is improving the environment for trade and investment and promoting the integration of MSMEs into value chains, in cooperation with leading companies. With innovations and the introduction of digital solutions in MSMEs, the project fosters value creation, competitiveness and market access. In this, it is cooperating with the consulting companies PEM Consult, ICON Institute and Mesopartner.
Building on the success of the predecessor project, this intervention is pursuing a multi-level approach in which experience from specific work in value chains can be incorporated into government reform processes. Improved general conditions and the strengthening of chambers and associations directly benefit the actors in the value chains.
The project is implementing development measures (capacity development) for individuals and organisations, as well as for society as a whole. The development of a network of experts (change agents) within governmental and economic institutions safeguards results and reduces the need for organisational advisory services. The network specifically involves women in order to push for their equal participation in economic and political decision-making.
In view of the many conflicts within the country, the project is designing the activities in a conflict-sensitive manner. This principally applies to the selection of development partnerships with the private sector and in cooperation with potential investors. Alongside this, economic promotion activities will take into account environmental and climate protection goals.
The project builds on the achievements of the preceding project. While the focus has hitherto been on developing capacities within partner ministries and national associations, efforts are now to shift more to institutions in the regions, especially in Shan State.
With the help of advice and training, MSMEs are using improved cultivation and production methods for agricultural produce so that export and investment potentials can be better harnessed. For example, the project advises authorities in Shan State on the development and implementation of an investment promotion plan. At the same time, new and innovative business models are being introduced and jointly developed with the help of development partnerships with the private sector. This increases local value creation and makes MSMEs more competitive. Both have a positive impact on creating and securing jobs, especially in rural areas.