MYANMAR BUSINESS ENVIRONMENT INDEX 2020 Measuring Economic Governance for Private Sector Development
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1 THE MYANMAR BUSINESS ENVIRONMENT INDEX 2020 Measuring Economic Governance for Private Sector Development Edmund Malesky, Dean Dulay, and Ville Peltovuori 3 Lead Researchers and Authors Edmund Malesky Dean Dulay Ville Peltovuori Core Research Team Kyaw Thu Marip Ja Dim Nyan Win Phyo Wai Htun San Yi Thiri Maung Ye Wana Hlaing Reviewers Jon Keesecker Kim Ninh Peter Yates Graphic Design Ye Htut Oo Photo Credits Ye Htut Oo Editor John H. Rieger © 2020 The Asia Foundation All rights reserved. No part of this report may be reproduced without written permission from The Asia Foundation. No. 11, Ko Min Ko Chin Yeik Thar Street West Ngar Htet Kyi Ward Bahan Township Yangon, Myanmar 4 Preface Recent reforms in Myanmar have led to a process of decentralization, one in which the states and regions are playing an increasingly important role in the political and economic life of citizens. While many policies and procedures are still determined at the Union level, there is growing awareness and recognition that, in a country as diverse as Myanmar, states and regions are critical actors in advancing the democratic transition and responding to the specific needs of local populations. This is an extraordinary development after decades of centralized military rule, but it is still very much a nascent one, and subnational governance institutions, practices, and capacity will need significant improvements and reforms to fulfill these new functions. This evolution of democratic governance will require time and much practice to become institutionalized, but signs of adaptation and innovation are already emerging as states and regions become more established in their new roles. One critical concern of governments at both the Union and the state and region levels is how to generate the economic growth necessary to increase incomes and economic well-being, create jobs and new businesses, and improve the tax base that makes it possible for the government to deliver basic services to citizens. A dynamic private sector is key to stable economic growth and thriving communities, and a more conducive business environment can bring many tangible benefits to both governments and citizens. These benefits could take many forms: building roads and bridges that allow for more efficient transportation of goods, services, and people; supporting a skilled labor force that helps businesses increase productivity; ensuring that the law upholds business contracts and resolves business disputes in a transparent and fair manner; and making sure that administrative procedures such as registering a business or paying taxes do not impose an unreasonable burden on businesses. The corona virus (Covid-19 ) pandemic has further underscored the need, in the age of globalization and burgeoning e-commerce, to streamline government services and take advantage of information and communication technologies to administer the government and its services to citizens and businesses. If these aspects of the business environment are not in place, then it will be burdensome to start or run a business, and it will be increasingly difficult to compete with businesses elsewhere in Myanmar and abroad. In this context, The Asia Foundation initiated the first ever Myanmar Business Environment Index (MBEI) in 2018, surveying 4,874 Myanmar businesses in the service and manufacturing industries across the country and gathering a multitude of other hard data to map a more comprehensive, in-depth picture of the challenges they face and where government can target reforms to improve the business environment. The results were published in 2019 and were widely disseminated to government officials and the private sector in all states and regions of Myanmar. In 2020, the Foundation carried out the second installment of the MBEI, surveying 5,605 businesses across the country. Conducting the two installments two years apart allows us to begin to track the progress states and regions have made over time. MBEI 2020 also includes methodological improvements over the first MBEI, with new indicators to provide more concrete measures of aspects of the business environment relevant to state, region, and township officials and decision-makers. Benchmarking the business environment to help governments devise targeted policy reforms has been a distinctive program of The Asia Foundation in a number of countries, one of the most successful being Vietnam’s Provincial Competitiveness Index (PCI), which recently celebrated its 15th anniversary and has become an integral part of the government’s private-sector development and economic growth agenda. It is widely used by governments at all levels, business associations, the media, civil society, and investors both domestic and foreign. We hope that the first two MBEI surveys have laid the groundwork for regular diagnostics of the business environment in Myanmar that will also continue into the future. The Foundation’s goal for the MBEI is to provide government officials with the information and tools to better understand the business environment in their state, region, or township and help them design and prioritize reforms that will help businesses prosper in their specific localities. 5 For businesses and other stakeholders, we hope that this report can be a valuable resource for business decision-making. The results reported here are merely a fraction of the vast trove of data that has been collected as part of the MBEI. More-detailed data is also available on all of the indicators, down to the township level for townships included in the survey, and we encourage everyone to explore this data for their specific needs, interests, and geographical areas. The MBEI data is available at https://opendevelopmentmyanmar.net/mbei. Other, related reports published by the Foundation include the first MBEI reportMyanmar Business Environment Index 2019: Measuring Economic Governance for Private Sector Development, and the reports Myanmar’s Economic Governance Actors and Good Practice in Subnational Economic Governance in Myanmar: Findings from the 2019 Myanmar Business Environment Index. In June 2020, as Myanmar confronted the impact of Covid-19 on businesses, the Foundation also carried out a rapid survey of 750 Myanmar businesses to capture the issues facing them, and the results are presented in the report Covid-19 Impact on Businesses: A Survey. All these reports can be downloaded from The Asia Foundation’s website at www.asiafoundation.org The MBEI project is generously funded by UK Aid through the DaNa Facility. The opinions expressed in this report are solely those of the authors and do not necessarily reflect those of the government of Myanmar, The Asia Foundation, UK Aid, or the DaNa Facility. Kim N. B. Ninh, Ph.D. Acting Country Representative The Asia Foundation, Myanmar 6 Acknowledgements The MBEI is the result of a major, ongoing, collaborative effort between The Asia Foundation, the DaNa Facility, and Foreign Commonwealth and Development Office (FCDO), the project’s funder. The MBEI is only possible due to the generous oversight and support of Myanmar’s Ministry of Commerce. We are also grateful to the governments and other stakeholders in the states and regions who facilitated data collection and will play a critical role in taking advantage of the findings in this report. The research project was developed and implemented under the overall leadership of Dr. Kim Ninh and Dr. Matthew Arnold, country representatives of The Asia Foundation in Myanmar, and benefited from assistance and input provided by Peter Brimble, senior technical advisor of the DaNa Facility, Linn Maung Maung, trade, competitiveness, and investment lead of the DaNa Facility, and Tom Coward, team leader, Inclusive Growth and Livelihoods Team and Priti Prajapati, private sector development adviser of FCDO. Edmund Malesky, professor of political economy at Duke University and Director of Duke’s Center for International Development, led the development of the MBEI’s research methodology and was the primary author for the presentation of its analytical findings. Dean Dulay, doctoral candidate at Duke University, served as research assistant and coauthor of the report. Two Duke research assistants provided valuable support: Nitin Subramanian assisted with data visualization, and Alessandra Waggoner provided background research. Critical data collection was carried out by The Asia Foundation’s MBEI project team in Yan- gon, led by Ville Peltovuori, who oversaw the survey implementation and contributed to the refinement of the survey methodology as well as data analysis. Kyaw Thu, Nyan Win, Jon Keesecker, Marip Ja Dim, San Yi, Ye Wana Hlaing, Phyo Wai Htun, and Thiri Maung from the MBEI project team undertook valuable background research, collected observational data, and provided additional feedback and contextual analysis that facilitated the final report. Please use this suggested citation when referencing the report or data: Malesky, E.J., D. Dulay, V. Peltovuori. 2020. The Myanmar Business Environment Index: Measuring Economic Governance for Private Sector Development. The DaNa Facility and The Asia Foundation: Yangon, MY. 7 List of Acronyms ACC Anticorruption Commission CDC City Development Council CEO Chief executive officer CSO Central Statistical Organization DALMS Department of Agricultural Land Management and Statistics DAO Development Affairs Organization DICA Directorate of Investment and Company Administration DISI Directorate of Industrial Supervision and Inspection EGI Economic governance