Prepared by: Mr. Myint Wai Ms. Khin Pa Pa Myo 9 Aug 2010 - 3 Sep 2010, Thailand

1. TICATraining Programme Training course on Enhancing Entrepreneurship in SME Development and Export Consortia 9 Aug 2010 - 3 Sep 2010, Thailand Country Report Union of Myanmar Prepared by: Mr. MyintWai Ms. Khin Pa PaMyo 9 Aug 2010 - 3 Sep 2010, Thailand

2. General Introduction to SMEs In any countries in the world, even in the well developed countries, SMEs are considered as important elements in the national economies. They constitute a large number of businesses to the Gross National Product or Gross National Income. SMEs play main economic role and backbone of the national economies.

3. General Introduction to SMEs In East Asia , those SMEs are receiving close attention by respective countries as their development will no doubt lead to the overall economic development of the East Asian countries as a whole. Encouragement and promotion of competitiveness and innovation of SMEs is necessary.

4. Country Profile : Myanmar Myanmar is the largest country in South-East Asia with a total land area of 677,000 sq.km 936 km from east to west 2,051 km from north to south Total coastline : 2,832 km. Population : 57.5 million (2008 est.) Climate : Tropical monsoon Religion : Buddhism(90%), Islam,Christian, Hindus National Races : 135

5. POPULATION • RACES • Burma 69% • Indigenous Races 25% • Indians & Pakistanis 1.3% • Chinese 0.7% • European & Other Race 3.3% • RELIGION • Buddhist 89.4% • Animist 1.2% • Hindu 0.5% • Muslim 3.9% • Christian 4.9% • Other 0.1% 2008-2009 - 57.5 million Growth rate - 1.75% Male 28.58 - Female 28.92 SEASON Hotseason, Rainy season, Cold season

6. Indigenous Races • Bamar (69%) • Mon (2.4%) • Rakhine (4.5%) • Shan (8.5%) • Kachin (1.4%) • Kayah (0.4%) • Kayin (6.2%) • Chin (2.2%)

7. Myanmar Arts Panpu (sculpture) Panchi (painting) Pandain (Gold & Selversmith) Panput (Turning Design on the lathe) Panyan (Masonary)

8. Musical Instruments in Myanmar Flute Conch Shell Brass Gong Circle (KyeiWaing) Royal Drum

9. Myanmar Famous Dance U ShweYoe and Daw Moe Modern Style of Stick Drum Dance Marionette dance duet or puppet style duet dance Golden Harp Music and Dance Portraiture

10. Myanmar Famous Festival Kason Watering Festival MathoThingan (Yellow Robe) Weaving Festival Thangyan Water Festival

11. Wonderful Place the Shwedagon Pagoda The Shwedagon Pagoda is one of the wonders of the world, it was believed to have been built over 2500 years ago where the four Buddhas' relics were enshrined. Successive kings has embellished the pagoda during the 15th century and Queen Shin Saw Pu raised it to its present heigh.

12. KYAIK HTEE YOE PAGODA The KyaikHteeYoe Pagoda is the highly refreshing and exhilarating climb itself which must be a never to most comes comers.

13. View Over Bagan Plain Bagan has become our chief tourist attraction. It is also one of the richest archaeological sites in Asia. There so many pagodas in Bagan as it was the capital of the first Myanmar Empire.

14. BEACHES Ngapali Beach NgweSaung Beach Chaungtha Beach

15. Macroeconomic Policy The Government has been formulating and implementing national development plan to attain all-round development of national economy in accordance with four economic objectives: Four Economic Objectives 1. Development of Agricultural as the base and all-round development of other sectors of the economy as well. 2. Proper evolution of the market-oriented economic system. 3. Development of economy inviting participation in terms of technical know-how and investments from sources inside the country and abroad. 4. The Initiative to shape the national economy must be kept in the hands of the State and the National People. 15

16. Macroeconomic Environment • Total Area : 676,577 km2 • Population : 57.5 millions (2008 cso.) • Type of land • - reserved forest : 41404 thousand acres • - net area sown : 28930 " • - occupied area : 29583 " • - cultural able waste other : 14304 " • than fallows • - Other wood land : 40891 " • GDP : 18943 billion kyats (2009 – 2010) • GDP growth rate : 10.4% • Structure of GDP • Production : 62.5% • Services : 16.1% • Trading : 21.4%

17. Volume of Export US$ (million) Sr. Category 2008-2009 2009-2010 • Industrial Product 2679.8 3233.8 • Agricultural Product 1436.2 1678.4 • Metals and Minerals 708.1 1017.6 • Forest Product 483.1 561.6 • Livestock and Fishery 474.7 491.0 • Others 997.2 604.5 Total 6779.1 7586.9

18. Volume of Import US$ (million) Sr. Category 2008-2009 2009-2010 • Inter-industry use 1591.6 1636.0 • Capital goods 1833.7 1530.5 • Consumer goods 1118.0 1014.9 Total 4543.3 4181.4

22. Top Export-Import Commodities (2009 – 2010) Export Commodities US$ (million) Import Goods US$ (million) Natural Gas 2926.69 Jade 964.82 Black Gram 464.26 Green Gram 285.76 Fish 285.07 Readymade Cloth 283.32 Rice 279.68 Hard-wood 278.15 Teak Round Log 211.72 Pigeon Pea 142.43 Crude Related Products 726.57 Machineries & spare parts 445.68 Construction materials 254.54 (Iron & Steel) 4. Automobiles & spare parts 242.54 5. Ship and accessories 204.00 6. Edible oil 178.29 7. Pharmaceuticals 152.74 8.Fertilizers 139.21 9. Plastic raw materials 135.24 10. Chemical 98.67 Source: c.s.o 22

23. Major Trade Partners (2009 – 2010) Export Country US$ (million) Import Country US$ (million) Thailand 3197.87 China 1582.67 India 1013.14 Singapore 670.41 Japan 177.35 Malaysia 152.61 Korea 75.58 Bangladesh 69.34 Vietnam 54.75 Germany 40.89 China 1268.97 Singapore 1202.19 Thailand 378.68 Japan 259.11 Korea 224.06 India 193.52 Malaysia 159.52 Indonesia 140.07 French 35.88 Germany 33.38 Source: c.s.o 23

24. Foreign Investment of Permitted Enterprise under the Foreign Investment Law (2009 – 2010) Sr. Country Type of Enterprise No US$ (million) • UAE Oil & Gas 1 41.00 • Hongkong Len manufacturing 1 6.08 • Thailand Hotel & Tourism 1 15.25 • China Mining 1 2.50 • Singapore Brewery industrial - 27.23 • Malaysia Oil & Gas 3 237.68 Total7 329.58 Source: c.s.o

25. Definition of SMEs In the " World Bank Group's SME Strategy"(a) , the following is written about the SME definition :- " What is an SME ? There is no universal definition. Some analysts use objective standards, classifying firms with fewer than 10 employees as " micro enterprise ", those with 10 to 100 employees as " small " and those with 100 to 500 as " medium " – even listing any company with annual turnover below 10 million as an SME. (a) SME Facts – World Bank

26. Definition of SMEs Other prefers to rank companies by their relative size within the local economy. Since a large company in Macedonia would be considered small in Brazil. Whatever the case, SMEs are vital to the emergence of healthy private sectors, especially in poorer countries. Overall SMEs must be considered the only realistic employment opportunity for million of poor people through the world ". (a) SME Facts – World Bank

27. Definition of SMEs in Myanmar The Private Industrial Enterprises Law of 1990, classified the industries as in the following table :- Source : Ministry of Industry 1

28. Major driving force for the development of economy Provide opportunities for entrepreneurs, workforce and utilization of natural resources Agricultural product, forestry product, garment and food & beverages product are major output Overview of SMEs Development in Myanmar

29. Private sector significantly contribute the industrial production Establishment of SMEs in Mining, manufacturing, construction, trade and services was estimated 99%. Critical factors limiting the growth: Financing, Human resource capacity building, Technology, Market access, ICT, energy, infrastructure etc… Overview of SMEs Development in Myanmar

30. Overview of SMEs Development in Myanmar Share by Employment, Output and Investment (2004) Source : Ministry of Industry 1

31. Overview of SMEs Development in Myanmar Share by Employment absorption, Output and Investment (2004) Source : Ministry of Industry 1

32. Key SME Support Agencies and Services in Myanmar (a) State Level Although there is no agency nor organization specifically assigned on SMIs development, agencies or organizations currently involve in SMIs business such as; - Industrial Development Committee (IDC) - Myanma Industrial Development Committee (MIDC) - Myanma Industrial Development Working Committee (MIDWC)

33. The Objective of MIDC (a)  To develop agro- based industries (b) To enhance industrial production both quantitatively and qualitatively. (c) To encourage production of new type of industrial machinery and equipment (d) To encourage production of machinery and equipment essential for the manufacturing and processing industries. (e) To create suitable conditions for change over to an industrialized state.

34. Function of the MIDWC Function of the Myanma Industrial Development Working Committee (MIDWC) is to implement the policy and programmes for the development of private industries such as:- (a) Development of Industrial Zones (b) Human Resource Development for private industries. (c) Transfer of technologies to SMI (Small and Medium Industries) (d) Financial Assistance to specific industry located at Industrial Zones etc..

35. Under the Working Committee there are 10- Subcommittees and 18 industrial Zones Supervision Committees to assist SMEs, namely:- (i) Production of Agricultural Machinery & Equipment (ii) Standardization and Quality Control (iii) Formulation and drafting of Industrial Law, Regulation and Procedure (iv) SMEs Promotion (v) Promotion of industrial R & D and Technology Transfer (vi) Industrial Information Dissemination and Publication (vii) Human Resource Development (viii) Promotion of Automobile and Parts Industry (ix) Promotion of Iron and Steel Industry (x) Promotion of Rubber Product Industry

36. Laws Following laws are to encourage, promote and foster the establishment of private SMEs. • Private Industrial Enterprise Law 1990 • Promotion of Cottage Industries Law 1991 • Myanmar Citizen Investment Law 1994 36

37. Business Registration Myanmar Citizen Investment Law, MCIL(1994) With a view to promote investment of Myanmar citizen and to provide equal treatment as foreign investors by granting them the right to enjoy to tax incentives, the MCIL was promulgated on 31st March 1994 and its procedures were prescribed on 3rd August 1994. Partnership Act (1932), Myanmar Company Act (1914) Company limited by shares is required to register. There are two types of companies, privated limited company and public limited company. The number of shareholders must be at least seven. The company, after registeration, must apply for a Certificate of Commencement of Business. 37

38. Employment Regulations • Labor Act and Social Security Act (1954) • Working hours for employees are 8 hours per day,48 hours per week. • Private enterprises employing at least five persons are covered by the Social Security Act 1954. The contribution to the scheme is approx. 4% of the insured wage and the ratio of contribution is 2.5% by employer and 1.5% by employee. • The selection of the worker should be made only those who registered at the Myanmar Labor Department. 38

39. Basic Principles of Private Industrial Enterprise Law (1990) • To enhance the higher proportion of the manufacturing value added in the gross of domestic product, and to increase the production of the respective economic enterprises which are related to the industrial enterprise; • To acquire modern technical know-how for raising the efficiency of industrial enterprises and to establish the sale of finished goods produced by the industrial enterprise not only in the local market, but also in the market abroad. 39

40. Basic Principles of Private Industrial Enterprise Law (1990) • To cause utilization by relying mainly on local natural resources; • To cause narrowing down of the gap between rural development and urban development by causing the development and improvement of industrial enterprises; • (5) To cause opening up of more employment opportunities; 40

41. Basic Principles of Private Industrial Enterprise Law (1990) (6) To cause avoidance of or reduction of the use of technical know-how which cause environmental pollution; (7) To cause the use of energy in the most economical manner. 41

42. Key SME Support Agencies and Services in Myanmar (b) Ministry / Institutional Level • - Directorate of Industrial Supervision and Inspection • (Ministry of Industry 1) • Science and Technological Research Department (MSTRD) • Sub-Committee related to the ASEAN SMEs Agencies Working Group (Ministry of Industry 2) • - Cottage Industries Department (Ministry of Cooperative) • Directorate of Labour • Myanma Agricultural Produce Trading (Ministry of Commerce)

43. Union of Myanmar Federation of Chambers of Commerce & Industry (UMFCCI) Myanmar Industries Association (MIA) Myanmar Agro-based Food Processors & Exporters Associations (MAFPEA) Myanmar Women Entrepreneurs Association (MWEA) Myanmar Computer Industry Association (MCIA) Myanmar Construction Entrepreneurs Association Myanmar Engineers Society (MES) Myanmar Forest Products & Timber Merchants Association Myanmar Garment Manufacturers Association Myanmar Pulses, and Beans & Sesame Seed Merchants Association Myanmar Pharmaceutical & Medical Association etc… Key SMEs Support Agencies and Services in Myanmar (c) Non Government Organizations

44. Role of MIDB : Financial assistant to SMEs Myanmar's financial structure includes state and private banks and state insurance institution. To assist the SMEs in finance, Myanma Industrial Development Bank (MIDB) had been formed in 1997 under MIDC. Loans are provided mostly on the recommendation of the Industrial Zones Supervision Committees. Up to September 2009, Loans amount Kyat 21,715.379 Million were granted to 265 no. of SMEs (in which 166 Nos are SMEs and loan amount is Kyat 10,203.786 million). The interest rate is 15% for SMEs established at Industrial Zones. MIDB has 5 branches, they are : - Yangon, Head Office and BayinNaung Branch - Mandalay Branch - Monywa Branch - Meikhtila Branch - Nay Pyi Taw Branch

45. Activities and Services • Activities and services of Myanmar Industries Association (MIA) are: • Consultancy services in project formulation and implementation. • Conducting seminars, workshops and trainings on topics of commercial. industrial and managerial interests. • Publication and distribution of industrial information bulletins and newsletters. • Organizing member’s company to participate in local and overseas trade fairs and exhibition. • Organizing and making arrangement for the exchange of information and views among local and foreign industralists. 45

46. Activities and Services of (MIA) • Organizing and arranging business opportunities networking between local and foreign enterprises. • Organizing and making arrangements for factory visists, study tours and sending business mission overseas. • Acting as representative of the member’s companies in advising governmentin matters affecting businesses and the economy. • Facilitating networking through a variety of Chambers/Associations activities.

47. Myanmar Agro-based Food Processors and Exporters Association The government of Myanmar realizes that due to the geographic location, demand potential, availability of raw materials and human resources, the food sector is seen as one of the most promising sectors for not only domestic industrial development but also export growth. Therefore, under the auspices of the Industrial Development Committee headed by the Prime Minister and the support of the Ministry of Commerce, the Myanmar Agro-based Food Processors & Exporters Association was founded on 21st August 2006 with the aim of developing the food industry of the country. Objectives Achieve all round productivity increase through systematic development of production capabilities of local agro-based food processors. Work towards the improvement of local quality standard in line with international levels leading to the development of wide spread value added quality products which can effectively compete in the local and international markets.

48. 6. Increase the contribution of agro-based processed foods sector in export promotion and import substitution through development of international level high quality value added products. 5. Aid local-based food industries in penetration, sales, marketing and expansion of international markets. 6. Aid local-based food processors in new product development through knowledge, technology, quality and market competencies. 7. Improve supply chain management of raw material suppliers, finished goods manufacturers and buyers for faster and easier linkages. 8. Undertake human resource development and information dissemination activities to improve the information and knowledge based of agro-based food processors. 9. To work towards the growth of new enterprise in the agro-based food industry for increased business opportunities an skilled work force. 10. To establish market linkages with local and foreign business organizations and associations for cooperation in the areas of knowledge and market access development.

49. Activities of MAFPEA

50. Regional Co-operation ASEAN Countries - Indonesia (8-8-67) - Malaysia (8-8-67) - Philippines (8-8-67) - Singapore (8-8-67) - Thailand (8-8-67) - Brue nine (8-1-84) - Vietnam (28-7-95) - Myanmar (23-7-97) - Laos (23-7-97) - Cambodia (30-4-99) 50