According to the survey, more than three quarters of the 70 European companies active in Myanmar, which responded to the poll, rated the Myanmar business environment as poor or needing improvement, compared to 67 percent in 2016. This year, the number of responses received for the survey was up by 25pc over the year before.

Last year, some companies had also rated the business environment to be very good or outstanding. This year though, not a single company believed this to be the case.

In fact, about a third believed the business environment had changed for the worse during the past 12 months compared to just 18pc in 2016. The companies cited regulatory issues, lack of a qualified labour force and legal uncertainty as biggest challenges in Myanmar.

Positive prospects

Yet, not every response was negative. Indeed, at least a quarter of the surveyed companies said they experienced a positive change in the business environment this year, with a number of firms saying the business environment “improved greatly.”

“With the enactment of the new Investment Law, we have granted investors different levels of tax exemption depending on sector and type of investment. We also allowed the Myanmar Investment Commission to approve investments in the various states and regions and created new industrial zones and promoted sectors” said U Than Aung Kyaw, Deputy Director General, Directorate of Investment  and Company Administration (DICA).He added that 15 DICA branch offices have been opened across the country.

Meanwhile, more than 40pc of the companies surveyed this year are profitable versus 50pc in 2016, and the same number of firms expects to be profitable within the next two years. Meanwhile, the majority expect to provide more services and see market share rising within the next three years. In addition, more than 70pc expect an increase in earnings over the same period.

Of the Europe companies in Myanmar, the UK, Netherlands and France are the biggest investors, with most active in the manufacturing, oil and gas and telecommunications sectors.

For most European companies, the opportunities in Myanmar’s domestic market remain the most important reason for setting up or continuing operations in the country, the survey showed. Others said expansion, establishing a regional base of operations and progress in economic reforms are key reasons for doing business in Myanmar.

In fact, although 96pc of Europe companies in Myanmar have their headquarters in Yangon, a larger share of is planning to reinvest in Mandalay, Naypyidaw and Tanintharyi Region compared to last year. However, the number of companies interested in reinvesting in Yangon and Rakhine State decreased.

New law

Looking ahead, the majority of European companies remain positive on their expectations of operational change during the upcoming three years. Among those changes is the the Companies Law, which was passed on

December 6. Although implementation will take another 8 months, “Myanmar has improved a lot in a very short time,” said Pedro Campo Llopis, Deputy Head of Cooperation, European Union Delegation to Myanmar.

Mr Llopis stressed though, that a higher level of commitment is needed to resolve the crisis in Rakhine to improve investor sentiment and said much more can be done to improve the current business environment.

U Than Aung Kyaw concurred that barriers remain in the way of economic progress and development in Myanmar. “The government is aware of the difficulties. That’s why, under the Companies Law, foreign investors can now own 35pc stakes in local companies, which enables a stronger capital market,” he said.

While it will take an additional 8 months at least to fully implement the new legal framework in a transparent and comprehensive way, “it is evidence of the government’s resolve to make the business environment better. With the Investment Law and Companies Law in effect, I think that in a year or two, the business environment in the country will be at its best,” U Than Aung Kyaw said.

Source: https://www.mmtimes.com/news/business-environment-poor-prospects-intact-europe-survey.html