Myanmar: Planning and finance minister hints at favouring import substitution

• May 26, 2017

The administration will focus on supporting the developments of local small and medium enterprises (SMEs) through measures such as tackling illegal trade, boosting export-oriented businesses and improving industrial zones, according to the vice president, the minister of the Ministry of Planning and Finance and Yangon Region’s chief minister.

Notably, the planning and finance minister also hints at supporting import-substitution industrialisation, advocating replacing foreign imports with domestic production.

SMEs are vital to the growth of the economy and so those measures will be implemented quickly and effectively, they said at a meeting with the business community on May 20.

At the local level, illegal trade accounts for 65 percent for some industries, and those businesses who pay taxes find it difficult to compete. It is not a level playing field, Vice President U Myint Swe said. He added that the government will clamp down on illegal trade throughout the country.

“If there is illegal trading, it cannot be possible for SMEs to develop fully.

“Therefore, we will carry out swift actions. We will form groups to crack down illegal trade in border areas. We will increase interests [the reward] for those who help us with tracking down the illegal trading,” he said.

Apart from seizing illegal trades in border areas, examinations will be also conducted for stores, shopping centres and local companies, Union Minister for Planning and Finance U Kyaw Win explained.

“We will inspect illegal goods in shopping centres, shops and companies.

“If we do not act, businesses and SME entrepreneurs who pay local taxes will struggle or even disappear due to the competition from those undertaking illegal trading,” he said.

The minister also said that the development of SMEs calls for import substitution, as Myanmar’s economy is import-oriented. He also promised that the government will give priority to supporting import-substitution industries and export-oriented industries.

“We do imports because the local market is big. If we only import, the country will not develop. That’s why we will focus on export-oriented businesses and import-substitution industries.

“We will provide technology and financial support. However, as there are limitations, we will be selective and support those businesses with concrete plans,” he said.

As Yangon is the commercial hub of the country, industrial zones will be upgraded so that SMEs can survive, according to Yangon Region Chief Minister U Phyo Min Thein.

Moreover, applications to transform farmlands into sites for other purposes, such as industrial zones, will be considered. Illegal settlements will also be dealt with, U Phyo Min Thein added.

“Yangon has 29 industrial zones. We are trying to upgrade all the zones, and we will cooperate with the private sectors to supply electricity and water, construct the basic infrastructure and buildings, and implement sewage system in the zones.

“We are preparing to start the trials in Hlain Thar Yar Industrial Zone 1. We are also researching techniques to do small-scale electricity production within the zone as a backup during power outages.

“Resettlement procedures for squatters have also started, and cooperation among ministries is needed in the resettlement process. The resettlement needs to be done in line with international standards.

“Some shop owners are expanding the areas they occupy illegally. The city development committee will confiscate any merchandise placed on the streets,” the chief minister said.

At present, local SMEs cannot develop properly due to the lack of access to finance and other reasons, businesses said.

Earlier this week, local businesses have, again, urged the government to open up the financial sector for foreign banks to take part. Liberalisation, those businesses argue, will provide them better access to capital necessary for developing their businesses and compete with other economies in the region.

Source: http://www.mmtimes.com/index.php/business/26160-planning-and-finance-minister-hints-at-favouring-import-substitution.html