The index is based on a nationwide survey of 4874 firms – many of which are small and medium-sized enterprises – in services and manufacturing sectors and represents the voice of private businesses across the country.

The MBEI was first launched in Vietnam over a decade ago by The Asia Foundation offering insight into economic governance and helping guide reform efforts. Now adapted to the Myanmar context, the index is a tool for policymakers, investors and citizens to understand the strengths and weaknesses of the country’s economic governance. The report also serves as the first step to provide necessary data for the local government to pursue extensive economic governance reforms.

Here are the six key takeaways of the index that you need to know ranging from transparency to favouritism.

1. The government needs to substantially improve transparency.

The percentage of businesses having access to vital information is extremely low, and major improvements are needed for government transparency. In general, businesses have very limited access to important planning and legal documents provided by the government.

Only 3.6 percent of firms report having access to the state or region budget, and only 4.3pc of firms report having access to new investment plans.

Among the application documents reviewed, the index found that the easiest to access were standard application forms for fulfilling regulatory processes, yet only 26.9pc of firms had access to these forms.

This lack of government transparency could reduce investment, and firms need to understand how to comply with official regulations and how to maximise their earnings potential in line with government investment and budget plans. Transparency provides businesses with the certainty and stability crucial to operate and plan ahead effectively.

2. Strong favouritism exists towards well-connected businesses.

The business environment in Myanmar remains biased in favour of businesses with connections to elite decision makers, which distorts investment patterns and reduces business productivity.

Sixty-four percent of respondents claim that the government has shown favouritism in land access for businesses with strong connections, and 44.6pc of firms believe that there is also favouritism in access to loans.

In contrast, only 19.8pc claim that there is favouritism in access to information, and only 25.2pc of firms claim that there is favouritism in administrative procedures.

3. Less than 10pc acquired an official registration certificate.

The majority of businesses said that they have obtained an operating licence – 65pc of businesses surveyed have secured only a township-level operating licence, while an additional 17pc has an operating licence from a City Development Council in Nay Pyi Taw, Yangon and Mandalay.

Only 6pc of businesses have acquired a registration certificate from the Directorate of Investment and Company Administration (DICA).

However, 60pc of businesses reported that they believe they have all the required documentation necessary to be fully legal within three months of starting the application process. Only 9.3pc of firms encounter difficulties in obtaining such documentation.

Furthermore, Myanmar companies spend less time on paperwork and find officials more effective than compared to the average Vietnamese firm. However, firms here are twice as likely to face regulatory inspections and are much more likely to complain that regulatory fees are not clearly posted in local offices than their Vietnamese counterparts.

4. Qualified labour is hard to find.

Recruitment of qualified workers, particularly skilled technicians and managers, is a major problem for firms in the country.

Over half of respondents found it difficult to recruit manual rank-and-file workers, technicians, accountants, supervisors, and managers. Moreover, finding good workers is expensive. The median firm spends 5.4pc of its operating budget on labor recruitment. Taken together, these results imply that it is difficult and expensive to find qualified applicants.

Among all the positions surveyed, Mon State led the way, with easy recruitment at more than 50pc for supervisors. Locations which performed the best with respect to ease of recruitment were Ayeyarwady Region and Mon State, with 33.0pc (for technicians) and 46.2pc (for managers), respectively. The worst in the ease of technician and manager recruitment are Kayah State and Bago Region, below 10pc at 7.7pc and 8.9pc, respectively.

5. Informal payments are not common.

MBEI findings generally align with the World Bank’s assessment that for many businesses informal payments are infrequent and also small.

Seventy-four percent of firms report that informal payments are not common for firms like them, and 79pc spend less than 2pc of their annual revenue on informal payments.

In comparison to neighbouring Vietnam, 60pc of firms say that informal payments are common, and only 50pc pay less than 2pc of revenue in informal payments.

For informal payments in procurement, 68pc of firms that participated in public tenders claim that commissions are not necessary for winning government contracts.

6. Poor transport and power infrastructure remains a key business concern.

The quality of infrastructure is causing a severe concern for businesses in Myanmar. In particular, 51pc of companies revealed that they are dissatisfied with road quality and electrical power. In regards to the telephone 66pc of firms reported it as good or very good and internet connectivity, 54pc reported having the same sentiment. However, even these infrastructure features encounter problems.

The report finds that the median firm experiences 20 hours of lost telecommunication and internet coverage, and 20 hours of lost electric power in the past month. Moreover, the median firm also claimed to have lost 7 days of transport activity due to flooded roads. These types of poor infrastructural works can cost companies tremendous amounts of money in lost and spoiled products.

The difference is even more noticeable than that of indicators within other key points. Nay Pyi Taw, the country’s capital, for instance, recorded only 16 hours of lost power in the month preceding the survey and only 10 days of road closures due to flooding in the past year. In comparison, in Ayeyarwady Region companies there experienced 67 hours of power outage and 67 days of impassable roads.

Read the full report on https://asiafoundation.org/wp-content/uploads/2019/04/The-Myanmar-Business-Environment-Index-2019_2019May_update.pdf

Source: https://www.mmtimes.com/news/myanmar-business-environment-index-six-key-takeaways.html