Interview: U Khin Maung Win
How do you see the newly drafted Foreign Investment Law impacting the industry and retail sector?
U KHIN MAUNG WIN: The government and lawmakers should be commended for their efforts to attract foreign direct investment (FDI). We do expect investment laws to go through a few more revisions. All investors prefer to deal with little paperwork and faster processes. The laws are still restrictive as the execution and approval for incentives could involve multiple agencies over an extended period. The laws also need to be more specific and rely less on investment bodies and individuals. There is a policy vacuum for post-investment compliance and oversight of regulating bodies. The government needs to be bold in deregulating and make hard choices if Myanmar is to be competitive. There are also concerns that FDI could suppress the development of local small and medium-sized enterprises (SMEs). On the contrary, FDI can only complement retail growth and benefit local SMEs as many operating conditions in the retail sector are Myanmar-centric.
What steps need to be taken to strengthen the nation’s distribution channels?
KHIN MAUNG WIN: The volume of increased trade activity will overwhelm existing infrastructure and limited trade financing impedes channels. Many firms operate with very low inventory turns. Import/export and Customs clearance processes have improved significantly in the past two years, but we need to deregulate more. Importing our products from Singapore to Yangon takes four to five weeks longer than the same process between Singapore and Vietnam. Revised taxation policies and self-assessed rather than administrative-assessed systems will improve efficiency.
What should new entrants bear in mind before they seek to fulfil their firms’ staffing requirements?
KHIN MAUNG WIN: Focus on training. New entrants will face a shortage of qualified workers and should be committed to providing training. We have a four-year apprenticeship for our technicians before they can be Caterpillar certified. It takes us months to instil the culture and provide multifaceted training to all other new recruits. The country’s education system went downhill in the past few decades. Although we are now on the right path, it will take another generation or two before the private sector can easily recruit qualified applicants. Policies are still weak in requiring foreign enterprises to invest in local talent. Investors should take the legitimate grievances of local communities seriously. Despite this, we have a very dedicated workforce.
What lessons can Myanmar learn from other ASEAN nations as it looks to advance its economy?
KHIN MAUNG WIN: Jeffery Sachs once said a model economy would be a perfect combination of success stories such as German labour-market policies, Swedish pensions, Canadian health care policies, etc. Many countries in ASEAN have their own policy successes.
Singapore stands out among all despite having no natural resources to support their economy. We do not have an unlimited war chest, and subsidies will weaken the economy in the long run. Even resource-rich countries like Indonesia and Malaysia cannot sustain such policies. It is not easy for policymakers to strike a fine balance, as we do need to protect the people, especially in the present climate where the benefits of economic reforms may take longer to reach the masses.
What approach do you think government should take in terms of privatisation?
KHIN MAUNG WIN: We need to speed up privatisation as the government is still shouldering the burden of loss-making business assets and innovative entrepreneurs can help turn these around. We are encouraged to see the government is mindful of concerns that state assets could end up in the hands of a few oligarchs if privatisation is not managed properly. We would like to see the leaders emphasise more of the old culture, which frowns upon private and free enterprises.
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