Viewpoint: U Tin Win
Before the military administration came to power in 1962, Myanmar was one of the most significant economies in ASEAN, boasting a well-educated workforce and a favourable trade balance. The country was a key exporter of textile products and other manufactured goods to Thailand, and its rice exports were shipped across the globe. However, this was reversed after the military came to power, and imports from Thailand and China began to expand rapidly.
This self-imposed isolation, along with US and Western sanctions, led to Myanmar becoming one of the least-developed countries in the world. The country was also home to an increased number of armed rebellions in ethnic minority states – an issue that defines the country today, standing in the way of the much touted peace dividend. As a result of such issues, Myanmar has struggled to attract investment and per capita income remains low.
The government is redefining the policy landscape by cautiously updating regulations and tax laws to fall more in line with international best practices. To guide these efforts, the government has launched the Myanmar Sustainable Development Plan, putting into place the essential building blocks to shape progress. Primarily, the plan introduces a range of policies and regulations to advance good governance and promote best practices in business. In addition, procedures are also being streamlined to remove bottlenecks and accelerate reform implementation. The Financial Regulatory Department at the Ministry of Finance, Planning and Industry is one such institution modernising regulations, for example. Charged with liberalising the insurance sector, they have attracted the industry’s key global players, who are confident they will be able to compete and grow while obeying their own strict compliance regimes. The market is changing from a closed, tightly regulated and centrally controlled environment, towards a more liberal ideal, where competition will define products and strategy.
Myanmar’s openness to international business is being felt across the financial world. In the banking sector, in addition to the 13 foreign-owned bank branches currently operating in the country, the Central Bank of Myanmar is looking to allow more global banks to operate, either as branches or subsidiaries. This means 2020 is an important year for the sector, and mergers and acquisitions will become a feature of the landscape as the Companies Law comes into effect and permits 35% investment in local banks.
Regarding tax, the Union Tax Law of 2019 came into effect towards the end of that year, notably bringing with it regulations aimed at moving undisclosed capital into the formal economy. This attempt to formalise the economy has taken the form of a tax amnesty for unaccounted income. This directive details thresholds at which individuals can, at preferential rates, declare capital and legitimise their business. The efficacy of such measures remains to be seen, but certainly it is an issue that requires a government response.
If you talk with the business community in Myanmar, the most common complaint you are likely to hear is the need to consult across multiple ministries while applying for licences. The state is working on a single-window system within the Myanmar Investment Commission – a plan that will see processes centralised and streamlined. This move will have a multiplier effect on business, and will likely have an positive effect on Myanmar’s ranking on the World Bank’s ease of doing business index, which reflects improvements to the business environment. The Asian Development Bank forecasts that by 2020 Myanmar will be the fastest-growing economy in South-east Asia.
Myanmar is in the process of transforming from a closed economy into a larger, more transparent, competitive and rule-based one. Within this, there is space for honest and sustainable global investment, and we must all work to ensure that foreign funding brings genuine benefits for the people of Myanmar.
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