Interview: U Khin Maung Cho
How is the government addressing the main challenges to industrial development?
U KHIN MAUNG CHO: Industrial development still faces many interconnected challenges that curtail the competitiveness and productivity of our manufacturing sector. Those challenges are identified in the government’s industrial plan, which is aligned with the National League for Democracy’s economic policy. Some of the government’s chief concerns are the high cost of land, the inadequate supply of electricity and energy, the shortage of a skilled labour force and the lack of quality infrastructure and transport links.
Industrial real estate prices across Yangon are consistently high and industrial facilities continue to fall short of international standards. While part of the price increase was driven by the influx of new investment into the country, it is also true that the other part of the problem is linked to Myanmar’s land laws. To deal with these issues the government recognises the importance of moving forward with land reform. It is also tackling land speculation by confiscating land in industrial zones that has been undeveloped for over three years. The objective is to control monopolisation in industrial areas, with a particular focus on Yangon and Mandalay, where demand for land is higher. The Yangon regional government has become more diligent in dealing with this problem as part of efforts to reduce land prices for investors seeking to build factories.
What effects can be expected from the creation of one-stop service centres across Myanmar?
KHIN MAUNG CHO: Developing the four economic corridors – north-south, east-west, north-east-southwest and Yangon-Myawaddy – is the backbone of the country’s industrial policy. As economic development spreads into new regions outside of Myanmar’s main urban centres, decentralisation of the decision-making process for the approval of new investments is an important step to facilitate and attract more investment, while also reducing time-consuming procedures. Having one-stop service centres in each region will help provide useful information on strategies for starting a business and the best ways of accessing finance and technology. Business owners will be able to register their companies at these regional centres, apply for licences for investments up to $5m, pay taxes and obtain visa documentation. For larger investments the Myanmar Investment Commission will continue to issue permits and approvals, while the relevant ministry will still have responsibility for conducting the preliminary assessment with regard to safety and general impact.
Do you think the new minimum wage will affect the global competitiveness of Myanmar’s industries?
KHIN MAUNG CHO: The global competitiveness of our labour intensive industries cannot be exclusively measured in terms of modifications to the national minimum wage. The government, unions, employers and other bodies from civil society have been in discussions regarding a potential increase of the minimum wage, which was last set at MMK3600 ($2.75) per day in 2015.
While the government is conscious about the importance of striking the best possible deal for all parties, it is also focused on improving other factors that undermine the competitiveness of local industry, namely the general skills of the industrial workforce, safety and quality standards. Gains in productivity will come from larger investment in vocational training, which has been identified as a key priority. Only better education levels will allow Myanmar’s industrial sector to produce more, reduce its current reliance on the imports of intermediate goods from China, Thailand and India, and boost exports. These transformations will not happen overnight, but some segments are starting to show good signs of progress, such as cement and pharmaceuticals. The government has also been working on an institution that will enforce and supervise intellectual property regulations to better protect Myanmar’s industries.
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