Nationwide survey launched to draft business environment index

The San Francisco-headquartered Asia Foundation (TAF) and the UK-funded DaNa Facility have launched a three-year nationwide program to improve sub-national business environment. The program is funded by the UK Department for International Development (DFID) and implemented by DAI Europe, a London-based international development company.

DFID provided £25 million (K43.9 billion) to fund DaNa, which supports inclusive economic growth and private sector development in Myanmar, through responsible and sustainable business growth, investment and trade.

The three-year program aims to enhance state and regional competitiveness in the country and promote sustainable and inclusive economic growth through creating a sound business environment. It will facilitate dialogue between businesses, national and sub-national governments, and other stakeholders with regards to business environment reforms to promote competitiveness.

The core part of the program will be the Myanmar Business Environment Index (MBEI), which will identify key constraints and areas for improvement in the regulatory environment at the state and regional level and raise awareness among key stakeholders on opportunities for reform.

The MBEI will be generated from a nationwide survey of domestic businesses from across the country’s states and regions. The index aims to promote streamlining of regulatory practices at the sub-national level to facilitate private sector development and to remove unnecessary bureaucratic obstacles and opportunities for rent seeking. At the same time, it will serve as a diagnostic tool for evaluating the local business environment in Myanmar.

Peter Brimble, team leader for the DaNa Facility, told The Myanmar Times that the MBEI is focused on understanding and improving the local business environment in which Myanmar companies operate. In addition, it will complement previous business surveys in Myanmar and existing research by helping to fill remaining gaps in people’s understanding of the sub-national business environments.

“Specifically, much more needs to be understood about the capacity of sub-national governments to improve the business environment in Myanmar, including the capacity of various offices and administrative divisions at the sub-national level, e.g. Development Affairs Organisations [DAOs] and General Administrative Departments [GADs], to improve economic governance and promote private sector development.

“Various aspects of economic governance in Myanmar fall to national-level ministries, state and regional governments, townships, towns, villages, and tracts, so an initial research phase of the project will aim to better understand these respective roles at the sub-national level,” he said.

He added that a large part of the project will be to contributing to ongoing efforts to map out the role of the domestic private sector in Myanmar, in particular in the states and regions.

“There have been a number of efforts to do this, and the MBEI will review that research and further contribute to improving our understanding.

“For example, identifying the relevant authorities with respect to sub-national economic governance is particularly challenging in Myanmar. Myanmar businesses engage with a number of different offices at the sub-national level, including DAOs and GADs, and various relevant ministries,” he said.

According to Mr Brimble, authority often hasn’t devolved to local governments and many key stakeholders remain without strong mandates. The MBEI will further the understanding of what opportunities do and don’t exist for sub-national governments aiming to improving the local business environment in the country.

Citing examples in the region, he added that these tools have been extremely valuable in supporting government reforms and decentralisation efforts.

“Similar tools — like the Vietnam Provincial Competitiveness Index — have been applied successfully elsewhere in the region over the past 10 years.

“These have proven highly valuable to governments, business and media in measuring the business environment, identifying specific reforms, and spurring innovative responses. The MBEI will adapt these tools to the Myanmar context.

“The Vietnam Provincial Competitiveness Index, which the MBEI will be partly modelled on, has been widely accepted there and now serves as a critical tool for government to engage in public-private dialogue and conduct diagnostic analysis of economic growth,” he said, adding that similar economic governance indices over the past decade have been effective tools for business environment improvements in a number of countries in the region.

“Investors have cited it [MBEI] in investment decision-making and it has served as a basis for important economic reforms at the provincial level. Similarly, the MBEI will serve a key tool to support government authorities in the states and regions in their efforts at creating stronger business environments,” he explained.

The MBEI will adapt lessons learned from regional experiences to suit the unique challenges and opportunities of doing business in Myanmar.

Kim Ninh, country representative for The Asia Foundation, understanding of the local economic governance is necessary for the country to step up its business environment.

“For many Myanmar micro, small and medium enterprises, the first engagement with government is at the township level, whether this involves business registration, tax collection, or inspection of a business. In order to improve the business environment in Myanmar, a better understanding is needed of the aspects of local economic governance that facilitate or restrain day-to-day business activity,” Ms Ninh said.

“Economic governance indices are a valuable tool for providing relevant information on business environment to the business community, policy makers, and other stakeholders.

“The index will provide a specialised instrument to measure the specific policy actions of national and sub-national authorities to spur progress on the local business environment,” she added.

The MBEI will also reinforce efforts to develop state and region investment promotion and facilitation strategies by the newly formed state and region investment committees. The three-year project will involve nationwide surveys in years one and three, with extensive outreach and dissemination in years two and three. The MBEI is targeted for release in late 2018.

Vietnam Provincial Competitiveness Index

Introduced in 2005, the Vietnam Provincial Competitiveness Index conducts an annual business survey, assessment and ranking of the economic governance quality of provincial authorities in creating a favourable business environment for development of the private sector. The overall index comprises ten sub-indices, reflecting economic governance areas that affect private sector development. Criteria for a province considered to perform well include:

1) low entry costs for business start-up;
2) easy access to land and security of business premises;
3) a transparent business environment and equitable business information;
4) minimal informal charges;
5) limited time requirements for bureaucratic procedures and inspections;
6) limit crowding out of private activity from policy biases toward state, foreign, or connected firms;
7) proactive leadership in solving problems for enterprises.

Source: Myanmar Times