SEZs offer lessons for manufacturing

SPECIAL Economic Zones (SEZs) in Myanmar are considered by the Ministry of Industry as the main pillar of economic development, according to the ministry’s spokesperson. The government aims to boost the growth of manufacturing sector by linking the SEZs and domestic industrial zones.

U Ko Ko Lwin, permanent secretary of the Ministry of Industry, said that technology transfer, infrastructure development and financing are the three benefits SEZs can bring to existing industrial zones across the country. The experience deriving from the SEZs will provide a good basis and experimentation for local investors and factory owners on how to make an industrial zone successful.

“The growth rate of the manufacturing sector at present is dropping, so we need to bring the momentum back.

“The main thing needed is mechanisms to connect SEZs with industrial zones. There are many challenges which arise from importing raw materials, processing, and then considering whether finished goods will be for either domestic consumption or for export purposes,” he said.

According to the new investment law, if the finished product is for export, it can be tax-exempted in varying degrees. But when developing the manufacturing sector, land as well as the supply of water and power, among other infrastructures, have to be reliable and sufficient.

U Ko Ko Lwin added that the developers failed to develop and properly operate factories after receiving land from the government in the industrial zones – one of the main factors constituting the failure of the government’s import-substitution and export-promotion strategy.

“In newly developing zones, investors need to send a proposal. The committees in charge of those industrial zones will make a decision, depending on the commitment outlined by the proposals.

“Then they will lease the land for between 50-70 years, and depending on conditions rather than selling the land to investors. A monitoring process will also be implemented in order to track the development of the sector,” he said.

There are 30 local industrial zones across the country and 11 of them are in Yangon Region.

Myanmar’s manufacturing sectors roughly made up 20 percent of the GDP in 2016 – with K2.2 billion from garment exports , according to the ministry’s statistics.

“In consequence to the economy’s slowing-down, the manufacturing sector has also been affected last year.

“We expect to have at least 25 to 30pc of the GDP from the manufacturing sector in the near future,” U Ko Ko Lwin commented.

Source : Myanmar Times

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