Corruption, access to lands and lack of technology: obstacles to manufacturing sector

Myanmar’s manufacturing sector faces various challenges, including corruption, lack of technology, inadequate financing, a lack of skilled labour, inflation of land and rent prices and inadequate supplies, all of which are most likely to constrain growth in the sector, according to the Myanmar Business Survey.

A recent OECD report describes 34 major obstacles to the current operations of manufacturers. Those obstacles for eight priority sectors are: corruption, lack of technology, the availability of lands, interest rate, skilled labour, political instability, lack of financing and access to foreign loans, according to the UMFCCI and UNESCAP-2014, Myanmar Business Survey Database.

The enactment of strict rules and regulations has put a heavy burden on small- and medium-sized enterprises (SMEs).

Myanmar’s development of SMEs is relatively low compared to Asian countries. Some countries, including India, Japan and Malaysia have established SME funds, or apex SME banks, and provided various financial services to their SME sectors. Myanmar’s SMEs face more difficulties in accessing funds and technological assistance than most other Asian countries.

“Myanmar’s SMEs face a lack of financial sources and have no collateral. The main thing SMEs [around the world] want to do is to take loans. They can take loans from their friends and relatives, banks and non-bank financial institutions. In addition, they can get loans by cashing in their bonds and stock shares. But our country has very few financial sources. The country is not in a position to issue bonds. And the stock market has yet to materialize. Taking loans from banks is impossible, as banks are unable to meet the increased demands,” said Set Aung, the vice-governor of the SMEs Development Seminar held last December.

The low the growth rate of SMEs in the manufacturing sector can be attributed to the fact that they account for 99 per cent of the sector, Set Aung said.

“Other countries have very simple financial products, so SMEs can get money via such financial products without taking any loans. But our country has yet to see such systems. These are problems we are facing now,” Set Aung added.