SMEs promotion policy(korea).ppt

Country Report – Union of MyanmarCountry Report – Union of Myanmar

Prepared by:Prepared by:

MYO AUNG THANMYO AUNG THAN

13-28 August 2009,Korea 13-28 August 2009,Korea

Small and Medium Enterprise promotion policy in Myanmar

Part-1Part-1Part-1Part-1

Overview of Overview of

Economy and SMEsEconomy and SMEs

Part-1Part-1Country Profile

Located in south-eastern Asia, bordering the Located in south-eastern Asia, bordering the

Andaman Sea and the Bay of Bengal, between India, Andaman Sea and the Bay of Bengal, between India,

Bangladesh, China, Laos and Thailand. Bangladesh, China, Laos and Thailand.

The economic system has been changed from The economic system has been changed from

centrally-planned economy system into market-centrally-planned economy system into market-

oriented system since 1988.oriented system since 1988.

The economic structure is mainly featured by The economic structure is mainly featured by

agricultural produces, especially rice, cereals crops agricultural produces, especially rice, cereals crops

and beans, with supplements of natural resources like and beans, with supplements of natural resources like

petroleum, natural gas and forest products.petroleum, natural gas and forest products.

Education in Myanmar has been well developed, Education in Myanmar has been well developed,

about 83.1% (in 1995) of population are educated.about 83.1% (in 1995) of population are educated.

Part-1Part-1economic Environment

Total AreaTotal Area : 676,577 km: 676,577 km22

PopulationPopulation : 55 millions : 55 millions (2009 est.)(2009 est.)

Labor ForceLabor Force : 27.8 millions : 27.8 millions (59% of population)(59% of population)

GDPGDP : 12,254.6 billion kyats : 12,254.6 billion kyats (2006 est.)(2006 est.)

GDPGDP growth rategrowth rate : 13.2% : 13.2% (2006 est.)(2006 est.)

Structure of GDPStructure of GDP

AgricultureAgriculture : 40%: 40%

IndustryIndustry : 20%: 20%

ServicesServices : 40%: 40%

Part-1Part-1Organization

The Directorate ofThe Directorate of Industrial Supervision and Inspection Industrial Supervision and Inspection

(DISI) is the service rendering organization under the Ministry of (DISI) is the service rendering organization under the Ministry of

Industry (1). With the head office at Nay Pyi Taw, it has fifteen Industry (1). With the head office at Nay Pyi Taw, it has fifteen

regional offices residing in capital cities of seven states and regional offices residing in capital cities of seven states and

seven divisions .seven divisions .

FunctionFunction

DISI is mainly responsible to promote, encourage and DISI is mainly responsible to promote, encourage and

foster the private industrial enterprises , by identifying and foster the private industrial enterprises , by identifying and

responding to their needs and business requirements and responding to their needs and business requirements and

supervise and inspect private industrial enterprisessupervise and inspect private industrial enterprises

Part-1Part-1Economic Policy

The Government has been formulating and implementing national The Government has been formulating and implementing national development plan to attain all-round development of national economy in development plan to attain all-round development of national economy in accordance with four economic objectives:accordance with four economic objectives:

1.1. Development of Development of Agricultural as the baseAgricultural as the base and all-round development of other and all-round development of other sectors of the economy as well.sectors of the economy as well.

2.2. Proper evolution of the Proper evolution of the market-oriented economic systemmarket-oriented economic system..

3.3. Development of economy inviting participation in terms of Development of economy inviting participation in terms of technical know-technical know-how and investmentshow and investments from sources inside the country and abroad. from sources inside the country and abroad.

4.4. The Initiative to shape the national economy must be kept The Initiative to shape the national economy must be kept in the hands of in the hands of the State and the National People.the State and the National People.

Four Economic ObjectivesFour Economic Objectives

Part-1Part-1Major Industries

Industry Contribution to

GDP (bn. kyats)

% of GDP

(1) Agricultural Sector(1) Agricultural Sector

(2) Manufacturing Sector(2) Manufacturing Sector

(3) Live Stock & Fisheries(3) Live Stock & Fisheries

SectorSector

1,8431,843

532532

445445

40%40%

11%11%

10%10%

Part-1Part-1Industrial Policy

The main aim of Industrial Policy was to develop Myanmar as an The main aim of Industrial Policy was to develop Myanmar as an

industrialized and developed country. Hence, the MIDC was formed in 1995 industrialized and developed country. Hence, the MIDC was formed in 1995

and laid down the following objectives for industrial development.and laid down the following objectives for industrial development.

1.1. To develop the industrial sector To develop the industrial sector basing the agriculturebasing the agriculture..

2.2. To enhance the To enhance the quantity and qualityquantity and quality of industrial products. of industrial products.

3.3. To increase the production of To increase the production of new types of machinery and equipmentsnew types of machinery and equipments..

4.4. To produce To produce industrial machineries and equipmentsindustrial machineries and equipments..

5.5. To create To create suitable conditionssuitable conditions for changing over to an industrialized state. for changing over to an industrialized state.

Industrial Development ObjectivesIndustrial Development Objectives

Part-1Part-1Comparative Advantage

Total areaTotal area : 678,500 sq km : 678,500 sq km

Land areaLand area : 657,740 sq km : 657,740 sq km

WaterWater : 20,760 sq km : 20,760 sq km Irrigated land areaIrrigated land area : 18,700 sq km : 18,700 sq km (2003) (2003)

CoastlineCoastline : 1,930 km : 1,930 km Electricity productionElectricity production : 6.31 billion kWh : 6.31 billion kWh (2004) (2004)

Educated populationEducated population : 83.1% of the population : 83.1% of the population (1995) (1995)

Labor forceLabor force : 28.49 million : 28.49 million (2006 est.)(2006 est.)

Rich and diverse Natural Resources:Rich and diverse Natural Resources:

Well-educated Human Resources:Well-educated Human Resources:

Part-1Part-1Major Export-Import Goods

1.1. Natural GasNatural Gas

2.2. GarmentGarment

3.3. TimberTimber

4.4. JadeJade

5.5. Hard-woodHard-wood

6.6. BeansBeans

7.7. Mining and MineralsMining and Minerals

8.8. PrawnPrawn

9.9. FishFish

10.10. Green PeasGreen Peas

1.1. Natural GasNatural Gas

2.2. GarmentGarment

3.3. TimberTimber

4.4. JadeJade

5.5. Hard-woodHard-wood

6.6. BeansBeans

7.7. Mining and MineralsMining and Minerals

8.8. PrawnPrawn

9.9. FishFish

10.10. Green PeasGreen Peas

Export GoodsExport Goods

1.1. Petroleum productsPetroleum products

2.2. Machinery productsMachinery products

3.3. Steel and construction materialsSteel and construction materials

4.4. Plastic raw materialsPlastic raw materials

5.5. Edible oilEdible oil

6.6. Ship and accessoriesShip and accessories

7.7. PharmaceuticalsPharmaceuticals

8.8. Vehicles and accessoriesVehicles and accessories

9.9. Steel and accessoriesSteel and accessories

10.10. Telecommunication equipmentsTelecommunication equipments

Import GoodsImport Goods

Part-1Part-1Political Regime

AdministrationAdministration

Myanmar is divided into 7 administrative Myanmar is divided into 7 administrative

divisions and 7 states. The administrative divisions and 7 states. The administrative

divisionsdivisions, mainly populated by the , mainly populated by the

majority, majority, BamarBamar, include:, include:

1.1. Ayeyarwady, Ayeyarwady,

2.2. Bago, Bago,

3.3. Magway, Magway,

4.4. Mandalay, Mandalay,

5.5. Sagaing, Sagaing,

6.6. Tanintharyi andTanintharyi and

7.7. YangonYangon

Meanwhile, the Meanwhile, the statesstates mostly mostly inhabited by minorities of inhabited by minorities of various ethnic groups are:various ethnic groups are:

1.1. Chin,Chin,

2.2. Kachin,Kachin,

3.3. Kayin @ karen,Kayin @ karen,

4.4. Kayah,Kayah,

5.5. Mon,Mon,

6.6. Rakhine andRakhine and

7.7. Shan.Shan.


Status of SME in MyanmarStatus of SME in Myanmar

Part-2Part-2Current Status of SMEs

Definition of SMEDefinition of SME

Size No. of

Workers

Capital Invested

(kyats)

Power Usage

(HP)

CottageCottage <10<10 -- --

SmallSmall 10-5010-50 1 million1 million 3-253-25

MediumMedium 51-10051-100 1-5 million1-5 million 26-5026-50

LargeLarge >100>100 >5 million>5 million >50>50

Note: Cottage industry means a small scale production, repair, maintenance and service industry by members of a family or by engaging workers or collectively.


Number of SMEs.Number of SMEs.

Size No. of

Industries

No. of Workers

employed

Annual Production

(million kyats)

SmallSmall 33,44233,442 -- --

MediumMedium 6,7446,744 -- --

LargeLarge 3,6013,601 -- --

TotalTotal 43,78743,787 438,523438,523 12600571260057

(March 2009)


Type of SMEs.Type of SMEs.

Business Type Small Medium Large Total

FoodFoodGarmentGarmentLivingLivingConsumer goodsConsumer goodsHouse-hold goodsHouse-hold goodsLiteratureLiteratureRaw materialsRaw materialsMinerals & MiningMinerals & MiningAgricultural machinesAgricultural machinesIndustrial machinesIndustrial machinesMotor vehicle productionMotor vehicle productionElectrical ProductsElectrical ProductsGeneral workshopsGeneral workshops

22883228831,3401,3402,2372,237409409119119188188350350

1,2201,2203838

17917961611111

4,4074,407

3,8343,83436836851251236336365657474

2262263163162828747428281616

840840

1,8611,86125125143543528128110910921219494

15815814143030

1221224040

185185

2,85782,85781,9591,9593,1843,1841,0531,053293293283283670670

1,6941,6948080

2832832112116767

5,4325,432

TotalTotal 33,44233,442 6,7446,744 3,6013,601 43,78743,787

(76.37%)(76.37%) (15.4%)(15.4%) (8.22%)(8.22%) (100%)(100%)

(March 2009)


Growth of SMEGrowth of SME

Size 2004 2005 2006 2007 2008

SmallSmall 33,86333,863 33,45633,456 33,45533,455 33,45533,455 33,44233,442

MediumMedium 6,3596,359 6,4306,430 6,4796,479 6,4946,494 6,7446,744

LargeLarge 3,2133,213 3,4383,438 3,4623,462 3,4723,472 3,6013,601

TotalTotal 43,43543,435 43,32443,324 43,39643,396 43,42143,421 43,78743,787

Part-1Part-1

Part-2Part-2Requirements for SMEs development

The requirements to development are as follows;The requirements to development are as follows; (a)(a) InfrastructureInfrastructure (b)(b) CapitalCapital InvestmentInvestment (c)(c) Industries and MachineriesIndustries and Machineries (d)(d) Human ResourcesHuman Resources (e)(e) Technology and Skill DevelopmentTechnology and Skill Development (f)(f) Fiscal policies and Financial InstitutionsFiscal policies and Financial Institutions (g)(g) Financial SupportingFinancial Supporting (h)(h) Innovation and Quality ControlInnovation and Quality Control (i)(i) MarketingMarketing (j)(j) International and Regional CooperationInternational and Regional Cooperation (k)(k) Hi-tech Electronic Communication and Information TechnologyHi-tech Electronic Communication and Information Technology


Programs for SME support in Programs for SME support in

MyanmarMyanmar

Part-3Part-3SME Promotion Policy

Policy Guidelines:Policy Guidelines:

To assist the development of economy with more To assist the development of economy with more suitable suitable

income distributionincome distribution..

To complement and To complement and support large-scale industriessupport large-scale industries through a through a

network of industrial linkages.network of industrial linkages.

To produce To produce high quality and value-added productshigh quality and value-added products..

Part-3Part-3Laws

LawsLaws

Private Industrial Enterprise LawPrivate Industrial Enterprise Law 19901990

Promotion of Cottage Industries LawPromotion of Cottage Industries Law 19911991

Myanmar Citizen Investment LawMyanmar Citizen Investment Law 19941994

Following laws are to encourage, promote and foster the establishment Following laws are to encourage, promote and foster the establishment

of private SMEs.of private SMEs.

Part-3Part-3

Committee for Industrial Development(CID)

headed by Prime Minister

Committee for Industrial Development(CID)

headed by Prime Minister

Myanma Industrial Development Committee(MIDC)

headed by Minister for Ministry of Industry (1)

Myanma Industrial Development Committee(MIDC)


Myanma Industrial Development Working Committee (MIDWC)


Myanma Industrial Development Working Committee (MIDWC)


(10) Sub-Committeesheaded by Deputy Ministers for related Ministries

Industrial Zone Supervisory and Management Committees

headed by regional district authorities

Institutions for SME Development

Part-3Part-3SME Promotions

Promotion Activities:Promotion Activities:

Since the formation of Since the formation of MIDCMIDC, it has been actively taking steps , it has been actively taking steps

for private industrial development by:for private industrial development by:

Establishing industrial zones, Establishing industrial zones,

Holding industrial exhibitions, seminars and workshops, andHolding industrial exhibitions, seminars and workshops, and

Setting up the Myanmar Industrial Development Bank for Setting up the Myanmar Industrial Development Bank for

granting industrial loans to private enterprises.granting industrial loans to private enterprises.

Part-3Part-3Business Registration

Myanmar Citizen Investment Law, MCIL Myanmar Citizen Investment Law, MCIL (1994)(1994)

With a view to promote investment of Myanmar citizen and to With a view to promote investment of Myanmar citizen and to provide provide equal treatmentequal treatment as foreign investors by granting them the as foreign investors by granting them the right to enjoy to tax incentives, the MCIL was promulgated on 31right to enjoy to tax incentives, the MCIL was promulgated on 31stst March 1994 and its procedures were prescribed on 3March 1994 and its procedures were prescribed on 3rdrd August 1994. August 1994.

Partnership ActPartnership Act (1932), (1932), Myanmar Company ActMyanmar Company Act (1914) (1914)

Company limited by shares is required to Company limited by shares is required to registerregister. There are two . There are two types of companies, types of companies, private limitedprivate limited company and company and public limitedpublic limited company. The number of shareholders must be at least seven. The company. The number of shareholders must be at least seven. The company, after registration, must apply for a company, after registration, must apply for a Certificate of Certificate of Commencement of Business.Commencement of Business.

Part-3Part-3Trade Regulations

Trade RegulationsTrade Regulations

Since Since 19881988, Myanmar citizens were allowed to register as exporters, , Myanmar citizens were allowed to register as exporters,

importers and business representatives. Registered exporters and importers and business representatives. Registered exporters and

importers are permitted to engage in foreign trade according to the importers are permitted to engage in foreign trade according to the

rules and regulations prescribed by the rules and regulations prescribed by the Ministry of CommerceMinistry of Commerce..

Myanmar was a founder member of the General Agreement of Tariff Myanmar was a founder member of the General Agreement of Tariff

and Trade (GATT) and member of World Trade Organization (WTO). and Trade (GATT) and member of World Trade Organization (WTO).

Hence, Myanmar’s external trade practices are generally governed Hence, Myanmar’s external trade practices are generally governed

by by WTO trading principlesWTO trading principles..

Part-3Part-3Tax

Income TaxIncome Tax

An enterprise operating under Myanmar Companies Act is liable to An enterprise operating under Myanmar Companies Act is liable to 30%30%

income tax.income tax.

Divided and profitsDivided and profits received are not treated as part of the total income and received are not treated as part of the total income and

exempted from tax.exempted from tax.

Commercial TaxCommercial Tax

The commercial tax is levied according to the schedules in the law, which is The commercial tax is levied according to the schedules in the law, which is

ranging from ranging from 5% to 25%5% to 25% depending on the nature of goods. Some specific depending on the nature of goods. Some specific

commodities are charged from commodities are charged from 30% to 200%,30% to 200%, such as cigarette, liquor, etc. such as cigarette, liquor, etc.

Part-3Part-3Trade Regulations

Border TradeBorder Trade

To develop and strengthen the bilateral trade relations with five To develop and strengthen the bilateral trade relations with five

neighboring countries, namely neighboring countries, namely Thai, Laos, China, Bangladesh, Thai, Laos, China, Bangladesh,

IndiaIndia, by using , by using border tradeborder trade as a mechanism for trade expansion. as a mechanism for trade expansion.

The Ministry of Commerce has established the The Ministry of Commerce has established the Department of Department of

Border TradeBorder Trade in August 1996. The department is providing in August 1996. The department is providing one-stop one-stop

servicesservices for border trade matters in collaboration with various for border trade matters in collaboration with various

departments concerned.departments concerned.

Part-3Part-3Business Development Services (BDS)

Current Situation of BDS (Government)Current Situation of BDS (Government)

Following Sub-committees are formed under MIDC to aid the SMEs in their Following Sub-committees are formed under MIDC to aid the SMEs in their respective industries:respective industries:

1.1. Farm Machinery & Equipment Production Sub-committeeFarm Machinery & Equipment Production Sub-committee

2.2. Standardization Sub-committeeStandardization Sub-committee

3.3. Industrial Law Drafting Sub-committeeIndustrial Law Drafting Sub-committee

4.4. Small & Medium Industry Development Sub-committeeSmall & Medium Industry Development Sub-committee

5.5. Industrial Information & Publication Sub-committeeIndustrial Information & Publication Sub-committee

6.6. Human Resource Development Sub-committeeHuman Resource Development Sub-committee

7.7. Motor Vehicle Production Development Sub-committeeMotor Vehicle Production Development Sub-committee

8.8. Iron & Steel Production Development Sub-committeeIron & Steel Production Development Sub-committee

9.9. Research & Development Sub-committeeResearch & Development Sub-committee

10.10. Rubber Product Development Sub-committeeRubber Product Development Sub-committee


Current Situation of BDS (NGO)Current Situation of BDS (NGO)

Industrial Associations are formed and affiliated with Union of Industrial Associations are formed and affiliated with Union of Myanmar Myanmar

Federation of Chamber of Commerce and Industry Federation of Chamber of Commerce and Industry (UMFCCI), such as:(UMFCCI), such as:

1.1. Myanmar Rice Millers Association (MRMA)Myanmar Rice Millers Association (MRMA)

2.2. Myanmar Industries Association (MIA)Myanmar Industries Association (MIA)

3.3. Myanmar Computer Industry Association (MCIA)Myanmar Computer Industry Association (MCIA)

4.4. Myanmar Garment Manufacturers Association (MGMA)Myanmar Garment Manufacturers Association (MGMA)

5.5. Myanmar Plastic Industries Association (MPIA)Myanmar Plastic Industries Association (MPIA)


Activities and Services of BDS (NGO)Activities and Services of BDS (NGO)

Activities and services of Myanmar Industries Association (MIA) are:Activities and services of Myanmar Industries Association (MIA) are:

1.1. Consultancy servicesConsultancy services in project formulation and implementation. in project formulation and implementation.

2.2. Conducting Conducting seminars, workshops and trainingsseminars, workshops and trainings on topics of on topics of

commercial. industrial and managerial interests.commercial. industrial and managerial interests.

3.3. PublicationPublication and distribution of industrial information bulletins and and distribution of industrial information bulletins and

newsletters.newsletters.

4.4. Organizing member’s company to participate in local and overseas Organizing member’s company to participate in local and overseas

trade fairs and exhibitiontrade fairs and exhibition..

5.5. Organizing and making arrangement for the Organizing and making arrangement for the exchange of informationexchange of information

and views among local and foreign industrialists.and views among local and foreign industrialists.

Part-3Part-3Business Development Services (BDS) contd.

Activities and Services of BDS (NGO)Activities and Services of BDS (NGO)

6.6. Organizing and arranging business opportunities Organizing and arranging business opportunities networking networking between between

local and foreign enterprises.local and foreign enterprises.

7.7. Organizing and making arrangements for factory visits, Organizing and making arrangements for factory visits, study toursstudy tours and and

sending business mission overseas.sending business mission overseas.

8.8. Acting as representative of the member’s companies in Acting as representative of the member’s companies in advising advising

governmentgovernment in matters affecting businesses and the economy. in matters affecting businesses and the economy.

9.9. Facilitating networkingFacilitating networking through a variety of Chambers/Associations through a variety of Chambers/Associations

activities.activities.


SME FinancingSME Financing

The present initiatives in The present initiatives in SME financing SME financing are carried out by private are carried out by private

banks and Government banks, such as:banks and Government banks, such as:

Myanmar Industrial Development Bank (Government)Myanmar Industrial Development Bank (Government)

Myanmar Economic Bank (Government)Myanmar Economic Bank (Government)

Myanmar Live Stock & Fisheries Bank (Government)Myanmar Live Stock & Fisheries Bank (Government)

Myanmar Private Banks (Private)Myanmar Private Banks (Private)

End of PresentationEnd of PresentationEnd of PresentationEnd of Presentation

Thank youThank you

SMEs promotion policy(korea).ppt

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