Myanmar businesses want policies
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There are concerns the new government, which took office in April, has not yet revealed its economic policies. Businesses are also concerned that if the policies further open up the economy, some companies would not be ready for potentially intense foreign competition.
At a panel discussion of the Economist Events’ Myanmar Summit 2016, Sai Sam Htun, executive chairman of Loi Hein Co, the No 1 beverage firm in Myanmar and the producers of Alpine drinking water, said local business were showered with optimism and challenges.
“Currently, local business people are worried,” he said. “We expect the government to come up with the road map, model and vision for the country. We expect that as soon as possible. Otherwise, we are in the dark and do not know where to go, what to do and what will happen in the future.”
He welcomed the national agenda to achieve reconciliation, but that should not be the single priority.
“The new government brings us to the road to democracy, but that doesn’t guarantee that everything will be smooth,” he said. “We are expecting our leader Daw Aung San Suu Kyi to say something about the future economy of Myanmar.”
Kyaw Win, planning and finance minister and chairman of the Myanmar Investment Commission, said the policies should be revealed by the end of this month.
Win Win Tint, chief executive officer of City Mart Holdings, the nation’s largest retail chain, noted that Myanmar needed to consider whether foreign investment should be allowed in trading, the services industry and retailing.
Currently, Myanmar’s retail industry is fragmented. Modern trade accounts for only 10 per cent of the retail industry, compared to 45 per cent in Thailand and 25 per cent in Vietnam.
“The new government brings us to the road to democracy, but that doesn’t guarantee that everything will be smooth,”
There is a huge growth potential, but poor infrastructure and low consumption may hold back the potential growth. Suppliers are still unable to support retailers, pushing the ratio of imported products to 80 per cent.
“One thing we always tell our policy-makers is that local businesses are not on a level-playing field,” Win Win Tint said. “If the MIC allows foreign players in these industries, they will enjoy tax incentives and access to overseas financing.”
She added that the old foreign investment law did not take local business interests into consideration.
Sai Sam Htun, however, is not afraid of foreign players. He recalled the situation a few years ago when all businesses fretted about the entry of foreign players.
“I was quite scared that I would be out of business. But I aggressively worked on the branding aggressively,” he said. “If you are in the market, you just have to be consistent. Then you can compete with any competitor and face any challenge.”
He noted that foreign and local businesses could have win-win strategies. Foreign companies like Coca-Cola, PepsiCo and multinational beer companies have successfully forged partnership with local players.
Loi Hein has formed four joint ventures with foreign companies – two each with Japanese and Thai counterparts.
Questions & Answers
Q.When can businesses expect the new government to reveal its economic policies?
When can businesses expect the new government to reveal its economic policies?
Kyaw Win, the planning and finance minister, stated that the new government's policies should be revealed by the end of the current month. Businesses are currently operating in uncertainty without a clear roadmap.
Q.What is the primary concern for businesses if the government further opens up the economy?
What is the primary concern for businesses if the government further opens up the economy?
Businesses are concerned they may not be prepared for potentially intense foreign competition if economic policies lead to more liberalisation. Local businesses fear being disadvantaged compared to foreign players with tax incentives and access to overseas financing.
Q.What challenges does Myanmar's retail industry currently face, despite its growth potential?
What challenges does Myanmar's retail industry currently face, despite its growth potential?
Myanmar's retail industry is fragmented, with modern trade accounting for only 10 per cent. Poor infrastructure, low consumption, and suppliers' inability to support retailers, leading to 80 per cent imported products, hold back its potential.
Q.How does Loi Hein Co. Approach the entry of foreign competitors in Myanmar's market?
How does Loi Hein Co. Approach the entry of foreign competitors in Myanmar's market?
Sai Sam Htun of Loi Hein Co. Is not afraid of foreign competitors, advocating for consistent branding to compete effectively. His company has formed four joint ventures with foreign firms, two each with Japanese and Thai partners.
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