Myanmar agriculture startups sustainable development

缅甸可持续发展计划:投资者须知的要点

In August, the Ministry of Planning and Finance published the Myanmar Sustainable Development Plan (2018-2030). The government’s master plan for the development of the country provides a framework for coordination and cooperation across all ministries, states, and regions.

The 66-page document, which incorporates existing and draft plans and policies, sets out three pillars, five goals, 28 strategies and 251 action plans.

In the coming months and years, proposals from ministries, states, and regions will be reviewed based on their strategic alignment with the MSDP and the action plans will be broken down into projects and programs that will be screened, time-bound and costed.

A project bank will be created to ensure that the implementation of projects is coordinated and transparent. An online portal will also be established to encourage public participation.

In short, the MSDP recognises the role of the private sector as the primary engine of economic growth and job creation and it prioritises market-based solutions. For investors, it is a useful guide to the government’s priorities and the opportunities that are likely to arise in the coming months and years.

Don’t have time to read the document? Here’s a guide to the key points relating to investment.

Peace

Peace leads the agenda: it’s the first pillar, the first goal and the first strategy, because the government believes peace and development go hand-in-hand.

The MSDP aims at fiscal federalism and the decentralisation of natural resources management. It seeks balanced development across states and regions. This means the government will prioritise and support responsible investment in less-developed areas of the country.

Governance

The MSDP aims to improve the efficiency, accountability and predictability of administrative decision making at every level. The government plans to review and strengthen anti-corruption related legislation, enforcement measures and policies, and establish a transparent and competitive tendering system for public procurement at the national and sub-national levels.

Macroeconomics

Fiscal prudence is the name of the game: the government aims to keep the fiscal deficit below 5 percent of gross domestic product, while reducing recourse to Central Bank financing to negligible levels.

To effectively manage the exchange rate and balance of payments, the Central Bank will move toward a market-based reference rate and will formalise the informal remittance system. Foreign exchange reserves will eventually be held at the Central Bank, rather than at state-owned banks.

The currency swap auction market will be developed to minimize foreign exchange risk and help meet local banks’ demand for foreign currency. Financial markets, including interbank, repo and bond markets, will also be developed to strengthen the economy.

Tax

Myanmar’s tax revenue is 8 percent of GDP, the lowest in the ASEAN region and the government intends to “significantly” increase tax revenue.

The structure and governance mechanisms of the Internal Revenue Department and relevant entities will be reformed, electronic payment systems will be expanded and modern tax laws developed, including a new Tax Administration Law, Income Tax Law and Value-Added Tax (VAT) Law.

State-Economic Enterprises

A small number of SEEs are significant revenue generators for the government, but many are a fiscal burden. The MSDP intends to reform SEEs by categorizing them according to function, reforming their financing, enhancing oversight and transparency and — in some instances — equitising or privatising them, as the government focuses instead on its regulatory role.

Priority sectors

The MSDP focuses on the creation of quality jobs together with the expansion of the private sector as the engine of environmentally conscious and socially responsible economic growth.

Given the structure of the economy, agriculture and small- and medium-enterprises are the priority. The government will facilitate growth in these sectors by improving access to finance and markets, security of land tenure and access to machinery and technologies.

A national innovation policy will support local entrepreneurs and start-ups, enabling a transition toward an inclusive digital economy.

In conjunction, the government will promote the role of the manufacturing, industrial and service sectors, with an emphasis on preparing for the coming digital economy.

Trade

Trade policies are being revised in line with regional and global commitments and in accordance with liberal principles. The Ministry of Commerce and other trade-related institutions will be reshaped, trade and customs procedures simplified and strengthened, tariffs rationalised and clear guidelines published.

Financial services

Less than 20 percent of the population has access to formal financial services and the MSDP says liberalization of this sector is needed due to capacity constraints at domestic financial institutions.

Foreign banks will be allowed to provide kyat and foreign currency loans to local borrowers and to engage in interbank lending with local institutions. They will also be able to take equity positions in domestic banks. Partnerships between domestic and foreign financial institutions will be encouraged.

State-owned banks will be reformed, the scope of mobile and fin-tech services will be expanded and a comprehensive microfinance sector strategy will be developed. The insurance sector will also be strengthened and further liberalised.

Improved cross-border financial services for migrant workers will be developed, to increase the diaspora’s contribution to the domestic economy.

Infrastructure

Priorities include nationally significant infrastructure, infrastructure in rural areas and infrastructure that facilitates greater rural-urban connectivity.

In principle, infrastructure projects that are commercially viable and bankable will be pursued through public-private partnerships and other innovative financing models. Projects with a clear social and economic development impact will be financed by the government or with development assistance.

International transport corridors will be upgraded, rail lines will be expanded and modernised, and rural transport connectivity will be improved, including through a new National Rural Road Access Program.

Education and health

The government sees the education system as indispensable to a healthy economy and will support the development of a strong education system.

Investment in the healthcare industry is also urgently needed and there will be opportunities for private sector health providers. A transparent system will be established to prioritise healthcare investments.

Environment

The MSDP seeks to protect the natural environment and ecosystems through conservation, improved infrastructure planning and enforcement against illegal and destructive natural resource-related practices and environmental crimes: think conserve and protect, not degrade and damage.

Green investments including renewable energy and sustainable urban development will be encouraged.

Power

Myanmar’s energy needs have increased significantly in recent years. To meet demand, the government wants to strike a balance between renewable and non-renewable energy sources.

Investment in innovative, sustainable energy harnessing is the priority, taking advantage of Myanmar’s abundance of renewable energy sources such as solar, wind, hydro and geothermal.

The MSDP aims to facilitate greater private sector participation in energy generation and provision, as well as greater cross-border regional and international collaboration.

Natural resources

The MSDP says natural resources have been a cause of Myanmar’s underdevelopment, due to historical mismanagement and opacity.

The priorities now are long-term sustainable land management, including protecting and sustainably managing forests, rivers, mangroves, mountain areas, lakes, and coastal areas and developing the necessary institutions at all levels required to manage natural resources in a sustainable manner.

The MSDP intends to transparently manage revenues generated from the extractive industries and to accelerate measures to meet requirements for the Extractive Industries Transparency Initiative.

Sustainable cities

The government intends to develop sustainable public transport systems and a national housing strategy, including for low-cost housing. Reforms will also focus on achieving the sustainable expansion of the tourism sector and on cultural and eco-tourism.

Implementation

The Ministry of Planning and Finance is the focal entity for the MSDP implementation. The ministry houses the MSDP Implementation Unit, which is responsible for providing guidance, approving strategic decisions and solving strategic issues.

The MSDP-IU includes the National Economic Coordination Committee, the Development Assistance Coordination Unit, and the Planning and Policy Appraisal and Progress Reporting departments of the planning and finance ministry. It will report to the chair of the National Planning Commission.

 

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