Myanmar, one of the world’s poorest countries, has a harmonized average CPIA country rating of 3.10 meaning that this country is considering as a Fragile State. This country needs a financing solution to boost country’s economic development to get out of a fragile state status. The members of World Bank Group including IDA is needed to support reforms in Myanmar to strengthen the public and private sector and create jobs to reduce poverty and boost shared prosperity. The private sector plays a critical role in job creation and in providing the means for all to benefit from economic growth. Policy makers need an assessment of the investment climate as part of their private sector development strategies. Actions in these strategies will help the government attract responsible foreign investment in certain sectors and create more jobs and opportunities for people.
2. OUTLINE
• EXECUTIVE SUMMARY
• BACKGROUND
• PROBLEMS AND FACTS
• REASONS TO PARTICIPATE
• MAIN OBSTACLES
• SOLUTIONS
• REFERENCES
3. EXECUTIVE SUMMARY
Myanmar, one of the world’s poorest countries, has a harmonized
average CPIA country rating of 3.10 meaning that this country is
considering as a Fragile State. This country needs a financing solution to
boost country’s economic development to get out of a fragile state
status. The members of World Bank Group including IDA is needed to
support reforms in Myanmar to strengthen the public and private sector
and create jobs to reduce poverty and boost shared prosperity. The
private sector plays a critical role in job creation and in providing the
means for all to benefit from economic growth. Policy makers need an
assessment of the investment climate as part of their private sector
development strategies. Actions in these strategies will help the
government attract responsible foreign investment in certain sectors
and create more jobs and opportunities for people.
4. BACKGROUND
A Country with Fragile Situations means the country has a
harmonized average CPIA country rating of 3.2 or less.
Myanmar has a harmonized average CPIA country rating of 3.10
(using data compiled by the FCV Group of the World Bank)
meaning that this country is considering as a Fragile State.
Myanmar needs a financing solution to boost country’s economic
development to get out of a fragile state status.
5. PROBLEMS AND FACTS
• Myanmar, one of the world’s poorest countries, has enormous needs
for development finance. Myanmar became a member of the
International Bank for Reconstruction and Development (IBRD) in
1952. The Bank has approved no new lending since 1987. In 1998, the
Government went into arrears but has remained a member of the
Bank.
6. PROBLEMS AND FACTS
• Based on the Table 1, we can see that Myanmar is in fragile condition with low FDI
inflows, small domestic credit to private sector, low GDP growth, and high
unemployment. Myanmar needs powerful tools for addressing the problems.
Table 1. Development Indicators-Myanmar 2011-2015
Source: World Development Indicators. World Bank
7. PROBLEMS AND FACTS
• Moreover, Myanmar is ranked on its ease of doing business as we can
see at Table 2. A very low ease of doing business ranking in Myanmar
means the regulatory environment is less conducive to the starting
and operation of a local firm.
Table 2. Ease of doing business Rank
Source: http://www.doingbusiness.org/rankings
8. PROBLEMS AND FACTS
• Another issues is that only one in three households in Myanmar has access
to electricity. Reliable electricity in Myanmar is expected to play a vital role
in helping people to overcome poverty by boosting income-generating
activities and employment and enabling continuous and sustained
industrial activity.
• Furthermore, Myanmar is one of Southeast Asia’s most natural resource-
rich countries. Natural resources are the country’s prime source of foreign
exchange earnings and a major attraction for FDI, and contribute
significantly to the government budget. Myanmar’s richness in natural
resources presents the government with an opportunity to raise revenues to
finance the country’s large development needs.
9. REASONS TO PARTICIPATE
Myanmar's government needs to attract private sector financing in the form of FDI to finance
infrastructure and boost economic growth. Greater inflows of foreign capital should support the
expansion in real GDP, helping one of Asia’s poorest countries to improve living standards for all citizens.
Myanmar's government needs to mobilize all the domestic sources to support economic development.
The IMF can participate to help Myanmar undertake general tax policy reviews and provides tax policy
advice with focus on oil, gas and mining sectors. It also helps countries to improve tax administration.
The International Development Association (IDA), the World Bank’s fund for the poorest, can participate
to provide development credits, grants and guarantees to Myanmar to help meet its development
needs.
Based on the data and information above, we can see that Myanmar is facing several problems that need
to solve immediately:
Conclusion: Participating from Myanmar's government to mobilize all the domestic sources, supporting
from official aid such as IDA and IMF to provide grants, loans and tax policy advice, and participating from
private sector to invest in certain sectors to increase economic development are needed.
10. REASONS TO PARTICIPATE
Furthermore, Myanmar needs support from IDA to finance the economic development. Myanmar is
one of the East Asian and Pacific countries eligible for IDA grants and concessional loans. Credits
from IDA are at concessional rates. Myanmar now has gained some relief from IDA as we can see
from Table 3.
Table 3. IDA Statement of Credits and Grants - Snapshot
Source: World Development Indicators. World Bank
11. MAIN OBSTACLES
Access to finance is the top constraint for private enterprises as Myanmar’s economy
undergoes market-oriented reforms after emerging from decades of isolation.
Among more than 1,000 foreign and domestic non-agricultural businesses interviewed in
the report, merely 1 percent of fixed-asset investment costs are financed by bank
borrowing, while 92 percent of firms rely on their own funds. Difficulties in getting land-use
rights, power outages, and inadequate workforce skills are other main barriers to business
operation and growth in Myanmar.
The main obstacles currently standing in the way of unlocking financial opportunities in
Myanmar are as follows:
Focusing Myanmar’s economic reforms on removing these obstacles will create a better
business environment and enhance the productivity and efficiency of private enterprises
allowing them to grow and flourish.
12. SOLUSIONS
Introduction of new financial products and risk management techniques, and lending by foreign
banks could become an important source of funding for private sector development.
Develop and implement a financial sector reform program to consolidate and modernize the
domestic banks, including with help from foreign banks, to improve and expand their services and
enhance their capacity for risk management so that they are competitive and are able to meet
global prudential standards.
Mobilizing revenues is particularly important to create fiscal space in the current macroeconomic
environment. The government should consider imposing a resource rent tax on profits from the
extraction of natural resources.
IDA needs to offer assistance to Myanmar, providing Myanmar with interest-free loans, grants,
technical assistance and policy advice.
13. SOLUSIONS
Myanmar's government needs to:
Attract private sector financing in the form of FDI to finance infrastructure and boost
economic growth by providing tax incentives to the investor;
Continue to pursue a wide-ranging program of reform, with a focus on economic
expansion and alleviating poverty;
Re-establish the presence of multilateral agencies in the country and increase their
support for the government’s efforts;
Plan further changes, including new legislation on mining and banking.
14. SOLUSIONS
The members of the World Bank Group need to:
Provide extensive policy advice and technical assistance on economic reform.
Conduct economic research in Myanmar to gain a better understanding of the extent of
poverty, to help expand and modernize the financial system, and enhance the business
environment.
Expand technical assistance and providing global expertise to help the Government
deliver services to the people.
Focus exclusively on private sector development, in particularly assessments in areas
critical to private sector growth such as access to finance, investment climate, and
infrastructure.
15. SOLUSIONS
Supporting from the World Bank grants to a national community driven
development program providing funds to people in local communities, including
in border conflict areas. Community members will select development projects
they need and transparency will ensure that everyone can track the use of funds.