92370 COUNTRY HIGHLIGHTS MYANMAR 2014 The World Bank interviewed a representative sample of the private sector, composed of 632 establishments, between February and April 2014. The Enterprise Survey covers several aspects of the business environment as well as performance measures for each firm. Below are the main highlights from the survey. Despite challenges in the business environment, private firms report strong growth Private sector firms in Myanmar have reported 30 8 spectacular sales growth since the onset of a series of 7 government-initiated policy reforms in 2011. A 24% 25 real annual sales growth rate puts Myanmar in the 6 20 fastest growing private sectors as measured by y 5 Enterprise Surveys (ES). The employment growth rate Percentage Percentage 15 4 is positive but lower than the average of the 3 economies in East Asia and Pacific (EAP). 10 Importantly, this remarkable sales growth took place 2 2014 MYANMAR ENTERPRISE SURVEY despite great hurdles (see below), which is suggestive 5 1 of continued growth that could be unlocked by 0 0 further reforms. As Myanmar continues to open up Real annual sales growth (%) Annual employment growth (%) to foreign investment, this growth will likely continue. Myanmar 2014 EAP Low income Access to finance remains difficult for firms in Myanmar One of the biggest challenges for firms in Myanmar is 100 16 access to financial services. The proportion of firms 90 14 with a checking or savings account is 30% which is 80 12 less than half the average for low income countries, , 70 and close to a third of the average of EAP economies. s. 10 Percentage 60 Percentage This is one of the lowest averages across all countriess 50 8 with ES data. Access to credit through banks is s 40 6 worse still. Only 7% of firms report having a bank 30 loan which is one-fifth the level for EAP or low 4 20 income countries. Less than 2% of investments are 2 10 financed from banks, slightly over a tenth of the EAP 0 0 average. These extremely low levels of bank usage Percent of firms with a checking or Proportion of investments financed by indicate that firms do not have access to basic savings account banks (%) financial services. Myanmar 2014 EAP Low income The country's power infrastructure needs to be updated and expanded 16 80 The Th ES quantifies ifi h substandard the b d d state of f 14 70 Myanmar’s infrastructure. Electricity outages are very 12 60 frequent, almost four times as frequent as the average for EAP, although less frequent than the average for 10 50 Number of outages low income economies. The private sector Percentage 8 40 compensates for the poor provision of electricity 6 30 though generators. Almost 76% of firms own or 4 20 share a generator, more than twice the average of 2 10 EAP countries. The number of days, upon 0 0 application, to obtain an electrical connection is over Number of electrical outages in a Percent of firms owning or sharing a 100, similar to Afghanistan. typical month generator Myanmar 2014 EAP Low income The private sector faces challenges regarding corruption Almost one out of two Myanmar firms experience at 50 least one bribe payment request across 6 transactions 45 dealing with utilities access, permits, licenses, and 40 taxes. This measure is known as Bribery Incidence. 35 The private sector experiences almost twice the 30 incidence compared to other EAP countries. Bribery Percentage 25 Depth measures the percentage of transactions 20 where a gift or informal payment is requested. 15 Again the depth is more than twice that of other 10 EAP countries, highlighting the high degree of 5 corruption experienced by Myanmar entrepreneurs. 0 An alarming 56% of businesses report being Bribery incidence (% of firms Bribery depth (% of public expected to give a gift or informal payment when experiencing at least one bribe transactions where a gift or informal payment request) payment was requested) requesting an electrical connection. y ya a 2014 Myanmar 0 4 EAP E P ow income Low co e Myanmar also needs to invest in its human capital 2014 MYANMAR ENTERPRISE SURVEY 50 70 Despite the lack of a well-educated workforce, firms 45 are reluctant to invest in formal training of their 60 40 workers. Only 15% of firms do so, almost one-third 35 50 of the average for EAP, and close to half the average 30 40 Percentage Percentage for low income economies. However, among firms 25 30 that do offer training, about the same proportion of 20 workers are trained compared to other low income 15 20 10 countries. As Myanmar opens up to foreign 10 5 investment, demand for skilled labor is likely to 0 0 increase, requiring substantial investments in human Percent of firms offering formal Proportion of workers offered formal training training (%) capital. Myanmar 2014 EAP Low income Business owners and managers feel access to finance, land, and electricity are priorities Among 15 areas of the business environment, firms Access to finance Access to land in Myanmar are more likely to rate access to finance Electricity to be the biggest obstacle to their daily operations, Poorly educated workers Labor regulations followed by access to land, electricity, and then Political instability poorly educated workers. As demonstrated above by Tax rates the actual experiences of firms, business owners and Tax administration Transport managers’ subjective complaints on finance and Licensing and permits electricity are justified. Interestingly, a small Customs & trade regulations percentage of firms in Myanmar rate corruption as Courts Informal competitors the biggest obstacle despite its prevalence; corruption Corruption Myanmar 2014 has become a routine cost of doing business for the Crime, theft and disorder private sector. 0% 5% 10% 15% 20% 25% 30% Percentage of firms The Enterprise Analysis Unit is a joint World Bank and IFC team of economists and survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of July 18, 2014