Dialogue titled “Is Doing Business in Myanmar Easy?”
MRTV presents the dialogue titled“Is Doing Business in Myanmar Easy?” in which Director General U Aung Soe of Myanmar Trade Promotion Organization, Director-General U Aung Naing Oo of Directorate of Investment and Companies Administration, Director Daw Thidar Myint of Internal Revenue Department and Secretary Daw Khaing Khaing Nwe of Myanmar Garment Entrepreneurs Association are participating.
- By Kyaw Thu Htet &
Myo Thu Hein
Photo by Aye Than
(Continued from 27-11-2018)
It took several months to establish a business company in Myanmar in the past. There is another regulation which sets minimum capital to establish a company. If you don’t have at least 5 million kyats, don’t think of establishing a company. These are some examples of restrictions and there are many steps to be taken to establish a company.
There are three indicators to measure the startup. The first indicator is how many steps are to be taken to establish a company. Secondly, how much time it takes for the process from the commencing of registration to getting a registration certificate. Third, how much it cost a company to get registered.
Generally speaking, a report in 2014 shows that Myanmar is a country where steps are to be taken most in company registration process. Moreover, the process took too much time and was the most expensive in the world. We had to start from such situation.
From then on, we took measures step by step as reform processes were underway. Some are long term process and some have to be carried out immediately. We have started from the rank of 189 and in 2015 it jumped to 170. In 2016, we were at 146, jumping 24 steps within the stack. Thus World Bank acknowledged Myanmar as the fastest growing economy that year.
Regarding startup, Myanmar won the best result in reform process according to 2016 report. But the situation was up and down because Doing Business is not for a country alone. Every country participates in it. Every country tries their best to increase the score. Therefore, Myanmar dropped slightly to the rank of 155 last year. We have a belief that the previous assessments were made based on old Company Act and old rules and regulations. The new law was enacted in 2017. According to this law, it is easier to run a business because many unnecessary regulations were omitted.
Under the incumbent government a new measure was taken. That is registration fee was reduced from 1 million kyats to 500,000 kyats. In 2017, the fee was just 250,000 kyats. Some procedures needed to be taken for establishing company were also abolished. According to report, there were 13 steps. But now, registration can be made online and as a result there left only three steps. And the duration has been also shortened. Previously it took at least three days, but now it can be completed within hours. If you have a mobile phone, you can register within hours.
I can say that much more reforms could be made. Last year, we won a prize from World Bank. The prize is to acknowledge Myanmar’s efforts for reform. Because of enacting the new investment law in 2016, easing many procedures and significant changes in investment World Bank handed out the Star Reformers Award to us. This is one of the results we have achieved in reform process.
Facilitator: While consumer and gold prices and the exchange rates are skyrocketing there are doubts whether there is an economic development. There has been a misunderstanding about indicators. High prices are due to economic downturn, they think. But, here, you try your best for international or domestic investors. You are here to explain the people that running a business here is easier than ever. But some express negative attitude on social media.
U Aung Naing Oo: That’s right. There are various opinions on this. Private businesses are facing difficulties. Economic downturn can also be seen in some parts. This is their opinion. For the government, it will do what is good for the nation. The main objective is to improve scores, to ease doing business and to get better condition. In our opinion, no matter how much scores we get. There is a high score, but not in good condition, it is useless. We aimed at easing in doing business with convenience. We need to ease restrictions as much as possible. We will do all we can to expedite the procedure. Complex procedures are made clear. We focus on these matters.
Facilitator: Please explain indicator in paying tax included in Ease of Doing Business Index.
Daw Thidar Myint: Ease of Doing Business Index is an index showing which country is convenient for doing business, how can the procedures for running a business be reduced, how much time can be saved, and how much cost can be cut. Looking at the index, investor countries are interested in a country with good ranking as they believe such a country is convenient for doing business. Paying tax indicator is an indicator on which the investors put their focus most.
It is unavoidable to pay tax if you start a business. The indicator becomes important in paying tax. In 2017, Myanmar was ranked 119 in paying tax indicator. This year the rank dropped to 125. According to their norm, scores are given by index. Our score went up, but the rank down. Internal Revenue Department plays a vital role in paying tax indicator. Based on taxes levied by departments including Development Committee and other taxes, the index shows how much time it takes or what reforms are made.
One of the reforms IRD has introduced is online tax payment system. Entrepreneurs who pay their tax online well understand it. Commercial tax shall be paid 12 times a year. So World Bank marks 12 times in the indicator. If it can be paid online, it will be marked just one time. Then, our rank will jump.
Large and Medium Taxpayers have been to pay their taxes online since 13 February 2018. This tax can be paid at Myanmar Economic Bank linking with CBM.net in any township where Internet access is available. But tax payers are not in a position to join in the process. Government has provided the facility. Tax payers need to use it. If tax payers apply this online system, the rank will improve.
If the rank is up in paying tax indicator, the ranks in other 10 indicators will also improve. If the indicators improve, investors will see that Myanmar is a country where doing business is easy and as a result more investments will come. We focus for our citizens’ convenience. All the departments open service centers. As regards paying tax, we are available at any time to answer questions and one can contact us through phones to ask questions. We also upload the procedures on the website.
Here, I’d like to urge businessmen to reply the questions of World Bank only after asking the said service center to be able to give thorough answers. We have arranged online payment system not only in our department but also in the Social Security Board and Development Committee.
Facilitator: Please identify the point of view of the private sector on Doing Business.
Daw Khaning Khaing Nwe: Reforms are being made by the ministry for users’ convenience. The index is a method to check whether the results of reform processes are enjoyed or not. It is also to check whether the private sector have easy access to the process or not. Just having access to the process is not enough. They ask that is it really beneficial for us. For this question, we need some connections. We know that the ministry is trying its best. It is needed to enact laws for some indicators and to amend the laws for the others. If there emerged a law the score will improve. When reforms are implemented in practice, the private sector also raises queries. Some sectors do not know what the question is meant. Therefore, scores and indicators should be higher than the present situation.
The ministry has its own system. There are scores for each point in the ten indicators. As for me, I’m getting credit. If there is a credit bureau, a data collection agency that gathers account information from various creditors and provides that information to a consumer reporting agency, the score becomes high. But just having a bureau is not enough. There is a rule that if there is a bureau this bureau must be used by 5 percent of adult population. But we are in just at the starting point we do not have that 5 percent. Due to this we cannot get the score. So, if both the government and private sectors commit to do reform, we need to discuss more on it. We need to know how much is it beneficial to the private sector, and the private sector needs to know in depth the process.
Reform processes presented by some departments are not for giving score. Although there are some points to give score, departments concerned do not mention the points and thus we cannot get score. Sometimes the private sector has no idea how reform process are made. If a private sector which receives a query and it replies “I have no idea” it loses the chance to get a score. If some measures will be taken for reform process in government or private sectors, it is important to consider first how much it will benefit for users or is it an effective reform. Then this should be revealed to the public for their knowledge. I believe this will help increase the score.
U Aung Naing Oo: Right! World Bank sends queries to businessmen in Yangon. Some queries go to law firms and some to entrepreneurs. They have no idea what the government side is doing for reform. As they have no knowledge on this, they give the same answers as they have given previously. Although the government has taken measures to do reform, their answers do not reflect real situation. For example, there was a question last year, asking when the company registration certificate was issued. To this question the businessman replied that the company registration certificate was issued only after opening bank account with the name of the company. In reality, this procedure was extinct.
This procedure has been abolished since 2014. Close cooperation between the government and the private sectors, in other words, cooperation between service providers and users is a must.
(To be continued)
(Translated by Wallace)