- By Maung Thitsa (Yankin)
The World Bank Group released an indicator of 20 most progressive countries in Doing Business 2020. The rating of the indicator is based on the ease of doing business, and Myanmar is included in it. The World Bank Group started to include Myanmar in the indicators in 2013, and it is the first time Myanmar is included in the 20 countries which economies improve the most. The Work Bank Group compiled the list during the period from April to May 2019 based on regulatory reforms. It releases the indicator annually in October.
The indicator is based on the following 11 areas of business regulations.
1. Starting a business
2. Dealing with construction permits
3. Getting electricity
4. Registering property
5. Getting credit
6. Protecting minority investors
7. Paying taxes
8. Trading across borders
9. Enforcing contracts
11.Labor market regulation
The initial information of World Bank says that Myanmar is included in the countries which economies improve the most based on the five areas. They are Yangon City Development Committee’s dealings with construction permits; two areas — starting a business and protecting minority investors — undertaken by the Ministry of Investment and Foreign Economic Relations; the area of registering property undertaken by Department of Settlements and Land Records; and the area of enforcing contracts undertaken by the Union Supreme Court Doing Business 2020 says that Myanmar has improved the quality of construction works by adopting strict measures for the qualifications of engineers and architects. It also states that as for the convenience of starting a business, the Ministry of Investment and Foreign Economic Relations has reduced the procedures of work process and the number of office visits through the establishment of an online company registry platform which is called MyCo. Myanmar has also taken appropriate measures for facilitating the work of registering property and strengthening the work of protecting minority investors, it also states.
Myanmar formed Ease of Doing Business Ranking Committee and support bodies under the leadership of Vice President U Myint Swe. The Directorate of Investment and Company Registration takes the responsibility of providing encouragement for starting a business and protection for minority investors.
Ease of Doing Business
Starting a business indicator is based on the following factors.
(a) Procedures to legally start and operate a company
(b) Time required to complete each procedure
(c) Cost required to set up company (% of income per capita)
(d) Paid-in minimum capital
Myanmar enacted the Myanmar Companies Act on 6 December 2017. The law helps facilitate the work of setting up a company, make the reforms easier, ensure better corporate administration and reduce unnecessary procedures and regulations. Moreover, the country introduced the online company registration system in 2018. The country reduced the registration fee of non-public companies from Ks 500,000 to 250,000 on 1 April 2018. In this way the cost required to set up a company could be reduced from 40.1% of income per capita to 24.8% of income per capita. Beginning 1 August 2018, the country reduced the stages of procedures to legally start and operate a company from 10 to four and the time required to complete each procedure from ten days to four days.
Protecting minority investors
The following factors serve as the base in assessing the protection for minority investors.
(i) Conflict of interest rules and regulations indicators
(ii) Shareholder administrative indicators
(iii) Minority investor protection indicators
The assessment is based on the public companies listed in the stock exchange. The ranking is based on the level of the protection for the minority investors. The clear expression of the responsibilities of directors of a company, fidelity, the right of a shareholders to convene a general meeting if necessary, transparence in company functions, structure, administration and ownership are also the basic requirements.
As the 1914 Companies Act lacks the provisions effectively protecting investors, Myanmar’s ranking was low in the past. On the other hand, the Myanmar Companies Act 2017 guarantees full protection for investors through its comprehensive and innovative stipulations. So the country ranking rises till reaching the list of most progressive countries in the World Bank’s initial report of the indicators. The chapter 19 of the Act includes the provisions enabling minority investors to file lawsuits against companies and persons who are involved in the unfair activities against their powers and rights to remedy.
As other countries of the world are also in the race to facilitate business functions, we should not be satisfied with the current level. As the race continues, we must make efforts to improve our ranking in the coming years. The Ministry of Investment and Foreign Economic Relations has been making amendments, additions and adoptions of legal measures and rules and regulations for greater convenience of startup businesses and investors. The ministry has already reduced the company registration fee from Ks 500,000 to 250,000.
Its follow-up businesses are as follows:
1. Establishment of a task force to ensure integrated business registry
2. On-going collective efforts for creation of a single submission force which meets all the requirements of Directorate of Investment and Company Administration, Internal Revenue Department, Labour Department and Social Welfare Department
3.Taking coordinated measures for the development of single company identification or unique business identifier (UBI) which can be used by all the business-related government bodies.
4.Taking coordinated measures for the application of uniformed online platform or integrated business registry that can be used in all business registrations.
As regards the resolving insolvency indicators undertaken by Union Supreme Court, all the matters in connection with the insolvency registration can go through the MyCo or the electronic registration system of the Directorate of Investment and Company Administration.
As Myanmar will implement the single electronic registry (integrated electronic registry) system that will smoothen the registration of all other businesses, it is certain that Myanmar will reach a higher ranking the near future.
The global indicators of the World Bank will surely reflect the image of the country and reputation of the government for its measures to improve the country’s entire business environment. Moreover, the country will gain extra wealth through the ongoing reforms that further improves the country’s business environment and its power to attract more foreign and local investments of all kinds.
(Translated by TMT)