Workshop on International Trade Finance, Logistics and Business Development

UMFCCI, Yangon, Myanmar November 28, 2015

Private Sector Development in

Myanmar

Peter Brimble

Myanmar Resident Mission

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Myanmar’s Private Sector Main Features

• The main constraint to private sector development in Myanmar is a serious shortage of infrastructure and energy, indicating high potential for public-private partnership (PPP) projects.

• The scale and range of financial products and services is very limited, especially for SMEs.

• The legal and regulatory framework is a work in progress, with many gaps and overlaps, especially in term of supporting regulations.

• Most relevant government agencies have weak capacity to administer and enforce activities. And a need for “mindset” change

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Myanmar’s Private Sector Main Features

• Relatively few support programs for start-ups, innovators and encouraging entrepreneurship.

• A need for improved PSD coordination and information flow – among development partners, business groups and government.

• A critical determinant of private sector development is establishing linkages with international business …

• … both with FDI projects established in Myanmar, and companies overseas. Entering regional and global value chains.

• That in turn requires the establishment of robust Myanmar companies. Filling the “missing middle”.

A Framework: Three Core “Activity Groups”

Private Sector Development

Private Sector Operations

Private Sector

Engagement

‘INTERACTION’

‘FACILITATION’ ‘DIRECT SUPPORT’

• Strengthening the Business Climate Program

- Policy-Based Loan

• Building on technical assistance to date on company

law, public debt management, financial inclusion,

trade facilitation, SPS, etc.

• Public-private partnership support

• Mekong Business Initiative

• Supporting the PSD Framework and Action Plan

• Seeking other areas to promote PSD

• Anchoring the policy-based loan

• Private Sector Operations Department

• Direct lending/equity/guarantee support to business

ADB Private Sector Development Activities in Myanmar

Areas of ADB PPP Assistance in Myanmar

Support sector level work through targeted PPP assistance on energy projects (with DFID support)

Provide assistance to develop a national framework for PPPs, covering policies and strategies, laws, regulations and institutions (likely including a PPP Unit and Risk Management Unit)

Activities to develop PPP capacities

Eventually, consider scaling up project development by the establishment of various PPP funds

• Project Development Facility

• Viability gap fund

Identify potential pathfinder projects

PSOD considering projects in several areas (ADB’s non-sovereign lending vehicle)

The Mekong Business

Initiative

What is it? • Policy advisory and

advocacy facility that promotes private sector development in Cambodia, Lao PDR, Myanmar and Viet Nam

• Initial value: $10.5 million (ADB and Australia)

• Initial phase: 2015-2017 • Work program to be

endorsed in August 2015

A new approach • Rapid • Flexible • Responsive • Strategic timeframe

Focus areas • Business regulation • Access to financial

services • Access to information

and knowledge • Supporting women-led

business

What are we doing in Myanmar?

• PSD Framework and Action Plan

• Building Microfinance and Agro-business Finance

• Working with Young and Women Entrepreneurs

• Promoting Corporate Governance

• Linking Myanmar into Regional Programs

• Anchoring other ADB/DFAT programs/activities

The Myanmar PSD Framework and Action Plan

• Government approach to ADB in May 2015

• Fill the gap between vision and practice

• A sort of transition document

• Commenced in June 2015

The Myanmar PSD Framework and Action Plan

Output: a coherent, coordinated high level approach for pursuing Myanmar’s PSD agenda, building on existing reforms and core policy, visions and principles with due consideration to the context of Myanmar as well as global best practice concepts and lessons learned.

The Myanmar PSD Framework and Action Plan

• Current Policy Overview (Deliverable 1): A “snapshot” of GOM’s policy directions and reforms relating to development of an overall PSD framework based on five key priority pillars:

• Pillar One: Improving the Legal and Regulatory Environment

• Pillar Two: Ensuring Access to Finance

• Pillar Three: Promoting Trade and Investment

• Pillar Four: Restructuring the State’s Role in Business Enterprise and Service Delivery

• Pillar Five : Building Myanmar’s Human Capital Base

• Reform Assessment (Deliverable 2). Assessment of reforms, remaining gaps and challenges, priority issues going forward.

• PSD Framework and Action Plan (Deliverable 3): A forward looking PSD policy framework, reform strategy and objectives/priorities, and institutional mechanisms and processes for implementation.

The Myanmar PSD Framework and Action Plan – Cross-cutting Findings

• Remarkable progress made despite difficult circumstances

• Well-intended PSD initiatives constrained by inherited management systems and weak coordination

• There remains a disconnect between the ambitious PSD vision and implementation capacity

• Multiple drivers of change are stretching government capacity to the limit

• Importance of human capital paramount

• Successful PSD reform requires fundamental shift in role and mindset of the public sector

Aligning Mindsets – Government and Business

Government Roles Private Sector Roles Foundational

Pillars

Regional MBI team Dominic Mellor (dmellor@adb.org) David Brunell (david@mekongbiz.org) Stanley Boots (stanley@mekongbiz.org) Tom Moyes (tom@mekongbiz.org) Quang Phan (quang@mekongbiz.org) Myanmar Country Team

Tin Htun Win (tin@mekongbiz.org) Melinda Tun (melinda@mekongbiz.org) Peter Brimble (pbrimble@adb.org)