ASEAN Economic Community (AEC), a common market with free movement of goods, services and labor across the 10 nations of Southeast Asia, is set to pose enormous challenges for small and medium-sized enterprises in Myanmar SMEs, experts say.
AEC has entered into force last January, however, Myanmar, Laos and Cambodia are not going to join the trade bloc until 2018. He left these economies underdeveloped ASEAN grace period to catch up with their developed counterparts. Yet, additional time may be insufficient.
Some of the challenges smaller companies in Myanmar face include the prices and the quality of the product compared to companies in Thailand, Malaysia and Singapore. Economists say the hardest races can kill small and medium enterprises weak in Myanmar.
“Myanmar would have to analyze the conditions of small and medium enterprises and their competitiveness before accepting with [AEC] system. Our local businesses do not meet the product quality [of others] and will not be able to make important market commissions , “U Tin Oo This, economist and specialist in law, he said.
The government has tried to implement the safeguard law to monitor commercial practices to reduce the number of obstacles to local small and medium businesses that are trying to compete with larger companies.
Under the law, if local Myanmar SMEs can not compete on the market and its production is reduced considerably due to free trade, imports of the same product would be prohibited for a specified period of time.
“Business owners may apply to do so by presenting the facts and evidence that imports of certain products has increased tremendously and that will impact on local businesses. The Ministry will investigate the product in question and a ban on import if deemed necessary,” Dr. Maung Aung, advisor to the Ministry of Commerce, said.
The government has started giving loans to shore up local SMEs, but the program has not been able to play a significant role.
“The government loan program for small and medium enterprises that lacks transparency and there is no favoritism involved. Prior to joining the ASEAN community, there were plenty of job opportunities in Myanmar, but after entering without doubt a great drain of skilled workers who will lose causing a shortage of local skilled workers, “said U Tin Oo Que.
Tin U Khine, owner of Shwe Kyar Pwint, a small shoe factory, also said that the loans granted by the Union government through state and local governments has not been very effective.
“It ‘was published in newspapers and magazines that have provided loans to small and medium-sized enterprises, but does not specify what kind of SMEs can receive loans,” he said.
“Shoes and slippers are imported from ASEAN countries such as Indonesia, the Philippines and Thailand and that are affordable and of good quality. There are also cheap shoes from China are mainly imported during the rainy season. The locally made Companies traditional slider may need to close if all these products flooding the market. ”
Dr. Than Tun, president of the Industrial Development Bank for small and medium-sized (SMIDB), said that 400 companies between 40,000 and 40,000 enterprises registered unregistered companies received the loan from the bank.
“While lending to small and medium-sized enterprises, must be analyzed carefully so that there is no loss. We appraisers to consider applications for loan. We estimate the value of collateral, which is different from region to region. On basic tests of guarantees, loans worth 20 to 40 percent is given the value of collateral, “said Dr. than Tun.
U Tin Oo, who said that the government should collect statistics on businesses across the country, sector by sector, and linking with foreign companies to allow the transfer of knowledge and technology.
Recently, consumer products, kitchen utensils, equipment for agriculture, livestock and fishery products originating in other ASEAN markets are imported into the local market and restaurants in Myanmar.
An official from the Myanmar fisheries and Exporters Association, who wishes to remain anonymous, said that while the ASEAN Free Trade pose obstacles for SMEs, the public will have more access to the best products at fair prices.
“Now imported meat and fish from neighboring countries is available in CityMart fair price shops. More competition means customers will have more choice and must pay even less,” he said.
Read Also : Myanmar FDA Open to investigate into Coffee Factory
Myanmar Capital 