Contents

• Introduction

– Role and Important of SMEs

– SMEs in ASEAN

– Strategic Plan of Action for ASEAN SMEs Development 2010-2015

•Achievements and Challenges of ASEAN SME Development

•SMEs in Myanmar

•Strong Points and Weak Points of Myanmar's SMEs

•The Way Forwards (Directions)

•Conclusion

Role and Important of SMEs

SMEs are considered as an important element in the national

economics.

SMEs play a significant role in the country's economic,

social and political development and also creating a lot

of job opportunities for the local population.

Contributing for

Employment creation

Resource utilization

Income generation

Promotion of investment from micro and macro economic aspects.

SMEs in ASEAN

• ASEAN SMEs Vision ;-

• " To promote innovation, competitive and resilient SMEs as the new engine of growth that would contribute to the equitable economic growth"

• Significant role of SMEs to ASEAN Economy .

• SMEs make up more than 96% of all enterprises, generate 50-95% employment, contribute 30-53% of GDP and 19-31% of export to the economies of all ASEAN member states.

• AEC's third pillar on equitable economic development focuses on SME development & the initiative for ASEAN integration IAI

• Contribute significantly to employment.

• Integration with the regional and global supply chain.

Strategic Plan of Action for ASEAN SMEs Development 2010-2015

Five Priority areas of regional co-operations:

• SMEs access to finance

• Internationalization of SMEs

• Establishment SME service centre.

• Improving marketing and ICI skills of SMEs.

• Strengthening SME human resources development and capacity buildings

Achievements of ASEAN SME Development Activities in ASEAN Member States

1. The ASEAN white paper and statistics on SMEs a research on the definition of SMEs, governing laws, SME development schemes and related information in six ASEAN member countries (2008)

2. Establishment of the Common curriculum for Entrepreneurship in ASEAN (Oct 2009)

3. A Study on National E-commerce system usage by ASEAN SME

4. A Survey on SME financial facilities (Feb 2010)

5. Development of the ASEAN Strategic Action Plan for SME development (2010-2015)

6. Development of a multi-media self-reliant system toolkit package (June2011)

7. Feasibility study on the ASEAN SME Service Center (June 2011)

8. Establishment of Expert Panel on SME Access to Finance (June 2011)

Challenges of ASEAN SMEs in the past 2-3 years

• Establishment of SME financial facilities in ASEAN (2011)

• Establishment of SME service centers in AMSs (2011)

• Establishment of a Regional Programme for the Promotion of Internship Scheme (2013)

• Establishment of a Regional SME Development Fund (2015)

Recommendation • Awareness of how SMEs can benefits on ASEAN FTA • Harmonization and regularly updated national/regional SME data, information • Establishment of SME agencies and websites for more coordination & cooperation • ASEAN SMEs funding

Key Challenges and Recommendations for SMEs Development

• To enhance SMEs development, Encounters significant structural physical and non physical challenges particularly;

• Access to Finance

• Access to Market

• Access to Technology and Innovation

Recommendations • To establish the ASEAN SME Regional Development Fund • To support development of models on credit rating, credit guarantee scheme as well as establishing the credit risk database for SMEs • To organize capacity building workshops to share good practices on access to finance

Access to Finance

Difficulties in accessing funds due to

• Rigorous requirements from the banks, especially for new start up and innovative SMEs and insisting on the collateral-based lending

• Difficult to get the grant of loans due to the reluctance to lend to microenterprises

• SMEs have to rely on informal source of funds which charge high interest rates.

Access to Market

• Lack of awareness on benefits and implications of FTAs

• Limited export promotion activities

• Use of e- channel and e-commerce not widely explored

• Non-tariff barriers still exist

• Lack of familiarity on trade facilities and customs procedures

• Market intelligence in ASEAN and outside of ASEAN not available

Recommendations

• To organize ASEAN SME Trade Fair annually • To undertake awareness programmes on FTA • To reduce cost and bureaucracy in doing business • To develop and ASEAN SMEs business portal

Access to Technology and Innovation

• Investment in R&D among SMEs is still low resulting in lower productivity and efficiency

• Funds for commercialization of R&D is not forthcoming due to uncertainty of demand or absence of contracts

• Recognition and promotion of innovative SMEs is not widespread

• Limited knowledge in protection of IP rights and high cost of IPR registration

Recommendation • To encourage SMEs to invest in R&D to enhance productivity and efficiency • Sharing for capacity building focus on best practices. • Encourage exchange of trainings between countries to learn from each other.

SMEs in Myanmar

At a Glance

SMEs sector is the backbone of Myanmar economy which can produce basic needs goods and services as well as

• exports

• creating middle class people

• helping poverty alleviation

It can be said that there is no definite and proper SMEs policy or law in Myanmar yet. Preparing to adopt the SME development policies.

SMEs in Myanmar

• SMEs represent the majority portion of businesses in the private sector of Myanmar.

• SMEs account for 96% of the economic sectors in both rural and urban areas and 92% of the manufacturing sector.

• Myanmar economic growth is thus totally depend on the development of SMEs in the private sector.

• Consequently, SMEs play a vital role in National Economy.

• No. of employees, capital investment, production volume at electrical usage applied to classify the SMEs. No distinction in size is made for other sectors in Myanmar.

Strategic and Support Programmes for the SMEs Promotion

• Promoting finance for SMEs

• Establishment of cooperation & linkages among Gov-Private Business Community- Academic to develop R&D and Training facilities.

• Establishing an Productivity Center to improve technical and managerial capabilities of SMEs.

• Awareness and improvement of Supply Chain Linkage.

• Provide assistance and organized to attend the seminars, workshops and exhibitions at home and abroad.

• Provide assistance to create awareness on regional competitiveness TQC,TQM,GMP,GAP etc.

• Development of ICT sector especially e commerce and e business and information to grow and expand the business.

• Adopting best business practices and benchmarking.

• Formation of national level Industrial Development Committee (IDC)

• Revising of existing laws, regulations and procedures related to the SMEs development

• Tax Liberalization Granting the Loans for SMIs by the Myanmar Industrial Development Bank (MIDB)

Objectives of Industrial Development Committee

• To encourage SMEs and enforce the establishment of import substitution and export oriented industries and to emphasis the followings:

• to develop agro – based industries

• to enhance industrial production both qualitatively and quantitatively

• to encourage production of new types of industrial machineries and equipments

• to encourage production of machineries and equipments essential for the manufacturing and processing industries

• to create suitable conditions for change over to an industrialized state

• to assist in channeling new investments into more value added products

66.46 4.45

7.51

2.46 0.75

0.65 1.53

4.08 0.21

0.48

0.68

0.13

12.86

Food & Beverages apparel

Construction Materials

Machinery & equipment

Personal goods

Mineral & petroleum

Printing & publishing Household goods

Transport vehicles

Miscellaneous Electrical goods

Sector Distribution of SMEs (As of January, 2011)

Clothing & wearing

Industrial raw material

Industrial Development Committee

Industrial development

supporting sub

committee

Iron and Steel

Industries Development

Sub Committee

Small and Medium

Industries development

sub committee

Environmental Protection

and renewable

energy development

sub committee

Industrial Zones

Development Supporting

Sub Committee

Human resource

development sub

committee

ORGANIZATION CHART OF MYANMA INDUSTRIAL COMMITTEE

Key SMEs Support Agencies in Myanamr

Directorate of Industrial Supervision and Inspection (Ministry of

Industry I)

Directorate of Trade Myanma Agricultural Produce Trading

(Ministry of Commerce)

Myanmar Science & Technological Research Department

(Ministry of Science &Technology)

Small and Medium Size Industries Department (Ministry of

Cooperatives)

Myanmar Industries Association (MIA)

Small and Medium Enterprise Committee ( Myanmar Engineering Society )

Myanmar Fisheries Federation (MFF)

Myanmar Women Entrepreneurs' Association (MWEA)

SMEs Development

National Skill Standard Authority (Ministry of Labor)

Other Trades and Services Associations

INGOs and NGOs (UNIDO, JICA, JETRO, KOTRA, etc)

Union of Myanmar Federation of Chambers of Commerce & Industry

(UMFCCI)

Industrial Development Committee (Ministry of Industry 2)

Government Private

ASEAN SME Working Committee

Strong Points of SMEs in Myanmar

• Government recognize SMEs as an important element in the national economic development.

• Encourage and Strong support by the Government and SMEs agencies

• Establishment of SMEs Promotion Committee in Chambers and Associations as well as in Government Agencies

• Entrepreneurship & Business Capacity Building Trainings for SMEs

• Business Opportunity Networking (BON)to develop market potential

Strong Points of SMEs in Myanmar

• Greater cooperation and linkages among the Government, private business community, educational and technological institutions.

• High prospects for regional markets

• Huge potential for export market & Labour intensive manufacturing sector.

• Agriculture and Agro Base Food Processing Industry.

• Tourism Sector Development

• Abundent of Human Resources with comparative Labour wages.

• Abundent of Natural Resources for SMEs and SMIs.

Weaknesses of SMEs in Myanmar

• Limited source of investment in SMEs sector

• Still need to upgrade the products standard for international market

• Difficulties in marketing, distribution ,connectivity, information & IT

• Inadequate level of management Skill & technology

• Low level of productivity

• Inadequate access to financing

• Increasing global and regional competitions

• Limited of infrastructure development, Business Environment

• Lack of environmental awareness and knowledge

In order to overcome these issues and challenges

To adopt a sound SMEs development policy and a basis law which could provide comprehensive and clear guidelines.

To establish SMEs consultation centre.

Promoting finance for SMEs and establishment of credit facilities

Promotion of cooperation & Linkage among Stakeholders

Sharing of experience and building up OVOP concept

To upgrade technology and managerial skill through technical cooperation and transfer.

To conduct training and supporting measures for capacity building (Appropriate HRD programmes)

To intensify the cooperation, technical support and financial assistance from other countries such as Japan, Korea and other developed ASEAN member countries

Readiness and Direction of ASEAN in the future

• With AFTA coming into full effect by 2015, and other trade agreements, the SMEs/SMIs can no longer depend on tariff protection to remain in the comfort zone.

• At that important time,

• CLMV nations as well as in Myanmar, Governments are introducing the Economic Transformation Programmes to boost the nation's economy, to enhance their competitiveness to penetrate foreign markets but still need to get the supporting from ASEAN members countries.

The way forward (National Level)

For the better direction in the future

• Need more interaction and coordination between government agencies and private sector ( Public – Private Partnership) PPP

• Need to give more awareness to the private sector action plans and time lines of ASEAN FTA

The way forward (Regional)

• SMEs & SMIs are major contributors to country's economy and serve as the backbone for the economic growth of the country.

• SMEs/SMIs to achieve economic of scale and competitiveness to penetrate regional and international market.

• Several SME agencies in Asia need to give adequate attention to the needs and problems of SME in their work programmes.

THE WAY FORWARDS (Regional)

• The promotion of SMEs will have to be accelerated both by the Government and non government organizations concertedly.

• The creation of necessary business environment, the formation of industrial clusters and the solution of problems now faced by SMEs as stated earlier are all essential to the growth of SMEs in the face of globalization of economy.

• The greater cooperation between member countries of Asia on SMEs and SMIs development in the form of technology transfer and financing schemes should be initiated for the development of the regions as a whole and will be achieved leading to competitiveness in the global market.

Conclusion

•SMEs have been and will continue to be the backbone of national economies in Myanmar and important for the Asian countries as well. •No point in competing with other developed countries, developing countries should need to look into niche strength to stand out. •Developing countries are difficult to go out on their own to market for their products and services in a highly competitive environment, so they should establish synergies with their neighbors. •SMEs need to adopt a development mindset and look ahead, plan carefully, build up their capacity and capability and venture forward actively to achieve the ultimate goals.

THANKING YOU

FOR YOUR KIND ATTENTION

Zaw Min Win Vice President The Republic of the Union of Myanmar Federations of Chambers of Commerce and Industry (UMFCCI)