This chapter focuses on how promoting and enabling responsible business conduct in Myanmar could lead to far-reaching and strategic successes for promoting a more sound and sustainable investment climate, upgrading in global supply chains, encouraging the private sector contribution to the Sustainable Development Goals, while also protecting Myanmar’s resources for the future. This chapter is part of a broader project on Responsible Supply Chains in Asia funded by the European Union.

The regulatory environment for Myanmar is relatively less burdensome compared to its Association of Southeast Asian Nations (ASEAN) neighbours, in part due to fewer laws and regulations in place overall. Yet a rapid enactment of new laws in the past decade risks creating an increasingly fragmented regulatory environment if ministries do not make concerted efforts to assess regulatory needs and impacts together. The government has nevertheless developed a clear and formal policy to support small- and medium-sized enterprise (SME) development, which has been accompanied by an SME law to support its implementation. National standards for products and services have not yet been developed in Myanmar, so businesses deciding to export must comply with foreign standards negotiated on a case-by-case basis. This risks limiting the scale of trade opportunities for SMEs by imposing excessive administrative and financial burdens on SMEs striving to meet multiple standards for different buyers.

Myanmar is at an early stage of developing SME policies and has tended to prioritise interventions to enhance the legal and regulatory environment for SMEs. A number of significant steps were taken over the period 2014-2015, but reform appears to have stalled during the past couple of years. Very recently, however, new steps have been taken to enhance the institutional setting and SME access to finance. Going forward, Myanmar could continue to focus on developing its institutional framework for SME policy.

In 2013 the OECD launched the first Multi-dimensional Country Review (MDCR), a new series that looks at economic development along the lines of inclusive growth, i.e. growth that is also equitable and sustainable and that improves the overall well-being of citizens. The series aims to identify key constraints to broad-based development, and to formulate appropriate policy recommendations to address these constraints, including sectoral as well as cross-cutting issues.

Myanmar faces a crucial few years ahead in shaping its economic growth towards a more rapid, sustainable and equitable trajectory. This will require fundamental changes in the structure of the economy. While the share of value-added of the manufacturing sector has increased over the last decade, Myanmar is still an agrarian country. Fortunately, Myanmar possesses a wealth of assets and opportunities that potentially enable it to pursue a development strategy to modernise the agriculture sector and to transform into a manufacturing- and services-based economy. This report investigates how to achieve structural transformation and pays particular attention to the requirements in terms of workforce skills and financing.

This chapter analyses Myanmar’s education and training system with a focus on the skills in Myanmar’s workforce. It looks at how to develop relevant skills – especially through technical and vocational education and training (TVET) – how to encourage people to actively contribute their skills to the labour market, and how to make sure people’s skills are put to effective use. The chapter also assesses and provides recommendations for strengthening the policy framework for the skills system in Myanmar.

Realisation of Myanmar’s potential will depend upon how effectively the country can mobilise and allocate the financial resources to support its development needs. At present, the key institutions in the government and financial system that govern mobilisation and allocation of development financial resources are underdeveloped and hampered by a range of constraints and distortions. These include limited government capacities and underdeveloped legal and fiscal institutions, as well as limitations in the regulatory frameworks essential to the effective functioning of markets and private sector development.Myanmar’s authorities have made impressive beginnings on addressing these obstacles but the challenge will be to sustain an ongoing process of institutional reforms and capacity building. Areas of reform should cover government mechanisms for reporting, co-ordinating, and managing external funding; public financial management and revenue collection; as well financial market development. Reforms should be targeted to ensure that the provision of financial resources not only keeps up with but helps to catalyse the country’s overall development.

Myanmar possesses multi-faceted development opportunities. The country is endowed with a wealth of resources, including fertile land, minerals, hydrocarbons, forests and water resources as well as a relatively young population. Myanmar’s geographical location suggests potential as a regional trading hub. However, as highlighted in the diagnostic first phase of the Multi-dimensional Country Review (MDCR) of Myanmar (OECD, 2013), in order to achieve stable and sustainable development in the long term, the country must address various key challenges.

Myanmar possesses vast assets and opportunities that enable it to modernise the agricultural sector and to pursue a potentially structural economic transformation towards a modern economy. This chapter focuses on measures to modernise the agricultural sector and promote the transformation towards a manufacturing and services-based economy. Importantly, while services can become important drivers of growth in developing countries, this can only be achieved in tandem with growing the manufacturing sector. Moreover, modernising the agricultural sector by building linkages to complementary non-agricultural activities can initiate a structural transformation towards a more manufacturing and service-based economy.

This chapter looks into Myanmar’s challenges for developing its financial sector and current reforms being implemented by the government. It begins with a brief description of Myanmar’s financial sector stage of development, followed by an assessment of regulatory deficiencies that have prevented the development of the banking sector. It looks into regulatory asymmetries between private and state-owned financial institutions that prevent greater competition in financial sectors and examines briefly some current institutional framework challenges that discourage the development of financial services in the country. This chapter also outlines the government’s recent reform efforts to modernise Myanmar’s financial sector and expand access to finance, including recent reforms to introduce more competition to the banking sector by allowing the entry of foreign banks. This chapter also briefly covers challenges and reforms being implemented to build Myanmar’s capital market.

This chapter looks at reforms by the government in the area of human and labour rights in Myanmar. Environmental considerations are discussed in . It also considers how international standards of responsible business conduct can be introduced by investors in the context of Myanmar’s reform process and looks at ways in which governments from the home countries of investors can encourage further reforms in Myanmar in this area and at the different ways in which they have sought to ensure that enterprises from their countries act responsibly when investing in Myanmar.

This OECD Investment Policy Review of Myanmar represents the first international co-operation with the Government of Myanmar on investment climate reform. Undertaken in partnership with the Secretariat of the Association of Southeast Asian Nations (ASEAN), it charts the dramatic economic reforms in Myanmar since 2011 and draws lessons from the earlier reform experience after 1988, as well as from other countries that have undergone similar transformations.

Promoting sustainable private investment in agriculture is crucial to enhance agricultural growth, maximise the development benefits of investments and achieve food security. This chapter highlights key policy challenges to be addressed to attract more and better investment in agriculture, drawing from the OECD Policy Framework for Investment in Agriculture. The first section examines the context for agricultural investment. The second section provides an overview of Myanmar’s investment policy in agriculture, focusing particularly on the land tenure system, the regime for foreign direct investment and the tax incentives offered to agricultural investors. The third section identifies key challenges to promote responsible investment in agriculture that can effectively contribute to sustainable economic and social development. The last section examines specific sectoral policies that can encourage investment in agriculture, namely financial sector development, trade, access to inputs, infrastructure development, human resource development and research.

This chapter considers briefly three other policy areas contained in the Policy Framework for Investment (PFI): corporate governance of state economic enterprises, trade policy and human resource development.