(Mizzima) – Businesses across Southeast Asia are preparing for the challenges presented by the Asean Free Trade Agreement.
In the case of Burma, the military government can play the largest role in making the country’s businesses more competitive.
For example; there is almost no macroeconomic management within the country that could provide businesses with the stability and data needed to make long-term investment decisions.
Furthermore, local entrepreneurs have very limited access to capital markets, with the except of the regime’s business cronies. In addition, there is no transparency on government revenue and expenditure. With the formation of the new government, some observers had hoped that a detailed government budget would be published for everyone to see and analyze, helping to create a climate of transparency, accountability and a fair playing field.
Even with these serious obstacles, the Burmese business community must embrace AFTA. When possible, Burmese businesses can strive to become part of the new local and regional value chain and grasp whatever new logistical opportunities AFTA may offer.
One of Asean’s concerns is the entry of cheap Chinese products. However, Burma already has experience with Chinese products. In terms of taxation, most imported items already carry less than a five percent tax rate. No remarkable change could be expected from a zero tariff or the removal of non-tariff barriers. Under AFTA, consumers may enjoy some tax-free goods.
The biggest challenge for Burmese businesses will not be external business threats. The most serious problem will continue to be the military generals who give priority to control and retaining power.
There are vast areas in the country which need improvement: productivity, standards and quality, environmental friendliness, market exposure and modern business management, in addition to setting up formal business structures and networking groups.
These are areas where the government could, if it chose, create a business friendly environment, by favoring the rule of law, transparency and consistency of policies. In addition, an updated infrastructure could reduce unnecessary transaction and operating cost . The proposed one-stop service for Special Economic Zones could be adapted to serve local enterprises, especially small and medium businesses that also need start-up capital at low interest rate.
Ultimately, it is the new Burmese government that must put its house in order.
AFTA is a test of Burmese businesses and whether they can compete in the region–but more than that, it is a test of the new government created by the military rulers.
