A comparative study on socio-economic and environmental development of myanmar and vietnam

Nội dung text: A comparative study on socio-economic and environmental development of myanmar and vietnam

1. A COMPARATIVE STUDY ON SOCIO-ECONOMIC AND ENVIRONMENTAL DEVELOPMENT OF MYANMAR AND VIETNAM Dr. Ah Mar drmarmar1967@gmail.com Associate Professor, History Dept, Pathein University, Myanmar Abstract The objective of this paper is to compare and analyze human resources of Myanmar and Vietnam based on socio-economic development and environmental management. Myanmar and Vietnam are the late members of ASEAN. Vietnam joined ASEAN in 1995 and Myanmar in 1997. Both countries are the developing countries in the southeast Asia region. They have seen to have similar socio-economic situations. Both economics started market oriented policies in late 1980s. In addition, both countries have more or less the same factors such as background experiences of colonialism, location, natural resources, economic structure, export structure, culture and custom. Religious, etc. Therefore, more efforts are need to put on enhancing human resources development. If they take the right moves at the right time by improving the quality and capacity of human resources their people enjoy prosperity and pursuit of happiness in the coming days. Key Words: ASEAN; Human resources, Socio-economic, Environmental, Urban- community Introduction Kingdom of Myanmar was terminated by the three successive occupations of the British in 1824, 1852 and 1885. However, Myanmar King's idea to modernize the country through industrialization led to failure by British invasion. The first British rule ended in August 1943 when the Japanese agreed to declare Myanmar's independence. But it was not a real freedom. Thus Myanmar's had to attempt military defect on Japan, and ask new British Rule for independence. On 4 January 1948 Myanmar regained her independence. After a parliamentary government was formed in 1948, Union (Pyi Daung Su) Government attempted to make Myanmar a welfare state. In the late 1988, the new military government took the state responsibilities and announced establishment of new modern developed country through market-oriented economic system. 935
2. Vietnam's independence ended in the mid-1800, a when the country was colonized by the French. The French maintained control of their colonies until World War II, when the Japanese war in the Pacific triggered the invasion of French Indochina in 1941. After liberalization movement against Japan, Viet Minh occupied Hanoi and proclaimed a provisional government which asserted independence on 2 September 1945 but severe war continued up to end of French administration in Indochina and separation of South and North. Since reunification of South and North in 1975, the economy of Vietnam has been plagued by enormous difficulties in production, imbalances in supply and demand, inefficiencies in distribution and circulation, soaring inflation rates, and rising debt problems. Vietnam is one of the few countries in modern history to experience a sharp economic deterioration in a postwar reconstruction period. Its peacetime economy is one of the poorest in the world and has shown a negative to very slow growth in total national output as well as in agricultural and industrial production. In a historic shift in 1986, the Communist Party of Vietnam implemented free-market reforms known as Doi Moi (renovation). With the authority of the state remaining unchallenged, private ownership of farms and companies, deregulation and foreign investment were encouraged. The economy of Vietnam has achieved rapid growth in agricultural and industrial production, construction and housing, exports and foreign investment. Vietnam achieved around 8% annual GDP growth from 1900 to 1997. Vietnam entered ASEAN in 1995 as a full-fledged member. Aim and Objectives of the study Based on the idea of the important role of socio-economic and environmental development in developing economies, major objectives of this paper are:  to study the profile of socio-economic and environmental development in Myanmar and Vietnam,  to compare the status of Small and Medial Enterprises sector in the two countries, and  to find out the major factors to develop Small and Medial Enterprises sector in Myanmar and Vietnam economy. Methodology In compiling this paper two approaches were attempted namely study of socio- economic and environmental on the subject. Necessary data and information are compiled from such main sources as Central Statistical Organization (CSO), Ministry of Industry. Moreover, SME seminars, class lectures and various internet websites are also desirable to acquire relevant information. 936
3. Results The evidence on small firm performance in developing countries especially in terms of cross sectional studies in very sparse flexibility, enhanced by subcontracting and the exploitation of economies of scale, meant these enterprises where able to adapt and operate successfully in niche markets away from the direct competition of large competitors. According to the studies, whether firm size is in itself a determinant of enterprise performance might be determined by other factors such as natural resource, endowments, technology, policies and institutions. This seminar paper intends to describe not only the development of social life of urban communities but also the changes and important role of socio-economic to be prosperous as town. Discussion Numbers of establishment of SMEs dominate most of Myanmar's economic sectors, accounting for 90 percent of the industrial sector and 99 percent of the manufacturing sector. SME development has become especially important since Myanmar claimed industrial objective in its 30-year industrial development master plan with intention to modernize and reach the same levels of industrialization as advanced Asian nations in 2015. To catch up such objective, SMEs plays more important role than large enterprises which has very limited founding and employment opportunities. Growth of private-own registered small and medium industries within industrial zones is still much higher than that of large scale industries even though their percentage share gradually increased. Between 2002 and 2006, total numbers of registered private industries from various industrial zones increased all the time. During this period, share contribution by large and medium industries increased from 6.0 percent to 8.0 percent and from 11.3 percent to 14.9 percent respectively. Small industries in term of absolute number increased from 31852 to 33455 but relative share decreased from 82.7 percent to 77.1 percent. With regard to job creation, small and medium industries from different industrial zones could absorb 80 percent of total labour employed although outputs and investments were less than 70 percent in 2006. Along with first point of Myanmar's national economic objective about the development of agriculture as the base and all-round development of other sectors of the economy as well, industrial focus also pays much attention on food and beverages. Consequently, very large part of small and medium industries were established in food and beverages sub-sector. Food and beverages sub-sector sharing as large as more than 80 percent was intensively produced within SMEs. About 60 percent of food and beverage industries were invested by SMEs. Not including miscellaneous items, establishment followed 937
4. to produce or process construction materials, clothing & apparel, and mineral & petroleum products. Electrical goods production is lowest emphasis with 0.1 percent. Myanmar Map For the case of Vietnam, its renovation movement known as Doi moi pushed up SME development because transition from a centrally planned economy to a market economy depressed to reduce the size of state-owned sector, and private sector has emerged in this process. As a result, numbers of private-owned SMEs became a dynamic force in the development of Vietnam economy. Success of Vietnam's development strategy also depends to a large degree on the development of private sector which consists mainly of SMEs. Vietnam's entry into the WTO by 2006 contributed SME sector to have a great opportunity to expand clustering 938
5. and exporting. Amount various initiatives to improve the competitiveness of Vietnam's SMEs, innovation policy attracted attention from policy makers, researchers and the business community. It was based on the assumption that innovation can affect firms' competitiveness and hence export status by increasing productivity, by reducing costs, and by developing new goods for international market. Such innovations were also expected to occur from mostly private sector. Thus, progress of privatization encouraged to expand private sector as well as total number of SMEs. Figure 1. Industrial Zone in Myanmar Source: Industrial Development and the Role of Private Sector After a period of 5 years up to 2000, the numbers of SMEs increased more than double with the average growth rate of about 25 percent per year. The ownership structure of SMEs indicates that most of SMEs are non-state owned. The number of 939
6. SMEs in State sector decreased due to the successive privatization process. In 2000, there was 11 percent of state-owned SMEs and 3 percent in foreign owned. In 2004, the shares of SEMs in these two sectors stood at equally 3 percent each and non-state sector occupied the remaining 94 percent. In this regard, in the year 2002, the government established the SME Development Agency under the Ministry of Planning and Investment, and Vietnam has introduce a lot of measures as following to promote SME sector development.  to private some kind of tax exemption for SME.  to establish a development assistance fund for providing SMEs and with special credit;  to establish a credit guarantee fund for SMEs;  to interest local authorities to assist SMEs for getting the land for doing business, especially building industrial zones for SMEs.  to strengthen the responsibility of the local authorizes and to govern for supporting SMEs in accessing market information, promoting their products and marketing, to use state budget for procuring goods produced by SMEs; and  to promote SMEs to invest in supporting industries and to link with big enterprises, to support SMEs in labour training. According to the estimation of the Ministry of Planning and Investment, the contribution of SMEs including those owned by the State and foreigners accounted for 24 percent of the economy in 2004. Although there were no accurate publicly available data on employment creation, the Ministry's survey showed that more than 90 percent of total firms were SMEs even though number of employees for them was defined less than 200. Table (1). Classification of Vietnamese Enterprises by Number of Employees (2007) Number of Employees Ownership Less than 100 100-199 200-499 More than 500 State-Owned 5067 190 263 1333 Foreign-Owned 457 15 33 238 Private-Owned 10908 165 351 2280 Joint Venture 102 3 3 20 Limited Company 4195 105 142 719 Cooperative 1849 38 97 636 Household 1879402 - - - Source: Industrial Department, Ministry of Planning and Investment, Vietnam. 940
7. Unlike Myanmar, sectoral structure of registered SMEs in Vietnam highlighted on manufacturing, trade and services rather than primary sectors such as agriculture, fishing and mining. Opportunities for SME Development in Myanmar As boasting since very earliest days, Myanmar is rich in variety of natural resources. Recently, most of these resources are exported in the forms of raw materials such as round logs, rough precious stones, and raw gas. There are numbers of rooms for SMEs to engage in the value-added production by using abundant resources. One of the most important points to grow SMEs in Myanmar is location of the country. Myanmar is surrounded by the most populous and emerging countries namely China and India. If Myanmar SMEs were able to penetrate certain products into these markets, their sizable demand could uplift rapid expansion of the sector. Size of domestic market also should not be ignored because its import demand for various types of consumer products is very significant in the country's external trade. There are number of small markets which are still unable to fulfill consumers' needs and wants. Relatively cheap and abundant labour force may be another occasion to operate the business in a lesser cost although most workers have limited skill. If formal and extensive trainings were given to unskilled workers, the SMEs would have potential efficiency gains. A good chance to encourage SMEs is export promotion by using multilateral and bilateral trade agreements which favor one-way or two-way tariff deduction. Since Myanmar is member of ASEAN, Common Effective Preferential Tariff (CEPT) scheme and tariff reduction programmes of other counterpart countries such as China, Japan, Korea and India are fruitful to Myanmar SMEs. Major Constraints for SME Development in Myanmar All SMEs, in general, are very fragile due to their nature of low capital investment, out of reach of bank loans, small market share, low level of technology, insufficient machines and equipments, etc. SMEs in Myanmar have relatively more constraints then those in Vietnam because of its underdeveloped industrialization and external barriers. It was found that exposure and culture, access to finance, high inflation rate and competition are major problems that new entrepreneurs in Myanmar have to contend with. 941
8. Figure 3. Institutions for SME Development in Myanmar Committee for Industrial Development (CID) headed by Priute Minister Myanma Industrial Development Committee (MIDC) headed by Minister for Ministry of Industry (I) Myanma Industrial Development Working Committee (MIDWC) headed by Minister for Ministry of Industry (II) (10) Sub-Committees headed by Deputy Minister of related Ministries Industrial Zone Superisory and Management Committees headed by regional districalautorities Very common and foremost problem is shortage of electric power supply. According to the ASEAN Statistical Yearbook 2006, proportion of household with electricity was 40.4 percent in Myanmar while 77.8 percent in Vietnam. One survey conducted on type and magnitude of constraints in industrial zones in Myanmar also showed electricity supply as the severest constraint. Nowadays, power meter boxes are easily accessible in the industrial zones and household residents. National grips and local cable extensions are also improved and newly installed throughout the country but shortage of electricity, unstable voltage, and frequent blackouts are still frequent problem. Other constraints in the series from most to less were concerning with raw material, labour, transport, financial assistance, technology, communication, market, sanitation and water supply, and revenue. 942
9. Among the constraints other than shortage of power supply, lack of financial sources is an obvious problem. SMEs are unable to acquire bank financing because of lack of adequate collateral. In Myanmar, only real estates are eligible to be offered as the collateral to the banks. Inability to attain loans from financial institutions forces them to borrow from informal lenders who usually charges much higher interest rates compared to bank interest rate. Unofficial money lenders charge very high interest rates, from 10 percent to 20 percent per month, depending on the quality of collateral property. An option to have loans by offering the properties such as cloth and furniture as the collateral (these properties are unacceptable by then banks) is the borrowing from pawnshops. Pawnshops, which acquire licenses from city and township municipal authorities, scatter all over the country. They charge monthly interest rate on small loans about 4 percent or 5 percent on average. Figure 4. SME Support Institutions System in Vietnam PRIME MINISTER SME Development Council Ministries, MPI Provinclal Other Support Agencies, ASMED Authorities Institutions Departments * VCCI * VCU* Union of scientific and Technical Assistance National Technical Centers InHanol, Da Nang Business Associations & HCMC Information * SME Association Center for Rural Trades * Vietnam Young Businessmen DPI (Provinclal SME) Association Development Support agendas Coordinator) + of Ministeries Support agendes of and Departments under Central level Business clubs, People's Agencies and local Communittess Departments associations, NGOs S M E s The SME Development Agency undertakes the SME policy coordination at the central level as well as the standing secretariat of the SME Development Council. The ultimate objective of SME Development Agency is to collabourate closely with 943
10. private sector representative organization and public and private service suppliers to assist SME to improve their competitiveness. Several fundamental features between Myanmar and Vietnam are believed to be more or less the same. But there are differences mostly in policy formulation, policy implementation, economic environment and external impacts. The comparison of basic features is shown in Table (2) . In Vietnam, a common evaluation framework of financial institution is the five C's namely Capacity, Capital, Collateral, Conditions and Character. Capacity refers to the cash flow and profitability of the firm. Capital is the money invested in the business. Collateral is a form of security for the lender. Conditions refer to the intended purpose of the loan. Character is the obligation that a borrower feels to repay the loan, which is acquired from payment history. Unlike Myanmar, SME banks in Vietnam accept firm equipments, buildings, accounts receivable, and inventory as the forms of collateral. Thus, Vietnam SMEs have easier access for loans. More or less, economic sanctions made by U.S and E.U countries are not neglected blockades to hinder development of industrial sector including SME in Myanmar. The most significant sector is CMP manufacturing, mainly garments. Vietnam, in contrast, is supported by the U.S with trade openness of its market and injection of its investments. In view of major constraints both internal and external, those in Myanmar are much considerable compared to those in Vietnam. Table. 2 Basic Features of Myanmar and Vietnam No Particulars Myanmar Vietnam 1. Location Southeast Asia Southeast Asia 2. Total land area 677,000 sq:km 331,668 sq:km 3. Population (2007/08) 57.5 million 87.3 million 4. Number of national races 135 54 5. Size of GDP (current price) (2006/07) 13,894 billion kyak 837,853 billion dong 6. Structure of GDP (2006/07) (%) Agriculture 45.3 20.9 Industry 18.5 41.0 Services 36.2 38.1 7. GDP growth rate (2006) 13.6% 8.4% 8. External trade (2005)* 944
11. No Particulars Myanmar Vietnam Export (US$ Mil) 3,810 32,233 Import (US$ Mil) 1,772 36,881 Trade volume (US$ Mil) 5,582 69,114 9. Growth of external trade (2005)* Export (%) 12.7 21.6 Import (%) (-)3.1 15.4 10. Price Index (annual change %) (2006) 10.74 4.8 11. International reserve (US$ Mil)(2005)* 782.3 7041.5 Conclusion With the assumption of State power, the military government officially announced in March 1989 to adopt market-oriented economic policy in Myanmar with invalidation the 1965 Law of Establishment of the Socialist Economic System. The Communist Party of Vietnam led the free-market reforms also known as Doi Moi in 1986. So, both Myanmar and Vietnam can be said that they initiated change of their economic system from planned or centralized to market oriented economy almost at the same time. The two countries encouraged the development of private sector in the economy and achieved rapid growth rate in the region. Reform measures in Myanmar were inconsistent because, for example, private sector is encouraged to promote export but high export tax is levied on exports of private sector. Vietnam could implement export promotion, for example, in rice export by using tax policy as a tool. References: 1. A proposeal ASEAN policy Blueprint for SME Development 2. ASEAN statistical year book, The ASEAN Secretarial Jakata, 2010 3. Asian Development Bank, Myanmar in Transition opportunities and -challenges 2012. 4. CIME, Vietnam's Economy 2002, National political publisher, Hanoi, 2003. 5. Country Profile of Vietnam, 2010. 6. Central statistical organization, statical yearbook 2005, Ministry of -National Planning and Economic Development, Myanmar 2005. 7. Kyaw min Han, ICT Setcor Development in Myanmar, 2009. 8. Kyaw Htin, Dr, Industrial Development and the Role of private sector, Power point, presentation, Seminar on 14th Annual Conference of UMFCCI, 2007. 945
12. 9. Liedholm C and D Mead, Small and Medial Enterprises and Economic Dvelopment, Routiedge, 199. 10. UN data, " Country profile of Vietnam " retried from http:// data. Un org/ country profile. aspx 2 or Name Vietnam 26 November 2010, p .15 11. UNESCO, "ICT in Education for Myanmar " retrieved 2 January 2011. from www. Myanmar com/ information/ computer/ IT/ Edu.html, 12. Internet world statistics, "wages of ICT workforce Myanmar, Malaysia and Vietnam " retrieved 30 June 2011 from http:// www. Internetworldsets, com/ stats 1.htm. 13. Wages range in Malaysia (www. Investingahaing. gov.mv, Myanmar Computer Federation, Business Opportunity Study withing the IT and Telecommunicating Industry in Vietnam in 2010. Internet Websites: 1. http:// www.adb.org (Accepted Date 25.9.2012) 2. http:// www. ctb.ku. edu (Accepted Date 24.6.2012.) 3. http:// www. moh.gov. mm (Accepted Date 30.9.2012.) 4. http:// www. Globalhealthcheck.int (Accepted Date 14.7.2012.) 5. http:// www. ministryofhealth. gove.mm 6. http:// www. wpro. who. org (Accepted Date 1.10.2012.) 7. http:// www. wikpedia. org/health in Vietnam 8. www. Ministry of health. gov.mm 946