Challenges to Small and Medium-size Businesses in Myanmar: What are They and How do We Know?
48 Pages Posted: 13 Jan 2016 Last revised: 26 Feb 2016
Date Written: February 2016
Abstract
We conducted a field study in the city of Yangon, Myanmar to investigate major obstacles to business development in the region. The analysis focuses on three aspects of the business environment that are considered to be top constraints among Myanmar small and medium enterprises (SMEs): (1) access to credit, (2) access to public services, and (3) access to electricity. By using anchoring vignettes we are both able to correct for possible differences in response scales across respondents and to elicit which characteristics of the business environment are seen as most difficult. Although we find some significant differences in response scales across different groups of respondents, their effects on qualitative conclusions are minor. The analysis of vignette ratings reveals that in terms of access to credit relaxing collateral requirements is considered of prime importance, while access to bank loans is seen as very problematic (equivalent to a 19 percentage points increase in the loan interest rate). Access to public services is another impediment, with cumbersome and time consuming procedures, often necessitating daylong trips to the capital for administrative procedures. Improving such procedures would be equivalent with average annual savings equal to US $4,700 per business. Results from the vignette analysis indicate that getting new electricity connections and unreliable electricity supply are perceived by our respondents to be the most difficult in getting access to electricity.
Keywords: Subjective measures, business environment, differential item functioning, anchoring vignettes, enterprise surveys, Myanmar (Burma)
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