New kids on the ASEAN block : Myanmar SMEs and regional economic integration

For decades, Myanmar's economic system has been characterized by central planning and international isolation. Today, as the country undergoes a far-reaching political and economic transition, it is leaving this past behind. For Myanmar's enterprises, and SMEs in particular, the opening of the country's economy and the intensification of regional economic integration through the ASEAN Economic Community brings both opportunities and challenges. It is in this context that the present study investigates the extent of Myanmar SME participation in ASEAN and East Asian regional economic relations as well as the challenges they face and the policy support they need for deeper integration. More specifically, this paper addresses the following four questions: What is the state of Myanmar SMEs' participation in regional trade, production networks, and investment activities? What are the enabling factors and obstacles to SME participation in regional economic activities? How are regional and preferential trade agreements affecting SMEs' activities and performance? And what are the policy imperatives to promote active participation of Myanmar SMEs in regional economic integration? To find answers to these questions, this study not only analyses existing secondary data but also draws on a new dataset collected by the Centre for Economic and Social Development (CESD) through a survey among Myanmar enterprises which focuses on the food-processing and garment sectors. It is found that, at present, Myanmar SMEs hardly participate in regional economic activities. They face numerous challenges such as: constrained access to capital and skills; limited investment in technology, innovation and human capital; minimal usage of ICT; and low awareness of regional integration dynamics. To overcome these challenges and reap the benefits of regional economic integration, enhanced firm-level efforts are needed while the government can provide support on various fronts. (J SEA Econ/GIGA)