Market Assessment

Assessment of the business service and training market in Myanmar, ILO, 2014

    Description
    This is a report of an assessment of the market for business services for micro and small enterprises (MSEs). The focus is on non-financial services and business start-up and management training. However, financial services were considered as well.The objective is to inform development and government agencies engaged in support to micro and small enterprise development.

    The study finds that the prospects for private sector development in Myanmar are significant, with GDP growth expected to increase from around 5 to 7 or 8% over the coming years. This builds on abundant natural and cultural resources, on-going economic reforms, and the expectation of foreign investment and donor support. Important challenges remain. These are related to a possible slowdown and reversal of the political and economic reform process, the absence of adequate institutions for a functioning market economy, corruption, low investments in infrastructure and ethnic tensions.

    Opportunities for output and employment growth are thought to be particularly strong in labour intensive manufacturing, tourism and travel, construction and retail. Strong output growth can also be expected in agriculture, energy and mining, telecommunications and financial services.

    This will translate into many opportunities for the MSEs. The current study estimates that the total number of MSEs may be around 2.8 million, with some 39,000 start-ups annually. Business services to support them in contributing and participating in growth are among the main factors that can accelerate economic and employment growth.

    The potential demand for business services and the expressed willingness to pay for services that address such needs (88.7% of the MSEs interviewed were willing to pay) is strong. Entrepreneurs give priority to services that provide them information on the market, knowledge and skills to reach customers and make sales, improve workers’ technical skills and develop linkages to new buyers and suppliers. Knowledge and skills to reach customers can be addressed through business management training, while improved management skills can also contribute to addressing the other priorities.

    Services would have to address fairly simple business issues. Characteristics of delivery prioritized by entrepreneurs are that the training should be easy to access in terms of distance and timing. The availability of printed training material was appreciated by a majority.

    Current usage of business services is very low, at just 19.7% of interviewed MSEs. The study indicates that this is not due to weak actual demand but because entrepreneurs either believe that services are unavailable or have low awareness of what is on offer and how it can be accessed. Only around 5% of users had paid for services. This does not reflect significantly on the willingness to pay since the large majority of services had been provided within value chain relationships (by buyers and suppliers) and were therefore part of commercial transactions.

    Supply of services is very weak (vocational/technical training mainly). It is characterized by low capacity, outreach, and diversity. While limited business management education is available (mostly in Yangon), this targets students and the corporate sector, not MSEs. There is no structured or standard entrepreneurship or business management training product for MSEs on the market at present. The situation with other services such as developing market linkages, provision of market information, business consultancy services and technology training services is similar. Supply of such services to both urban and rural MSEs is weak or non-existent. Public sector providers are fully dependent on government budget allocations, while NGOs depend on donors. This limits their scope (potential outreach) and sustainability.

    Methods for info gathering
    The study was conducted in June and July 2013. It comprised a review of available studies, data and documentation, some 40 interviews with key informants, a small survey of 315 MSEs in Yangon and Bagan and 6 Focus Group Discussions (FGDs) with MSEs.

    Summary of results
    The study resulted in the following key recommendations on the business services and business management and start-up training markets:

    1. The main interventions to develop the market for business services need to initially invest in developing the supply side.
    2. Efforts to develop the supply of business services should focus on the private sector and possibly on local NGOs. Government institutions function under severe budget and bureaucratic constraints and officials are in any case not the providers of choice.
    3. Exploring ways in which business services can be provided by actors in value chains is recommended for developing sustainable services embedded in market systems.
    4. The business services developed should as much as possible be adapted to the specific needs of the target markets, i.e. the characteristics of the enterprises and their markets, gender roles, localities, ethnic groups.
    5. A further implication is the need for gender analysis. The present study has not found significant differences between the needs of (potential) male and female entrepreneurs.
    6. Urban areas can be expected to grow and potential outreach of services is greatest in urban areas. The initial focus should be on the main urban centres.
    7. Once more services become available, targeted promotion by the providers is likely to be more effective than large-scale campaigns. This could make use of business associations and chambers.
    8. The market for business services is not yet distorted by donor and government subsidies and incentives. Therefore, initiative should be undertaken to bring stakeholders together to coordinate the development of sustainable and viable services.
    9. Invest in the development of a capacity to provide (potential) MS entrepreneurs with entrepreneurship, business start-up and business management training.
    10. Training should be adapted to local needs and circumstances. Most important is availability in local languages, and an emphasis on marketing-related skills and knowledge.
    11. For outreach to smaller towns and rural areas, alternative delivery modalities should be developed. For example, through mass media.