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SMEs represent the greatest share of Myanmar economy in terms of number, contribution to employment, output and investment. Therefore, the development of Myanmar economy is totally dependent on the development of SMEs in the private sector. The role of SMEs is more important in today’s era in order to sharpen national competitive advantages and to take advantage on the speedy economic integration in the ASEAN region. However, surveys explored that SMEs are facing a number of constraints and problems that come from environment as well as their own internal inefficiencies. Among these constraints, shortage of power and inaccessible of financing from formal sector poses as severest constraints on their development. The problem of financing SMEs has long been existed and deeply rooted in both demand and supply side and it is also related to macro economic fundamentals and lending infrastructure of the country. Government’s policy towards SEEs could also lead insufficient support to SMEs sector in the country. Therefore, focusing on SMEs and private sector development as a viable strategy for industrialization and economic development of the country is a perquisite for the SMEs development. The policy recommendations for stabilizing macro economic fundamentals, improving demand and supply side conditions from SMEs financing aspect are made in order to provide better accessible financing and contribute towards overall development of SMEs sector in Myanmar.

Myanmar highly appreciates as FDI is a key solution in order to reduce development gap with leading ASEAN countries and accordingly it is welcomed by the government. Myanmar Foreign Investment Law was enacted in 1988 soon after adoption of market oriented economic system to boost FDI into the country. Foreign investors positively responded to these measures in the early years and FDI inflow into Myanmar was gradually increased during the period from 1989 to 1996. However, after 1997, FDI inflow was dramatically reduced and stagnant at very low level up to 2004. In 2005, FDI inflow was dramatically increased unprecedented rate and reached maximum throughout the history. However, this growth was not sustainable in the subsequent years and declined again and stagnant at the previous level. In terms of source regions, ASEAN is major investor in Myanmar which investment is significantly more than combined investment of other world regions. Among top ten countries, Thailand investment alone is significantly more than combined total of other nine countries. Among ASEAN countries, seven countries have made investment in Myanmar of these Thailand, Singapore and Malaysia stand at the first, second and third place respectively. In terms of sector, the combined total of FDI inflows into Power and Oil & Gas sector represent 64% of total investment. Myanmar is relatively disadvantages in communication infrastructure, delay in administrative procedures, level of economic freedom, FDI related policies particularly existence of multiple exchange rates, imposition of tax on export earning and foreign exchange control, and external impact due to the sanctions of US and EU countries. Combined impacts of these factors impede the FDI inflow into the country even though Myanmar is rich in natural resources, human resources, cultural and national heritages that are very attractive to foreign investors. There are many opportunities for foreign investment in other sectors which are not yet exploited like agriculture, hotel and tourism, wood based industry, garment, electronic and IT etc. ASEAN countries will certainly be source countries of Myanmar FDI in future and Myanmar should expand other Asian countries like Japan, India, China, Korea and Hong Kong in its FDI portfolio. In order to effectively attract FDI into the country, Myanmar needs to minimize the effect of policy while opening and encouraging other potential sectors of FDI to foreign investors in ASEAN and Asian countries.