Entrepreneurship and the Role of SMEs in Myanmar's Economy

This report provides a comprehensive overview of entrepreneurship in Myanmar, detailing various types of entrepreneurial ventures such as small businesses, scalable startups, large company entrepreneurship, and social entrepreneurship. It explores the similarities and differences between these ventures, offering examples from the Myanmar context. The report further examines entrepreneurship in both the public and corporate sectors, emphasizing the importance of Small and Medium Enterprises (SMEs) in the country's economy. It defines SMEs based on Myanmar's criteria, presents SME member data, and discusses the impact of SMEs on the economy, including job creation, income generation, and resource utilization. The report also highlights the significance of small businesses and start-ups for the growth of the social economy, comparing small, medium, and large businesses in Myanmar. Finally, it explores the role of SMEs in addressing unemployment and contributing to the GDP, emphasizing the importance of financial resources and start-up support in Myanmar's economic development. The report is submitted by Khant Min Zaw, Student ID 2018A5874, for the HNC in Business Strategy program.

[…………………..]
Assignment Title:
[Entrepreneurship and Small Business Management]
Submitted To:
[ Daw Phway Phway Aung ]
Submitted By:
[ Khant Min Zaw ]
[Student ID - 2018A5874 ]
Level – 4 HNC in Business
STRATEGY FIRST INSTITUTE

Contents
Entrepreneurship..............................................................................................................3
Different types of entrepreneurial ventures and relation to the typology of
entrepreneurship..............................................................................................................3
There are many different ventures. These difference are depend on the purpose and
Finance investment and individual purpose of people and the characteristics of
entrepreneurs. Four types of entrepreneurial ventures in Myanmar are as follows;.....3
Small business entrepreneurship..................................................................................3
Scalable Business Startups Entrepreneurship..............................................................3
Large Company Entrepreneurship................................................................................4
Social Entrepreneurship................................................................................................4
The similarities and differences between entrepreneurial ventures.................................4
Example in Myanmar....................................................................................................6
Entrepreneurship in Public sector and cooperate sector..................................................6
The Importance of SME in Economy................................................................................8
Definition of SME and criteria in Myanmar....................................................................8
SME member List in Myanmar....................................................................................10
Background and History..............................................................................................10
Impact of SME in Myanmar Economy.........................................................................11
The importance of small businesses and business start-ups to the growth of social
economy.........................................................................................................................11
The differences of Small, Medium and Large business in Myanmar Economy..............12
Number of small medium large firm data 2016 / 2017 / 2018................................12
References.....................................................................................................................16

Entrepreneurship
Entrepreneurship is the study of how to create new business and the certain process
of starting a new business. Now, entrepreneurship is a popular major in every university
with an aim on studying new venture creation. The road to entrepreneurship is often a
treacherous one filled with unexpected detours, roadblocks, and dead end. (Fenandes,
2019).
Different types of entrepreneurial ventures and relation to the
typology of entrepreneurship
There are many different ventures. These difference are depend on the purpose and
Finance investment and individual purpose of people and the characteristics of
entrepreneurs. Four types of entrepreneurial ventures in Myanmar are as follows;
Small business entrepreneurship
Today in the world, small business entrepreneurship spread with immense rate in
business field. This type can operate the business by the owners and a few employee.
(e .g Business can startup with family members and friends). In Myanmar, there are
many business of this types such as tea shop, store, Air con service. The formations of
these business are family business model. Along with this, the income levels are not
much and these businesses always centering to get more customers and development
of their services and products. There are more than half of people in Myanmar are
depend on the small business. (Drucker, 2014)
Scalable Business Startups Entrepreneurship
This kinds of entrepreneurial venture start business with creative ideas and focuses
on the quality of product and services. These entrepreneurs’ main motto is to change
the world. And then they search investment from venture investors. They always attract
financial investment from the investors in order to expansion or achieve the objectives
and then to do new innovations. The main aim of this entrepreneurs is to find scalable
business and try to catch the business by perfect strategies. (Drucker, 2014)

Large Company Entrepreneurship
These businesses are larger than above two entrepreneurship. The large company
has certain life cycle and they emphasize on supplying new product or service to the
people for sustainability of the business. They are always focus to competition.
Therefore it is important to shape product and service suitably with the changes of trend
and business environment. New competitors can offer pressure on the existing and to
innovate more products. Therefore the creative ability of the entrepreneur can create
new products and can attract new customers. And then making innovation in existing
product can sustain their success.
Social Entrepreneurship
The intent of this entrepreneurship is for the social systems. The entrepreneur of these
organization focus on solving problems by producing and implementing their products
and services. This type of entrepreneurship focus on creating better environment for the
people. And then it can be for profit or non-profit. (Scarborough, 2016)
The similarities and differences between entrepreneurial ventures
Factors Small Business
Entrepreneurship
Scalable startup
entrepreneurship
Large company
entrepreneurship
Social
Entrepreneurship
Goals These business
types are might
not have specific
goals. They aim
to work on high
profitability and
more growth.
They focus to
innovative
products and
achieve profit.
These firms
emphasize on
sustainability in
the existing
market by
producing new
products and
services and
strategies.
They intent to
change the world
for better
placement of the
social systems by
providing quality
and effective
products or
services.
Risks Their risks are
lower and high
The risk is high
because of
Their risks are
medium because
The risks are not
much for those

competition is the
problem for those
business with
same size.
financial
investment and
may be failure.
And then it has the
pressure to return
for the investors by
sales volume.
of they are
existing brand
value in market.
But competitors
are always still.
because they can
get help from public
and government.
Employee
number
There are may be
less than 50
people. But in
Myanmar, most of
them are not
more than 10
people and
around.
It depends on
structure and size.
It can be more
than 500. But in
Myanmar, the
large firms have
around 200 and
300 people.
It also depends on
the size of the
business and may
be same with small
business in
Myanmar.
Structure There are no
specific
organizational
structure because
of family types
and business run
with sole
proprietorship
and partnership.
It also run with sole
proprietorship and
partnership.
Their structure is
generally complex
and can be public
or private limited
company.
Mostly trustee
based
organizations.
Then I present the two examples about different entrepreneurships in Myanmar: Fame
Pharmaceuticals Industry Co. Ltd which produces herbal products from the finest
organic herbs in Myanmar to support health and wellness and Genius Shan Highlands
Coffee which intent to support community development projects in the villages in Shan
State.

Example in Myanmar
Topic Fame Genius
Type of venture Large Company Entrepreneurship Social Entrepreneurship
Owner Dr. Khin Maung Lwin U Ngwe Tun
Goal They believe that prevention is the
best medicine for healthy and
supplements.
They aim to development of the
Danu farmers and supporting
community development for the
village.
Risk People trust are very important for
company. Therefore they are
committed to sustainable organic
agriculture and healthy benefits.
There are low risk but they have
other coffee competitors.
Employee
number
The company has over 300 employee. Genius currently 30 employees full
time staff and they organized over
100 farmers.
Location Their organic farm is located in Pyin
Oo Lwin and they manufacture drug in
Yangon.
Growing and production is operate
in Ywar Ngan Township in
Southern Shan State and Their
cafes are opened in Yangon.
Year It was started in 2000 in Pyin Oo Lwin. Genius started processing and
roasting coffee in late 2012.
Entrepreneurship in Public sector and cooperate sector
Entrepreneurship in public sector and cooperate sector are based on that they are
business entrepreneurship and social entrepreneurship. There are various kind and
type of entrepreneurial ventures in Myanmar by depending of the purpose of the
business and investment range and also on the individual purpose. Both of these kinds
are emphasize on their target market.

Entrepreneurship in cooperate sector can be determined as a business of economy
and making profit. These business are not owned by government like public sector.
Entrepreneurship in public sector are moderated by government. Government and
some private organization help to them and provide invests. These kinds of organization
intent to offer quality products and services to the people.

The Importance of SME in Economy
The micro and small businesses support immensely in the economy of a country.
SMEs are crucial in the development of Myanmar economy because they can create a
lot of job opportunities, employment, income generation, resource utilization and
promotion of investment. The increasing of small business make high income by
offering products and services. The small business running in the country is playing an
important role in the development of the economy. Moreover, small businesses such as
small store, small restaurant, small ticket service, not only create job opportunities and
but also support the GDP increase for the country.
SMEs paly as an important role in also Myanmar. 99.4% of all business in Myanmar
are classified as SMEs. Government trust that small business entrepreneurship will
develop the country’s future economic. In addition, 10% are micro (less than 5
employees) and 69% are small (5 to 19 employee) business in all of enterprise.
(Charltons, 2019)
There are four measures or criteria for classification, namely number of employee,
investment and production volume and electrical usages. This is used to divide the
different size for Myanmar private firms. These four measures can be showed as follow:
Definition of SME and criteria in Myanmar

Legal definition of SMEs according to the 2015 SME Development Law

SME member List in Myanmar
There are many SME members in the whole Myanmar and it is divided region and
state. According to the survey of Myanmar SME Development Agency in 2018 member
list: There are 66652 small and 4214 medium. Graph is as follow:
Kachin
Kayah
Kayin
Chin
Saging
Tanintary
Bago
Magway
Mandalay
Mon
Rakhine
Yangon
Shan
Ayarwaddy
Nay Pyi Taw
0
2000
4000
6000
8000
10000
12000
SME members list 2018
small Medium
(agency, 2018)
Background and History
Since 2011, Myanmar has been on a path of transaction from military rule and a state-
controlled economy, towards democracy and a market-based economy. From 2012 to
2017, Myanmar’s GDP rate increase 7.2% per annum. But Small business in Myanmar
are less likely to innovate than in Asia countries.

In 2012, SME development was formed under the MOI. In 2014, It is extended across
the country with 50 branches. In 2015, SMEs development law was enacted and also
policy was approved. And then SMEs development rule was approved. In 2018, SMEs
development working committee and responsible bodies were formed.
Myanmar is also rich in natural resources. Therefore agriculture, forestry and fisheries,
those enterprise can attract to high tourism potential.
Impact of SME in Myanmar Economy
SMEs are a main part of the economic framework in developing countries like
Myanmar. SME produce product and service that people use in their daily lives.
Therefore SMEs can be considered as the heart of the country’s economy. And then it
also alleviate poverty and the development of SMEs can be considered as the character
of modern country because of GDP rate increase, create large number of job
opportunity for people. (Thanlwin, 2018)
In addition, the role of banks in Myanmar is critical in developing SMEs sector because
they can provide and support financial resources such as loans and collateral for small
firms, especially which face with the financial problems. Nowadays, banks provide loans
with interest rate of up to 13% a year. Besides the financial problems, fixed assets are
needed as guarantee for loans. Lack of fixed assets and financial resources can hinder
the success of start-up SMEs from innovation and creation.
The importance of small businesses and business start-ups to the
growth of social economy
Start-ups business have influence in Southeast Asia countries in order to keep the
growth of social economy. Start-up business habitually run with innovative ideas that
can fit people needed. Start-up business can meet the market very fast and high
revenue in short time. These business require to pay high amount of tax that can
develop the economy of country to growth. This business also can reduce

unemployment in country due to low capital and hires low skilled employees with lower
salaries.
Most of these business are related with CSR activities to improve brand value. Those
businesses support education poor people and then these people can use their help in
future to get work. That is also support the growth of social economy. There are many
start-up businesses are founded in every industries in Myanmar, it have high assistance
in the GDP of Myanmar.
The small business and Start-up businesses are the important role in Myanmar
economy. Most of Myanmar people faced with unemployment. These small and start-up
enterprises can decrease this problem as a main creator of employment in social
economy. Many new jobs are became opportunities for Myanmar population. And then
these opportunities can change Myanmar people life style and can develop life
standard. Therefore small and start-up businesses are contribution of social economy.
The differences of Small, Medium and Large business in
Myanmar Economy
The number of Small and medium businesses are more than large business in
Myanmar. Small and medium business have huge part of every industry in Myanmar
economy. Although the large business gain high income because of their brand value,
small and medium businesses makes growth, creativity and innovations within societies
and then they make the development of social economy in Myanmar. The role of SMEs
make to stimulate the growth of living standard of people in Myanmar. On the other
hand, the large business make foreign currencies and they also use large amount in
CSR activities in country.
Number of small medium large firm data 2016 / 2017 / 2018
Year Micro Small Medium Large
2016 42563 15678 5031 504
2017 48405 17286 5243 516
2018 53567 19457 5318 538