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e-Magazine (For the Japanese version of this article)

Bright Prospects for Agribusiness in Myanmar Yoshihiro Araki ASEAN Program Director International Person Exchange Support Association Former Managing Director, JETRO Yangon Office [Date of Issue: 28/February/2017 No.0264-1035]

Date of Issue: 28/February/2017

Bright Prospects for Agribusiness in Myanmar

Yoshihiro Araki
ASEAN Program Director
International Person Exchange Support Association
Former Managing Director, JETRO Yangon Office

It is almost a year now since the launch of the new Aung San Suu Kyi administration. The veritable frenzy that Myanmar (Burma) aroused for a while has calmed, but foreign companies remain very interested in the potential of the Myanmar market. Foreign investment in agriculture has remained sluggish, but agriculture’s approximately 30 percent share of Myanmar’s GDP make it the country’s mainstay, leaving major business chances to be found. This article is based on lectures given at seminars in Sapporo and Asahikawa which I attended as part of a December 2016 program organized by the Institute for International Studies and Training (IIST) that brought to Japan leading figures from Burmese agriculture.

Two experts highlight business chances

Tin Htut Oo was Director-General of the Ministry of Agriculture and Irrigation’s Agricultural Planning Department under the former military regime. Many years of insight into agriculture and excellent business sense led to his appointment to the key post of Chairman of the National Economic and Social Advisory Council (NESAC). Having studied in the US and Japan and worked at the United Nations Food and Agriculture Organization (FAO), he also has a strongly international perspective, and his key message is that agribusiness should not be viewed in terms of Myanmar alone, but addressed with an eye to all of Asia at very least.

Sandwiched between the two giants of India and China and with front-running ASEAN developed and semi-developed members Thailand, Singapore, Malaysia and Indonesia as neighboring markets, Myanmar enjoys a strategic advantage as a location for agricultural production and processing and the food business. Mr. Tin is keen for Japanese companies to abandon their traditional mindset of manufacturing with cheap Asian labor for export back to Japan. He wants them to use Japan’s outstanding agriculture and food processing knowhow to manufacture in nature-rich Myanmar and push these products in the massive urban markets of Myanmar’s neighbors.

Moe Myint Kyaw is a rising entrepreneur still in his mid-50s. He occupied the pivotal post of Secretary-General of the Union of Myanmar Federation of Chambers of Commerce and Industry until October 2016, but since November, he has put aside all public duties to focus on his own agribusiness. He was originally president of the company making and selling Myanmar its first marine products in pull-tab tins using technological knowhow introduced from Thailand in the mid-1990s. Mr. Moe also manufactures various types of vegetable-based sauces, and demonstrated a huge amount of knowledge about agriculture and agricultural products. His first major foray into agriculture came several years ago when he set up a harvesting combine firm. He imports combine parts from Thailand and assembles them in Myanmar, selling the combines under his own brand “Alligator.”

Mr. Moe stresses the importance of partnership with Thailand. Many food processing industries, Japanese companies included, are clustered in the outskirts of Bangkok. Some companies are already sourcing some of their raw materials from Myanmar, while moves have also begun to secure manufacturing bases in Myanmar. The key in that regard will be the development of a distribution network between Thailand and Myanmar. Border trade along the road connecting Mae Sot in Thailand with Myawaddy in Myanmar is expected to boom following the planned completion of the second Friendship Bridge, possibly by mid-2017. An intergovernmental agreement enabling trucks to go backwards and forwards between the two countries without transferring their cargo should be concluded shortly, opening the way for exponential growth in Myanmar’s agricultural exports to Thailand. Many food processing companies, foreign companies included, may also choose to set up on the Myanmar side of the East-West Economic Corridor. The need for knowhow on efficient agricultural production, various types of agricultural machinery, and food processing machinery will also very likely soar.

Visiting a company in Asahikawa: Maw Myint Kyaw (left) and Tin Htut Oo (middle)

Visiting a company in Asahikawa: Maw Myint Kyaw (left) and Tin Htut Oo (middle)

Shan Highland as an agricultural new world

Myanmar is generally associated with scorching tropical heat, but in fact it has an extremely diverse spectrum of natural and meteorological conditions. With the exception of southern Myanmar, which borders the Bay of Bengal and the Andaman Sea, the rest of the country is surrounded by 1,000-2,000 meter mountain ranges, terrain that creates a diverse climate distribution.

In the rainy season, which usually begins in early May, tropical monsoon weather from the Indian Ocean hits the Arakan Mountains on the Indian border, bringing heavy rain to the Chin and Rakhine States. This area experiences extreme levels of precipitation—an average of over 5,000 millimeters per annum. However, Magway and Mandalay to the east both sit within the central arid zone, and even further to the east stretches the Shan Highland, where the average altitude is around 900-1,500 meters and the monsoon brings a good amount of rain. The average monthly rainfall in the rainy season (May-October) is 200-300 millimeters, and the average temperature is 23-24 degrees. That rainfall and temperature are extremely close to the Kamikawa region in central Hokkaido. The dry season (November-April) temperature is also on average 16-20 degrees, creating meteorological conditions extremely well-suited to agriculture.

During the era of British colonial rule, resort areas were developed for foreigners in Kalaw and Maymyo (Pyin Oo Lwin), which led to extensive cultivation of highland vegetables and flowers around these areas. Recently, huge quantities of mangoes, watermelons and other fruits, as well as ginger and garlic, are being exported to China through border trade. Sales of fresh fruit and vegetables in big modern supermarkets in Yangon and other major cities have also been booming, leading more farmers to cultivate a wide range of produce, including cabbage, Chinese cabbage, and other leafy greens, as well as pumpkins, paprika, beans, and greenhouse strawberries.

As a result, the Shan Highland is a strong candidate for companies looking at engaging in agribusiness in Myanmar. When planning agricultural missions from Japan, this area really can’t be missed. Much of the produce at which Hokkaido excels—potatoes, onions, soybeans, carrots, and other beans, for example—are also extensively cultivated in the Shan Highland, and the various types of agricultural machinery used for these crops in Hokkaido is very likely immediately applicable in the Shan Highland as well. Foreign companies too have been quick to take note particularly of Maymyo near Mandalay, the capital of Naypyidaw, and the area around Taunggyi and Aungban in the south, where development of a road network connecting with Thailand is proceeding apace.

Myanmar's Mandalay-centered food distribution network Young people leave agriculture in droves

According to Myanmar’s 2014 national census, the first to be conducted in 38 years, the country’s population is around 50.2 million. This was over 10 million fewer people than the previous estimate of around 62 million. The farming population accounted for 70 percent of the total at 35 million, with the countryside continuing to dominate. However, as of a few years ago, the farming population has been on the decline, with a particularly marked drop in the number of young people. Urban drift accompanying economic growth is an Asia-wide trend, but in Myanmar’s case, there has been a manifest offshore drift. In particular, there are apparently around four million Burmese, illegal overstayers included, in neighboring Thailand. Young Burmese workers are also heading out to Malaysia, Singapore, Indonesia and other ASEAN countries, Korea and Taiwan, and even the Middle East. With Japan aiming to boost its intake of technical interns, we too are likely to join that list in the coming years.

Most of these young people are from the countryside, leaving elderly people in charge of Myanmar’s agriculture. This is one reason why mechanization is so vital, along with the need to convince young people who dislike the idea of hard labor that agriculture is not the backbreaking occupation that it used to be. In other words, a new “cool” style of agriculture that employs mechanization and IT must be developed to attract young people to the industry. If foreign investment picks up and the manufacturing and service industries surge ahead, urban drift is likely to intensify still further. Myanmar faces the risk that if agriculture doesn’t modernize now, there will be no one left to shoulder this key industry.

In addition, Myanmar needs to actively introduce overseas technology and knowhow to realize this new agriculture, and train human resources to that end, beginning with production improvements such as agricultural produce storage, knowhow about greenhouse cultivation, irrigation, fertilization and soil improvement, and seed planting and raising and cultivar improvement technologies. The rural farming offices under the jurisdiction of the Ministry of Agriculture and Irrigation have traditionally been in charge of such farming guidance, but these are in fact not functioning due to limited government funding and incompetent advisors. Japan’s official technical cooperation in this area has just begun and is far from adequate. The private sector will need to become actively engaged in supplying technology, and some major Japanese trading companies have begun making moves in that direction.

In terms of human resource development, school education in the field of agriculture needs to be totally reformed. Yezin Agricultural University (YAU) in the suburbs of Naypyidaw is the only institution of higher learning in agriculture in Myanmar. YAU has been receiving support from JICA, Korea, India and elsewhere as of two years ago, but this is insufficient. There are also no educational institutions at all in the agricultural machinery field.

Dealing with nature means that agriculture is inevitably exposed to risk, and it also takes time to reap rewards. While this is certainly a difficult area for private business to get into, it is no time to be standing idly by. Mr. Tin and Mr. Moe visited very individual agricultural machinery manufacturers in Asahikawa, Biei and Chitose. All their products were suitable for immediate use in Myanmar, and both entrepreneurs listened closely to the company briefings, firing off numerous detailed questions. They also did not fail at the end of each session to suggest that manufacturers come to Myanmar to see the current situation for themselves so that manufacturers do not miss out on a great business opportunity.

(original article : Japanese)
(For the Japanese version of this article)

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