Myanmar’s rapidly developing economy is underpinned by its critical agricultural industry. New evidence suggests that private investments are boosting the South-East Asian country’s agricultural output, significantly benefitting Myanmar’s economy as a result. Htet Tayza comments.
Myanmar has a lucrative economy, with an annual gross domestic product (GDP) growth rate which has not fallen below 6% since 2012. Myanmar’s economy is growing at such a fast pace, it could surpass Singapore’s in 20 years’ time. The latter is Asia’s most prominent financial hub, with an increasingly profitable financial technology sector, so this displays how much potential Myanmar holds.
It is hard to underestimate just how crucial agriculture is to Myanmar’s economy. The South-East Asian nation is a major producer and exporter of some of the world’s most sought-after cash crops, including rice, beans, sesame and sugarcane. Agriculture accounts for a massive 37.8% of Myanmar’s GDP and hires 70% of its workforce, so when this sector thrives, the country’s economy does too.
A report from Asian business publication Nikkei Asian Review (via Frontier Myanmar, a local news source) indicates that the country’s agricultural industry is indeed thriving right now. This is primarily because, it suggested, private investment in Myanmar’s agricultural industry is rising, allowing its major players to implement the modernisation measures the sector needs to compete globally.
The Kyaiklat-based rice mill was cited a key example of this trend, by the report. This US$6.66m project, which is being constructed by the Myanmar Agribusiness Public Corporation (MAPCO) to raise Myanmar’s rice exports, will be the nation’s largest rice mill. When the mill starts operating, it will be able to process 450 tonnes of rice per day; nearly three times that processed at MAPCO’s existing mill in Myanmar’s capital. The Kyaiklat mill will notably house innovative parboiling equipment, which can steam rice prior to milling in such a way as to make said rice resistant to breaking.
This parboiling technology will be a major boon to Myanmar, one of South-East Asia’s top rice exporters, as it will allow the nation’s rice mills to move away from milling broken rice. Explaining, the report noted that “the export competitiveness of rice produced in Myanmar is weak because of its inferior quality compared to rice grown in Thailand and Vietnam.” Therefore parboiling equipment will allow Myanmar to be more competitive in this key market at a very crucial time.
China is the biggest importer of Myanmar’s rice. However, the country’s rice shipments to the People’s Republic suffered, due to the latter nation’s increasing efforts to stop smuggling across border trade zones such as Muse, which handles 90% of Myanmar/China border trade. These Chinese efforts have disrupted trade at places such as Muse, causing Myanmar rice exports to fall by between 20% and 30% in the current financial year so far. Therefore, Myanmar’s rice mills need investment more than ever, to make their products more attractive and overcome this extremely significant trading hurdle.
Nikkei Asian Review cited Myanmar Awba Group’s US$15m agricultural chemicals factory in Yangon, as another example of how investment is boosting agriculture. Two thirds (US$10M) of the project’s total costs came courtesy of The International Finance Corporation (IFC), an arm of the World Bank. This factory is estimated to supply half of Myanmar’s demand for crop protection products such as pesticides, allowing the country’s farmers to develop higher quantities of quality produce. It will be Myanmar’s only factor that meets the World Bank’s environmental criteria, according to the IFC.
Htet Tayza’s commentary
Consumers are becoming increasingly discerning, due to the advancement of e-commerce technologies, which allow them to order whatever products they desire, from anywhere on earth. Myanmar must increase the quality of its exports, to compete with regional powerhouses like Thailand, in a world where sub-standard products do not sell. Yangon is fast-realising that facilitating investment is key to achieving this aim. This provides the capital domestic firms require to upgrade production infrastructure and supply the higher quality items so many consumers now demand.
Myanmar has chosen to liberalise the nation’s investment laws, providing a freer market for investors to operate within, to achieve this goal. Nikkei Asian Review’s report indicates that this strategy is proving effective, as Myanmar’s agricultural players are increasingly gaining the funds to utilise new technologies to improve quality, benefitting the nation’s economy as a whole, due to agriculture’s massive contribution to national GDP. As the Myanmar Investment Law comes into effect, it will create an even more favourable operating environment for both domestic and foreign investors in Myanmar, allowing its agriculture sector and therefore its entire economy, to keep expanding going forward.