The Agrifood Sector in Myanmar: a Market Review and Analysis of Trends A report for the Rural Industries Research and Development Corporation By Suku Bhaskaran and Stephanie Fahey RIRDC Publication No 98/49 RIRDC Project No AFM-1A i ii ©1998 Rural Industries Research and Development Corporation ISBN 0 642 54073 X ISSN 1440-6845 “The Agrifood Sector in Myanmar: a Market Review and Analysis of Trends“ Project No: AFM-1A Publication No 98/49 The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Communications Manager on phone 02 6272 3186. Researchers & Contact Details Mr Suku Bhaskaran Professor Stephanie Fahey Australian Food Marketing Centre Department of Asian & International Studies Victoria University of Technology Victoria University of Technology City Campus (C069) Footscray Campus (F004) PO Box 14428 PO Box 14428 MELBOURNE CITY MC VIC 8001 MELBOURNE CITY MC VIC 8001 Phone: 03 9 248 1053 Phone: 03 9 367 4992 Fax: 03 9 248 1021 Fax: 03 9 367 4063 Email: [email protected] Email: [email protected] RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2600 Phone: 02 6272 4539 Fax: 02 6272 5877 Email: [email protected] Internet: http://www.rirdc.gov.au Published in June 1998 Printed on environmentally friendly paper by Union Offset iii FOREWORD Australian companies have very limited business and investment links with Myanmar. The country's low level of economic development, poor human rights record (which isolated Myanmar internationally) and the government's monopoly of business activities have all been disincentives to the growth of our business links. Myanmar's entry into ASEAN, greater deregulation and privatisation of the economy, improvements to the investment regime, substantial natural resource endowments, growing investment flows from ASEAN and a more conciliatory attitude by some developed countries suggest that opportunities for Australian companies could evolve. Australian companies have to be prepared to access the growing opportunities in this new frontier. We believe that this report will be a useful reference document on the developments, trends and opportunities in the agricultural, livestock and fishery sectors in Myanmar. This project is part of the Corporation's Global Competitiveness program which identifies important impediments to the development of a globally competitive Australian agricultural sector. The program also supports research leading to options and strategies to remove these impediments. Peter Core Managing Director Rural Industries Research and Development Corporation iv ACKNOWLEDGMENTS This study was conceived and initiated by the Australian Food Marketing Centre, Victoria University of Technology. The project was supported through a grant from the Rural Industries Research and Development Corporation. In addition, Dr Jeff Davis of the Rural Industries Research and Development Corporation provided detailed comments and suggestions during various stages in the study, read the manuscript in full and made valuable comments and editorial input. The support from the Rural Industries Research and Development Corporation, financially and in many other forms, is gratefully acknowledged. Ms Anne-Marie Humphries of the East Asia Analytical Division, Department of Foreign Affairs and Trade provided comments, support and guidance to the authors. Several other persons from private industry in Australia and abroad contributed to this study in various ways. We wish to particularly acknowledge the support from Mr Lawrie Raymond of Huile Trading in Melbourne. Mr Raymond shared his business experiences in Myanmar, provided leads on possible sources of information, introduced several Australians who have business experience in Myanmar and provided valuable contacts in Myanmar. Among Mr Raymond's introductions was Capt Aung Gi (rtd.) and his wife Molly of Myanmar International Consulting. Capt Aung Gi and Molly organised several useful appointments, provided interpreter services, recorded the proceedings at interviews and offered valuable comments on the draft report. During the field study, approximately 80 persons in government, industry associations, private companies and consultancies in Myanmar were interviewed. In addition, the principal researcher consulted with several small-scale farmers, retailers, food importers and food service companies in Myanmar in order to gain an in-depth appreciation of the practices and changes in the country's business environment. The names and contact details of the principal organisations covered in this study are provided in Appendix 9. This report draws extensively on information in government publications (Central Statistical Organisation, Ministry of National Planning and Economic Development, Ministry of Agriculture and Irrigation) and comments by government officials in Myanmar. We express our gratitude for the support and comments by Brigadier General David Abel (Minister of Planning and Economic Development) and Dr Mya Maung (Director General, Department of Agricultural Planning). Mr Mukesh Gupta of the Australian Food Marketing Centre provided research assistance for this project through actively sourcing literature and contacting various organisations for information. Ms Angelina Rizk and Ms Usha Sukumaran assisted with the word processing, layout and presentation of this report. Ms Rizk developed all the diagrams in this report. Dr Jean Dawson proof read the manuscript and provided valuable editorial comments. While several individuals contributed to the preparation of this report, the responsibility for the views expressed and for the errors, omissions and limitations of this report is solely that of the authors. Suku Bhaskaran v Stephanie Fahey TABLE OF CONTENTS Page Foreword.................................................................................................................. iii Acknowledgments................................................................................................... iv List of Tables ......................................................................................................... viii List of Figures ......................................................................................................... ix About the Author...................................................................................................... x Glossary of Abbreviations...................................................................................... xi Executive Summary .............................................................................................. xiii Chapter 1................................................................................................................... 1 1. Introduction: The Study Setting 1 1.1 Geography 1 1.2 Climate 1 1.3 Administration 1 1.4 Legal System 1 1.5 Banking & Insurance System 2 1.6 Taxation 2 1.7 Population 2 1.8 History 5 1.9 Economic Decline: Burmese Way to Socialism 5 1.10 Economic Reforms: Changing Tack 6 Chapter 2................................................................................................................... 9 2. Agricultural Food Crops, Livestock, Fishery and Processed Food Sectors 9 2.1 Significance of the Agricultural Food Crops, Livestock, Fishery and Processed Food Sectors 9 2.2 Trends in the Agricultural Sector 12 2.2.1 Cereal Crops 13 2.2.2 Oilseeds 16 2.2.3 Food Legumes 19 2.2.4 Other Food Crops 21 2.2.5 Agricultural By-Products 22 2.3 Trends in the Livestock Sector 22 2.4 Trends in the Fishery Sector 23 Chapter 3................................................................................................................. 29 vi 3. Role and Activities of Government and State-Owned Enterprises in the Food Sector 29 3.1 Ministry of Agriculture and Irrigation 29 3.2 Commercial Operations and Farm Extension Services of the Ministry of Agriculture and Irrigation 32 3.3 Ministry of Livestock and Fisheries 39 3.4 Ministry of Industry 40 3.5 Other Public Sector and Government-Associated Food Organisations 44 Chapter 4................................................................................................................. 45 4. Trends in International Trade and Foreign Trade Regulations 45 4.1 International Trade Relations 45 4.1.1 Overview of Myanmar's External Trade 45 4.1.2 Directions in Trade 49 4.1.3 Trends in Trade 50 4.1.4 Composition of Trade 51 4.1.5 Trade Agreements 53 4.1.6 Informal Trade 54 4.2 Procedures for Export, Import and Customs Clearance 54 4.2.1 Registration of Exporters and Importers 54 4.2.2 Financing of Imports 54 4.2.3 Fees 55 4.2.4 Procedures for Payment of Licence Fees 55 4.2.5 Validity of Licences 55 4.2.6 Pre-shipment Inspection 56 4.2.7 Import of 'Priority' Goods 56 Chapter 5................................................................................................................. 59 5. Foreign Investment Trends, Procedures and Incentives 59 5.1 Trends in Government Policy 59 5.2 Foreign Investment Trends 59 5.3 Foreign Investment Policies and Objectives 62 5.4 The Myanmar