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

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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

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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 Foreign Investment Commission (MFIC) 63 5.5 Establishing Business Operations in Myanmar 64 5.5.1 Union of Myanmar Foreign Investment Law 64 5.5.2 Permit to Trade Legislation 65 5.5.3 Registration of Business Representatives Order 65 5.6 Investment Proposal 66 5.7 Termination and Dissolution of Joint Venture 67 5.8 Joint-Venture Termination without Approval 67 5.9 Investments in the Agricultural and Food Sectors 67 5.10 Investment Incentives in the Agricultural, Livestock and Fishery Sectors 68

Chapter 6...... 71

vii 6. Conclusions: Implications for Australian Food Trade and Investment 71 6.1 Review of Myanmar's Economic and Trade Strategies 71 6.2 Effects of Recent Policy Changes 72 6.3 Implications for Australian Industry 73 6.4 Significance of Findings 74 6.5 Recommendations 75

Appendices & Annexes

Appendix 1 Schedule of 'Optional/Luxury' Goods and 'Priority/Essential' Goods 81 Appendix 2 Application Form for Import Licence 89 Appendix 3 Application for Permit to Trade 91 Appendix 4 Procedures Relating to Permission to Carry Out Economic Enterprises Defined Under Section 3 of the State-Owned Economic Enterprises Law 93 Appendix 5 Capital Structure Committee "Questionnaire" (Foreign Company Incorporated in Myanmar) 95 Appendix 6 Capital Structure Committee "Questionnaire" (Foreign Branch of a Foreign Company Incorporated Outside Myanmar) 101 Appendix 7 Proposal of the Promoter to make Foreign Investment in the Union of Myanmar 105 Appendix 8 Table of Fees to be Paid to the Registrar 111 Appendix 9 Schedule of Persons Interviewed During Field Survey 113

Annex A Bibliography 121

Case Studies

Case Study 1 Myanma Agricultural Produce Trading: Government Procurement of Rice 15 Case Study 2 TZ Trading Enterprise Co Ltd: Contract Manufacturing Sesame Oil for the Japanese Market 18 Case Study 3 Huile Trading Company: Contract Cultivation of Sesame 19 Case Study 4 Kyun-Shwe-War Co. Ltd: Trading in Pulses and Beans 20 Case Study 5 Onion Cultivation for Export to Japan 22 Case Study 6 Universal Concord Co. Ltd: Small-Scale Fishery Company 25 Case Study 7 Annawar International Fisheries Holdings Ltd: Large Fishery Company 26 Case Study 8 Myanmar Seafoods Ltd: Joint-Venture Fishery Company 27 Case Study 9 Agricultural Inspection Services - SGS (Myanmar Ltd.) 53

viii List of Tables

Table 1: Gender and Regional Distribution of Population, 1994-95 ('000) 3 Table 2: Population in Major Urban Centres, 1983 4 Table 3: Population Trends in Myanmar - Age Distribution, 1973 and 1993 4 Table 4: Economic Indicators, 1982-83 to 1994-95 7 Table 5: Size of Farm Holdings, 1985-86 11 Table 6: Controls on Land Use for Agricultural and Livestock Farming, 1995 12 Table 7: Production of Major Agricultural Crops, 1989-90 ('000 tonnes) 12 Table 8: Cereal Crop Production, 1989-90 to 1995-96 ('000 tonnes) 13 Table 9: Land Use for Cereal Crops, 1989-90 to 1995-96 ('000 hectares) 13 Table 10: Rice Cultivation in Myanmar - Agronomic Conditions, 1994-95 14 Table 11: Production of Oilseed Crops, 1989-90 to 1995-96 ('000 tonnes) 17 Table 12: Landuse for Oilseed Crops, 1989-90 to 1995-96 17 Table 13: Production of Pulses, 1989-90 to 1994-95 ('000 tonnes) 20 Table 14: Production of Other Crops ('000 tonnes) 21 Table 15: Production of Meat and Milk ('000 tonnes) 23 Table 16: Livestock Population ('000) 23 Table 17: Landings of Fishery Products ('000 tonnes) 24 Table 18: Ministry of Agriculture and Irrigation - Land Resources and Agricultural Land Classification System, 1994-95 30 Table 19: Paddy Yield and Fertiliser Input - Selected Countries in Asia 31 Table 20: Myanmar Farm Enterprises, Farm Locations and Activities 33 Table 21: Sugar Cane and Refined Sugar Production and Export Trends, 1989-90 to 1995-96 35 Table 22: Myanma Sugarcane Enterprise, Manufacturing Plants and Production Capacity 35 Table 23: Land Utilisation and Sectoral Share in the Cultivation of Perennial Crops, 1991-92 to 1995-96 37 Table 24: Sectoral Share in the Production of Perennial Crops, 1991-92 to 1995/96 38 Table 25: Manufacturing Facilities - Myanmar Perennial Crops Enterprise, 1995-96 38 Table 26: Schedule of Foreign Technical Collaboration and Joint-Venture Food Processing and Manufacturing Operations, 1995-96 41 Table 27: Joint-Venture Industrial Zones, Major Investors 43 Table 28: Trends in Imports of Food Products (tonnes) 47 Table 29: Trends in Exports of Food Products (tonnes) 48 Table 30: Level of Trade Dependence - South and Southeast Asia, 1993 51 Table 31: Composition of Primary Commodities in Exports - South and East Asia, 1980 and 1992 52 Table 32: Schedule of Fees for Import Licences 55 Table 33: Foreign Investment, Sectoral Share and Trends 59 Table 34: Foreign Investment Approvals, Sources and Trends 61 Table 35: Size Limits for Government Land Allotments Under Foreign Investment Legislation 69

ix List of Figures

Figure 1: Trends in Foreign Trade, 1982-83 to 1994-95 46 Figure 2: Destinations and Trends in Exports, 1992-93 to 1995-96 49 Figure 3: Sources and Trends in Imports, 1992-93 to 1995-96 50 Figure 4: Foreign Investment Approvals and Actual Investment, 1990-91 to 1994-95 62

x Rural Industries Research and Development Corporation

The Rural Industries Research and Development Corporation (RIRDC) is a statutory corporation formed in July 1990 under the Primary Industries and Energy Research and Development Act 1989.

The RIRDC's mission is to manage research and development investments on behalf of government and industry for the benefit of the people of Australia through:

• enhancing innovation in the rural and related sectors • fostering the development of new industries, and • addressing strategic issues facing the rural sector

The Corporation, based in Canberra, has a Board of nine directors and employs 18 full time staff.

Australian Food Marketing Centre

The Australian Food Marketing Centre (AFMC) is a unit within the Faculty of Business, Victoria University of Technology. AFMC is a research, consultancy and training services provider to the agricultural and livestock food sectors. AFMC has completed projects for R&D Corporations (example: Australian Centre for International Agricultural Research; Dairy Research and Development Corporation; Meat Research Corporation; Pig Research and Development Corporation; Rural Industries Research and Development Corporation), government departments (example: Department of Foreign Affairs and Trade; Department of Employment, Education, Training and Youth Affairs) and several business corporations (example: Carlton and United Breweries; Sakata Rice Snacks). The AFMC has also been commissioned by organisations such as AUSTRADE, Crawford Fund for International Agricultural Research, Australian Chamber of Manufactures and Gilbert Chandler College to provide food-sector related training services. AFMC has an active research and consultancy program in Asia, and has excellent collaborative linkages with several research organisations in Asia. The AFMC has organised several special events in-country on various themes relating to the food sector. Under this program, more than 70 senior executives, government officials and researchers from various Asian organisations have been guests of the AFMC.

About the Authors

Mr Suku Bhaskaran (Executive Director, Australian Food Marketing Centre) and Professor Stephanie Fahey (Head, Department of Asian and International Studies) of Victoria University of Technology are respectively the principal and co-author of this publication. Suku and Stephanie have completed several Asian trade and investment-focussed research and consultancy projects. Suku's research focus is in marketing and public policy matters relating to the food industry and Stephanie's focus is on contemporary socio-economic changes.

xi GLOSSARY OF ABBREVIATIONS

ASEAN Association of South-East Asian Nations AFPL Anti-Fascist Peoples' League AFTA ASEAN Free Trade Association BSPP Burma Socialist Programme Party CIF Cost Insurance and Freight DAP Department of Agricultural Planning FAO Food and Agricultural Organisation FEC Foreign Exchange Certificate FDI Foreign Direct Investment FIC Foreign Investment Commission FIL Foreign Investment Law GATT The General Agreement on Tariffs and Trade GDI Gross Domestic Investment GDP Gross Domestic Product GNFS Goods and Non-Factor Services GNS Gross National Savings LDC Least Developed Country MAI Ministry of Agriculture and Irrigation MAPT Myanma Agricultural Produce Trading MAS Myanma Agriculture Service MCIC Myanmar Citizens Investment Commission MEH Union of Myanmar Economic Holdings Limited MFE Myanma Fisheries Enterprise MFAE Myanma Farms Enterprise MFI Myanma Foodstuff Industries MFIC Myanmar Foreign Investment Commission MFIL Myanmar Foreign Investment Legislation MIC Myanmar Investment Commission MLF Ministry of Livestock and Fisheries MSE Myanma Sugarcane Enterprise MPCE Myanma Perennial Crops Enterprise RBD Refined, Bleached, Deodorised SLORC State Law and Order Restoration Council UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme

Currency Values:

Official Exchange Rate: 1996 - US$1 = Kyat 5.98

Unofficial Exchange Rate: 1996 - US$1 = Kyat 170

x ii xiii EXECUTIVE SUMMARY

Background The principal motivations for this study included Myanmar's size (both in terms of population and land mass), its proximity to countries such as Thailand, India, China, Malaysia and Singapore (many of which were until recently among the fastest growing economies in the world), its membership of the Association of South East Asian Nations (ASEAN) and comments by several business people from Southeast and East Asia that Myanmar had great potential to become a major food producer.

Myanmar has a population of 44 million people. The country has the highest adult literacy rate in Southeast Asia (81 per cent) and uses a familiar legal system (Common Law). Myanmar has the potential (because of its climate, topography, soil conditions, rainfall, waterways, agricultural land resources, fishery resources and human resources) to produce an extensive variety of competitively priced agricultural, livestock and fishery products.

Unlike other countries in Southeast Asia (which have concentrated on industrial development), Myanmar's national plans promote the development and modernisation of its agricultural, livestock and fishery sectors. The Government has introduced wide-ranging changes to encourage private sector and foreign participation in the country's food sector. These changes have contributed to increasing investor interest from ASEAN and other East Asian countries.

Generally, Myanmar's economy is complementary to that of other countries in the region. Myanmar has the resource endowments to become a major food producer. On the other hand, countries such as Malaysia and Singapore have difficulty in increasing food production. In the next ten years tariffs on intra-ASEAN trade in manufactured and processed agricultural goods will be reduced to between 0 per cent and 5 per cent. This should increase food exports from Myanmar to other ASEAN countries.

Research Methodology This study was completed through:

Desktop Study Secondary sources of information such as reports from the Food and Agricultural Organisation, World Bank, Asian Development Bank, publications by government departments in Myanmar and articles in newspapers and periodicals (New Straits Times, Singapore Straits Times, Asian Wall Street Journal, Far Eastern Economic Review and The New Light of Myanmar) were reviewed in order to collect background information on the political social, economic, trade and investment environment in Myanmar.

Experiential Survey Information from the desktop study was amplified through face-to-face and telephone interviews with executives of selected food companies in Australia, ASEAN, Korea and Japan.

x iv

Field Study: Myanmar In-depth face-to-face interviews were conducted with approximately 80 persons in government, private sector companies, consultancies and trade associations. Observational surveys were completed through field visits to factories, farms and retail outlets. The field study clarified the views of various respondents and provided a forum to check the information obtained during the desktop and exploratory studies.

Findings Investments from ASEAN and North-East Asia This study tracked investments by companies from China and Thailand in sugar processing, investments in dairy processing, poultry farming and cashew cultivation by companies from Singapore, investments in fishery and poultry production by companies from Thailand, and contract cultivation of crops such as gherkins, baby carrots, bamboo shoots, onions, beans, pulses and sesame by companies from Japan, the Republic of Korea and Australia. In addition to investments in farming and food processing, investors from ASEAN are making significant investments in hotels and restaurants. The level of interest and exploratory studies pursued by companies from ASEAN and North-East Asia suggests that investments, technical collaboration, contract farming and trade linkages between Myanmar and countries in this region will increase substantially.

Short Term - Export Opportunities In the short-term, trade barriers (for example, importers in Myanmar must generate foreign exchange and their imports must include specified volumes of 'priority' goods) will limit the capacity of Australian companies to increase direct exports. However, Australian companies can access the market through various strategies such as `counter-trade' and `import-first'.

Medium Term - Threat to Australian Exports It is probable that in the medium-term Myanmar could affect Australian food exports in the following manner:

• Preferential tariff arrangements for members of the ASEAN Free Trade Association and investment-related trade between countries in ASEAN could impact upon Australian exports to ASEAN. • Improvements in regulations and procedures on cross-border trade and investment- related trade between Myanmar and countries such as China and India could affect Australian exports to these countries. • Growth in Myanmar's food processing sector could affect Australian exports to countries such as Malaysia and Singapore which re-export these goods to Myanmar. • Australia's export potential to `new' markets such as Sri Lanka could be affected because of the growth in exports from Myanmar.

Long Term - Export Opportunities Myanmar could become an important export destination if economic development, political stability and the inflow of tourists lead to demand for high-value food products.

Recommendations It is important for Australian exporters to establish a foothold in this market. The following methods of market entry are recommended:

xv Strategic Alliances with Importers in Myanmar Australian food processors must work with trading companies in Australia and importers in Myanmar to overcome the regulatory hurdles in Myanmar. Perhaps export merchants and traders in Australia and ASEAN may be better positioned to manage exports through 'counter trade' and 'import-first' arrangements. Therefore, some Australian exporters may have to resort to indirect exporting. The perceived difficulty in market-entry may discourage Australian exporters, but this could mean the loss of valuable trade opportunities.

Consortiums: Integrated Consultancy, Investment and Trade Projects Australian companies are well positioned to provide consultancy services in farming and food processing. Commonwealth and State governments must support and assist Australian companies to establish consortia type arrangements (comprising farming companies, manufacturing companies, equipment suppliers, trading companies and training service providers) to undertake integrated (consultancy, investment and trade) projects in the agricultural, livestock and fishery sectors in Myanmar.

Investments Australian companies should invest in Myanmar's agricultural, livestock and fishery sectors. This, besides generating investments through backward linkages to companies in Australia, could improve the competitive advantage of Australian food companies because of:

• Raw material availability and costs in Myanmar • Savings in operating expenses including freight costs to ASEAN markets • Better market access because of trade arrangements between Myanmar and other countries (example, ASEAN Free Trade Association, Cross-border Trade Agreements).

x vi Map 1: Myanmar: River Systems and Principal Cities

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Chapter 1

1. Introduction: The Study Setting

1.1 Geography Myanmar is the largest country in mainland Southeast Asia. It has a land area of 676,577 sq. kilometres. The country is 2,090 km long from North to South and 925 km wide from East to West. Three parallel chains of mountain ranges run from North to South. These are (a) Western Yoma/Rakhine Yoma (b) Bago Yoma, and (c) Shan Plateau. These mountain chains divide the country into three river systems. The Ayeyarwaddy (2,170 km long) and its tributary the Chindwin are the major riverine systems in the country (Map 1). The Ayeyarwaddy forms a vast delta before flowing into the Bay of Bengal. This delta is an important agricultural region in the country. Myanmar has a long coastline of approximately 1,931 km.

There are seven major geographic regions in Myanmar. These are: • The Northern Hills • The Western Hills • The Shan Plateau • The Central Belt • The Lower Myanmar Delta • The Rakhine Coastal Region • The Tanintharyi Coastal Strip

1.2 Climate Myanmar has a Tropical-Monsoon climate characterised by three distinct seasons as follows: • Hot season: mid-February to mid-May • Rainy season: mid-May to mid-October • Cool season: mid-October to mid-February

1.3 Administration Myanmar is divided administratively into seven Divisions and seven States, the Divisions being autonomous regions in which indigenous minorities such as the Shan, Karen, Kayah, Kachin and Chin live. The Divisions and States are sub-divided into districts. Each district comprises several townships and each township includes administrative units called village tract which are made up of several villages.

1.4 Legal System Myanmar has a relatively well developed legal system which is similar to that in other common law jurisdictions. According to Wood and Lewis (1996), Myanmar's commercial law is similar to the Companies Act (1929), England. Myanmar's laws are set out in the Burma Code, supplemented and amended by the Burma Acts of the 1950s. From 1960 to 1980 the country's laws were reviewed and revised by the socialist government through various parliamentary decrees. The post-1988 State Law and Order Restoration Council (SLORC) decrees contain the most important recent changes to the laws of the country.

Government officials have discretionary authority to interpret the law and decisions are often made on a case-by-case basis.

1 1.5 Banking & Insurance System In 1975 the Government nationalised all banks. The Central Bank of Myanmar regulates and controls banking operations. The country's banking laws were revised in 1990 in order to reduce government control and encourage foreign participation in this sector. Myanmar's banking laws identify four classes of financial institutions: commercial banks, investment or development banks, finance companies and credit societies. Different rules and capital structures moderate the operations of financial institutions in the various classes. The 'Transfer of Immovable Property (Restriction) Act 1987' (which bars foreigners from owning property and therefore being able to use this as collateral for loans) is a constraint on foreign- owned companies wishing to borrow funds in Myanmar.

Several joint-ventures between foreign and private sector local banks have started operations. By 1996, 23 foreign banks had incorporated representative offices in Myanmar. There are four major government-owned banks: The Myanmar Economic Bank, The Myanmar Investment and Commercial Bank, The Myanmar Foreign Trade Bank, and The Myanmar Agricultural and Rural Development Bank.

1.6 Taxation Persons continuously living in Myanmar for more than 182 days in the year of assessment are classed as residents and have to pay income tax on their earnings in Myanmar and abroad. Income tax on residents is assessed on a progressive scale which ranges from 5 per cent to 30 per cent of the chargeable income.

Foreigners who are continuously resident in Myanmar for more than 90 days in the year of assessment are required to obtain tax clearance prior to departing from the country. Non- residents (persons not living continuously in Myanmar for more than 182 days in the year of assessment) are assessed only on their earnings in Myanmar. The income tax on non- residents is either 35 per cent of the chargeable income or the tax calculated on a progressive scale ranging from 5 per cent to 40 per cent of chargeable income (whichever is greater).

Profits of incorporated businesses are taxed at a flat rate of 30 per cent.

Other taxes in Myanmar include (a) capital gains tax (residents - 10 per cent, organisations operating under the Myanmar Foreign Investment Legislation (MFIL) - 30 per cent, and non-resident foreigners - 40 per cent), (b) withholding tax on some foreign remittances and (c) sales and excise duties.

1.7 Population In 1994-95 Myanmar's population was estimated to be 43.92 million. The indigenous population is made up of several ethnic groups with distinct languages, customs and religious differences. The indigenous communities are descended from three major racial groups: (a) Tibeto-Burman (Bamar, Chin, Kachin, Rakhine etc.), (b) Mon-Khemer (Kaya, Mon, Zayen etc.), and (c) Thai-Chinese (Shan, Kayin, Taungthu). Sixty-nine per cent of the population is classed as Bamar (30.3 million), 25.7 per cent as other indigenous groups (11.3 million), 3.3 per cent as European/Eurasian (1.4 million), 1.3 per cent as Indians/Pakistanis (570,000) and 0.7 per cent as Chinese (307,000). Several local languages are spoken but Burmese is the official language of the country and is used extensively in education and commerce.

Eight-nine per cent of the population is Buddhist and the religious homogeneity is an

2 important unifying force. Other religious denominations include Christians (4.9 per cent) and Muslims (3.9 per cent).

Myanmar's population is concentrated in the major agricultural areas such as Ayeyarwaddy, Mandalay, Yangon, Sagaing, Bago and Shan (Table 1).

Table 1: Gender and Regional Distribution of Population, 1994-95 ('000)

REGION GENDER TOTAL

State: Male Female

Shan 2,214 2,202 4,416

Rakhine 1,237 1,245 2,482

Mon 1,096 1,087 2,183

Kayin 656 667 1,323

Kachin 562 573 1,135

Kayah 116 112 228

Chin 213 225 438

Division:

Ayeyarwaddy 3,060 3,047 6,107

Mandalay 2,876 2,947 5,823

Yangon 2,508 2,529 5,037

Sagaing 2,397 2,492 4,889

Bago 2,306 2,301 4,607

Magway 1,997 2,070 4,067

Tanintharyi 594 593 1,187

TOTAL 21,832 22,090 43,922

Source: Central Statistical Organization (1996a)

Myanmar is predominantly a rural community. According to the last census in 1983, there were only 26 towns with populations in excess of 50,000 people. Of these, only eight towns had more than 100,000 people. Yangon and Mandalay are the only cities with populations in excess of 500,000 people (Table 2). In comparison to other Southeast Asian countries, the level of urbanisation in Myanmar is relatively low. The urban population is estimated to have increased from 23 per cent in 1970-71 to about 35 per cent in 1994-95.

Table 2: Population in Major Urban Centres, 1983

3

TOWN POPULATION

Yangon 2, 513,023

Mandalay 532,949

Mawlamyine 219,961

Bago 150,528

Pathein 144,096

Taunggyi 108,231

Sittiwe 107,621

Monywa 106,843

Source: Central Statistical Organization (1996a)

Myanmar has a relatively young population and the young-age population is increasing rapidly (Table 3). More than 40 per cent of the country's population is less than 20 years of age and approximately 76 per cent of the population is less than 39 years of age.

Table 3: Population Trends in Myanmar - Age Distribution, 1973 and 1993

AGE-CLASS POPULATION SHARE OF TOTAL CUMULATIVE (million) POPULATION (%) SHARE (%)

1973 1993 1973 1993 1973 1993

0 - 9 Years 8.49 10.0 29.39 23.19 - -

10 - 19 Years 6.55 9.11 22.67 21.13 52.06 44.32

20 - 29 Years 4.24 7.8 14.68 18.09 66.74 62.41

30 - 39 Years 3.33 5.96 11.53 13.82 78.27 76.23

40 - 49 Years 2.7 4.16 9.35 9.65 87.62 85.88

50 - 59 Years 1.86 2.93 6.44 6.79 94.06 92.67

More than 59 Years 1.71 3.17 5.91 7.3 99.97 99.97

Source: Central Statistical Organization (1996a)

4 1.8 History Myanmar has a rich and long history which dates back 5,000 years. Among the most wealthy countries in Southeast Asia, it was annexed by the British in 1886 and became independent on 4 January 1948. Independent Burma was threatened by disintegration because of ethnic, ideological and generational conflicts leading to a guerrilla rebellion by the Communists and ethnic minority leaders attempting to displace the 'new' government.

The country's constitution was drafted in 1947 and was modelled on a federal system of government. The constitution provided for nominal political and administrative autonomy for the indigenous minorities (Shan, Karen, Kayah, Kachin and Chin).

Until 1957, the country was governed by the Anti-Fascist People's League (AFPL). As a result of factional in-fighting within the AFPL and a reduced majority in the Parliament following the 1956 elections, Prime Minister U Nu invited the army commander General Ne Win to assume control of the Government. General Ne Win formed a caretaker government which was expected to prepare the country for elections. In the elections, which were finally held in 1960, U Nu's party was returned to office with a dominant majority. The relations between the army and Prime Minister U Nu deteriorated. In 1962, on suspicion that Prime Minister U Nu would make concessions to demands by ethnic minorities for greater autonomy, the army launched a coup and assumed control of the country. The civilian government was replaced by a 'Revolutionary Council' made up of 17 military officers who ruled by decree. The Council accused the previous government of abandoning its original socialist goals and adopted an ideology which it popularised as the 'Burmese Way to Socialism'.

The private sector was curtailed and multi-national and non-indigenous owned businesses were nationalised. This particularly affected the Indian and Chinese merchant communities. In 1962 the economy came under the domination of 23 State-Owned Enterprises directed by military appointees. In 1964 Burma became a single party state under the military-controlled 'Burma Socialist Programme Party' (BSPP).

1.9 Economic Decline: Burmese Way to Socialism The military government established a centrally planned economy. It nationalised banks, transport systems, wholesale and retail trade, foreign companies and most industrial enterprises. Agriculture remained in private hands but agricultural produce had to be sold to the Government at artificially low procurement prices. The Government concentrated on industrial development. Public investment in the industrial sector increased from less than 4 per cent in 1960/61 to 40 per cent in 1970/71. Short-falls in agricultural investment curtailed production, thus affecting export incomes because of reduced agricultural surplus for export.

These policies resulted in economic stagnation, increased political discontent and uncertainty in the country. In July 1971 the Government announced that it would formulate a new constitution and transfer power to a civilian government. In 1972 Ne Win and his senior commanders retired from the army and became civilian members of the Government with Ne Win as the Prime Minister. The 'new' Government promoted investment in the primary sector and encouraged private enterprise through various incentives such as increasing the procurement prices for agricultural produce. The Government also attempted to improve the efficiency of the public sector and reduce the level of government intervention in the

5 economy through programs such as performance-related bonuses in State-Owned Enterprises, deregulating the financial system and rationalising the operations of State-Owned Enterprises. The Government announced that these programs would be introduced over a 20 year period through five development plans, each plan lasting four years.

1.10 Economic Reforms: Changing Tack Myanmar's development was affected by the slow pace at which economic reforms were being introduced. In recognition of the urgent need for greater private sector role in the economy, in 1974 the Government declared that it would limit its role in the economy. From 1982-83 to 1985-86 (Fourth Plan Period), Myanmar's Gross Domestic Product (GDP) increased by 5.5 per cent per year. However, from 1985-86 to 1988-89 the country's economy declined substantially (4 per cent in 1987/88 and 11.4 per cent in 1988/89) because shortfalls in foreign exchange led to cut-backs in imports of much needed spare parts, fuel and other intermediate and capital goods. The economic conditions deteriorated substantially and in 1987 Myanmar, which was once regarded as one of the most prosperous economies in Southeast Asia, was designated by the United Nations as a 'Least Developed Country (LDC)'.

Significant economic downturn, shortages of basic essentials and inflationary pressures gave rise to political disturbances in 1988. The military assumed control of the country, banned demonstrations, imposed a curfew and abolished government administrative institutions. The country came under the governance of the SLORC made up of 19 military commanders.

Generally, commentators agree that from 1989 substantial changes have been introduced by the Government. As a step towards promoting a unified national identity, the country's name was changed from Burma to Myanmar. Although Bamars are the predominant indigenous ethnic group, there are large minorities of other indigenous communities. The leaders felt that the name Burma did not present this identity. The SLORC introduced programs to accelerate the role of the private sector in the economy, deregulate trade, encourage foreign investment, encourage domestic capital formation, streamline taxation laws, restructure the financial system, and phase-out price controls and subsidies. These changes have improved the country's economic performance: from 1989-90 to 1993-94, GDP increased by 4.2 per cent annually and in 1994-95 GDP increased by 6.8 per cent (Table 4). However, these data disguise the significant inter-year fluctuations in the growth rate. For example, in 1991-92 GDP declined marginally but in 1993-94 it increased by more than 9 per cent. The variability in the growth rates is a result of the dominance of the agricultural sector (more than 60 per cent of GDP), the performance of which is still dependent upon favourable weather conditions.

In a bid to overcome international criticism of the undemocratic manner in which it assumed control of the country the SLORC proposed to hold parliamentary elections in May 1990. The National League for Democracy, the major opposition party, headed by Aung San Suu Kyi won 392 of the 476 seats which were declared. The National Unity Party, the current ruling party which was backed by the military, won only ten seats. The military refused to hand over power. This gave rise to criticism from the international community. Besides its reluctance to relinquish political control, the military also controls economic activities through a large number of State-Owned Enterprises.

6 Table 4: Economic Indicators, 1982-83 to 1994-95

1982-83 to 1985-86 1986-87 to 1988-89 1989-90 to 1993-94 1994-95

GDP Growth (Average %) 4.9 -5.5 4.2 6.8 Agriculture, livestock, fishery & forestry 5.1 -5.6 3.9 6.1 Industry 5.5 -9.4 8.8 9.0 Services 4.3 -4.0 3.2 6.8

Economic Structure (End-period, Current Prices %) Output Shares: Agriculture, livestock, fishery & forestry 48.2 57.4 63.0 62.7 Industry 13.1 9.7 8.6 9.2 Services 38.7 32.9 28.4 28.1

Employment Shares: Agriculture, livestock, fishery & forestry 65.9 65.2 68.6 67.8 Industry 10.8 8.8 9.7 10.8 Services 23.3 26.0 21.7 21.4

Export growth (GNFS, average %) -4.0 -3.7 18.2 19.4 Export growth (GNFS, average %) 1.0 -16.0 12.9 16.8

Savings-Investment Gap (average %) 6.0 2.8 0.7 0.2 GNS/GDP (average %) 12.8 9.6 12.1 11.9 GDI/GDP (average %) 18.8 12.3 12.8 12.1

Budget deficit/GDP (average %) -8.3 -10.5 -5.8 -6.3 Current account deficit/Exports (average %) -77.4 -87.9 -43.0 -30.4 Debt service obligations/Export (average %) 41.4 88.2 43.6 31.8

Inflation (average annual rate, %) 4.3 19.7 26.1 22.5

Real effective exchange rate (trade-weighted, end-period, % 8.5 9.8 24.3 21.7 change) a/ On commitment basis b/ Exports of goods and non-factor services

7 Source: World Bank (1995)

8 The military continues to maintain strong control of both the Government and economy of the country. The level of foreign participation in Myanmar's economy is insignificant. Contentious debates on human rights abuses and opposition by human rights groups have discouraged larger Western companies from undertaking business in Myanmar. The petroleum and natural gas producers, Total from France and Unicol from the United States, are the largest investors in Myanmar. Both companies face strong criticism and opposition from human rights groups in Europe and the United States. Pressure from human rights groups led to Pepsico divesting its 40 per cent equity in a bottling plant in Myanmar (Asian Business Review, 1997; Fairclough, 1996a). Other Western companies which have withdrawn from Myanmar are Apple Computers Inc., Levi-Strauss, Liz Claibourne, Macy's, Amoco, and Oshkosh (East Asia Analytical Unit, 1997). In 1996 both Carlsberg and Heineken announced that they were cancelling plans to establish breweries in Myanmar (Fairclough, 1996a). The reluctance of major Western companies to invest in Myanmar is a significant barrier to the country's economic development. It seems unlikely that this position will change in the immediate future.

The main sources of foreign investment in Myanmar are Singapore, Malaysia, Thailand, Japan, and the Republic of Korea. Companies from Singapore, Malaysia and Thailand have invested in hotels, real estate and manufacturing industries, often in collaboration with ethnic Chinese-owned businesses in Myanmar. Chinese-owned businesses in Myanmar (for example the Ho Group, Asia World, Myanmar Golden Star Group and Serge Pun Associates) and overseas Chinese companies (for example Victoria Garment Manufacturing, Kemayan Group, Kuok Group and Syntech Woh Hup) are the major private sector investors in Myanmar (Vatikiotis, 1995a; Fairclough, 1996a; 1996c; 1996d).

Another disincentive to foreign investment is the wide disparity between the official and unofficial rates of the national currency, the kyat. The official exchange rate of the kyat is substantially higher than its market value (official exchange rate US$ 1= K 5.95; market rate US$1= K 170). The over-valuation of the kyat has made foreign investment and trade decisions more complex than in neighbouring countries such as Thailand, Malaysia and Singapore.

9 Chapter 2

2. Agricultural Food Crops, Livestock, Fishery and Processed Food Sectors

2.1 Significance of the Agricultural Food Crops, Livestock, Fishery and Processed Food Sectors Agriculture, the dominant economic activity in Myanmar, accounts for more than 60 per cent of GDP at current-price (38 per cent at constant-price), contributes about 46 per cent of the country's foreign exchange earnings and employs about 64 per cent of its workforce. As elsewhere in Asia, the cultivation of food crops is predominantly a small-scale activity. The World Bank (1995) estimates that about 13 per cent of Myanmar's land area is being used as farming land. The rapid development of the agricultural sector is attributed to the reforms introduced by the Government of Myanmar (World Bank, 1995).

From the late 1980s the Government adopted deregulatory measures and removed barriers to private sector participation in the economy. In 1987 the Government discontinued the forced procurement of crops such as rice, maize, pulses and oilseeds. In 1988 the Government relaxed regulations requiring farmers to only cultivate approved crops and allowed agricultural produce (other than rice and some industrial crops) to be sold by private traders. The 1948 and 1973 Constitutions transferred the ownership of all land to the State (Than, 1988). In 1988, the Government ceased to enforce the Land Nationalization Act (1953), it abolished the Disposal of Tenancy Act (1953) and passed the Tenancy Law (1963). This law permitted farmers to cultivate crops of their choice but prohibited them from buying, selling or mortgaging the land.

It seems obvious that agriculture will continue to be the dominant economic activity in Myanmar. The Government has declared that agricultural development will be its key economic objective with subsidiary objectives such as privatisation and deregulation of commercial activities (Box 1). On the basis of these pronouncements, it seems that the Government will encourage agricultural development by the private sector in collaboration with foreign companies.

This policy has major implications because, to-date, the private sector in Myanmar is relatively unimportant and highly regulated. When Myanmar became independent in 1947 the Government nationalised most commercial activities and actively discouraged foreign participation in the economy.

The importance accorded to the agricultural sector contrasts sharply with the policies in neighbouring countries such as Thailand, Malaysia and Indonesia. Until the economic slow- down in 1997-98, the Governments in these countries (even though during their early stages of development, agriculture was the most important sector both in terms of contribution to GDP and employment) concentrated on promoting the manufacturing and construction sectors. Therefore, it seems that the model of economic development in Myanmar is different to that of other ASEAN countries.

10 Box 1: Political, Economic and Social Objectives of the Government of Myanmar

Four Political Objectives

• Stability of the State, community peace and tranquillity, prevalence of law and order • National reconsolidation • Emergence of a new enduring State constitution • Building of a new, modern, developed nation in accord with the new State constitution

Four Economic Objectives

• Development of agriculture as the base and all-round development of other sectors of the economy as well • Proper evolution of the market-oriented economic system • Development of the economy inviting participation in terms of technical know-how and investments from sources inside the country and abroad • The initiative to shape the national economy must be kept in the hands of the State and the national peoples

Four Social Objectives

• Uplift of the morale and morality of the entire nation • Uplift of national prestige and integrity and preservation and safeguarding of cultural heritage and national character • Uplift of dynamism of patriotic spirit • Uplift of health, fitness and education standards of the entire nation

Source: Political, Economic and Social Objectives (1997)

In spite of government controls on buying, selling or mortgaging agricultural land, fragmentation was a problem. Average farm sizes declined from 2.57 hectares in 1961-62 to 2.29 hectares in 1985-86. Most farms of more than 20 hectares were rubber plantations. However, the control on the sale and mortgage of lands appear to have delivered some benefits. For example, Ambler (1983) estimated the Gini coefficient for Myanmar in 1980-81 to be 0.485. This suggests that Myanmar has more equitable land distribution in comparison to other South and Southeast Asian countries.

11 It seems that, from the time of the Ambler study, the size and distribution of farm holdings has not changed significantly. As shown in Table 5, even in 1985-86, 62 per cent of farmers had less than two hectares of land and 86 per cent had less than four hectares of land. Farms of less than four hectares represented 56 per cent of the total cultivated area. Less than three per cent of the farm families cultivated more than 20 hectares of land (Than, 1988).

Table 5: Size of Farm Holdings, 1985-86

SIZE OF HOLDINGS FARM FAMILIES AREA (Hectares) (Hectares)

'000 Per Cent '000 Per Cent

Less than 2 2,661 61.60 2,460 25.11

2 to less than 4 1,058 24.49 3,051 31.14

4 to less than 8 491 11.38 2,773 28.30

8 to less than 20 107 2.47 1,218 12.43

20 to less than 40 2 0.04 52 0.53

40 and above 1 0.02 244 2.49

TOTAL 4,320 100.00 9,799 100.00

Source: Report to the Pyithu Hluttaw, 1986-87 as cited in Than (1988)

In order to encourage large-scale agricultural enterprises, the Government constituted a high- powered committee for the management of 'cultivable land', 'fallow land' and 'waste land'. This committee is authorised to determine the procedures for agricultural and livestock land use. The committee has increased the maximum sizes of land holdings for different agricultural and livestock farming purposes (Table 6). This committee is encouraging State- Owned Enterprises, joint-venture organisations, co-operative societies and individuals in Myanmar to undertake agricultural and livestock farming projects in 'cultivable', 'fallow' and 'waste-land'. Foreign-owned organisations and non-nationals are also encouraged to undertake agricultural and livestock farming in Myanmar. However, foreign-registered companies have to apply to the Myanmar Investment Commission (MIC) for use of land for agricultural and livestock farming.

12

Table 6: Controls on Land Use for Agricultural and Livestock Farming, 1995

ACTIVITY AREA (Hectares)

Agriculture:

Plantation Crops 2,023

Orchard 1,214

Aquaculture 809

Seasonal Crops 405

Livestock and Poultry Farming:

Buffalo, Cattle and Horse 2,023

Sheep, Goat 405

Poultry, Swine 202

Source: Ministry of National Planning and Economic Development (1996a)

2.2 Trends in the Agricultural Sector Myanmar's northern latitudinal position and diverse agro-climatic conditions (in comparison with most other ASEAN countries) makes it possible to cultivate a wide variety of agricultural crops. The Ministry of Agriculture and Irrigation (MAI) estimates that more than 60 different agricultural crops ranging from tropical to sub-temperate species are cultivated in Myanmar. The MAI classifies agricultural crops into six major groups: (a) cereal crops (b) oilseeds (c) food legumes (d) industrial crops, and (e) plantation crops. As shown in Table 7, from 1992-93 the output of most agricultural crops has increased.

Table 7: Production of Major Agricultural Crops, 1989/90 ('000 tonnes)

Year Cereal Crops Oil Seeds Food Legumes Other Crops

1989-90 14,013 782 500 2,120

1992-93 15,313 781 924 3,365

1993-94 16,760 768 906 2,699

1994-95 18,195 955 1,161 2,421

1995-96 19,568 1,116 1,473 3,366

Source: Ministry of National Planning and Economic Development (1996a)

13 Central Statistical Organization (1996a) (1996b) 2.2.1 Cereal Crops The principal cereal crops cultivated in Myanmar are rice, wheat, maize and millet. These four crops account for more than 90 per cent of total cereal crop production. Rice is the major cereal crop and it accounts for nearly 90 per cent of total cereal crop output. Rice output increased rapidly from 13.80 million tonnes in 1989-90 to 19.57 million tonnes in 1995-96 - an increase of about 7 per cent per year (Table 8). Rice output increased most significantly from 1992-93. Between 1992-93 and 1995-96, rice output increased by 10.6 per cent annually whereas the output of all other cereal crops declined.

Table 8: Cereal Crop Production, 1989-90 to 1995-96 ('000 tonnes)

Crop 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Rice 13,804 13,968 13,201 14,837 16,760 18,195 19,568

Maize 194 187 191 208 205 284 208

Wheat 124 124 143 138 109 89 107

Millet 116 126 120 137 144 123 137

Source: Central Statistical Organization (1996a) Ministry of National Planning and Economic Development (1996b)

As elsewhere in Asia, rice is the staple food and the principal source of nutrition for most people in Myanmar. The rice sector contributes between 40 to 50 per cent of export earnings and accounts for 40 per cent of value-addition in agriculture. Approximately 65 per cent of the population is engaged in farming. In 1995-96 rice was cultivated in approximately 6.19 million hectares. As shown in Table 9, rice farming accounts for more than 90 per cent of the total land used for cereal crop cultivation.

Table 9: Land Use for Cereal Crops, 1989-90 to 1995-96 ('000 hectares)

Crop 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Rice 4,879 4,945 4,830 5,133 5,674 5,926 6,193

Millet 184 180 191 210 212 216 225

Wheat 142 150 155 151 125 109 116

Maize 133 141 140 156 150 172 168

Source: Central Statistical Organization (1996a) World Bank (1995)

14 Ministry of National Planning and Economic Development (1996b) Rice is cultivated under different climatic and agronomic conditions (Table 10). Irrigated paddy is cultivated in the dry zone areas of Myanmar. However, because of the country's topography and rainfall levels, rice is predominantly cultivated in the rain-fed deltas to the south of the country. As a result of the low input costs on irrigation, fertiliser and labour, Myanmar's ex-farm cost of rice production is highly competitive. The Government is promoting rice production through increasing the planting area, encouraging double cropping, introducing new crop varieties and expanding irrigation facilities.

The deregulation of agricultural pricing and marketing in 1987-88 improved the income of rice farmers. Since then, there have been no attempts to re-establish government control over agricultural marketing. Harrison (1990) estimates that from 1987 to 1990 the income of rice farmers increased by about eight to ten times. However, the Government's rice procurement policies (Case Study 1), pricing of fertiliser, the ban on private-sector rice exports, small size of farm holdings and the restrictions on rice farmers to make choices regarding cropping patterns and input use are affecting farm productivity (World Bank, 1995).

Table 10: Rice Cultivation in Myanmar - Agronomic Conditions, 1994-95

Growing Conditions Area ('000 Hectares) Per Cent

Irrigated Area 1,592 26.86

Rainfed Area 4,128 69.67

Saline Area 207 3.50

Deep Water Area 391 6.60

Normal Plains 3,530 59.57

Upland Area 206 3.47

TOTAL 5,926 100.00

Source: Ministry of Agriculture and Irrigation (1996)

Before the Second World War, Myanmar was the world's largest exporter of rice. With exports of about 3.05 million tonnes in 1940, Myanmar accounted for 50 per cent of the world's rice exports. As a result of social, political and economic problems in the post-war period, rice output in Myanmar declined dramatically. The production levels of the 1940s were only achieved again in 1963.

From then on, rice output has gradually improved. This was achieved principally through expanding the cultivated area (Table 9). The Government estimates that between 1989-90 and 1995-96 'new' planting was undertaken in 1.3 million hectares of land. However, the expansion of areas under irrigation, good weather conditions, increased use of pesticides and

15 fertilisers, improved farming techniques and the use of high-yielding varieties of seeds have also contributed to better production. Myanmar's rice production increased by an average of 11.3 per cent in the last six years. In comparison to most other major rice-producing countries, Myanmar's rice yields are low. Fertilisers and pesticides are not widely used. Government-owned fertiliser plants are operating at 50 per cent of their capacity. Shortages of spare parts and breakdown in power and gas supply have caused frequent shut-downs of fertiliser plants (Duckworth, 1994). Between 1980 and 1989, the average export volume was only 600,000 tonnes per year. In the last 30 years (1962-1993) Myanmar's exportable surplus in rice has declined from approximately 42 per cent to 5 per cent (Duckworth, 1994).

The exportable surplus in rice decreased because population increases led to growth in demand within the country. Myanmar's population increased from about 17 million, just prior to the Second World War, to about 43.9 million in 1995. Additionally, the compulsory purchases of rice by the Government at prices which were less than the prevailing market prices was a major disincentive to increasing production. Also, foreign exchange shortages meant that Myanmar could not import much-needed fertiliser and other agricultural inputs. From 1985 to 1994 fertiliser input in rice cultivation is reported to have decreased by about 42 per cent.

Production and therefore the marketable surplus of rice was also affected by poor weather conditions and inefficient post-harvest handling of rice crops. It is estimated that about 30 per cent of Myanmar's rice output is wasted because of inefficient post-harvest handling. Myanmar's rice is considered to be of low quality and cannot be sold at competitive prices in the international market. Until recently, Myanmar's rice exports were predominantly to countries in Sub-Saharan Africa. Myanmar exported approximately 300,000 tonnes of rice each year to these countries. However, in 1994-95 Indonesia became the major importer. With imports of 600,000 tonnes in 1994-95, Indonesia accounted for more than 50 per cent of Myanmar's rice exports. Other major importers in 1994-95 were Sri Lanka (59,000 tonnes), Bangladesh (33,000 tonnes) and Singapore (22,000 tonnes).

Case Study 1 Myanma Agricultural Produce Trading: Government Procurement of Rice Myanma Agricultural Produce Trading (MAPT) comes under the jurisdiction of the Ministry of Commerce. The MAPT has three roles: (a) procurement of rice crops (paddy) from farmers, (b) distributing rice to government employees at subsidised prices, and (c) supplying the Government's export arm, Myanmar Export-Import Service (a Government monopoly), with rice stocks for export.

The Ministry of Commerce has a monopoly on rice milling. After having supplied the MAPT per the Government-specified procurement quantities, the farmers can sell the rest of their paddy output in the open market.

The farmers in Myanmar have to sell a fixed quota (250 kg) of rice to the MAPT at less than the prevailing market prices. MAPT has 900 buying centres in 200 townships for procuring rice from farmers. The Ministry of Commerce operates both large and small-scale rice mills. Production capacity in these mills ranges from 25 tonnes/day to 150 tonnes/day. The broken

16 rice is sold as animal feed. The MAPT does not operate retail outlets. Government departments have to draw their quota from MAPT warehouses. During the socialist period, the MAPT procured approximately 4.5 million tonnes of rice annually. By 1996, MAPT's rice procurement had decreased to 1.6 million tonnes. Therefore, increasing volumes of rice trade are now handled by the private sector.

In December 1994 the cabinet passed a decree to completely deregulate domestic rice trade with effect from January 1995. The cabinet instructed the Ministry of Commerce not to enter into export contracts without its approval. A new decree promulgated in early 1996 directs MAPT to undertake government procurement at domestic market prices. As such, the cost of subsidised rice sales to government employees and organisations are now fully absorbed by the Government.

MAPT also procures beans and pulses. The trade in beans and pulses is not government controlled and the MAPT purchases beans and pulses in the open market. As MAPT has warehouse and manpower resources to support its rice trade, the procurement of beans and pulses is designed to increase the use of its warehouse capacity.

2.2.2 Oilseeds The principal oilseed crops are groundnut, sesame, sunflower and mustard. The main sesame and groundnut growing areas are in Magway Division in Central Myanmar, and in Mandalay and Sagaing Divisions in Upper Burma. Groundnut oil was the major edible oil used in Myanmar. The output of groundnut decreased progressively from 559,841 tonnes in 1985-86 to 378,985 tonnes in 1991-92. Thereafter, it increased to 569,000 tonnes in 1995-96 (Table 11). However, the area under groundnut cultivation decreased from 558,000 hectares in 1989-90 to 487,000 hectares in 1993-94 before increasing again to 524,000 hectares in 1995- 96 (Table 12). The area under groundnut cultivation has decreased by more than 15 per cent over a eight year period. According to the World Bank (1995) the output of oilseed crops is still below their 1985 levels and the crop yields have remained stagnant. The output of groundnuts appears to have been affected by imports of low-cost palm-oil from Malaysia. Several small-scale groundnut processing factories have ceased business because as consumers substituted to low-priced imported palm oil these factories became commercially non-viable. There is a shortage of edible oils in Myanmar because of oilseed exports (direct shipments and cross-border trade) to Yunnan, China.

The output of sesame seeds decreased from 248,931 tonnes in 1985-86 to 170,696 tonnes in 1991-92 (Table 11). Thereafter, the output of sesame has increased. Output in 1995-96 was 351,000 tonnes. Sesame cultivation has expanded because of the demand for sesame seeds and sesame oil in export markets such as Japan. Some small-scale edible oil manufacturers are contract manufacturing sesame oil for Japanese companies (example, TZ Trading Enterprise Co. - Case Study 2). Some foreign companies are contract farming sesame seeds in Myanmar. An Australian company, Huile Trading, has developed a successful business through contracting farmers in Myanmar to cultivate sesame. Huile Trading exports the sesame from Myanmar to East Asian markets such as Japan and Korea (Case Study 3).

17

Table 11: Production of Oilseed Crops, 1989-90 to 1995-96 ('000 tonnes)

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Groundnut 458 472 378 433 432 501 569

Sesame 206 215 171 238 223 303 351

Sunflower n/a n/a n/a 76 63 117 162

Mustard 8 8 6 6 7 6 6

Source: Central Statistical Organization (1996a) (1996b) World Bank (1995)

Table 12: Landuse for Oilseed Crops, 1989-90 to 1995-96 ('000 hectares)

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Sesame 1,278 1,324 1,288 1,367 1,300 1,331 1,378

Groundnut 558 554 510 494 487 507 524

Sunflower n/a 163 146 156 121 199 223

Mustard 16 17 14 13 14 14 14

Source: Central Statistical Organization (1996a) (1996b) World Bank (1995)

18

Case Study 2 TZ Trading Enterprise Co. Ltd: Contract Manufacturing Sesame Oil for the Japanese Market. The mill is in a new industrial zone about 16 km from Yangon. The Government of Myanmar has established six industrial zones which are reserved for the nationals of the country. These industrial zones were established to encourage the 'start-up' of small to medium industrial enterprises by the nationals of Myanmar. Joint venture companies between the nationals of Myanmar and foreigners are also permitted to commission production facilities in these zones. In comparison to the overall standards of industrial infrastructure in Myanmar, these industrial zones are well connected by road and have good power supply.

TZ Trading Enterprise is wholly owned by the family of Colonel (rtd) Win Maung. The company manufactures pure and refined sesame oil. Generally, manufacturers in Myanmar produce sesame oil by the cold expeller method. TZ Trading has introduced a new production technology through the assistance of its Japanese importer. In this process, the sesame seeds are roasted over charcoal fire and only then is the oil extracted. The equipment for roasting the sesame seeds was made in Myanmar. The sesame seeds are roasted under charcoal fire because of the specification from the Japanese company. It is claimed that roasting under charcoal fire produces flavour and product attributes which are preferred by Japanese consumers.

The colour of the oil is regulated by the temperature at which the sesame seeds are roasted. The temperature for roasting the sesame seed is stabilised at about 1700 C. TZ Trading uses brown sesame seeds grown in the Magway Division (Central Myanmar). It is reported that brown sesame seeds have an oil content of about 48 per cent (white and black sesame seeds have lower oil content) and are, therefore, preferred for use in oil extraction.

The roasted sesame seeds are passed through a machine to flatten the seeds. The flattened seeds are lifted by an elevator to a bin and fed into an oil expeller. The oil which is extracted is then heated and filtered. The heated and filtered oil is then piped into cylindrical tanks in a cold room (temperature approximately 50 C). The oil is stored in the tanks for seven days and, thereafter, filtered again and piped into two cylindrical tanks. The bases of these tanks are funnel shaped, thus facilitating the residue to settle in the base of the tank. The oil is then piped into a tank in a dust proof bottling room. The bottling plant in the company is fully automated.

When the company started operations the oil was packed in round polythene plastic bottles. Recently, PET bottles were trialed and introduced because there was less damage to these bottles as a result of mass stacking and freighting of cargo. Each bottle contains 500 ml of sesame oil. The bottles are manually packed into cardboard boxes. The labelling on the bottles and the cardboard boxes is in Japanese and is supplied by the Japanese company. Many of the equipment, containers, bins and tanks used in the factory are leased from the Japanese importer. Lease charges for this equipment are set-off by the Japanese importer from the payments for goods supplied to the company.

19

Cont ...

20 After the first oil extraction, the sesame seeds are reprocessed a further two times. Oil which is extracted during the second and subsequent processing is sold in the domestic market. The residue (oil cakes) is sold as animal feed. The first milling is reported to yield only 20 per cent of the oil. This is the premium quality oil and is exported to Japan. The production capacity of this mill is approximately 4.6 tonnes per shift. The mill only processes oil on confirmed forward orders from the Japanese importer. The Japanese importer has also fitted out a laboratory at the plant so that the quality and purity of the oil which is extracted and refined can be tested prior to packaging the goods for shipment to Japan.

Case Study 3 Huile Trading Company: Contract Cultivation of Sesame. Huile Trading is a Melbourne-based trading and food processing company. The company exports sesame seeds to several Asian countries and also produces sesame paste for sales in Australia. The company faced difficulty in sourcing sufficient quantities of sesame seeds in Australia. It explored various opportunities to purchase sesame seeds in the international market. This proved to be difficult. The Managing Director of the company, Mr Lawrie Raymond was advised by a friend that it was possible to source sesame seeds from Myanmar. Mr Raymond visited Myanmar in 1993 to explore opportunities for purchasing sesame seeds. He was not satisfied with the variety of sesame seeds which were available in Myanmar. He negotiated with Myanma Agriculture Service, a government organisation, which agreed to contract farmers to cultivate sesame seeds. Huile Trading appointed an agent in Myanmar to liaise with Myanma Agriculture Service and facilitate the contract cultivation of sesame. Huile Trading provided the seeds and signed an agreement to purchase the crop which was harvested. Approximately 971 hectares of sesame are now being cultivated for Huile Trading. Huile Trading is also trialing two other varieties of sesame. It plans to also contract cultivate other crops such as mung beans, canola and onions.

2.2.3 Food Legumes Several varieties of food legumes are cultivated in Myanmar (Table 13). Food legumes are Myanmar's third most important export commodity. Many local and international trading companies and food brokers based in Myanmar export food legumes (Case Study 4). Japan is the most important export market for beans and pulses. Between 1985 and 1995 the output of pulses increased by more than 130 per cent and the area under this crop doubled. As production of sesame decreased in the late 1980s, pulses became the second most widely cultivated crop in Myanmar.

Firms from Japan, Republic of Korea and Singapore (Mitsui, Mitsubishi, Marubeni and Lucky Gold Star) are supplying seeds to farmers through their agents in Myanmar to contract cultivate beans and pulses. Other than in areas which are designated for summer crops, the Government of Myanmar now permits farmers to cultivate the crops of their choice. The foreign companies also provide agronomic advice to farmers. As a result of these developments, the productivity of farms has increased and new agronomic varieties which are demanded in export markets have been introduced.

Table 13: Production of Pulses, 1989-90 to 1994-95 ('000 tonnes)

21

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95

Mung Beans 63.8 100.3 196.3 225.7 192.0 285.3

Green Beans 43.9 62.9 99.0 150.4 170.6 271.9

Pigeon Pea 37.0 42.4 63.1 139.0 142.6 145.3

Chick Pea 101.1 103.6 111.6 100.5 60.2 76.9

Soya Bean 25.5 25.8 26.9 30.3 34.1 50.6

Green Gram 21.6 25.3 28.3 36.7 63.2 49.9

Bocate Beans 22.4 28.4 36.9 41.9 40.5 49.1

Lablab Beans 36.3 40.6 33.3 36.5 42.0 39.6

Cow Pea 11.7 14.5 18.7 19.8 21.8 35.3

Butter Bean 39.2 47.0 46.3 41.9 38.0 31.2

Blue Beans 21.5 29.6 27.6 25.5 23.3 25.1

Sadawpe Beans 13.8 13.8 15.1 20.2 20.7 24.9

Peyin Bean 5.4 6.1 5.1 6.9 7.3 9.9

Stripe Beans 5.0 6.3 6.4 5.7 5.9 6.9

Red Beans 2.9 4.0 4.1 3.9 4.5 5.3

White Bean 1.2 1.2 1.2 2.7 1.8 1.9

Lentils 0.2 0.3 0.5 1.0 1.0 0.8

Source: Central Statistical Organization (1996a)

Case Study 4 Kyun-Shwe-War Co. Ltd: Trading in Pulses and Beans. Kyun-Shwe-War Co. Ltd is a large family business which has been in operation for several generations. The company purchases, cleans, grades and trades in legumes. It exports sesame seeds to Japan and pulses and beans to India, Pakistan, Indonesia and Malaysia. The company has trade linkages with the Kuok Group in Singapore. It imports (on consignment) palm stearine, and crude palm oil from the Kuok Group and barters pulses and beans. The company supplies palm stearine to government-owned detergent factories and purchases finished products from these factories for domestic distribution. The company plans to establish a detergent manufacturing plant. The company is an active organisation displaying significant entrepreneurial skills and linkages with overseas Chinese business groups. The management expressed interest in diversifying into value-added food products and the acquisition of technology to undertake downstream processing of beans and pulses.

2.2.4 Other Food Crops Until recently the output of most other crops (chillies, onions, garlic, sugar cane and potato) had decreased substantially. Even by 1995, the output of many of these crops had not reached

22 the level of output recorded in 1985-86. Sugar cane is the major crop in this group and its output decreased from 3.85 million tonnes in 1985-86 to 2.11 million tonnes in 1990-91. Since then production has increased (Table 14). Sugar cane, tea and coffee are classified as industrial crops, and their production is predominantly undertaken by State-Owned Enterprises. The Government has initiated programs to expand the production of industrial crops. This is discussed in Chapter 3.

Importers from Asian countries such as Japan, Republic of Korea, Singapore and Malaysia are exploring opportunities to contract farm some of these crops in Myanmar. Some contract farming programs have started on a small-scale basis and trial shipments to Japan, Republic of Korea and Singapore have been made. An example of such a development is discussed in Case Study 5.

Table 14: Production of Other Crops ('000 tonnes)

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993- 1994-95 1995-96 94

Sugar 2,198.1 2,105.1 2,430.8 3,409.9 2,848.9 2,356.8 3,115.8 Cane

Onions 160.6 173.5 171.3 178.6 160.5 173.1 186.9

Potato 130.3 136.3 156.3 142.9 173.1 146.5 164.3

Tea 49.8 36.5 48.0 51.0 54.6 52.7 52.8

Garlic 38.6 37.3 40.3 46.3 44.7 41.6 43.7

Chillies 33.2 30.2 44.2 40.5 38.6 32.0 38.6

Rubber 14.3 14.8 14.3 15.1 15.5 16.3 16.8

Coffee 1.4 1.4 1.3 1.2 1.4 1.5 1.5

Source: Central Statistical Organization (1996a)

Case Study 5 Onion Cultivation for Export to Japan.

23 Dr Zaw Win is a medical practitioner who represents Japanese importers of onions. Dr Win contracts farmers in different parts of Myanmar to grow onions. The Japanese importer supplies the hybrid seeds, some agronomic advice, packaging material and advances some payment. Payments are fully settled prior to shipping the goods.

The main onion-growing areas in Myanmar are in Central Myanmar. Onion is a 'winter' crop and is cultivated in November and harvested in March-April.

The Japanese importers visit Myanmar when the crops are being harvested and select their produce. The onions are packed in 20 kg plastic bags and transported by trucks to Yangon from where they are exported in refrigerated containers (12 tonnes/20 feet container) to Japan.

2.2.5 Agricultural By-Products Agricultural by-products are used to manufacture stock feed. Products such as sesame cake, groundnut cake, cotton cake and coconut cake are exported from Myanmar. Exports of oil cake declined from 94,500 tonnes in 1974-75 to 2,000 tonnes in 1990-91 because of increasing domestic demand and weakening prices in the world market.

2.3 Trends in the Livestock Sector Per capita meat and dairy consumption in Myanmar is relatively low. The output of these products has only increased marginally (Table 15) because livestock population is low and has not increased significantly in recent years (Table 16). Cattle are mainly used as draught animals. The Government has banned the culling of draught cattle until they reach a certain age. The slaughtering facilities for cattle are predominantly operated by Indian Muslims.

There are a few large livestock farms which are operated by State-Owned Enterprises (refer Chapter 3). The Government supplies pedigree and local-cross breed animals to farmers. A firm from Singapore is establishing a Random Sample Testing (RST) operation in collaboration with the Ministry of Livestock and Fishery. The Ministry will supply the land and buildings and the Singapore company will supply the equipment and technology. This venture is expected to come on-stream in October 1997. This project aims to identify and breed poultry stock which are appropriate to the conditions in Myanmar.

Another firm from Singapore (Formula One) and a private sector company are reported to have established a joint-venture poultry farm. This farm is said to be the most modern poultry farm in Myanmar. The CP Group from Thailand is reported to be operating a contract farm through supplying broilers and feed technology to a local company, and buying-back the full grown birds.

Table 15: Production of Meat and Milk ('000 tonnes)

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

24

Milk 507.1 516.6 520.6 527.4 532.5 538.3 n/a

Poultry 70.2 67.6 69.7 74.4 79.9 83.9 88.0 Meat

Pork 42.3 38.4 41.9 44.6 47.3 53.8 68.3

Beef 37.9 46.9 47.2 47.9 48.5 48.9 48.9

Duck Meat 11.9 10.8 12.2 14.9 14 14.2 14.4

Mutton 6.5 6.6 6.5 7 7.3 7.3 7.3

Source: The Economist Intelligence Unit (1995). Central Statistical Organization (1996a) (1996b)

Table 16: Livestock Population ('000)

Livestock 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Chicken 24,280 23,323 24,365 26,772 27,120 27,277 27,461

Cattle 9,145 9,310 9,384 9,508 9,611 9,718 9,825

Duck 3,600 3,245 3,680 4,722 4,586 4,648 4,710

Pig 3,246 2,278 2,520 2,630 2,655 2,726 2,801

Buffalo 2,021 2,061 2,072 2,101 2,111 2,136 2,161

Sheep & 1,344 1,354 1,369 1,399 1,432 1,463 1,494 Goat

Source: The Economist Intelligence Unit (1995). Central Statistical Organization (1996a)

2.4 Trends in the Fishery Sector Next to agriculture, the development of fishery resources is a priority in Myanmar's economic development programs. The main products in the fishery sector are fresh-water and sea-water prawns, sea fish, jelly-fish, turtle eggs, dried fish and dried prawns. Government planners are of the opinion that Myanmar has excellent fishery resources and has the potential to become a major exporter of fishery products. Myanmar has a coastline of about 2,000 kms and several large rivers which are rich in fishery resources. The longest river, Ayeyarwaddy is about 2,170 km. At the mouth of Ayeyarwaddy there is a vast delta (more than 50,000 sq km). The maximum sustainable fishery yield in 1993 was estimated at 1.1m tonnes per year but only 0.61 million tonnes (55.5 per cent) was harvested (Duckworth, 1994). The indigenous community in Myanmar prefer fresh-water fish and prawns. Therefore, there is abundant exportable surplus of sea-water fish, prawns and other products. Myanmar's total fishery catch has progressively expanded (Table 17). In 1995-96 more than 830,000 tonnes of fishery

25 products were landed. Less than ten per cent of the catch was exported. Fresh-water fish and shrimp farming activities are expanding. Landing of fresh-water fishery products increased from 143,400 tonnes in 1989-90 to 226,100 tonnes in 1995-96.

Table 17: Landings of Fishery Products ('000 tonnes)

SOURCE: 1989-90 1990-91 1991-92 1992-93 1993-94 1994- 1995- 95 96

Fresh-water 143.4 145.3 167.2 193.7 211.0 220.1 226.1

Marine 585.8 588.0 590.3 597.6 599.9 602.9 606.4

Source: Central Statistical Organization (1996a)

The Ministry of Livestock and Fisheries provides advice and technical support to farmers by supplying fingerlings, prawn larvae and extension services.

The Ministry of Livestock and Fisheries operates two companies: (a) Livestock Enterprise, and (b) Pearl and Fisheries Enterprise (renamed Myanma Fisheries Enterprise). These companies had a monopoly in the production and marketing of fishery products. In 1993-94 the Myanma Fisheries Enterprise (MFE) had a fleet of 95 fishing vessels and harvested approximately 26,400 tonnes of fish. The MFE operated a number of wholly-owned fish processing companies and was also engaged in several joint-venture operations. In August 1994 the Government disbanded the MFE and privatised its operations.

The United Nations Development Programme (UNDP) and the Singapore government provide assistance to Myanmar to modernise its aquaculture industry, improve the harvesting of fishery products and develop industries for processing fishery products. These programs assisted in increasing fishery production. Myanmar's exports of fishery products increased from 102 tonnes in 1975-76 to more than 10,000 tonnes by 1982-83, an export level which has since been maintained. In 1988 the Government of Myanmar leased offshore fishing rights to firms from Thailand, Malaysia, Republic of Korea and Singapore (Than, 1992). This increased smuggling activities and made it difficult for the nationals of Myanmar to hire fishing trawlers. Fishery exports declined to 5,080 tonnes in 1988-89.

Foreign vessels are now banned from fishing in Myanmar's territorial waters. There are no restrictions on foreign buyers purchasing fishery products from Myanmar. Fishery companies in Myanmar can hire vessels from foreign companies or from the Ministry of Livestock and Fisheries. The Ministry provides facilities such as wharves, leases cold store facilities, operates a wet-market for retailing and wholesaling fishery products and regulates the operations of the industry.

Generally, cold store facilities in Yangon and the coastal towns are inadequate. Ice (for freezing fishery products) is also in short supply. The Ministry and some private sector companies operate ice manufacturing plants.

26 Private sector participation in the fishery sector, both through joint-venture with the Government and on a wholly-owned basis, is increasing. Case Study 6 outlines the operations of a small-scale fishery company, Case Study 7 outlines the operations of a large fishery company and Case Study 8 outlines the operations of a joint-venture company.

Case Study 6 Universal Concord Co. Ltd: Small-Scale Fishery Company. Universal Concord Co. Ltd is a small-scale fishery company which is wholly owned by the nationals of Myanmar. The principal products of this firm are Hilsa (a sea-water fish) which the company exports to the USA and shrimps which it exports to Western Australia. The Hilsa is harvested from April to November. Smaller quantities of this fish are harvested from the Ayeyarwaddy River in the rainy season (May to October). The Hilsa has not been marketed widely.

The company's principal area for harvesting fish is the central coast, and its main area for harvesting shrimp is the northern coast of Akyab (Kyaukphyu and Sandoway townships) and in Tenessarim (Tavoy and Mergui townships). The catch is processed in the towns nearest to the area where it is harvested, the products are frozen and transported to Yangon for cold storage. The company executives expressed interest in establishing a joint-venture cold storage facility with a capacity of 100 tonnes. The firm leases cold storage facility from the Government and private companies. The products are exported in 40 feet refrigerated containers which hold 20 tonnes of fish. The company exports one container of fish each week.

Shrimps are bred and processed by an associate company in Akyab, and transported to Yangon for export. The company breeds shrimps in sea-water ponds near Akyab, a coastal town. Current yields are low (about 80 kgs per pond). Shrimp farmers in Thailand record yields of about 500 kgs per pond. The company also faces serious problems because of high shrimp mortality rates (approximately 50 per cent). The firm is seeking technical assistance to reduce the mortality rate in shrimp farming.

The company plans to expand the size of its of operations in order to increase exports. As a result of good personal contacts with buyers in USA and other markets, the company has received export orders. However, financial constraints are limiting the company's expansion plans. It is difficult to obtain commercial loans in Myanmar. Banks limit loan values to 30 per cent of the valuation of fixed assets. Loans for breeding shrimps are nominal (K 20,000 for a 0.40 hectare pond).

Case Study 7

27 Annawar International Fisheries Holdings Ltd: Large Fishery Company Annawar International Fisheries Holdings Ltd was established two and a half years ago but it commenced business only about one and a half years ago. Annawar International Fisheries Holdings Limited is a new but highly capitalised and aggressive company. The company is managed by seven directors who are elected by its shareholders. The directors elect the Managing Director. The company has a fleet of 200 fishing vessels of which 140 vessels are owned by individual shareholders of the company and the remaining 60 vessels are leased from other companies. The company does not own any fishing vessels. The principal products of the company are sea-water fish and shrimp. These products are sold to trading companies in Myanmar which in turn sell the catch both in the local market and also export to countries such as Singapore, Malaysia, Taiwan and Thailand.

The company has established a large and modern facility for processing and storing its fishery products. The company acquired cold store equipment from Denmark, UK and Singapore. The equipment was commissioned about three months ago by Sabroe Co Ltd. of Singapore. The company owns an ice factory with a production capacity of 100 tonnes per day. The company is constructing another ice factory with a capacity of 200 tonnes. On completion of the second ice factory the company will be producing 300 tonnes of ice daily. However, the increased output will not be sufficient as the company requires about 400 tonnes of ice each day. The company purchases ice from its associate companies.

The company has developed a large (910 sq metre) and modern wharf close to the location of its processing facility. The wharf has four berths and 16 vessels can dock alongside these berths at any one time. Eight boats (total capacity of 480 tonnes) can be discharged within 24 hours. These levels of productivity are new to the industry in Myanmar.

28 Case Study 8 Myanmar Seafoods Ltd: Joint-Venture Fishery Company Myanmar Seafoods Ltd is a joint-venture between U Kyan Kin (a Chinese from Myanmar who is now a Singapore citizen) and the Ministry of Livestock and Fisheries. The company was incorporated under the terms and conditions of the Myanmar Investment Commission. The Myanmar Investment Commission has delineated two classes of shares ('A' shares for State-Owned Enterprises and `B' shares for joint-ventures between State-Owned Enterprises and private companies). The State-Owned Enterprise provided the land to construct the processing facility. The foreign partner provided processing infrastructure, equipment and technical support. The overseas partner has an equity of 65 per cent in the business and the Government has an equity of 35 per cent. There are six directors in the company (three government appointees and three directors from the foreign partner). The Chairperson of the Board is a government appointee. The Managing Director and the General Manager are nominated by the foreign partner. As such, the joint-venture company is under the management of the foreign partner.

Mynamar Seafood Ltd is a processor, packer and exporter of fishery products. The principal export product is shrimp but the company also exports small quantities of red snapper and pomfret. The products are exported in refrigerated containers. The company also owns a ship with cold storage capacity of 200 tonnes. This vessel plies the Myanmar coast purchasing fishery products from fishermen and other supply sources along the coast. Export sales are managed by the foreign partner's Singapore office.

The joint-venture partners have also established a trading company (Myanmar P.L. International Company). This company imports (on consignment) products such as palm oil and corrugated sheets from the joint-venture partner's firm in Singapore. These products are sold in Myanmar and the income which is earned in local currency (Kyat) is used to purchase shrimp and other products from various local suppliers for Mynamar Seafood Ltd. This procedure is described as `import-first' i.e. income from the sale of imported goods is used to finance the purchases of the fishery factory and the processed fishery products are exported to the foreign company as payment for imports. The imports from the foreign partner are quoted CIF Yangon. The Ministry of Commerce and the Directorate of Trade determine the price for the fishery exports which are to be 'bartered' for the imports.

Myanmar P.L. International Company was incorporated to overcome restrictions in Myanmar's investment laws which control the activities of foreign companies. As Myanmar Seafood Ltd is registered as a seafood processor and packer, the company cannot undertake trading activities including importing and domestic trading. However, the company needed to import goods to finance its local purchases. As the imports are on a consignment basis, it saves considerable capital outlay for the company. Therefore, incorporating two companies (one to process fishery products and another to trade in various commodities) was a method of overcoming some of the barriers on the activities of foreign companies.

29

30 Chapter 3

3. Role and Activities of Government and State-Owned Enterprises in the Food Sector

3.1 Ministry of Agriculture and Irrigation The Ministry of Agriculture and Irrigation (MAI) is the apex organisation which regulates matters regarding the agricultural and the food sectors. The MAI is also the major provider of farm extension services. The MAI has significant commercial programs. These are discussed in a later section of this chapter. Officials in the MAI are of the opinion that Myanmar's agricultural, livestock and fishery output can be substantially increased through:

• Expanding agricultural land • Increasing cultivation intensity • Introducing new farm and process technology, and • Improving tenancy practices in farms.

This appears to be a rational assessment of the potential and strategy for increasing food and agricultural output in Myanmar. The MAI's policies, objectives and strategies for the agricultural sector are as follows:

Policies • De-control agricultural production • Increase the availability of agricultural land • Encourage private sector participation in agricultural food crops • Encourage private sector participation in agricultural cash crops • Encourage private sector production of agricultural machinery and farm inputs

Objectives • Promote export-orientated production of rice • Promote self-sufficiency in the production of edible-oil crops • Increase output of pulses and beans for export • Increase output of industrial crops for local industries

Strategies • Develop cultivable land • Increase irrigation facilities • Facilitate mechanisation of agricultural activities • Introduce modern farming and process technology • Develop and encourage farmers to use high yielding variety of seeds

In comparison to neighbouring countries such as Thailand and Vietnam, Myanmar has greater potential to expand agricultural and livestock food production. Only 13 per cent of Myanmar's total land area (67.6 million hectares) is cultivated. According to the World Bank (1995), from 1989 to 1994-95, the total area under agriculture increased by more than 10 per cent. As shown in Table 9, the area under rice cultivation increased from 4,879,000 hectares in 1989- 90 to 6,193,000 hectares in 1995-96 (by approximately 27 per cent). The area under millet

31 increased from 184,000 hectares in 1989-90 to 225,000 hectares in 1995-96 (by more than 22 per cent). The area under maize increased from 133,000 hectares in 1989-90 to 168,000 hectares (more than 26 per cent). The area under wheat, groundnut and mustard decreased (Table 9 and 12). The MAI officials who were interviewed during the field study reported that cultivable area can be increased substantially.

MAI classifies potential agricultural land as 'fallow' (2 per cent of total agricultural area in 1995) and 'waste-land suitable for cultivation' (12 per cent of total agricultural area in 1995). The Government's classification of agricultural land is shown in Table 18. It seems that food deficit countries in the region have recognised the potential for Myanmar to expand food production by increasing the area under food crops. The Minister for Economic Planning advised the researcher that several members of ASEAN were of the view that Myanmar could play a major role in supplying food crops and processed food products to these countries. The level of interest, exploratory work being conducted by companies from ASEAN and investments by companies from Singapore, Malaysia, Japan, China and Republic of Korea suggest that investors in the region also believe that there are good investment opportunities in Myanmar's food sector.

MAI officials are of the opinion that mixed and multiple cropping areas can be expanded. The potential for this is most obvious in lower Myanmar. The moisture content of the soil and water availability in Lower Myanmar is better than in Upper Myanmar. In 1995 about 21 per cent of the net sown area in Myanmar was irrigated. Agriculture in Upper Myanmar (especially in the Dry Zone) is based on irrigation. Officials in MAI are of the view that agriculture in Upper Myanmar can be expanded through improving irrigation facilities. In the short-term MAI's target is to extend irrigation coverage to at least 25 per cent of the net sown area in the country.

Table 18: Ministry of Agriculture and Irrigation - Land Resources and Agricultural Land Classification System, 1994-95

Classification Hectares ('000) Per cent

Other Forests 21,995 32.51

Others 17,136 25.32

Reserved Forests 10,402 15.38

Cultivated Area 8,856 13.09

Cultivable Waste 7,987 11.80

Current Fallow 1,282 1.90

TOTAL 67,658 100.00

Source: Ministry of National Planning and Economic Development (1996a)

32

Myanmar is potentially an efficient agricultural producer because its topography, soil quality (fertility) and water resources are suitable for intensive cultivation of food crops. The country's agricultural lands are generally fertile, sufficient water is available in the main rice- growing areas, cropping intensities are relatively low and vast tracts of cultivable land are available. Data on rice yields and fertiliser inputs in selected Asian countries demonstrate that Myanmar has greater potential than several neighbouring countries to increase its agricultural output (Table 19). In comparison to other major agricultural countries in Asia, Myanmar has the lowest intensity of fertiliser input but its rice yields are greater than in Thailand, Bangladesh and India.

Table 19: Paddy Yield and Fertiliser Input - Selected Countries in Asia

COUNTRY YIELD FERTILISER INPUT (kg/hectare - 1993) (kg/hectare of cropped land - 1992)1

China 5,854 300

Indonesia 4,333 115

Vietnam 3,429 135

Sri Lanka 3,135 96

Myanmar 3,055 7

India 2,822 72

Bangladesh 2,664 103

Thailand 2,128 54

Source: World Bank (1995)

Recognising the potential to increase agricultural output, the Government has diversified investment from the manufacturing sector to the agricultural sector. In 1995 public investment in agriculture was 34.7 per cent more than in 1994. This investment was predominantly used to increase the area under double cropping of rice. Cropping intensity in Myanmar increased from 126 per cent in 1992-93 to 134 per cent in 1993-94. In 1995 agricultural output increased by 5.4 per cent (in real terms). However, this was less than the targeted increase of 11.1 per cent.

1Total nutrients = Nitrogen+Phosphorus+Potassium; cropped land area refers to arable land and permanent cropped land area (FAO estimates)

33

3.2 Commercial Operations and Farm Extension Services of the Ministry of Agriculture and Irrigation

MAI has thirteen departments and enterprises under its jurisdiction:

• Department of Agricultural Planning • Myanma Agriculture Service • Myanma Farms Enterprise • Myanma Sugarcane Enterprise • Myanma Perennial Crops Enterprise • Myanma Cotton and Sericulture Enterprise • Myanmar Jute Industries • Irrigation Department • Water Resources Utilisation Department • Agricultural Mechanisation Department • Settlement and Land Records Department • Myanma Agricultural and Rural Development Bank • Institute of Agriculture

As the name suggests, the Department of Agricultural Planning (DAP) is the principal agency for developing the Government's objectives, strategies and plans in the agricultural sector, and monitoring performance against plan targets. The DAP is the principal government institution for negotiations and review of projects funded by multilateral agencies and foreign governments. Therefore, bilateral and multilateral agricultural aid programs have to be negotiated through the DAP. As a result of the acceleration of agricultural privatisation programs, negotiations on establishing wholly private-sector-owned and joint-venture agricultural projects are handled by the DAP.

The principal organisations engaged in the production of agricultural food crops are Myanma Agriculture Service, Myanma Farms Enterprise, Myanma Sugarcane Enterprise, and Myanma Perennial Crops Enterprise. The activities of these organisations are discussed below.

Myanma Agriculture Service (MAS) produces agricultural crops such as pulses and beans. It also provides research and extension services to farmers. MAS has established a joint-venture with LK Bio-research (Singapore) for tissue culture of crops such as potatoes, orchids and strawberries. It has also entered into joint-venture with the Singapore branch of Sumitomo to manufacture mosquito coils. It assisted Kee Ong Pvt. Ltd of Singapore to lease 8,100 hectares of land in Myanmar to cultivate rice and establish a rice mill. MAS is an important conduit for contract farming. Huile Trading from Australia used the services of MAS to contract farm sesame crops (Case Study 3). The company reported that the services of MAS contributed to the success of its project.

Myanma Farms Enterprise (MFAE) operates agriculture, livestock and aquaculture farms. MFAE owns 32 agricultural properties in various parts of Myanmar. These include seasonal crop farms (rice, wheat, sorghum, beans, maize, sesame and pulses such as chick peas, pigeon

34 peas, green gram and black gram), plantations (rubber, coffee, oil palm and cashew nuts), livestock farms (poultry, goat, draught animals and swine) and aquaculture farms (fresh water fish and shrimp). The principal activities of MFAE and the location of its farms are shown in Table 20.

Table 20: Myanma Farm Enterprises, Farm Locations and Activities

REGION Number of Farms Principal Crops

Cereal Crops:

Ayeyarwaddy 7 Rice, wheat and sorghum. Total production of Division rice in these farms is 550 tonnes and the total production of wheat from these farms is 400 tonnes.

Mandalay Division 2

Kayah State 1

Bago Division 1

Maize:

Northern Shan State 2 Total production from these farms is 500 tonnes

Southern Shan State 2

Pulses & Oil Crops:

Sagaing Division 2 Pulses: chick peas, lablab bean, black gram, green gram, pigeon pea and soya bean. Oil Crops: sesame, sunflower, niger, mustard. The total production from these farms are: pigeon peas 300 tonnes, black mung 150 tonnes, chick peas 50 tonnes and sesame 40 tonnes.

Mandalay Division 4

Ayeyarwaddy 1 Division

Vegetable Farm:

Yagon Division 1 Mushrooms such as straw, oyster, jew-ears and shitak

Coffee Estates:

Mandalay Division 4

Chin State 1

Kayin State 1

35 Livestock and Aquaculture:

Yangon Division 1 Poultry

Bago Division 1 Swine

Ayeyarwaddy 1 Cattle and Fish Division

Source: Ministry of Agriculture and Irrigation (1996)

In some areas, MFAE has integrated livestock farming with the cultivation of food crops. The principal livestock products from MFAE farms include poultry eggs (12.8 million units), chicken meat (42.3 tonnes), pork (81.72 tonnes), fish (39.53 tonnes) and 'day-old' chicks (1.3 million). MFAE owns a coffee factory in Pyin-Oo-Lwin township and a cannery in Thar-Zi township. The cannery, Hline Tet Canning Factory, manufactures cordials, nectars, squashes, concentrates, jams, dehydrated fruits, canned vegetable, fruits in syrup and other food products for local consumption and for export. It is a relatively small factory with an installed manufacturing capacity of 1,712 tonnes per year. It is reported that a Malaysian company has a joint-venture agreement with MFAE and is providing technical assistance to improve the operating efficiency of Hline Tet Canning Factory.

The MFAE also has a trading arm which is responsible for purchasing and selling farm inputs (machinery, fertiliser, diesel etc) and the produce from its agricultural, livestock and aquaculture farms. The MFAE undertakes its trading activities through various arrangements such as 'buy-back', 'import-first', 'counter-trade', 'border-trade' and 'simultaneous counter- trade'. MFAE exports products such as chick pea, pigeon pea, green gram, yellow maize, sorghum, castor seeds, cumin seeds and coffee beans. It imports high speed diesel oil, chemical fertiliser and food additives.

MFAE officials expressed interest in facilitating the entry of foreign firms into Myanmar for cultivating and processing food crops. The MFAE is particularly keen to explore joint-venture opportunities in fruit and vegetable processing, coffee processing and dairy farming. The officials advise that foreign participation will be governed by Myanmar's foreign investment law which permits the establishment of (a) wholly-owned foreign companies (b) joint-venture companies with MFAE, or (c) contract farming with either MFAE and/or local farmers. MFAE can also lease agricultural land to foreign enterprises. Proposals for collaboration between MFAE and foreign companies have to be approved by the DAP and MAI.

Myanma Sugarcane Enterprise (MSE) was incorporated in 1994. MSE has a monopoly in the cultivation of sugar cane and the production of sugar. The major sugar cane growing areas are Mandalay, Bago Division and Mon State. Sugar cane cultivation is generally undertaken close to the mills. In recent years, sugar cane cultivation, and sugar production and exports have increased substantially. Sugar cane production increased from 2.2 million tonnes in 1989-90 to 4.1 million tonnes in 1995-96 - an increase of 86 per cent in five years. In the same period, the area under sugar cane cultivation increased from 48,160 hectares to 80,940 hectares (Table 21). MSE operates eight sugar mills which have the capacity to crush 9,246 tonnes of sugar cane per day (Table 22). The company produces 91,000 tonnes of sugar annually. MSE

36 is expanding sugar processing capacity by constructing an additional 11 sugar mills. Out of these, one mill is a joint-venture company and the other two are wholly foreign owned.

37 Table 21: Sugar Cane and Refined Sugar Production and Export Trends, 1989-90 to 1995-96

1989-90 1992-93 1993-94 1994-95 1995-96

Area (hectares) 48,160 75,680 63,950 53,420 80,940

Sugar Cane Production 2,200,000 3,410,000 2,720,000 2,270,000 4,070,000 (tonnes)

Sugar Production n/a n/a 43,060 51,000 203,200 (tonnes)

Export (tonnes) n/a n/a 12,550 30,480 40,640

Source: Ministry of Agriculture and Irrigation (1996) Central Statistical Organization (1996a)

MSE has established a 2,000 tonne per day sugar milling facility in joint-venture with Sutech Engineering Co. Ltd (Thailand). This company, Myanmar-Sutech Co. Ltd, is expected to come on-stream in 1999. MSE has also signed contracts with Guong Dong Zhuhei Corporation of the Peoples' Republic of China to establish two sugar mills. Each mill will have a production capacity of 1,524 tonnes per day. Several other companies from Asia are reported to be investigating opportunities to 'start-up' sugar mills in Myanmar.

Table 22: Myanma Sugarcane Enterprise, Manufacturing Plants and Production Capacity

Sugar Mill Constructed Commissioned Crushing Capacity Sugar Recovery (tonnes/day) (Per Cent)

Pyinmana - 1 1995 1957 1,524 6.5

Pyinmana - 2 1981 1984 1,524 7.9

Yedashe 1982 1990 1,524 8.5

Zeyawadi 1980 1987 1,524 7.0

Belin 1964 1966 1,524 7.8

Namtee 1953 1957 1,016 7.0

Shwe Nyaung 1981 1983 305 8.0

Kyauktaw 1981 1984 305 6.0

Source: The Ministry of Agriculture and Irrigation (1996)

38 MSE also operates four small-scale sugar mills with a total capacity of 8 tonnes per day. These mills produce sugar from jaggery. During the interview with the principal investigator, the Deputy Director General of Agriculture proposed that foreign companies can:

• Build sugar cane mills under a 'barter-trade' arrangement i.e. receive payments 'in- kind' for constructing sugar mills (output from the mills or other agricultural crops) • Establish joint-ventures with MSE • Establish wholly-owned production facilities in Myanmar

In order to promote the cultivation and processing of sugar cane MSE has adopted the following programs:

• Develop new land for sugar cane cultivation • Introduce new manufacturing technology • Introduce new crop varieties • Increase farm mechanisation • Develop agricultural credit schemes for small-scale farmers • Increase utilisation of current mills and then up-grade the production capacity of these mills • Improve standards of maintenance and quality control in mills

Myanma Perennial Crops Enterprise (MPCE) was established in 1994. MPCE took over the activities of the Plantation Crops Division, originally established in 1980 as one of the key divisions within MAS. The Plantation Crops Division was transferred to MFAE in 1990. The main functions of MPCE are as follows:

• Cultivation of crops such as rubber, oil palm and cashew • Production of rubber, oil palm and cashew crops • Processing of rubber and palm oil • Delivery of agricultural extension services and supplying planting material and other inputs to private sector enterprises • Delivering research and training services • Facilitating the marketing of rubber, palm-oil and cashew crops

The cultivation and production of crops such as rubber, oil palm and cashew has increased substantially. The private sector, especially small-scale farms, dominate the cultivation and production of 'perennial' crops. By 1995-96 the area under 'perennial' crops had increased significantly. In 1995-96 the total cultivated area under various crops was as follows: (a) rubber - 102,400 hectares (b) oil palm - 8,100 hectares, and (c) cashew - 19,400 hectares. MPCE has 18,000 hectares under rubber (17.8 per cent of total area under rubber), 800 hectares under oil palm (10 per cent of total area under oil palm) and 3,200 hectares under cashew (16.5 per cent of total area under cashew crops) (Table 23).

39 Table 23: Land Utilisation and Sectoral Share in the Cultivation of Perennial Crops, 1991-92 to 1995-96

PRODUCT Planted Area ('000 Hectares)

1991-92 1992-93 1993-94 1994-95 1995-96

Rubber

MPCE 16.2 16.2 17.8 18.2 18.2

Private 59.9 61.5 65.2 70.8 84.2

Total Area 76.1 192 77.8 89.0 102.4

Oil Palm

MPCE 7.3 7.3 0.4 0.8 0.8

Private - - 6.9 6.9 7.3

Total Area 7.3 7.3 7.3 7.7 8.1

Cashew

MPCE 4.0 4.4 4.4 3.2 3.2

Private 5.3 10.1 14.2 15.8 16.2

Total Area 9.3 14.5 18.6 19.0 19.4

Source: Ministry of Agriculture and Irrigation (1996)

Between 1991-92 and 1995-96 rubber production increased by nearly 86 per cent, oil palm production increased by more than 400 per cent and cashew production increased by more than 500 per cent (Table 24). Even though MPCE is the single largest producer of these crops, its role in the industry is still relatively small. It accounts for 15 per cent of rubber production, 10 per cent of oil palm production and about 0.5 per cent of cashew production. As the production share of the MPCE is substantially less than its share of the cultivated land under these crops, it would appear that the private sector is a more efficient producer of these crops.

The organisational changes which were introduced in 1994 to the perennial crops sector were designed to increase the efficiency and output of these crops and facilitate a more pro-active and commercial strategy for the MPCE. In 1993, the MPCE leased 6,591 hectares of oil palm land to private sector investors in Myanmar for periods ranging from 10 to 15 years. In 1994 the MPCE leased out two cashew plantations (1,052 hectares) for 10 years to private sector investors. MPCE has established a joint-venture cashew plantation and processing facility with a company from Singapore. MPCE has undertaken experimental farming of macadamias and is now commercialising the cultivation of this crop.

40 Table 24: Sectoral Share in the Production of Perennial Crops, 1991-92 to 1995-96

PRODUCT Production (Tonnes)

1991-92 1992-93 1993-94 1994-95 1995-96

Rubber

MPCE 2,467 2,705 3,633 4,098 4,130

Private 12,664 12,823 12,579 23,384 24,060

Total Production 15,131 15,528 16,212 27,842 28,190

Oil Palm

MPCE 618 732 254 236 249

Private - - 2,130 1,832 2,291

Total Production 618 732 2,384 2,068 2,540

Cashew

MPCE 34 46 98 40 38

Private 1,438 1,750 6,625 7,542 7,642

Total Production 1,472 1,796 6,723 7,582 7,680

Source: Ministry of Agriculture and Irrigation (1996)

The MPCE operates one rubber factory, three factories for extracting crude palm oil and one factory for refining palm oil (Table 25).

Table 25: Manufacturing Facilities - Myanmar Perennial Crops Enterprise, 1995-96

Type of Factory Production Capacity (Tonnes)

Crumb Rubber Factory 1,301

Ingabo Oil Palm Mill 249

Pagawzon Oil Palm Mill 1,005

Launglon Oil Palm Mill 501

Thingangyun Oil Refinery

Palm Oil 50

Bran Oil 128

41 Source: Ministry of Agriculture and Irrigation (1996) 3.3 Ministry of Livestock and Fisheries Next to agriculture, the livestock and fishery sector is the main focus in Myanmar's economic development plans. The Government has outlined the following objectives for this sector:

• Promote livestock and fishery development • Encourage greater private sector participation • Increase self-sufficiency in livestock and fishery products • Promote exports of livestock and fishery products • Expand aquaculture activities • Improve the socio-economic status of livestock and fishery farmers

Activities in the fishery sector were regulated by the Fisheries Manual 1905. The Government enacted several new laws such as the Law Relating to the Fishing Rights of Foreign Fishing Vessels, Myanma Aquaculture Law, Myanma Marine Fisheries Law and Freshwater Fisheries Law in order to increase the transparency in the administration of this industry. Joint-ventures in the fishery sector which are approved under Myanmar's foreign investment law will have to be licensed by the Department of Fisheries. This licence will specify the fishing grounds.

The livestock sector in Myanmar is in its infancy. The breeding of cattle, buffalo, sheep, goat, pig and poultry is an integral part of the country's rural economy. Generally, farmers maintain small herds of cattle and poultry to satisfy the consumption needs of their family.

The Ministry of Livestock and Fisheries operate two livestock farms. The Pyinmabin Livestock Breeding Farm, commissioned in 1980, was established with parent stock which was imported from USA, Canada and Belgium. However, new breeds have not been imported. This farm breeds approximately 180,000 birds annually. The farm sells breeder stocks to private sector companies and farmers at subsidised prices. The other farm owned by the Ministry is Poultry Farm Number 1 (Insein). The operations of this farm are identical to the Pyinmabin Livestock Breeding Farm.

The Ministry of Livestock and Fisheries is encouraging foreign investment in: • Cattle breeding • Breeding, processing and marketing of fresh water and marine fish, prawns, shrimp and other aquatic products • Pig and poultry production • Construction of ice manufacturing plants • Construction of cold storage complexes • Construction of fish meal plants • Construction of canning factories • Development of shrimp hatcheries • Establishment of shrimp farms • Bee keeping and production of honey • Supporting industries for the fishery sector (construction of fishing vessels, production of fishing nets etc)

42

3.4 Ministry of Industry The Ministry of Industry is responsible for directing and promoting investment and the modernisation of the manufacturing sector. It is the apex organisation for public sector manufacturing activities. The Ministry administers six industrial enterprises. These enterprises own 86 factories which manufacture a range of consumer goods including foodstuff and beverages. An enterprise owned by the Ministry, Myanma Foodstuff Industries (MFI), has 19 factories including one beer factory, three alcohol factories, nine soft drink and ice factories, one wheat products factory, one monosodium glutamate factory, one virginia tobacco processing plant, two cigarette factories, and one sauce and vinegar factory. Many of these businesses are not profitable, operate well below their production capacity (in 1995, the capacity utilisation ratio in the Ministry's factories averaged 52.1 per cent) and operate with plant and equipment that are obsolete. Additionally, some of the persons interviewed during the field study suggested that these State-Owned Enterprises were constrained by liquidity problems and centralisation of decision making. Generally, the management was under military officials and it was implied that decisions were not exclusively made on commercial considerations.

The Ministry of Industry has identified the problems in its manufacturing sector and has adopted the following strategies to modernise this sector:

• Increase the manufacturing sector's share in the national economy • Encourage and expand foreign investment • Increase the collaboration between State-Owned Enterprises and private sector companies • Diversify manufacturing output • Diversify export products • Up-grade plant and equipment in the factories owned by the Ministry • Maximise utilisation of plant capacity in the factories owned by the Ministry

Private sector food processing and manufacturing activities seem to be expanding rapidly in Myanmar. Several joint-ventures or technical collaborations in food processing are in progress. Some example of joint-ventures and technical collaborations are summarised in Table 26.

43 Table 26: Schedule of Foreign Technical Collaboration and Joint-Venture Food Processing and Manufacturing Operations, 1995-96

Name of Company Products Joint- Venture/Technical Collaboration

Bursa Myanmar Tobacco Ltd Manufacturing and marketing of U.K cigarettes and tobacco

Hline Tet Canning Factory Cordials, juices, jams, fruit Malaysia concentrates

Myanmar Impex Agro-Livestock Livestock breeding, fishery and Thailand agriculture

General Fisheries Co Ltd Fishing, prawn farming Thailand

Hansawaddy Fisheries Co Ltd Fishing, prawn farming Thailand

Hong Cheng Joint Venture Co Ltd Animal Feeds China

Gold Star Ltd Animal Feeds Singapore

Livestock, Feedstuff and Dairy Poultry farming Thailand Products Enterprise

Myanmar American Fisheries Co Fish and marine products U.S.A Ltd

Myanmar Bangladesh Fisheries Shrimps, extension services, Bangladesh Ltd management of farms and consultancy services

Myanmar Garming Fisheries Ltd Shrimps cultivation, processing Hong Kong and marketing of fish water and marine products

Myanma Singapura United Cigarettes and tobacco products Singapore Tobacco Co Ltd for export

Myanma Yaung Chi Oo Co Ltd Beer and soft drinks Singapore

Myanmar PL International Ltd Prawn Farming, processing and Singapore marketing of aqua and marine products

Myanma Seafoods Ltd Processing and marketing of aqua Singapore and marine products

Myanmar Dairy Industries Full-cream sweetened condensed Singapore milk

Pacific Food Industries Dairy products Britain/France

Rocket Flour Mills Fine and course wheat flour Germany

Rothmans of Pall Mall Myanmar Manufacturing and sale of Singapore/U.K Pte Ltd cigarettes

Source: Foreign Investment Commission (1996a)

44 Agreement with Pacific Food Industry (1997) LFDPE and Bangkok Livestock Processing Co. (1997)

The Ministry is encouraging foreign investors to submit proposals to undertake manufacturing activities either as joint-ventures or wholly owned companies. Officials in the Ministry are of the opinion that there are opportunities to collaborate with foreign companies on the basis of `buy-back' arrangements. They suggested that foreign companies can contract manufacture in the factories owned by the Ministry under barter trade arrangements which will involve supplying raw materials, spare parts and packing materials to the factories. Under a partial privatisation program, the Ministry is leasing some of its factories, buildings and land to private entrepreneurs. The Ministry has also established a number of joint-ventures with foreign companies.

As part of its program to encourage nationals to engage in manufacturing activities, the Ministry is setting-up industrial estates in various parts of the country. The Ministry has developed five industrial estates:

• Thanlyn Industrial Estate • Hmawbi Industrial Estate • Daik-U Industrial Estate • Bago Industrial Estate • Sagaing Industrial Estate

These industrial estates will service small-medium-scale enterprises owned by the nationals of Myanmar or manufacturing companies in which the nationals or companies owned by nationals have at least 51 per cent equity.

The Myanma Industrial Development Committee, under the jurisdiction of the Ministry, is developing 12 industrial zones. These industrial zones are for local and foreign companies, especially export-oriented manufacturing companies. Several joint-venture industrial zones involving substantial foreign investment and technical collaboration are in various stages of development (Table 27).

45 Table 27: Joint-Venture Industrial Zones, Major Investors

Name of Industrial Zone Investors

Mingaladon Industrial Zone Mitsui & Company (Japan) has invested US$12 million. Located in Mingaladon township north of Yangon.

Thanlyin - Kyauktan Zone Largest project undertaken in Myanmar. Total investment is US$166.1 million. Foreign investors are Sinar Mas Development International Pty Ltd (Singapore) and Genting Sendrian Bhd. (Malaysia). The joint venture partner in Myanmar is the Department of Human Settlement and Housing Development (DHSHD). Located South of Yangon.

Hlinethaya Industrial Zone Joint-venture project between Department of Human Settlement and Housing Development (DHSHD) and Rojana Industrial Park Company (Thailand). Investment US$14 million. Located northwest of Yangon.

Mingaladon Industrial Park Myanma Port Authority and C & P Holding Pty Ltd. (Singapore) will build a container facility at cost of US$66.34 million. The same partners will build a second container facility at a cost of US$62.75 million. This project, when completed would be capable of handling 500,000 containers per year. Freight handlings at this yard will be managed by Hutchinson Port Myanmar Ltd, a subsidiary of Hutchinson of Hong Kong - the world's largest container handling company.

Source: Perspectives: New Industrial Zones (1997).

46

3.5 Other Public Sector and Government-Associated Food Organisations Other State-Owned Enterprises include General Merchandise Trading (trading in edible oils, dairy products, household and industrial goods); Livestock, Foodstuff and Milk Products Enterprise (livestock breeding, milk processing and livestock product marketing); Myanmar Export and Import Service (export of rice, rice products, pulses, beans, maize, oil cakes and animal feed); and the Restaurant and Beverage Enterprise (importing whisky, brandy, food colours, essences, pastry and milk products).

In 1990, senior officers in the military established an investment company, Union of Myanmar Economic Holdings Limited (MEH). Although this is not a State-Owned Enterprise is headed by key persons within the Government. The Chairman of MEH is Lt. General Myo Nyunt (a member of SLORC) and the Managing Director is Brigadier General Abel (Minister for National Planning and Economic Development). MEH is engaged in several joint-venture food and consumer goods manufacturing projects including one with the British cigarette company, Rothmans of Pall Mall (Fairclough, 1996b). MEH, unlike several State-Owned Enterprises, is a profitable organisation. It has shown steady increases in profits (K 0.55 million in 1991; K 6.66 million in 1992; and K 6.0 million in 1993). MEH is one of the largest companies in the country and is reported to account for 10 per cent of Myanmar's GDP (East Asia Analytical Unit, 1997; Fairclough, 1996b).

47 Chapter 4

4. Trends in International Trade and Foreign Trade Regulations

4.1 International Trade Relations

4.1.1 Overview of Myanmar's External Trade Myanmar is highly reliant on export proceeds and funds from foreign aid and loans to finance its imports. Economic downturn in the late 1960s and early 1970s led to imports declining sharply. Imports increased in the mid 1970s when Myanmar was able to access funds from the Asian Development Bank and the World Bank. In 1988 most countries, including Australia, suspended aid programs to Myanmar. Myanmar is also not a major recipient of multilateral assistance. Opposition from the United States to the policies of the current regime and the reluctance of the Government to introduce more far-reaching fiscal and monetary reforms restrict multilateral assistance. However, there are indications that some countries such as Germany, Switzerland, France and Japan have adopted more conciliatory policies and are encouraging the International Monetary Fund to provide loans to Myanmar (Vatikiotis and Holloway, 1995). Recently, several senior officials from the United States have also visited Myanmar for discussions with government officials (EIU, 1995).

Myanmar's links with countries such as Singapore, Thailand, Indonesia, Vietnam and Laos are strengthening (Girard, 1995). Both Prime Minister Goh Chok Tong of Singapore and President Suharto of Indonesia led a delegation of business leaders to Myanmar recently. While in Myanmar, Mr Goh Chok Tong announced that Singapore would earmark US$3 billion to provide technical assistance to Myanmar.

The recent deregulation and the move to a market economy has improved Myanmar's trade performance. The Government has adopted an export-led development strategy based on privatisation and deregulation of the foreign investment regime. This is a major change from the import substitution and nationalisation strategies which were previously pursued.

The changes to the country's trade and investment policies enhanced Myanmar's two-way trade. By the early 1980's, Myanmar's two-way trade (imports and exports) had increased substantially. From 1977-78 to 1985-86 imports increased by 15.4 per cent. However, from 1982-83 exports again declined substantially leading to a sharp increase in the ratio of imports to GDP (15 per cent). The Government responded by curbing imports. From 1985-86 imports gradually declined to about 7 per cent of GDP in 1988-89.

In 1988 the Government revised its trade and investment regulations. Businesses which were registered by the Ministry of Trade were allowed to engage in imports and exports, and were also permitted to retain 60 per cent of their income from exports. In the following year (1989) this regulation was amended and private sector traders were allowed to retain the entire export proceeds. In addition, private sector traders were allowed to deposit their foreign currency earnings in foreign exchange accounts at the Myanmar Foreign Trade Bank. In 1993 the Government further liberalised the monetary system by issuing Foreign Exchange Certificates (FECs) and allowing residents in the country to use FECs to trade and operate foreign exchange accounts. The value of the FEC was pegged to the official exchange rate. Importers are licensed. Custom duties (generally higher for `non-essentials' and goods which

48 compete with the domestic industry) and sales tax (between 5 per cent to 15 per cent of the landed cost) are payable on imported goods.

In spite of the on-going reforms, from 1990 the gap between Myanmar's imports and exports widened sharply leading to substantial trade deficits (Figure 1). In 1990-91, the ratio of exports to imports was 85.5 per cent. The increase in Myanmar's trade deficit prompted the Government to introduce import restrictions. Recent regulations require importers to generate export revenue (unless engaged in barter or countertrade) in excess of the value of their imports. Additionally, importers are required to use 25 per cent of their export earnings to import goods which are classed by the Government as `priority' goods.

These trade regulations, wide discrepancy between the official (US$1= K 5.98) and `unofficial' (US$1= K 170) value of the national currency and shortage of foreign exchange to pay for imports have created a difficult trade environment. More than half of Myanmar's imports are financed by aid, grants and loans from trade partners or multilateral agencies. Respondents during the primary research suggested that most private sector imports are undertaken through barter, counter-trade or other arrangements (examples are discussed in case studies 2 and 8).

Figure 1:

It appears from the data in Table 28 and Table 29 that Myanmar's foreign trade in food products has recently increased. However, this is mainly because data on `border-trade' (which was previously omitted in official records) are now being included in the trade data. During the field survey several respondents suggested that, even now, the value of `border- trade' is understated because trade flows with neighbouring countries are not recorded accurately.

49 Table 28: Trends in Imports of Food Products (tonnes)

PRODUCT 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Edible vegetable oils and other hydrogenated 16,967 136,854 135,685 124,509 155,141 204,823 n/a oils

Wheat flour n/a 4,064 22,352 2,032 24,384 61,976 n/a

Taste powder 102 51 51 7,366 39,116 26,162 n/a

Milk, condensed and evaporated 1,219 4,064 4,064 8,128 14,884 13,208 n/a

Milk food including malted milk 1,524 1,524 2,082 1,219 152 813 n/a

Spices n/a 508 11,684 15,748 864 559 n/a

Tea - 9 1 nil 1 1 n/a

Sugar 20 61 102 nil nil nil n/a

Total food imports ('000 kyat) 28,700 108,500 168,200 612,000 841,600 1,188,800 1,416,000

Total imports ('000 kyat) 3,395,000 5,522,800 5,336,700 5,365,300 7,923,300 8,332,300 8,375,400

Share of food imports to total imports (%) 1 2 3 11 11 14 17

Source: Central Statistical Organization (1997) Central Statistical Organization (1996a) Ministry of National Planning and Economic Development (1996b)

50 Table 29: Trends in Exports of Food Products (tonnes)

FOOD PRODUCTS 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96

Pulses 55,880 194,060 195,070 449,070 522,220 424,690 643,200

Rice and rice products 168,660 134,110 182,880 199,140 265,180 1,041,400 353,300

Maize 14,220 20,320 40,640 43,690 40,640 70,110 52,700

Fish and fish products n/a n/a 10,300 13,500 4,700 71,800 8,500

Oilcakes 29,460 25,400 16,260 26,420 35,570 14,230 600

Total exports of food products (in '000 571,420 886,610 856,790 1,315,620 1,459,680 2,737,050 2,435,000 kyat)

Total exports (in '000 kyat) 2,834,00 2,953,000 2,926,000 3,590,000 4,228,000 5,405,000 4,028,000 0

Share of food exports (%) 20 30 29 37 35 51 60

Source: Central Statistical Organization (1997) Central Statistical Organization (1996a) Ministry of National Planning and Economic Development (1996b)

51 4.1.2 Directions in Trade Myanmar's major export destinations are neighbouring countries such as India, Thailand and Singapore (Figure 2). Exports to these three countries increased from 20 per cent in 1982-83 to more than 50 per cent by 1995-96. Exports to India, the major export destination, increased from K 121 million in 1982-83 to K 1,023 million in 1995-96 (more than 62 per cent annually). Exports to Singapore, the second most important export destination, increased from K 433 million in 1982-83 to K 926 million in 1995-96 (more than 9 per cent annually) and exports to Thailand, the third most important export destination, increased from K 57 million in 1982-83 to K 633 million in 1995-96 (nearly 84 per cent annually). The developed countries account for only about 10 per cent of Myanmar's exports.

Figure 2:

(Chart to be placed here)

Imports from all major countries in ASEAN (Singapore, Malaysia, Indonesia and Thailand) and China have increased substantially (Figure 3). Other important sources of imports are Japan and India. Myanmar has a trade deficit with most of its ASEAN and East Asian trading partners. The trade deficits with Singapore, Malaysia, China and Japan (important sources of foreign investment and technical collaboration) are particularly high. Myanmar's trade surplus with India is expanding rapidly. Until recently, Myanmar had a trade deficit with the USA, Britain and Australia but in the last two years this position has been reversed. Figure 3:

52

(Chart to be palced here)

4.1.3 Trends in Trade The Government has relaxed its monopoly and control of exports and imports. The private sector, especially companies with foreign affiliations, is becoming important in international trade. The private sector has concentrated on trade with Myanmar's neighbouring countries, importing consumer goods and building material (such as cement) and exporting agricultural products (such as pulses and beans) and timber.

Despite deregulation of the economy and encouragement of exports Myanmar is not an important trading nation. In 1994 the ratio of imports to GDP was 2 per cent and the ratio of exports to GDP was 3 per cent. This is substantially lower than in other Southeast Asian countries (Table 30).

Table 30: Level of Trade Dependence - South and Southeast Asia, 1993

53

COUNTRY Share of imports to GDP1 Share of exports to GDP1 (%) (%)

Myanmar 3 2

Malaysia 75 80

Thailand 41 37

Philippines 41 32

Vietnam 32 28

Indonesia 26 28

Bangladesh 18 12

India 11 11 1 Imports and exports of goods and non-factor services

Source: World Bank (1995)

4.1.4 Composition of Trade Overall, Myanmar's imports (particularly food imports) are not as large as that of other ASEAN countries. For example, in 1995-96 total imports were only K 8,375,400 (approximately US$1.5 million) and food imports were K 1,416,000 (approximately US$250,000) (Table 28). However Myanmar only imports eight major categories of food products. The imports of some food products are fairly sizeable. Additionally, Myanmar's imports are predominantly higher-value food products and not raw materials. For example, unlike most other ASEAN countries, Myanmar imports wheat flour instead of wheat, and condensed milk instead of skimmed and wholemilk powder. This is because Myanmar's food processing industry is less developed than in other ASEAN countries. Imports of almost all categories of food products have increased substantially. Imports of wheat flour increased from 4,064 tonnes in 1990-91 to 61,976 tonnes in 1994-95; imports of condensed and evaporated milk increased from 1,219 tonnes in 1989-90 to 13,208 tonnes in 1994-95; and imports of vegetable and other hydrogenated oils increased from 16,967 tonnes in 1989-90 to 204,823 tonnes in 1994-95 (Table 28). Almost all food imports are from countries such as Singapore, Malaysia and Thailand.

Myanmar's exports are less diversified than in other South and Southeast Asian countries (Table 31). Primary commodities (principally timber and other hardwoods, hides and skin, copper, tin, zinc, tungsten, silver and food products) account for more than 80 per cent of Myanmar's exports. Food products (rice and rice products, pulses, maize and fishery products) accounted for about 60 per cent of exports in 1995-96 (Table 29). Food exports have increased rapidly. For example, exports of rice and rice products increased from 168,660 tonnes in 1989-90 to more than 1 million tonnes in 1994-95, principally because of the imports of more than 600,000 tonnes by Indonesia. In 1995-96 rice exports decreased to 353,300 tonnes. Exports of pulses increased from 55,880 tonnes in 1989-90 to 643,200 tonnes in 1995-96. Similarly, the exports of maize and fishery products have, generally, increased substantially. In the last few years, animal and marine products have become important export

54 commodities. From 1990-91 to 1994-95 exports of agricultural and forestry products increased by about 14 per cent annually. This is a significant improvement considering that in the early 1980s exports decreased by more than 8 per cent annually. The importance of trade in agricultural commodities is evident from the expanding activities and the number of new companies which provide inspection services for agricultural and food exports (Case Study 9).

Table 31: Composition of Primary Commodities in Exports - South and East Asia, 1980 and 1992

Share of Primary Commodities (%)a COUNTRY

1970 1992

Myanmar 91.6 91.2

Vietnamb 86.7 67.5

Thailand 77.1 31.6

Malaysia 62.7 22.0

India 35.2 21.0

Philippines 69.8 18.8

Bangladesh 35.0 18.2

Indonesia 54.3 14.9

Source: World Bank (1995) a Excluding fuels, minerals and metals b Data are for 1980 and 1992 instead of 1970 and 1992

The trading and marketing systems for rural produce are relatively unsophisticated. Commodity brokers in regional towns such as Sagaing purchase crops from small-scale farmers and sell these products to traders in Mandalay or Yangon, who in turn sell the products to export traders. Several of the commodity brokers who were interviewed during the survey reported that they have been in this business for about 20 to 30 years. There are about ten commodity brokers in a small township such as Sagaing. These brokers handle a wide range of seasonal crops such as wheat, sesame, chick peas, pigeon peas, green gram, white chick peas, yellow chick peas and maize. The brokers sometimes advance funds to farmers and deduct these from the payment for the goods purchased from the farmers.

55

Case Study 9 Agricultural Inspection Services - SGS (Myanmar Ltd.). SGS Myanmar Ltd., a wholly owned subsidiary of Societe Generale De Surveillance of Switzerland, commenced its Myanmar operations in 1948. SGS is the major provider of inspection services for agricultural exports from Myanmar (85 per cent market share). Its major competitors are the Government Inspection and Agency Services (predominantly concentrates on rice exports by the Government), Overseas Merchandise Inspection Services (Japan), Myanmar Export-Import Service and Inchape Inspection and Testing Services.

The principal products inspected by SGS are rice and timber. However, from 1992 Myanmar's exports of beans and pulses have gradually increased (1988 - 30,000 tonnes, 1990 - 60,000 tonnes, and 1995 - 650,000 tonnes). The main varieties of beans which are exported include black matpe, mung beans and chick beans. India, the major export market, accounts for approximately 80 per cent of Myanmar's exports of beans. Raw sesame oil is exported to Singapore. In 1994-95, Myanmar exported approximately one million tonnes of rice. The traditional market for Myanmar's rice exports are African countries but in 1994-95 Indonesia was the major rice importer. Rice exports were temporarily banned in 1996-97 because of increasing domestic prices. Other agricultural exports include rubber, fruits (especially mangoes to Singapore) and cashew nuts. Some large companies from Japan and South Korea such as Mitsui, Marubeni, Mitsubishi and Lucky Gold Star are contract cultivating crops such as gherkins, baby carrots and bamboo shoots for export to their countries.

4.1.5 Trade Agreements The most significant recent development in Myanmar's external relations is its membership of the Association of South East Asian Nations (ASEAN) thus leading to its participation in the ASEAN Free Trade Area (AFTA). AFTA is to be operationalised through the Common Effective Preferential Tariff (CEPT) Scheme, endorsed by the initial members of ASEAN (Thailand, Malaysia, Singapore, Brunei, Indonesia and Philippines). The CEPT will reduce tariffs on all inter-ASEAN trade in manufactured and processed agricultural goods to between 0 per cent and 5 per cent within 15 years. The CEPT contains two programs (fast track and normal track) of tariff reduction. The fast track program will reduce tariffs on 15 product categories. Tariffs on products which currently attract more than 25 per cent duty will be reduced to 0 per cent to 5 per cent by the year 2003, and products which currently attract tariffs of 20 per cent or less will have tariff levels reduced to 0 per cent to 5 per cent by the year 2000. Under the `normal track', all goods which currently attract more than 20 per cent tariff will have their tariff levels reduced to 20 per cent by the year 2001 and subsequently to 0 per cent to 5 per cent per an agreed schedule by the year 2008. As a recent member of ASEAN, Myanmar has been granted a longer period to conform to these tariff reductions. However, the level of complementarity between Myanmar's economy and other ASEAN countries, and the increasing in-flow of FDI from ASEAN suggests that Myanmar will be a major beneficiary of the CEPT Scheme.

56

Myanmar, together with Thailand, Vietnam, Laos, Kamboja and the Yunnan Province of China is part of the `Greater Mekong Subregion'. The Asian Development Bank is financing several projects which aim to foster greater development and commercial integration of this region. Many infrastructure programs (transport, energy, water resources) have already commenced. The development of this region should increase the trade linkages between the countries in the region.

Myanmar has multilateral and bilateral trade agreements with many countries. It is a member of the General Agreement on Tariffs and Trade (GATT) and it participates in the United Nations Conference on Trade and Development (UNCTAD).

4.1.6 Informal Trade According to some sources the size of the informal trade sector is as large as the formal sector. This is because trade figures are understated through private arrangements, and cross- border trade is often not recorded and therefore not included in trade data.

4.2 Procedures for Export, Import and Customs Clearance Import and export procedures and processes are regulated by the Directorate of Trade (Ministry of Commerce) and the Customs Department (Ministry of Finance and Revenue). There are no restrictions on the export and import of goods except for some prohibited items (drugs, pornography and politically sensitive materials) and a specified number of items in which the State has a monopoly (teak, rice, oil, natural gas, pearls, jade, precious stones and minerals).

The Government has specified several conditions for approving import licences. An importer of 'optional' or 'luxury' goods must also import 'priority' or 'essential' commodities of comparable value. A schedule of `optional/luxury' goods and `priority/essential' goods is provided in Appendix 1.

Myanmar has adopted the Harmonised Tariff Codes for recording its imports and exports.

4.2.1 Registration of Exporters and Importers The Director General, Directorate of Trade (Ministry of Trade) has exclusive authority to grant export and import licences. Licences are restricted to:

• Businesses owned by the citizens of Myanmar on a sole proprietor basis • Partnerships in which all partners are citizens of Myanmar • Limited companies including foreign-owned companies, branches of foreign companies or joint-venture companies incorporated in Myanmar • Co-operative societies which are registered in Myanmar • Enterprises holding permits issued under the Foreign Investment Law

4.2.2 Financing of Imports Importers are required to establish a foreign exchange account in a government-owned bank and deposit the full payment for imports in hard currency into this account prior to applying for an import licence. Licences are only valid for six months. A copy of the application form is shown in Appendix 2. Applications for import licences must include (a) documents which

57 provide information (descriptions, standards etc) regarding the products to be imported, (b) the proforma invoice, and (c) the sales contract. Only members of Chambers of Commerce which represent the border-trade countries can engage in `border trade'. Approvals from relevant government organisations must be obtained in order to import products in the `restricted schedule'. Products under the restricted schedule include medicines, foreign motion picture films, reconditioned machinery, telex and facsimile machines, telephones, products for cross-border trade, animals, animal products and animal feed.

4.2.3 Fees The fees for import licences are shown in Table 32.

Table 32: Schedule of Fees for Import Licences

CIF Value of Imports (Kyats) Licence Fee (Kyats)

10,000 250

10,001 to 25,000 625

25,001 to 50,000 1,250

50,001 to 100,000 2,500

100,001 to 200,000 5,000

200,001 to 400,000 10,000

400,001 to 1,000,000 20,000

1,000,001 and above 50,000

Source: Foreign Investment Commission (1996a)

4.2.4 Procedures for Payment of Licence Fees Within 21 days of a licence being approved the scheduled fees must be paid into the Myanmar Economic Bank . Late payments (up to a maximum of 51 days) will be accepted on payment of a penalty for the delay in remitting the licence fee.

4.2.5 Validity of Licences Licences are valid for six months but can be extended (without limit) on payment of an additional fee equivalent to the original licence fee. A surcharge is payable if the application for extension was made seven days after the expiry of the licence. Licence fees must be paid in full even in instances where imports are only partially delivered. Where the quantity and value of goods imported exceed the licence limits, an additional fee is payable for the excess value or quantity of imports.

58

4.2.6 Pre-shipment Inspection Goods can only be shipped out after a pre-shipment inspection and confirmation that the imports conform to the quantities and descriptions in the import licence. Similarly, imports are also inspected when the goods are landed in Myanmar. With the imports of some products (e.g. live animals), certification from the National Health Laboratory is required. Pre- shipment inspection of some products such as RBD palm olein, dairy products and monosodium glutamate can only be conducted by organisations which are approved by the Government of Myanmar.

4.2.7 Import of 'Priority' Goods The following are the principal methods of importing goods which are categorised as 'priority' products:

• Establishing a letter of credit using as collateral foreign exchange earnings deposited in a local bank ('Normal Import')

• Establishing a letter of credit through using as collateral the letter of credit issued by an importer (back-to-back letter of credit)

• Using a letter of credit for re-exports as the criteria to import products, and

• Establishing a letter of credit for imports by using the proceeds retained from previous exports.

'Priority' goods can be imported without establishing a letter of credit where:

• Goods are imported on a 'consignment' basis

The importer has to register at the Directorate of Trade and provide documentary evidence of appointment as a Business Representative. A Business Representative has to be appointed on a commission basis (maximum commission of 5 per cent). Goods which are imported can be sold in Myanmar either in local currency (kyat) or foreign currency. If the goods are sold in foreign currency, the sale proceeds (less the agent's commission and sales tax) can be used to pay the overseas exporter. If the goods are sold in local currency (kyat), products from Myanmar can be bartered for a value not exceeding 120 per cent of the CIF value of the goods which were imported on a consignment basis.

• Goods are imported to finance the purchase of local goods for re-export (Import-First)

Documentary evidence of the 'Import-First' agreement must be provided to the Directorate of Trade. The registered importer/exporter must provide an advance payment for the imports through exporting goods valued at not less than 10 per cent of the CIF value of the goods to be imported. Where 'optional' or 'other' goods are imported prior to importing 'priority' goods, the CIF value of the 'optional' and 'other' goods should not exceed US$100,000. The importer is also required to import the

59 'priority' goods within six months of importing the 'optional' and 'other' goods.

• Goods are imported for re-export to other countries (Transit trade) • No money is payable for the goods imported (Import free-of-charge)

• Imports are on the basis of deferred payment

• Imports are for modifying the products through using services in Myanmar such as cutting, packaging etc, and

• Raw materials are imported for purposes of fulfilling export orders for value-added products.

In the past, the complex conditions regulating the imports of 'priority', 'optional' and 'other' goods were not strictly enforced by the Ministry of Trade. As a result of frequent abuse of the system and substantial increase in import levels, the Government now enforces this rule more rigorously. An import licence can be revoked if the 'priority' goods (as stipulated in the approval to import) are not imported within six months after the 'optional' and 'other' goods have been imported.

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61 Chapter 5

5. Foreign Investment Trends, Procedures and Incentives

5.1 Trends in Government Policy In September 1994 the Government announced a broad-based privatisation program aimed at reducing its control of economic activities, encouraging private sector participation in the economy and encouraging foreign investment. The Government estimates that more than 12,000 State-Owned Enterprises would be privatised but it appears that the Government will continue to control the larger State-Owned Enterprises. It seems that only the small and medium enterprises will be privatised or open to acquisition by foreign companies.

5.2 Foreign Investment Trends By the end of 1993 more than US$1 billion of foreign investments from approximately 84 companies in 16 countries were approved by the Government. By 1996 total foreign investment approvals had increased to US$5.3 billion. There have been several foreign investment projects in agriculture, fishery, hotels and tourism (Table 33).

Table 33: Foreign Investment, Sectoral Share and Trends

Sector Number of Projects Amount (US$ millions)

1993 1996 1993 1996

Oil and Gas 20 31 381.1 1,498.22

Manufacturing 25 71 89.27 1,073.78

Real Estate - 13 - 839.95

Hotels and Tourism 18 38 287.33 731.24

Mining 10 41 155.35 496.97

Fisheries 9 15 87.58 252.04

Industrial Estate - 3 - 193.11

Transport & Communication 1 10 1.00 169.09

Agriculture 1 2 2.69 8.68

Others - 2 - 8.29

TOTAL 84 226 1,004.32 5,271.37

Source: Ministry of National Planning and Economic Development (1996b)

62 Foreign investment approvals have increased both in terms of number of projects and the value of investments. The number of projects increased from 84 in 1992-93 to 226 in 1995-96 (169 per cent). The value of investment approvals increased from US$1,005 million in 1992- 93 to US$5,271 million in 1995-96 (425 per cent).

Companies from Singapore, Britain, Thailand, Malaysia and France account for 77 per cent of total investment approvals in 1995-96 (Table 34). Several companies from Singapore, Thailand, China and Malaysia are exploring various agricultural and food sector projects. It seems that the privatisation program is attracting considerable interest from companies owned by overseas Chinese and ethnic Chinese from Myanmar who have settled abroad. As elsewhere in ASEAN, the business networks among Chinese residents in Myanmar and in other countries appear to be a strong basis for business linkages. Overseas Chinese-owned companies such as the Kuok Group and the CP Group are active in Myanmar. The trade and investments by some of these companies are discussed in the case studies.

63 Table 34: Foreign Investment Approvals, Sources and Trends

Country Cumulative Cumulative Number of Projects Amount (US$ millions)

1992-93 1994-95 1995- 1992-93 1994- 1995-96 96 95

Singapore 15 33 53 104 548 1,172

Britain 7 16 26 43 643 1,014

Thailand 17 27 34 211 418 960

France 1 1 2 10 465 466

Malaysia 2 9 16 10 227 446

USA 10 14 15 203 241 244

Netherlands 1 2 5 80 83 238

Indonesia - - 3 - - 209

Japan 5 6 12 101 107 184

Austria 1 1 72 - 72

Hong Kong 11 - 17 57 - 64

Korea 7 - 9 60 - 61

Australia 2 - 10 27 - 39

Canada 1 - 9 22 - 33

China 1 - 7 0 - 28

Germany - - 1 - - 15

Denmark - - 1 - - 13

Philippines - - 1 - - 7

Bangladesh 2 - 2 3 - 3

Macau 1 - 1 2 - 2

Sri Lanka - - 1 - - 1

TOTAL 84 108 226 1,005 2,732 5,271

Source: Ministry of National Planning and Economic Development (1996a) Central Statistical Organization (1996a) World Bank (1995)

Most of the large investments are in oil exploration, development of industrial zones and hotels. Investments in the food sector are generally in the small-scale sector such as the processing of fish. Many of these foreign investments which have been approved are being translated into actual investments. The recent trends in yearly investment approvals and actual investment are illustrated in Figure 4.

64

Figure 4:

5.3 Foreign Investment Policies and Objectives Following significant decreases in many sectors of the economy, deteriorating balances of trade and an overall decline in economic performance, the Government adopted a privatisation and export-oriented development strategy. Foreign investment was required to meet Myanmar's shortfall in capital and technical expertise. Foreign investment policy and regulations are embodied in the Union of Myanmar Foreign Investment Law (1988). The objectives of this legislation are to:

• Promote and expand exports • Encourage capital investment for the extraction of natural resources and establish manufacturing and service industries • Encourage the adoption of modern technology • Increase employment opportunities • Develop investments to save energy consumption • Foster the economic growth of less developed regions in the country 5.4 The Myanmar Foreign Investment Commission (MFIC)

65 The MFIC is the principal organisation which reviews foreign investment proposals. This commission was accorded discretionary powers to provide one or more of the following incentives to foreign investors:

• Income-tax exemption for three years (including the year in which the business commenced). After the three years, the MFIC can extend the tax exemption period if the project achieves its objectives and is assessed to provide on-going benefit as per the objectives of the Union of Myanmar Foreign Investment Law (1988).

• Income tax exemption on profits which are retained by the investor in a reserve fund and re-invested in the business within a year.

• Accelerated depreciation allowances on machinery, equipment, building or other capital assets used in the business.

• Income tax exemption (maximum of 50 per cent tax) on profits accrued from exporting the goods and services of the business.

• Full deduction of personal income tax from company profits and impost of personal income tax at resident rates for expatriate employees (in cases where taxes are paid by the investor).

• Full deduction of approved in-country expenses for research and development.

• Full deduction of the brought forward losses of the business for a maximum of three years.

• Exemptions from custom duty and/or other internal taxes on equipment, instruments, machinery, components, spare parts and materials that are imported for establishing the business.

• Exemption or relief from custom duty and/or other internal taxes on imported raw materials for a maximum period of three years after commencement of production.

Other benefits under the Myanmar Foreign Investment Law include guarantees against expropriation and nationalisation (S 22), the right to repatriate foreign capital and profits (S 25) and the right to repatriate foreign currency (S 26).

Various other changes were also legislated by the Government to encourage and promote investments. These include the following:

The Private Industrial Enterprise Law (1990) was enacted to promote and identify wholly- owned or joint-venture manufacturing enterprises belonging to the citizens of Myanmar.

The Promotion of Cottage Industries Law (1991) was enacted to support small-scale industries which use substantial quantities of local raw materials and/or the by-products of State-Owned Enterprises and Government Departments. The New Citizens Investment Law (1994) was introduced by the Government to supervise organisations owned by the nationals of Myanmar (including joint-venture companies in

66 which the nationals of Myanmar have majority share). Nationals can apply to the Myanmar Citizens Investment Commission (MCIC) to start up manufacturing companies.

5.5 Establishing Business Operations in Myanmar Foreigners can undertake commercial activities in Myanmar under the provisions of any one of the following law:

• Union of Myanmar Foreign Investment Law • Permit to Trade Legislation • Registration of Business Representatives Order

The process, benefits and restrictions under the three laws are different and foreign companies will have to make their choices based on the size of their investment, the level of management control which they wish to exercise and the types and level of government incentives which they plan to access. The terms and conditions in these laws are outlined below.

5.5.1 Union of Myanmar Foreign Investment Law(FIL) Myanmar allows 100 per cent foreign-owned investments. Alternatively, foreign companies can either incorporate a joint-venture company or establish a business through a contractual/ unincorporated joint-venture (partnership).

If the investment is by a company the investor has to obtain a 'Permit to Trade' (Appendix 3) before incorporating a company in Myanmar. If the investment is a joint-venture with a State- Owned Enterprise the business will be incorporated under the Special Company Act (1950). In such an event a 'Permit to Trade' is not required. As with all contracts with government organisations, the Attorney General's office will review the Memorandum and Articles of Association of the joint-venture company (Appendix 4).

Myanmar has stringent rules on property ownership and one of the principal benefits of forming a joint-venture is that it can overcome the restrictions imposed by the Immoveable Property (Restrictions) Law 1987. The legislation in Myanmar classifies land as freehold land, government land and long-term lease/grant land. The law prohibits private long term leases or transfer of land to foreign or foreign-owned companies, a foreign company being defined as one which is not under the management control of Myanmar nationals and in which more than 50 per cent of the equity is owned by foreign nationals or companies.

The Government approves land leases to foreign investors for a maximum period of 30 years with an option to renew it for a further five years.

Minimum levels of foreign investments are stipulated for approval under the FIL: the greater of either 35 per cent of the paid-up capital or US$500,000 (industrial/manufacturing companies) and US$100,000 (service companies). Foreign equity can be both in cash and in kind (plant, equipment, technology, patents etc). Joint-venture companies incorporated in Myanmar are regulated under the Myanmar Companies Act (1914).

Unincorporated joint-ventures are governed by the Partnership Act (1932). Partners can only take action against one another or against a third party if the enterprise is registered under the Partnership Act. As in other common law jurisdictions the partners have unlimited liability on the debts of the partnership, are jointly and severally liable for its debts, are deemed to be

67 equally responsible for its management and are expected to exercise the utmost good faith in their dealings with one another.

5.5.2 Permit to Trade Legislation The Permit to Trade enables the Government to supervise foreign investments through a bi- annual review of the business. Companies requesting a Permit to Trade are required to invest either twice the estimated operating expenditure for the first year or the scheduled fees (whichever is greater). The scheduled fees (computed at the official exchange rate) are as follows:

• Manufacturing/Industrial: K 1,000,000 • Trading: K 500,000 • Hotel/Tourism: K 300,000

The funds which are invested can be used to cover the operating expenses of the company. In addition, up to a maximum of 75 per cent of the investment can be used to establish letters of credit for importing capital equipment.

Applications (Appendix 5 and 6) for the Permit to Trade have to be submitted to the Registrar of Companies. The Registrar of Companies will forward the application to the Capital Structures Committee which will specify the minimum foreign investment required. The application is then sent to the MIC. Under the MFIL, the MIC is required to meet at least twice a month. The offer letter for a Permit to Trade will outline the conditions and terms of the offer. The offer should be accepted within 30 days. The Permit to Trade will only be granted after the company invests at least 50 per cent of the funds which it had committed to invest. The company is required to complete the investment within one year after being granted a Permit to Trade. Generally, a Permit to Trade is issued for two years; thereafter it may be renewed.

5.5.3 Registration of Business Representatives Order A national of Myanmar or a company in Myanmar can register as the business representative of a foreign company.

Establishing a business representative office is a useful mode for accepting and placing orders, evaluating business opportunities and establishing links with potential business partners.

The conditions and terms for registration as a business representative are specified in the Registration of Business Representatives Order, Ministry of Trade. This legislation defines a Business Representative as ... "An agent engaged in accepting indents and placing orders for goods from the supplier abroad on a commission basis or any business representative employed to do any business transaction for any individual or organisation abroad or to represent another person in dealings with third person".

According to this legislation, the Business Representative: • Must be a citizen of Myanmar

68 • Must be at least 18 years of age • Must not be an employee of a government organisation, and • Must possess appropriate qualifications for the position.

The letter by the foreign organisation appointing an individual or company as a Business Representative must specify the terms and conditions of the appointment. This letter must be registered at the Ministry of Trade. The Ministry will issue a Certificate of Registration. The Certificate of Registration is valid for one year and can be renewed for further terms. Applications for renewal must be made prior to the expiry of the current licence.

The fee for a Certificate of Registration is based upon the Business Representative's income. If the representative is paid an agency commission in foreign exchange, the registration fee is 10,000 kyat (payable in foreign exchange). If the representative is paid a fixed salary, the fee for the Certificate of Registration is payable in the local currency at scheduled rates as follows:

Salary/Month (US$) Registration Fee (kyat) Licence Renewal Fee (kyat)

1,000 and above 10,000 5,000

501 to 1,000 5,000 2,500

Less than 500 2,500 1,000

As the private sector in Myanmar is still in its infancy it may not be easy for foreign investors to identify suitable local partners. To overcome this problem, and also to train businessmen in the country in commercial activities, the Government has established a number of joint- venture corporations with the private sector. A holding company, MEH, owned by serving and veteran members of the military has also been established. Foreign investors can enter into joint-ventures with these organisations. Alternatively, foreign investors can enter into joint-ventures with State-Owned Enterprises, Co-operative Societies, private sector companies or establish wholly-owned businesses.

5.6 Investment Proposal Even though it is not compulsory to submit all foreign investment applications to the MIC, many respondents in the survey suggested that this was the best mode of market entry. The MIC is a highly influential agency and its committee includes two Deputy Prime Ministers and the Ministers of Commerce, Finance, Industry and Natural Resources. Applications to the MIC should be made in the prescribed form (Appendix 7) together with the following supporting information:

• Evidence of Investor's Financial Position (audited accounts) • Banker's Reference to demonstrate the financial standing of the applicant • Project Benefits (estimated profits, potential foreign exchange earnings or savings in foreign exchange outflows, foreign exchange required to start-up business, payback period, number of jobs which may be created, impact on national income) • Proposed contract with the Government of Myanmar (for wholly foreign-owned

69 companies) • Proposed contract between foreign partner and local company (for joint-venture companies) • Proposed Memorandum and Articles of Association of the company (for limited liability companies) • Lease Agreement (where land or building is leased)

After preliminary verification of the documents by the Directorate of Investment and Company Administration Office (The Myanmar Investment Commission Office), the proposal is submitted to the MIC. The MIC will review the application on the basis of the country's foreign investment laws and then submit its recommendation to the full Cabinet. On Cabinet approval, the 'Investment Permit' together with the terms, privileges and conditions of the approval will be issued. The schedule of fee payable to the Registrar of Companies is shown in Appendix 8. In the case of sole proprietor and partnership businesses, there are no additional procedures. If the business is constituted as a company or a branch office of a foreign company a 'Permit to Trade' and a branch registration/company incorporation must be obtained from the Registrar of Companies.

Generally, most foreign investment applications to the MIC are approved. The endorsement of the Cabinet, in the form of an Investment Permit, is a mark of government approval and is beneficial when the assistance of other government agencies is required.

5.7 Termination and Dissolution of Joint Venture A joint-venture which is formed under the FIL cannot be terminated before the end of its contracted term without the approval of the MIC. The MIC requires the partners to agree to the cessation of the joint-venture and demonstrate that the joint-venture is not feasible because of at least one of the following reasons:

• Substantial and recurring losses from the project • Breach of contract by one of the partners • Force Majeure i.e. environmental changes • Difficulty in achieving the aims and objectives of the project

5.8 Joint-Venture Termination without Approval The MIC does not specify the actions which will be taken if an FIL approved joint-venture is dissolved without its approval. It is probable that benefits accorded under the FIL would be withdrawn retrospectively and the foreign investor barred from repatriating funds which have been invested in Myanmar.

5.9 Investments in the Agricultural and Food Sectors The Government of Myanmar promotes investments in the agricultural and food sectors (Ministry of National Planning and Economic Development, 1996a). Foreigners can invest in all agricultural and food sectors except in government research organisations such as fish and prawn breeding centres. Under some circumstances, foreign companies are granted approval to participate in government-run research agencies.

The Government is currently promoting investments in the following food sectors:

70

• Agriculture ¾ Seasonal Agricultural Crops (example, tapioca and tobacco): production, processing and marketing ¾ Plantation Crops (example, medicinal plants, coffee, tea, palm-oil, horticulture etc): production, processing and marketing

• Value-added food products ¾ Bakery Products (example, biscuits, wafers, noodles, macaroni, spaghetti): manufacturing and marketing ¾ Confectionery (example, sugar confection, cocoa and chocolate): manufacturing and marketing ¾ Preserved Foods (example, jams, pickles): manufacturing, canning and marketing ¾ Oils and fats of vegetable and animal origin: processing, manufacturing and marketing ¾ Fruit juices and carbonated drinks: manufacturing and marketing ¾ Malt and malt liquors: manufacturing and marketing ¾ Alcoholic drinks: distilling, blending, bottling and marketing

5.10 Investment Incentives in the Agricultural, Livestock and Fishery Sectors The Government provides the following incentives to encourage investments in the agricultural, livestock and fishery sectors:

• Agricultural leases for 30 years to develop cash crop plantations, orchards, livestock farms, poultry farms and aquaculture farms. The size of the land which is leased will depend upon the specific activity which is undertaken (Table 35). The leases can be extended through negotiation with the Government. In the case of seasonal crops, the lease can be continued indefinitely as long as the lessee does not breach the conditions of the offer.

• Exemption from payment of land revenue for periods ranging from two to eight years after the lease has been approved. The period of exemption depends upon the specific activity which is undertaken.

• Income-tax exemption for a minimum period of three years, commencing from either the year in which funds were used to develop the land or when commercial production commenced.

• Leasing government-owned farms in various parts of Myanmar. These farms range in size from 200 hectares to 400 hectares.

• Approving contract farming of crops on the basis of the investor supplying seeds, inputs and appropriate technology. The Government will contract farmers to cultivate the crops and will provide extension service support to the farmers.

71 • Fast-track implementation of project. An order permitting the right to cultivate/right to utilise land will be granted on payment of a deposit of 10 per cent of the investment as a guarantee.

Table 35: Size Limits for Government Land Allotments under Foreign Investment Legislation

Activity Maximum Size (Hectares)

Agriculture

Plantation Crops 2,000 (Area for rubber plantations and oil palm estate could be expanded up to 20,200 hectares after completion of planting on the granted land)

Orchard 1,200

Seasonal Crops 400

Aquaculture 809

Livestock and Poultry Farming

Buffalo, cattle, horse 2,000

Sheep, goat 400

Poultry, pig 200

Source: Ministry of Agriculture and Irrigation (1996)

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73 Chapter 6

6. Conclusions: Implications for Australian Food Trade and Investment

6.1 Review of Myanmar's Economic and Trade Strategies From the time of its independence in 1948, Myanmar was threatened by disintegration because of ethnic, ideological and generational conflicts leading to a guerilla rebellion by the Communists and ethnic minority. After several years of turbulent conflicts, the military under General Ne Win took control of the country in 1962. Myanmar adopted a self-imposed isolation. The military government established a centrally-planned economy, curtailed the private sector, nationalised multi-national and non-indigenous-owned businesses, adopted a policy of self-sufficiency and brought most commercial activities under government control and management. These programs led to the deterioration of Myanmar's economic, political and social conditions and resulted in shortages of basic essentials, high inflation and political disturbances.

The first major changes were introduced in 1972. General Ne Win resigned from the army to head a civilian government. The Government promoted investment in the primary sector (agriculture and minerals), encouraged private sector investment and introduced various programs to increase the efficiency of State-Owned Enterprises. The principal programs which were outlined by Ne Win's government included the following:

• Increase the procurement prices for agricultural crops • Introduce performance-related bonuses in State-Owned Enterprises • Deregulate the financial system • Rationalise the operations of State-Owned Enterprises

However, Ne Win's government seemed to believe that these changes could be introduced slowly. The Government proposed to introduce these changes over a twenty-year period. The slow pace at which these changes were introduced curtailed Myanmar's economic performance. The economy deteriorated, GDP declined by 11.4 per cent in 1988-89. Food shortages and spiralling inflation resulted in political disturbances. The military assumed control in 1988, disbanded government organisations and handed over the Government to the SLORC.

Generally, it is acknowledged that substantive changes to economic policies, strategies and the pace of reform took effect after the SLORC assumed power. The economic policies of the SLORC included:

• Continuing with the previous government's programs in deregulating agricultural pricing and marketing • Reducing government controls on farming through, for example, deregulating cropping patterns • Encouraging private sector participation in the economy • Providing investment incentives to foreign and local companies • Deregulating the banking and financial markets through approving the start-up of private banks (including joint-ventures with foreign banks) • Deregulating foreign exchange controls through allowing export and import traders to

74 retain foreign exchange proceeds from exports • Approving land leases for agricultural, livestock and fishery projects to private enterprises in Myanmar and foreign companies • Introducing transparent trade and business licensing procedures • Introducing guarantees against nationalisation and expropriation of property • Granting autonomy and greater authority to the management of State-Owned Enterprises • Legalising cross-border trade with neighbouring countries

6.2 Effects of Recent Policy Changes These reforms improved investor confidence and encouraged investments by both private sector investors from Myanmar and foreign investors. However, in comparison to neighbouring countries such as Thailand, Malaysia and Indonesia, the level of foreign investment in Myanmar is small. In spite of this, these changes accelerated Myanmar's economic performance. Between 1989-90 and 1993-94, the country's GDP increased by 4.2 per cent annually.

The most significant feature of the reform programs in Myanmar is the focus on developing the agricultural, fishery and livestock sectors through greater private sector participation. This strategy is different to that of countries such as Thailand, Malaysia, Singapore and Indonesia where the thrust is on industrialisation. It seems that the national planners in Myanmar have recognised the benefits of developing an economy based on trade complementarity with its ASEAN, South Asian and East Asian neighbours.

Investors from countries such as Malaysia, Singapore, Thailand, the Republic of Korea and Japan are investigating investment, contract farming and contract manufacturing opportunities in the agricultural, livestock and fishery sectors in Myanmar. It would seem that the difficulties in increasing food production in many of these countries (because of land scarcity and labour shortages), could lead to Myanmar becoming an important source of agricultural and livestock food products to these countries.

Myanmar can produce a wide variety of agricultural, livestock, fishery and food crops because it has substantial land resources, and diverse climatic, topographical and agronomic conditions. Myanmar shares its borders with Thailand, China, India, Bangladesh, and Laos. It is geographically close and is well connected by sea and air to countries such as Singapore, Malaysia, Indonesia and Sri Lanka. Port and other infrastructure are being rapidly developed through technical and financial support from companies in Japan and Singapore. In addition, there is direct investment and technical collaboration between food producers in Myanmar and organisations elsewhere in Asia.

It is significant that Myanmar has developed close linkages with its Asian neighbours and that there is increasing investment and technical linkages with companies in ASEAN and East Asia. These linkages provide some insight on the trends and the strategies which are being pursued by the Government of Myanmar.

75

This study tracked investments by companies from China in sugar production, investments by companies from Singapore in dairy, poultry, fishery and cashew production, investments by companies from Thailand in fishery, sugar and poultry production, contract cultivation of crops such as gherkins, baby carrots, bamboo shoots, onions and sesame by companies from Japan and the Republic of Korea. It seems that foreign investment, foreign technical collaboration and contract farming by foreign companies will be the principal mode by which Myanmar's agricultural, livestock and fishery sectors will be developed.

The effects of these strategies are already evident. Myanmar exports crops such as mangoes, sesame, pulses, beans, rice, sugar, onion, garlic and fishery products to countries such as Singapore, Malaysia, Indonesia, India, Sri Lanka and China. These countries are Myanmar's most important trading partners.

Generally, production and productivity levels in Myanmar's agricultural, livestock and fishery sectors are low. However, after several years of progressive decline in production, agricultural and livestock output have improved. Even then, the output levels in the mid 1990s for many crops were only registering the levels achieved in the mid 1980s. Government officials contend that the low output was an outcome of inefficient farming practices because of shortages in capital and technical skills. These officials suggest that the current low levels of productivity demonstrate the potential to increase output through increased capital investment, introduction of modern technology, introduction of better farming practices, increased farm inputs and extending the cultivable land.

Myanmar's membership of ASEAN should also benefit the country as a result of the tariff concessions which are accorded to members of the AFTA. In the next ten years tariff levels for intra-ASEAN trade in manufactured and processed agricultural goods will be reduced to between 0 per cent and 5 per cent. Myanmar's comparative advantage in the production of agricultural, livestock and fishery products and the constraints faced by countries such as Malaysia and Singapore in increasing food production suggests that food trade and investment linkages between Myanmar and its neighbouring countries will expand.

6.3 Implications for Australian Industry Countries such as Malaysia, Singapore, India and China are important destinations for food exports from Australia. Malaysia, Singapore and China being important export destinations for fruits, vegetables, seafood, sugar and dairy products. India is Australia's most important market for the export of pulses and beans. Myanmar is developing an export-oriented food sector in many of these products. In several cases this is with investments from companies which are based in Australia's export markets.

Some Australian exports to countries such as Malaysia, Singapore and Thailand are re- exported to Myanmar. For example, several branded and packaged food products such as milk powder, condensed milk, beer, wine, biscuits, carbonated drinks and fruit juices are imported from ASEAN through various trading arrangements such as counter trade, consignment and `import-first'.

76

In the short term it is unlikely that Myanmar will be an important destination for agricultural, livestock and fishery exports from Australia. Trade barriers (for example, currency controls which require importers in Myanmar to generate foreign exchange for imports, quantitative controls requiring the import of specified volumes of 'priority' goods etc) restrict the free import of food products.

In the longer term, it is highly probable that Myanmar will become a trade-dependent economy in which the private sector will have a dominant role. The pace at which this will occur will depend upon changes to the political environment in Myanmar. Notwithstanding trade and investment restrictions imposed by several Western countries Myanmar has developed linkages with its ASEAN neighbours, become a member of ASEAN and attracted investments from ASEAN and East Asia. Some commentators believe that Myanmar demonstrates greater potential for economic `take-off' than countries such as Vietnam. Golin (1996), for example, comments that:

... Myanmar is a place where deals can be done, and some investors disenchanted with Vietnam, the French oil giant Total for one, appear to be now turning their sights towards the country. Myanmar offers some substantial advantages which cause some to feel that it may be the next Thailand of Southeast Asia. Among the mainland nations of Southeast Asia it is both large in area and population. Many of its more than 40 million people speak English, and a set of commercial laws based on British statutes remains on the books. Myanmar is mineral rich (oil, timber, precious stones), and shares borders with three of Asia's most dynamic economies, China, India and Thailand. The tourism potential is among the best in the region.

Critics, however, see a country governed by a junta that has seized power illegitimately, a human rights record which is one of the least attractive in Asia, and the potential for renewed political instability. Despite the critics, there is little doubt that Myanmar is booming.

6.4 Significance of Findings The significance of this study for the Australian food industry are as follows:

• Myanmar could become a competitive threat to Australian exports of some products such as rice, pulses, beans, sugar, fishery products, fruits and vegetables to ASEAN countries because of preferential tariff arrangements for members of the AFTA and because of investment-related trade between countries in the region

• Myanmar could become a competitive threat to Australian exports of products such as pulses and beans to India, and sugar to China because of the introduction of more transparent and export-enhancing regulations and procedures on cross-border trade and investment-related trade between these countries and Myanmar

• Re-exports of Australian products to Myanmar from countries such as Singapore and

77 Malaysia could decline because of import-substitution as Myanmar's food manufacturing sector modernises and expands

• Australia's export potential to `new' markets such as Sri Lanka could be affected because of exports from Myanmar

However, in the longer-term Myanmar could become an important market especially if its economy grows, political conditions improve and the inflow of tourists into that country generates demand for high-value food products.

6.5 Recommendations It is important for Australian exporters to establish a foothold in this market through investment, licensing arrangements and contract farming. Studies suggest that offshore affiliates which are vertically integrated to the parent company tend to procure input products and support services from the parent company. This should create trade with the home country (East Asia Analytical Unit, 1990). Huile Trading (case study 3) has demonstrated the potential to do this. Although only a small company, Huile Trading has developed Australian exports of seeds and technical services through its contract farming activities in Myanmar. The experiences and success of Huile Trading (a small company and a recent entrant to the international market) in developing exports of Australian services and technology, demonstrates the opportunities for larger Australian companies.

The exports to Myanmar by companies from Singapore, Malaysia and Thailand have been largely supported through their own investments and technical collaboration, and the investment and technical services provided by other companies from the region. Companies from ASEAN have invested in hotels, fishery projects, sugar cane cultivation, processing of food products, poultry farming, cashew cultivation and the cultivation of edible oil crops such as palm oil. Although larger companies such as the Kuok Group and CP are well represented, there is a large number of relatively small companies. These companies have entered Myanmar through forming networks with other companies in the region. Therefore, it would seem that there are opportunities for both large Australian companies and small-to-medium enterprises.

It seems that, generally, Australian companies have been slow to respond to changes in Asia. A report by the East Asia Analytical Unit (1990), for example, suggests that the low level of investments by Australian companies in countries such as Malaysia, Singapore and Thailand in the 1980s affected Australian exports to these countries. Even now, Australian exports to South-East Asia tend to be bulk commodities such as wheat, skimmed milk powder, whole milk powder and anhydrous milk fat. It has been suggested by various analysts that this could be because, unlike companies from New Zealand and the European Union, Australian companies are not active in downstream operations. Investments which establish a presence downstream, especially in sectors which use Australian inputs, and distribution and marketing expertise could have increased the exports of technology, high value products, services, machinery and equipment.

As Australia does not have 'large vertically integrated, multifaceted conglomerates', Australian firms need to network and cooperate, both within industries and across industries, in order to maximise the trade benefits of offshore investment activities (East Asia Analytical

78 Unit, 1994). The success of companies from ASEAN suggests that there could be opportunities for Australian companies to form strategic alliances with businesses in ASEAN in order to undertake collaborative projects in Myanmar. This could, for example, form part of the Strategic Links Initiative being promoted by the Governments of Australia and Singapore. As some of the case studies in this report show, Chinese-owned businesses in Myanmar have established successful trade and investment relationships with Chinese-owned businesses in ASEAN. This could be an outcome of the "psychological closeness" of overseas Chinese communities. Australian companies have a long history in business relationships with Chinese businesses in ASEAN. Similarly, there is a large ethnic Indian population in Myanmar, and India is Myanmar's most important trading partner. There is potential for strategic alliances between Australian companies and Non-Resident Indian (NRI) companies. It would seem that there are opportunities to form strategic alliances with these businesses in the region to make in roads into Myanmar.

Australian companies are well positioned to provide consultancy services in farming and food processing, and to a more limited extent export products and services to Myanmar. Like their counterparts in ASEAN, Australian companies need to work with importers in Myanmar to overcome some of the regulatory constraints in Myanmar's export regime. It would seem that export merchants and traders in Australia are better positioned to export to Myanmar as they have greater flexibility in organising trade arrangements such as counter trade and 'import- first'. The perceived difficulty in market entry may deter Australian exporters but this could mean the loss of trade opportunities not only in Myanmar but elsewhere in Asia.

This study revealed that, generally, businesses in Myanmar are not aware of Australia's strengths in the food sector. There is need to promote Australia's expertise in the agricultural and livestock food sector. Commonwealth and State governments need to encourage and assist Australian companies to develop consortia-type arrangements (comprising farming companies, manufacturing companies, equipment suppliers, trading companies and training service providers) to enable them to pursue various projects in the agricultural, livestock and fishery sectors in Myanmar.

Australian companies and public sector organisations (universities, research and training organisations) could collaborate with agencies such as the Ministry of Agriculture and Irrigation, and the Ministry of Livestock and Fisheries in providing technical and managerial assistance and supplying goods and services for:

• Expanding the production of cereal crops, oil seed crops, vegetables and fruits • Processing cereals, oil seeds, vegetables and fruits • Establishing storage and transport facilities for food crops • Breeding cattle and other ruminants • Breeding, processing and marketing fresh-water and marine fish, prawns, shrimp and other aquatic products • Constructing ice manufacturing plants • Constructing cold storage complexes • Constructing fish meal plants • Constructing canning factories • Developing shrimp hatcheries • Establishing shrimp farms

79 • Bee farming and production of honey • Establishing supporting industries for the fishery sector (construction of fishing vessels, production of fishing nets etc)

An essential strategy for Australian companies to position themselves in Myanmar would be to develop investment links in the agricultural, livestock and fishery sectors, and in food processing industries. World opinion regarding human rights abuses in Myanmar would necessarily be a barrier to entry into this market. However, it seems that companies from ASEAN, North East Asia and even Britain are more active in Myanmar than Australian companies. Australian companies will need to carefully monitor developments in Myanmar as the investment linkages being developed by companies from ASEAN could be to source products from Myanmar. It seems that Myanmar could become an important source of agricultural and livestock products for ASEAN because of:

• Raw material availability and costs • Savings in operating expenses including freight costs to ASEAN markets • Better market access because of trade arrangements between Myanmar and other countries (Example, AFTA, Cross-border Trade Agreements).

Australian companies should access some of this potential to develop their businesses in Myanmar to serve both the local market and export markets. Studies such as that by the East Asia Analytical Unit (1994b) suggest that offshore investments can generate exports if there are strong backward linkages. It seems that Australian companies were slow to invest in South-East Asia in the 1980s and as a consequence lost the opportunity to develop a strong market share. Myanmar presents an opportunity to re-launch Australia's strategy to access ASEAN markets.

80

81

APPENDICES AND ANNEXES

82 Appendix 1 Schedule of `Optional/Luxury' Goods and `Priority/Essential' Goods

List of Priority Items Sr. No. Name of Commodity

1. Machinery and spare parts

2. Industrial raw materials

Food Products

Section Sub-Section Commodity

1 2 3 4

664 27. Foodstuff 1. Cane Sugar 1. Sulphur Rolled. Industry Factories

665 2. Alcohol Group 1. Diammonium Phosphate.

666 (a) Alcohol 2. Amine - 3. F a c t o r y

667 Raw Materials 3. Crown Corks.

83 668 (b) Beer Factory 1. Malt.

669 Raw Materials 2. Hops.

670 3. Priming Sugar.

671 4. Crown Corks.

672 5. Essences.

673 27. Foodstuff 3. Wheat Group 1. Ammonium Bicarbonate.

674 Industry (a) Biscuit 2. Sodium Bicarbonate.

675 Factory Raw 3. Sodium Carbonate.

676 Materials 4. Baking Powder.

677 5. Vanillin Powder.

678 6. Lecithin.

679 7. Skimmed Milk Powder.

680 8. Essence and Colour.

681 9. Acetic Acid.

682 10. Flavour.

683 11. Cream of Tartar.

684 (b) Spices 1. Vanilla.

685 2. Cinnamon and Cassia Lignea.

686 3. Clove.

687 4. Nutmegs.

688 5. Mace.

84

689 6. Cardamons.

690 7. Saffron.

691 8. Cumin Seeds.

692 9. Spices, n. e. s.

693 27. Foodstuff 4. Tapioca Group 1. Hydrochioric Acid.

694 Industry (a) Mono Sodium 2. Caustic Soda.

695 Glutamate 3. Soda Ash.

696 Factory Raw 4. Corn Steep Liquor.

697 Materials 5. Disodium Hydrogen Phosphate.

698 6. Activated Carbon.

699 7. Phosphoric Acid.

700 5. Virginia Group 1. Cigarette Paper.

701 (a) Cigarette 2. Tipping Paper (Brown).

702 Factory Raw 3. Cellophane Paper 117 mm.

703 Materials 4. Plug Wrap Paper.

704 5. Acetate Tow.

705 6. Tear Tape (Red).

706 7. Liquorice Block/Juice.

707 8. Swift Glue.

708 6. Canning Group 1. 1 lb. Can.

85 709 (a) Cans 2. 1/2 lb. Can

710 Factory 3. 1/2 kg. Can

711 4. Aluminium Sheet.

712 27. Foodstuff 7. Ice Group 1. Crown Cork.

713 Industry (a) Soft Drink 2. Essences and Colours.

714 Industry Raw 3. Citric Acid. Materials

8. Cooking and Food 1. Tapioca 715 Industry Raw Materials

716 9. Oral Rehydration 1. Glucose.

717 Salt Industry 2. Trisodium Citrate.

86

87 Agricultural inputs

3. Fertilizer

4. Pesticides/insecticide

5. Hybrid seeds and seeds of pure stock

Foodstuff

6. Edible oil

7. Wheat flour

Construction materials

8. Cement

9. Round bars

10. Pipes (both G.I and P.V.C)

11. Refractory brick (H.S code 69.02) [Endorsement by Ministry of No. 1 Industry shall be submitted}

12. Building materials

(A) Galvanized corrugated iron sheets (B) Other roofing sheets (C) Wire nails

13. Machinery, components and materials for fisheries

(A) Assorted fishing nets and mending twines and ropes (B) Steel wire ropes (C) Outboard motor (D) Marine gear, engines and spare parts (up to 240 H.P) (E) Cold storage, ice plants, chemicals and spare parts for them (F) Fish/prawn processing materials, equipments, components and spare parts for the export of marine products

Vehicle, transport equipment and others

14. Logging trucks

15. Tyres and tubes for heavy duty vehicles

(A) 825x20x12 ply and above

88 (B) 900x20x14 ply and above (C) 1000x20x14 ply and above (D) 1100x20x14 ply and above

16. Dump truck

17. Bus for 45 passengers and above

18. Trucks (2 ton and above)

19. Logging truck spares

20. Brand new motor vehicle spares

Medicines and medical equipment

21. X ray films/ X ray machine

22. Surgical goods and instruments

23. Optical frames/lenses

24. Medicines and medical equipment

Materials for livestock breeding

25. Pure livestock of high quality

26. Foodstuff additives

Equipment for power supply

27. Transformer

28. Meter box

29. Street lantern (Endorsements by the relevant department concerned shall be submitted)

Communication equipment and materials

30. Telephone and telephone switchboards

31. Facsimile machine, telex machine, teleprinter

32. Drop wire 33. Telecommunication equipment and materials (Endorsement by the Department of Posts and Telecommunications shall be

89 submitted)

Stationery

34. Stationery for students (pencil, eraser, mathematical set, ruler, exercise book, ball pen)

35. White paper

Petroleum products

36. Lubricants

Machinery and spare parts (additional items)

37. Tractors

38. Wheel loader

39. Loader tractor

40. Cranes, truck with crane

41. Power take-off puller (Crane)

42. Excavator, forklift truck and tyres

43. Escalator, passenger elevator and spares

44. Sewing machine

45. Radial arm saw and accessories

46. Computer and spares

47. Manual typewriters and duplicating machine

48. Plastic grinding machine

49. Plastic injection moulding machine

50. Marine gear box

51. Strapping machine for packaging

52. Dozer, scraper and loader

53. Plastic drawing machine

90

54. Shuttle plastic circular loom

55. Plastic bag engraving machine

56. Hydraulic gear for marine use

57. Snail meat making machine

58. Artificial charcoal moulding machine and spares

59. Plastic blowing machine

60. Bean separator

61. Corrugating machine

62. Wirenail making machine

63. Black and white/ single colour photo-copier

64. Machinery for soap industry

Industrial raw materials (additional items)

65. Raw materials for pharmaceutical industry

66. Raw materials for soap industry

91 Appendix 2

Application Form for Import Licence

DIRECTORATE OF TRADE IMPORT LICENCE

1. Importer (Name & Address) 6. Importer Registration No 2/

7. Licence (No & Date)

IL

2. Seller (Name & Address) 8. Method of Import

9. Country Whence Consigned

3. Mode of Transport 1. Sea 2. Road 3. Air 10. Country of Origin

4. Place/Port of Discharge 11. Value CIF FOB C & F

5. Last Date of Import 12. Total value (CIF) Ks

13. No 14. H.S code 15. Description of Goods 16. Unit 17. Unit Price 18. 19. Value Qty (USDollar )

20. Conditions: 21. Signature of Authorized Person

92

Stamp For Director General ( )

22. First Revalidation of Licence 23. Second Revalidation of Licence

Up to ______(Receipt No.______Dated Up to ______(Receipt ______Attached) No.______Dated ______(______Attached) ______(______

Stamp Stamp

Date For Director General Date For Director General ( ) ( )

93 Appendix 3

Form A

APPLICATION FOR PERMIT TO TRADE

(See Regulation 3)

Note - This application is to be accompanied by: -

(1) A copy of the company's Memorandum and Articles of Association or of the charter, statures or other instruments constituting or defining the constitution of the company, (2) Copies of the company's Balance Sheets and Profit and Loss Accounts for the last two years preceding the application.

Application by a Foreign Company or Company carrying on International trade for issue of a permit under section 27A of the Act:

(1) Name of Company. (2) Country of incorporation of company (3) (a) Names, addresses and nationality of shareholders in case of companies incorporated in the Union of Myanmar (b) Number of citizens or non-citizen shareholders together with the number of shares held by them separately in the case of companies incorporated outside the Union of Myanmar. (4) (a) Location of company's head office. (b) The location of company's principal office in the Union of Myanmar. (5) The objects for which the company is formed (field of business). (6) (a) The amount of capital and the number of shares into which the capital is divided. (b) If more than one class of share is authorised, the description of each class and the rights and privileges pertaining to each. (c) Amount of capital brought or to be brought into the Union of Myanmar. (d) Whether there is any discrimination among different classes of shareholders with regard to number of votes he may cast. (7) (a) The maximum amount of indebtedness if any which may be incurred by the Company; and (b) The prohibition against the contracting of debts in excess of that amount. (8) Period for which Permit is applied for. (9) The officers who are to conduct the affairs of the company, duties of each, and the authority of the Board of Directors to fill the positions above named. (10) The number of directors, the manner of their appointments and their powers. (11) The names, addresses and nationality of the Directors for the current year. (12) The names, addresses and nationality of the promoters. (13) Statements of compliance with legal requirements for initial capital including the amount to be paid in before commencement of business.

94

Appendix 4

PROCEDURES RELATING TO PERMISSION TO CARRY OUT ECONOMIC ENTERPRISES DEFINED UNDER SECTION 3 OF THE STATE-OWNED ECONOMIC ENTERPRISES LAW

95 The Government may, in the interests of the State, permit any enterprise which is prescribed under Section 3 of the State-owned Economic Enterprises Law to be carried out solely by the Government, in any of the following form:-

(a) Joint-venture between the organisation and a citizen or a foreigner; (b) Joint-venture between the organisation, a citizen and a foreigner; (c) Joint-venture between a citizen and a foreigner; (d) Enterprise by a citizen or a foreigner;

When any citizen or any foreigner applies to carry out any economic enterprise which is prescribed under Section 3 of the said law, the following procedures are required:-

(a) Application shall be made in attached Form (A) to the State Economic Organisation concerned; (b) The organisation shall submit the proposal to its ministry together with its comments; (c) If the ministry concerned considers the proposed enterprise submitted by the organisation is not covered by the Union of Myanmar Foreign Investment Law and is also in the interest of the State, the ministry concerned shall submit the following particulars together with explanations and its comments, to the Government:-

n Type of business to be carried out; o Type of organisation to be formed; p Estimated amount of capital to be invested; q Financial arrangement; r Duration to be carried out; s Estimated income and expenses; t Economic and social justification for the State; u Conditions to be prescribed.

(d) If the proposal submitted by the organisation is covered by the Union of Myanmar Foreign Investment Law, the ministry concerned shall obtain the approval of the Government; (e) If the proposal submitted under sub-paragraph (c) and (d) is considered to be in the interests of the State, the Government or the Ministry authorised for this purpose may, by notification, permit it to be carried out, with appropriate conditions; (f) If the ministry concerned considers the proposal submitted by the organisation to be not in the interests of the State or if the Government does not permit, the proposal may be rejected. Such rejection shall be communicated to the applicants.

96

Appendix 5

CAPITAL STRUCTURE COMMITTEE "QUESTIONNAIRE" (Foreign Company incorporated in Myanmar)

For assessment of Application received for Issue/Renewal of "Permit to Trade" under Section 27A of the Myanmar Companies Act and the Myanmar Companies Regulations, 1957.

A. Name of Company ------B. Address: ------

97 ------C. Old Company - in business ------in liquidation ------D. New Company - to be incorporated ------

Seq. Particulars Committee's assessment Remarks

Complete Deficient

Kyat (Million) 19--- 19--- 1.0 FINANCIAL POSITION (in the case of a Company carrying on business) 1.1 Capital (i) Authorised ------(ii) Issued and Paid up Capital ------

(iii) Shareholders Equity Capital - Issued and Paid-up ------Reserves and Retailed Earnings

Total Equity Q (i) Is the Issued and Paid up Capital strong? A. Q (ii) Is the Shareholder's Equity strong? A. Change in Financial Positon 1.2 Increase/(Decrease) in working Capital 19--- ( ) 19--- ( )

Seq. Particulars Committee's assessment Remarks

Complete Deficient

Q. Is the Working Capital improving? A. 1.3 Trends in Income/Expenditure, etc, 19--- 19--- Gross Income Operating Expenditure Gross Profit Administration Taxation Net profit after Tax 2.0 PRESENTATION OF FINANCIAL STATEMENTS (Based on statement field in accordance with the Myanmar Companies Act)

98 (In the case of a Company carrying on business) 2.1 Q. Are these statements audited by a qualified accountant, and by whom? A. 2.2 Q. Are books maintained in accordance with Section 130 of the Myanmar Companies Act and certified by the auditor? A. 2.3 Q. If a holding Company, does Balance Sheet include particulars as to the subsidiary company, as required under section 132A? A. 3.0 BASIS OF ACCOUNTING (In the case of a Company carrying on business) 3.1 Q. Are any sales into Myanmar contracted by the Foreign Parent Company on behalf of the company? A. 3.2 Q. Are all such sales invoiced by the Company, or by the Foreign Parent Company? A. 3.3 Q. How is the Company remunerated by the Parent Company on sales contracted by them (3.1): (i) Management Fee? or (ii) Administration Fee? or (iii) Supervision Fee? or (iv) Commission? A.

Seq. Particulars Committee's assessment Remarks

Complete Deficient

3.4 Q. Are the above fees due physically remitted to Myanmar? A. 3.5 Q. In case the Parent Company is due by the local Company for supervision, management, etc., how are they paid or adjusted? A. 4.0 TAXATION (As issue renewal of "Permit" is dependent on compliance with the Myanmar Tax Laws.) 4.1 Q. When was the Company last assessed and taxed to Myanmar Income-tax? A. (i) Assessment Year (ii) Income Year ended Q. If assessments have been pending, since which year? A. (i) Assessment Year (ii) Income Year ended 4.2 Q. Are there any exemptions from Income-tax? (state by documentary evidence) A.

99 Note: Exemption of tax and duties on imported goods does not amount to exemption of Income-tax on the profits of the company. 5.0 EXCHANGE CONTROL REGULATIONS (As issue/renewal of "Permit" is dependent on compliance of these Regulations) 5.1 Issued and Paid-Up Capital Q. What is the Issued and Paid-Up Capital previously approved by CSC? A. Q. Has capitalisation of reserves and retained earnings (profits) been approved? If so, the amount. A. Q. Has capital determined by the CSC been brought into Myanmar? A. Q. If not brought in, Why not? A. Q. Are any calls on share called up due and outstanding? A.

Seq. Particulars Committee's assessment Remarks

Complete Deficient

Q. If there is an inter-company account with the Parent Company, what is the amount due from the Parent company, and the ratio to Paid-up Capital?

6.0 A. 6.1 RENEWAL OF "PERMIT TO TRADE" Q. Have the Issued and Paid-up Capital been brought into Myanmar? A. 6.2 If not, give reasons. Q. Have new issue and calls on shares been made during the current year? Give details. 6.3 A. Q. Need the Authorised Capital be increased due to the company's activities or expansion? 6.4 A. Q. What is the total outside indebtedness of the Company (i) to local creditor? (ii) to overseas creditors? 6.5 A. Q. What is the Local Debt/Equity Ratio? A. Q. Is the Company still in solvent financial position? If not, the extent of insolvency.

100 7.0 A. 7.1 MYANMAR COMPANIES ACT Q. Is the Application Form A for "Permit to Trade" complete (i) as to details to be furnished? (ii) as to attachments required? 7.2 A. Q. In a case of renewal application has compliance been made of:- (i) annual requirements under the Myanmar Companies Act? (ii) Reporting of any changes within the prescribed time? 7.3 A. Q. Have conditions set out in the "Permit to Trade" been complied with fully? A.

Seq. Particulars Committee's assessment Remarks

Complete Deficient

7.4 Q. Are there any changes in the Memorandum and Articles of Assocation and the Company's activities which are considered to warrant any changes to the conditions for which the "Permit" has been originally issued? A

101

102

Appendix 6

CAPITAL STRUCTURE COMMITTEE "QUESTIONNAIRE" (Foreign Branch of a Foreign Company incorporated outside Myanmar)

For assessment of Application received for Issue/Renewal of "Permit to Trade" under Section 27A of the Myanmar Companies Act and the Myanmar Companies Regulations, 1957.

A. Name of Head Office/Parent Company ------B. Address: ------Head Office/Parent Company Branch in Myanmar ------Phone ------C. Country of Incorporation ------

Seq. Particulars Committee's assessment Remarks

Complete Deficient

1.0 FINANCIAL POSITION 1.1 Capital US$ mn 19------19------Q. Is the Capital reasonably strong? A. ------1.2 Shareholders Equity 19---- 19---- (US$mn) (US$mn) Capital Reserves & Retained Earnings ------Total Equity ------Q. Is the Capital/Total Equity strong? A. ------1.3 Changes in Financial Position Increase/Decrease in Working Capital 19---- ( ) 19---- ( ) Q. Is the Working Capital improving?

103 A. ------2.0 PRESENTATION OF FINANCIAL STATEMENTS (Based on statements filed in accordance with the laws of the country of origin) 2.1 Financial Statements presented in Yen and US$ (currency)

Seq. Particulars Committee's assessment Remarks

Complete Deficient

2.2 Q. Are these statements audited by qualified auditors? A. ------3.0 BASIS OF ACCOUNTING FOR MYANMAR BRANCH 3.1 Q. If accounts are maintained at HO., whether they are on Cash basis showing expenses in Myanmar only with no income or receipts? A. ------In such a case:- Q. Are all sales into Myanmar declared? (i.e. sales into Myanmar made directly either by Head Office or by the Branch) A. ------Q. Have management, administration or supervision fee, commission or any remuneration due to the Branch been brought into account? A. ------Q. And physically remitted to Myanmar? A. ------3.2 If Branch is an independent accounting unit and all income (whether received or not) and expenses (whether paid or not) are accrued. Q. Have all dues by way of management, supervision and administration fees due 'by the Head Office to the Branch on Myanmar sales been reported? A. ------4.0 TAXATION (as issue/renewal of "Permit" is dependent on compliance with the Myanmar Tax Law) 4.1 Q. When was the Branch last assessed and taxed to Myanmar Income-tax? A. ------Income Year ended - IF assessed, require submission of Assessment Form/Demand Notice and Tax receipt Q. If asessment have been pending, since which year? A. ------

Seq. Particulars Committee's assessment Remarks

104

Complete Deficient

4.2 Q. On what basis was the Branch's income determined and assessed for tax? A. ------4.3 Q. Had there been any exemption? (state by documentary evidence) 5.0 EXCHANGE CONTROL REGULATIONS (As issue/renewal of "Permit" is dependent on compliance of these Regulations) 5.1 Head Office Capital Account Q. Has the amount, as fixed by the CSC been brought in fully, or not? A. ------5.2 Income accruing and arising in Myanmar and due to the Branch Q. Has such dues by way of managing fee, commission, administration charge, or in any other form of remuneration been fully brought into Myanmar? A. ------5.3 Head Office Current Account (In addition to Head Office Fixed Capital Account, a Branch may set up a Head Office Current Account, to which all debits and credits other than the Fixed Capital, are made, including the Branch Profit & Loss) Q. In such a case, state whether the debit balance on Head Office Current Account has been cleared within the three months of the end of the accounting year by a remittance from H.O.? A. ------6.0 RENEWAL OF PERMIT Q. State whether the Head Office Fixed Account has remained intact? A. ------Q. Or, has the Head Office Fixed Account been depleted by a debit balance on the Head Office Current Account? A. ------

Seq. Particulars Committee's assessment Remarks

Complete Deficient

Q. If so, has the deficit on Head Office Current Account been cleared by a remittance from Head Office or not? A. ------Q. Has the Head Office Capital Account been certified by an Auditor, registered with the Myanmar Accountancy Council and who has the " Certificate of Practice"?

105 A. ------Q. Has Head Office Fixed Account been determined or received on renewal of "Permit"? A. ------Q. If so, is an increase in the amount considered necessary? A. ------7.0 MYANMAR COMPANIES ACT Q. Is the application Form A for "Permit to Trade" complete? (a) as to details to be furnished? and (b) as to attachments required? A. ------Q. In the case of renewal application has compliance been made of:- (a) annual requirements under Section 277 EB? (b) reporting of any changes with the prescribed time? A. ------Q. Has there been any changes in the Memorandum & Articles of Association and the Branch's activities which are considered to warrant any changes to the conditions for which the "Permit" had been originally issued? A. ------

Appendix 7

Form (I)

Proposal of the Promoter to make Foreign Investment in the Union of Myanmar

To

The Chairman, Myanmar Investment Commission, Yangon.

106

Reference No. Date,

I wish to make investment in the Union of Myanmar in accordance with the Union of Myanmar Foreign Investment Law, and I herewith apply for permission furnishing the following particulars -

1. Promoters -

(a) Name ...... (b) Father's name ...... (c) National registration No...... (d) Citizenship ...... (e) Address ...... (f) Name of principle organisation ...... (g) Type of business ...... (h) Place of organisation ...... (i) Place of incorporation ......

2. If investment is to be made by joint-venture, the particulars of the persons wishing to participate in the joint-venture with the promoter -

(a) Name ...... (b) Father's name ...... (c) National registration No...... (d) Citizenship ...... (e) Address ...... (f) Name of principle organisation ...... (g) Type of business ...... (h) Place of organisation ...... (i) Place of incorporation ......

3. Type of business in which investment is to be made -

(a) Production ...... (b) Services ...... (to indicate name of goods or type of services)

4. Form of economic organisation -

(a) Sole Proprietorship ...... (b) Partnership ......

107 (c) Limited Company ...... (to enclose the list of the name, citizenship, address and designation of the executives of the organisation, indicating the local and foreign capital ratio)

5. If the organisation is in the form of a partnership -

(a) Capital ratio and amount to be contributed by the partners ...... (b) Profit sharing ratio ...... (c) Rights and liabilities of partners ......

6. If the organisation is in the form of a limited company -

(a) Authorised capital ...... (b) Types of shares ...... (c) Share capital to be subscribed by the shareholders ......

7. Particulars relating to the organisation in which investment is to be made -

(a) Amount of capital - Kyat

(1) Amount of local capital to be contributed ...... (2) Amount of foreign capital to be brought in ...... ______Total - ______

(b) Amount of foreign capital to be brought in - Kyat (1) Foreign currency ...... (2) Others ...... ______Total - ______

(c) Period for bringing in items mentioned in sub-paragraph (b) ...... (d) Proposed duration of investment ...... (e) Construction period ...... (f) Commencement of construction ......

8. Particulars relating to the proposed economic organisation -

(a) Type of business ...... (to indicate production/services etc.) (b) Proposed place(s) at which investment is to be made ......

108 ...... (c) Technique of operation ...... (d) Annual fuel requirement ...... (to indicate type/quantity) (e) Annual electricity requirement...... (f) Annual water requirement ...... (to indicate daily requirement, if any) (g) Annual equipment/raw materials requirement ...... (to enclose a list of type/quantity/value) (h) Building requirement ...... (i) Type of land and area requirement ...... (j) Goods to be produced/services to be rendered ...... (to indicate name, type, annual estimated quantity and value of the goods/services). (k) System of sales ......

9. Details of foreign capital to be brought in - Foreign Estimated Kyat Currency Equivalent

(a) Foreign currency (type and amount)

(b) Value of machineries, equipment etc. (to enclose detail statement)

(c) Value of raw material and other similar materials

...... (d) Value of rights which can be evaluated, such as licence, trade mark, patent rights

(e) Value of technical know-how ......

Total

10. Details of local capital to be contributed -

Kyat

(a) Amount of cash ...... (b) Value of machineries and equipment ...... (to enclose detail statement) (c) Buildings/Land ...... (d) Value of furniture and office equipment ...... (to enclose detail statement) (e) Value of raw materials ...... (to enclose detail statement)

109

Tl

11. Particulars relating to annual production/services- Foreign Estimated Kyat Currency Equivalent (a) Type and value of foreign exchange required

(b) Amount of foreign exchange to be received (c) Amount of working capital requirement in Kyat (d) Value of exportable goods/services (e) Value of annual local sale of goods/services

12. List of personnel required for the proposed economic organisation -

(a) Local personnel required - Serial No. Type of personnel Number ...... (b) Foreign experts and technicians required - Serial No. Type of expertise Number Proposed period of employment ......

13. Particulars relating to economic justification- Foreign Estimated Kyat Currency Equivalent (a) Annual income (b) Annual expenditure (c) Annual net profit (d) Yearly investments (e) Recoupment period (f) Other benefits (to enclose detail calculations) (g) To mention prospects to new employment opportunities/local and foreign market foreign exchange savings

14. Supporting documents for the proposal - The following documents are attached for the proposed investment - (a) Draft contract;

110 (b) References for business and financial standing; (c) Drafts of Memorandum of Association and Articles of Association.

Signature...... Name ...... Designation ......

111

Appendix 8

TABLE B (See Section 249 and 262 of Company Law)

TABLE OF FEES TO BE PAID TO THE REGISTRAR

I - by a company having a share capital

Kyats

1. For registration of a company whose nominal share capital does not exceed 600.00 20,000 Kyats a fee of 2. For registration of a company whose nominal share capital exceeds 20,000 Kyats the above fee of six hundred Kyats, with the following additional fees regulated according to the amount of nominal capital (that is to say). For every 10,000 Kyats of nominal share capital, or part of 10,000 Kyats, 300.000 after the first 20,000 Kyats up to 50,000 Kyats. For every 10,000 Kyats of nominal share capital or part of 10,000 Kyats, 75.00 after the first 50,000 Kyats up to 1,000,000 Kyats. For every 10,000 Kyats of nominal share capital or part of 10,000 Kyats after 15.00 the first 1,000,000 Kyats. 3. For registration of any increase of share capital made after the first registration of the company, the same fee per 10,000 Kyats or part of 10,000 Kyats as would have been payable if such increased share capital had formed part of the original share capital at the time of registration provided that no company shall be liable to pay in respect of nominal share capital on registration, or afterwards, any greater amount of fees than 15,000 Kyats taking into account, in the case of fees payable on an increase of share capital

112 after registration, the fees paid on registration. 4. For registration of any existing company except such companies as are by this Act exempted from payment of fees in respect of registration under this Act, the same fees as is charged for registering a new company. 5. For filing any document by this Act, required or authorised to be filed, other 75.00 than memorandum or the abstract required to be filed with the Registrar by a receiver of the statement required to be filed with the Registrar by the liquidator in a winding up. 6. For making a record of any fact by this Act, authorised or required to be 75.00 recorded by the Registrar of fee of.

II - by a company not having a share capital

Kyats

1. For registration of a company whose number of members, as stated in the 600.00 articles of association, does not exceed 20 2. For registration of a company whose number of members, as stated in the 1,500.00 articles of association, exceed 20, but does not exceed 100. 3. For registration of a company whose number of members, as stated in the articles of a association, exceeds 100, but is not stated to be unlimited, the above fee of 1,500 Kyats with an additional 75 Kyats for every 50 members or less number than 50 members, after the first 100. 4. For registration of a company in which the number of members is stated in 6,000.00 the articles of assocation to be unlimited of fee of 5. For registration of any increase on the number of members made after the registration of the company, the same fees as would have been payable in respect of such increase if such increase had been stated in the articles of association at the time of registration; provided that no one company shall be liable to pay on the whole a greater fee than 6,000 Kyats in respect of its number of members, taking into account the fee paid on the first registration of the company. 6. For registration of any existing company, except such companies as are by this Act, exempted from payment of fees in respect of registration under this Act, the same fee as is charged for registering a new company. 7. For filing any document by this Act required or authorised to be filed, other 75.00 than the memorandum or the abstract required to be filed with the registrar by a receiver or the statement required to be filed with the Registrar by the liquidator in a winding up. 8. For making a record of any fact by this Act, authorised or required to be 75.00 recorded by the Registrar, a fee of.

113 Appendix 9

Schedule of Persons Interviewed During Field Survey

Brig-Gen D. O Abel Dr Tun Shin Minister for National Planning and Legal Adviser to the Ministry & Economic Development Deputy Director General to the Directorate Ministers' Office Ministry of National Planning & Thain Byu Street Economic Development YANGON Directorate of Investment and Companies UNION OF MYANMAR Administration 653/667 Merchant Street YANGON, MYANMAR

Dr Kyi Win U Chit Lwin Deputy Director General Director Department of Agricultural Planning Department of Agricultural Planning Ministry of Agriculture & Irrigation Ministry of Agriculture & Irrigation Thiri Mingala Lane Thiri Mingala Lane Kabaaye Pagoda Road Kabaaye Pagoda Road YANGON, MYANMAR YANGON, MYANMAR

U Ye Htut U Mya Hlaing General Manager General Manager Myanmar Sugarcane Enterprise Myanma Perennial Crops Enterprise Ministry of Agriculture & Irrigation Ministry of Agriculture & Irrigation Thiri Mingala Lane Thiri Mingala Lane Kabaaye Pagoda Road Kabaaye Pagoda Road YANGON, MYANMAR YANGON, MYANMAR

U Thaung Nyunt U Aung Myaing Deputy Director Marketing Division Deputy General Manager Myanma Farms Enterprise Myanmar Agriculture Service Ministry of Agriculture Ministry of Agriculture & Irrigation 9th Mile, Pyay Road Thiri Mingala Lane YANGON, MYANMAR Kabaaye Pagoda Road YANGON, MYANMAR

U Kyaw Lwin U Kyaw Myint Director General Chief Executive Officer Department, Ministry of Livestock & Ecodev Consultants Ltd Fisheries Building No 133, Room 2 Union of Myanmar Yankin TSP Ministry of Livestock & Fisheries YANGON, MYANMAR Directorate of Livestock & Fisheries No 460 Konthe Road YANGON, UNION OF MYANMAR

U Mya Thein Roy U Tin Maw Thein

114 Sole Proprietor Chairman Roy's Aquacultural F.A.M.E Enterprise Myanmar Aquaculture & Fisheries Association No 69 Botataung Bazar St 74-86 Bo Sun Pat Street Botataung Township Pabedan Township YANGON, MYANMAR YANGON, MYANMAR

U Ba Maung Thein Min Soe Proprietor Broker House Aung Zabu Broker House No 45 Shwe Ook Awe Street No 26 Street, Between 88 and 89 Street MANDALAY, MYANMAR Thirigeha Quarter MANDALAY, MYANMAR

U Tin Myint Oil Mill U Thu Ya 88 Street, Between 26 and 27 Street Globe Brokers MANDALAY, MYANMAR 87 Street, Between 25 and 26 Street MANDALAY, MYANMAR

U Bo Phyu Daw Win Shwe Production Manager Manager Mandalay Division Cooperative Milk Factory Zwe Thatti MANDALAY, MYANMAR Sagaing Division Sagaing Township

U Khim Maung U Ba Maung Deputy Division Manager Aung Zabu Broker House Sagaing Division No 26 Street, Between 88 and 89 Street Sagaing Township Thirigeha Quarter MANDALAY, MYANMAR MANDALAY, MYANMAR

U Thaung Pe U Myo Lwin Manager Manager Rocket Flour Mill Mandalay Tha Zin Biscuit Factory MANDALAY, MYANMAR MANDALAY, MYANMAR

Captain Hla Myint U Thet Win Deputy Director Farm Manager Pyin Oo Lwin Coffee Factory MFE Farm MANDALAY, MYANMAR Doe Kwin, Maymo MANDALAY, MYANMAR

Col Thura Maung Ko Daw Nyomi Kyi Managing Director Deputy Director Myanma Farms Enterprise Planning & Finance Ministry of Agriculture Myanma Farms Enterprise The Union of Myanmar Ministry of Agriculture & Irrigation 9th Mile, Pyay Road 9th Mile, Pyay Road YANGON, MYANMAR Myangon Township YANGON, MYANMAR

U Kyaw Tin U Hla Thein M.A

115 General Manager Member SGS (Myanmar) Limited The Union of Myanmar 123 Sule Pagoda Road Chamber of Commerce 2 Floor, PO Box 975 74-86 Bo Sun Pat Street YANGON, MYANMAR YANGON, MYANMAR

U Tun Myaing Dr Soe Myint Director Managing Director Universal Concord Co. Ltd Crescent Land Trading Co Ltd 55A Tay Nu Yin Road 55A, Tay Nu Yin Road 7 1/2 Mile Mayangone T/S 7 1/2 Mile, Mayangone T/S YANGON, MYANMAR YANGON, MYANMAR

U Mya Min U Myint Thein Director General Manager Myanmar Seafoods Ltd Myanmar P L International Ltd Bayint Naung Highway Road Bayint Naung Highway Road (Department of Fisheries Compound) (Department of Fisheries Compound) Gyogone, Insein Township Gyogone, Insein Township YANGON, MYANMAR YANGON, MYANMAR

U Tint Wai U Paul Eng Chief Inspector Director Export Quality Control Section Annawar International Fisheries Holdings Ministry of Livestock Breeding and Fisheries Limited Department of Fisheries Nyaungdan Jetty Sinmin Road, Ahlone P.O Lower Pazundaung Road YANGON, MYANMAR Pazundaung Township YANGON, MYANMAR

U Htay Myint U Than Tun Managing Director Director General Annarwa Fishery Holdings Ltd Department, Ministry of Livestock & Limited Fisheries Nyaungdan Jetty No 460 Konthe Road Lower Pazundaung Road YANGON, UNION OF MYANMAR Pazundaung Township YANGON, MYANMAR

U Than Daing U Saw Elai Director Liaison Officer Department, Ministry of Livestock & Department, Ministry of Livestock & Fisheries Fisheries No 460 Konthe Road No 460 Konthe Road YANGON, UNION OF MYANMAR YANGON, UNION OF MYANMAR

Doe Kwin U Ein Yar Deputy Supervisor Managing Director Salai Cindothang Kyun Shwe War Co Ltd MAY MO, MYANMAR A/68, Bahosi Housing Complex Lanmadaw Township

116 YANGON, MYANMAR

U Thaung Tint U Nyan Wai Director Director Kyun Shwe War Co Ltd Kyun Shwe War Co Ltd A/68 Bahosi Housing Complex A/68, Bahosi Housing Complex Lanmadaw Township Lanmadaw Township YANGON, MYANMAR YANGON, MYANMAR

U Per San Minn U Tin Win Purchasing and Production Manager Executive Director Shwe Myin Bakery Grand Wynn Fine Food Company Ltd No. 184-186 Importer & Exporter Sule Pagoda Road Room No 2 Kyauktada TSP Aung San Stadium East Wing Yangon 11141 Upper Pansodan Street MYANMAR next to Tachun-Pe Mosque Mingalar Taung Nyunt YANGON, MYANMAR

U Yu Chow Chong U Yan Aung Production Consultant Director - Administrative Division Global Pact SDN BHD Myanma Farms Enterprise Hline Tet Canning Factory Ministry of Agriculture and Irrigation Thazi Mandalay Division 9 Mile, Pyay Road 11 Jun PJS 10/16, Subang Indah, Mayangone T.S 47500 PJ, Selangor, West Malaysia YANGON, MYANMAR

U Tun Myaing U Aung Hlaing Managing Director Assistant Director Tun Sandar Trading Co Ltd Department of Agricultural Planning No 352 Well Street Ministry of Agriculture Sittwey, Arakan (Rakhine) State Thiri Mingalar Lane PO Box 1015 Kaba Aye Pagoda Road YANGON, MYANMAR YANGON, MYANMAR

U Saw Aung Dr Nyan Taw General Manager Consultant - Backyard Hatcheries Myanma Agricultural Produce Trading Food and Agriculture Organisation of the Ministry of Commerce United Nations No 70, Pansodan Street Department of Fisheries YANGON, MYANMAR 50 Ban Road, YANGON, MYANMAR

Dr Soe Myint U Soe Lwin Managing Director Manager Universal Concord Asia-Japan Group Co Ltd General Trading Company Limited Room 1, Building 55 No 41/G Yangon-Insein Road Bahosi Housing Avenue Kamayut Township 11041 Lanmadaw Township YANGON, MYANMAR YANGON, MYANMAR

117 Daw Theint Theint U Pann Ei Myaing Director Agricultural Medicines Myanmar Japan Relations Centre Limited Instruments and Gardening Tools 124/126, 50th Street Western Side, Zay Lay Street Pazundaung TSP Pyin OO Lwin YANGON, MYANMAR MYANMAR

U Maung Maung Lay Mr Michael Chin Yum Yum Managing Director Instant Noodles Distributor Tennant Oriental Limited No 50, Lanmadaw Road 216-222 Mahabandoola Road Latha Township 9 Floor, B8-C8, Bo Myatt Tun Building YANGON, MYANMAR Pazundaung Township YANGON, MYANMAR

U Win Naing U Myo Chit General Manager Director Anawar Hlwan Co Ltd Anawar Hlwan Co Ltd No 113 No 113 52nd Street 52nd Street Pazundaung TSP Pazundaung TSP YANGON, MYANMAR YANGON, MYANMAR

U Ohn Maung U Maung Maung Than Senior Analyst Marketing Consultant Myanmar Survey Research Myanmar Survey Research 55 Maha Bandoola Garden Street 55 Maha Bandoola Garden Street YANGON, MYANMAR YANGON, MYANMAR

U Kyaw Hlaing U Aye Cho Vice President Director - Business Development Myanmar Survey Research Aung Myay International Co Ltd 55 Maha Bandoola Garden Street No (28), Shwe Taung Dan St YANGON, MYANMAR Lanmadaw Township YANGON, UNION OF MYANMAR

Mr S M Shamsul Alam U Ko Ko Vice President & Chief Representative M.Sc QII Chemistry National Bank Limited Yadanarsupon Hotel Representative Office No 12 (A), Aungsitthe Ward 42A Komin Kochin Road Yezarni Road Bahan TSP Nan Shie Mandalay YANGON, MYANMAR UNION OF MYANMAR

Mr Graham J Leonard U Kyee Shein Principal Managing Director Lenfam Pty Ltd A.M.A Group Limited Strategic Consultants No. 79 Khine Shwe Wah Street Unit 1, 16 Talbot Avenue Kamayut Township ST KILDA EAST 3183 YANGON, MYANMAR

118 Mr Fraser Morrison Mr Praba Nair General Manager HR Development Manager SPA F&B Limited Sedona Hotel No 1, Kun Gyan Road No 1 Kaba Aye Pagoda Road Mingalar Taung Nyunt T/S Yankin Township YANGON, MYANMAR YANGON, MYANMAR

Mr S Nanthakumar Mr Jim Sheridan Engineer Manager No. 6 Glenside Novotel Mandalay Myanmar British Embassy Resident Compound No (9) Kwin (416.B) Mahasi Thathana Yeiktha Road 10th Street, At the Foot of Mandalay Hill YANGON, MYANMAR MANDALAY, MYANMAR

U Thaw Darw U Tin Win Area Manager Agricultural Consultant Saya Distribution and Trading No 5 Thit Sar Street 105/107 Kayebin Road Mingalar Taung Nyunt Dagon Township, YANGON, MYANMAR YANGON, MYANMAR

U Maung Aye Capt Khin Maung Nyunt Agricultural Consultant Myanmar Navy (Retd) Room 35, Building 4 80 Inya Road Hlaing Yadana Estate YANGONG, MYANMAR Yagon - Insein Road Hlaing TSP, YANGON, MYANMAR

119

120 Annex A

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