provisional translation myanmar industrial development vision · provisional translation myanmar...

Provisional Translation

Myanmar Industrial Development Vision

～Next Frontier in Asia: Factory, Farm, and Fashion～

June 2015

Ministry of Economy, Trade and Industry

Myanmar industrial development vision

～Next Frontier in Asia: Factory, Farm, and Fashion～

<Contents>

1. Objectives of Myanmar Industrial Development Vision (MIDV)

(1) Issues and objectives of MIDV

(2) Connection to existing development plans/strategies

2. Urban-Rural Synergy Strategy

(1) Realize virtuous cycle and synergy between urban and rural development

(2) Foster industries exploiting comparative advantages at individual development stages

(3) Make environmental and social considerations to respect human dignity and societal

harmony

3. Future of manufacture industry: Urban manufacturing cluster formation

(1) Roles of manufacturing industry

(2) Rationale for fostering urban manufacturing clusters

(3) Characteristics of manufacturing industries to be attracted

(4) Specific manufacturing industries expected to be clustered for the coming 5 years

(5) Addressing current issues and new opportunities towards Myanmar’s industrialization

(6) Specific manufacturing industries expected in middle-/long-term under improved business

environment

4. Future of agriculture/forestry/fishery & other industries: Establishing value chain

exploiting local uniqueness and regional connectivity

(1) Outline

(2) Regional characteristics and available resources

(3) Pioneering industrialization of traditional products/cultural heritages

5. Priority policies for coming 5 years

(1) Improving infrastructure and connectivity to boost industrial development

(2) Improving rules and institutions for predictable and efficient business environment

(3) Human resource upgrading to support “Human-centered development”

(4) Other strategic and cross-sectoral policies

(5) Realizing sustainable, high-value-added agriculture/fishery/forestry industries

6. Toward realizing the future outlined by MIDV

1. Objectives of Myanmar Industrial Development Vision (MIDV)

(1) Issues and objectives of MIDV

Myanmar has been rapidly promoting economic liberalization since the transition to civilian rule in

2011. Specifically, it has relaxed import and export regulations, established foreign investment law,

enforced the labor act, and eliminated foreign exchange rates and shifted to the managed float

exchange rate system etc. As a result, Myanmar’s real economic growth rate for FY2013 increased

to 8.3% (IMF estimates), and it came to surpass the overall average growth rate of the ASEAN-5

countries (Thailand, Malaysia, Singapore, Indonesia, Philippines) in 2011 and later. In addition,

Special Economic Zone development is being promoted as one of the highlights of such economic

reforms, and foreign corporate investments have been steadily increasing in the soon to open

Thilawa SEZ, and it is producing great results.

(Figure) Real GDP Growth Rate of Myanmar and ASEAN-5 Developed Countries

Source: IMF

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(Chart) (Left) Trends in Foreign Direct Investments in Myanmar, (Right) Industry-wise Foreign Direct

Investments

Source: UNCTAD, JETRO

While such economic reform and economic growth are achieved, 4 years have passed from a

large transformation of economic policy, and the structural issues for Myanmar to achieve

sustainable growth in medium and long-term are becoming apparent. Firstly, expansion of fiscal

deficit and trade deficit continues, and the necessity to enhance the international competitiveness of

the domestic industry and establish a stable macroeconomic base is increasing. In addition, the

current economic growth is mainly driven by the service industry such as real estate, trade,

distribution & retail, etc., which are centered in urban areas, and there is a demand to achieve wider

economic growth in terms of both region and industry. And, it is reaching a stage where it is

necessary to work out an appropriate policy in a timely manner, after also contemplating how to

achieve balanced development of urban and rural areas, what approach to use to select

development projects from the multiple choices available, while also controlling the expansion of

foreign debt, and the way the medium and long-term economic and industrial development should be.

More specifically, there is a demand to formulate and implement appropriate policies over a wide

range of fields such as infrastructure and legal system, human resource development etc., under the

outlook of economic development at the industry level. As specific instances that reflect this situation,

for example, various issues such as the following are also becoming apparent. In order to solve

these issues also, there is a need to formulate and consistently execute the growth strategy for

progressively improving the economic and industrial structure of Myanmar.

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- Although foreign capital investment accumulation has begun at Thilawa SEZ etc., since

predictability is poor for the policies related to the manufacturing industry, which are long-term

businesses with a large amount of investment, there is a need to improve it, and dramatically

increase manufacturing industry participation willingness of domestic private companies along

with attracting foreign investments.

- Against the background of power shortage, acceleration of the development of power sources

is desired because the manufacturing industry locations that are averse to power failure

including the electrical and electronic parts industry will not improve. As a result of this, a great

effect can also be expected in improvement of public welfare, industrial development at each

stage including primary industries, such as, removal of hindrances towards expansion of cold

transport systems, frozen food processing facilities, farming / refrigeration / ice-making facilities

related to fisheries, dairy facilities etc.

- Because of undeveloped logistics infrastructure, the domestic industries are at a disadvantage

due to damage to the goods by land transportation or high domestic logistics costs even as

compared to imports from Thailand. And, there is a demand for improvement of logistics

infrastructure even for the development of agriculture and fisheries industry, considering the

situations where transportation of agriculture and fishery products etc. to urban areas, market

development are difficult.

- For companies that undertake contract manufacturing processing, there is a need to improve

incentives of giving exemption of custom duties etc. which is currently only available for those

which procure all the raw materials from overseas and sell all the products to overseas, and

encourage development of domestic supporting industries.

(Note) In Myanmar, while preferential treatment is being given by the CMP (Cutting, Making and Packing: CMP)

system in contract manufacturing type of businesses (raw materials are all imported and processed, finished

products are all exported in principle, and the processing party gets the contract manufacturing fees), the issue

mentioned above has been pointed out. In addition, it is said that efforts are being made to solve this in the new

investment law.

- Smooth expansion of labor supply from rural areas and human resource development is

necessary.

- Agricultural production increase and quality improvement do not progress because of poor

basic technology and skills. And, problems are seen in terms of safety due to excessive use of

pesticides. Therefore, there is a need for encouraging mechanization, introducing knowledge

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of basic cultivation techniques, promoting proper use of fertilizers and pesticides etc.

- There is a need to build a value chain that commensurate with high-value-added products,

given the current situation where the sales methods remain as they were in the past even if

farmers learn and practice organic farming, and access is not possible to markets where the

added value is assessed properly.

- The sophisticated designs and techniques in the traditional culture of various places around

Myanmar are being lost in rapid industrialization, and since these are difficult to recover once

lost, the appeal to the luxury market of the world needs to be exposed.

For these, first and foremost, it is essential for Myanmar government officials to plan and execute

policies with their own hands. At the time of planning policies, it is desired that the Myanmar

government and government officials thoroughly grasp the actual state of Myanmar companies and

realities of the industrial structure, and additionally get a sense of the market, and then develop

comprehensive policies based on this. When the Myanmar government officials are boldly

challenging such issues, the Japanese government should also be prepared to consider cooperating.

Under such a premise, the Myanmar Industrial Development Vision has the following 2 purposes

based on the awareness of the issues described above.

(1) To show projection of Myanmar’s staged industrial development that simultaneously achieve

geographically balanced development and sustainable economic growth

(2) To clarify priority industrial policies to be implemented for the coming 5 years to realize the

above future projection

In response to the fact that "From the point of view of sustainable economic growth, Japan should

cooperate in specifying the details of the initiatives necessary for the industrial development of

Myanmar." was welcomed in the Myanmar-Japan Joint Initiative (5th Meeting) held with Dr. Kan Zaw,

(Minister for National Planning and Economic Development) and Mr. Tateshi Higuchi, (Ambassador

Extraordinary and Plenipotentiary of Japan to the Republic of the Union of Myanmar) as co-chairs in

October 2014, this vision is one that has been compiled through carrying out internal and external

research and analysis, as well as, vigorously conducting interviews with experts, private companies

etc., and discussions in “Myanmar Industrial Development Expert Committee” consisting of

Japanese experts in this field12.

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This vision received valuable comments from and extends gratitude to everyone who is a conference member: Prof. Fukunari Kimura - Professor, Faculty of Economics, Keio University (Chair), Prof. Kenichi Ohno - Professor, National Graduate Institute for Policy Studies, Prof. Ikuko Okamoto - Professor, Global Community

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In addition, while the “Industry” referred to here is not limited to the manufacturing industry, and is

one in which a wide-range of industry groups are taken into consideration, such as the service

industry including agriculture, forestry, and fishery / mining / tourism, it has been described with focus

on the manufacturing industry and agriculture, forestry & fishery industries, in light of their importance

in Myanmar economy.

(2) Connection to existing development plans/strategies

So far, Japan has consistently supported policymaking for Myanmar’s economic reform and

development, including the early economic structural adjustment support project of the 2000s.

After its transition to civilian rule, the Ministry of National Planning and Economic Development

took center stage and drafted the National Comprehensive Development Plan (NCDP), as a grand

design of the development plan of Myanmar. At this time, Japan gave an intellectual contribution

through the formulation (Year 2013) of Myanmar Comprehensive Development Vision (MCDV) by

Economic Research Institute for ASEAN and East Asia (ERIA).

(Figure) Myanmar Comprehensive Development Vision (MCDV)

Department, Toyo University, Prof. Toshihiro Kudo - Professor, National Graduate Institute for Policy Studies, Dr. Seiya Sukegawa - Japan External Trade Organization (JETRO), Planning Department Overseas Regional Strategy (ASEAN) Manager, Prof. Shigeru Matsushima - Professor, Tokyo University of Science Graduate School. Further, it received valuable comments and cooperation from and extends gratitude to many people, including Japanese Chamber of Commerce and Industry, Myanmar participants. 2 While accuracy of description is intended for, this vision does not fully guarantee that accuracy. Further, it

does not necessarily reflect the views or policies of a particular organization, and nor does it impose any rights or obligations on the parties concerned that are legally binding.

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NCDP is a policy framework whose coverage period is up to 2030, and it sets forth the following 2

long-term goals,

Build a growing, diversified and sustainable economy

To ensure inclusive growth and development are people centered

and it presented the following 7 strategies to support those goals.

Strengthening Governance & Institution

Enabling Business Environment

Expand domestic & global connectivity

Fostering Competitive Sectors

Local Economic Potentials

Human Development

Environmental Protection

Subsequently, Myanmar formulated a 5 year plan targeting 2011 to 2016 on the basis of NCDP and

executed policies for economic development3.

This vision has been developed in response to the fact that in proceeding with these initiatives and

orienting them towards balanced urban and rural area development, and that the Myanmar

government is seeking advice for this. And, it is a vision that clarifies the specific strategies and

policies in order to overcome the structural issues being faced by the Myanmar economy currently,

and realize balanced land development and sustainable economic growth. Further, this vision has

intensively analyzed the way to develop industries responsible for Myanmar's economic

development, which has not been clear until now, and the contents described above are based on

such analysis.

In this way, this vision can be said to be one that evolved past policy documents and made them

concrete. It is desired that this vision is utilized actively in the Myanmar government, so that it can

contribute to the formulation of policies for Myanmar's economic development in related fields,

including the new 5 year plan being developed for 2016 to 2021.

3 Further, several policy documents have also been created in Myanmar, which focus on specific areas. For

example, priority sectors or priority initiatives beyond the sectors have been pointed out in "National Export Strategy of Myanmar 2015-2019" that shows the direction of future export policies. Also, "Multi-dimensional Review of Myanmar Volume 2. In-depth Analysis and Recommendations, OECD Development Pathway" published by OECD in 2014 points out the need to shift to the various kinds of modern economic activities, from economy based on agriculture that is dependent on the current small-scale agriculture, and it also points out the importance of human resource development, effective utilization and allocation of funds.

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(Figure) Myanmar National Export Strategy (NES) 2015-2019

NES priority sectors

1. Beans, pulses and oilseeds

2. Rice

3. Fisheries

4. Textiles and garments

5. Rubber

6. Forestry products

7. Tourism

NES priority cross-sector functions

1. Trade facilitation and logistics

2. Quality management

3. Access to finance

4. Trade information and promotion

The following section shows the “Urban-Rural Synergy Strategy” planned by Myanmar Industrial

Development Vision, and describes the measures that must be worked on in the next 5 years, after

depicting the future vision of the manufacturing industry and agriculture, forestry & fishery industries,

high-value-added local industries and respective industrial developments that embody it.

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2. Urban-Rural Synergy Strategy

With this vision, it is proposed that Myanmar is to drive this “Urban-Rural Synergy Strategy” to

create a synergistic effect of both urban and rural development with 3 basic concepts as below. With

this, Myanmar would implement the balanced development and sustainable economic growth of its

land.



(3) Make environmental and social considerations to respect human dignity and societal harmony

(Figure) Urban-Rural Synergy Strategy

Below are the details written to decide how to use these 3 as basic concepts or how to implement

the balanced development and sustainable economic growth with the help of these three concepts,

in order to create the synergistic effect of both urban and rural development.


The current working population of rural prime industries that is agriculture/forestry/fishery

contributes more than 60% of entire working population and almost 30% of GDP. If we calculate

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the labor productivity with simple comparison, it is just 1/3 of all other industries which is low.

Myanmar has potential export capacity of various agricultural/forestry/fishery products even today.

And it has great opportunity to increase the productivity and expand its export. For rural

development, it is imperative to push forward the modernization of agricultural/forestry/fishery by

mechanization or promotion of proper use of pesticides and fertilizers, to increase the productivity

and to strengthen the international competitiveness. On the other hand, hereafter by promoting

the accumulation of industries including manufacturing industries for little less than 40% of entire

population in the urban areas which shares almost 70% of entire GDP, it is expected that the

employment and export will increase. For this, It is required to radically improve the vulnerability of

urban and industrial infrastructure such as electricity that causes a bottleneck of economic activity

in urban areas and streamline the location environment of manufacturing industry including those

with foreign capital.

The key industries in rural and urban areas have different characteristics and they face different

issues, but they handle those issues using their respective characteristics. In order to handle the

issues, synergy is to be created by simultaneous development of both the regions rather than

handling the issues only in any one region as it does not really prove effective. This can contribute

to exhibit their respective characteristics and resolve their issues. More concretely, agriculture in

rural areas is expected to realize substantial growth by improving productivity through

mechanization and other modernization efforts while it will produce surplus labor in rural areas.

On the other hand, industries in urban areas are expected to accumulate and make development

with focus on labor intensive manufacturing industry by introducing foreign capital or inducing

full-scale entry in domestic manufacturing industry, but large labor force is required for this. By

utilizing surplus labor force of rural area in rural areas, virtuous cycle of employment is created

and it is continued to implement the development of entire Myanmar economy based on the

mutually beneficial relation of both the regions.

Due to the expansion of consumer market associated with development of urban areas, the

demand of rural products will be increased. And the daily commodities produced in urban areas

will be supplied to rural areas where household income has been increased due to increase in

productivity. This contributes to the improvement of both the consumers. Additionally, as labor in

rural area may transfer their earnings to rural areas from urban areas, leveling effect between

localities is also expected.

Such effective functioning of mutually beneficial linkage of rural and urban areas is crucially

important for balanced development of Myanmar economy. The enhancement of the connectivity

is the key for this effective functioning. The improvement in logistics, transportation and

information infrastructure and enhancement of the connectivity between the localities will be the

vital elements to create the synergistic effect by establishing both the rural and urban

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development.

It has been indicated that already there is labor shortage in both agricultural village and urban

areas on the field site of actual employment. This is due to the impact of difficulty in labor

migration including lack of intermediary function between job opportunities and job applicants,

mismatch between required knowledge, skill and expertise and vulnerability of residential

infrastructure in urban areas. Of course, this discussion does not deny the existence of such

issues, and it is important for the efforts to solve such issues to create above macroscopic

virtuous cycle. In case of development of rural economy, we need to consider that for medium and

long-term economic development, the multi-layered development such as existence of not only

rural agricultural village but also area that serves certain urban functions and existence of rural

manufacturing industries and rural processing industries that contribute to the rural employment

creation.


Comparative advantage is a fundamental concept of international trade theory. In a country, it is

seen how Goods A can be produced with cheaper or higher price as compared to Goods B. When

the same is compared with another country and when Goods A can be produced with much

affordable price, it is said that that particular country has comparative advantage in production of

Goods A. All counties prioritize in production of goods having cheaper advantage and economic

welfare of that country can be improved by engaging in trade. More importantly, it is different than

the "Absolute advantage" where an easy comparison of the productivity of the said goods in a

country is made with another country. It is the consistent comparison of relative productivity

measured in other products in same country. Theoretically, every country possesses the goods

having comparative advantage.

For the industrial development based on comparative advantage, the industries to be

developed are not arbitrarily decided by the government but it follows the directions from the

market. The comparative advantage keeps on changing based on the natural and social

environment and developmental stages of economy. Due to the increased globalization, people,

goods, capital move dynamically on a world scale. If the current trend of progressing the fusion

and collaboration evolution of world economy is taken into account, desirable allocation of

domestic resources is implemented by maximal utilization of marketing principles even in

Myanmar and it is important to activate the domestic economy.

Government should reform the development of industries having comparative advantage so

that it is not inhibited by unnecessary regulations or government interventions. It should also

strategically perform environmental improvement and support on physical and human side so that

proper investment and business development are carried out based on marketing principles. By

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this environmental improvement, it is important to consider this industrial field that can exhibit the

comparative advantage of homeland as a key. The industrial fields capitalized by comparative

advantage in homeland can be considered as the promising fields that can survive even in intense

competition with other countries. It is important to prepare the system and infrastructure to

strengthen the competitive advantage possessed by such industries.

Below 3 points can be considered as the origin of comparative advantage for present Myanmar.

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(ⅰ) Abundance in low-cost good-quality labor

As shown in the following figure, Myanmar has the cheapest wage levels as compared to

neighboring countries such as China, India and other ASEAN countries and has more than 35

million productive-age population (15 to 64 years). In addition, the literacy rate in Myanmar is

above 90%. There are many opinions from Japanese companies established in Myanmar that

Myanmar people usually dedicated themselves to work. It is thought that competitive advantage of

good quality, low cost and abundant labor force can be maintained in the future by retaining the

increase in wages with improvement of the productivity at the same level and it is important to

make a best use of good labor force along with such quality and quantity at the time of industrial

development.

(Figure) Basic Monthly Salary of General Workers in Asian Cities

Source: Japan External Trade Organization (JETRO)

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(Figure) Literacy Rate Comparison of Asian Countries

Source: United Nations

(ⅱ) Geographical advantage of proximity to large markets/production bases

Myanmar is surrounded by Asian developing countries such as China, India, Thailand,

Bangladesh and Laos. In particular, China, India and Thailand are achieving high-performance and

are forming a huge consumer market. In view of promoting the industry to leverage the increase in

export, it is advantageous to be closed to the huge market because it reduces the cost of

transportation and there is a high possibility of superiority as compared to other competing

countries.

Myanmar has a long coastline facing the Indian Ocean on the west side of Indo-China peninsula;

it is a bridge that connects the regions from East Asia and South Asia to Africa. It is a suitable

location for logistics, intermediate processing and other functions. It has a capability to strengthen

the comparative advantage of related industries.

By exposing such geographical advantages through the development of logistics infrastructure

such as roads and ports, it is expected that Myanmar will further increase the competitiveness of

industry having comparative advantage and will expand the trade with neighboring countries.

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(Figure) GDP Scale of Myanmar and Neighboring Countries (Year 2013)

Bangladesh141

Cambodia16

Hong Kong*274

Indonesia*870

Laos10

Malaysia312

Myanmar*56

Philippines272

Taiwan489

Thailand387

Vietnam171

Japan4,902

Korea*1,222

China9,181

Indonesia870

India1,871

China9,181

Source: Created by IMF

(ⅲ) Vast variety of tradition, culture, and local uniqueness to develop agriculture/forestry/ fishery

Regions having different climatic conditions such as northern mountain regions, eastern cool

plateau regions, central arid regions and southern delta regions exist in Myanmar. Myanmar have

various agricultural and forestry resources in various regions. Additionally, in coastal areas, there is

a potential to develop marine resources. This means there is a possibility that a wide range of

efficient agricultural/forest/ fishery products needed in overseas consumer market are produced

and exported.

Myanmar is a multi-ethnic country. Various regions of the country have refined designs and

techniques rooted in the history and traditional culture. These also include designs and techniques

having the impact of ancient Buddhism culture and designs and techniques using indigenous

tradition and culture of historical legacy. By using such designs and techniques, and capturing

needs of overseas high-end market, high-quality products can be exported to high-income lifestyle

market and it can be connected to industrial development.

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(Chart) Local products in Myanmar

Type Examples of local products

Textiles · Variety of traditional textiles (made of cotton, silk, lotus fiber) in different regions (Kachin, Kayah, Kayin, Shan, Chin, Mon and Rakhine)

Embroidery · Embroidery products characteristic of individual ethnic cultures

Handicrafts · "Pathein umbrella" in Ayeyarwaddy region · Bagan lacquerware" in Mandalay region · Silverware in Shan and Kayin States

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Regarding tourism, there is only one registration of world heritage site, but Myanmar has various

and abundant natural and cultural resources and 14 sites are registered in provisional registration

list. On the other hand, tourist attractions in Myanmar are not recognized enough abroad. Tourism

services are very small and undeveloped as compared to other Asian countries and do not meet

the potential needs of foreign tourists. Therefore, due to expansion and diversification of services

and sales network, there is a wide scope for developing the tourism industry. When making a

tourism plan that extends across the region, travel schedule will be extended for a long-term and

the cost will also be increased. The number of tourists is not increasing. Therefore, potential

advantage of tourist attractions is expected to connect to industrial development by expanding and

diversifying the tourism services and sales network and by reducing the required time and cost for

intercity transportation through development of transportation infrastructure.

(Figure) Provisional Registration List of Myanmar's World Heritage Site (Right) and

its Distribution Chart (Left)

Source: Created by UNESCO

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(Figure) Country wise Tourism Industry Scale

Source: World Travel & Tourism Council

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(3) Make environmental and social considerations to respect human dignity and societal harmony

As shown in NCDP, Myanmar emphasizes on human-centered development and not the

development that focuses only on the economic growth. Human-centered development includes

the viewpoints such as well-being and quality of life, capacity building and participation into

community. It is a concept which is strongly related to the fields such as basic human needs,

education, health and hygiene and medical care. Economic growth never conflicts with the

human-centered development by increasing the necessary resources. Especially, development of

proper basic infrastructure contributes to advancement of economic and industrial structure. It also

directly contributes to human-centered development through consumer improvement. Such kind of

development is essential. For example, stable and low-cost supply of electricity to the citizens of

Myanmar means stable electricity supply to regional households, public organizations such as

medical care and education and industries; it also contributes to human-centered development.

Thus, expansion of power supply is urgently needed, and it has to consider properly balanced

power mix.

However, if the development for such economic growth threatens the lives and human rights of

residents and destroys natural and social environment, rather there is a negative impact from the

viewpoint of human-centered development. Therefore, it is not appropriate to underestimate the

negative impact on natural environment and local community in case of economic development

including such kind of infrastructure development and the situation that significantly damages the

human dignity and societal harmony should not be created. In infrastructure development projects

particularly having a big impact on natural environment and society, careful Environmental and

Social Considerations (ESC) are required. In many countries, the problems such as public health

and safe life are threatened due to destruction of natural environment such as atmosphere, water

quality and soil pollution; social environment deterioration due to destruction of resettlement,

landscape and cultural heritage, are occurring frequently. Even in Myanmar, there are cases in

which projects are delayed and stopped due to impact on environment in some mine and hydraulic

power plant projects.

The important issue in promoting the development where careful environmental and social

considerations are secured is to adopt the appropriate technology to mitigate the impacts of

environment aspects as far as possible and to do the development according to the international

standards and procedures. In particular, while choosing and implementing the development project

such as infrastructure, as already recognized in international practice, it is necessary to evaluate

the environmental and social impact and review the alternative solution or mitigation measures so

that adverse effect can be avoided or minimized as and when required. Government is

accountable for the enhancement of environmental administration such as streamlining the related

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legislation including monitoring or information disclosure and it is necessary to promote the

development project under the relief and trust of the nation by giving them the explanation. For

example, for big power plant projects that are deemed to be necessary and appropriate,

introduction of proper measures and technology for environmental protection, evaluation of

environmental and social impact are of primary importance. On that basis, monitoring of air, water,

and other environmental pollution, and information disclosure endorsed by satisfactory

environmental legislation enables construction and operation of power plants with due

environmental and social consideration. Use of JICA guidelines or standards is desirable, if

needed, to proceed with the urgent infrastructure development before environmental regulations

are implemented.

(Figure) Environmental and Social Considerations in JICA

This is the reason why "Urban-Rural Synergy Strategy" should be implemented by actualizing

balanced development and sustainable economic growth of its land. Based on this, a picture of

future vision of the industrial development of manufacturing industries and high-value-added local

industries is created in following two sections.

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3. Future of manufacture industry: Urban manufacturing cluster formation

(1) Roles of manufacturing industry

Cluster formation of manufacturing industry in the urban area is very important for targeting

growth with well-balanced distribution of land. The development of manufacturing industry

provides stable employment opportunities to the citizen including locals, creates consumer market

for local products through creation of comparatively high-income stratum and thus, benefits of

economic growth are penetrated into the society which also includes locals. Production of

value-added high-quality export products earns foreign currency which also contributes to

reduction of trade deficit and stabilization of macro economy. Furthermore, as the mid-term goal,

continuous growth in productivity can be anticipated through improvement in production process,

and this industry will be the center of economic growth due to development of related service

industries such as finance/logistics/legal work, etc. The proportion of agriculture/, forestry/ fishery

industry and energy-related industry is higher in the present economy of Myanmar and majority of

export is of raw materials. The growing fields are service industries such as real

estate/trade/distribution and retail, etc. The proportion of manufacturing industry is small in terms

of both production and export and Myanmar is dependent on import for its needs. Hence, in the

view of this situation, growth of manufacturing industry in Myanmar is an urgent need.

(Figure) GDP Structure of Southeast Asian countries (Year 2012, left), Main Export Items of Myanmar (FY

2013, right)

Source: Asian Development Bank, Myanmar Directorate of Investment and Company Administration

(2) Rationale for fostering urban manufacturing clusters

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Hard infrastructure such as electricity, transport, communication is vital for the development of

competitive manufacturing industries. The present state is such that electricity, land transportation

network and communication have been centered in Yangon and farther from Yangon, more difficult

it is to receive the economic benefits. Yangon is also the main international and foreign goods

distribution port. Thus, considering the above situation, it is realistic to centralize manufacturing

industry in the urban area centered in Yangon and Mandalay, for attracting foreign capital in the

coming few years.

The impending cluster formation of the manufacturing industry in the urban area will boost the

economic growth of Myanmar while realizing its merits. Various advantages such as reduction of

consolidated cost related to division of labor, buffer function against fluctuation in conditions,

promotion of innovation, including advantage of cooperation with related service industries such as

distribution, legal and finance etc. can be anticipated from the cluster formed location of the

industry related to finished goods, parts, raw material industry and not the one where cluster is not

formed. Importance of Two Polar (namely Yangon and Mandalay) development as a way of spatial

development of Myanmar has been identified also by MCDV formulated by ERIA. A development

strategy wherein regional characteristics of an area are revived, difficulty of introducing foreign

capital into all regions and of consolidating modern industrial estates is recognized, risk of

spreading resources of development over a plurality of regions is avoided and Yangon and

Mandalay having high population, fixed infrastructure and industrial cluster formation are made as

important points, has been proposed.

Therefore, though it is rational to locate it at an area where special manufacturing industry is

located from the viewpoint of vicinity of site of growth of raw material or utilization of conventional

technology and industrial cluster formation etc., adequate investment and cluster formaton in the

urban area of Yangon and Mandalay must be promoted for associating the funds and resources

restricted to Myanmar with a sustainable economic growth.

(3) Characteristics of manufacturing industries to be attracted

(ⅰ) Differentiation from neighboring countries

Differentiation with neighboring countries is a very important viewpoint for studying future

development of manufacturing industries in Myanmar. Many ASEAN countries achieve economic

growth by attracting manufacturing industries with foreign capital and export leadership so as to

execute high value addition of the industry. If ASEAN Economic Community (AEC) is established,

competition with other ASEAN companies in a more integrated market will be a must. However,

concept of comparative advantage suggests presence of potential export competitive industry in

Myanmar. It is henceforth important to attract industries differentiated from these countries after

forecasting competition with the neighboring countries for a growth-oriented Myanmar.

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These viewpoints are essential for solving the problem of dependency on import of various

materials, development of internal demand-oriented industry for materializing domestic supply and

export-oriented industry reviving comparative advantage mentioned above, in Myanmar

considering the next 5 years.

(ⅱ) Actual demand in domestic/overseas markets

Industrial growth is not achieved by developing unilateral supply capacity but is materialized by

the existence of demands to be met and properly handling these demands. A careful study of

existence of enough demand in the domestic and foreign market and if products of Myanmar can

capture these demands is trivial at the time of achieving industrial growth.

For example, as automobile industry, used cars are getting rapidly popular around the urban

area of Yangon and this industrial field is prompting domestic location considering magnitude of

value addition, employment creation and spread of supporting industries. However, amidst the

progress in expansion of global production base, construction process of knock-down system

already exists partially and its further fixed expansion may materialize. However, existence of a

domestic market where few ten thousand ~ few hundred thousand cars can be sold annually is the

basic concept of locating a production base for full-scale production of finished cars. When there is

no actual demand for new cars, productivity will lower and the industry cannot cope with the

imported products even if locating of automobile industry progresses in one go. As a result, it will

not be established as there will be no government support and it will become a domestic industry

with no competitive strength.

Not being able to capture enough demand is also an example of problem that is originated in the

problem of supply. The packaged food industry of Myanmar has high potential due to rich

agriculture/forestry/fishery resources and it has tried export of dry fruits to advanced countries in

the past. However, quality of products currently being produced in Myanmar cannot meet the

demand of advanced countries due to hygiene standards and discoloration during processing. Also,

the marketing to domestic rich stratum, foreign tourists, overseas demand which are considered to

be potential demands have not been properly established. It has remained as a limited scale

industry due to these reasons. Efforts from private companies are needed for this. However, there

is room for government to boost industrial growth by consolidating quality standard, management

and examination systems, logistics infrastructure etc.

Not only exposure to demands, but comprehensive thinking including reclamation of potential

demands is needed and support of government from political viewpoint or removal of obstacles is

sometimes sought. The garment industry which is the representative CMP (Cutting, Making and

Packing) industry of Myanmar saw a definite growth by reviving exemption of import duty on raw

material for CMP companies with comparative advantage due to good-quality cheap labor force.

23

However, exemption for CMP is needed for import of entire quantity of raw material and hence,

Myanmar domestic supply cannot be revived for a part of raw material which has hindered the

development of supporting industries such as spinning, woven cloth, secondary material etc. If

further growth of garment industry is anticipated, capturing of the expanding demand for raw

material as the potential domestic demand and government conversion for shifting to domestic

production is needed.

(ⅲ) Importance of FDI

Foreign companies not only bring funds, technology and latest management know-how to the

country in which it is investing, but can also bring overseas marketing, procurement and production

network. Exponential growth that could not be achieved by Myanmar alone can be anticipated by

calling foreign companies and effectively utilizing this advanced knowledge at the time of

attempting future growth in manufacturing industry in Myanmar. Foreign companies were the main

factor in the economic development of China that became a country that accomplished rapid

development from a backward nation from 1990s to 2000s. In particular, as export leaving behind

foreign companies, proportion of products of foreign companies holding rapidly expanding export

increased rapidly till year 2005, achieving 58 % growth in year 2005, thus making it clear that role

played by foreign companies is very big.

(Figure) Proportion of Foreign Companies in Export of China

40.7 41.0 44.1 45.5 47.9 50.1 52.2

54.9 57.1 58.3 58.2 57.1 55.4 56.0 54.7

0

10

20

30

40

50

60

70

80

90

100

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

(％)

Source: JETRO “Japan – Sri Lanka Business Needs Survey”

With the progress of globalization, the government of the country in which investment is made

does not choose the investing foreign company but the foreign company generally compares and

evaluates plurality of countries and selects subjectively. This trend is stronger for a global company

in possession of useful capital, technology and network as mentioned above and how appealing is

the business environment of the country and how the government invites such company amid

24

fierce competition with other countries, namely how the domestic direct investment will be

qualitatively and quantitatively expanded, is important. Moreover, in most cases, it is difficult for the

domestic regional companies to independently access international market and compete and

considering the long time taken, the possibility of development for domestic companies will widen

by locating of the foreign companies in Myanmar and forming a linkage with domestic companies.

It is also essential to consider that development of infrastructure and system is not for not losing in

the competition with other companies for attracting foreign companies but so that domestic

industry competes with foreign companies and to form a base for development.

(4) Specific manufacturing industries expected to be clustered for the coming 5 years

The types of industries for which cluster formation can be anticipated till around Year 2020 as

per “Urban–Rural Synergy Strategy” are as follows. As explained above, the development of an

industry basically takes place by establishing a production base as a result of selection of business

strategy of the company, expansion and introduction of foreign capital. In this vision, reference to

the individual industry type is just for description and illustration of possible future of expansion of

the industry. However, many of the industries given here are presently emerging or have shown

good results in production and export and their cluster formation progress has started gradually.

During the next 5 years, more development of environment both in physical and human terms will

be done around urban area as a result of which flow of industrialization will be further accelerated.

(ⅰ) Construction material

In the construction market of Myanmar, demands for roads, bridges are increasing with the

background of commercial buildings, hotels mainly in urban areas and active development of

infrastructure. Thus, the scope for expansion of market is high. As shown in the following figure,

number of approvals and licenses for domestic investment in real estate in Myanmar is rapidly

increasing during the recent years. The following things are used for vital real estate development

or infrastructure development. Namely, construction material (wood, stone, concrete, iron and steel

etc.), interior and exterior finishing material (masonry wall material, floor material, roof material,

different types of boards, furniture, hardware for construction etc.), performance retention

materials (seal material, heat-insulating material, sound absorbing material, waterproof material

etc.) and types of raw materials like wood, cement, clay, metals, plastic etc. Their demands will

also increase in the future. The demand quantity of cement that is used in many of the applications

such as roads and real estate construction for Myanmar was around 4 million tons in the Year 2012

however it will widely increase in the recent years. As the supply capacity, the domestic market,

with state and local combined, is present at 15 locations. However, the present state is that this

stretched demand cannot be adequately met according to the Ministry of Industry. Therefore, the

25

Ministry of Industry is currently executing international bidding for joint venture so as to expand

production capacity based on joint venture between domestic and foreign companies and has

selected 13 foreign affiliate companies out of which 9 plants have already obtained approval of

investment committee (As in February 2014). The cement industry in Vietnam or Thailand has

supply capacity 10 times higher than that of Myanmar and has grown to export to other countries.

Considering examples of these countries, there is a large scope for development of construction

material related industries in Myanmar.

(Figure) Transition in Number of Approvals and Licenses for Investment in Real Estate in Myanmar (left),

Scale of Cement Market of Various Countries (Year 2012) (right)

* Demand for Myanmar, supply for Vietnam and Thailand

Source: VDB Loi, METI, IPSOS

(ⅱ) Food processing

It has been estimated that amount of consumption of packaged food in Myanmar will increase

with economic growth and improved earnings. In particular, as for dairy products, soft drinks,

pastries and flavoring, instant food, cheap conventional substitute food that is consumed daily by

all age groups from infant to elderly people is available and hence, price is more important than

quality and thus, there is high possibility of local production. More than 50 % of food consumed

belongs to 5 categories mentioned above even in Thailand and Vietnam having similar dietary

habits as Myanmar. Construction of plant of Japanese company, execution of test marketing is

already being done in succession as pioneering examples in this field.

26

(Chart) Pioneering Investments and Processed Food Market in 2014(10Bil dollars)

Source: Euro Monitor, created by individual companies such as HP

(ⅲ) Chemicals (e.g. fertilizer, detergent, paint)

The short-term locating of the large-scale petroleum refining and petrochemical industry is

difficult since the demand for petroleum products mainly gasoline or light oil should reach a fixed

scale (0.2 million dollars a day) as a required conditions for locating. On the other hand, there are

various chemical products that are produced by easy process that can be located at an early stage

with prerequisite of high domestic demand.

Particularly, fertilizers are anticipated to have high domestic demand. It can be anticipated that

use of fertilizers which was restricted till now will rapidly increase in future without missing the

modernization starting with use of good-quality fertilizers for improving agricultural productivity.

Moreover, it is also assumed that demand for surfactants used in aromatic cosmetic products such

as shampoos, soaps, toiletries etc. will increase with improvement in earnings of citizens and

hygiene awareness and demand for paints will increase with the expansion of above mentioned

construction market.

Examples of start of penetration by foreign affiliate companies has started to appear with

Japanese companies. Kansai Paints has established a production subsidiary jointly with a local

company in the Year 2015 and is planning to go operational with the line of 1000 kilo liters of

27

monthly production capacity. Mitsubishi Corp. has invested in Rubia Limited which is a subsidiary

of Capital Diamond Star Group (CDSG) with a view of possibility of opportunity in fertilizer

business.

(Figure) Ratio of Area Under Irrigation of Asian Countries and

Fertilizers Consumption Figures (Year 2013)

Source: FAO

(ⅳ) Plastics processing

Plastic processed products are used in household miscellaneous goods such as tableware,

interior miscellaneous goods such as chairs and accessories, other small articles and various

daily-use goods. They are also used in many of the electronic products, their parts and accessories.

Similar to a part of products in chemical products, increase in demand is estimated with

improvement in earnings of citizen and goods which are currently dependent on import from

neighboring countries such as Thailand are anticipated to be produced domestically.

The present plastic processing and production industry of Myanmar is around 1 hundred million

dollars based on plant shipment. However, Vietnam having advanced economic development is 10

times higher in terms of production standard than Myanmar based on shipment amount and similar

growth is anticipated in Myanmar also.

Moreover, the location of the same industry is of high importance from the point of contributing

to increasing manufacturing industry such as expansion of cluster formation of processing

technology such as injection molding to future precision molding or to molding technology of other

materials without stopping at increase of production amount or export amount of this industry.

(kg/ha)

28

(ⅴ) Textile products

As the textile industry of Myanmar, various fields such as spinning of cotton and silk, weaving,

sewing are clustered in north Burma zone from Mandalay to Meiktila since past, which has

domestic supply. The textile industry of Myanmar grew around Yangon mainly as production for

Europe and America in the 1990s. However, it fell for a long period after Year 2001 due to

economic restrictions by European and American countries. The recent years has seen expansion

due to effect of economic reform and export amount of garments reached 1 billion USD in the fiscal

year 2013, 1.3 billion USD in the fiscal year 2014 and is estimated to reach 1.5 billion USD in the

fiscal year 2015 according to Myanmar Garment Employer’s Union.

The present entire global apparel export market is of the scale of 400 billion dollars and little less

than 50% of it is in Asian countries with focus on China. The textile industry, particularly garment

industry is a labor-intensive industry. In particular, exports have largely increased due to low labor

cost in Bangladesh and Vietnam during the recent years. Myanmar has adequate comparative

advantage over these countries and hence, similar expansion of production is estimated in future.

In more developed countries such as China and Thailand, shifting of garment industry to other

countries is being seen due to increase in labor cost which is a tailwind for Myanmar even in case

of competitive environment. Actually, in the area of dying and printing , there is a case where

production base shifted from Thailand to Myanmar. Continuation of plant management in Thailand

has become difficult even for mild and upstream processes such as spinning from the viewpoint of

cost competitiveness which may generate flow of cluster formation not restricted to garment

industry.

(Figure) Apparel Export of the World (Year 2013) and Export Trend of Major Exporters (right)

Source: UN Comtrade

(ⅵ) Other industries

29

For the labor-intensive niche assembly industry, desire to shift from other regions where labor

cost is high to Myanmar where price competitive strength will sustain and intensify and cheap

skilled labor force can be assured, may increase. The following industry types and items belong to

the fields of such labor-intensive assembly. Other ASEAN countries were successful in attracting

foreign companies for these items during the period in which their economic standard was same as

that of Myanmar and location of production base of similar items in Myanmar can be anticipated in

future. However, as mentioned already, these are mentioned so as to depict and present the future

image. Especially, detailed items are mentioned as per the combination of examples from other

ASEAN countries, but for the actual production base location, it is important to consider that it is

also dependent on the construction status in and out of the production network including upstream

and downstream of the world market and management strategy of individual company.

In the field of machinery for transport, Asmo that is into development and production of small

motor for automobiles has already shifted assembly plant for wiper system for automobiles from

Indonesia since Year 2014 and production has already started. Moreover, a local company of

Myanmar, UMH has started production of airbag parts since Year 2014 in addition to production of

apparels for Japan since past and is into study of propriety production since Year 2015.

(Table) Product examples of labor-intensive assembly & other industries

(5) Addressing current issues and new opportunities towards Myanmar’s industrialization

(ⅰ) Current issues and new opportunities

30

The concept of industrial development categorized by industry type as mentioned above is a

process of economic growth pursued by many countries with focus on East Asia. However, it is not

easy to materialize similar growth in Myanmar in this age. The fact that period during which similar

growth took place in Thailand or other more-developed countries is different from the situation in

Myanmar such as formation of ASEAN Economic Community (AEC), presence of neighboring

countries where early economic growth was materialized, must be taken into consideration.

In ASEAN countries such as Thailand, Indonesia, Vietnam etc., freedom of investment was

competitive, business environment was prepared, favorable measures were taken to attract

foreign capital and cluster formation of manufacturing industry including support already

progressed appropriately. Amid this, there is no reason why foreign companies will choose to

locate their plants in Myanmar with focus on export-oriented model if location environment superior

than that in neighboring countries is not available. Furthermore, with inauguration of AEC this year,

trade within ASEAN region has become smoother and it has become much easier for the foreign

companies to export to the countries within the region from the most favorable manufacturing base.

Movement of entering and withdrawing of global companies has also further accelerated and more

efforts are needed to grab new investment or continuous location of foreign companies.

One of the above mentioned modern problems that did not exist in the past was inventing new

opportunities that did not exist before in similar background situation. In a more concrete manner,

with the background of reducing service-linked cost crossing the boundary by freedom of trade

and investment and innovation, the scope for changing the global assembly-line production to

more specialized short process units is wider and further international specialization has

deepened so that Myanmar can exhibit its competitive strength by specializing in specific process.

The neighboring Thailand effected policy change of applying equal minimum wages of 300 baht

(daily wages) on a national scale from Year 2013 along with regarding investment encouraging

and promoting target industry as an important advanced industry. Hence, foreign companies

which already have a base in Bangkok or location regions in Thailand are seeking a new base in

SEZ in neighboring countries like Laos and Cambodia that share border with Thailand. For

example, Japanese Nikon which is a major digital camera manufacturer has shifted a part of final

assembly process carried out in main plant in Thailand to Laos. Even if the distance between the

existing Ayudhya plant of Thailand and Savannakhet plant of Laos is about 600km, it has been

judged to be economical even after considering additional cost of transport and customs, time

taken for shipment.

Thus, plant location in more specialized process units was expanded from ASEAN countries

such as Thailand and Indonesia that have already reached industrial cluster formation which can

be seen as a new opportunity for industrial development of Myanmar.

31

(ⅱ) Actions to be taken

The Myanmar government needs to assure the business environment required for industries to

be promoted while carefully listening to the views and demands of foreign companies in order to

counter the problems mentioned above. For example, policy for controlling rise in wages within the

scope of improving productivity is vital for controlling excess rise in wages in short period since

labor-oriented industry is a favorable industry after reviving cheap labor. Moreover, it is crucial to

arrange a foundation for investment target candidates of new industry for medium and long-term

without stopping at labor-oriented industry, accumulate technology required for advanced

industries and consciously train manpower required for these industries. In addition, government

support is simultaneously required so that manpower of appropriate wage standard is stably

supplied in short, medium and long-term. In Myanmar, it has also been identified that several

million people migrated to neighboring countries like Thailand and inter-region migration of

population within country is not that active. Infrastructure development such as urban infrastructure

and transport infrastructure is needed to create flow of the migrated manpower returning to country

and to ease inter-region migration.

The Myanmar government must legalize vehicle transport with neighboring countries, develop

logistics infrastructure and customs system with introduction of single-window, take efforts to

improve connectivity with neighboring countries and achieve regional and industrial development

that can work with industrial cluster formation in say Thailand so as to exhibit its geographical

superiority to the maximum in order to grab the above mentioned opportunities.

(6) Specific manufacturing industries expected in middle-/long-term under improved business

environment

Location of higher value added type industries possibly illustrated by given below can be

anticipated in medium and long-term based on central formation of manufacturing industry

described in (4). However, the requirement conditions for materializing this high value added

industrial location are cluster formation of production technology and know-how, expansion of

related industries, expansion of domestic market with increased earnings, in addition to

infrastructure development. Moreover, more focus should be on the infrastructure and systems

sought by industries for which medium and long-term development is anticipated than industries

that are located for short-term. For example, as for electricity, precision machines industry seeks

momentary power failure or voltage fluctuation to be within a fixed range. For this, medium and

long-term infrastructure and system development must be done taking into account the demands

of the industries for which medicum and long-term development can be anticipated.

(ⅰ) Transport machinery (motorbikes)

32

In Myanmar, motorbikes are popular as the main daily way of transport except Yangon City and

the present number of registered vehicles is 3.6 million which comes to 71 vehicles per 1000

persons which is 1/5th of that of Vietnam. The cars are not locally produced but most of the city cars

are second-hand cars from China or Thailand.

Myanmar has already crossed GDP 1000 dollars per capita which is the standard for

motorization and hence, rapid expansion in the motorbike market is expected in future. The foreign

companies generally shift to domestic production from import sales when their domestic sold

number of vehicles reaches a fixed scale, riding on motorization. Therefore, there is a possibility of

medium and long-term locating of transport machines (motorbikes).

In addition to further infrastructure development with focus on electricity, proper application of

motorbike registration system and vehicle inspection system, creation of related laws must also be

done for actual development of plant location.

(Table) Comparison of Number of Transport Vehicle Owners of Different Countries

Source: Japan Automobile Manufacturers Association, Inc “World Motor Vehicles Statistics Annual

Report (2014)”, various data

(ⅱ) Electric/electronics

The expenditure including home appliances products has risen favorably due to increased

earnings with economic growth. Currently, the supply of electronic products is almost entirely

dependent on imported parts and domestic production is exceptionally present such as production

of sound parts by foreign companies.

The foreign companies that currently import and sell due to fixed domestic demand scale may

gradually change to local production to meet the demand scale of large products having high

transport cost (refrigerators, washing machines etc). Vietnam that took up infrastructure

development in both physical and human terms much before Myanmar at around Year 2000 and

developed electronic industry showed growth rate of electronic industries for years 2000 – 2010 of

annual average of 20 – 30% and crossed 96% in year 2011. The export figures of electronic

products as in year 2012 was 22.9 billion dollars which was 18% of the total export of Vietnam,

33

crossing crude oil, becoming highest export item.

Development similar to that in Vietnam can realize in Myanmar also. However, a few

requirements must be fulfilled for this. The first requirement is attracting foreign manufacturers to

the country. The rapid growth of electric and electronic industry in Vietnam is due to investment of

many major foreign information and communication equipment industry such as Canon and

Panasonic. Favorable environment was created. Namely, location of such major manufacturers

needs location of support industries of peripheral parts and business persons and locatio of final

product industry and supporting industry accelerates location of more major manufacturers. For

creating such favorable environment, infrastructure development such as adequate electricity and

creation of different systems must be done considering minimum conditions for the foreign

companies to study shifting and investment and business environment must progress faster than

neighboring countries.

(ⅲ) Other machinery (molds, etc.)

The mold manufacturers for plastic processing industry, businessmen that manufacture

equipments and parts are present in Myanmar even if few. However, there is no opportunity to take

in the overseas advanced technology for a long period and cases of inferior quality are not few

from the viewpoint of cooperating with foreign companies for short term. Therefore, small quantity

production is undertaken and it becomes a small-scale business only for local manufacturers.

For molds, future location of plants is progressing with development of other transport machines

and electric and electronic industries. It is assumed that domestic businessmen supply products to

domestic manufacturers that do not require high quality and foreign mold manufacturers step

forward and supply products to foreign manufacturers that require high precision molds. In the

long-term, creation of flow to gradually replace foreign companies with local companies having

trained skilled labor, acquired technology and rich experience is anticipated. However, mold

industry in Vietnam is also in the beginning stage and in Myanmar, how the mold industry that

includes domestic businessmen will form in the future is a big problem.

Other machine industries do not have many products. However, the products having high

transport cost may slowly change to domestic production similar to electric and electronic industry.

Since certain Japanese machine manufacturers mainly have plants in Thailand, if there is sufficient

transport infrastructure for easy connection with Thailand plants and the supporting industries that

supply parts are well-trained, advanced study needs to be performed.

The problem for location of these industrial fields is proper physical and human infrastructure

similar to motorbikes and electric and electronic industry. The mold industry plays an important role

of supply in the background of developing other industries such as textile, food packaging,

34

automobiles etc. and hence, concurrent growth simultaneously with other industries is

indispensable.

(ⅳ) Iron and steel (electric furnace)

Demand for iron and steel as construction material is rapidly increasing amid active investment

in infrastructure and real estate. The domestic current annual production capacity of Myanmar is

30,000 tons and there is a big scope for future expansion of iron and steel industry in Myanmar

considering expansion to the level of 4 million tons which is the current capacity of Thailand and

Vietnam.

In Myanmar, equipments made in China and Taiwan are used and companies that supply to

state-managed companies similar to machine industry are partially present, however, competitive

strength is low due to inferior quality and high cost.

There is enough possibility for expansion of new investment in equipments by companies having

large capital if power supply is stable. Hence, preparation of an environment for such investment is

important based on progress of stable supply of electricity in specific industrial zones where

location is anticipated.

(ⅴ) Non-ferrous manufacturing

Demands of non-ferrous manufacturing have definitely changed for various products with the

background of investment in infrastructure and increase in domestic consumption. Plants can be

located at the current stage for labor-oriented downstream processing processes (electric cable)

and shifting of plants of electric cable for transmission and distribution of electricity is already

planned.

For medium and long-term, location of upstream processes such as fusion, separation, refining

etc. is also possible with focus on copper that is richly present domestically. However, it is crucial to

provide industrial zones to have stable local electricity supply similar to iron industry (electric

furnace steel) in order to promote industrial growth, particularly location of upstream processes.

(ⅵ) Petroleum refining and petrochemicals

Large-scale petroleum refining and petrochemical plants do not exist currently in Myanmar and

only fuel oil is produced at oil refineries owned by state-managed company. These existing oil

refineries hold only about 20 percent share (20,000 barrels of daily consumption) of domestic

demand and competitive strength is low as compared to imported products due to old equipments.

If domestic demand is increased to 0.2 million barrel of daily consumption, construction of new

oil refinery may be undertaken with the target of around Year 2030 for assuring economy of plant

35

with international competitive strength.

A plan of training for petroleum industry including future petrochemical plant must be first

considered as a future project. The industrial training plan must include location of large plant and

plan for providing domestic logistic network and plan for storage for energy security as its

prerequisites. Infrastructure development is required along such plan.

36

4. Future of agriculture/forestry/fishery & other industries: Establishing value chain

exploiting local uniqueness and regional connectivity

(1) Outline

As mentioned in above mentioned 2, Myanmar has diverse climatic zones and topography. It is

possible to produce variety of products in each region. In addition, there is abundant export surplus

of agricultural/forestry/fishery products and as it is adjacent to the huge consumer markets such

as China, India, these markets can be acquired if each region is connected to international and

domestic urban and rural areas by the logistics infrastructure. Agriculture/forestry/fishery

accounted for about 30% of GDP today, and plays an important role from the viewpoint of

conservation of employment and national land, however, there is a large scope to improve the

productivity because modern technology such as technology or know-how were not fully

introduced till now. Moreover, it is believed that it is linked to industrial expansion by solving

problems such as improvement of quality control systems or logistics infrastructure, and

development of food processing industry. This is the field for which scale expansion, export

expansion, high value addition are desired by continuously developing as a key industry.

On the other hand, agriculture industry is directly connected to the healthy life of consumers, so

assurance of safe and secure food is very important challenge in this policy. In Myanmar,

excessive pesticides are used in the agricultural products, and thus it is indicated that there is a

doubt about the safety of production and distribution of such products having doubt about safety or

there is a fear that usage of bad quality of pesticides is adversely affecting the agricultural land and

thereby reducing the productivity of the product for medium and long-term products.. It is essential

to introduce technology and know-how about the proper use of pesticides or fertilizers to the

farmers. In addition it is necessary to promote the healthy development of agriculture, forestry and

fisheries by explaining importance of enhancing consumer protection or public health by

simultaneously carrying out training related to quality display and safety and security of food

product and information disclosure.

(2) Regional characteristics and available resources

(ⅰ) Delta region (such as the Ayeyarwady local area)

Delta region is the rice-producing area which utilizes the fertile soil and water resources. The

rice export is increasing now and this area is suitable to some extent for international

competitiveness. However, at present, rice production is not so high because the field and

irrigation maintenance rate is low, there are more areas where drainage system is poor, congested

seed varieties are used and mechanization of cultivation is limited. Storage and management of

post-harvest is also insufficient, congestion has occurred in the distribution stage because

37

modernization of distribution has not been made and rice evaluation in an international market is

not high because quality of crushed rice is very low.

Above mentioned issues can be resolved by developing production infrastructure, dissemination

of good seeds, progress of mechanization, and improving storage and management technology,

and if these problem gets resolved, productivity and quality of rice of this region will be improved,

and presence of rice in an international market in future will increase.

Also, traditional feedings were prosperous for buffalo that are used for cultivation in this area,

one reason may be that major consumption areas are close to Yangon and not only rice and

vegetables but animal products have also been supplied to this area. In particular, cow feedings,

milk production or processing is increased in order to meet the increased demand of dairy products.

Mixed feed factory of Thailand companies are operating in Yangon, it supports the promotion of pig

farming industry (30% of the country), poultry industry (40% of the country), and responds to

increased demand of urban areas. However, domestic animal diseases are still many which affects

adversely on productivity. So if these decease can be controlled by matching with the location

characteristics spread over the huge plains and thus increases the productivity. In this way

development of animal husbandry is possible in response to a further increase in the domestic

demand.

Mangrove forest is spread over in this region where water purification or fishery cultivation

resources, and prevention of damages due to cyclone, storm surge, can be expected from this

forest. However, this forest is reducing significantly by the use of firewood, charcoal etc. Recovery

of natural environment and development of the community both can be expected by achieving

sustainable management of mangrove forests through the life of residents and by taking the

production of high value coal.

(ⅱ) Central, northern part of dry region

In the central and north region there is a drought due to irregular rainfall of about 700~1000mm

in the rainy season, so sesame, peanut, sunflower, maize, onion, cotton, etc. are planted in the

vast farmland as they can grow with some extent in such dry region. Also this land is suitable for

Licorice, such as herbaceous herbal and variety of commercial crops can be cultivated in this

region.

A production of each commodity crop is unstable and income of farmers is unstable because of

irregular rainfall in the region, however, now a days, a movement that attempts to overcome the

problem by applying the agricultural insurance (weather index insurance developed by Sompo

Japan Nipponkoa) can also be seen.

Crop production of this region is expected to increase by establishing farmer management, by

selecting an appropriate commodity crops that match the preferences of the market, and by taking

38

initiatives in order to give the stability of income to the farmer through agricultural insurance.

Furthermore, those crops have increased extra value because of processing in the field, if it is

possible to retain the freshness of crops, there is possibility of further expansion into domestic and

international markets. At that time, if local companies seek for the cooperation with any suitable

foreign companies as a business partner, immense development is expected by introducing high

technology. In such cases contact to food wholesale giant Kokubu, establish a joint venture of SPA

groups and Logistics business of local companies (company name KOSPA), start air conditioned

transport between Yangon-Naypyidaw, Mandalay. We have started improving air conditioned

network within the country for the food items including vegetables and fruits

On the other hand, the region mining resources are also abundant Other than the most

abundant jewelry, copper, lead and zinc are also abundant.

In addition, including natural teak forests distributed in the center of the Bago Mountains of

Central Region, the region has abundant forest resources. Wood is a valuable natural resource of

Myanmar. Wood and wood products that are produced from this wood are an important export

goods, therefore the development of the regional economy can be expected by promoting

sustainable forest management.

(Table) Mineral Resources Reserves in Myanmar (One Million Tons, in the Year 2012)

Source: ADB

(ⅲ) Plateau region (Shan state)

This region produces variety of vegetables, fruits, flowers which require cool climate. Also it has

horticultural suitability which is internationally competent. There are foreign companies that are

39

also considering the possibility of dairy promotion.

Many horticultural crops have been shipped to Yangon, Mandalay, however, lack of logistics

infrastructure is main constraint. It is observed that, in the products such as mango, pesticides

more than proper amount are being sprayed due to lack of knowledge about it.

Rural roads for the transport of goods up to collection facilities from production area and

highway from the collection facility to the consumption areas are developed. Further cold chain is

also developed proper the production area up to the consumer area. In addition if guidance about

the usage of appropriate amount of pesticide is given, freshness of the crops will be high,

horticultural crops will be shipped safely and it is expected that sell in the supermarket in the city

will be increased. Also even in the current status of logistics condition, the normal products such as

Chrysanthemum flower which responds to short day is not produced but Chrysanthemum flower

product of summer chrysanthemum system type which is not day length sensitive is produced. It is

proved by exporting these flowers to Japan, and so it is considered that potential for development

of this region as a horticulture production area is large.

In addition, vegetables produced in the same plateau have begun to be supplied as raw

materials for processing to other regions. Potatoes are exported to Thailand for food processing by

using simple and dedicated bass management facilities. Frozen vegetables in domestic factory are

also being exported as a processed food to Singapore., There is a plan to export these crops to

other Asian countries also.

(ⅳ) Southern region (Mon State, Tanintharyi local area)

It is located under natural conditions such as high temperature and heavy rainfall and no

coherent crop other than rice is produced in this region.

Typical production such as rubber plantation is spread by using this hot and humid climate.

Processing a plant of natural rubber is started in the Cain region. The promotion of rubber related

industries is expected depending on the expansion of production of the rubber. A process for using

rubber as a timber is also scheduled.

40

(Table) Region Wise Crop Production (Year 2009/2010) (Unit: thousand tons)

Rice Peanuts Sesame Beans

Bago District 5581.2 131 51 900

Yangon District 2042.3 7 1 199

Ayeyarwady

District8506.7 85 12 864

Subtotal 16130.2 223 64 1963

Kachin State 969.8 37 7 11

Chin State 119.9 2 1 3

Sagaing District 4004.6 421 250 909

Maguwai District 1729.2 268 335 624

Mandalay District 1643.9 196 164 475

Subtotal 8467.4 924 757 2022

Mon State 1500.7 19 15 22

Tanintharyi District 557.2 - - 0

Subtotal 2057.9 19 15 22

Total of above 3 areas 26655.5 1166 836 4007

Other 5500.3 175 18 241

Entire country 32155.8 1341 854 4248

Delta region

Central part, northern

dry zone

Southern part

Source: Agricultural Statistics 2011 (Myanmar Ministry of Agriculture and Irrigation)

Maize Potato Onion Coffee Cotton Sugar cane Rubber

Bago District 3 3 16 0.18 15 999 3

Yangon District - - - - - 74 1

Ayeyarwady District 27 - 11 - - 8 -

Subtotal 30 3 27 0.18 15 1081 4

Kachin State 35 34 8 0.37 - 444 -

Chin State 68 11 3 0.15 - 9 -

Sagaing District 233 51 213 0.14 108 4032 -

Maguwai District 117 40 442 0.01 216 335 -

Mandalay District 62 26 349 0.68 173 852 -

Subtotal 515 162 1015 1.35 497 5672 0

Mon State - - - - - 71 72

Tanintari District - - - 0.01 - - 22

Subtotal 0 0 0 0.01 0 71 94

Total of above 3 areas 545 165 1042 1.54 512 6824 98

Other 681 389 50 5.49 2 2738 12

Entire country 1226 554 1092 7.03 514 9562 110

Delta region

Central part, northern dry

zone

Southern part

41

(Table) Regional Livestock Numbers 2012/2013 (Unit: 100,000 Animals)

cattle buffalo pig goat sheep chicken duck geese and muscovy

Bago District 14.58 3.04 8.94 0.59 0.00 254.59 63.89 1.32

Yangon District 6.17 1.47 9.56 0.94 0.00 327.67 29.34 2.38

Ayeyarwady District 12.17 2.31 14.1 0.99 0.00 170.52 33.22 3.7

Subtotal 32.92 6.82 32.6 2.52 0 752.78 126.5 7.4

Kachin State 3.48 2.58 8.41 0.58 0.00 66.79 2.48 0.54

Chin State 1.62 0.46 3.32 0.88 0.00 40.35 0.33 0.09

Sagaing District 23.46 4.55 10.45 3.51 1.93 147.61 2.68 0.57

Maguwai District 24.88 1.39 22.07 20.5 4.81 289.18 2.61 0.14

Mandalay District 21.7 0.68 6.06 9.77 2.1 160.56 3.93 0.54

Subtotal 75.14 9.66 50.31 35.3 8.84 704.49 12.03 1.88

Mon State 4.75 0.88 3.56 0.97 0.00 76.3 13.11 0.76

Tanintharyi District 1.54 1.51 1.92 0.33 0.00 41.56 4.85 0.28

Subtotal 6.29 2.39 5.48 1.3 0 117.86 17.96 1.04

Total of above 3 areas 114.35 18.87 88.39 39.1 8.84 1575.1 156.4 10.32

Other 31.25 13.20 25.92 4.44 0.00 367.08 11.31 2.33

Entire country 308.46 56.17 225.9 117 26.52 3586.9 227.7 18.49

Southern part

Central part, Northern

dry zone

Delta region

Source: Myanmar Livestock Statistics 2013 (Myanmar Livestock and Fisheries Ministry)

(ⅴ) Coastal areas

Myanmar has a long coastline on the north and south and hence development margin for

fisheries resources such as fish and shrimp is great. In case of fisheries, if there is a scope for

productivity improvement and there is high expansion potential for developing a food processing

industry, but the points such as resources survey and resource management to promote

sustainable resource use is not enough. It is observed that the fishery resource management of this

coast is not good and process technology/quality control ability is low. In future, these will be

improved, and fisheries and fish processing industry will be developed if power infrastructure is

established.

In addition, mangrove forest is also spread over in this region, so it is important to achieve

sustainable management.

(3) Pioneering industrialization of traditional products/cultural heritages

As mentioned in 2, in Myanmar region, there are many local products (miscellaneous goods,

fashion, etc.) based on respective culture and tradition and those are inherited even from the small

things so far. These products are well discovered. If these products will be connected with

adequate customers, they have capacity to be sold to the wealthy people of the world. And it is a

potential element that can become a product with a significant competitive force for Myanmar and

it is a field that can form a high value added local industry. It is important to provide an opportunity

to connect the local products to the market of foreigners and wealthy people and discover the

possibilities of new markets.

Products of Myanmar are an example of high appealing power to the international wealthy

42

people. For example, a unique fabric made by fiber extracted from the stems of lotus flowers is

produced around Shan State Inle Lake. Example of this fiber spun yarn from the fiber of lotus is

uncommon in the world and it is realized that this is a labor-intensive process. To produce a single

scarf, 1200 or more lotus flowers are used and it will take more than two weeks to produce it.

These fibers are basically used in robe of a Buddhist monk. This fabric is uncommon and it attracts

attention by its soft touch. It is made to sell to foreign tourists and recently it has also been adopted

in the famous textile business of Italy.

In addition, Sone-Tu has to face the crisis such as production of cotton fabric, silk fabric by using

Rakhine state Chin technique which is handed over by word of mouth and have been made on

waist machine (back strap loom), is interrupted. Since 2002 training about the technology has

been provided from old women to young women and textile industry of this region was revived. Till

the Year 2013, 52 industries were restored and 120 women weave artists were trained and they

were guided up to opening the shop in Rakhine state. Beautiful fabrics that are manufactured by a

very labor-intensive process, has gained a high reputation and it is displayed in Western

museums.

To get the demand for these local products in an international market by achieving mass

production and simplistic westernization of cheaper goods is difficult and rather can lose the

possibility of industrial development. Rather, it is possible to take advantage primarily to maximize

the traditional designs and techniques even by applying a twist to the design surface and can offer

luxury goods to the market. Social Enterprise Pomelo of present Yangon is committed to the

promotion of these local products of Myanmar, and with this suggestion of improving the design

surface, it is successful in increasing the appeal to the international markets. For example, for

Rakhine State cotton fabric, natural dye product line through ecological considerations (Natural)

and product lines (Colorful) for the bright colors to suit foreign tastes, are added in the product lines

(Traditional) which has advantage of dyeing and are woven from conventional pattern. While

adding this product line, table runner idea is also coming out to expand the sale.

Production Process of lotus thread and stole made from lotus thread

43

Cotton fabric of Rakhine State which has been exhibited in Pomelo store (from the top Natural,

Traditional, Colorful)

44

5. Priority policies for coming 5 years

In this section, we propose a policy package to be addressed with priority in the coming five years

so that Myanmar will achieve sustainable economic growth and national land of balanced

development. In short, these five policies are:

(1) Improving infrastructure and connectivity to boost industrial development,

(2) Improving rules and institutions for predictable and efficient business environment,

(3) Human resource upgrading to support "Human-centered development",

(4) Other strategic and cross-sectoral policies,

(5) Realizing sustainable, high-value-added agriculture/forestry/fishery industry

In recent years, mainly in developing countries, the World Bank Group is conducting "Doing

Business" report every year which is often referred to as a benchmark for the improvement of

business environment. From 2015 report, the report have analyzed various issues such as

entrepreneurship, business licensing, power supply, asset preservation procedures, credit, minority

shareholder protection, tax, trade procedures, contract fulfillment, funds recovery etc. in 189

countries and regions. An evaluation about the Myanmar is shown in the table below. Although as

per the report, Myanmar business environment is in the direction of improvement, it is essential to

take immediate efforts towards the improvement of more rapid business environment, measures

below are also very important for that.

(Figure) Myanmar’s Evaluation Listed on the Doing Business Report

Source: World Bank Group


If you look at the current situation of Myanmar, there is a gross shortage of power which is a main

element in industrial infrastructure. It has become an obstacle to the realization of policy issues such

45

as industrial development or economic growth and resolved disparities. Even to exhibit cheap and

abundant labor force and geographical superiority of country which are comparatively advantageous

in order to advance the infrastructure properly, it is vitally important that you overcome the negative

elements steadily. In addition, from the point of region establishment, along with establishing

labor-intensive industries in future in metropolitan area such as Yangon, Mandalay which are densely

populated, are establishing the power, transportation, water supply and sewerage systems is also

extremely important to advance the area expansion smoothly. Maintenance and expansion of

Myanmar metropolitan area is delayed compared to neighboring countries, in terms of not only

industrial development but it has become major issue in consumer development in urban areas.

Metropolitan area (Year 2010) 830km2 (0.1% of the country)

(1/3 of Vietnam, 1/5 of Malaysia)

Metropolitan area expansion speed (Year 2000-2010)

An annual rate of 0.8% (East Asia lowest level)

(Annual rate of Yangon is 0.5 percent)

Metropolitan area population expansion speed (Year 2000-2010)

An annual rate of 2.8% (East Asia average of 3.0%))

Metropolitan area population density (2010)

7500 persons/km2 (Growth rate after Indonesia)

expanding urban population growth per capita in metropolitan area

40 m2 / person (Minimum after Indonesia)

(Yangon is 24 m² / person)

Source: World Bank report

The main challenges are as follows.

(ⅰ) Early eradication of power shortage

Shortage of power supply is one of the most important issues and that should be resolved

urgently. The basic need of urban and rural consumer is power and it is also need of industrialized

countries, it is important that the power supply to the industry such as Thilawa SEZ should be

perfect.

In the power sector, under the JICA assistance, Myanmar power development plan is ready by

the Ministry of Power (power master plan), reliable performance of this plans over the rapid launch

Current status of the metropolitan area in Myanmar

46

and over the medium and long-term period is required. In the same master plan, as the best power

supply configuration, comparative study of following three scenarios is considered (1) Domestic

energy consumption (large-scale hydro-dependent), (2) Minimum cost, (3) Power supply

configuration balance importance. According to these scenarios, hydropower and natural gas are

used as a domestic energy. Newly established large-scale hydropower (more than 1,000 MW) has

to face lots of hurdles on the aspect of environmental and social considerations, or the constraints

of natural gas development amount, for the Ministry of Power in Myanmar, scenario 3 (Year 2030

(hereafter the same): large-scale hydropower (6%), small and medium-sized hydropower (31%),

gas (21%), coal (33%), renewable energy (9%)) is more energy security oriented rather than 1 and

2 which are fully dependent on the large-scale hydropower. In future, in the country, the amount of

power generation due to the high efficiency of thermal plants will increase through a secure energy

source due to the promotion of natural gas development. In addition, it is necessary to strengthen

and repair a power transmission and distribution network where transmission loss is large due to

aging or theft. Moreover, concrete investment plan for power source type (Renewable energy such

as coal, hydraulic power, gas and geothermal energy) based on the power master plan is required.

It is planned to engage Japan in supporting the same plan as follow up of master plan.

(Figure) Future Power Sources on JICA National Electricity MP

Source: JICA Power Master Plan

47

(Figure) Trend of Power Transmission and Distribution Losses in Myanmar

2007 2008 2009 2010 2011

MEPE 6.5% 6.3% 7.8% 8.0% 7.6%

YESB 23.8% 22.0% 22.1% 19.9% 19.3%

ESE 21.8% 22.7% 19.7% 17.2% 17.0%

Total 27.8% 27.5% 27.2% 25.0% 24.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

MEPE

YESB

ESE

Total

Source: JICA Power Master Plan

Power supply quantity and the GDP growth rate are interdependent. If a sufficient power

development is not carried out that will match with the future demands, it will become a major

constraint in the growth. In JICA's master plan, the relationship between the economic growth rate

and the power supply amount is clarified, however, based on this if it is assumed that, when the

power supply amount of Year 2030 will achieve only 80% or 50% of the amount assumed (low

case) in the master plan and, if corresponding GDP average annual growth rate (Year 2012- 2030)

is estimated, obtained result shows that the rate will decrease from 6.7% up to 5.7% or 3.7%

respectively. Power is an essential utility services in industries like primary industry of storage,

processing and transportation of agricultural products, secondary industry of factory operations,

and tertiary industry of management facilities, the supply shortage for above mentioned leads to a

decrease in GDP growth rate. Also, not only growth of these industries is inhibited but it causes

bad affect on consumer development (excluding villages without power supply)

Moreover, for additional power supply to the grid-connected area it is assumed that high thermal

power and hydroelectric power of high efficiency are used for this, while it is expected that

expansion and extension of the power transmission and distribution system to the rural areas will

continuously expand in the future, on the other hand, use of distributed generation systems such

as solar and small hydro is desired in the non-system connection area.

48

(Figure) Impact on GDP if JICA Power Development Plan is not Achieved

Power-

generating

capacity

(MW)

GDP

(BilUSD)

Power-

generating

capacity

(MW)

GDP

(BilUSD)

Power-

generating

capacity

(MW)

GDP

(BilUSD)

Power-

generating

capacity

(MW)

GDP

(BilUSD)

2012 1,874 56 1,874 56 1,874 56 1,874 56

2015 2,527 72 2,376 68 2,389 66 2,268 62

2020 4,531 109 3,862 94 3,483 87 2,901 75

2025 8,121 166 5,930 130 5,077 115 3,711 89

2030 14,542 252 9,100 179 7,280 152 4,550 107

CAGR(12-30) 12.1% 8.7% 9.2% 6.7% 7.8% 5.7% 5.1% 3.7%

JICA Master Plan Estimation

High Case Low Case LOW * 80% LOW * 50%

Note) CAGR = Compound Annual Growth Rate (Compound Average Growth Rate)

Source: Created by JICA Power Development Plan

(ⅱ) Improve energy infrastructure (excluding power)

Primary energy supply for industry and for consumer has played a supporting role in economic

activity as a power source for the domestic economy. The primary energy is an energy source in

power plants and factories and it is main element in the improvement of the civilian as a general

consumer.

In case of gas supply, in addition to the existing gas development project, proper infrastructure

improvement of pipelines for effective utilization of produced native gas domestically after

implementing maintenance of investment environment (Speeding up of procedures, transparency

of the system) in which a new gas field development project is smoothly carried out. Along with

installation to receive LND/LPG imported from overseas and arranging the facility to supply

LNG/LPG effectively domestically, it is required to repair the aging pipelines as and when required.

In order to execute this steadily, it is important to realize the use of stable gas and power supply to

the country.

Stable power supply is as important as petroleum products. Petroleum downstream business of

Myanmar is privatized in Year 2010, now private operators are doing the business on the basis of

free competition. Small and medium sized businesses are large in numbers, however, inefficient

and non-modern operations are also seen, so shortly modernization of import sales of gas or

refueling infrastructure such as gas station will be required by oil terminal enhancement. To

overcome these challenges try to eliminate these hurdles by using foreign investments. In the

medium to long term, it must be designed by considering the balance between the existing

transportation network or logistics amount and refinery construction or domestic delivery network

with international competitiveness. It should be tackled early in the development of plan.

49

(ⅲ) Improve logistics infrastructure (roads, railways, ports, airports, etc.)

For smooth economic growth and industrialization, strong network is required that connects

domestic and foreign cities, this network can be developed by developing both physical and

human system for land, sea, aviation network. In addition, in order to improve connectivity

between the cities within the country, along with contributing to the activation of socio-economic

activities for trade expansion between the cities, try to use potential of each city by extending

suitable location for industry. Once the connectivity with neighboring countries get established,

access to other countries market will be ensured and their market will be open for your home

products, along with this it becomes possible to join supply chain including neighboring countries

that support the labor division and its processing unit. This will increase the possibility that new

industries will get attracted to its own country, and bring a lot of benefit to Myanmar.

(Figure) Major Economic Corridor in Myanmar

Source: JICA Myanmar National Transportation Program Formation Preparatory Survey

As a development policy, corridor development plan which is proposed in Myanmar national

transportation master plan of JICA is considered as main axis, and it is important to promote the

development of core logistics infrastructure steadily.

50

(Figure) Incremental development of major logistics infrastructure

Source: Created by Myanmar’s National Transport Master Plan (JICA), and

others

1) Road maintenance and improvement

Among the road maintenance and improvement projects, the main domestic economic corridor

project is considered as the most important project. Even in the main cities, it is necessary to focus

on main economic activity in case of MCDV (Myanmar Comprehensive Development Vision). It is

also required for Yangon and Mandalay to communicate each other by standard road by which

heavy traffic can be passed through to other major urban areas or important airport/port.

(Figure) Road Density in each Asian Country

51

42.8

26.1 21.9

17.3

5.6

47.0

67.3

35.1

48.3

-

10

20

30

40

50

60

70

80

Ch

ina(2

01

1)

Ind

on

esia(2

01

1)

Cam

bo

dia(2

00

9)

Lao P

DR

(20

11

)

Myan

mar(2

01

1)

Malaysia(2

01

1)

Ph

ilipp

ine

s(20

03

)

Thailan

d(2

00

6)

Vie

tnam

(20

07

)

（km/100㎢）

Source: World Bank

For every project, logistics network facility that contributes to the industrial growth is very

important. It is necessary to cancel the prohibition of the traffic on express highway between

Yangon and Mandalay. Currently, National Highway 1 (NH1) is used for the traffic between Yangon

and Mandalay but as compared to the express highway, the time required is more, infrastructure

maintenance level is low, and there is a pain in loading the luggage. There is an adverse and

harmful effect on the residential road as well. In addition to this, the truck traffic volume on NH1 is

estimated to exceed its capacity in the Year 2017. If the traffic continues as it is, then there is a risk

of becoming a bottleneck for the expansion of economic activity. It is also necessary to construct

Bago River Bridge connecting Yangon and Thilawa to exercise the function of Thilawa SEZ to the

fullest.

For the efficient logistics of road, it is necessary to consider the physical and human aspects

both. Currently, in case of domestic and international transport of Myanmar, though the products

are loaded in outbound voyage, returning of goods is not secured. As a result of this, the transport

cost keeps on increasing. As a measure for all such cargo, wide spreading consolidated shipment

for consolidated commodity distribution or commoditizing of goods and car request information

within an industry is recommended.

Note) In Japan, Japan Trucking Association builds an information network related to goods and

car request, and provides a mechanism to supplement the management resources of small and

medium business corresponding to “Securing the returning of goods or chartered car” or

“Aggregate transport”, “Creating partners”.

52

(Figure) Truck Demand and Supply and Main Line between Yangon and Mandalay / Comparison Analysis

of Express Highway Capacity

Source: JICA Myanmar National Transport Development Master Plan

2) Railway facility

In case of railway infrastructure, in addition to increasing the transport efficiency (Container etc.)

between Yangon and Mandalay, it is also necessary to improve cyclic rail-road to improve the

urban transport condition of Yangon. It is also necessary to reform organization of Myanmar

Railway to streamline railway business management.

3) Water transport, Port, Airport maintenance

It is necessary to streamline Inland water transport (Irrawaddy River etc.) and facility

improvement of inland water port or cold chain network facility, logistics related to Inland

distribution centre (Inland container depot (ICD)) etc.

In case of port, it is necessary to have deep sea port coupled with industry location and which is

the key to economic growth anticipating that the existing port capacity meets in-port limit in medium

and long-term and anticipates industry location including the iron and steel or petroleum chemistry.

For short term, based on the division of labour, construction status of regional production network

or infrastructure environment etc. of other country, it is necessary to find out the trend of cluster

information of manufacturing industry in urban area or agriculture/forestry/fishery products in rural

area / key industry behind the production of mining industry resources, and then verify the overall

priority order of port improvement. Especially, it is necessary to implement Thilawa port service

immediately behind Thilawa Special Economic Zone at an early stage. It is necessary to streamline

53

administrative procedure; collect large-scale goods by implementing Japan Port EDI system and to

build an efficient logistics network of inland port considering Thilawa as a core and that is a strong

point for international trading. Note that introduction of port related advanced technology and

know-how is must along with human resource cultivation to implement these Physical and human

mechanism.

In case of airport, Mandalay international airport or new Hanthawaddy international airport

facility is must for domestic and international passengers in metro and increase in the demand of

cargo shipment.

(ⅳ) Urban residential development

In Myanmar, there is a shortage of housing due to economic growth (mainly in cities). As per the

status of housing and urban development, there are many things that are still inadequate like the

raw material, technical staff handling that material/ know-how, implementation / quality

management system, formal law related to residential town etc. Therefore, construction material

industry or human resource cultivation, construction activity with foreign capital / introduction of

quality management technology or system, and a formal control system related to residential town

is a must.

If Government role is considered, inadequacy of master plan or supply system of housing supply

is a major challennge. Myanmar government executes residential estate development for

government employees, housing plan for redeployment along with facility or public works for living

environment improvement but there is overall insufficient housing or a master plan to

systematically provide housing to people having low income or ordinary supply system, financial

system like housing loan etc. are not sufficiently maintained. Therefore, it is necessary to maintain

a master plan for urban development in every city and also promoting measures for providing

quality and inexpensive housing and improving residential environment is a must.

(ⅴ) Securing and supplying industrial water

Securing and providing industrial water is an important utility in the industrial field and it is a must

in an industrial location along with providing energy. Especially in case of establishing thermal

power station or food industry, heavy industry, etc., major portion of water is used for cooling the

equipments. Therefore, it is necessary to continue the logistics based on an appropriate plan in

every industry complex or industrial location as far as industrial water is concerned.

(ⅵ) Environmental law and administration in line with global standard

Environmental society care mentioned in the above point 2 is especially an important

54

mechanism to continue further infrastructure development. However, an effective environment

related law is not adequate in Myanmar at present. Environment protection act was formed in the

Year 2012, though it was regulated in the year 2014, the regulation of the environment standards

of business type is not developed till March 2015. Therefore, there is still scope for improvement

in the implementation of ESIA (Environmental and Social Impact Assessment) in the current public

works.

Even for the implementation of environment-friendly recent international tidal current and

domestic smooth infrastructure project, early enhancement of environment related law and

appropriate operations are must. It is recommended to implement after consulting with the central

government or public service based on the guidelines of JICA etc.

In addition to this, it is required to properly monitor the infrastructure and business activity that

impacts the environment or society, provide information to the people, and explain by the

government to accomplish the accountability by protecting the environment and safety of the

people. It requires developing a legal system and environment administration system/practice for

the same.

Priority projects expected to be implemented with Japanese support

( ⅰ ) Thilawa SEZ

Develop industrial complex in Thilawa SEZ located at 20 km south from Yangon central urban

area. In case of fast development area (Approximately 400ha), Japan-Myanmar consortium

(Financial contribution of JICA from Japan government) is development agent and for

establishment in the summer of the Year 2015 (planned), infrastructure related to electricity, water,

port, road, communication etc., Yen loan/free financial aid can also be used.

55

(Table) Yen loan items related to Thilawa SEZ

Domain Business name Loan provision amount

Electricity 50MW electricity, transmission line, related facility etc. 34.8 billion

Yen

Commodity distribution

Expansion of Thilawa port, terminal facility

Access road between Yangon and Thilawa

4.6 billion Yen

Water Water improvement in Yangon 23.6billion Yen

Communication Improvement of communication network in the entire nation

10.5 billion Yen

Source: JICA

Contract is reserved with 43 companies after starting sale in May 2014 (This is May 2015). In the

fast developed area, it is expected to generate employment for approximately 50000~60000

people.

Based on the revised SEZ law established in January 2014 (created, supported and

implemented by JICA), one stop service center is established for Thilawa SEZ, and JICA specialist

is dispatched to the same center from September 2014, and he/she contributes by granting quick

permissions to moving in companies.

(Photo) Development status of Thilawa SEZ

(ⅱ) Implementation of highly efficient power generation, environmental technology, environmental

regulations and administrative systems

It is required to introduce highly efficient thermal power generation in Myanmar but it is also

necessary to select the best applicable technology, which satisfies strict environmental regulations,

to avoid or reduce negative impacts on the environment or society. In addition, it is necessary to

56

establish proper environmental regulations and administrative systems in order to implement the

aforementioned technologies. Japan is willing to contribute in this field..

(ⅲ) Yangon-Mandalay railroad

Procurement of field correction, improvement, vehicle procurement of roadbed / track, civil

structure, signal, etc., is done and Yen loan (phase1, 1st stage (approximately 20 billion Yen)) is

implemented with an objective to minimize the required time between Yangon and Mandalay to

half and emphasize the transport capacity of passenger/supply. Technical cooperation to improve

the track maintenance management efficiency or free financial aid to improve signal system and

operation system is also being implemented.

(ⅳ) Dawei SEZ

Infrastructure facility corresponding to deep sea port, industrial area, road/track,

powerhouse/transmission network is required considering development of special economic zone

of approximately 200km2 in Myanmar south east part Dawei north city part. It is necessary to start

from the actual business considering gradual development by creating a master plan from the long

term and large scale development. Japan continues cooperation with Myanmar and Thailand by

having financial contribution in special purpose entity (SPV) related to Dawei development through

an appropriate public agency like JBIC or JICA etc. There are ongoing arrangements between

Japan, Myanmar and Thailand corresponding to the detailed design/system of this authentic

development.


With the expansion of economic activity in future, it is required to develop a business environment

to support the same based on huge investments. However, in case of Myanmar, wherein the

economic activity is delayed, the appropriate environment development and operation know-how is

not accumulated properly. The required measures are mentioned below:

(ⅰ) Developing and implementing transparent and predictable legal system

It is necessary to develop and operate a transparent and predictable legal system to continue

single layered economic development starting with the investment from foreign country. It is

necessary to at least expand so that the development and operation standards are equivalent to

ASEAN.

Myanmar government has targeted three special economic zones called Thilawa, Kyaukpyu,

and Dawei based on SEZ law and it is expected to focus the development of the companies with

57

foreign investment in future. Especially, investment environment development in Thilawa SEZ

started by attracting factories and operation is a pioneering mechanism of excellent business

environment development. Here, the possibility of receiving a positive image of Myanmar

investment increases in future if high evaluation can be received by the overseas investors and

entrepreneurs. As a concrete measure, uninterrupted review with speed and transparency

(procedures of establishing a company, trading, investment, customs clearing, etc.) of one stop

service centre is a must. In future, industry cluster formation not limited to Thilawa can be

anticipated by widely applying the know-how of business environment development established by

SEZ in other domestic companies other than SEZ.

In addition to this, uninterrupted mechanism contributing the related legislation to the

development of smooth business activity with internal and external indifference by collecting the

opinion of companies not limited to SEZ is necessary. It is must to constantly work by streamlining

clear standards and operations, speedy procedures, and cumulative rules.

(ⅱ) Protection of investors and intellectual property

In terms of stepping up investment in Myanmar from domestic and overseas, it is necessary to

develop the institutional framework to protect the investment property and intellectual property.

Regarding the Investment protection (investor), it is necessary to conclude the investment

protection agreement with foreign countries and continue the adherence is necessary. Japan and

Myanmar already have signed an agreement that ensures a high level of liberalization compared

with other investment agreements signed by Myanmar, reliable execution and operation are

expected.

In addition, with respect to intellectual property protection, effective laws and institutions to

protect the current intellectual property rights are not organized well and the Intellectual property

office has not been established yet .Therefore, it is not possible to control the circulation of

counterfeit products and moreover their technology and rights are not sufficiently protected, as a

company risk factor, it has become a barrier to pair Myanmar investment. Therefore, there is an

urgent need to establish operational system by early enforcement and intellectual property office

establishment of intellectual property 4 bill that Myanmar Ministry of Science and Technology has

been developed (patents, designs, trademarks and copyright). The main operation of intellectual

property office performs the examination of patent, design and trademark application and to meet

registration requirements, monopolistic right to exclude is set to the applicant. The most important

point is performing this examination work promptly and accurately. After establishing the

intellectual property office, the aim is to develop the organization and business flow, IT system of

Intellectual Property office and build a system that can perform prompt and accurate examination.

In addition, not only to develop operational system in the Intellectual property office but it is also

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important to build a cooperation system between Customs, police and prosecutors of intellectual

property rights enforcement organization. Dealing with cases related to intellectual property court,

intellectual foundation bodies aggregate the opinions of the private sectors and it is necessary to

build up an intellectual property system of Myanmar.

(Figure) Cooperation with Intellectual Property Office and Related Organizations

(ⅲ) Introduction of policy-based financing, and upgrading financial systems (banking, securities

and insurance)

1) Introduction and strengthening of policy-based financing

In accordance to develop the Myanmar economy in future, the financial sector also plays an

important role. At present, mainly the ODA funds and private funds from overseas are considered

as a possible supporting economic development. Japan also determines the small and

medium-sized enterprises development two-step loans (ODA loans. November 2014 Pledge), it is

the financially supportive policy for the small and medium-sized enterprises development and is

one of the important issues of the Myanmar government. However, there is a limit to ODA funds,

and direct investment of private funds from abroad play a leading role and does not always flow in

the desired form by Myanmar. Therefore in the process, Myanmar makes efforts based on the

medium- and long-term industrial policy and it is important to start and strengthen the financial

policy system to support its efforts.

2) Upgrading financial systems (banking, securities and insurance)

For the banking sector, in the current Year 2015, there are 4 state-owned banks, 23 local private

banks and 43 representative offices of foreign banks. October 2014, Myanmar central bank

determines the first business license granted after democratization in 9 foreign banks containing 3

Japanese banks. In April 2015, Bank of Tokyo-Mitsubishi UFJ, Mitsui Sumitomo Bank will open a

branch office and Mizuho Bank is also planning to open one soon. In future, the establishment of

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branches of licensed foreign banks is expected. On the other hand, the challenges such as low

confidence level regarding bank, lack of bank employees to understand the advanced banking

(especially loan examination), fund limitations of local banks etc. get accumulated. As future

measures, for various practices including loan review for local banks, inspection of regulatory

authorities, supervision work acquire the know-how within people and within government office

and it is important to train the required personnel

Regarding security field, Myanmar's first over-the-counter exchange (Myanmar Securities

Exchange Centre (MSEC) (a joint venture of Daiwa Securities and Myanmar Economic Bank

(state-owned))) has been opened in the Year 1996. In the Year 2013 under the support of the

Japanese government, the Securities and Exchange Law is established. Securities authorities are

installed in the Year 2014 and joint venture agreement on the establishment of Yangon Stock

Exchange (A joint venture of JPX / Daiwa Institute of Research and the Myanmar Economic Bank

(state-owned)) was also signed. Currently, opening of Yangon Stock Exchange for the year 2015 is

in the pipeline. As the future measures, for a highly transparent market development, it is

necessary to

(1) Upgrade the recruitment shares and trading and rules for listing,

(2) Take supervisory capacity improvement of security authorities for their collateral

effectiveness.

Regarding Insurance field, since the Year 1963, one company of state-owned Myanmar Insurance

Corporation continued monopoly but is limited to local insurance company and it opened to the

insurance industry in the private sector. Although 12 Local insurance companies were opened after

receiving the license, but as the people’s understanding of the insurance is poor, the insurance

industry is still developing. In addition to acquire the knowledge and know-how of foreign insurance

company, it is necessary to cultivate insurance professionals. In the revised SEZ law enacted in

January 2014, foreign insurance companies goodwill is also granted in the SEZ. In May 2015 Sompo

Japan Nipponkoa, Mitsui Sumitomo Insurance Co., Tokio Marine & Nichido Fire Insurance, these

three companies obtained business license in the Thilawa SEZ. In future to support the business

expansion of foreign companies in Myanmar and in order to promote attractive investment, along

with the expansion of the business area of foreign insurance companies, advance the knowledge

transfer and know-how to the local insurance companies and it is important to enhance its insurance

services as a whole.

(ⅳ) Improving basic statistics

In Myanmar, basic statistics and industry of data maintenance and its digitization is not sufficiently

advanced, and thus a number of problems occur.

Basic indicators such as GDP, population do certainly existand the existence of detailed, accurate

statistics of important industries and infrastructure of the country is really necessary for country

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policy-making. Qualitative and sensuous policy decisions can lead to wrong decision if they do not

involve a quantitative evaluation and analysis. In addition, monitoring of the progress of bill

enforcement and measures are done and policy evaluation is executed but, statistical information is

indispensable.

Furthermore, consolidation of statistical information is also important from foreign investment

promotion viewpoint. In order to conduct advance examination, foreign fund enterprise actually

valuate whether economic efficiency is established or not by a variety of statistics and quantitative

information but lack of information leads to uncertainty and is considered as a risk and there is a

possibility to lose willingness to invest.

Therefore the Myanmar government must consolidate the important statistical data, digitize and

make it publically available. In this case, digitization of statistics and sharing it through media like

WEB site will lead to easy access to the data and therefore will bring in cost reduction for all the

parties like Myanmar government various foreign institutions, private enterprises, etc.


(ⅰ) Development of international standard business environment such as the one-stop services in

Thilawa SEZ (reprinted).

(ⅱ) Adoption of efficient customs clearance

In addition to supporting the modernization of customs administration through the dispatch of

experts, as the work towards the introduction of NACCS type system of Japan (import, export and

port-related information processing system), review of customs procedures and systems,

comprehensive package that includes technical support for the development of human resources are

implemented.


(ⅰ) Upgrading industrial human resource (managers, engineers, workers, etc.)

For Myanmar human resources, from the perspective of High literacy rate, seriousness, high

proficiency etc. potential capabilities and its underlying force are expected but development of

industrial human resources is not always done sufficiently.

So far, Industry human resource development by the Myanmar Government has been

implemented in each ministry within their own jurisdiction on a small scale in every field. For

example, Ministry of Industry. Established six training centers in the association with the

state-owned factory and border Ministry has set up a sewing-related personnel training center in

36 places. Ministry of Science and Technology has Technical Vocational Training Education

Department and engineering college, Ministry of social safety of labor and employment has Skills

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training center and Cooperative ministry has cooperative university respectively. In these training

centers and universities due to equipment shortages, etc., it has become many of them focus on

out-of-date training and lectures. Effective utilization of human resource development, new

facilities, and production sites are done very little.

In addition, wages are lower than neighboring countries such as Thailand, due to less

employment opportunities and thus many Myanmar people are working abroad and there is also a

problem of incentives for receiving education not being effective.

When seen from the demand side of human resources, in future, for Myanmar when advancing

the industrialization, the lack of so-called middle management personnel in the production site can

be a problem. For foreign companies, including Japan, Myanmar becomes an attractive

investment destination and easy to promote the localization plant operations as well. For that also,

it is necessary to increase the middle management human resources for production site.

As a future initiative, as an organization to cultivate the human resources necessary for a company

to improve the productivity, UMFCCI (Myanmar Chamber of Commerce and Industry Association)

is trying to establish "Myanmar productivity center" for which Myanmar government support is

necessary. Currently, officials are discussing towards its realization. Japan also scheduled to carry

out Japan Productivity Centre in cooperation with the same Centre, through JAIF (Japan ASEAN

Integration Fund).And in future, higher education institutions of Myanmar are required in great

numbers than the human resources required by the local industry.

(ⅱ) Upgrading administrative officials that support economic growth

Regarding the industrial development of Myanmar, for the state to play a leadership role, human

resource development of State Personnel is indispensable. The Year 1988 onwards, market

economy was introduced in the Myanmar, until the transition to civilian rule in 2011, investment by

foreign companies was not necessarily much and Myanmar was becoming an isolated economy

from the movement of global economy. During this period, the primary role of government was to

provide the products through state-owned companies. In spite the role of such state-owned

companies in the industrial field and service industry is already becoming small, each ministry’s

planning and execution of the industrial policy currently remains in the poor state. In such situation,

at present, there is a shortage of personnel who can take up industrial policy and it is necessary to

strengthen the human resource development in this area drastically

Therefore, it is important to impart the training in order to improve the policy planning and

execution capacity of government officials. While planning and designing of industrial policy,

globalization of the world economy, international expansion of companies, the situation of

governments attracting investment, to deepen the knowledge and the role of government

appropriate with the development stage of the economy, it is necessary to learn about policy

approaches and its impact. Further, in the practice of industrial policy, the basic understanding with

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respect to the above stated knowledge and understanding of the practice of business is needed for

the approval of investment.

Furthermore, for government officials to enable the planning and formulation of industrial policy, in

the first place, it is a prerequisite to have a policy-making function (authority) at each ministry. Thus,

for human resource development of government officials, it is necessary to strengthen policy

making functions of the ministry (authority) and implement in parallel.

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(ⅰ) Compiling a master plan of industrial human resource development

Since there is shortage of human resources at all levels (technicians, Managers), the

development of a master plan that defines the development policies and plans of the industrial

human resources should be considered.

(ⅱ) Increasing Myanmar students in Japan.

While developing the industrial human resources and administrative personnel, and in addition

to the opportunity of adequate education in the country it is also important to deepen the abroad

knowledge. After the war, to deepen the knowledge about Japan's economic policy and industrial

policy, which has pushed the high economic growth, and even significant in Myanmar's economic

development, Educational institutions of Japan are also taking initiatives in order to increase the

students from Myanmar.

For example, the University of Tokyo Graduate School of Public Policy (GraSPP) Note 1 has the

policy focused on to accept Myanmar government executive candidates, on scholarship. In

addition, Waseda University Graduate School, with an idea of development of core human

resources in developing countries, the "scholarship benefit Admission Office (AO) entrance

examination" Note 2 is introduced from September 2014 admission. First as a pioneering case

looking for a student with a Myanmar nationality. In addition, the International School of Asia

Karuizawa (ISAK) Note 3, while conducting the scholarship benefits in accordance with the domestic

economic circumstances, actively accepts Myanmar youth policy.

Note 1) GraSPP is 2 years professional degree course (Masters) in English and provides Master of Public

Policy and the International Program (MPP / IP). In future, the number of Myanmar government executive

candidates that meet the entrance qualifications per year, can be accepted as regular students. Due to this

realization, GraSPP with the cooperation of the Ministry of Economy, Trade and Industry, is prepared to

work closely with the Government of Myanmar.

Conventionally, GraSPP is accepting about 5 personnel who can play a key role in Myanmar ’s future

financial markets for half yearly credit earning programs, and,Tokyo University Policy Vision research

center, ERIA, and the Ministry of Economy, Trade and Industry are developing human resource related

energy policy.

Note 2) Established as part of the entrance examination system reform. Up to 5 years period in the case

of master's and doctoral programs. It is the same three years in the case of a doctoral program only. In

addition to the application fee, enrollment fee, tuition, various fees amount, life support amount is to be

paid (about 80,000 yen)

Note 3) The only boarding International School in Japan, ISAK, from the view point of medium-long term

human resource development, in future, will accept applications from Myanmar youth, who qualify the

entrance qualification every year. ISAK in cooperation with the Ministry of Economy, Trade and Industry

will closely work with Myanmar government.

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(ⅰ) Declaration of “Manufacturing-friendly” country (e.g. “Next Factory in Asia”)

If we look at the situation of Myanmar economy over many years until the transition to civilian

rule in the Year 2011, the economy was not good and investment environment was not stable, due

to policy changes and sanctions by foreign countries. With little investment by foreign companies

and restrictions on activities of domestic private sector businesses over a long period of time, a

product supply by state-owned enterprises having poor international competitive strength was at

the core of the Myanmar economy. With this background, the domestic private sector in Myanmar

still continues lack will to build momentum towards taking responsibility for the manufacturing

industry. Manufacturing industry needs a large amount of funding, and must continue to promote

financial management, improvement of production technologies, labor management, acquisition of

sales channels, etc. over a long period of time. Building an environment where the private sector

can embark on such business is the major role for the government. Therefore, Myanmar

government must present a clear vision towards the cluster formation of manufacturing industry,

steadily implement those policies, and showcase the development potential of the manufacturing

industry at home and abroad.

Demonstration of planning and a definite vision for future by the government is especially critical

during the time of facing the inflection point of economic development. Even in the leading

industrialized countries and other more developed countries, we can see that repeated

presentation of comprehensive vision and slogans by the government's top brass, with implication

to disseminate at home and abroad, and steady and bold implementation of the same has won

them trust and interest from government agencies and companies of other countries. In particular,

in order to achieve medium to long-term business deployment by foreign-affiliate companies, more

manufacturing industry-friendly policies compared to other countries must be in place.

As specific measures, for example, it is important to continue to present and convey an industry

vision and initiatives at home and abroad, along with declaring an impressive message such as

"Next Factory in Asia".

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(Table) Slogans and policies for economic development in other semi-developed countries

Country Slogan/Polic

y

Background and Outline

India “Make in India”

This slogan was adopted by the Prime Minister Modi who took the

charge in the Year 2014. The main pillar of his industrial policy is the

growth of manufacturing industry supported by foreign investments,

and he frequently mentions this phrase in public.

Malaysia

“Vision

2020”

This slogan was announced by the 4th Mahathir administration in the

Year 1991, aiming at making Malaysia one of advanced countries by

the Year 2020 with ambitious long-term development plan. This has

been the basis of Malaysian development plans.

Others

Before the Year 1990, Malaysia occasionally announced new

concepts such as “Look East” and “Malaysia Inc.” to present the

background concept of Malaysia’s economic growth. Those intended

to follow the development models in East Asia including Japan and

Korea, not in European/American countries.

China

“Socialist

Market

Economy”

This development strategy was announced in the Year 1992 by then

President of the People’s Republic of China Deng Xiaoping. It

aspires to achieve high economic growth by means of efficient

resource allocation based on market principles.

Brazil

“Fifty years

progress in

Five”

The President Kubitschek, who took the charge in the Year 1956,

announced a 5-year plan ”Plano de Metas (Goals Plan)”. With its

associated slogan “Fifty years progress in Five”, he propelled

industrialization of Brazilian economy and promoted foreign

investment. Several tens of Japanese companies such as banking,

trading, and spinning invested in Brazil on this trend of economic

reform.

(ⅱ) Promotion of small and medium enterprises

Small and medium enterprises account for about 87% of all companies in Myanmar, and play an

important role in the entire economic activity in Myanmar, from primary industries to tertiary

industries. The trend is noticeable in the manufacturing industry, and especially in the

food-processing sector. In this sector, the proportion of small and medium enterprises as a

percentage of total number of operators is more than 90%. Also, in case of machinery industry, it is

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difficult to keep on developing all only with the domestic small and medium enterprises. However, it

can be said that there is room for improvement, for example, in how to achieve linkage with

foreign-affiliate companies that enter Myanmar based on the existing castings and forgings

production technology. Small and medium enterprises continue to being concentrated in places

such as industrial parks in the Yangon suburbs, and there are several companies brimming with

originality and ingenuity. There is a need for efforts to develop these small and medium enterprises

with a strong zeal to produce as the regional industry.

While implementing measures, it is imperative for the government to obtain a detailed

understanding of circumstances and industrial structure of the companies and to develop a

comprehensive policy in light of market awareness. Providing information about demand trends in

the market and providing guidance and training required for improving technological and

management know-how (business management, practices such as labor, finance, and accounting)

to the management teams of small and medium enterprises can be mentioned as specific

measures to be taken.

In addition, it is necessary to build a system for smoothly financing the small and medium

enterprises, by means of improving the screening ability of financial institutions on one hand, and

by improving the accuracy of the management in small and medium enterprises which are the

borrowers on the other hand.

It is indispensable to train the administrative officers as shown in (3), for improving their policy

planning and execution capabilities, so that the administrative officers can plan and design the

small and medium enterprises policy in the context of the actual situation on the ground as

described above.

( ⅲ ) Middle/Long-term industrial strategy

Among the wide range of industrial field, it is unclear whether the location will develop or not only

due to market principles, even if environmental improvement is carried out from the appropriate

physical and human aspects. However, significant synergistic effects can be expected due to

spillover effect on the domestic economy and collaboration with other industries. In such industrial

fields, policy measures for location promotion should be taken after conducting a comprehensive

examination from a broad perspective, rather than simply waiting for the industrial location, leaving

it for the company to decide. It is necessary to investigate how to do this. Following 2 industries

can be mentioned as an example.

1) Transport equipment (four-wheel)

As for the current state of the finished vehicles production in the industry in the country, even

though state-owned companies and Japanese manufacturers are engaged in small-scale

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production, economies of scale have not been fully realized. Also, in case of automotive parts

production, although a trend of starting the production by limiting the items and operations can be

seen, such supporting industries for the finished car production have almost no influence. As the

parts themselves are dependent on overseas procurement, the cars produced domestically in

Myanmar have higher cost when compared to imported finished cars.

Domestic auto market in Myanmar is still small, with 400,000 registered vehicles in the Year

2013 and few tens of thousands new car sales, including used cars. However, it has been said that

typically, motorization accelerates when the GDP per capita crosses 3,000 dollars, and rapid

growth in the Myanmar automobile market can be expected from that level onwards. In the future,

it seems that car ownership will grow to the levels seen in countries (about 10% of the population)

where the GDP per capita has crossed 3,000 dollars (Indonesia: Year 2010, Philippines: Year

2014). Then, it is believed that if the domestic market reaches a certain size in this manner, then in

Myanmar also, the possibility of the location of the automobile industry will increase, including the

finished vehicles production in full scale. If you look at the history of location of the automobile

industry in the neighboring countries, the consolidation of the automobile industry started from the

labor-intensive parts production, or the knockdown production where parts of the finished vehicles

are imported and then assembled on the site. There are numerous examples of gradual

progression towards relocation of parts production from engine assembly and large press parts

where the transportation costs are high. Subsequently, it can be seen that parts such as casting

forged parts and electrical parts can be covered, and there is shift towards production of even

higher value-added sophisticated parts.

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(Figure) Future Estimates and Industrial Location Time of Number of Registered vehicles (Image)

However, such process of industrial progress is feasible when it is possible to continue to

expand production capacity and scope from production geared towards growing domestic

demand. For Myanmar, having neighbors such as Thailand, Indonesia, China, and India, who

have already realized vehicle accumulation, it is not easy to follow a similar process. It is

believed that MFN tariff of 30 to 40% for passenger car imports as against ASEAN intra-regional

tariff is 5% (Expected to be 0% in the Year 2018 owing to AEC.) will pose further difficulties for

full-scale automobile production in Myanmar. In order to achieve full-fledged location of

automobile related industries in Myanmar in the future, there is need to keep on building

automobile-related legislations spanning a wide range such as reconsidering the handling of

used car imports that account for majority of the domestic market in Myanmar at present, reliable

operation of vehicle registration systems and vehicle inspection system, introduction of

regulations related to environment consciousness and fuel efficiency, from a medium to

long-term perspective with the prerequisite that industrial location is Myanmar, while also taking

the measures in Thailand, Malaysia etc. into account.

2) Agricultural machinery

In farming villages close to the cities, there is labor shortage as the number of workers going

to the cities for work is on the rise. Against this backdrop, agricultural machinery is spreading, as

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the large landowners and rental operators collect the funds to buy the agricultural machinery and

rents it out to farmers. Especially, in the rice farming households close to the city in the suburbs

of Yangon and Mandalay, the demand for machinery such as tractors, combine harvesters, and

tillers is on the rise, and is expected to rise even further in the future.

What is satisfying this demand are the products from China, India, and Thailand. These

products are taking advantage of the economies of scale against the background of huge

domestic market. In such a competitive environment, the domestic tractor company Zwe, with

their low production efficiency, are presently stuck with a production of few dozens of units per

year. Though not having a scale comparable to other transport machinery or electrical machinery

industry, the agricultural machinery industry has a deep relationship with the agriculture. In other

words, in Myanmar where the agriculture accounts for an important position in the industry,

increased distribution and proliferation of agricultural machinery, and expansion of maintenance

network is expected to have qualitative and indirect utility, by contributing to the potential and

productivity growth of the country's agriculture.

With regard to location promotion of agricultural machine industry, it is necessary to

investigate over a medium to long-term, after taking into account in a comprehensive manner the

industry characteristics and the surrounding environment such as described above, and also the

ripple effect on other industries.

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(ⅰ) Attraction of FDI in Thilawa economy zones (reprinted)

(ⅱ) Exhibition of Myanmar’s traditional local products in Japan (July, 2015)

An exhibition of fashion and craft will be held in Tokyo in July this year in order to elicit a potential

of connecting Myanmar's local products to foreigners and affluent markets, along with deepening

the understanding of Myanmar's traditions, culture, and climate.

(ⅲ) Small and medium enterprises two-step loan (November 2014 pledge, maximum amount 5.033

billion yen)

Two-step loan through medium to long-term funding to the intermediary financial institutions as

well as financial capacity building support for such institutions.


( ⅰ ) Establishing food value chain (Including improvement in productivity and expansion of

production volume)

In order for producers, manufacturers, and distributors to continue to gain a greater added value,

it is desirable to base the policy on increasing the added value in each stage from production of

agricultural, forest, and fisheries products to manufacturing and processing, by means of building a

food value chain. At that time, in view of the current situation that quality and industrial standards of

agricultural, forest, and fisheries products in Myanmar cannot be said to be high when compared to

international standard, measures to give a "fundamental strength" as the industry such as

improvement of basic cultivation technology of major crops can be emphasized in the short term,

while in the medium to long-term, a shift can be made to strategic measures that can lead to

development of agriculture, forestry, and fishery, such as provision of high-value-added products

according to maturity of domestic and international markets.

In particular, in recent years, with the development of the economy, due to improving income

level and growing middle and high income class in the urban areas, from traditional food

consumption with rice as staple (Rice consumption: 160kg per capita (milled rice)), there is gradual

shift in growing demand for non-rice foods such as meat, vegetables, fruits, dairy products, fats

and oils, other packaged foods (such as bread, confectionery, snacks, dry food, refrigerated and

frozen food). This sophistication of the food consumption market also needs to be kept in mind.

In light of the direction of the basic measures described above, taking following measures can

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be considered based on the crop type, etc.

1) Improving export competitiveness of main agricultural products such as rice, bean, sesame,

etc.

For improving the productivity of these crops, it is essential to improve the production base first

of all, by means of developing field maintenance, irrigation and drainage facilities. Also, for coping

up with the fact that with the progress of industrialization, labor force in the farming villages will

shift to other industries and there will be shortage of labor force, it is also necessary to promote the

mechanization of agriculture. Timely work has become necessary in order to respond to climate

change, such as irregular rainfall. From that viewpoint too, it mechanization cannot be neglected.

Further, proper use of fertilizers and pesticides is also necessary in order to ensure an

environment conscious and sustainable production. Also, development and spread of high-quality

seeds and seedlings is necessary as it affects both the productivity growth and improvement in

quality. For this, it is necessary to properly select and maintain the cultivars and ensure cultivars

that are suitable for that particular region, by means of greatly improving the breeding and cultivar

management techniques. In the course of seed growth also, it is important to strive for reliable

supply of cultivars having uniform traits by reliably carrying out field screening and not just product

screening.

In addition, the distribution system for rice based on the traditional classification by size is a

challenge, and we need to change to a system that distributes rice of uniform quality according to

the needs of the consumers. If this challenge is overcome then it will very likely appreciated in the

international market enhance the export competitiveness.

Myanmar national export strategy 2015-2019 also positions rice, beans, and sesame as priority

export products. The measures mentioned above and the measures for productivity growth and

quality improvement according to this strategy are consistent with each other.

Also, even though small-scale short-term financing is being offered by MADB (Myanmar

Agricultural Development Bank), it is also necessary to further enhance and expand the services,

including medium to long-term medium-scale financing. To do so, it is necessary to nurture

farmers' organizations that operate as the farmers' own initiative and investigate new

institution-building based on cooperation between such farmers' organizations and the MADB.

Moreover, it is also necessary to introduce and continuously popularize crop insurance as a

safeguard against unstable production associated with irregular rainfall owing to climate change.

2) Enhancing production of high-value-added horticulture crops

In recent years, consumers in the middle and high income segment are getting increasingly

health conscious. This is expected to increase the need for safe and high-quality fruits and

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vegetables, along with an increase in domestic consumption of fruits and vegetables. In order to

meet these needs, it is fundamental to provide superior seeds and seedlings, and form production

areas using these seedlings, based on the right crop for right land principle.

On the other hand, most of the suitable sites for production in Myanmar are remote areas such

as Shan Plateau, whereas consuming regions are Mandalay and Yangon. Transportation to these

consuming regions has been a challenge and hard development such as development of logistics

infrastructure, cold chain supported by the electricity supply is necessary. In addition, as opaque

and complex transactions due to intervention of a large number of intermediaries cause an

increase in these distribution costs, it is necessary to promote the modernization of distribution

system such as introduction of transparent trade practices through the use of ICT.

In addition, with the expansion of retail businesses with strong purchasing power such as

supermarkets, instances of direct procurement of fruits and vegetables from the production area

can now be seen. In other developing countries, such a trend of procurement from large-scale

producers at the exclusion of small producers can often be seen. Hence, it is also important to

keep in mind that the wholesale market needs to function in such a way that small producers that

rely on the wholesale market are not excluded while responding to the purchasing from

supermarkets etc. To that end, it is necessary to strengthen various functions of the wholesale

market such as product assortment, proper price formation, and information dissemination.

Moreover, against the background of income improvement and an increase in the number of

foreigners, high added value by the organic farming will be one of the effective strategies for

responding to their needs for high quality products. Concrete efforts have already begun. For

example, since the Year 1999, Japanese NGO Terra People Association has been offering circular

agriculture training, such as guidance for producing organic crops that do not use chemical

fertilizers and pesticides, through camps and visits to the villages. The number of students has

crossed 1000. Initially, there were very few students who produced organic crops on a continuous

basis, as the harvested organic crops did not have access to salable market at a price

commensurate with the cost. However, Terra People Association opened "Green Hill", a retail store

that sells organically grown vegetables, etc. in Yangon, and connected farmers and consumers by

selling these organic crops as high-value-added products, and in this way, has succeeded in

raising the incentives for organic crop production on a continuous basis. Such initiatives are

expected to increase.

3) Enhancing production of livestock products, modernizing distribution system

Demand for animal products such as meat and dairy products is also increasing. In response to

this, there is an urgent need for expansion of livestock production, productivity growth, and also

livestock improvement by means of popularizing artificial insemination. It is expected that the feed

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cost will be reduced further as there is further improvement in the productivity of forage crops such

as maize. In addition, cold chain for distribution of livestock products such as milk, meat, and eggs

also needs to be put in place in order to promote the livestock farming. For example, in case of

meat, modernization of distribution such as a shift from distribution of live cattle to distribution of

frozen meat is expected to promote a shift from slaughter in the consuming regions to slaughter in

the production area.

Moreover, as there are problems related to animal health such as lack of systems and diagnostic

capabilities for livestock diseases, and low vaccination coverage of foot-and-mouth disease, it is

necessary to urgently promote vaccination and strengthen diagnostic capabilities for various

diseases, including foot-and-mouth disease, by collaborating with organizations such as OIE

(World Organization for Animal Health). There are no more than 1000 veterinary officers, including

assistants in LBVD (Livestock Breeding and Veterinary Department). Hence, it is necessary to

urgently strengthen the veterinary organizational structure by cooperating with the private sector,

along with training private veterinarians. Also, currently, livestock is brought alive to the

slaughterhouses in the consuming regions, slaughtered, and brought to the consumer market after

processing. However, as there is no strict inspection by veterinary officers in the unsanitary

slaughterhouses, it is essential to stringently apply the Animal Health Development Law which

regulates the management of the slaughterhouses and to create a system for proper management.

4) Increasing production/export of processed food, and fostering food processing industry

Presently, increasing demand for packaged food especially in the urban areas has also been

observed. In order to meet this demand, the food-processing sector which is driven by primary

processing needs to be modernized by introducing advanced technologies, by introducing foreign

capital etc., so that production up to the final product is possible. Quality management is important

for improving the export competitive strength of perishable agricultural products and packaged

food. In particular, if an internationally acknowledged quality management is achieved through

development of analysis system for pesticide residues etc., then it will contribute to further growth

in exports of agricultural products and processed goods.

In the development of the food-processing sector, instead of development of only the processing

plant, it is necessary to organically link all the related facilities from agricultural production which is

upstream of the value chain to distribution such as storage and transportation and factory

processing and sales which are downstream of the value chain, and locate these facilities as a

cluster in an area of certain expanse which is adjacent to the base such as an airport. It is

expected that by making it possible to ship high-quality agricultural products to domestic and

overseas markets, by implementing the Global GAP (Global Good Agricultural Practices) for

feedstock production in the periphery of that area where shipping is possible and within the area

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itself, by implementing efficient wholesaling for trading of agricultural products which have been

collected from peripheral production areas, GMP (Good Manufacturing Practices) in processing

plants, and screening for pesticide residue and food hygiene etc., will produces the benefits of

making the entire value chain efficient.

(ⅱ) Production of natural rubber up to international market standard

Rubber plantation is spreading around the Mon state. However, quality products that can be

traded in international commodity market are still not being produced. Therefore, at present, these

products are being bought at low prices by companies in the neighboring countries. It is imperative

to aggressively promote introduction of foreign capital and technology alliances, and achieve a

stable product supply that meets the high quality standards. Since the product supply cycle of

plantations needs a period of about 7 years from tree planting to sap collection, replantation of

rubber trees from a medium to long-term view and incorporation of foreign know-how is necessary.

On the other hand, international certification is required for trading natural rubber in the

international commodity markets, and it is important to establish an inspection body that can

receive authorization for certification.

(ⅲ) Promotion of fishery sector

1) Fishery resources management and promotion of offshore fishery

In recent years, fish catch of Myanmar has been on an upward trend. However, potential of

improving the productivity of the fishing industry is extremely high because in the coastal areas,

efficiency of the catch is expected to increase owing to promotion of proper resource management,

and in the offshore areas, information about resource status or catch status of species used in

fishing is inadequate and effective resource use is not being done. Therefore, in order to promote

the fishing industry of Myanmar, it is effective to increase the productivity of fisheries by

implementing a proper resource management. On the other hand, as the number of fisheries

experts in Myanmar is not sufficient, catches for grasping the amount of resources, collection of

information on fishing effort (capital needed for the catch, amount of labor needed, etc.),

development of statistics, and scientific resources survey are not yet fully implemented in Myanmar.

Implementation of such appropriate resource management is a fundamental challenge. Also, in

case of development of resource utilization in the offshore area, understanding of resource status

of available fish species and introduction of fishing techniques that utilize it properly are necessary.

However, considering the present technological level etc. in Myanmar, it is difficult to build such a

system in near future. For this reason, it is useful to share Japan's knowledge about appropriate

implementation of resource management, and support for development of offshore fishing and

75

scientific research for the understanding of the resource status of useful marine resources

(Research, fishing port facilities maintenance etc. using the SEAFDEC (Southeast Asian Fisheries

Development Center) research vessel of Myanmar government).

In addition, while cross-border operation by neighboring countries etc. can be the reason why

marine resources of Myanmar have decreased compared to the past, inadequate development of

regulatory framework on the Myanmar side has also been pointed out as a significant factor.

Japan's cooperation in strengthening this monitoring system will also be effective.

2) Introduction of advanced aquaculture practices

Inland aquaculture has already been deployed throughout Myanmar and there is not much room

left for expansion of aquaculture water surface. However, since level of technology in seedling

production, feed development, and measures against fish diseases etc. is low and facilities

improvement is also lagging, occurrence of diseases and low productivity are the challenges faced.

Therefore, it seems that promotion of aquaculture production technology, aquaculture facilities

improvement, seedling production, measures against fish diseases and its popularization activities

etc., with the initiative of private sector businesses will lead to improvement in productivity. Also,

since the development of marine aquaculture industry has been delayed, there is still room for

expansion, and there is great potential for increase in production volume.

(ⅳ) Sustainable forestry management

In Myanmar, forest area accounts for about 50% of the country. Variety of forests are distributed,

reflecting a variety of land and climate conditions. However, due to illegal logging, encroachment

by agriculture, and collection of firewood, the forest cover has decreased by about 20% (7.45

million ha) in the 20 years since the year 1990, and proportion of forested land is expected to be

45% in the Year 2015. Forests are an important resource, and historically, forestry has been an

important industry in Myanmar. In the light of these circumstances, it is conceivable to take

following measures.

1) Hither governmental involvement in forestry for sustainable resource management

In order to make a judgment and decision that integrates the land-use policies and proper

management of forest resources, it is indispensable to create a forest basic map (Basic document

for forest management that depicts terrain and forest boundaries (compartment). Contour lines and

forest conditions, surrounding land usage etc. are filled). The forest basic map can also be the

basis for monitoring etc. of compartmentalization and utilization of community forestry to promote

forest management by local residents, along with making it possible to understand the status of

presence of highly valuable and useful tree species such as teakwood, and status of progress of

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deterioration and desertification of the forest due to the collection of fuelwood. In recent years, the

Ministry of Environmental Protection and Forestry has been newly involved in land-use planning,

and is supposed to play a role in construction of National Geographic Information Systems (One

Map System). Creation of basic maps using satellite data and GIS has become essential. It is

important to enhance the forest and forestry policy by placing the information about existence of

teak wood etc., degradation of forests, progress of desertification, compartmentalization of

community forestry etc. is on such maps.

In Japan, there is a wealth of technologies for acquiring and processing satellite images, and for

integrating and utilizing various data. It can be said that Japan's private sector can contribute in

this area by leveraging their know-how. Also, creation of these forest basic maps and subsequent

construction of a monitoring system will lead to construction of MRV (Measurement, reporting,

verification) system of REDD+ (emission control measures of carbon dioxide due to deforestation

and forest degradation) which is expected by the Myanmar government. Hence, in the future, it

may also lead to implementation of REDD+ business by means of introducing public support and

private funds from abroad.

Further, measures need to be taken in order to achieve sustainable management and recovery

of natural teak resources and dry forests. Specifically, it is important to continue to achieve

sustainable rural development by the government, private sector, and local residents working

together, and through promotion of sustainable forest management to improve the maintenance

and recovery of natural forest resources (forestry), along with reviving the forest resources from

the viewpoint of economy, society, and environment, and by promoting breeding and seedling

development for excellent teak, drought resistance tree species, and the mangrove forests.

2) Promotion of wood processing industry with improved technology

From Myanmar, logs are exported to India, Vietnam, Thailand, China etc. Domestic wood

processing industry in Myanmar is not yet able to substitute the processing at these export markets,

despite the processing technology to be applied for making the final product in these countries is

not relatively high. Therefore, more and more employment opportunities should be created by

enabling the production and export of high value-added wood products by means of introducing

foreign investments and establishing a wood processing industry as soon as possible. To that end,

from the point of view of the development of investment and business environment which is easy

to enter for the foreign companies, measures such as ensuring of (increase in quantity) of scale of

one time log sale by MTE (Myanmar Timber Enterprise), ensuring of period from invitation of

tenders to their implementation, and clarification of the long-term rights for land and business

continuity are necessary.

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(ⅰ) Fishery business F/S

In order to explore the possibility of a sustainable commercialization in fisheries fields in

Myanmar, there is a plan to identify fisheries fields having international competitive strength and

comparative advantage, and which are expected to have a stable supply, and validating their

business profitability based on Japanese financial assistance, and at the same time, clarifying the

infrastructure and related legal systems which are necessary for ensuring the profitability.

(ⅱ) Compiling roadmap to establish Food Value Chain

In order to build the food value chain in line with this vision, complie roadmap for initiatives by the

public and private sectors in the coming 5 years target period.

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6. Toward realizing the future outlined by MIDV

MIDV is expected to be referenced by Myanmar government as instructive suggestions to their

next 5-year development plan and development plans/policy papers of individual ministries. It

enables Myanmar and Japanese governments to form common understanding on Myanmar’s

current economic status and future development strategy, and will help Japan implement effective

and proper cooperation.

It would be advisable that Myanmar government fully use valuable knowledge and experiences

shared in MIDV.

1

Annex: List of measures to be taken by the Myanmar government at the earliest (recommendation

list)


Large item Small item

Early eradication of power

shortage

Introduction of high-efficiency thermal power generation (gas and

coal)

Strengthening and improvement of power distribution network

Follow-up of electricity master plan

Improve energy infrastructure

(except electricity)

Development of investment environment for development of

natural gas (quick procedures, transparent system etc.)

Development of gas supply infrastructure

Reinforcement of oil terminal required for import of gasoline etc.

Development of domestic supply network required for stable supply

of fuel such as oil depots, gas stations etc.

Development of plan of petroleum reserve using the above

mentioned distribution network for strengthening energy security

Improve logistics infrastructure

(roads, railway tracks, ports,

airports etc.)

Development of domestic main economic corridors

Relaxation of freight transport regulations on highways

Construction of new Bago bridge

Development of Yangon – Mandalay railway track

Repair of Yangon loop railway track

Development of inland water transport (including development of

facilities of inland water ports)

Development of deep-sea ports

Construction of Thilawa port

Introduction of effective port logistics information system

(introduction of port EDI etc.)

Introduction of technology and know-how related to construction of

ports through training of manpower

Development of Mandalay international airport, Hanthawaddy

international airport

Thilawa SEZ development

Preparation for Dawei SEZ development

Urban residential development Deciding a master plan for housing supply

Securing industrial water Ensuring supply to SEZ etc.

2

Environmental laws and

administration in line with

global standard

Development of environment-related laws and its execution system



Developing and implementing

transparent and predictable

legal system

Making procedures of one-stop service center quicker and

transparent (procedures for establishment of company, trade,

investment, customs etc.)

Clarification of standards and application of related laws,

simplification of quick procedures and duplicate rules

Introduction of an effective customs system

Protection of investors and

development of intellectual

property

Improvement in application of investment protection pact

Early enforcement of intellectual property bill 4 (patent, design,

trademark, copy rights)

Establishment of application system by establishment of

intellectual property office

Introduction and strengthening

of policy-based financing, and

upgrading financial systems

(banking, securities and

insurance)

Introduction and strengthening of policy-based financing

Improvement in practicality of loan examination of local bank,

improvement in ability of inspection and supervision of regulation

authorities

Development of rules related to stock application, transactions, its

listing, improvement in supervision ability of securities authority for

securing its efficiency

Improvement in practical business ability of local insurance

companies and training of insurance experts



Upgrading industrial human

resource (managers,

engineers, workers, etc.)

Support for establishment of Myanmar productivity center

Formulate a master plan for training industrial manpower

Upgrading administrative

officials that support economic

development

Training of administrative officials for improvement of policy draft

and enforcement ability

Strengthening of policy draft function (authority) of each of the

ministries



3

Declaration of Manufacturing

country

Creation of slogans and steady and firm execution

Attracting foreign companies to Thilawa SEZ



Establishing food value chain Creation of table for work schedule for construction of food value

chain along the vision of industrial development (target time: 5

years from now)

(Improving export

competitiveness of rice,

bean, sesame, etc.)

Enforcing various efforts and aid for improvement of productivity

(Promotion of agricultural mechanization, introduction of

appropriate application of fertilizers and agricultural chemicals,

promotion of growing and spreading superior seeds, development

of agricultural fields and irrigation)

Construction of modern distribution system

Construction of medium and long-term medium scale finance

system by MADB

Introduction of crop insurance system

(Enhancing production of

high-value-added

horticulture crops)

Enforcing various efforts and aid for improvement of productivity

(Introduction of growing district by providing superior seeds and

suitable land)

Construction of modern distribution system (including

strengthening functions of wholesale market)

Efforts and aid to organic agricultural industry (establishment of

authentication system)

(Enhancing production of

livestock products,

modernizing distribution

system)

Improvement of livestock by popularization of artificial insemination

Improvement of production of fodder crops

Development of cattle market

Strengthening of diagnosis ability of various diseases and

popularization of vaccine

Strengthening of veterinary doctor setup

Strengthening of slaughterhouse management system

(Increasing production of

processed food, and

fostering food processing

industry)

Introduction and improvement of food packaging technology

Execution of inspection of residual agricultural chemicals, good

hygiene

Production of natural rubber up

to international market

Strengthening production system such as assembly, exchange of

foreign know-how

4

standard

Promotion of fishery sector Management of fishery resources and introduction and

management for utilization of coastal fishing resources

Introduction of improvement in cultivation technology

Sustainable forestry

management

Strengthening of participation of government for sustainable forest

management

Development of environment for attracting foreign investment for

establishing wood processing industry

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