Myanmar's Industrial Development
By U Win Khaing, President
Myanmar Engineering Society
Tel. 0095-1-519673; 0095-1-519674; 0095-1-519675; 0095-1-519676
Mobile: 0095-95002596Fax: 0095-1-519681
Email: [email protected]: www.mes.org.mm
1 July 2011
Nay Pyi Taw
About Myanmar
About MyanmarName : Republic of the Union of MyanmarCapital: NaypyitawMajor cities: Yangon (Pop-7 m) and
Mandalay (Pop-1 m)Area: 676,578 Sq KmPopulation: 60 millionGovernment: President elected by Bicameral
assembly called Pyidaungsu Hluttaw Administrative States and Divisions: 7 states and
7 DivisionsMain Export: Natural gas, beans, pulses, teak, minerals, gems and rice
GDP: MMK 36,146.72 Ban (2010)
Literacy: about 95% in 2010
About Myanmar
Infrastructure: Railway – 5,707 kmRoads – 35,386 km69 airports25 ports & jetties (Foreign going)3 container ports321 microwave stations Phones about 1.5 melectricity – 3,344 MW (installed capacities)schools – 40,876/about 8.15 m students154 universities & colleges/ about 0.68 m students,898 hospitals
About Myanmar
Part-1 Development of National Industries
Review of present industrial environment State owned industries Semi state owned (MEC,UMEHL) MIC industries (under FDI) Industrial zones (18) Cooperatives Medium scale industries (private) Small scale industries (private) Cottage industries (private) Family type (private) Workshops/machine shops (private)
Statistics on ownership of industrial establishments (2010)
State owned………………… (791)
Private owned……………… (101,000)
No of persons employed in industrial sector about
4.8 million
Industries by size
Small 25 hp 50 workers
Medium 50 hp 100 workers
Large over 50 hp over 100 workers Note : State owned enterprises are large scale and possess extensive technical and human resources.
Future industries
Dawei Special Economic Zone
Kyaukpyu Economic and Technology Zone
Thilawa SEZ
Others in domestic areas (Thargaya, Myingyan, etc)
Ministries and semi-government organizations, NGOs, private companies involved in industrial sector
Ministry of Industry No.1
Ministry of Industry No.2
Ministry of Myanma Industrial Development (formed April 2011)
Ministry of Mines (Iron and steel, copper, nickel, tin, coal production)
Ministry of Energy (Petrochemical Industries, refining, fertilizer production)
Ministry of Commerce (Rice Mills)
Ministry of Livestock and Fisheries (Animal and marine products processing)
Ministry of Forestry (Timber products processing)
Ministry of Agriculture and Irrigation (Sugar and rubber cultivation & processing. cotton and jute)
Ministry of Cooperatives (Producer CoOps)
Ministry of Information (newspapers, magazines and printing presses)
Ministry of Defence (Defence Industries)
Myanma Economic Corporation (MEC)-(Steel production)
Union of Myanmar Economic Holdings Ltd. (UMEHL)
RUMFCCI (Agriculture, Trade and Industry)
Myanmar Industries Association (MIA)-Industrial Zones
Private companies (Cement production)
Ministries involved in Infrastructure Sector Ministry of Electric Power No.1 ( Generation from
Hydropower)
Ministry of Electric Power No.2 (Generation from gas, transmission and distribution)
Ministry of Energy (Natural gas production and transport, oil production)
Ministry of Construction (Roads and Bridges)
Ministry of Posts and Telecoms (Communications)
Ministry of Transport (Ports and air transport, airports)
Ministry of Rail Transportation (Road and Rail Transport)
Ministries and NGOs, private sector involved in human resources development
Ministry of Education
Ministry of Science and Technology
Ministry of Industry No.2
Ministry of Labour
Ministry of Health
RUMFCCI/MIA
Myanmar Computer Federation
Myanmar Engineering Society
Technical Training Schools (private)
Industrial Development Committee (IDC ) The IDC is headed by the Minister of Industry No.2 and comprise
the following sub-committees headed by Deputy Ministers Industrial Development Supporting and increasing Productivity SME Development Environmental and Renewable Energy Import Substitution & Export Promotion Human Resource Development Automobile Production Agricultural and Farm Machinery Production Development Food Industry Development Chemical Industry Development Rubber Industry Development
Myanmar Work Force
about 35.5 million (60% of population)
about 5 m in industrial sector
about 7.5 m in services sector
about 23 m in agriculture sector
Foreign Investment by Sector Approved Amount %
1. Energy …………………………………….14,529.742 m 40.91
2. Oil and Gas………………………………13,815.375 m 38.90
3. Minging……………………………………2,395.386 m 6.74
4. Manufacturing…………………………1,668.126 m 4.70
5. Hotel and Tourism……………………1,064.811 m 3.00
6. Real Estate……………………………….1,056.453 m 2.97
7. Livestock and Fisheries…………….324.358 m 0.91
8. Transport and Communication…313.272 m 0.88
9. Industrial Estate……………………….193.113 m 0.54
10. Agriculture……………………………..96.351 m 0.27
11. Construction…………………………..37.767 m 0.11
12. Other Services………………………..23.686 m 0.07Total……..USD 35,518.440 million 100.00 (USD 35.518 Bn)
Note: FDI of USD 35.518 billion was recorded on 31 January 2011
FDI led export driven economy can be the engine of growth and will benefit the alleviation of poverty
FDI led industrialization by MNCs can have some impacts due to supply chain disruptions (natural disaster, unrest, financial instability, etc)
The MNC global factory concept of geographical locations for production and value adding and final assembly nearest end users by integrating local producers into global supply chains
The global factory concept enables MNCs and different locations of developing countries to specialize in specific parts of global value chain to service different geographical markets
Environmental concerns and Kyoto Protocol Annex-II (for developing countries) is taken as a plus side for FDI investing in developing countries
Industrial Clusters concept Clusters are backbone of industrial development in
developing countries
Resource based clusters: processed food, wood, leather, rubber, gem-stones, etc
Low tech industries clusters: textiles, garments, footwear, furniture, glassware, toys, etc
Medium tech industries: automobiles, chemicals, machinery, etc
High tech industries: electronics, pharmaceuticals, biotechnology, precision instruments, aerospace, etc
Types of industrial clusters
Large national firms and local suppliers.
Micro, small and medium enterprises (MSME)
MNCs and local suppliers,
Myanmar still has comparative advantage in labour intensive industries and mineral extraction industries.
Labour abundance is linked to “productivity vs. adjusted cost of labour”.
Vietnam Experience
Vietnam has made remarkable transition since 1989 from a centrally planned industrial sector to an industrial sector governed by market forces.
Much of the success in industrial development has been the result of government’s decisions to remove barriers to entrepreneur efforts in FDI and domestic private investors.
Macroeconomic stability was achieved within 5-6 years.
Improving Business Climate by: Political climate and international relations
Basic economic system
Banking system
Legal framework
Taxation system
Intellectual proprietary rights
Labour
Infrastructure
Vietnam Experience
Improving Foreign Investment Climate by: Legal framework
Investment guarantees
Establish sectors with FDI encouragement
Taxation and tax incentives
Foreign exchange incentives
Land lease and rent
BOT,BT and BTO projects
Industrial zones
Vietnam Experience
Improving Trade Environment by: Trade legislation
Trade liberalization
Export and import policy
Foreign trade contracts and Vietnam laws
Export processing contracts and Vietnam laws
International shipping and freight forwarding
Certificate of origin for exports
Resolution of disputes
Vietnam Experience
Part-2 Development of Small ScaleRural Industries
Development of Small Scale Rural IndustriesThe GoM has recently announced the 8 point program for rural development and poverty alleviationThey are:-
Development of agricultural production sector
Development of rural productivity and cottage industries
Development of microwaving and credit enterprises
Development of rural cooperatives tasks
Development of rural socio-economy
Development of rural energy
Environmental conservation
The main objective is to develop the rural economies and create jobs
The characteristics of agricultural economy is that it is seasonal
Thus under employment situation exists in rural areas
With 23 million working in the agriculture sector and forming 70% of the population the need arise to create jobs in the rural area and develop the rural industries
Poverty alleviation can be reduced by introducing and promoting small scale industries in appropriate rural areas
This will create additional jobs and income for farmers
It will mitigate rural-urban migration
Non-farming income can be generated by developing small scale rural industries They are in:
food processing agro products processing wood processing textiles and garments production construction materials production handicrafts* others
These are 80% based on domestic natural resources * traditional handicrafts to be linked to domestic tourist sales outlets and for export
Incentives for success simplify business registration procedures
simplify tax assessments
micro and mini financing
better roads and communications
extended electrification
improved access to social services i.e. education and health
This is similar to the concepts in OVOP(One Village One Product) movement which is being implemented with considerable success in many neighbouring countries to improve rural economies and reduce poverty by creating small scale industries and providing jobs.
The potential OVOP group are in: Agro-processing
Handicrafts
Laquerware
Wood carvings, bamboo products
Stoneware
Tourism related souvenirs
Clothes and silk weaving
Embroidery, bags, fine mat
Costume jewelries
The potential OVOP group are in: Rattan furniture
Pottery and ceramics
Cooking oil (groundnut, sesame, sun flower)
Toddy palm products
Honey, preserved fruits, fruit juices
Preserved meats, sausages and dried fish
Concrete blocks, bricks, lime, late rite
Dairy and milk
OVOP group must be decided on natural resources, human resources, expertise, traditional, cultural aspects
To identify the best product suitable for each township and village within region/state.
With tourism on the rise, OVOP for tourism related products will greatly help rural people living near tourist areas.
The presence of many Myanmars abroad also increase OVOP market for packaged and preserve traditional food with quality control
Conclusion
To develop the national industries with own resources and FDI for import substitution and exports.
The national industries led by heavy industries and mechanical industry under taken with state support and the active promotion of SMEs with private participation and entrepreneurship.
To develop the small scale industries and micro-industries in rural areas to help develop the rural economies by creating employment and raising the income and gradually reduce poverty.