Myanmar’s agricultural sector is ‘very close’ to seeing an uptick in foreign investment but only if the government continues providing policy support and if investors are willing to ‘innovate’, according to the Myanmar resident partner of the world’s largest law firm.
After decades of neglect, Myanmar’s largest industry lags well behind that of regional neighbours Thailand and Vietnam in terms of output but it’s the lack of transport infrastructure which has the greatest impact on the sector, said Mark Livingston, Resident Partner of Dentons Myanmar.
“The biggest issue with agriculture in Myanmar at the moment is not agriculture, it’s transport.
“[Myanmar] doesn’t have good rail, good roads, a lot of storage facilities and ports are still under development so actually the key enabler for really opening up the agriculture sector will be the transport sector,” he told Myanmar Business Today.
“…It doesn’t really matter if you produce greater volumes of higher quality crops if you can’t move them to market quickly.”
While it could be a decades long wait while the nation’s ageing transport infrastructure is upgraded, there are opportunities for innovative smaller businesses to fill in the gaps, he said.
“Smaller businessescould alleviate that problem by bringing small scale processing closer to the farmer and also some more modern techniques in terms of storage capacity and transport that doesn’t rely as much on traditional road and warehouse networks.”
Agriculture accounts for 37.8 percent of Myanmar’s gross domestic product (GDP), 25 to 30 percent of total export earnings and employs 70 percent of the labour force, according the statistics of United Nation’s Food and Agriculture Organization.
In order to attract foreign investors there needs to be more policy support and practical support in the form of grants and land leases, which is already happening to some extent, said Livingston.
A new investment law that came into effect in April promotes several sectors – where investors are offered incentives including tax exemptions – including manufacturing, infrastructure and agriculture.
In May, U Aung Naing Oo, the Myanmar Investment Commision’s General Secretary said that agriculture in particular has the potential to attract foreign direct investment this fiscal year “because we have created better incentives and an investment landscape to lure FDI.”
“If Myanmar is going to approach anything like a Chinese style rapid uplifting of a very large number of lower socio economic citizens it has to involve agriculture, because it’s the sector that touches the most people,” said Livingston.
“It’s such a big industry, it’s so close to massive markets and it’s only a matter of time before it sees more foreign investment.”
Source: Myanmar Business Today