Agro-Based Industries in Myanmar: The Long Road to Industrialisation

The development objective of agro-based industry as one of policy instruments of industrialization had been and still continues to pursue over forty years in Myanmar. Yet its performance still stands stagnant, unable to transform the agrarian economy into agro-based industrial economy. It is estimated that agro based industry contributes about 3 percent of GDP and 43 percent of industrial output value. The level of industrial formation in terms of the ratio of the manufacturing sector to GDP is also stagnant around 8 to 9 percent. This paper examines why Myanmar still could not have step up from the agrarian economy to the agro-based industrial economy and attempts to provide a policy framework how agro-industrial development is likely to occur. The industrial ownership structure consists of large number of small scale, scattered private enterprises and few number of large scale, capital intensive industries of state economic enterprises (SEEs). The major problem of most agro-based industries is found to be insufficient raw materials supply which could be ascribed to (i) the government’s policy conflict of self-sufficiency vs. export (ii) raw materials procurement policy of SEEs at lower than market prices, and (iii) highly distorted exchange rate and macroeconomic instability affecting the costs of imported goods for import-dependent agro-based industries. Unless the correct course of actions are taken in dealing with these issues, the raw material supplies would decline to a crisis point and agro-based industries could be forced into a dead end – a ‘raw material trap’. In the mill areas of SEEs industry, declining raw material supply and poor performances of factories are often generating vicious circle. The paper points out how vicious circle could be converted into virtuous circle by adopting market-driven contractual linkage between farms and factories, and it calls for the management reforms of SEEs, strengthening the capacity of private entrepreneurs, managing macroeconomic stability and domestic capital formation. It also assesses the competitiveness and comparative advantages of the agricultural commodities as the raw materials of agro-based industries in its integration to the ASEAN Free Trade Area. The results indicate the gloomy prospect.

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Additional Info

Field Value
Document type Reports, journal articles, and research papers (including theses and dissertations)
Language of document
  • English
Topics Agriculture and fishing
Geographic area (spatial range)
  • Myanmar
Copyright No
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Version / Edition 1.2
License unspecified
Contact

Institute of Developing Economies, Japan External Trade Organization, 3-2-2 Wakaba, Mihanma-Ku, Chiba-Shi, Chiba 261-8545, Japan

Author (individual) San Thein
Co-author (coorporate) Institute of Developing Economies (IDE)
Publication date 2006
Pagination 54
Keywords Agro-Industry,Industrialisation,Agriculture Sector Development
Date uploaded August 17, 2018, 04:05 (UTC)
Date modified September 7, 2018, 09:24 (UTC)