"Agro-based Industry in Myanmar: with special reference to sugar industry"

U San Thein (Deputy General Manager, Myanmar Sugarcane Enterprise, Ministry of Agriculture and Irrigation of Myanmar)
15:30-17:30, February 6 (Monday), 2006
Room 409, 4th floor of CSEAS Common Building

The purpose of this seminar is 1) to provide an insight of the government's command economy in establishing and management of state economic enterprises (SEEs) and the comparative performances of small and medium enterprises (SMEs) in private sector in agro-based industries of sugar, textile, rubber products, and edible oil milling.; 2) to examine why Myanmar still could not have step up from the agrarian economy to the agro-based industrial economy although the development of agro-based industry has been placed a high priority over forty years; and 3) and to provide a policy framework how agro-based industrial development is likely to occur.

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. 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. Since agriculture and agro-industry have direct input-output relationship, problems of demand and supply imposed by government policy in agricultural sector become the constraint to agro-based industry. In the mill areas of SEEs industry, declining raw material supply and poor performances of factories are often generating vicious circle. Stagnant growth of agro-based industry could also be ascribed to the existence of large number of inefficient SEEs factories within its ownership structure.

The seiminar 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.

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