By Khin Su Wai and Thompson Chau
WITH more warehouses, better road networks, an improved power supply and enhanced human capital, Mandalay can become the country’s northern economic powerhouse after two years, according to the region’s chamber of commerce.
Myanmar’s second largest city was the last royal capital and remains the hub of the country’s heartland. The city is fully embedded in the national agricultural economy, trade and logistics – with produce being transported from its vast hinterland to the city before being exported to Yunnan or abroad via Yangon.
With Yangon increasingly crowded with foreign investments, Mandalay has naturally become the next focus. India and China have already stationed their consulates in the city, while European business chambers are establishing their presence as well.
The Myanmar Times sat down with U Win Htay, vice chair of the Mandalay Region Chamber of Commerce and Industry (MRCCI) in Mandalay Hill Resort, to talk about the city’s economic growth, urbanisation, foreign investments as well as the Belt and Road Initiative.
The vice chair said agriculture is the most important sector for the city as well as the fast-growing industry.
“We have a lot of vacant land, those not yet cultivated. We produce watermelons and cucumbers, and boast the largest trade associations for beans.
“Tourism is another developing sector, because the city, such as Mogok township, has a lot of heritage and attractions to offer,” he said, adding that the tourism growth is supported by an increase in both domestic and international travellers.
“It is around 50-50 for domestic visitors and foreigners. We have seen more Westerners and also a lot of Chinese, many of whom come from Yunnan via Muse.
Mandalay’s challenges in economic development are prevalent in other states and regions – the lack of finance, insufficient human resources and the absence of proper infrastructure in terms of road networks and power supply.
U Win Htay explained that the politics is an additional problem.
“In terms of both the Union and Mandalay regional level, the National League for Democracy-led governments are facing a lot of administrative challenges. They cannot control all the departments and this is not going very smoothly for businesses. Some departments are still being run in the old way.
“The economy is slowing down and growth is very slow or even stagnant for businesses,” he observed.
From the point of view of traders, the government’s task of providing clear policies and creating a business-friendly environment remains to be done.
U Win Htay, vice chair of the Mandalay Region Chamber of Commerce and Industry (MRCCI), talks to The Myanmar Times in Mandalay Hill Resort. Photo: Thompson Chau/ The Myanmar Times
“For example, if you want to obtain a permit from the Myanmar Investment Commission [MIC], you need to first sort out environmental and social impact assessments [EIAs, SIAs], to prove your land ownership and submit your business proposal together with recommendations and authorisation from relevant authorities. It takes at least 3-6 months to get a permit,” he complained, but praised the regional MIC as a step forward.
The Japan International Cooperation Agency’s small and medium-sized enterprise (SME) loan programme has a favourable interest rate, yet the maximum loan amount of K5 billion is insufficient for individual businesses.
U Win Htay is also worried about brain drain triggered by Yangon’s rapid growth and the job opportunities made available by that.
“I am worried – yes – about the brain drain to Yangon. We don’t have many job opportunities here. Young people go to Yangon and abroad to work and make a living,” he said, preferring businesses to expand and create employment in Mandalay instead. The city needs more promotion, more investments and more jobs to spur growth.
But it’s not all bad news. The Myotha Industrial Park is up and running already despite the lack of infrastructure, whereas a cyber-city project will be implemented next year on a 10,000-acre site near Pyinoolwin. The vice chair suggested that electricity and road network will be in place in two years. The 285MW-gas powered plant in Myingyan, supported by the Asian Infrastructure Investment Bank, will provide much-needed electricity for infrastructure development.
Mandalay needs more investments for logistics facilities, such as more warehouses and trucks.
– U Win Htay, Mandalay Region Chamber of Commerce and Industry
More importantly, Mandalay’s future lies in being Myanmar’s northern economic powerhouse by developing the connectivity necessary to make it a competitive logistics hub.
“As the heart of logistics, we are connected to the Chinese border via Muse as well as the Indian border.
“The dry port developed by Kerry Logistics has already started operation in July,” he went on, adding that he had imported goods via Yangon port, transported them to Mandalay’s dry port by train and then moved them to Muse by truck.
Additionally, the city will start developing its river port in the Ayewaddy River with support from a survey drafted by JICA.
Both software and hardware are imperative for Mandalay to become the northern powerhouse, according to U Win Htay. The city needs more investments for logistics facilities, such as more warehouses and trucks. In terms of software, Mandalay has to develop its human capital, especially in training engineers, drivers, mechanics and other logistics-related vocational training. The region lacks the skills to turn raw materials into value-added products.
Belt and Road
Additionally, the vice chair said that China’s Belt and Road Initiative is beneficial and the city should take part. However, Mandalay ought to be careful about not losing its own culture and damaging the environment. The influence of Chinese cultures and changes to the city’s demographics are causes for anxiety. There is a case for preserving the culture, traditions and way of life of Mandalay in face of potentially rapid changes imposed externally.
“The BRI will promote trade and tourism and bring in technical support, expertise, investments and human capital for Mandalay.
“The Mandalay population is already dominated by ethnic Chinese … The Belt and Road Initiative may exacerbate this trend in terms of demographics. This is worrying.
“Many people call Mandalay ‘Yunnan Mandalay’ because of the visible ethnic Chinese population. Many move from the border areas to the city, and some acquire a National Registration Card [NRC],” he noted, adding that some Chinese trade associations wield more influence than the MRCCI and, due to the background of Chinese businesses, they have more extensive interests which not many domestic companies can parallel.
U Win Htay said that the primary concern for businesses regarding the Belt and Road Initiative is the immigration from China.
“It’s hard to solve the problem. There are more immigrants from border areas. The immigration authorities should better enforce regulation in the border areas so Mandalay won’t be affected by the immigrants.”
He did not provide information on when Myanmar can begin to export honey to the EU.
Myanmar-produced honey has good potential to sell in the international market.
“The advantage is Myanmar honey is mostly organic so many international buyers are already paying attention. However, many hesitate to buy from Myanmar because of our manufacturing practices,” said Dr Hlaing Min Oo, Deputy Secretary General Asian Apicultural Association (AAA).
In order to penetrate the world market, Myanmar honey must be certified by international bodies such as HACCP, GAP, Halal and FDA.
In accordance with HACCP requirements, Myanmar has started to introduce good beekeeping practices since December 2016.
To become an exporter of honey products to the EU, the country’s apiculture sector has also tried to comply with the requirements stipulated in European food legislation and collaborated with the German Corporation for International Cooperation (GIZ).
Myanmar is upping efforts to extend the overseas reach of its honey products after demand from its existing markets has fallen in recent years.
It also comes at a time when expanding the markets Myanmar can export to is rising in importance to avoid price volatility when demand trends change.
Currently, there are five active honey-exporting companies in Myanmar: Smile Happy Company, Myanmar Honey Farm, Shwe Panm, The Unique Country and The Asia Honey.
In the 2016-2017 fiscal year (FY), Myanmar exported a total of 2,409.7 tonnes of honey worth $3.43 million, mostly to Thailand and China but also Japan and Canada.
This was down slightly from the 2,426.7 tonnes exported in FY2015-2016. Compared to FY2014-15 though, honey exports are down by more than a third.
The decline was due to a drop in international demand since 2015, which led to a sharp drop in honey prices in the second half of 2015, said U Aung Khaing Htwe.
Ko Zaw, beekeeper in Myitkyita in Kachin state told The Myanmar Times that his regular customers from China now buy 100 baskets of honey a year at K2,500-K3,500 per viss. One basket of honey is equivalent to 180 viss and one viss is equivalent to 1.6kg.
Building up the market
There is also a lack of demand compared to supply at home. There are 893 registered commercial beekeepers in Myanmar producing about 3,500-4,000 tonnes of honey a year, which is more than the current market demand.
“Supply is more than demand and that is the main challenge. Meanwhile, many local beekeepers don’t have a regular market of customers to rely on. This situation is not attractive for creating a honey market,” Dr Hlaing Min Oo told The Myanmar Times.
While supply outpaces demand, it is nevertheless irregular, as some locals do not approve of bee colonies in their villages, according to Ko Zaw the beekeeper. Last year, locals from Kani township, Sagaing Region, were reported to have destroyed K10 million worth of bee colonies in their village.
In fact, some beekeepers are forced to pay villagers K300-K500 per bee colony, U Aung Khaing Htwe said.
However, Dr Hlaing Min Oo also told The Myanmar Times that the law supports and protects beekeepers in Myanmar.
Modern beekeeping was introduced in Myanmar under the British colonial rule around the 1920s. The British brought the apis mellifera bee species from UK. In the early 1980s, with the help of FAO and the US, a project was set up to train dozens of government employees and fresh university graduates in modern beekeeping.
Myanmar government also sent newly trained beekeepers to the US, UK, Australia and Israel for further trainings.
In 2013, a local project to train the rural population in modern beekeeping to raise incomes was launched under the combined efforts of the Apiculture, Livestock Breeding and Veterinary Department and other organisations
Still, the Myanmar bee-producing market is much smaller than its neighbours. “Among the Southeast Asia countries, Myanmar bee production is still small. In fact, Myanmar production is equal to one week’s production in Yunnan Province in China, Dr Hlaing Min Oo said.
But as demand for organically-produced honey rises, there is potential for Myanmar to become a bigger exporter of honey to world markets as it raises efforts to comply with international standards.
There is also opportunity to market honey and bee-produced products like bees’ wax, pollen, royal jelly and bee venom, locally.
“We must develop the local market and promote honey as a substitute for sugar. We can also raise knowledge about other products produced by bees. If we can do that, local producers can sell up to 75pc of their honey products to local customers,” he said.