Industrial sector needs more attention
Experts within Myanmar’s industrial sectors say there needs to be a more detailed policy outlining industrial development, including a pathway for solving the woes of economic zones.
POOR infrastructure, low-quality or unreliable electricity supply, water shortages, inadequate transportation links, and ongoing disagreements with local residents affected by zone development are among the most serious problems developing the country’s industrial sector, experts say.
But perhaps the biggest problem, they say, is the lack so far of any overarching government industrial development policy.
Parliament should pass laws to promote industry and the SME sector, says U Myint Zaw, vice president of Myanmar Industrial Association.
“We’ve had industrial zones for more than 30 years, but no industrial zone development law,” he told The Myanmar Times. “To develop industrial zones around the country, we need to enact specific legislation.”
Despite the designation by governments from time to time of industrial zones, Myanmar still lags behind its ASEAN neighbours, he said.
“The current government said that when they took office they would develop the industrial sector. The last government said the same thing,” U Myint Zaw said. “But we’ve seen no action. It’s not just a question of designating a piece of land as an industrial zone. We need legislation.”
Industrial developers around the country say they face the same challenges: high land prices, electricity supply and loan financing.
Hlaing Tharyar industrial zone patron U Myat Thin said the zone was being upgraded as a special pilot project funded by resident companies. The first step would be to address the issue of affected people, he said, which was delaying the project.
U Tin Oo, who owns a factory in the zone, said investment into the industrial estate was moving too slowly.
“Some zones around the country have more empty space than industry,” he said.
The quality of power supply was proving a huge hindrance, he added.
“We have electricity, but it is unstable and low-quality,” he said. “Products are damaged by voltage fluctuations.”
U Ko Lay, an investor at South Dagon Industrial Zone, said things were in a poor state at his zone.
“The infrastructure has started to decay,” he said. “Accidents have occurred in our zone because of faulty wiring.”
More than 70 percent of Yangon’s Myaung Dagar zone, which occupies 682 acres (273 hectares), is devoted to storage space or is just empty, said U Min Thu, a manufacturer at Myaung Dagar.
And U Thiha Min, owner of a factory in Mandalay, said many of the zones there were occupied by wholesale outlets for electronics, vehicle accessories and clothing instead of factories.
In Kayin State, Myawaddy Industrial Zone is home to only three working factories, said its head, U Ye Htun Oo. The zone was established on 201 acres (80ha) in 2013, and 80pc of the land has been sold to local and foreign investors.
Taungoo zone, Bago Region, has made no progress in developing because of a lack of infrastructure.
Across the board, there needs to be a coordinated policy that looks at the planning of zones collectively, experts say.
“The government should implement new industrial zones in villages, outside Yangon and Mandalay,” said the industrial association’s U Myint Zaw. “They should set them up in lowdensity population areas like Tanintharyi Region. That will bring down the Yangon prices,” he said, referring to a growing problem of land speculation close to the capital.
The new zones, like their counterparts in other ASEAN countries, should benefit from stable and sufficient power and water, transportation, waste disposal, and measures to counter air pollution and protect the environment, he said.
The inauguration of the ASEAN Economic Community increases pressure on local manufacturing investors and SME start-ups, as competition in a reduced-tariff market is expected to intensify. Myanmar industries will have to work harder to retain their domestic markets while seeking to penetrate foreign markets, said U Myint Zaw.
The government needs a clear industrial policy that specialises in specific sectors, he said.
“Our industrial sector should focus on a single sector like agricultural products, accessories or clothing,” said U Myint Zaw. “There’s no focus at the moment.”
Agriculture is simply not enough to sustain future growth - more focus on industry is needed for job creation, he said.
“We need to develop a committee for each sector, including industrial zones, education and other business sectors,” he said. “These committees would comprise industrialists and experts rather than government officials.”
For its part, the government has announced a push toward a more manufacturing-intensive economy. It is aiming to encourage more foreign and local investment into the sector with the passing of a new investment law and a raft of red-tape cutting initiatives that it hopes will make it easier to do business in Myanmar.
The Myanmar Investment Commission has announced that it will try to attract local and international developers by establishing new industrial zones, as well as by upgrading existing zones.
“MIC will invite new local and international developers to develop new industrial zones and to upgrade the old zones to promote industrialisation and create job opportunities,” MIC secretary U Aung Naing Oo said.
A worker rides a motorbike through the Dawei special economic zone construction site.