Foreign Investment in Agriculture Rests on Policy Support, Innovation, Says Dentons

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