A 5,000-tonne shipment of rice to Japan from
Myanmar for the first time in 45 years caught international headlines
last week, with media lauding another milestone in Myanmar’s political
reforms.
But industry sources say the cooperation comes amid a bid for both
Japan and Myanmar to bolster deeper economic ties, with the shipment
bound from Yangon to Nagoya dwarfing the expected output of rice for
export from Myanmar under Japanese technical assistance.
Two potential joint ventures between Myanmar Agribusiness Public
Corporation (Mapco) and Japanese conglomerates, Mitsui & Co and
Mitsubishi Group, may propel Myanmar forward as the one of the region’s
key rice exporters.
Mapco and Mitsui plan to establish the Integrated Rice Complex
Project (IRCP), a network of rice-milling and processing plants in
Myanmar that will supply countries along the Ivory Coast with
low-quality (25% broken) rice.
“The most important thing isn’t rice exports to Japan, but Mitsui and
Mapco’s cooperation to establish mills to promote rice exports and help
Myanmar become a large rice exporter in the world market again,” said
Masaki Takahara, the executive managing director of Japan External Trade
Organisation (Jetro) in Yangon on March 28.
Although the Financial Times and Bloomberg reported earlier that
Mapco and Mitsui would build three mills capable of producing 300,000
tonnes per year, Mapco confirmed last Monday that it would build four
mills with a capacity of 400,000 tonnes per year.
Myanmar exported 1.2 million tonnes of rice last year, Mapco
calculates; 400,000 tonnes would increase annual exports by about 33%.
“The mooted output is roughly a third of this year’s total exports
and this year’s exports are a 30-year record,” said Sean Turnell, a
Myanmar economics expert at Australia’s Macquarie University.
The mills will be built in Yangon Region’s Twantay Township; Kyaiklat
Township in the Ayeyarwady (delta) Region; in the west of Bago Region;
and in the capital, Nay Pyi Taw.
William Myint Maung, the manager of international business relations
at Mapco, said on Monday that Mapco and Mitsui planned to enter a joint
venture within the next two weeks. Currently, the companies are
operating under an agreement that states the IRCP is 51% owned by Mapco
and 49% owned by Mitsui.
Mapco and Mitsui have shortlisted four candidates to operate the rice
mills under an engineering-procurement-construction (EPC) contract. The
winner of the tender will set up and ensure the machinery’s
functionality, and train local staff.
The four shortlisted candidates are China National Technical I&E
Corporation (CNTIC); Fortune International Co Ltd (CAMC); Lucky Exports
Pvt Ttd; and Daewoo. CAMC currently holds the highest bid at US$29.9
million.
The companies delivered their technical presentations on Friday and
will be selected by the end of the month. Mapco and Mitsui will then
employ a local Myanmar company to construct the facilities, which are
expected to take about one year to build.
A spokesperson for Mitsui told the Bangkok Post on Tuesday that
although the shipment of high-quality (5% broken) rice to Japan was an
important step in trade relations, Mitsui wanted to focus on supplying
developing markets in Southeast Asia and West Africa to keep up with a
growing demand for food by investing in the IRCP.
“[The IRCP] will bring more value to products made from rice and will contribute to all stakeholders,” the spokesperson said.
Japan, as a country that is self-sufficient in rice, gives minimum market access to rice exporters.
The spokesperson added that the shipment of 5,000 tonnes to Nagoya
was contracted based on the minimum access system, when the company won a
tender from the Japanese government. Although Mitsui will try to
facilitate the export of more rice from Myanmar in the future, the
spokesperson said, there are no set plans for the future: it depends on
Japan’s economic policy.
“Japan’s involvement is not a surprise. The extent of Japan’s
investment in Myanmar is, I think, the largely hidden but big foreign
investment story. Western countries, and their possible competition with
the dominant but deeply unpopular Chinese, get all the publicity — but
quietly and behind the scenes it is the Japanese that are putting the
runs on the board,” Turnell said.
Mapco also plans to enter a JV with Mitsubishi by the end of the
month to start milling tropical japonica rice — used to make thin rice
cakes popular for consumption in Japan — at mills in Myanmar.
The rice is currently milled in China.
“Japan and China are not on good terms,” Maung said.
“We’re discussing with Mitsubishi about how the company can move that
investment in rice milling from China to Myanmar, and the potential
JV.”
Ye Min Aung, the managing director of Mapco, said Myanmar’s
cooperation with Japan “is a wakeup call” to other countries in the
region.
“Thailand is concentrating on a pledging scheme that reduces its
competitiveness level substantially, while Vietnam and India are relying
too heavily on intensive cultivation that deteriorates the quality and
safety of their rice,” he said.
“Japan is back. Myanmar has been advising Japan to reconsider more
investment in Myanmar to help the rice economy, which 60% of the country
is dependent on. Myanmar has given Japan a strong recommendation that
investing in rice is beneficial to both countries and peoples.”
During the British colonial era, Myanmar was one of the world’s top
rice exporters: it shipped a record 3.4 million tonnes in 1934. However,
the export market diminished throughout the country’s decades of
economic isolation.
“Japan has kept a good relationship with Myanmar and a lot of
Japanese companies want to contribute to Myanmar’s development, with the
strong belief that Myanmar has the potential for rapid economic
growth,” Jetro’s Takahara said.
“On the other hand, European and American companies seem hesitant.”
Mapco is a private company and shares the same board of directors
with the Myanmar Rice Federation, a non-government affiliated rice body.
It oversees the associate Ayeyar Hinthar Group of Companies.
The company handles transactions for investments through a branch
office in Singapore, where it has an offshore account with United
Overseas Bank.
source: Bangkok Post
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