Chinese Firm to Boost Rice Industry

Joint venture will provide loans and upgrade equipment

By KYAW HSU MON / YANGON

AMyanmar rice milling company and the Chinese firm CAMC Engineering Co. Ltd. have signed a joint venture Memorandum of Understanding (MoU) to improve the quality and capacity of rice milling operations in Myanmar, according to U Thaung Win, the secretary of the Myanmar Rice Millers Association.

Members of the Myanmar Rice Millers Association formed the Myanmar Rice Mill Company in 2012 with the aim of supporting the development of the milling industry. Both the Myanmar Rice Mill Company and its Chinese partner enter into the joint venture aiming to boost Myanmar rice exports, in part by improving the quality of its rice as well as the milling process.

“It [the Myanmar Rice Millers Association] is only a nonprofit organization so we can’t do it [joint ventures] directly, that’s why rice millers formed the company—so that they can work with foreign companies,” said U Thaung Win, who is also the director of the Myanmar Rice Mill Company.

“We’re going to discuss the details of how we can form the JV company in line with the Myanmar Investment Commission’s rules,” he told The Irrawaddy in February, adding that the MoU was signed late the previous month.

Under the terms of the MoU, the joint venture will also provide loans to rice millers and work to upgrade rice storage facilities that currently leave a large portion of the nation’s harvest susceptible to spoilage through exposure to humidity and other elements, U Thaung Win said.

“If we can form the JV, we will invest equal shares and we can support local rice millers. That will include loans, technical support and rice quality control,” he said.

“As we have very old mills in our country, we need technical improvements from foreign investors. We do expect that if we can control the quality of rice, the price of exported rice will also increase,” U Thaung Win said.

According to a World Bank report in June 2014, Myanmar could increase its agricultural exports greatly if it improves the quality of rice by investing in the expansion and upgrade of domestic rice mills. The report said that since economic and political reforms began in 2011, rice exports have risen significantly, but in the past two years export volumes have leveled off at about 1.3 million tons annually.

The World Bank said much of the rice grown is of low quality and unfit for export to high-value markets such as the European Union, where Myanmar products are exempt from import tariffs under a preferential trade scheme linked to the country’s “least developed country” status.

U Chit Khaing, chairman of the Myanmar Rice Federation, said he welcomed the MoU.

“Chinese companies have been very interested to work in the rice industry for years; CAMC has also worked here for years. That’s why they have mutual understanding and believe they can improve the rice industry,” U Chit Khaing said.

“If we compare the quality of mills here and in Thailand, it’s quite different. We only have very lowquality mills in Myanmar,” he said.

The Myanmar Agribusiness Public Co. Ltd. (MAPCO), whose chairman is U Chit Khaing, is also working with a foreign firm to improve the rice industry’s competitiveness. It has entered into a joint venture with Japan’s Mitsubishi to build more rice mills, improve quality control measures and increase exports.

According to Myanmar Rice Millers Association figures, there are more than 2,000 mills nationwide, most of which operate at a capacity of 30 tons to 50 tons per day, with few mills capable of outputting at the 200to 300-ton level that is typical of more competitive rice exporters.

Myanmar’s agriculture sector is the country’s largest employer and 70 percent of all Myanmar live in rural areas, but under the previous military regime agricultural productivity languished and rice exports fell sharply compared to the 1960s.