By Deirdre May Culley and Martha Baxter, policy analysts at the OECD Development Centre
On 30 March, Htin Kyaw, a long-time adviser and ally of Aung San Suu Kyi – whose National League for Democracy party achieved a historic victory in recent elections – became the first elected civilian to hold office in Myanmar since the army took over in 1962.
The NLD won the democratic battle and enjoys unparalleled political capital and legitimacy. It must now deliver on exceedingly high expectations, build a cohesive multi-ethnic state and improve citizens’ lives. Economic progress will be indispensable if the country is to overcome years of ethnic armed conflict and move towards a common future. So what can the new government do?
Myanmar is one of south-east Asia’s poorest countries. More than 13 million people still survive on less than $1.25 (£0.88) a day, most of them in rural areas. Yet, Myanmar is rich in natural resources like oil, gas, precious stones, hydropower, fresh water and fertile lands that span several climate zones and can support a range of crops – from tea in the hills of north-eastern Shan state to rice in the Irrawaddy river delta. Myanmar also borders the economic powerhouses China and India.
A multi-dimensional review of the country (pdf), carried out by the OECD Development Centre and multiple stakeholders in Myanmar over the past three years, identified agriculture and the agri-food industry as investment areas where the government would get the biggest bang for its buck.
Though natural resource extraction can be fiscally tempting, 70% of the population, some of Myanmar’s poorest people, work in agriculture. Investment in this sector would build on the country’s natural climatic advantages and enable it to return to its historic role as south-east Asia’s rice bowl, a distinction it held in the late 1950s. There is precedent: in China, Korea and Vietnam (pdf), agricultural growth was among the initial catalysts for modernising the wider economy and reducing poverty.
Myanmar is far from making the most of its agricultural assets: 55% of farms are tiny plots – less than two hectares (4.9 acres) – with farmers using antiquated practices such as sowing and harvesting by hand. This is back-breaking, highly unproductive work. What raw products are produced are seldom transformed or fit for export.
As Linda Fulponi, co-author of the Multi-dimensional review and a visiting fellow at Yangon University, explains: “What food exports there are tend to be raw products rather than processed goods, which are far less valuable, with some excluded entirely from international markets as they don’t meet food safety and quality requirements.”
Infrastructure and mechanisation are problems, but so is knowhow: technical training in modern production processes is very difficult to come by. Only 0.5% of eligible students are enrolled in technical training programmes, compared with more than 40% in China.
Farmers struggle to improve productivity. They are unable to choose which crops to grow – that decision is made by the government – and rarely receive information or training. For example, many farmers misuse fertilisers, not only because they are imported with untranslated Chinese labels, but also because very little information is available locally on how to use them.
To become a modern agri-food hub, exporting high-quality products throughout the region and around the world, Myanmar will first need legal reforms so that farmers have secure rights to their land and the freedom to choose which crops to grow.
Second, it will need to facilitate access to finance for entrepreneurs and farmers – weaning them off public subsidies and allowing commercial banks to operate in the sector. Third, Myanmar will need to provide training in modern production techniques that meet export standards. Finally, investment is needed to build infrastructure: food safety inspection laboratories, cold storage facilities at airports and ports, and better transport networks.
Enthusiasm is high and opportunities plentiful; it is time to seize the momentum to enable Myanmar and its people to reach their full potential (tweet this ). Targeted and intensive reform of the agricultural and agri-food sectors would give farmers and the country a fair shot at that future.
This article first appeared in The Guardian on April 11, 2016. Click here to read it anew.
The Multi-dimensional Review of Myanmar was launched by the OECD Development Centre and H.E. Jong-won Yoon, Ambassador and Permanent Representative of Korea to the OECD, on 23 June in Yangon, Myanmar.