Accelerated Industrialization for Rapid Integration into Regional and Global Networks

U Khin Maung Cho, Union Minister of Industry of the Republic of the Union of Myanmar, was born on 3 November, 1950,in Meikhtila, Mandalay Region, Myanmar. He graduated from the Rangoon Institute of Technology (RIT) in 1973 with a Bachelor Degree in Mechanical Engineering. As an outstanding student, he invented the Hovercraft 001 in 1973 during his college years. He worked as an Assistant Engineer at Department of Rice Milling under the Ministry of Trade from 1976 to 1977, and due to his remarkable performance, he was promoted to Deputy Director of the Research and Development Department under the Ministry of Industry. In 2007, he left the Ministry and worked as a CNG Design Engineer at the Omnitek Corporation (USA), in Thailand for a year. Upon returning to Myanmar, he was appointed Vice President of Automobile Technical Division and Executive Engineer at Super Seven Stars Motors Industry Co., Ltd. Last year, when NLD came to power, he was elected as Union Minister of the Ministry of Industry. The Minister’s interests are playing table tennis, walking, reading and research activities.

What are Myanmar’s priority sectors?

U Khin Maung Cho: Myanmar is still in the early stages of industrialization, but rapid industrialization is underway. Currently, around 57% the majority of the total population is employed in the agricultural sector. The industrial sector took up 32.4% during the fiscal year of 2013-2014, while the manufacturing sector trailed with a share of only 19.9%. Since then, there has been stagnation of growth. The main factor which sparked Myanmar’s rapid industrial development is the determination to use the opportunity to quickly integrate into regional and global networks.

Myanmar is highly dependent on exports of natural resources like natural gas and agricultural products, a few primary commodities and labour-intensive manufacturing products with low value-added. The challenges Myanmar is facing on its current industrial development path can be divided into three aspects: industrial structure, business-enabling components and institutional capabilities and governance mechanism within the government. For this reason, the priority sectors set-up by the Ministry of Industry focus on promoting Myanmar’s Private Sector-led Industrial Development.

Myanmar’s industrial structure is not diversified; the majority of the manufacturing industries are labour-intensive low-technology industries engaged in relatively low value-added activities like textiles/garments. Very little has been invested in the manufacturing sector. Clearly, Myanmar needs to produce higher-value commodities in order to eventually achieve industrial diversification in the manufacturing sector which should stimulate long-term economic growth.

In this regard, our priorities lie on the betterment of Human Resource Development (HRD), along with Small and Medium Enterprises Development and Restructuring of State-owned enterprises. When it comes to Human Resource Development, during the era of the new Democratic Government, foreign investors are encouraged to invest in the education towards the development of high-skilled human resources and creation of more and better employment opportunities with decent jobs through industrialization. As for the SMEs Development, SMEs’ Law and By-law were enacted for the achievement of successful industrial diversification and upgrading based on both agriculture modernization and higher value-addition & introduction of new technology in manufacturing industries. In order to ensure the business-enabling environment for SMEs, the emphasis is being taken on financing, infrastructure, tax and procedure relief, and foreign direct investment issues. So, reforms shall greatly reflect to the financial sector to support industrial development more effectively, especially SMEs. Another aspect of the industrial structure that is hindering Myanmar’s industrial development is the inefficiency of some State-owned enterprises (SOEs). Currently, SOEs cover a wide range of sectors, including extraction of natural resources, power, telecommunications and industry. SOEs dominate the industrial sector in Myanmar, which is why a Public-Private-Partnership System was introduced by the new Government in order to procure the balance development between SOEs and SMEs/private sectors, as well as SOE’s higher efficiency. Currently, 59 out of 118 SOEs were privatized, 17 SOEs are in the process of privatization, and the remaining SOEs shall float tender for further privatization processes.

Why should international investors target Myanmar?

U Khin Maung Cho: Myanmar is endowed with abundance of natural resources and has the comparative advantage of low-cost labour. Moreover, Myanmar has great growth potential due to its advantageous geographical location at the juncture of the Association of Southeast Asian Nations (ASEAN) and borders of the world’s most dynamic and fast-growing countries such as China and India.

After decades of isolation, Myanmar is now experiencing impressive growth. By co-operating with international investors, especially in the SMEs sector, in the first stage rural communities may become direct suppliers of resources to industrial companies in the urban area. It is equally important for the rural communities to benefit from the economic growth and industrial development. Furthermore, by utilizing the opportunities of Generalized System of Preference (GSP), EU investors can enjoy the favours of GSP after extending their investments at later stages as well.

What is your personal message to local and international business readers?

U Khin Maung Cho: Potential industries, such as automotive parts manufacturing, industrial raw materials manufacturing, minerals and petroleum, pharmaceutical products, tools and electrical products manufacturing sectors are open for EU investors and international investments are encouraged. We would like to invite international SMEs to make joint investments in the development of a supply chain infrastructure for better transportation of commodities and to get technical assistance and experiences for making value-added products. International investors and entrepreneurs are welcomed and encouraged to have more understanding of Myanmar in order to elevate the respective fields of investment and to have a win-win economic cooperation in Myanmar.