Thu 27 Sep 2012
Filed under: Business / Trade,International,News
Myanmar used to be a major exporter of many products – from rice to clothing to its world-famous red rubies. But crippling sanctions left the country with few willing buyers aside from China and India who just wanted fuel or food.
That looks set to change with the US about to lift restrictions on exports from the country. But what might US consumers actually buy from Myanmar?
Myanmar’s current export situation is neatly summed up here by CLSA:
India is Myanmar’s primary beans and pulses customer and China imports significant quantities of gems and timber from the country. Finally, Japan is a market for the country’s garments. Officially gas represents 57% of exports, followed by beans and pulses (18%), teak and hardwood (10%), garments (6%), rice (5%) and fish and seafood (4%).
So what, among all this, might appeal to the US?
One potential export could be rice. Before the country fell into a spiral of economic decline Myanmar was the world’s number one exporter of rice – a title now ceded to Thailand or Vietnam (depending on the year). Though it will take a while to improve yields, collection and distribution channels, there’s no reason Myanmar couldn’t become a rice powerhouse again.
But with the US running a huge surplus in rice of its own, the white stuff from Myanmar is unlikely to land on Iowa dinner tables now, or any time in the near future.
What about gemstones – like jade? The price of jade has soared in recent years on voracious Chinese demand, making millions for traders and mine-owners. But jade is something of an acquired taste – and holds a particular place in Chinese hearts. While other stones, like rubies, might have a more global appeal, it seems unlikely that the US would make that much of a difference to the market.
Myanmar is also rich in energy resources – both oil and gas – although those are also likely to continue heading north to China, or east into Thailand. Next year, in fact, a pipeline carrying both from Myanmar’s Andaman coast into China’s Yunnan province will begin operating. The US, meanwhile, is enjoying its own energy boom.
Other major exports – like vegetables, fuels, and wood – hold limited appeal outside Asia itself.
So what does that leave? In the short-term, frozen seafood might be one potential growth market. Vietnam and Thailand both have huge export industries in that sector, which could perhaps be emulated in Myanmar.
A more likely area would be apparel, which is already a major export to Japan. Rising wages in China have forced some clothing manufacturers to move into Cambodia, Vietnam and Laos. Wages in Myanmar are lower still, while the workforce is much larger – at least compared to Laos and Cambodia. “Made in Myanmar” labels could hit your local Walmart or Gap relatively quickly.
Longer-term, Myanmar might want to become part of the Asian supply chain – assembling consumer goods – as in Thailand and Malaysia. It already does this on a small scale for some Japanese camera makers, but there is surely much potential.
But this is likely to prove a challenge. Myanmar suffers crippling power cuts, making factory operation a real problem. Second, the workforce is largely unskilled, following years locked out of most global trade.
And then there’s the question of infrastructure. Myanmar’s roads, railways, and ports are miserable. Though a major new port facility is under construction in the southern city of Dawei, it will be years before it is up and running.
So, while news that the US is now open to imports from Myanmar is no doubt a morale boost to the country, there is unlikely to be a massive pickup in trade any time soon. Myanmar needs huge investment and development at home before it really think about building an true export economy in the Asian tiger mold. But when it does, there are lots of reasons to be optimistic – unless you are a Vietnamese fisherman or a Cambodian seamstress.