Mon 14 Jul 2014
Filed under: Business / Trade,News
A leading player in Myanmar’s seafood sector tells Mizzima Business Weekly he’s optimistic about the industry’s export potential if constraints can be overcome.
Few countries can boast crab so plentiful that it is sold as a cheap street food snack. But despite Myanmar’s abundance of seafood, in terms of availability and comparable affordability, the sector remains largely untapped in terms of export volumes. There has been a big improvement in the situation since the European Union and the United States lifted trade sanctions in 2012, but challenges such as electricity shortages and weak infrastructure continue to inhibit efforts to attract more foreign buyers for Myanmar’s rich bounty of seafood.
U Myat Aung Nyunt is the managing director of Ocean Harvest (Myanmar) Limited, which has an ice-making, cold storage and seafood processing factory in Yangon that he established more than two decades ago. He is also joint secretary of the Myanmar Fishery Products Processors and Exporters Association, which was formed in 2004 and aims to forge investment links between exporters and importers, as well as providing information about best practices in the industry.
“Myanmar’s potential to increase seafood exports is huge, but we need to set up prawn farms to obtain higher quantities to export,” U Myat Aung Nyunt told Mizzima Business Weekly. “At the moment there’s only one prawn farm in the entire country,” he said.
Prawn farming is a highly skilled and labour intensive industry and Myanmar is yet to establish a seafood processing training centre. Ocean Harvest had to provide training in a range of tasks for its workforce of about 200 after they joined the company.
The June 20 decision by the United States to downgrade Thailand’s status to the lowest level on an international list for failing to meet minimum standards for eliminating human trafficking has focussed a spotlight on abuses in its fishing industry, but U Myat Aung Nyunt said he has never heard about fishery sector workers being ill-treated in Myanmar.
“I provide my staff with three meals a day as well as free health care and accommodation,” U Myat Aung Nyung said. “My unmarried workers live in a dormitory at the back of the factory, while housing is provided for 20 families in North Dagon,” he said. “I treat my staff as my family, because without them, how can I do this business?”
U Myat Aung Nyunt ? who prefers to employ women because he believes they work harder than men ? said some employees have been with the company since it was established in 1993 but added that retaining skilled staff can be difficult because of rampant poaching by competitors.
“I do everything I can to retain my staff, but there are several Chinese companies in Myanmar who have bigger budgets and operate with a local proxy,” he said. “It’s causing a lot of problems for players in the local industry.”
Although Myanmar’s seafood stocks have declined in the past five years, U Myat Aung Nyunt said conditions in Thailand were far worse. He said introducing the right measures could help to ensure that Myanmar’s fishing industry was sustainable and that export volumes could increase exponentially if the potentially lucrative prawn farming sector expanded beyond its existing one farm.
Deterrents to the expansion of the sector included high operating overheads, such as the need for diesel generators as a back-up power source, and the complexities of having to provide around-the-clock care and maintenance.
In the absence of farms, most prawns are caught in the wild and they fetch some of the highest prices.
U Myat Aung Nyunt said a net was used to contain a large number of prawns for two or three months until they grow to marketing size. The haul was then sold at various markets in Yangon, including at the Shwe Zin Yaw Hein Jetty, which has been approved by the European Union.
Another method involved the use of small trawlers but in both cases U Myat Aung Nyunt said roads needed to be upgraded to reduce the time needed to transport prawns and other seafood to markets in Yangon from Rakhine State and Ayeyarwady Region. Shorter delivery times were essential because the boats lacked refrigeration equipment and relied on ice to keep the catch fresh.
“Although there’s definitely a demand for prawns without their heads removed, most fishermen tend to cut off the head because it’s too easy for bacteria to spread from the head to the body,” he said.
Despite infrastructure challenges, the Department of Fisheries is striving to ensure that seafood meets international standards. Departmental officials conduct monthly factory checks to ensure that exporters are complying with processing laws, which include stringent hygiene regulations.
In early June, the Ministry of Livestock, Fisheries and Rural Development said it would grant K1.5 billion (about US$1.5 million) to livestock breeders and fish farmers to help boost capacity and export revenues. Ministry figures show that in the last 10 months of 2013-14 fiscal year export revenues were $414 million, down $76 million on the $490 million earned in the same period of the previous year.
Ocean Harvest is approved by the Food and Drug Administration in the United States and 80 percent of the 400 tonnes of prawns, squid and fish it exports each year is destined for restaurants in Los Angeles or Las Vegas, said U Myat Aung Nyunt.
“Until the sanctions were lifted, we mostly exported to Japan,” he said. “However Japanese buyers tend to buy smaller quantities of a particular size or species. The US is a constant buyer and often in bulk,” he said.
A hotelier in Los Angeles was so impressed by the quality of Ocean Harvest’s produce that U Myat Aung Nyunt’s family was invited for an all-expenses paid holiday last year.
Indonesia and Australia are other popular export destinations, U Myat Aung Nyunt said.
“The Australians are clever – they sell the best of their seafood to Japan and then import for domestic consumption,” he said, laughing.
The European Union is a less appealing destination, as it offers much lower prices than the US.
“I’m not sure why that is – it could be that buyers in the EU are sourcing seafood from markets elsewhere that are cheaper.”
U Myat Aung Nyunt said Ocean Harvest was cheated out of a $200,000 payment last year for a consignment of freshwater fish sent to the Middle East and he will no longer supply companies based in the region.
“I’m not sure whether it was the agent in Yangon or the company in the Middle East who was responsible for not paying me,” he said.
“After a few containers were released from the cargo, the company had told me they had a cash shortfall and asked if I could release the entire order – and that I’d be paid the following week.
“If I’d said no, I would have had to pay extra storage costs until the entire amount came through; we had a gentleman’s agreement.”
The company in the Middle East refused to acknowledge U Myat Aung Nyunt’s demands for payment and his efforts to seek legal redress in Yangon were unsuccessful because the agent lacked assets. “Not even a car!” said U Myat Aung Nyunt.
Many exporters in Myanmar had lost money in deals with Middle Eastern companies, he said.
“Sometimes even their banks operate dishonestly, such as by allowing containers to be released before money has been deposited,” U Myat Aung Nyunt said.
“And often it’s all done through brokers and we don’t know who the company at the end of the line is,” he said.
“When we supplied to Iraq, for example, our goods would be dropped in Kuwait and taken to Iraq by a separate transport company. We can’t exactly go to Iraq to find out what happened to an outstanding payment.”
Despite various challenges, U Myat Aung Nyunt is optimistic about his company’s future prospects. And those of his family.
In June his daughter, Ma Myint Myat, 26, opened a restaurant on Parami Road. In a nod to her father’s line of business she called it ‘Crustacean’.
“I supply all the seafood to my daughter’s restaurant,” said U Myat Aung Nyunt.
“She worked at Ocean Harvest for five years and after getting an MBA, she decided she wanted to run her own business.”
Ocean Harvest also supplies a Germany company that operates flights for VIPs.
“But we stick to exporting because the prices are better for us,” said U Myat Aung Nyunt.