Around the Institute

Myanmar POD Social Entrepreneur Blog

May 16, 2013  • Salif Romano Niang, Co-founder, Malo

When Mickey asked me in December 2013 if I would be interested in visiting Myanmar as part of a Partnership Opportunity Delegation (POD) composed of philanthropists, impact investors, diplomats, and social entrepreneurs I was intrigued. I’ve never been to Asia before and like many, my knowledge of the country was limited to stories about its poor human rights record and that The Honorable Aung San Suu Kyi, her family, and her allies suffered greatly at the hands of the junta.

I grew up in Ethiopia during the Marxist military regime of Mengistu Haile Mariam so I am keenly aware of what it feels like to live in a country where freedom is restricted. I am also from a Mali, a country with a recent history of military dictatorship and a struggle to transition to democratic governance. My academic background is in international relations and the focus of my research was on the impact of demography (population age distribution) on conflict, democratization, and economic performance.

I am the co-founder of Malo, a rice processing and fortification social enterprise in Mali so given that Myanmar is one of the world’s top consumers and producers of rice, I also wanted to have a much better understanding of the challenges and opportunities across the country’s rice value chain and whether or not there was a business case for the fortification of local rice.

I arrived in Yangon just before midnight so my first impression of the country was dictated more by the architecture and the quality of the streets and not the people. I noticed that although most cars had the steering wheel on right side of the car, the taxi driver was also driving on the right side of the road. I later found out that Myanmar’s military ruler issued a decree switching the side on which people drove in 1970. The decision took effect immediately and since then the people of Myanmar literally drive on the “wrong” side of the road. 

Another peculiar feature of life in Yangon is the absence of motorcycles. Motorcycles or mopeds are the most popular form of transportation in congested urban areas in developing countries due its versatility and low operating costs however they were banned by the junta in 2003. Speculation about the reason range from a failed assassination attempt against a general by guys on bikes to a general’s daughter dying in a traffic accident.

Our first meeting was at the headquarters of Ooredoo—the Qatari telecom company that won a tender to build nationwide mobile voice and data network. I learned from Ooredoo Myanmar CEO Ross McCormack’s remarks that the company has high hopes for the country and that finding talent was relatively easy. He stressed the importance of building a company culture and while some jobs did require technical skills, what they were looking for was for good people willing to learn and innovate.

Innovation and risk taking is not something that is often prized in many cultures and even more so in a country that was under tight military control. Being obedient and toeing the party line is what gets rewarded not being disruptive.

Mr. McCormack’s remarks were followed by a panel discussion about investing in Myanmar and the challenges and opportunities to look out for. My big takeaway from the discussion was that it is essential to understand and respect the culture of Myanmar. While the people of Myanmar were looking for change and engagement with the global community, it was still traditional society at heart. He also talked about the importance of corporate social responsibility and that the Myanmar government takes it very seriously. A startup within Ooredoo called IdeaBox was quite interesting and they hope to develop innovative mobile solutions to address needs and wants of farmers and other potential customers.

The issue of managing expectations was raised several times. Expectations management applied to all the stakeholders: the people of Myanmar had to be patient yet engaged to ensure that the transition process went smoothly; international donors had to manage expectations given that the country was simultaneously reforming its political, economic, administrative system, as well as its private sector. Too much pressure—either the people on government, the international community on the government and the people may make things worse not better. One quote that stuck in my head from the panel discussion was that they were optimistic about the business context, but pessimistic about the political context.

I asked Prof. Aung Tun Thet about the rice industry and the assessment he gave could be applied to Mali. Although farmers do a relatively decent job of growing rice, post-harvest technology and processes are obsolete. Although total acreage under cultivation is high, there is certainly some room for improvement in terms of better yields. But milling is very poor and silos are virtually non-existent although Myanmar is self-sufficient when it comes to its own rice needs. However, it cannot compete with Thailand on price and quality due to these deficiencies.

Prof. Aung Tun Thet also gave us very good briefing on Myanmar’s new investment code and  the incentives in place to encourage foreign investment. It was also abundantly clear that what they meant by foreign investment, was Western investment. The Myanmar authorities do not simply want money to be poured into the country. They want Western companies and in particular American brands to set up shop.

Prior to leaving Ooredoo’s headquarters, U.S. Ambassador Derek Mitchell popped in to deliver a few remarks and answer questions. You can tell that he loved his job but that the complexity of his work was enormous. His remarks were sobering especially concerning the ethnic tensions in  Rakhine State and his assessment stood in stark contrast to Mr. McCormack’s more optimistic outlook for the country. The truth is probably in between but the lead up, organization, and the aftermath of the elections in 2015 will hugely determine which path the country goes. One statement that stood out from the Ambassador’s remarks was that the junta did a spectacular job of ruining a country that had everything going for it. They didn’t just dig themselves into a hole, they cut off their legs at the knees.

On Day 2, we visited the Union of Myanmar Federation Chambers of Commerce and Industry (UMFCCI) and I along with my fellow social entrepreneurs gave a 5 minute presentation about the work that we do. After delivering the remarks, I led a breakout session focused on agriculture and food security and was joined by representatives of USAID, Winrock International, Worldview International, the UMFCCI, and some fellow POD members. 

We got a great overview of the Myanmar rice industry in particular from U Aung Myint, an engineer by training and a former rice miller. He explained that Myanmar’s rice industry began its downfall in 1962 after being one of the leading exporters of rice in the world. Over the course of four decades, the machinery and mills deteriorated and by the time mills were privatized in 2003, the post-harvest sector basically collapsed. Since then, private businesses have re-entered the milling industry and standards are improving but still have a long way to go.

Another big takeaway from the breakout session was the importance of climate change and ensuring that ecosystems remain resilient. In addition to heavy rain and flooding during monsoon season, Myanmar is prone to earthquakes and typhoons. Dr. Arne Fjortoft of Worldview International Foundation is working on a mangroves project to protect farmland by planting nipa palm trees. The importance of solar energy, timely market information, and certifying seeds was also discussed.

After our session at the UMFCCI, I visited the United Nations World Food Program office. I met with the Head of Procurement to get a sense of their current activities and how they see the rice industry in Myanmar. The issue of land rights and ownership came up several times and it varies by geography. WFP’s work is geared towards serving refugees and internally displaced persons primarily in Rakhine state and the border areas with Thailand where there are ethnic tensions and armed groups still active.

I learned that Myanmar does export limited quantities of rice but it is not really tracked and that the quality is poor. The country also doesn’t have strategic reserves which is quite risky given its propensity to be hit by natural disasters. To be competitive and to be rice supplier of the WFP   for its global efforts, the country’s road infrastructure would have to improve. The WFP purchases about 45,000 metric tons per year for its Myanmar operations from local suppliers.

On Tuesday evening, we had dinner at Project Hub Myanmar and I got to meet some young entrepreneurs mostly working on tech ideas. I spent most of the evening speaking with Aung Khine Tun, from the Italian nonprofit, Cesvi. Aung Khine Tun like many middle class professionals operate small rice farms to supplement their incomes. Rice production is not easy and in the face of unpredictable climate, doing it well requires knowledge, drive, and someone trustworthy to assist you. As an agronomist, Aung Khine Tun copes better than others but with more support and technology he could do a much a better job. He sells his harvests by the basket (a standard across Myanmar) but the main issue is price. Getting a good price for paddy is difficult especially since storage is risky.

We flew to Mandalay early Wednesday morning and visited the famous U Bein Bridge. We also visited a Phaung Daw Oo a monastic education school that serves both boys and girls from across the country.

In the afternoon we met with labor and land rights activists and held small group discussions about the plight of peasants. My big takeaway from the discussion was that although political freedom and freedom of speech has improved dramatically since 2011, the issue of land seizures and land disputes have gotten worse. We heard personal testimony of activists who were being prosecuted for coming to the aid of farmers and villagers who had their land taken without proper compensation and usually on very short notice. It was clear that one of the keys to Myanmar’s success and stability is how well it deals with land rights and disputes as it continues to open up itself to foreign direct investment.

On Thursday we drove down from Mandalay to Myanmar’s new capital city, Nay Pyi Taw. The drive was literally straightforward. I was struck by the lack of traffic and the fact that there were very few towns or villages on the route. Building paved roads is extremely expensive and highways typically seek to connect to other roads or to as many population centers as possible between the two endpoints. But this was not the case and I am not sure whether this was deliberate or because there are no major towns between Mandalay and Yangon. 

The best word to describe Nay Pyi Taw is “wow.” Wow because the city is truly impressive in terms of its size, the quality of the roads, its pagoda, and the number of resort-style hotels. But also “wow” because the city was essentially a ghost town. The story goes that the junta decided to relocate from Yangon after an astrologer predicted that a foreign invasion was probable and that the old capital was vulnerable to such an attack. Another argument for relocating the capital to the center of the country was that Yangon was getting to congested and being in the center of the country made it easier to control more remote parts of the country that were prone to instability.

On Friday, we began our meetings with government officials. Our first stop was the Ministry of Agriculture and Irrigation and I along with two of my fellow social entrepreneurs gave brief presentations on our work. Interestingly, the minister—a retired Air Force lieutenant general was busy chatting with his staff during much of our presentations. I was initially offended but it became apparent that they were simply trying to ensure everyone else understood what was being said given the differing levels of English proficiency of the officials.

During the Q & A session the excitement and enthusiasm on the part of the representatives was clear. The big takeaway from the discussion is that in their view, agriculture will play a key role in the democratization process and that they have no choice but democratize.

Myanmar has the second largest land and water resources in the region but despite 70% of the population relying on farming, pre-harvest and post-harvest technology and methods are deeply lacking. The entire value chain needs to be modernized from logistics to distribution. There is a big desire amongst officials for Myanmar to contribute to global food security and several officials stressed the fact that the soil is essentially organic due to the lack of fertilizer and pesticide use by farmers due to its unavailability during sanctions.

The rector of Yezin Agricultural University, Dr. Tin Htut—a North Carolina State graduate—repeatedly stressed the need for machinery adapted to small scale farmers. With sanctions lifted, partnering with land grant universities in the US with strong agricultural research programs would certainly be useful in terms making appropriate technology more readily available to farmers.

It also important to note that government seemed to suggest that access to land was not an issue given abundant virgin land but the issue of disputes over already settled land was not brought up. In addition, given Myanmar’s size and geographic diversity, parts of the country have a problem of too much water, while others (Dry Zone) don’t have sufficient water so expertise when it comes to large water infrastructure projects and proven technologies like drip irrigation and water harvesting could go a long way.

Our next meeting was with U Soe Thane from the President’s office. As Coordinating Minister for Economic Development, his mission was to “materialize ideas into action.” He stressed the magnitude of the reform agenda and that it was a “total reform” that was underway. In his view, Myanmar can and should be contributing to global food security.

The Director Generals for Education, Investments, and Science and Technology were also present and gave us a very good overview of some initiatives and reforms taking place such as signing up for the United Nations Global Compact and drafting and adopting a new labor welfare law that adheres to International Labor Organization (ILO) standards. They also talked about reforming the banking sector in order to allow foreign banks to operate by 2015. While there are no ownership restrictions or criteria in the new investment law, a local partner is required in order to import finished products. Furthermore, a local partner is needed if you want sell and distribute goods locally but such a requirement is not in place if the goods are destined for export. For example, a company that uses contract farmers to grow premium organic Burmese rice for export to Western markets would not need a local partner to do so.

After lunch, we visited the Ministry of Livestock, Fisheries, and Rural Development. The major concern for the ministry was the lack of processing and packaging centers such as modern slaughterhouses. Although Myanmar has a capacity to produce beef, chicken, and pork for export, safety and quality concerns means that neighboring countries only purchase live animals. Beef is not very popular in Myanmar for cultural reasons so if an external markets exists farmers could potentially increase their incomes significantly. 

Our final stop, was the Ministry of National Planning and Economic Development. The ministry is responsible for project appraisal, project reporting, registering companies, tracking government equipment, and developing the National Development every five years. The ministry is also responsible for collecting and disseminating national statistics and data.

It is also important to note that while there were female officials at all of the ministries we visited, the Ministry of National Planning and Economic Development was the only time we actually heard from a female official. The issue of gender and the role of women was brought up several times throughout the day by members of the POD but were not always fully addressed by the government officials. It felt like by the time we got to the last stop, word had got out to the officials that they should expect questions on the role of women.

Having said that, the Minister of National Planning and Economic Development, Dr. Kan Zaw came across as a progressive and someone committed to the democratization process. He indicated that the majority of his staff were women and the female officials exuded confidence and pride when they introduced themselves and explained their roles at the ministry. From the government’s standpoint, women played a strong and critical role in society (especially in education) and entrepreneurship and did not necessarily need special protection.

In conclusion, the visit to Myanmar was a great personal and professional experience for me. It exposed me to a part of the world that I did not know much about and I made some wonderful friends. It was also rewarding to compare and contrast Myanmar with Mali and it is evident that challenges facing the agricultural sector for example, were eerily similar despite such a different political, social, and economic context. Like Myanmar, Mali is going through a tough time politically and socially but it has the natural resources to help finance the needs of its people if used correctly. Also like Myanmar, Mali is a country with a large cohort of young people that with the right support and investment can propel the country forward.

But achieving that potential will require patience, perseverance, a government that is competent and fair, and foreign investors interested in more than just financial returns.