Rakhine Myanmar

Rakhine focuses on agriculture, tourism as infrastructure improves

RThe future looks a little brighter for Rakhine State. As one of the least developed areas of Myanmar, with high rates of poverty and poor infrastructure, it has been wracked by conflict since 2012­ – deterrent factors which prevent many potential investors from exploring opportunities in the state.

But many observers, including the Advisory Commission on Rakhine State, formerly led by Kofi Annan, have noted that the state’s conflicts are in part the result of a lack of economic development and opportunities that affects all communities.

Accordingly, the government is seeking to build a better future for Rakhine State by attracting more foreign and domestic investment, and offering tax breaks and other incentives to businesses.

In November 2018, the government sent a delegation to India in an effort to drum up interest from that country’s business community.

A large infrastructure development initiative is also underway, with new highways under construction and the national electricity grid being rolled out.

A key development has been the expansion of Sittwe Port with financing from India. The US$500 million Kaladan Multi-modal Transport Project will see Sittwe linked to landlocked northeast India through a combination of river and road infrastructure.

In October 2018, Myanmar and India signed an agreement to appoint a private operator for the port, which was completed in 2016. India has also concluded dredging of the Kaladan River to Paletwa in Chin State and the construction of a river terminal at Paletwa.

An Indian contractor, C&C Constructions, is currently building the road from Paletwa to the border, with Indian media reporting in April 2018 that work was due to be completed in the coming years.

Further to the south, in central Rakhine State, Myanmar and China signed a revised framework agreement in November 2018 to develop a deep-sea port and Special Economic Zone at Kyaukphyu. Under the agreement, the two sides will invest a total of US$1.3 billion in the project, which will be developed by China’s CITIC Group.

Kyaukphyu is already the site of an oil terminal as well as oil and gas pipelines that connect Rakhine State with Yunnan Province in China.

Another investment hotspot is southern Rakhine State, where scores of hotels have been built on and around Ngapali Beach in Thandwe Township. In 2016, Thandwe Hotel Zone recorded more than 72,000 visitors, including more than 42,000 foreign tourists.

Further south, Gwa Township is seeing its first foreign tourism, with Arakan Nature Lodge at Kanthaya Beach winning rave reviews.

Dr Htoo Min Thein, director of the Sittwe branch of the Myanmar Investment Commission, said the government had identified agriculture, livestock and tourism as priority sectors for investment.

Investors would receive “exceptional” treatment, as all townships in Rakhine State had been designated least-developed zones under the 2016 Myanmar Investment Law.

“Investors will enjoy a seven-year tax holiday regardless of where they invest in Rakhine State,” he said, adding that Rakhine was unusual because the entire state had been classified least-developed.

The investment approval process has already been decentralised for smaller projects, he said.

“We have established some committees for those investing under US$5 million or K60 million. They don’t need to apply at the Myanmar Investment Commission for approval, it can be completed at our region-level committee.”

Dr Htoo Min Thein said investors would still face a range of challenges in Rakhine due to its lack of development.

“The biggest obstacle for investors is the lack of infrastructure. In most parts of the state, electricity is still not accessible.”

U Khin Maung Gyi, managing director of the Rakhine Economic Initiative Public Company, said most businesses in Rakhine State are focused on agriculture and fisheries.

He said the rollout of the national electricity grid would be crucial for attracting further investment. While there are prime opportunities to add value to primary products, the lack of electricity makes this difficult.

“Where there’s lots of land, there’s no electricity, and vice versa,” he said.

One initiative to address this problem is the Ponnagyun Industrial Zone, which was initiated under the former government and is still in development.

State media has reported that the conceptual plan of the industrial zone will contain small and medium factories producing or processing garments, livestock, prawn and fish, and wood.

Khin Maung Gyi said the zone’s location just an hour from Sittwe meant it would have reasonable electricity supply and would also benefit from lower land prices.

But he also urged the government to do more to attract investment to the state.

“If someone really wants to see development in the region in the next three or four years, they will need to reform the agriculture sector and prioritise trade so we can take advantage of our good ports,” he said.

He said most farmers lack access to markets so are often forced to sell their goods to brokers at low prices. Initiatives that improve market access – such as through improved transport and logistics – will bring significant benefits for many people, he added.

Photo credit: Steve Tickner | Frontier

The Rakhine State Investment Fair took place in late February 2019, a landmark event which aimed to demonstrate the beauty and potential of the State to investors. Read more about it in the official press statement here.

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