Support to Special Plan for Prawn and Shrimp Farming, Myanmar













Table of Contents


BASED ON THE WORK OF

Abdul Basir Kunhimohamed
Shrimp Fanning Economist

TECHNICAL COOPERATION PROGRAMME

TCP/MYA/4554
Field Document

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
BANGKOK, 1998

The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

The Food and Agriculture Organization is greatly indebted to the organizations and individuals who assisted in the implementation of the project by providing information, advice and facilities.

This electronic document has been scanned using optical character recognition (OCR) software and careful manual recorrection. Even if the quality of digitalisation is high, the FAO declines all responsibility for any discrepancies that may exist between the present document and its original printed version.


Table of Contents


Executive Summary

1.0 Introduction

1.1 Consultancy Inputs
1.2 Terms of Reference

2.0 Market of Cultured Shrimp Production

2.1 International Shrimp Market
2.2 Prices in the International Market
2.3 Outlook

3.0 Fisheries Status of Myanmar

3.1 Measures Taken to Promote Development in Fisheries Sector
3.2 Export of Prawn and Shrimp from Myanmar
3.3 Inspection and Quality Control

4.0 Economics and Profitability of Shrimp Farming

4.1 The Joint Ventures Companies in Myanmar
4.2 Companies Interested to Invest in Myanmar

5.0 Investment Climate

5.1 Foreign Investment Policy
5.2 Eligible Economic Activities
5.3 Types of Business Organizations

6.0 Foreign Investment Application Procedure

6.1 Submitting a Proposal
6.2 Appraisal of the Proposal
6.3 Application for a Permit to Trade from the Ministry of National Planning and Economic Development at the Time of Incorporation of the Enterprise with the Registrar of Companies
6.4 Registration

6.4.1 Registration of Business Organisations
6.4.2. In Applying for Registration of a Company or Branch Office of a Foreign Company
6.4.3. Initial Capital to be Brought in by Foreign Company Incorporated in Myanmar or a Branch Company
6.4.4. Registration Fees

7.0 Tax Structure and Incentives

7.1 Income Year
7.2 Tax Structure
7.3 Taxable Income
7.4 Tax Rates
7.5 Deductions at Source (withholding tax)
7.6 Tax Exemptions and Relief
7.7 Income and Allowable Expenses Exempt from Tax
7.8 Carry Forward of Loss
7.9 Advance Payment of Tax
7.10 Tax Returns
7.11 Customs Duties
7.12 Commercial Tax

8.0 Present Constraints

8.1 Political Uncertainties
8.2 Disease
8.3 Land
8.4 Transportation Cost
8.5 Shipping Facilities
8.6 Hatcheries

9.0 Conclusions

10.0 Recommendations

11.0 References

Guidelines for Foreign Investment

Appendixes

Appendix 1: Proposal of the Promoter to make Foreign Investment in the Union of Myanmar
Appendix 2: Guidelines on the Conversion of Mangroves to Ponds
Appendix 3: List of People Met


Executive Summary

Shrimp culture is a recent development in Myanmar compared with some other Southeast Asian countries. It has, however, tremendous potential if modem and cautious management techniques are applied.

Myanmar presents many attractive advantages for foreign investors, including land availability and relatively low labour cost. However, many problems remain unsolved: scarcity of technical information, lack of trained personnel, and the fact that much of the farming has to be done at an extensive level.

New economic regulators and reforms are underway; however, that should boost individual and private initiatives. Introduction of imported feeds and increased activity by foreign investors are also stimulating factors.

If Myanmar is to increase its competitiveness in the world shrimp market, it is also critical that the industry's productivity per hectare be increased. To accomplish this, investments in semi-intensive culturing of shrimps must be encouraged.

No matter what advancement Myanmar achieves in the production of shrimp, they can be easily overshadowed by international shrimp market prices. Producers should therefore trim production costs and increase efficiency in order to be at par with their competitors in the world market.

This report identifies and determines some of the constraints which hinder the rate of investment in shrimp farming in Myanmar. As the international market forces for shrimp are expected to play a large part in the confidence of investors, this report also briefly reviews the global market for cultured shrimp.

Guidelines for foreign participation in shrimp culture are also provided in the report.

1.0 Introduction


1.1 Consultancy Inputs
1.2 Terms of Reference


1.1 Consultancy Inputs

The consultant (shrimp farming economist) was assigned to the project for a period of two months. He arrived for his first visit in Yangon on 5 April 1997 and departed on 11 April 1997. His counterpart officer was Mr. Maung Maung Lwin of the Fisheries Department, Myanmar. The consultant visited Myanmar again from 6 May to 13 May 1997. His counterpart officer was U Tin Htut, a fisheries assistant of the DOF, Myanmar. The counterparts assisted the consultant in collection of data and arranging meetings and visits to the various departments and farms.

1.2 Terms of Reference

The consultant was expected to review the economic conditions applicable to international enterprises and/or entrepreneurs intending to invest in farming of marine shrimps in Myanmar.

The consultant, jointly with the expert on coastal environments and appropriate officers in the government, was to draft guidelines for the management of the participation of international shrimp culture enterprises in the Myanmar economy.

Overlap with the consultant expert environmentalist was not possible. The consultant and his counterparts travelled to visit shrimp farms, hatcheries, processing plants, exporters and government departments. Data/information were collected through interviews with government officers, shrimp culturists, traders, processors, and also through recorded literature and other documents.

2.0 Market of Cultured Shrimp Production


2.1 International Shrimp Market
2.2 Prices in the International Market
2.3 Outlook


2.1 International Shrimp Market

Over the last few years, the world shrimp supply has increased primarily as a result of increasing global demand. Landings increased from 1.82 million t in 1983 to 3.06 million t in 1994. Although technological developments in fishing methods contributed to the higher landings, aquaculture has been the major force in increased world production during the last 6-7 years. Cultured shrimp production increased from 341,000 t in 1986 to 758,000 t in 1994 and to the total, Asia contributed about 80 percent.

Major Asian contributors are Thailand, Indonesia, India, the Philippines, Vietnam, Bangladesh and China. Among these countries China is the only major producer of white shrimp (P. orientalis). The rest of the Asian aquaculture giants produces black tiger (P. monodon).

Table 1: World Catches of Shrimp 1989-92, including cultured shrimp (1000 tonnes, live weight)


1989

1990

1991

1992

1993

1994

1995

1996

Wild catches

1 959

1 865

1 810

2 181

2 077

2 307

2 190

2 080(E)

Cultured shrimp

565

635

730

731

633

758

732

693

Total

2 525

2 500

2 540

2 912

2 210

3 065

2 922

2 773

(E): Estimate.

World shrimp exports reached 1,000,000 t with a value of US$ 8 billion in 1994. Leading suppliers were Thailand, Indonesia, China, India, Ecuador, the Philippines, Hong Kong and Denmark. But the latter two countries are mostly re-exporters.

Japan and the USA were the dominant importers, followed by Europe. However, it is interesting to note that the EU as a single market imported more than the total of Japan or USA. The EU imported over 400,000 t of shrimp in 1995, of which about 315,000 t were fresh and frozen products. Although the European market preference for coldwater shrimp is strong, tropical shrimp supply to Europe increased by 60 percent during 1984-90.

The Indo-Pacific region is the primary supplier to Japan, while producers in the Americas have been the principal sources of supply to the US market. Western Europe is supplied chiefly by countries in the Northern Atlantic, and Africa. However, due to revolutionary developments in shrimp culture, particularly in Asia, the traditional pattern has gradually changed. A steady increase in production, improved accessibility to market information, and improved transport facilities have also contributed to the changing patterns of the international market.

About four percent of the world's imported shrimp are being traded in fresh form, 84 percent in frozen form, 8 percent prepared/preserved (cooked and canned shrimp) and 1 percent in dried form.

2.2 Prices in the International Market

The prices of major species and all sizes of shrimp declined during 1985-89. During this period year-end prices of black tiger shrimp from the Philippines, for example, declined by 37-38 percent, while Chinese white shrimp prices dropped by 26-42 percent in the Japanese market.

Little effort has so far been made in the area of marketing to distinguish cultured shrimp from shrimp produced from capture fisheries. At the exporters' level, some differentiation in prices between wild-caught shrimp and cultured shrimp of the same species, size and origin exists, particularly when Japanese traders are involved. However, at the retail market level price variations can rarely be noticed. Although continuity of supply and consistency in sizes, combined with good quality, are creating an awareness of the advantages of using cultured shrimps, it is still traded equally as the wild-caught ones.

The rapid decline in prices caused by the aquaculture boom, competition from exporting countries, and the strength of the Yen have undoubtedly been the major factors in the increase in shrimp consumption, particularly of black tiger in Japan, USA and to some extent in Europe. The decline in shrimp prices has contributed to a change in the market structure both in Japan and the USA. In 1982 Japanese institutional consumption accounted for over 75 percent of total usage and in the USA it was more than 80 percent. By 1988 home consumption had taken a 55 percent share of the total usage in Japan and by 1990 US retail sales accounted for 30 percent of the total consumption.

The Japanese market always sets price trends for black tiger and white shrimp in the international market. High inventories and very low domestic consumption during late 1988, due to the Emperor's illness and eventual death, caused black tiger prices to drop to US$7.50/kg for 16/20 counts during mid-1989 from US$13.50 in early 1989 and US$17.40 in mid-1988. Predictably it had a chain effect on the US and European markets. However, the market recovered within a year. In 1992 black tiger shrimp prices moved up again to US$14.50 for 16/20 counts as consumption improved in the Japanese market.

Prices of black tiger and white shrimp began to increase further when 80 percent of the Chinese fanned shrimp were wiped out by disease in 1993. Supplies from China have been low since then, which has created a shortage in the international market. Increases in cultured black tiger shrimp in India and other Asian countries could not fill the vacuum created by decreased exports from China. Landings from the sea have remained unchanged for sometime now.

Demand for shrimp in the Japanese and US market was strong during 1993-1996. On the other hand there was an overall shortage in producing countries. As a result, international shrimp prices - particularly of headless black tiger and white shrimp - reached record levels in early 1996.

Due to the strong Yen, domestic prices in Japan were not affected which helped to keep the domestic market reasonably strong despite the on-going recession in the country. The wholesale price, for example, for 16/20 Thai headless black tiger shrimp was ¥1695/kg in May 1992 when the c&f price was at the level of US$12.20/kg. In May 1995 the domestic market price in Japan was ¥1639/kg as the international market price escalated to US$17.50/kg for the same size shrimp.

For black tiger shrimp the counts 16/20 (headless) and 21/25 are usually taken as the parameters in international markets, particularly in Japan. Thai and Indonesian black tiger, followed by Indian products, usually fetch the highest price in the Japanese as well as US markets. The price difference varies from US$0.50-1.00/kg depending on whether the products are bought from reputable packers or ordinary packers.

White shrimp usually has a higher value in the market than black tiger. However, the price difference has narrowed substantially due to consistent supply of quality cultured black tiger. Again, blue tiger fetches from US$0.50-0.75/kg less than the same grade black tiger in the Japan market.

Black tiger are sold at a very high price in certain Asian markets. In Southeast Asian markets, particularly Singapore and Malaysia, the retail price of live black tiger could be as high as US$12-15.00 for 30-40 pc/kg.

Increased prices of black tiger and white shrimp in 1994 and 1995 also affected prices of other species such as brown shrimp, pink shrimp and flower. However, small sizes shrimp have not gained much from these price hikes with the exception of peeled black tiger shrimp. Demand for peeled black tiger in the Japanese and US market has increased in the past two years despite the increase in prices.

Shrimp prices were at a record high during late 1996 and early 1997. For example, offer prices for 16/20 headless black tiger reached US$18/kg for Thai, US$17 for Indian and Indonesian and US$15.50 for Bangladeshi products during the first quarter of 1997, which was basically the result of short supplies from the main producing countries in Asia. The same price trend was also noticed in the US market.

However, the markets failed to retain these high offers due to strong resistance from consumers; consequently, some adjustments took place in May-June 1997. For the last six months, low supplies have continued to persist from Asian countries thus keeping prices firm in the world market.

2.3 Outlook

Of the fisheries products, shrimp has the highest value in the world trade. Japan, USA and Europe are the major markets, and it appears that important new markets are also opening in Southeast Asia and the Far East.

The recent market expansion in Japan and the USA has been remarkable, particularly the growth in home consumption due to lower shrimp prices. Another factor for market expansion is the increasing number of supermarkets and chain retailers entering the trade encouraged by substantial profit margins. Restaurants do not change their menu prices frequently, and as a result consumers do not get the benefit of price reduction immediately. On the other hand, retail outlets are much more flexible in pricing. Naturally demand tends to increase more rapidly at the retail level than it does through institutional outlets. This is one of the reasons for increased consumption of shrimp at the household level, both in Japan and USA. However retail sales both in Japan and the USA have been affected by the increase in shrimp prices. Supermarkets in Japan are no longer having promotional sales for black tiger during the high consumption season. As a result, household consumption of shrimp has declined, although marginally, in 1995. High shrimp prices have affected the retail market sales in the USA. Nevertheless the bigger share of imported shrimp is still channelled to the final consumers through institutional outlets.

Processing plants in Japan and USA are being adversely affected by the high cost of labour. As a result, there is an increasing trend to purchase semi-prepared products ranging from peeled shrimp to breaded shrimp from producing countries, particularly in Asia.

Direct imports by the Japanese supermarkets are expected to increase in the near future. Big supermarket chains like JUSCO have set up importing companies to procure products from processors. They are also providing some kind of technical assistance to their suppliers in order to ensure quality and proper packaging. Big importers like Maruha, Nisho Iwai and Nichirei are also importing an increasing volume of processed shrimp from Thailand, Indonesia and Vietnam. Some processors in Thailand and Vietnam process 30-50% of their black tiger shrimp into nobashi form which fetch 20-30% higher prices than the ordinary block frozen shrimp.

Supermarkets are also interested in headless Individual Quick Frozen (IQF) black tiger on tray packs. The preferred sizes are - 13/15, 16/20 and 21/25. Even for block products, exporters add value by freezing it in pans (which are called pan-frozen products) that fetch 20-30 cents more than the carton-frozen products.

A study of the Japanese market indicates that volume-wise, there is little room for further increase as the institutional sector appears to have reached a saturation point with household consumption also reaching its peak. However, Japanese buyers are importing increasing quantities of value-added shrimp as domestic re-processing is becoming very expensive. This has become an incentive to Asian processors as maximum profit margin comes from value-addition. Many Japanese companies are engaged in joint-venture operations with Asian processors to expedite the importation of value-added shrimp products.

Conversely, shrimp consumption in the US market is expected to increase in view of its popularity as the number one seafood item both in preference and market value. The present low per capita consumption of shrimp should rise along with the continuous expansion of retail outlets. The possibility of major fast food outlets offering shrimp based products - and any positive results from the present market testing of shrimp sandwiches in place of fish sandwiches - could have a positive impact on further expansion of shrimp imports into the USA. As mentioned earlier, restaurants are expected to import more peeled and peeled tail-on shrimp in future.

At the annual convention of the US National Fisheries Institute (NFI), its President Mr Lee J Weddig commented "In our scenario the US will need to secure an additional 527 million lbs (239 545 MT) of shrimp between 1989 and the year 2000. The majority of this increase will most likely have to come from imports". This is expected to happen if US per capita seafood consumption reaches 20 lbs from the present level of 15 lbs by the year 2000, as forecasted by the NFI.

Europe, Spain and Italy still have a strong preference for white shrimp. However, Western Europe can now be considered black tiger territory when it comes to tropical shrimp. Judging from the current per capita consumption of shrimp, southern European markets offer promising growth potential. However, the marketing effort needs to be aggressive as the popularity of shrimp in Europe is not as strong as it is in Japan, USA or in Asia. Price is another factor which will continue to influence the consumption patterns in European markets. Recently there has been a shift in demand from black tiger to freshwater shrimp in Europe as prices of the former continue to remain high since 1995. High import duty on products from Thailand and the other ASEAN countries will also shift buyers' attention to other sources in future.

The Asian markets in future are also expected to consume and import more shrimp in future. Considering the size of the population in the affluent provinces of Shanghai, Canton, Shenzen and Beijing in China, any slight increase in seafood consumption will have a major impact on imports in that country. The growing tariff and non-tariff barriers in the EU markets are also forcing exporters to look for alternative markets.

In the 1990s the international shrimp market will undoubtedly grow, but at a slower pace compared to the last decade. Any change in market conditions in the future will depend on the strength of major currencies, disposable incomes and most of all, on the supply situation in producing countries.

During the late 1980s the shrimp industry went through many ups and downs, with a major market crash in 1989. These events helped to bring about an equilibrium to this important fishery sector. The outlook for the Asian shrimp industry is brighter than for any other shrimp producing region in the world because of its competitive position in terms of production costs, consistent supplies and a processing sector which is gaining the world's recognition because of efficiency and high output, quantity and quality wise.

3.0 Fisheries Status of Myanmar


3.1 Measures Taken to Promote Development in Fisheries Sector
3.2 Export of Prawn and Shrimp from Myanmar
3.3 Inspection and Quality Control


Myanmar is an agrarian country, endowed with equitable climatic conditions and vested with an abundance of land, water, fishery and forestry resources. The agriculture sector - including forestry, livestock and fishery sub-sectors - is the most important in Myanmar's economy, accounting as of 1995-1996 for about 46% of GDP and about 79% of export earnings. Three quarters of Myanmar's population is rural, and the agricultural sector directly or indirectly engages two-thirds of Myanmar's 44.47 million inhabitants. Myanmar has a long coastline of 2832 kilometres with a continental shelf area 225000 square kilometres. The Exclusive Economic Zone extends seawards to a distance of 200 nautical miles from the baseline. The fisheries resources maximum sustainable yields (MSY) of Myanmar is estimated at 1.05 million MT. Aquaculture development is still very limited and there is substantial scope for expansion. In 1996-97, over ninety thousand acres of ponds produced eighty five thousand tons of freshwater fish and prawn. (Table 2)

Table 2: Aquaculture production and acreage

Sr No

Particular

Unit

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1.

Fish

Acre

38000

52179

58778

37951

49308.54

50270.445

2.

Fresh Water Prawn

Acre

-

-

-

2820

2293

2486.363

3.

Sea Water Prawn

Acre

4523

4641

4611

33852

40270

43049.77

4.

Production

MT (000)

25.9

51.6

67.8

71.7

79.8

85.2

Source: DOF

In 1995-96 Myanmar produced about 833,000 MT of fish and shrimp from fresh water and marine fisheries. Out of this, only 54,000 MT were exported. (Table 3)

Table 3: List of Fisheries Products Exported In (1994-95), (1995-1996), (Including Border Trade)

No

Commodities

(1994-1995)

(1995-1996)

Quantity (MT)

Value (US$)

Quantity (MT)

Value (US$)

1.

Fish

78587.91

35304043

34740.94

28510487

2.

Prawns

7943.49

63200672

8814.46

72363603

3.

Others

4203.92

9867312

4039.61

8462506

4.

Border Trade

6004.69

12270888

6765.81

4351282


Total

96740.01

120642915

54360.82

113687878

Source: DOF

3.1 Measures Taken to Promote Development in Fisheries Sector

With the adoption of the new market economic system, Myanmar has opened its doors for foreign investment. The Government of the Union of Myanmar has been striving hard to promote all round development of its national economy to improve provision of food, clothing and shelter so as to ameliorate the population living standards. Steps have been taken to ensure mass participation with maximum utilization on the basis of equality and mutual benefit.

The Government has also envisaged such policy objectives as exploitation of abundant resources of the country with a view to: catering to the needs of the nation in the first instance; exporting surplus; creation of new employment opportunities through expansion of economic activities - that would also expand employment opportunities for youth through on-the-job training as well as technical upgrading both inland and abroad; economic and social development of various regions of the state along with expansion and improvement of transport and communication.

Foreign investors who invest and operate on equitable principles would be given the right to enjoy appropriate economic benefits, and to take their legitimate assets back home if closing their business. They would also be given proper guarantees by the Government against nationalization of their business while in operation.

To make legal provisions for investment in Myanmar, the Government has enacted the Foreign Investment Law on 30 November 1988. The state had promulgated four relevant fisheries laws to manage the industry and to protect the environment more efficiently and effectively.

Name of Fishery Acts.

Year enacted

1. Law relating to the fishing right of foreign fishing vessels

1989

2. Law relating to aquaculture

1989

3. Myanmar marine fisheries law

1990

4. Freshwater fisheries law

1991

Export potential of shrimp is rather limited due to lack of capital market, insufficient onshore facilities such as ice plants, cold storages, canning factories and fish-meal plants. In order to increase shrimp production and export, construction of cold storage facilities, fish meal plants, canning plants and also establishment of marine as well as freshwater and shrimp hatcheries along the entire coast has been included in the sectorial development plans of Fisheries Department of Myanmar.

Since Myanmar has huge potential of assured prospects, great diversity in aquatic resources, well defined discipline and most of all a clean natural environment, there will be no unpleasant consequences of fishing and farming in fishery industry.

Economic Activities (Fishery) Eligible For Foreign Investment are:

Breeding, fishing, processing, and marketing of freshwater and marine fish, prawns, shrimp and other aquatic organisms including fish fry, fingerlings, post larvae of shrimp production; processing, marketing of all kinds of fish/shrimp feeds. Excluded are, breeding and culturing of fish and prawns/shrimp in some restricted areas reserved for research and conservation by the Government.

3.2 Export of Prawn and Shrimp from Myanmar

Sr No

Budget Year

MT

Price (US$) million

Remark

1

1991-92

3000

18.6




Including culture & capture products



2

1992-93

5000

31.58

3

1993-94

7000

43.70

4

1994-95

7943

63.00

5

1995-96

8814

72.00


Total

31757

228.89

Source: DOF

3.3 Inspection and Quality Control

The fishery products, such as shrimp processed and marketed locally, are not subject to any regular, systematic quality testing. However, items of export are subject to laboratory testing. Inspection and certification of exports is conducted by the Quality Control Unit of DOF. In the fishery industry, at present, there are twenty of state owned refrigeration complexes and fifteen of privately owned refrigeration complexes.

There are nearly seventy (70) ice making factories in Yangon and over two hundred (200) factories around the country (Table 4)

4.0 Economics and Profitability of Shrimp Farming


4.1 The Joint Ventures Companies in Myanmar
4.2 Companies Interested to Invest in Myanmar


Like any other commercial venture, shrimp farming too, requires investment of both non-recurring and recurring nature. Non-recurring capital investment in shrimp farming is for construction of main and subsidiary bunds/dykes, sluice gates, excavation of the pond area for retaining the required level of water, construction of watchmen shed-cum store house, cost of equipment such as pumps, aerators, nets, traps, screen, shutters to the water gate. These components may vary depending upon the size of the farm and its operation. The operational costs of recurring nature for shrimp farming include pond preparations, seed, fertilizers, chemicals, feed, fuel, maintenance and repairs of bunds, replacement of short lived farm equipment, wages for workers, annual land leasing rent, repayment of the loan taken for development and interests on the loan. In the existing condition the farm developed for shrimp farming can often be utilised for a minimum of two crops in a year. Depending upon the water quality, the ponds can be stocked with tiger prawn for both crops. The economics worked out of the alternative shrimp culture systems are given in the following table. (No 5)

Tab. No 4: Department of Fisheries - CAPACITY CHART OF COLDSTORAGE AND ICE MAKING COMPLEXES


 

STATE & DIVISION

NAME OF PLANT

CAPACITY OF ICE PLANT

CAPACITY OF ICE STORAGE

CAPACITY OF FREEZER

CAPACITY OF ICE STORAGE

COOLER STORAGE

REFRIGERANT

FLAKE

BLOCK

CONTACT

BLAST


RAKHINE

1


ICE MAKING PLANT (KYAUK PYU)

50 MT/D


200 MT

5 MT/D

20 MT/D

600 MT

100 MT

NH3

2


ICE MAKING PLANT (SITTWAY)

25 MT/D


100 MT

3 MT/D

30 MT/D

200 MT

200 MT

NH3

3






ICE MAKING PLANT (MAYOBAPY)


72 MT/D

300 MT

6 MT/D

35 MT/D

200 MT

180 MT

NH3






12 MT/D









FLOW FREEZER




4


ICE MAKING PLANT (RAMREE)

10 MT/D


30 MT




10 MT

NH3

5


ICE MAKING PLANT (MYE-BON)

10 MT/D


30 MT




10 MT

NH3

6


ICE MAKING PLANT (ANN)

10 MT/D


30 MT




10 MT

NH3

7


ICE MAKING PLANT (GWA)

10 MT/D


30 MT




10 MT

NH3

8


COLD STORAGE FACTORY (LONTHA)





4 MT/D

200 MT





SUBTOTAL

115 MT/D

72 MT/D

720 MT

14 MT/D

84 MT/D

1 200 MT

520 MT



MANDALAY



ICE MAKING PLANT (MADALAY)


10 MT/D

30 MT



50 MT

100 MT

NH3



SUBTOTAL


10 MT/D

30 MT



50 MT

100 MT



TANINTHARYI

1


ICE MAKING PLANT (PA HTET)


50 MT/D

250 MT

6 MT/D

10 MT/D

200 MT

150 MT

NH3

2


ICE MAKING PLANT (KYAUK NI MAW)


50 MT/D

250 MT

6 MT/D

10 MT/D

200 MT

150 MT

NH3

3


ICE MAKING PLANT (PANLONEAWE)


25 MT/D

100 MT




100 MT

NH3

4


ICE MAKING PLANT (KAW THAUNG)


25 MT/D

100 MT/D

2 MT/D

3 MT/D

50 MT

100 MT

NH3

5


ICE MAKING PLANT (WAR GYUN)


25 MT/D

100 MT




100 MT

NH3

6


ICE MAKING PLANT (SHWE NGA)


10 MT/D

30 MT


3 MT/D

100 MT





SUBTOTAL


185 MT/D

830 MT

14 MT/D

26 MT/D

550 MT

600 MT



SHAN

ICE MAKING PLANT (NYAUNG SHWE)


5 MT/D

20 MT




100 MT

NH3

1


SUBTOTAL


5 MT/D

20 MT




100 MT



YANGON

1


ICE MAKING PLANT & CS NO (4)

20 UST/D


100 MT






2


ICE MAKING PLANT CS NO (5)


50 MT/D

200 MT

5 MT/D

10 MT/D

600 MT

200 MT

NH3

3


ICE MAKING PLANT & CS NO (6)


50 MT/D

250 MT

4 MT/D

12 MT/D

600 MT

150 MT

NH3

4


ICE MAKING PLANT & CS NO (7)


10 MT/D

30 MT

3 MT/D

12 MT/D

200 MT

100 MT

NH3



SUBTOTAL

20 UST/D

110 MT/D

580 MT

12 MT/D

34 MT/D

1400 MT

450 MT




GRAND TOTAL

135 MT/D

382 MT/D

2180 MT

40 MT/D

144 MT/D

3200 MT

1770 MT


Table 5: Characteristics and operational costs of four alternative shrimp culture systems

Description

Extensive

Semi-intensive

Intensive

Super-intensive

Pond size (ha)

5-20

1-5

0.5-1

0.5-1

Stocking density (Pls/m2)

0.5-2

5-10

10-50

50-100

Sources of fry

wild/hatchery

hatchery

hatchery

hatchery

Stocking size

>PL30

PL25

PL15

PL15

Water management

tidal/pump

pump

pump

pump

Aeration

no

some

yes

heavy

Central drain

no

no

some

yes

Feed

fertilization

fresh/pellet

pellet + fresh

pellet + fresh

Culture period (months)

3-6

4-5

4-5

4

Survival rate (%)

80

80

70

65

Production (ton/ha/year)

0.3-1.2

2.5-5.0

5.0-20.0

20.0-40.0

Operational costs (US$/kg)

Extensive

Semi-intensive

Intensive

Super-intensive

Seed

0.53

0.44

0.40

0.43

Feed

-

1.60

2.40

2.12

Labour

0.85

0.51

0.27

0.17

Electricity

0.08

0.32

0.41

0.45

Fertilizers & pesticides

0.08

0.02

0.01

0.01

Fuel

0.33

0.13

0.10

0.08

Materials & suppliers

0.08

0.02

0.02

0.02

Overheads

-

0.89

0.67

0.38

Total

1.95

3.93

4.28

3.66

Source: Hassanai Kongkeo, 1990 Pond Management and Operation Paper Presented at Aquatech 90 Kuala Lumpur

4.1 The Joint Ventures Companies in Myanmar

Up to date, seven fishery related joint venture companies have been formed and are in operation. Fishing, construction of ice plants, cold storages, fish meal plants, canning plants, and aquaculture are some of the activities undertaken by the J.V.C.'s

1. Myanmar Bangladesh Fisheries Ltd. (J.V.)
Myanmar Fisheries Enterprise
Cox's Bazar Sea Foods (Bangladesh)

2. Hansawaddy Fisheries Co., Ltd. (J.V.)
Myanmar Fisheries Enterprise.
Hinn Thar Minn Co., Ltd. (Thailand)

3. Myanmar P.L. (Int) Ltd. (J.V)
Myanmar Fisheries Enterprise.
P.L. International (Pte) Ltd. (Singapore)

4. Myanmar Garming Fisheries Ltd (J.V.)
Myanmar Fisheries Enterprise
Garming Marine Products Trading Co. Ltd. (Hong Kong)

5. Myanmar Sea Foods Ltd. (J.V)
Myanmar Fisheries Enterprise
P.L. International (Pte) Ltd. (Singapore)

6. Myanmar Beijing Fisheries Co. Ltd. (J.V)
Department of Fisheries
The Beijing Fisheries Corporation (China)

7. Myanmar Sanwa Fisheries Joint Venture Co. Ltd
Department of Fisheries
Sanwa Trading Co. Ltd. (Japan)

Myanmar P.L. International has begun construction of their pond located at Great-Chi Island Kyaukphyu. (Figure 1)

4.2 Companies Interested to Invest in Myanmar

1. Raja Udang Sdn Bhd
PLO 210 Jalan Besi
81700 Pasir Gudang
Johor, Malaysia
Tel: 607-251 4222
Fax: 607-251 5151
Contact person: Mr. Syed Omar Syed Jaafar

2. MBF Trading Sdn Bhd
13C & 13D Wisma Ampang Triangle II
Jalan Mamanda 7/1, Ampang Point
Off Jalan Ampang
68000 Selangor, Malaysia
Tel: 603-4703308
Fax:603-4703315
Contact person: Mr Louis Voon

3. Innovative Diamond Technology Sdn Bhd
1-2-18, Seri Relau Complex
Persiaran Bukit Jambut I
11900 Penang
Malaysia
Tel: 604-6436979
Fax: 604-6446082
Contact person: Mr. Ghori Mohamed

4. Transpac Capital Sdn Bhd
Suite 19A-8-2, Level 8, UOA Centre
19 Jalan Pinang, 50450
Kuala Lumpur
Tel: 603-2637800
Contact person: Mr Yeo Tien Kiong

5. Josu Aquaculture Sdn Bhd
Wisma Josu, No 332
Taman Yoon Fook
70450 Seremban
Negeri Sembilan
Tel: 606 7622181
Fax: 606 7625181
Contact person: Mr. Mun Kok Hing

6. Majuikan Sdn Bhd
Tingkat 1, Wisma PKNS
Jalan Raja Laut
50350 Kuala Lumpur
Malaysia
Tel: 603 2918346
Fax: 603 2946429
Contact person: Mr. Mahmud

Fig. No 1. PROPOSED GENERAL LAYOUT PLAN FOR SHRIMP CULTURAL FARM MYANMAR P.L INTERNATIONAL LTD AT GREAT-CHI ISLAND KYAUKPHYU

5.0 Investment Climate


5.1 Foreign Investment Policy
5.2 Eligible Economic Activities
5.3 Types of Business Organizations


Myanmar is rich in natural resources. It has vast forests, numerous river systems with broad deltas, rolling mountain ranges, cultivable plains and highlands on geographical surfaces supplemented with rich underground resources of known minerals, renowned gems and many other minerals which have not yet been exploited commercially. It is a very attractive country for investors. Furthermore, its long historical lineage and rich cultural background make it a country worth visiting, a country with great potential for tourism. Myanmar has a tolerable climate, that is absent of extremes and it is not prone to natural disasters. It has a moderately sized population of about 43.13 million with high literacy rate. With a total land area of 676,577 square kilometers (261.228 sq. miles) it is the largest country on the mainland of South East Asia.

Myanmar has a long coastline with rich fishing grounds that have not been fully exploited; the offshore fishing grounds are the least exploited. Hence, vast potential still exists for investment in this area. As a form of liberalisation in the fishery sector, fishing rights have been granted to foreign companies on contractual basis in specified areas within the Myanmar exclusive economic zone territorial waters. Various laws and procedures relating to fishing rights, marine fisheries, aquaculture and fresh water fisheries have been enacted in the 90's so as to allow wider fishing rights to private individuals, both local and foreign, and also to form joint ventures.

5.1 Foreign Investment Policy

Myanmar is striving to improve productivity, increase all round production, develop efficiency in trade and increase its trade volume following the liberalisation of its economy and adoption of a market-oriented economic system since late 1988. Activities to induce direct foreign investment are being continued. Myanmar's policy on foreign investment is an important component of the overall restructuring and development policy of the government. The main components of this policy are:-

a) adoption of a market-oriented system for the allocation of resources.
b) encouragement of private investment and entrepreneurial activities.
c) opening of the economy for foreign trade and investment.

Policy objectives underlying foreign investment are for the promotion and expansion of exports, exploitation of natural resources which requires heavy investment, acquisition of high technology, supporting and assisting capital intensive production and services, opening more employment opportunities, development of energy conserving activities, preservation of the environment, and regional development. The Foreign Investment Law in which a wide spectrum of incentives is provided has been enacted, and Procedures Relating to the Law have also been prescribed.

Foreign investors are allowed to make investment either in the form of a hundred percent wholly foreign-owned enterprise or partly-owned, or in the form of a joint venture with a private or public local entity. If it is a partly-owned concern or a joint-venture, the minimum foreign capital shall be 35 per cent of the total equity capital.

A foreign investor who invests and operates under the Foreign Investment Law has the right to enjoy appropriate economic benefits particularly in the form of tax incentives, as well as to repatriate profits and to withdraw the legitimate assets on winding up his business. There is also an unequivocal State guarantee against nationalisation and expropriation.

5.2 Eligible Economic Activities

Economic activities allowed under the Foreign Investment Law, and notified by the then Foreign Investment Commission, cover almost all sectors of the economy. Activities not specified in the notification will be considered upon request. Previously, there were twelve economic activities defined in section 3 of the State-owned Economic Enterprises Law, in which private investment was restricted and were reserved to be carried out solely by the State-owned Economic Enterprises. However, relaxation has now been made by the government for private investors to invest also in these activities.

5.3 Types of Business Organizations

In accordance with section 5 of the Foreign Investment Law a foreign investor can organise his activity in Myanmar in the following manner.

i) Wholly-owned by the foreign investor

An individual foreign investor can establish his business as a sole proprietorship by bringing in one hundred per cent foreign capital. Similarly, a partnership firm or a limited company which is incorporated outside Myanmar can do business as a foreign branch by bringing in the total capital required by such a branch.

ii) Establishing business in which citizens have interests

A foreign investor can enter into a partnership with his local counterpart or set up a limited liability company with shares held by local investors. He can also join with any individual, firm, company, co-operative or State-owned enterprise from Myanmar to establish a joint-venture either as a partnership firm or a limited company. In all such cases, the foreign capital to be brought in must be at a minimum 35 percent of the total equity capital.

6.0 Foreign Investment Application Procedure


6.1 Submitting a Proposal
6.2 Appraisal of the Proposal
6.3 Application for a Permit to Trade from the Ministry of National Planning and Economic Development at the Time of Incorporation of the Enterprise with the Registrar of Companies
6.4 Registration


6.1 Submitting a Proposal

A promoter must submit a proposal in the prescribed form (Appendix 1) to the Myanmar Investment Commission enclosing the following documents.

i) Documents in support of the investor's financial credibility (audited final accounts of a most recent year of the person or firm intending to make investment).

ii) Bank recommendation regarding the business standing.

iii) Detailed calculation relating to economic justification of the proposed project indicating inter alia estimated annual net profit; estimated annual foreign exchange earnings or savings as well as foreign exchange requirement for the operation, recoupment period; prospects of new employment; prospects of increased national income; local and foreign market conditions and distribution.

iv) If it is a hundred per cent foreign investment, a draft contract to be executed with the organisation determined by the Ministry concerned.

v) If it is a firm, limited company or joint venture of any kind, a draft contract to be entered into between the foreign investor and local counterpart.

vi) If it is a limited company or a joint-venture in the form of a limited company draft Memorandum and Articles of Association.

vii) Lease Agreement for lease of land or building to be entered into between the lessor and the lessee.

6.2 Appraisal of the Proposal

The Office of the Myanmar Investment Commission makes a preliminary appraisal of the proposal. The proposal is then forwarded together with the views and comments to the Myanmar Investment Commission. The Commission will scrutinise the proposal from the technical, financial, commercial, economic and social aspects within the frame work of the policy objectives. Upon approval by the Commission, a permit is issued to carry out business specifying the terms and conditions as required according to the type of business.

6.3 Application for a Permit to Trade from the Ministry of National Planning and Economic Development at the Time of Incorporation of the Enterprise with the Registrar of Companies

Basically any enterprise which has obtained a permit from the Commission can start its business constituting itself as a sole proprietorship, partnership or a limited company or a branch office of a foreign company. A limited company which brings one hundred percent foreign capital, a joint-venture limited company or a branch company is deemed as a foreign company under section 27 A of the Myanmar Companies Act, and accordingly it is required to obtain a Permit to Trade by applying to the Registrar of the Companies Registration Office of the Directorate of Investment and Company Administration of the Ministry of National Planning and Economic Development with Form A. Court Fees to the value of K. 6 must be affixed to Form A and to pay US$100 as application fee. However, a limited company which is a joint-venture with a State-owned Economic Enterprise formed under Special Company Act 1950 is exempted from obtaining a Permit to Trade.

The application is to be accompanied by the following documents.

i. Required particulars entered in Form A of the Myanmar Companies Regulation. 1957

ii. The Company's drafts Memorandum of Association, Articles of Association or other instruments defining the constitution of the company.

iii. Duly completed questionnaire form prescribed by the Capital Structure Committee of the Ministry of National Planning and Economic Development.

iv. List of economic activities intended to be performed in Myanmar. (A permission from the relevant Ministry if any).

v. Estimated expenditures to be incurred in Myanmar for the first year operations.

vi. Financial credibility and business profiles of the company/individual

vii. Board of Director's Resolution, if the subscriber is a company.

In the case of a foreign branch, the following shall be furnished in addition to the above mentioned documents.

i. Instead of the company's drafts Memorandum and Articles of Association, a copy of the Head office's Memorandum and Articles of Association or of the Charter, Statute or other instruments constituting or defining the constitution of the company, duly notarised and conservatised by the Myanmar Embassy concerned in the country where the company is incorporated.

ii. Copies of the head office balance sheet and profit and loss accounts for the last two financial years.

iii. Where the Memorandum of Association, Articles of Association and other original relevant documents are not in English in original, authentication of the translation into English.

The Ministry of National Planning and Economic Development will issue the Permit to Trade after considering the recommendation of the Capital Structure Committee. In the case of a company which has been issued a Permit from the Myanmar Investment Commission, the terms and validity of the Permit to Trade shall be the same. If the company fails to register and surrender the permit, it shall pay US$500 for administrative charges.

6.4 Registration


6.4.1 Registration of Business Organisations
6.4.2. In Applying for Registration of a Company or Branch Office of a Foreign Company
6.4.3. Initial Capital to be Brought in by Foreign Company Incorporated in Myanmar or a Branch Company
6.4.4. Registration Fees


6.4.1 Registration of Business Organisations.

i. A sole proprietorship is not required to register at the Companies Registration Office.

ii. A partnership firm may be registered, but registration is not compulsory.

iii. A company limited by shares is required to register under the Myanmar Companies Act at the Office of Registrar of Company.

iv. A company with share contribution of the State shall be registered under the Special Company Act, 1950 and the Myanmar Companies Act, as a Special Company.

v. A company which comes under the definition of foreign company shall apply and obtain a permit from the Ministry of National Planning and Economic Development before registration.

6.4.2. In Applying for Registration of a Company or Branch Office of a Foreign Company

In applying for registration of a company or branch office of a foreign company, the following papers and documents shall be submitted.

i. Two sets of Memorandum of Association and Articles of Association duly stamped and printed both in Myanmar and English

ii. Declaration of registration

iii. Declaration of legal and official version of the documents.

iv. Declaration of the situation of registered office

v. Translation certificate by a competent translator

vi. List of Directors and Managers for a Company incorporated in Myanmar

vii. List of person(s) authorised to accept services of process and notice in Myanmar on behalf of the Company (for a branch office of a foreign company)

6.4.3. Initial Capital to be Brought in by Foreign Company Incorporated in Myanmar or a Branch Company

The minimum amount of capital in acceptable foreign currency to be brought by foreign company or a branch company are as follows:-

- Industrial company (including trade and services) foreign currency equivalent to K100,000.

- Trading company (including services) foreign currency equivalent to K5000,000.

- Services company (services only) foreign currency equivalent to K300,000.

- The foreign company/branch are to bring in 50% of the above minimum capital as specified according to the type of business within 60 days from the date of the approval of the application and to bring in the remaining 50% within one year from the date of issue of Permit.

For a Public Company the following additional documents shall be submitted before commencing the business.

i - List of persons to act as Directors.
ii - List of persons who have consented to act as Directors.
iii - Agreement to take qualification shares

6.4.4. Registration Fees

i - For a partnership firm the registration fee is fixed at Kyats 45

ii - For a company limited by shares the registration fee ranges from a minimum of Kyats 500/- to maximum of Kyats 15,000/- depending upon the authorised capital of the Company.

Since the promulgation of the Foreign Investment Law in November 1988, the Government of Myanmar has taken measures to encourage foreign investment and up to November 1994, the commission has permitted 113 enterprises to invest in the agriculture, manufacturing, energy, mining, fishery, tourism and transport sectors.

7.0 Tax Structure and Incentives


7.1 Income Year
7.2 Tax Structure
7.3 Taxable Income
7.4 Tax Rates
7.5 Deductions at Source (withholding tax)
7.6 Tax Exemptions and Relief
7.7 Income and Allowable Expenses Exempt from Tax
7.8 Carry Forward of Loss
7.9 Advance Payment of Tax
7.10 Tax Returns
7.11 Customs Duties
7.12 Commercial Tax


7.1 Income Year

Income is computed on the basis of one fiscal year which starts on April 1 and ends on March 31 of the following year. The fiscal year in which income is received is expressed as "income year" and the year following it as "assessment year".

7.2 Tax Structure

At present, there are fifteen types of taxes and duties under the four main categories.

7.3 Taxable Income

A person or an enterprise operating under the Foreign Investment Law is liable to income tax on the income accruing or derived from all sources within the Union of Myanmar.

7.4 Tax Rates

A flat tax rate of 30 per cent is applicable to an enterprise operating under the Foreign Investment Law and those operating under the Myanmar Companies Act.

A foreign employee of any enterprise operating under the Foreign Investment Law, for income tax purposes, could be treated as a resident citizen. As a consequence, progressive tax rates starting from 3 per cent to a maximum ceiling of 30 per cent is applicable. This progressive rate also applies to Co-operatives Societies. From the total income, a basic allowance of 20 per cent of total income subject to a limit of K 6000, wife and children allowances and life insurance premium for the employee and spouse are deductible before the rates are applied. Relief allowed for the wife of an assessee is K 2500. However, the wife shall not on her own earn on assessable income within the income year.

Children allowance:-

- For each child under 5 years of age

K 500

- For each child above 5 & under 10 years

K 600

- For each child above 10 & under 15 years

K 800

- For each child above 15 years

K 1000

Children must be unmarried/if over 18 years, receiving full time education having no taxable income of his or her own.

7.5 Deductions at Source (withholding tax)

The employer responsible for paying income chargeable under the head "Salaries" must at the time of payment, deduct income tax due from such payment and remit the amount to the Town Revenue Office. Employers are also required to furnish an annual return pertaining to such deductions within three months of the end of the income year.

Payments on income such as interests, royalties and on contracts are subject to withholding tax at various rates as shown in the table below.

Type of income

Withholding tax rates

For resident foreigners

For non-resident foreigners

1. Interests

15%

20%

2. Royalties for the use of licence, trade marks, patent rights etc.

15%

20%

3. Payment on contracts undertaken by State organisations, development committees and co-operative societies

3%

3.5%

4. Payment for work done to foreign contractor
A relief of early years of inception may be applied

2.5%

3%

7.6 Tax Exemptions and Relief

An enterprise covered by the Foreign Investment Law is entitled to a tax holiday period of three consecutive years inclusive of the year of commencement of production or services and also to a further reasonable period, provided the Commission considers such extension is appropriate in the interest of the State.

In addition, the enterprise may obtain any or all of the following exemptions and reliefs:-

a. Exemption or relief from tax on profit held in reserve and ploughed back into the business within one year.

b. Accelerated depreciation of capital assets.

c. Relief from up to 50 per cent of income tax on the profits arising from the export of goods produced by the enterprise concerned.

d. Allowance for research and development expenditure which is necessarily incurred within the State.

e. Right to carry forward and set-off losses up to three consecutive years from the year the loss is sustained.

f. Right to deduct an amount of income tax paid to the State on behalf of a foreign employee from the assessable income of the enterprise.

g. Exemption or relief from customs duties and/or other taxes on machinery equipment, components, spareparts, instruments and other materials imported during the period of construction.

h. Similar exemption or relief on raw materials imported in the first three years' commercial production following the completion of construction.

7.7 Income and Allowable Expenses Exempt from Tax

Dividends and share-profits received are not treated as part of the total income of the recipient and are exempted from tax. Expenses incurred in earning the income, and the depreciation allowance inclusive of initial depreciation allowance in respect of capital assets are deductible from the gross income but it does not include expenses which are of capital, personal or domestic nature, and which are not commensurate with the volume of business. The payments made by a firm or an association of persons to its partners by way of salaries, wages, bonuses, commissions are also not allowed.

Amount actually donated to any approved institution or fund established for religious or charitable purpose is also deductible but not exceeding twenty five percent of the total income.

7.8 Carry Forward of Loss

A loss, not being a capital loss or a share of loss, from a source of income can be set off against the income from the remaining sources of income in the same year. Unabsorbed net loss can be carried forward and set off up till the following three consecutive years.

7.9 Advance Payment of Tax

Advance tax is payable monthly or quarterly by an enterprise in the course of the year in which the income is made on the basis of projected income for the whole year and credit is given for such payment in the regular assessment.

7.10 Tax Returns

The return of income is to be filed with the Office of the Internal Revenue in the respective townships on or before June 30 following the income year, but on the business being discontinued it is to be filed within one month from the date of discontinuation.

Return for capital gains are also to be sent in within one month of the disposal of the capital assets concerned.

7.11 Customs Duties

With a few exceptions, all imported goods are liable to customs duties and would accordingly have to be declared to the Customs Department. In order to levy customs duties in accordance with the market oriented economic system and to have a harmonised system of grouping and symbolising goods as practised in most nations of the world, the Tariff Law was promulgated in March 1992 and notifications have been issued. The customs duties levied on the imports of machinery, spare parts and inputs, generally range from 5 per cent to 30 per cent.

7.12 Commercial Tax

The Commercial Tax Law was promulgated on March 31, 1990 and became effective from the financial year 1990/91. This law was amended in March 1991. Commercial tax is a turn over tax levied on goods and services. The tax is imposed on a wide range of goods and services produced or rendered within the State and the imported goods from abroad. Except for trade, the tax is imposed as an ad valorem single stage tax, that is at the point of sale of producer or manufacturer for domestically produced or manufactured goods.

The tax payable for imported goods is to be collected by the Customs Department in the same manner as the customs duty is collected.

Regulations are provided to set off input from output tax, in case of production and services in order to avoid tax cascading.

The tax is levied according to the schedules appended to the said law. Schedule I lists tax free items comprising 65 essential and basic commodities. Schedule II to V carry rates ranging from 5 per cent to 25 per cent depending on the nature of the goods. The tax will be charged on the landed cost of the imported goods and on the sale proceeds of the goods produced within the State. Schedule VI is for specific type of commodities such as cigarette, fuel oil, liquor, pearl, jade and gems on which tax is chargeable at rates ranging from 30 per cent to 200 per cent and Schedule VII is applicable to services including trade.

On the proceeds of sale from trading business, no tax shall be payable according to Schedule VII, serial number 3 in respect of goods imported from abroad.

8.0 Present Constraints


8.1 Political Uncertainties
8.2 Disease
8.3 Land
8.4 Transportation Cost
8.5 Shipping Facilities
8.6 Hatcheries


There are some important issues to address in the investment of shrimp fanning by foreign investors in Myanmar, as identified during farm visits and interviews with future and present investors.

8.1 Political Uncertainties

Political instability and an unpredictable future do not facilitate long range projections. Investors are reticent to invest for the time being.

8.2 Disease

Shrimp disease is one of the most important constraints to the investors. So far, Myanmar appears to have remained free from disease even though their neighbours, Bangladesh and Thailand are facing viral disease problems.

8.3 Land

Investors were complaining that the premium for land is very steep. And also the land aliented could not be used as collateral for obtaining finance from local banks.

8.4 Transportation Cost

Since most of the shrimp farms are located in Rakhine State or in the Southern part of Myanmar, the cost of transport to Yangon is very high, and this will reduce the profit margin of the investors.

8.5 Shipping Facilities

There are no direct shipment facilities from major towns other than Yangon. According to exporters, it causes relatively higher freight costs and also the shipment schedules are not very frequent.

8.6 Hatcheries

The total production of post larvae for culturing are limited.

9.0 Conclusions

The Aquaculture industry in Myanmar is already worth more than US$ 15 million annually. Substantial growth in this sector is forecast. Aquaculture is expected to play a more important role in the production of seafoods. Myanmar has considerable competitive advantages in its long coast, relative lack of pollution, wide range of species, absence of serious disease and its ability to supply off season supplies to South East Asia and Europe.

Disadvantages include a complex regulatory framework, lack of capital, a low awareness of overseas market factors and a fragmented industry structure. It is predicted that the trend will be that investors will target the implementation of infrastructure including hatcheries, feed production, processing and marketing. The industry will continue to consist of numerous small operators, specialising in a particular area such as hatchery production, nursery culture or grow-out. However, vertical integration may occur in the larger, capitalized, companies (foreign).

10.0 Recommendations

10.1 While semi-intensive culture should be encouraged, further development should be guided through the institution of new policies and the implementation of existing and recommended guidelines. A good starting point is the strict enforcement of the ban on mangrove conversion into ponds. (Appendix 2)

10.2 Pond water should first be cleaned of all effluents before draining into estuaries in order to protect nearby habitats from the pollutants and pathogens discarded by farms. Discharge standards for shrimp pond effluents should be developed as a basis for governmental regulations.

10.3 There should be strict controls on imported chemicals, antibiotics and feeds-expiry dates, identification of ingredients, etc. Legislate a pharmaceutical policy pertaining to aquacultural applications including punishment for violators.

10.4 There should be a total ban on imports of shrimp fries which would help in curbing disease problems. The introduction of disease through infected fry or contaminated water could devastate the local shrimp industry.

10.5 Having foreign companies buy ownership shares of state own subsidiaries would be a far more expeditious way of privatizing and bring in foreign investments than to engage in the time consuming tasks of revising existing laws or passing new legislations to allow direct foreign ownership of state enterprises.

10.6 Require registration and an operational license for all commercial farms including on-farm certification by the government.

10.7 Research and development efforts should be intensified in the area of aquaculture and wastewater treatments systems.

10.8 Appropriate resource-use planning related to shrimp culture operations should be developed by government agencies. This should consider the carrying capacity of the immediate environment affected by such operations. Environment Impact Assessments should be required from all shrimp farm operators before permits for construction is issued.

10.9 Any company or person engaged in semi-intensive shrimp culturing should be eligible for pioneer status.

Pioneer status enables a company to obtain partial exemption from the payment of income tax. The company will have to pay tax only on 30% of its statutory income for a period of 5 years.

11.0 References

1. Anonymous, 1995. Investing in Myanmar 1995

2. Anonymous, 1996. Foreign Investment Law, Procedures and Types of Economic Activities Allowed for Foreign Investment, March 1996. The Union of Myanmar.

3. Department of Fisheries, Myanmar. Newsletters.

4. Government of The Union of Myanmar, 1996: Statistical Abstract, Ministry of National Planning and Economic Development.

5. Landesman, 1994. Coastal Aquaculture Development World Aquaculture 25:2.

6. Ministry of Agriculture and Irrigation 1996. Agriculture, Food and Nutrition Situation in Myanmar. World Food Summit 1996.

7. MPEDA, 1991. Handbook on Shrimp Farming.

8. Nyan Taw 1997. Current Status and Potential of Shrimp Aquaculture in Southeast Asia and Myanmar. Proceedings of Workshop on Shrimp Aquaculture Industry. December 12-13, 1996. Yangon. DOF, MLF, FAO.

9. T. Singh and A.K. Jee 1988. Marine Prawn Farming in Malaysia. Malaysian Fisheries Society Occ. No. 1.

Guidelines for Foreign Investment

1. Eligible

The economic activities that could be undertaken under the Foreign Investment Law are given in Notification No. 1/89 dated 30th May 1989 issued by the Foreign Investment Commission. The notification covers almost all sectors of the economy. There are however, twelve economic activities defined under Section 3 of the State-owned Economic Enterprises in which foreign investment would be allowed only when the government considers investment is in the interest of the State.

2. Minimum Investment

The minimum investment to be made by a foreign investor under the Union of Myanmar Foreign Investment Law is at present fixed at US$ 100,000.

3. Approval of Eligible Economic Activities

In processing a proposal, the Commission would look into the justification of the enterprise proposed in the light of the requirements and priorities of the national economy, the appropriateness of the technology to be introduced and also the financial credibility of the investor. When the Commission finds the proposal to be in order, a "Permit" under the Foreign Investment Law will be issued. Such a permit is not transferable in any manner. Only the person or economic organization given the permission is to make the particular investment allowed therein.

An enterprise establishing economic activities in the Union of Myanmar either under the Foreign Investment Law or otherwise will have to apply for appropriate registration, e.g., registration under the Myanmar Companies Act, Importer and Exporter Registration, in accordance with the procedures laid down for such registration.

GUIDELINES TO ATTRACT INVESTORS FOR INVESTMENT IN SHRIMP CULTURE IN MYANMAR

1.0 PERSPECTIVE

World trade in seafood has been steadily growing over the years and today stands at over US$ 45 billion from just US$ 12 billion in the late 70s. The changing dietary habits of people all over the world are creating a spurt in demand for seafood, particularly on account of the health conscious consumers of industrialized nations. There is today a 2% increase growth in demand, as against only 1% growth in supply which, according to the FAO, would lead to a shortfall of around 20 million tonnes by the end of the century. It has also been projected that capture sources of the world cannot be sustained beyond 90 million t and therefore, the demand will have to be made-up from aquaculture sources. Myanmar accounts for less than 0.06% of the world trade, even though the last few years have seen a substantial growth in the production and export of marine products. Shrimp and prawn product exports in 1995/1996 were of the order of US$ 72 million, a rise of 12.5% from US$ 63 million in the preceding year. Shrimp continues to be the single dominant item in the seafood export basket. However, the harvest from the shrimping grounds in the Myanmar Exclusive Economic Zone (EEZ) stagnated over the last few years. Further increases in the shrimp exports must therefore come mainly through culture methods.

2.0 COMPARATIVE ADVANTAGES

Myanmar is a minor player in the global seafood trade. However, it does in fact have the comparative advantages to be a potential leader in shrimp farming and its production. Some of these advantages are as follows:-

2.1 Myanmar is one of the few countries in the world endowed with rich natural resources ideally suited for aquaculture development, these being:

2.1.1. abundant cultivable fish resources;

2.1.2. ideal environment and climate to culture diversified species of temperate and tropical origins;

2.1.3. a vast stretch of unutilised/under utilized land and water bodies of marine, brackish and fresh water origin;

2.2. Studies have shown that the cost of production of cultured shrimp in Myanmar, in comparison tot he major supplying countries, is one of the lowest;

2.3. There is virtually no domestic competition for price;

2.4. The aquaculture industry today has one of the highest rates of return compared to any other sunrise industry.

3.0 AQUACULTURE TECHNOLOGY

In the seafood export sector, aquaculture has been synonymous with brackishwater shrimp farming, although today a very large number of species are under cultivation around the world. Commercialization of aquaculture has primarily been due to the breakthrough achieved in hatchery technology (hatching of post larvae in artificial conditions). The technique of duplicating the natural shrimp ecosystems was perfected in Japan and commercialised by Taiwan, Philippines, and Indonesia, who were among the first nations that went in for commercial aquaculture ventures. Aquaculture technology has been classified into four broad categories, i.e., traditional, extensive, semi-intensive and intensive. Essentially, the capital investment stocking density, feed and management requirements go up as the scale moves towards higher levels of technology. Taiwan adopted intensive culture as land costs were high. Indonesia and the Philippines adopted the semi-intensive and extensive technologies due to larger availability of suitable land. In Myanmar too, the latter experience appears more logical.

4.0 ROLE OF GOVERNMENT AND HER AGENCIES

A number of institutions are involved in the management of the fisheries sector in Myanmar. The Ministry of Livestock and Fisheries is mainly responsible for the administration of the entire fisheries sector in Myanmar. The government has passed a number of laws and regulations relating to aquaculture and environmental protection.

The Fisheries Department of Myanmar plays an important role such as:-

- to promote all round development in the fishery sector.
- to encourage the expansion of aquaculture
- to upgrade the socio-economic status of fisheries communities
- to encourage foreign investment in the sector through joint ventures

5.0 NEED FOR POLICY FOR ORIENTED AQUACULTURE INDUSTRY

Marine products already occupy an important place in Myanmar's export. With the introduction of the New Economic Policy by the State Law and Order Restoration Council (SLORC), growth of exports is a major requirement for the success of the structural reform program. Simultaneously with the announcement of the long term and liberalized trade policy, the Ministry of Commerce also announced a package of measures for special thrust in the export of high potential items. Marine Product Exports fall in this category.

This report describes the potential for aquaculture in Myanmar and a crash program is suggested to develop exports in a three to five year time frame. DOF has also been given a target to be achieved by the end of the year. It is, therefore, imperative that a strategy for development of export oriented aquaculture be put in place.

6.0 STRATEGY FOR DEVELOPMENT OF SHRIMP CULTURE

Today, aquaculture development in the country is taking place in a haphazard manner and is mainly concentrated along the coast. Investment climate varies in different areas, and infrastructure development as well as extension services leave much to be desired. Productivity and production patterns vary from small marginal holdings to large farms that are now coming up. A strategy for aquaculture must necessarily address these variations. A two-pronged approach to be applied to the two different levels of technology is required. On the one hand, it is necessary to extend benefits of aquaculture technology to the rural poor and marginal farmers by promoting low input, cost extensive aquaculture linked with rural employment. On the other hand, in order to obtain a quantitative jump in marine products export, it is necessary to establish high productive centers with semi-intensive aquaculture technology on a factory farm basis. The two-pronged strategy would be to address the traditional farming areas with low input, cost extensive technology, and separately take up areas for semi-intensive farming. The Ministry of Livestock and Fisheries, through its various institutions, mainly concentrates on the small aquaculturists which are presently engaged in traditional farming. The Ministry of Commerce would address directly strategies for export oriented aquaculture industry, assisting all entrepreneurs with extensive farming technologies and simultaneously promoting aquaculture estates, for larger entrepreneurs.

7.0 POLICY INITIATIVES

Experience, in South Asia particularly, has shown that the growth of aquaculture invariably results in the achievement of other social economic goals like increase in food production, rural employment, improved nutrition etc. Export oriented shrimp culture would generate new sources of employment and lead to an overall development of rural areas through integrated projects besides earning precious foreign exchange for the country.

Considering the profit potential of shrimp culture, it is clear that with the development of this sector, subsidies should be reduced. What is necessary are the removal of impediments as well as development of infrastructure for realizing the potential of this high priority growth sector.

The following guidelines are recommended to facilitate organized development of shrimp culture by foreign investors;

8.0 GUIDELINES

8.1. Land:- Guidelines

8.1.1. Most of the brackishwater land identified as suitable for aquaculture is under the for Government ownership of the Governments. Despite communication of specific guidelines for the leasing of such land to private entrepreneurs for aquaculture purpose, the actual handling over of land has been rather negligible. It is therefore desirable that the government concerned expedite land allotment for shrimp fanning.

8.1.2. Micro level surveys of the potentially suitable lands maybe carried out and all lands identified suitable for aquaculture may be allotted for the activity and not for any other activity.

Application for allotment of Government land, preferably disposed of on merit, within 45 days from the date of application.

Lease period may be fixed at a minimum of 20 years, with a provision for renewal for another period often years the option of the investors

8.2. Land Use

8.2.1. DOF with the assistance of the Department of Environment would work out a plan Plans and for land use and environmental management. Environment

8.2.2. The plan prepared by DOF may be taken as a model by the State to prepare Master Plans for development of shrimp farming

8.2.3. Such Master Plans for development of shrimp industry may be get approved from the Department of Environment.

8.2.4. Specific proposals for development of farms shall be based on the Master Plans and each proposal maybe submitted to the Department of Environment.

8.2.5. Environmental clearance to aquaculture farms may be given preferably within 60 days from the date of submission of the application.

8.2.6. Effluent treatment systems measuring not less that 5% of the farming area may be made mandatory in case of aquaculture units of size more 10 ha.

8.2.7. State Governments may provide common effluent treatment system for areas leased out by them to small and marginal entrepreneurs.

8.2.8. DOF would formulate norms of land use plans and set environmental standards jointly with the Environment department

8.3. Setting up Shrimp Farm Estates

8.3.1. It is desirable that the government or private sector consortium to develop estates for export oriented aquaculture in suitable areas.

8.3.2. The Master Plan for the estates may be along similar lines as those for industrial estates. Delineation of water supply and drainage and other infrastructure development may be made mandatory on the part of land allotted to conform project plans to the Master Plan.

State Governments or private consortium may set up aquaculture infrastructure development corporations on a commercial and self-financing basis in order that it may help small entrepreneurs to obtain standard basic infrastructural facilities such as road, electricity, communication etc. from cost effectiveness as well as pollution points of view. It is also highly desirable that in such areas the government/consortium construct common main feeder canals and drainage canals.

8.4 Satellite Farming

8.4.1 DOF will promote integrated units with farm, hatchery, feed mill and processing facilities with tie-ups for technology, seed and feed and buy back arrangements with small entrepreneurs functioning as 'satellite' farming systems.

8.5 Man Power Development

8.5.1 DOF in association will draw up a plan for suitable man power development. In order to overcome the shortage of trained man power for aquaculture, the University system may be re-oriented to produce trained manpower for the industry.

8.6 Availability of Finance

8.6.1 Credit constraints are still continuing to impede the development of aquaculture. In view of the present instructions from the Central Bank, this will be approached to accord priority for aquaculture lending.

8.7 Seed

8.7.1 Integrated farms with hatcheries will be encouraged.

8.7.2 Subsidy for setting up hatcheries may be continued for a period of three more years.

8.8 Development Council

8.8.1 A development Council for export Oriented Aquaculture will be set up in the Ministry of Commerce to oversee the growth of this sector as well as to take policy decisions for the same. The Development council shall be headed by the Minister of Commerce and will comprise representatives of various Ministries and organisations as well representatives of the Trade.

Appendixes


Appendix 1: Proposal of the Promoter to make Foreign Investment in the Union of Myanmar
Appendix 2: Guidelines on the Conversion of Mangroves to Ponds
Appendix 3: List of People Met


Appendix 1: Proposal of the Promoter to make Foreign Investment in the Union of Myanmar

To

The Chairman
Myanmar Investment Commission
Yangon

Reference No.
Date,

I wish to make investment in the Union of Myanmar in accordance with the Union of Myanmar Foreign Investment Law, and I herewith apply for permission furnishing the following particulars:-

1. Promoter's

(a) Name..............................................................................................
(b) Father's name.................................................................................
(c) National registration No..................................................................
(d) Citizenship......................................................................................
(e) Address...........................................................................................
.............................................................................................................
(f) Name of principle organisation........................................................
(g) Type of business............................................................................
(h) Place of organisation......................................................................
(i) Place of incorporation......................................................................
.............................................................................................................

2. If investment is to be made by joint-venture, the particulars of the persons wishing to participate in the joint-venture with the promoter

(a) Name.............................................................................................
(b) Father's name................................................................................
(c) National registration No.................................................................
(d) Citizenship.....................................................................................
(e) Address.........................................................................................
...........................................................................................................
(f) Name of principle organisation.......................................................
(g) Type of business...........................................................................
(h) Place of organisation.....................................................................
............................................................................................................
(i) Place of incorporation.....................................................................
............................................................................................................

3. Type of business in which investment is to be made

(a) Production......................................................................................
(b) Services.........................................................................................
(to indicate name of goods or type of services)

4. Form of economic organisation

(a) Sole Proprietorship.........................................................................
(b) Partnership.....................................................................................
(c) Limited Company............................................................................
(to enclose the list of the name, citizenship, address and designation of the executives of the organisation, indicating the local and foreign capital ratio)

5. If the organisation is in the form of a partnership

(a) Capital ratio and amount to be contributed by the partners............
(b) Profit sharing ratio...........................................................................
(c) Rights and liabilities of partners......................................................
..............................................................................................................

6. If the organisation is in the form of a limited company

(a) Authorised capital............................................................................
(b) Type of shares.................................................................................
(c) Share capital to be subscribed by the shareholders........................
..............................................................................................................

7. Particulars relating to the organisation in which investment is to be made

(a) Amount of capital

Kyat

(1) Amount of local capital to be contributed

.........................

(2) Amount of foreign capital to be brought in

.........................

Total

______________

(b) Amount of foreign capital to be brought in Kyat

(1) Foreign currency

.........................

(2) Others

.........................

Total

______________

(c) Period for bringing in items mentioned in sub-paragraph (b)...........
..............................................................................................................
(d) Proposed duration of investment.....................................................
(e) Construction period.........................................................................
(f) Commencement of construction.......................................................

8. Particulars relating to the proposed economic organisation

(a) Type of business..............................................................................
(to indicate production/services etc.)
(b) Proposed place(s) at which investment is to be made.....................
..............................................................................................................
(c) Technique of operation....................................................................
(d) Annual fuel requirement...................................................................
(to indicate type/quantity)
(e) Annual electricity requirement..........................................................
(f) Annual water requirement.................................................................
(to indicate daily requirement, if any)
(g) Annual equipment/raw materials requirement..................................
(to enclose a list of type/quantity/value)
(h) Building requirement........................................................................
(i) Type of land and area requirement...................................................
..............................................................................................................
(j) Goods to be produced/services to be rendered................................
(to indicate name, type, annual estimated quantity and value of the goods/services)
(k) System of sales.................................................................................

9. Details of foreign capital to be brought in Kyat


Foreign Currency

Estimated Equivalent

(a) Foreign currency (type and amount)

............................

..................................

(b) Value of machineries, equipment etc (to enclose detail statement)

............................

..................................

(c) Value of raw materials and other similar materials

............................

..................................

(d) Value of rights which can be evaluated, such as licence, trade mark, patent rights

............................

..................................

(e) Value of technical know-how

............................

..................................

Total

________________

___________________

10. Details of local capital to be contributed

Kyat

(a) Amount of cash....................................................................................
(b) Value of machineries and equipment...................................................
(to enclose detail statement)
(c) Building/Land.......................................................................................
(d) Value of furniture and office equipment...............................................
(to enclose detail statement)
(e) Value of raw material...........................................................................
(to enclose detail statement)
Total..........................................................................................................

11. Particulars relating to annual production/services


Foreign Currency

Estimated Kyat Equivalent

(a) Type and value of foreign exchange required

..........................

.......................................

(b) Amount of foreign exchange to be received

..........................

.......................................

(c) Amount of working capital requirement in Kyat

..........................

.......................................

(d) Value of exportable goods/services

..........................

.......................................

(e) Value of annual local sale of goods/services

..........................

.......................................

12. List of personnel required for the proposed economic organisation

(a) Local personnel required

Serial No.

Type of personnel

Number

................

...........................

.............

................

...........................

.............

................

...........................

.............

................

...........................

.............

................

...........................

.............

(b) Foreign experts and technicians required

Serial No.

Type of expertise

Number

Proposed period of employment

...............................

.............................

..............

....................................................

...............................

.............................

..............

....................................................

...............................

.............................

..............

....................................................

...............................

.............................

..............

....................................................

...............................

.............................

..............

....................................................

13. Particulars relating to economic justification


Foreign Currency

Estimated Kyat Equivalent

(a) Annual income

............................

.........................................

(b) Annual expenditure

............................

.........................................

(c) Annual net profit

............................

.........................................

(d) Yearly investments

............................

.........................................

(e) Recoupment period

............................

.........................................

(f) Other benefits (to enclose detail calculations)

.........................................................................

(g) To mention prospects of new employment opportunities/local and foreign market conditions/foreign exchange savings

.........................................................................

14. Supporting documents for the proposal

The following documents are attached for the proposed investment

(a) Draft contract;
(b) References for business and financial standing;
(c) Drafts of Memorandum of Association and Articles of Association

Signature.............................
Name...................................
Designation..........................

Appendix 2: Guidelines on the Conversion of Mangroves to Ponds

1. Wherever possible, first consideration should be given to mangrove areas which have already been reclaimed earlier (e.g. for agriculture) and are now either lying idle or are under-utilised.

2. Should the use of existing forests be inevitable, then ponds should be sited on the landward side of the mangroves. The latter are considered as inferior forest with an uneven and heterogeneous crop of poorly formed trees which are usually abandoned or exercised from the forest reserve.

3. Where pond installations have to be constructed in the mangroves forest proper, the least productive areas with trees of poor growth or of uneconomical species should be utilised.

4. It is recommended that for the time being at least only the stateland forests be made available for aquaculture and that forest reserves be kept intact.

5. To maintain the ecological balance of estuarine mangrove areas, forests adjoining the mouths of major river systems should not be released for pond aquaculture purposes.

Appendix 3: List of People Met

1. U Maung Maung Lwin
Department of Fisheries
Yangon

2. U Tin Htut
Department of Fisheries
Yangon

3. Dr. George Soe Win
Myanma Livestock & Fisheries Development
Bank Ltd.
Yangon

4. U Ai Kauk
Super Group Limited
Yangon

5. U Chin Khoke, NPD
Department of Fisheries
Yangon

6. U Mya Thein (a) Roy
Roy's Aquacultural F.A.M.E Enterprise
Yangon

7. U Khin Maung Win
Institute of Fisheries Technology
Yangon

8. U Than Tun
Department of Fisheries
Yangon

9. Col., Tin Hlaing (Rtd.)
Union of Myanmar
Yangon

10. Lt. Col Khin Maung Yin
JV6
Yangon

11. U Soe Win
Department of Fisheries
Yangon

12. U Khin Maung Aye
Institute of Fisheries Technology
Yangon

13. Mr William Y.Y. Yip
Hip Shing Hong Aquatic & Foodstuffs Co.
Yangon (branch office)

14. U Tint Wai
Ministry of Livestock Breeding and Fisheries
Yangon

15. Mr U Win Aung
Department of Fisheries
Yangon

16. Mr Narin Piyarom
Mak Marvest Co. Ltd
Bangkok

17. U Tin Maw Thein
Myanmar Aquaculture & Fisheries Association
Yangon

18. Mr Kyaw Soe
Min Zar Ni Co. Ltd
Yangon

19. Mr U Tun Lin
Department of Fisheries
Mawlamyine

20. Dr. Nyan Taw
FAO Consultant-Backyard Hatcheries, TCP/MYA/4554
Yangon

21. U Khin Zaw
Annawar International Fisheries Holdings Ltd
Yangon

22. U Myint Thein
Myanmar Seafoods Ltd
Yangon

23. U Than Aung
Myanmar Garming Fisheries Ltd
Yangon

24. U Hkun Saw Lwin
Myanmar Garming Fisheries Ltd
Yangon

25. U Ye Myint
Myanma Investment & Commercial Bank
Yangon

26. U Tin Maw Thein
Moe Thitar Company Limited
Yangon

27. Tin Maung Thann
Myanmar Aquaculture & Fisheries Association
Yangon

28. Maj. Thi Ha (Retd.)
Myanmar Garming Fisheries Ltd
Yangon

29. Mr Nyo Min
Min Zar Ni Co. Ltd
Yangon

30. Mr Tin Win
Myanma Livestock & Fisheries Development Bank Ltd
Yangon

31. Ms Hea Myint
Directorate of Investment & Co. Administration
Yangon

32. Mr Mya Than Tun
Marine Fisheries Survey Unit
Yangon

33. U Tun Win
Department of Fisheries
Sittwe

34. Mr Win Myo Thu
SCODEV Group
Yangon


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