Japanese interest in the agriculture sector of Shan and Mon States is rising. In particular, investors see the opportunity to provide the machinery and equipment farmers need for harvesting their crops as well as high quality fertilisers and seeds.
“In Japan, there are many companies that are interested in Myanmar as an investment and business destination,” said Hirokazu Yamaoka, Managing Director of the Japan External Trade Organisation (JETRO) in Yangon.
The agriculture sector, in particular, is drawing a high level of investor interest. “As mechanisation in the agriculture sector is rising in importance, Japanese investors have been trying to enter this market,” Mr Yamaoka said, adding that many Japanese seed and fertiliser companies have also been eyeing the Myanmar market.
Mr Yamaoka was speaking during an event announcing a JETRO mandate to source for investment opportunities in the Myanmar agriculture sector on behalf of Japanese businesses earlier this month. The mandate is similar to previous years’.
This year, interest in Shan and Mon agriculture has seen keener interest. Together with JETRO, a total of 11 Japanese companies traveled to the two states to meet with 20 local firms and gauge market conditions.
As JETRO has a good relationship with the Cooperate Department of Mon State and finding solutions to selling products in cooperative retail stores, “we are looking at cooperative department retail stores in which to push sales since Japanese companies really want to sell their agricultural items in Myanmar but are finding it very difficult to find the right locations,” said Mr Yamaoka.
Meanwhile, some Japanese companies are exploring ways to establish contract farming agreements to produce fresh vegetables with local farmers. The main purpose is to produce higher quality vegetables to be exported to Japan and ASEAN with a higher price, Mr Yamaoka said.
“In Vietnam, there is a city called Dalat which is very similar to Shan State. In Dalat, the Japanese have successfully invested in the agriculture sector. We can copy this in Shan State,” he said.
Shigeru Oi, Director and Chief Strategic Officer of Sugano Farm Machinery Company, one of the companies that visited Shan State, said more tractors and other machinery are needed.
“We need to develop a pricing strategy that meets Myanmar demand. Then I think we can penetrate the Shan market by competing with existing Chinese machinery makers within 3 years,” he said.
Mr Yamaoka agreed. “We have to come up with a strategy to compete with Chinese products that are dominating in Myanmar market,” he said.
Based on available data, Japanese imports of Myanmar agricultural products amounted to more than $24 million during the 2015-16 fiscal year. Meanwhile, Japanese investments totaling $95 million were channeled into the local agriculture sector during the period.
Among the Japanese companies invested in Myanmar areG7 AgriJapan, which entered in a joint venture in Myanmar to farm and sell agriculture products in 2013, as well as Myanmar Bell Company, which is a JV with Japanese partners produce and export frozen vegetables to Japan, establised in 2015.
Meanwhile, Kubota Corporation, which makes tractors, has established a sales company in Myanmar, while trading company Marubeni Corporation has also established a fertiliser manufacturing company in the Thilawa Special Economic Zone.