Myanmar’s second largest city was the last royal capital and remains the hub of the country’s heartland. The city is fully embedded in the national agricultural economy, trade and logistics – with produce being transported from its vast hinterland to the city before being exported to Yunnan or abroad via Yangon.

With Yangon increasingly crowded with foreign investments, Mandalay has naturally become the next focus. India and China have already stationed their consulates in the city, while European business chambers are establishing their presence as well.

The Myanmar Times sat down with U Win Htay, vice chair of the Mandalay Region Chamber of Commerce and Industry (MRCCI) in Mandalay Hill Resort, to talk about the city’s economic growth, urbanisation, foreign investments as well as the Belt and Road Initiative.

The vice chair said agriculture is the most important sector for the city as well as the fast-growing industry.

“We have a lot of vacant land, those not yet cultivated. We produce watermelons and cucumbers, and boast the largest trade associations for beans.

“Tourism is another developing sector, because the city, such as Mogok township, has a lot of heritage and attractions to offer,” he said, adding that the tourism growth is supported by an increase in both domestic and international travellers.

“It is around 50-50 for domestic visitors and foreigners. We have seen more Westerners and also a lot of Chinese, many of whom come from Yunnan via Muse.

Difficulties

Mandalay’s challenges in economic development are prevalent in other states and regions – the lack of finance, insufficient human resources and the absence of proper infrastructure in terms of road networks and power supply.

U Win Htay explained that the politics is an additional problem.

“In terms of both the Union and Mandalay regional level, the National League for Democracy-led governments are facing a lot of administrative challenges. They cannot control all the departments and this is not going very smoothly for businesses. Some departments are still being run in the old way.

“The economy is slowing down and growth is very slow or even stagnant for businesses,” he observed.

From the point of view of traders, the government’s task of providing clear policies and creating a business-friendly environment remains to be done.

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“For example, if you want to obtain a permit from the Myanmar Investment Commission [MIC], you need to first sort out environmental and social impact assessments [EIAs, SIAs], to prove your land ownership and submit your business proposal together with recommendations and authorisation from relevant authorities. It takes at least 3-6 months to get a permit,” he complained, but praised the regional MIC as a step forward.

The Japan International Cooperation Agency’s small and medium-sized enterprise (SME) loan programme has a favourable interest rate, yet the maximum loan amount of K5 billion is insufficient for individual businesses.

U Win Htay is also worried about brain drain triggered by Yangon’s rapid growth and the job opportunities made available by that.

“I am worried – yes – about the brain drain to Yangon. We don’t have many job opportunities here. Young people go to Yangon and abroad to work and make a living,” he said, preferring businesses to expand and create employment in Mandalay instead. The city needs more promotion, more investments and more jobs to spur growth.

Development

But it’s not all bad news. The Myotha Industrial Park is up and running already despite the lack of infrastructure, whereas a cyber-city project will be implemented next year on a 10,000-acre site near Pyinoolwin. The vice chair suggested that electricity and road network will be in place in two years. The 285MW-gas powered plant in Myingyan, supported by the Asian Infrastructure Investment Bank, will provide much-needed electricity for infrastructure development.

Mandalay needs more investments for logistics facilities, such as more warehouses and trucks. - U Win Htay, Mandalay Region Chamber of Commerce and Industry

More importantly, Mandalay’s future lies in being Myanmar’s northern economic powerhouse by developing the connectivity necessary to make it a competitive logistics hub.

“As the heart of logistics, we are connected to the Chinese border via Muse as well as the Indian border.

“The dry port developed by Kerry Logistics has already started operation in July,” he went on, adding that he had imported goods via Yangon port, transported them to Mandalay’s dry port by train and then moved them to Muse by truck.

Additionally, the city will start developing its river port in the Ayewaddy River with support from a survey drafted by JICA.

Both software and hardware are imperative for Mandalay to become the northern powerhouse, according to U Win Htay. The city needs more investments for logistics facilities, such as more warehouses and trucks. In terms of software, Mandalay has to develop its human capital, especially in training engineers, drivers, mechanics and other logistics-related vocational training. The region lacks the skills to turn raw materials into value-added products.

Belt and Road

Additionally, the vice chair said that China’s Belt and Road Initiative is beneficial and the city should take part. However, Mandalay ought to be careful about not losing its own culture and damaging the environment. The influence of Chinese cultures and changes to the city’s demographics are causes for anxiety. There is a case for preserving the culture, traditions and way of life of Mandalay in face of potentially rapid changes imposed externally.

“The BRI will promote trade and tourism and bring in technical support, expertise, investments and human capital for Mandalay.

“The Mandalay population is already dominated by ethnic Chinese … The Belt and Road Initiative may exacerbate this trend in terms of demographics. This is worrying.

“Many people call Mandalay ‘Yunnan Mandalay’ because of the visible ethnic Chinese population. Many move from the border areas to the city, and some acquire a National Registration Card [NRC],” he noted, adding that some Chinese trade associations wield more influence than the MRCCI and, due to the background of Chinese businesses, they have more extensive interests which not many domestic companies can parallel.

U Win Htay said that the primary concern for businesses regarding the Belt and Road Initiative is the immigration from China.

“It’s hard to solve the problem. There are more immigrants from border areas. The immigration authorities should better enforce regulation in the border areas so Mandalay won’t be affected by the immigrants.”



