Description:
Conclusion:
"The stable supply of rice at a low price continued to be the principal
rationale of the rice marketing system in Myanmar even after the two
liberalisations. The transition from comprehensive state control over rice
marketing that began with the first liberalisation and continued with
the second can be seen as an ad hoc transformation of the marketing
system in response to the changing economic and political situation.
It eventually took the form of gradual rice price deregulation. After the
two liberalisations, Myanmar?s rice-marketing system shifted from being
one supported by the rice procurement and ration systems and export
controls to one solely dependent on rice export controls to achieve the
low rice price policy.
This policy orientation determined the development of the private
rice marketing sector. The whole sector was allowed to develop only
in the remaining sphere of the rice marketing sector and on condition
that it did not jeopardise the stable supply of rice at a low price. This
was the inevitable consequence of Myanmar?s rice marketing policy.
In the liberalisation process, however, the private rice marketing sector
was able to achieve self-sustaining development. The government?s
policy to promote rice production and cut-backs in the volume of
rice procurement increased the amount of rice sold in the market,
which induced more traders to enter the rice-marketing business.
This was a clear manifestation of the latent willingness of Myanmar?s
traders to grasp whatever small opportunities arose to increase profits,
opportunities that had been closed for more than one-quarter of a
century during the socialist period. The rice traders who expanded
business while avoiding conflicts with the government rice policy were
the ones who were able to survive during the 1990s.
By the end of the 1990s, however, the private rice marketing sector
had reached a crossroads as the domestic rice market approached total
saturation. This problem was most evident in the tough business
conditions facing medium and large-scale rice millers. The worn-out
state of their mills grew apace, but they could not risk venturing into
new investments under the existing market structure where low and
medium-quality rice was in greatest demand. Even in the milling of
lower-quality rice, the big mills were losing out to the growing number
of small-scale rice mills in the villages. Thus, by the time of the second
liberalisation, medium and large-scale rice mills were facing a crisis in
their operations.
What are the implications of this transformation of the rice sector
in accordance with the low rice price policy to the development of
Myanmar?s national economy? The first implication is the poor prospects
for the development of the rice industry. It cannot be denied that the
commercial and processing industries of Myanmar?s rice marketing
sector continue to be the base of the rural economy. In neighbouring
Thailand, rice millers turned to exporting and, with the accumulated
capital, expanded their businesses to other industries with great success.
In Myanmar, one would hope that the same scenario could play out
for private rice traders and millers. In reality, however, there is little
prospect that private rice exporting will be allowed in the near future.
The present government is unlikely to change its rice policy, which
prioritises a low price for the sake of political stability. Since export
controls become the sole direct policy tool that the government has
for keeping the price of rice low, it will remain reluctant to undertake
any rapid deregulation of rice exports. This means that the private rice
marketing sector will have to survive within the confines of the present
domestic market, which limits demand largely to low and medium-quality rice. Thus the government?s rice policy has again thwarted the
development of Myanmar?s rice industry and denied it the potential to
stimulate growth in the economy as a whole.
The second implication, which could be more serious than the
first, is the absence of a clear scenario to utilise the low rice price for
development led by industrialisation (Fujita and Okamoto 2006).
Generally speaking, the low rice price policy itself is not unique to
Myanmar, and has been adopted in various developing countries,
especially in the early stages of economic development. The purpose
is to promote industrialisation using cheap labour, backed by the low
price of rice. Any clear vision for this type of industrialisation has,
however, been barely observed for Myanmar in the past 19 years. The
low rice price policy has not gone beyond the purpose of maintaining
the regime and it is likely to continue that way for some time."
Source/publisher:
2006 Burma Update Conference via Australian National University
Date of Publication:
2007-01-00
Date of entry:
2008-12-30
Grouping:
- Individual Documents
Category:
Language:
English