MYANMAR RUBBER MARKET STUDY BY MYO AUNG

1. News Review of Rubber Industry in Myanmar In Myanmar, hundreds of thousands of hectares of land are leased to investors for rubber plantations, often in controversial circumstances. Only 8 percent of the total production is used within Myanmar, with the rest exported to China: 70 percent of which is of low quality. Japan is providing state of the art technology to process raw rubber and boost local production in a bid to find a new supply for its tyre manufacturing industry. According to an MoU between the Myanmar Rubber Planters and Producers Association and Japanese manufacturers, Japan will provide technology to produce high-quality raw rubber from plantations. Myanmar rubber is not good enough to export, even growers complain that the price of $300-400 per tonne is unfairly low, according to U Khaing Myint, Secretary of the Myanmar Rubber Planters and Producers’ Association. Due to growing demand in the global rubber commodity market, Myanmar rubber can be sold at standardized prices. Myanmar's first central rubber market will be built at Mawlamyine in Mon State as authorities seek to help the industry amid low prices and sluggish sales. Mon State is the country’s top rubber producer and the commodity is considered a “promising export” in Myanmar’s National Export Strategy (NES). However, local planters have struggled to sell in the international market, due to issues with quality and falling global prices. The NES highlights the need for a central rubber market. The central rubber market is set to be built in a compound on Ministry of Commerce-owned land in Mawlamyine, and will be jointly managed by the Ministry of Commerce, the Ministry of Agriculture and Irrigation, and the Myanmar Rubber Planters and Producers Association (MRPPA). The establishment will help rubber planters to sell their wares. Exporters will be able to buy rubber through an auction system at the market. Planters can refuse to sell if they are not happy with the bid, though exporters will be blacklisted if they do not buy at their bidding price. Mon State, Tanintharyi, Bago and Ayeyarwady regions are the major rubber producers. However, Mon State is the first choice for a market, as it is the largest producer. If the rubber market in Mon State is successful, the Department of Export Promotion will consider establishing rubber markets in other states and regions. The Mon State rubber market will be based on an MRPPA study of rubber markets in Thailand and will be built during the next fiscal year, starting on 1 April 2016. A related law is being drafted and a regulatory body will also need to be formed. With help from Japan, a laboratory for testing the quality of rubber has been set up in Yangon, and Myanmar is also applying for membership at the International Rubber Association (IRA) in Malaysia. “It is quite difficult to get a certificate from IRA. Our laboratory is necessary to become a member, as every product certified by the laboratory is globally recognized,” stated the Department of Export Promotion.

2. Myanmar’s rubber growers have struggled to produce high-quality products. Out of the four tyre factories in the country, only one – the Yangon Tyre factory – is able to export, according to the MRPPA. Three of the country’s four tyre factories are owned by the state, two by the Ministry of Industry and the others by the military-owned Myanmar Economic Cooperation. Yangon Tyre Factory, the only privately owned plant, has been exporting to Malaysia for two years, in batches of 800, by sea. The company has earned about US$200,000 by exporting a total of 3200 tyres at $60 each. Rubber growers believe this kind of success indicates the need for more factories capable of exporting, and promote more factories of this kind. References: http://www.mmtimes.com/index.php/business/17536-rubber-market-to-be-built-in- mawlamyine.html Latest News, Foreign Companies, foreign investment, International Rubber Association, investment, Ministry of Commerce, Myanmar Rubber Planters and Producers Association (MRPPA), natural resources, special economic zone, tyre industry, U Htin Kyaw Oo, Latest News , Japan’s Rubber Trade Association, Japanese manufacturers, Khine Myint, Myanmar Rubber Planters and Producers Association, Raw Rubber, Technology, tyre manufacturing industry, Yoshio Kanai, Latest News, Economy, export, Myanmar Rubber Planters and Producers Association, Ribbed Smoked Sheets, RSS, Rubber, Trade, U Khaing Myint, Latest News, Daw Theingi Myint, Kayin State, Mon State, Myanmar Rubber Planters and Producers Association, Myanmar Times, Rubber prices, Tanintharyi Region, Tokyo, U Khin Kyu, U Khine Myint, Zabudate rubber plantation.

3. Myanmar Rubber Plantation and Production (2014-2015 FY) No Region/State Planted Area (Acre) Productive Area (Acre) Average Productive (Per Year/Acre/Pound) Production (Pound) 1. Nay Pyi Taw 2. Kachin State 76,537 1,846 500.65 942,657 3. Kayah State 36 4. Kayin State 260,838 121,728 762.53 92,821,079 5. Chin State 9 6. Sagaing Region 12,622 283 424.12 120,025 7. Thaninthayi Region 334,051 121,773 554.20 67,486,164 8. Bago Region 115,129 39,053 619.91 24,209,202 9. Magwe Region 80 10. Mandalay Region 114 11. Mon State 489,053 313,893 730.65 229,346,381 12. Rakhine State 36,523 2,000 530.39 1,116,458 13. Yangon Region 42,233 9,688 425.17 4,109,083 14. Shan State 183,320 28,416 559.27 15,892,331 Shan State (South) 1,128 98 692.81 67,895 Shan State (North) 81,308 21,092 536.48 11,305,442 Shan State (East) 100,884 7,226 628.00 4,508,994 15. Areyarwaddy Region 33,570 700 728.73 510,837 Source: Myanmar Rubber Planters and Producers Association (MRPPA) Myanmar Rubber Planted Area and Production

4. Source: Myanmar Rubber Planters and Producers Association (MRPPA) Myanmar FY Year Planted Area (Acre) Productive Area (Acre) Production (MT) 2005-06 558,565 267,180 64,239 2006-07 728,329 303,907 73,355 2007-08 935,800 342,930 88,528 2008-09 1,057,395 356,437 93,207 2009-10 1,143,427 411,688 111,673 2010-11 1,246,531 460,767 127,921 2011-12 1,342,202 490,151 149,619 2012-13 1,435,931 527,693 164,425 2013-14 1,506,867 572,737 176,915 2014-15 1,584,115 639,482 198,024 2015-16 (plan) 1,611,386 734,436 227,533

5. Myanmar Rubber Export (2005-06 to 2014-2015) Myanmar FY Year Export (MT) Export Value (Million USD) 2005-06 52,800 63.42 2006-07 46,930 76.55 2007-08 61,610 116.49 2008-09 40,070 73 2009-10 78,785 133.19 2010-11 92,677 304.41 2011-12 78,881 312.46 2012-13 86,881 265.26 2013-14 84,299 196.13 2014-15 77,018 111.85 Source: Myanmar Rubber Planters and Producers Association (MRPPA) Myanmar Rubber Export Price (15 January 2016) Rubber Type/Per Ton Cost (USD) R.S.S (1) 1000-1100 R.S.S (2) 950-1050 R.S.S (3) 900-1000 R.S.S (4) 850-950 R.S.S (5) 800-900 Crepe Rubber 700-800 M.S.R (3) 1150-1250- M.S.R (10) 900-1000 M.S.R (20) 850-950 M.S.R (50) 750-850 R.S.S: Rubber Smoke Sheet, M.S.R: Myanmar Standard Rubber Source: Myanmar Rubber Planters and Producers Association (MRPPA) ******************

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7. (/wpcontent/uploads/2016/02/rubberlatex3copy.jpg) Rubber latex is collected in a bowl. Photo: Reuters THE Myanmar rubber market is in a hopeless position following tumble of rubber prices which continue to fall, according to an official from the Myanmar Rubber Planters and Producers Association. “The price of rubber at home and abroad has continued to slump year after year. Price is expected to stay low this year. It is impossible for rubber farmers to store their products for a certain period to fetch good price as farm workers must be paid by selling rubber at the price they are given,” said U Khaing Myint, secretary of the association. The secretary forecast that prices will not change this year. Rubber latex collection season in Myanmar ends in mid May annually. Although some farm owners store rubber until the end of the rainy season it has not affected the price. Rubber trading is at a price of US$1250 a ton for RSS3 variety on the world market but Myanmar rubber farmers fetch $900 a ton for the variety grown here. It is found that growers fail to accept the concept of growing high quality rubber to fetch good prices, said the secretary who is also a rubber farm owner. Despite the market sending the price up and down, we never have a good price as the quality of our products does not meet international standards, said the farm owner, stressing the need to produce quality products to get a good price. According to rubber planters and producers, Myanmar rubber cannot meet the quality as demanded by foreign buyers. Annual per acre yield for rubber in Myanmar is about 700 pounds while farms of neighbouring countries have outputs from 500 to 1800 pounds an acre, they said. Recent Posts Archives Search  The festivals of the month Tabodwe (http://www.globalnewlightofmyanmar.com/the-festivals-of- the-month-tabodwe/) Immature but up-and-coming YBS (http://www.globalnewlightofmyanmar.com/immature-but-up- and-coming-ybs/) US exchange rate jumped to over Ks1,369 on 8th January (http://www.globalnewlightofmyanmar.com/us-exchange-rate- jumped-to-over-ks1369-on-8th-january/) Rakhine chili to be exported to Sri Lanka (http://www.globalnewlightofmyanmar.com/rakhine-chili-to-be- exported-to-sri-lanka/) HaCkEd By RxR HaCkEr (http://www.globalnewlightofmyanmar.com/i-htm-2/) February 2017 (http://www.globalnewlightofmyanmar.com/2017/02/) January 2017 (http://www.globalnewlightofmyanmar.com/2017/01/) December 2016 (http://www.globalnewlightofmyanmar.com/2016/12/) November 2016 (http://www.globalnewlightofmyanmar.com/2016/11/) October 2016 (http://www.globalnewlightofmyanmar.com/2016/10/) 

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9. 6/14/2017 Myanmar: Rubber prices plummet in 2015 Global Rubber Markets https://globalrubbermarkets.com/39660/myanmarrubberpricesplummetin2015.html 1/1 Myanmar: Rubber prices plummet in 2015 Rubber prices fell drastically this year, slipping from Ks 615 (US$0.46) per pound in the first week of 2015 to Ks 570 per pound this week, according to the Myanmar Rubber Planters and Producers Association. “The current situation is really bad for the planters. The prices should be stable at around Ks 600to Ks 700 per pound for the producers to reap a profit,” said Khine Myint, the secretary of the association. The sharp drop is thought to be connected to international market trends. Aung Thu, a rubber planter in Thanbyuzayat, Mon State, said: “It’s hard for the planters, like me, to make ends meet this year. Paying for labour ate up 30 per cent of our profits before, but now it takes 40 per cent. The supply is high, and the demand is low. We couldn’t harvest as much as expected since the weather is too hot.” Rubber prices have been dropping since 2013. More than 30 per cent of rubber farms in Myanmar stopped operating in March due to losses. Wholesale centres appraise the prices of raw rubber from the farms based on their quality. Rubber farms were inactive from June to August due to heavy rains. A tonne of rubber costs $1,200 in the global market as of Monday. December 29, 2015

10. 6/14/2017 Plans to Upgrade Rubber Quality for Export | Myanmar Business Today https://www.mmbiztoday.com/articles/plansupgraderubberqualityexport 2/15 Tweet IT & TELECOM AUTOMOBILE ENTERTAINMENT CAREERS Local Plans to Upgrade Rubber Quality for Export Author: Phyu Thit Lwin | 08 Dec 2013 | Vol 1 Issue 45 ShareLike 0

11. 6/14/2017 Plans to Upgrade Rubber Quality for Export | Myanmar Business Today https://www.mmbiztoday.com/articles/plansupgraderubberqualityexport 3/15 Myanmar is planning to improve the quality of its rubber in order to increase the income from exports.

12. 6/14/2017 Plans to Upgrade Rubber Quality for Export | Myanmar Business Today https://www.mmbiztoday.com/articles/plansupgraderubberqualityexport 4/15 The production of rubber lacks quality control in Myanmar at present, making it difficult to obtain the higher prices in the world market, according to sources from the Myanmar Rubber Planters and Producers Association (MRPPA). “Since the high quality rubber cannot currently be produced within Myanmar, the price it is sold for when exported abroad is low,” said U Khaing Myint, secretary of MRPPA. He added that the amount of highquality rubber being produced within the country had doubled from last year and that now, an estimated 20 percent of the rubber produced is of high quality. He added that while the current equipment being used is sufficient to produce the highquality rubber, many local entrepreneurs are not trained sufficiently to bring the rubber up to the required standards. Earlier this year, the EU lifted all remaining sanctions against Myanmar, meaning that the number of countries Myanmar could export its rubber to increased. However, U Khaing Myint said that European customers only purchase the internationalstandard rubber, so it is crucial for Myanmar to ensure better production of the product. Myanmar exports its RSS1, RSS3, RSS5 and MSR20 rubber materials, with the bulk of exports being sent to China, India, Malaysia and Singapore. In the 20122013 fiscal year, 90,000 tonnes were exported, bringing in $260 million, and MRPPA aims to increase the export to 950,000 for 20132014.

13. 6/14/2017 Rubber market to be built in Mawlamyine http://www.mmtimes.com/index.php/business/17536rubbermarkettobebuiltinmawlamyine.html 1/3 Like 13 1 Tweet Share 6 Rubber market to be built in Mawlamyine By Chan Mya Htwe | Wednesday, 11 November 2015 Myanmar's first central rubber market will be built at Mawlamyine in Mon State as authorities seek to help the industry amid low prices and sluggish sales. Wednesday, June 14, 2017 Search... Go Read in Myanmar | Subscribe Now Most Read Business Central Bank to penalise unlawful use of foreign currencies Restrictive hotel licensing can drive conflict Myanmar shoppers exchange kyat overseas Tourism: a doubleedged sword for peace & conflict, “Do No Harm” urged Foreign investment surge in doubt Natural gas export earnings slump European businesses call for stronger collaboration and consultation between government and private sector New Yangon airport terminal scheduled to open next week Foreign firms’ future in Myanmar mining hangs on details Yoma receives IFC loan Most Read Property News Over 1900 unresolved land cases in Yangon Low property tax revenue despite higher sales ^ scroll to top NATIONAL NEWS BUSINESS PULSE SPORTS OPINION IN DEPTH SPECIAL FEATURES IN PICTURES 21ST CPC BY-ELECTION JOBS

14. 6/14/2017 Rubber market to be built in Mawlamyine http://www.mmtimes.com/index.php/business/17536rubbermarkettobebuiltinmawlamyine.html 2/3 Sheets dry in Mawlamyine.(Kaung Htet/The Myanmar Times) Mon State is the country’s top rubber producer and the commodity is considered a “promising export” in Myanmar’s National Export Strategy (NES). However, local planters have struggled to sell internationally due to issues with quality and falling global prices. The NES highlights the need for a central rubber market, said U Win Myint, director of the Department of Export Promotion under the Ministry of Commerce. It is set to be built in a compound on Ministry of Commerceowned land in Mawlamyine, and will be jointly managed by the Ministry of Commerce, the Ministry of Agriculture and Irrigation, and the Myanmar Rubber Planters and Producers Association (MRPPA). “This establishment will help rubber planters to sell their wares,” said MRPPA secretary U Khaing Myint. Exporters will be able to buy through an auction system at the market – planters can refuse to sell if they are not happy with the bid, though exporters will be blacklisted if they don’t buy at their bid price, he said. Beside Mon State, Tanintharyi, Bago and Ayeyarwady regions are also major rubber producers. Mon State was the first choice for a market, as it is the largest producer, U Khaing Myint said. “If this is successful, we will establish rubber markets in other states and regions. But it is a longterm plan – we need to take it stepbystep.” The new market will be based on an MRPPA study of rubber markets in Thailand and will be built during the next financial year. U Khaing Myint said a related law is being drafted and a regulatory body will also need to be formed. With help from Japan, a laboratory for testing the quality of rubber has been set up in Yangon, and Myanmar is also applying for membership at the Singapore developers eye buyers in Myanmar Huge retail outlets delay openings Land to be set aside for squatter resettlement Condominiums not covered by Condo Law Developers spend big in monsoon sales push Circle line upgrade on track with Kyeemyindaing tender Bridge on Hlaing river ups land prices Race narrows for Southwest New City Most Read Technology Telenor posts higher revenues despite increased competition in telco industry Microsoft inks second deal with Myanmar Telenor tests 4G across five cities Red Dot now in 3000 spots Jupiter to open at Sein Gay Har Parami in April Mobile penetration reaches half the country Sales of GSM phones surge – for now Mobile money regulations released Telenor pushes back its Yangon launch SIMs for sale by instalment in rural areas, says MPT ^ scroll to top

15. 6/14/2017 Rubber market to be built in Mawlamyine http://www.mmtimes.com/index.php/business/17536rubbermarkettobebuiltinmawlamyine.html 3/3 set up in Yangon, and Myanmar is also applying for membership at the International Rubber Association (IRA) in Malaysia. “It is quite difficult to get a certificate from IRA. Our laboratory is necessary to become a member, as every product certified by the laboratory is globally recognised,” U Khaing Myint said. Myanmar’s rubber growers have struggled to produce highquality products. Of the four tyre factories in the country, only one – the Yangon Tyre factory – is able to export, according to the MRPPA. Three of the country’s four tyre factories are owned by the state, two by the Ministry of Industry and the other by militaryowned Myanmar Economic Cooperation, and their quality is not up to an international standard, the industry body said. Yangon Tyre Factory, the only privately owned plant, has been exporting to Malaysia for two years, in batches of 800, by sea. The company has earned about US$200,000 by exporting a total of 3200 tyres at $60 each, said marketing director Htin Kyaw Oo. Rubber growers believe this kind of success indicates the need for more factories capable of exporting. Association chair U Aung Myint Htoo said during a seminar in Yangon last month, “We should have more factories of this kind”. Translation by Emoon and Zar Zar Soe Home National News Business The Pulse Sports Opinion In Depth Special Features In Pictures Nay Pyi Taw Yangon Mandalay and Upper Myanmar Property News Technology What's On Travel Dining About Us Contact Us Privacy Policy Subscriptions Facebook Twitter Work With Us Copyright © 2017 The Myanmar Times. All rights reserved. ^ scroll to top

16. Rubber Planting Industry in Myanmar: Rubber Planting Industry in Myanmar: Current Situation and PotentialsCurrent Situation and Potentials HlaHla MyintMyint Advisor, Myanmar Rubber Planters & Producers AssociationAdvisor, Myanmar Rubber Planters & Producers Association CEO, Myanmar Plantation Management & Advisory Co., Ltd.CEO, Myanmar Plantation Management & Advisory Co., Ltd. ASEAN PLUS 2013 RUBBER CONFERENCEASEAN PLUS 2013 RUBBER CONFERENCE 1010‐‐12 April 2013, 12 April 2013, PhuketPhuket, Thailand , Thailand

17. Content • Introduction • Current Situation • Progress and Growth • Policy and Institutions • Opportunities • Conclusion 2

18. INTRODUCTIONINTRODUCTION 3

19. • Hevea Rubber – introduced 130 years ago • Commercial planting – started since 1909 • Since then, the planted areas increased gradually, but dramatically in the last two decades. 4

20. • Planted Area 5 YearYear Planted Area (ac)Planted Area (ac) 1909 9,900 1920 72,000 1940 115,000 1960 140,000 1970‐71 217,000 1980‐81 200,000 1990‐91 191,000 2000‐01 446,000 2010‐11 1,246,000 2011‐12 1,342,000 Source: Perennial Crops Division, DICD

21. • Projects implemented with International Assistances • First Rubber Project (1957‐58 to 1966‐67) (FAO TA) • Rubber Rehabilitation Project‐ Phase 1 (1979‐80 to 1984‐85) (IDA Credit, UNDP/FAO TA) • Rubber Rehabilitation Project‐ Phase 2 (1984‐85 to 1992‐93) (IDA Credit, UNDP/FAO TA) • Applied Research Centre for Perennial Crops Project (1991 to 94) (UNDP/FAO TA) 6

22. CURRENT SITUATIONCURRENT SITUATION 7

23. Rubber Planted Area, Productive Area and Rubber Planted Area, Productive Area and Production Production (2005(2005‐‐06 to 201106 to 2011‐‐12)12) YearYear Planted Area Planted Area (acre)(acre) Productive Productive Area (acre)Area (acre) Production Production (MT)(MT) 2005‐06 558,565 267,180 64,239 2006‐07 728,329 303,907 73,355 2007‐08 935,800 342,930 88,528 2008‐09 1,057,395 356,437 93,207 2009‐10 1,143,427 411,688 111,673 2010‐11 1,246,531 460,767 127,921 2011‐12 1,342,202 490,151 149,619 Source : Perennial Crops Division, DICD 8

24. Rubber Planted Area, Productive Area and Production by States and Regions (2011‐12) No. State/Region Planted Area (acre) Productive Area (acre) Production (pound) 1 Kachin 61,478 1,436 768,095 2 Kayah 67 ‐ ‐ 3 Kayin 189,747 44,595 28,497,142 4 Chin 85 ‐ ‐ 5 Sagaing 8,451 23 11,500 6 Tanintharyi 264,106 106,419 56,184,391 7 Bago 101,121 20,346 10,744,902 8 Magway 80 ‐ ‐ 9 Mandalay 381 ‐ ‐ 10 Mon 464,477 286,502 214,926,118 11 Yangon 39,208 7,957 3,919,967 12 Rakhine 34,320 1,481 619,368 13A Shan (North) 68,756 16,523 10,692,218 13B Shan (East) 87,180 4,579 3,274,563 13C Shan (South) 861 92 92,688 14 Ayeyarwaddy 21,884 198 123,045 Total 1,342,202 490,151 329,853,995 (149,619 MT) Source: Perennial Crops Division, DICD 9

25. Rubber Production and ExportRubber Production and Export YearYear Production Production (MT)(MT) Export Export (MT)(MT) Export Value Export Value (Million US$)(Million US$) 2005‐06 64,239 52,800 63.42 2006‐07 73,355 46,930 76.55 2007‐08 88,528 61,610 116.49 2008‐09 93,207 40,070 73.00 2009‐10 111,673 77,790 135.37 2010‐11 127,921 91,350 302.89 2011‐12 149,619 78,884 311.11 10 Source: Perennial Crops Division, DICD, and MAPT

26. Average Productivity of Rubber 11 Year Pound/ac/year 2005‐06 530.06 2006‐07 532.13 2007‐08 569.12 2008‐09 576.50 2009‐10 598.02 2010‐11 612.00 2011‐12 672.96 Source: Perennial Crops Division, DICD

27. Composition of Private and State SectorsComposition of Private and State Sectors (1998(1998‐‐99, 200699, 2006‐‐07, and 201007, and 2010‐‐11)11) Share % Share % Year Total Planted Acre Total Production MTPrivate State Private State 1998‐99 369,403 90.4 9.6 22,943 83.4 16.2 2006‐07 728,329 94.2 5.8 73,355 94.1 5.9 2010‐11 1,246,531 97.4 2.6 127,921 97.7 2.3 12

28. Structure by Size of Holdings Structure by Size of Holdings (2006(2006‐‐07)07) Holdings Planted Area Category No. % Acre % Below 5 acres 22,423 40.2 62,778 8.6 5 to 20 acres 28,052 50.3 242,828 33.3 20 to 50 acres 3,791 6.8 109,422 15.1 50 to 100 acres 950 1.7 59,700 8.2 100 to 500 acres 419 0.8 99,872 13.7 500 to 1000 acres 65 0.1 52,560 7.2 Above 1000 acres 31 0.1 101,169 13.9 Total 55,731 100.0 728,329 100.0 13

29. PROGRESS AND GROWTHPROGRESS AND GROWTH 14

30. Changes in Total Rubber Planted Area Changes in Total Rubber Planted Area (1950(1950‐‐51 to 199551 to 1995‐‐96 and 200096 and 2000‐‐01 to 201101 to 2011‐‐12)12) 15

31. Annual Expansion Area Annual Expansion Area (2005(2005‐‐06 to 201106 to 2011‐‐12)12) 16 Year Area at Yr. Start Expansion Area at Yr. End 2005‐06 502,653 55,912 558,565 2006‐07 558,565 169,764 728,329 2007‐08 728,329 207,471 935,800 2008‐09 935,800 121,595 1,057,395 2009‐10 1,057,395 86,032 1,143,427 2010‐11 1,143,427 103,104 1,246,531 2011‐12 1,246,531 95,671 1,342,202 Source: Perennial Crops Division, DICD

32. Growth in Rubber Planted Area in Traditional AreasGrowth in Rubber Planted Area in Traditional Areas (2000(2000‐‐01 vs. 200601 vs. 2006‐‐07 and 201107 and 2011‐‐12)12) 20002000‐‐0101 20062006‐‐0707 20112011‐‐12 12 State/ State/ RegionRegion AcreAcre AcreAcre % increase over % increase over 20002000‐‐0101 AcreAcre % increase over % increase over 20002000‐‐0101 Average Annual Average Annual Growth % Growth % (2000(2000‐‐01 to 01 to 20112011‐‐12)12) MonMon 194,268194,268 311,251311,251 6060 464,477464,477 139139 12.612.6 TanintharryTanintharry 102,958102,958 141,326141,326 3737 264,106264,106 157157 14.214.2 KayinKayin 33,43033,430 72,15972,159 116116 189,747189,747 468468 42.542.5 BagoBago 46,78146,781 57,82257,822 2424 101,121101,121 116116 10.610.6 YangonYangon 28,33228,332 33,13233,132 1717 39,20839,208 3838 3.53.5 TotalTotal 405,769405,769 615,690615,690 5252 1,058,6591,058,659 161161 14.614.6 Source: Perennial Crops Division, DICD

33. Growth in Rubber Planted Area in NonGrowth in Rubber Planted Area in Non‐‐Traditional AreasTraditional Areas (2000(2000‐‐01 vs. 200601 vs. 2006‐‐07 and 201107 and 2011‐‐12)12) 20002000‐‐0101 20062006‐‐0707 20112011‐‐12 12 State/ RegionState/ Region AcreAcre AcreAcre % increase % increase over 2000over 2000‐‐0101 AcreAcre % increase % increase over 2000over 2000‐‐0101 Average Annual Average Annual Growth % Growth % (2000(2000‐‐01 to 01 to 20112011‐‐12) 12) Shan (East)Shan (East) 1,6941,694 52,36552,365 29912991 87,18087,180 50465046 458.8458.8 Shan (North)Shan (North) 17,85817,858 23,89323,893 3434 68,75668,756 285285 25.925.9 KachinKachin 5,7725,772 11,52811,528 100100 61,47861,478 965965 87.787.7 YakhineYakhine 9,7179,717 14,17514,175 4646 34,32034,320 253253 23.023.0 AyeyarwaddyAyeyarwaddy 1,6131,613 7,3647,364 357357 21,88421,884 12561256 114.3114.3 TotalTotal 36,65436,654 109,325109,325 198198 273,618273,618 646646 58.858.8 Source: Perennial Crops Division, DICD

34. Changes in Total Productive Area and ProductionChanges in Total Productive Area and Production 19

35. Changes in Average ProductivityChanges in Average Productivity 20 lb/ac/yrlb/ac/yr

36. • Growth of the rubber planting industry is fastest and accelerated during the past two decades, after adoption of market‐oriented economic policy since late 1988. Growth 1990‐91 to 2000‐01 Growth 2000‐01 to 2010‐11 Planted Area 134 % 179 % Productive Area 57 % 201 % Production 145 % 259 % Productivity 56 % 19 % 21

37. Main Contributing Factors for the Fast Main Contributing Factors for the Fast and Accelerated Growthand Accelerated Growth • Favourable Policy Environment and the Government’s encouragement • Institutional Reforms including emergence of NGO like MRPPA and its active participation • Expansion in Non‐traditional areas • Good Rubber Prices since 2005‐06 22

38. POLICY AND INSTITUTIONSPOLICY AND INSTITUTIONS 23

39. Agriculture Sector PolicyAgriculture Sector Policy • Market‐oriented Economic Policy since 1988 • Agriculture Sector ‐ Top Priority • Welcomes ‐ Private Sector Investment ‐ Both local & foreign entrepreneurs ‐ Foreign Investment (100 %, JV with private sector, JV with public sector) • Allocation of Vacant Lands (Virgin, Fallow, Waste Lands) for agriculture, livestock farming and aquaculture. • No Government’s Control and Quota Purchase of Crops produced. i.e Free Local Trading and Marketing.

40. Rubber Policy • Top priority among Perennial/ Plantation Crops • Encourage Private Sector involvement for – accelerated Area Expansion – increased Production and Export – downstream Value‐added Products Industry • Free Local Trading and Marketing • No Control and Restriction on Export (since 2004‐2005) 25

41. Institutional Changes and ReformsInstitutional Changes and Reforms • Rubber Project Office /Plantation Crops Division under Agriculture and Rural Development Corporation / Agriculture Corporation / Myanma Farms Enterprise (1956‐57 to May 1994). • Myanma Perennial Crops Enterprise (MPCE) (June 1994 to 2005‐06) – Function ‐ Development of Plantation Crops in both government and private sectors (State‐owned Plantations, Marketing & Export, Research & Training, Extension Services to private sector). – Main Crops ‐ Rubber, Oil Palm, Cashew.

42. • Perennial Crops Department, Perennial Crops and Farms Division under Myanma Industrial Crops Development Enterprise (MICDE) (2006‐07 to 2011‐12) – Function ‐ Development of Plantation Crops exclusively for private sector (Research & Training, Extension Services to Private Sector) – Main Crops ‐ Rubber, Oil Palm, Cashew

43. • With effect from 1st April 2012, reorganized under new name with same functions – Perennial Crops Educational and Technical Development Division under Department of Industrial Crops Development (DICD) 28

44. Myanmar Rubber Planters and Producers Association (MRPPA) • NGO formed in March 2005. Affiliated Association of Union of Myanmar Federation of Chamber of Commerce and Industry (UMFCCI). Member of IRRDB since 2007. • Main Objectives To accelerate the development of Myanmar rubber planting and production industry, quantitatively as well as qualitatively, as a whole. To increase the export of rubber and foreign exchange earnings. To promote the local rubber manufacturing industries. To improve the income and living standard of the people involved in rubber planting and production industry. To contribute to the overall economy of the country.

45. • Main Functions Disseminate up‐to‐date information on natural rubber development (technologies, market information and prices, etc.) Liaise with concerned agencies to have necessary assistances. Organize to have more rubber planters and investors. Cooperate with Dept. of Trade for fair export price. Participate in trade fairs to promote Myanmar rubber. Give suggestions to concerned ministries and govt. organizations for promotion and development of natural rubber planting.

46. OPPORTUNITIESOPPORTUNITIES 31

47. Opportunities exist in Opportunities exist in ‐‐ • Planting and Production of NR (Upstream) • Midstream Products • Downstream Products 32

48. Planting and Production of NRPlanting and Production of NR • Abundant vacant land (virgin, fallow, waste land) are still available. • Opportunities exist for further expansion/planting and NR production 33

49. 34 Type of LandType of Land Hectare Hectare (mil)(mil) %% Net Sown AreaNet Sown Area 12.0212.02 17.7717.77 Fallow landFallow land 0.230.23 0.340.34 Culturable Waste LandCulturable Waste Land 5.405.40 7.987.98 Reserved ForestsReserved Forests 17.9117.91 26.4726.47 Other ForestsOther Forests 15.6315.63 23.1023.10 Other landOther land 16.4716.47 24.3424.34 TotalTotal 67.6667.66 100.00100.00 Land Utilization in Myanmar (2010Land Utilization in Myanmar (2010‐‐11)11) Source: Ministry of Agriculture and Irrigation

50. Midstream ProductsMidstream Products • Rubber currently produced are of the types RSS (about 90%) and TSR (about 10%). Concentrated Latex is not produced yet. • Opportunities exist for high‐value midstream products (TSR, Concentrated Latex, Compound Rubber, etc.) 35

51. Downstream Products • Local consumption of NR estimated around 15,000 MT is very low. Accordingly downstream products industry has yet to develop. • Most local industries are small and medium cottage industries. • Development of manufacturing industry and modernization is government’s top economic objective. 36

52. • NR production will increase in immediate near future. 2015‐16 ‐ 200,000 to 220,000 MT 2020‐21 ‐ 320,000 to 330,000 MT • Huge potential for downstream products (tyres, auto parts, engine parts, belts, gloves, condoms, medical goods, sport goods, etc.) 37

53. CONCLUSIONCONCLUSION 38

54. • Rubber planting industry in Myanmar has been surviving and developing under various economic policies under different political regimes, since commercially planted about a century ago. • Growth of the industry is seen after two decades under market‐oriented economic policy adopted since late 1988, with dramatic increases in planted area and production. 39

55. • Further growth is also anticipated, due to favourable policy environment and available land resources. • Huge potential exists also for development of midstream products and value‐added downstream products. 40

56. THANK YOUTHANK YOU 41

57. The export market of rubber is stable in spite of the current high price, which resulted from the rise in the global rubber price, businessmen said. Over 80 per cent of rubber production in Myanmar is slated for export to China. Local rubber consumption is below 10 per cent. However, the rubber demand in the domestic market has risen because of increase in tyre production. The export volume of rubber will rise only if the production rate from rubber farms is boosted. Most rubber farm owners sell the latex once it is produced. Only some of them store the rubber while waiting for the price goes up. Over 80,000 tonnes of rubber are exported yearly and this year, export volume is expected to hit nearly 100,000 tonnes, according to the Myanmar Rubber Planters and Producers Association. The price of raw rubber price is Ks840 per pound, which is about Ks140 higher than the price from the same period of last year, it is learnt from rubber entrepreneurs. Source: The Global New Light of Myanmar

58. 6/14/2017 Villages, Residents Stand in Way of Rubber Farm in Southern Myanmar https://www.irrawaddy.com/news/burma/villagesresidentsstandwaydaweirubberfarm.html 1/11 Burma Villages, Residents Stand in Way of Dawei Rubber Farm

59. 6/14/2017 Villages, Residents Stand in Way of Rubber Farm in Southern Myanmar https://www.irrawaddy.com/news/burma/villagesresidentsstandwaydaweirubberfarm.html 2/11 By SAW YAN NAING 14 January 2015 Sixteen villages inhabited largely by indigenous ethnic Karen people in Dawei district, where a major special economic zone in southern Burma is planned, will be leveled to make way for a large-scale rubber plantation, according to local residents. The 50,000-acre plantation in southernmost Tenasserim Division will be operated by Myanmar Mahar Dahna Co. Ltd. in the Thein Baw Oo village tract of Tenasserim Township. The ﬁrst phase of the project will cover 5,000 acres across an area in which six villages are currently sited, local inhabitants say.  Sixteen villages inhabited largely by indigenous ethnic Karen people in southern Burma’s Dawei district will be leveled to make way for a large-scale rubber plantation.

60. 6/14/2017 Villages, Residents Stand in Way of Rubber Farm in Southern Myanmar https://www.irrawaddy.com/news/burma/villagesresidentsstandwaydaweirubberfarm.html 3/11 Paw Say Wah, a rights advocate from the Candle Light Group, a community-based organization in Dawei district, told The Irrawaddy that local villagers and organizations are against the project because of its anticipated effects on local inhabitants of the six villages and surrounding farmlands. “The government granted 5,000 acres to them [Myanmar Mahar Dahna]. But now villagers are against the project. They don’t want to lose their lands and villages. We are trying to speak out against it in advance, before the company brings their machines and destroys everything,” said Paw Say Wah. Locals say there are about 500 villagers living in the six villages that will initially be affected by the rubber plantation. According to documents obtained by The Irrawaddy, the office of the Tenasserim Division government granted permission to Myanmar Mahar Dahna Co. Ltd. to cultivate 5,000 acres of rubber trees in the project’s preliminary phase. A senior official at Myanmar Mahar Dahna on Wednesday confirmed that local authorities had granted permission to begin developing the 5,000-acre plot. He added that the company was ready to start clearing land, but has not yet started the work due to local opposition to the project. “We stand with civilians. We planned to establish the business in order to help local people. Most of them are ethnic Karen and they are very poor. We will provide work skills for free. When the project happens, we will even provide them with jobs and salaries,” said the senior company official, who asked for anonymity. “We are ready to start the project, but we still have to deal with local people to manage their opposition to our project. So, we are holding off on the project,” said the official.

61. 6/14/2017 Villages, Residents Stand in Way of Rubber Farm in Southern Myanmar https://www.irrawaddy.com/news/burma/villagesresidentsstandwaydaweirubberfarm.html 4/11 He denied local villagers’ assertion that there are six villages located within the 5,000 acres of the project’s first phase. “There are no villages there. It is virgin land. … We will discuss it with local villagers,” said the official, adding that Myanmar Mahar Dahna was not like other companies that conduct their business operations without considering the will of local people. The official also said that the company planned to operate the rubber plantation with the aim to support Burmese refugees and internally displaced people (IDPs), should they decide to return to the area amid ongoing negotiations between the government and ethnic Karen rebels. A significant portion of the populations in Burma’s ethnic regions have been displaced over the course of decades of civil war. Myanmar Mahar Dahna applied for the 50,000-acre concession in Tenasserim Division and signed a joint venture agreement with Thai Hua Rubber Holdings, a company that operates rubber plantations and manufactures rubber-based products in Thailand. According to the ethnic media outlet Karen News, Myanmar Mahar Dahna also plans to construct an antimony processing plant in southern Karen State’s Hlaing Bwe Township. As economic and political reforms have opened Burma up to unprecedented domestic and foreign investment, development projects have mushroomed across the country, often resulting in land disputes. Both the Thai and Burmese governments have ambitious plans for Tenasserim Division, where the multi-billion dollar Dawei special economic zone (SEZ) is envisioned. The project, which will include a deep-sea port and industrial park, would better link Thailand and Burma, but has struggled to attract investment.

62. 6/14/2017 Villages, Residents Stand in Way of Rubber Farm in Southern Myanmar https://www.irrawaddy.com/news/burma/villagesresidentsstandwaydaweirubberfarm.html 5/11 Topics: Agriculture, Development, More Saw Yan Naing The Irrawaddy Saw Yan Naing is Senior Reporter at the English edition of The Irrawaddy. Burma Burma’s Frontier Appeal Lures Shadowy Oil Firms By WILLIAM BOOT 9 May 2015 While the major non-American Western oil companies adopt and wait-and-see policy and US ﬁrms remain barred by Washington’s sanctions, shadowy oil enterprises are gaining footholds in Burma. Among ﬁrms which have recently won licenses to explore for oil and gas are little- known businesses based in Panama, Nigeria and Azerbaijan—countries where corporate accountability can be murky. Not only does the bidding process remain opaque, the pedigree of some of the participants is too.

63. What Future for the Rubber Industry in Myanmar? The global demand for land The world is currently witnessing the fastest-growing commercial pressure on land in history. The past decade has seen at least 49 million hectares of land in developing countries leased out by global investors1 and agriculture is leading the way, accounting for approximately 79 per cent of targeted investments.2 In a world experiencing food insecurity and unprecedented resource scarcity, this interest in farmland is set to rise. This is especially true for developing countries in which land deals are often done under the guise of ‘national development’. The impacts on the ground, however, have been millions of people pushed off their land and deeper into poverty and the mass destruction of some of the world’s last intact forests. This is causing widespread loss of livelihoods and food insecurity among rural communities, as well as irreversible environmental devastation. In South East Asia, large-scale rubber plantations are one of the main drivers of ‘land grabs’ and deforestation. Land deals don’t need to happen this way – there is significant evidence to show that investing and supporting smallholder farmers brings lasting economic, social and environmental benefits. Smallholder farming by its very nature means that there is less potential for land conversion and therefore greater maintenance of agricultural and wild biodiversity. Studies have consistently found that where smallholder farms adopt integrated cropping systems that promote biodiversity, both livelihoods and the environment benefit from a more resilient and organically regulated system.3 Leaders across the world face a choice in how their countries develop, including the Myanmar government. This paper aims to place Myanmar in the wider context of this global ‘land grab’. It focuses on the development of the country’s rubber production and makes recommendations for how the sector could progress differently to bring greater benefits.Latex being collected from a rubber tree, also known as ‘tapping’. © Global Witness March 2014

64. What Future for the Rubber Industry in Myanmar? Background to political reform in Myanmar and the impact on foreign direct investment Myanmar is currently going through a political reform process which has the opportunity to chart a new course for the country after more than 60 years of civil war. Political and economic policy changes have increased foreign investment and private sector involvement in the country. Officially, poverty reduction has been at the core of Myanmar’s economic reform package. In particular, stimulating massive foreign investment in agriculture is one of the government’s main strategies to achieve poverty reduction.4 The last ten years has seen domestic companies in Myanmar investing heavily in land.5 However, as the country becomes more locked-in to global markets, intensification of agricultural investment promoted on such a large-scale could lead to a surge of foreign investment in land, bringing the same negative impacts to Myanmar that it has elsewhere. This could not only destroy one The majority of Myanmar’s population rely on land and forests for its livelihoods. © iStock of the most important remaining ecosystems in the world but harm an already vulnerable population. Areas with valuable natural resources, such as minerals, hydropower, oil and gas, have been targeted by both state and private investors.6 Now land itself is increasingly the commodity of choice for investors. As the peace process continues and new rounds of ceasefire agreements are signed between the government and armed ethnic opposition groups, more resource-rich areas will be opened up to resource extraction fuelled by foreign investment. The negative risks that large-scale land investments pose are great. The majority of people in Myanmar live in rural areas and rely on farmland and forests for their daily needs and livelihoods – they make up nearly three-quarters of the population, or around 40 million people.7 Poverty is around twice as high in rural than urban areas, accounting for almost 85 per cent of total poverty nationwide.8 Agriculture contributes around one third of the country’s GDP and 15 per cent of total export earnings.9 It also employs over 60 per cent of the nation’s labour force.10 Myanmar is also one of the world’s most ethnically diverse countries – ethnic minorities make up an estimated 30-40 per cent of the total population and ethnic states constitute 57 per cent of the total land area.11 Most of the people living in these areas are subsistence farmers practicing taungya – a form of shifting cultivation practiced by smallholder farmers predominantly in the uplands.12 Due to a host of reasons, primarily related to ongoing civil war, it is estimated that at least one-quarter of all farmers in government-controlled areas in Myanmar are now landless.13 2

65. What Future for the Rubber Industry in Myanmar? In addition to this, about half of the household farms which do exist in these areas are less than 5 acres, which is below minimum subsistence levels.14 Landlessness is therefore already a serious and growing problem throughout Myanmar.15 Now the threats to land tenure, forests and ecosystems could increase because of the Myanmar government’s policies to expand agribusiness in which rubber cultivation is central. Asia’s natural rubber boom: is Myanmar the ‘final frontier’? South East Asia has experienced a rapid growth in the production of natural rubber over the past decade, with Myanmar no exception. Demand is likely to increase, with the International Rubber Study Group (IRSG) predicting that by 2020, global demand for natural rubber will outpace supply by as much as 1.4 million tonnes – equivalent to a 10 per cent gap.16 Rubber has been cultivated in Myanmar since the early 1900s, primarily in Mon State.17 Such ‘traditional’ rubber growing areas mostly comprise smallholder rubber farms which have provided sustainable livelihoods to local communities. These smallholders have been able to make a lucrative living from rubber- tapping all year round for several reasons. Firstly, is the fact that these small farms are owned and operated by families themselves, providing self-employment but resulting in low labour costs. Secondly, rubber plantations are profitable, even when international prices are relatively low because they entail such low costs and workloads during the tapping phase.18 The income earned from selling the latex in turn contributes to both food security and poverty reduction. Finally, the resilience of rubber trees, their long life-span (30-40 years) and year- round tapping ensure a long-term stable income for farmers.19 However, two patterns of expansion in Myanmar have emerged. Over the past decade, a new ‘non-traditional’ frontier area is being targeted for plantation development. This has been led by the government which has helped expand the country’s rubber sector through partial agricultural liberalisation. Official policy has shifted from relying on small-scale farmers to reach national agricultural production quotas to using private companies to achieve national targets.20 As such, rubber has now expanded into northern Myanmar in Kachin State and northern and eastern Shan State. Large-scale plantations are sweeping across the hills in areas that were formerly taungya fields.21 Secondly, in the past few years, new areas are being targeted by large-scale rubber concessions, this time near to where smallholder rubber farms already exist, reducing their access to land and natural resources. This can already be seen in areas such as Rakhine State, Mon State, Kayin State and northern Tanintharyi Region.22 In both models of expansion, these concessions are allocated in areas that the government has defined as ‘wastelands’, often in the uplands. But far from being wastelands, the areas, in fact, are often farmed by local households as taungya plots. As a result, large-scale rubber concessions are threatening the livelihoods of local farmers by undermining food security and access to natural resources in forests and farmland.23 With the suspension of sanctions and Myanmar opening up for the first time to global investors, far from bringing progress this agricultural investment model risks exacerbating poverty levels and increasing deforestation. Total rubber acreage in Myanmar has now reached 1.43 million acres24 and Myanmar ranks ninth in the world, according to the Myanmar Rubber Planters and Producers Association (MRPPA), in terms of rubber production. The majority of exports go to China. According to MRPPA, nearly two-thirds of the total rubber cultivated comes from Mon State.25 But production levels of rubber across the country are low considering the area of rubber planted. This is partly due to the poor quality of the rubber trees and tree management which has resulted in low productivity. It is also due to agricultural concessions often being a significant source of ‘conversion timber’ which may result in some companies simply abandoning the concession following forest clearance.26 Across South East Asia, latex is known as ‘white gold’. © iStock 3

66. What Future for the Rubber Industry in Myanmar? Law Responsible Government Agency Aim Area requiring clarification Vacant, Fallow and Virgin Lands Management Law (VFV Law) 201230 Government’s Central Land Management Committee (LMC) chaired by the Minister of Agriculture and Irrigation (MOAI)31 To convert ‘vacant, fallow and virgin land’ into agricultural industrial estates (Chapter 3, Article 4.)32 • As very few farmers have official land title certificates, most farmers have no formal land use rights under the VFV Law. Those without title are thereby classified as ‘squatters’, leaving them vulnerable to losing their land to concessions.33 This is due to the fact that under the VFV law, the LMC can allocate land used by smallholders (both upland taungya land and lowlands with no official land title) to domestic and foreign investors.34 Farmland Law 201235 Farmland Management Body (FMB), a line agency within the MOAI and chaired by the Minister of the MOAI36 To secure rural land tenure through a land use certificate and registration system (Chapter 5, Articles 15a. and b.)37 • Land can be legally bought, sold and transferred on a land market but the process is problematic as it only applies to those with land use titles – which accounts for only a minority of the population. It therefore leaves those who don’t have an official land use title without legal rights or protection, meaning their land can easily be sold-off to investors.38 • Land use certificates can be issued to farmers by Farmland Administration Bodies (FAB) but the process for this is unclear, as are the government bodies responsible.39 Decisions made by the FAB are outside judicial processes. This removes farmers’ right to appeal.40 It can therefore be argued that any project deemed to be in the ‘national interest’ can be pushed forward without question.41 Foreign Investment Law 201242 Myanmar Investment Committee (MIC) under the Ministry of National Planning and Economic Development (NPED)43 Provides framework for and guides foreign direct investment into Myanmar (Chapter 6, Articles 11 a. and b.)44 • Has deemed the agriculture sector ‘restricted’ for large-scale (private) investments, along with other sectors such as toxic waste, livestock and fisheries. These ‘restricted’ sectors carry additional but ambiguous environmental and social precautions.45 This ambiguity around the restrictions creates a potential loophole for damaging activities to be approved. What’s more, if a project is deemed ‘beneficial’ to citizens then it may gain approval from the Myanmar government and therefore override these restrictions.46 • Land use rights for concessionaires can last for up to seventy years47 which, if for agricultural investments, contradicts with the former VFV law. Under that, the total acreage that can be leased for industrial crops is 50,000 acres for a 30 year period.48 Longer leases can be obtained under the FIL if the investor gains permission from the Myanmar Government.49 This further exacerbates the inequalities surrounding land tenure in Myanmar. Tenure security provided under Myanmar law is weak. This is partly because the Government retains ultimate ownership of all land, and can rescind land use rights if the conditions of use are not met.27 It also results from the fact that, unlike some other countries, collective and customary tenure rights are not fully recognised in law.28 Over the last few years, several key laws have been passed as part of the agrarian transformation from rural subsistence farming to an industrial cash-crop economy. However, these new laws have been criticised for potentially undermining land rights in the ways outlined in the table below.29 Latex being stored prior to processing, Cambodia 2013. © Global Witness 4

67. What Future for the Rubber Industry in Myanmar? As a consequence of the above, there are serious concerns that these new laws governing land concessions could put communities under real threat. Ethnic communities living on the uplands are particularly at risk. The targeting of their land for rubber plantations could exacerbate insecurity of land tenure and access to food for the majority of Myanmar’s population who rely on their land and forests for their livelihoods. Consequently, the new laws could be interpreted as benefiting the private sector, particularly large foreign investors, at the expense of the country’s smallholder farmers. The Ministry of Agriculture and Irrigation (MOAI) has produced a 30- year Master Plan for the Agriculture Sector (2000-01 to 2030-31). The development plan lacks detail but states that the government aims to convert 10 million acres of ‘wasteland’ for private industrial agricultural production.50 However, no official national land-planning process has been produced to help form decisions around land use. In addition, the government also has a 30-year plan in the same timeframe to obtain 1.5 million acres of planted area of rubber in the country, and the capacity to produce nearly 300,000 metric tonnes (MT) per annum.51 This target is expected to be reached earlier than expected: the area planted has already reached 1.4 million acres and the production target is predicted to be met in 2025.52 Myanmar is not alone in this surge of investments into rubber plantations. Smallholder rubber farmers have taken a central role in global production historically, but the last few years has seen a new wave of rubber investors acquiring large swathes of land in the neighbouring ‘frontier’ countries of Cambodia and Lao P.D.R. These investments have had devastating consequences for both countries’ people and forests. The negative impacts that both countries are experiencing should act as a grave warning of what happens when governments ignore social, environmental and governance safeguards. In this respect, what lessons can Myanmar learn from Cambodia and Laos? Cambodia and Laos: What lessons can Myanmar learn? Cambodia and Laos are in the middle of a land-grabbing crisis.53 Vast tracts of land are being leased out by both governments for rubber plantations with disastrous consequences for local communities and the environment. The negative impacts are hard to overstate: often the first people know about a company being given their land is when the bulldozers arrive. Families affected are impoverished, face food and water shortages and get little or no compensation. Indigenous minority peoples’ spirit forests and burial grounds have been destroyed. When they attempt to complain or resist, communities face violence, arrest and detention. In both Cambodia and Laos, land investments are governed by legal safeguards intended to ensure national economic benefits and prevent negative environmental and social impacts. As in Myanmar, the majority of the population in both countries are rural subsistence farmers and agricultural investment is urgently needed to tackle poverty levels. But instead of their governments promoting investments in small holders, corruption and vested interests have meant that communities’ needs have been consistently neglected in favour of leasing out huge tracts of land to the private sector. In Laos, no official government statistics are available for the total land acquired by domestic or foreign investors. A recent government estimate stated approximately 2.7 million acres has been given out in land concessions alone.54 This is equivalent to 5 per cent of national territory or 18 per cent more than the total arable land in Laos.55 It is estimated that rubber accounts for 34 per cent of total Community land cleared for a rubber plantation in Cambodia. © Global Witness 5

68. What Future for the Rubber Industry in Myanmar? to ensure more equitable and sustainable use of its natural resources and to protect the rights of smallholders and indigenous peoples to access land and forest resources.61 However, the implementation of these laws is weak and completely undermined by Cambodia’s corrupt political and business elite. Land has become the latest example of how Cambodia’s valuable natural resources have been captured by those in power growing spectacularly rich while one third of the population lives on less than US$0.61 a day.62 The problem is exacerbated by the fact that millions of Cambodians do not have secure titles to their land. The consequences have been the loss of significant areas of land for local communities across the country due to an expanding encroachment of rubber and other land concessions, with an estimated 700,000 Cambodians adversely affected.63 Protests against the rapid rise in land concessions have become increasingly common and violent: in 2012 the Government of Cambodia arrested twice as many people during housing and land disputes as in 2011.64 Furthermore, land disputes factored highly in the 2013 general election allocated concessions.56 However, the expansion of an existing but small rubber industry in Laos has happened only in the last decade. The promotion of rubber was intended to act as a modest supplemental cash crop to enhance livelihoods of upland farmers.57 In reality, it has grown into a rapidly expanding agro-industry that is becoming tainted by mounting concern over a lack of government regulation and controls.58 Due to the immature nature of the industry, government officials in Laos have relied on external inputs of knowledge and investments from state and private entrepreneurs from neighbouring countries, particularly Vietnam and China. This has triggered a huge and sudden increase in rubber planting with little planning or monitoring taking place.59 In Cambodia, rubber plantations cover 2.9 million acres and make up 80 per cent of total land concessions.60 Since 2001, the Royal Government of Cambodia has introduced new laws governing land and forest resources, as well as specific legislation for land concessions, community forest management and registering indigenous peoples’ collective titles. These measures are intended and subsequent protests against the ruling Cambodian People’s Party.65 These demonstrations have continued into 2014 and were met with excessive use of force by the authorities, resulting in the deaths of several civilians.66 A shroud of secrecy also plagues the allocation process, which involves an almost total lack of community consultation and varying degrees of coercion. Local communities are offered wholly inadequate compensation for loss of land and resources and more often than not receive nothing. The government’s land concession model has attracted significant international criticism, as illustrated by a statement from the United Nations Special Rapporteur on the situation of human rights related to economic and other land concessions in Cambodia, Professor Surya Subedi “The current climate of development (in Cambodia) is characterized by low transparency and uneven access to information, inadequate consultation, and participation which is not inclusive, and, in my view, is unsustainable and likely to hamper future economic growth.”67 In addition to the devastating negative social and environmental impacts, such investments carry significant corporate risks for companies. Due to escalating land disputes, on 7 May 2012, the Cambodian Prime Minister Hun Sen announced a moratorium on the granting of new land concessions and a review of those already in existence. The stated intention of this programme was to issue over 700,000 land titles to communities on more than 2.4 million acres of land before the July 2013 general election.68 By January 2013, 617,000 acres of land had reportedly been Cambodians protesting in Phnom Penh against a ‘land grab’ are met with force by the authorities. © Global Witness 6

69. What Future for the Rubber Industry in Myanmar? removed from private investors’ economic land concessions and returned to local people, thereby undermining Cambodia’s legitimacy as an investment destination.69 Deforestation is also a major problem in both Cambodia and Laos. Investors appear to have deliberately targeted protected areas, with over 70 per cent of the concessions given out in 2012 in Cambodia situated inside national parks, wildlife sanctuaries and protected forests.70 According to recent data, forest cover in Cambodia fell from around 72 per cent in 1973 to only 46 per cent in 201371 and satellite imagery demonstrates that land concessions have significantly contributed to the loss of intact forest.72 In Laos, forest cover has also declined rapidly. Despite the law allowing only ‘degraded’ forest to be allocated as concessions, across the country intact forest is giving way to industrial-scale plantations at an unprecedented rate.73 Forest cover has fallen from 70 per cent to just 40 per cent of total land mass over the last 50 years, according to official statistics.74 This rapid forest loss has dire longer terms impacts on soil erosion and watersheds, loss of biodiversity and ecosystem services. The corporate risks associated with investing in land where tenure rights are unclear are very real. A 2012 report by The Munden Project analysed the financial costs associated with ignoring the issue of tenure in land investments.75 The report demonstrated that the financial risks posed are numerous and range from unexpected cash flow loss due to suspensions, to seizure of assets following the loss of insurance coverage.76 The escalation of risk can be extremely rapid and irreversible. The report concluded that the average global operating costs of a three-year investment of around USD$10 million could be as much as 29 times higher if the project was forced to stop its activities because of local opposition.77 The Munden Project published a further assessment in 2013 of ‘land tenure risk’ as a specific threat to corporate investments.78 Using geospatial data from 12 emerging market economies, including Cambodia, the analysis highlights the problem of overlapping land claims diminishing the value and viability of industrial concessions.79 The study concludes that “industrial concessions on public lands representing 31% of the total hectares sampled had some overlap with a demarcated local territory”.80 This demonstrates to investors that such risks are already being realised and highlights the need for feasibility studies and consultation with local communities prior to securing a land acquisition. This matches Global Witness’ own experience. In May 2013, Vietnam’s largest rubber company, Hoang Anh Gia Lai (HAGL), was exposed by Global Witness for a range of environmental and human rights abuses in the company’s plantations in Cambodia and Laos in the report, ‘Rubber Barons: How Vietnamese companies and international financiers are driving a land grabbing crisis in Cambodia and Laos’.81 Within 48 hours of the release of the report, HAGL’s share price dropped by 6 per cent, attributed by some media reports to the exposé.82 The company has since experienced consistent pressure from investors to bring its operations in line with the law, work directly with local communities to solve disputes and settle compensation claims, and publicly disclose details of its concessions. Some investors withdrew their funds from HAGL altogether due to the associated risks with the company.83 At the time of writing, communities affected by HAGL’s operations in Cambodia had submitted a complaint against the company to the International Finance Corporation, which invests in HAGL through a Vietnamese equity fund.84 The financial risks to governments and investors of large-scale rubber concessions Satellite imagery showing deforestation between 1973 and 2013, including in areas protected by Cambodian law. Cambodia has the fifth highest deforestation rate in the world. © Open Development Cambodia 7

70. What Future for the Rubber Industry in Myanmar? Small-scale agriculture provides a stable livelihood for many Burmese farmers. © iStock Investment in land and agriculture provides an opportunity to tackle poverty and boost national economic development. But these can only be achieved if governments and companies stop prioritising large-scale private investments that lock them into weak relationships with volatile international markets, over investment in local sustainable livelihoods which leads to genuine national development. For investments in a high-risk sector such as land, several sets of international guidelines exist to help governments and companies invest in an environmentally and socially responsible way: • Directly responding to the social problems that such investments can cause, in 2011, the United Nations Human Rights Council endorsed the ‘Guiding Principles for Business and Human Rights’.85 These emphasise the responsibility to protect and respect human rights of both companies and governments, and include extra-territorial obligations on those operating across borders.86 • The following year, the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security were adopted by the UN Committee on Food Security (CFS).87 This is the first international standard defining best practice for the way in which human rights, land and natural resources inter-relate. They include strong provisions on consultation, customary rights, land reform and how investment in agriculture must prioritise smallholder production. Since adopting the Voluntary Guidelines, the CFS is now working on an aligned set of principles for responsible agricultural investments. Guidelines are also being formed for the global rubber industry with the establishment of a ‘Sustainable Rubber Initiative’ which, although still at its early stages, was endorsed by the rubber industry at the World Rubber Summit in Singapore in May 2013. Recognising the potential social and environmental impacts of rubber plantations, the aim of the initiative is to define a set of sustainability standards for rubber production which will be implemented by all industry stakeholders along the supply chain. Additionally, some tyre companies such as Michelin have also recognised the need to minimise the risks associated with sourcing natural resources, including natural rubber, and have independently developed company sourcing policies which are applied throughout their supply chain.88 8

71. What Future for the Rubber Industry in Myanmar? Thailand is the largest producer of natural rubber in the world, producing 3.5 million metric tonnes, nearly a third of total global output during 2012.89 The country only consumes 10 per cent of its natural rubber domestically, with 90 per cent of production for export.90 The vast majority of Thailand’s rubber is produced by smallholdings, which accounts for almost 90 per cent of rubber production and provides a livelihood for thousands of households.91 For the last decade, the government of Thailand has promoted Rubber Integrated Livelihood Systems (RILS), a programme through which smallholders have diversified to combine rubber farming with livestock, fruit, fisheries, rice and other crops.92 RILS provides higher household incomes than that of rubber monocrop systems alone, whilst also ensuring the sustainability and resilience of household livelihoods.93 Given that in rubber cultivation, the costs of production are not necessarily reduced through investment in bigger plantations, RILS guarantees economic security for farmers, dynamic production for markets, and less industrialized exploitation of the natural environment. The Thai government also provides subsidies for local farmers who, as a result, are able to produce high quality rubber. Almost 50 per cent of Thailand’s natural rubber is of a quality high enough to meet the domestic certification standard.94 This is predominantly used to make car tires and is therefore able to serve the export market. The remaining half of Thai rubber produced is used for lower quality products. Although ongoing political unrest has recently impacted upon the country’s rubber sector over the longer term,95 Thailand’s production of natural rubber is expected to increase.96 Case Study one for sustainable rubber: Thailand Sustainable agriculture, sustainable rubber The commercial rush for land in recent years has pushed forward an often polarised debate around small-scale versus large-scale agriculture, particularly in the wider context of food security.97 Some have stated that large farms are more efficient and benefit from easy access to markets.98 Two recent reports by the UN, however, have concluded that a shift to supporting smallholder farmers, as well as a more holistic approach to agriculture, is the only way to tackle food security, sustainable land use and climate change.99 In practice, subsidies and tax systems often favour large-scale, export- dependent farms and have locked countries into serving fluctuating international markets.100 In some cases this has been at the price of small farms and the families supported by them. Smallholders have often been ruined by industrial commodity producers who have banked big profits and left taxpayers to pick up the tab for a degraded environment.101 However, small- scale farming is an efficient and resilient mode of production. Small farms are often more productive than their larger counterparts: due to the fact they are often directly run by the owners themselves, they are able to self-manage their labour, consequently leading to a higher output per hectare than large farms.102 Overall, it is estimated that approximately 450 million smallholders feed around 2 billion people worldwide.103 In contrast, although large commercial agribusiness companies tend to have greater success in market integration, they often do not involve local farmers.104 In addition, their tendency to focus on specific crops – often large-scale monocultures – and dependency on specific economic conditions means they have difficulty in adapting to changing markets and prices.105 Studies have also shown that a more equitable distribution of land leads to higher rates of economic growth and helps to ensure that growth is more beneficial to the poor, due to communal labour opportunities provided by small-scale farming in rural areas.106 What’s more, smallholder income can be between two and ten times higher than the income from wage employment.107 Large-scale monocrop plantations also impact on biodiversity and result in the loss of environmental services such as carbon storage, forest products, water sources and soil fertility.108 Furthermore, the lack of biodiversity and associated vulnerability to disease and pests makes necessary the input of large quantities of chemical pesticides within the concession. Pesticide-use can have damaging effects on both human health and can poison both wildlife and water sources used by local communities.109 To conclude, there is little evidence to suggest that large-scale plantations are needed to improve or ‘modernise’ agriculture. There is, however, a wealth of evidence demonstrating the benefits of small-scale agricultural production, including rubber. 9

72. What Future for the Rubber Industry in Myanmar? India is the fourth largest producer of natural rubber globally.110 The rubber sector in India is dominated by small holdings which account for 92 per cent of production and 89 per cent of the area of rubber in the country.111 In the 1960s, the Rubber Board of India helped support the organisation of district-level rubber cooperatives through both organisational and financial support.112 For example, in Kerala, these cooperatives helped to improve the efficiency and productivity of rubber smallholder systems, enabling them to achieve a lower cost of production and better prices for their products compared to non-members.113 Furthermore, rubber growers adopting a group approach were able to produce superior grades of rubber due to training from the Board and the provision of facilities for processing good quality rubber.114 Growers were also more likely to adopt new technologies due to financial support from the Rubber Board as well as the strengthened bargaining power that comes from being part of a co-operative.115 Rubber production in India has stayed stable for the last decade, in part reflecting the strength of the country’s production model. Although trade data is not commonly available, the general trend is for the majority of rubber produced to be consumed domestically by India’s growing car industry, only exporting natural rubber when the price on the international market is higher than the domestic.116 The case of India shows that rubber cooperatives can have a significant positive impact on the costs of inputs, processing and marketing when compared to farmers who do not engage with the cooperative model. This highlights the importance of rubber cooperatives receiving institutional support from the government; helping to overcome the challenge of increasing the economic performance of members, whilst maintaining their own financial solvency. Such results can be achieved through efforts to professionalise cooperatives, providing sound legal frameworks around cooperatives and through providing enough autonomy such that cooperatives are able to decide their own organizational structure.117 The benefits of smallholder rubber In the main rubber producing countries, smallholder production dominates the natural rubber industry: smallholder produce 93 per cent of rubber in Malaysia, 90 per cent in Thailand, 92 per cent in India and 85 per cent in Indonesia.118 An historically successful smallholder cash crop, rubber carries potential for smallholder farmers for a number of important reasons: 1. Economic resilience and food security: Natural rubber can easily be planted with other cash crops providing a more diverse source of income for farmers. Rubber can also play an important role in a wider agro-forestry system – also known as ‘jungle rubber’119 – which has emerged as a resilient system in the traditional rubber-producing countries, both environmentally and economically.120 Integrating rubber into such wider farming systems can both increase household incomes and provide resilience to market volatility. In one research project in Indonesia, agroforestry was perceived by local farmers as the most important use of land compared to both monoculture and simpler rubber crop systems as it could provide a range of sources of income and food.121 Further research in Indonesia showed that smallholders in the country combine rice and rubber production with rubber meeting the need for market goods whilst rice meets subsistence needs. This provides smallholders with flexibility: farmers tend to abandon rice cultivation when rubber prices are high but return to it during economic downturns.122 2. Increased growth and productivity: Inter-cropping of certain crops with rubber canRubber tapper in Kerala. © iStock Case Study two for sustainable rubber: India 10

73. What Future for the Rubber Industry in Myanmar? improve the performance of rubber trees. This is due to nitrogen inputs to the soil from particular crops which help boost the growth of the trees.123 One study in China also shows that rubber trees actually yield more when grown with other crops than on its own in a monoculture plantation.124 This is because fertile topsoil can be lost due to erosion because of mono- cropping, leading to lower yields overall and over time.125 3. Poverty alleviation: If given the right technical and financial support, smallholder rubber, and particularly rubber agroforestry, can provide a stable livelihood for local farmers. Smallholder income is greater than the wages earned by farmers working as labourers in a concession model. In addition, planting rubber with other crops can provide food and fuel for domestic consumption, as well as other cash commodities on a shorter term basis.126 4. Environmental and biodiversity protection: In South East Asia, large areas of rich biodiversity have been put under great pressure from the establishment of plantations, including rubber.127 Monoculture plantations have a particularly detrimental effects on species diversity and ecosystems – a shift to small-scale and more diverse rubber systems could reduce these impacts. Species diversity is higher in agroforestry rubber systems than monocultures and studies have concluded that agroforestry systems can play an important role in the conservation of primary forest species.128 Rubber plantations have recently been brought into the debate around carbon sequestration and the incorporation of rubber into carbon markets.129 It should go without saying that rubber, or indeed any other plantation, cannot be deemed as ‘carbon positive’ – that is a sequester of carbon – if it is replacing intact natural forest. In addition, recent studies in one paper have looked at the relationship between the replacement of taungya fields with rubber in terms of carbon sequestration in the context of global REDD (Reducing Emissions from Deforestation and Degradation) policies. This is in part due to the fact that taungya fields are often perceived to be degraded and inefficient with regards to carbon sequestration.130 The authors of the paper found that taungya in some cases may be carbon-neutral or even carbon positive, compared with some other types of land-use systems.131 The study concluded by highlighting the uncertainties surrounding carbon stocks in various forms of land-use and stated that it is ‘impossible to predict accurately the extent that REDD policies involving swidden- rubber transitions will ultimately increase carbon sequestration’.132 Thailand Malaysia Malaysia Indonesia India Burmese Shrike Lanius collurioides. Habitat protection is crucial for the survival of Myanmar’s unique flora and fauna. © iStock Key Natural rubber produced by smallholders domestically Natural rubber produced by large-scale plantations domestically 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 10093% 92% 7% 8% 15% Malaysia India Indonesia Thailand 10% 85% 90% 11

74. What Future for the Rubber Industry in Myanmar? however, merely go to show what happens when vested interests are prioritised over genuine national development. Drawing upon the experiences of Thailand and India, it is clear that smallholder rubber production is a viable and effective model to move households and communities out of poverty. Farmers can better manage their lands productively if their tenure and user rights are legally recognised and they are given the right technical and financial support.135 On the other hand, externally-imposed, large-scale policies such as the commercial estates being established in Cambodia and Laos negatively affect smallholders and the country overall.136 Even when laws and policies have been drafted that could assist smallholders to maintain control of their land and invest in commercial crops, lack of capacity and conflicting vested interests from government officials in both countries Conclusion and recommendations The governments of the largest rubber producing countries globally (Thailand, Indonesia, Malaysia and India) have all deliberately introduced policies to support smallholder rubber production.133 As outlined above, the reasons for this include on-going progressive land reform policies in the different countries, interest from smallholders in establishing rubber, and the interest of governments to better control smallholder farms and their production.134 Experts from the main rubber producing countries continue to push for investments in smallholders in order to boost both the livelihoods of local farmers and productivity in order to meet global demand. It is therefore well recognised by successful producer countries that the future of global rubber production continues to lie with smallholder farmers. The examples of Cambodia and Laos, have prevented these measures from being implemented effectively.137 Consequently, in many communities farmers are struggling to maintain community land and forests in the face of growing pressure from investors and government institutions to impose concession arrangements.138 The international community is poised to invest in Myanmar’s rich natural assets. The government currently stands at a crossroads with regards to how it takes advantage of such foreign investor interest. There is growing demand, predominantly from China, for natural rubber, and in Myanmar this will continue to drive a transition from traditional farming systems to a landscape dominated by cash crops, including rubber. The future of smallholders is not yet clear, but the decisions the Myanmar Government makes now will impact significantly on its people and environment for many years to come. Rubber plantation in Kerala. © Global Witness 12

75. What Future for the Rubber Industry in Myanmar? On rubber production: 1. Promote and protect smallholder rubber production. Support smallholder farmers through technology and knowledge transfer, access to processing points and other extension services. Support and strengthen farmers groups in order to help boost the productivity and quality of Myanmar’s rubber sector; 2. Provide institutional support for rubber co-operatives in order to improve the efficiency and productivity of smallholders and, in turn, secure greater commercial and economic benefits for farmers; On governance of large-scale land concessions and land reform policy: The following recommendations apply to all land concessions, including rubber concessions. This includes the Opium Crop Substitution Programme (OCSP) and other programmes under which rubber concessions are allocated and managed: 3. Establish an overarching national land policy which serves the needs and rights of smallholder farmers and guides, strengthens and aligns current laws governing land concessions. The land policy should: a. Reform and align the Vacant, Fallow and Virgin Lands Management Law, the Farmland Law and the Foreign Investment Law which govern rubber and other agricultural concessions to ensure that smallholder farmers, in particular ethnic minorities, are protected and prioritised over large private investors; and establish legal clarity including definitions of key articles in the law; b. Recognise and legally protect legitimate collective and customary land tenure and user rights, including taungya, across all laws. Adequate safeguards should be put in place to ensure land conflicts do not increase in the future; c. Adopt and implement the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests and to make these standards legally binding; d. Adopt the standard of Free, Prior and Informed Consent as defined in the UN Declaration on the Rights of Indigenous Peoples – to which Myanmar is a signatory – for all communities potentially affected by rubber and other agricultural investments. 4. Undertake a participatory national land-use planning process in line with national land policy in order to develop a formal framework that guides decisions about existing and future land allocation, use, management and protection. This needs to include recognition of collective and customary land and user rights and identification of the areas most agronomically and economically feasible for rubber and other commodity production. Draft land use plans should be made available for review and comment by smallholder farmers, civil society, government representatives, and the private sector. Finalized land use plans should be made freely accessible to the public and government authorities, in all relevant languages; 5. Ensure that Environmental and Social Impact Assessments are undertaken for all land investments prior to contracts being secured in order to prevent deforestation and other environmental impacts, and prevent forced evictions. Ensure such assessments are sufficiently rigorous to prevent projects from going forward if the negative impacts are too great. Harmonise such assessments with existing environmental laws and related regulation and ensure the results of such assessments are made public; 6. Establish legal and judicial recourse for the protection of land and user rights in order that socially unjust decisions around the use of land may be challenged by affected communities; 7. End all land acquisitions that do not offer compensation to affected communities in line with international standards; Establish and enforce a moratorium on any further large-scale land concessions until the above actions have been taken. Recommended actions for the Government of Myanmar 13

MYANMAR RUBBER MARKET STUDY BY MYO AUNG

MYO AUNG Myanmar

MYANMAR RUBBER MARKET STUDY BY MYO AUNG