Beijing-based CITIC Construction, subsidiary of CITIC Group and Myanmar’s Myanmar Agribusiness Public Corporation (MAPCO) will invest up to $500 million into establishing high-end rice mills and agri-business service centers across the country, a top executive of MAPCO said.
MAPCO and CITIC have been in advanced talks in establishing a rice sector-focused entity, Myanmar China Rice Industry (MCRI), a $100 million investment for high-end rice mills in areas like Twante township in Yangon region, Nay Pyi Taw, Kyauk Taw in Rakhine state and Kyeik Latt or Myaung Mya township in Ayeyarwaddy Region.
“The project will also help the border trade. The establishment of the high-end rice mills will boost both the local and export market and we expect to complete the MCRI project in 2019,” said Ye Min Aung, managing director of MAPCO.
The two companies will also invest in building agri-business service centers (ASCs) across 33 townships in Myanmar. This investment is estimated to be around $400 million.
A memorandum of understanding had been signed between the two companies in late 2017, and currently, feasibility studies are being performed on the rice market, agricultural market and its related businesses.
In implementing the two projects, CITIC Construction and MAPCO are looking into establishing a joint venture, which could lead either company to take a majority stake of 51 percent.
MAPCO will contribute with its existing assets and CITIC with the working capital form China CITIC Bank, said Aung.
“We are targeting to submit a proposal to the Myanmar Investment Commission around the first half of February,” said Aung.
The two companies are also preparing to establish a service business that will provide engineering and contracting works for the agriculture industry.
In providing agribusiness services centers, the joint venture is aiming to offer services relating to mechanization and provision of fertilizer and agro chemicals, targeting any type of agriculture products.
“We expect to take up to 2020 to implement the agri business service centers across the country,” said Aung. Further, he said they would welcome additional shareholders for the project.
The targeted main businesses that will be implemented under the ASC project include, contract farming and seed production in partnership with farmers; drying and storage facilities that include building warehouses and grain dryers; sales of fertilizer and agro-chemicals in a most reasonable price and best quality; and offering farm mechanization service.
On the other hand, the companies are in talks with a Chinese bank for a possible loan for the ASC project.
On a broader picture, MAPCO said it welcomes long-term strategic investors interested to join the team with up to 35 per cent stake in the company.
Aung said the firm was interested in welcoming investors targeting agriculture commodity trading space. “With the liberalization of the trading of agricultural products, we welcome investors who are interested in dealing across logistics and trading,” he added.