Published in Mizzima Business Weekly on 14 July 2014

Ocean Harvest's factory in Yangon

Ocean Harvest’s factory in Yangon

A leading player in Myanmar’s seafood export sector talks to Mizzima Business Weekly about the industry’s future potential – which may only be realised if current constraints can be overcome.

Very few countries in the world can boast that crab is sold a cheap street food snack. Yet whilst Myanmar’s natural abundance of seafood is evident – both in terms of its availability and comparable affordability – the sector remains largely untapped in terms of export volumes. Much has improved since the European Union and United States lifted export sanctions against Myanmar in 2012, however ongoing challenges such as electricity shortages and weak infrastructure continue to hold back the country’s capacity to export enough of its beautiful bounty of seafood.

U Myat Aung Nyunt is the Managing Director of Ocean Harvest (Myanmar) Limited, a seafood cold storage, processing and ice plant factory in Yangon, which he set up more than two decades ago. He is also the joint secretary of the Myanmar Fishery Products Processors and Exporters Association, which was established in 2004 and aims to forge investment links between exporters and importers, as well as disseminating information about best practices in the industry.

“Myanmar’s potential to increase seafood exports is huge – but we need to set up prawn farms to obtain higher quantities to export. At the moment there’s only one prawn farm in the entire country,” U Myat Aung Nyunt told Mizzima Business Weekly.

However prawn farming is a highly skilled and labour intensive endeavour, and at this stage Myanmar is yet to even establish a seafood processing training centre. This means that Ocean Harvest’s 200-odd workers – had to be taught several different skill sets on the job.

While reports have recently surfaced in neighbouring Thailand about an illegal fishing industry that relies on slave labour and trafficked workers, U Myat Aung Nyunt said he’s never heard of fishery workers being ill-treated in Myanmar.

“I provide my staff with three meals a day as well as free healthcare and accommodation. My unmarried workers live in a dormitory at the back of the factory, while housing is provided for 20 families in North Dagon. I treat my staff as my family, because without them, how can I do this business?”

Although some of U Myat Aung Nyunt’s workers (most of whom are female – he says because they’re harder working) have been with the company since it was first set up back in 1993, he said that the demand for skilled workers has resulted in rife poaching among competitors. As Myanmar does not yet have a seafood processing training centre, each of his 200 factory workers were trained on site.

“I do everything I can to retain my staff, but there are several Chinese companies in Myanmar who have bigger budgets and operate with a local proxy. It’s causing a lot of problems for players in the local industry,” he said.

Myat Aung Nyunt, Managing Director of Ocean Harvest and Joint Secretary of Myanmar Fisheries and Seafood Exporters and Processors Association

Myat Aung Nyunt, Managing Director of Ocean Harvest and Joint Secretary of Myanmar Fisheries and Seafood Exporters and Processors Association

Although Myanmar’s seafood stocks have declined over the past five years, U Myat Aung Nyunt said that conditions in Thailand are far worse and that Myanmar’s industry could easily be sustainable if the right measures are put in place. In the meantime, quantities could be exponentially multiplied if prawn farming took off. At present, just one prawn farm exists in Myanmar. This is part due to the high overheads of operating the farming equipment (particularly if diesel generators are required as a back-up power source) and the complexities of round-the-clock maintenance and care.

Therefore, the overwhelming majority of prawns – which fetches some of the highest prices – are caught in the wild. U Myat Aung Nyunt explained that a net is used to seal off a sizeable population of prawns, who remain confined for two or three months and scavenge around for whatever food they can find. Once the prawns have grown bigger, the haul is seized and brought to various markets in Yangon, including Anawar Fishery, VMP Jetty, Anawar Hlwam Jetty, Shwe Zin Yaw Hein Jetty (the latter of which has been approved by the European Union). Other methods include small boats with trawlers, however in both cases, U Myat Aung Nyunt said that road conditions need to be improved so that travel times from Rakhine State and Ayeyarwady Region, which are the source of prawns and other seafood, can be reduced. This is particularly important because the boats lack refrigeration facilities, relying instead on ice to keep the produce fresh.

Frozen pink shrimps for export

Frozen pink shrimps for export

“Although there’s definitely a demand for prawns without their heads removed, most fishermen tend to cut off the head because it’s too easy for bacteria to spread from the head to the body,” he explained.

Despite ongoing infrastructural challenges, Myanmar’s Fishery Department is serious about ensuring that Myanmar’s sea produce meets international standards. Factory checks are carried out by department officials every month to ensure that exporters are complying with processing laws, which include stringent hygiene regulations.

In early June, the Ministry of Livestock Breeding, Fisheries and Rural Development announced that it will grant K1.5 billion (US$1.5 million) to livestock breeders and fish farmers to help boost capacity and export revenues, which in the last 10 months of the 2013-14 fiscal year fell by US$76 million.

Ocean Harvest is also registered with the FTA in the United States – which is important, because 80 percent of the 400 tonnes it exports annually (which includes shrimp, squid and fish) usually end up in restaurants in Los Angeles or Los Vegas.

“Until the sanctions were lifted, we mostly exported to Japan. However Japanese buyers tend to buy smaller quantities of a particular size or species. The US is a constant buyer, and often in bulk,” he said.

A hotel owner in Los Angeles was so delighted with Ocean Harvest’s produce and delivery service (which involves ice-trays of seafood travelling for 40 days on a container ship from Yangon via Singapore or Malaysia in refrigerated temperatures of at least -18 degrees Celsius) that U Myat Aung Nyunt’s entire family was invited for an all expenses paid holiday last year.

Indonesia and Australia are other popular export destinations, U Myat Aung Nyunt said.

“The Australians are clever – they sell the best of their seafood to Japan and then import for domestic consumption,” he said with a laugh.

The European Union is a less appealing destination, as it offers significantly lower prices than the US.

“I’m not sure why that is – it could be that buyers in the EU are sourcing seafood from markets elsewhere that are cheaper,” U Myat Aung Nyunt said.

After being cheated out of payment for an order of freshwater fish valued at US$200,000 last year, Ocean Harvest will no longer supply to any company based in the Middle East.

“I’m not sure whether it was the agent in Yangon or the company in the Middle East who was responsible for not paying me. After a few containers were released from the cargo, the company had told me they had a cash shortfall and asked if I could release the entire order – and that I’d be paid the following week. If I’d said no, I would have had to have paid extra storage costs until the entire amount came through. We had a gentleman’s agreement,” he said ruefully.

The company in the Middle East refused to even acknowledge U Myat Aung Nyunt’s demands for payment and his attempts to sue the local agent were unsuccessful because the agent lacks assets (“Not even a car!” he said).

Ocean Harvest's shrimp size classifying machine

Ocean Harvest’s shrimp size classifying machine

“Many exporters in Myanmar have lost money to Middle Eastern companies. Sometimes even their banks operate dishonestly – such as by allowing containers to be released before money has been deposited. And often it’s all done through brokers and we don’t know who the company at the end of the line is. When we supplied to Iraq, for example, our goods would be dropped in Kuwait and taken to Iraq by a separate transport company. We can’t exactly go to Iraq to find out what happened to an outstanding payment,” he explained.

Nonetheless, U Myat Aung Nyunt is upbeat about his future prospects and in June, his 26-year-old daughter Myint Myat opened a restaurant in Parami called – you guessed it – Crustacean.

“I supply all the seafood to my daughter’s restaurant – she worked at Ocean Harvest for five years and after getting an MBA, she decided she wanted to run her own business.”

In addition to Crustacean, Ocean Harvest sells to a German company that operates flights for VIPs.

“But we stick to exporting simply because the prices are better for us,” he said.