Priority Sectors for encouraging investment in Shan State

According to the Shan State Investment Promotion Plan, the following priority sectors will be set up to encourage investment in Shan State based on the investment growth paths and development of the Shan State:

  • Agriculture/ livestock
  • Light manufacturing, in particular agro processing
  • Services, in particular tourism
  • Infrastructure and energy, in particular hydropower and renewable energy

High-tech industries, ICT, R&D, engineering.

Shan State has strong potential for agricultural development and light manufacturing, especially agroprocessing. The agricultural sector plays an important role in the economy of the state and produces a wide variety of crops. Demand from neighboring countries for these products is high. Shan State has a great potential to boost its crop production, productivity of major crops is still low in comparison to neighboring countries. Agriculture in Shan State is still based on traditional cultivation methods and a limited use of technology and availability of capital. However, the agricultural sector of Shan State is becoming increasingly commercially oriented in recent years. The contribution of the agricultural sector in Shan State’s GDP has slightly decreased from 36.9 per cent in 2015/2016 to 34.2 per cent in 2017/2018, however, this is ­due to the higher service sector contribution. Despite the large area of land, only about 8 per cent (3 million acres) of its land area has been used for agriculture.

The market for European standard goods such as tomato sauce and wine has growth potential. Coffee and tea leaf production is also a high – potential area for investment. The abundant production of vegetables and fruits in the region makes it feasible to set up dehydration facilities and produce goods that can be exported to foreign countries. Cold storage and vehicles for transport is also a potential area for investment.

Due to a surge in tourists, there are over 180 hotels in Southern Shan State. In the near future, it is expected that more than 10 million tourists will visit Shan State- the tourism sector is a high potential sector for investment . Inle Lake in Shan State receives the maximum number of visitors-there are opportunities to invest in the reduction of the noise emitted by boat engines used for transportation in the lake. The wall painting at Padarlin Cave in Ywa Ngan Township, which was a habitat for stone age people , is a source of interest for foreign visitors. However, the area is difficult to reach and investment in a sky cable car from the Eastern mountain ranges of Taunggyi would be an opportunity. Direct flights from China (Heho-Lin Chan) and Thailand (Heho- Chiang Mai) should be arranged to bring more visitors from neighboring countries. Trekking tours in Kalaw are also a potential opportunity in the tourism sector. There are 34 different ethnicities in Shan State; the traditions, lifestyles and cultures are interesting for tourists to explore along with the natural views of caves, rivers and waterfalls. Community- based tourism is also being introduced as an attraction in the Pa-O and Danu area of Southern Shan State. Adventure sports such as rafting, trips on speed boats and mountain climbing can be developed in the Than Lwin river, Nam Teng, Nam Pan, Mekong and Dote Hta Waddy river basin areas. From a total of 55 townships in Shan State, only 13 have licensed hotels and guest houses; there is opportunity to invest in hotels and guest houses in the remaining 42 townships such as Lashio, Pindaya and Keng Tung.

Shan State is actively seeking to support its traditional industries and to diversify its economy by developing its hard and soft infrastructure. Shan State requires a significant level of investment in infrastructure across all sectors, especially, power (hydropower, renewables, thermal), transport (roads, rail, river ports, airports) and urban infrastructure. To reap the maximum economic and social benefits, Shan State would need to attract more investments in hard physical infrastructure.  Shan State has faced challenges with infrastructure for public utilities (electricity and water) over the decades. Rural areas in Shan State are not covered by the national grid. Areas on the border between China and Thailand are also supplied by China and Thailand at high cost. The current electrification rate is 21 per cent, much lower than the national average of 36.1 per cent (excluding Yangon region, which is at 78 per cent). According to the Shan State Investment Promotion Plan, the Ministry of Electric Power and Energy will distribute power to (7042) villages and (4177579) households in 2020 – 2025 and will provide businesses and investors with a stable distribution of electricity Shan State has great potential for solar and wind power and hydropower generation for electrification of households and industries. There are also opportunities for hydropower generation from the Than Lwin  River.

According to the Shan State Investment promotion plan, Shan State’s economy is characterized by modern agriculture and modern agriculture. It will be based on sustainable tourism and competitive manufacturing sectors. Shan State is an industry focused on domestic and export markets. As a result, knowledge and innovation of the state will gradually change to a state-based economy model to develop leading economies. In addition, the Shan State Investment Promotion Project is planning to upgrade the use of innovations and technologies to improve the quality of products and services in Shan State by upgrading to Industry 4.0. Therefore, investment based on quality knowledge and innovation is available in Shan State. The use of technology to provide market access for agricultural farmers is an important requirement in Shan State. High-tech industries based on natural resources in Shan State; High-tech agriculture; Information communications and research; The technology-based services sector is an investment opportunity in Shan State.