Final Report: Supply Side Evidence of Myanmar’s Growing Mechanization

The market is highly concentrated, with the three largest dealerships accounting for 58% of the value of sales made in the first six months of 2016. The largest dealerships stock a wide range of products, including large high-value machines such as combine harvesters and four-wheel tractors, as well as smaller machines. Most machinery suppliers market their products with the assistance of networks of rural sales agents known as distributors. These distributors stock small numbers of machines consigned by dealerships and can earn sales commissions or seek out and refer potential customers to dealerships. Each dealership has an average of 37 affiliated distributors. The majority of dealerships specialize exclusively in sales of machinery, but there is some diversification of activities and services. Five businesses reported manufacturing items in their workshops or subcontracting out production to companies in China. Domestic manufacture is limited to the production of simple welded parts, while subcontracting includes the production of wheels for two-wheel tractors and trawlajee frames. A significant number of dealerships also offer spare parts and offer assembly services, which reduces import costs as parts take up less space during transport than fully assembled machines. The machine rental services market is dominated by rural entrepreneurs, with two businesses in the cluster offering combine harvester services and four-wheel tractors. The cumulative number of machinery supply businesses established within the cluster between 1990 and 2016 grew gradually until 2010, then more rapidly, reaching 27 in 2016. New branches outside the cluster were established at a faster rate than new businesses inside it, particularly after 2010. The geographical distribution of branches has shifted over time, with a decrease in concentration in the four core regions and an increase in branches in more distant areas. The volume of sales made by machinery supply businesses in the cluster grew by 535% between 2012 and 2016, from 21,223 to 134,700 units. Sales of large machines, such as four-wheel tractors and combine harvesters, grew at a particularly rapid rate after 2014, while sales of smaller machines remained higher. The average number of sales staff working for dealerships in the cluster grew by 43% between 2013 and 2016, corresponding to the increasing volumes of sales made.