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Tough time for Mandalay’s iron smelting businesses

The iron smelting industry using iron scraps is facing challenges to survive, according to the business managers and owners in Mandalay.

The industry’s challenges include the lack of technology, capital, skilled labour as well as regional competition – key difficulties shared by small and medium-sized enterprises (SMEs) in other sectors. What iron melting factories in Mandalay are uniquely facing is the scarcity of raw materials.

A major blow to that scarcity is illegal trading, said U Maung Maung Oo, secretary of Mandalay Industrial Zone Management Committee.

“Iron merchants are selling raw [products] to Thailand via illegal routes. Previously, it was illegal trading but these days, it has increased. Local business persons cannot give that much price as the people on the other side,” he said.

Local scraps are being sold not only to Thailand but also to China. As a result, scrap price went up from K400-450 a viss to K600-700.

30pc of 131 registered iron melting factories in Mandalay Industrial Zone has halted operations since early this year due to the lack of raw materials.

“There are traditional Myanmar iron melting furnaces and factories. As the raw product price is increasing, small businesses cannot purchase them. We cannot translate the increase in cost to our sales price in the market. The products from the neighbouring nations are different in quantity and quality. And these products are cheaper,” said U Maung Maung Oo.

In the past, various unused scrap-iron within the domestic sector are exported and sold to other countries, but now the traders are selling all kinds of irons,” Ko Soe Htet, owner of Than Nyo iron melting factory, observed.

“Because of demand abroad, the price of raw products soared. I’m not sure if that’s because they do not have raw products there. But, we cannot compete with them in price. The merchants here melt and sell but they are not making as much as when they sell the raw products; so they are selling the raw materials instead,” Ko Soe Htet went on.

With insufficient raw materials, businesses in the region find it increasingly difficult to operate, he continued. Only the melting businesses which rely on the rural traders are still surviving.

The domestic iron melting businesses do not have the technologies and machineries to produce metal, and the discarded scrap-irons are being melted to be used in construction as iron poles, plates, and to produce “Hin Ga Line” [L-shaped angle iron], sewing chair, wok-like frying pan, iron materials-used for agricultural use and other products, and molds.

As it is a traditional family business, not every scrap-iron can be melted, because businesses lack of the technological know-how. Only raw materials that can be melted are used, said Ko Zaw Naing Oo, owner of Shwe Nan Taw, an iron melting business.

“Not every raw iron material can be melted. Cast iron cannot be melted. If the material is too large for the furnace, it can’t be melted as well. Only after discarding all of these, the remaining materials are used,” he said.

Two factories were closed and the jobs of 190 people now depend on the last factory, owner Ma Thidar Oo said. “The business owner can change business if one business is not going well but the workers cannot do that. One factory still remains for the workers and one with income of K10,000 per day in the past now get K7,000. Their income decreased and we wouldn’t be able to last in the long run,” she said.

The Mandalay Industrial Zone Management Committee submitted to Pyithu Hluttaw Investment and Industrial Development Committee to secure government support for the faltering industry.

Manday’s regional Directorate of Industrial Supervision and Inspection offers loans to the SMEs using CGI – Credit Guarantee Insurance System, a joint programme by state-owned Myanma Insurance Enterprise and CB Bank. But the system is, in practice, not working for the local businesses.

Among 4,131 SMEs registered at Mandalay’s Directorate, 814 business owners received recommendations to secure loans and only 45 businesses actually obtained the loans. From 2015 until now, a total of K1,288 million of loan was given, said U Myo Htut Swe, the department head.

“It is not easy to get loans. There are many phases to pass to get it,” said Ma Thidar Oo.

SOURCE: MYANMAR TIMES

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