Procurement of Local Goods & Services by Myanmar Yang Tse Copper Limited
Within Myanmar, local procurements of goods required to operate and sustain the activities of MYTCL have been an ongoing challenge in many respects. The disadvantages of sanctions from many countries have impeded the purchase of goods not available within Myanmar. However, on the positive side of this action, this has led to a growth in the local industry in order to support the supply chain of goods for the mine.
Specialised products are not manufactured within the Republic of the Union of Myanmar, and initially the procurement process was required to bring in from other countries the supplies required. Facing difficulties with time-lines, and again, the lack of cooperation from external sources, it would be assumed that most goods would be imported and not locally procured. From 2015 through 2017, MYTCL has managed to sustainably increase local procurement to a significant 48% of all goods purchased, including services and training for equipment. This has had a dramatic and constructive effect on the local economic growth.
Many organisations such as the IFC – International Finance Corporation, and the UNCDF – United Nations Capital Development Fund have focused on the importance of local procurement and the effect oil, gas and mining companies can have in least developed countries. MYTCL has taken progressive steps towards ensuring that local procurement is key in the operations of its facilities.
The IFC iterates that local procurement refers specifically to the purchase of goods and of business services from local resources. Typically, this occurs in emerging markets, such as within Myanmar, and in developed markets where local communities have expectations about participating in new opportunities (such as Australia and Canada). Also known as business linkages, local supplier development, local content or local sourcing, local procurement is increasingly favoured as a strategic business tool by international companies in the extractive industries.
There are three main reasons:
• To mitigate risk to company operations
• In response to government regulations or investment agreements stipulating local content levels
• To provide benefits to the local community by creating sustainable business opportunities with local enterprises
MYTCL has captured a great number of local business interests through the cooperation of local entrepreneurs and the advantages of establishing an internal supply chain for the S&K Project.
In Association with Engineers Against Poverty
“Good procurement practice includes many of the themes of good governance, including efficiency, effectiveness, transparency and accountability. Good governance in procurement brings immediate benefits in terms of money savings or improved quality of the goods, works or services procured. In turn, establishing and demonstrating the benefits of good procurement practice results in improved administrative capacity and better understanding of the essential building blocks of good governance. Therefore, good procurement practice is a core concern for local development programs supported by UNCDF in the Asia-Pacific region and worldwide.”
Building on the foundations of SME – Small, Medium Enterprise accomplishments and development, the current local procurement commitment from MYTCL to work with and build capacity of local suppliers in a way that enables them to become more competitive and profitable is thriving. Although there have been no officially new upstarts to date, the existing platforms of businesses interested in capital growth based on mining needs have established partnerships for procurement programs with the supply chain management of Myanmar Yang Tse Copper Limited. It is expected that future SMEs, created and mentored by the MYTCL Corporation, will begin to take place on small scale levels in the coming years.