Thursday, August 17, 2017

Legal China trade would see Myanmar in surplus

Eliminting the smuggling of jade and other items of value to China, and replacing it with officially sanctioned trade, would at a stroke replace the trade deficit with a surplus – as well as sending trade volumes much higher, say exporters.

A truck filled with straw drives through Muse in Shan State, Myanmar’s biggest trading point with China. Photo: Aung Htay Hlaing / The Myanmar TimesA truck filled with straw drives through Muse in Shan State, Myanmar’s biggest trading point with China. Photo: Aung Htay Hlaing / The Myanmar Times

China is by far Myanmar’s biggest trading partner, providing machinery and manufactured goods, and receiving Myanmar farm products, rubber, timber, gems, jade and hydropower.

The volume and the value of cross-border trade between Myanmar and China has been growing for the past five years and is on target to reach or exceed US$10 billion this financial year, though to China’s advantage.

“If it were not for the smuggling, Myanmar would have a positive trade balance with China. The value of the jade being smuggled is in the millions. If that trade were conducted through legal channels, instead of mountain roads, we could tax it,” U Khine Myint, secretary of the Myanmar Rubber Planters and Producers Association (MRPPA), told The Myanmar Times.

In 2011-2012 official cross-border trade with China already amounted to more than $5 billion, with exports amounting to $2.2 billion and imports about $2.8 billion.

After a brief dip in 2012-2013, the volume has been steadily rising, topping $7 billion in 2013-2014 ($2.9 billion in exports, $4.1 billion in imports), and $9 billion in 2014-2015 ($4.69 in exports, $5.019 in imports).

As of September this year, about halfway through financial year 2016, trade already amounts to more than $5 billion, with $2.133 billion in exports and $3.129 billion in imports.

That sum already exceeds the entire tax revenue for the coming year, which is estimated at $4.57 billion.

Since trade volumes fell during a two-month suspension in rice exports following nationwide flooding in July and August, analysts believe the figures for the second half of the year will be higher, pushing the trade volume above the $10 billion mark.

“We weren’t allowed to export rice to China before the economic reforms. Now, Chinese demand is high and rising every year,” said U Maung Aung, adviser to the Union Minister of Commerce.

Official exports of jade to China are lagging. Sales at last week’s gems and jade emporium were down one-third, or more than $30 million, from last year, mainly because Chinese buyers stayed away. But there is still plenty of illegal trade in jade, timber, rubber and precious metals, analysts believe, while items illegally imported from China are of much less value.

Economist U Maung Maung Soe said the trade balance would switch to Myanmar’s favour if this illegal trade could be brought under control. “That trade will continue whatever the border authorities do. The country could profit from it,” he said.

Translation by Khant Lin Oo and Khine Thazin Han