U Maung Maung Yi reads from the ASEAN Statistical Yearbook 2006 at his home in Bahan township, Yangon, on October 17. Pic: Aung Tun Win

A TRADE expert in Yangon has called on the local business community to take greater advantage of trade opportunities provided by the ASEAN Free Trade Area (AFTA) economic scheme.

He warned that the AFTA agreement would be worthless to Myanmar unless business owners took advantage of the preferential trade opportunities offered by other Southeast Asian nations.

“Few of our businesses are enjoying the preferential trade arrangements offered through AFTA by the more developed ASEAN members,” said U Maung Maung Yi, a former director general of the Directorate of Investment and Company Administration who retired in late 2006.

U Maung Maung Yi used the example of tariff reductions granted in January this year on more than 4000 agricultural, textile, wood and rubber-based products from 11 sectors.

To qualify for these reductions the products must be manufactured with at least 40 percent of raw materials from a developing nation, like Myanmar. However, these preferential trade incentives will be removed by 2012.

“So we have a five-year period to exploit the low tariffs offered by our more-advanced counterparts. It’s a situation in which we could also attract foreign investors for our export businesses,” he said.

U Maung Maung Yi said the tariff-exempted items make up about 40pc of the 10,000-plus products that newer members like Myanmar must make tariff-free by 2015 under AFTA’s common effective preferential tariff (CEPT).

One of the sectors targeted for tariff removals is textile manufacturing and there are numerous factories in Myanmar that produce these items.

But U Zaw Min Oo, a leading garment manufacturer and managing director of Grand Sports International Ltd, said the local garment industry would not suffer when tariffs are removed.

“We won’t be heavily affected as an industry because tariff reductions are only beneficial when you’re not importing lots of raw materials. In Myanmar we have to import more than 90pc of our raw materials,” he said, adding that the size of the local garment market is limited and exports are quite low.

U Maung Maung Yi expressed optimism about Myanmar’s efforts to join the ASEAN trade integration process, quoting Myanmar’s national AFTA unit, under the Ministry of National Planning and Economic Development, as stating that more than 99pc of its product lines have already been brought within the 0-5pc tariff bracket.

He said ASEAN faces several challenges in the years ahead, including China’s increased competitiveness and internal calls to expedite the regional economic integration process. But he warned that increasing the pace of integration would be tricky.

“To speed up the process, a comprehensive blueprint is needed to integrate all the existing initiatives like AFTA, the ASEAN framework agreement on services and the ASEAN investment area,” he said, referring to the Manila declaration made last January that aims to establish the ASEAN Economic Community by 2015.

The Manila declaration envisages the ASEAN Economic Community to be a single market production base devoid of all barriers to the free flow of goods, services, capital, and skilled labour, he said.

ASEAN figures show that Myanmar’s two-way trade with the bloc’s nine other members amounted to US$2456 million in 2005, or 51.6pc of Myanmar’s total foreign trade that year.

Myanmar’s exports accounted for US$1559.7 million, or 63.5pc, of this.
AFTA was established in January 1992 to eliminate trade barriers among ASEAN states and to fuse the regions’ economies – with a market of 500 million people – into a single market production base.

The 10-member Association of Southeast Asian Nations comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.