Trucks await unloading at the Muse border trading zone with China. Pic: Myanmar Times archive

THE government is urging the private sector to focus on border trade, the Minister for Commerce, Brigadier General Tin Naing Thein, said on March 16.

Brig Gen Tin Naing Thein said the aim of the change is to take advantage of a new trade corridor that will pass through Southeast Asia.

“In the not-so-distant future, it is likely that we’ll resume transit trade along the border region to benefit from the advent of the Greater Mekong Sub-Region’s East-West Corridor,” he said.

The road is intended to link Vietnam’s port of Danang with the port of Mawlamyine in Mon State.

Brig Gen said Myanmar’s section of the road is “under construction” as far as Kawkareik in Karen State. He added that Myanmar is well placed to profit from the transit trade opportunities the corridor is expected to offer.

In the 2006-07 financial year, Myanmar’s trade volume was US$8.6 billion, with 86 percent of this coming through normal trade and only 14pc through border trade, Ministry of Commerce statistics show.

The decision to re-emphasise border trade marks a significant change, with most recent economic initiatives aimed at stamping out the practice, which is difficult to police and tax.

Since the beginning of 2005, the government has worked on a transition from border trade to normal trade, which requires the opening of Letters of Credit (LC) for transactions at border checkpoints with China, Thailand, Bangladesh, India and Laos.

Normal trade is conducted through government checkpoints such as ports, airports or trading zones – all of which are easy to police.

China is the nation’s largest border trade partner, some 70pc of total trade, a Department of Border Trade official told The Myanmar Times.

Before 2005, traders on both sides formed their own bilateral agreements and worked without formal banking procedures.

As a result, the government was unable to levy export and import taxes.
By forcing traders to opens LCs with state-owned banks the government formed a system known as ‘border trade with normal trade procedures’.

“Almost all trade in those areas – about 70 percent – was then normalised,” the official confirmed on March 28.