Burma’s Rising Imports Drive Overall Trade Boost

By Kyaw Hsu Mon 14 January 2015

RANGOON — Burma’s total trade volume this fiscal year is expected to rise by least US$5 billion compared with the previous 12 months, government data show, but economists warn that a rising trade deficit threatens to undermine that growth.

In the nine months from April 1, 2014, to Jan. 2, the total trade volume reached nearly $21 billion, according to Ministry of Commerce figures, surpassing the previous fiscal year’s $18.6 billion in trade.

Of the total trade, exports decreased slightly to $8.6 billion, while imports increased by $2.5 billion to reach $12.3 billion.

Yan Naing Tun, the deputy director general at the Ministry of Commerce, confirmed the rising import-export disparity but declined to offer a reason for the widening trade deficit when asked by The Irrawaddy.

Burma’s main imports are electronics, agriculture-based equipment, automobiles, refined oil products, processed foods and machinery, while the country’s biggest exports are commodities like rice, timber, jade and gems, oil and gas, and beans and pulses.

Out of last year’s total trade, exports accounted for $8.9 billion while imports totaled $9.8 billion. The 2013-14 full-year trade deficit was only $866 million, compared with just under $3.7 billion through the first nine months of the current fiscal year.

Dr. Maung Maung Lay, the vice chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), said the government needed to lower the trade deficit by limiting “unnecessary” imported goods to Burma.

“Actually, for developing countries, the imported products are always higher than exported goods, but the government has to control the trade deficit not to become an extreme amount. If not, inflation will become an issue soon,” he said.

“As far as I know, the government is considering canceling unnecessary projects, and trying to collect more taxes to control the trade deficit,” he added.

Maung Maung Lay said that in looking for the unnecessary, the government could target high-value imports such as luxury items.

The value of the Burmese kyat has taken a hit over the last year, in part due to the US dollar’s resurgence but also potentially linked to the widening trade deficit. The kyat has weakened about 20 percent since it was floated in April 2012, with the Central Bank on Wednesday listing it at 1,025 kyats to the dollar.

“The floating currency rate is a related concern in terms of the trade deficit’s impact,” Maung Maung Lay said.

He added that if frequently smuggled goods—such as timber, jade and other precious stones—were included in Burma’s export total, the trade deficit would shrink considerably.

“It is certain that if these smuggled goods were legal exports, export volume would rise. That’s why mobile teams are seriously checking for these smuggled goods now,” he said.

Illicit goods including gemstones, timber, wildlife parts and precursor drugs have been seized along the Sino-Burmese border near Muse, with an estimated total value of $27 million over the past two years, Ministry of Commerce officials said recently.

Thaung Win, the executive director of the rice exporter Myanmar Agribusiness Public Corporation, echoed calls for a government role in curbing the deficit.

“With the rice export market, China banned Burmese rice [imports] last year. Export is legal from our side, but not on the China side. That’s why there were problems with agricultural products’ export,” he said.

“But even if we can export rice regularly, the amount of imported goods is increasing—you can see that there are a lot of cars imported, electronics and goods used for construction and factories, so import volume will continue to increase in future.”