Myanmar’s border trade with Thailand has slumped further as years of fighting and junta restrictions continue to take their toll.
Border trade was worth US$ 4 billion in the 11 months from April 1 to Feb. 16, down from $4.6 billion in the same period for the 2022-23 fiscal year, according to data from the junta-controlled Commerce Ministry.
Frequent clashes between junta troops and Karen National Liberation Army (KNLA)-allied forces along the Asian Highway to the border-trade town of Myawaddy in Karen State have seriously disrupted the flow of goods. The junta’s frequent policy changes are also to blame for the slump, said traders.
The Federation of Thai Industries said recently that border trade between Thailand and Myanmar has dropped 11.1 percent due to political conflicts in Myanmar.
Trade was hit when the regime, starved of hard currency, adopted various measures to control imports and export earnings. Previously, exporters were required to convert 65 percent of their export earnings to kyat at the official exchange rate set by the junta-controlled Central Bank of Myanmar (CBM). This was later reduced to 50 percent.
In December, the CBM relaxed its forex conversion rule, announcing that traders only needed to convert 35 percent of their foreign currency income at the official rate and could exchange the remaining 65 percent at market rates.
Despite this, traders can only sell their foreign currency at 3,100 to 3,200 kyats per dollar, while the market rate is above 3,600 kyats.
The regime also imposed additional rules, such as requiring that the value of exports matches that of imports. Traders are permitted to import goods only when they can show foreign currency earned from their previous exports.
Traders also complain that the Foreign Exchange Supervisory Committee (FESC) led by General Mya Tun Oo is too slow in approving import and export licenses.
A border trader in Myawaddy said: “Trade has declined. We still have to convert export earnings at the exchange rate set by the CBM. Though we can convert the remaining 65 percent at market rates, we still need approval from the committee to make imports using our export earnings. Even though we are importing with our own money, sometimes they don’t grant us import licenses.”
The black market is thriving as a result, he added.
“The committee works very slowly. Though they say they are organizing an import reduction drive, locally manufactured products cannot make up for imports. So smuggling has increased,” the border trader said.
According to merchants, it takes around a month to get approval for an import-export license, for which payment must be made in dollars or baht through a junta-controlled bank. The regime also requires import-export traders to seek approval from Myanmar’s Food and Drug Administration. And it is only allowing essential goods to be imported into the country.
Meanwhile, trade is often delayed by fighting along the border. Traders are also having to pay high tariffs at checkpoints along the route.
The Asian Highway linking Myawaddy and Kawkareik has been closed since December 1 due to fighting. Resistance forces have seized control of half of Kawkareik town on the Asian Highway, Southern Special Operation Force commander Aung San Sha told The Irrawaddy.
With trade at the major border hub of Myawaddy now halted, Thai-Myanmar cargoes are being rerouted through border crossings in Tachilek, Kawthoung, Myeik, Htee Khee and Mawtaung.
However, border trade is still being disrupted through Shan State’s Tachilek and Htee Khee in Tanintharyi Region due to fighting.
One trader from Tanintharyi told The Irrawaddy: “There have been clashes in Htee Khee, so traders do not often go there. There is regular trade [with Thailand] through Myeik.”
The cost of transporting one truckload of goods from Yangon to Mawtaung has now risen to around 7 million kyats or over $3,300, according to a trader from Mawtaung.
Myanmar mainly exports corn, rubber, peppers, onions and fishery products to Thailand, while importing materials for its cut-make-pack (CMP) industry, consumer goods, foodstuffs, construction materials, machinery, vehicle spare parts, pharmaceuticals and electronics.
