US Sanctions Forge Closer Burmese-Thai Trade

By May Lay 30 July 2012

The US government’s decision last week, albeit held up in a Senate wrangle, to extend a ban on Burmese imports for three years is likely to forge closer trade ties with Thailand, claim experts.

“Thailand and Burma have to work more closely and Burma can look for markets in Asia. In 2015, the AEC [ASEAN Economic Community] will open up and Burma has to work with regional countries,” said Pasu Loharjun, director-general of the Thai Industry Ministry.

Before 2009-2010 fiscal year, Thailand was the largest investor in Burma for six consecutive years until China overtook the Kingdom in 2010-2011 with large energy sector outlays, according to the data from the Myanmar Investment Committee.

During his three-day trip to Thailand last week, President Thein Sein signed three Memoranda of Understanding with Thai Prime Minister Yingluck Shinawatra for assistance in promoting security, logistic and infrastructure.

In addition, both countries renewed their commitment to the controversial Dawei (Tavoy) deep-sea port and special economic zone in southern Burma.

“In our talk, I reaffirmed the commitment of the Thai government to push forward with this cooperation with Myanmar in regard to the development of the Dawei deep-sea port to have concrete progress,” said Yingluck.

Thein Sein met also with Thai business executives from PTT Plc, Siam Cement Group and Charoen Pokphand Foods among others. PTT, Thailand’s state-owned energy giant, pledged during the meeting to return excess gas to alleviate a chronic power shortfall in Burma.

PTT signed a deal with the Burmese Energy Ministry to explore two blocks—PSC-G at 13,333 square kilometers and EP-2 at 1,344 square kilometers—on June 6. These will be explored together with Burmese energy company Win Precious Resources Pte Ltd as a joint venture.

PTT already operates four natural gas blocks in Burma’s Yadana and Yetakun fields which can produce 1.1 billion cubic feet per day for the Thai domestic market.

Prajuab Supinee, commercial counselor at the Thai embassy in Rangoon, said Thailand is interested in expanding investments in four key sectors—food, garments, healthcare and construction.

“Thailand and Burma are neighbors and we can have good business relation in the future. Thai business people are very interested in Burma and some Thai companies already started their businesses before the Burmese government initiated economic reform, especially in energy and industrial sectors,” he said at a Thailand-Myanmar business-matching meeting at the Union of Myanmar Federation of Chambers of Commerce and Industry.

Positive testimony received from International Labour Organization (ILO) in June with regards action taken to combat forced labor was seen as vital towards negotiating further trade concessions in the wake of the easing of international sanctions.

The key measure would be inclusion in the European Union and World Trade Organization generalized system of preferences (GSP), which reduces tariffs for developing nations. Burma was included in the GSP before 1997 and could export products with minimal taxes, but this was later withdrawn due to the former military junta’s appalling human rights record.

“I felt upset after the announcement of the US import ban on Burma for the next three years. We have to sell our products with a poor price to Thailand and Asian counties. If we can export to Western countries, we can get a good price and extend new markets,” said the owner of a furniture factory in Rangoon.

Bilateral trade between Burma and Thailand increased by around 25 percent in the last fiscal year. The value of trade between the two countries stood at US $3.6 billion in 2010-2011 and $4.5 billion in 2011-2012, according to data from the Ministry of Commerce.