Burma

With Virus-Hit China ‘Closed for Business’, Myanmar Exporters Feel the Pinch

By Nan Lwin 11 February 2020

YANGON—Trade at Myanmar’s largest border gate with China, in Shan State’s Muse, has dried up since late January as the coronavirus has spread across the northern neighbor from its epicenter in the central Chinese city of Wuhan, claiming over a thousand lives so far.

In the past two weeks, Myanmar’s trade sector has lost several hundred million dollars, with the impact mostly being felt by traders, farmers, producers and workers as the country’s largest trading partner avoids doing business amid growing concern over the spread of the deadly outbreak.

“95 percent of business activity has halted here. It’s the very first time; we have never had this kind of experience in the past,” U Min Thein, vice chairman of the Muse Rice Wholesale Center, told The Irrawaddy.

“Rice exports to China have stopped completely. We had to let all the workers go back home,” U Min Thein said.

The Chinese government’s travel bans, aimed at curbing the coronavirus’ rapid spread, have blocked logistics channels to and from China. Shipments of Myanmar’s main exports to China—rice, sugar, corn, watermelon, muskmelon, shrimp, sea crab and eel—have virtually ground to a halt at the major border checkpoints in Shan State’s Muse and Chinshwehaw, and Kachin State’s Kanpiketi.

Among exporters, watermelon farmers have been hit the hardest, as almost the entire harvest is normally China-bound. According to the Myanmar Melon Producers and Exporters Association, sales have been slowing since mid-January. Currently, daily watermelon exports are down by about 95 percent due to a lack of potential buyers. The price dropped by 50 to 70 percent and thousands of tons of watermelon and muskmelon are locked up at the border gate trade center.

“A thousand tons of watermelon is going to rot very soon. We have had to give it away free to the locals. Some truckloads have already turned back from Muse,” Sai Thein Win, a watermelon trader from Muse, told The Irrawaddy.

“Another harvest season is coming. We don’t know what we’re going to do,” Sai Thein Win said.

The 105-Mile Trade Zone in Muse, on Myanmar’s border with China in northern Shan state. / Zaw Zaw / The Irrawaddy

According to officials from the 105 Mile Trade Zone in Muse, exports of rice, sugar, corn, shrimp, sea crab and eel have stopped completely. Meanwhile, about 1,000 truckloads of export goods are stranded in and near the trade center.

In Ayeyarwaddy Region, meanwhile, over 200 crab production businesses have closed down temporarily, leaving 30,000 workers unemployed due to the lack of demand in China, according to the Labutta Crab Producers Association. More than 10 tons of crab are normally exported to China daily from Labutta Township. Since Jan. 26, crab exports to China from Ayeyawaddy, Rakhine and Yangon have stopped.

U Myat Oo, the chair of the Crab Producers Association, told The Irrawaddy that almost all crab producers have halted their businesses after Chinese buyers stopped accepting crabs from Myanmar due to the outbreak.

“We can’t send them to China. So, we have to take it all back,” he said.

“All the workers are very upset. I am praying that the virus problem will be solved very soon,” U Myat Oo stressed.

Myanmar Ministry of Commerce data show the extent of Myanmar’s reliance on border trade with China. During the last fiscal year (2018-19), total trade value between Myanmar and China reached US$11.3 billion (16.5 trillion kyats) while Myanmar exported over $5 billion worth of goods to China and imported $6.3 billion worth.

The ministry’s data show that Myanmar has lost more than $15 million a day since Jan. 27 due to the coronavirus outbreak. No applications for import and export licenses for overseas trade with China have been accepted for two weeks.

Total bilateral trade through the Muse checkpoint last fiscal year was worth $4.9 billion (Myanmar exported $3.1 billion worth of goods to China and imported $1.7 billion worth). From Oct. 1, 2019 to Jan. 31, 2020, Myanmar exported $1.2 billion worth of goods via the Muse gate, according to the Commerce Ministry.

The gate accounts for more than 50 percent of the total value of Myanmar’s border trade. Since Jan. 27, the country has lost $8 million a day in trade with China through the Muse border gate alone.

In Kachin State, thousands of workers on China-backed tissue-banana plantations have not received their wages, as Chinese owners and supervisors have been unable to come back to work after the Chinese New Year due to the outbreak, according to the state’s Agriculture, Livestock and Irrigation Ministry.

Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) vice chairman U Maung Maung Lay said the coronavirus outbreak has hammered the Myanmar economy badly, adding that conditions are worse than during the 2002 SARS outbreak.

U Maung Maung Lay told The Irrawaddy, “The economy is slowing down as business activities with China have been suspended. We have had to postpone a lot of business activities with China.

“Myanmar needs to learn a lesson from this. We need to find another market instead of relying too much on China,” he said.

Meanwhile, UMFCCI is planning to form a committee to tackle the crisis and draw up an emergency plan, including looking for new markets for Myanmar’s export products.

At a press conference introducing Myanmar’s new export strategy on Jan. 31, U Aung Htoo, deputy minister for commerce, said the ministry is seeking new markets for Myanmar’s exports to substitute for losses due to the virus outbreak.

The new strategy will be focused on both new and existing sectors such as industry, electrical components, textiles and garments, forestry products, processing of farm products, fisheries, and digital products and services.

Economists have warned that the outbreak could hinder implementation of the Myanmar government’s National Export Strategy (NES) 2020-25 to boost trade.

“They [the government] will not be able to find new markets within a short time. It might be too late when you look for a solution after the situation has already deteriorated. The government must have a backup plan to ensure such damage does not happen again,” economist U Zaw Phay Win told The Irrawaddy.

“They also need to draw up a strategic plan for the long term, when it comes to exploring new markets. There are many countries accepting export products from Myanmar, without having a government-to-government agreement,” the economist said.

“The government needs to have ‘G-to-G’ export agreements with those countries. G-to-G agreements come with guarantees and are hard to break. So, we can reduce our overreliance on China,” U Zaw Phay Win said.

Myanmar is not alone; the virus has sent shockwaves through the global economy, with a number of manufacturers from the US and South Korea halting their operations after Chinese factories were unable to produce components. According to Chinese state-owned media, the Chinese government has urged critical industries to resume operations as soon as possible. Most provinces asked to be allowed to reopen businesses on Monday after an emergency 10-day extension to the Chinese New Year holiday.

Myanmar traders had expected that Chinese buyers would return on Feb. 10. However, as of Tuesday the border trade center remained deserted. It sent a chilling signal to traders, producers and workers that conditions could be much worse than they first thought.

Some Myanmar traders said they had been informed by Chinese buyers via WeChat that border trading could resume after Feb. 23.

U Min Thein said, “Trade activity remains silent here so far.”

“There are growing concerns about what will happen if the outbreak lasts longer than we think. Our businesses will be hurt terribly,” U Min Thein said.

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