The Permanent Secretary of Ministry of the Commerce provided an exclusive interview on policy, trade liberalization, and ASEAN free trade

7 Dec 2017

Myanmar Business Today’s deputy editor, Ko Phyo Thu, interviewed the Permanent Secretary of Ministry of Commerce, U Toe Aung Myint about the trade situation in Myanmar including, policy, trade liberalization, and ASEAN free trade. One goal of  the interview is to provide helpful information to business wishing to extend their trade with Myanmar

It’s been about two years the NLD government came into power, what changes have the Ministry of Commerce made, and what improvements in trade and policy?

 The Ministry of Commerce has done continuous reforms and eased restrictions. I’ll briefly describe some changes. Foreign companies were not allowed to import fertilizer, seeds, antibiotics, and hospital equipment; now they are allowed import these items.

Foreign traders as well as local farmers can now trade farming equipment. Items such as powdered prawns, seeds, and oilseed by-products, were previously not allowed to be exported, are now allowed. Export and import permits are now granted without changing the prices described in submitted invoice and sales contracts.

There were 4,405 items listed on the Negative List (items requiring an import license). 417 items were re-moved from the Negative List, there are plans to re-move more items from the Negative List.

We also now allow live cattle exports according to rules and regulations from the Livestock Breeding and Veterinary Department. Because of these changes, the import/export trade volume jumped to $29 billion in 2017 fiscal year from $27 billion the previous year. Trade volume reached $18.9 billion as of November 3rd during this fiscal year, or $3.274 billion higher than that of the same period last year.

 

There was an agency called Mobile Team under the former government to handle illegal trade, what agency has taken over this task?

 The Ministry of Commerce is inspecting and monitoring according to relevant departments at the Yaypu checkpoint on Muse-Mandalay trade route, and at the Mayan Chaung checkpoint on Myawady–Yangon trade route.

 

Myanmar is part of the ASEAN Free Trade, is it challenging that Myanmar does not have enough quality goods, and is battling illegal trade? What changes should the government make in addition to changes in the private sector?

There have been some changes, but to be honest, it’s not enough. We need to think about protecting domestic products and domestic enterprises, but the solutions must be Non-Tariff Barriers (NTB).

Although there are some restrictions on quality, Myanmar as a member of ASEAN, is actively working together with other neigh-boring countries to implement the ASEAN Economic Community’s plan. The Ministry of Commerce is working together with private sectors to boost the quality of products.

Myanmar’s economy is based on agriculture, so we need to improve the agro-processing industry with things like background checks, food safety standards, quality assurance, and reliability.

We will also need to encourage foreign direct investment (FDI) to proide knowledge and skill in packing and design for better quality products.

 

What should be done about Chinese banks that often close a trader’s bank account at any time? What can be done as a long-term plan for the traders?

A memorandum of understanding (MoU) on money transfers using the Chinese Yuan between Myanmar Economic Banks (Muse branch), Agricultural Bank of China (ABC), China Construction Bank (CCB), was signed.

Moreover, the Myanmar Economic Bank has also inked a MoU on payments using Yuan with the Industrial and Commercial Bank of China (ICBC).

Central Bank has also allowed private banks including foreign banks holding Authorized Dealers License to service Trade Financing. The goal is to smoothly connect the banks from two countries. The Chinese banks usually fix the financial issues diplomatically according to the situation.

I think, in the long term, we need to try to improve the banking system for making money transfers in and out of the country.

 

How much impact on trade do conflicts in border areas have? Shouldn’t the government authorities do more to support trade?

There has been some impact on trade at the two border trade posts in Northern Rakhine State near the Bangladesh border, namely Sittwe and Maungdaw, although they have not been closed. Flow of trade depends on the stability of the area.

Trade volume through the Maungdaw border trade post as of November 3rd this fiscal year is $5.5 mil-lion, that’s $2 million higher than the same period last year. The trade volume at the Sittwe border trade post, likewise, is $6.4 million as of November 3rd, over $4 million higher than the same period for the last fiscal year. Trade volume has increased despite conflicts, because of the local trader’s hard work.

To support trade, we have allowed up to K15 million per trader in one week using individual trader certificates to streamline trading. We are going to hold the ninth Myanmar-Bangladesh Joint Trade Committee meeting in Myanmar in November. We also signed a government to government trade deal in September 2017, to export 300,000 tons of rice to Bangladesh. Moreover, the Kanyin Chaung Trade zone started out with an area of 49.6 acres — first implement by the Rakhine State government in October 2015 to make the economy and livelihoods of locals better — has been expanded to 100 acres to implement the economic zone by the Union government in colaboration with the private sector.

There will be more job opportunities when the project is implemented, as manufacturing factories including cold storage facilities and garment factories will be built in Kanyin Chaung trade zone.

 

We noticed some new sectors were added to NES this year. What was the government’s policy change?

We started implementing the National Export Strategy (NES) as a part of the policy of improving exports of Myanmar Trade Improvement Committee.

There are 11 major sectors: 7 prioritized sec-tors and 4 supporting sec-tors. The aim of NES is to boost export improvement and competitiveness. Now we are planning to add five more potential sectors to the NES as prioritize sec-tors: agricultural products processing, gems and jewelry, fruits and vegetables, handicrafts, and information technology.

 

Are there any other projects in which the Ministry of Commerce is involved in besides the National Export Strategy? Is there any plan to enhance online services for trading or to reduce Negative List?

Myanmar entered the Enhanced Integrated Framework (EIF) program by the World Trade Organization (WTO) in 2013. Ac-cording to the program, the Ministry of Commerce has drawn up Diagnostic Trade Integration Study (DTIS) with the help of the experts from World Bank, and then worked out ‘Myanmar Medium-Term Program’.

There are five major panels, 23 series of working process and 181 prioritized enterprises in Medium- Term Program. We have been granting licenses for 43 items using Fully Online License. We update information regularly at the commerce website: www.commerce.gov.mm and www.com-mercejournal.com.mm .

We have also set up a Myanmar Tradenet Website for the traders to apply for licenses online in 2017.

 

Do you think Myanmar economy is gaining momentum com-pared to the previous years, and why?

 I think Myanmar’s economy is slowly improving. Developing the economy, raising incomes, and pro-viding new job opportunities in Myanmar depends on foreign direct investment (FDI).

Easing regulations, procedures and other policies will create a good environment for domestic investors as well as foreign investors. Focusing on projects and sectors linked with trade or the National Trade Framework will not only encourage foreign direct investments but benefit the local people.

 

Since the sudden policy changes by the neighboring countries such as India’s policy change on importing beans and China’s un-stable rice importing policy. What do you think should be done?

We formed a special task force which will study, analyze, and report on the situation. We have also discussed India’s policy change to restrict bean imports with the Ministry of Agriculture, Livestock, and Irrigation on the possibility of changing from the cultivation of beans to other crops.

Additionally, we discussed how to increase domestic bean consumption, how to expand the bean export market, and how to procure a government to government deal to export beans to India.

 

What’s your opinion of the rise in commodity prices and inflation?

 The Ministry of Commerce is conducting market price assessment of basic commodities. We found out, according to the market analysis, that price fluctuation is just the phenomenon of supply and demand problems, and that a price hike is often caused by inflation and short-age of supply and stock-pile.

In a market oriented economy, prices depend on the condition of supply and demand in the market. The price will go up when demand is higher than supply. 

 

(Myanmar Business Today: https://www.mmbiztoday.com/articles/exclusive-interview-permanent-secretary-ministry-commerce-myanmar-s-trade-situation )