Trade Deficit Continues to Mar Export-led Growth Vision
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Myanmar continues to suffer a trade deficit according to the figures reported by the Central Statistical Organisation of the country for the 2016-2017 financial year that ended on March 31. The nation’s trade gap value reached more than $5 billion during the period, which is roughly the same amount compared to the year earlier. Up to the final week of March 2017, the external trade value totalled at more than $28 billion for the 2016-2017 financial year, with export value hitting $11.62 billion and import value totalling at $17 billion.

The country performed an extra $1 billion of external trading, $650 million in exports and nearly $350 million in imports, in that financial year when compared to the same period in the year before. But, it needs approximately $3 billion to meet the official foreign trade estimation for the fiscal year 2016-2017, according to the Ministry of Commerce, which had placed an estimation of $31 billion trading volume. The actual trade deficit is much more than the official prediction, which projected the gap value to end up at $31.35 billion for the fiscal 2016-2017. The negative balance of trade is a reoccurring result for Myanmar, which saw continuous trade gaps in recent years; $92 million for 2012-2013, $2.5 billion for 2013-2014, $4.9 billion for 2014-2015 and $5 billion for 2015- 2016.

The trade deficit situation in Myanmar can be mainly attributed to the lack of ability to produce value-added products. The country’s export structure is largely dominated by natural resources and primary products. It mainly exports agricultural produce and oil and natural gas. Other major exports include forest products, fishery produce, mined products, clothing and rubber. Despite a National Export Strategy being launched in 2015 to lead the country to sustainable development through export-led growth, Myanmar is yet to get done much to intensify export promotion and is still having to depend on the buyer’s market for its exports following decades of economic stagnation and isolation from the world market.

In the 2016-2017 financial year, the country grossed more export earnings of $480 million than the year before, exporting a total of seven kinds of goods – agricultural products, animal products, fishery produce, forest products, industrial finished goods, mined products and other exports. Although the industrial finished goods earned the largest amount, it dropped more than $340 million compared to the fiscal 2015-2016, mainly due to the decrease in export volume of natural gas, an export commodity categorised into industrial finished goods.

When it comes to external trade, Myanmar works on both normal trade (maritime trade) and border trade. Statistics show that the amount of imports into Myanmar normally surpasses that of exports in normal trade while export volume is bigger than import volume in border trade. There are a total of 16 border trade posts in Myanmar at present. Of those, the major and most active border trade posts are Muse on the Chinese border, Myawaddy on the Thai border and Tamu on the Indian border. Among those, Muse trade post is the largest in terms of trading volume. The other, smaller border trade posts are Lwejel and Chinshwehaw which connect with China, Tachileik, Kawthaung and Myeik with Thailand, Rhi with India and Sittwe and Maungdaw with Bangladesh.

For exports, Myanmar mainly relies on neighbouring countries, which it has mostly traded with for years because of international isolation and poor infrastructure. The country’s main trading partners are China, Thailand, India, Japan, Indonesia, Germany and Hong-Kong. It exports agricultural products, natural resources and raw materials and imports consumer products, fuel, industrial machines, capital goods and other value-added products.

Once engaged in import-substituting industrialisation by adopting an inward-orienting strategy, Myanmar is now trying to pursue export-promotion to achieve national development through export-led growth. For this reason, the country’s first-ever National Export Strategy (NES) was launched on March 25, 2015 under the Thein Sein government. The strategy, spearheaded by the Ministry of Commerce, focuses on seven sectors – rice, peas and pulses, fishery products, textiles, timber and forest products, rubber, and tourism.

A five-year roadmap of the needs and priorities of Myanmar for sustainable development through trade, the NES runs with the technical assistance of the International Trade Centre (ITC) and financial support from Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and implementation support of the German Agency for International Cooperation (GIZ).

The NES is aimed at paving the way for new development ventures as the national roadmap for trade and competitiveness. Action plans in the NES include interventions to enhance the competitiveness of small and medium enterprises (SMEs) and to develop longer-term policy and legislative changes, all geared at realising the vision of the strategy.

It is still far away for Myanmar to achieve targeted visions as to trade. Lots of checklists and challenges are awaiting the nation to venture into deeper integration with the global supply chain. Production procedures and practices need a revolutionary internationalised change to raise the value chain in the country.

The Ministry of Planning and Finance expects the country’s foreign trade to reach $29 billion in the coming financial year. It estimated the trade deficit for 2017-2018 would stand at nearly $1 billion, while export value is being predicted to account for $14 billion and the import value $15 billion.

Source : www.myanmarinsider.com