Roundup: Chronic problems challenge Myanmar's new government in boosting export

Myanmar has chronic problems to boost the country's export to cure the country's huge trade deficit, experts said.

The Southeast Asian country is suffering huge trade deficit year by year and that is why the country has high demand for hard currency such as U.S. dollars and low foreign currency reserve, according to local experts.

The trade deficit for the fiscal year 2015-2016 reached 5.4 billion U.S. dollars while that of the fiscal year 2014-2015 was 4.04 billion U.S. dollars.

Myanmar's export value stood by over 11.04 billion U.S. dollars in the fiscal year 2015-2016 while it was over 12.4 billion U.S. dollars in 2014-2015.

Thailand, the country's neighbor, has the average export value of 210 billion U.S. dollars.

Myanmar's newly appointed Minister for Commerce Than Myint said the new government targets to boost the country's export volume three times higher within five years at a meeting with country's exporters in April.

Although agricultural products are majority in exported items, the country is receiving major export earning from natural gas.

Therefore, the country's export earning will decrease if oil prices down in the world's market, according to World Bank's report.

However, Myanmar cannot manufacture value added wooden, agricultural and fishery products which are exported every year.

The industrial items that the country can export are just sugar and CMP clothing.

Thus, the former government aimed in its National Export Strategy to enhance local production of value added products to cover both cases of boosting export and saving natural resources.

Local production is very limited as the country's small and medium enterprises (SMEs) which took over 90 percent stake of country's industrial sector are facing lack of financing, infrastructure, skilled labors, technology and other unnecessary costs such as transportation cost.

"There are over 700 industries operating in our industrial zone. The necessary power for those industries is about 270 MW but the total power we received is about 50 MW. So we cost to fill power need unnecessarily," said U Own Sai, vice president of a management committee for Hlaing Tharyar industrial zone.

The local transportation cost for a container to the port is about 40 U.S. dollars while the cost for this container from the port to Singapore is about 30 U.S. dollars, according to local SMEs.

Lack of financing is one of the chronic problems due to local banks and some regulations of the central bank. The banks are afraid to give low interest loans without collateral as they do not want to get risk.

The local interest rate is 13 percent for any loan. It is also needed to improve the country's banking sector for trade transition.

Meanwhile, Myanmar also needs to develop new markets such as ASEAN countries, Europe and the United States. At present, the major trading countries are China, Thailand, Singapore, Japan and South Korea.

The minister said to cooperate with the Ministry of Agriculture, Livestock and Irrigation and Ministry of Industry to boost local production enhancing country's agricultural sector and SMEs through supporting technology, financing and absolving some regulations at the meeting mentioned above.

How to solute the electricity need for the industrial sector is the main issue for the new government among the problems, experts said. Enditem