The increasing trade deficit shows that the influx of displaced Rohingya is not affecting trade between the two countries
Trade between Bangladesh and Myanmar is likely to remain stable despite the two countries being locked in dispute over the Rohingya crisis, stakeholders have said.
Although trade across the shared land border has been suspended since military operations began in Rakhine state in August, Bangladeshi traders say the devaluation of the Myanmar currency as a result of the crisis may actually boost overall trade.
Bangladesh’s trade deficit with Myanmar has increased to more than Tk3,000 crore over the last six years, despite a number of barriers between the two neighbouring countries.
During this time, Bangladesh imported goods worth Tk3,736 crore while total exports were only Tk645 crore.
Around 536,000 displaced Rohingya have fled Rakhine state for Bangladesh since August 25, when alleged insurgent attacks on security officials in the region triggered a renewed military crackdown.
However, the increasing trade deficit shows that the influx of displaced Rohingya is not affecting trade between the two countries, and Bangladesh is yet to take any measures to suspend trade with Myanmar because of the issue.
A 12% devaluation of the Kyat, Myanmar’s currency, in relation to the Taka, is likely to boost trade further.
Founder President of the Bangladesh-Myanmar Chamber of Commerce and Industry (BMCCI), KB Ahmed, told the Dhaka tribune that the actual volume of trade between the two countries is higher than the official figure, as the majority of trade between Myanmar and Bangladesh is informal.
“Some of the major opportunities being taken by Bangladeshi businesses are in the import of grain from Myanmar, as production is plentiful there,” he said.
“Local businesses could profit more once a coastal shipping agreement to allow small ships to carry products to and from Myanmar and Chittagong is implemented.”
The BMCCI founder president said the recent accession of Myanmar to the Asian Clearing Union had given the country’s currency formal recognition by the Association of Southeast Asian Nations (Asean) and world businesses.
“So we have opened letters of credit through Sonali Bank and the private commercial AB bank Limited to facilitate trade,” KB Ahmed said. “If the situation in the Rakhine state improves, local Bangladeshi businesses will be able to take even more benefit from the devaluation of the Kyat.”
Six years of trade deficit
According to Bangladesh Bank data, the total trade deficit between Bangladesh and Myanmar was Tk3,091cr between the 2010-11 and 2015-16 fiscal years.
During this period, Bangladesh imported Tk3,736cr worth of goods while exporting only Tk645cr. Furthermore, the Bangladesh government has not taken any real initiative to reduce the trade gap against Myanmar exports.
According to local businesspeople, most of the bilateral trade between Myanmar and Bangladesh took place in the Maungdaw township. The majority of traders in the area are enthusiastic about informal trade, which conveniences those wishing to make deals.
Although the latest escalation in violence has put most of this trade on hold, traders from both neighbouring countries are still selling fish and pharmaceuticals.
Bangladeshi merchants are buying fish from Myanmar’s maritime territories, with about 70-100 tons of fish arriving at Chittagong port from Myanmar every day. In addition, local pharmaceutical companies such as Square, Beximco and Incepta are sending their products via ships to Myanmar.
MJL Bangladesh Limited (formerly Mobil Jamuna Lubricants Limited), a joint venture company between state owned Jamuna Oil Company and EC Securities Limited (a subsidiary of the East Coast Group), also exports its products to Myanmar.
Myanmar currency devalued
The Kyat is now facing an odd situation due to the ongoing Rohingya crisis. The demand for Kyat in the international market is now sluggish, with the European Union having decided to cut ties with Myanmar over the “ethnic cleansing” of the Rohingya people.
An agreement approved by EU ambassadors has called for the violence to come to an end. However, it still needs to be signed off by foreign ministers of the countries in the European Union.
In the first week of September, the Maldives condemned Myanmar over the plight of the Rohingya in Rakhine and ceased all trade ties with the country. Malaysia and Indonesia are now thinking of cutting ties with Myanmar because of the military’s systematic repression of the minority group, as documented in the past by the United Nations.
As such, the Kyat has devalued by more than 12% during the last month, with $1 now buying only 1,372.67.
Meanwhile, Tk16 now trades for 1 Kyat, as compared Tk20 for 1 Kyat a month ago.
Dulal Miah, a businessman of Cox’s Bazar, said there has been no trade between Bangladesh and Myanmar through land routes from Maungdaw since August 25.
“Now the local traders are trading with businessmen in Yangon (and) most imported items now come to Teknaf port in Bangladesh through Yangon port in Myanmar,” he said.
“Bangladeshi traders are importing white rice, wood, and fish from Myanmar. Import per day is now not more than 70 tons.”
Dulal further said this was proving more problematic for owners of small businesses, as they were more reliant on the land route from Maungdaw and can rarely afford goods by sea from Yangon.
As such, Bangladeshi businesspeople who used to trade with Maungdaw in Myanmar are now sitting idle.