Working group formed for international trade
A new working group of government officials and entrepreneurs has been formed with support from the Asian Development Bank, to develop local supply chains for international trade.
A NEW working group comprising government officials and entrepreneurs was formed this week with support from the Asian Development Bank, to develop local supply chains for international trade.
The International Trade Supply Chain (ITSC) working group will focus on areas in need of reform, such as trade finance and restrictive trade policies, entrepreneurs said at the association’s launch on August 9.
While banking services for individuals have improved over the past few years, there are still weaknesses in business services such as loans, trade financing and letters of credit, they said.
“Myanmar’s economy was supported by its banking sector from 1989 until 1997 [the start of the Asian Financial Crisis]. At that time, the process of applying for an export licence was easy and could be done within a day,” said U Aye Lwin, general secretary of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).
“But policies were changed after that and the economy started slowing. The ITSC group will identify the reasons for this slowdown and find out what needs to be changed.”
The ITSC working group includes representatives from the Ministry of Commerce, the Ministry of Planning and Finance’s Customs Department, the Internal Revenue Department, the Central Bank, Myanma Foreign Trade Bank, Myanma Investment and Commercial Bank, departments in 19 ministries, UMFCCI members and representatives from private enterprises.
The Asian Development Bank will meet the group at least once a month, with the aim of encouraging it to work in line with international standards. The ADB will also advise the ITSC group on difficulties in Myanmar’s supply chain, and help it compile detailed information on imports and exports.
Daw Pwint Thit War, a trade facilitation specialist at the ADB, told The Myanmar Times the development bank will work to ensure the initiative is effective.
“Its main objective is to facilitate trade. Only if there is trade facilitation will [Myanmar] attract new investment. At first, ADB will support the ITSC, but will then transfer that responsibility to the UMFCCI when [the ITSC] becomes stable,” she said.
U Win Myint, a director in the Department of Trade, said the Ministry of Commerce has already relaxed some rules on trade and will continue to cooperate with private enterprises.
“The department is gradually adding to the list of goods that can be imported without a licence, and we will continue to relax the rules,” he said.
“We have also relaxed export rules, but in some cases approval is needed from certain ministries. We have to ask entrepreneurs to prepare for that, and we will find a way to fix it.”
For now, traders must open a foreign currency bank account to buy international goods, and must have enough money in their account to pay for an order. Trade financing is still new in Myanmar and most importers and exporters pay for shipments on the spot.
State-owned Myanma Investment and Commercial Bank will try to make it easier for traders to use letters of credit, said the bank’s deputy director U Khin Pe Oo.
A letter of credit allows a bank to guarantee that the seller will receive a timely payment from the buyer – if they fail to pay, the bank steps in. With such an agreement in place, exporters are able to ship products before receiving payment.
A letter of credit from a bank provides a seller with a guarantee that if a buyer is unable to make timely payment for the goods, the bank will step in.
‘Only if there is trade facilitation will [Myanmar] attract new investment.’
Daw Pwint Thit War Asian Development Bank
“We will try to make the banking system more suited to the use of letter of credit. If anything is unclear, entrepreneurs can get in touch with us to find out which services are available,” U Khin Pe Oo said.
A trader walks beside a truck at the 105 Mile trading zone in Muse.