Ru­pee re­moval freezes trade on In­dia bor­der

The Myanmar Times - - Front Page - CHAN MYA HTWE chan­myahtwe@mm­times.com

The In­dian govern­ment’s de­ci­sion to re­move high-de­nom­i­na­tion ru­pee notes from cir­cu­la­tion is caus­ing tur­moil among Myan­mar bor­der traders.

THE In­dian govern­ment’s de­ci­sion to re­move 500 and 1000 ru­pee notes from cir­cu­la­tion has frozen bor­der trade with Myan­mar, where traders are con­cerned that some of their ru­pee hold­ings could be­come worth­less.

Traders in the town of Tamu and Nant Hpa Lon Mar­ket in Sa­gaing Re­gion said cross-bor­der busi­ness with In­dia had stopped com­pletely, fol­low­ing In­dian Prime Min­is­ter Naren­dra Modi’s an­nounce­ment on Novem­ber 8 that 500 and 1000 ru­pee notes would no longer be le­gal ten­der.

In­dian’s de­mon­eti­sa­tion pol­icy is de­signed to com­bat cor­rup­tion and fake cur­rency, but has caused up­roar as the pop­u­la­tion at­tempts to ex­change old 500 and 1000 notes into bank de­posits or smaller de­nom­i­na­tions.

Across most of Myan­mar, any busi­ness deals with In­dia are typ­i­cally de­nom­i­nated in US dol­lars and con­ducted through bank trans­fers. But in bor­der towns like Tamu, sales and pur­chases are all con­ducted in ru­pees.

The de­mon­eti­sa­tion pol­icy’s im­pact on Myan­mar bor­der trade is twofold. Firstly, amid the con­fu­sion over how to ex­change newly il­le­gal ru­pees notes and lim­its on with­drawals from In­dian ATMs, some In­dian traders have yet to fin­ish pay­ing Myan­mar ex­porters for goods.

U Khin Maung Tin, sec­re­tary of the Tamu Bor­der Traders As­so­ci­a­tion, said the In­dian an­nounce­ment had stopped cross-bor­der trade while trans­ac­tions were still to be com­pleted.

“There are still debts to be paid [to Myan­mar traders],” he said. “We are wait­ing to see how much we have lost in ru­pee pay­ments.”

The sec­ond is­sue is that Myan­mar traders who have ac­cu­mu­lated ru­pee hold­ings are now won­der­ing how to ex­change 500 and 1000 notes that are no longer le­gal ten­der.

“Myan­mar peo­ple have been left with a lot of ru­pees. I’m not sure whether they’ll lose money or not,” said U Khin Maung Tin. “We are wait­ing to see how much [of our ru­pee hold­ings] we will be able to ex­change.”

He said that Tamu traders were hold­ing around 210 mil­lion ru­pees (US$3.07 mil­lion; K3.95 bil­lion). Ru­pee-based cross-bor­der trade also takes place in the Rih area of Chin State, but the Rih Bor­der Traders As­so­ci­a­tion could not be reached for com­ment.

The In­dian govern­ment is al­low­ing their cit­i­zens to change up to 2000 ru­pees into new notes at In­dian banks and other of­fi­cial in­sti­tu­tions across In­dia, pro­vid­ing the per­son has valid source of iden­tity. For larger sums, the money must be de­posited into an In­dian bank.

Many Tamu res­i­dents say they have far more than 2000 ru­pees, but as they are not In­dian cit­i­zens they have no means of chang­ing the old notes. Tamu trader U Aye Kyaw said that in­di­vid­ual traders on both sides of the bor­der have cash hold­ings of more than 200,000 ru­pees.

The Tamu Bor­der Traders As­so­ci­a­tion has sub­mit­ted a re­quest to the lo­cal Min­istry of Com­merce of­fice to help solve the is­sue and help restart trade, U Khin Maung Tin said.

“We heard that the [Min­istry of Com­merce] head of­fice [in Nay Pyi Taw] will solve the prob­lem through diplo­matic chan­nels if they can,” he said.

U Khin Maung Lwin, as­sis­tant sec­re­tary at the com­merce min­istry, said there had been no case sub­mit­ted to the head of­fice on the mat­ter yet.

“All this money [ru­pees] is not de­posited in a bank in Myan­mar,” he said. “So there will be some dis­cus­sion and some dif­fi­cul­ties. If they get paid in ru­pees, they are re­spon­si­ble for ex­chang­ing the money. I heard they are ex­chang­ing the ru­pees by link­ing with bor­der mer­chants.”

Ex­change the ru­pees in­side Myan­mar is an op­tion. But U Zaw Htay, chair of Nan Phar Lone Mar­ket in Sa­gaing, said that al­though the Myan­mar Cen­tral Bank’s of­fi­cial ex­change rate showed 100 ru­pees was equal to K1905, the lo­cal ex­change rate for 100 ru­pees had dropped to be­tween K1200 and K1500.

U Khin Maung Tin also said his as­so­ci­a­tion had con­tacted the In­dian con­sulate in Man­dalay.

“Our traders are fac­ing losses so we asked them how they can help, but they haven’t said any­thing yet,” he said.

The In­dian Con­sulate in Man­dalay and the In­dian em­bassy were un­able to re­spond by press time.

Be­tween April and Oc­to­ber this year, trad­ing vol­umes at the Tamu com­mer­cial trad­ing sta­tion are in ex­cess of $31 mil­lion, according to a spokesper­son for the Tamu of­fice of the Min­istry of Com­merce, who asked to re­main anony­mous. Areca nut is the mostly com­mon ex­ported good, while im­ports from In­dia are dom­i­nated by garden peas, wheat power, lentils, threat and mo­tor­bikes, he said. – Trans­la­tion by San Layy, Win Thaw

Tar, Khine Thazin Han and Emoon

Photo: EPA

An In­dian woman car­ries uten­sils af­ter wash­ing them near the Indo-Myan­mar In­ter­na­tional bor­der fenc­ing in Moreh, which bor­ders Myan­mar’s Tamu town.

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