Monday, July 25, 2016
Myanmar - Myanmar farmers wary of free trade deadline
Six months into the grace period, Myanmar farmers are worrying what will happen when free trade finally comes to all ASEAN members in 2018.
For most of its members, the ASEAN Economic Community came into force on December 31 last year, allowing the free movement of goods and services across the borders of participating countries without tariffs.
Cambodia, Laos, Myanmar and Vietnam were granted an extra three years to put their national economies into order, in recognition of their relatively smaller status. The deadline for all non-tariff barriers to be eliminated within ASEAN is 2018.
Some farmers fear that may not be enough time.
Myanmar still has the right to levy duty and apply import restrictions to agricultural primary products like rice, beans and fisheries products, said U Myint San, director of the Myanmar Research Centre for Economic Development.
But there are already fears of foreign competition when people living in Myeik township, Tanintharyi Region, eat Thai rice – cheaper and better than the home-grown variety.
“We need to learn how to compete with imported agricultural products,” said U Myint San.
“Farmers will face difficulties if they can’t meet the quality and price of imported goods. Higher-quality imports are good news for consumers, but not for local producers. Right now we can tax imports up to 5 percent, but that will fall to zero in 2018. We’ll be in trouble if we can’t compete with Thai and Vietnamese rice.”
Rice Federation deputy director U Soe Htun said the federation was keeping a close eye on the situation, but he did not expect a serious problem to develop because foreign rice was only imported in times of domestic shortage.
“I don’t see a major influx of imported rice at this point,” he said.
The Thai rice that most people in Tanintharyi Region eat is often illegally imported and easily acquired because of the proximity to the border, said one of the resident in Myeik township. Illegally imported Thai clothes and electronic goods are popular for the same reason.
But Myanmar is still able to stop the free flow of agricultural goods, including Thai rice, into other regions, said U Myint San.
Once the AEC arrives that will no longer possible, and the remaining window is tight for Myanmar to be able to compete on quality and price, he said.
Bean farmers have less to worry about. Myanmar is one of the world’s largest exporters of beans and pulses, typically exporting more than 1 million tonnes a year – worth about US$1 billion. About 80 percent of Myanmar’s bean and pulse exports head to India, although Myanmar is also hoping to break into the United States and Middle East markets.
Some types of pulse – like black beans – are very specific to Myanmar, and competitors like Australia, Canada and Senegal are too far away to provide much of a threat in the export market.
“Free trade won’t cause problems for the bean farmers,” said pulse exporter U Min Ko Oo.
Most of Myanmar’s fish exports, meanwhile, go to Nepal, Korea and in particular the Middle East.
Because the quality of Myanmar fish exports are comparable with those of other ASEAN nations, the advent of the AEC is unlikely to cause issues, said U Myat Thu Tun, an executive from GP Trading Company, a manufacturer and exporter of fish products.
But Myanmar’s fishery industry is still in difficulty, mainly because flooding makes fish farming difficult, he said. This in turn has pushed up the local price of raw fish for firms exporting fish products.
“The fishery sector has problems,” U Myat Thu Tun said, “but they aren’t related to the AEC.”
The World Bank’s Economic Monitor report published in May noted that local producers in the food processing industry are also facing growing competition from cheaper imports.
“Their productivity and competitiveness are hampered by weak domestic supply chains and a lack of access to affordable finance,” it said. Much of the inputs for domestically processed foods – flour, preservatives, and packaging material – also have to be imported, according to The World Bank.
Myat Noe Oo