Wed 27 Aug 2014
Filed under: ASEAN,Business / Trade,News,On The Border
Thailand is expected to post a border-trade surplus with Myanmar within two years as that country welcomes flows of trade and investment, and its growing economy leads to greater purchasing power.
Kobsak Pootrakool, executive vice president of Bangkok Bank, said two-way border trade between Thailand and Myanmar was worth about Bt200 billion, of which border trade accounted for 80 per cent.
Thailand’s trade deficit with Myanmar has been gradually decreasing, and now is Bt40 billion, down from an average of Bt70 billion per annum during the past decade driven by this country’s imports of natural gas from Myanmar, worth about Bt100 billion a year.
The bank expects the trade deficit will drop to Bt20 billion this year, he said, as Thai exports to Myanmar via border checkpoints had been growing by 17 per cent annually for four to five consecutive years.
Kobsak shared this overview of the border trade between Thailand and Myanmar to bank clients yesterday, as part of its series of talks on international issues.
He said the decreasing trade deficit was an indicator that Thailand could be headed for a trade surplus with Myanmar after seeing rising trade activities through checkpoints, especially in Mae Sot, Tak province, which posted the highest bilateral trade of all Thailand-Myanmar border crossings.
Thailand is constructing a road from Mae Sot to Myawaddy, Myanmar, while Myawaddy is implementing an industrial zone. That it expected to increase the value of trade via Mae Sot from the current level of Bt40 billion, he said.
Myanmar ‘s annual growth of gross domestic product is forecast to increase to more than 10 per cent over the next five years, up from the current rate of 8 per cent. In the view of Bangkok Bank, consumer products from Thailand will benefit the most from this growth, followed by agricultural machinery, processed foods and building materials.
Trade volumes between the two countries could grow after the National Council for Peace and Order approved a pilot project for five new border special economic zones. One of the five is in Mae Sot.
Border trade with Myanmar could eventually surpass that with Malaysia through the Sadao checkpoint, which reports annual trade value of Bt300 billion.
Of all border trade with the four neighbouring countries, totalling more than Bt900 billion a year, that going through Sadao in Songkhla province has the highest value.
Given the rising importance of Thailand’s border trade with Myanmar together with the implementation of the Asean Economic Community next year, Bangkok Bank has suggested that Thai manufacturers and exporters consider setting up factories or representative offices in the border provinces. Having a presence in those provinces could reduce operational and transport costs as well, Kobsak said.
He added that Thai producers should avoid distributing low-quality products to central Myanmar because their prices are unable to compete with those of Chinese products. They should focus on selling low-priced products for Myanmar people who live in border provinces instead because their purchasing power is lower.