Merchants, meanwhile, are calling for increased lending and the removal of obstacles that are currently making exporting goods time-consuming and expensive.
According to the Ministry of Commerce, total trade in Myanmar from April through October reached $13.5 billion, outpacing the $18.3 billion generated from the trade sector in the 2012-13 fiscal year, according to data released by the Ministry of Commerce. The increase comes on the heels of increased foreign investment in Myanmar as well as resonance stemming from potential government and international financing in the trade sector through the new National Export Strategy.
“Financing for exports is one of the key strategies that we considered putting in the NES [National Export Strategy], which should be completed by April,” said U Aung Soe, deputy director general of the Ministry of Commerce’s Department of Trade Promotion, adding that it is up to private institutions such as banks to also contribute financing the burgeoning sector.
“Export financing is very important, but it cannot be done only by our ministry,” U Aung Soe said.
Some local banks do lend to exporters, but other obstacles remain, including high interest rates and the expensive cost of money transfers, he said. Of the total trade figure this year, $10.77 billion happened via ocean freights, while the remainder came from cross-border trade on land.
Myanmar’s main trade partners – Thailand, China, India, Singapore, Japan, Korea and Malaysia – represented the bulk of the figure.
Since the civilian government took office three years ago, exports have increased by about $3.2 billion annually.
“The trading market is getting bigger, but there is no finance institution yet able to support the export industry,” said U Maung Aung, an economic adviser to the Ministry of Commerce.
He said that along with the NES, the country needed an import-export bank to offer pre-shipment loans, export credit and insurance loans. “We can increase revenue bydeveloping these kinds of banks,”he said.
He also said that only one out of 3000 exporters was trading more than $100 million worth of goods annually, while about 40pc of all traders handled less than $100,000.
As of the end of June, the government and private banks lent K1.93 trillion (about $1.96 billion) to the trading sector in the current financial year, representing only about one-third of total loans, said an official from the Central Bank of Myanmar.
U Moe Myint Kyaw, secretary general of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), said the current regulations made exporting too expensive for Myanmar traders because they cannot export goods before receiving payment, thus obliging them to maintain overseas bank accounts.
“This means our exporters have to invest at least three times as much as those of other countries in the region,” he said.
Nevertheless, the recent reforms have improved the trading climate. An export licence can now be issued in one day instead of four days, and no longer requires a trip to Nay Pyi Taw. Restrictions have been eased, and there is more transparency in customs procedures.
“But if local banks or the government can lend to exporters, we can enlarge trading volume even more,” said garment exporter U Soe Myint.
source: The Myanmar Times
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