Thursday, 3 April 2014

Illegal trade sees billions of dollars lost

Continued poor law enforcement at the borders and an overall lack of resolve in tackling illicit industries has resulted in rampant smuggling that could account for annual losses of up to half a trillion dollars, the equivalent of 20 times Myanmar’s estimated total trade volume, officials said.

Despite recent efforts by the government to crack down on illegal trading, government officials and businesspeople claim that the country is unable to deal with chronic illicit activity at the borders as customs officials are in short supply and tend to falter to complex border practices and bribery.

“Border trade ways are unsafe and there are big problems with investigations [into illegal activity],” said U Ko Gyi, Union Solidarity and Development Party member for the Pyithu Hluttaw seat of Aung Myay Thar San in Mandalay, adding that corruption is so wide- spread that police officials aspire to a post with the customs department so that they can collect on bribes.

“I’ve heard a transfer to a border gate is like winning the lottery,” he said.

Though various goods, including alcohol and agricultural products, make their way in and out of the country illegally, the largest losses come from timber and gem exports, he said, adding that illegal trade revenues exceed formal trade 15 to 20 times over.

In conflict areas and at the major land trade areas, including the Myawaddy border in Kayin State and the Muse border shared with China, armed ethnic groups and gangs are known to negotiate bribes with customs officials on behalf of traders, he said.

“They guarantee traders will not have to pay taxes or undergo complicated export or import procedures,” U Ko Gyi said. “Most small and medium traders rely on them to get their products to the market cheaply.”

Ministry of Commerce deputy director U Soe Aung, who works at Muse trading zone, said that the bribes are costing the government trillions of kyat, as a trader might pay a K500,000 tax for a K3 million assessment, then bribe officers K200,000 each to wave trucks through the border without checking.

“Some government staff treat those traders hospitably. Corruption can be hard to reduce,” he said.

According to government data, Myanmar’s total annual trade revenue has grown some 30 percent, surpassing $24 billion in the first 11 months of the 2013-14 financial year on its way to the $25 billion government target for the year.

Still, investigators found that the gap between Thai and Myanmar trade figures at the Myawaddy-Mae Sot border was about $1 billion a year, while the overall land trade between the two countries is officially $400 million this year, said U Soe Aung.

“There is a billion-dollar gap at just one border post. Imagine how many billions we’re losing every year,” he said, adding that no figures at all were available from posts on the borders with China and other countries.

At the Muse border meanwhile, raids by the Illegal Trade Prevention and Supervision Control Committee since November 2012 have seized another K5 billion in contraband.

With trade on the rise, the government has also attempted to reduce widespread smuggling by seizing billions of kyat worth of contraband motorcycles, telephones and jade since January, U Soe Aung said.

U Maung Maung Lay, deputy chair of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), said corruption was hard to eradicate as the government currently does not have the means to provide training to officers nor has it secured the political stability essential to the resolution process.

“We have found that situation in other countries as well, but it’s worse in Myanmar,” he said.

“But it’s unlikely to change these practices immediately because they’ve been rooted here for so many years. The government needs the capacity to make good on its pledge of ‘good governance, clean government’.”

source: The Myanmar Times
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