Forex rate gap and need for export licence pose difficulties for bean traders

Bean traders involved in cross-border trade between Myanmar and China are battered by the currency policy and the need for an export licence.
The gap between the regulated exchange rate and the market rate and the requirement to seek an export licence for various beans and pulses are contributing factors to the trade impediment. Additionally, the prices of beans exported to China are down by K5,000-10,000 per bag for now.
Earlier, export earnings for beans were allowed to be made with Yuan-Kyat or Baht-Kyat direct payment. Starting from 30 June, transactions for beans and pulses are instructed to be paid in US dollars.
After export earnings were set to be paid in dollars, the official exchange rate against the US dollar was set at K1,850. Meanwhile, a dollar is worth around K2,500 in the unofficial FX market, resulting in the large gap between the official and unofficial exchange rates. Therefore, traders are struggling with that.
According to the newsletter (7/2022) dated 23 May issued by the Ministry of Commerce, traders need to seek an export licence for various beans and pulses, oil crops and edible oil in order to alleviate the impacts on the domestic edible oil prices amid the global oil export slump. This notice will come into effect starting from 1 August 2022 and traders must seek an export licence for those goods whatever trade routes (sea, border or air) they use.
Recent changes in export policy hindered the trade in the Muse 105th mile trade zone. Consequently, the prices of green grams dropped from K152,000-140,000 per bag.
China accounts for 60 per cent of Myanmar’s green gram exports. China prefers green gram (Shwe Wah) varieties. China makes value-added products from green grams and sends them to foreign markets. Moreover, it produces bean by-products as feedstuffs.
Myanmar conveyed US$200 million worth over 263,000 metric tons of green grams to foreign trade partners between 1 April and 8 July of the current financial year 2022-2023, according to the Ministry of Commerce’s trade data. — KK/GNLM