Myanmar businessmen are lobbying the government to open a new state-run foreign exchange bank near Muse Trade Zone in response to China’s recent closures of Myanmar traders’ bank accounts along the Yunnan border, according to a report of Myawady Daily newspaper yesterday.
In an effort to crack down on illegal gambling, smuggling and other illicit cross-border trade, the Chinese government shut down thousands of bank accounts held by Chinese and Myanmar traders along the border.
Until the recent crackdown, Myanmar traders relied on Chinese banks because there were no foreign exchange institutions in the Muse Trade Zone on the Myanmar side of the border.
The proposal may be attractive to government officials as it could help formalize Muse’s fast and loose gray market, where rice and motorcycles are traded alongside, yaba and trafficked women.
In addition, if businessmen are able to deposit Chinese yuan in the Muse Trade Zone, the bank would be able to levy taxes and capture more legitimate revenue, said Dr Soe Tun, the secretary of Myanmar Rice Federation (MRF) to Myawady Daily. Such an institution would also help to appease China, which has recently taken a stricter stance on irregular border trade, and would better protect Myanmar businessmen from dramatic financial policy shifts by a foreign government.
Muse is Myanmar’s busiest land port of entry. Many Myanmar merchants sell commodities at the border, particularly rice, on a credit system to Chinese merchants who pay for those goods later with yuan deposits in China. The system allows Myanmar merchants to settle their accounts in the stronger and more stable Chinese currency.
China is Myanmar’s most important trading par tner, accounting for 60 per cent of Myanmar’s rice, 99 per cent of corn and 90 per cent of watermelon exports. China also consumes significant quantities of Myanmar sugar (domestically produced and re-exported), peas, sesame seeds and fisheries products in Myanmar’s predominately agricultural economy.
A precedent for the foreign exchange bank proposal was set in Myawady where Thailand opened a Bangkok Bank branch for smoother Thailand-Myanmar trade.
According to an announcement of Muse-Namhkan Merchant Association, 390 bank accounts belonging to Myanmar merchants, and many more belonging to Chinese merchants, were blocked last month. Approximately 300 Myanmar accounts have been unfrozen since then.