Informal Trade and Underground Economy in Myanmar

Informal Trade and Underground Economy in Myanmar

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English
96 Pages

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At present, collecting and analyzing data from inside Myanmar remains notoriously difficult. There is, therefore, a non-Myanmar approach towards the majority of studies on Myanmar. This is especially the case when dealing with informal or illegal trade within the country’s territory. IRASEC and the Observatory on Illicit Trafficking wanted to fill this gap by giving the floor to Professor Winston Set Aung, the founder and the director of the Asia Development Research Institute, and director of the Asia Language and Business Academy in Myanmar. He is also an MBA lecturer at the Institute of Economics in Yangon and is involved in several international and regional research programs in partnership with various research institutes including the Institute of Asian Studies, Chulalongkorn University, Thailand; Tokyo University, Japan; and the Institute for Security and Development Policy of Sweden, Stockholm Environmental Institute. The focus of Professor Winston Set Aung’s study is to provide a Myanmar-centric perspective on informal or illegal trade. The author offers an analysis regarding the process of informal exchanges through a pragmatic and non-contextualized critique. The causes of informal and illegal exchanges are identified and described without commenting on their origins. This intentional, measured, and calculated conservative perspective enables us to think on how to best use these flows in the current political situation in Myanmar. It seems therefore useful and relevant to make this data available to our readers.


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Published 03 July 2018
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Informal Trade and Underground Economy in Myanmar Costs and Benefits
Winston Set Aung
DOI: 10.4000/books.irasec.1123 Publisher: Institut de recherche sur l’Asie du Sud-Est contemporaine Year of publication: 2011 Published on OpenEdition Books: 3 July 2018 Serie: Observatoire des trafics Electronic ISBN: 9782355960246
http://books.openedition.org
Printed version ISBN: 9786167571010 Number of pages: 96
Electronic reference SET AUNG, Winston.Informal Trade and Underground Economy in Myanmar: Costs and Benefits.New edition [online]. Bangkok: Institut de recherche sur l’Asie du Sud-Est contemporaine, 2011 (generated 05 juillet 2018). Available on the Internet: . ISBN: 9782355960246. DOI: 10.4000/books.irasec.1123.
This text was automatically generated on 5 July 2018.
© Institut de recherche sur l’Asie du Sud-Est contemporaine, 2011 Terms of use: http://www.openedition.org/6540
At present, collecting and analyzing data from insi de Myanm ar rem ains notoriously difficult. There is, therefore, a non-Myanm ar appro ach towards the m ajority of studies on Myanm ar. This is especially the case when dealing with inform al or illeg al trade within the country’s territory. IRASEC and the Observatory on Illicit Trafficking wanted to fill this g ap by g iving the floor to Professor Winston Set Aung , the founder and the director of the Asia Developm ent Research Institute, and director of the Asia Lang uag e and Business Academ y in Myanm ar. He is also an MBA lecturer at the Insti tute of Econom ics in Yang on and is involved in several international and reg ional rese arch prog ram s in partnership with various research institutes including the Institute of Asian Studies, Chulalong korn University, Thailand; Tokyo University, Japan; and the Institute for Security and Developm ent Policy of Sweden, Stockholm Environm ental Institute. The focus of Professor Winston Set Aung ’s study is to provide a Myanm ar-centric perspective on inform al or illeg al trade. The autho r offers an analysis reg arding the process of inform al exchang es throug h a prag m atic a nd non-contextualized critique. The causes of inform al and illeg al exchang es are identified and described without com m enting on their orig ins. This intentional, m easured, and c alculated conservative perspective enables us to think on how to best use these flows in the current political situation in Myanm ar. It seem s therefore useful and relevant to m ake this data available to our readers.
WINSTON SET AUNG
Winston Set Aung has been involved in m any international and reg ional research projects in various countries including Myanm ar, Vietnam , Cam bodia, Lao PDR, Thailand, Malaysia, Bang ladesh and Japan. He has successfully com pleted over 40 international and reg ional research projects in m ore than 10 countries. He has written various research papers in cooperation with several international and reg ional academ ic, research and policy institutes that include University of Tokyo of Japan, Institute for Security and Developm ent Policy of Sweden, Mekong Institute of Khon Kaen in Thailand, Chulalong korn University of Bang kok, Stockholm Environm ental Institute (SEI-Asia), Nom ura Research Institute of Japan, UNDP, etc. He is currently a Founder and the Director of Research of the Asia Developm ent Research Institute (www.asiadevelopm ent.org ), and also a Founder and Executive Director of Asia Lang uag e and Business Academ y (www.alba-edu.com ) of Myanm ar. He is also a non-resident senior research fellow at the Institute for Security and Developm ent Policy of Sweden. In addition, he is a m em ber of the Research Advisory Com m ittee of Mekong Institute which is an inter-g overnm ental org anization of the Greater Mekong Sub-reg ion based in Thailand. He is also a m em ber of the Editorial Board of the Journal of Mekong Societies published by Center for Research on Plurality in the Mekong Reg ion, Khon Kaen University of Thailand.
TABLE OF CONTENTS
Foreword Benoît de Tréglodé and Anne-Lise Sauterey
Executive summary
Introduction 1 - Objective 2 - Methodolog y
Part 1. Myanmar’s cross-border trade 1 - Impact of sanctions on cross-border trade 2 - Local perceptions of cross-border trade 3 - The context of informal/illeg al cross-border trade 4 - Illeg al versus illicit products 5 - Costs and benefits of informal cross-border trade 6 - Case studies related to cross-border trade and its effects
Part 2. Cross-border mobility and human smuggling from Myanmar 1 - Illeg al border crossing s 2 - Causes and effects of cross-border mobility 3 - Costs and benefits of mobility
Conclusion
Annexes
References
Foreword
Benoît de Tréglodé and Anne-Lise Sauterey
At present, collecting and analyzing data from insi de Myanm ar rem ains notoriously difficult. There is, therefore, a non-Myanm ar appro ach towards the m ajority of studies on Myanm ar. This is especially the case when dealing with inform al or illeg al trade within the country’s territory. IRASEC and the Observatory on Illicit Trafficking wanted to fill this g ap by g iving the floor to Professor Winston Set Aung , the founder and the director of the Asia Developm ent Research Institute, and director of the Asia Lang uag e and Business Academ y in Myanm ar. He is also an MBA lecturer at the Insti tute of Econom ics in Yang on and is involved in several international and reg ional rese arch prog ram s in partnership with various research institutes including the Institute of Asian Studies, Chulalong korn University, Thailand; Tokyo University, Japan; and the Institute for Security and Developm ent Policy of Sweden, Stockholm Environm ental Institute. The focus of Professor Winston Set Aung ’s study is to provide a Myanm ar-centric perspective on inform al or illeg al trade. The autho r offers an analysis reg arding the process of inform al exchang es throug h a prag m atic a nd non-contextualized critique. The causes of inform al and illeg al exchang es are identified and described without com m enting on their orig ins. This intentional, m easured, and c alculated conservative perspective enables us to think on how to best use these flows in the current political situation in Myanm ar. It seem s therefore useful and relevant to m ake this data available to our readers.
Executive summary
Myanm ar, the second big g est country in term s of area in m ainland South East Asia, borders five neig hboring countries: China, Thailand, India, Bang ladesh, and Lao PDR. Myanm ar’s long est borders are with China (approxim ately 1,357 m iles) and Thailand (approxim ately 1,314 m iles), and it shares coastal waters with Malaysia and Sing apore. Being a m em ber of at least nine Asia and Pacific inter-g overnm ental o rg anizations that include the ASEAN Reg ional Forum (ARF), the Greater Mekong Subreg ion (GMS), the UN Econom ic and Social Com m ission for Asia and the Pacific (UNESCAP), the Asian Developm ent Bank (ADB), Upper Mekong Com m ercial Navig ation, the Asia Pacific Fish ery Com m ission, Asia-Pacific Telecom m unity (APT), and the Association of South E ast Asian Nations (ASEAN), Myanm ar is actively involved in various econom ic cooperation prog ram s. However, the pace of Myanm ar’s econom ic developm ent still lag s behind that of other m em bers in these org anizations. In addition, inform al activities and inform al m om ent of g oods and people have been quite sig nificant due to m any factors. Althoug h various policy m easures have been developed to m itig ate these inform al activities, there has not been any study reg arding the sources of these inform al activities, their costs and benefits, im pacts and consequences of the existence and nonexistence of these activities, or how these activities could be m itig ated without having sig nif icant neg ative econom ic and social im pacts on the local people and the econom y as the whole. Without knowing causes and effects, costs and benef its, and factors behind inform al activities, it is not sim ple to com e up with restrictive policies to control them . In som e cases, restrictive policies have caused severe adverse soc ial and econom ic im pacts on the com m unity. Hence, it is very im portant that proper research is conducted in order to identify m ultidim ensional issues that could effectively be addressed by m ultidim ensional policies throug h close cooperation am ong the stakeholders. This paper attem pts to identify factors behind causes and effects of inform al flows in g oods and persons across the borders between Myanm ar and its neig hboring countries, especially China and Thailand, and to address related issues a nd possible policy im plications. This paper is a result of various surveys and studies in m any places in Myanm ar, Lao PDR, Thailand, and China from 2005 to 2009 under several research projects.
Introduction
Due to various external and internal factors, infor m al trade and hum an flows are sig nificant at cross-border areas of Myanm ar, espec ially at the borders with China and Thailand. Althoug h several studies have focused on border areas from the side opposite Myanm ar, there are very few studies m ade on the Mya nm ar side m ainly due to the difficulty of research. Besides, lack of proper inform ation and data lead to a situation where m isunderstanding s, m ism atches, and controversies of ten occur between what happens inside Myanm ar and what it is perceived or conclude d outside. This paper is based on em pirical research finding s of surveys conducted on various stakeholders at two cross-border areas bordering on China and Thailand and al so at other areas in Myanm ar. This paper focuses m ainly on case studies, interview sur veys, focus g roup discussions, and questionnaire surveys of various stakeholders such as local authorities, traders, brokers, facilitators, returned m ig rants, m ig rants’ fam ilies, and other inform al players at the two cross-border areas, as well as an area that is on the way to two active cross-border areas, with a view to study inform al/illeg al m ovem ent of g oods and persons and associated costs and benefits. In the trade sector, Myanm ar achieved a positive tr ade balance of US$777 m illion in 2002– 03, which increased to US$3.06 billion in 2007–08 due to g rowth of natural g as exports to Thailand. The averag e share of external trade in Myanm ar’s GDP during the five years from 2003–04 to 2007–08 was 22.6 percent. External trade has been a m ajor foreig n currency earner since foreig n direct investm ent was m arg inal ized after 1997, when the Asian financial crisis broke out and the first econom ic sanction (then m ainly on investm ent) was im posed by the United States. As a result of factors such as the external econom ic sanctions, the internal licensing system , inadequate trade prom otion, and absence of value-added industries, Myanm ar’s total trade value is very low com pared to those of other countr ies in the Greater Mekong Subreg ion, like Thailand and Vietnam . The value of Myanm ar’s t otal exports in 2009 was only 3.8 percent that of Thailand and 10.1 percent that of V ietnam , but was 135.6 percent that of Cam bodia and 546.0 percent that of Lao PDR (UN Com t rade). The m ain destinations of Myanm ar’s exports are Thailand (accounting for 47.3 percent of Myanm ar’s total export value), India (20.1 percent), China (11.0 percent), and Japan (5.8 percent). Myanm ar im ports products prim arily from China (accounting for 35.7 percent of total im ports), Thailand (24.4 percent), Sing apore (14.1 percent), Korea (6.4 percent), and Malaysia (3.3 percent). Since Myanm ar is well-endowed with natural resources, resource exports account for over 70 percent of the total value of exports, and the m ajority of resources, m ainly tim ber and g em stones, are inform ally traded. The exception is natural g as, accounting for nearly 50 percent of the total value of exports, which is exp orted leg ally throug h cross-border pipelines. Since econom ic sanctions were im posed by the West, Myanm ar’s cross-border trade with its neig hboring countries has becom e m or e sig nificant and inform al practices have proliferated at the border areas. Am ong the cross-border areas, inform al trade is m ost
sig nificant in Muse (bordering on Ruili, China) and Myawaddy (bordering on Maesot, Thailand). These inform al practices facilitate form al as well as inform al m ovem ent of g oods, leading to the situation where the value of undocum ented g oods, which m ostly flow throug h cross-border areas, reached over US$1 billion in 2006, hig hlig hting the sig nificance of inform al trade in Myanm ar. These inform al channels for the m ovem ent of g oods are also found to be safe havens for inform al m ig ration, m aking trade flows and hum an flows associated with each other to som e extent. In term s of hum an m obility, the inform al flows of m ig rants from Myanm ar to Thailand are found to be m uch hig her than those to China. There are m any cross-border points along the porous borders. Am ong those points, Bam ar (the m ajority population in Myanm ar), Mon and Karen (ethnic g roups living in the southern part of the country), and people from Taninthari Division norm ally take the inform al chan nel throug h Myawaddy (bordering Maesot, Thailand) and Kawthaung (bordering Ranong , Thailand) whereas m ost Shan (an ethnic g roup living in the eastern part of the country) choose different cross-border points, for instance, at Tachileik (bordering Mae Sai, Thailand) and Muse (bordering Ruili, China). Due to m any external and internal factors discourag ing form al/leg al practices, inform al practices can be found in all these cross-border ar eas. Thailand is the larg est recipient of Myanm ar m ig rants, with approxim ately 2 m illion m ig r ants. Malaysia, the second larg est recipient, has received between 0.5 and 1 m illion M yanm ar m ig rants. The rem aining m ig rants are dispersed in other destinations such a s Sing apore, Australia, the United King dom , the Middle East, Korea, and Japan. Malaysi a and Thailand are the m ain destinations for m ost unskilled and sem i-skilled wo rkers from Myanm ar, whereas Sing apore, Australia, and the UK are key destinatio ns for Myanm ar students. The Middle East, Korea, and Japan attract Myanm ar workers with a hig her skill level. Due to reg ional integ ration and the wide econom ic d isparity between Myanm ar and other countries (including neig hboring Thailand), m ig ration from Myanm ar to other countries is likely to increase. Hence, it is necessary to ensur e that m ig ration takes place in a safe and secure m anner to m axim ize its positive effects for both the hom e and recipient countries and to m inim ize the possible neg ative im pacts. Approxim ately 2 m illion Myanm ar people, m ost of who m are illeg al laborers, live in neig hboring Thailand alone, hig hlig hting the sig nif icance of inform al hum an flows from Myanm ar. It is estim ated that around 10 percent of Myanm ar’s 55 m illion people have been out of Myanm ar, hig hlig hting the sig nificant deg ree of m obility. Due to requirem ents associated with form al channels of m obility, use of inform al practices throug h border routes1al routesand norm 2h info rm alwho have g one throug has soared and m ig rants channels are vulnerable to various abuses, creating social problem s both in the country of orig in and the destination countries. The m ajority of m ig rants g oing to Thailand and Chin a take inform al border routes throug h social networks and/or brokers. Those taking inform al channels of trade are often sm ug g led in trucks carrying g oods. Depending on the am ount of paym ent m ade to the brokers, m eans of transportation for m ig rants g oing to Thailand vary g reatly. They m ay have to travel on foot, taking about seven days to reach a safe place where there is no checkpoint, or be transported by truck or private vehicle.