Myanmar is losing billions of dollar in revenue to cross-border illicit trade. However, the authorities are fighting back and so far, the results are encouraging. Lee Kok Leong, executive editor, Maritime Fairtrade, reports
According to the United Nations Conference on Trade and Development, Myanmar encounters illicit trade valued at about US$6.4 billion every year. But this staggering figure only reflects trade on official routes between Myanmar and its neighboring countries. Long borderlines, insecurity and weak capacity make it difficult to effectively control illicit trade, which includes wildlife trafficking, smuggling of alcohol and tobacco.
In response, the Myanmar government has stepped up its efforts to combat illicit trade. The government has also announced efforts to combat the illegal flow of goods into the country through the sea routes with the help of maritime police.
In 2019, it formed the Illegal Trade Eradication Steering Committee, led by the vice president, and empowered the Ministry of Commerce to coordinate state-level departments and establish policies, strategies, tactics, programs and plans to control illicit trade. These commitments are extraordinary and offer a model that any government—developing or developed—could replicate.
The results have been immediate and impressive, starting with an agreement between Myanmar and China to resume joint inspections of their common border for the first time in 24 years. In addition, Myanmar and UNODC have held joint meetings to improve border management and security efforts in Kachin State, particularly through facilitating greater cross-border intelligence sharing with neighboring Yunnan, China, and capacity-building of Kachin-based law enforcement officials.
Recognizing that industry can be a critical partner in the fight against illicit trade, the government has also initiated partnerships to leverage the strengths of the private sector.
EuroCham Myanmar, the European Chamber of Commerce representation in the country, is one of the partners. Its member companies that constitute the ‘EuroCham Myanmar Anti-Illicit Trade Initiative’ have taken a proactive stance on the issue through their annual Anti-Illicit Trade Forum, which raises awareness on illicit trade in Myanmar.
The initiative raises awareness on the volume of illicit trade across industries to both the government and the general public, while advocating solutions and best practices that can improve enforcement.
The consequences of illicit trade are far-reaching, with negative impacts on economic development and regional integration, as well as on every aspect of society. Illicit narcotic drugs, along with human, wildlife, timber and mineral trafficking, threaten stability and security and accelerate environmental degradation.
The flood of fake products, especially medicines, tobacco, alcohol, healthcare products and other fast-moving consumer goods, keeps the country pinned to informal economic markets that preclude true economic growth and depress lasting employment opportunities.
The challenge facing Myanmar was underscored by findings from the Global Illicit Trade Environment Index, a study commissioned by TRACIT, which ranked the country 82nd out of 84 countries evaluated on their ability to inhibit illicit trade.
The illicit trade of jade from Myanmar has been labelled the biggest natural resources heist in modern history. The country produces jade worth between $12 billion and $31 billion every year, but up to 80 percent is smuggled out, robbing the government of billions in taxes. Other forms are illegal logging or illegal import of substandard goods, fake or unregistered medicine and dangerous goods that pose health and safety risks.
This multifaceted problem chips away at Myanmar’s progress as it transforms to a market economy. The country has made great progress by liberalizing trade and investment and promoting industrial development. However, these advances are undermined by the scale of illicit trade that permeates the economy.
The alarming magnitude of illegal trade is evidenced by “missing” $150 million trade revenues between Myanmar and neighboring Thailand. This hole in revenues points to an underground trade in products that frustrates Myanmar’s micro, small and medium enterprises as they compete with the inflow of illegal goods.