Thai maritime industry gains from Myanmar ban on land transport

Opportunity to boost maritime trade.

Myanmar’s ban on certain imports by road is an opportunity for Thailand’s maritime industry.  

On May 2 2021, Myanmar banned the import of five drinks and related products from Thailand transported by land but said it will allow the import by sea, which is a longer, more time-consuming and expensive route. Soft drinks, fruit juices, ready-to-drink coffee, condensed sweetened milk, and juices transported by land are all prohibited.

However, the ban remains a mystery. Some say it may be due to tighter land border controls to curb illegal crossing. Interestingly, the ban followed a spike in beverage exports to Myanmar earlier this year. But after February 1 when the military staged a coup and overthrew the civilian government led by Aung San Suu Kyi, many citizens have expressed a desire to boycott products linked to companies controlled by the military. 

The Thai-Myanmar border is 2,416 km long, starting from the tri-border area with Laos in the north to the Andaman Sea coast in the south. The 2,416 km long border has several crossings, such as Mae Sot in western Thailand to Myawaddy, Mae Sai in Northern Thailand to Tachilek, and Ranong in Southern Thailand to Kawthaung in Myanmar.

Opportunity amid the chaos

According to the Thai Commerce Ministry, the value of drink exports to Myanmar increased by 10 percent to US$64.4 million (2 billion baht) between January and February before the political turmoil in Myanmar. 

Thai drink exports are worth US$322 million per year, and the goods are generally shipped to Myanmar by land through three border checkpoints in Chiang Rai’s Mae Sai district, Tak’s Mae Sot district and Ranong. These land borders are close to the Mekong river, which is important to note as ports in Thailand and Myanmar are able to reach them, thus ensuring connectivity, albeit in a circuitous route.

To Thailand, the sea route, although it comes with higher export costs for businesses, presents a smoother journey as there were long congestions on the road.  Moreover, the ban offers business opportunities to maritime freight vessels.

Nevertheless, with the higher export costs, businesses have to consider whether to pass on the costs to consumers.  In normal circumstances, this will be the case but in Myanmar right now, consumers may not be able to afford more expensive drinks as jobs are lost and the economy is going through a slump amid a political turmoil.

Worthwhile for Thailand to invest in port development

So far, Myanmar is keeping the country open to trade and has forecasted rice exports of two million tons this year.  As it has historically enjoyed a good relationship with Thailand, there is no indications that the trading relationship is in jeopardy.  

Thailand may see this as an opportunity to increase maritime trade and invest more in the development of ports in anticipation of increase demand. There are ports that are close to Myanmar where there are around 500 cargo barges from China, Laos, Myanmar, and Thailand operating along the Mekong River.  

For example, Chiang Saen Port and Chiang Khong Port in northern Thailand, and in southern Thailand, Ranong Port along the Kraburi River of the Kra Peninsula, across from Myanmar and near the Indian Ocean coast.  These three ports may see more attention and investment from the authority in the near future.

However, the question remains if this ban is permanent or just a short-term measure to achieve some hidden agenda.  Be that as it may, it is still worth Thailand’s effort to modernize and improve port infrastructure and processes as this can complement land transport, if or when the ban is revoked, and also will facilitate trade with Myanmar, as well as with other neighboring countries too.

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