We all know the story of that man who wanted to live alone and that is why went to the jungle. But soon he understood that it is not possible to live alone so he returned his home. Just like, the countries of the world are not self dependent in all the sectors. To fulfill the need of the consumers the country has the need to trade with the other countries of the world. This inter trading between the country is known as the international trade.
International trade is very important for all the countries especially for the countries that are not endowed with adequate amount of goods and needs much more than the domestic production. So international trade is very important for all the countries of the world. Because all the countries of the world are in need of international trade it has become a major concern for the business studies. Based on the availability of the information and benefit of analysis we have tried to analyze the trade situation of our neighboring country “Myanmar”.
Outlook on Myanmar
Myanmar is situated in Southeast Asia and is bordered on the north and northeast by China, on the east and southeast by Laos and Thailand, on the south by the Andaman Sea and the Bay of Bengal and on the west by Bangladesh and India.
It is located between latitudes 09 32 N and 28 31 N and longitudes 92 10 E and 101 11 E.
Myanmar has rich natural resources. Petroleum, Timber, Tin, Antimony, Zinc, Copper, Tungsten, Lead, Coal, Some Marble, Limestone, Precious Stones, Natural Gas, Hydropower are abundant in Myanmar.
Rice, Pulses, Beans & Peas, Oilseeds, Fruits and Vegetables, Sugarcane, Soft wood, hard wood, Fish and Fish products are produced in Myanmar.
Agricultural processing, Knit and Woven apparel, Wood and wood products, Manufacturing, Construction materials, Pharmaceuticals, Fertilizer, Cement industries are being operated.
Agricultural produce, Wood products, Gas, Minerals, Marine products, Clothing and all exportable commodities are exported.
Crude oil, Petroleum products, Machinery, Transport equipment, Construction materials, Fabric, Raw material for plastics are imported.
Myanmar is basically an agricultural country. The agricultural sector constitutes 41 per cent of the total GDP and 11 per cent of foreign exchange earnings. The vast potential of land resources is available with different weather and various soil conditions by the combination of technology can enhance the production of cash crops and industrial crops. Various types of cash crops and industrial crops are able to cultivate in Myanmar, such as rice, pulses and beans, maize, sesame, rubber, coffee, tea, sugar cane, jute, wheat, cotton, pepper, oil palm, various kinds of herbs, variety of fruits and vegetables, etc.
The investor, who wishes to cultivate the perennial crops such as oil palm, rubber, is allowed to use up to 50,000 acres of uncultivated land by the land regulation.
The existing supply of those crops cannot meet the present position of demand and there is, therefore, high yield cultivation and value-added manufacturing of these cash crops and industrial crops with the investment of capital and high technology are the areas of the potential business in Myanmar.
The Government is also encouraging the development of agro-based industries by setting up of sugar mill, cotton industry, jute industry, rubber industry, seed industry, and edible oil industry, food processing and animal feed plant.
Businesses other than agricultural production, such as agro-based industries by producing value-added agricultural products and processed food are also welcome. The establishment of recreation centers and resorts, golf clubs, motels around the several dams with beautiful landscape is also potential areas.
Livestock and Fisheries
Second prospective sector is livestock and fisheries sector. Myanmar is endowed with rich and varied marine and inland fisheries resources, with production potentials of 1.05 million metric tons per annum from marine source only. Inland water bodies such as natural lakes, reservoirs, river systems, ponds, etc. cover an area of about 8.2 million hectares.
Under this sector, the significant nature is almost all of the production, processing and marketing of fishery/fishery related activities are carried out by the private sector. All state owned fishing vessels, carried vessels, ice plants, processing plants, cold stores, fishmeal plants dehydration plants, etc. are sold or leased to private sector.
There is no state owned institution competing with the private sector in fishery and fishery related industry.
Myanmar has a long coastline with 2,832 kilometers, which provides a very good base for the development of shrimp and prawn culture. In order to cope with the increasing fishing activities in Myanmar, various laws such as Law Relating to the Fishing Rights of Foreign Fishing Vessels, Myanmar Aquaculture Law, Myanmar Marine Fisheries Law and Freshwater Fisheries Law have been enacted and procedures have been prescribed.
The foreign investors can undertakes economic activities in the livestock and fishery sector are, cattle breeding, veterinary pharmaceutical production, construction of ice plant, cold storage complex, fish meal plant, canning plant, dockyard and fishing port and fishnet making factory, development if shrimp hatchery, establishment of shrimp farm, bee keeping and bee products production.
The third potential is forestry sector. Myanmar, since the immemorial time, has always been deeply committed to forest and biodiversity conversation and, as a consequence still possessed vast and varied natural forest rich in biodiversity.
The forest flora is diverse, varying from sub-alpines on the snow-capped mountains in the north, through dry and moist deciduous to tropical monsoon forests in the south with mangrove along the coastal areas and coral reefs offshore.
Myanmar is also home of teak which is recognized as one of the most valued and sought-after tropical timber of the world and it is asserted that extensive and beautiful natural teak stands can be seen only in Myanmar today.
There are more than 7,000 recorded plant species of which 1,071 are endemic, about 100 species of bamboos, 30 species of rattan and species of orchids. The diverse forest ecosystems in Myanmar are home to about 1,000 bird species nearly 300 mammal species and about 360 known species of reptiles.
Myanmar is, therefore, often cited as the last frontier of global biodiversity in Asia.
Production of value-added wood based items such as wood related products, wood carvings, parquet, tiles, plywood, doorframes and furniture are prosperous business under the forestry sector.
Myanmar ranks high among the Asian countries in terms of mineral potentials. However, the mineral resources are very mush under-utilized and still exist a larger potential to boost up to fulfill the growing needs of local and foreign markets.
The investment can be made either production sharing or profit sharing to encourage the foreign investors. To enhance the investment, the Myanmar Mines Law and the Myanmar Mines Rules were promulgated in 1994 and 1996 respectively.
With the intention of producing dimension stones for use in construction and decoration works, systematic geological survey and prospecting has shown abundant occurrences of granite and marble deposits in Myanmar with various colors and patterns.
Jewelry manufacturing and jade carving is the one of the areas of prospects with new discovery if large stone-tract which needs the new technology gem cutting, polishing and manufacturing.
Oil and gas exploration under the energy sector is contributed highest in the foreign investment of Myanmar. Myanmar has very high potential in the development of oil and gas and hydro- energy sector. New discovery of offshore gas fields developed by foreign investors are operating under the production sharing contracts. There is, therefore, a lot of potential can be seen in the establishment of downstream and related industries in this particular sector.
Pyar, Kyat (1 Kyat = 100 Pyars)
1 April – 31 March
The background color is the Red with a blue rectangle in the upper hoist-side corner bearing, 14 white five-pointed stars encircling a cogwheel containing a stalk of rice; the 14 stars represent the 7 administrative divisions and 7 states.
International Organization Participation
Myanmar is a member of many international organization: APT, ARF, AsDB, ASEAN, CP, FAO, G-77,IAEA, IBRD, ICAO, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, ITU, NAM, opcw (signatory), UN, UNCTAD, UNESCO, UNIDO, UPU, WCO, WHO, WIPO, WMO, WTO.
Doing Business in Myanmar
Myanmar’s export policy is to export all exportable surpluses and diversify foreign markets by using of natural and human resources. Increasing and diversifying exports and improving the quality of products are among the main objectives of the export promotion policy.
We give top priority for the development of agriculture as the base and all – round development of the economy as well. A number of new items in the manufacturing and processing sectors have been introduced in the past few years. Main export items include agricultural products, forest products, fishery products, metals & minerals, precious stones and industrial products.
The registered exporter / importer have the right to do trading business. The registered exporters / importers are allowed to enjoy 100 percent export retention money for the import of goods. There exists neither export quota nor ceiling for any exportable product or any individual or organization.
Regarding the import policy, import is allowed against the export earnings with a view to promote export and to overcome the balance of trade deficit problems.
The private businessmen are encouraged to import capital goods, industrial machineries including raw materials and other essential items while the consumer choices can be fulfilled equally at the same time.
License should be applied for any export or import. The authority to issue export/import licenses and permits is dedicated to Directorate of Trade and Department of Border Trade under the Ministry of Commerce. Directorate of Trade is authorized to issue export/import licenses and permits for conventional export/import by overseas. The Department of Border Trade is authorized to issue export/import licenses for overland trade with the neighboring countries.
The validity of export / import license / permit issued by the Directorate of Trade is three months from the date of issue, and it cannot be extendable.
Export license fee is not payable on export of any commodity including agricultural crops. All the imports are subject to pay the license fees, customs duty and commercial tax.
Customs duty together with the commercial tax is collected at the point of entry and the time of clearance of imported goods. Raw materials and other essential imports are taxed at very low rates, while the highest rate is applied to luxury items.
Commercial tax is levied according to the Schedules appended to the Commercial Tax Act 1991, and the rates vary depending on the types of goods and services. For the items not exempted from commercial tax, the rates of tax on imported goods are 5%, 10%, 20% 25% according to the respective schedule of goods. Another schedule represents specific types of foods such as cigarette, liquor, etc. carrying rates above 25%.
Assessment of Import Duty is based on the assessable value, which is the sum of CIF value and the landing charge (0.5 % of the CIF value) for the goods imported. The commercial tax together with the custom duty is collected at the point of entry and the time of clearance of imported goods.
There are three state banks namely Myanmar Foreign Trade Bank – MFTB, Myanmar Investment and Commercial Bank -MICB and Myanmar Economic Bank – MEB, conducting foreign trade transactions of the Union of Myanmar. MEB opens branch offices at the border checkpoints for the commercial transactions of overland trade with the neighboring countries.
Since the adoption of the market-oriented economic system, the Union of Myanmar Foreign Investment Law (FIL) was enacted on 30 November 1988, to induce foreign direct investment together with technology and also to mobilize its natural resources.
Policy objective underlying foreign investment is for:-
(a) Promotion and expansion of exports;
(b) Exploitation of natural resources, which; require heavy investment;
(c) Acquisition of high technology;
(d) Supporting and assisting production and services involving large capital;
(e) Opening up of more employment opportunities;
(f) Development of works which would save energy consumption; and
(g) Regional development.
Formation of Myanmar Investment Commission
Export Import Procedures
Laws and Orders
The law governing export, import, carriage of passenger baggage, etc. by the state owned organizations or private enterprises or private individuals of the Union of Myanmar, is the control of Imports and Exports (Temporary) Act, 1947, which is till 0in force up to now.
Registration of Exporter/Importer
The following enterprises desirous of carrying on export/import business may apply to the Directorate of Trade, Ministry of Commerce for registration as exporter/importer:
(a) The following enterprises registered under Myanmar Companies Act and Special Company Act of 1950
-Limited Companies (inclusive of foreign companies /branches)
-Joint Venture Corporation.
(b) Co-operatives societies registered under the Co-operative Societies Law.
Term of Registration Fee and Extension Fee
Term of registration fee and extension Fee for exporter/importer are as follows:
(a) Term of registration fee and extension fee for one year 50,000/- Kyat
(b) Term of registration fee and extension fee for two years 100,000/- Kyat
Rights of the Registered Exporter/Importer
The following are the rights of registered exporter/importer:
(a) To export all products in accordance with the prescribed rules and regulation except for those which are prohibited by the state and the products prescribed to be solely undertaken by the state-owned economic enterprise;
(b) To import all products in accordance with the prescribed rules and regulation, with the foreign exchange (earned on export) or using any other permitted methods of import;
(c) To do border trade business in accordance the prescribed rules and regulations, but registered exporter/importer should not be a foreign firm;
(d) To distribute by whatever means available in the local market;
(e) To apply for issuance of business pass-port;
(f) To receive the foreign guest for business negotiation.
Documents attached for applying Import Licenses
– Import License application letter with company’s letter head
– Import License application letter (with 6ks revenue stamp)
– The original copy of Performa Invoice
– Sales contract
– Export Earning recommendation
– Recommendation from government departments concern of and organization concerned (If needed)
Department of Border Trade
Department of Border Trade was established on August 28, 1996 under the Ministry of Commerce. Department of Border Trade is headed by a Director General and the Head Office consists of the following six divisions:
- Administration and Training Division
- Planning, Statistics and Policy Division
- Foreign Trade Promotion and Export-Import Research Division
- Border Export Division
- Border Import Division
- Accounts Division
The five objectives for organizing of the Department of Border Trade are as per below:
- To further strengthen the existing friendship between the two countries.
- To promote border trade between the two countries, putting it in line with normal trade.
- To get reasonable revenue for the state.
- To facilitate private business activities there by allowing them to acquire reasonable profit.
- To enhance the smooth flow of commodities.
The main functions of the Department of Border Trade are as per below:
· Issuing the export/import licenses/permits for trading undertaken by border areas
· Establishing Trade Zones and Wholesales Markets
· Carrying out to facilitate the trade activities
· Carrying out to increase trade volume
· Attempting to export the new items
· Trying to reach to the legal trade way from the illegal trade way
· Promoting transit trade
· Carrying out to get reasonable revenue for the state
· Holding the trade fairs and discussions for trade promotion
· Assisting to the businessmen who want to establish the Companies
· Arranging to open the trainings for Export/Import Procedures to be able to carry out the border trade
International Trade Relation
Trade Agreement signed between Myanmar and other countries
Union of Myanmar has signed Trade Agreements with the following countries;
1. Israel (1955)
2. India (1956)
3. Sri Lanka (1959)
4. Korea (1967)
5. China (1971)
6. Bangladesh (1973)
7. Pakistan (1976)
8. Vietnam (1976)
9. Malaysia (1988)
10. Thailand (1989)
11. Laos (1995)
12. Philippines (1997)
Procedures of border export and import
The procedures of border export and import are as follows:
- The numerous and large valued commodities must be exported or imported by means of the normal trade method through border. The currencies allowed for transaction are Euro and US dollar and Singapore dollar.
- The commodities for the local consumption and local products in border areas can be exported or imported by means of border trade method. Not only American Dollar but also the currencies of both bordered countries are allowed for the transactions.
- The 8 percent of commercial tax and 2 percent of income tax shall be payable for export.
- The proper customs duty, commercial tax, income tax, imports license fee and bank service charges must be paid for import.
Border Trade News
In Myanmar – China border trade, the most frequently exported and imported commodities during the Fiscal Year 2007-2008 are as per below:
(a) Export Commodities
(1) Green Mung Bean
(2) Black Eye Bean
(3) Black Matpe
(4) Soya Bean
(6) Yellow Maize
(8) Frozen Fish
(11) Long-Finned Eel
(12) Fish Maws
(13) Salted Fish
(14) Roselle Cardamom
(15) Water Melon
(17) India wild
(18) Musk Melon
(19) Rattan /Cane
(20) Sugar Cane
(21) Dry Taro
(22) Herb of Aromatic Tuber
(b) Import Commodities
(1) All sorts of chemical fertilizer
(2) All sorts of glass
(3) All sorts of porcelain
(4) All sorts of footwear
(5) Strike a piece of iron and perforated steel
(7) Motorcycle spare parts
(8) Bicycle spare parts
(12) Electrical goods
(13) Materials for construction
(14) Motorcar spare parts
(15) All sorts of cloth
(16) All sorts of cotton
In Myanmar – Thailand border trade, the most frequently exported and imported commodities during the Fiscal Year 2007-2008 are as per below:
(a) Export Commodities
(1) Various kinds of fish
(6) Betel Nut
(7) Turmeric finger
(8) Cumin Seed
(9) Rose color leadwort
(11) Various size of glazed earthen Jar
(12) Various size of marionette
(14) All kinds of gold embroidery puppet
(16) Nether garment worn by men and women
(17) Ceylon polyester nether garment
(18) Blanket (Cotton)
(20) Various kinds of snack
(21) Old cardboard paper
(b) Import Commodities
(1) Plastic resin
(2) PVC compound
(3) All sorts of polyethylene string
(4) All sizes of battery
(5) All sorts of chemical fertilizer
(6) Motorcycle spare parts
(7) Nylon cotton fishing net
(8) Fishing net
(9) Various kinds of flat plastics
(10) All sorts of bicycle spare parts
(11) All sizes of car tyre
(12) Rice mill spare parts
(13) PVC Resin
(14) All kinds of foot wares
(15) Food for Animal
(16) Ceramic Tiles
(17) All sorts of paper
(18) Empty glass bottle
(19) Bottle lid
(20) Construction materials
(21) Household appliances
(22) Various kinds of cloth
(25) Chemical Raw Materials
In Myanmar – Bangladesh border trade, the most frequently exported and imported commodities during the Fiscal Year 2007-2008 are as per below:
(a) Export Commodities
(1) Sea Prawn
(2) Dried small fish
(3) Dried plum
(4) Plum pulp
(5) Tamarind (with seed)
(6) Plum Packet
(b) Import Commodities
(2) T – Shirt
(3) Vest cloth
(4) Copper goblet
Basic Agricultural Products Prices which have been set for Export on 3-4-2009 by Price Negotiation Committee Meeting
|US Dollar per MT|
|1||Black Matpe||8||Cow Pea||450-500|
|FAQ||500-550||9||Lab Lab Bean||520-570|
|Split and Husked||715-765||11||Millet||165-175|
|Split with Husk||625-675||12||Onion|
|2||Green Mung Bean||Size 20mm – 35mm||200-220|
|FAQ (Anyar)||540-590||Size 35mm & up||220-240|
|Size 3.25mm Above(Anyar)||650-700||FAQ||400-450|
|Size 3.25mm Above(Pakokku)||660-710||Split with Husk||420-470|
|Pedeshwar (Size under 3.5mm)||650-700||Split and husked||500-550|
|Pedeshwar (Size 3.5mm & above)||700-750||14||Kidney Bean|
|Split and Husked (small)(Anyar)||675-725||FAQ||500-550|
|Split and Husked (small)(Pakokku)||750-800||Split with Husk||525-575|
|Split with Husk (big)(Anyar)||815-865||Split and husked||625-675|
|Split with Husk (big)(Pakokku)||825-875||15||Sultanipya||350-400|
|Split and Husk (small)(Anyar)||720-770||16||Red Bean||300-350|
|Split and Husk (small)(Pakokku)||800-850||17||Lima White Bean||530-580|
|Split and Husked (big)||865-915||18||Lima Bean||530-580|
|3||Toor Whole||19||Soya Bean||450-500|
|Toor (Red)||600-650||20||Lima Bean||430-480|
|Toor (White-Red)||600-650||21||Red Flat Bean||350-400|
|Toor (White)||600-650||22||Science Black Sesame||1600-1700|
|Split and Husked||800-850||23||Sesame Seeds(black)||1250-1350|
|4||Black Eyed Bean||24||Sesame Seeds (white)||1350-1450|
|SQ (12.5 Sieve)||550-600||26||Turmeric Finger|
|SQ (13 Sieve)||640-690||Turmeric Finger(Shan)||500-520|
|Split with Husk||565-615||Turmeric Finger(Kyauk Se)||550-570|
|Split and Husked||600-650||Turmeric Bulb||400-420|
|5||Black Eyed Bean (red)||27||Ginger||250-300|
|6||Chick Peas||Dried Ginger(Slice)||1500-1700|
|Split and Husked||600-650||with seed (new crop)||170-190|
|7||Gram Whole||seedless (new crop)||400-420|
|FAQ||500-550||with seed (old crop)||120-140|
|Split and Husked||665-715||seedless (old crop)||350-370|
The private sector is permitted to export all commodities except the following prohibited commodities through the border areas:
(a) Agricultural Products
(1) Rice Products
(2) White Sugar, Red Sugar, Brown Sugar
(3) Ground Nut /Ground Nut Oil
(4) Sesame Oil
(5) Niger Oil
(6) Mustards/ Mustard Oil
(7) Sunflower seeds/ Sunflower oil
(8) All Sorts of Cakes
(9) Cotton and Cotton Products (Cotton Yarn)
(b) Mine and Metals
(10) Crude Oil
(11) Precious Stones (Gems and Jewelleries )
(18) not allowed metal from Ministry of Mine
(c) Animals and Animal Products
(20) Buffalos, Cow & Ox , Elephant, Horse and All Rare Animals
(d) Marine Products
(21) Prawn Shell Dust
(e) General Materials
(22) Arms and Ammunitions
(f) Forest Products
The private sector is permitted to import all commodities except the following prohibited commodities through the border areas:
(a) Seasoning Powder ( MSG )
(b) Soft Drinks
(c) Biscuits Assorted
(g) Chewing Gum
(h) Tinned Meats and Fruits
(i) All sorts of Instant Noodles
(m) Plastic household goods
(n) Restricted Products as par Existing Laws
(o) Affecting products to the domestic Industries
Myanmar Border Trade Flow
By Financial Year
|Myanmar Border Trade Flows of 2005-2006 to 2007-2008 Fiscal Years|
|(In Millions of U.S dollars)|
By Border Wide
|Myanmar Border Trade Flows of 2005-2006 to 2007-2008 Fiscal Years|
|(In Millions of U.S dollars)|
Trade situation of Bangladesh with Myanmar
|12||Hong Kong Dollar||HKD||1/-=K||0.7382|
|21||New Zealand Dollar||NZD||1/-=K||2.8937|
|27||Saudi Arabian Riyal||SAR||1/-=K||1.5463|
|30||South Africa Rand||ZAR||1/-=K||0.5437|
|31||Sri Lanka Rupee||LKR||1/-=K||0.0507|
|(Kyat – million)|
|Export import situation (year wise)|
IMPORT BY MAJOR TRADING COUNTRY
|(Kyat – million)|
|EXPORT OF PRINCIPAL COMMODITIES|
|Qty: Thousand metric ton|
(APRIL – MAY)QTYVALUEQTYVALUEQTYVALUEQTYVALUEQTYVALUERice182.0180.2180.0214.014.518.0358.5552.6107.6183.9Maize254.8465.490.064.6183.3155.6156.0169.420.924.1Matpe407.2527.8379.6846.1487.21747.6494.41511.8109.3288.1Pedesein143.6248.0174.0451.6248.5843.1178.8605.035.093.3Pesingon193.9297.2203.2352.0266.7468.8269.9754.055.3148.4Gram53.794.631.069.358.5190.1114.8353.0302.091.6Other pulses74.5115.177.6156.894.6248.383.5238.722.161.5Sessamum seed10.451.521.5106.239.4170.831.5209.41.511.4Niger seed 0.30.91.33.84.722.214.171.124Onion126.96.36.1998.18.7188.8.131.52.12.7Tamarind13.7184.108.40.2061.820.215.8220.127.116.11Oil cake Raw rubber14.187.4349.3204.79.582.719.2191.42.021.0Hide and skin3.513.14.015.13.011.31.13.90.20.8Fresh and dried prawn19.7597.219.5576.120.5608.018.3518.104.22.168Fish and fish products62.7409.878.0544.4104.9725.4120.11059.416.9124.8Crab1.825.41.724.31.521.31.922.214.171.124Teak319.21515.3333.11723.1347.41750.1282.41540.031.6189.9Hard wood496.8726.9636.71027.2637.41189.0791.81423.893.4174.8Plywood and venner92.532.8114.329.7131.016.7112.412.711.10.3Base metal and ores32.8547.529.7646.216.7637.812.74126.96.36.199Gas335524.55812.2322722.36234.7460087.511676.255689.613937.937766.01059.0Garment86522.11237.771308.81586.080044.31601.877065.11554.67326.3161.6Others 3934.2 5648.7 7711.4 9972.5 2052.1
|IMPORT OF PRINCIPAL COMMODITIES|
Value : Kyat Million
(APRIL-MAY)1.Milk, condensed102.0129.2164.4166.423.22.Milk and evaporated14.5014.106.33.5 3.Milk powder22.312.2028.130.80 4.Other milk, food including malted milk6.79.2014.613.81.35.Spices188.8.131.52.80.36.Edible vegetable oil and other hydrogenated oils474.0571.1478.21057.7469.57.Pharmaceutical product314.8362.1554.9635.683.58.Cement22.153.3115.6152.721.19.Dyeing tanning and coloring materials40.136.151.049.55.910.Chemical elements and compound134.3146.3158.3185.422.511.Fertilizer184.108.40.2062.00.612.Scientific instrument128.7108.2148.6139.831.113.Base metals and manufactures899.31164.01183.61206.2297.214.Machinery non-electric and transport equipment2164.91786.22718.24161.7556.515.Electrical machinery and apparatus874.4645.8707.6861.1214.916.Paper, paperboard and manufactures314.6295.8302.8292.352.417.Rubber manufactures171.1140.3210.7287.336.518.Crude oil 19.Coal and coke17.233.730.028.00.120.Refined mineral oil1361.01560.93966.62034.0418.121.Wheat flour 22.Tobacco and tobacco manufactures121.9113.2101.866.820.023.Cotton fabric66.574.651.072.03.7624.Fabric of artificial and synthetics fabric823.2917.21059.71168.5130.525.Woven and special woven fabric147.1143.5165.5134.522.326.Government and laced fabric220.127.116.11.82.727.Plastic457.4574.3719.7857.0105.028.Other2626.602584.103809.74735.7867.7
Source: Central Statistical Organization
FTA (Free Trade Areas)
Free trade area is defined as the countries where there is no tariff between trading countries.
The ASEAN Free Trade Area (AFTA)
The ASEAN Free Trade Area (AFTA) has now been virtually established. ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6, comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0-5 percent tariff range.
ASEAN’s newer members, namely Cambodia, Laos, Myanmar and Viet Nam, are not far behind in the implementation of their CEPT commitments with almost 80 percent of their products having been moved into their respective CEPT ILS. Of these items, about 66 percent already have tariffs within the 0-5 percent tariff band. Viet Nam has until 2006 to bring down tariff of products in the Inclusion List to no more than 5 percent duties, Laos and Myanmar in 2008 and Cambodia in 2010.
Following the signing of the Protocol to Amend the CEPT-AFTA Agreement for the Elimination of Import Duties on 30 January 2003, ASEAN-6 has committed to eliminate tariffs on 60 percent of their products in the IL by the year 2003. As of this date, tariffs on 64.12 percent of the products in the IL of ASEAN-6 have been eliminated. The average tariff for ASEAN-6 under the CEPT Scheme is now down to 1.51 percent from 12.76 percent when the tariff cutting exercise started in 1993.
The implementation of the CEPT-AFTA Scheme was significantly boosted in January 2004 when Malaysia announced its tariff reduction for completely built up (CBUs) and completely knocked down (CKDs) automotive units to gradually meet its CEPT commitment one year earlier than schedule. Malaysia has previously been allowed to defer the transfer of 218 tariff lines of CBUs and CKDs until 1 January 2005.
Products that remain out of the CEPT-AFTA Scheme are those in the Highly Sensitive List (i.e. rice) and the General Exception List. The Coordinating Committee on the Implementation of the CEPTScheme for AFTA (CCCA) is currently undertaking a review of all the General Exception Lists to ensure that only those consistent with Article 9(b) 1 of the CEPT Agreement are included in the lists.
ASEAN Member Countries have also resolved to work on the elimination of non-tariff barriers. A work program on the elimination of non-tariff barriers, which includes, among others, the process of verification and cross-notification; updating the working definition of Non-Tariff Measures (NTMs)/Non-Tariff Barriers (NTBs) in ASEAN; the setting-up of a database on all NTMs maintained by Member Countries; and the eventual elimination of unnecessary and unjustifiable non-tariff measures, is currently being finalized.
In an effort to improve and strengthen the rules governing the implementation of the CEPT Scheme, to make the Scheme more attractive to regional businessmen and prospective investors, the CEPT Rules of Origin and its Operational Certification Procedures have been revised and implemented since 1 January 2004. Among the features of the revised CEPT Rules of Origin and Operational Certification Procedures include: (a) a standardized method of calculating local/ASEAN content; (b) a set of principles for determining the cost of ASEAN origin and the guidelines for costing methodologies; (c) treatment of locally-procured materials; and (d) improved verification process, including on-site verification.
In order to promote greater utilization of the CEPTAFTA Scheme, substantial transformation has also been adopted as an alternative rule in determining origin for CEPT products. The Task Force on the CEPT Rules of Origin is currently working out substantial transformation rules for certain product sectors, including wheat flour, iron and steel and the 11 priority integration sectors covered under the Bali Concord II. Direction of Trade ASEAN’s exports had regained its upward trend in the two years following the financial crisis of 1997- 1998 reaching its peak in 2000 when total exports were valued at US$ 408 billion. After declining to US$ 366.8 billion in 2001, as a result of the economic slowdown in the United States and Europe and the recession in Japan, ASEAN exports recovered in 2002 when it was valued at US$ 380.2 billion. The upward trend for ASEAN-6 continued up to the first two quarters of 2003. Intra-ASEAN trade for the first two quarters of 2003 registered an increase of 4.2 and 1.6 percent for exports and imports respectively.
Direction of Trade
ASEAN’s exports had regained its upward trend in the two years following the financial crisis of 1997-1998 reaching its peak in 2000 when total exports was valued US$ 408 billion. After declining to US$ 366.8 billion in 2001, as a result of the economic slowdown in the United States and Europe and the recession in Japan, ASEAN exports recovered in 2002 when it was valued at US$ 380.2 billion. The upward trend for ASEAN-6 continued up to first two quaters of 2003. Intra-ASEAN trade for the first two quarters of 2003 registered an increase of 4.2 and 1.6 percent for exports and imports respectively.
ASEAN Trade with Selected Trading Partners
The United States, the European Union and Japan continued to be ASEAN’s largest export markets. Japan, followed by the U.S. and EU, were the largest sources of ASEAN imports. During the first half of 2002-2003, ASEAN-6 trade with major markets as a whole increased by 11.71 percent for exports and 6.91 percent for imports. However, ASEAN exports to the U.S. and India and imports from Canada and India declined during the same period.
Regional trade agreements
Regional Trade Agreements (RTAs) have become in recent years a very prominent feature of the Multilateral Trading System (MTS).
The surge in RTAs has continued unabated since the early 1990s. Some 380 RTAs have been notified to the GATT/WTO up to July 2007. Of these, 300 RTAs were notified under Article XXIV of the GATT 1947 or GATT 1994; 22 under the Enabling Clause; and 58 under Article V of the GATS. At that same date, 205 agreements were in force.
If we take into account RTAs which are in force but have not been notified, those signed but not yet in force, those currently being negotiated, and those in the proposal stage, we arrive at a figure of close to 400 RTAs which are scheduled to be implemented by 2010. Of these RTAs, free trade agreements