Dollar restriction halting exports in beans, corns, sesame
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Khit/ Phoo (NP News) – Aug 4
Government’s recent restrictions to present in advance the export earnings in the USD for getting the export license for beans and pulses, corns and sesame which will be traded via shipment.
Currently, traders are keeping an eye on the market, which resulted in trade halting in some places.
Authorities announced to show credit notes and bank statements that have been already paid for the goods like beans, corns, and sesame shipment. The announcement was enforced on July 1, 2022.
Foreign Exchange Supervisory Committee’s meeting No.3/2022 decided to pay the export earnings in advance only via the ‘Advanced TT system’. The export declaration form will be granted only if the exporter can show that payment has been deposited in the bank statement. The announcement was made in July.
“The border trade is almost halted since payment terms have to be done in dollars for peanuts, corns, beans and pulses, and sesame. After restrictions have been made to make transactions in the dollar for beans and sesame, exports have completely stopped here,” a trader from the Muse border told NP News.
The red tape TT system was exercised only in the military regime decades ago. The LC system was used for the export trade in previous years. Exporters face difficulties in using the TT system since their investments have to be made double for the export.
“In the LC system, goods were sold first. Payment is made only after full documents of the shipment loading. In the TT system, the foreign company has to make the payment transaction into my bank account equivalent to the amount of export goods. Then, it will have to pass to the Central Bank. Only after the transaction passed through the Central Bank, the license will be issued. So, which buyers will pay for that? The exporters have to pay or invest in it. It means the exporters have to make the double investment. One for the goods. Second for the advance payment,” said a bean exporter.
At present, exporters have difficulties due to the gap in the exchange rate between the reference rate and market rate, plus the shortage of foreign currency.
Along with difficulties in earning foreign currency, decreases in exports will impact on earning revenues of the State, experts said.
“There is no independent situation at present condition. There are supplies but not much demand. Traders are watching the market condition,” a sesame exporter said.
Although the exchange reference rate set by the CBM is 1850 MMK, the market rate reaches double that.
Main agricultural products of Myanmar include rice, peanut, sesame, sunflower, beans and pulses, cotton, and sugarcane. Amongst, bean exports take the second largest share in exports.
Exports of beans and pulses from Myanmar were 399731.037 tons via shipment as of July 2022 which amounted to USD 315.815 m; 139579.967 tons via border trade amounted to USD 409.820 m, according to data released by the Ministry of Commerce.