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25 Sep 2020

Econ Digest

COVID-19 hinders exports: Thailand’s cross-border exports to Myanmar in 2020 may fall below THB100 billion, but the impact of stringent border restrictions on trade is insignificant

               

Myanmar has recently announced several requirements for truck drivers from Thailand: It is now necessary for drivers crossing the Myanmar border via Chiang Rai’s Mae Sai checkpoint to be replaced with Myanmar nationals. Furthermore, only six vehicles of any kind bearing Thai license plates are allowed to cross the border to Tachilek in Myanmar from the Mae Sai checkpoint per day,  where normally there are at least 300 vehicles entering daily. Such vehicles are required to register with Myanmar’s Road Transport Administration Department and to comply with the regulations of Shan State’s Road Transport Administration Department, effective from September 17, 2020. It is expected that such restrictions will directly hurt Thailand’s cross border exportation to Myanmar via Chiang Rai’s Mai Sai border checkpoint. During the first seven months of 2020, such shipments were valued at THB6.549 billion. Since the volume of Thai shipments to Myanmar is set to decline, there could be a shortage of numerous goods in Myanmar.

 

KResearch believes that due to the importance of border trade for both countries, the stringent restrictions at Chiang Rai’s Mae Sai border checkpoint will likely be eased once the COVID-19 pandemic improves. Myanmar may allow more freight trucks to enter in the future. However, Thailand’s cross-border exports to Myanmar via Chiang Rai’s Mae Sai checkpoint account for only 13% of the total cross-border export value to Myanmar. Moreover, such shipments are primarily necessities; therefore, the restrictions on Myanmar’s border may not significantly affect Thailand’s cross border exports to Myanmar.

 

However, because Thailand’s cross-border exports to Myanmar have been affected by uncertain economic conditions as a result of COVID-19, Thailand’s cross-border shipments to Myanmar contracted 14.2%YoY to THB51.4 billion during the first seven months of 2020. KResearch deems that Thailand’s cross border exports to Myanmar do not look promising in 2020 and will likely see a steeper contraction of at least 10%. Given this, Thailand’s cross-border exports to Myanmar may fall below THB100 billion for the second consecutive year in 2020. Nevertheless, close attention must be paid to potential further contractions of such shipments if Thailand and Myanmar see the need to impose similar restrictions on other checkpoints, especially at the Mae Sot checkpoint in Tak and Ranong Customs House in Ranong.


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