Parallel Session 6: Economic reforms and opening in LDCs

Transcription

1 ASIA-PACIFIC RESEARCH AND TRAINING NETWORK ON TRADE ARTNeT CONFERENCE ARTNeT Trade Economists Conference Trade in the Asian century - delivering on the promise of economic prosperity rd September 2014 Parallel Session 6: Economic reforms and opening in LDCs

2 Trade Policy Reform in Myanmar Daw Zin Zin Naing Department of Applied Economics Yangon University of Economics 2

3 3 Contents Introduction Agenda of Reforms Recent Macro-economic performance International Trade Sector Overview Pattern of Trade Direction of Trade Border Trade Trade Policies Non-tariff Barriers Customs administration and procedures Technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures Investment Policies Trade remedy measures Other Trade - and Investment-Related Measures Regional Integration and Cooperation Ways Forward

4 Introduction A series of reforms started in 2011 aiming at comprehensive economic development. National Economic and Social Advisory Council (NESC) was formed. Framework for Economic and Social Reforms (FESR), served as the roadmap of the government, was developed in consultation with senior officials of various ministries through May to October 2012 and released in late December Quick win policy priorities - fiscal and tax reforms, liberalization of trade and investment, monetary and financial sector reforms, private sector development, health and education reform, governance and transparency, expanded access to mobile phone and internet, infrastructure improvement, and effective and efficient government. 4

5 5 Agenda of Reforms First wave of reform - National reconciliation and inclusiveness The second wave of reform - reform strategy based on four economic policies: sustaining agricultural development towards industrialization and all round development, balanced and proportionate growth among regions and states, inclusive growth for entire population, quality of statistics and statistical system. Liberalization of trade and foreign investment; outward-looking; the multilateral trading system (MTS), access to export markets, ultimately aiming at poverty reduction. At preset - the third wave - public administrative reforms for good governance and clean government.

6 Recent Macroeconomic Performance Sectoral contribution to GDP (%) 2009/ /13 Agriculture* Manufacturing Services * Agricultural production alone. Source: MNPED,

7 Recent Macroeconomic Performance (Cont.) Growth Performance in comparison with ASEAN members Per capita GDP, nominal, USD 2000s Singapore Malaysia Thailand Indonesia Philippines Vietnam Lao PDR Cambodia Myanmar Source:ERIA, MCDV, GDP growth, constant prices 7

8 Recent Macroeconomic Performance (Cont.) Monetary Sector The liberalization of the exchange rate - the most important economic reform In September unification of exchange rate, i.e., multiple exchange rates into a single rate through a "managed float" in April 2012 Foreign Exchange Management Law (2012) aimed to remove all the present restrictions on current payments and transfers abroad. Result of these reforms - appreciation of kyat; Inflation remained moderate, (2.8% in 2012/13), then upward pressure on inflation to be around 5.6% in 2013/14 I as projected by the IMF, due to the increases in prices of real estate and wage 8

9 Recent Macroeconomic Performance (Cont.) 9 Fiscal sector The fiscal deficit in 2013/14,broadly unchanged at around 5% of GDP, mainly financed by rising revenues from gas projects The budget for the budget to be debated in and approved by Parliament Collaborating with IMF, World Bank, ADB and Multi-Development Partners improve the Myanmar Public Finance Management System; taking steps to strengthen Myanmar's Public Financial Management (PFM) reforms, Public Expenditure and Financial Accountability (PEFA) and Public Expenditure Review (PER) The Paris Club countries have forgiven much of Myanmar's debt. The tax reforms aims at broadening the tax base and improving compliance.

10 10 International Trade Sector Overview Strategic location in the region An original member of the WTO Myanmar's trade policy is strongly influenced by its participation in ASEAN, and ASEAN's free-trade agreements with third countries. Myanmar is also looking beyond its Asian neighbors to develop trade and investment ties. Myanmar expects to benefit from GSP schemes reinstated by the EU and Norway. The exporter of primary products and importer of manufactured and investment goods at unfavorable terms of trade. Myanmar s foreign trade has been mainly with the Asian countries. State trading monopolies were abolished in November 2011.

11 International Trade Sector Pattern of Trade Table 1. Top Ten Export Items in Table 2. Top Ten import items in No Items % of Total Export No Items % of Total Import 1 Natural Gas Petroleum products Pulses & Bean Vehicles & spare parts Garment Machinery and spare 8.44 parts 4 Rice Iron and steel 6.18 construction materials 5 Fish Iron & steel Jade Plastic raw materials Teak Log Palm oil Natural Rubber Pharmaceuticals Sesame Seed Ships, boats and spare 2.67 parts 10 Hardwood Log Fertilizer 1.83 Total in million USD Total in million USD Source: Ministry of Commerce, Myanmar. Source: Ministry of Commerce, Myanmar.

12 International Trade Sector Direction of Trade Not appear to have caused trade diversion between and

13 International Trade Sector Thailand remains a main trading partner, while China and India have been increasingly important trading partners of Myanmar. In July 2013, the EU reinstated GSP for Myanmar and applied the EBA scheme retroactively from June Myanmar was suspended the GSP from the US since 1989, and from the EU since March Since the establishment of a democratic government, Myanmar s relations with the EU and the US have improved. 13 In April 2013, the US was reported to be considering resumption of the GSP with Myanmar.

14 International Trade Sector Border Trade Since 1996, Myanmar had signed three border trade agreements with India, Thailand and Bangladesh, one MoU with China and one protocol with Laos. Apart from Laos, Myanmar had opened the respective border trade posts in border areas. The seven fundamental points in border trade _ Myeik, Maw Taung and Htee Khee border trade posts in Myanmar-Thailand border; Chin Shwe Haw, Kan Pyke Tee posts in Myanmar-China border; and Sittwe post in Myanmar-Bangladesh border. 14

15 15 International Trade Sector: Trade Policies Trade policies changes initially made: The export tax reduction. Exports of seven agriculture commodities (rice, pulses, maize, sesame, rubber, fishery products and animal products) are exempted from the commercial tax These export items are required to pay only 2% income tax. Exports of value- added products based on timber, bamboo and rattan are exempted from the commercial tax for five and half months up to 14 February These export items are required to pay only 2% income tax. The income tax levied on CMP exports and currency salaries of nationals weres reduced. Import and export licenses are issued in two or three days.. Everybody is now allowed to import automobiles.

16 International Trade Sector: Trade Policies 16 Myanmar does not impose any tariff rate quotas (or quantitative restraints). The government is willing to consider binding more tariff lines in order to provide mutually satisfactory in negotiations. The commercial tax on most exports was eliminated at the beginning of , thereby reducing the tax component in export prices and therefore making Myanmar exports more competitive Taxes on most exports were removed in except on only a few natural resource products like gems, oil and gas, teak and other timber. The intention of replacing the existing export tax on virgin teak with an export ban, as of 1 April 2014.

17 International Trade Sector: Trade Policies In the longer term, to improve the capacity of tax (including customs) administration; to reduce further tax rates and broaden the tax base, by rationalizing tax incentives for investment, thus rendering the tax system more neutral, and gradually shift reliance from direct to indirect taxation. Trade facilitation measures: Two important trade liberalization measures: automatic licensing with most licenses issued within 24 hours (June 2012); licensing requirements were essentially eliminated on a selection of commodities covered by 1,928 HS tariff lines considered as nonsensitive. 17

18 International Trade Sector: Trade Policies 18 The establishment of the Single Window with technical assistance from Japan. Since 2013 the risk management System for customs clearance was introduced. Myanmar has a plan to apply the WTO Customs Valuation Agreement. The amendment of the Sea Customs Act 30 is revised and subject to approval of Parliament The Government intends to gradually phase out the license regime through a series of announcements in 2014 and The license procedures are applied on a non-discriminatory basis.

19 International Trade Sector: Trade Policies The government of Myanmar has no intention of impeding imports of these products without science-based justification. For Technical barriers to trade (TBTs) and phytosanitary (SPS) measures, no intention of impeding imports of these products without science-based justification. the new FIL to adopt a "negative list" approach The registration procedure for companies has also been simplified since 22 February 2013 a strategic location and a low-cost production base for exports to the region: SEZs Intellectual property rights 19

20 International Trade Sector Committed to liberalizing intra-asean trade in its services sectors by 2015 for free flow of trade. Timely and active implementation of the AEC initiatives Ways forward The reforms ultimately aim at an ambitious target, which is an allinclusive development. Improved market access, trade facilitation initiatives and increased FDI in the economy are playing key supporting roles in this economic diversification strategy In order for trade facilitation, it is urgent to have a single NSW portal to link the multitude of government agencies and private enterprises Institutional capacity building 20