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Thursday, June 30, 2022

Mianmar: Rubber growth bounce leads to smuggling rise

Recent increases in rubber production are not reflected in export statistics, leading officials to conclude that illegal exports are on the rise.

Trucks carrying raw rubber wrapped in plastic to conceal the smell often try to slip undetected through the borders, while others deliberately underestimate the size of their rubber loads at the border, all in a bid to avoid export duties.

“Some traders have found they are able to carry rubber anywhere in the country without inspection and can carry it easily to other countries,” said U Khint Myint, secretary of the Myanmar Rubber Planters and Producers Association.

Domestic rubber production is thought to top 160,000 tonnes per year, though official statistics have recorded consistent exports of about 90,000 tonnes per year. With domestic demand at about 10,000 tonnes annually, the numbers do not add up – and a substantial amount is likely diverted to illegal exports, he said.

“Catching these informal rubber exporters would likely mean Myanmar’s official exports would be at least 100,000 tonnes this year,” he said. “But if not, illegal exports will likely get bigger – so the government needs to urgently conduct effective raids.”

The export of raw rubber is outlawed in a bid to keep processing jobs in Myanmar, but trading partners are said to prefer raw rubber to Myanmar’s semi-processed rubber, leading to smuggling. Some illegal traders are also keen to avoid paying taxes, such as a 2 percent tax on exported goods that began in June last year.

Illegal exporters are thought make use of popular trade routes such as Muse and Chinshwehaw linking Shan State and China, and illegal links in the Payathanzou border area near Thailand, he said, adding it is more difficult to illegally export from Myanmar’s sea ports.

U Khint Myint said he advocated for stricter regulations and more effective enforcement to cut down on those unfairly exporting their rubber.

Ministry of Commerce officials said that an additional 10,000 acres have been planted with rubber annually over the past several years, though you would never know it looking at the export statistics.

Some 90,000 tonnes of rubber was exported three years ago when production was at 120,000 tonnes, said U Win Myint, director of the ministry’s Trade Promotion Department.

Yet export statistics for the 2013-14 fiscal year show nearly the same 90,000 tonnes being exported, despite production having increased to 160,000 tonnes.

U Win Myint said much of the informal rubber exports probably goes to Thailand, as they have many factories for processing it.

Thailand is the world’s largest source of rubber, producing some 3.51 million tonnes in 2013, according to Bloomberg news wire.

Requesting anonymity, the owner of one trading company who regularly exports through Muse said border traders generally demand cheaper unprocessed rubber, as the legal semi-processed rubber produced by local factories is often low quality.

Unprocessed rubber currently fetches under US$800 a tonne, while rubber processed at the RSS standard commands about $1800.

The trader said his counterparts who used legal channels not only had to worry about paying taxes, but faced higher labour and transport charges.

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