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Trade deficit worthwhile to fund future growth |
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The expanding trade deficit is not a large problem because much of the increase in imports are for construction material and machinery needed to fuel future growth, according to Ministry of Commerce experts.
Trade volumes totalled about US$15 billion so far this fiscal year, which started April 1, of which about $9 billion were imports and $6 billion were exports, ministry statistics show.
Ministry of Commerce economist and advisor U Maung Aung said exports are up about $400 million over the same period, though imports have increased by $2 billion.
As long as the growth in imports are directed to productive economic sectors that support further economic growth, a trade deficit is not necessarily problematic, he said.
“We should give priority to the country’s infrastructure development, therefore it is impossible to reduce imports,” he told The Myanmar Times.
“Importing items used for investment is also a good sign for the country,” he added. Many of the goods are imported for use in tax-free projects like SEZs, and some, like machinery, will later be exported when no longer required, meaning some of the figures will cancel out.
About 46 percent of the imports are for investment goods, a category which includes machinery, vehicles and telecoms equipment. Another 35pc are fuels and materials like palm oil which are also important for production, the figures show.
Although officials contend the rise in imports is crucial to boost production and economic growth, some also say they are looking at ways to reduce the gap.
Trade Promotion Department director U Win Myint said the Ministry of Commerce is focusing on ways to increase export values by adding more value to locally produced raw materials and planning trade promotion events in other countries.
Natural gas exports currently make up the largest portion of exports, worth $3.2 billion last year with opening of a pipeline to China. However, exports of primary goods such as rubber, fish and timber logs have all decreased this year.
U Win Myint said farmers and traders need education to boost quality control so they can take advantage of opportunities in advanced markets like the EU and Japan.
“Exports to new markets won’t be a roaring trade from the start, these countries have stringent requirements on hygiene,” he said. “It’s not like China and India which buy goods of every sort of quality, but these advanced countries offer higher prices.”
The commerce minister has said he expects total trade volumes to hit $30 billion this fiscal year.
Source : mmtimes.com
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