Page 28 - Azerbaijan State University of Economics

Y.V. Aleskerovа: Economy agriculture countries: Myanmar
THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 2, 2015, pp. 24-31

may use one of several exchange rates. Private sector imports require import licenses
for each transaction and are financed through the importers‟ foreign trade account.
Private sector trade is transacted at the parallel market rate, although a range of other
exchange rates may be applied.
Myanmar entered AFTA on January 1998 a year after being a membership in
ASEAN. Under this scheme, imports are classified under several lists: the inclusion list,
temporary exclusion list, sensitive list and general exception list. About 43 percent of all
imports were on the inclusion list which consisted of commodities on the fast track (0-5
percent tariff rate within 5-8 years) and normal track (0-5 percent tariff rate within 10
years). Products on the temporary exclusion list (about 55 percent) were phased into the
inclusion list by 2015. The government practiced an unrealistic official exchange rate to
overvalue the Kyat. Although the official rate has remained fixed at Kyat 8.5 per Standard
Drawing Right (SDR) since 1977, the market rate of the Kyat has significantly
depreciated and business transactions are conducted at market rate. SEEs are required to
record their transactions at the official rate as well as foreign firms are also. This practice
distorts the accounts and reduces transparency. In 1993, the government introduced
foreign exchange certificates which have been used in external trade and selected invisible
private sector transactions (means unrecorded business transactions). Despite moves to
encourage foreign trade and investment, extensive regulations and procedures tend to
hinder commercial activities in the country. The procedure for requesting permits that
required for exports, imports and other business activities has been cited as not being
transparent and the list of prohibited exports has been frequently changed. Commercial
disputes are handled solely under the arbitration among the persons involved in the
disputes. As a result, business involved in disputes tend to seek settlement informally
rather than legal system. The government partially liberalized rice production in 1996 and
encouraged the farmers to diversify the crop production away from so-called
industrialized crops such as pulses, sugarcane and cotton. However, the restrictions on rice
export made the domestic prices far lower than international prices. In 2004, government
announced that domestic rice marketing and export of rice are freed. But unfortunately,
export of rice has been again prohibited to stabilize the rice prices inside the country. As a
result, the export capabilities in Myanmar are restrained by the unintended effects of
agricultural and trade policies as well as by political situations in the past.
The scientific novelty of the research lies in the fact that the author has made
specific proposals and recommendations on the modernization of the rural economy

28