The Rakhine State Federation of Chambers of Commerce and Industry, has reported that Myanmar-Bangladesh border trade is being impacted by certain banks in Bangladesh restricting the use of US dollars.
Beginning in the last week of March, Sonali Bank and Agrani Bank, both owned by the government of Bangladesh and privately owned respectively, have imposed limitations on the issuance of US dollars to traders from Myanmar.
Sonali Bank, which has been facilitating money transfers for Myanmar-Bangladesh border trade, has indicated that it has run out of US dollars, and will no longer be issuing them since the last week of March. Similarly, Agrani Bank has restricted funds due to a software issue.
The Rakhine State Federation of Chambers of Commerce and Industry’s Secretary, U Aung Aung, has stated that as a consequence, Bangladesh traders are finding it challenging to purchase the necessary US dollars from the government for their procurement of goods, and buying commodities from Myanmar owing to shortage of US dollars.
They are refusing to pay in US dollars when making payments. There are restrictions and controls.
So when the money does not flow from the official bank, it is difficult for traders as well," he said.
According to traders, businesses in Bangladesh have placed orders for goods from Myanmar, but due to the lack of available US dollars, they are currently unable to make payments for their orders.
As a result, they are encountering challenges and have temporarily suspended imports from Myanmar.
U Aung Aung, the Secretary of the Rakhine State Federation of Chambers of Commerce and Industry, has also mentioned that there are concerns regarding financial sector-related issues between both countries, which may result in illegal trade in the future.
“ If there are restrictions on dollars, confidence will decrease. Even if it doesn’t happen now, it will happen in the future. Also we consider that trades from legal channels may go to illegal channels,” he said.
Traders have reported that bilateral trade activities are encountering challenges due to Bangladesh’s struggle with the dollar, as the Central Bank of Myanmar mandates foreign trade to be conducted in foreign currencies.
Currently some goods exported to Bangladesh from the Maungdaw and Sittwe border trade stations on the Myanmar side are being paid solely in Myanmar currency.
The main exports from Myanmar to Bangladesh are freshwater fish, onions and local products such as coconuts, betel nuts, mungo beans and dried anchovies.
As per the Rakhine State Federation of Chambers of Commerce and Industry, exports from the Sittwe and Maungdaw border trade stations, were valued at 5.58 million US dollars, while imports were valued at 0.12 million US dollars from October to December 2021.
As of now, the exchange rate between Myanmar Kyat and Bangladeshi Taka is 1 Bangladeshi Taka equal to 25 (or 26) Myanmar Kyats.
