Stringent Controls on Myanmar’s Border May Have Short-term Impact on Border Trade, but 2020 Cross-Border Exports to Myanmar Projected to Fall below THB100 Billion due to COVID-19 (Current Issue No.3138)

                Thailand is facing hurdles in transporting goods across the border to Myanmar again after a recent announcement by Myanmar to tighten its cross-border controls as part of its COVID-19 prevention and control measures. Such controls include a requirement for truck drivers from Thailand via Chiang Rai's Mae Sai checkpoint to switch shifts with a Myanmar national before entering the town of Tachilek. Myanmar has also imposed a cross-border quota, allowing only six trucks per day to cross from each side. Such trucks are required to register with Myanmar's Road Transport Administration Department and comply with the regulations of Shan State's Road Transport Administration Department, effective September 17, 2020. It is expected that such restrictions will directly hurt Thailand's cross border exports to Myanmar via Chiang Rai's Mai Sai border checkpoint. During 7M20, such shipments were valued at THB6.55 billion. Since the volume of Thai shipments to Myanmar is set to decline, there could be a shortage of numerous goods in Myanmar.

                 Due to the importance of border trade for both countries, KResearch is of the view that stringent controls at Chiang Rai's Mae Sai border checkpoint will likely be eased once the COVID-19 pandemic improves. We expect that Myanmar may allow more freight trucks to enter in the future, though such trucks will have to be certified by the relevant authorities while truck drivers will still have to switch shifts with a Myanmar national. However, Thailand's cross-border exports to Myanmar via Chiang Rai's Mae Sai checkpoint account for only 13 percent of the total cross-border export value to Myanmar. Moreover, such shipments are primarily necessities; therefore, the stringent controls on Myanmar's border may not significantly affect Thailand's cross border exports to Myanmar.

             ​ However, because Thailand's cross-border exports to Myanmar have been affected by murky economic conditions as a result of COVID-19, Thailand's overall cross-border shipments contracted 14.2 percent YoY, to THB51.4 billion during 7M20. KResearch expects that Thailand's cross border exports to Myanmar will be gloomy in 2020 and will likely record a steeper contraction of at least 10 percent (compared to a shrinkage of 6.2 percent projected before). Given this, Thailand's cross-border exports to Myanmar may fall below THB100 billion for the second consecutive year in 2020. Nevertheless, close attention must be paid to a further contraction of such shipments if Thailand and Myanmar see the need to impose stringent controls on other border checkpoints, especially at Mae Sot in Tak and in Ranong.​