Identifier
Created
Classification
Origin
04RANGOON513
2004-04-23 04:33:00
CONFIDENTIAL
Embassy Rangoon
Cable title:  

THE BURMA-THAI BORDER TRADE CHRONICLES, PART III:

Tags:  ETRD PHUM PREL ECON PGOV BM TH NGO 
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C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000513 

SIPDIS

STATE FOR EAP/BCLTV, EB, DRL
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 04/22/2014
TAGS: ETRD PHUM PREL ECON PGOV BM TH NGO
SUBJECT: THE BURMA-THAI BORDER TRADE CHRONICLES, PART III:
SANCTIONS, PEOPLE, AND ASSISTANCE

REF: A. RANGOON 497

B. RANGOON 488

C. RANGOON 138 AND PREVIOUS

D. 03 RANGOON 1552

E. 03 BANGKOK 7434

Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D)

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000513

SIPDIS

STATE FOR EAP/BCLTV, EB, DRL
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 04/22/2014
TAGS: ETRD PHUM PREL ECON PGOV BM TH NGO
SUBJECT: THE BURMA-THAI BORDER TRADE CHRONICLES, PART III:
SANCTIONS, PEOPLE, AND ASSISTANCE

REF: A. RANGOON 497

B. RANGOON 488

C. RANGOON 138 AND PREVIOUS

D. 03 RANGOON 1552

E. 03 BANGKOK 7434

Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D)


1. (C) Summary: Despite predictions that new U.S. sanctions
would cause major changes in border trade and migration, a
recent visit by Bangkok and Rangoon Econoffs to two of the
three major Thai-Burma border crossings (refs A and B) shows
business as usual in the movement of goods and people.
Though border trade has not spiked since the sanctions came
into effect, it continues to grow because of the generally
informal nature of the border trade. The flow of economic
migrants to Thailand has also not risen dramatically since
the new sanctions took effect, but thousands of Burmese
continue to flock across the border in search of better
economic opportunity. The Thai government has started some
assistance programs aimed at developing Burma's border area
economy. However, local businesspeople on both sides are
skeptical that such an approach will have much impact. End
summary.

Border Trade Booms Despite Sanctions


2. (C) Despite expectations of sharp spikes in border trade
and economic migration due to new U.S. sanctions (which took
effect in July 2003),on the Thai-Burmese border at Ranong
(Thailand)-Kawthaung (Burma; ref B) and Mae Sot
(Thailand)-Myawaddy (Burma; ref A) businesspeople said they'd
seen few notable changes. Since July 2003, the volume of
trade has continued to rise in both areas, though there has
been no unusual jump in volume either legal or illegal. Thai
traders in Mae Sot said they have noticed a more lax attitude
at Burmese Customs to the free flow of goods in the last
year. However, a Burmese trader in Kawthaung said that, to
the contrary, import licenses for border trade have become
dearer since Rangoon re-asserted control over issuance -- a

right previously devolved to local GOB Border Trade
Department officials.


3. (C) Border trade trends are independent from those of
non-border commerce (which has fallen dramatically since last
summer) because of the informal nature of border trade, even
if done legally. Businesspeople contract almost exclusively
with friends, and payments are nearly always routed via an
unofficial, and illegal in Burma, hundi system. (The hundi
system is an unofficial network that is used worldwide to
send remittances and provide trade settlement across
borders.) For legal border trade imports into Burma,
underinvoicing is the rule, with hundi payments used make up
the difference. Thai-Burma border traders are further
insulated from the impact of the 2003 sanctions because they
rarely use USD for their transactions, instead dealing in
Burmese kyat or Thai baht.


4. (C) Thai businesspeople on the border were universally
negative about the U.S. sanctions. Though they are unlikely
democracy boosters and are no champions of the Burmese
everyman, some pled the case of the "poor Burmese" suffering
under sanctions-induced economic problems, making it
impossible for them to "think of democracy." Others were
more parochial, saying sanctions induced increased illegal
immigration which burdened Thailand. Most supported PM
Thaksin's decision to engage with the SPDC, saying the
previous PM's support for U.S. policy on Burma had led to a
GOB crackdown on Thai trade and businesspeople in general.


5. (C) However, Thai and Burmese businessmen did not blame
sanctions for the poor economic climate in Burma and the need
for smuggling. Instead they pointed to the mercurial trade
policy of the GOB. All agreed that nearly all products could
be traded legally or illegally depending on the current GOB
restrictions.

Economic Migrants: An Unstoppable Flow


6. (C) It is clear that Burma's major export to Thailand at
both border points is people. An international NGO in Ranong
(Thailand) told us as much as 40 percent of the city's
250,000 population is Burmese, the vast majority working in
fish processing factories and in construction. Many more
cross over and move further inland into Thailand seeking a
better economic situation elsewhere. Likewise in Mae Sot,
the population of Burmese migrants is very high, with
2,500-4,000 crossing into Thailand every day. Many return to
Myawaddy at night, but many others stay to work in shops, in
the agricultural sector, or in the foreign-owned garment
factories of Mae Sot.


7. (C) Labor organizers in Mae Sot report that these
migrants, even those few who register with the Thai labor
authorities, face harsh working conditions and wages about 50
percent of the Thai minimum wage (about USD 3.50/day).
However, even this small sum is probably 100-250 percent what
they would make as laborers in Burma so the inflow of Burmese
workers is relentless.


8. (C) Local representatives of World Vision, a USG partner
in anti-trafficking and HIV/AIDS efforts in the region,
report that while trafficking of Burmese women into Ranong is
rare, Mae Sot does serve as a portal for trafficked persons
and economic migrants to other destinations in Thailand. One
estimate from Ranong was that only 10 percent of migrants
there were "trafficked," and few illegal Burmese in town were
working as prostitutes. Mae Sot has a more organized labor
export business from Burma -- involving the private sector
and authorities on both sides of the border -- which charged
would-be migrants USD 175 a head to cross through the jungle
and USD 375 a head to be smuggled in by truck.


9. (C) Thai NGOs and local factory owners told us that there
had not been a large increase in migrants since the new
sanctions, which also banned imports of Burmese products,
took hold last July. However, the steady inflow of workers
was certainly higher than the demand for cheap labor on the
Thai side in both Ranong and Mae Sot. One labor NGO leader
in Mae Sot said that he had seen an increase in female job
seekers from Rangoon and Mandalay since the sanctions,
alongside the normal crowd from Karen and Mon States.

Thailand's ECS Plan Has Little Impact at Border


10. (SBU) Since the initiation of the Economic Cooperation
Strategy (ECS) program in 2003 (ref E),the RTG has worked to
spur bilateral trade and provide technical training and
development aid to Burma. The Thai Finance Ministry is
currently considering eliminating import tariff rates on 751
products from Burma under the ASEAN Integrated System of
Preferences (AISP). According to Thai Ministry of Commerce
(MoC) officials, the RTG will soon allow duty free entry of
eight agricultural products -- maize, sweet corn, soybeans,
potatoes, eucalyptus, sesame seeds, and cashew nuts -- from
Burma, Laos, and Cambodia. Under the ECS program, Thailand,
a net importer of soybeans, plans to provide technical
training to Burmese farmers to help improve quality; in Mae
Sot, local businessmen opined that at some point in the
future, contract farming might be a viable investment,
boosting agricultural trade. In addition, the RTG has vowed
to build a road from Myawaddy to the base of the Karen hills
18 km from the border as part of a larger effort to create a
road link across central Burma, from Thailand to India.
According to a Thai MFA source, this project is "well under
way," with funding from the Asian Development Bank.


11. (SBU) Businessmen in Ranong, however, complained that the
ECS program favors large Thai companies with close ties to
leaders in Bangkok, and will likely have very little impact
on the realities of cross border trade in the provinces. In
any case, as both Thai MoC officials and local traders
pointed out, the ECS program did little to improve the
biggest hurdles in dealing with Burma -- the chronically
uncertain investment climate. The constant threat of
appropriation by the GOB leaves little incentive for Thai
businessmen to seek local partnerships. A Thai MoC official
noted that efforts to forge a bilateral investment and border
trade agreement have been ongoing for almost ten years, with
little success. Even if such an agreement were possible, she
admitted, this document would still be "just paper."
Comment: Squeezing the Balloon

12. (C) The RTG's efforts to stimulate the border economy are
logical considering the demand for some Burmese products and
the desire to stem illegal migration. However, the success
of this project, like so many other traditional efforts to
develop Burma's rudimentary economy, will depend on the will
of the Burmese regime to take advantage of the proffered
assistance. For instance, the Burmese government is
inexplicably banning the export of some of the products for
which Thailand is thinking of allowing tariff-free access.
Even if the ECS projects do not succeed in stimulating
Burma's formal economy and legal trade, and U.S. sanctions
continue, we are confident that the close personal links
between businesspeople on both sides of the borders will
ensure informal trade of goods continues to pick up a good
deal of the slack. Likewise, until employment opportunities
in Burma increase drastically, the allure of even Thailand's
worst-paying jobs will be significant for hundreds of
thousands of poor Burmese. End comment


13. (U) This is a joint Embassy Rangoon-Embassy Bangkok cable.
Martinez