FTI urges government to do more to protect Thai interests in Myanmar

MONDAY, MARCH 04, 2024

The Thai private sector is facing disruptions in business operations in Myanmar, leading to delayed investments and a continuous decline in cross-border trade, which dropped by 11% last year.

However, plans are being prepared to capitalise on opportunities as other countries pull out, thus extending Thai business operations.

Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), stated that businesses investing in Myanmar must closely monitor the geopolitical challenges that are becoming increasingly intertwined. Western countries, in particular, are not favouring the Myanmar government due to its business ties with China.

The military rule has led to Western countries relocating their investments elsewhere. Thai businesses are also slowing down their expansion plans, waiting for the situation to stabilise.

Kriengkrai expressed gratitude to Prime Minister Srettha Thavisin for proactively responding to the proposal submitted by the FTI to promptly open checkpoints. According to him, the checkpoints need to be modernised to facilitate the smooth flow of goods, both in terms of import and export. The Thai government has demonstrated swift decision-making, acting like business professionals who understand and promptly address issues.

He stated that this situation should be seen as an opportunity. While investors from other countries are hesitant and divesting, Thailand should strategise on how to seize or make use of this opportunity to its advantage. This is a matter that needs to be discussed and explored further, he added.

The ongoing unrest in Myanmar has not greatly impacted Thai investors over the past 2 to 3 years. Thailand has been fortunate, with the Bank of Thailand (BOT) playing a significant role in facilitating and promoting cross-border trade discussions in the region over the past decade. The Thai economy has thrived due to increased demand for Thai goods.

Currently, the main challenge lies in the exchange rates. A collaborative policy has thus been put in place to facilitate the convenient use of local currencies, the baht and the kyat. The BOT has worked in partnership with the Myanmar government on this matter, marking it as a significant milestone.

Myanmar’s political crisis and resultant trade imbalance caused foreign exchange reserves to decrease significantly. The central bank of Myanmar then declared a halt to trading to preserve the remaining foreign currency reserves. While those trading with dollars have been affected, Thailand has not experienced a major impact.

"But when the conflict expanded and extended into ethnic areas near the Thai border, this caused logistical problems. Trade and product distribution were disrupted and security risks soared," said Kriengkrai.

Montri Mahaplerkpong, vice chairman of the FTI, said the federation was proposing continuous facilitation of trade along the Thai-Myanmar border by the government. This includes taking care of Thai investors engaged in business activities to minimise the impact of the ongoing unrest in Myanmar. He made mention of the ongoing decline in investment and border trade with Myanmar, with a reduction of 11% in 2023, adding that it is anticipated that this trend will persist at a similar level throughout the current year.

Moreover, a concern is the minority groups taking over Thai investments. Some Thai factories are not located in areas controlled by the central Myanmar government. If there is an attempt to extend influence and these investments are seized by minority groups, it could lead to complications. So if the government provides assurances that such assets will remain secure, Thai investors will be more willing to proceed with their business plans.

“The remaining risk lies in transportation and border trade regulations, restricting the value of cross-border trade so that it does not exceed the specified limit. This could potentially hinder trade from thriving as before. Currently, both Myanmar and Laos are facing issues of currency depreciation. Hence, businesses may experience some fatigue,” Montri said.