ASEAN KEY DESTINATIONS
South Korea looks to Myanmar for further trade
Recently, the Korea Importers Association (KOIMA) scoped out new suppliers to bolster their imports from Myanmar. A total of 38 South Korean delegates, each representing a company, participated in the Korea-Myanmar Business Forum and Seminar, held last week at the Shangri-La Hotel.
KOIMA dispatches “Import Missions” around the world four to five times a year, as a means to organize business matchmaking and augment the trade deficit. The forum hosted speakers including the South Korean Ambassador to Myanmar, the chairman of KOIMA, Director General of Myanmar Trade Promotion organization and Vice President of Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).
Korea–Myanmar Trade Relations were first established in 1975, but it wasn’t until the new civilian government under Thein Sein came to power that a significant amount of trade started to take place. The trade between the two countries has risen steadily during the past five years, surpassing US$850 million in 2015. Currently, South Korea is the sixth largest foreign investor in Myanmar, two of the notable corporations in Myanmar being conglomerates Daewoo and Lotte.
The South Korean economy is highly developed but lacks natural resources. Import of raw materials and semi-finished goods is essential to the country’s economy, which relies on refining and adding value to the goods for export – notably electronics, semiconductors, telecommunications equipment and vehicles.
Conversely, Myanmar’s emerging economy is still undergoing liberalization. About 70% of Myanmar population works in agriculture and its primary products have a competitive edge in the world market due to its low price. Gems, oil, industrial minerals and agricultural products are some of the country’s top exports.
The compatibility of the two economies makes them attractive trade partners to each other, but not without challenges of its own.
Jong-hoon You, the manager of Phil Co. Seoul, said: “With the recent economic downturn in Korea, things are tightening up in general.” Between 2014 and 2015, South Korea’s growth rate slowed down from 3.3% to 2.6% and import fell from US$526 billion to 436 billion. Mr You said “unfamiliarity with the country, its people and hence its business practices” may be another reason for extra caution. This is his first time visiting Myanmar and the forum.
On the other hand, Myanmar people feel an affinity towards Korea, said Ms. Kin Myo Shaw from the Myanmar Embassy in Korea. “Korean Wave has made its way to Myanmar where the music and entertainment have grown in great popularity. Meanwhile, Korea can look forward to the new government of Myanmar opening up its uncharted economy with a new focus to recuperate.”
Indeed, the government has relaxed import restrictions and abolished export taxes. The goods traded between Korea and Myanmar enjoy preferential tariffs and for some cases even tax exemption. “Many companies are not aware of this, and fail to take advantage of this,” said Ms. Naw Mutakapaw, Director of Trade Development Division.
Ms. Mutakapaw also noted the importance of improving and making consistent the quality of products to facilitate Myanmar’s exports. “Similar to Japan, Korea has a high standard for products and strict rules regarding quality assurance, especially when it comes to the matter of food safety. There are tests to pass, certificates to obtain.” Agricultural and marine products such as spices, coffee, and seafood are some of Myanmar’s major exports to Korea.
Although its approach is tentative, Korea looks to Myanmar and its potential for growth with great interest, said KOIMA Chairman Myoung Jin Shin: “Myanmar is abundant in the natural resource we lack. We are here to see whether we can procure items such as gems, rubber, and textiles which we import from Malaysia, Indonesia, and Thailand, at a lower price.”
Products from Myanmar will be gradually brought in and tested for safety and quality, he said. Meanwhile, he strongly encourages Myanmar businesses to refer to KOIMA for resources and connections.
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