ENGLISH DEYEA NEWS

by Solomon | New Delhi (Mizzima) - Burma and India has agreed to replace the US dollar with the Euro or the Singapore Dollar to facilitate bilateral trade between the two countries from the beginning of 2009, a Burmese Trade Union official said.

An official at the Union of Myanmar Federation of Chamber of Commerce and Industry (UMFCCI) said, the two countries had agreed to replace the use of the US Dollar for trade with the Euro or the Singapore Dollar in October.

"We will start using the Euro or the Singapore Dollar for trade with India from 2009, currently it is in the final stages of discussion," the official told Mizzima in a telephonic conversation.

Burma and India have been using the US Dollar as the base currency for its bilateral trade, which registered an increase in the past few years.

The official said the decision to replace the use of the US Dollar was for better and smoother transactions. However, he refused to elaborate on how the change of base currency for trade would garner better monetary transactions.

Sean Turnell, an Associate Professor in the Economics Department of Australia's Macquarie University, said although the conversion of the currency for bilateral transactions was not a major problem, the process would involve extra costs, commissions, and complexity in trade.

"Given that most of Burma's exports and imports are priced in USD in world markets, some sort of conversion will be necessary. Therefore, there is extra costs, commissions and complexity," Turnell said.

Turnell, however, added that it is "another poor economic decision by the SPDC," referring to Burma's military junta with its official name –the State Peace and Development Council.

Burma's military government, which is under financial sanctions enforced by the United States, has repeatedly held the sanctions responsible for its economic failures saying, "sanctions are immoral" and hurt the economy with a direct impact on the people.

Whatever the reasons maybe behind the conversion of the currency for transaction, Turnell said Indian traders would be affected the most since Burmese traders "are quite efficient at evading all sorts of government restrictions."

"Indian businessmen are used to dealing in USD for most things, so for them it must be an irritant," Turnell said.

Over the past few years, India and Burma had increased bilateral trade with Burma enjoying substantial trade surplus.

According to India's Ministry of Commerce & Industry, India's exports to Burma for the fiscal year 2007-08 accounted for about USD 185 million, while its imports from Burma were valued at around USD 810 million, comprising mostly of pulses.

Despite targeting USD 1 billion bilateral trade in 2006-07, the countries fell short with a trade volume of only USD 650 million. However, Indo-Burmese bilateral trade has been increasing with the trade amount reaching USD 557.68 million in 2005-06, which is 25 per cent up from the previous year, 2004-05, when it stood at USD 341.40 million.

Additional reporting by Mungpi