11/05/2011 (Myanmar Times) - The value of export credits has shot upward in the wake of the Ministry of Commerce decision on April 9 to allow more companies to import palm oil.

“There are many factors that are acting to push the value of export credits upward but the biggest is definitely the announcement that more companies will be allowed to import palm oil. Since then traders have been rushing to get their hands on export credits,” said U Hnin Oo, chairman of the Myanmar Shrimp Association.

Under Myanmar’s export first, import later trade policy, importers are required to show evidence that they have export credits – which they can buy from exporters – before permission is granted to import.

U Hnin Oo said the value of one export credit had risen by almost 10 percent since early April, increasing to K920 on May 4 from K850 a month earlier. In the same period the exchange value of one US dollar was more or less static at about K840, he said.

U Win Aung, a beans and pulses exporter based at the Bayintnaung Wholesale Commodity Exchange Centre, said exporters were happy to see the value of export credits rising.

“Exporters are relieved to see export credits increasing in value because for a long time there was almost no difference to the value of the US dollar,” he said.

“I think export credits should always be worth about 10pc more than dollars because the taxes have already been paid in the export process,” said U Win Aung, adding that he would be keeping an eye on future trade policy changes.

In mid-April, the newly appointed Minister of Commerce, U Win Myint, told senior Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) officials that he would allow private companies to import palm oil, which had previously been controlled by a cartel of companies such as Union of Myanmar Economic Holdings Limited, Htoo Trading and Yuzana Group.

U Win Myint has opened the market to new players after seeing palm oil prices hit K2800 a viss (1 viss is 1.6 kilograms or 3.6 pounds) in early April, up from K2100 in February. Within a week of the announcement that more import licences would be granted, palm oil prices had receded to K2400 a viss, said one palm oil trader at Bayintnaung.

“I fear commodity price rises the most, which are far more important than overall export and import volumes to most working-class people. I want to keep commodity prices stable,” U Wint Myint said at the UMFCCI 20th annual general meeting, held at the Myanmar International Convention Centre in Nay Pyi Taw on May 1.

U Win Myint was formerly chairman of the UMFCCI but gave up his position to contest the election as a Union Solidarity Development Party candidate.

“We are working hard to import enough palm oil to meet demand. But at the same time we want to reduce our reliance on those imports in the long-term by producing more groundnut and sesame oil,” he said.

One anonymous UMFCCI official said more than 100 private companies would eventually be granted palm oil import licences.