In the wake of US sanctions on two commercial banks in Myanmar, Bangladesh is contemplating resuming financial transactions with Myanmar’s alternative bank, UAB. The looming impact on trade has prompted considerations of alternative financial avenues, notably the UAB (United Amara Bank) in Myanmar. This strategic shift emerges as a potential solution to circumvent the limitations imposed by recent sanctions.
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Sources reveal that Bangladesh’s commerce ministry has initiated discussions with the Bangladesh Bank (BB) to outline a strategic course of action. A crucial part of this process involves communication with the Bangladesh mission in Yangon. The mission, in turn, has proposed UAB as a viable option while providing a detailed blueprint to resolve the ongoing financial quandary.
keen interest conducting business
Despite the substantial potential for significant trade, the current level of commerce between Bangladesh and Myanmar remains minimal. Consequently, Bangladesh is actively exploring the prospect of reinstating financial transactions by engaging with an alternate financial institution, UAB, within Myanmar. In fiscal year 2020-21, Bangladesh exported approximately $4.0 million worth of goods to Myanmar while importing goods valued at around $130 million.
- Bangladesh and Myanmar (2020-21)
- Bangladesh Exports to Myanmar: $4.0 million
- Imports from Myanmar to Bangladesh: $130 million
UAB named Best Bank in Myanmar
The United Amara Bank, known as UAB, is a leading bank in Myanmar. It’s known for being adaptable and a leader in the banking sector, especially when rules and how things are run change a lot.
In 2020, it was recognized as one of the best places to work for employees in Myanmar, showing it cares about its staff.
Since starting in 2010, UAB has grown a lot. It now has more than 79 branches in 53 places across Myanmar. It offers lots of different financial services like banking for regular people, important customers, small businesses, big companies, trade deals, and managing money for others. It also has a part called UAB Securities that helps with buying and selling stocks, giving advice about money, and doing big money activities like investment banking.
Despite historical challenges, the drive to fortify economic ties is evident. Leveraging their geographical proximity and complementary advantages, Myanmar and Bangladesh aim to strengthen economic collaboration. This endeavor not only aims to reduce dependency on China and India but also seeks to invigorate trade within the South and Southeast Asian regions.
Myanmar boasts rich resources, particularly in oil and gas, which complement Bangladesh’s industrial prowess in textiles, apparel, and pharmaceuticals. This synergy opens doors for reciprocal trade in both raw materials and finished goods, offering avenues for mutually beneficial transactions.
Infrastructure and Agriculture Collaboration for Trade Boost
The prospects for trade and investment are significantly linked to infrastructure development, particularly in transportation and energy sectors. Bangladesh is poised for potential investments in Myanmar’s infrastructure, tourism, and agriculture, envisioning a promising future in these sectors.
Amidst a crisis in 2019, Bangladesh sourced onions from Myanmar due to an onion shortage from India.
Myanmar’s military-backed government recently introduced a controversial currency policy, drawing widespread attention.
The newly implemented foreign-exchange regulations have sparked criticism from various quarters, including embassies, global organizations, development agencies, foreign investors, businesses, and chambers, as stated.
Plans for projects like the Trans-Asian Railway Network and the establishment of economic zones near the border underscore the intent to stimulate trade and investment. However, to fully realize their trade and investment potential, Myanmar and Bangladesh must pursue a Free Trade Agreement and resolve existing disagreements. These initiatives are essential steps toward comprehensive economic integration between the two nations.
Implications of US Sanctions
The impact of US sanctions reverberates through Bangladesh’s financial landscape. In response to the restrictions, the Bangladesh Bank directed local banks to cease financial engagements with Myanmar Foreign Trade Bank (MFTB) and Myanmar Investment and Commercial Bank (MICB). Consequently, accounts held by Sonali Bank Ltd with these entities were frozen, disrupting the flow of bilateral trade.
Sonali Bank, the largest state-run bank in Bangladesh, faces constraints with frozen deposits totaling $17,000 and $200,000 in MFTB and MICB, respectively. Similarly, the MFTB and MICB hold deposits of approximately $100,000 and $1.0 million with Sonali Bank. Efforts by the Myanmar ambassador in Bangladesh, alongside top officials engaging with Sonali Bank, aim to resolve this deadlock.
Currently, all financial transactions with Myanmar banks are halted in accordance with the directives issued by the Bangladesh Bank. However, the potential reinstatement of these transactions, under consideration by the present government, holds promise for fostering prosperity within the nation.
Rohingya Crisis and its Impact on Bangladesh-Myanmar Relations
Both Bangladesh and Myanmar are urged to transcend the crisis that has overshadowed their bilateral ties. Fostering economic links can pave the way for growth and amicable relations.
Myanmar was among the earliest supporters, recognizing independent Bangladesh in January 1972, marking over 50 years of official bilateral relations. Throughout diplomatic fluctuations, Bangladesh has consistently advocated for cooperation. Myanmar, since gaining independence from British rule in 1948, has grappled with internal turmoil.
The Rohingya exodus due to a military crackdown in 2017 strained Bangladesh’s resources significantly. Despite grappling with this immense refugee crisis, Bangladesh remains committed to fostering peaceful ties with its neighbors. The Bangladesh-Myanmar relationship presents opportunities for diverse cooperation, spanning infrastructure, tourism, security, and economic endeavors. Both nations share mutual interests, setting the stage for multifaceted collaboration.
Myanmar has much to gain, both economically and strategically, by strengthening trade relations with Bangladesh. Bangladesh serves as a crucial gateway for Myanmar to access the South Asian Association for Regional Cooperation (SAARC), bridging ASEAN with South Asia.
Under the bilateral agreement facilitated by China, Bangladesh and Myanmar were set to execute a pilot repatriation program for Rohingya refugees. This initiative presents a new chance for fostering improved relations between the two nations. Given their geographical proximity and shared cultural values, the economies of these Asian countries are well positioned to strengthen through increased trade and investment.
Frozen Deposits and Negotiations Between Sonali Bank and Myanmar Banks
- Sonali Bank
- $17,000 frozen in MFTB.
- $200,000 frozen in MICB.
- MFTB and MICB:
- $100,000 held in Sonali Bank by MFTB.
- $1.0 million held in Sonali Bank by MICB.