US embassy cable - 04RANGOON488

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000488 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 04/20/2014 
TAGS: ETRD, ECON, PREL, PGOV, EFIS, BM, TH, Economy 
SUBJECT: THE BURMA-THAI BORDER TRADE CHRONICLES: PART I, 
THE SOUTHERN FRONTIER 
 
REF: A. RANGOON 138 AND PREVIOUS 
 
     B. 03 RANGOON 1552 
     C. 03 BANGKOK 7434 
 
Classified By: DCM Ron McMullen for Reasons 1.4 (B,D) 
 
1. (C) Summary: A recent joint visit by Bangkok and Rangoon 
Econoffs to Ranong and Kawthaung, along the southern 
Burmese-Thai border, shows business as usual in the informal 
movement of goods and people.  However, the formal economy on 
both sides is sluggish due to the continued ban on Thai 
fishing in Burmese waters and the Burmese government's 
perpetually capricious economic policies.  For Kawthaung 
(Burma), economic activity from the southern border trade 
continues to provide critically needed goods, and the border 
crossing remains an important outlet for workers from the 
interior seeking better economic opportunities in Thailand 
and Malaysia.  In Ranong (Thailand), locals are giving up on 
Burma and looking regionally for their economic future.  End 
summary. 
 
Waiting for Fish: Ranong 
 
2. (U) To assess the current environment along the Thai-Burma 
border, Bangkok and Rangoon Econoffs traveled March 15-19 to 
two major border trade points -- Ranong (Thailand) and 
Kawthaung (Burma) and Mae Sot (Thailand) and Myawaddy (Burma; 
septel).  Separated by a wide river mouth on the Andaman Sea, 
Ranong and Kawthaung are tied together by the fishing 
industry and modest amounts of legal and illegal trade. 
According to Ranong Fisheries Association sources, more than 
2,000 fishing boats (of various sizes) call Ranong home 
despite the fact that rich Burmese territorial waters have 
been off-limits to Thais for several years.  Local 
businesspeople still blame the previous Thai Prime Minister 
Chuan Leekpai whose tough Burma policy led to the Burmese 
regime's cut off of Thai access to Burmese waters. Other Thai 
fishing industry sources blame overzealous Thai fishermen for 
decimating Burmese fish stocks in the 1990s, which led to a 
permanent Burmese crackdown. 
 
3. (SBU) Whatever the reason, the fishing ban is slowly 
strangling Ranong's once vibrant commercial fishing and 
processing industry.  Local Thai waters are not as rich, and 
severe responses by the Burmese Navy to poaching -- 40 Thai 
boats were seized in 2003 -- discourage poaching in Burmese 
waters.  While a few fish processing plants remain, they buy 
much of their raw materials from Songkhla and other fishing 
grounds to the south to supply the domestic market. 
 
4. (C) Border trade between the two countries is steady, but 
stifling GOB import controls and foreign exchange laws 
prevent it from booming.  This environment keeps traders on 
their toes and requires creativity in sourcing and methods. 
The local Thai Customs chief noted that when the Burmese 
regime closed the border for trade in May 2002, Chinese 
products replaced Thai goods in Kawthaung's markets.  Ranong 
Chamber of Commerce officials told us they would never invest 
in Burma because of its unstable business environment, and 
that trade is only possible on a small scale between 
"friends."  A Burmese border trader agreed, saying only a 
small group Burmese businessmen in Kawthaung can thrive on 
trading with Ranong, using small boats to import consumer 
goods and diesel fuel -- usually illegally -- and export 
foodstuffs. 
 
5. (SBU) Ranong's business community, and local RTG 
officials, say the future of Ranong is as much or more 
regional than bilateral.  There is a vision of a major 20,000 
ton-per-year port at Ranong that would serve as Bangkok's 
access to the Andaman Sea and points west.  There is also 
hope that the touristic development of Burma's untouched 
Myeik Archipelago (800 islands lying offshore of Kawthaung 
and north) will be a boon for Ranong's hotels, boat 
operators, and tour guides. 
 
Tourism and Palm Oil: Kawthaung 
 
6. (C) In Kawthaung, Burma's southernmost point, local 
businesspeople are rather pessimistic about the town's 
economic future.  Its proximity to Thailand and Malaysia, and 
the number of small craft that ply the coastal waterways, 
will always ensure its role as a border trading and smuggling 
center and a mustering area for illegal migration to Thailand 
and Malaysia.  However, Kawthaung's lack of infrastructure 
and neglect by the GOB will likely retard any major 
development (such as tourism or fisheries). 
 
7. (C) A major GOB campaign underway north of Kawthaung is 
the development of large import-substituting palm oil and 
rubber plantations.  Small businesspeople with whom we spoke 
supported the program, wherein the GOB will give low-interest 
loans and other assistance to set up these farms.  However, 
this will be a crony-dominated program though larger, more 
savvy entrepreneurs admitted they were dubious that the 
government would ultimately prove a reliable consumer, at a 
fair price, of the end product. 
 
Comment: Diverging Priorities 
 
8. (C)  Action along the Ranong-Kawthaung border, while 
relatively sleepy, illustrates several national trends. 
Particularly we saw in action the chilling effect on legal 
commerce of the Burmese regime's capricious and often 
punitive policies.  Fortunately for local businesspeople, 
their close historical personal ties allow a continuation of 
trade on the informal level.  However, this is no way to 
sustainably expand cross border economic ties.  Sadly the 
Burmese business community is helpless to improve its lot. 
However local Thai entrepreneurs can and are moving on, 
looking elsewhere for their economic future.  End comment. 
 
9. (U) This is a joint Embassy Rangoon-Embassy Bangkok cable. 
Martinez