This Technical Assistance Report paper highlights that the work on verifying reasonable size of coverage adjustments for Myanmar’s imports was addressed during the mission, using bilateral trade data from Thailand and China. The mission illustrated how granular data can be used to help determine proper adjustments to improve the coverage of the International merchandise trade statistics, using Thailand’s data on exports to Myanmar cross-classified by border checkpoint and 2-digit HS code. The data indicated potential under-coverage of Myanmar imports for a few checkpoints sharing land border with Thailand. Although the actual travel expenditure per person per day for certain years is likely to be lower than the time series published by the Ministry of Hotels and Tourism given continuous depreciation of Kyat over the past five years, this factor should unlikely outweigh the effect of growing numbers of inbound tourists. Balance-of-payments compilation file used by the Central Bank of Myanmar Balance of Payments Section has now been modified to accommodate suggested coverage adjustments for imports, and the new estimation model for freight and insurance on imports proposed during March 2019 mission.

Abstract

This Technical Assistance Report paper highlights that the work on verifying reasonable size of coverage adjustments for Myanmar’s imports was addressed during the mission, using bilateral trade data from Thailand and China. The mission illustrated how granular data can be used to help determine proper adjustments to improve the coverage of the International merchandise trade statistics, using Thailand’s data on exports to Myanmar cross-classified by border checkpoint and 2-digit HS code. The data indicated potential under-coverage of Myanmar imports for a few checkpoints sharing land border with Thailand. Although the actual travel expenditure per person per day for certain years is likely to be lower than the time series published by the Ministry of Hotels and Tourism given continuous depreciation of Kyat over the past five years, this factor should unlikely outweigh the effect of growing numbers of inbound tourists. Balance-of-payments compilation file used by the Central Bank of Myanmar Balance of Payments Section has now been modified to accommodate suggested coverage adjustments for imports, and the new estimation model for freight and insurance on imports proposed during March 2019 mission.

Summary of Mission Outcomes and Priority Recommendations

1. A technical assistance (TA) mission on external sector statistics (ESS) was conducted for the Central Bank of Myanmar (CBM) in Nay Pyi Taw during June 3–5, 2019, as part of the Project on the Improvement of ESS in the Asia–Pacific region. The Project is funded by the Government of Japan; managed by the IMF’s Statistics Department (STA); and implemented by the IMF Capacity Development Office in Thailand (CDOT).

2. The work on verifying reasonable size of coverage adjustments for Myanmar’s imports was addressed during the mission, using bilateral trade data from Thailand and China. Under conservative scenario (i.e., excluding trade through land border checkpoints which potentially involves exports from Thailand and China going through Myanmar onward to the final destination countries), the analysis suggested that Myanmar’s 2018 imports are under-reported by approximately 1.9 billion USD for Myanmar’s imports from Thailand (total discrepancies are 2.0 billion USD), and another 1.9 billion USD for Myanmar’s imports from China (total discrepancies are 4.3 billion USD).1

3. Travel credits were also assessed to be potentially understated (by almost 2.0 billion USD in 2018, and in the range of 0.9–2.7 billion USD for the years 2014–2017). Although the actual travel expenditure per person per day for certain years is likely to be lower than the time series published by the Ministry of Hotels and Tourism (MOHT) given continuous depreciation of Kyat over the past five years, this factor should unlikely outweigh the effect of growing numbers of inbound tourists (from 2.0 million tourists in 2013 to 3.6 million tourists in 2018).

4. Balance of payments compilation file used by the CBM Balance of Payments Section (BPS) has now been modified to accommodate suggested coverage adjustments for imports, and the new estimation model for freight and insurance on imports proposed during March 2019 mission.

Table 1.

Myanmar: Priority Recommendations for ESS Enhancement

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Detailed Technical Assessment and Recommendations

A. Updated Action Plan

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Priority Scale:H – High, M – Medium, L – Low

B. Potential Under-Coverage of Myanmar Imports

5. The March 2019 mission worked with CSO IMTS compilers in verifying bilateral trade discrepancies with main counterparts, starting with Thailand as a pilot case. The mission illustrated how granular data can be used to help determine proper adjustments to improve the coverage of the IMTS, using Thailand’s data on exports to Myanmar cross-classified by border checkpoint and 2-digit HS code. The data indicated potential under-coverage of Myanmar imports for a few checkpoints sharing land border with Thailand.

6. The result of this mirror exercise was also shared with the BPS. The BPS was advised to apply the outcome of discrepancy analysis to the “coverage adjustments” when deriving imports for the goods account in the balance of payments, as an interim solution while the Customs is working on enhancing the data collection and compilation of exports and imports data. BPS compilers took note of the need for this interim-approach for coverage enhancement and the rationale behind using the mirror data. However, the revision was pending forthcoming adjustments to other ESS items (particularly, imports from China and travel credits), so as to avoid too frequent revision as a result of change in methodology and data sources.

7. Continuing the work from the previous mission, this mission trained BPS compilers and officials of the Trade Statistics Division of the CSO how to retrieve and use counterpart data from China Customs (China’s exports to Myanmar, classified by province and by commodity) to quantify potential under-coverage, using data for 2018 as the demonstration case (see Appendix I). Guidelines were provided to the BPS and the CSO to repeat the exercise to quantify the adjustment amount for 2014–2017.

8. In essence, under conservative scenario (i.e., excluding trade through land border checkpoints which potentially involves exports from Thailand and China going through Myanmar onward to the final destination countries), the analysis suggested that Myanmar’s 2018 imports are under-reported by approximately 1.9 billion USD for Myanmar’s imports from Thailand (total discrepancies are 2.0 billion USD), and another 1.9 billion USD for Myanmar’s imports from China (total discrepancies are 4.3 billion USD).2 The mission presented the results of the analysis on imports under-coverage to the CBM’s Deputy Governor (DG) and the Director General of the Monetary Policy Affairs and Financial Institutions Regulation Department (DDG); and underscored the importance of timely implementation to enhance the coverage of imports, which would in turn improve the accuracy of the current account balance.

Recommended Actions:

  • BPS and CSO compilers to repeat the mirror exercise to quantify coverage adjustments for 2014–2017. Consult CDOT ESS Advisor via e-mail, as necessary.

C. Travel Credits

9. The mission assisted the BPS in verifying travel credits for the years 2013–2017 as published by the MOHT (based on MOHT’s Tourism Survey) against the MOHT’s published variables used to derive travel credits: “number of tourists”, “average duration of stay (in days)”, and “average travel expenditure per person per day (ATE)”. Given the published “number of tourists”, “average duration of stay”, and “travel credits”, the derived ATE turned out to be much less (55–69 percent lower) than the published ATE. Even with assumptions applied to lower the estimates for the case of travelers passing through land-border checkpoints for one-day visit (who likely spent much less than ATE), coupled with the continuous depreciation of Kyat over the past five years, the effects of these two factors combined should unlikely outweigh the effect of growing numbers of inbound tourists (from 2.0 million tourists in 2013 to 3.6 million tourists in 2018). Therefore, the mission has a view that there is a possibility of the published travel credits being underestimated. An Excel file with calculation of ATE and travel credits under different scenarios was also provided to the BPS at the end of the mission as part of data verification exercise (see Appendix II).

10. Further investigation requires detailed data from the immigration and the MOHT’s tourism survey, particularly: (i) number of inbound tourists with breakdown by checkpoint, by type of travel document (e.g., passports versus border passes), and by country; (ii) individual responses on travel expenditure and duration of stay. Granular data would enable removing the outliers as well as deriving more realistic ATE for different groups/categories of tourists, which should in turn lead to more accurate estimates of total travel credits. Follow-up missions should provide further guidance, once the authorities obtain granular data at least for the recent one to two years.

Recommended Actions:

  • BPS to request more detailed data from the immigration and the MOHT, based on the list of suggested variables stated above.

D. Other Matters

11. The mission also had discussion with the Deputy Governor of the CBM (U Soe T regarding his concerns over the data on private sector EDS produced during the August 2018 in-country training, clarifying that BPS compilers and officials from the Directorate of Investment and Company Administration (DICA) have closely coordinated on the compilation of private sector EDS to ensure no double-counting of the data across different sources. The DG expressed his intention to disseminate the EDS (submission of the Quarterly EDS templates to the World Bank) after careful review of the private sector EDS, which the CBM has compiled for the first time.

E. Officials Met During the Mission

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Myanmar: Technical Assistance Report-External Sector Statistics Mission
Author: International Monetary Fund. Statistics Dept.