The Role of Informal Cross-border Trade in Myanmar

In a country where there are constraints in formal practices, informal activities normally arise. Informal practices are not necessarily illegal and bad, however some of them tend to occupy a grey area and/or are illegal in accordance with local regulations. There are costs and benefits in minimizing these informal practices in a country. While constraints and restrictions still exist in the formal economy, any attempt to crush informal practices may realize more costs than benefits. Reduction of these constraints and restrictions in the formal economy may gradually erase informal practices in most cases. The facilitating role of informal players is quite important in border areas, and any attempt to eliminate them could have an adverse effect on cross-border trade and people living around the borders. Existing trade policies should be tilted to incorporate measures favorable to the poor, so that border trade can not only contribute to economic development but also to poverty alleviation, opening up more opportunities for the ethnic minorities and disadvantaged in the border areas.