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How the Rakhine War Affects Bangladesh’s Economy

In addition to disrupting the official trade flow, the war in Myanmar has led to a spike in smuggling, black markets, and other economic crimes.

The entrance to the Teknaf Land Port in Cox’s Bazar, Bangladesh, just across the border from Maungdaw in Myanmar.

On February 23, three Bangladeshi-origin members of the Arakan Army (AA), the dominant ethnic armed organization (EAO) in Myanmar’s Rakhine State, were apprehended by the Border Guard Bangladesh while infiltrating Bangladesh through the Chattogram Hill Tracts. Some 168,000 Myanmar kyat (around 9,800 Bangladeshi taka) were recovered from them. 

Six days earlier, the AA abducted five Bangladeshi citizens from the vicinity of the Shah Pori Island at the mouth of the Naf River. A day before that, the AA had released 73 out of more than 200 Bangladeshi hostages. 

These incidents indicate two of the multitude of economic crimes committed against Bangladesh amid the war in Myanmar’s Rakhine State: namely, currency smuggling and kidnapping for ransom. In fact, the Rakhine war has exerted a considerable negative economic impact on Bangladesh, an issue that has so far remained understudied.

Background of the Rakhine War

Myanmar’s Rakhine State has witnessed a complex armed conflict since the independence of the country in 1948. The current phase of the Rakhine war started on October 27, 2023, when the Arakan Army joined two other EAOs to launch Operation 1027 against the military-controlled Myanmar government. 

Since then, the AA has captured more than 90 percent of Rakhine State, including the northern Maungdaw District – the traditional Rohingya heartland – and Paletwa Township in southern Chin State. In doing so, the Rakhine nationalist organization gained control of the entirety of the 271-kilometer-long Bangladesh–Myanmar border, effectively cutting off Myanmar’s government-controlled territories from Bangladesh. 

At present, the statelet controlled by the AA and its political wing, the United League of Arakan, is the de facto southeastern neighbor of Bangladesh, and it exerts substantial control over the trade flows between Bangladesh and Myanmar.

The trade volume between Bangladesh and Myanmar is modest, peaking in 2018–2019 at an estimated $223.22 million. In 2024, trade turnover slumped to just $90.1 million, partly due to the disruptions caused by the intensification of fighting in Rakhine. More than 90 percent of Bangladesh’s trade with Myanmar is conducted through two checkpoints in Rakhine State: Sittwe and Maungdaw. Currently, Maungdaw is under the control of the AA and Sittwe, the capital of Rakhine State, is besieged and cut off from the rest of Myanmar. That gives the AA a chokehold on trade between Bangladesh and Myanmar.

Disruptions in Official Trade

The outbreak of a full-scale war between the Myanmar government and the Arakan Army has led to substantial reduction in the bilateral trade between Bangladesh and Myanmar. The AA has imposed an indefinite ban on the movement of vessels in the section of the Naf River near Rakhine State. The AA has also been carrying out indiscriminate seizures of Bangladesh-bound cargo ships arriving from Myanmar’s core territories, and exacting additional taxes from Bangladeshi traders shipping goods from Sittwe to Teknaf. These factors are responsible for this downturn in bilateral trade. 

Before November 2023, around 50 cargo ships arrived at the Teknaf Land Port every day. After the capture of Maungdaw District by the AA, the port received only three to five ships per month on average.

In FY2022–2023, Bangladesh imported 188,999 tonnes of goods worth 15.5 billion takas ($126.43 million) from Myanmar, and exported 2,941 tonnes of goods worth 67.2 million takas to its neighbor. However, after the start of Operation 1027, it was reported in November 2023 that the government of Bangladesh was suffering losses worth 30 million takas daily due to the contraction in bilateral trade with Myanmar. Since then, the amount of financial losses has only mounted. 

In FY2023–2024, Bangladeshi imports from Myanmar shrank by 62 percent to 71,741 tonnes of goods worth 8 billion takas and exports to Myanmar shrank by 76.1 percent to 704 tonnes of goods worth 24.5 million takas. This demonstrates a substantial decrease in bilateral trade between Bangladesh and Myanmar owing to the Rakhine war.

While Bangladesh’s export basket to Myanmar is small, Bangladesh imports a number of grocery items from its southeastern neighbor. These daily essentials include foodstuffs such as rice, frozen fish, dried fish, coconuts, and pickles, as well as culinary aromatics such as ginger, garlic, and onions. 

In particular, Bangladesh, despite being the third largest producer of rice in the world, has to import a large........

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