Steep import duties imposed by Bangladesh and tight administrative controls have crippled cross-border trade with Myanmar’s Arakan (Rakhine) State, leaving local merchants struggling despite a worsening regional economic crisis.

Cross-border trade between Teknaf in Bangladesh and the Kanyin Chaung Jetty in Maungdaw resumed in May, following disruptions caused by intense fighting between the Myanmar military and the Arakan Army (AA).

However, ordinary merchants say high tariffs and restrictive policies prevent them from operating through formal channels.

"When buying goods across the border, taxes can amount to half the purchase price—essentially a 50 percent import duty," a local merchant in Maungdaw told Development Media Group (DMG). "On top of that, independent merchants are barred from trading directly through official channels."

Instead, official trading privileges are largely restricted to merchant associations overseen by the United League of Arakan (ULA), the political wing of the Arakan Army, which controls vast swaths of Arakan State.

While Bangladesh formally recognizes trade under bilateral agreements signed with the Myanmar government, it operates with the ULA on an informal basis to keep essential goods moving.

The region has grown increasingly dependent on imports from neighboring India and Bangladesh after the ruling military junta cut off transport routes connecting Arakan State to mainland Myanmar.

Current imports through official ports are largely restricted to basic food staples like potatoes and onions, while smaller merchants rely on informal routes through border points such as Taungpyo, Nanthataung, and Bandoola to bring in clothing, cosmetics, and packaged food.

"Is border trade happening? Yes and no," said a Maungdaw resident. "There is a small volume of goods coming in, but rather than standardized formal trade, people are doing business through whatever means they can find."

Despite ongoing security risks, local merchants note that increased patrols by the Arakan Army have somewhat reduced threats from militant groups like the Arakan Rohingya Salvation Army (ARSA) along informal trade routes.

In the 2022–2023 fiscal year—before the AA's offensive that captured multiple townships across Arakan State—annual border trade between Bangladesh and Arakan State totaled nearly $260 million. Local business owners are now calling on authorities on both sides of the border to establish a broader, more inclusive trade framework that accommodates independent traders.