Trading Amidst Conflict: The State of Border Relations Between Arakan and Neighboring Countries

Executive Summary

From November 2023 to December 2024, the resumption of armed clashes in Arakan, driven by the Arakan Army (AA) as part of the broader '1027 Operation,' severely disrupted border trade with Bangladesh. The conflict led to the closure of key trade routes, such as the Maungdaw-Angumaw road, halting official trade crossings and causing goods like rice and betel nuts to rot in warehouses, resulting in significant economic losses. Informal trade persisted under volatile security conditions, with local traders reporting challenges due to blockades by the Myanmar junta and ongoing fighting, which pushed both traders and authorities to seek alternative routes through India’s Mizoram via Paletwa.

Throughout this period, the United League of Arakan (ULA)/Arakan Army (AA) gradually consolidated control over Arakan’s border areas, emerging as the de facto authority regulating cross-border commerce. By implementing taxation on imported goods, conducting inspections, and occasionally detaining cargo vessels, the ULA/AA secured trade revenues, transforming from a disruptor to a regulator of border trade. This shift was particularly evident after the AA’s territorial gains in Maungdaw and Buthidaung in December 2024, which granted them near-total control over the 270 km Bangladesh-Myanmar border, fundamentally altering the trade landscape.

Following the AA’s territorial gains in December 2024, Bangladesh adopted a pragmatic approach to trade with ULA/AA-controlled areas, despite not formally recognizing ULA/AA- issued trade documents. Initially rejecting shipments with ULA tax receipts, Bangladesh authorities began selectively permitting imports, such as bean sacks, by January 2025, acknowledging the AA’s control over border infrastructure. This shift was underscored by public statements from Bangladeshi officials, who recognized the AA’s role in collecting tariffs, reflecting a strategic need to maintain trade flows for food security and economic stability amid a volatile security environment.

As trade with Bangladesh faltered, the Paletwa-Mizoram corridor emerged as a critical alternative route for Arakan, facilitating the import of essential goods like food, fuel, medicine, and household items. Controlled by the ULA/AA after their January 2024 capture of Paletwa, this route faced significant challenges, including damaged infrastructure, monsoon-related disruptions, and blockades by local Mizoram groups like the Central Young Lai Association. Despite these obstacles, the corridor provided a vital lifeline for civilians in northern and central Rakhine, sustaining the flow of goods amid the conflict-driven collapse of traditional trade routes. From November 2023 to August 2025, Arakan’s border trade evolved into a dual system characterized by disrupted Bangladesh routes and a fragile yet essential Mizoram corridor.

Introduction: Background of the report

TArakan (Rakhine State) in Myanmar has historically been trading routes, occupying immediate linkages to neighboring countries like Bangladesh from the northwest through Maungdaw border and lying near India through Sittwe Port and Chin State’s Pletwa.¹ Both this geographic location and strategic strong point- the area has been targeted and being interested by the great and regional powers for investments including the trading. It is critically and historically the potential area of regional economic development with strategic location as cross-border connectivity and local livelihoods.² However, the situations of those trading routes have been changed throughout the timeline and different authorities shaping by ongoing political situations, bilateral relations, armed conflicts, and broader regional dynamics, with formal trade routes corridors like Teknaf–Maungdaw and Paletwa– Mizoram^3/4 have frequently been disrupted or suspended amid conflict and control shifts between the Myanmar Military junta and the Arakan Army.

The 2021 military coup has caused serious serial conflicts in the Arakan State and the Arakan Army has controlled most of the areas of the State,⁵ including the areas of those trading routes. These power shifts have significantly disrupted and reshaped cross-border trade with neighboring countries, particularly Bangladesh.⁶ As the SAC lost territorial control in border areas, the ULA filled the vacuum by implementing its own regulatory and taxation structures, including for border trade.⁷ Therefore, it is interesting to investigate the evolving nature of border trade in Arakan between early 2021 and mid- 2025. It explores how military confrontations, governance vacuums, and the rise of parallel administrative systems, especially by the ULA, have transformed economic transactions across borders.

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