The military takeover in Myanmar has held back its economy for years, if not decades, as political unrest and violence disrupt banking, trade and livelihoods and millions are slipping deeper into poverty.
The Southeast Asian country was already in recession when the pandemic took hold in 2020, paralyzing its lucrative tourism sector. Political unrest after the army ousted its civilian government on February 1 has accumulated further misery on its 62 million people who pay sharply higher prices for food and other necessities while the value of the kiat, the national currency, falls.
With no end to the visible political stalemate, the outlook for the economy is blurred.
UN humanitarian leader Martin Griffiths appealed last week to Myanmar’s military leaders to allow unhindered access to more than 3 million people in need of “living” aid “due to growing conflict and insecurity, COVID-19 and a failing economy.”
Griffiths said he is increasingly concerned about reports of rising levels of food insecurity in and around the cities.
Hundreds of thousands of people in the country lost their jobs and poverty deepened as Myanmar’s inflation skyrocketed.
“Imported food and medicine cost twice as much as before. . . so people buy only what they need to buy. And when traders sell an item for 1,000 kyats one day and 1,200 the next, it means the seller loses by selling, ”said Ma San San, a trader in the town of Mawlamyine, which sells Thai goods.
Myanmar’s economy is projected to shrink by 18.4% in 2021, according to the Asian Development Bank, one of the deepest recent contractions anywhere.
The civilian government ousted in February has made slow but steady progress toward weaving poor Myanmar into the global economy after decades of quasi-isolation under past military regimes. Exports have risen over the past decade, after the generals relaxed their ten-year hold on power. Eager to capture a young and cheap workforce, foreign investors have set up factories making clothing and other lightweight products.
Yangon, the former capital and largest city, was transformed when molded buildings dating back to British colonial days were decorated or demolished, making room for new roads, industrial zones, shopping malls and modern housing. Private enterprises have emerged, creating jobs and meeting a long-running demand for products such as mobile phones and new cars.
But the military still controlled key government ministries and many industries, and corruption and friendship thrived. Months in Myanmar’s political crisis, the country has returned to the days of black market trade and dollar declining.
“Now most people are losing faith in the Myanmar currency and buying dollars, so prices are rising,” said Soe Tun, president of the Myanmar Automobile Association of Manufacturers and Distributors and an employee of the Myanmar Rice Association.
Trade has been hampered both by the global shortage, and rising costs, by shipping companies and by the closure of China from its border to Myanmar’s exports to help control coronavirus epidemics.
Myanmar’s total trade fell 22% from a year earlier in the 10 months from October 2020 to July 2021, Chief General Min Aung Hlaing, who led the army’s takeover, recently told his army-installed cabinet. He said the country recorded a trade deficit of $ 368 million.
The less Myanmar exports, the less it earns in foreign currency – especially dollars – making the greenback less scarce and valuable against the kyat.
In January, the dollar bought 1,300-1,400 kyatos. In late September, it hit a record high of 3,000 kits between money changers on Yangon’s Shwebontha Street, informally known as Broker Street.
This has raised prices in kits for necessities such as cooking oil, cosmetics, food, electronics, fuel and other increasingly expensive supplies that have to be imported in dollars.
Authorities suspended vehicle imports from Oct. 1 to preserve foreign currencies. To stop the kyat’s plunge, the Central Bank of Myanmar has intervened in the market 36 times since February. But such operations have had little impact, traders say, as most of the dollars sold by the central bank go to pro-war businesses.
“Some say the dollars issued by the central bank do not meet domestic demand, and we accept that this is true,” Chief General Zaw Min Tun, the military administration’s chief spokesman, told reporters.
“As a government, we need to take responsibility for what has happened in our time rather than blame the past,” he said. “I mean, our government is working hard to find the best solution.”
Some people have set up money exchange groups to exchange kits for dollars online despite the risks, and the central bank recently issued a notice banning such unofficial deals.
“Online is easier nowadays. You can easily find people who want to buy or sell. But you need to build trust between sellers and buyers. There are also scammers online, ”said Ko Thurein, who often posts dollar sales in the Myanmar Money Changer Group.
Lack of fuel has become a major problem. Partly thanks to rising global oil prices, the cost of gasoline, which is imported because Myanmar has a low refining capacity, more than doubled to a record of about 1,500 kia per liter from about 700 kia in January.
Zaw Min Tun, an army spokesman, said Myanmar is working on long-term hydropower and wind power projects trying to conserve energy and cut imports because it cannot “cover the demand for fuel.”
Top leader Min Aung Hlaing urged the public to help reduce energy use.
“It’s hard to buy dollars, and oil companies no longer sell to us on credit,” said an employee of Max Energy, a major conglomerate operating dozens of gas stations. “You can’t buy everything you want, and it’s hard to build trust with them. So we’re just trying not to lose too much right now. ”
He blamed the political crisis. “Even in our country, people do not trust each other, and there is no doubt that foreigners do not trust us. It is also because the banking system is in turmoil,” said the official, who spoke on condition of anonymity because of the sensitivity. of the subject.
“Gasoline prices have gone up, so we have to raise fares. But passengers don’t want to pay. I know everyone is getting poor now, so people are using buses instead of taxis,” said Moe Myint Tun, a taxi driver in Yangon. “When we have high fuel prices, we lose a lot of passengers.”
Like many other modern amenities, banking services were periodically disrupted by protests and strikes, forcing people wishing to access their cash to use mobile banking devices and pay 5% -7% fees at so-called Pay Money stores providing financial services.
“Due to inflation, the money in our hands automatically decreases in value. Once the money in the bank cannot be withdrawn, we have to pay a commission at the Pay Money stores. In the end, we are left with nothing, ”said Su Yee Win Aung, a salesman for a telecommunications company in Yangon.
“It can be said that it’s the hardest time for us,” she said.