Asian Angle | Myanmar’s economy sinks deeper into quagmire as junta extends coercive control
- Restrictions and punitive measures have hampered trade and investment, leading to heightened scarcity and demand, and soaring prices
The State Administration Council’s (SAC) coercive and controlling approach to the economy does not bode well for Myanmar’s mid- to long-term prospects.
In the past quarter, conflicts in Rakhine and Shan States have intensified, and humanitarian crises nationwide have worsened. These issues have compounded the negative impacts of the SAC’s economic policies, which seek to secure the junta’s interests through control and coercion.
The World Bank’s June 2024 issue of its biannual Myanmar Economic Monitor forecast a rise in gross domestic product by only 1 per cent through to the 2024 financial year ending March 2025, while economic output would remain 9 per cent lower than pre-Covid-19 levels. The bank also warned in a separate report on Myanmar’s public finances of “a weakening of budget transparency practices”. Publication of several hitherto regular updates on government financial policies and quarterly budget reports has been halted since October 2023. Inflation data and select monthly economic indicators reports have not been published since August 2022.
The SAC’s partial loss of control over border-trade crossings with Bangladesh, China, India and Thailand has exacerbated challenges for importers and exporters but opened certain economic, trade and governance opportunities for groups resisting the junta. The kyat’s continued weakening reached a market rate of 4,450 kyat to the US dollar in late June, from 1,330 kyat in February 2021. The SAC’s manipulation of foreign exchange policies, which are mainly aimed at preserving the regime’s interests, has also earned it a potential US$1.8 billion in 2023 as the growing gap between rates creates arbitrage opportunities. This comes at a substantial cost to Myanmar’s overall economy.
The SAC’s militarisation of the economy continued with additional reshuffles in key economic posts and further restrictions on economic actors. Two technocrats in the SAC’s economic machinery were removed from office in late May. Aung Naing Oo was a minister in the SAC chairman’s office and chairman of the Myanmar Special Economic Zone Central Working Committee. Maung Maung Win was deputy minister of planning and finance.
Aung Naing Oo was a key promoter of Myanmar as an investor-friendly country as director general of the Directorate of Investment and Company Administration during the Thein Sein administration from 2011 to 2016. He became the permanent secretary in the Ministry of Investment and Foreign Economic Relations under the National League for Democracy government. Maung Maung Win, former Exchange and Securities Commission chairman, had held his deputy minister role for over a decade.
