Isolated, but Not Insulated

By MIN LWIN

The financial crisis that began in the United States and rapidly evolved into a once-in-a-generation global economic downturn has reached Burma, a country whose military leaders have long prided themselves on their ability to keep outside influences at bay.

Despite being locked out of the US financial system by sanctions designed to force the ruling junta to make democratic reforms, Burmese businesses are suffering from a credit crunch of their own, stemming from the reluctance of commodity exporters to lend to producers.

“I can’t borrow any money,” said Thein Tin Aung, the owner of 10 acres of rice paddy in
Nyaung Laybin, a township in Pegu Division.

Thein Tin Aung (not his real name), said that he had traveled to Pegu, the capital of the division, to borrow money for workers’ wages, but was unable to secure a loan.

“Most exporters have no money to lend or pay in advance to farmers, who need credit so they can harvest their crops,” he said. “We have collateral, such as farms and motorbikes, but no one will give us the cash to pay wages.”

The lack of credit for farmers—which in largely agrarian Burma comes mainly from traders who sell rice, beans, pulses and other cash crops to neighboring countries—is the result of the economic slowdown hitting the rest of the region. As the country’s main trading partners—Thailand, India and China—all strain under the effects of the recession, Burmese exporters are also hurting.

“The price of export goods, including beans and rice, is falling,” said an analyst from the Rangoon Institute of Economics, speaking on condition of anonymity.

“Exports have been at a standstill for several months now,” he added. “Many exporters have begun to stockpile grains because they don’t want to sell at a loss.”

Meanwhile, the country’s ruling junta remains in denial about the impact of the global slowdown. On December 2, the state-run Myanma Alin newspaper reported the prime minister, Gen Thein Sein, as saying that Burma would not be affected by the financial meltdown.

Instead of addressing the crisis, the Burmese regime appears to be adding to the problem by squeezing the public to meet its own budgetary shortfalls, according to analysts.

“Unlike other governments, which are offering bailouts and stimulus measures, in Burma, the regime is trying to get more money from the general public,” said Aung Thu Nyein of the Thailand-based Vahu Development Institute.

He cited the imposition of a license fee for motorcycles in July as an example of efforts to increase government revenues. According to police statistics, the regime has so far issued 877,405 licenses, raising 230 billion kyat (US $184 million) over the past five months. Meanwhile, it has auctioned off other vehicles seized from owners who failed to pay license fees.

Any hopes that Burma will be spared the worst of the global economic downturn must take into account the junta’s knack for taking a bad situation and making it worse, says Aung Thu Nyein.

“The Burmese financial crisis will be worse than in other countries because of the government’s mismanagement,” he said.