Junta waging war on Myanmar’s doom-loop economy – Asia Times

Junta waging war on Myanmar's doom-loop economy - Asia Times

The rapid demise of Myanmar’s collapse into failed state position is clearly visible across the numerous battlegrounds of the countryside, but the most alarming decline is already being felt by the rapidly deflating economy.

What was once a promising “last frontier” Asian developmental state has been transformed into a war economy predicated on the survival of the regime by the State Administration Council ( SAC ) junta.

On May 3, the criticism National Unity Government ( NUG) and minister of planning, finance, and purchase Tin Tun Naing and government assistant Sean Turnell detailed the doom loop of drop that the SAC has orchestrated in a long press conference.

In recent months, the Myanmar kyat has fallen to 5, 000 to the US dollar, marking a historical low. The kyat is now at 25 % of its 2019 price, just before the mini tragedies of the Covid- 19 crisis and the February 2021 revolution.

The government has responded to the market’s decline by rolling the pecuniary machines, printing an estimated 25 trillion kyats since the revolution, fueling inflation and economic volatility. Myanmar’s dollar deposits have fallen by US$ 3 billion over three centuries.

The main thrust of SAC monetary policy, according to Turnell, is now very simple: to safe as much international trade as possible so that it can purchase the weapons and weapons it needs to survive.

60 % of the federal budget is currently estimated to be used for military spending, which has disastrous consequences for funding for health and education.

Budget dump: Burmese soldiers on festival in Naypyidaw in a March 2023 image. Image: Xinhua News Agency / X Screengrab

People living in dire poverty now represent 40 % of the population, with an average household “food basket” increasing by 140 % over the past three years. Many people in Myanmar are currently out of the reach of many of these standard items.

This will be felt more acutely in conflict-torn regions, where supply chains and businesses have been severely impacted by fighting. That was intentional in the Myanmar State war zones, where the SAC has censored access to basic foods and fuel in key cities like Sittwe.

The government has also directed Myanmar companies to” suspend interest and principal repayment on permitted loans made by foreign lenders,” which is basically a state-imposed loan default.

The Union of Myanmar Federation of Chambers of Commerce and Industry ( UMFCC ) demanded in a bizarre retrograde move that made it almost pre-industrial practice to use a Barter Transaction Arrangement ( BTA ) system for trading. Banks are then largely “zombie entities” according to Turnell, kept on living assistance by the regime but basically no- functioning.

Exacerbating the horrific circumstances, energy resources have quickly declined, including in key cities such as the business capital Yangon. However, the new Military Service Law, enacted in February to boost the government’s ranks, has driven thousands of young people into captivity or the arms of anti- SAC insurgents: a brain dump mirroring the nation’s capital flight.

Yet many foreign visitors to Yangon remark on the city’s alleged vibrancy and general calm. This may well be a surface- level mirage.

Despite some dreadful predictions that urban warfare would increase significantly in late 2023 but never materialized, the real threat to regime stability in urban areas is most likely caused by economic desperation and declining living standards, which were a major factor in the Saffron Revolution demonstrations in 2007.

The SAC is clearly agitated and is now taking draconian measures to try to stabilize an already depressed economy.

Former Commerce Minister Aung Naing Oo, a significant economic figure in the regime, recently received the slang used in Myanmar’s military to describe his dismissal as the third minister of the union, completing what was thought to have been a gradual decline in SAC strongman and coup leader Senior General Min Aung Hlaing. Maung Maung Win, deputy minister of the Ministry of Planning and Finance, was” sacked” the same day.

There are also widespread, credible rumors that the government has arrested a number of well-known business figures without question. Than Than Than Swe, the head of the Central Bank of Myanmar ( CBM ), was allegedly detained before she could board an international flight from Yangon to Naypyidaw, the military fortress capital.

She had just met with senior Thai bank executives a few days prior, where they reportedly discussed “(CBMs) established policies to stabilize the foreign exchange rate, remittances of trade and Myanmar migrant workers to be diverted from legal channels, facilitation of smooth delivery of the wages of expatriate Myanmar workers in Thailand to their families, more investments from Thailand in Myanmar, financial support… to further develop trade between Thailand and Myanmar, foreign exchange rates, and the facilitation of foreign currency transfers between the two countries

Than Than Swe, the governor of the Myanmar Central Bank, is in the limelight. Image: X Screengrab

Than Than Shwe was badly hurt in a targeted assassination attempt by an anti-regime armed group in April of 2022. He is portrayed as a loyalist. Soon after, she was promoted to the position of governor. In September 2023, she and 43 other CBM staff were designated as “terrorists” by the NUG for financing the SAC’s war effort.

The kaw la ha la ( rumors ) that dominate all political dynamics in Myanmar have been exaggerated by reports that prominent business cronies Serge Pun from Yoma Bank and Aung Ko Win from Kanbawza Bank have been detained, along with others.

Numerous important business documents are said to have been kept by the SAC while traveling with restrictions to Singapore and Bangkok. Aung Ko Win’s daughter, a Kanbawza executive known as Nang Lang Kham, was reportedly detained by military intelligence at Mingaladon in May 2022 while trying to fly to Thailand, although she was not arrested.

The central bank issued a warning to” those who are illegally trading and speculating in foreign currencies …will be prosecuted under Sections 38 and 42 of the Foreign Exchange Management Law, as well as under sections of the Penal Code for harming the public interest on the same day the CBM governor met with Thai banks.

On June 4, it was revealed that 14 currency traders had been detained, 11 others had their photos and addresses listed, and were still at large due to the alleged offense of being “engaged in speculation to hinder the country’s economic development,” and 14 had been.

Meanwhile, some money changers who allegedly violated the rules and regulations set by the CBM to “destabilize” the economy have also been targeted. According to analysts, this is undoubtedly a sign of the regime’s frustration that so many people are attempting to circumvent measures that are causing the economy to collapse.

On June 3, state media reported the arrest of 21 gold traders, the majority of them in Yangon, for the crime of” committed instability of prices in the domestic gold market.” Ten more than ten traders received public access to their business addresses and photos, and the public was “urged to secretly inform relevant security forces about those evading suspects.”

Five real estate brokers are next in line to be accused of “illegally” selling condominiums to Thai citizens in Myanmar, a desperate attempt to stem the rising tide of capital flight and maintain hard currency there.

The Myanmar economy’s growing criminality is just one more reason to continue on this downward spiral. The repugnant scam center system at Shwe Ko Ko, KK Park, and many other locations is the most compelling proof. The SAC’s earnings are unknown, but they are thought to have generated billions of dollars worth of poorly received gains. &nbsp, &nbsp,

At the same time, drug trading, wildlife smuggling and human trafficking are also all reportedly intensifying, with Myanmar topping the list of 193 countries of the Global Organized Crime Index. The Financial Action Task Force ( FATF ) trotted out Myanmar on their blacklist last year for money laundering practices.

The absurdly named” Illegal Trade Eradication Steering Committee” targets everything from wood, unregistered motorbikes, lightbulbs, and” DeeDo” orange juice made in Thailand and traded “without official documents,” in a compulsion that has gripped successive military regimes of the past.

The government is increasing official predation and bribery for lower-level officials as the country’s economic conditions worsen and the population’s need for help diminishes.

Money changers exchanging Myanmar kyat bank notes into US dollars in a back alley of the country's main city and former capital Yangon. Photo: AFP / Soe Than Win
In a back alley of Myanmar’s main city and former capital Yangon, money changers exchange Myanmar kyat bank notes for US dollars. Photo: Asia Times Files / AFP / Soe Than Win

By all accounts, the SAC has completely abandoned its economic responsibilities to the Myanmar population. And by all indications, Min Aung Hlaing would rather choose to rule the abandoned land than to seek a negotiated resolution that would allow for the reconstruction of the war-ravaged economy.

Turnell’s remedy for the meltdown? increased a number of financial measures to accelerate the SAC’s demise. The junta’s ability to wage war must be the focus of sanctions. Capacity must be the focus, not sentiment or signaling”, said the Australian economist and NUG advisor who was imprisoned for nearly two years in the coup’s aftermath.

The international community should not be able to help Myanmar’s citizens, though heavier, targeted sanctions targeted specifically at the junta’s commercial interests are the least the outside world could do to undermine the SAC’s war economy and its resilience in this post-coup stage of rising vulnerability.

David Scott Mathieson is an independent analyst who studies human rights, conflict, and human rights in Myanmar.