Global Financial Crisis Hits Burmese Markets

The first signs of the global financial crisis hitting Burma have emerged as marketplace prices of goods such as rice, beans and palm oil plummet in Rangoon.

According to weekly business journals in Rangoon, the price of a 50 kg (108 lb) sack of rice at Bayintnaung Market has decreased from 16,200 kyat ($12.85) to about 14,200 kyat ($11.25) within a month, even though demand for rice traditionally increases in November.

The price of beans has dropped 50 percent since the financial crisis began, from 740,000 kyat ($580) per ton to about 500,000 kyat ($394) per ton, according to businesspeople in Rangoon.

Bean exports to India have been particularly hit, with Indian companies all but suspending all imports from Burma since the crisis began last month.

“Bigger companies have been harder hit than smaller ones,” one businessman said. “Some of those who export beans to China and India have gone into hiding because they cannot pay back their loans.”

Speaking to The Irrawaddy recently, a Burmese economist based in Bangkok said, “I do not expect Burma to be hugely affected by the global financial crisis. However, some exports—garments, for example—could be hit.”

He said that most direct foreign investment in Burma centered on the energy sectors, such as natural gas and hydropower projects. “However, the size of investment is only the approved amount, not the realized amount, so it is very difficult to calculate what will happen,” he said.

“At least 20 percent of Thailand’s energy is imported from Burma. Thailand cannot reduce its energy demand even though it faces a financial crisis,” he added.

However, the global price of oil price has been cut by 63 percent since it hit an all-time high of $147 per barrel in July.

Analysts estimate that decreasing oil and natural gas prices could seriously affect the Burmese junta’s revenue. The Burmese regime took in an estimated $2.5 billion in 2007 by selling natural gas to Thailand.

A Rangoon-based economist told The Irrawaddy that he could not say whether Burma would be affected by the crisis, because the Burmese regime does not announce official data relating to the economy.

He said the Burmese regime claimed during the Asian financial crisis in 1997 that Burma could escape the crisis because of it was isolated from the global community.

“But the claim was not true. The Asian financial crisis also affected Burma,” he said. “The current crisis could also impact the country.”

Burma also became a member of the Association of Southeast Asia Nations (Asean) in 1997, a move the regime hoped would encourage investment in Burma. However, investment from the bloc has been slow to materialize.

He added that as Burma’s economy was weaker than other nations, Burma could be hit worse if the current trends continue.

Burma’s main trading partners—China, Thailand, India and Singapore—have all seen their markets hit by the ongoing global financial crisis, he said.

Global Financial Crisis Hits Burmese Markets