Protests against the military’s seizure of power in Myanmar have crippled its economy, as businesses struggle to conduct commerce without physical cash and a banking system that is now unreliable, sources in Myanmar told RFA.
Since Feb. 1, the day of the coup, protesters have mounted a civil disobedience movement (CDM) including a refusal to work. The labor stoppage across all private and public sectors is disrupting some of society’s most critical functions.
With nearly all private bank employees participating in the CDM, businesses that require bank transactions are dealing with setbacks and delays.
“GDP losses may be in the billions [of U.S. dollars] as the situation worsens each day,” economist Soe Tun told RFA’s Myanmar Service.
“I don’t know the exact figures, but losses are likely huge as most businesses have to stop operating because of the banking freeze. Some businesses are still open, but they are facing great difficulty. A lot of businesses have come to a stop,” said Soe Tun.
“The COVID-19 pandemic made it so that only a third of the economy had been running over the past several months, but now it seems everything has stopped,” he added.
Myanmar, a nation of 54 million, recorded a GDP of $75 billion in 2020, making it among the poorest countries in Southeast Asia.
The banking sector’s setbacks have started a ripple effect, with most businesses still running are short on physical cash with no way to pay employees.
“We cannot do any business right now,” a local businessman who requested anonymity for security reasons told RFA.
“Transactions at banks have stopped and cash in circulation has come to a trickle. As we are faced with more delays and difficulties, the incomes of salaried employees as well as daily wage workers will fall drastically,” the businessman said.
“We just hope all this will end very soon. Only then will we be able to get business back out there and prop up the economy,” he added.
Banks will need to come up with drastic solutions if they cannot get back on line soon, an economic analyst who requested anonymity to speak freely told RFA.
“If this current situation drags on, the country’s economy will be in serious trouble. There could be some solutions to the problem, like using coupons for transactions instead of using the kyat currency,” the analyst said.
“The banks could issue guarantee documents. They could issue, for example, 10-million-kyat [1409 kyat = $1] security coupons or 30-million-kyat security coupons and so on to keep the ball rolling. There could be a disaster if we go on like this,” said the analyst.
The lack of physical cash could also be detrimental in the approaching harvest season, leaving many rice traders with no way of operating.
Since Feb 1, the value of the kyat has fallen dramatically. The central bank has had to sell $6.8 million to private banks and money traders. It then auctioned off treasury bonds on Feb. 16.
On the 17th, the Committee Representing the Pyidaungsu Hluttaw (CRPH), a group formed by lawmakers elected to the parliament that was dissolved by the coup, issued a warning saying that the bonds were not legal, and buyers could suffer losses.
A report published by the Reuters News Service said that fuel imports have also come to standstill. A source quoted in that report said that Myanmar may rely on foreign sources for 98 percent of its fuel, and the country could run out of oil in two months.
Reported by RFA’s Myanmar Service. Translated by Khin Maung Nyane. Written in English by Eugene Whong.