Falling Myanmar Kyats & Growing Junta’s Arrests

by mohingamatters

Since the coup, the value of Myanmar Kyats has plummeted and the price of everything has skyrocketed. The regime has taken various measures to stabilize the market, including setting caps on exchange rates and gold prices. Obviously, these measures haven’t worked as prices continue to rise. One particularly interesting tactic of the regime is arresting business people. We’ve seen the arrests of gold businessmen, raids on dollar exchange centers, and recently the targeting of rice mill owners and traders. What are they trying to achieve with this? We discussed this with a Myanmar Development Economist (MDE).

MM: What do you think the regime’s rationale is behind arresting business people?

MDE: Well, I think it is just pure stupidity and lack of accountability on MAH’s part. As usual, the military just blamed all their miscalculations and mistakes onto their enemies. Moreover, I think the military officials in charge also lack basic understanding of business or economics. They are too afraid to face the facts that market forces are beyond anyone else’s control. It is in Myanmar Sit-Tat’s DNA that they want to be in control of everything, and they don’t have the courage to face uncertainties. It is their way of self-denial.

MM: Who do you think is giving Min Aung Hlaing & Co. such advice? Is there a real economist on the team, or is this move fully borne out of military generals?

MDE: That is a very good question! I think MAH is the only one who can answer this question. But even if there are real economists on his team, he has neither the audacity to listen to opposing perspectives nor the intellect to understand basic economic principles. Who knows MAH is listening to? Maybe Moe Hein (Thuriya Nay Wun) or Dr Yin Yin Nwe? How can any technocrat willing to give honest advice to MAH who is already hysterical and delusional, at the risk of losing his/her head?

MM: How do you think these arrests are impacting the confidence of the remaining business community? Are they inspired to invest more or are they perhaps planning their escape routes?

MDE: Definitely, but here we have to clearly define who the business communities are. Cronies used to be sheltered from politics under Than Shwe’s administration because Than Shwe knows exactly how to be a dictator. Than Shwe tended to use both carrot and stick approaches to either reward his loyal supporters or punish dissents. Average business communities, the kind of individuals you find in your daily life, are already struggling so much. Ordinary people have nothing to invest, nor can plan any escape routes. Now that even cronies are not even protected from MAH’s whims, and that is something that is unheard of in Sit-Tat’s 70-year rule. Only a few cronies remain in the country, perhaps due to restrictions by the Sit-Tat or due to personal reasons. However, most of their movable wealth (assets) are already transferred out of the country, and they are still sheltered from price volatility thanks to the assets. But never underestimate the power of cronies in Myanmar’s political economy context. They are the first ones to hear about the coup, even before the State Counsellor herself. You will be dumbfounded to learn how well-connected they are.

MM: Can you compare the regime’s approach to economic stabilization with any other countries? Have the generals found a new ‘best practice’ in crisis management?”

MDE: Not really. The main difference between Myanmar Sit-Tat and other authoritarian governments in the region is that Myanmar Sit-Tat considers themselves as “the State”. Myanmar is Sit-Tat. Period. If you compare Myanmar Sit-Tat to their counterparts in the region, (Thai military, for example), Prayut does not think of himself as “the State”. Prayut will probably think of himself as the defender of nationalist ideology or a protector of the Thai monarchy. But he wouldn’t go so far as to regard himself as representing Thailand herself. But for Myanmar Sit-Tat, since they are “the State”, anyone who opposes Sit-Tat are considered enemies of Myanmar. Therefore, they can also come up with many justifications to put down their enemies and even willing to sacrifice religion to protect themselves, as we have seen in 2007 Saffron Revolution. And look at how they managed to twist the story from murdering Buddhist monks in the streets to defenders of religion against Rohingya threat. My two-cent here is that the regime’s approach to economic stabilization is geared towards their own survival since they are “the State”, and they are willing to sacrifice everyone’s well-being just to ensure they survive. They will sell out the country if they need to. So their ‘best practice’ in crisis management is also not geared towards the crisis management for Myanmar but solely oriented towards the crisis management for Sit-Tat. Never underestimate their ruthlessness.

MM: What could be the long-term effects of continually arresting business people on Myanmar’s economy? If you could send a friendly piece of advice to the regime about their economic strategy, what would it be?

MDE: Informal networks and black markets will thrive. Rent-seeking behaviors will thrive. Individuals who are closer to the source of power, especially at local levels, will also thrive. Productive sectors like manufacturing will not survive, not just because of Sit-Tat’s mismanagement of the economy but also because of the conflicts. If the military junta truly cares about the country, they wouldn’t stage a coup in the first place and they wouldn’t meddle in the economy at all. The best they can do, if they truly care for the country, is to lift the restrictions they have put on the economy so that ordinary Myanmar people will have any chance of survival. Please find Prof Sean Turnell’s insights on Myanmar’s economy in the link below as well. I think they are relevant for this question.


MM: Lastly, do you think there’s a point at which the regime might realize that their arrest-based strategy isn’t working, or will they continue doubling down on this approach?

MDE: Well, intimidation is the only language they know, so I don’t think they will change anytime soon. It will take a miracle. Self-reflection is something Myanmar military is not capable of.

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