Burmese Economy Has Hit Bottom

A shoe repair vendor in Rangoon waits for customers [Photo: AP]
Burmese Economy Has Hit Bottom;
People Are Suffering
By Wai Moe October 17, 2007

Two of Rangoon's biggest hotels have closed their doors in what business owners say is a drastic downturn in the tourist industry and the overall economy following the pro-democracy demonstrations.
Signs of a failed economy are everywhere, say business people. Teashops have fewer customers, day workers are relying on rice handouts from their employers and prostitutes are walking the streets in daylight— unembarrassed—trying to survive.
Business sources told The Irrawaddy on Wednesday that the Kandawgyi Hotel and the Hotel Nikko have closed their doors for lack of customers.
Many hotels in Rangoon are reportedly empty, and business has dried up at tourist agencies and airline offices.
A shop owner in Rangoon said on Tuesday that business is suffering, following the demonstrations and the government's increase in fuel prices on August 15, which raised the cost of public transportation and increased food prices.
“This situation really hit our pocket,” said the shop owner. “We keep going with our business because we do not want to close. Rice shop owners keep running their shops not because the economy is good but because people need rice. All pockets are empty.”
Most businesses made only a small profit before fuel prices were increased, said the shop owner, but since then, profits have gone to pay for increased fuel prices.
“There is inflation in Burma and the currency is losing more of its value,” he said.
After August 15, gasoline and diesel fuel prices more than doubled, while the cost of compressed gas, used to power buses, increased five-fold, driving up ticket prices for those who depend on public transportation.
In 1988, the unofficial exchange rate for 25 kyat was US $1; in the early 1990s, 100 kyat equaled $1; currently, 1,300 kyat equal $1 on the unofficial market.
People have even cut back on going to the ever-popular tea shops, the traditional place for friends to gather, said one Rangoon resident. Now, he said, people try to save money any way they can.
“If I go with my family to a tea shop and have food there, it will cost about 6,000 kyat," he said. "When my income was good, it was no problem for me. But now my income is not good, and I have to use this money for food.”
“Most people cannot eat meat because the price is skyrocketing," he said. "Meat prices increase about 200 kyat every week. Poor people now buy only vegetables because they are cheaper."
Workers who rely on temporary day work are sometimes given rice by their employers, he said, which helps the very poor survive. The poorest families buy food one day at a time, he said.
Even younger people with educations who have jobs with large companies are feeling the strain. "All jobs are insecure,” he said.
Rangoon sources said women who rely on prostitution to earn money can now be seen on Rangoon streets even in daylight.
“Women are at the 10-mile highway bus station, around RC-2 (Regional College 2) and on Waizayanter Road trying to find customers," he said.
"They are not embarrassed to be seen in the daytime. They are trying to survive too, and it's hard to find customers. People now only think about daily food.”
A taxi owner in Rangoon said before the rise in fuel prices he could save a little money each month, and he could pick and choose when to drive during the day. Now he drives all day searching for customers, and it's hard to pay the monthly rental fee for his taxi.
A Burmese economist who lives in Thailand said a UN survey found that the average Burmese citizen used 70 percent of their income for food.
“It is difficult to find a real money-making business in Burma at the moment," he said. "So many people are poorer. It's the sign of a failed economy.”

Defiant Myanmar junta says it won't back down

YANGON (AFP) — Myanmar's military junta Tuesday shrugged off international steps to punish the regime for its bloody crackdown on protests, even as Japan cut aid and European nations widened sanctions.
State media reported that the military government was still holding nearly 500 people in detention nationwide following pro-democracy demonstrations that led to the death of at least 13 people, including a Japanese journalist.
The junta also criticised a UN Security Council statement condemning violence used by the army in late September to crush the biggest anti-government protests seen here in nearly two decades.
The response came amid growing international pressure on the regime to halt its repression and launch talks with the pro-democracy opposition led by Aung San Suu Kyi.
Of the 500 still held, about 190 were detained in Yangon, Myanmar's main city and the scene of the biggest demonstrations, state television said.
Myanmar also disclosed that the number of people officially arrested during the protests had risen significantly to nearly 3,000, compared to 2,100 reported previously.
Japan, one of Myanmar's main donors, said Tuesday it was cancelling grants of about 4.7 million dollars over the fatal shooting of the Japanese journalist when security forces put down last month's huge protests.
The chief of French oil group Total, meanwhile, reiterated that it will make no new investments in Myanmar, but that it will not withdraw from the country.
On Monday, European Union foreign ministers approved a new set of sanctions against the junta including an embargo on the export of wood, gems and metals, and threatened further penalties.
US President George W. Bush, whose country has imposed targeted sanctions against junta leaders, called for "enormous international pressure, to make it clear to the generals that they will be completely isolated and not accepted into the international community."
But Myanmar vowed to resist. "We will march on. There is no reason to change the course," the official New Light of Myanmar daily said.
The newspaper also criticised last week's Security Council statement deploring the crackdown and calling for the release of political prisoners.
"The situation in Myanmar does not constitute a threat to regional and international peace and security," it said.
"In reality, there is no one in Myanmar who is in prison for political reasons. There are only those against whom action has been taken in violation of the existing laws."
Last month's protests led by Buddhist monks drew up to 100,000 people onto the streets in what escalated into the most potent threat to the regime since student-led demonstrations were crushed in 1988.
But they were violently broken up by troops and riot police.
The United Nations sent trouble-shooter Ibrahim Gambari to Myanmar after the crackdown to meet junta chief Than Shwe and Aung San Suu Kyi, who is under house arrest in Yangon.
Gambari returned to the region Monday for a multi-nation tour aimed at building pressure on the regime, saying in Bangkok that reports of further arrests of activists were "extremely disturbing."
He travelled on Tuesday to Malaysia, where he said he planned to pass on a message from UN Secretary General Ban Ki-moon on how neighbouring countries and the Association of Southeast Asian nations (ASEAN) could help ease the crisis.
Malaysian Foreign Minister Syed Hamid Albar said ASEAN could help foster dialogue between Myanmar and the United Nations, but warned the regional bloc would not suspend the country's membership.
"If you want Myanmar to continue to be engaged, first we should not be talking about suspending. Nobody can talk when you are threatening with all sorts of things," he told reporters.
Myanmar dissidents, meanwhile, urged the UN Security Council in a letter to slap an arms embargo and other sanctions on their country's ruling junta, and to demand an immediate end to repression and detentions of political prisoners.
After leaving Malaysia, Gambari is set to fly on to Indonesia, India, China and Japan. He has said he aims to return to Myanmar by mid-November but hopes the junta will allow him to visit sooner.

US urges China, Southeast Asia to act on Myanmar
SYDNEY, Australia (AP): China and the Association of Southeast Asian Nations should use their influence to help fix the ``atrocious situation'' in Myanmar, one of Washington's top diplomats in Asia said Tuesday.
``It's an atrocious situation. No one country can solve this problem, we have to work together on this,'' U.S. Undersecretary of State Christopher Hill told Australian Broadcasting Corp. radio during a trip to Sydney.
The military junta in Myanmar, also known as Burma, has been at the center of international ire since it launched a bloody crackdown on pro-democracy protesters last month. A U.N. special envoy returned to Asia this week to urge countries to take the lead in resolving the crisis.
Hill, whose area of responsibility is the Asia-Pacific region, said China should tell Myanmar's isolated ruling generals they cannot expect protection from Beijing, one of the junta's chief backers.
``China increasingly understands that in the long run it's not good for China, not good for the region, China's reputation, that it has a situation like Burma,'' Hill said.
``So one hopes that in working with the Chinese, we can make the Burmese understand that they can't go hiding behind the Chinese and ignore everyone else,'' he said.

Keep Up the Pressure on Than Shwe's Cronies
[Editorial]By The Irrawaddy October 17, 2007
To keep up the momentum on the Burma issue and to persuade the military leaders to sit at the negotiating table, the international community and individual governments need to put pressure on the cronies who prop up the regime leadership.
One of the principal targets would be Tay Za, CEO of Htoo Trading Group and founder of Air Bagan, which recently launched services to Singapore and Thailand.
The young tycoon in his early 40s is Burma’s wealthiest business man, thanks largely to his close friendship with the country’s top leaders, including Snr-Gen Than Shwe and Gen Thura Shwe Mann, number three man in the regime.
Tay Za was recently in the hot seat, however. During the September demonstrations, he left Burma in a hurry to seek refuge elsewhere. News reports suggested that he left Burma on September 27.
Than Shwe’s wife Kyaing Kyaing and members of her family also left Burma the day before, on September 26, apparently for reasons of personal safety.
When street demonstrations started, Tay Za asked his staff to keep an aircraft on standby at Rangoon airport.
It has been suggested that he, Kyaing Kyaing and her party flew to Dubai. Diplomatic sources in Bangkok believe they went first of all to Singapore and then flew on to Laos on a chartered flight. From there they reportedly flew to Dubai, although some reports also suggest that they flew to Macau.
More troubles loom on the horizon for tycoon Tay Za because of his strong ties to the Than Shwe family.
Since the crackdown, people have been avoiding flying on Tay Za’s Air Bagan, and the airline’s planes have been reportedly grounded because of a shortage of passengers.
Public anger at Tay Za and the Htoo Trading Company is on the rise. The Htoo Trading Company was temporarily closed down during the demonstrations, and staff had to wait until now for their delayed salaries.
Air Bagan, which began operations in 2004, has a fleet of five aircraft, including A-310 airbus planes. It expanded its international network this year with the start of direct flights to Singapore and plans to fly later in 2007 to Kunming and Seoul.
Kyaing Kyaing and members of her family have shares in Air Bagan. More importantly, Tay Za and Kyaing Kyaing keep assets and savings in Singapore, where Tay Za has bought luxury apartments.
In 1990, while still in his twenties, Tay Za set up his company with an initial capital investment of US $333,333, concentrating on the export of timber and gaining access over the years to large areas of virgin forest. Three years into the life of the Htoo Trading Company, Tay Za expanded his dealings with the regime by supplying the military with aircraft parts. He created Myanmar Avia Export, Burma’s sole representative of Russia’s Export Military Industrial Group, known as MAPO, and of the Russian helicopter company Rostvertol.
Military analysts say he was instrumental in the junta’s purchase of advanced MiG-29 fighter-bombers and helicopters from Russia.
Despite the presence of Russian arms dealers in Rangoon—confirmed by western diplomats—Htoo denies involvement in arms trading, although admitting that it does sell helicopters to the regime.
Tay Za’s close connection to the regime is undoubtedly one of the keys to his success. Ties to the top are vitally important when doing business in Burma, and Tay Za has no shortage of friends in high places.
He cleverly recruited the children of powerful generals in order to take them on board his company, which appears to be one of Tay Za’s business strategies. Aung Thet Mann, son of the junta’s number three, Gen Thura Shwe Mann, who is tipped to take over the leadership when Than Shwe goes, is on Tay Za’s executive business board.
Aung Thet Mann’s company, Ayer Shwe Wah, is now part of Htoo, and the general’s son is reaping big cash rewards from the arrangement. When the regime relaxed its ban on rice exports, Aung Thet Mann’s company was awarded the first rice export licence, providing for the delivery of 11,000 tons to Bangladesh and Singapore.
The US and the EU imposed visa bans on Tay Za and businessmen who are closely associated with the Than Shwe regime. But it is important to take further steps to freeze assets Tay Za holds overseas, possibly in Singapore.
The US government should talk to one of its strongest allies in the region about the possibility of taking action against Tay Za. Rumor has it that Tay Za is considering moving his bank accounts and other assets in Singapore to Macau.
Tay Za and the Than Shwe regime are tightly linked–if Tay Za and his empire begin to feel shaky, we’ll see Than Shwe make more political concessions with the opposition and show readiness to bend to international pressure.