Under sanctions, Myanmar's economy crumbling

31 December 2007

Sunday, December 30, 2007 12:39:45 PM Oman Time

YANGON –– Myanmar's already battered economy is groaning under the weight of new sanctions following a crackdown on dissent, business leaders say, fueling concerns that the hardships could spark more protests.

The United States, the European Union and Australia slapped tougher sanctions on Myanmar's military regime in the wake of the bloody suppression of pro-democracy protests in September.

A UN investigator found that at least 31 people were killed when soldiers opened fire on the peaceful protests, which were led by Buddhist monks in Yangon and other cities around Myanmar, formerly known as Burma.

The country has been under a patchwork of sanctions for years, but the latest measures have blocked access to US financial institutions and made it more difficult to export Myanmar's highly desired teak and precious stones.

The US sanctions have targeted specific companies and business leaders, noteably the flamboyant tycoon Tay Za, who is close to the top military leadership.

Tay Za has bitterly complained that the sanctions have crippled his Air Bagan airline, and warned that he would be forced to pass along his own economic pain to his employees.

Other business leaders have echoed that sentiment. Some say that they are struggling to stay in business only to support their employees, and that the current situation could soon become unsustainable.

"These sanctions pose problems for us. If the government suffers, we, businessmen have to suffer. If we suffer, the workers have to suffer," said one top business leader in Yangon, speaking on condition of anonymity.

The original protests were sparked by the economic hardships facing Myanmar's impoverished population, after an overnight hike in fuel prices on August 15 left many unable to afford even a bus ride to work.

The Yangon business leader said that he and other factory owners quickly negotiated deals with their workers, who had threatened their own protests over the fuel prices.

"The protests actually started with factory workers in industrial zones in August, because of their economic hardship," he said.

An ordinary factory worker earns about 30,000 kyats (24 dollars) per month. Low-level government workers earn even less, about 25,000 kyats (20 dollars) per month.

A typical Myanmar meal of rice and pork curry for one costs about 500 kyats (40 cents).

Even before the energy hike in August, business leaders at 87 factories in Yangon, mainly in the garment sector, raised salaries to help workers deal with the sky-high fuel prices.

"It was quite lucky that the protests in the factories finished before the monks' protests began. Otherwise, they would have gotten mixed up together," the Yangon business leader said.

"The country's economic development depends on the political situation. We cannot say yet what could happen next year. Right now we are running our business at a loss, just to keep our workers employed," he said.

Myanmar's fledgling tourism industry has also taken a blow, as the country saw an almost total drop-off in foreign arrivals after the bloody crackdown.