Economic crisis raises real fears
source : Bangkokpost (12-03-02)
The Burmese economy is in deep trouble. People across the classes are suffering as the prices of the most basic of goods continue to rise. And as the prices rise so, too, does the threat to social order and the ruling regime.
By LARRY JAGAN
Burma's economic crisis continues to deepen. Unemployment is rising dramatically every month while the prices of consumer goods are spiralling out of control. The value of the local kyat on the black market continues to tumble.
``People are growing more and more dissatisfied every day,'' said a Burmese businessman in Rangoon who asked not to be identified. ``And if it continues like it is, it could easily reach boiling point in the coming months.''
The value of the kyat has fluctuated wildly in the past few weeks. ``It's depreciated by some 15% in the past two weeks,'' a local money changer said. Economists and businessmen in Rangoon predict the kyat is going to decline even further.
Economic analysts in Rangoon say the run on the kyat is the result of the increased domestic demand for dollars. ``Many local people need more dollars at the moment to pay for the new batch of mobile phones that has been released on the market,'' said one financial analyst, ``while others need dollars to buy gems in the government sponsored auction.''
The fall in the kyat has also caused the prices of many imported goods to rise, especially dairy products and medicines. ``The cost of medicines are so prohibitive now that many people are not seeking medical attention because they know they can't afford the prescriptions,'' a Rangoon doctor said. The prices of meat, eggs and palm oil are all rising steadily. Analysts in Rangoon estimate that palm oil essential for cooking and imported from Malaysia has risen by more than a 50% in the last six months.Western diplomats in Rangoon estimate that onions have more than doubled in price in the past year and fermented fish paste has also doubled in that time.
Now even the price of rice is rising. Local residents complain that rice in the market has risen by more than 20% in the past month. In some rural areas, residents report a three-fold increase in the rice price over the past three months. ``This is largely because of the government's obsession with meeting its export target of a million tonnes by the end of next month,'' said a financial consultant with a foreign investment firm in Rangoon.
In the past, the generals kept the price of rice relatively stable by controlling the supply. But it is more than six months since they last released stocks from the government reserves to keep the price down. And with their export drive they are not likely to do that again soon.
Petrol prices are also skyrocketing. In the past few weeks, they have risen by nearly 15%, according to Rangoon's taxi drivers. This appears to be partly seasonal. With the Water Festival the Burmese New Year approaching, many people are hoarding petrol so they can visit their families during the festive period in mid-April. As a result, the minimum taxi fare in Rangoon has almost doubled. Bus fares have also risen.
Most analysts estimate that inflation is running at more than 50% a year. Even bribes, like that necessary to keep a phone line, have risen. But the real problem is that wages and salaries are not rising as prices increase.
Local economists estimate that an average family of five needs more than 80,000 kyat a month to live, covering food, medicine and transport but not luxury goods. The average monthly income of a professional worker teacher, university professor or civil servant is less than 10,000 kyat.
``People are really feeling the pinch,'' a Western diplomat based in Rangoon said. ``Comparisons are being drawn with the situation more than a decade ago that led to the events of 1988. The difference though is then everyone suffered.''
Many families, especially those living on the outskirts of Rangoon or in the poorer rural areas of the country, cannot afford to eat more than one meal a day. In the poorest parts of Rangoon the most desperate are surviving on rice water " water in which rice is cooked " which they buy for 15 kyat a bottle and have for their evening meal.
The living standard of many Burmese is declining rapidly. UN officials fear a massive humanitarian crisis is looming. They estimate that one child in three under the age of five is already suffering from malnutrition. If the situation remains unchecked, they fear this could double within the next 12 months.
``People are getting increasingly dissatisfied with the situation,'' said a Burmese economic analyst close to the military. ``They are tolerating it at present, but if the situation continues to deteriorate over the next 12 months then there is a very real risk of massive social unrest.''
Many in the government seem to understand this, and that is one of the main reasons the generals have started to talk secretly to opposition leader Aung San Suu Kyi. Even the deputy foreign minister, Khin Maung Win, privately admits that only political reform can save Burma from economic ruin.