No cash, no internet and safety fears: Myanmar entrepreneurs struggle to stay afloat two months after coup

The military coup, on top of the Covid-19 pandemic, has hit Myanmar’s economy hard, with the kyat depreciating, business activity falling and food insecurity rising

Company owners are also worried about the safety of their staff, as the junta’s crackdown becomes increasingly violent

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Demonstrators flash the three-finger salute during a march against the military coup, which has negatively affected business activity in the country. Photo: EPA-EFE

Published: 11:36am, 23 Apr 2021Updated: 2:38pm, 23 Apr 2021

As soon as he heard that the army had seized power on February 1, Myanmar entrepreneur Samuel, who owns a construction material company with 10 employees, rushed to Yangon bank to withdraw most of the money in his business account and convert the kyats to US dollars.

“I never trust the military. We took the risk,” the 36-year-old said. “We actually lost some money because of the currency exchange policy set by the bank. But that’s OK. It’s better to keep the USD.”

The move proved prescient. Over two months into the crisis, business activity has plummeted and many of his counterparts are struggling with severe cash shortages.

Myanmar’s purchasing managers index (PMI) last month fell to a record low 27.5, according to business information provider IHS Markit. Fitch Solutions is projecting a “conservative” 20 per cent contraction for the 2020-21 financial year. “There is no worst-case scenario on the economy which we can rule out,” it said.

The World Bank forecasts Myanmar’s GDP to contract 10 per cent this year, while the UN World Food Programme on Thursday warned that food insecurity is rising sharply in the country in the wake of the coup and the Covid-19 pandemic. It said up to 3.4 million people will struggle to afford food in the next six months as job losses mount in the manufacturing, construction and services industries.

The military junta, whose attempt to move about US$1 billion held at the Federal Reserve Bank of New York was reportedly blocked by the US government, has frozen withdrawals from US dollar accounts without conversion into local currency at an exchange rate stipulated by the Central Bank of Myanmar. The official rate is much lower than the market rate, which went from about 1,350 kyat to the US dollar before the coup to 1,600.

No cash, no internet and safety fears: Myanmar entrepreneurs struggle to stay afloat two months after coup

The military coup, on top of the Covid-19 pandemic, has hit Myanmar’s economy hard, with the kyat depreciating, business activity falling and food insecurity rising Company owners are also worried about the safety of their staff, as the junta’s crackdown becomes increasingly violent

The military coup, on top of the Covid-19 pandemic, has hit Myanmar’s economy hard, with the kyat depreciating, business activity falling and food insecurity rising

Company owners are also worried about the safety of their staff, as the junta’s crackdown becomes increasingly violent