BUSINESS
High Kyat Killing Business, Say Burma’s Exporters
A fistful of kyat. But exporters complain the currency is too strong. (PHOTO: STEVE TICKNER/ THE IRRAWADDY)
Burmese businesspeople exporting agricultural products and garments say that they cannot sell their goods at the current rate of exchange, even though it has increased recently from the float-rate of 818 kyat, which was introduced by the Burmese government on April 1 in an attempt to abolish the multiple exchange rate system that had existed in Burma for decades.
According to Soe Tun, a central executive member of the Myanmar Rice Industry Association, in first week of June a group of leading businesspeople and exporters held a meeting in Rangoon, following which they released an open letter to President Thein Sein requesting government assistance in raising the exchange rate to 1,100 kyat to the dollar.
“We have sent a statement to our president,” said Soe Tun. “We requested that the exchange rate be fixed at 1,100 kyat to the dollar. If that is not possible, we would like to see it at around 1,000 kyat. That would be better than nothing. We cannot survive at this rate any longer.”
He said that Burma could not compete with other rice-exporting nations unless the rate was adjusted. Burma is the third largest rice exporter in Asia after Thailand and Vietnam.
Speaking to The Irrawaddy on Friday, a garment factory owner who employs nearly 2,000 workers in Hlaing Tharyar in Rangoon Division, said, “Following the mass strikes and protests earlier this year, we have had to raise laborers’ wages. If the exchange rate remains the same, we will not be in business in three months time.”
There are 293 factories in the garment industry alone in Burma, employing no less than 100,000 workers, mostly women.
Several Rangoon businessmen have blamed the inflated exchange rate on the Central Bank’s decision to issue 10,000-kyat bank notes, saying their introduction had caused immediate inflation. Consequently, the impact of inflation caused panic-buying of the US dollar on the black market.
The exchange rate peaked at 890 kyat on June 27, its highest value this year. It began the month of June at 835 to the dollar.
3 Responses to High Kyat Killing Business, Say Burma’s Exporters
“Several Rangoon businessmen have blamed the inflated exchange rate on the Central Bank’s decision to issue 10,000-kyat bank notes, saying their introduction had caused immediate inflation. Consequently, the impact of inflation caused panic-buying of the US dollar on the black market.”
Please teach me a lesson. People buy the US dollar in panic now because they are scared of an inflation in Burmese kyat after Burma’s Central Bank decided to issue K10,000 notes. They pay K890 to buy a dollar on June 27 which was worth K835 at the beginning of June. That means the value of the dollar rises and that of the kyat decreases. That is what the business people want, right? They even want one US dollar to be worth up to K1,100. I am of the opinion that the Central Bank’s strategy is right. It might be called “Quantitative Easing” as the United States has done recently to artificially devalue the US dollar.
The Government-owned old buildings and other properties should be sold with the US dollar so that the demand for the dollar increases until the desirable exchange rate is achieved. The banks should offer better exchange rates than the open market to those who deposit dollars.
Burmese businessmen are selfish and self-centered eaters of almost 60 mils people’s resources. I fear the current rise of exchange rate, and wish no more up. Govt, please do not listen to them, but to your people.
Thanks….
“But exporters complain the currency is too strong.”
Do the exporters never import?
While a strong currency may make rice farmers effectively ask a higher price than competitors, farmers may find there is ample need and demand at even the higher prices. With assuming volumes sold decrease, earning a higher value currency has its benefits.
A strong currency is a symptom of and a validation of a job well-done. It is a signal that the budget is in order along side economic growth.
Businesses that import will be benefited, and this smaller sector of the economy will broaden. Next step, is to mine local gold, and as the central bank and state earn revenues – acquire gold bullion physically within the custody of the state. Peace be with your beautiful land and people.