Executive Summary: The Tatmadaw has been the primary source of repression on the civilian population since its overthrow of the civilian democratic leadership under State Councillor Aung San Suu Kyi in February 2021. Turn to the economic landscape, this segment has been considered as the ‘scapegoat’ of the military regime’s deteriorative policymaking strategies. Amidst the exit of key sectors, the financial institutions and firms have maintained their grip in the economic stronghold supported by their focus given to agricultural lending and social education campaigns in the hilly tracts of Myanmar. Their opportunities and future forecast projections are covered in this brief.
Current Scenario
It has been three years since the military junta led by General (Gen.) Min Aung Hlaing has overthrown the civilian-led, democratic administration governed by the then State Councillor, Aung San Suu Kyi in the name of protecting the civilians from the ‘sins’ committed by the incumbent government.
In its initial press statement post the military coup on 1st February 2021, Gen. Hlaing; the junta chief and the self-proclaimed Heads of both the State as well as the Government of Myanmar, had reassured concerned civilians of their plans to conduct elections in the coming months, the military takeover was only to cleanse Myanmar’s political proposition from the ‘poisonous’ policy actions of the State Councillor and her kitchen cabinet.
Desperate, downtrodden civilians who have been anxious for the return of civilian rule normalcy have waited for those ‘couple of months’ to turn ‘three whole (couple) years’ with the sole benefactor being the empowered Tatmadaw regime having continued to draw (ill) legitimate power from the scrapped Constitution, a farce opposition and ever-weakened political audience. Since 2021, the Myanmar military junta has carried out large-scale civilian-targeted attacks aimed at quelling any internal efforts to pose opposition to their self-proclaimed policies, largely benefiting the military establishments within the territory. In the span of close to a year, the Tatmadaw has been held responsible for the carrying out 580 airstrikes, resulting the displacement of 12 million people and a totality of 2.8 million civilian in three years of military rule, accounted for close to 90% of internal movement due to the sponsored casualties.
Assessment
In the concerned environment, the role of finance sectoral organization has been limited in operations given the strict government restrictions on maintaining business regulations in the military-governed Burmese territory. The Tatmadaw have maintained their politico-economic stronghold in the capital Nyapyidaw and its surrounding urban agglomerated districts and their population, making any potential business opportunities in the capital-city and the rural districts mutually co-operational in nature.
The economic environment has been rigidly centred around the military dictatorship, invested heavily in the efforts to support their asset monetization campaigns as well as the extensive military shelling on critical, public infrastructure along with the heavy acquisition of weaponry from their ‘military deals’ with their external appeasers – China, Russia and North Korea. A United Nations (UN) report on “The Economic Interests of the Myanmar Military” released in 2019 had highlighted the manner in which the Tatmadaw extensively utilized the taxes collected from the private sector firms to fund the ethnic cleansing of the Rohingya Muslims and their subsequent migration out of the Rakhine State north-west to that of Cox Bazaar in Southern Bangladesh.
This report was just a ‘sample’ considered when compared to the military operations since February 2021 that targeted the rebel-guerilla forces surrounding the capital city to that of the Dawna Range in Southeast Myanmar, a major stronghold for the Myanmar Resistance. According to the 2023 UN report, the reported casualties from landmines had risen from 34 in 2022 to 1000 in figures, a cumulative increase by 270% in close to 12 months under the military junta. The financial business environment has been extremely volatile; considering the cooperation with military exchequer, yet their demand and customer base has grown by an average annual rate of 25% since 2021.
The volatility of the financial environment has been exacerbated by the growing shortage of United States Dollar (USD) reserves in the administration’s treasury, which has been the immediate consequence of the depreciation and revaluation of the Myanmar Kyat between 2022-23 fiscal period. Foreign sectoral firms dealing in textile production, clothing and auto parts manufacturing as key victims given the deteriorative labour laws that promote violation of their freedom of rights and formation of unions in support of wage modernization campaigns.
Financial sector firms are not heavily impacted by the military’s policies on the rigid labour laws as much by the land acquisition regulations imposed on selective semi-urban areas of Central and Southeastern Myanmar. The sector contributes to the Myanmar economy in association through private financial banks, chit-fund cooperate institutions and asset monetization & lending banks maintained by the foreign stakeholders.
These firms are usually concentrated in the Southeast, Southern and Central-east tracts of hilly terrains and plateau geography given that a significant population are farmers and subsistent wage-earners residing in the semi-urban and rural landscape of the economy, where agriculture and poultry husbandry account for close to 45% of Myanmar’s total GDP growth share.
Business Implications
Given the geographical landscape and the targeted population, it is expected for the financial sector to grow in consideration of the candid opportunities offered by the large customer base for financial instruments such as money lending, crop monetization schemes for farmers during the low-crop yield period as well as greater investment in formation of chit-fund grouping through promotion of educational campaigns in the themes of small savings, crop yield monetization and land grants loans.
Threats:
- Civil war escalations between the Tatmadaw and the Resistance forces into the hilly tracts of Southeast and Southern Myanmar, especially the latter’s strongholds in Dawna Range, Rakhine State and Mandalay may hamper the sustenance of the famer cultivation and livelihood with the history of significant attacks targeting the locals; innocent to the civil war activities.
- Increased probability of the Tatmadaw regime imposing severe land acquisition laws on these tracts based on the increasing refuge and guerilla hideouts of the Resistance forces, destroying the crop yields, the poultry subsistence, shift in cultivation from food to cash crops, thereafter, leaving the local population to starve extensively and bound to migrate eastwards to Bangladesh or Northeast India.
Opportunities:
- Transparency of the finance sectoral firms in their account statements or tax compliance figures may boost the trust of the military regime and the Tatmadaw leadership in these agencies. This aspect may ensure the continuity of the firms’ registration in the Directorate of Investment and Company Administration (DICA)’s registry.
- Increased association of these financial companies with Indian or Chinese stake in the management board may appease both the military regime as well as the local population, given their increased ethical trust & customer preference to their neighbour countries and their work policies that favour the upliftment of the civilian population and rooting for their increased participation in the workforce.
Recommendations
The relevance of financial sectoral firms, are therefore, pivotal in the function of Myanmar’s economic responsibilities despite the authoritarian, military regime lead by Gen. Aung and his son, Aung Pyae Sone. The latter has been known to administer the economic and business centric environment of the Myanmar economy.
- As iterated, the financial sector firms are suggested to have either a Chinese or Indian association in their management board or top leadership circles that accounts for increased preference and greater support and security by the Tatmadaw and the local leadership.
- It is preferred for these sectoral firms to base their operation in the Southeastern tracts around Mandalay or the Centre-east region of semi-urban and rural geography given the limited history of military regime escalations in these areas. This may be associated with the lack of Resistance forces being backed or refuge in these tracts of land.
- Ensure increased transparency in book-keeping with regard to the annual financial statements, tax compliance regulations and the updated with reference to the Current Income Taxation (CIT) rate of 22% for foreign companies.
- Relevance of schemes that benefit the local farmers and poultry workers in the aspects of crop cultivation, crop turnover and yield maximization, increased lending at reasonable interest rates to women cooperatives as well as regional chit-fund associations ought to be recorded.
- Building local population trust through social welfare activities such as promoting savings and investment education to youth and elderly as well as being the intermediary that connects the local population to the central government for concerns redressal and efficient fund promotion to the grassroot levels are suggested for long-term company sustenance.
