BUSINESS IN MYANMAR
There are 20 or so private banks in Myanmar and a few state ones. After the new quasi-civilian government came to power in March 2011 plans were to launch a stock market in Yangon. The goal is to have 22 companies listed on it when it is slated to open by 2015.
The business class shrunk due to decades of socialist policies. The most successful businessmen are with drug dealers, merchants of investors with connections to the military regime.
According to Jiji Press, “The Japanese Finance Ministry said that it has signed a memorandum of understanding with Myanmar's central bank to support the development of the capital market in the Southeast Asian country. Japan will help Myanmar draw up a securities exchange law to ensure fair transactions of stocks and bonds, and protect investors. A group of Japanese securities experts and lawyers will provide advice to develop human resources in Myanmar. Japan will also accept trainees from the country. [Source: Jiji Press, August 17, 2012]
See Other Articles Related to Economics.
Banking Crisis in the Early 2000s
Myanmar experienced a banking crisis in the early 2000s that it never really recovered from. Three banks completely collapsed and policies by the Central Bank, such as recalling loans from borrowers, made the situation worse. The state of the economy sometimes seem to guided by what was happening to Aung San Suu Kyi. When she was released in May 2002, the value of the kyat shot up 30 percent.
In February 2002, the economy went through a crisis when account holders withdrew money from Myanmar’s 20 private banks after the collapse of about a dozen private financial institutions. In March2003, there was another, more serious run on the banks. This time it was prompted by a statement by the governor of Myanmar’s central bank that there was nothing to worry about, with of course people taking this mean that clearly there was something to worry about. So many people tried to withdraw their money that the government had to limit withdrawals from bank accounts to around the equivalent of $1,000.
The 2003 banking crisis is believed to have been the result of the collapse of some shady schemes. All the news wasn’t bad. According to government figures inflation fell from 54 percent in 2002 to 8 percent in 2003 due to a banking crisis. Myanmar’s ability to grow was hampered by China’s ability to attract most of the foreign investment that flowed into Asia.
Military and Business
The military has a stake in nearly all the profitable enterprises in Myanmar. For Burmese to get a job they must a good friend or relative "with the rank of sergeant or above." Hundreds of state-owned companies and private firms are controlled by senior military generals. Cross-border business deals must be approved by the military. The generals often take bribes. They have been involved in border casino businesses.
To do business on a high level you need to make a deal with a general. On the lower level you have pay a 5 percent commission to a uniformed officer. A British firm advised businesses to "align yourself with individual members” of the military regime. A Burmese businessman told National Geographic, " Go day by day. What is true today could be false tomorrow. Do not look forward or back. Accept the risks. Accept the way things are or go crazy. Then you ca make big money." [Source: Joel Swerdlow, National Geographic, July 1995]
In the 1990s, the generals reduced red tape and made the licensing process easier for local and foreign businesses they favored. They were especially accommodating after sanctions were imposed. One son of a hotel owner told Newsweek, "If they like you, they'll give you so many facilities. If they don't like you, they'll send you to jail.”
Cronies in Myanmar
Simon Denyer wrote in the Washington Post, “A new English word has entered colloquial Burmese, a word that could not even be uttered in public until recently. The word is “crony,” and it describes the business elite who exploited their closeness to the country’s military rulers to amass vast wealth in the past two decades. These well-connected elite made their money in industries such as construction, rubber and logging, as well as in arms dealing and drug smuggling. Their gains have only increased in the past two years, a result of changes that have privatized many state-owned assets and enterprises — and allowed the rich to buy them up at bargain prices. [Source: Simon Denyer, Washington Post, March 26, 2013]
“Burma’s business elite have been investing some of their wealth by erecting hotels and office buildings in Rangoon and other cities. But outside these gleaming new buildings, cycle rickshaws still ply the streets, and there are few signs of a more general boom. Small-business owners and shopkeepers say consumer demand remains tepid. The business elite, say critics such as Zaw Aung, a former political prisoner who is a research fellow at Thailand’s Chulalongkorn University, have the power to crush potential competitors, corner the benefits of Burma’s reform process and prevent a new, more diverse middle class from emerging.
Aung Zaw wrote in The Irrawaddy, “Indeed, there are many questions that need to be asked. Can cronies become builders of industry and national economic power? How can they contribute back to society by building philanthropic foundations and provide life-long assistance to society? Many showy tycoons and cronies in Burma are not interested in helping society. In fact, critics have charged that contributions from cronies are tiny compared to the money they spend on their posh Italian sports cars.” At same time some “cronies have quietly supported Suu Kyi and the opposition movement and donated to the Burmese community. [Source: Aung Zaw, The Irrawaddy, January 28, 2013 ////]
“Sean Turnell, an expert on Burma’s economy at Macquarie University in Sydney, Australia, thinks the cronies are destructive and resistant to reform. “I think the majority are cronies of the destructive sort—but some might turn out for the better.” “They are rent-seekers pure and simple rather than builders of genuine enterprise,” he added. “[They are] living off government regulatory largesse, the recipients of monopoly and quasi-monopoly profits and so on. As such, they are political animals as much as economic ones. But certainly there are some too who may emerge as something else. On this front, I guess we have to hope so, since they are amongst the few with sufficient capital to do transformative things, if this is what their desire is.” ////
Jill Drew wrote in the Washington Post, “"All they know is stealing," seethed one taxi driver as he took a passenger on a circuitous route to the airport, slowing in front of the house of Tay Za, the owner of a local airline who is close to Senior Gen. Than Shwe, leader of the junta. The villa had an open garage, with two Ferraris inside, one red and one yellow. "They want money, money, money. And we have nothing," he said. The driver keeps a notebook hidden under newspapers on his dashboard. In it he writes, in Japanese characters, how the government controls gasoline sales to siphon money for themselves. He wants to smuggle the notebook out of the country so foreign media can report on the system. The government limits official gas sales to two gallons a day. To buy more, drivers must purchase black-market gasoline — obtained by sellers who pay kickbacks to government-appointed filling station managers — at nearly double the official rate.[Source: Jill Drew, Washington Post, October 24, 2007 \]
See Separate Article LOCAL GOVERNMENT, BUREAUCRACY, CRONIES AND CORRUPTION IN MYANMAR
Industries in Myanmar
Myanmar has a very underdeveloped industrial and manufacturing sector, especially in terms of employing people. It has the potential to employ a lot more as labor is very cheap. On multinationals setting up shop in Myanmar, David Webb, of UK Trade & Investment, said, "Myanmar's manufacturing industry has pretty much been wiped out by sanctions. Foreign companies have money and access to expertise, markets and knowledge of supply chains... it gives them an advantage." [Source: Aidan Jones, AFP, March 14, 2013]
Labor force - by occupation: agriculture: 70 percent; industry: 7 percent services: 23 percent (2001) GDP - composition by sector: agriculture: 38.8 percent; industry: 19.3 percent; services: 41.8 percent (2012 est.); GDP - composition by sector (percent) agriculture: 54.6 percent, industry: 13 percent, services: 32.4 percent (2005 est.). Industrial production growth rate: 4.3 percent (2010 est.), country comparison to the world: 69. [Source: CIA World Factbook]
The private sector dominates in agriculture, light industry, and transport activities, while the military government controls energy, heavy industry, and rice trade. Industries have traditionally been small and family-owned. Wood carving, stone sculpting and brass casting are local industries. Tobacco, cheroots, cigars and some jute are produced. The red, green, white and black trades are the most lucrative enterprises in Myanmar. The colors refer to rubies, jade, heroin and opium (See Rubies, Jade, Opium, Heroin) There is also commerce in gold, sapphires, teaks, diamonds, oil, rubber.
Inefficiencies remain: some of them a legacy of out-dated socialist policies. The lack of an educated workforce skilled in modern technology prevents the economy developing, maturing and being competitive. The country also lacks adequate infrastructure. Goods travel primarily across the Thai border (where most illegal drugs are exported) and along the Ayeyarwady River. Railroads are old and rudimentary, with few repairs since their construction in the late nineteenth century. Highways are normally unpaved, except in the major cities. Energy shortages are common throughout the country including in Yangon.
Important Industries in Myanmar
Important industries: agricultural processing; knit and woven apparel; wood and wood products; copper, tin, tungsten, iron; construction materials; pharmaceuticals; fertilizer; cement; natural gas. Many of Myanmar’s saw mills, cement factories, rice mills, textiles factories and steel mills have traditionally been in the Rangoon area. Mandalay is a center for many crafts.
Burma is also the world's second largest producer of opium, accounting for 8 percent of entire world production and is a major source of illegal drugs, including amphetamines. Other industries include agricultural goods, textiles, wood products, construction materials, gems, metals, oil and natural gas. [Source: Wikipedia]
According to Countries and Their Cultures: “ Industrial production focuses on goods for local consumption, although a handful of factories produce for exportation. Local industries include textiles and footwear, wood processing, mining, the production of construction materials, pharmaceuticals, and fertilizer manufacturing. Although the country has substantial gem, oil, and natural gas reserves, extraction and processing capabilities are limited. There is a small tourist industry. There has been a dramatic growth in the number of hotels built since the introduction of economic reforms. Travel restrictions and poor infrastructure have concentrated the tourist industry in a few areas. [Source: Countries and Their Cultures everyculture.com ]
There has been something of a construction boom in downtown Rangoon as investors from Hong Kong and Singapore have financed new hotels and office buildings. Otherwise relatively few buildings have been built since colonial times. Paint and plaster is peeling, despite cosmetic whitewashing.
Cottage Industries and Crafts in Myanmar
The art of Panbe (blacksmithing) is the tempering of iron in the furnace to make crafts of necessary items. The artisans make ox cart axles, ox cart irons, tyres, scissors, hammers, adzes, pickaxes, knives, hatchets, axes, digging hoes and mattocks. Myanmar’s traditional blacksmith craftmaking emerged in the early of Pagan period (11th century A.D) and was improved in the mid Pagan, Ava and Mandalay periods. Myanmar’s traditional blacksmith craft. from the Inlay region was famous in the Mandalay period. Many types of blacksmith craft articles are available such as military armour, weapons, files, pickaxes and swords. [Source: Myanmar Travel Information ~]
The art of Pantin refers to producing items from copper bronze or brasss, The artisans make triangular brass gongs, gongs, brass bowls for monks, weights in the shape of brainy ducks, trays, copper pots, cups, bowls, cymbals, bells, jingle bells and small brass gongs. Myanmar’s traditional coppersmith’s craft emerged before the Pagan period and was improved during Pagan and Ava periods. Every pagoda in Myanmar has bells, which have traditionally been struck to tell the people of good deeds done. They are triangular bells which twirl when struck and ring with a sweet rising and falling tone, which gradually fades away. Gongs slung from carved ivory or wood elephant trunks are prized as dinner gongs. Bells of different sizes and shapes, all unmistakably Burmese in design, are popular as souvenirs. So are other castings such as weights and cow bells. ~
See Crafts
Panpoot (Lathe-Turned Woodwork) and Wooden Parquetry in Myanmar
The painting and inlaying of variously colored woods is called parquetry (Parqueterie). The goal is to produce articulately rich and soul touching pictures in veneer-jointed format which is overlaid on plywood by glue bond. In Myanmar veneer-painting is called Thit-parr-hlwar ba-gyee. The art form was developed at the No.1 Plywood Factory in Kyimyindine Township, Yangon. The factory was founded by former George Bah Oh (Bah Oh Teak and Hardwood Co. Ltd.) in 1956 and was nationalized in 1964. [Source: Myanmar Travel Information ~]
To make a veneer-painting, first of all some sketches of the designer are necessary to be translated into parquetry . The designs are cut with cutter-a sharp knife or scissors. Edges of the parts are joined and composed with veneer tape, step by step to complete a full scene. This stage is an important factor in the process. It has to be accomplished with great care and patience. In each cautiously cut and composed veneer figure, highlighted movement and slight attenuated forms are particularly delightful. Composed veneer-painted pictures are glue bonded on a piece of plywood and put in the hot press machine. After that pictures are cut out by a small circular sawing machine. Then, they are scraped clean and the rough surface is rubbed with sandpaper for a smooth finish. ~
Large size parquetry are decorated with ornately curved teak frames. The art of arranging lines. shape and details in a pattern is amazing. Popular designs include "Elephant Power", "Oil Lamp Dance", "Royal Princess", "Playing Myanmar Harp", "Great Wall" and "Santa Claus". The most amazing is the workmanship of the portraits of famous persons. The portrait of princess Maha Chakri Sirindhorn (Thailand) is remarkable. There are also parquetry wall clocks of multi color rays and assorted backgrounds; fascinating trays; highly interesting ceilings and fancy plywood for wall decoration. Unique and fascinating parquetry decorates the Thiripyitsaya Hotel in Pagan and Tatmadaw Dhammayon (a community hall for religious purpose) in Yangon. ~
The art of Panpoot is an enterprise to make wooden utensils by turning wood on a lathe. Items made in thsi way include shafts of umbrellas, table legs, the legs of beds and posts for pavilions and railings. Some say the craft dates back to 8th century Pagan. ~
Pantaut (Making Designs with Masonry) and Panyan (The Art of Bricklaying)
The art of Pantaut (stucco sculpture) refers to the handicraft of making decorative floral designs, lions, dragons and other figures in relief with stucco. Myanmar traditional stucco carving emerged before the Pagan period and was improved in the Pagan, Ava, Amarapura and Mandalay periods. According to historical records, Stucco works were greatly valued in the Pagan period. Stucco works of Pagan period have detailed decorations. After Pagan stucco carvings of mid-Konbaung or Amarapura period, were uniquely Burmese in style and very fine. The curled leaves and buds are particularly beautiful. The buds and flowers in bunches in the center of the portal at U Kin-danke are unique. Menu’s brick monastery at Ava also has fine examples of the craft. [Source: Myanmar Travel Information ~]
The art of Panyan (mason) refers to the enterprise of constructing buildings and structures using bricks, stones and cement. Masons build brick houses, pagodas, other religious buildings and bridges. The masonry pagodas and other religious buildings around the Pagan region are world famous. Myanmar’s traditional masonry of the Pagan period is the highly developed. The structures there are remarkable for their strength, grandeur, beauty of form, immensity of size and detailed and appropriate decorations. The masonry of the mid Amarapura period is beautiful and lively. Myanmar’s traditional masonry was derived from the Mon culture of Suvanna Bhumi and from 11th century Southern Indian. Masonry in Myanmar emerged in the Pyu period in the A.D. 1st century. ~
Silk Weaving in Myanmar
Weaving is a highly developed traditional art form in Myanmar. Among the Burmese, it reached its highest form in the production of lun-taya acheik cloth. The technique was brought from Manipur in the eighteenth century, but the complex motifs are distinctly Burmese. This style of cloth is still woven near Mandalay for sale to elite Burmese. There are distinctive textile traditions among the ethnic minorities. [Source: Myanmar Travel Information ~]
Burmese proudly wear hand-woven silk materials on auspicious occasions. Traditional turbans, jackets and longyis worn by Myanmar men are made of silk while intricate acheik designs woven with over 100 silk threads are a feature of silk blouses and silk shawls proudly worn by Myanmar ladies. Although the colors and patterns of silk-woven materials have changed since the time of Myanmar kings. they are still proudly worn by Burmese. ~
To make silk thread firstly three or four raw silk threads from a cocoon are twisted tightly with the aid of the machine and made taunt and smooth. After that impurities are removed by washing the threads in a boiled soap-nut liquid. You will have to boil and wash more thoroughly the threads which are used for the designs. because they need to be softer than ordinary silk thread. After dyeing the threads for about 30 minutes in boiling dye-filled water you have to rinse the excessive dye from the threads. This step may be repeated several to acquire the desired color. Then the dyed threads are dried in the sunlight. In this way. you get beautiful smooth dyed-silk threads. ~
To weave the silk threads you wind the threads on a machine or a loom. After attaching the bobbins on the loom the weavers will weave the desired acheik patterns. The acheik patterns are horizontal wavy lines of various sizes and numbers. There are up to 300 small bobbins used to weave very intricate and complicated acheik designs. Traditionally, acheiks have names like “royal thread,” “6 design thread,” “5 design thread,” “4 design thread” and so forth—depending on the usage of color and the number of small bobbins used for the particular design. In the old days, people used to prefer the acheik with more colors. But nowadays people prefer soft and smooth silk threads of only two or three colors. ~
Traditional Acheik designs woven with more modern colors and designs are winning the hearts of locals and foreign visitors. Both women and men wear lovely, colorful silk acheiks to special occasions like weddings and important festive ceremonies. Men's silk have diamond, jasmine or pearl designs. In Amarapura city, not far from Mandalay, 100-shuttle looms make acheik pasoes and shawls woven in a variety of designs and colors. ~
Textile Factories in Myanmar
Textiles with the "Made in Myanmar" began showing up more and more in American department stores in the 1990s. One garment factory from that time, a South Korean-military partnership, employed 1,200 female sewers outside Rangoon,
There are many garment factories in the industrial zone of Hlaing Tharyard in Yangon Factories have produced sweatshirts that say “I Love This Game” for the NBA and sexy lingerie. Many were closed own after the U.S. imposed sanctions in 2003 that named imports from Myanmar. Some who lost their jobs found worked at reopened factories like the Korean-owned Wa Hong Hon factory, which produced cheap T-shirts and paid workers $15 a month.
In March 2012, six of Thailand's largest garment manufacturers announced that they would move production to Burma, principally to the Yangon area, citing lower labor costs there.
U.S. Sanctions Hurt Myanmar Industry But Asia Keeps It Going
Alan Sipress wrote in the Washington Post, “Burmese industry and exports were on the decline in the 1990s as a result of progressive attempts by the United States to tighten economic sanctions on Burma, protesting its suppression of democracy. More than half of Burma's 400 garment factories closed after the trade sanctions were approved, and many workers returned to their village homes or found work in new plants just over the Thai border, said businessmen and foreign economic experts. Those who kept their jobs saw their wages drop. [Source: Alan Sipress, Washington Post, January 7, 2006 //\]
“But the effort to pressure Myanmar rulers was vastly undercut by Asian neighbors, anxious to tap its cheap workforce and abundant natural resources and in some cases by making goods for country that imposed sanctions on Myanmar. Sipress wrote: “ Hundreds of women leaned over sewing machines amid the soft whir of industry. Row after row they sat, dark eyes intent on work, cheeks smeared with a traditional chalky cosmetic made from tree bark. The workers were stitching a sample batch of women's trousers ordered by a Taiwanese company for sale in Europe. If successful, the Burmese factory owner anticipates a follow-up order of as many as half a million pieces, which would make for a very busy year. "We've suffered a lot, but it's getting better and better," he said. "There are so many new buyers." //\
“When trade sanctions blocked garment exports to the United States in 2003, subcontracting work from China kept some factories working, businessmen said. The garment industry was one of the few sectors hit hard by the embargo. About 80 percent of Burma's garment exports had gone to the U.S. market, valued by officials at about $470 million a year. According to Khine Khine Nwe, managing director of Best Industrial Company and a board member of the Myanmar Garment Manufacturers Association, Burmese businessmen kept less than $50 million of this while foreign companies supplying the fabric and buying the finished products took the rest. //\
“Since then, business has picked up, with Burmese factories receiving mounting orders from Korean, Taiwanese and other Asian companies selling primarily in Europe, manufacturers said. But behind the high metal gates of one Rangoon factory, the plant owner complained that foreign companies knew Burmese manufacturers were in a weak position, so they offered low prices and placed difficult orders that other countries turn down. He said with a thin smile that he had no choice but to accept. "If we don't get enough orders, we send our workers home after half a day," he said, motioning toward the young women outside the door of his factory office. But suddenly turning upbeat, he added, "Next year will be better. More orders will come." //\
Automobile Industry in Myanmar
In February 2013, AFP reported: “Japanese automaker Suzuki Motor Corp said it would resume production in Myanmar. Small-vehicle producer Suzuki, which has seen huge success in India with its Maruti Suzuki unit, said it would invest about US$7 million to restart its wholly owned Suzuki (Myanmar) Motor unit in the commercial capital, Yangon. Production started in May at the factory that was operated as a joint venture with Myanmar’s government from 1998 and 2010, a Suzuki spokesman said. The plant closed after the contract expired, the spokesman added, without saying why the agreement was not extended at the time. [Source: AFP, February 27, 2013 **]
The factory in the Thilawa district f Yangon, will initially produce just 100 Carry mini-trucks monthly for the local market, with up to 90 local employees. “With Myanmar’s democratization efforts, investment activities [by foreign firms] are in a full swing,” the spokesman said. “The auto market might be in a transition period. But we expect the market to grow, and we wanted to be there when it does.” **
In March 2013, said it would open in May its first showroom in Yangon, Myanmar as the automaker is “gearing up for market entry” even though there us almost no market for new cars as the duties on them are so high.
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Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, The Irrawaddy, Myanmar Travel Information Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, burmalibrary.org, burmanet.org, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.
Last updated May 2014