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By The Irrawaddy AUGUST, 2000 - VOLUME 8 NO.8


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Kyat Reaches New Low

Burma’s national currency has stabilized after reaching an all-time low of around 395 kyat to the US dollar in mid-August. The kyat, which has been under pressure since civil servants received a pay increase of more than 500% in April, recovered to around 385 kyat to the dollar by late August, after briefly testing the 400 kyat per dollar level.

The Burmese military regime resorted to various measures to bring the kyat’s drop under control, including mass arrests of moneychangers and "market-friendly interventions" such as price subsidies for gasoline and diesel fuel and the introduction of tax-free markets for produce from state-owned farms. The official press also accused the regime’s opponents of fuelling speculation that new five and ten thousand kyat notes would soon be introduced. A commentary in the state-owned Mirror newspaper said that anti-junta elements were "attempting to stab the government in the back" by spreading the rumors.

The parlous state of Burma’s foreign exchange reserves another source of pressure on the kyat was receiving little help from rice exports. Burma’s exports have more than halved in the past year, from 120,400 tons in fiscal 1998 to 53,700 tons in fiscal 1999, according to official statistics. The regime, meanwhile, claimed that it had achieved a record rice crop of 20 million tons last year, or more than double US Ministry of Agriculture estimates.

 

Thai Trade Slumps as Investment Expands

Figures released by Burma’s Central Statistical Organization belied the upbeat tone of comments made by Thailand’s Deputy Prime Minister and Commerce Minister Supachai Panitchpakdi during the second session of the Thai-Burma Joint Trade Commission (JTC), held in Rangoon August 4-5.

According to official statistics compiled by Burma’s military regime, trade between the two countries was down by 33.78% in fiscal 1999 compared with the previous year, despite claims by Supachai that trade expansion had "for some years" exceeded 20%. Recently published economic indicators for the year ending in March 2000 showed that bilateral trade had dropped to US $393.83 million, with Thai exports to Burma falling 8.4% to $330.45 million compared with the previous year and Burmese exports to Thailand plunging by 72.8% to $63.38 million.

Although the decline in trade was blamed chiefly on the effects of a slow recovery from the 1997 Asian financial crisis, Thailand was the single largest foreign investor in Burma last year, putting $16.5 million out of a total of $55.61 million into the Burmese economy in fiscal 1999. Thailand is now the third largest investor in Burma after Singapore and Britain, with a total investment of over $1.25 billion.

During his visit to Rangoon, Supachai also reportedly announced that Thailand had finally paid $283 million it owed for natural gas from the Yadana oil field. 

BUSINESS DIGEST

New Malaysian investment

Malaysia’s Amalgamated Metal Corporation has announced plans to construct a US$8.9 million sulphuric acid plant in Burma—the largest investment to come from Malaysia since 1997. The new plant, due to become operational by the end of 2001, will produce 100 tons of sulphuric acid a month for domestic use.



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