Business

Regime Attempts to Control Inflation and Corruption

The ruling military junta in Burma has been trying to contain the country’s highest inflation ever with a variety of new economic policies. The regime last month reduced the number of licensed moneychangers from eighteen to six, then for the first time capped the Foreign Exchange Certificate (FEC) at a buying-and-selling price of 490-500 kyat. The FEC is officially worth one US dollar. However the official exchange rate for the kyat is 6.5 to the dollar, effectively giving Burma two astronomically different exchange rates.

The junta has also recently made attempts at controlling the widespread corruption within the country. In late June Sec-1 Lt-Gen Khin Nyunt chastised customs officials for facilitating corrupt dealings at Rangoon’s international airport. He accused the officials, among other things, of taking bribes from individuals involved in the smuggling of teak and gems. The regime is also taking steps to ensure that gems and jade are sold to state-run emporiums and not on the black market which bypasses the regime’s revenue system. How this is to be done remains unclear.

Thai and Burmese Officials Look to Make Peace

Over the last two months a number of high-level officials from both Thailand and Burma have exchanged visits in hopes of easing tensions and kick-starting a stalling business relationship.

Following Thai Prime Minster Thaksin Shinawatra’s visit to Rangoon in July the Mae Sai border crossing was reopened after a five-month closure. Burma’s Foreign Minister Win Aung then came to Bangkok shortly after Thaksin’s return to discuss bilateral relations, which had taken a nosedive in February following a series of serious border clashes.

During the last week of July, Thailand’s Defense Minister Chavalit Yongchaiyudh and other Thai army leaders made a trip to Rangoon, where Gen Chavalit pledged to stop all support of anti-Rangoon forces attempting to undermine the Burmese government from Thai soil, including the Shan State Army and the Karen National Union. The Thai leaders also asked their Burmese counterparts to stop all support for the United Wa State Army, which operates on Burmese soil and is responsible for a large percentage of the narcotics that are trafficked through Thailand.

The latest trip by Chavalit has paved the way for Sec-1 Lt Gen Khin Nyunt, Burma’s number three man, to visit Thailand on September 1. The aim of the visit will be to tackle bilateral problems such as border demarcation and drug and human trafficking, as well as to discuss Burma’s ban on over forty products made in Thailand.

BUSINESS DIGEST

Problems Continue for Myanmar Air

The financial problems of Myanmar Airways International (MAI) are continuing with daily flights running at 50% capacity. The lease on their lackluster fleet of two 737-400s expired last month and they have opted to lease smaller 737-300s. Prithpal Singh, CEO of MAI, describes their current situation as directionless, with no advertising or promotion occurring. Singh took over operations in January when the Singapore-based Region Airlines bailed out the near bankrupt Burmese owners in exchange for a 49% stake.