Crisis Forces Businesses to Close, Crime to Rise
By KYAW ZWA MOE Friday, March 14, 2003

Burma is buckling under the weight of a worsening financial crisis. Ever since private banks started telling customers they couldn’t withdraw all their savings last month, prices have become unstable, businesses have closed, workers have been laid off and crime has increased. A few days after Burma’s Finance and Revenue Minister Khin Maung Thein retired on Feb 1, 20 private banks faced currency shortages when anxious customers rushed to banks to withdraw their money. The incident came after the collapse of several private service companies. After more than a month of financial woes across the country, some businesses have now been forced to close. "The month-long currency shortage has meant most businesses aren’t doing well," a businessman in Rangoon said today. "Some businesses have had to shut down recently, and some have laid some workers off since they couldn’t pay wages." In the second week of February, banks started to impose limits on withdrawals. Some banks told customers they could only withdraw a maximum of 50,000 kyat (US $52) per week. Later, some banks ordered customers with outstanding loans to repay 20 percent of their debt within a few days. According to business sources, this move pushed down the price of used cars. "Some car owners have had to sell their vehicles for half price because they need to pay off their debts to the banks before the due date," a car salesman in Rangoon said. "Car prices have dropped to half the previous price." He said the price of a luxury car worth 100 million kyat before now sold for around 50 million (US $52,700). "On the other hand, there are few buyers," he added. In addition, the currency shortage has caused the kyat to strengthen. Early this year the kyat was relatively steady at around 1,100 to the US dollar. But according to moneychangers, since bank problems started to escalate last month, black market exchange rates have fallen below 1,000 kyat. Today, the dollar was trading for as little as 900 kyat. At the same time, financial problems have been attributed to an increase in burglaries. Recently, a house in Rangoon’s Kyee Myin Daing Township was robbed at daytime while the owner was stabbed to death, a neighbor reported. Moreover, a wealthy Chinese businessman at Phar-Kant in Kachin State was killed on Feb 21, the day after he was seen arguing with bank staff at a branch of the Asia Wealth Bank (AWB). Though no one has been able to confirm why he was killed, sources say he was angry at being restricted to withdrawals of 100,000 kyat per week. He was believed to have had millions invested in the bank. In reports on Feb 22, Burma’s ruling military publicly backed the private banks—including the AWB, the Yoma Bank and the Kanbawza Bank—and offered a bailout of 25 billion kyat. But analysts say stability in Burma’s finance sector has not been restored. Economists put the blame squarely with the government. "It’s not unusual to hear that they [the military government] cannot manage economic issues well. After all, it is Deputy Sr-Gen Maung Aye who oversees all the economic sectors of the country," an economist in Rangoon said. Maung Aye, vice-chairman of Burma’s ruling State Peace and Development Council, serves as chairman of the National Industrial Development Committee, the National Agricultural and the Economic Development Committee. He also looks after the National Trade Committee, responsible for border trade with neighboring countries. Observers say Maung Aye lacks the economic know-how to manage Burma’s financial mess. Maung Aye is reportedly still in the hospital in Singapore, where he has been since Sunday, seeking treatment for prostrate cancer.

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